Prodways Group

Annual Report • Apr 29, 2019

2018 ANNUAL REPORT

Summary

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2018 ANNUAL REPORT 1

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OVERVIEW OF THE GROUP AND ITS BUSINESSES 7

1.1	Key figures	8
1.2	Overview of the Group and its businesses	10
1.3	Strategy and outlook, investment and R&D policy	18
1.4	Analysis of consolidated performance and business sectors	20
1.5	Activities and results of PRODWAYS GROUP SA	23
1.6	Risk factors	25
	CORPORATE GOVERNANCE	35
2.1	Governance	36

• 2.2 45 Corporate officer remuneration policy
• 2.3 Company reference to a Corporate Governance Code and its application by the Company 54
• 2.4 Special arrangements, if any, regarding shareholder participation in shareholders' meetings 55
• 2.5 Regulated agreements, related-party agreements and current agreements 56
• 2.6 Internal control and risk management procedures 58

FINANCIAL AND ACCOUNTING INFORMATION 61

3.1	2018 consolidated financial statements	62
3.2	Separate financial statements 2018	104

INFORMATION ABOUT THE COMPANY, ITS SHARE CAPITAL AND SHAREHOLDERS 119

- 4.1 120 Information about the Company 4.2 122 Share capital

• 4.3 128 Shareholding 4.4 Financial communication (financial agenda, share performance, dividend policy, etc.) 129

OUR VALUES, OUR EMPLOYEES AND OUR CSR COMMITMENTS 131

General approach and methodology	132
3D printing: a production method that meets the challenges of sustainable development	135
Building a major player in technological innovation	135
Medical: an area of strategic development for PRODWAYS GROUP	137
Commitments to its employees	138
Activities with limited impact on climate change and the environment	142
Report by the independent third-party entity on the consolidated statement of non-financial performance in the
	144
	management report

INFORMATION ON THE SHAREHOLDERS' MEETING OF 7 JUNE 2019 147

6.1	Report of the Board of Directors presenting the resolutions submitted to the combined shareholders' meeting of 7 June 2019	148
6.2	Draft resolutions for the ordinary and extraordinary shareholders' meeting of 7 June 2019	152
6.3	Reports of the statutory auditors presented to the shareholders' meeting	157
6.4	Other reports by the Board of Directors presented to the shareholders' meeting of 7 June 2019	160
	ADDITIONAL INFORMATION	163
7.1	Information concerning the statutory auditors	164
7.2	Person responsible for the information	164

7.3 165 Concordance tables

2018 ANNUAL REPORT

This document describes the Company's activity during the 2018 financial year, in accordance with the provisions of article L.451-1-2 of the French Monetary and Financial Code and articles 222–3 and 222-9 of the General Regulations of the French Financial Markets Authority (AMF). It is filed with the "Autorité des Marchés Financiers" and is available on PRODWAYS GROUP website.

A MESSAGE FROM THE CHAIRMAN

In 2018, PRODWAYS GROUP achieved another year of solid growth, and once again posted one of the highest revenue growth rates in the 3D printing market. The Group continued to improve its profitability with positive EBITDA for the first time over the financial year. This performance comes from the combination of a large number of already very profitable activities and some promising, yet still lossmaking, activities.

The acquisitions and R&D developments since the IPO have strengthened the Group's positions in its core businesses, particularly in 3D printing production applications. Hence, the machines and materials for the dental sector are well-recognised in their market. The acquisition of the US machine manufacturer, SOLIDSCAPE, in 2018 allows us to position ourselves in the jewellery market, where a significant share of production has already shifted to 3D printing. This strategic acquisition also offers us strengthened access to the North American market and an enlarged distribution network.

The acquisition of SURDIFUSE-L'EMBOUT FRANÇAIS in January 2019 is also part of this strategy. This acquisition complements that of INTERSON PROTAC in 2017, and enables us to become the French leader in hearing aid eartips and to digitalise their production.

For 2019, PRODWAYS GROUP should continue to benefit from the development of 3D printing as a manufacturing method in an increasing number of markets, as well as from its positioning and differentiated technologies. The Group will continue its investments in the future applications of 3D printing (Rapid Additive Forging technology, digitalisation of processes in the healthcare sector, etc).

In a market with high growth potential, we are ready to seize opportunities and build a strong, innovative Group capable of creating value for our shareholders and for all of our stakeholders.

Raphaël GORGÉ Chairman of the Board of Directors

PRODWAYS GROUP - 2018 ANNUAL REPORT 3

PRODWAYS GROUP

SPECIALIST IN INDUSTRIAL 3D PRINTING UNIQUELY POSITIONED AS AN INTEGRATED EUROPEAN PLAYER

O U R S T R A T E G Y

• Become a major player in the 3D printing market by offering high-performance products for professional and industrial uses.
• Continue to develop priority markets, such as aerospace, healthcare and jewellery, for which the Group's products and expertise are well-suited, and seize growth opportunities in all other sectors.

OUR OBJECTIVE

• Help our industrial customers to be more innovative, more effective and more profitable thanks to our products and services.

OUR GOVERNANCE

• PRODWAYS GROUP is a subsidiary of GROUPE GORGÉ, an industrial group that specialises in high-tech industries controlled by the GORGÉ family.
• GROUPE GORGÉ holds 57% of the capital of PRODWAYS GROUP. The two companies are listed on EURONEXT Paris.
• Our Board of Directors comprises 5 directors including 2 independent directors.

REVENUE

2013 2014 2015 2016 2017 2018

17.8 ^M

5.0 ^M

€

0.1 ^M

€

€

34.8 M

€

60 € .9 M

3 countries

OUR MODEL

SYSTEMS

• The Group targets a large number of sectors, from aerospace, to healthcare and jewellery, to support industrial companies in their digital transformation and incorporate 3D printing into their production processes.

Machines

• PRODWAYS GROUP is one of the primary European manufacturers of industrial 3D printers, with a wide range of multitechnology 3D printing systems (plastic, lost wax, ceramic and metal), and premium related materials and services.
• A range of 23 machines (plastic, ceramic, lost wax).
• A proprietary Rapid Additive Forging technology for 3D metal printing of largescale parts.

Materials

• A wide range of over 140 materials (liquid resins, ceramic powders and polymers, waxes).

3D software

• The Group's businesses also include the integration of DASSAULT SYSTÈMES' SOLIDWORKS 3D design, simulation and optimisation software.

PRODUCTS

Parts design

• PRODWAYS GROUP is today one of the largest European metal and plastic parts manufacturers with a sizeable fleet of 3D printers across all 3D printing technologies based in Annecy, France and Austin, USA.

Medical applications

• At the same time, PRODWAYS GROUP has developed activities transformed by 3D printing and digitalisation in the healthcare sector.
• The Group has a portfolio of activities in the podiatry (orthotic insoles), dental (impression trays, mouthpieces) and audiology (custom hearing aid eartips and custom hearing protectors) sectors, for which a proportion of the production uses 3D printing, sold directly to healthcare professionals.

OVERVIEW OF THE GROUP AND ITS BUSINESSES

1.1	KEY FIGURES		8
	1.1.1	Change in revenue	8
	1.1.2	Change in EBITDA	8
	1.1.3	Change in profit (loss) from continuing operations	8
	1.1.4	Change in net income	8
	1.1.5	Key financial data	9
	1.1.6	Investments	9
	1.1.7	Change in workforce	9
1.2		OVERVIEW OF THE GROUP AND ITS BUSINESSES	10
	1.2.1	History and development of PRODWAYS GROUP	10
	1.2.2	Activities, markets and competition	11
	1.2.3	Principal subsidiaries and organisational chart at 31 December 2018	16
	1.2.4	Significant events	17
1.3	STRATEGY AND OUTLOOK, INVESTMENT AND R&D POLICY
	1.3.1	Strategy	18
	1.3.2	Outlook	18
	1.3.3	Investment policy and R&D	19
	1.3.4	Events after the reporting period	19

1.4		ANALYSIS OF CONSOLIDATED PERFORMANCE AND BUSINESS SECTORS	20
	1.4.1	Analysis of Group results	20
	1.4.2	Group's financial position (cash and cash equivalents, financing and capital)	22
1.5	SA	ACTIVITIES AND RESULTS OF PRODWAYS GROUP	23
	1.5.1	PRODWAYS GROUP SA's role in the Group	23
	1.5.2	Activities and results	23
	1.5.3	Proposed appropriation of income	23
	1.5.4	Standard payment terms	23
	1.5.5	Other financial and accounting information	24
1.6		RISK FACTORS	25
	1.6.1	Legal risks	25
	1.6.2	Risks associated with intellectual property	26
	1.6.3	Operating risks	28
	1.6.4	Risks associated with the Group's business	29
	1.6.5	Financial risks	32
	1.6.6	Industrial and environmental risks	33

1.1 KEY FIGURES

The key figures have been extracted from the consolidated financial statements. The 2017 figures were restated as detailed in Note 1.3 to the 2018 consolidated financial statements ("Restatement of 2018 financial statements").

1.1.1 Change in revenue

(in millions of euros)	2018	2017	2016
Systems	38.40	17.39	13.10
Products	22.86	17.82	12.15
Structure and disposals	(0.37)	(0.41)	(0.04)
CONSOLIDATED REVENUE	60.89	34.81	25.21

1.1.2 Change in EBITDA

(in millions of euros)	2018	2017	2016
Systems	1.11	(1.55)	(5.42)
Products	0.53	0.84	1.39
Structure and disposals	(0.44)	(0.46)	(0.87)
CONSOLIDATED EBITDA(1)	1.19	(1.17)	(4.89)

(1) EBITDA: profit (loss) from operations before depreciation and amortisation, impairments, charges related to free share allocations, and other non-recurring items. This non-IFRS measure is described in Note 3.2 to the consolidated financial statements.

1.1.3 Change in profit (loss) from continuing operations

(in millions of euros)	2018	2017	2016
Systems	(2.10)	(3.68)	(7.36)
Products	(1.44)	(0.57)	0.20
Structure and disposals	(0.40)	(1.20)	(0.89)
CONSOLIDATED PROFIT (LOSS) FROM CONTINUING OPERATIONS	(3.95)	(5.45)	(8.06)

1.1.4 Change in net income

(in millions of euros)	2018	2017	2016
CONSOLIDATED NET INCOME	(5.66)	(7.70)	(8.31)
NET INCOME – GROUP SHARE	(5.45)	(7.57)	(8.27)

1.1.5 Key financial data

(in millions of euros)	2018	2017	2016
EQUITY(1)	80.92	86.83	26.01
Available cash and cash equivalents (a)	25.93	41.48	8.68
Financial debt(2) (b)	6.73	4.77	16.32
Net cash(3) (a) - (b)	19.19	36.71	(7.64)
ADJUSTED NET CASH(4)	19.32	36.88	(7.64)

(1) Equity attributable to owners of the Group plus non-controlling interests.

(2) A schedule of financial debt is presented in Note 8.1.1 to the consolidated financial statements.

(3) Available cash less financial debt (a negative figure indicates net debt).

(4) Net cash plus market value of treasury shares.

1.1.6 Investments

(in millions of euros)	2018	2017	2016
Total R&D expenditure(1)	3.31	1.93	2.18
R&D expenditure as a percentage of revenue	5.4%	5.6%	8.7%
Other capitalised investments	4.49	2.89	3.67

(1) R&D charged against income plus R&D capitalised during the financial year.

1.1.7 Change in workforce

	2018	2017	2016
Systems	241	180	120
Products	215	192	128
Structure	4	3	-
TOTAL WORKFORCE	460	375	248

1.2 OVERVIEW OF THE GROUP AND ITS BUSINESSES

PRODWAYS GROUP is a specialist in industrial and professional 3D printing with a unique positioning as an integrated European player. The Group has developed throughout the 3D printing value chain (software, machines, materials, parts & services) with a high value added technological industrial solution.

PRODWAYS GROUP is one of the primary European manufacturers of industrial 3D printers with a wide range of multi-technology 3D printing systems and premium associated materials. The Group's businesses also include the integration of DASSAULT SYSTÈMES' SOLIDWORKS 3D design, simulation and optimisation software. The 3D printers developed by PRODWAYS GROUP are used in a large number of sectors, from healthcare, jewellery and aeronautics, providing the necessary tools to innovative companies that wish to incorporate 3D printing into their production processes.

The Group is also one of the largest European metal and plastic parts manufacturers with a sizeable fleet of 3D printers and using every kind of 3D printing technology. PRODWAYS GROUP also develops and markets medical applications that use 3D printing for podiatry, dentistry and audiology and sells them directly to healthcare professionals.

By making software and machine, materials and parts design an integral part of its core expertise, PRODWAYS GROUP is positioned throughout the entire value chain and provides its customers a complete offer from the design stage of their projects through the manufacturing of their parts.

At 31 December 2018, the Group employed 460 people, had offices in three countries and directly exported around 31% of its goods and services.

PRODWAYS GROUP is a GROUPE GORGÉ subsidiary.

1.2.1 History and development of PRODWAYS GROUP

z The origins of PRODWAYS

In the early 1990s, André-Luc ALLANIC, one of the world's leading specialists in 3D printing, who worked on many innovative technologies (including stereolithography, sintering of metal powder and polymers) developed some of the first 3D printing systems in Europe for the French National Centre for Scientific Research (CNRS) and the Company Laser 3D which he joined in 1993. The stereolithography machines he designed were already the fastest on the market at that time.

In 1997, André-Luc ALLANIC created his own company – Optoform – and developed revolutionary systems. He went on to sell that company to 3D Systems in 2001.

In 2007, the arrival of the new generation of DLP® microelectronic chips helped André-Luc ALLANIC make his vision a reality. He combined a DLP® chip with a high-power light-emitting diode (LED) to design the most precise and fastest 3D printers on the market. Thus MOVINGLight® technology was born. André-Luc founded PHIDIAS TECHNOLOGIES so that he could market the new machines built with that technology.

In 2013, André-Luc ALLANIC met Raphaël GORGÉ. André-Luc ALLANIC became interested in partnering with a French industrial Group with a strong technological culture. Raphaël GORGÉ very quickly saw the technological advances made possible by MOVINGLight® technology and the resources that GROUPE GORGÉ had at its disposal for its international deployment.

In May 2013, GROUPE GORGÉ acquired PHIDIAS TECHNOLOGIES. The Company was renamed PRODWAYS.

z In 2014

In April 2014, GROUPE GORGÉ created PRODWAYS GROUP, which acquired DELTAMED, a leading player in 3D printing materials. This acquisition has since enabled the Group to master and capture all of the value creation for the machine-material relationship for the applications developed by the Group.

In July, PRODWAYS GROUP acquired a 20% equity stake in DENTOSMILE, a French manufacturer of 3D transparent aligners for orthodontics.

z In 2015

In February, PRODWAYS opened a subsidiary in the United States (PRODWAYS AMERICAS), allowing it to provide local support for its American customers, in particular in the areas of pre-sales consulting and technical support services.

In March, two acquisitions marked the acceleration of the Group's strategy, which aims to offer its customers multi-technology products and a full range of services: INITIAL, the leading independent French manufacturer of 3D printed parts, and the assets of NORGE SYSTEMS, an English start-up specialising in the design of 3D printers using laser sintering of plastic powders.

In September, an agreement was signed with the Chinese company HUNAN FARSOON for the distribution of a new range of "PRODWAYS powered by FARSOON" premium printers based on laser sintering technologies for plastic powders. It was an initial step in the Group's positioning as a serious alternative to the market leaders. At the same time, PRODWAYS GROUP purchased a 45% equity stake in the Texas Service Bureau company VARIA 3D, the historic trading partner of HUNAN FARSOON.

In November, PRODWAYS GROUP completed the acquisition of EXCELTEC, a company specialising in the development and sale of premium polymer materials specifically designed and optimised for selective laser sintering, for industrial applications in particular. This acquisition consolidates the Group's position on selective laser sintering technology with a complete range of printers and premium materials, thus allowing a complete solution for all market issues and confirming the Group's desire to become the new alternative to the leaders in this technology.

z In 2016

In January, PRODWAYS GROUP took control of PODO 3D, a start-up founded by a chiropodist whose ambition is to develop a modelling and 3D printing solution for foot orthotics.

In May, PRODWAYS introduced the first industrial laser sintering printer for under €100,000. This new printer is the result of the combination of NORGE SYSTEMS products and the expertise of PRODWAYS R&D teams in selective laser sintering technology.

In June, PRODWAYS GROUP set up CRISTAL to take over the assets of a French dental laboratory (SOCA laboratory) for the purpose of accelerating the development of 3D printing applications in dentistry.

z In 2017

In April, SAFRAN and PRODWAYS GROUP announced a technological partnership to jointly develop materials and processes for additive manufacturing. As part of this collaboration, Safran Corporate Ventures acquired a stake in PRODWAYS GROUP.

In May, PRODWAYS GROUP was listed on Euronext Paris. The €66 million in funds raised helped to continue the ambitious expansion of the Group's activities.

In June, PRODWAYS GROUP announced the development of its new Rapid Additive Forging (RAF) technology, offering 3D metal printing for large-scale parts.

During the third quarter, PRODWAYS GROUP strengthened its medical business via the acquisition of INTERSON-PROTAC, one of the leading French manufacturers of earmoulds, aiming to step up development of 3D printing applications in the field of audiology.

In November 2017, PRODWAYS GROUP expanded its offering to industry 4.0 with the acquisition of AVENAO INDUSTRIE, a distributor and integrator of Dassault Systèmes' 3D design, simulation and optimisation software for over 15 years.

z In 2018

In March, NEXTEAM GROUP and PRODWAYS GROUP announced the installation of the first industrial machine based on Rapid Additive Forging (RAF) at NEXTEAM Group's site in Toulouse. Also in March, PRODWAYS GROUP took a controlling 70% equity stake in VARIA 3D, the U.S. office service, in which it bought a minority interest in 2015. This acquisition has strengthened PRODWAYS GROUP's foothold in the U.S. market and its international production capacities for parts on demand.

In July, PRODWAYS GROUP acquired the US company SOLIDSCAPE, a subsidiary of STRATASYS specialising in 3D printing machines for investment casting applications, particularly for the jewellery market. This acquisition strengthened machine sales activity and the Group's presence in North America and internationally through an expanded distributor network.

In October, Olivier Strebelle, previously Deputy Chief Executive Officer responsible for Strategy and Business Development at GROUPE GORGÉ, was appointed Chief Executive Officer of PRODWAYS GROUP.

1.2.2 Activities, markets and competition

PRODWAYS GROUP is one of the market leaders in Europe for 3D printing, an additive manufacturing process consisting of creating physical objects by superimposing different layers of material.

3D printing has gone through three major phases since the 1960s. During its early development phase (1960s-2010), 3D printing was mainly used to create prototypes. More recently, the market has seen a massive improvement in the printing processes and the development of new materials. These new technological trends have led to a substitution phase. 3D printing today allows complex products and parts to be manufactured. This technology complements and in some cases offers a credible alternative to conventional manufacturing techniques. In addition, the 3D printing market has recently enjoyed renewed interest from major multinational companies. In 2016, the acquisition of Arcam and Concept Laser by General Electric marked the start of a new industrialisation phase for 3D printing. Parts that were formerly subject to traditional industrial constraints can now be custom-designed using 3D printing.

Basing its strategy on this new industrial cycle, PRODWAYS GROUP has decided to focus its activities on the industrial 3D printing market. This segment has seen significant growth in recent years, generating revenue of €6.5 billion in 2017 (compound annual growth rate – CAGR – of 30% in the last five years – source: Wohlers report 2018). PRODWAYS GROUP is keen to expand into the rapid manufacturing segment, in which 3D printing is applied to industrial mass production. The materials used in the 3D printing process are mainly plastic (82%(1) of the market) and metal (16%(1) of the market). The Group operates through two business segments: Products and Systems.

1.2.2.1 Systems division

PRODWAYS GROUP develops, assembles and markets different ranges of 3D printers and related materials for its customers and distributes and integrates Dassault Systèmes' SOLIDWORKS 3D design software. This complementary offering establishes PRODWAYS GROUP as a major player in the 4.0 industry. It also generates a recurring revenue stream for the Group, which sells the materials customers need to use the machines they have purchased. PRODWAYS GROUP has identified three key areas: medical, jewellery and aerospace.

z 3D printers

PRODWAYS GROUP is one of the leading manufacturers of 3D printers. The Group develops several ranges of 3D printing machines based on different technologies:

• stereolithography with proprietary DLP® MOVINGLight® z technology for 3D printing of resins and ceramics:
  • plastic DLP® MOVINGLight® ^z : an L range designed to produce detailed prototypes. This range is intended for industrial applications such as dental models and surgical guides, injection and blow moulding, thermoforming models, insoles and jewellery design,
  • ceramic DLP® MOVINGLight® ^z : a V range that uses proprietary DLP® MOVINGLight® technology to produce ceramic parts on an industrial scale. The ProMaker V series is designed to produce ceramic parts for biomedical applications such as bone substitutes and R&D;
• z plastic laser sintering: the selective laser sintering P range, the result of the acquisition of Norge Systems and the in-house R&D of PRODWAYS, is designed for industrial rapid prototyping and mass production. The technology is designed for a wide range of sectors, including aerospace, automotive, healthcare, design and architecture, consumer products, education and research;
• z precision casting: the ranges developed by SOLIDSCAPE are dedicated to the direct manufacture of high-precision wax parts. This technology applies to precision casting and mould making for sectors such as jewellery, in which SOLIDSCAPE is the market leader, as well as the medical and aerospace sectors;
• z Rapid Additive Forging (RAF Technology): this machine, used for 3D printing of large-scale metal parts, employs a robot equipped with a head depositing molten metal in an atmosphere of inert gas.

This innovative technology quickly manufactures titanium blanks with very similar geometry to the final part. These blanks are then finish-machined, thus avoiding considerable losses of material as shavings which can represent up to 95% of the initial metal block with traditional machining processes. The aerospace sector offers high potential for this technology.

The machines designed by PRODWAYS for these technologies are mainly used in a production environment, most often replacing conventional production methods. PRODWAYS markets its printers at between €15 thousand and €400 thousand for a lifetime of up to ten years.

z Associated materials

Following the acquisition of DELTAMED in 2014, PRODWAYS GROUP makes premium-quality resins for 3D printing using DLP® technology. By acquiring EXCELTEC, PRODWAYS GROUP gained 15 years of experience in polymer powders used with selective laser sintering technology. The Company therefore has the in-house expertise to become a major manufacturer of materials used in 3D printing processes. This activity is also highly complementary with the machines sold by the Group.

PRODWAYS GROUP offers a range of hybrid and composite materials in the form of liquid resins and polymer powders with a high ceramic, metal, fibre or nanoparticle content. These materials are designed to be high-performance. They boast distinctive characteristics in terms of mechanical properties (strength and elasticity), physical and aesthetic properties (colour and transparency), and stability over time (extended ageing). These materials can be used with the Group's printers as well as with those of other manufacturers.

The 3D printing materials produced by the Group are mainly used in cosmetic and remedial dentistry, hearing aids, jewellery, prototyping and aviation.

PRODWAYS GROUP manufactures and sells proprietary materials and to a lesser extent materials developed by third parties.

z 3D design software (CAD)

Following the acquisition of AVENAO in 2017, PRODWAYS GROUP integrates and distributes Dassault Systèmes' Solidworks 3D design and development applications. Avenao handles all issues relating to the functioning of the design office and offers 3D design consulting solutions and 3D printing solutions integration.

By offering organisations a complete solution from project design to parts manufacturing, AVENAO strengthens the Group's integration strategy and collaboration between Dassault Systèmes and PRODWAYS GROUP in future industry.

With its "Products" division, PRODWAYS GROUP is currently one of the largest European metal and plastic parts manufacturers with a sizeable fleet of 3D printers and using all 3D printing technologies. PRODWAYS GROUP also develops and markets dentistry applications that use 3D printing for podiatry (orthopaedic insoles), dental (dental impressions, trays) and audiology (custom-made hearing aid tips and hearing protection) and sells them directly to healthcare professionals.

The division's objectives are to:

• z use market intelligence to identify new industry trends;
• z optimise value by capturing more margin;
• z accelerate the uptake rate.

This division is a showcase for potential customers.

z INITIAL, manufacturer of 3D printed parts

Acquired by PRODWAYS GROUP in 2015, INITIAL is the French market leader in the design and production of additive manufacturing and thermoplastic injection parts.

With 28 years of experience, INITIAL offers a wide range of design and production solutions for industrial parts through 3D printing. The prototype or mass-produced parts are intended for the industrial, aerospace, medical, dental, automotive or luxury sectors.

Based in Annecy, INITIAL operates 32 high-tech machines through a unique multi-brand fleet. It has 22 plastic printers and 10 metal printers and offers the best systems available on the market (MOVINGLight®, SLS®, SLA®, FDM, DMLS, EBM etc.). Its expertise in the production of prototype parts now has to deal with growth in the production of mass-produced parts with 3D printing. INITIAL will be able to respond to this increase in production because its fleet is sized accordingly. INITIAL produced more than one million parts in 2018, all technologies combined.

INITIAL has more than 4,000 business customers in France and across Europe, ranging from large corporations to small firms which it supports from the drafting of specifications through the industrialisation and pre-mass production and mass production phase. Its tooling and thermoplastic injection activity allows it to cover all production methods.

INITIAL also has a design office and high-definition 3D scanners which can capture the geometry of any object and offer its customers "reverse engineering" or dimensional inspections.

z Medical applications (dental, audiology and chiropody) to capture business transformed by 3D printing

INITIAL identifies key sectors and applications where 3D printing could revolutionise conventional industrial processes. Once these key markets have been identified, PRODWAYS GROUP's development and marketing is handled by dedicated and specialised entities such as CRISTAL, PODO 3D (which sells the Scientifeet® product range), INTERSON PROTAC and SURDIFUSE-L'EMBOUT FRANCAIS. For all of these medical applications, additive manufacturing has replaced long and costly manual customisation processes while offering greater prostheses quality and precision.

z CRISTAL, an in-house dental laboratory which markets PRODWAYS GROUP applications to the dental sector

PRODWAYS GROUP set up CRISTAL in June 2016 to take over the assets of a French dental laboratory (Socalab), the aim being to expedite the development of 3D printing applications in dentistry. CRISTAL has built up a portfolio of over 150 dentists and works closely with health insurance companies. The dental laboratory offers dentists a comprehensive range of dental devices, including models, surgical guides, splints and impression trays.

PRODWAYS GROUP is keen to transform CRISTAL into a centre of excellence, demonstrating the advantages of 3D printing in the dental sector.

Scientifeet® z (PODO 3D entity), an offering that aims to revolutionise the orthotic insoles market

In March 2016, PRODWAYS GROUP launched the Scientifeet® offering in a bid to transform the orthotic insoles industry. The market is already being disrupted by 3D printing, with 3D insoles proving highly profitable compared with conventional designs. Lead times have also been reduced along the entire production chain.

The manufacturing process for a 3D insole consists of four separate stages: a scan of the patient's foot, virtualisation of the impression, 3D modelling, printing and delivery of the pair of finished insoles.

The insoles are 3D printed by INITIAL in Annecy using SLS® technology before being delivered by carrier to the chiropodists, who then give them to patients. To date, PODO 3D has equipped over 38,000 patients with Scientifeet® soles.

z INTERSON PROTAC and SURDIFUSE-L'EMBOUT FRANCAIS, the leading manufacturers of customised hearing aid eartips in France

Just as the prostheses developed by PRODWAYS GROUP transformed the dental and podiatry sectors, the world of audiology is being transformed by 3D printing. In November 2017, PRODWAYS GROUP expanded into the audiology market with the acquisition of 75% of the capital of INTERSON PROTAC, followed by the January 2019 acquisition of 100% of the capital of SURDIFUSE–L'EMBOUT FRANÇAIS. These leading French manufacturers offer audioprosthetists and industry professionals customised hearing aid and hearing protector eartips that match individual users' ear canal impression.

Today, INTERSON PROTAC and SURDIFUSE-L'EMBOUT FRANCAIS manufacture between 20% and 50% of their products through 3D printing, and their integration within PRODWAYS GROUP will enable them to take advantage of the most powerful technologies and further increase this figure.

Markets

3D printing enables direct finished part and product creation from a virtual 3D file without the need for intermediate processing steps. This technique reduces inventories, limits materials waste and, especially, provides access to radically new designs and shapes. 3D printing is already playing a key role in some applications, particularly in the medical field (hearing aids, implants). Its users are drawn by the many benefits of this new manufacturing process and, in particular, by the improved quality of complex parts and products, the reduced product development time and costs and access to mass personalisation.

In 2017, the industrial 3D printing market was worth €6.5 billion(1). This market comprises two branches: printing the finished parts (direct approach), and printing the moulds, which are then used to design the finished parts (indirect approach).

Conventional mould design is a lengthy process (going back and forth on the technical specifications, making several attempts before arriving at the perfect mould). Indirect printing represents a considerable time saving when producing moulds to be used for industrial applications. With 3D printing, the mould is rapidly designed to the exact technical specifications enabling the finished part to be produced. The indirect approach is also used to design metal parts, initially by producing a plastic mould that will be used to manufacture the metal part (e.g. aircraft engine parts developed by PRODWAYS GROUP). There are three major types of 3D(1) printing:

• z rapid prototyping (€2.0 billion in 2017, 31% of revenue in the B2B market).
  • Rapid prototyping refers to the production of models and prototypes from 3D Computer-Aided Design (CAD) data;
• z functional parts (€2.2 billion in 2017, 33% of revenue in the B2B market).

In this segment, 3D printing is used to manufacture custom and spare parts and small series. It is also suitable for short production runs as well as mass production, particularly in the healthcare and aviation markets;

z instruments and moulds (€1.3 billion in 2017, 20% of revenue in the B2B market).

Instruments and tools are produced directly by the 3D printer, whereas moulds involve the indirect approach. This consists in using a standard template to produce the mould, which will then be used to make the part;

z other (€1 million in 2017, 16% of revenue generated in the B2B market).

This mainly concerns activities relating to research and education. 3D printers have been immensely popular with technical colleges and research institutes.

The diversity of materials, technologies used, printing systems and products designed using 3D printing makes it possible to handle a growing number of constraints specific to each sector of activity.

Competition

The market is divided into four segments:

• z integrated players (offering all three types of 3D printing: manufacture of machines, materials and parts), and non-integrated players;
• z rapid prototyping and rapid manufacturing players;
• z mono-technology and multi-technology players;
• z generalist players in the B2C and B2B market and specialist players in the industrial market (B2B).

PRODWAYS GROUP is an integrated, multi-technology player. It is present in rapid manufacturing and specialises in the industrial market. 3D printing is a particularly dynamic market. It has strong barriers to entry (technology, patents). However, the major players are still quite limited in number and relatively small. Globally, the five companies with the highest revenue are:

• STRATASYS (€562 million in revenue in 2018(2) z ), which was formed from the merger in late 2012 between the Israeli manufacturer OBJET and STRATASYS manufactures 3D printers and offers its customers (B2B & B2C) associated services. It is present in America, Europe, Asia, Israel and Australia;
• 3D Systems (€583 million in revenue in 2018(2) z ), which was established in 1986 in California. 3D Systems manufactures 3D printers, offers its customers (B2B & B2C) associated services and materials, and is present in North America, Europe and Asia;
• z EOS is a powder sintering and fusion laser machines manufacturer based in Munich. EOS makes 3D printers and offers its customers (B2B) associated services, materials and software. EOS is present in Europe and North America;
• MATERIALISE NV (€185 million in revenue in 2018(2) z ), which specialises in software solutions, industrial 3D printing services, medical applications, advanced industrial design with MATERIALISE MGX, and 3D online printing services via I MATERIALISE. MATERIALISE NV is present in Europe, America, Asia and the Middle East and focuses on the B2B market;
• SLM SOLUTIONS (€72 million in revenue in 2018(2) z ), which designs 3D printers (selective laser melting), provides related services and supplies materials. SLM Solutions is present in Europe and America and focuses on the B2B market.

Our products and solutions are widely recognised in the marketplace

The Group now offers a line of 24 machines, 140 materials and a Service Bureau. Its flagship products include:

(1) Source: Wohlers report 2018

(2) Source: companies

z ProMaker LD-10

The ProMaker LD-10 3D printer retains the strengths of MOVINGLight® technology, combining very high resolution and precision with increased productivity through its motion DLP®, optimised cost-per-part and compact design.

z PLASTCure Model 300 resin

Perfect for the manufacture of dental models, the PLASTCure Model 300 resin is suited to a wide range of dental applications from prosthesis models to orthodontics. It provides high precision and excellent resolution as well as excellent properties.

z SOLIDSCAPE series S300

The world leader in the jewellery market, SOLIDSCAPE's 3D printers produce high-precision wax models. The S300 series of 3D printers offers jewellers ultra-precise wax models with complex geometries and unparalleled surface finishes.

z Mass production

INITIAL mass produces polymer and metal parts using additive manufacturing technology, in particular for the aeronautical sector.

z TPU-70A

The TPU-70A powder is an elastomer material used for the printing of flexible rubber parts suitable for a wide range of applications, including gaskets, hoses or even sports shoe insoles and luxury goods. Its excellent stretch capacity enables ultra-flexible objects to be printed with a high level of precision and resolution.

PASSTOP® z

Passtop® patented customised hearing protectors are anti-noise Personal Protective Equipment (PPE) with a particularly innovative design. Passtop® uses a selective noise mitigation chamber that differs from conventional hole filtering.

1.2.3 Principal subsidiaries and organisational chart at 31 December 2018

With the exception of PELICAN VENTURE's stake in GROUPE GORGÉ, the percentages listed refer to both capital and voting rights. PELICAN VENTURE holds 53.60% of GROUPE GORGÉ's capital and 68.31% of its voting rights. GROUPE GORGÉ holds 56.61% of the capital and voting rights of PRODWAYS GROUP. The subsidiaries listed are those included in PRODWAYS GROUP's consolidation scope.

Newly consolidated Deconsolidated 2019 L'EMBOUT FRANÇAIS - SURDIFUSE(1) - 2018 VARIA 3D(2) SOLIDSCAPE - 2017 IP Gestion (and its subsidiary INTERSON PROTAC) AVENAO Solution 3D (and its subsidiaries) - 2016 Business assets of SOCALAB (acquired by CRISTAL) PODO 3D -

The major changes (acquisitions and disposals) in the organisational structure over the past three years were as follows:

(1) Acquired on 3 January 2019.

(2) Controlling interest acquired after a non-controlling interest in 2015.

The full list of the Group's companies, grouped by division, can be found in note 13 to the consolidated financial statements. The table showing PRODWAYS GROUP SA subsidiaries and shareholdings can be found in note 8 of the notes to the Company's separate financial statements. The consolidated financial statements can be found in Section 3.1 of this report, and the separate financial statements of PRODWAYS GROUP SA in Section 3.2.

1.2.4 Significant events

In 2018, the highlights were as follows:

1.2.4.1 Systems division

During the financial year, PRODWAYS GROUP continued to pursue its development strategy with the acquisition in July of the US machine manufacturer SOLIDSCAPE, a subsidiary of STRATASYS. For over 25 years, the Company has been developing a leading 3D printing technology for investment casting applications, particularly for the jewellery market. This acquisition strengthens the positioning of PRODWAYS GROUP, which bases its strategy on 3D printing production applications. This transaction substantially increases the Group's presence in North America and strengthens its global geographic coverage through an international distribution network.

The Group continued to record many commercial successes for its various ranges of 3D printing machines. The year 2018 was marked by acceleration in the number of customers who purchased more than one PRODWAYS machine and the successful launch of the new ProMaker LD-10 3D printer dedicated to dentistry, which was launched commercially at the end of 2017, and the first successes for the Rapid Additive Forging technology:

• z in January, PRODWAYS GROUP announced the success of the early-adopter ProMaker LD-10 programme, with its first sales in the "compact" dental segment, and a sale of the ProMaker P4500 HT laser sintering 3D printer in the aeronautics sector;
• z in February, FISCHLER DENTAL AG, one of Switzerland's leading dental laboratories, reaffirmed its confidence in the Group with the purchase of a second MOVINGLight® ProMaker L5000 D 3D printer to increase its dental model production capabilities while maintaining its renowned quality and precision;
• z in March 2018, NEXTEAM GROUP and PRODWAYS GROUP announced the installation of the first industrial machine based on Rapid Additive Forging (RAF) technology for large-scale titanium parts at NEXTEAM GROUP's site in Toulouse;
• z in April, PRODWAYS GROUP announced the first simultaneous order of two ProMaker LD-10s by a leading North American dental laboratory;
• z in December, PRODWAYS GROUP announced the first sale of its new ProMaker LD-20 printer to a new dental customer. This non-French customer purchased another ProMaker LD-10 machine at the same time, thus proving that there is a new type of customer directly equipping itself with several machines for volume production;
• z finally, PRODWAYS GROUP registered one of its largest orders with the simultaneous sale of three ProMaker L5000 machines. This aeronautical sector customer already has two machines. This large fleet is used for the development of an industrial process that could be deployed on a larger scale.

The Group also commercially launched new machines to expand its product range:

• z in June, PRODWAYS, in collaboration with W2P, launched a new compact 3D printer, the ProMaker LD-3, based on DLP® technology, to help professionals in the dental, jewellery, education and prototyping sectors integrate 3D printing into their production processes;
• in September, PRODWAYS introduced its new MOVINGLight® z V10 ceramic 3D printer in China;
• z in November, PRODWAYS GROUP introduced its new ProMaker LD-20 printer equipped with a dual projector at the Formnext trade show in Germany. This new machine is the most productive in the range and can print up to 50 dental arches in less than an hour.

Finally, in September, PRODWAYS MATERIALS launched its 3D printing resins and powders e-commerce site to facilitate industrial access to these high-performance materials.

1.2.4.2 Products division

In March, PRODWAYS GROUP took a controlling 70% equity stake in VARIA 3D, the U.S. office service, in which it bought a minority interest in 2015. This acquisition has strengthened PRODWAYS GROUP's foothold in the U.S. market and its international production capacities for parts on demand.

In September, INITIAL and L'OREAL teamed up to accelerate the development of thermoplastic parts through 3D printing. This collaboration with L'OREAL paved the way for the production of final material prototype parts using 3D printed moulds and the new 3D Molding® offer.

In November, PRODWAYS GROUP announced new commercial successes for its subsidiary INITIAL in mass production for aeronautics and the optical market, including a contract for the production of mass-produced parts for the French eyewear manufacturer MOREL. An unprecedented mass production of potentially several thousand frames per month was launched and a strengthening of the initial machine fleet will be needed to keep up with the pace.

1.3 STRATEGY AND OUTLOOK, INVESTMENT AND R&D POLICY

1.3.1 Strategy

PRODWAYS GROUP is pressing ahead with its ambitious development strategy focused around a number of key goals:

• z become a major player in the 3D printing market by offering printers and materials which are among the best performing for professional and industrial uses;
• z continue to develop priority markets, such as healthcare, jewellery and aeronautics, for which the Group's products and expertise are well-suited, and seize growth opportunities in all other sectors.

1.3.1.1 Systems division

PRODWAYS GROUP is the only integrated player to offer its industrial and professional customers 3D design, simulation and optimisation software, but also a wide range of 3D printers and related materials. The complementarity of this offering guarantees customers the solution which best matches their requirements and guarantees PRODWAYS GROUP recurring revenues through the establishment of a pool of machines, sales of related materials and service and maintenance contracts.

PRODWAYS GROUP is more specifically developing this strategy in high-growth priority sectors such as healthcare, jewellery and aeronautics.

1.3.1.2 Products division

PRODWAYS GROUP now has a manufacturing capacity for parts and solutions that covers all sectors where 3D printing has been developed and will benefit from the acceleration of mass production.

Rapid prototyping and mass production services are provided by the INITIAL entity, which has expertise in each sector. INITIAL offers market intelligence services, helping to detect new trends in the sector and acting as a showcase for potential customers who may then go on to purchase machines, materials or software.

The Group has also developed a portfolio of healthcare applications in the dental, chiropody and audiology sectors. These applications help optimise value by capturing a greater margin in markets being transformed by 3D printing.

1.3.2 Outlook

The Group believes that the markets in which it currently operates provides significant potential for growth and intends to become a leading player in 3D printing solutions via the implementation of its strategy.

It aims to become a major player in the 3D printing market by offering printers which are among the best performing for professional and industrial uses, and materials, services and software which will provide a recurring revenue stream.

The Group began 2019 with a firm backlog of €7.5 million. In the current scope and excluding new acquisitions, it expects for 2019 full-year revenue growth of at least 15%. This increase will be especially pronounced in the "Systems" division, driven by the launch of new machines: ProMaker V10, ProMaker LD-20 and Solidscape DL. In the "Products" division, the Group continues to prepare for the digital transition of its medical activities, which should bear fruit in the medium term.

1.3.2.1 Recent publications

In January 2019, PRODWAYS GROUP announced the completion of the acquisition of 100% of the capital of SURDIFUSE-L'EMBOUT FRANCAIS, a major player in the manufacture of customised hearing aid eartips, some of which are produced with 3D printing. Thanks to the merger of SURDIFUSE-L'EMBOUT FRANCAIS with INTERSON PROTAC, which was acquired in 2017, the Group aims to create the leading French manufacturer and a leading European manufacturer of customised hearing aid eartips.

1.3.3 Investment policy and R&D

1.3.3.1 R&D policy

The Group's Research and Development policy is described in Note 6.2 to the consolidated financial statements.

Invention protection policy

The Group protects its inventions and know-how through non-disclosure agreements and patent applications.

Given the cost of filing and maintaining in force patents, the Group regularly assesses the opportunity for filing a patent application for a given invention and the need to maintain in force patents and patent applications, as well as the suitability of their geographic coverage in relation to the Group's current and/or future activities.

The Company's subsidiaries generally initially file a national patent application. Each subsidiary then takes advantage of the priority period granted following this initial patent application to further research patent clearance and assess in-house the potential for extending the protection to other countries.

1.3.3.2 Major investments in 2018

In addition to research and development, the Group's ongoing investments mainly consist in acquiring 3D printers. Other ongoing investments involve IT equipment, software, workshop tools and the fitting and installation of sites.

The value of investments over three years breaks down as follows:

(in millions of euros)	2018	2017	2016
Research and development(1)	1.59	1.94	1.79
Other intangible assets	0.18	0.06	0.10
Technical installations, equipment	3.49	2.40	3.48
Other property, plant and equipment(2)	0.15	0.43	0.10
TOTAL	5.41	4.83	5.47

(1) Only capitalised R&D.

(2) Advance payments and ongoing fixed assets.

The Group has made regular acquisitions in recent years, and in 2018 both divisions made one acquisition each:

• z acquisition of a controlling interest of 70% in VARIA 3D, which was previously 45% owned ("Products" division);
• z the acquisition of SOLIDSCAPE ("Systems" division).

These two acquisitions represented a payment of €9.2 million (net of cash and cash equivalents of acquired companies).

The Group has no future acquisitions in its sights and has not set a budget for such transactions.

In the second half of the year, the Group committed to acquire a site in Chavanod (38) to relocate its subsidiary INITIAL, which is currently located in two separate buildings a few kilometres away. The acquisition of the site will be effective in 2019, and the investment, acquisition and works will total between €4.5 and €5 million. There were no other significant investments for which firm undertakings would already have been made. No planned Group investment is conditional on receipt of anticipated significant funding.

1.3.3.3 Major property, plant and equipment/Property rentals

The Group's property, plant and equipment consist of 3D printers, fixtures, installations and computer equipment. The vehicle fleet is very limited and for the most part leased from specialised agencies.

The Group's "Products" division carries out the mass (and sometimes short run) production of parts. The production equipment dedicated to this activity is mainly 3D printers, for which printer usage rates are not currently measured. For the Group's other division ("Systems֨"), it is not necessary to have production equipment with a significant value, mainly tools and small equipment.

The Group mainly leases its sites under standard leasing agreements. The sites that are currently being leased do not present any risk in terms of their extended availability or that of other similar operating sites.

1.3.4 Events after the reporting period

Major events that have occurred between the closing of the financial year and the date on which the financial statements were approved (1 April 2019) are described in Note 12.3 to the consolidated financial statements.

1.4 ANALYSIS OF CONSOLIDATED PERFORMANCE AND BUSINESS SECTORS

1.4.1 Analysis of Group results

The Board of Directors approved the 2018 consolidated financial statements on 1 April 2019, showing:

• z revenue of €60,895 thousand;
• z net income of -€5,657 thousand;
• z net loss (Group share) of -€5,454 thousand.

The consolidated financial statements were drawn up in compliance with the financial information presentation and evaluation rules of the IFRS (International Financial Reporting Standards) and interpretations adopted by the European Union and published in the Official Journal dated 13 October 2003. The figures presented below are from the financial statements for 2018 and 2017. It should be noted that the 2017 figures were restated retrospectively as part of the application of IFRS 3R and the first application of IFRS 15. The restatements are detailed in Note 1.3 to the consolidated financial statements. The data may only be compared by taking into account the changes in scope discussed in the notes to the consolidated financial statements.

The consolidated revenue for the financial year stood at €60.90 million versus €34.81 million in 2017.

This surge reflects the growth of all the Group's activities, bolstered by the contributions of SOLIDSCAPE and VARIA 3D acquired during the financial year.

For the first time, EBITDA at €1.2 million exceeds equilibrium over the full year, showing the continued improvement to profitability.

Profit (loss) from continuing operations was -€3.95 million versus -€5.45 million in 2017. Non-recurring items in operating income amounted to €1.07 million, compared with €1.20 million in 2017. These mainly include amortisation of intangible assets recognised at fair value from acquisitions, acquisition costs and provisions for impairment.

Financial expenses (net of financial income) amounted to €0.08 million compared with €0.04 million in 2017.

Tax came to -€0.68 million versus -€1.16 million in 2017. Earnings of equity-accounted companies were €0.12 million versus €0.11 million in 2017. The year ended 31 December 2018 generated a consolidated net loss of €5.66 million, compared with €7.74 million in 2016.

Net loss Group share was -€5.45 million (-€7.61 million in 2017) while non-controlling interests incurred a loss of -€0.20 million.

MAIN AGGREGATES FROM THE CONSOLIDATED INCOME STATEMENT

(in thousands of euros)	2018	2017
Revenue	60,895	34,807
Profit (loss) from continuing operations	(3,947)	(5,453)
Operating income	(5,016)	(6,651)
Financial income and expenses	(76)	(38)
Equity method	118	107
Tax	(683)	(1,160)
NET INCOME	(5,657)	(7,742)
NET INCOME – GROUP SHARE	(5,454)	(7,613)

2018 FINANCIAL YEAR

(in thousands of euros)	Systems	Products	Structure	Disposals	Consolidated
Backlog beginning of period	3,873	988	-	(23)	4,838
Backlog end of period	7,068	591	-	(166)	7,493
Revenue	38,404	22,859	1,702	(2,070)	60,895
EBITDA	1,110	526	(443)	-	1,194
% of revenue	2.9%	2.3%	-26.0%	-	2.0%
Profit (loss) from continuing operations	(2,100)	(1,443)	(404)	-	(3,947)
% of revenue	-5.5%	-6.3%	-23.7%	-	-6.5%
Operating income	(2,847)	(1,517)	(653)	-	(5,016)
% of revenue	-7.4%	-6.6%	-38.4%	-	-8.2%
Research and development expenses capitalised over the period	1,526	60	-	-	1,586
Other property, plant and equipment and intangible investments	902	3,499	85	-	4,486
Sector assets	60,921	24,698	2,959	(2,909)	85,669
Sector liabilities	15,183	5,606	1,116	(2,845)	19,060

2017 FINANCIAL YEAR*

(in thousands of euros)	Systems	Products	Structure	Disposals	Consolidated
Backlog beginning of period	2,556	449	-	(25)	2,980
Backlog end of period	3,873	988	-	(23)	4,838
Revenue	17,393	17,825	901	(1,312)	34,807
EBITDA	(1,554)	841	(456)	-	(1,169)
% of revenue	-8.9%	4.7%	-50.6%	-	-3.4%
Profit (loss) from continuing operations	(3,678)	(572)	(1,204)	-	(5,453)
% of revenue	-21.1%	-3.2%	-133.6%	-	-15.7%
Operating income	(4,665)	(603)	(1,384)	-	(6,651)
% of revenue	-26.8%	-3.4%	-153.6%	-	-19.1%
Research and development expenses capitalised over the period	1,731	204	-	-	1,935
Other property, plant and equipment and intangible investments	1,555	1,337			2,892
Sector assets	49,725	21,429	2,361	(1,574)	71,941
Sector liabilities	12,088	5,098	928	(1,575)	16,539

* 2017 is restated, see Note 1.3 to the consolidated financial statements.

1.4.1.1 Systems division

The "Systems" division (3D software, 3D printers, materials and related services) generated revenue of €38.4 million in 2018, versus €17.4 million in 2017. SOLIDSCAPE was consolidated for 5.5 months and contributed €3.75 million.

The division's revenue was 41% worldwide, a decrease (60% in 2017) because the weighting of AVENAO's revenue in France was higher.

EBITDA amounted to €1.1 million, compared to a loss of €1.6 million in 2017. Improved profitability was possible through the good performance and positive contribution of software, the positive contribution of materials as the installed base of machines increased, and the reduction in losses in the machines activity.

Profit (loss) from continuing operations was negative at €2.0 million (-€3.7 million in 2017) due to €3.2 million in amortisation and provisions.

The order book was up 82% to €7.1 million.

1.4.1.2 Products division

The "Products" division (manufacturing of special-order parts and medical applications) generated revenue of €22.9 million in 2018, versus €17.8 million in 2017. Growth was 28.2%.

The division generated 16% of its revenues abroad.

EBITDA for the division was €0.5 million, a decrease due to the investments in the parts design business to prepare the ramp-up of series production and the continued strengthening of sales efforts in the dental and audiology sectors.

Continuing operations generated a loss of €1.44 million versus a loss of €0.57 million in 2017.

The backlog fell to €0.6 million but is unlikely to account for a large share of revenue in this division given that lead times between the placing and delivery of orders is short.

1.4.2 Group's financial position (cash and cash equivalents, financing and capital)

Consolidated shareholders' equity stood at €81.3 million, compared with €86.8 million at 31 December 2017.

At 31 December 2018, consolidated net cash (cash and cash equivalents of €25.9 million less the sum of loans and financial debt of €6.4 million and bank overdrafts of €0.4 million) amounted to €19.2 million (cash was greater than debt). At 1 January 2018, it was €36.7 million. Treasury shares held by PRODWAYS GROUP are not included in these figures. Net cash plus treasury shares amounted to €19.3 million at the end of 2018.

The change from a net cash position of €36.7 million to a net cash position of €19.2 million is explained by the maintenance of a high level of investments (€5.3 million), the impact of the acquisitions of new subsidiaries (€9.2 million) and changes in debt (+€0.5 million). Operating activities once again had a negative impact (-€1.7 million, compared to -€4.3 million in 2017) with a controlled but unfavourable change in working capital requirements of €1.8 million.

Detailed information about the Group's financial liabilities and any related covenants is provided in Note 8 "Borrowings and financial liabilities" to the consolidated financial statements.

1.5 ACTIVITIES AND RESULTS OF PRODWAYS GROUP SA

1.5.1 PRODWAYS GROUP SA's role in the Group

The organisation of the Group is as follows:

PRODWAYS GROUP is a holding company whose assets are made up of the stakes held in its subsidiaries. The Company has no industrial activity. Its function is to:

• z implement the Group's strategy;
• z supervise the management of its subsidiaries;
• z liaise with financial stakeholders such as banks and investors;
• z provide technical assistance in areas such as management control and legal affairs;
• z develop and maintain common procedures in areas such as reporting, management control and accounting.

Its funding is secured by the dividends it receives and the service contract entered into between the Company and its subsidiaries.

The Company is controlled by its main shareholder GROUPE GORGÉ.

GROUPE GORGÉ is a French public limited company (société anonyme) whose shares are admitted to trading on the regulated market of Euronext in Paris. GROUPE GORGÉ publishes a Registration Document (Document de référence) annually. Its 2018 Registration Document is available on the GROUPE GORGÉ website at www.groupe-gorge.com. As set out in its Registration Document and on its website, GROUPE GORGÉ has two other "Business" divisions in addition to the "3D printing" division consisting of PRODWAYS GROUP and its subsidiaries.

GROUPE GORGÉ is controlled by PELICAN VENTURE.

PÉLICAN VENTURE, the family holding company of the GORGÉ family, is a French simplified joint-stock company (société par actions simplifiée). Its consolidated shareholders' equity at 31 December 2017 was €210 million, with its main asset being its stake in GROUPE GORGÉ. Its other assets are:

• z SOPROMEC, a private equity firm managing around €21 million in assets;
• z real estate and financial assets.

1.5.2 Activities and results

At its meeting of 1 April 2019, the Board of Directors approved the separate financial statements of PRODWAYS GROUP SA which showed:

• z revenue of €1,702 thousand;
• z net income of €2,749 thousand.

The financial statements were prepared using the same principles and rules as for previous years.

Revenue came to €1.70 million versus €0.90 million in 2017. The operating loss for the financial year was -€0.64 million versus -€0.75 million in 2017.

Income from continuing operations before tax was €1.94 million versus €0.72 million in 2017. PRODWAYS GROUP financial income in 2018 was €2.58 million (€1.46 million in 2017), including €2.46 million in dividends (€1.49 million in 2017).

After taking into account non-recurring income (nil in 2018 compared to €0.12 million in 2017) and tax consolidation income (€0.81 million), the year ended 31 December 2018 generated a net profit of €2.75 million, compared with €0.83 million in 2017.

Shareholders will note the absence of non-tax-deductible charges and expenses incurred during the financial year.

1.5.3 Proposed appropriation of income

The Company's income for the financial year ended 31 December 2018 showed a profit of €2,749,344.25. On 1 April 2019, the Board of Directors decided to appropriate €1,707,390.57 to the legal reserve, increasing it to €2,540,782.15, or 10% of the share capital, and €1,041,953.68 to retained earnings.

As a reminder no dividend payout was made for the last three financial years.

1.5.4 Standard payment terms

In accordance with article D.441-4 of the French Commercial Code we point out that at 31 December 2018, the balance of PRODWAYS GROUP SA's trade payables was €365,200 (€648,500 at 31 December 2017). These trade payables are not yet due and in general are payable at 30 days (in 2018 as in 2017).

1.5.5 Other financial and accounting information

SECURITIES PORTFOLIO AT 31 DECEMBER 2018

Company	Net asset values (in euros)
I – EQUITY SECURITIES
1. French companies
a/ Listed equity securities
None	-
b/ Unlisted equity securities
AVENAO SOLUTIONS 3D	16,466,467
CRISTAL	475,000
EXCELTEC	250,000
INITIAL	12,000,000
IP GESTION	2,714,428
PODO 3D	679,963
PRODWAYS	26,750,000
PRODWAYS RAPID ADDITIVE FORGING (formerly PRODWAYS 1)	575,000
PRODWAYS 2	5,000
PRODWAYS CONSEIL	4,500
PRODWAYS DISTRIBUTION	1,000
PRODWAYS ENTREPRENEURS	701,000
SCI CHAVANOD	1,999
2. Foreign companies
DELTAMED	7,065,924
VARIA 3D	978,878
SOLIDSCAPE	11,725,569
TOTAL I	80,394,727
II – OTHER LONG-TERM INVESTMENTS
1. French companies
a/ Listed securities
None	-
b/ Unlisted securities
None	-
2. Foreign companies
a/ Listed securities
None	-
b/ Unlisted securities
None	-
TOTAL II	-
III – MARKETABLE SECURITIES
a/ Money market funds (SICAVs) and term deposits	2,005,008
b/ Listed French shares
None	-
c/ Listed foreign shares
None	-
d/ Treasury shares	148,099
TOTAL III	2,153,107
GRAND TOTAL (I + II + III)	82,547,834

Nature of information	2018	2017	2016	2015	2014*
Share capital	25,407,821	25,407,821	16,896,535	16,896,535	15,717,290
Number of shares	50,815,643	50,815,643	16,896,535	16,896,535	15,717,290
Par value per share	0.50	0.50	1.00	1.00	1.00
Revenue excluding taxes	1,702,100	901,135	653,009	-	-
Earnings before taxes, depreciation, amortisation & provisions	1,951,182	846,707	731,210	(24,388)	(362,090)
Income tax	810,751	-	-	-	-
Earnings after taxes but before depreciation, amortisation & provisions	2,761,933	846,707	731,210	(24,388)	(362,090)
Earnings after taxes, depreciation, amortisation & provisions	2,749,344	833,392	729,639	(24,388)	(362,090)
Distributed earnings	-	-	-	-	-
Earnings per share after taxes but before depreciation, amortisation & provisions	0.0543	0,0167	0,0432	(0,0014)	(0,0231)
Earnings per share after taxes, depreciation, amortisation & provisions	0.0541	0,0164	0,0432	(0,0014)	(0,0231)
Net dividend per share	-	-	-	-	-
Average number of employees	3.82	2.38	4.15	-	-
Total payroll	423,387	357,887	442,663	-	-
Social security contributions and employee benefits	174,522	124,466	191,012	-	-

FINANCIAL TABLE – ARTICLE R.225-102 OF THE FRENCH COMMERCIAL CODE

* The Company was created in March 2014.

1.6 RISK FACTORS

The Company has reviewed the risks that could materially adversely affect its business, financial position or results and is not aware of any other significant risk not presented herein. For a proper understanding of the risks to which the Group is exposed, this Chapter should be read in conjunction with the full consolidated financial statements and the annual report.

1.6.1 Legal risks

1.6.1.1 Risks associated with local certifications and branding of 3D printers

The 3D printers manufactured by the Company comply with current European Union quality and safety requirements, and they bear the CE "European conformity" marking. However, this CE certification is different from the certification procedures in the United States, Canada or other countries. The Company is currently investigating the possibility and implications of obtaining a UL(1) marking for its printers.

The lack of certification for machines manufactured by the Group for standards other than CE standards may influence the decisions made by customers in the purchasing of 3D printers developed by the Company, in particular in the event of public tenders that require local certifications. As such, it may have an adverse impact on the development of machine sales abroad (outside the European Union) to certain entities, in particular entities subject to local public procurement rules.

1.6.1.2 Risks associated with the regulation of chemicals and changes thereto

The Group develops and markets materials that incorporate chemicals. In accordance with the European REACH Regulation (EC no. 1907/2006) relating to chemical risks, the Group must identify and manage any risks associated with the materials manufactured and communicate the risk management measures implemented to the users of its materials.

Based on the state of research, the European authorities may, at any time, restrict or prohibit the use of substances that prove to be toxic to humans or the environment. In such a scenario, it would be the Group's responsibility to immediately inform the customers affected and replace the prohibited chemical with authorised substances.

This would involve new R&D developments to review the formulation of the materials in question and, as the case may be, the unavailability of the relevant materials during the time required for their reformulation.

Were such a situation to occur, it would be likely to have a significant adverse effect on the Group, its business, financial position, results, development and outlook.

(1) UL is the acronym for the independent US certifcation body "Underwriters Laboratory". A UL certifcation conf rms that the products destined for the US market have been tested for safety requirements in the United States, which differ from European CE standards.

1.6.1.3 Risks associated with medical device regulations and changes thereto

The Group develops biocompatible materials or medical devices that are subject to strict standards in Europe and the rest of the world. In this respect, European medical device regulations are set to evolve in the coming years. The same is true for countries outside the European Union. These changes in standards may require new R&D to adapt the products developed by the Group.

DELTAMED formulates, manufactures and markets special resins, including for the biomedical field. The formulation, manufacture and marketing of medical devices by DELTAMED requires the maintenance of a certified quality management system (DELTAMED complies with EN ISO 13485 (EU) and AC: 2012 (Canada) standards) and a specific quality management system (DELTAMED complies with European Directive 93/42/EEC Annex II for class IIa and IIb medical devices).

DELTAMED has been licensed as a manufacturer with the Food and Drug Administration (FDA) in the United States. The maintenance of these certifications and authorisations is necessary for DELTAMED to continue to market its products in Europe, Canada and the United States. These certifications and authorisations give DELTAMED a competitive advantage.

A loss of the required qualifications and authorisations would have a significant adverse impact on DELTAMED's business and therefore on the Group's results, financial position and outlook.

1.6.1.4 Risks associated with research and development financing

The Group has a significant level of expenditure on research and development. It uses the French research tax credit mechanism to partially finance its R&D. A scaling back of this mechanism in the future would jeopardise the level of R&D expenditure that the Group could reasonably finance and would therefore have an adverse impact on the Group's business, financial position and outlook.

Moreover, even if the Group ensures the compliance and quality of its supporting documents, it is still possible that the tax authorities may question the calculation methods used by the Company for research and development expenses. A tax adjustment to the Group in this area could have an adverse impact on the Group's results and cash position.

1.6.1.5 Litigation

The Group may be involved in litigation and disputes with third parties. Ongoing litigation is reviewed and if applicable, provisioned in the financial statements.

or disclosed when significant in the Notes to the consolidated financial statements (Note 12.2 "Exceptional events and disputes").

At 1 April 2019, no state or legal proceeding or arbitration, either pending or threatened, had in the past 12 months or was likely to have a material impact on the financial position or profitability of the Company and/or Group.

1.6.2 Risks associated with intellectual property

The future growth of the Group will depend in particular on its ability to develop and protect its know-how and innovations.

For the subsidiaries concerned, intellectual property policy consists of the filing of patent applications in their country and internationally, depending on the interest that such filings may have and the protection of their know-how as much as possible through the preservation of its confidentiality.

As a result, the research and development projects the Group consider the most sensitive are carried out internally. R&D teams are also subject to strict confidentiality rules.

1.6.2.1 Limits to the protection given by patents and other intellectual property rights

If an invention is identified, the Group evaluates the interest of filing a patent application. To do this, it relies on its teams of in-house engineers and its industrial property attorneys.

Patent applications are examined by the competent regional, national or international patent offices. It takes a number of years before a patent is granted. The examination process may also result in a patent being granted with narrower claims than initially sought, or even a refusal to grant a patent.

The industrial property rights filed do not provide protection in all jurisdictions and provide protection for a term that may vary from one territory to another. Accordingly, systematic protection through patents could indeed be difficult to achieve and would represent significant costs if it were to be considered for use in all potential markets in which the Group is present or could carry out its activity.

Furthermore, there is no certainty that industrial property offices will register patents, trademarks and other intellectual property rights the Group has applied or will apply for. The Group may encounter difficulties within the framework of the filing and examination of some of its applications for patents, trademarks or other intellectual property rights currently under examination or in the registration process. For example, when a patent application is filed, other patent applications may constitute prior art that is opposable but not yet published. Despite prior art searches and the monitoring conducted by or for it, the Group cannot be certain that it was the first to design an invention and to file a corresponding patent application. In particular, it should be noted that in most countries, patent applications are published 18 months after the filing of the applications themselves and that patents for inventions are sometimes not published or applied for until months or even years later.

Similarly, when one of its trademarks is filed for registration in a country where it is not covered, the Group may find that the mark in question is not available in that country or is not sufficiently distinctive according to the criteria of certain countries.

Finally, the granting of a patent, trademark or other intellectual property rights does not guarantee its validity or enforceability. The Group's competitors could at any time contest the validity or enforceability of those rights before a court or in other specific proceedings. Depending on the outcome of such disputes, the rights may be reduced in scope or cancelled and thus be circumvented by competitors. In addition, developments, changes or divergences in the interpretation of the legal framework governing intellectual property in Europe, the United States or other countries could allow competitors to use the Group's inventions or intellectual property rights or develop or market the Group's products or technologies without financial compensation. In addition, there are still some countries that do not protect intellectual property rights in the same way as Europe or the United States, and effective procedures and rules necessary to defend the Group's rights may not exist in those countries. There is therefore no certainty that the Group's existing and future patents, trademarks and other intellectual property rights will not be challenged, invalidated or circumvented or will provide effective protection against competition and patents by third parties covering similar inventions.

As a result, the Group's rights pertaining to its patents, trademarks, related applications and other intellectual property rights may not confer the expected protection against competition.

The Group cannot therefore guarantee with certainty that:

• z it will develop new inventions for which patents may be applied for or granted;
• z patents, trademarks or other registered intellectual property rights will actually be granted further to the relevant applications currently under examination;
• z the patents or other intellectual property rights granted to the Group will not be challenged, invalidated or circumvented by competitors; and
• z the scope of protection conferred by the Group's patents, trademarks and intellectual property rights is and will be sufficient to protect it against competition and patents, trademarks and intellectual property rights of third parties covering similar devices, products, technologies or developments.

In any event, despite the efforts made to protect its industrial property, the Group cannot rule out any risk of infringement of its inventions or challenges to the validity of its patents.

1.6.2.2 Risks of disclosure of the Group's know-how to third parties

It is also important for the Group to protect itself against the unauthorised use and disclosure of its confidential information, know-how and trade secrets.

The Group endeavours to retain non-patented or non-patentable technologies, formulations, processes, know-how and proprietary data by limiting the communication of key elements of its know-how to third parties to the information strictly necessary for cooperation with them and contractually ensuring that such third parties undertake not to divert, use or disclose such information, including by means of confidentiality clauses.

Despite the implementation of these confidentiality procedures, the Group cannot guarantee that such third parties will comply with these confidentiality agreements, and there is a risk that confidential information may be disclosed or that an R&D partner, customer or competitor may appropriate the Group's know-how.

The occurrence of any of these events could have an adverse effect on the competitive advantage of the Group's product offering and therefore on its business outlook, development and future results.

1.6.2.3 Risks of violation of third-party intellectual property rights by the Group and of the Group's intellectual property rights by third-parties

The subsidiaries, with their internal teams, monitor the activity (particularly as regards the filing of patents) of their competitors and evaluate (through freedom to operate studies) the risk of infringement of third-party patents during the course of their research or development programmes. External advice may be sought for occasional assessments of activities of entities external to the Group.

However, the Group cannot guarantee that its products do not infringe on or violate patents or other intellectual property rights of third parties. Therefore, it is possible that third parties acting in relation to infringement or violation of their rights may take action against the Group to obtain damages and/or the cessation of manufacturing activities and/or marketing of the products or processes in question.

In the event of disputes relating to intellectual property, the Group may have to:

• z cease to develop, sell or use the product(s) that depend on the disputed intellectual property;
• z obtain a licence from the holder of the intellectual property rights, which may not be obtained or obtained only under conditions that are economically unfavourable to the Group;
• z revise the design of some of its products/technologies or, in the case of trademark applications, rename its products to avoid infringement on the intellectual property rights of third parties, which may prove impossible or lengthy and costly and could impact its marketing efforts;
• z suffer a negative impact to its reputation and results.

In addition, monitoring the unauthorised use of Group products and technology, and thus the infringement of its own intellectual property rights, is a delicate matter. The Group could be compelled to bring legal or administrative proceedings against third parties in order to assert its rights, intellectual property rights in particular, in court. However, the Group cannot guarantee in any way that it will be able to avoid, sanction and obtain redress for possible misappropriation or unauthorised use of its products and technology, especially in foreign countries where its rights are less protected by the territorial scope of industrial property rights.

Any disputes or litigation on these subjects, whether justified or not and whatever the outcome, could entail very substantial costs and jeopardise the Group's financial position and reputation. In addition, despite the efforts undertaken and costs incurred, the Group may not obtain the protection or penalty sought.

1.6.3 Operating risks

1.6.3.1 Risks associated with the acceptance of 3D printing

The Group as a whole is positioned on the following growth areas: (1) the development and sale of 3D printing machines and the innovative materials they use,(2) the design and manufacture of parts using 3D printing for third parties and(3) development of business applications using 3D printing technologies. The Group's customers are manufacturers and professionals that are adopting additive manufacturing in their production methods.

The industrial manufacturing market remains dominated in most industrial sectors by conventional manufacturing technologies that do not involve 3D printing. If additive manufacturing were not accepted by manufacturers as a more efficient technology, its development may not grow as expected.

The growth of the 3D printing market therefore depends on the acceptance of these new technologies by manufacturers and their ability to integrate these new technologies into their conventional production methods or revise their production methods. Weak growth in the 3D printing market around the world would have a significant negative impact on the Group's situation and outlook.

1.6.3.2 Risks associated with technological developments

Technological innovations in recent years have been significant in the additive manufacturing sector and the pace of technological developments remains strong. This market could undergo significant new technological developments, and new technologies or equipment that are more efficient and/or cheaper than those offered by the Group could come into existence. Competing technologies, whether they exist or are under development or as yet unknown, could capture significant market shares in the near future and restrict the Group's ability to market its products successfully.

Since its creation, the Group has devoted a significant portion of its resources to research and development to develop and improve its lines of 3D printers and equipment and find new applications for additive manufacturing. These innovation policy efforts must be maintained so that the Group retains its position as a benchmark player in technological innovation, remains in a position to adapt to future technological innovations in the sector, as appropriate, and continues to win market shares.

Competitors with significant financial resources or new entrants to the market could also develop new technologies that are more efficient and/or less costly than those developed by the Group, which could lead to a reduction in demand for the Group's existing products.

If the Group were to fail to keep pace with technological developments or to continue its innovation policy efforts, compared in particular to those made by competitors with greater resources, or if alternative technologies were to appear and revolutionise the market, the Group's ability to continue to remain relevant and competitive in additive manufacturing would be affected, and this could have an adverse impact on the Group's business, revenue, results, financial position, development and outlook.

1.6.3.3 Risks associated with competition

Foreign players have long been established in the additive manufacturing market, and some of them have significant resources (such as STRATASYS or 3D Systems in particular). This fast-growing market is also attracting many new players, including international groups with significant resources, including HP, GENERAL ELECTRIC and ADDUP, or more recent companies that have raised significant funds, such as CARBON3D. The Group therefore faces many competitors, some of whom have very deep resources and/or a high profile.

The multiplication of actors in the 3D printing market, some of whom have significant resources, may more quickly increase awareness of 3D printing technologies amongst manufacturers and professionals. However, this also means increased competitive pressure for the Group. This competitive pressure could lead to a decline in demand for the Group's products and force the Group to reduce its selling prices or make additional investments. These factors could have an adverse impact on the Group's business, revenue, results, financial position, development and outlook.

1.6.3.4 Risks associated with the international economic and political environment

The development of the Group's international sales could be affected by national preference policies as well as the uncertain or changing economic, financial, political and regulatory environments of certain countries in which the Group markets or wishes to market its products and services (notably the United States or China). If certain markets targeted by the Group, such as the United States in particular, were to adopt or reinforce protectionist practices or customs barriers, this could put a brake on attempts by potential customers to develop their business and invest in the Group's products or adversely affect the competitiveness of the Group's products, which could have an adverse impact on the Group's business, results, financial position and outlook.

1.6.3.5 Risks associated with changes in health policy

Many outlets for the Group's products have ties to the health sector, notably the dental sector. Depending on the country and the health systems in place, health policies aimed at controlling costs could lead to the discontinuation or capping on the reimbursement of patient care and would result in increased pressure on the prices of the corresponding products sold by the Group.

As a result, changes in health policies could have an adverse impact on the business, results, financial position, development and outlook of the relevant Group subsidiaries.

1.6.4 Risks associated with the Group's business

1.6.4.1 Risks associated with the Group's strategy on a constantly changing 3D printing market

The 3D printing market is experiencing rapid and profound changes, which requires the Group to regularly question the relevance of its strategic choices and the direction of its Systems and Products activities and its commercial policy so that it can detect and penetrate the most promising new markets that create value for the Group. Its strategic choices can also be impacted by changes in its relationships with strategic partners, distributors or suppliers.

The Group has demonstrated its agility and ability to adapt its strategy, but it cannot guarantee that its choices will always be the most relevant in a constantly changing market such as 3D printing.

If the Group's strategic choices turn out not to be pertinent, the Group's business, financial position, results, development and outlook could be significantly affected in the medium and long term.

1.6.4.2 Risks associated with the Group's rapid growth

The growth of the Group's business has been significant for many years. Difficulties related to growth management of a commercial, technical or administrative nature are likely to arise. In terms of human resources, this growth requires the steady reinforcement of managerial structures, the recruitment of the necessary qualified personnel, the ability to train employees quickly enough in the Group's products and the retention of qualified staff. The deployment of risk control procedures and the implementation of possible synergies within the Group will also be challenges. From a financial standpoint, revenue growth raises issues regarding the control of the working capital requirement.

The Group's inability to manage its growth or unexpected difficulties encountered during its expansion could have a material adverse effect on its business, results, financial position, development and outlook.

1.6.4.3 Risks associated with the acceptance of the Group's products by the markets addressed

The Group's customers are manufacturers and professionals that are adopting additive manufacturing in their production methods. Additive manufacturing machines using MOVINGLight® technology or the selective laser sintering technology that the Company manufactures and distributes, as well as the materials associated with each of these technologies, are particularly suitable for certain sectors of activity (many of these have already been identified: dentistry, foundry, plastic injection, medical and jewellery).

The growth of the Group's business depends on the ability of manufacturers and professionals to integrate new technologies into their production methods, adapt their organisational structure and adopt more or less rapidly additive manufacturing, in particular the solutions and products offered by the Group. The integration of additive manufacturing into a customer's production process involves the customer rethinking its existing processes and methods and making investments (modification of facilities, training, review of quality processes and certification, etc.), which can hinder the acceptance of the Group's products by the targeted markets.

To assist manufacturers and professionals in these production method changes, the Group has developed a consulting services offer. In addition, the INITIAL Service Bureau's custom parts manufacturing offer may allow customers to test the opportunity to integrate additive manufacturing into their production methods and adapt the technology to their needs. The scale and speed of the Group's development therefore depends on the ability of manufacturers and professional customers to use its technologies to adapt their industrial production structures.

As a result, if the acceptance of the Group's products by the targeted markets is not as rapid or significant as expected, this could have an adverse impact on the Group's business, revenue, results, financial position, development and outlook.

1.6.4.4 HR risks (dependence on key personnel and enticement of Group employees)

The Group's success and development are dependent on the work, know-how and experience of key employees and of the management team. The temporary or permanent unavailability of a key person may lead to a loss of know-how and technical deficiencies that may slow down the activity of a subsidiary or the Group.

Raphaël GORGÉ, the Chairman and Chief Executive Officer of PRODWAYS GROUP, does not perform his duties on a full-time basis as he is also Chairman and Chief Executive Officer of GROUPE GORGÉ, PRODWAYS GROUP's parent company. However, he devotes a significant part of his time to the PRODWAYS GROUP, with the assistance of the management teams in charge of the Group's "Systems" and "Products" divisions, which were strengthened in October 2018 by the appointment of a dedicated Chief Executive Officer.

Expertise in additive manufacturing is relatively rare in France and the Group must invest in the training of its new employees in those technologies.

In a growing market in which qualified people are relatively rare, the Group's visibility makes it a target for customers or competitors that want to poach its employees.

The Group will also need to recruit new managers, sales representatives and qualified staff to continue to grow. Despite its attractive development outlook and the interest in additive manufacturing technologies, the Group may not be able to attract or retain key personnel on economically acceptable terms.

To mitigate these risks as much as possible, the Group relies on many factors.

Firstly, the Group's employees are naturally motivated by a commercial and/or technical interest in the additive manufacturing sector and the projects in which they are involved. The introduction of profit-sharing and shareholding plans may also serve as additional motivation. To this end, free share allocation plans were implemented in the Group in 2016 and a new one was implemented on 31 January 2019.

Moreover, when this is accepted, the contracts of key employees and managers include non-competition clauses. They also include confidentiality clauses, as well as, where relevant, clauses for compensation and transfer to the employer of employee inventions.

Finally, the Group ensures that the success of its subsidiaries is not based on too few people and their managers are considering the implementation of succession plans for key people.

The difficulties that the Group may encounter in recruiting and retaining qualified employees could have an adverse impact on the Group's business and outlook.

1.6.4.5 Risks associated with sales levels

The Group's income and results are not linear and may fluctuate during the year due to many factors, most of which are beyond the Group's control (degree of acceptance of its products on the market, breakdown by product of revenue over a given period, competition activity, changes in policies or regulations, R&D levels, etc.).

Moreover, the sales cycle of 3D printers is particularly long, with equipment testing and qualification procedures for prospects. As a result, it is very difficult to predict and plan 3D printer sales and production reliably, sales of 3D printers may be irregular from quarter to quarter.

These fluctuations can have an impact on the interim presentation of the Group's revenue, its financial position and its ability to finance its activities and development.

1.6.4.6 Risks associated with research and development projects

The Group's research and development projects are decided by the Executive Committee, based on opportunities identified by the Group, customer demands and the Group's strategy. Ongoing projects are re-evaluated regularly. However, the Group cannot guarantee that all of its research and development projects will produce satisfactory results due to, for example, limited resources or technical challenges. Some of the projects initiated could be halted or suspended, while others could require more investment than expected or fall behind schedule.

Projects that fall behind schedule or are not completed will incur costs for the Group and are likely to affect its ability to keep pace with its competitors' technological innovations. The Group's inability to develop and market new products quickly could thus have an adverse impact on the Group's business, results, financial position and outlook.

1.6.4.7 Risks associated with research and development partnerships and commercial partnerships

The Group is involved in a number of R&D projects with universities and research organisations as well as strategic commercial partners, including distribution contracts under which the Group acts as a distributor.

The results of the Group's R&D partnerships may sometimes be protected by intellectual property rights (i) held by the Group, (ii) jointly owned by the parties, or (iii) held exclusively by the relevant partner, which grants the Group, as necessary, temporary usage rights, exclusive or non-exclusive, for the corresponding results, thus enabling the Group to distribute and offer its customers the new products developed.

Some research and development efforts carried out through partnerships (such as for the development of new materials adapted for additive manufacturing) sometimes begin before a partnership agreement is signed. The risk that the parties will not be able to finalise their agreements at an advanced stage of a project could have a negative impact for the Group on the expected profit from a partnership.

There is also a risk of divergence between the parties during the conduct of the partnership, which may lead to a breakdown in the partnership or a calling into question of its balance.

Moreover, under its partnerships, the Group must frequently share certain aspects of its know-how or sensitive business data with its counterparties that are not protected by patents. Although this information is covered by confidentiality undertakings, the Group must allow for the possibility that its know-how or business data is misappropriated and used by third parties.

Finally, the Group's partnerships could lead to unsatisfactory results or not provide immediate benefits to the Group.

The unsatisfactory performance of R&D partnerships could have an adverse impact on the Group's business, results, financial position and outlook.

1.6.4.8 Risks associated with the industrialisation of an innovative product

The industrialisation phase of an innovative product may require numerous adjustments and iterations that lead to delays in the marketing of the product or more frequent warranty services with customers for repairs or adjustments, resulting in additional costs for the Group and possible harm to its image.

Since the reliability of its products is paramount, the Group tests its main innovations relating to 3D printers and materials at its INITIAL Service Bureau or at VARIA 3D. This allows it to benefit from feedback and thus improve and stabilise its prototypes before it approves the final products. In addition, the Group now tests its key innovations with its key customers (Services Bureau or end users qualified as early adopters), who give feedback on product functionalities before the standard product is marketed.

These industrialisation phases relating to an innovation may vary in length and lead to delays in the marketing of a new product. Such delays could have an adverse impact on the Group's business, results, financial position and outlook.

1.6.4.9 Risks associated with poor product quality

The Group's sales growth depends on the quality and reliability of its products and the products distributed by the Group (such as third-party materials and HUNAN FARSOON SLS® printers).

The Group's companies have established procedures for the quality management and traceability of their products. As part of its ongoing efforts to improve quality, the Group strives to ensure that all of its subsidiaries are working to implement quality control policies that are as demanding as possible.

The subsidiaries of the Company that manufacture or resell products to the medical sector have a performance obligation regarding the quality of their products and must guarantee product quality over the stated periods.

In addition, the Group tests its innovations with its INITIAL Service Bureau, VARIA 3D and/or key volunteer customers in order to benefit from feedback and improve its prototypes before approval of the final products.

Nevertheless, the products manufactured or distributed by the Group are complex and may contain design or production defects.

Technical product reception procedures are put in place by the Group to detect any defects (in particular, the installation and receipt of a 3D printer involves various operating tests).

Defects may also be caused by parts or materials from third-party suppliers. However, the Group's ability to claim compensation from the supplier at fault may be limited by the sales conditions imposed by that supplier.

Furthermore, 3D printers are complex machines that require prior user training and regular maintenance. Such training is mandatory when a machine is purchased. In addition, the Group offers its customers multi-year preventive maintenance programs. Despite mandatory training and the offers of maintenance, an error in use by a customer or a maintenance defect is still possible.

Any product quality problem involves warranty claims for the Group, which generate unanticipated costs and may be the cause of customer complaints. Repeated problems could have an adverse impact on the Group's results and reputation.

1.6.4.10 Risks associated with potential imposition of unfavourable terms of sale

The Group makes every effort to enforce its general conditions of sale. Nevertheless, certain customers from large groups have a policy of imposing their own terms of purchase, which are generally unfavourable to suppliers and therefore to the Group, in particular regarding payment conditions, machine performance and liability clauses.

Unfavourable conditions of sale are likely to have an adverse impact on the Group's financial position and results.

1.6.4.11 Risks associated with key supplier failures

To this date, the Group has not implemented systematic double sourcing, which would be costly.

Moreover, the MOVINGLight® technology developed by the Company incorporates commercial parts manufactured exclusively by Texas Instruments, as well as certain parts developed specifically for the Company by specialised companies. In order to secure its production process, the Group has focused on maintaining sufficient inventories and is working to identify alternative suppliers for these critical components.

For the manufacturing of materials, the Group receives supplies of components and products from major chemical groups or certified suppliers. Any change in a component or supplier would involve new research and development to adapt the material formulations and the final product evaluation process.

Any difficulty in supplying certain special parts or chemical components may therefore have a negative impact on the ability of a subsidiary or the Group to manufacture and deliver its products.

1.6.4.12 Risks associated with external growth transactions

The Group has regularly acquired businesses or third party companies in the course of its development and intends to continue with this strategy as opportunities are identified. Nevertheless, the Group cannot guarantee the timeframes in which new opportunities for external growth will arise or may be successful.

An external growth operation may have the effect of diluting the shareholders of the Company in the event that such growth is financed through the issuance of transferable securities.

In addition, any acquisition involves risks associated with the integration of the acquired company or business into the Group, the realisation of assumptions underlying the valuation and the expected benefits of the transaction, the existence of unforeseen costs or hidden liabilities and the departure of key personnel from those companies.

To limit some of these risks, the Group systematically performs financial, legal and technical audits and negotiates asset and liability guarantees where possible. The Group also takes the measures it deems appropriate to retain the key persons identified and thus ensure the sustainability of those companies.

Moreover, the integration of a new entity or activity within the Group may take longer than anticipated and require increased mobilisation of the Group's teams, and the assimilation by the new entity of the Group's procedures, management tools and guidelines, or its acceptance of a change to its strategy, may vary in length.

Finally, the benefits of future or completed acquisitions may not materialise within the expected timeframes and standards. In most cases of acquisitions, goodwill is recognised in the consolidated financial statements. Impairment tests are carried out each year. If an impairment loss for goodwill is recognised, this could have an impact on the Group's financial situation (revenue and equity), and would indicate that the business outlook is not at the expected level hoped-for at the time of the acquisition.

1.6.4.13 Risks associated with the Group's network of distributors and agents

The Group markets its products in France and abroad, both directly and through its network of distributors and sales agents worldwide.

The Group selects its distributors and agents on the basis of technical expertise and reputation. However, the Group cannot guarantee that the distributors and agents selected will devote the necessary efforts to the commercial success of its products and comply with applicable regulations. The ramping-up of the indirect international sales network could thus take longer than expected and require additional commercial efforts.

The Group's reputation and results could be adversely affected by distributors or agents who are insufficiently involved or do not comply with the applicable regulations.

1.6.4.14 Risks associated with inventory management

In order to deal with order forecasts, the Group may keep inventories of machinery, parts or components that may be difficult to sell or use in the event of changes to technological or regulatory developments or changes to product lines that make certain inventories obsolete. In the event of a loss of value in the machines or supplies inventoried, the Group may be required to make significant provisions for impairment of its inventories, which could have an adverse effect on its financial position, results, development and outlook.

1.6.4.15 Insurance and coverage of operating risks

In the course of conducting its business, the Group may be confronted with disputes, proceedings and claims concerning its activities and products. The Group has taken out insurances to cover the cost of these risks.

For the most part, the insurance taken out by the Group against possible risks encompasses:

• z liability for defective products;
• z civil liability;
• z property, plant and equipment;
• z leased premises.

Specific insurance has also been purchased for the risks specific to sales in the aeronautic sector. Local insurances have also been implemented in accordance with local regulations. All policies are entered into with reputable insurance companies. However, these insurance policies contain exclusions and exceptions that make it impossible to cover the totality of the potential harm suffered.

Furthermore, the amount of expenses could exceed the limits of the Group's insurance coverage. Accordingly, the Group cannot guarantee that its current insurance coverage is sufficient to meet any liability claims that may be brought against the Company or any of its subsidiaries. If the Group's liability were thereby called into question and if it were not in a position to obtain and maintain appropriate insurance coverage at an acceptable cost, or protect itself effectively against liability actions for defective products, the marketing of its products and, more generally, its activities, results, financial position, development and outlook could be seriously affected.

1.6.5 Financial risks

1.6.5.1 Credit or counterparty risks

The economic situation around the world and changes to it may affect the Group's partners, customers and suppliers due to economic slowdowns and financial, geopolitical or social difficulties, or any other factors. The Group has a very wide variety of customers and has the capacity to obtain a growing number of new referrals, so it has little exposure to a particular customer risk, but it could be seriously impacted nonetheless if the international economic situation were to significantly weaken its customers or suppliers in general.

The Group as a whole is not over-reliant on any one customer, as can be seen from the percentage of consolidated revenue generated from each of the top five customers (for each of the top five customers in 2018, the percentage of 2017 revenue generated from such client is also indicated):

	2018	2017
z Customer A:	2.0%	3.7%
z Customer B:	1.9%	-
z Customer C:	1.6%	3.0%
z Customer D:	1.3%	-
z Customer E:	0.9%	-

In 2018, the top five customers accounted for 7.8% of the Group's revenue (compared with 12.9% in 2017). The Group's top twenty customers accounted for 17.4% of revenue in 2018 (compared with 29.0% in 2017).

The diversity of the Group's customers and the quality of most of them generally enable the Group to control customer credit risk. Impairments of trade receivables amounted to €1,143 thousand, compared with €860 thousand in 2017. Past-due trade receivables are disclosed in the Notes to the consolidated financial statements, (Note 4.5 "Customers, contract assets and liabilities"). The Group does not systematically carry out solvency studies on its customers.

Outside France, the Group operates directly or through distributors in a large number of countries. There is no high concentration of international revenue in any particular country. The Group is growing in the United States, which is a large mature market for 3D printing. A qualitative change to its country risk would significantly affect the Group.

To this date, the Group does not export to countries subject to international sanctions. The geopolitical development of a country is, however, a risk that may complicate or suspend trade relations with such country. The diversity of countries to which the Group exports its products and services is a factor that allows the impact of this risk to be reduced. An embargo or sanctions against a country in which the Group has significant commercial prospects could, however, significantly or completely alter these prospects.

1.6.5.2 Liquidity risk

The liquidity risk is described in Note 8.3.1 "Liquidity risk" to the consolidated financial statements. The Group's low net debt, financial position and shareholder support gave it substantial access to credit until its IPO in May 2017, in particular to finance acquisitions. Since the IPO in May 2017, the Group has had a positive net cash position and a confirmed line of credit of €10 million that has never been used.

The Company specifically reviewed its liquidity risk and believes it is in a position to meet all future maturities.

1.6.5.3 Dilution risk

In addition to the capital increases that may be necessary to finance its activities or allocate shares that may have vested under current free share plans, the Company may in the future issue or grant shares or new financial instruments giving access to the Company's share capital as part of its policy to motivate its managers and employees.

1.6.5.4 Interest rate risk

Interest rate risk is limited. It is described in detail in the Notes to the consolidated financial statements (Note 8.3.2 "Interest rate risk").

1.6.5.5 Foreign exchange risk

The foreign exchange risk is described in the Notes to the consolidated financial statements (Note 8.3.3 "Foreign exchange risk"). As of the date hereof, the Group's dollar expenditure is higher than its receipts in such currency. However, according to its forecasts, the growth in dollar sales should lead to a natural hedge of such foreign exchange risk.

The Group believes that the foreign exchange risk is not currently significant, and has therefore not made any other hedging arrangements to protect its business against exchange rate fluctuations. However, due to the acquisition of SOLIDSCAPE in July 2018, based in the United States, this position may change depending on future flows. Although SOLIDSCAPE generates all of its revenue in US Dollars, with almost all its costs in the same currency, thus leading to natural hedging, the Group may be required to set up a more structured hedging policy for this risk.

1.6.6 Industrial and environmental risks

Group companies do not have facilities that are subject to the regulations for facilities classified for environmental protection (ICPE).

Like many industrial activities, the Group's activities require the preservation and handling of hazardous products. The concerned companies implement the safety procedures recommended for the handling and storage of such products. For example, INITIAL handles potentially hazardous powders (explosion risks), which may pose a health hazard when inhaled. Strict handling and storage procedures have been put in place. Similarly, the use of DLP® or lasers requires certain handling precautions to protect the health of the concerned employees.

The collection and recycling of potentially polluting materials is entrusted to specialised service providers.

Compliance with these regulations is costly and any tightening of these regulations would entail additional costs for the Group. Regulations are also complex and any violation thereof by the Group could result in fines or penalties or could incur its liability. These circumstances would have an adverse effect on the Group's financial position and development.

2.1 36 GOVERNANCE

	2.1.1	Composition of the Board of Directors and Board Committees	36
	2.1.2	Presentation of the members of the Board	38
	2.1.3	Gender balance on the Board of Directors	43
	2.1.4	Information on securities transactions by corporate officers	43
	2.1.5	Non-conviction and conflicts of interest	43
	2.1.6	Executive Management	43
	2.1.7	Conditions for the preparation and organisation of the work of the Board of Directors (and its Committees) during the period	43
2.2		CORPORATE OFFICER REMUNERATION POLICY	45
	2.2.1	Principles and rules established by the Board of Directors to determine the remuneration and benefits in kind of corporate officers	45
	2.2.2	Remuneration of executive corporate officers	50

		54
		55
		56
2.5.1	Presentation of agreements	56
2.5.2	statutory auditors' special report on regulated agreements and commitments	57
		58
2.6.1	General organisation of internal control	58
2.6.2	Group organisation	58
2.6.3	Implementing internal control	58
	financial information for shareholders	59
2.6.5	Legal and regulatory compliance	59
		COMPANY REFERENCE TO A CORPORATE GOVERNANCE CODE AND ITS APPLICATION BY THE COMPANY SPECIAL ARRANGEMENTS, IF ANY, REGARDING SHAREHOLDER PARTICIPATION IN SHAREHOLDERS' MEETINGS REGULATED AGREEMENTS, RELATED-PARTY AGREEMENTS AND CURRENT AGREEMENTS INTERNAL CONTROL AND RISK MANAGEMENT PROCEDURES 2.6.4 Preparation and control of accounting and

This section on corporate governance includes the new corporate governance report pursuant to article L.225-37 of the French Commercial Code, which was approved by the Board of Directors on 1 April 2019.

2.1 GOVERNANCE

2.1.1 Composition of the Board of Directors and Board Committees

The composition of the Board of Directors reflects the GROUP GORGÉ control over the Company. However, the Company also promotes democratic and collective representation of all shareholders and the consideration of the corporate interest through the presence of independent Directors.

As at 31 December 2018, the PRODWAYS GROUP Board of Directors is composed of five Directors: Raphaël GORGÉ (Chairman of the Board of Directors and Chief Executive Officer until 4 October 2018), Catherine GORGÉ, BPIFRANCE PARTICIPATIONS (represented by Paul-François FOURNIER), SAFRAN CORPORATE VENTURES (represented by Hélène de Cointet) and Olivier STREBELLE (Chief Executive Officer since 4 October 2018). The Board also includes one observer, Loïc LE BERRE.

The terms of office of Thierry Moulonguet (independent Director) and Jacques Toupas (observer) ended at the close of the combined shareholders' meeting of 13 June 2018.

Hélène de Cointet and Paul-François FOURNIER are independent Directors.

Although these two Directors represent Company shareholders, the percentage of share capital held is relative compared with the majority shareholding held by GROUPE GORGÉ. These Directors have no links to the Company, its Group or its management that would jeopardise the exercise of their freedom of judgement. In this respect, PRODWAYS GROUP entered into a technological cooperation framework agreement with Safran Corporate Ventures in 2017 relating to developments in 3D printing. This is a significant contract for the Group from a technological standpoint but the transactional amounts are insignificant. A qualitative and quantitative analysis of the existing business relationship between PRODWAYS GROUP and SAFRAN CORPORATE VENTURES concluded that it was not liable to compromise the latter's status as an independent Director permanently represented by Hélène de Cointet. Hélène de Cointet and Paul-François FOURNIER have continuously demonstrated their independence and never hesitated to speak their mind.

Raphaël GORGÉ and Catherine GORGÉ are Directors representing GROUPE GORGÉ, the majority shareholder.

Mr Raphaël GORGÉ is Chairman and Chief Executive Officer of GROUPE GORGÉ. Ms Catherine GORGÉ is married to Mr Raphaël GORGÉ and a Director of GROUP GORGÉ.

Olivier STREBELLE was GROUPE GORGÉ's Deputy Chief Executive Officer responsible for strategy and business development until December 2018. He has been Chief Executive Officer of PRODWAYS GROUP since 4 October 2018.

To strengthen the Board's governance, it is proposed that the shareholders' meeting of 7 June 2019 appoint a new independent Director, Michèle LESIEUR, and two Directors appointed at the request of GROUPE GORGÉ, namely Loïc LE BERRE and Céline LEROY.

As set out in the Articles of Association, Directors are appointed for a term of 3 years.

Given its small size, the Board of Directors has not created any Board Committees. The appointment of a new independent Director will enable the Board to re-consider the possibility of creating an Audit and Risk Committee.

At 1 January 2019, the composition of the Board of Directors is as follows:

Name	Independent	Board Committees	Date of first appointment	Expiry of term of office	Experience and areas of expertise
Hélène DE COINTET Permanent representative of SAFRAN CORPORATE VENTURES	Yes	/	21 April 2017	Shareholders' meeting called to approve the financial statements for the year ended 31 December 2019	Mergers and acquisitions, financial analysis, aerospace industry, space and defence
Paul-François FOURNIER Permanent representative of BPIFRANCE PARTICIPATIONS	Yes	/	5 May 2017	Shareholders' meeting called to approve the financial statements for the year ended 31 December 2019	Innovative industries, telecoms, strategy
Raphaël GORGÉ Chairman of the Board of Directors	No	/	12 June 2015	Shareholders' meeting called to approve the financial statements for the year ended 31 December 2020	Executive management, finance, industry and technology, strategy
Catherine GORGÉ	No	/	5 May 2017	Shareholders' meeting called to approve the financial statements for the year ended 31 December 2019	Project management, 3D printing, luxury goods
Olivier STREBELLE Chief Executive Officer	No	/	12 June 2015	Shareholders' meeting called to approve the financial statements for the year ended 31 December 2020	3D Printing
Loïc LE BERRE Observer	No	/	12 May 2017	Board of Directors' meeting to approve the financial statements for the year ending 31 December 2019	Finance

The appointment of Michèle LESIEUR as a new independent Director on the Board of Directors is proposed to the shareholders' meeting of 7 June 2019. Her expertise and experience are presented below. Her contributions to the work of the Board come from her experience in international companies in the healthcare sector, her executive management experience in a listed company, and her expertise in international sales, marketing and development strategy.

The appointment of Loïc LE BERRE as a new Director, representing GROUPE GORGÉ, is proposed to the shareholders' meeting of 7 June 2019. He will bring his financial expertise to the Board.

The appointment of Céline LEROY as a new Director, representing GROUPE GORGÉ, is proposed to the shareholders' meeting of 7 June 2019. She will bring her legal expertise to the Board.

2.1.2 Presentation of the members of the Board

2.1.2.1 Management expertise and experience of Directors, observers and candidates for the Board of Directors

Hélène DE	Main function: Co-Head of SAFRAN CORPORATE VENTURES
COINTET Permanent representative of SAFRAN CORPORATE VENTURES	Hélène DE COINTET has been Co-Head of SAFRAN CORPORATE VENTURES since mid-2015. She joined SAFRAN's Mergers & Acquisitions Department in 2010 where she led a number of successful acquisitions, divestments and joint ventures for most of the Group's companies. Previously she spent nine years in the Valuations Team under Mergers & Acquisitions at KPMG CORPORATE FINANCE and four years at CIC SECURITIES as a financial analyst responsible for the aeronautic and electronics sectors. Hélène de Cointet graduated with a Master in Management Sciences from Université Paris-Dauphine in (1997) and qualified as a Certified International Investment Analyst in (2000).
Independent Director	Date of first appointment: shareholders' meeting of 21 April 2017
	Expiry of term of office: shareholders' meeting called to approve the financial statements for the financial year ended 31 December 2019
	Other offices and positions held within the Group: None
	Other offices and positions held outside the Group: Member of the Strategic Committee of DIOTASOFT SAS, representing Safran Corporate Ventures Member of the Strategic Committee of SAFETYLINE SAS, representing Safran Corporate Ventures Member of the Investment Committee of SAFRAN CORPORATE VENTURES
	Offices held during the last five years by Hélène de Cointet whose terms have expired: None
Paul-François	Main position: Innovation Director and Member of the Executive Committee at Bpifrance
FOURNIER Permanent representative of BPIFRANCE PARTICIPATIONS Independent Director	An alumnus of École Polytechnique and a graduate of Telecom ParisTech, Paul-François FOURNIER joined France Telecom Orange in 1994 as a business engineer where he spent seven years developing the Company's B2B services. In 2000, he was appointed Broadband Director at Wanadoo where he was responsible for the roll-out of ADSL in France. He was also involved in Wanadoo's international operations as a member of its Executive Committee. He worked on strategic projects such as the launch of Livebox and Voice over IP in partnership with French start-ups Inventel and Netcentrex. In 2011, he became Executive Director of the Orange Technocentre where he was in charge of product innovation. He favoured more regional and decentralised organisational methods, as reflected in the creation of Technocentres in Amman and Abidjan. Since April 2013 he has been Executive Director of the Innovation division at BPIFRANCE
	Date of first appointment: shareholders' meeting of 5 May 2017
	Expiry of term of office: shareholders' meeting called to approve the financial statements for the financial year ended 31 December 2019
	Other offices and positions held within the Group: None
	Other offices and positions held outside of the Group: Chairman of the Supervisory Board of CORNOVUM SAS Member representing BPIFRANCE on the Board of Directors of PARROT SA Member representing BPIFRANCE on the Board of Directors of SIGFOX SA Member representing BPIFRANCE on the Board of Directors of YOUNITED SA Member of the Board of Directors of EUTELSAT COMMUNICATIONS SA Member of the Board of Directors of EUTELSAT SA
	Offices held during the last five years by Paul-François FOURNIER whose terms have expired: None

* Listed company.

Raphaël GORGÉ	Main position: Chairman and Chief Executive Officer of GROUPE GORGÉ* Raphaël GORGÉ joined GROUPE GORGÉ (named FINUCHEM at the time) in 2004 after a ten-year career in finance
Chairman of the Board of Directors	and technology. He initiated and implemented the Group's withdrawal from the automotive sector (70% of its revenue in 2004), then steered its development toward new areas of business, including 3D printing. Raphaël GORGÉ has been the Chief Executive Officer of GROUPE GORGÉ since 2008.
Chief Executive Officer until 4 October 2018	Raphaël GORGÉ has an engineering degree from the École Centrale de Marseille and holds an advanced degree in molecular modelling.
	Date of first appointment : shareholders' meeting of 12 June 2015
	Expiry of term of office : shareholders' meeting called to approve the financial statements for the financial year ended 31 December 2020
Other offices and positions held within the PRODWAYS GROUP: None
	Other offices and positions held outside of the Group: Deputy CEO of PÉLICAN VENTURE SAS Chairman of the Board of Directors of ECA SA* Legal representative of GROUPE GORGÉ SA as Chairman of VIGIANS (formerly BALISCO) SAS Chairman of the Supervisory Board of SOPROMEC PARTICIPATIONS SA Manager of SOCIÉTÉ CIVILE COMPAGNIE INDUSTRIELLE DU VERDELET Manager of SCI THOUVENOT Manager of SCI AUSSONNE Manager of SCI MEYSSE Manager of SCI DES CARRIÈRES Chairman of STONI SAS Legal representative of PELICAN VENTURE SAS as Chairman of VIBRANIUM SAS (since 11 December 2018)
	Offices held during the last five years by Raphaël GORGÉ whose terms have expired: Chief Executive Officer of PRODWAYS GROUP SA * (split of the roles of CEO and Chairman of the Board of Directors in October 2018) Legal representative of PRODWAYS GROUP SA as Chairman of CRISTAL SAS, PRODWAYS SAS, PRODWAYS DISTRIBUTION SAS, PRODWAYS RAPID ADDITIVE FORGING SAS (formerly PRODWAYS 1), PRODWAYS 2 SAS, PODO 3D SAS, PRODWAYS ENTREPRENEURS SAS, PRODWAYS CONSEIL SAS, AVENAO INDUSTRIE SAS, 3D SERVICAD SAS, AVENAO SOLUTIONS 3D SAS, IP GESTION SAS, INTERSON PROTAC SAS (until 4 October 2018) Chairman of NUCLÉACTION SAS (until 31 January 2017)

Member of the Executive Committee of LA VÉLIÈRE CAPITAL SAS (until 18 October 2016)

Chairman of FINU 10 SAS (until 10 April 2018)

Chairman of PORTAFEU NUCLEAIRE SAS (until 13 May 2016)

* Listed company.

2

Catherine GORGÉ	Main position: Chairperson of CBG CONSEIL SAS
Director	Catherine GORGÉ began her career as a process engineer at ATLANTIC RICHFIELD, then joined the TECHNIP Group as a project engineer. After working at the Industrial Projects & Services business of GROUPE GORGÉ, she joined the luxury sector. There, she held the position of Director of Development and Operations at the PUIG GROUP, first for the PACO RABANNE brand, then for the MAJE brand. She currently runs the company CBG CONSEIL, specialising in business consulting. Since 2014, she has provided consulting services to PRODWAYS GROUP. Catherine GORGÉ is also a Director of ECA and GROUPE GORGÉ. Catherine GORGÉ has an engineering degree from the École Centrale de Marseille and holds an advanced degree in project management.
	Date of first appointment: shareholders' meeting of 5 May 2017
	Expiry of term of office: shareholders' meeting called to approve the financial statements for the financial year ended 31 December 2019
	Other offices and positions held within the PRODWAYS GROUP: None
	Other offices and positions held outside the Group: Director of GROUPE GORGÉ SA Director of ECA SA
	Offices held during the last five years by Catherine GORGÉ whose terms have expired: Manager of Immobilière BENON SCI (removed from the companies register in February 2014)
Olivier	Main position: Chief Executive Officer of PRODWAYS GROUP
STREBELLE Director Chief Executive	Olivier STREBELLE was awarded a degree in engineering (École Centrale Paris), then spent ten years with McKinsey in Paris and London as a management consultant, notably in the automotive industry. Olivier STREBELLE joined GROUPE GORGÉ in 2014 and was Deputy Chief Executive Officer responsible for strategy and business development until his appointment as Chief Executive Officer of PRODWAYS GROUP in October 2018.
Officer since 4 October 2018	Date of first appointment: 12 June 2015
	Expiry of term of office: shareholders' meeting called to approve the financial statements for the financial year ended 31 December 2020
	Other offices and positions held within the PRODWAYS GROUP: Member of the Board of Directors of PRODWAYS AMERICAS CEO of SOLIDSCAPE Legal representative of PRODWAYS GROUP as Chairman SA of various subsidiaries of PRODWAYS GROUP (CRISTAL SAS, PRODWAYS SAS, PRODWAYS DISTRIBUTION SAS, PRODWAYS RAPID ADDITIVE FORGING SAS (formerly PRODWAYS 1), PRODWAYS 2 SAS, PODO 3D SAS, PRODWAYS ENTREPRENEURS SAS, PRODWAYS CONSEIL SAS, AVENAO INDUSTRIE SAS, 3D SERVICAD SAS, AVENAO SOLUTIONS 3D SAS, IP GESTION SAS, INTERSON PROTAC SAS) since 4 October 2018 Other offices and positions held outside the Group: Deputy Chief Executive Officer responsible for strategy and business development (employment contract suspended until January 2020 before expiry). Offices held during the last five years by Olivier STREBELLE whose terms have expired: None

* Listed company.

2

Observer Loïc LE BERRE is a graduate of Sciences Po (1992) and holds an EMBA from HEC Paris as well as the equivalent of a Master in Accounting DESCF. Having begun his career at ARTHUR ANDERSEN, he joined the manufacturing sector at Candidate whose EURALTECH as Group Financial Controller where he then became Subsidiary Administrative and Financial Director and appointment as a finally Group CFO. After a time spent at Ineo (SUEZ) as Deputy Administrative Director then Project Coordinator, he Director is joined GROUPE GORGÉ in 2006 as Group Administrative and Financial Director. He has been Chief Financial Officer of proposed to the GROUPE GORGÉ since 2008. shareholders' meeting of 7 June Date of first appointment as observer: 12 May 2017 2019 Expiry of term of office as observer: Board of Directors' meeting called to approve the financial statements for the financial year ended 31 December 2019 Date of first appointment: Appointment proposed to the shareholders' meeting of 7 June 2019 Expiry of term of office (if appointed): shareholders' meeting called to approve the financial statements for the financial year ended 31 December 2021 Other offices and positions held within the PRODWAYS GROUP: None Other offices and positions held outside the Group: Member of the Supervisory Board of SOPROMEC PARTICIPATIONS Observer within the Board of Directors of ECA SA Manager of SCI DES PORTES Manager of SARL FINU 12 Offices held during the last five years by Loïc LE BERRE whose terms have expired: Director of ECA S.A. (until 21 March 2017) Co-manager of VLB E&C (until January 2017) Manager of SCI BETHUNE 34 (until 9 September 2018) Michèle LESIEUR Main position: Chief Executive Officer and Chair of the Executive Board of SUPERSONIC IMAGINE Candidate whose Michèle LESIEUR has been Chief Executive Officer and Chair of the Executive Board of SUPERSONIC IMAGINE since appointment as an 2016. Before serving as head of SUPERSONIC IMAGINE, Michèle LESIEUR built a 20-year career in the PHILIPS independent GROUP. She held various management positions within the PHILIPS GROUP at the national and international level. In the Director is early 2010s, she served as Chairman of PHILIPS FRANCE and Chief Executive Officer of PHILIPS HEALTHCARE in proposed to the France. Previously, Michèle led sales and marketing for the Group's medical imaging systems for five years, after six years of shareholders' leading the Philips Medical "Systems" division in France. Michèle LESIEUR has extensive experience in the consumer meeting of 7 June electronics and telecommunications sectors, having successively held the positions of Marketing Director of Philips Business 2019 Electronics France and General Manager of a Philips Business Electronics Department in charge of commercial policy and international development strategy. Michèle LESIEUR holds a Master's degree in physics from Université Paris XI and a DEA in optical transmission and signal processing from the Institut Supérieur d'Optique. Date of first appointment: Appointment proposed to the shareholders' meeting of 7 June 2019 Expiry of term of office (if appointed): shareholders' meeting called to approve the financial statements for the financial year ended 31 December 2021 Other offices and positions held within the Group: None Other offices and positions held outside the Group: None Offices held during the last five years by Michèle LESIEUR whose terms have expired: Chairman of PHILIPS FRANCE Chief Executive Officer of PHILIPS HEALTHCARE	Loïc LE BERRE	Main position: Chief Financial Officer of GROUPE GORGÉ

Céline LEROY	Main position: General Counsel of GROUPE GORGÉ SA
Candidate whose appointment as Director is proposed to the shareholders' meeting of 7 June 2019	Céline LEROY has been General Counsel of GROUPE GORGÉ since 2007. With a CAPA (Certificate of Aptitude for the Profession of Lawyer) and a DESS degree in business and tax law from the University of Paris I, Céline Leroy previously practised as an attorney at the law firm Freshfields Bruckhaus Deringer in the Finance and Mergers-Acquisitions Departments, before spending one year seconded to the Legal Department of DANONE.
	Date of first appointment: Appointment proposed to the shareholders' meeting of 7 June 2019
	Expiry of term of office (if appointed): shareholders' meeting called to approve the financial statements for the financial year ended 31 December 2021
	Other offices and positions held within the PRODWAYS GROUP: None
	Other offices and positions held outside of the Group: Employee Director of GROUPE GORGÉ SA(1) Director of ECA SA(1)
	Offices held during the last five years by Céline LEROY whose terms have expired: None
* Listed company.

Professional addresses of the Directors

The business addresses of the members of the Board of Directors are the registered office of the Company.

2.1.3 Gender balance on the Board of Directors

The Board of Directors applies the principle of gender equality set out in article L.225-18-1 of the French Commercial Code.

By taking into account the proposed appointments of Directors, there is gender equality amongst the Directors.

The choice of Directors (other than salaried Directors) is guided mainly by the search for skills complementary to those already represented on the Board, the knowledge of the markets in which the Group operates and the issues with which the Group may be confronted.

2.1.4 Information on securities transactions by corporate officers

To the Company's knowledge, the corporate officers, Group managers and persons referred to in article L.621-18-2 of the French Monetary and Financial Code subject to voluntary reporting of their securities transactions, have not conducted any securities transactions during the 2018 financial year.

2.1.5 Non-conviction and conflicts of interest

As far as the Company is aware, no member of the Board of Directors or corporate officer has, over the past five years, been convicted of fraud, been involved in his/her capacity as a member of the Board of Directors or manager in a bankruptcy, receivership or liquidation, been charged and/or officially sanctioned by a legal or regulatory authority, or been barred by Court order from serving on an administrative, Management or Supervisory Board of an issuer or from being involved in the management or running of an issuer.

As far as PRODWAYS GROUP is aware, there are no conflicts of interest between the personal interests of members of the administrative bodies and their duties to the Company.

As far as PRODWAYS GROUP is aware, the Directors and executive corporate officers have not agreed to any restriction on the free transferability of any interests they may have (save as mentioned in article 4.3.4).

2.1.6 Executive Management

Executive Management structure

At its 12 June 2015 meeting, the Board of Directors resolved that the positions of Chairman of the Board of Directors and of CEO would be held by a single person (Raphaël GORGÉ).

On 4 October 2018, the Board of Directors chose to separate the positions of Chairman of the Board of Directors and Chief Executive Officer.

Following the separation and the appointment of a new Chief Executive Officer, it was decided that the Chairman of the Board of Directors would retain an executive or active role in the following areas:

• z financial communication;
• z external growth and partnerships;
• z support for the Chief Executive Officer. Scope of the CEO's powers.

Scope of the CEO's powers

No restrictions were placed on the powers of the CEO when he was appointed. The CEO is therefore vested with the broadest powers to act on behalf of the Company in all circumstances, within the limits of the corporate purpose and subject to the powers expressly assigned by law to the general shareholders' meeting and to the Board of Directors.

2.1.7 Conditions for the preparation and organisation of the work of the Board of Directors (and its Committees) during the period

The rules governing the operation of the Board of Directors can be found in the Articles of Association and are set out in detail in the Board's Internal Regulations.

2.1.7.1 Frequency of Board meetings and attendance record

Over the past year, the Board of Directors met 8 times. Directors had a very strong attendance record of 95.31%.

2.1.7.2 Convening Board meetings

In accordance with article 15 of the Articles of Association, Board meetings may be convened by any means, including verbally.

In 2018, Board meetings were convened by email.

Pursuant to article L.225-238 of the French Commercial Code, the statutory auditors were invited to attend the Board meetings held to review and approve the interim and annual financial statements.

2.1.7.3 Provision of information to Directors

Directors were provided with all the papers, technical dossiers and information required to carry out their duties either when meetings were called or prior to Board meetings.

2.1.7.4 Holding of Board meetings

Meetings of the Board of Directors are held at the registered office or occasionally at a subsidiary head office. The Internal Regulations approved by the Company's Board of Directors, allow the use of video-conferencing or other telecommunications technologies subject to the regulatory requirements for holding the meetings of the Board of Directors.

2.1.7.5 Decisions taken

During the past financial year, the Board of Directors took decisions on current issues that are in the interest of the Company.

2.1.7.6 Minutes of Board meetings

Minutes of Board of Directors meetings are drawn up following each meeting and sent to all Directors at the latest before the next Board meeting.

2.1.7.7 Board assessment

In order to ensure compliance with Recommendation 11 of the Middlenext Code, Directors are encouraged to express their opinion on the workings of the Board and the preparation of its work during Board meetings held to approve the separate financial statements.

2.1.7.8 Board Committees

No Board committee was created. Under (article L.823-20-5° of the French Commercial Code) the Company is exempt from the obligation to create an Audit Committee given that its parent company (GROUPE GORGÉ SA) has its own Audit Committee.

Pursuant to article L.823.19 of the French Commercial Code, the Audit Committee of GROUPE GORGÉ is required by its Board of Directors to:

• z follow the financial reporting preparation process and, where required, formulate recommendations to ensure the integrity thereof;
• z monitor the efficiency of internal control and risk management systems and, where applicable, internal audit systems with regard to procedures for preparing and processing accounting and financial information, without impacting its independence;
• z make a recommendation on the proposed appointment of the statutory auditors by the shareholders' meeting to the Board in accordance with regulations, and make a recommendation on the proposed reappointment of the Auditor(s) to the Board in accordance with regulations;
• z monitor the statutory auditors' audit of the financial statements and take the comments and findings of the (H3C) French auditing oversight body into account following the audits conducted in accordance with regulations;
• z ensure the statutory auditors' compliance with independence criteria under the terms and in accordance with the procedures set out by applicable regulations;
• z approve the provision of services by the statutory auditors other than the certification of the financial statements pursuant to applicable regulations;
• z regularly report to the Board on the performance of its duties (including on certifying the financial statements, on how said certification contributed to the integrity of financial reporting, and on the role it played in this process); promptly inform the Board of any difficulties encountered.

In the course of preparing the GROUPE GORGÉ interim and annual financial statements, the Audit Committee meets with the Company's statutory auditors to finalise the interim and annual financial statements and to get updates from the statutory auditors on their work. In this respect, it ensures the independence of the statutory auditors.

The Audit Committee was not required to vote on the provision of services by the PRODWAYS GROUP statutory auditors other than the certification of the financial statements. It took part in discussions with the statutory auditors during the preparation of the statutory auditors' new report to the Audit Committee.

2.2 CORPORATE OFFICER REMUNERATION POLICY

2.2.1 Principles and rules established by the Board of Directors to determine the remuneration and benefits in kind of corporate officers

In accordance with article L.225-37-2 of the French Commercial Code, this section sets out the principles and criteria for determining, distributing and allocating the fixed, variable and exceptional components making up the total remuneration and benefits in kind that may be granted to executive corporate officers of PRODWAYS GROUP in respect of their term of office at PRODWAYS GROUP.

Until October 2018, Raphaël GORGÉ held the positions of Chairman of the Board of Directors and Chief Executive Officer. Following the separation of the functions on 4 October 2018, Raphaël GORGÉ retained the position of Chairman of the Board of Directors and Olivier STREBELLE was appointed as the Group's Chief Executive Officer.

2.2.1.1 General principles of the remuneration policy for executive corporate officers of PRODWAYS GROUP

The principles and criteria for determining, distributing and allocating the total fixed, variable and exceptional remuneration and benefits in kind of the executive corporate officers in respect of their office are discussed and approved by the Board of Directors.

The Board of Directors reviews and decides the remuneration of the executive corporate officers for the current year, the calculation of their bonus for the past year based on performance, the bonus criteria for the current year and the Director's fees. If applicable, any other component of remuneration and benefits of any kind shall be considered.

During its work, the Board of Directors assesses the individual performance of the Group's executive corporate officers, which it compares to the performance of the Company. It also takes into account the alignment of objectives with medium-term strategy, the interests of shareholders and changes to the Middlenext Corporate Governance Code. It also refers to external studies that indicators market practices for comparable companies. It takes into account any remuneration received by the corporate officers in companies controlled by PRODWAYS GROUP or the Company controlling PRODWAYS GROUP (GROUPE GORGÉ). It should be noted that PRODWAYS GROUP is more than 56% controlled by the GORGÉ family through the intermediary of GROUPE GORGÉ, which is in turn controlled by PÉLICAN VENTURE.

Pursuant to the recommendations of R13 of the Middlenext Corporate Governance Code, the Board of Directors takes the following principles into account:

• z Comprehensiveness: the remuneration determined for executive corporate officers must include the fixed portion, variable portion (bonus), stock options, free shares, attendance fees, conditions for retirement and special benefits in its overall assessment of remuneration;
• z Balance: between each remuneration component must be justified and be in the best interests of the Company;
• z Benchmark: to the extent possible remuneration must be assessed in relation to a benchmark business and market and be proportional to the Company's position, taking into account the inflationary effect;
• z Consistency: executive corporate officer remuneration must be consistent with that of other executives and employees at the Company;
• z Clarity: the rules must be simple and transparent, meaning the performance criteria used to determine the variable portion of remuneration or any stock options or free shares allocated must be in line with the Company's performance, correspond to its objectives, be demanding and easily explained, and be as sustainable as possible. They must be described without compromising the confidentiality of certain components;
• z Moderation: remuneration must be determined and stock options or free shares allocated in a sensible manner and take into account the Company's best interests, market practices and executive performance;
• z Transparency: annual updates to "shareholders" about the total remuneration and benefits paid to executives are provided in accordance with applicable regulations.

2.2.1.2 Principles relating to the setting of fixed remuneration

Since the end of 2018, PRODWAYS GROUP has had a Chief Executive Officer (Olivier STREBELLE) and a Chairman of the Board of Directors with a few executive or special assistance functions (Raphaël GORGÉ).

Principles relating to the setting of fixed remuneration of the Chairman of the Board of Directors

Raphaël GORGÉ, the Chairman of the Board of Directors exercises the traditional functions of chairing Board meetings and the specific tasks assigned by the Board of Directors.

Raphaël GORGÉ receives fixed and variable remuneration from the direct and indirect owners of PRODWAYS GROUP.

To take into account the time devoted by Raphaël GORGÉ to the development of the Company and his active role in certain areas, it was decided that Raphaël GORGÉ would receive fixed remuneration from PRODWAYS GROUP. In view of the remuneration paid to Raphaël GORGÉ from the companies controlling PRODWAYS GROUP, his fixed remuneration as Chairman of the Board of Directors of PRODWAYS GROUP should not exceed €100,000 for the 2019 financial year.

Principles relating to the setting of fixed remuneration of the Chief Executive Officer

Olivier STREBELLE, the Chief Executive Officer of PRODWAYS GROUP receives fixed remuneration from PRODWAYS GROUP for his position.

The total fixed remuneration takes into account the level of difficulty of the Chief Executive Officer's responsibilities, his skills, experience in the position, seniority in the Group and the practices of other similar and comparable companies. His remuneration for his position also takes into account the other remuneration that the Chief Executive Officer may receive elsewhere in the group (it being specified that, to date, the positions held in the subsidiaries are performed without remuneration).

Principles relating to the setting of fixed remuneration for executive corporate officers

In the event that the Company appoints other executive corporate officers, it may determine their fixed remuneration by taking all remuneration paid to them by companies controlling, or controlled by, the Company, the level of difficulty of their responsibilities, their skills and experience, seniority in the Group and the practices of comparable firms into account.

2.2.1.3 Principles relating to the setting of variable remuneration

Principles relating to the setting of variable remuneration of the Chairman of the Board of Directors

Raphaël GORGÉ, Chairman of the Board of Directors, receives variable remuneration from PRODWAYS GROUP.

This variable remuneration will not exceed half of his fixed remuneration. It will be paid subject to quantitative performance criteria being met and to the shareholders' meeting called to approve the 2019 financial statements approving the variable and non-recurring components of the remuneration of the Chairman of the Board of Directors for his position for the 2019 financial year.

The Board of Directors determines the applicable quantitative and qualitative criteria based on the priorities defined by the Group and applies a weighting to each of these criteria.

The quantitative criteria specifically relate to the Group's performance objectives. The qualitative criteria are defined according to projects and the Group's strategy. The Company wishes to keep the criteria selected confidential.

Principles relating to the setting of variable remuneration of the Chief Executive Officer

The Chief Executive Officer receives annual variable remuneration from PRODWAYS GROUP or, if applicable, from its subsidiaries, for his position or positions held in those subsidiaries.

This variable remuneration will not exceed half of his fixed remuneration. It will be paid subject to qualitative or quantitative performance criteria being met and to the shareholders' meeting called to approve the 2019 financial statements approving the variable and non-recurring components of the Chief Executive Officer's remuneration in respect of his position for the 2019 financial year.

The Board of Directors determines the quantitative and qualitative criteria to be applied according to the priorities defined by the Group and the weighting given to each of these criteria. The quantitative criteria specifically relate to the Group's performance objectives. The qualitative criteria are defined according to projects and the Group's strategy. The Company wishes to keep the criteria selected confidential.

Multiannual variable remuneration may also be determined.

Principles relating to the setting of variable remuneration for executive corporate officers

In the event that the Company appoints other executive corporate officers, it will determine their annual and/or multiannual variable remuneration by taking all remuneration paid to them by companies controlling, or controlled by, the Company, the level of difficulty of their responsibilities, experience in the position and seniority in the Group as well as the practices of comparable firms into account.

2.2.1.4 Other remuneration and benefits in kind

Executive corporate officers are not entitled to any compensation or benefits due or likely to be due on account of their assumption, cessation or change of duties or after the performance thereof.

The breakdown of attendance fee is discussed during Board of Directors meetings. The Directors' fee allocation policy adopted by the Board of Directors states that only independent Directors not remunerated by a shareholder that they represent will receive Directors' fees.

Accordingly, if the Chief Executive Officer is also a Director, he or she does not receive Directors' fees for his or her duties as Director, since he or she is already remunerated by the Company for his or her position as Chief Executive Officer and thus cannot be considered as independent.

The Chairman of the Board of Directors may, however, receive Directors' fees for his or her duties as a Director, depending on the situation and based on the remuneration received elsewhere and if he or she is considered as independent.

Under exceptional circumstances, the Board of Directors may decide to allocate non-recurring remuneration to executive corporate officers. The reasons for this decision would be explained.

In the event that new executive corporate officers are appointed, the Board of Directors may also decide to grant benefits in kind, complementary pension schemes or bonuses, (including compensation or benefits due or likely to be due on account of their assumption, cessation or change of duties or after the performance thereof), in accordance with market practices and the executive's experience.

The Board of Directors may also grant stock options or free shares to executive corporate officers under the conditions provided by law. To do this, it is granted the necessary authorisations as voted by the shareholders' meeting. In its decision of 31 January 2019, the Board decided to allocate free shares to the Chief Executive Officer. (see Section 4.2.1)

In the event that the Board of Directors appoints one or more Deputy Chief Executive Officers, the Company pays them fixed remuneration and, where applicable, exceptional remuneration by taking the level of difficulty of their responsibilities, experience in the position and seniority in the Group as well as the practices of comparable firms into account. The principles and criteria for variable remuneration applicable to the Chief Executive Officer also apply to any Deputy Chief Executive Officers, including any necessary modifications.

In the event that the Board of Directors combines the positions of Chairman and Chief Executive Officer, the Company pays the latter fixed, variable and, where applicable, exceptional remuneration by taking the level of difficulty of their responsibilities, experience in the position and seniority in the Group as well as the practices of comparable firms into account. The principles and criteria for variable remuneration are those set out above, including any necessary modifications.

The payment of variable and any exceptional remuneration in respect of offices held during the 2019 financial year is subject to the ordinary shareholders' meeting approving the remuneration package of executive corporate officers paid or allocated during the year.

2.2.1.5 Remuneration of corporate officers for 2018

Remuneration of Raphaël GORGÉ

Raphaël GORGÉ was Chief Executive Officer until 4 October 2018. As of that date, the positions of Chairman of the Board of Directors and Chief Executive Officer are separate: Raphaël GORGÉ became Chairman of the Board of Directors and a new Chief Executive Officer was appointed (Olivier STREBELLE).

The remuneration package and benefits in kind paid or allocated for the 2018 financial year to Raphaël GORGÉ as Chairman and Chief Executive Officer and then Chairman of the Board of Directors of the Company as from 4 October 2018 are summarised in the table below.

The shareholders' meeting of 7 June 2019 (tenth resolution) will be asked to approve the fixed, variable or exceptional components of the total remuneration and benefits in kind paid or allocated to Raphaël GORGÉ for the 2018 financial year as Chairman and Chief Executive Officer, then as Chief Executive Officer. His remuneration remained unchanged when the functions were separated given the particular assignments that he retained within the Group.

Remuneration components paid or allocated for the period	Amounts or book value submitted for approval	Presentation
Fixed remuneration from PRODWAYS GROUP	€75,000	Fixed remuneration paid by PRODWAYS GROUP from 1 April 2018
Fixed remuneration paid by companies controlling PRODWAYS GROUP	€109,000	Fixed remuneration paid by GROUPE GORGÉ and PÉLICAN VENTURE, in respect of the corporate offices held within these companies
Fixed remuneration by controlled companies	none
TOTAL FIXED REMUNERATION IN RESPECT OF 2018	€184,000
Annual variable remuneration payable by PRODWAYS GROUP	€45,000 (amount to be paid after approval of the shareholders' meeting)	On 28 March 2018, the Board of Directors of PRODWAYS GROUP decided to allocate gross variable remuneration of up to €50,000 to Raphaël GORGÉ for 2018, depending on the achievement of quantitative and qualitative criteria linked to the Group's performance and projects. The criteria were precisely defined by the Board of Directors and remain confidential.
Variable remuneration paid by a controlling entity	€58,630	Variable remuneration paid by PÉLICAN VENTURE in 2018 (€30,000) and to be paid by GROUPE GORGÉ (€28,630) after approval by the shareholders' meeting of GROUPE GORGÉ.
Variable remuneration paid by a controlled entity	none	Any offices held by Raphaël GORGÉ in PRODWAYS GROUP subsidiaries were exercised without remuneration.
TOTAL VARIABLE REMUNERATION IN RESPECT OF 2018	€103,630	(AMOUNT PAID OR TO BE PAID)

Remuneration components paid or allocated for the period	Amounts or book value submitted for approval	Presentation
Multiannual variable remuneration in cash	none	Raphaël GORGÉ receives no multiannual variable remuneration in cash from PRODWAYS GROUP nor from controlled or controlling companies.
Stock options allocated	none	The Board did not grant any stock options in 2018.
Free shares allocated	none	The Board did not grant any free shares in 2018; Raphaël GORGÉ did not benefit from the plans decided in 2016 and 2019.
Exceptional compensation	none	No exceptional remuneration is due in respect of 2018.
Attendance fees	€10,000	GROUPE GORGÉ paid €10,000 in Directors' fees to Raphaël GORGÉ in 2018, in respect of his position at GROUPE GORGÉ in 2017.
Compensation, allowances or benefits for taking office	none	Not applicable.
Compensation components paid on account of the cessation or change of duties, retirement commitments and non-compete commitments	none	No compensation is due on account of the cessation or change of duties, retirement commitments and non-compete commitments.
Remuneration components and benefits in kind under agreements entered into with the Company by virtue of office, or any entity controlled by the Company, or any entity that controls it, or any entity controlled by the entity that controls it.	none	No such agreements exist. The service provision agreement between GROUPE GORGÉ and PÉLICAN VENTURE is not related to Raphaël GORGÉ's position.
Other components of compensation granted in respect of the term of office	none
Benefits of all kinds	€9,964 (book value)	Raphaël GORGÉ received a benefit in kind in respect of his position at PÉLICAN VENTURE.

Remuneration of Olivier STREBELLE

The remuneration package and benefits in kind paid or allocated for the 2018 financial year to Olivier STREBELLE as Chief Executive Officer of the Company as from 4 October 2018 are summarised in the table below. Olivier STREBELLE was not remunerated by the Company until 1 December 2018.

The shareholders' meeting of 7 June 2019 (eleventh resolution) will be asked to approve the fixed, variable or exceptional components of the total remuneration and benefits in kind paid or allocated to Olivier STREBELLE for the 2018 financial year as Chief Executive Officer. There is none to approve in respect of the 2018 financial year given the date of his appointment.

Remuneration components paid or allocated for the period	Amounts or book value submitted for approval	Presentation
Fixed remuneration paid by PRODWAYS GROUP	€16,667	Fixed remuneration paid by PRODWAYS GROUP from 1 December 2018.
Fixed remuneration paid by a controlling entity	€118,758	Olivier STREBELLE was a GROUPE GORGÉ employee until 1 December 2018 and as such received remuneration from GROUPE GORGÉ, albeit unrelated to his position.
TOTAL FIXED REMUNERATION IN RESPECT OF 2018	€135,425

Remuneration components paid or allocated for the period	Amounts or book value submitted for approval	Presentation
Annual variable remuneration paid by PRODWAYS GROUP	none	Olivier STREBELLE is likely to receive variable remuneration starting from the 2019 financial year.
Variable remuneration paid by a controlling entity	€60,000	Olivier STREBELLE was a GROUPE GORGÉ employee until 1 December 2018 and as such received remuneration from GROUPE GORGÉ, albeit unrelated to his position.
Variable remuneration paid by a controlled entity	none	Olivier STREBELLE's positions in the subsidiaries of PRODWAYS GROUP were performed without remuneration.
TOTAL VARIABLE REMUNERATION IN RESPECT OF 2018	€60,000	(AMOUNTS PAID)
Multiannual variable remuneration in cash	none	Olivier STREBELLE receives no multiannual variable remuneration in cash from PRODWAYS GROUP nor from controlled or controlling companies.
Stock options allocated	none	The Board did not grant any stock options in 2018.
Free shares allocated	none	The Board did not grant any free shares in 2018; Olivier STREBELLE did not benefit from the plans decided in 2016. He benefited from the plan decided in January 2019.
Exceptional compensation	none	No exceptional remuneration is due in respect of 2018.
Attendance fees	none	The Company did not pay Directors' fees and would not pay any to the Chief Executive Officer according to its policy.
Compensation, allowances or benefits for taking office	none	No remuneration was paid to Olivier STREBELLE for the assumption of his position.
Compensation components paid on account of the cessation or change of duties, retirement commitments and non-compete commitments	none	No remuneration is provided for termination or change of duties. There are no specific pension commitments. The Chief Executive Officer has accepted a non-compete undertaking that could be applied on the termination of his duties.
Remuneration components and benefits in kind under agreements entered into with the Company by virtue of office, or any entity controlled by the Company, or any entity that controls it, or any entity controlled by the entity that controls it.	none	No such agreements exist.
Other components of compensation granted in respect of the term of office	€579 (book value)	Olivier STREBELLE benefits from a GSC insurance covered by PRODWAYS GROUP from December 2018.
Benefits of all kinds	€10,383 (book value)	Olivier STREBELLE received a benefit in kind when he was an employee of GROUPE GORGÉ.

2.2.2 Remuneration of executive corporate officers

The tables below present the remuneration and benefits paid to each corporate officer by the Company, entities controlled by PRODWAYS GROUP or the entities controlling PRODWAYS GROUP in the past year. They are covered by the AMF recommendation on the preparation of Registration Documents.

Raphaël GORGÉ (Chairman and Chief Executive Officer until 4 October 2018, then Chairman of the Board of Directors as from that date) is remunerated as described in Section 2.2.1 above.

Olivier STREBELLE (Chief Executive Officer as from 4 October 2018, then Director) is remunerated as described in Section 2.2.1 above.

Catherine GORGÉ (Director) acted as a consultant (via her consulting firm CBG CONSEIL) to the subsidiary PRODWAYS (2014 to 2016) then to PRODWAYS GROUP (in 2016 and 2017) and invoiced fees for her services in that capacity. Since 2018, CBG CONSEIL has acted under a commercial collaboration agreement for INITIAL and, as such, invoices commissions (see table 3 below and Section 2.5.1 below).

TABLE 1 – SUMMARY TABLE OF THE REMUNERATION PAID AND THE OPTIONS AND SHARES GRANTED TO EACH EXECUTIVE CORPORATE OFFICER

Raphaël GORGÉ, Chairman	2018	2017
Remuneration due for the financial year	€120,000	none
Remuneration due by controlling entities for the financial year (details in Table 2)	€187,594	€231,301
Value of multiannual variable compensation granted during the financial year	none	none
Value of the options granted during the financial year	none	none
Value of free shares granted	none	none
TOTAL FOR RAPHAËL GORGÉ	€307,594	€231,301

Olivier STREBELLE, Chief Executive Officer	2018	2017
Remuneration due for the financial year	€16,667	none
Remuneration due by a controlling entity for the financial year (details in Table 2)	€169,141	€157,114
Value of multiannual variable compensation granted during the financial year	none	none
Value of the options granted during the financial year	none	none
Value of free shares granted	none	none
TOTAL OLIVIER STREBELLE	€185,808	€157,114

	Amounts for 2018		Amounts for 2017
Raphaël GORGÉ - Chairman	Payable(4)	Paid(5)	Payable(4)	Paid(5)
z fixed remuneration	€75,000	€75,000	none	none
fixed remuneration paid by controlling companies(1) z	€109,000	€109,000	€184,000	€184,000
annual variable remuneration(2) z	€45,000	none	none	none
fixed remuneration paid by controlling companies(3) z	€58,630	€57,600	€27,600	€56,750
z multiannual variable remuneration	none	none	none	none
z exceptional remuneration	none	none	none	none
attendance fees by a controlling entity(3) z	€10,000	€10,000	€10,000	€10,000
benefits in kind(1) z	€9,964	€9,964	€9,701	€9,701
TOTAL	€307,594	€261,564	€231,301	€260,451

TABLE 2 – SUMMARY TABLE OF THE REMUNERATION OF EACH EXECUTIVE CORPORATE OFFICER

(1) This remuneration was paid by PÉLICAN VENTURE, the entity that controls GROUPE GORGÉ, and by GROUPE GORGÉ, the entity that controls PRODWAYS GROUP.

(2) The Board of Directors decided to allocate gross variable remuneration of up to €50 thousand to Raphaël GORGÉ for 2018, depending on the achievement of quantitative and qualitative criteria linked to the Group's performance and projects. The criteria were precisely defined the beginning of the year by the Board of Directors. These criteria remain confidential.

(3) The Board of Directors decided to allocate gross variable remuneration of up to €42 thousand to Raphaël GORGÉ for 2018 (€92 thousand for 2017), depending on the achievement of quantitative and qualitative criteria linked to the Group's performance and projects. The criteria were precisely defined the beginning of the year by the GROUPE GORGÉ Board of Directors on a proposal by the Remuneration Committee. These criteria remain confidential. Raphaël GORGÉ received gross variable remuneration of €30,000 from PELICAN VENTURE. He also received Directors' fees paid by GROUPE GORGÉ.

(4) Remuneration payable to the corporate officer during the financial year, the amount of which cannot be changed regardless of the payment date.

(5) Remuneration payable to the corporate officer during the financial year.

	Amounts for 2018		Amounts for 2017
Olivier STREBELLE, Chief Executive Officer	Payable(3)	Paid(4)	Payable(3)	Paid(4)
z fixed remuneration	€16,667	€16,667	none	none
fixed remuneration by a controlling entity(1) z	€118,758	€118,758	€126,193	€126,193
z annual variable remuneration	none	none	none	none
variable remuneration by a controlling entity(2) z	€40,000	€60,000	€20,000	€50,000
z multiannual variable remuneration	none	none	none	none
z exceptional remuneration	none	none	none	none
z Director's fees	none	none	none	none
benefits in kind(1) z	€10,383	€10,383	€10,921	€10,921
TOTAL	€185,808	€205,808	€157,114	€187,114

(1) This remuneration was paid before December 2018 by GROUPE GORGÉ, the entity that controls PRODWAYS GROUP.

(2) GROUPE GORGÉ has allocated to Mr. Olivier STREBELLE gross variable remuneration of €40,000 for 2017 and €20,000 for 2018. These two variable remuneration payments were made in 2018, based on the achievement of quantitative and qualitative criteria related to the Group's performance and projects.

(3) Remuneration payable to the corporate officer during the financial year, the amount of which cannot be changed regardless of the payment date.

(4) Remuneration payable to the corporate officer during the financial year.

TABLE 3 – TABLE OF ATTENDANCE FEES AND OTHER REMUNERATION RECEIVED BY NON-EXECUTIVE CORPORATE OFFICERS

Members of the Board of Directors	Paid in 2018	Paid in 2017
Hélène DE COINTET
Attendance fees	none	none
Other remuneration	none	none
Paul-François FOURNIER
Attendance fees	none	none
Other remuneration	none	none
Catherine GORGÉ
Attendance fees	none	none
Other remuneration(1)	€40,926	€123,063
Loïc LE BERRE
Attendance fees	none	none
Other remuneration(2)	€235,999	€230,441

(1) "Other remuneration" paid to Catherine GORGÉ includes fees (excl. tax) invoiced to INITIAL, a subsidiary of PRODWAYS GROUP, by her firm CBG CONSEIL as well as €10,000 in attendance fees paid by GROUPE GORGÉ SA, the entity that controls PRODWAYS GROUP.

(2) Remuneration paid by GROUPE GORGÉ SA, the entity that controls PRODWAYS GROUP.

The shareholders' meeting allocated a Directors' fees budget of €30,000 for each financial year from 2018. In accordance with its Directors' fees policy, no Directors' fees were allocated by the Board of Directors for the 2018 financial year.

TABLE 4 – STOCK OPTIONS ALLOCATED DURING THE PERIOD TO EACH EXECUTIVE CORPORATE OFFICER BY THE ISSUER AND BY ANY GROUP ENTITY

None.

TABLE 5 – STOCK OPTIONS EXERCISED DURING THE PERIOD BY EACH EXECUTIVE CORPORATE OFFICER

None.

TABLE 6 – FREE SHARES GRANTED TO EACH CORPORATE OFFICER

Date of Board of Directors' meeting	31 January 2019
Date of the shareholders' meeting granting the delegation to the Board	13 June 2018
Total number of free shares allocated to corporate officers(1)	135,000
Olivier STREBELLE	135,000
Acquisition date of the shares	1/3 in February 2021, 1/3 in February 2022 and 1/3 in February 2023
Date of end of the lock-up period	(2) -
Valuation of the shares(2)	427,950

(1) All the shares are allocated subject to performance conditions linked to the Group's results and share price in 2019, 2020 and 2021 and subject to a continued employment condition.

(2) Olivier STREBELLE has a commitment to hold 5% of the shares that will become vested until the termination of his duties as corporate officer

(3) For information purposes, the shares are valued at the closing price at 31 January 2019 (allocation date), i.e. €3.17. The value that will be selected for the consolidated financial statements, in accordance with IFRS 2, is not available. It will take into account a discount related to performance criteria and the probability of vesting.

TABLE 7 – FREE SHARES MADE AVAILABLE TO EACH CORPORATE OFFICER

None.

TABLE 8 – HISTORY OF ALLOCATION OF STOCK OPTIONS

None.

TABLE 9 – STOCK OPTIONS GRANTED TO THE FIRST TEN EMPLOYEES WHO ARE NOT CORPORATE OFFICERS AND EXERCISED BY THEM

None.

TABLE 10 – HISTORY OF FREE SHARE AWARDS

Date of Board of Directors' meeting	17 February 2016	9 December 2016
Date of shareholders' meeting granting authority to the Board	28 September 2015	28 September 2015
Total number of free shares(1)	632,200	488,500
including corporate officers	240,000	200
Philippe LAUDE(2)	240,000	200
Acquisition date of the shares	31 March 2021 at the latest	31 March 2021 at the latest
Date of end of the lock-up period	same	same
Number of shares acquired	-	-
including corporate officers	-	-
Number of shares cancelled or expired(3)	632,200	226,120
including corporate officers	240,000	200
Philippe LAUDE(2)	240,000	200
Free shares with ongoing acquisition period	-	262,380

(1) Allocation subject to continued employment, liquidity and performance conditions associated with the Group's profits.

(2) Philippe LAUDE was a Director of the Company until May 2016. He left the Group in February 2017.

(3) Shares are cancelled when the beneficiary leaves the Group, meaning the condition of continued employment has not been met. Philippe LAUDE left the Group on 28 February 2017 and thus did not meet the condition of continued employment attached to the shares allocated to him.

TABLE 11 – INFORMATION RELATING TO EMPLOYMENT CONTRACTS, SUPPLEMENTARY PENSION SCHEME AND INDEMNITIES FOR EACH EXECUTIVE CORPORATE OFFICER

Executive corporate officers	Raphaël GORGÉ, Chairman	Olivier STREBELLE, Chief Executive Officer
Employment contract	no	no
Supplementary pension scheme	yes(1)	no(1)
Compensation or benefits due or likely to be due on account of the end or change of office	no	no
Compensation relating to a non-compete clause	no	yes(2)

(1) Supplementary pension plan with defined contributions of 2.5% of the gross salary, paid by GROUPE GORGÉ, the entity controlling PRODWAYS GROUP. Olivier STREBELLE was a beneficiary while he was employed by GROUPE GORGÉ.

(2) In return for a non-compete commitment accepted by the Chief Executive Officer, throughout its duration, the Company undertakes to pay Olivier STREBELLE a gross non-compete compensation of €70,000 per year, payable in 12 monthly instalments. The Company may waive this compensation by releasing Olivier STREBELLE from his non-compete commitment.

2.3 COMPANY REFERENCE TO A CORPORATE GOVERNANCE CODE AND ITS APPLICATION BY THE COMPANY

At the Board of Directors' meeting on 22 February 2017, the Company decided to adhere to the MIDDLENEXT Corporate Governance Code. This code can be consulted on the MIDDLENEXT website (www.middlenext.com).

The Board of Directors acknowledged the "Items requiring careful attention" section of the Middlenext Code.

The table below shows where the Company stands with respect to the recommendations made in the Middlenext Corporate Governance Code at the time of the 1 April 2019 Board of Directors meeting.

Middlenext Code recommendations	Compliant	Non-compliant
I. SUPERVISORY POWER
R1: Code of ethics for Board members	X
R2: Conflicts of interest	X
R3: Board members – Presence of independent members on the Board	X
R4: Information for Board members	X
R5: Organisation of Board and committee meetings	X
R6: Setting up of committees		X(1)
R7: Implementation of internal regulations for the Board	X
R8: Choice of Directors	X
R9: Terms of office of Board members	X
R 10: Remuneration of Directors by Directors' fees	X(2)
R11: Assessment of the work done by the Board	X
R12: Shareholder relations	X
II. EXECUTIVE POWER
R13: Setting and transparency of executive corporate officer compensation	X
R14: Preparation for the succession of officers		X(3)
R15: Multiple employment contracts and corporate offices	X
R16: Severance pay	X
R17: Supplementary pension schemes	X
R18: Stock options and allocation of free shares	X
R19: Review of vigilance points	X

(1) At this stage, the Company has not set up any Board Committees given the size of the Board of Directors. Under (article L.823-20-1 of the French Commercial Code) the Company is exempt from the obligation to create an Audit Committee given that its parent company (GROUPE GORGÉ SA) has its own Audit Committee.

(2) In accordance with its current remuneration policy, the payment of Directors' fees shall be reserved for independent Directors who are otherwise not paid by the Company or by a significant shareholder as a permanent representative. The Board does not have an allocation rule based on Director attendance. If, however, the participation rate is unsatisfactory, the Board is free to review its allocation policy.

(3) The Company's Board of Directors did not discuss the matter of executive succession in 2018. The Board of Directors will have to reflect on this issue.

2.4 SPECIAL ARRANGEMENTS, IF ANY, REGARDING SHAREHOLDER PARTICIPATION IN SHAREHOLDERS' MEETINGS

The Articles of Association do not contain any provision waiving the ordinary legal provisions governing the arrangements for shareholder participation in shareholders' meetings (see the partial excerpt of article 22 of the Articles of Association inserted in Section 4.1.2 below).

2.5 REGULATED AGREEMENTS, RELATED-PARTY AGREEMENTS AND CURRENT AGREEMENTS

2.5.1 Presentation of agreements

Commitments and regulated agreements covered in articles L.225-38 and L.225-42-1 of the French Commercial Code

During 2018, the Board of Directors of the Company authorised the signing of the following regulated agreement: absorption agreement entered into between PRODWAYS GROUP, GROUPE GORGÉ and the new Chief Executive Officer Olivier STREBELLE, pursuant to which the suspension until January 2020 of Olivier STREBELLE's employment contract with GROUPE GORGÉ following his appointment as Chief Executive Officer of PRODWAYS GROUP is duly noted and at the end of that suspension period, Olivier STREBELLE's employment contract will automatically be terminated.

In view of the change of Olivier STREBELLE's status from GROUPE GORGÉ employee to PRODWAYS GROUP corporate officer, the need to provide him with unemployment coverage and the group's interest in seeing Olivier STREBELLE manage PRODWAYS GROUP, the Board of Directors of PRODWAYS GROUP has authorised the signing of this regulated agreement.

During the 2018 financial year, the Board of Directors of the Company also authorised a non-compete commitment applicable to the Chief Executive Officer (Olivier STREBELLE). In return for a non-compete commitment accepted by the Chief Executive Officer, throughout its duration, the Company undertakes to pay Olivier STREBELLE a gross non-compete compensation of €70,000 per year, payable in 12 monthly instalments. The Company may waive this compensation by releasing Olivier STREBELLE from his non-compete commitment. In accordance with article L.225-42-1 of the French Commercial Code, such non-compete agreements must be treated as regulated agreements.

In addition, the Board of Directors that approved the 2018 financial statements noted that there are no longer any regulated agreements entered into in previous financial years that are still in force.

Related-party agreements (agreements referred to in article L 225-37-4 2° of the French Commercial Code)

In accordance with article L 225-37-4 2° of the French Commercial Code, the following agreements are mentioned:

z the development of the Group's new Rapid Additive Forging technology is partly outsourced to COMMERCY Robotique, a GORGÉ GROUP company. COMMERCY Robotique posted revenue of €447.100 in 2017 with a profit margin matching its average margin;

z Catherine GORGÉ (through her company CBG CONSEIL) launched the PRODWAYS GROUP "Luxury, Art, Design & Architecture" division (otherwise known as "Creations") in 2016, which she continued to develop in 2017. Starting in 2018, CBG CONSEIL continued to contribute to the development of this activity as a commercial agent. Under this commercial collaboration agreement between CBG CONSEIL and INITIAL (a subsidiary of PRODWAYS GROUP), the commissions charged by CBG CONSEIL to INITIAL in 2018 amounted to €30,926 excluding taxes.

Current agreements

The Group deals with intra-group services agreements and leasing or sub-leasing agreements between Group companies, Director employment contracts (excluding cases of significant promotion or exceptional salary increases) and tax consolidation agreements as ordinary agreements entered into on normal terms, having regard in particular to the terms and remuneration applied.

For information purposes, PRODWAYS GROUP presents the following agreements considered current and entered into under normal conditions within a Group:

• z GROUPE GORGÉ and PRODWAYS GROUP are bound by a service agreement whereby GROUPE GORGÉ undertakes to provide PRODWAYS GROUP with extensive assistance in operational management, administrative management and legal, accounting, financial and marketing matters. For this purpose, GROUPE GORGÉ is compensated by invoicing its subsidiary a percentage of its consolidated revenue (1.00% for 2018, i.e. €609 thousand). This percentage is revalued each year in order to ensure fair distribution, in line with the reality of the pooled management fees of the main subsidiaries of GROUPE GORGÉ. Hence, such percentage may change in 2019 and in the years to come. This agreement, which has been in force since 2016, is entered into for an indefinite period and may be terminated by either party subject to three months' notice. It will automatically be terminated in the event of loss of control of the Company by GROUPE GORGÉ;
• z PRODWAYS's lessor for the Les Mureaux site is a subsidiary of GROUPE GORGÉ. The lessor for PRODWAYS GROUP, PODO 3D, PRODWAYS ENTREPRENEURS and PRODWAYS CONSEIL in Paris is GROUPE GORGÉ. The rents charged are identical to the rents granted to the other GROUPE GORGÉ subsidiaries on the same sites and are in line with market prices;
• z the PRODWAYS GROUP further engages in joint ventures with the aeronautical activities of GROUPE GORGÉ (access to GROUPE GORGÉ customers, creation of a showroom dedicated to 3D printing at ECA AEROSPACE, a GROUPE GORGÉ subsidiary in Toulouse, collaboration for commercial offers).

2.5.2 statutory auditors' special report on regulated agreements and commitments

To the Shareholders,

In our capacity as your company's statutory auditors, we hereby report to you on regulated agreements and commitments.

It is our responsibility to report to shareholders, based on the information provided to us, on the main terms and conditions of agreements and commitments that have been disclosed to us or that we may have identified as part of our engagement, without commenting on their relevance or substance or identifying any undisclosed agreements or commitments. Under the provisions of article R. 225-31 of the French Commercial Code, it is the responsibility of the shareholders to determine whether the agreements and commitments are appropriate and should be approved.

Where applicable, it is also our responsibility to provide shareholders with the information required by article R. 225-31 of the French Commercial Code in relation to the implementation, during the year, of agreements and commitments already approved by the shareholders' meeting.

We conducted the procedures we deemed necessary in accordance with the professional guidelines of the French National Institute of statutory auditors (Compagnie Nationale des Commissaires aux Comptes) relating to this mission. These procedures consisted in verifying that the information given to us is consistent with the underlying documents.

Agreements and commitments submitted to the approval of the shareholders' meeting

Agreements and commitments authorised and signed during the past year

In accordance with article L 225-40 of the French Commercial Code, we have been informed of the following agreements and commitments signed during the past year which received prior authorisation from your Board of Directors.

Purpose:

Authorisation for the signature of a takeover agreement for the employment contract concluded between PRODWAYS GROUP, GROUPE GORGÉ and the new Chief Executive Officer, Olivier STREBELLE, under which it is noted the suspension until January 2020 of Olivier STREBELLE's employment contract at GROUPE GORGÉ.

Person concerned: GROUPE GORGÉ SA, Mrs Catherine GORGÉ, (Director of PRODWAYS GROUP SA and GROUPE GORGÉ SA) Mr Raphaël GORGÉ (Chairman and Chief Executive Officer of GROUPE GORGÉ SA and Chairman of the Board of Directors of PRODWAYS GROUP SA) and Mr Olivier STREBELLE, Chief Executive Officer of PRODWAYS GROUP SA.

Pursuant to this agreement, it is duly noted that the employment contract of Mr Olivier STREBELLE at GROUPE GORGÉ is suspended up to January 2020, following his appointment as Chief Executive Officer of PRODWAYS GROUP and that at the end of this suspension period, Olivier STREBELLE's employment contract will automatically be terminated.

Having reviewed the terms and conditions and in view of the change of status of Olivier STREBELLE from employee of GROUPE GORGÉ to corporate officer of PRODWAYS GROUP, the need to provide unemployment insurance and the Group's interest to see Olivier STREBELLE become Chief Executive Officer of PRODWAYS GROUP, the Board of Directors of PRODWAYS GROUP authorised the signature of this regulated agreement.

Purpose:

Authorisation for the signature of a non-compete commitment applicable to the Chief Executive Officer, Mr Olivier STREBELLE.

Person concerned: Mr Olivier STREBELLE, Chief Executive Officer of PRODWAYS GROUP SA.

Pursuant to this agreement, it is duly noted that a non-compete commitment is applicable to the Chief Executive Officer, Mr Olivier STREBELLE. In return for this non-compete commitment accepted by the Chief Executive Officer, throughout its duration, the Company undertakes to pay Olivier STREBELLE a gross non-compete compensation of €70,000 per year, payable in 12 monthly instalments. The Company may waive this compensation by releasing Olivier STREBELLE from his non-compete commitment.

Having reviewed the terms and conditions, the Board of Directors of PRODWAYS GROUP approved the signature of this regulated agreement.

Agreements and commitments already approved by the shareholders' meeting

We inform you that we have not been informed of any agreements or commitments already approved by the shareholders' meeting which remained current during the last financial year.

Neuilly-sur-Seine and Paris, 11 April 2019 The statutory auditors

PricewaterhouseCoopers Audit David Clairotte

RSM Paris Stéphane Marie

2.6 INTERNAL CONTROL AND RISK MANAGEMENT PROCEDURES

Our Company has developed internal control procedures with a view to achieving, to the extent possible, strict financial management and risks control, and preparing the information provided to shareholders on the financial position and financial statements.

The main risks facing the Group are discussed in the management report and annual report published by the Company ("Risk Factors"). The internal control system is built around the following organisation and methodologies:

2.6.1 General organisation of internal control

The Chairman and Chief Executive Officer, assisted by the Chief Financial Officer, established the Company's internal control system with a view to ensuring:

• z the safeguarding and integrity of assets;
• z and the reliability of information flows.
• This internal control system primarily encompasses:
• z oversight of the Group's business by the introduction of a procedure for monthly reporting and analysis of sales, profit (loss) and cash flow;
• z a procedure for organising the closing of accounts and the preparation of consolidated financial statements every half-year;
• z a special reporting procedure for the quarterly preparation of consolidated revenue figures.

2.6.2 Group organisation

PRODWAYS GROUP SA does not carry out any industrial activities, and its purpose is to:

• z define and implement the Group's strategy;
• z supervise the management of its subsidiaries;
• z liaise with financial stakeholders such as banks and investors;
• z develop and maintain common procedures in areas such as reporting, management control and accounting.

The Group operates through two business segments: Products and Systems. Each segment is independent with its own operational and management structures.

Management at the Group's main operating subsidiaries reports directly to the Group's senior management.

2.6.3 Implementing internal control

2.6.3.1 Activity report

All direct and indirect subsidiaries of PRODWAYS GROUP complete the Group's reporting scorecards which include the following business indicators:

• z monthly and year-to-date sales;
• z monthly order intakes;
• z total order book;
• z significant events.

These scorecards, once approved by the finance chiefs and executive management in the operating entities, are sent on the 5th of each month together with any notes or commentaries required to analyse and understand them.

2.6.3.2 Performance report

All direct and indirect subsidiaries of PRODWAYS GROUP prepare a monthly income statement in the Group's format with a comparison against the budget. The cash flow position and a three-month cash flow forecast are also included. These reports also include information on Working Capital Requirements (WCR) and capital expenditures.

This information, together with any commentary required for understanding it and following approval by management, is sent to HQ on the 18th of each month.

Monthly meetings are held between Group management and management of subsidiaries to discuss the information sent and to consider any corrective measures taken or to be taken and to update forecasts.

These monthly reports are accompanied by an end-of-year income statement, which is updated several times during the year.

2.6.3.3 Closing of the financial statements

All the Group's subsidiaries close their annual and interim financial statements on 31 December and 30 June respectively.

The interim and annual financial statements as well as the consolidation reporting are audited or partially reviewed by the statutory auditors.

Preparation meetings between Group management and management at subsidiaries are held at each accounting close in order to agree the relevant options for said accounting closes.

The data required for preparing the consolidated financial statements are entered in a decentralised input system. The software used is SAP BFC, with an automatic module that immediately reconciles reported intra-group transactions. An internal manual details the principles and policies applied by the Group for the purposes of preparing the consolidation reporting.

The Group's consolidated financial statements are prepared internally in accordance with applicable principles and are audited by the statutory auditors.

Following these accounting closes, all legal disclosure requirements are satisfied.

The SAP BFC software package is used for the consolidation of the financial statements as well as all budgets, reports and forecasts.

2.6.3.4 Quarterly business reports

The Group publishes its quarterly consolidated revenue. These numbers are prepared in the same way as for the preparation of the consolidated financial statements. The press releases disclosing quarterly revenue numbers are prepared on the basis of the business and profit (loss) reports as well as discussions with management at the subsidiaries.

2.6.3.5 Assessment of internal control

In 2016, GROUPE GORGÉ comprehensively reviewed the Company's risk mapping and internal control accounting system. The objective was to stabilise a robust and sustainable internal control system, taking into account the specificities of the Group, and to provide a reasonable level of assurance for control of the main risks. The work carried out by the Group was reviewed by one of our statutory auditors, PwC.

With regard to risk, the project began with risk identification, which took place through a set of maintenance actions. The identified risks were sorted, categorised and evaluated in terms of impact and likelihood of occurrence. The risks were regrouped on a map. Risk mapping is meant to be updated annually for each business segment and at Group level.

On the basis of the risk mapping, actions to improve risk control were defined. The most important of these actions are the strengthening and dissemination of internal control measures.

A Group internal control framework common to all GROUPE GORGÉ subsidiaries was developed to facilitate the dissemination and monitoring of good internal control practices. Critical processes were identified (accounting closure, cash, purchases, sales, inventories, HR/payroll, project management, legal and tax, R&D, control environment and general computer controls). An internal control framework was built for each process and then adapted and validated in cross-functional workshops. The sum of the frameworks for each process constitutes the Group's internal control framework. For each process and sub-process, this framework defines the risks to which the Group is exposed, the objectives of the controls to be carried out, the control activities, their frequency, responsible persons and proof of achievement.

The dissemination of the internal control framework within the Group was accompanied by self-assessment questionnaires that focused on the controls deemed to be priorities.

The use of the internal control framework within the Group is the responsibility of the entire management chain, starting with the managers (division managers or CEOs of subsidiaries) who rely for this on the administrative and financial managers or Directors.

2.6.4 Preparation and control of accounting and financial information for shareholders

The Chairman of the Board of Directors, assisted by the Chief Financial Officer, establishes the financial communications policy.

Presentations of highlights, outlook and interim and annual financial statements are put up on the Group's website when results are published. The Company also takes part in investor meetings.

2.6.5 Legal and regulatory compliance

In order to ensure that their businesses are in compliance with applicable regulations, Group companies have recourse to the Group's Legal Department and to external advisers (lawyers, labour law experts and intellectual property experts).

3.1		2018 CONSOLIDATED FINANCIAL STATEMENTS	62
	3.1.1	Consolidated income statement	62
	3.1.2	Statement of comprehensive income	63
	3.1.3	Statement of consolidated financial position	63
	3.1.4	Consolidated cash flow statement	65
	3.1.5	Statement of changes in consolidated shareholders' equity	66
	3.1.6	Notes to the consolidated financial statements	67
	3.1.7	Statutory auditors' report on the consolidated financial statements	101

3.2		SEPARATE FINANCIAL STATEMENTS 2018	104
	3.2.1	Income statement	104
	3.2.2	Balance sheet	104
	3.2.3	Change in cash and cash equivalents	105
		3.2.4 Notes to the parent company financial statements	106
	3.2.5	Statutory auditors' report on the separate financial statements	115

3.1 2018 CONSOLIDATED FINANCIAL STATEMENTS

The Group's consolidated financial statements are prepared in accordance with IFRS published by the International Accounting Standards Board (IASB) as approved by the European Union. The accounting policies are detailed in Section 3.1.6 of the notes to the consolidated financial statements.

3.1.1 Consolidated income statement

(in thousands of euros)	Notes	2018	2017*
REVENUE	4.1	60,895	34,807
Capitalised production		2,139	3,224
Inventories and work in progress		134	(287)
Other income from the business	4.2	1,166	938
Purchases and external charges		(35,863)	(22,377)
Personnel expenses	5.2	(26,002)	(17,914)
Tax and duties		(739)	(540)
Depreciation, amortisation and provisions (net of reversals)	4.3	(5,181)	(3,537)
Other operating income and expenses		(496)	235
PROFIT (LOSS) FROM CONTINUING OPERATIONS		(3,947)	(5,453)
Non-recurring items in operating income	3.2.1	(1,069)	(1,199)
OPERATING INCOME		(5,016)	(6,651)
Interest on gross debt		(139)	(211)
Interest on cash and cash equivalents		61	5
COST OF NET DEBT (A)	8.2	(78)	(206)
Other financial income (B)		82	334
Other financial expense (C)		(80)	(166)
FINANCIAL INCOME AND EXPENSES (D = A+B+C)		(76)	(38)
Income tax	9.1	(683)	(1,160)
Group share of the earnings of affiliated companies	8.1.4	118	107
NET INCOME FROM CONTINUING ACTIVITIES AFTER TAX		(5,657)	(7,742)
Net income from discontinued activities		-	-
CONSOLIDATED NET INCOME		(5,657)	(7,742)
INCOME ATTRIBUTABLE TO PARENT COMPANY SHAREHOLDERS		(5,454)	(7,613)
INCOME ATTRIBUTABLE TO NON-CONTROLLING INTERESTS		(203)	(130)
Average no. of shares	10.2	50,765,920	44,061,841
Earnings per share (in euros)	10.2	(0.107)	(0.173)
Diluted earnings per share (in euros)	10.2	(0.107)	(0.173)

3.1.2 Statement of comprehensive income

(in thousands of euros)	2018	2017*
NET INCOME	(5,657)	(7,742)
Currency translation adjustment	88	30
Tax relating to currency translation adjustments	-	-
Actuarial gains and losses on defined benefit plans	(9)	57
Tax relating to actuarial gains and losses on defined benefit plans	2	(26)
Group share of gains and losses recognised directly in equity of equity-accounted companies	-	-
TOTAL OTHER COMPREHENSIVE INCOME	82	61
of which can be reclassified subsequently to profit and loss	82	61
of which cannot be subsequently reclassified to profit and loss	-	-
COMPREHENSIVE INCOME	(5,574)	(7,682)
Comprehensive income attributable to parent company shareholders	(5,383)	(7,550)
Comprehensive income attributable to non-controlling interests	(192)	(131)

* Column 2017 restated for the elements detailed in Note 1.3.

3.1.3 Statement of consolidated financial position

ASSETS

(in thousands of euros)	Notes	31/12/2018	31/12/2017*
NON-CURRENT ASSETS		62,217	52,961
Goodwill	6.1	37,883	29,760
Other intangible assets	6.2	13,320	14,054
Property, plant and equipment	6.3	9,442	6,700
Investments in affiliated companies	8.1.4	995	1,504
Other financial assets	8.1.4	517	273
Deferred tax assets	9.2	60	670
CURRENT ASSETS		52,948	63,885
Net inventories	4.4	6,693	4,722
Net trade receivables	4.5	13,391	10,989
Contract assets	4.5	2,202	1,806
Other current assets	4.6	2,973	3,678
Tax receivables payable	9.1.1	1,762	1,182
Other current financial assets		-	31
Cash and cash equivalents	8.1.2	25,927	41,476
ASSETS HELD FOR SALE	-	-
TOTAL ASSETS		115,165	116,846

TOTAL EQUITY AND LIABILITIES

(in thousands of euros)	Notes	31/12/2018	31/12/2017*
EQUITY ATTRIBUTABLE TO OWNERS OF THE PARENT		80,917	86,306
Capital(1)	10.1	25,408	25,408
Premiums(1)		84,408	84,371
Retained earnings and other reserves(2)		(28,899)	(23,473)
STAKES ATTRIBUTABLE TO NON-CONTROLLING INTERESTS		398	522
NON-CURRENT LIABILITIES		7,451	6,906
Long-term provisions	5.3	863	836
Long-term liabilities – portion due in more than one year	8.1.1	4,219	3,183
Other financial liabilities	8.1.3	930	889
Deferred tax liabilities	9.2	1,438	1,998
Other non-current liabilities	4.7	-	-
CURRENT LIABILITIES		26,399	23,112
Short-term provisions	11	388	210
Long-term liabilities – portion due in less than one year	8.1.1	2,515	1,582
Operating payables	4.7	8,949	8,476
Contract liabilities	4.5	3,199	1,353
Other current liabilities	4.7	11,274	11,414
Tax liabilities payable	9.1.1	73	77
LIABILITIES HELD FOR SALE		-	-
TOTAL LIABILITIES		115,165	116,846

(1) Of the consolidating parent company.

(2) Including profit (loss) for the financial year.

3

3.1.4 Consolidated cash flow statement

(in thousands of euros)	Notes	2018	2017*
NET INCOME FROM CONTINUING OPERATIONS		(5,657)	(7,742)
Accruals		5,336	4,790
Capital gains and losses on disposals		453	127
Group share of income of equity-accounted companies		(118)	(107)
CASH FLOW FROM OPERATING ACTIVITIES (BEFORE
ELIMINATION OF NET BORROWING COSTS AND TAXES)	7.1	14	(2,933)
Expense for net debt	8.2	78	206
Tax expense	9.1	683	1,160
CASH FLOW FROM OPERATING ACTIVITIES (AFTER ELIMINATION OF NET BORROWING COSTS AND
TAXES)		775	(1,566)
Tax paid		(611)	(653)
Change in working capital requirements	7.2	(1,849)	(2,099)
NET CASH FLOW FROM OPERATING ACTIVITIES (A)		(1,685)	(4,319)
Investing activities
Payments/acquisition of intangible assets		(1,452)	(1,997)
Payments/acquisition of property, plant and equipment		(3,627)	(2,805)
Proceeds/disposal of property, plant and equipment and intangible assets		-	7
Payments/acquisition of long-term investments		(241)	(4)
Proceeds/disposal of long-term investments		14	24
Net cash inflow/outflow on the acquisition/disposal of subsidiaries	7.3	(9,166)	(8,481)
NET CASH FLOW FROM INVESTING ACTIVITIES (B)		(14,472)	(13,255)
Financing activities
Capital increase or contributions	10.1.1	-	62,483
Dividends paid to parent company shareholders	10.1.2	-	-
Dividends paid to non-controlling interests		(38)	-
Proceeds from borrowings	8.1.1	2,352	987
Repayment of borrowings	8.1.1	(1,867)	(11,157)
Cost of net debt	8.2	(58)	(168)
NET CASH FLOW FROM FINANCING ACTIVITIES (C)		390	52,146
CASH FLOW GENERATED BY (USED IN) ALL ACTIVITIES (D = A+B+C)		(15,767)	34,572
CHANGE IN CASH AND CASH EQUIVALENTS		(15,767)	34,572
Effects of exchange rate changes		63	(8)
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR	8.1.2	41,228	6,871
Reclassification of cash(1)		27	(206)
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR	8.1.2	25,552	41,228

(1) Treasury shares.

3.1.5 Statement of changes in consolidated shareholders' equity

	Group share or owners of the parent company
(in thousands of euros)	Capital	Share capital reserves	Treasury shares	Retained earnings and other reserves	Equity – attributable to parent company shareholders	Equity – attributable to non controlling interests	Total equity
2016 SHAREHOLDERS' EQUITY	16,897	23,857	-	(14,842)	25,911	101	26,012
Share capital transactions(1)	8,511	59,966	-	-	68,477	-	68,477
Treasury share transactions	-	-	(196)	-	(196)	-	(196)
Payments in shares	-	548	-	6	554	-	554
Commitments to non-controlling interests	-	-	-	(889)	(889)	-	(889)
Dividends	-	-	-	-	-	-	-
Net income (loss) for the financial year(2)	-	-	27	(7,640)	(7,613)	(130)	(7,743)
Gains and losses recognised directly in equity	-	-	-	62	62	(1)	61
CONSOLIDATED COMPREHENSIVE INCOME	-	-	27	(7,578)	(7,550)	(131)	(7,682)
Changes in scope	-	-	-	(1)	(1)	553	551
2017 CLOSING EQUITY	25,408	84,371	(168)	(23,305)	86,306	522	86,828
Share capital transactions	-	-	-	-	-	-	-
Treasury share transactions	-	-	(26)	-	(26)	-	(26)
Payments in shares	-	37		6	43	-	43
Commitments to non-controlling interests	-	-	-	(41)	(41)	-	(41)
Dividends	-	-	-	-	-	(38)	(38)
Net income (loss) for the period	-	-	60	(5,514)	(5,454)	(203)	(5,657)
Gains and losses recognised directly in equity	-	-		71	71	11	82
CONSOLIDATED COMPREHENSIVE INCOME	-	-	60	(5,443)	(5,383)	(192)	(5,574)
Changes in scope	-	-		18	18	105	123
2018 SHAREHOLDERS' EQUITY	25,408	84,408	(134)	(28,765)	80,917	398	81,315

(1) Including the redemption of convertible bonds.

(2). Restated for the elements detailed in Note 1.3

3

3.1.6 Notes to the consolidated financial statements

NOTE 1	Accounting principles	68
1.1	Standards applied	68
1.2	Basis for preparation	69
1.3	Restatement of financial information for previous financial years	69
NOTE 2	Scope of consolidation	72
2.1	Accounting principles related to the consolidation scope	72
2.2	Changes in the consolidation scope	72
2.3	Off-balance sheet commitments related to the consolidation scope	73
NOTE 3	Segment information	74
3.1	Key indicators by division	74
3.2	Reconciliations with Group data	75
3.3	Revenue by geographical area	77
NOTE 4	Operational data	78
4.1	Recognition of income and revenue	78
4.2	Other income from the business	78
4.3	Net charges to amortisation and provisions	78
4.4	Inventories and work in progress	78
4.5	Customers, contract assets and liabilities	79
4.6	Other current and non-current assets	80
4.7	Other current and non-current liabilities	81
4.8	Off-balance sheet commitments related to operations	81
NOTE 5	Employee expenses and benefits	82
5.1	Workforce	82
5.2	Employee expenses and benefits	82
5.3	Provisions for pensions and similar commitments	82
5.4	Share-based payments	83
5.5	Remuneration of the Directors and related parties	84

NOTE 6	Property, plant and equipment and intangible assets	85
6.1	Goodwill	85
6.2	Other intangible assets	85
6.3	Property, plant and equipment	87
6.4	Value impairments on non-current assets	88
NOTE 7	Details of cash flows	89
7.1	Calculation of cash flow	89
7.2	Change in working capital requirements	90
7.3	Acquisitions/Disposals of equity holdings	90
NOTE 8	Financing and financial instruments	91
8.1	Financial assets and liabilities	91
8.2	Financial income and expenses	93
8.3	Policy for the management of risks	93
8.4	Off-balance sheet commitments related to the Group's financing	94
NOTE 9	Corporate income taxes	95
9.1	Corporate income tax	95
9.2	Deferred tax liabilities	96
	NOTE 10 Shareholders' equity and earnings per
	share	97
10.1	Equity	97
10.2	Earnings per share	97
10.3	Pledges of the issuer's shares	97
	NOTE 11 Other provisions and contingent
	liabilities	98
	NOTE 12 Other notes	99
12.1	Statutory auditors' fees	99
12.2	Exceptional events and disputes	99
12.3	Subsequent events	99
	NOTE 13 List of consolidated companies	100

PRODWAYS GROUP - 2018 ANNUAL REPORT 67

Note 1 Accounting principles

The consolidated financial statements of PRODWAYS GROUP for the year ended 31 December 2018 include:

• z the financial statements of the company PRODWAYS GROUP;
• z the financial statements of its subsidiaries;
• z the proportion of the net assets and the net income of the companies accounted for using the equity method (joint ventures and partnership businesses).

The consolidated financial statements of PRODWAYS GROUP for the 2018 financial year were approved by the Board of Directors on 1 April 2019.

They will be subject to approval by the next ordinary shareholder's meeting.

1.1 Standards applied

The accounting standards used to prepare the consolidated financial statements comply with the regulations and interpretations of the International Financial Reporting Standards (IFRS) as adopted by the European Union as of 31 December 2018. These accounting standards are consistent with those used to prepare the annual consolidated financial statements for the year ended 31 December 2017, with the exception of the new standards, revised standards and interpretations applicable from 1 January 2018.

The application over the period of the following new standards and interpretations did not have any significant effect on the consolidated financial statements on 31 December 2018:

• z IFRIC 22 Foreign Currency Transactions and Advance Consideration;
• z amendments to IFRS 2 Classification and evaluation of share-based payment transactions;
• z amendments to IAS 40 Transfers of Investment Property;
• z annual improvements to IFRS cycle 2014-2016 (December 2016);
• z amendments to IFRS 4 Apply the IFRS 9 standard Financial instruments with IFRS 4.

The Group implemented IFRS 15 – Revenue from Contracts with Customers for the first time in 2018. Note 1.3 provides detailed comments on this implementation.

The Group has not applied the following standards and interpretations, which had not been adopted by the European Union at 31 December 2018 or for which application is not mandatory as of 1 January 2018:

• z standards adopted by the European Union:
  • z amendments to IFRS 9 Prepayment Features with Negative Compensation,
  • z IFRS 16 Leases;
• z standards not adopted by the European Union:
  • z IFRS 17 Insurance contracts,
  • z amendments to IAS 19 Modification, reduction or liquidation of a plan,
  • z amendments to references to the conceptual framework in the IFRS standards,
  • z amendments to IAS 28 Long-term Interests in Associates and Joint Ventures,
  • z annual improvements to IFRS cycle 2015-2017 (December 2017),
  • z amendments to IFRS 10 and IAS 28 Sale or Contribution of Assets between an Investor and its Associate or Joint Venture,
  • z amendments to IFRS 3 Definition of a business,
  • z amendments to IAS 1 and IAS 8 Definition of relative importance.

These interpretations and amendments should have no material impact on the Group's financial statements.

Application of IFRS 16 – Leases in 2019

The application of IFRS 16 – Leases will be mandatory for financial years beginning 1 January 2019.

Per this standard, all leases other than short-term leases and leases of low-value assets must be recognised on the lessee's balance sheet in the form of a right-of-use asset and in counterpart to a financial debt. Currently leases qualified as "operating" are presented off balance sheet (see Note 4.8).

The Group's lease contracts mainly concern real estate (office buildings) and, to a lesser extent, vehicles.

The Group has identified the potential impacts of the application of IFRS 16 and has collected information on the characteristics of the various ongoing lease contracts.

In 2018, the Group adjusted its internal procedures on the collection and integrity of data relative to lease contracts.

The Group intends to apply this standard on 1 January 2019, using a modified retrospective approach (without restatement of the comparative period).

The two exemptions provided by the standard will be used concerning the following contracts:

• z lease contracts of short duration or with a residual duration less than twelve months at the date of transition;
• z lease contracts relating to assets of low value as new.

The Group used the simplification measure enabling it no not assess if a contract existing at the date of application is, or contains, a lease contract pursuant to IFRS 16.

Based on this study, the application of IFRS 16 to the financial statements of the Group will increase financial debt by an estimated amount between €4.0 and €6.0 million on 1 January 2019.

1.2 Basis for preparation

The financial statements are presented in euros and are rounded to the nearest thousand.

The financial statements have been prepared under the historical cost convention, except in the case of derivatives and available-for-sale financial assets, which are measured at fair value. Financial liabilities are measured at amortised cost. The carrying amount of hedged assets and liabilities and the related hedging instruments corresponds to their fair value.

The preparation of the financial statements requires that Group management or the subsidiaries' management make estimates and assumptions that affect the reported amounts of assets and liabilities on the consolidated balance sheet, the reported amounts of income and expense items on the income statement and the commitments relating to the period under review. The actual results may differ.

The above-mentioned assumptions mainly concern:

• z the calculation of the recoverable amounts of assets;
• z the calculation of provisions for risks and charges;
• z the calculations performed in the context of acquisitions;
• z the calculation of pension and other post-employment benefit obligations (assumptions set out in Note 5.3).

As the Group's consolidated companies operate in different sectors, the valuation and impairment methods used for certain items may vary according to the sector.

1.3 Restatement of financial information for previous financial years

The financial statements on 31 December 2017 were modified for two reasons: the completion in 2018 of the work on the fair valuation related to the acquisitions of 2017; the first implementation of the IFRS 15 standard. In all of the notes, the information relative to 2018 is compared to the restated 2017 information.

1.3.1 Completion of the work to value acquired assets and liabilities (IFRS 3R)

The IFRS 3R standard specifies that the fair valuation of acquired assets and liabilities must be subject to retrospective modifications, as if the modifications were made from the date of entry into scope. The financial statements on 31 December 2017 were therefore modified due to the completion of fair valuation work on assets, liabilities and contingent liabilities acquired from the companies AVENAO and INTERSON PROTAC.

The modifications made cover the valuation of intangible assets excluding deferred taxation:

• z for AVENAO, €5,934 thousands for the brand and the distribution contract;
• z for INTERSON PROTAC, €670 thousand for the brand and the customer relationships.

1.3.2 Application of IFRS 15 - Revenue from contracts with customers

The Group implemented IFRS 15 – Revenue from Contracts with Customers for the first time in 2018. Since the Group chose the full retrospective approach, the financial statements for 2018 include the 2017 comparative financial statements, restated to reflect the effects of applying this new standard. The opening balance sheet at 1 January 2017 was also adjusted.

The main reasons for discrepancies between past rules and IFRS 15 are as follows:

Backlog

IFRS 15 introduces the concept of an accounting backlog ("revenue to be recognised"). The Group did not previously include the backlog in its notes to the financial statements, but does so now. The definition of IFRS 15 complies with that previously applied by the Group.

Segmentation of contracts into performance obligations

In certain situations, IFRS 15 imposes the segmentation of contracts into performance obligations with differentiated profit margins. This may be the case in particular for contracts combining construction and operations. The Group has not identified any such situations in its contracts.

Contract costs

Under IFRS 15, the costs of obtaining a contract must be recognised as an asset and amortised if they represent incremental costs, i.e. costs the entity would not have incurred had that individual contract not been obtained, and which the entity expects to recover on the basis of the contract's expected profit. The Group has not identified any such costs.

Elements of variable consideration

IFRS 15 defines the total transaction price as the total amount to which an entity expects to be entitled, which may therefore include upward or downward adjustments (discounts, revisions, indexation, penalties, etc.). The Group is already identifying the elements of variable consideration and including them in the transaction price as soon as they are estimated to be highly probable. In particular, late delivery penalties are treated according to the same principle.

Revenue recognition based on progress

Under past rules, revenue from construction contracts was recognised using the percentage-of-completion method.

IFRS 15 provides criteria to demonstrate the gradual transfer of control of goods and services to the client and recognise revenue using the percentage-of-completion method. Revenue relating to service contracts is, as previously, recognised over time based on the completion of services, with the client benefiting from such services as they are performed.

Method for measuring progress

With IFRS 15, the method for measuring progress is based on cost. Since the Group was already applying a cost-based percentage-of-completion measurement method (the rate of completion is equal to the ratio between the costs recognised to date and the total estimated costs at the end of the project), the rule now set by IFRS 15 has no impact.

Contract assets and liabilities

New aggregates were created under assets and liabilities of the consolidated statement of financial position.

"Contract assets" and "contract liabilities" are determined on a contract-by-contract basis. "Contract assets" correspond to the share of revenue not yet invoiced to date, less customer advances. Revenue not yet invoiced is the difference between revenue calculated using the percentage-of-completion method to date and the invoices issued. Conversely, when the invoices issued exceed the revenue recognised to date, the net amount is accounted for under deferred income and aggregated with customer advances under "contract liabilities".

1.3.3 Impacts of restatements on the 2017 financial statements

The impacts of all modifications made to the financial statements are described in the following tables:

(in thousands of euros)	31/12/2017 published	IFRS impact 3R AVENAO and INTERSON	31/12/2017 restated
REVENUE	34,807	-	34,807
Capitalised production	3,224	-	3,224
Inventories and work in progress	(287)	-	(287)
Other income from the business	938	-	938
Purchases and external charges	(22,377)	-	(22,377)
Personnel expenses	(17,914)	-	(17,914)
Tax and duties	(540)	-	(540)
Depreciation, amortisation and provisions (net of reversals)	(3,537)	-	(3,537)
Other operating income and expenses	235	-	235
PROFIT (LOSS) FROM CONTINUING OPERATIONS	(5,453)	-	(5,453)
Non-recurring items in operating income	(1,137)	(62)	(1,199)
OPERATING INCOME	(6,590)	(62)	(6,651)
Financial income and expenses	(38)	-	(38)
Income tax	(1,178)	17	(1,160)
Group share of the earnings of affiliated companies	107	-	107
CONSOLIDATED NET INCOME	(7,698)	(44)	(7,742)
INCOME ATTRIBUTABLE TO PARENT COMPANY SHAREHOLDERS	(7,574)	(39)	(7,613)
INCOME ATTRIBUTABLE TO NON-CONTROLLING INTERESTS	(124)	(5)	(130)

		Impact of IFRS
(in thousands of euros)	31/12/2017 published	15 on the financial statements at 1/1/2017	Impact of IFRS 15 over the period	Impact IFRS 3R AVENAO and INTERSON	31/12/2017 restated
NON-CURRENT ASSETS	51,119	-	-	1,842	52,961
Goodwill	34,394	-	-	(4,634)	29,760
Other intangible assets	7,512	-	-	6,542	14,054
Property, plant and equipment	6,700	-	-	-	6,700
Investments in affiliated companies	1,504	-	-	-	1,504
Other financial assets	273	-	-	-	273
Deferred tax assets	736	-	-	(66)	670
CURRENT ASSETS	63,885	-	-	-	63,885
Net inventories	5,669	(1,359)	412	-	4,722
Net trade receivables	11,849	(680)	(181)	-	10,989
Contract assets	-	2,038	(231)	-	1,806
Other current assets	3,678	-	-	-	3,678
Tax receivables payable	1,182	-	-	-	1,182
Other current financial assets	31	-	-	-	31
Cash and cash equivalents	41,476	-	-	-	41,476
ASSETS HELD FOR SALE	-	-	-	-	-
TOTAL ASSETS	115,004	-	-	1,842	116,846

(in thousands of euros)	31/12/2017 published	Impact of IFRS 15 on the financial statements at 1/1/2017	Impact of IFRS 15 over the period	Impact IFRS 3R AVENAO and INTERSON	31/12/2017 restated
EQUITY ATTRIBUTABLE TO OWNERS OF THE PARENT	86,344	-	-	(39)	86,306
NON-CONTROLLING INTERESTS	408	-	-	115	522
NON-CURRENT LIABILITIES	5,140	-	-	1,766	6,906
Long-term provisions	836	-	-	-	836
Long-term liabilities – portion due in more than one year	3,183	-	-	-	3,183
Other financial liabilities	889	-	-	-	889
Deferred tax liabilities	232	-	-	1,766	1,998
CURRENT LIABILITIES	23,112	-	-	-	23,112
Short-term provisions	210	-	-	-	210
Long-term liabilities – portion due in less than one year	1,582	-	-	-	1,582
Operating payables	8,476	-	-	-	8,476
Contract liabilities	-	653	700	-	1,353
Other current liabilities	12,767	(653)	(700)	-	11,414
Tax liabilities payable	77	-	-	-	77
LIABILITIES HELD FOR SALE	-	-	-	-	-
TOTAL LIABILITIES	115,004	-	-	1,842	116,846

Note 2 Scope of consolidation

2.1 Accounting principles related to the consolidation scope

2.1.1 Consolidation method

The companies that are either directly or indirectly controlled by the Group are fully consolidated. Companies over which the Group exercises significant influence are accounted for using the equity method. Significant influence is assumed to exist when the Group holds more than 20% of the voting rights.

Acquisitions or disposals of companies during the year are recognised in the consolidated financial statements from the date on which the Group took direct or indirect control or gained significant influence (or until the date on which control or significant influence was lost).

All significant transactions between consolidated subsidiaries are eliminated, as is income that is internal to the Group (capital gains, profits on stocks and dividends).

Consolidation is carried out with reference to the financial statements or positions as of 31 December.

The list of consolidated subsidiaries and equity interests is shown in Note 13. Certain subsidiaries, which are not significant in terms of the Group, may not be consolidated.

2.1.2 Translation of the financial statements of foreign companies

The currency in which the consolidated financial statements are prepared is the euro.

The financial statements of subsidiaries that have a different functional currency are translated into euros using:

• z the official exchange rate on the reporting date, in the case of assets and liabilities;
• z the average exchange rate for the year, in the case of income statement and cash flow statement items.

The average exchange rates for the year may be calculated using monthly exchange rates prorated in relation to revenue.

Translation differences arising from the application of these exchange rates are recognised under the item "Cumulative translation reserves" in consolidated equity.

2.1.3 Transactions in foreign currencies

Transactions in foreign currencies are recognised using the exchange rate applicable on the date the transactions are recognised or the hedging rate. At closing, payables or receivables denominated in foreign currencies are converted into euros at the closing exchange rate or at the hedging rate. Currency exchange rate differences on foreign currency transactions are recognised in financial income.

2.1.4 Business combinations

The Group is applying, on an advance basis, the revised IFRS 3 standard – Business combinations.

Business combinations are recognised in accordance with the acquisition method:

z the cost of an acquisition is evaluated at the fair value of the consideration transferred, including any price adjustment, at the date of taking control. Any subsequent variation in the fair value of a price adjustment is recognised in the income statement or in other items of the overall net income, in accordance with the standards applicable;

z the difference between the consideration transferred and the fair value of the identifiable assets acquired and liabilities taken over as at the date of taking control represents the goodwill, recognised in the assets in the report on the financial position.

Adjustments to the fair value of identifiable assets acquired and liabilities taken over recognised on a provisional basis (as a result of expert assessment work in progress or additional analyses) are recognised as retrospective adjustments to the goodwill if they occur within a period of one year with effect from the date of acquisition and if they result from facts or circumstances existing at the date of acquisition. Beyond this deadline, the effects are recognised directly in the income statement, as are any changes in estimates or error corrections.

For each takeover of control which involves the taking of an equity stake of less than 100%, the interest fraction which is not required (equity stakes which do not give control) is valued:

• z either at fair value, in which case goodwill is recognised for the proportion relating to equity stakes which do not give control (complete goodwill method);
• z or at its proportion of the net identifiable assets of the acquired entity, in which case only goodwill in respect of the proportion acquired is recognised (partial goodwill method).

The costs directly attributable to the acquisition are recognised in expenses over the period during which they are incurred.

2.2 Changes in the consolidation scope

2.2.1 Transactions carried out in 2018

Changes in scope over the year are as follows:

• z the takeover of the company VARIA 3D, which was previously held at only 45% and consolidated by the equity method; the Company has been fully consolidated from the second quarter of 2018 and contributed €0.4 million to revenue and -€62 thousand to the Group's net profit/loss (not including the proportionate share of profit/loss accounted for by the equity method from the beginning of the year). Goodwill was recognised in the financial statements;
• z the acquisition by PRODWAYS GROUP of 100% of the capital of SOLIDSCAPE, a company specialised in 3D printing machines, which is developing a technology for precision casting applications. Integration into the consolidated financial statements from mid-July 2018 contributed €3.8 million to revenue and -€383 thousand to the Group's net income.

SOLIDSCAPE only prepared its financial statements according to U.S. standards. Financial statements according to IFRS standards were prepared on entry into the consolidation scope. In the first half-year, under U.S. standards, SOLIDSCAPE had revenue of €5.0 million and a net loss of -€691 thousand. The Group did not reconstitute the accounts under IFRS for the first half-year and considers that this would require a disproportionate effort in relation to the expected precision of information.

The fair valuations of the assets, liabilities and contingent liabilities acquired in 2017 from AVENAO and INTERSON PROTAC are finalised; they were adjusted from the prior financial statements (see Note 1.3).

The assets and liabilities of companies acquired during the period are still being valued.

The fair value assessment of the assets, liabilities and contingent liabilities of companies acquired during the period has not been finalised, and may be subject to adjustments over the 12 months following the acquisition date.

2.2.2 Contribution of business combinations

First consolidation of SOLIDSCAPE

The assets and liabilities acquired break down as follows:

(in thousands of euros)	Carrying amount	Revaluation at fair	value First consolidation
Intangible assets	49	-	49
Property, plant and equipment and financial assets	711	-	711
Inventories	1,308	-	1,308
trade receivables	843	-	843
Social and tax receivables	5	-	5
Prepaid expenses	76	-	76
Cash and cash equivalents	2,842	-	2,842
Trade payables	(246)	-	(246)
Tax and operating debt	(719)	-	(719)
Deferred income	(576)	-	(576)
TOTAL	4,292	-	4,292

First consolidation of VARIA 3D

The assets and liabilities acquired break down as follows:

(in thousands of euros)	Revaluation at fair Carrying amount value First consolidation
Property, plant and equipment	783	-	783
Inventories	70	-	70
Trade and other receivables	106	-	106
Cash and cash equivalents	46	-	46
Financial debt	(619)	-	(619)
Trade and other payables	(35)	-	(35)
TOTAL	351	-	351

2.3 Off-balance sheet commitments related to the consolidation scope

In the first quarter of 2015, PRODWAYS acquired the assets of NORGE Systems. The transaction was carried out with the payment of a fixed part of the price and three price additions conditional on the achievement of milestones in the further development of the 3D printer created by NORGE. A price addition of €200 thousand was paid in February 2017. A potential earn-out was shown in the Group's debts in 2017 for €200 thousand, but the milestones that should have triggered its payment before the end of January 2019 was not achieved, so the debt was cancelled by recognising a profit.

In 2107, PRODWAYS GROUP acquired 75% of the shares comprising the share capital of IP GESTION SAS, which was itself the sole shareholder of INTERSON PROTAC. The vendors granted an assets and liabilities guarantee with a term of three years. This guarantee is capped at €733 thousand in the first eighteen months after which it will be reduced to €367 thousand for the following eighteen months. The Group did not call the guarantee.

In 2017, PRODWAYS GROUP acquired all of the shares comprising the share capital of AS3D, 3D SERVICAD, and AVENAO INDUSTRIE. The vendors granted an assets and liabilities guarantee with a term of two to three years depending on the nature of any claim. This guarantee is capped at €2,000 thousand. The Group did not call the guarantee.

In 2018, PRODWAYS GROUP acquired all shares making up the share capital of SOLIDSCAPE. The vendors granted an assets and liabilities guarantee with duration of 18 months to 8 years depending on the nature of any claim. This guarantee is limited to \$1 million or the acquisition price according to the nature of the claims. The Group did not call the guarantee.

In PODO 3D, CRISTAL and IP GESTION, PRODWAYS GROUP is associated with minority shareholders who are managers of those companies. Shareholders' agreements provide for the possible liquidity of their holdings.

Note 3 Segment information

In accordance with the provisions of the IFRS 8 standard – Operating segments, the segment information presented below is based on the internal reporting used by the General Management to assess the performances and allocate resources to the various segments. The General Management is the principal operational decision maker within the meaning of IFRS 8.

The three sectors adopted correspond to the organisation of the Group by divisions and are the following:

• z "Systems" division: PRODWAYS, PRODWAYS AMERICAS, PRODWAYS MATERIALS, DELTAMED, EXCELTEC, PRODWAYS RAPID ADDITIVE FORGING, GROUPE AVENAO and SOLIDSCAPE;
• z "Products" division: INITIAL, CRISTAL, PODO 3D, PRODWAYS CONSEIL, INTERSON PROTAC, VARIA 3D and DENTOSMILE;
• z "STRUCTURE" division: PRODWAYS GROUP (and the companies with no activity, PRODWAYS DISTRIBUTION, PRODWAYS ENTREPRENEURS and PRODWAYS 2).

The key indicators by division presented in the tables below are the following:

• z the backlog, which corresponds to the revenue remaining to recognise for orders that have been taken;
• z the revenue includes revenue made with other divisions;
• z operating income;
• z the Research and Development expenses recognised in the assets during the financial year;
• z the other tangible and intangible investments;
• z the segment assets which describe the current assets used within the operational businesses (stocks, receivables, advances from suppliers, other operating debtors), the property, plant and equipment and intangible assets (including the goodwill);
• z segment liabilities refer to supplier and other operating liabilities, accrued liabilities, customer advances, warranty provisions and costs related to goods and services sold.

Key non-IFRS financial indicators examined by Group management are also presented:

• z EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortisation) which corresponds to profit (loss) from continuing operations before depreciation, amortisation, impairments and other non-recurring income and items;
• z profit (loss) from continuing operations;

EBITDA and profit (loss) from continuing operations are not IFRS financial aggregates and may not be comparable to indicators of a similar name used by other companies.

These non-IFRS indicators are defined and reconciled with operating income in Note 3.2.1.

3.1		Key indicators by division
-----	--	----------------------------

2018 Financial year

(in thousands of euros)	Systems	Products	Structure	Disposals	Consolidated
Backlog beginning of period	3,873	988	-	(23)	4,838
Backlog end of period	7,068	591	-	(166)	7,493
Revenue	38,404	22,859	1,702	(2,070)	60,895
EBITDA	1,110	526	(443)	-	1,194
% of revenue	2.9%	2.3%	-26.0%	-	2.0%
Profit (loss) from continuing operations	(2,100)	(1,443)	(404)	-	(3,947)
% of revenue	-5.5%	-6.3%	-23.7%	-	-6.5%
Operating income	(2,847)	(1,517)	(653)	-	(5,016)
% of revenue	-7.4%	-6.6%	-38.4%	-	-8.2%
Research and development expenses capitalised over the period	1,526	60	-	-	1,586
Other property, plant and equipment and intangible investments	902	3,499	85	-	4,486
Segment assets	60,921	24,698	2,959	(2,909)	85,669
Assets segment liabilities	15,183	5,606	1,116	(2,845)	19,060

2017 financial year*

(in thousands of euros)	Systems	Products	Structure	Disposals	Consolidated
Backlog beginning of period	2,556	449	-	(25)	2,980
Backlog end of period	3,873	988	-	(23)	4,838
Revenue	17,393	17,825	901	(1,312)	34,807
EBITDA	(1,554)	841	(456)	-	(1,169)
% of revenue	-8.9%	4.7%	-50.6%	-	-3.4%
Profit (loss) from continuing operations	(3,678)	(572)	(1,204)	-	(5,453)
% of revenue	-21.1%	-3.2%	-133.6%	-	-15.7%
Operating income	(4,665)	(603)	(1,384)	-	(6,651)
% of revenue	-26.8%	-3.4%	-153.6%	-	-19.1%
Research and development expenses capitalised over the period	1,731	204	-	-	1,935
Other property, plant and equipment and intangible investments	1,555	1,337	-	-	2,892
Segment assets	49,725	21,429	2,361	(1,574)	71,941
Assets segment liabilities	12,088	5,098	928	(1,575)	16,539

* 2017 is restated for the elements detailed in Note 1.3.

3.2 Reconciliations with Group data

3.2.1 Reconciliation of EBITDA with operating income

Operating income includes all income and expenses other than:

• z interest income and expenses;
• z other financial income and expenses;
• z Group share of net income of equity-accounted companies;
• z corporate income tax.

To make it easier to compare financial years and monitor its operating performance, the Group has decided to isolate non-recurring items of operating income and present "profit (loss) from continuing operations". It also uses an EBITDA indicator:

z non-recurring items of operating income include restructuring costs, recognised or fully provisioned if they are liabilities arising from a Group obligation to third parties, which stem from a decision taken by a competent body, and which materialise before the reporting date through the announcement of said decision to third parties and provided the Group no longer expects consideration for these costs. These costs consist primarily of compensation for termination of employment contracts, severance pay, as well as miscellaneous expenses. Other non-recurring items of operating income concern the acquisition costs of companies, amortisation of acquired intangible assets recorded under business combinations, impairment of goodwill, expenses related to the allocation of free shares and all unusual items by their occurrence or amount;

z EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortisation) is defined by the Group as profit (loss) from continuing operations before depreciation, amortisation, impairment, expenses related to the allocation of free shares and other non-recurring operating items.

2018 Financial year

(in thousands of euros)	Systems	Products	Structure	Consolidated
EBITDA	1,110	526	(443)	1,194
Payments in shares	-	(6)	46	40
Depreciation, amortisation and provisions	(3,211)	(1,963)	(8)	(5,181)
PROFIT (LOSS) FROM CONTINUING OPERATIONS	(2,100)	(1,443)	(404)	(3,947)
Restructuring costs	(133)	-	-	(133)
Acquisition costs	-	-	(249)	(249)
Amortisation of intangible assets recognised at fair value during the acquisitions	(505)	(74)	-	(579)
Exceptional provisions for impairment of asset values	(109)	-	-	(109)
TOTAL NON-RECURRING ITEMS	(746)	(74)	(249)	(1,069)
OPERATING INCOME	(2,847)	(1,517)	(653)	(5,016)

2017 financial year*

(in thousands of euros)	Systems	Products	Structure	Consolidated
EBITDA	(1,554)	841	(456)	(1,169)
Payments in shares	-	(6)	(741)	(747)
Depreciation, amortisation and provisions	(2,124)	(1,406)	(7)	(3,537)
PROFIT (LOSS) FROM CONTINUING OPERATIONS	(3,678)	(572)	(1,204)	(5,453)
Restructuring costs	(151)	-	14	(138)
Acquisition costs			(194)	(194)
Amortisation of intangible assets recognised at fair value during the acquisitions	(353)	(31)	-	(384)
Exceptional provisions for impairment of asset values	(483)	-	-	(483)
TOTAL NON-RECURRING ITEMS	(987)	(31)	(181)	(1,199)
OPERATING INCOME	(4,665)	(603)	(1,384)	(6,651)

* 2017 is restated for the elements detailed in Note 1.3.

3.2.2 Reconciliation of the segment assets and liabilities

The total segment assets and liabilities are reconciled as follows with the total assets and liabilities of the Group:

2018 Financial year

(in thousands of euros)	Systems	Products	Structure	Disposals Consolidated
Segment assets	60,921	24,698	2,959	(2,909)	85,669
Deferred tax assets	-	60	-	-	60
Tax receivables payable	728	398	636	-	1,762
Other current and non-current assets	1,661	601	17,483	(17,998)	1,747
Cash and cash equivalents	8,456	2,039	15,431	-	25,927
TOTAL CONSOLIDATED ASSETS	71,767	27,795	36,510	(20,907)	115,165
Assets segment liabilities	15,183	5,606	1,116	(2,845)	19,060
Long-term provisions	193	659	11	-	863
Long-term debt	1,415	5,320	-	-	6,734
Other current financial liabilities	-	-	930	-	930
Other current and non-current liabilities	16,629	3,168	3,015	(18,062)	4,750
Deferred tax liabilities	1,862	35	(459)	-	1,438
Tax liabilities payable	73	-	-	-	73
TOTAL CONSOLIDATED LIABILITIES(1)	35,354	14,789	4,613	(20,907)	33,849

(1) Total liabilities less shareholders' equity and non-controlling interests.

2017 financial year*

(in thousands of euros)	Systems	Products	Structure	Disposals	Consolidated
Segment assets	49,725	21,429	2,361	(1,574)	71,941
Other current financial assets	-	-	31	-	31
Deferred tax assets	16	337	316	-	670
Tax receivables payable	840	343	-	-	1,182
Other current and non-current assets	1,106	431	9,381	(9,372)	1,546
Cash and cash equivalents	4,750	2,919	33,807	-	41,476
TOTAL CONSOLIDATED ASSETS	56,437	25,458	45,895	(10,946)	116,846
Assets segment liabilities	12,088	5,098	928	(1,575)	16,539
Long-term provisions	142	688	6	-	836
Long-term debt	1,679	3,087	-	-	4,766
Other current financial liabilities	-	-	889	-	889
Other current and non-current liabilities	12,521	1,762	2	(9,370)	4,914
Deferred tax liabilities	1,875	123	-	-	1,998
Tax liabilities payable	64	13	-	-	77
TOTAL CONSOLIDATED LIABILITIES(1)	28,367	10,770	1,826	(10,946)	30,018

(1) Total liabilities less shareholders' equity and non-controlling interests.

* 2017 is restated for the elements detailed in Note 1.3.

3.3 Revenue by geographical area

2018 Financial year

(in thousands of euros)	France	%	Europe	%	North America	%	Other	%	Total	%
SYSTEMS	22,765	54%	8,571	74%	5,445	93%	1,662	99%	38,404	63%
PRODUCTS	19,472	47%	2,980	26%	389	7%	19	1%	22,859	38%
Structure and disposals	(368)	-1%	-	-	-	-	-	-	(368)	-1%
TOTAL	41,869	100%	11,551	100%	5,834	100%	1,641	100%	60,895	100%
%	69%		19%		9%		3%		100%

2017 financial year

(in thousands of euros)	France	%	Europe	%	North America	%	Other	%	Total	%
SYSTEMS	7,039	32%	7,038	72%	2,819	100%	497	98%	17,393	50%
PRODUCTS	15,049	69%	2,763	28%	-	0%	13	2%	17,825	51%
Structure and disposals	(411)	-2%	-	-	-	-	-	-	(411)	-1%
TOTAL	21,678	100%	9,800	100%	2,819	100%	509	100%	34,807	100%
%	62%		28%		8%		1%		100%

Note 4 Operational data

4.1 Recognition of income and revenue

The "Systems" division manufactures and sells different types of 3D printers and associated materials and distributes and integrates 3D design software. The "Products" division prints 3D parts on demand for its customers. It develops and markets healthcare applications (chiropody, dental, audiology) sold directly to healthcare professionals.

The Group now applies IFRS 15 regarding the recognition of revenue from contracts with customers. Its revenues consist of sales of goods, provision of services and project completion revenues. The circumstances under which revenue may be recognised in progress, the method to measure progress and the treatment of elements of variable consideration in contracts are described in Note 1.3.

The backlog corresponds to the amount of customer contracts for which revenue has not yet been recognised. The Group expects the December 2018 backlog to be consumed within 12 months.

The Group's revenue grew strongly in five years, going from €5.0 million in 2014 (pro forma integrating PRODWAYS) to €17.8 million in 2015, €25.2 million in 2016, €34.8 million in 2017 and €60.9 million in 2018. This trend is partly associated with acquisitions.

4.2 Other income from the business

The other income from the business mainly comprises public subsidies, research tax credits (RTC) and tax credits for competitiveness and employment (TCCE).

These subsidies and research tax credits (RTC), which partially or totally cover the cost of an asset, are recognised in the income statement at the same rate as the asset's depreciation. In 2018, the research tax credit for the period stood at €0.3 million, all of it recognised directly as deferred income. The research tax credit recorded as deferred income in previous years was also recognised in the income statement in 2018 for €0.7 million.

The deferred income that appears in liabilities includes €1,287 thousand in research tax credits.

(in thousands of euros)	2018	2017
Subsidies	26	56
Research tax credit	696	525
Employment and competitiveness tax credit	445	357
TOTAL OF OTHER INCOME FROM THE BUSINESS	1,166	938

Tax credits recognised in income which cannot be charged to tax payable appear mainly in assets in the consolidated balance sheet under "other current assets", more specifically under "receivables related to tax consolidation" for the years before 2017 and under "income tax receivables" for 2017 and 2018. They amount to €2,572 thousand, including a research tax credit of €1,772 thousand and an employment and competitiveness tax credit of €800 thousand.

4.3 Net charges to amortisation and provisions

(in thousands of euros)	2018	2017
DEPRECIATION, AMORTISATION AND PROVISIONS
Intangible assets	(1,980)	(1,337)
Property, plant and equipment	(2,010)	(1,425)
Capital leases	(600)	(524)
SUBTOTAL	(4,590)	(3,286)
CHARGES TO PROVISIONS, NET OF REVERSALS
Inventory and work in progress	(76)	-
Current assets	(216)	(132)
Liabilities and expenses	(300)	(119)
SUBTOTAL	(592)	(251)
TOTAL NET CHARGES TO AMORTISATION AND PROVISIONS	(5,181)	(3,537)

4.4 Inventories and work in progress

Inventories of raw materials and semi-finished and finished goods are valued at the lower of their acquisition cost or their estimated net realisable value. The cost price is calculated using the FIFO or weighted average cost method.

The methods for valuing and impairing work in progress are tailored to the context of each consolidated company. However, the valuation principles generally accepted in the field are followed, including:

• z work in progress is valued at direct and indirect production costs, excluding all sales and financial costs;
• z hourly production rates are based on normal activity excluding any sub-activity cost;
• z when, based on the forecast revenue and cost estimates, a termination loss is probable, said loss is covered by an impairment provision for the portion included in work in progress and a provision for liabilities and expenses for the part of the costs yet to be committed.

Movements in inventories in the consolidated balance sheet are as follows:

	2018		2017*
(in thousands of euros)	Gross values	Impairment losses	Net values	Gross values	Impairment losses	Net values
Raw materials	2,696	(172)	2,524	1,357	-	1,357
Semi-finished and finished	1,923	(126)	1,797	1,253	(513)	740
Goods	2,564	(192)	2,371	2,881	(256)	2,625
TOTAL INVENTORY AND-WORK IN PROGRESS	7,183	(490)	6,693	5,492	(769)	4,722

* Column 2017 restated for the elements detailed in Note 1.3.

Over the period, impairments were recognised for €76 thousand in the income statement.

4.5 Customers, contract assets and liabilities

The backlog (revenue to be recognised) is indicated by division in Note 3.1. Trade receivables are receivables invoiced that give certain entitlement to payment.

(in thousands of euros)	2018	2017*
trade receivables	14,535	11,857
Impairment losses	(1,143)	(865)
CUSTOMERS, NET VALUES	13,391	10,989

* Column 2017 restated for the elements detailed in Note 1.3.

Trade receivables are impaired according the IFRS 9 simplified the receivable and its impairment are transferred to losses in the approach. As soon as they arise, trade receivables would be income statement. impaired for their expected losses over their remaining term. Credit risk assessment of trade receivables is carried out for each customer. Provisions for expected losses are thus assessed by using the default history of comparable customers, the aged balance of the receivables and the Group's assessment of credit risk for each receivable. When it is certain that the receivable will not be collected,

The risk of customer default is the main credit risk to which the Group is exposed. The Group has implemented a policy of monitoring its credit risk at all of its subsidiaries.

Overdue trade receivables for which there is no provision were €4.6 million, and are broken down as follows:

Overdue (in thousands of euros)	2018	In %
Trade receivables not yet due	8,803	66%
<1 month overdue	2,798	21%
1-2 months overdue	886	7%
2-3 months overdue	280	2%
>3 months overdue	624	5%
NET TRADE RECEIVABLES	13,391	100%

Of the total receivables, almost €1.9 million has been paid as at 10 March 2019. The Group is not aware of additional difficulties which might justify a provision.

recognised to date). These new items arise from the application of contract-by-contract basis. "Contract assets" correspond to contracts IFRS 15 (see Note 1.3). in force for which the value of created assets exceeds the advances

received. "Contract liabilities" correspond to all contracts in a situation where the assets (work in progress, receivables in progress) are less than the liabilities (advances from clients and deferred income recorded when the invoices issued exceed the revenue "Contract assets" and "contract liabilities" are determined on a

(in thousands of euros)	2018	2017*
Work in progress (A)	885	946
Receivables in progress (B)	1,316	860
Down payments received (C)	-	-
Deferred income (D)	-	-
ASSETS FROM CONTRACTS (A) + (B) - (C) - (D)	2,202	1,806

* Column 2017 restated for the elements detailed in Note 1.3.

(in thousands of euros)	2018	2017*
Work in progress (A)	-	-
Receivables in progress (B)	-	-
Down payments received (C)	1,665	629
Deferred income (D)	1,534	724
Other liabilities (E)	-	-
LIABILITIES FROM CONTRACTS (A) + (B) - (C) - (D) - (E)	3,199	1,353

* Column 2017 restated for the elements detailed in Note 1.3.

4.6 Other current and non-current assets

2018			2017
(in thousands of euros)	Gross values	Write-downs	Net values	Net values
Advances and down-payments made	133	-	133	197
Other receivables(1)	1,160	-	1,160	1,258
Social and tax receivables	1,093	-	1,093	1,936
Prepaid expenses	587	-	587	288
TOTAL OTHER CURRENT RECEIVABLES	2,973	-	2,973	3,678

(1) Of which €1,018 thousand corresponding to receivables related to tax consolidation for which GROUPE GORGÉ was the parent company. GROUPE GORGÉ will refund these tax receivables to PRODWAYS once it has received its own payment from the French finance ministry.

4.7 Other current and non-current liabilities

(in thousands of euros)	2018	2017*
Suppliers	8,594	8,444
Fixed asset suppliers	355	32
TOTAL TRADE PAYABLES	8,949	8,476
Advances and down-payments received	1	-
Social Security liabilities	4,755	4,817
Tax liabilities	2,122	1,714
Current accounts payable	-	-
Miscellaneous debts	3,103	3,187
Deferred income	1,292	1,695
TOTAL OTHER CURRENT LIABILITIES	11,274	11,414

* Column 2017 restated for the elements detailed in Note 1.3.

Trade payables are paid on their normal due dates, provided the services from the suppliers are fully completed and in the absence of litigation. Deferred income corresponds to subsidies and research tax credits that will be recognised in profit/loss as the corresponding assets are depreciated (€1,287 thousand, see Note 4.2).

4.8 Off-balance sheet commitments related to operations

The operating lease commitments that will be restated on 1 January 2019 for the application of IFRS 16 break down as follows:

(in millions of euros)	Less than 1 years old	From 1 to 5 years	More than 5 years	TOTAL
Real estate rentals	1.13	2.52	1.09	4.75
Movable property rentals	0.34	0.30	0.02	0.66
TOTAL RENTAL COMMITMENTS	1.47	2.83	1.11	5.41

No other commitment has been given related to operating activities that are not included in the Group's debts.

Note 5 Employee expenses and benefits

5.1 Workforce

	31/12/2018	31/12/2017
Workforce at end of period	460	375
Average workforce	425	284

The workforce is mainly based in France; at 31 December 2018, 104 people were based abroad.

5.2 Employee expenses and benefits

The employee benefits are estimated in accordance with the revised IAS 19. They are broken down between short term and long term benefits.

The employees of the Group receive short term benefits such as holiday pay, sickness pay, bonuses and other benefits (other than contract termination payments) payable within the 12 months following the end of the period during which the employees provided the corresponding services.

These benefits are recognised in current liabilities and recorded in the expenses in the year in which the service is provided by the employee.

The long term benefits cover two categories of employee benefit:

• z the benefits subsequent to employment, which include the allowance paid on retirement;
• z the other long term benefits (during employment), which mainly concern long service awards.

The various benefits offered to each employee depend on the local legislation and the conventions and agreements in effect in each Group company.

Employee expenses include the following items:

(in thousands of euros)	2018	2017
Salaries and benefits	(19,136)	(12,444)
Social security contributions	(6,517)	(4,557)
Payments in shares	40	(747)
Profit sharing and incentive schemes	-	-
Other	(390)	(166)
TOTAL	(26,002)	(17,914)

5.3 Provisions for pensions and similar commitments

The Group makes provisions for post-employment benefits (retirement pay) and long term employee benefit plans (awards). The cost of retirement and related benefits (awards) is provisioned for the remaining obligations. It is estimated for the entire workforce on the basis of accrued rights and a projection of current salaries, taking into account the risk of mortality, staff turnover and a discounting assumption.

The discount rates are determined by reference to the yields on bonds issued by first class corporations over terms equivalent to those of the commitments on the date of valuation.

Actuarial variances are generated where differences are recorded between the actual data and the forecasts made previously, or due to changes in actuarial assumptions. The actuarial variances generated are recognised in the overall income statement, net of deferred taxes.

The expense recognised in the income statement includes:

• z the costs of services provided during the financial year, the cost of past services, as well as any effects of any reduction or liquidation of the scheme;
• z the net interest expense on bonds and hedging assets.

The provision for claims is updated annually on the basis of the prevailing fee schedules, changes to the assessment base, staff turnover and mortality assumptions and discount rates.

The main parameters used for the year are as follows:

• z departure at the employee's initiative (voluntary departure);
• z calculation of compensation under the collective agreement in force in each of the companies (SYNTEC);
• z assumed retirement age 67;
• z IBOXX discount rate in the euro zone 1.58%;
• z loading rate 50%;
• z turnover deferred from one entity to another according to the type of activity, seniority and the average age of personnel;
• z average wage revaluation rate 2.4%, including inflation;
• z INSEE mortality table 2013-2015.

Change in the obligation (in thousands of euros)	2018	2017
OPENING PROVISION	836	547
Cost of services provided for the period	106	96
Interest on discounting	17	11
Cost of services provided	-	-
First consolidation/(Deconsolidation)	-	250
Profit/Loss relating to liquidation or curtailment	(104)	(13)
Actuarial losses/(gains) generated on the obligation	8	(56)
Benefits paid	-	-
CLOSING PROVISION	863	836

With respect to retirement and other post-employment benefits, a 0.5 point increase in the discount rate would reduce the amount of the obligation by approximately €84 thousand. An equivalent reduction would increase the obligation by €94 thousand.

Certain employees of the Group receive a remuneration in equity statement. instruments, for which the payment is based on shares. The costs of the free share award schemes, share subscription warrants or options are recognised in employee costs. This expense, which corresponds to the fair value of the instrument issued, is spread over the vesting period for the rights, counterbalanced by a corresponding adjustment to the shareholders' equity. The Group periodically re-examines the

5.4 Share-based payments number of potential shares. Where applicable, it recognises the consequences of the revision of its estimates in the income

PRODWAYS GROUP set up free share allocation plans in 2016. Under the terms of these plans, the vesting period is at least two years. The vesting of the shares in April 2019 is subject to presence and performance conditions. The potential shares are those that fulfil the required performance conditions.

Free share allocation plans	FSA 02-2016 PRODWAYS GROUP	FSA 12-2016 PRODWAYS GROUP
Initial number of recipients	200	239
Support share	PRODWAYS GROUP	PRODWAYS GROUP
Number of shares allocated	632,200	488,500
Vesting / cancellations over the financial year	0 / 86,460	0 / 208,120
Cumulative vesting / cancellations	0 / 632,200	0 / 226,120
Potential share balance	-	262,380
Date of establishment	February 2016	December 2016
Start of the vesting period	February 2016	December 2016
End of the vesting period	15 April 2017	15 April 2017
End of lock-up period	15 April 2017	15 April 2017
Total expense recognised (in thousands of euros)	-	618
Potential value of the shares (in thousands of euros)	-	705

CRISTAL also set up a stock option plan for the benefit of an executive. At the end of that plan, the capital of the Company may be increased by 27,777 shares and the holding rate of PRODWAYS GROUP may be reduced by up to 90%.

Stock option plan	CRISTAL options
Initial number of recipients	1
Support share	CRISTAL
Potential number of shares	27,777
Options exercised/cancellations for the year	0 / 0
Cumulative options exercised/cancellations	0 / 0
Potential share balance	27,777
Date of establishment	December 2016
Subscription price per share	1 euro
Start of the subscription period	July 2020
End of the subscription period	June 2021
Potential value of the shares (in thousands of euros)	28

5.5 Remuneration of the Directors and related parties

5.5.1 Directors' remuneration

The members of PRODWAYS GROUP's Board of Directors did not receive any attendance fees.

The Chairman is remunerated by PRODWAYS GROUP and by the controlling companies GROUPE GORGÉ and PÉLICAN VENTURE, itself related to GROUPE GORGÉ by a service provision agreement. In 2018, PÉLICAN VENTURE paid him gross overall remuneration of €79,600 (€49,600 of fixed remuneration and €30,000 of variable remuneration), as well as €9,964 of benefits in kind. GROUPE GORGÉ paid total gross remuneration of €97, 000 (€59,400 in fixed remuneration, €27,600 in variable remuneration for 2017, and €10,000 in attendance fees for GROUPE GORGÉS' Board of Directors). PRODWAYS GROUP paid him gross overall remuneration of €75,000 (€75,000 of fixed remuneration). The variable remuneration of the Chairman for 2018 has not yet been determined by the meetings of the Boards of Directors of GROUPE GORGÉ and PRODWAYS GROUP on the approval date of the financial statements of PRODWAYS GROUP.

A Director of PRODWAYS GROUP became Chief Executive Officer in October 2018. He was remunerated in 2018 by GROUPE GORGÉ until November 2018, and then by PRODWAYS GROUP. GROUPE GORGÉ paid him overall gross remuneration of €189,641 (€118,758 in remuneration, €60,000 in variable remuneration for 2017 and for 2018, and €10,383 of benefits in kind). PRODWAYS GROUP paid him gross overall remuneration of €16,667 (fixed remuneration).

5.5.2 Related parties

Related parties are persons (Directors, managers of PRODWAYS GROUP or of its principal subsidiaries) or companies owned or managed by such persons (except for subsidiaries of PRODWAYS GROUP). The following transactions with related parties conducted during the year have been identified in the PRODWAYS GROUP financial statements:

2018 Financial year

(in thousands of euros)	GROUPE GORGÉ	GROUPE GORGÉ's subsidiaries	CBG CONSEIL
INCOME STATEMENT
Revenue	4	145	-
Other income	1	3	-
Purchases and external charges	(609)	(1,329)	(31)
Financial result	-	-	-
BALANCE SHEET
Trade accounts receivable	5	46	-
Deposits and guarantees	7	-	-
Debtors	1,018	-	-
Prepaid expenses	-	-	-
Suppliers	67	207	-
Creditors	-	-	-
Deposits and guarantees received	-	-	-

GROUPE GORGÉ is PRODWAYS GROUP's main shareholder. The Director of GROUPE GORGÉ and married to Raphaël GORGÉ. Her Company's Chairman is Raphaël GORGÉ who is also PRODWAYS company CBG CONSEIL performs services for the PRODWAYS GROUP's Chairman. CBG CONSEIL belongs to Catherine GORGÉ, GROUP. Pursuant to 2018, she invoiced €31 thousand excluding tax a Director of PRODWAYS GROUP since May 2017. She is also a and had no claims on the Group at the reporting date.

Note 6 Property, plant and equipment and intangible assets

6.1 Goodwill

Goodwill is initially recognised at the time of a combination of businesses as described in Note 2.1.

Goodwill corresponds to the difference between the cost of an acquisition and the fair value of the Group's share in the identifiable net assets acquired. Positive differences are recognised under "Goodwill" on the assets side of the balance sheet, while negative differences are recognised directly in the income statement. The goodwill is assigned to one of the Cash Generating Units (CGU). The essential elements of the business are treated in the same way as goodwill. The profit/loss on disposal of the activity of a CGU takes into account the goodwill related to the transferred activity based on the relative values of the activity transferred and the share of the CGU retained.

Goodwill may be adjusted in the 12 months following the acquisition date to reflect the final calculation of the fair value of the assets and liabilities acquired. Subsequent to their initial recognition, they are not amortised but are the subject of an impairment test on the appearance of indications of loss of value, and at least once a year. The impairment test procedures carried out in 2017 and 2018 are described in Note 6.4.

Net value (in thousands of euros)	2018	2017*
At 1 January	29,760	18,560
Acquisitions	-	-
Changes in scope(1)	8,123	11,200
Departures	-	-
Other changes	-	-
At 31 December	37,883	29,760
Of which depreciation at 31 December	-	-
Systems	74%	69%
Products	26%	31%

* Column 2017 restated for the elements detailed in Note 1.3.

(1) First-time consolidations break down as follows: in 2017, INTERSON PROTAC (€1,126 thousand) and AVENAO (€10,074 thousand); in 2018, VARIA 3D (€690 thousand) and SOLIDSCAPE (€7,433 thousand).

6.2 Other intangible assets

Intangible assets acquired separately are recognised in the balance sheet at their acquisition cost. They are subsequently measured at amortised cost, as recommended by IAS 38 – Intangible Assets. Intangible assets acquired in a business combination are recognised in the balance sheet at their fair value, determined on the basis of external valuations. These valuations are performed using generally accepted methods, based on future inflows. The value of intangible assets is tested on a regular basis for impairment.

Intangible assets are amortised on a straight-line basis over their useful life, taking into account the period of legal protection, if applicable.

The value of amortised intangible assets is tested when there is any indication that their recoverable amount may be less than their carrying amount. Any impairment resulting from these valuation tests is recognised in non-current items of operating income.

Fixed assets generated internally, concerning mainly expenses for development of new projects. They are capitalised where the following criteria are strictly fulfilled:

• z the technical feasibility necessary for the completion of the intangible assets with a view to its commissioning or its sale;
• z the intention to complete the intangible assets and to commission it or to sell it;
• z the capacity to use or sell the intangible assets;
• z the way in which the intangible assets will generate probable future economic benefits. The entity must demonstrate, among other things, the existence of a market for the production from the intangible assets or for the intangible assets itself or, if the latter has to be used internally, its utility;
• z the availability of technical, financial and other resources necessary to complete the development and to commission or sell the intangible assets;
• z the capacity to reliably estimate the expenses attributable to the intangible assets during its development.

Development costs that do not meet these criteria are expensed in the period in which they are incurred. This is notably the case for research and development work that may be carried out in connection with customer orders where the costs cannot be separated from the costs involved in fulfilling the order.

Capitalised development projects are depreciated over the lifetime of the underlying technology, generally between 3 and 15 years from their date of completion.

3

(in thousands of euros)	Development projects	Other intangible assets	Total
Gross value
At 1 January 2018 *	9,130	10,284	19,413
Acquisitions	1,586	180	1,766
Changes in scope	-	74	74
Departures	-	(652)	(652)
Other changes	-	1	1
Impact of changes in exchange rates	(1)	1	-
At 31 December 2018	10,715	9,889	20,603
Depreciation and amortisation, and impairment
At 1 January 2018 *	3,161	2,198	5,359
Depreciation and amortisation	2,032	528	2,559
Changes in scope	-	25	25
Impairment losses	-	-	-
Departures	-	(651)	(651)
Other changes	-	(9)	(9)
Impact of changes in exchange rates	-	-	-
At 31 December 2018	5,193	2,091	7,283
Net value
At 1 January 2018 *	5,968	8,086	14,054
AT 31 DECEMBER 2018	5,522	7,798	13,320

* Data at 1 January 2018 restated for the elements detailed in Note 1.3.

Other intangible assets include intangibles relative to the customer relationship (€1,399 thousand, including €1,758 thousand of gross value and 359 of amortisation) recognised during the consolidation of DELTAMED and INTERSON-PROTAC as well as €5,673 thousand (€5,934 thousand of gross value and €213 thousand of amortisation) relative to the contract binding AVENAO to DASSAULT SYSTEMES.

The Group makes major investments in research and development to maintain and further develop its competitive edge. The Group files patent applications when necessary to protect patentable technical, technological and commercial breakthroughs.

The Group's research and development has been primarily focused on the following areas over the past three years:

• z improving the DLP® MOVINGLight® polymerisation technology, with the development of a new generation of machines for which the first model (LD 10), more specifically dedicated to dental applications, has been marketed since the end of 2017 and has been highly commercially successful. A variant with even greater productivity (LD20) has been marketed since the end of 2018;
• z developing Norge technology and fine-tuning a 3D printer using selective laser sintering of plastic powders (launch of the P1000, an entry-level laser sintering manufacturing machine, in late 2016);
• z developing new additive manufacturing printing materials in the photosensitive resin and plastic polymer powders families. The goal of these developments are to create high-performance materials in terms of mechanical properties (strength and elasticity) and physical and aesthetic properties (colour and transparency) and stability over time (for liquid and viscous resins for polymerisation and for plastic powders for laser sintering);
• z developing a digital impression process for feet (Podoclic and now its new version Podostep), an orthopaedic insole design, and an order and 3D printing tracking software system for these orthopaedic insoles.

R&D work in progress pertains primarily to the following three areas:

• z 3D metal printing processes, in particular Rapid Additive Forging (RAF) technology which is used for 3D printing of large metal parts. After finalising a first prototype using RAF in collaboration with an aerospace partner, two new machines were ordered, confirming the merits of this technology;
• z New materials in both plastic powders and photosensitive resins;
• z the next generations of 3D printers, with productivity that is constantly improved and a wide range of fields of application, with optimised integration into the design chain for manufacturing objects using 3D printing in the medical field;
• z the continuation of developments of the SCIENTIFEET solution (solution for the design and manufacture of orthopaedic insoles) and the finalisation of new products for hearing aids or hearing

protection following the acquisition of INTERSON-PROTAC in 2017, followed by the companies Surdifuse and Embout Français at the beginning of 2019;

z the development of new printers dedicated to high-precision casting, and more specifically, to jewellery, following the takeover in mid-2018 of Solidscape in the United States, the recognised leader in this market.

R&D expenditure amounted to some €3.31 million in 2018. The R&D expenditures evolved as follows:

(in millions of euros)	2018	2017
Capitalised research and development	1.59	1.93
Research and development recognised as an expense	1.73	-
TOTAL R&D EXPENDITURE	3.31	1.93
Total research and development as % of revenue	5.4%	5.6%
Research tax credit for the financial year	0.29	0.65
Research and development net of tax credits	3.02	1.28

To finance its investments, the Group systematically seeks external financing (Bpifrance, FUI, Europe, Regions, etc.) and uses the research tax credit. All subsidiaries of the Group obtained research tax credits for a total of €0.3 million, the total of which is recognised in deferred income and will contribute to future profit/loss.

R&D expenditure is virtually solely internal costs and it is very rare that R&D work is sub-contracted.

6.3 Property, plant and equipment

Property, plant and equipment primarily comprises land, buildings and production equipment, and is recognised at purchase cost, less accumulated depreciation and any impairment losses, as recommended by IAS 16 – Property, Plant and Equipment.

Each component of an item of property, plant and equipment with a useful life that differs from that of the item as a whole, is depreciated separately on a straight-line basis, without taking into account the residual values. The useful lives of items of property, plant and equipment are generally considered to be the following:

• z buildings: 10 to 35 years;
• z technical facilities, equipment and tools: 3 to 10 years;
• z other: 3 to 12 years.

The useful life of items of property, plant and equipment used in operating activities reflect the estimated life cycles of the products. The useful life of items of property, plant and equipment are reviewed periodically, and may be adjusted prospectively, if appropriate.

Depreciation is expensed in the year incurred.

Items of property, plant and equipment are tested for impairment when there is an indication that they may be impaired (see Note 6.4).

Finance leases

Properties used in the framework of a finance lease are capitalised, in consideration of a debt, when the effect of the finance lease is to transfer almost all the risks and benefits of the ownership of the properties to the Group.

Finance leases where the risks and benefits are not transferred to the Group are classified as operating leases. Lease payments under operating leases are recognised as an expense on a straight-line basis over the term of the lease.

3

(in thousands of euros)	Land and buildings	Fixtures and equipment	Equipment held under finance lease	Non-current assets in progress	Total
Gross value
At 1 January 2018	837	11,393	3,452	433	16,115
Acquisitions	62	3,428	668	148	4,306
Changes in scope	230	3,081	-	112	3,423
Departures	-	(784)	-	-	(784)
Other changes	-	344	-	(430)	(86)
Impact of changes in exchange rates	4	105	-	1	110
At 31 December 2018	1,133	17,568	4,120	264	23,085
Depreciation and amortisation, and impairment
At 1 January 2018	329	7,155	1,932	-	9,415
Depreciation and amortisation	92	2,033	600	-	2,725
Changes in scope	133	1,813	-	-	1,946
Impairment losses	-	(115)	-	-	(115)
Departures	-	(374)	-	-	(374)
Other changes	3	3	-	-	6
Impact of changes in exchange rates	2	37	-	-	39
At 31 December 2018	559	10,552	2,531	-	13,643
Net value
At 1 January 2018	509	4,238	1,520	433	6,700
AT 31 DECEMBER 2018	573	7,016	1,588	264	9,442

6.4 Value impairments on non-current assets

Open-ended non-current assets are not amortised and are tested for impairment at each reporting date. These assets consist of goodwill. Goodwill impairment losses are irreversible.

Amortised property, plant and equipment and intangible assets are tested for impairment when, due to special events or circumstances, the probability of recovering their carrying amount comes into question. The appearance of impairment factors specific to certain assets other than goodwill and specifically R&D assets may be related either to internal factors (e.g. changes in the assessment of management's ability to bring an R&D project to conclusion) or external events (e.g. a changing commercial outlook). The sum of these factors influences management's appraisal, asset by asset, of whether or not there are any future economic benefits or what those future economic benefits are. For non-current assets that are impaired, the possible recovery of the impairment is reviewed on each reporting date.

For the purposes of measuring impairment, assets are then grouped into cash-generating units (CGUs), which represent the lowest level of unit generating separate cash flow.

Impairment is accounted for to match the surplus of the carrying amount over the recoverable amount of a CGU. In the absence of market value, the recoverable amount of a CGU is its value after tax, calculated using discounted future cash flow method.

The main CGUs in the Group's current configuration and organisation are the two existing "Systems" and "Products" divisions.

Process for the impairment tests

At 31 December 2018, impairment tests on all property, plant and equipment and intangible assets resulted in impairment losses of €65 thousand on capitalised 3D printers. These impairments are non-current items of the operating income. No impairment of goodwill was observed.

The recoverable value of a CGU is determined using the discounted future cash flow method. The discount rate adopted corresponds to the Weighted Average Cost of Capital (WACC) calculated with the rates of the 10 year OAT (risk-free rate at 0.76%), a market risk premium and a ßeta calculated according to the Company's share price and changes to the ENT Tech 40 index. Flows after taxes are projected conservatively over the forecast period of the relevant activity (five years) and may include a terminal value with a growth assumption of 3%.

The following key operational assumptions are used: we anticipate strong growth in business activity for the SYSTEMS CGU (due to increases in machine sales after enlarging the range, especially smaller machines, and the dissemination of production processes technology). Strong growth in sales of material and services (maintenance) is also forecasted. This growth is linked to the number of installed machines (there is a multiplier effect because each installed machine consumes material and requires regular maintenance). For the PRODUCTS CGU, we are planning to develop our applications, notably for the medical and aeronautical sectors. The assumptions on rates of profitability include the optimisation of production costs and, especially for the SYSTEMS CGU, better absorption of fixed costs. To support this phase of strong growth, a sustained level of R&D investment and working capital requirement was planned and which could be improved.

The discount rates used in 2018 are 11.7% for the SYSTEMS and PRODUCTS CGUs. The tests performed take into account the measurement of the sensitivity of key assumptions (including operational ones) used for calculating the recoverable value (discount rate of +/- 0.5 points, perpetual growth rate of +/- 0.5 points, EBITDA of +/- 0.5 points). These sensitivity measurements are identical for each of the CGUs.

Management does not believe that any reasonably possible change in the key assumptions used to calculate the recoverable value might lead to the carrying amount of a CGU being considerably higher than its recoverable value.

The CGUs and the discount rates used are therefore the following:

CGU	Goodwill	Discount rates used, including risk premiums
SYSTEMS	28,103	11.7%
PRODUCTS	9,780	11.7%
CONSOLIDATED	37,883

Note 7 Details of cash flows

7.1 Calculation of cash flow

(in thousands of euros)	2018	2017*
NET INCOME FROM CONTINUING OPERATIONS	(5,657)	(7,742)
Allowances for/reversals of depreciation, amortisation and provisions	5,367	4,266
Earnings of equity-accounted companies	(118)	(107)
Payments in shares	43	554
Capital gains and losses on disposals	453	127
Other	(74)	(30)
CASH FLOW FROM OPERATING ACTIVITIES (BEFORE ELIMINATION OF NET BORROWING COSTS AND TAXES)	14	(2,933)

* Column 2017 restated for the elements detailed in Note 1.3.

EBITDA is reconciled with the operating cash flow as follows:

(in thousands of euros)	2018	2017*
EBITDA	1,194	(1,169)
Cancellation of capital gains and losses on treasury shares	(74)	(30)
Capital gains and losses on disposals	453	127
Payments in shares	84	(193)
Appropriations and reversals concerning current assets	(291)	(132)
Offsetting of reversals of provisions with an expense	(153)	(13)
Non-recurring items excluding charges and reversals	(440)	(375)
Financial income excluding financial charges and reversals	(76)	13
Corporation tax	(683)	(1,160)
CASH FLOW FROM OPERATING ACTIVITIES (BEFORE ELIMINATION OF NET BORROWING COSTS AND TAXES)	14	(2,933)

7.2 Change in working capital requirements

(in thousands of euros)	Notes	Start of the period*	Changes in scope	Change over the year	Other movements(1)	Currency translation adjustment	Closing
Net inventories		4,722	1,377	567	-	26	6,693
Net receivables		10,989	949	1,432	-)	21	13,391
Contract assets		1,806	-	396	-	-	2,202
Advances and down-payments		197	-	(64)	-	-	133
Prepaid expenses		288	76	223	-	1	587
SUBTOTAL	A	18,002	2,403	2,553	-	48	23,006
Trade payables		8,444	271	(128)	-	6	8,594
Contract liabilities		1,353	575	1,261	-	11	3,199
Advances and down-payments		-	-	1	-	-	1
Deferred income		-	-	5	-	-	5
SUBTOTAL	B	9,797	846	1,140	-	16	11,800
WORKING CAPITAL REQUIREMENT	C = A - B	8,205	1,556	1,414	-	32	11,207
Social and tax receivables		3,118	5	(267)	-	-	2,855
Other receivables		1,289	-	(211)	82	1	1,160
SUBTOTAL	D	4,407	5	(479)	82	1	4,015
Tax and social debts		6,647	725	(439)	-	18	6,951
Accrued interest		-	-	-	-	-	-
Other payables and derivative instruments		4,038	3	(68)	218	19	4,210
Current accounts payable		-	-	-	-	-	-
Deferred income from subsidies and research tax credit		1,695	-	(408)	-	-	1,287
SUBTOTAL	E	12,380	728	(915)	218	36	12,448
OTHER ITEMS OF WORKING CAPITAL REQUIREMENT	F = D - E	(7,973)	(723)	436	(136)	(35)	(8,433)
WORKING CAPITAL REQUIREMENT	G = C + F	232	833	1,849	(136)	(3)	2,774

* Data upon opening restated for elements detailed in Note 1.3.

(1) The "Other changes" column contains cash flows that do not generate cash movements.

7.3 Acquisitions/Disposals of equity holdings

Cash flows from acquisitions are summarised in the table below. In 2018, the Group acquired SOLIDSCAPE and acquired an additional, and controlling, stake in VARIA 3D. In 2017, the Group acquired INTERSON PROTAC and AVENAO.

(in thousands of euros)	2018	2017
Payments	(12,058)	(11,685)
Cash and cash equivalents	2,892	3,205
TOTAL	(9,166)	(8,480)

Note 8 Financing and financial instruments

The financial assets and liabilities consist mainly of the following items:

• z long term financial liabilities, short term loans and bank overdrafts which make up the gross financial debt (see Note 8.1.1);
• z loans and other long term financial assets and the cash and cash equivalents which are added to the gross financial debt to arrive at the net financial debt (see Note 8.1.2);
• z derivative instruments (see Note 8.1.3);
• z other financial assets and liabilities (see Note 8.1.4).

8.1 Financial assets and liabilities

8.1.1 Gross financial debt

Gross financial debt includes long-term financial liabilities, short-term loans and bank overdrafts.

Changes in borrowings and financial debt

Financial liabilities consist primarily of current and non-current financial debt contracted with credit institutions. These liabilities are initially recognised at fair value, from which are deducted, if need be, any directly attributable transaction costs. They are then valued at amortised cost based on their actual interest rate.

INITIAL has subscribed three new loans to finance its investments:

• z in April 2018, two bank loans of €300 thousand and €700 thousand subscribed with Crédit Agricole at fixed rates of 0.15% and 0.55% respectively (amortisable over a 5-year period);
• z in June 2018, a bank loan of €1,350 thousand subscribed with BNP at a fixed rate of 0.57% (repayable over 5 years).

(in thousands of euros)	Finance lease liabilities	Bank borrowings	Other borrowings	Long-term debt	Bank overdrafts	Gross financial debt
At 1 January 2018	1,519	2,722	277	4,518	248	4,766
New finance lease contracts	668	-	-	668	-	668
New bond issuance/subscription	-	2,350	2	2,352	379	2,731
Redemptions	(608)	(1,207)	(52)	(1,867)	(248)	(2,114)
Other changes(1)	-	20	-	20	-	20
First consolidation/(Deconsolidation)	-	449	174	623	(4)	619
Impact of changes in exchange rates	-	32	13	46	-	46
AT 31 DECEMBER 2018	1,579	4,367	414	6,360	374	6,734

(1) Changes with no impact on cash related to effective interest rates and accrued interest on borrowings.

The credit facility of €10 million secured by PRODWAYS GROUP in December 2017 to fund general corporate requirements and acquisitions. The facility is confirmed for €10 million until June 2019 and then on a declining basis for €2.5 million per year until December 2022; no draw-downs were made.

Schedule of borrowings and financial debt

(in thousands of euros)	31/12/2018	<one year	>one year	one to two years	two to three years	three to four years	four to five years	>five years
Finance lease liabilities	1,579	629	950	606	188	134	22	-
Bank borrowings	4,367	1,289	3,078	1,203	1,084	607	183	-
Other borrowings	414	223	191	-	-	-	-	191
LONG-TERM DEBT	6,360	2,141	4,219	1,809	1,272	741	205	191
Bank overdrafts	374	374	-	-	-	-	-	-
GROSS FINANCIAL DEBT	6,734	2,515	4,219	1,809	1,272	741	205	191

The costs attributable to the implementation of loans are amortised over the term of the debt (amortised cost method) based on their true interest rate.

The "other borrowings" include the repayable advances cashed by the Group, notably for COFACE prospection advances. These advances cannot be repaid, or only repaid partially according to the success of the operations on the basis of which they were granted.

8.1.2 Net cash and cash equivalents

Cash and cash equivalents presented in the balance sheet consist of cash in hand, bank accounts, term deposits of no more than three months and marketable securities meeting the criteria in IAS 7.

Accrued interest earned on term accounts is recorded under investment income. A provision for impairment is recognised when the net asset value is less than the acquisition cost.

(in thousands of euros)	2018	2017
Marketable securities and term deposits	2,007	24,504
Cash and cash equivalents	23,919	16,972
GROSS CASH (A)	25,927	41,476
Bank overdrafts (B)	374	248
CASH AND CASH EQUIVALENTS (C) = (A)-(B)	25,552	41,228
Financial debt (D)	6,360	4,518
NET CASH (NET DEBT) (C)-(D)	19,192	36,711
Treasury shares	128	165
NET DEBT CASH, ADJUSTED	19,320	36,876

8.1.3 Derivative financial instruments

Composite financial instruments such as convertible or redeemable bonds are recognised in accordance with IAS 32, i.e. separate posting of the bond component recorded as debt at amortised cost and of the share component recognised as equity (similar to selling a stock purchase option), expenses related to the issue being recognised as equity and debt respectively in proportion to the proceeds of the issue.

In 2015 PRODWAYS GROUP issued 10 million convertible bonds to FIMALAC DEVELOPPEMENT. In the first quarter of 2017, new convertible bonds were issued for a total of €17.67 million, of which €10 million to redeem the 2015 bonds. These bonds were redeemable only as shares and did not have coupons. They were recognised as equity, net of issuance costs, until they were automatically converted to shares when the Company was floated in May 2017.

The Group may use, if it deems it necessary, derivative financial instruments to hedge against foreign exchange or interest rate risks associated with operations. These risks mainly arise from variable rate financing and sales in USD. On initial posting, derivatives are recorded in the balance sheet at their acquisition cost. They are then valued at their fair value calculated on the basis of market prices provided by the relevant financial institutions. The Group applies hedge accounting for foreign exchange transactions according to the criteria defined by IFRS 9. This is macro hedging, with changes in the fair value of the hedging instrument being recognised as income.

A rate cap was taken out in September 2016 to cover the 10 million variable rate loan contracted with LCL. The cap was set at 1%. Due to prepayment of the underlying asset, this hedge was discontinued in the second half of 2017.

IP GESTION' minority shareholders have put options exercisable from 2023. PRODWAYS GROUP has a call option exercisable from 2021. These options have been valued at fair value through equity. The valuation is equivalent to the estimated current value of the option to date, which is itself a multiple of the estimated income of the subsidiary over the period in question.

(in thousands of euros)	Start of the period	In	Income	Equity effect	Other	Closing
INTERSON-PROTAC call option	889	-	-	41	-	930
NON-CURRENT TOTAL	889	-	-	41	-	930

8.1.4 Other non-current financial assets

The new IFRS 9 standard covers three main financial asset classifications, those valued at amortised cost, those valued at fair value through other comprehensive income and those valued at fair value through net income. Financial assets are classified according to the asset's economic holding model and the characteristics of its contractual cash flows.

The application of IFRS 9 did not impact the Group's accounting methods regarding the valuation of assets at amortised cost (loans and receivables) nor the valuation of securities previously recognised at historic cost €92 million).

Net value (in thousands of euros)	2018	2017
Loans	39	51
Deposits and guarantees	380	124
Non-consolidated holdings	92	92
Other long-term investments	5	5
TOTAL OF OTHER FINANCIAL ASSETS	517	273

Investments in affiliated companies

The movements are as follows:

(in thousands of euros)	Start of the period	In	Income	Currency translation adjustment	Exit	Closing
DENTOSMILE	901	-	94	-	-	995
VARIA 3D	603	-	24	-	(627)	-
TOTAL	1,504	-	118	-	(627)	995

8.2 Financial income and expenses

On the one hand, financial income and expenses comprise interest income and expense related to the cost of net financial debt and, on the other hand, financial income and expenses.

Interest expenses correspond to the amount of interest recognised in respect of the financial debts and the interest income to the amount of the interest received from cash investments.

(in thousands of euros)	2018	2017
Interest expense	(139)	(211)
Income from other securities	(16)	(35)
Net income on sales of marketable securities	77	40
Cost of net debt	(78)	(206)
Other interest income	3	113
Net exchange gain or loss	(1)	105
Financial allowances net of reversals	-	(50)
TOTAL FINANCIAL INCOME AND EXPENSES	(76)	(38)

8.3 Policy for the management of risks

8.3.1 Liquidity risk

At 31 December 2018, the Group's net cash amounted to €19.2 million (€25.9 million in cash, minus €6.7 million in financial debt).

The Group has the funding it needs and there are no loans essential to its activity being negotiated. The Group has no bank financing that depends on the Group's rating, and its credit risk is focused on a small number of first rate partners.

The arrangements for repaying the principal loans are as follows:

Loan (in thousands of euros)	Rate	Amount	Outstanding capital	Maturity
LCL	E+0.80%	10,000	-	RCF maturity December 2022, declining basis from June 2019
BNP PARIBAS	0.57%	1,350	1,220	60 monthly payments starting in July 2018
BPI France	0%	1,400	910	20 quarterly instalments from June 2017
CREDIT AGRICOLE	0.55%	700	596	60 monthly payments starting in April 2018
CREDIT AGRICOLE	0.60%	700	440	60 monthly payments starting in February 2017
BNP PARIBAS	0.96%	600	234	60 monthly payments starting in December 2015

The BPIFRANCE loan is guaranteed by GROUPE GORGÉ. It carries a change-of-control clause, as does the revolving credit facility (RCF).

8.3.2 Interest rate risk

Generally, the Group's policy for managing interest rate risk is to examine on a case by case basis credit agreements concluded on the basis of a variable interest rate and to consider, with the help of its external financial advisors, whether it is opportune to use ad hoc financial instruments to hedge, where appropriate, identified rate risks. Excluding short-term placements and bank overdrafts, the Group was exposed to a change in interest rates of €10 million on the LCL variable rate loan taken out in 2016. This risk was covered by a 1% interest rate cap which was discontinued in the second half of 2017 due to prepayment of the underlying asset.

Overdrafts and short-term loans (financing of trading receivables) are concluded at variable rates and therefore expose the Group to fluctuations in interest rates.

8.3.3 Exchange-rate risk

Foreign currency transactions mainly concern the U.S. dollar. The share of foreign currency revenues by Group companies remained limited until 2018 but increased due to the acquisition of SOLIDSCAPE (United States), whose purchases are nevertheless made in US dollars.

The Group's expenditure in dollars remains stable and is financed by an overdraft in dollars and growing sales in dollars. The increased sales in dollars will gradually permit the overdraft to be reduced. Moreover, the Group must develop a more elaborate policy for managing its foreign exchange risk, and will require an assessment of the risk of currency rate changes by the management on the advice of its banks.

(in thousands of euros)	USD
Assets	4,628
Liabilities	1,875
Net position before management	2,754
Off-balance sheet position	-
Net position after management	2,754

A uniform exchange rate with a rise or fall of 1 cent (euro) against the major currencies could have an impact of +/-€24 thousand on the net position, assuming a strict stability of assets and liabilities.

8.3.4 Market risk

PRODWAYS GROUP holds 49,723 treasury shares. These shares were acquired under liquidity contracts or in order to deliver shares when exercising rights attached to securities giving access to capital through redemption, granting stock purchase options to employees, cancelling all or some of the shares thus redeemed, delivering securities in payment or exchange in the framework of external growth transactions, or regulating the share price on the stock market.

The market value of treasury shares at 31 December 2018 was €0.13 million. A uniform change of 10% in share prices could have an impact on equity of €13 thousand compared with the position at 31 December 2018.

The rest of the cash invested by the Group is in money market funds or deposits.

8.4 Off-balance sheet commitments related to the Group's financing

There is no collateral, guarantee or surety at closure of the 2018 financial year other than the pledging of assets to guarantee loans used to finance them.

GROUPE GORGÉ stood as guarantor for Bpifrance for the repayment of the Zero Rate Loan for Innovation (PTZI) taken out by PRODWAYS during the first half of 2015. At the end of 2018, the outstanding amount of this loan was €910 thousand.

PRODWAYS GROUP SA has a renewable credit line of €10 million, confirmed until December 2022. This line reduces by €2.5 million per year from June 2019. It was not used. It has a "change of control" clause and a financial covenant.

Note 9 Corporate income taxes

9.1 Corporate income tax

The tax charge on net income includes the tax payable and the deferred taxes of the consolidated companies.

The taxes related to items recognised directly in other items of total net income are recognised in other items of total net income and not in the income statement.

9.1.1 Details of corporate income tax

Breakdown of tax expense

(in thousands of euros)	2018	2017*
Deferred tax liabilities	(72)	(507)
Taxes payable	(611)	(653)
TAX EXPENSE	(683)	(1,160)

* Column 2017 restated for the elements detailed in Note 1.3.

Tax expense does not include research tax credits, classified as other income (see Notes 4.2 and 9.1.2). It does, however, include CVAE in the amount of €336 thousand in 2018 and €127 thousand in 2017.

Tax receivables and payable

(in thousands of euros)	2018	2017
Tax receivables	1,762	1,182
Tax payable	(73)	(77)
NET TAX RECEIVABLE/(DUE)	1,689	1,105

Tax receivable is mainly made up of research tax credit receivables for (€938 thousand) and CICE receivables for (€616 thousand), which it was not possible to deduct from the tax charge payable.

9.1.2 Analysis of the tax charge

In accordance with standard practice and with IAS 12 and IAS 20, as the research tax credit is neither an element of taxable income, nor computed on the basis of taxable income, and as it is neither a tax liquidation component nor limited to the amount of tax liquidated, it is classified as operating income.

Research tax credits for subsidiaries are recognised in current operating income rather than as a decrease in tax expense if they are not generated by research and development expenses included in the consolidated balance sheet. If they are generated by research and development expenses recognised in the consolidated balance sheet, research tax credits are recognised as deferred income in liabilities and recognised in income at the rate of future amortisation.

3

Contributions on Corporate Added Value (CVAE) are recognised in income tax accounts, this tax being based on value added. The Group's analysis is based in particular on the definition of income tax as defined in IAS 12 and on an IFRIC position from 2006 that states that the term "taxable income" implies a notion of a net rather than a gross amount, although not necessarily identical to the accounting income.

	(5,657)
NET INCOME FROM CONTINUING OPERATIONS		(7,742)
Tax Income/(Expense)	(683)	(1,160)
Earnings of equity-accounted companies	118	107
Earnings before tax	(5,092)	(6,689)
Tax rate	28.00%	33.33%
THEORETICAL TAX CHARGE	1,426	2,229
Reconciliation items
Uncapitalised tax losses incurred for the period	(2,016)	(2,914)
Use of uncapitalised tax losses	46	56
Reassessment of deferred tax assets	(137)	(696)
Differential rates France/Foreign countries and reduced rates	(50)	41
CVAE	(336)	(127)
Tax impact associated with the accounting classification of the value added contribution (CVAE) and tax credits/or tax savings on the CVAE and the theoretical restatement/cancellation on tax
credit	182	255
Other permanent differences	203	(35)
Impact of the tax reform	-	31
ACTUAL NET TAX INCOME (EXPENSE)	(683)	(1,160)

* Column 2017 restated for the elements detailed in Note 1.3.

The tax rate matches the parent company's current rate.

9.2 Deferred tax liabilities

Deferred taxes corresponding to time differences between the taxes and accounting bases of consolidated assets and liabilities are recognised using the liability method. Deferred tax assets are recognised when their future realisation seems likely on a date which can be reasonably determined.

Future income tax breaks arising from the use of tax loss carry-forwards (including unlimited carry-forward) are recognised only when they can be reasonably anticipated.

The main timing differences are related to tax losses carried forward, to provisions for pensions and other similar benefits, to other provisions which are temporarily non tax-deductible and to capitalised development expenses. The deferred tax assets and liabilities are calculated using tax rates which will be in effect at the time of the reversal of the timing differences.

Deferred tax assets and liabilities are not discounted and are offset if they relate to the same taxable entity and have identical repayment maturities.

Breakdown of deferred taxes by type

(in thousands of euros)	2018	2017*
Differences over time
Retirement and related benefits	207	160
Development costs	(58)	(55)
Finance leases	(1)	1
Derivative financial instruments	(10)	(16)
Fair value – IFRS 3 R	(2,449)	(2,535)
Other	59	132
SUBTOTAL	(2,251)	(2,315)
Temporary differences and other restatements	113	91
Deficits carried forward	760	897
TOTAL	(1,378)	1,328
DEFERRED TAX LIABILITIES	(1,438)	(1,998)
DEFERRED TAX ASSETS	60	670

* Column 2017 restated for the elements detailed in Note 1.3.

Deficits carried forward are capitalised due to opportunities for rapid them if it had not transmitted them under the tax consolidation. The posting of these deficits. PRODWAYS GROUP and its eligible Group will therefore be indemnified for the deficits which were subsidiaries formed part of the tax consolidation constituted by transmitted to GROUPE GORGÉ when its result would have GROUPE GORGÉ from 2014 to 2016. Tax consolidation ended allowed the deduction of deficits, if they had not been transmitted when GROUPE GORGÉ's percentage ownership fell below 95% in under the tax consolidation, at the tax rate at that time. The terms of May 2017. The deficits carried forward include those transferred to the agreement remain in force as long as deficits transferred are not GROUPE GORGÉ under the tax consolidation in force between indemnified, thus guaranteeing the Group complete tax neutrality. 2014 and 2016. They amounted to €16 million at 31 December 2018. The tax agreement with GROUPE GORGÉ stipulates that the deficits transmitted will be indemnified, not immediately, but according to the use PRODWAYS GROUP would have made of

Some deferred tax assets resulting from these capitalisations can be charged to tax liabilities because of the net deferred tax liability position of the companies concerned.

UNDERLYING TAX POSITION

Bases(1) (in millions of euros)	2018	2017
Ordinary deficits	33.2	25.6
TOTAL	33.2	25.6

(1) Ordinary tax deficits carried forward including the indemnifiable deficits transmitted to GROUPE GORGÉ, only the non-capitalised part in the consolidated financial statements.

Note 10 Shareholders' equity and earnings per share

10.1 Equity

10.1.1 Capital and issue premiums

As at 31 December 2018, the share capital of PRODWAYS GROUP was €25,407,821.50 consisting of 50,815,643 fully paid-up shares, each with a nominal value of €0.50.

Changes in capital

	Cumulative number of shares	Amount of capital (in euros)
Capital at 31/12/2016	16,896,535	16,896,535
Capital at 31/12/2017	50,815,643	25,407,821.50
Capital at 31/12/2018	50,815,643	25,407,821.50

In May 2017, the share capital was increased when the Company listed on Euronext Paris, Compartment B. A total amount of €66 million was raised (before share issue expenses), taking into account convertible bonds subscribed prior to the capital increase.

In November 2017, the share capital was increased once again to pay for part of the acquisition of AVENAO. The share capital was increased by 992,586 new shares to pay for the contribution of a portion of the shares of AVENAO Solution 3D (AVENAO). The value of the shares contributed was set at €5,995,230.12.

The share premiums represent the difference between the nominal value of the shares issued and the amount, net of costs, of the contributions received by PRODWAYS GROUP at the time of the issues. They amount to €83,787 thousand.

Potential shares

None of the convertible bonds issued by PRODWAYS GROUP remain in circulation.

PRODWAYS GROUP decided on two free share allotment plans (see Note 5.4). Given the cancellations which have occurred, the maximum number of potential shares is 262,380.

10.1.2 Dividend per share

The Company has never paid dividends.

The distributable reserves of the parent company (shareholders' equity excluding share capital and legal reserve) amount to €84,879 thousand, before appropriation of the 2018 net income. They were €84,963 thousand on 31 December 2017.

10.2 Earnings per share

Basic earnings per share are calculated by dividing the Group's net profit attributable to shareholders by the weighted average number of shares outstanding during the year calculated on a pro rata basis, net of treasury shares, in compliance with IAS 33.

Diluted earnings per share is calculated by increasing the weighted average number of shares outstanding that would result from the creation of all potentially dilutive shares in view of the weighted average on a pro rata basis for the number of shares equivalent to shares outstanding during the year. Dilutive instruments are taken into account if and only if their dilutive effect decreases earnings per share or increases loss per share.

	2018	2017*
Weighted average number of shares	50,765,920	44,061,841
EARNINGS PER SHARE (IN EUROS)	(0.107)	(0.173)
EARNINGS PER SHARE FROM ONGOING ACTIVITIES (IN EUROS)	(0.107)	(0.173)
Dilutive potential ordinary shares(1)	262,380	556,960
DILUTED EARNINGS PER SHARE (IN EUROS)	(0.107)	(0.173)
DILUTED EARNINGS PER SHARE FROM ONGOING ACTIVITIES (IN EUROS)	(0.107)	(0.173)

(I) To date, free share allocations are currently the only type of instrument outstanding with a potentially dilutive effect. To the extent that accounting for the dilutive effect of free shares would have decreased loss per share, diluted earnings per share is equal to basic earnings per share for the periods presented.

* Column 2017 restated for the elements detailed in Note 1.3.

10.3 Pledges of the issuer's shares

The Company has no knowledge of any pledges of PRODWAY GROUP shares outstanding at the reporting date.

Note 11 Other provisions and contingent liabilities

The Group recognises a provision if it has an obligation to a third party prior to the reporting date, where the loss or liability is probable and can be reasonably estimated. In cases where such loss or liability is neither probable nor reliably measurable, but still possible, the Group reports a contingent liability in commitments (excluding the posting of contingent liabilities in the event of acquisition). Provisions are estimated on a case by case basis or on a statistical basis.

Provisions are primarily intended to cover:

• z economic risks: these provisions cover tax risks identified during inspections carried out locally by tax authorities and financial risks arising primarily on guarantees given to third parties covering certain assets and liabilities;
• z business risks and contingencies; these provisions comprise:
  • z statistical provisions for guarantees: Group subsidiaries provide for all guarantees which may be given on equipment sales on a statistical basis. Some guarantees may cover 24 months,
• z provisions for termination losses on ongoing projects,
• z provisions for work outstanding on projects already delivered;
• z restructuring costs, if the restructuring was covered by a detailed plan and an announcement or project launch before the reporting date.

In contrast to the foregoing definition of a provision, a potential liability is:

• z a potential obligation resulting from a past event of which the existence will only be confirmed by the occurrence or otherwise of an uncertain event which is not within the control of the Group;
• z a current obligation resulting from a past event for which either the amount of the obligation cannot be reliably estimated or it is unlikely that an outflow of resources representative of economic benefits will be necessary to extinguish the obligation.

As part of business combinations, potential liabilities may be recognised as provisions in accordance with the criteria defined in the IFRS 3R standard.

Provisions (in thousands of euros)	Litigation	Customer warranties	Other	Total
At 1 January 2018	70	28	112	210
Appropriations	60	4	295	359
Provisions used	-	-	(86)	(86)
Reversals	(70)		(25)	(95)
Impact on income for the period	(10)	4	184	178
Changes in scope	-	-	-	-
Other changes	-	-	-	-
Impact of changes in exchange rates	-	-	-	-
AT 31 DECEMBER 2018	60	32	296	388

Note 12 Other notes

12.1 Statutory auditors' fees

The fees invoiced to all Group companies by PRODWAYS GROUP SA's statutory auditors were as follows:

2018 Financial year

(in thousands of euros)		PWC		RSM		TOTAL
Statutory Audits, review of financial statements	83	100%	101	100%	184	100%
z Parent company	54		50		104
z Fully consolidated companies	29		52		81
Services other than certification of the financial statements	-		-	-	-
TOTAL	83	100%	101	100%	184	100%

2017 financial year

(in thousands of euros)		PWC		RSM		TOTAL
Statutory Audits, review of financial statements	64	100%	93	100%	157	100%
z Parent company	39		38		77
z Fully consolidated companies	25		55		80
Services other than certification of the financial statements	-		-		-
TOTAL	64	100%	93	100%	157	100%

12.2 Exceptional events and disputes

The Group is involved in various legal proceedings. After reviewing each case and seeking counsel, the provisions considered necessary have, as applicable, been recorded in the financial statements.

12.3 Subsequent events

On 3 January 2019, PRODWAYS GROUP acquired EMBOUT FRANÇAIS and SURDIFUSE, within its "Products" division.

On 31 January, the Board of Directors of PRODWAYS GROUP approved a new free share allocation plan. Under this plan, there are 802,800 potential shares, subject to continued employment and/or performance conditions concerning the financial years 2019 to 2021.

No other significant event took place between 31 December 2018 and the date on which the Board of Directors approved the consolidated financial statements.

Note 13 List of consolidated companies

	Parent company	% control		% interest		Method
Company	At 31 December 2018	2018	2017	2018	2017	2018	2017
Structure
PRODWAYS GROUP	Consolidating company	Top	Top	Top	Top	FC	FC
PRODWAYS DISTRIBUTION(1)	PRODWAYS GROUP	100	100	100	100	FC	FC
PRODWAYS ENTREPRENEURS	PRODWAYS GROUP	100	100	100	100	FC	FC
PRODWAYS 2(1)	PRODWAYS GROUP	100	100	100	100	FC	FC
Systems
3D SERVICAD	AVENAO SOLUTIONS 3D	100	100	100	100	FC	FC
AVENAO INDUSTRIE	AVENAO SOLUTIONS 3D	100	100	100	100	FC	FC
AVENAO SOLUTIONS 3D	PRODWAYS GROUP	100	100	100	100	FC	FC
DELTAMED (Germany)	PRODWAYS GROUP	100	100	100	100	FC	FC
EXCELTEC	PRODWAYS GROUP	100	100	100	100	FC	FC
PRODWAYS	PRODWAYS GROUP	100	100	100	100	FC	FC
PRODWAYS AMERICAS (USA)	PRODWAYS	100	100	100	100	FC	FC
PRODWAYS MATERIALS (Germany)	DELTAMED	100	100	100	100	FC	FC
PRODWAYS RAPID ADDITIVE FORGING	PRODWAYS GROUP	100	100	100	100	FC	FC
SOLIDSCAPE (USA)(2)	PRODWAYS GROUP	100	-	100	-	FC	-
Products
CRISTAL	PRODWAYS GROUP	95	95	95	95	FC	FC
DENTOSMILE	PRODWAYS ENTREP.	20	20	20	20	EM	EM
INTERSON-PROTAC	IP GESTION	100	100	75	75	FC	FC
INITIAL	PRODWAYS GROUP	100	100	100	100	FC	FC
IP GESTION	PRODWAYS GROUP	75	75	75	75	FC	FC
PODO 3D	PRODWAYS GROUP	82.07	82.07	82.07	82.07	FC	FC
PRODWAYS CONSEIL	PRODWAYS GROUP	90	90	90	90	FC	FC
VARIA 3D (USA)	PRODWAYS GROUP	70	45	70	45	EM FC	EM

(1) Companies with no activities.

(2) Companies acquired in 2018.

3.1.7 Statutory auditors' report on the consolidated financial statements

To the Shareholders,

Opinion

In application of the assignment entrusted to us by your Articles of Association and your shareholders' meeting, we have conducted an audit of the PRODWAYS GROUP consolidated financial statements for the year ended 31 December 2018, appended to this report.

In our opinion, the consolidated financial statements give a true and fair view of the results of operations, financial position and assets and liabilities at year-end, of all of the persons and entities within the scope of consolidation, in accordance with International Financial Reporting Standards as adopted by the European Union.

Basis for the opinion

Audit framework

We conducted our review in accordance with professional standards applicable in France. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Our responsibilities in view of these standards are set out in the section "statutory auditors' responsibilities regarding the audit of the consolidated financial statements" in this report.

Independence

We conducted our audit in accordance with the rules of independence governing our assignments, for the period from 1 January 2018 to the date on which our report was issued; in particular, we did not render any services prohibited by article 5, paragraph 1 of EU Regulation N° 537/2014 or by the Code of ethics governing statutory auditors.

Observation

Without qualifying the above opinion, we draw your attention to Note 1.3 "Restatement of the financial information for prior years" to the consolidated financial statements, outlining the impact of the adoption at 1 January 2018 of the new IFRS 15 "Revenue from Contracts with Customers."

Justification of our assessment - Key audit points

Pursuant to the provisions of articles L.823-9 and R.823-7 of the French Commercial Code on the justification of our assessments, we hereby inform you of the key audit points relating to risks of material misstatements which, in our professional judgement, were most significant for the audit of the consolidated financial statements for the year, as well as our responses to address such risks.

These assessments were made as part of the audit of the consolidated financial statements, taken as a whole, and of the opinion we formed and expressed above. We have not expressed an opinion on individual elements contained in these consolidated financial statements.

Evaluation of the recoverable amount of goodwill

Risk identified

As part of its development, the Group has carried out targeted acquisitions and recognised a certain amount of goodwill.

At 31 December 2018, goodwill recorded on the balance sheet amounted to a net carrying amount of €37.9 million, representing 32.89% of assets. Each year, management ensures that goodwill is not carried at more than its recoverable amount by performing impairment tests. For the purposes of these tests, goodwill acquired through a business combination is allocated to the cash generating units (CGUs) that would benefit from synergies.

Determining the net recoverable amount of each CGU relies on discounted future cash flow projections and requires management to exercise significant judgement, specifically with respect to preparing forecasts and the discount and long-term growth rates to adopt.

In light of the foregoing, we considered the recoverable amount of goodwill to be a key audit point, given the proportion of goodwill on the balance sheet and the inherent uncertainty linked to certain factors, such as the likelihood of forecasts used to determine the recoverable amount actually materialising.

Our response

We carried out a critical review of the methods used by management to analyse impairment indicators and perform impairment testing. Our work consisted in:

• z taking due note of the PRODWAYS GROUP's process for preparing estimates and assumptions used as part of the impairment tests;
• z verifying that the discounted future cash flow projections used to determine the value in use of the cash generating units (CGUs) tested corresponds to those generated by elements comprising the carrying amount of the CGUs;
• z assessing the appropriateness of assumptions used, in particular cash flow projections, the discount rate and long-term growth rate, via a comparison with past performance and external analyses available on the market context;
• z reviewing the tests carried out by management on the sensitivity of the recoverable amount of the CGUs to a reasonable change in the discount or long-term growth rates.

Finally, we assessed the appropriateness of information provided in Note 6.4 to the consolidated financial statements.

Specific verifications

In accordance with professional standards applicable in France, we have also carried out specific verifications of the information and data relating to the Group presented in the Board of Directors' management report.

We have no matters to report as to its fair presentation and its consistency with the consolidated financial statements.

Information resulting from other legal and regulatory obligations

Appointment of statutory auditors

We were appointed statutory auditors of PRODWAYS GROUP by the Articles of Association of 13 March 2014, for RSM Paris and by your shareholders' meeting of 5 May 2017 for PricewaterhouseCoopers Audit.

At 31 December 2018, RSM Paris was in the 5th year of its assignment without interruption, and PricewaterhouseCoopers Audit in its 2nd year, and two years for each firm since the Company's securities were admitted for trading on a regulated market.

Responsibilities of management and those in charge of corporate governance in relation to the consolidated financial statements

It is management's responsibility to prepare fair and accurate consolidated financial statements in accordance with IFRS as adopted in the European Union, and to implement the internal control procedures that it deems necessary for the preparation of consolidated financial statements free of any material misstatements, whether resulting from fraud or errors.

In preparing the consolidated financial statements, it management's responsibility to assess the Company's ability to continue as a going concern, to present, where relevant, the necessary information relating to the going concern, and to apply the going concern principle of accounting, unless there are plans to liquidate or cease the Company's activity.

These consolidated financial statements have been approved by the Board of Directors.

Responsibilities of the statutory auditors in relation to the audit of the consolidated financial statements Audit objective and approach

We are tasked with preparing a report on the consolidated financial statements. Our aim is to obtain reasonable assurance that the consolidated financial statements, taken as a whole, do not include any material misstatements. Reasonable assurance means a high level of assurance, however without any guarantee that an audit conducted in accordance with professional standards will systematically detect any material misstatement. Misstatements may be the result of fraud or errors, and are considered material when, individually or combined, they can be reasonably expected to impact economic decisions taken based on the financial statements.

As set out in article L.823-10-1 of the French Commercial Code, our assignment to certify the financial statements does not involve guaranteeing the sustainability or quality of the management of your company.

As part of an audit conducted in accordance with professional standards applicable in France, the Statutory Auditor exercise their professional judgement throughout the entire audit.

Furthermore:

• z identifies and assesses the risk of material misstatement in the consolidated financial statements, whether the result of fraud or errors, defines and implements audit procedures to address such risks, and gathers adequate and appropriate information on which to form an opinion. The risk of not detecting a material misstatement resulting from fraud is higher than that of a material misstatement resulting from an error, given that fraud may imply collusion, falsification, wilful omissions, false statements or the circumvention of internal control;
• z takes note of internal control processes relevant to the audit, in order to define suitable audit procedures, and not for the purpose of expressing an opinion on the effectiveness of such internal control;
• z assesses the appropriateness of the accounting methods adopted and the soundness of accounting estimates made by management, as well as information concerning them provided in the consolidated financial statements;
• z assesses the appropriateness of management's application of the going concern principle and, based on the information obtained, whether there is significant uncertainty with regard to events or circumstances that could jeopardise the Company's ability to continue as a going concern. This assessment is founded on information obtained up until the date of the report, it being specified, however, that subsequent circumstances or events may jeopardise business continuity. If the auditor identifies significant uncertainty, they highlight such uncertainty in their report by drawing readers' attention to the corresponding information presented in the consolidated financial statements, or, if this information has not been provided or is not relevant, issues certification with reserves or a refusal to certify;
• z assesses the overall presentation of the consolidated financial statements and determines whether they provide a true and fair reflection of the underlying transactions and events;
• z regarding financial information of persons or entities included in the consolidation scope, gathers adequate and appropriate information on which to form an opinion. The auditor is responsible for the management, supervision and completion of the audit of the consolidated financial statements, as well as the opinion issued on these financial statements.

Neuilly-sur-Seine and Paris, 11 April 2019 The statutory auditors

PRICEWATERHOUSECOOPERS AUDIT David Clairotte

RSM Paris Stéphane Marie

3.2 SEPARATE FINANCIAL STATEMENTS 2018

3.2.1 Income statement

(in thousands of euros)	2018	2017
REVENUE	1,702.1	901.1
Reversals of provisions, expense transfers and other income	32.6	22.4
TOTAL OPERATING INCOME	1,734.7	923.5
Other purchases and external charges	1,648.7	1,108.1
Taxes and similar payments	8.8	7.4
Payroll expense	717.6	554.9
DEPRECIATION, AMORTISATION AND PROVISIONS:
non-current assets	3.4	2.6
current assets	-	-
Other expenses	-	-
TOTAL OPERATING EXPENSES	2,378.5	1,673.0
OPERATING RESULTS (A)	(643.8)	(749.5)
FINANCIAL INCOME (B)	2,582.4	1,464.9
INCOME FROM CONTINUING OPERATIONS BEFORE TAX (C) = (A)+(B)	1,938.6	715.4
NON-RECURRING INCOME (D)	-	118.0
Income tax (E)	810.7	-
NET INCOME (F) = (C)+(D)+(E)	2,749.3	833.4

3.2.2 Balance sheet

ASSETS

		2017
(in thousands of euros)	Gross	Dep., Amort. & provisions	Net
Intangible assets	80.0	0.6	79.4	-
Property, plant and equipment	12.0	7.0	5.0	2.8
Equity securities	80,394.7	-	80,394.7	65,265.2
Receivables related to shareholdings	-	-	-	-
Other long-term investments	230.7	-	230.7	3.9
NON-CURRENT ASSETS	80,717.4	7.6	80,709.8	65,271.9
Net trade receivables and related accounts	2,434.1	-	2,434.1	1,454.6
Other trade receivables	18,417.4	-	18,417.4	10,636.6
Cash and cash equivalents	15,574.6	19.8	15,554.8	33,997.6
CURRENT ASSETS	36,426.1	19.8	36,406.3	46,088.8
Prepaid expenses	9.6	-	9.6	6.1
TOTAL ASSETS	117,153.1	27.4	117,125.7	111,366.8

LIABILITIES AND SHAREHOLDERS' EQUITY

(in thousands of euros)	2018	2017
Share capital	25,407.8	25,407.8
Share premiums	83,786.8	83,786.8
Legal reserve	833.4	-
Other reserves	-	-
Retained earnings	343.2	343.2
Income (loss) for the period	2,749.3	833.4
EQUITY	113,120.5	110,371.2
PROVISIONS FOR RISKS AND CHARGES		-
Bonds	-	-
Bank borrowings	-	-
Other borrowings	-	2.3
Suppliers	365.2	648.5
Tax and social debts	625.5	344.8
Other liabilities	3,014.5	-
TOTAL DEBT	4,005.2	995.6
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	117,125.7	111,366.8

3.2.3 Change in cash and cash equivalents

(in thousands of euros)	2018	2017
NET INCOME	2,749.3	833.4
Accruals	3.4	2.6
Capital gains and losses on disposals	-	-
Other	-	-
CASH FLOW FROM OPERATING ACTIVITIES	2,752.7	836.0
Change in working capital requirements	(8,824.2)	(10,727.6)
NET CASH FLOW FROM OPERATING ACTIVITIES (A)	(6,071.5)	(9,891.6)
Investing activities
Payments/acquisition of intangible assets	(80.0)	-
Payments/acquisition of property, plant and equipment	(5.0)	-
Proceeds/disposal of property, plant and equipment and intangible assets	-	-
Payments/acquisition of long-term investments	(12,286.3)	(10,690.2)
Proceeds/disposal of long-term investments	-	0.2
NET CASH FLOW FROM INVESTING ACTIVITIES (B)	(12,371.3)	(10,690.0)
Financing activities
Capital increase or contributions	-	62,482.1
Dividends paid	-	-
Proceeds from borrowings	-	-
Repayment of borrowings	-	(10,000.0)
Change in other debt	-	(377.4)
NET CASH FLOW FROM FINANCING ACTIVITIES (C)	-	52,104.7
CHANGE IN CASH AND CASH EQUIVALENTS (D = A + B + C)	(18,442.8)	31,523.1
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR	33,997.6	2,474.5
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR	15,554.7	33,997.6

PRODWAYS GROUP - 2018 ANNUAL REPORT 105

3.2.4 Notes to the parent company financial statements

NOTE 1	Accounting principles	107	NOTE 5	Notes to the balance sheet	109
NOTE 2	Significant events of the year	107	5.1 5.2	Non-current assets Statement of operating and other receivables	109 110
NOTE 3	Notes to the income statement	107	5.3 5.4	Equity Net debt	110 111
3.1	Operating income	107	5.5	Operating payables and other liabilities	111
3.2	Operating expenses	107
3.3	statutory auditors' fees	107	NOTE 6	Transactions with affiliate companies
3.4	Directors' remuneration	107		and related parties	111
3.5	Financial result	108
3.6	Income tax	108	NOTE 7	Off-balance sheet commitments	112
NOTE 4	Notes to the cash flow statement	109	7.1	Off-balance sheet commitments related to ordinary activities	112
4.1	Cash flows from operating activities	109	7.2	Complex commitments	112
4.2	Cash flows from investing activities	109	7.3	Commitments received	112
4.3	Cash flows from financing activities	109	7.4	Financial covenants	112
			7.5	Pledges, guarantees and sureties	112
			NOTE 8	Subsidiaries and equity interests	113
			NOTE 9	Other information	114

The notes, tables and comments referenced below in the list of contents to the Notes are an integral part of the annual financial statements. The financial year covers the 12 months from 1 January to 31 December 2018.

The financial statement (balance sheet, income statement) presented is as follows:

z the net balance sheet total for the year ended 31 December 2018 is €117,125,636.83;

z the income statement presented in list form shows a profit of €2,749,344.25.

The Board of Directors approved the separate financial statements of PRODWAYS GROUP on 1 April 2019. They are subject to the approval of the shareholders' meeting of 7 June 2019.

Note 1 Accounting principles

The separate financial statements were prepared in accordance with the French Commercial Code, the accounting decree of 29 November 1983 and Regulation 2014-03 issued by the ANC (French accounting standards Board) on the revised French GAAP, as amended by ANC regulations 2016-06, 2016-07, 2017-01 and 2018-07, applicable at year-end, with the following assumptions:

• z going concern;
• z consistency of accounting methods;
• z separateness of accounting periods.

The recommendations of the Autorité des normes comptables (French accounting standards authority), the Ordre des experts comptables

Note 2 Significant events of the year

2017 was marked by the initial public offering of PRODWAYS GROUP in May 2017 and the acquisitions of IP GESTION and its wholly-owned subsidiary INTERSON PROTAC in the audiology sector, and the AVENAO Group, an integrator of software for 3D design, simulation and optimisation.

(French association of chartered accountants) and the Compagnie nationale des Commissaires aux comptes (French national institution of statutory auditors) have been applied.

The basic method used to value items in the financial statements is the historical cost method.

Generally accepted accounting principles have been applied in accordance with French legislation in effect on the reporting date.

The accounting rules and methods applied are identical to those used in the previous financial year.

In April 2018, PRODWAYS GROUP increased its stake in the share capital of VARIA 3D in the United States, which specialises in the

In July 2018, PRODWAYS GROUP acquired 100% of the share capital of SOLIDSCAPE, a major player in 3D printing, specialised in

machines for high-precision casting, particularly in jewellery.

Note 3 Notes to the income statement

3.1 Operating income

PRODWAYS GROUP had revenue of €1,702.1 thousand in the form of services invoiced to its subsidiaries, including €140.1 thousand exported.

3.2 Operating expenses

Operating expenses were €2,378.5 thousand, consisting primarily of:

• z services of €609 thousand invoiced by GROUPE GORGÉ, the main shareholder;
• z fees of €760 thousand;
• z personnel expenses of €718 thousand;
• z travel expenses of €136 thousand

Average workforce over the financial year is broken down as follows:

	2018	2017
Average workforce employed	3	2
of which executives and higher professional positions	3	2
of which technicians and supervisors	-	-

3.3 statutory auditors' fees

design and manufacture of parts on demand.

The fees for PRODWAYS GROUP's statutory auditors in 2018 were €103 thousand.

3.4 Directors' remuneration

The members of PRODWAYS GROUP's Board of Directors did not receive any attendance fees.

The corporate officers received gross overall remuneration of €92 thousand (fixed remuneration of Raphaël GORGÉ and Olivier STREBELLE) during the 2018 financial year. Olivier STREBELLE was only remunerated by the Company from December 2018. Previously, he was remunerated by GROUPE GORGÉ, the controlling company of PRODWAYS GROUP. Raphaël GORGÉ was only remunerated by the Company from April 2018. He is also remunerated by GROUPE GORGÉ.

3.5 Financial result

(in thousands of euros)	2018	2017
Investment income(1)	2,462.5	1,495.4
Net income from financial investments and interest on current accounts	267.6	83.9
Interest expense	(138.6)	(103.7)
FINANCIAL INCOME BEFORE PROVISIONS	2,591.5 1,475.6
Reversals of provisions for impairment	10.7	-
Provisions for impairment	(19.8)	(10.7)
FINANCIAL RESULT	2,582.4 1,464.9

3.6 Income tax

Since 1 January 2017, PRODWAYS GROUP and its subsidiaries are no longer included in the tax consolidation group constituted by GROUPE GORGÉ. The losses transferred by these companies (€16,419 thousand in total) could be compensated, depending on their use.

(1) Investment income consists of dividends received in 2018 from subsidiaries IP GESTION, AS3D and INITIAL.

From 1 January 2018, PRODWAYS GROUP SA has been solely liable for income tax as head of the tax consolidation group formed by itself and the following subsidiaries:

Company	Date of entry
PRODWAYS	1 January 2018
PRODWAYS ENTREPRENEURS	1 January 2018
PRODWAYS DISTRIBUTION	1 January 2018
INITIAL	1 January 2018
EXCELTEC	1 January 2018
PRODWAYS RAPID ADDITIVE FORGING	1 January 2018
PRODWAYS 2	1 January 2018
3D SERVICAD	1 January 2018
AVENAO SOLUTIONS 3D	1 January 2018
AVENAO INDUSTRIE	1 January 2018

At 31 December 2018, the taxable income of the consolidated group is a loss carryforward of €5,596 thousand. Income resulting from the tax consolidation of €811 thousand was recognised.

Note 4 Notes to the cash flow statement

4.1 Cash flows from operating activities

Change in working capital requirements amounted to -€8,824.1 thousand. This requirement is explained in particular by the increase in net outstandings of subsidiaries' current accounts of €7,349.5 thousand (including the tax integration current accounts for €175.0 thousand). The €1,076.0 thousand increase in trade receivables is completes this explanation.

4.2 Cash flows from investing activities

In 2018, PRODWAYS GROUP acquired shares of VARIA 3D to become the majority shareholder and acquired SOLIDSCAPE. The Company also had a €2 thousand equity investment in the creation of the property investment company SCI CHAVANOD, to acquire a building to accommodate the Group's companies. The total paid for these transactions was €12,059.5 thousand. Added to this amount is the payment of deposits and guarantees for €226.8 thousand.

In 2017, PRODWAYS GROUP acquired IP Gestion and AS3D. The total paid for these transactions was €10,685.7 thousand. The Company also provided 90% of the share capital, i.e. €4.5 thousand, to create PRODWAYS CONSEIL.

4.3 Cash flows from financing activities

No financing transactions were carried out during the financial year 2018.

As a reminder, PRODWAYS GROUP had its initial public offering on the Euronext Paris Compartment B in May 2017 (its information document was filed with the French Financial Markets Authority on 23 March 2017 under number I. 17-008 and its prospectus was authorised by the AMF on 25 April 2017 under number 17–174). A total amount of €62,482 thousand was raised (after share issue expenses), taking into account convertible bonds subscribed prior to the capital increase.

In 2016, PRODWAYS GROUP took out a €10 million bank loan repayable in four annual instalments from 2019.

This loan was fully paid off in September 2017 following the capital increase in May 2017 undertaken to avoid interest charges. At the same time a credit facility for the same amount was taken out with the same institution allowing drawdowns at any time. The amount authorised under this credit facility will decline by a quarter from 2019 according to the same schedule as the annual instalments on the initial loan.

Note 5 Notes to the balance sheet

5.1 Non-current assets

Equity securities are recognised on the balance sheet at their acquisition cost less any necessary estimated impairment.

An impairment may be recognised based on the value after tax of the securities, which represents the acceptable value payable to acquire the securities. Value after tax is estimated according to the value of the share of equity of the relevant entities at year-end as well as their income and short-term earnings outlook. This involves using cash flow projections or any other method.

Gross values (in thousands of euros)	Start of the period	Increase	Decrease	End of period
INTANGIBLE ASSETS
Industrial know-how	-	80.0	-	80.0
PROPERTY, PLANT AND EQUIPMENT
Office and computer equipment	7.0	5.0	-	12.0
LONG-TERM INVESTMENTS
Equity securities	65,265.2	15,129.6	-	80,394.8
Loans	-	-	-	-
Other long-term investments	3.9	226.8	-	230.7
TOTAL	65,276.1	15,441.4	-	80,717.5

The main increases in the financial year were as follows (in thousands of euros):

• z acquisition of the balance of 25% of VARIA 3D shares: 332.0;
• z acquisition of 100% of SOLIDSCAPE: 11,725.6;
• z share capital increase PRODWAYS RAPID ADDITIVE FORGING: 570.0 by capitalisation of receivables;
• z earn-out on the AVENAO Group: 2,500.0 not disbursed on 31/12/2018;
• z investment in SCI Chavanod at its creation €2,000.

5.2 Statement of operating and other receivables

Maturity of receivables

(in thousands of euros)	Gross amount	Due within 1 year	Due in more than 1 year
Loans	-	-	-
Receivables related to shareholdings	-	-	-
Other long-term investments	230.7	-	230.7
Other trade receivables	2,434.1	2,434.1	-
Social Security and other organisations	4.9	4.9	-
State and other government authorities:
z income tax	635.8	-	635.8
z value-added tax	113.0	113.0	-
Group and associated companies	17,663.7	-	17,663.7
Other receivables	-	-	-
Prepaid expenses	9.6	9.6	-
TOTAL	21,091.8	2,561.6	18,530.2

The item "Group and associated companies" includes current account advances granted to subsidiaries, as well as compensation for tax on subsidiaries, related to the tax integration within the Group.

Accrued income: none.

5.3 Equity

5.3.1 Change in equity

(in thousands of euros)	Beginning of period	Capital increase or decrease	Appropriation of income	Payment of dividends End of period
Capital	25,407.8	-	-	- 25,407.8
Share premiums	83,786.8	-	-	- 83,786.8
Legal reserve	-	-	833.4	- 833.4
Other reserves	-	-	-	- -
Retained earnings	343.2	-	-	- 343.2
N-1 income	833.4	-	(833.4)	- -
TOTAL	110,371.2	-	-	- 110,371.2
Income (loss) for the period				2,749.3
TOTAL EQUITY AT END OF PERIOD				113,120.5

At 31 December 2018, the share capital of PRODWAYS GROUP was made up of 50,815,643 shares at a par value of €0.5 amounting to €25,407,821.50.

5.3.2 Potential shares

linked to presence conditions. In February and December 2016, PRODWAYS GROUP issued free share allocation plans for Group employees. Each employee present

was allocated at least 200 potential shares in February and December. The vesting of these shares is subject to the Group achieving its performance targets and on continued employment with the Group. Given cancellations already made, these two plans together represent a total of 262,380 potential shares, now only

5.4 Net debt

5.4.1 Available cash

Where applicable, marketable securities are recognised on the balance sheet at their acquisition cost. Accrued interest earned on term accounts is recorded under investment income. A provision for impairment is recognised when the net asset value is less than the acquisition cost.

The "Cash and cash equivalents" line on the assets side of the balance sheet, with a net value of €15,554.8 thousand at 31 December 2018, comprises cash current accounts in the amount of €13,421.5 thousand.

PRODWAYS GROUP holds 49,723 treasury shares under its liquidity contract managed by Portzamparc. On 31 December 2018, the value of the shares held stood at €148.1 thousand. Comparison with the closing rate led the Company to recognise a provision for impairment of €19.8 thousand.

5.4.2 Financial debt

In June 2016, the Company took out a €10 million loan with LCL bank. This loan was fully paid off in September 2017. A credit facility for the same amount was taken out with the same institution allowing drawdowns at any time.

5.5 Operating payables and other liabilities

Schedule of debts

(in thousands of euros)		Gross amount Due within 1 year	At more than one year
Trade payables	365.2	365.2	-
Employees	136.7	136.7	-
Social Security and other social services	99.5	99.5	-
State and other government authorities:
z income tax	-	-	-
z value-added tax	381.4	381.4	-
z other taxes and similar payments	7.9	7.9	-
Group and associated companies	512.2	-	512.2
Other liabilities	2,502.3	2,502.3	-
TOTAL	4,005.2	3,493.0	512.2

The "Other debts" include the €2,500.0 thousand earn-out to be paid at the beginning of 2019 to the former shareholders of the AVENAO group. Accrued liabilities: €464 thousand.

Note 6 Transactions with affiliate companies and related parties

Related parties are persons (Directors or managers of PRODWAYS GROUP or its main subsidiaries) or entities owned or managed by these persons. All transactions between related companies and parties are catted out under normal market terms and conditions.

The net amounts for related undertakings included in PRODWAYS GROUP SA's balance sheet and income statement items for the year ended 31 December 2018 are as follows:

(in thousands of euros)		Subsidiaries	GROUPE GORGÉ
STATEMENT OF FINANCIAL POSITION
Deposits	-	-	1.9
Net trade receivables and related accounts	-	2,434.1	-
Current accounts receivable	-	17,663.7	-
Suppliers	-	22.4	1.8
Current accounts payable	-	512.2	-
INCOME STATEMENT
Operating income	-	1,733.0	-
Purchases and external charges	-	23.9	612.7
Investment income	-	2,462.5	-
Other financial income	-	197.5	-
Financial expense	-	-	-

Note 7 Off-balance sheet commitments

7.1 Off-balance sheet commitments related to ordinary activities

None

7.2 Complex commitments

In March 2015, PRODWAYS GROUP acquired all the shares making up the share capital of INITIAL SAS. The vendor granted an assets and liabilities guarantee with a term of 2 to 3 years depending on the nature of any claim. This guarantee is capped at €2,500 thousand in the first year, after which it will be reduced to €1,250 thousand. The Group did not call the guarantee, which has now expired.

Within PODO 3D, CRISTAL, IP GESTION and VARIA 3D, PRODWAYS GROUP is associated with minority shareholders who are managers of those companies. In certain cases, shareholders' agreements provide for the potential liquidity of their holdings.

In 2107, PRODWAYS GROUP acquired 75% of the shares comprising the share capital of IP GESTION SAS, which was itself the sole shareholder of INTERSON PROTAC. The vendors granted an assets and liabilities guarantee with a term of three years. This guarantee is capped at €733 thousand in the first eighteen months after which it will be reduced to €367 thousand for the following eighteen months. The Group did not call the guarantee.

In 2017, PRODWAYS GROUP acquired all of the shares comprising the share capital of AS3D, 3D SERVICAD, and AVENAO INDUSTRIE. The vendors granted an assets and liabilities guarantee with a term of two to three years depending on the nature of any claim. This guarantee is capped at €2,000 thousand. The Group did not call the guarantee.

In 2018, PRODWAYS GROUP acquired all shares making up the share capital of SOLIDSCAPE. The vendors granted an assets and liabilities guarantee with duration of 18 months to 8 years depending on the nature of any claim. This guarantee is limited to \$1 million or the acquisition price according to the nature of the claims. The Group did not call the guarantee.

7.3 Commitments received

PRODWAYS GROUP has a confirmed credit facility of €10 million which has not yet been used. This facility is confirmed up to June 2019 and thereafter on a declining basis for €2.5 million per year up to December 2022.

7.4 Financial covenants

PRODWAYS GROUP's confirmed credit facility is accompanied by a change of control clause and a financial covenant which applies in the event of a drawdown.

7.5 Pledges, guarantees and sureties

None

(in thousands of euros)	Capital Equity	Share Dividends	Gross value of shares Net value of securities	Loans, advances Warranties	Revenues Income
DELTAMED	27.0	100%	7,065.9	-	4,700.3
	3,130.7	-	7,065.9	-	654.6
PRODWAYS
ENTREPRENEURS	701.0	100%	701.0	187.2	-
	599.8	-	701.0	-	(9.5)
PRODWAYS	6,426.7	100%	26,750.0	13,229.1	8,188.0
	(6,307.6)	-	26,750.0	-	(6,610.6)
INITIAL	400.0	100%	12,000.0	-	11,970.5
	2,268.3	750.0	12,000.0	-	(257.3)
PRODWAYS DISTRIBUTION	1.0	100%	1.0	10.5	-
	(10.4)	-	1.0	-	(1.0)
VARIA 3D	525.7	70%	978.9	-	388.8
	287.2	-	978.9	-	(90.6)
EXCELTEC	20.0	100%	250.0	186.3	572.3
	24.6	-	250.0	-	45.8
PODO 3D	27.9	82.1%	680.0	1,651.5	1,108.1
	(1,362.7)	-	680.0	-	(874.6)
CRISTAL	500	95%	475.0	1,040.9	4,674.2
	(277.2)	-	475.0	-	(719.2)
PRODWAYS Rapid Additive
Forging	575.0	100%	575.0	566.7	261.6
	580.0	-	575.0	-	11.6
PRODWAYS 2	5.0	100%	5.0	2.5	-
	(2.0)	-	5.0	-	(2.2)
PRODWAYS CONSEIL	5.0	90%	4.5	101.7	142.7
	(61.0)		4.5	-	78.2
IP GESTION	592.0	75%	2,714.4	-	-
	1,024.3	112.5	2,714.4	-	197.7
AS3D	20.8	100%	16,466.5	-	17,648.0
	3,357.5	1,600.0	16,466.5	-	1,725.5
SOLIDSCAPE	28,930.2	100%	11,725.6	-	3,751.1
(since 14 July 2018)	3,847.0	-	11,725.6	-	(518.3)
SCI CHAVANOD	2.0	99.95%	2.0	-	-
(since 13 September 2018)	2.0	-	2.0	-	-

Note 8 Subsidiaries and equity interests

3

Note 9 Other information

9.1 Identity of the consolidating parent company

PRODWAYS GROUP prepares consolidated financial statements. The financial statements of PRODWAYS GROUP are in turn consolidated by GROUPE GORGÉ, a société anonyme (public limited company) with a Board of Directors and share capital of €13,502,843 domiciled at 19 rue du Quatre-Septembre 75002 Paris.

9.2 Subsequent events

Since January 2019, PRODWAYS GROUP acquired Embout Français and Surdifuse, specialised in the manufacture of hearing aids. This strengthened the position of the Group in this sector after the acquisition of IP GESTION and its subsidiary INTERSON PROTAC in summer 2017.

On 31 January 2019, PRODWAYS GROUP issued a free share allocation plan in two tranches, in favour of Group employees. Under a collective plan, each employee of a French company is allocated at least 50 potential shares subject only to a presence condition. Under a selective plan reserved for 50 persons, 783,000 shares were allocated, with the vesting of these shares being subject to the achievement of the Group's performance objectives in 2019, 2020 and 2021 and to presence conditions. These two plans together represent a total of 802,800 potential shares.

There were no other significant events occurring between 31 December 2018 and the date of the meeting of the Board of Directors which approved the separate financial statements.

3.2.5 Statutory auditors' report on the separate financial statements

To the Shareholders,

Opinion

In application of the assignment entrusted to us by your Articles of Association and shareholders' meeting, we have conducted an audit of the PRODWAYS GROUP financial statements in respect of the year ended 31 December 2018, which are appended hereto.

We hereby certify that the financial statements give a true and fair view of the assets and liabilities and of the financial position of the Company as at 31 December 2016 and of the results of its operations for the year then ended in accordance with French accounting principles.

Basis of the opinion

Audit framework

We conducted our review in accordance with professional standards applicable in France. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Our responsibilities in view of these standards are set out in the section entitled "statutory auditors' responsibilities regarding the audit of the separate financial statements" in this report.

Independence

We conducted our audit in accordance with the rules of independence governing our assignments, for the period from 1 January 2018 to the date on which our report was issued; in particular, we did not render any services prohibited by article 5, paragraph 1 of EU Regulation N° 537/2014 or by the Code of ethics governing statutory auditors.

Justification of our assessment - Key audit points

Pursuant to the provisions of articles L.823-9 and R.823-7 of the French Commercial Code on the justification of our assessments, we hereby inform you of the key audit points relating to risks of material misstatements which, in our professional judgement, were most significant for the audit of the financial statements for the year, as well as our responses to address such risks.

These assessments were made as part of the audit of the financial statements, taken as a whole, and of the opinion we formed and expressed above. We have not expressed an opinion on individual elements contained in these financial statements.

Assessment of equity securities

As at 31 December 2018, equity securities were recorded on the balance sheet with a total net carrying value of €80.4 million, representing 69% of total assets. They are recognised on the date of purchase at their acquisition cost.

When the value in use of securities is lower than their net carrying value, a provision for impairment is recorded for the difference. Value in use is determined, where applicable, based on:

• z the value of the share of equity of the investment;
• z an analysis of the short and medium-term results and profitability outlook of the investment, in particular through the use of cash flow projections.

Estimating the value in use of these securities therefore requires management to exercise its judgement in selecting the items to consider, depending on the investments concerned.

In this respect, we considered the estimation of the value in use of equity securities a key audit point, given the representation of equity investments on the balance sheet and inherent uncertainty linked to the likelihood of forecasts used to determine the value in use actually materialising.

Audit procedures implemented to address identified risks

Our work consisted in:

• z assessing the appropriateness of the valuation method applied by management, the assumptions and the figures used;
• z comparing the data used to conduct impairment testing of securities with accounting data, where applicable;
• z where relevant, assessing the consistency of management's cash flow projections with subsidiaries' past performances.

We also verified the appropriateness of the information presented in Section 5.1 "Non-current assets" in the notes to the separate financial statements.

Specific Verifications

We have also performed, in accordance with professional standards applicable in France, the specific verifications required by French law and regulations.

Information provided in the management report and in the other documents with respect to the financial position and the financial statements

We have no matters to report as to the fair presentation and consistency with the financial statements of the information given in the management report from the Board of Directors, and in the other documents sent to shareholders with respect to the financial position and the financial statements.

In application of the law, we hereby inform you that the information relative to customer payment terms specified by article D. 441-4 of the French Commercial Code, taken in application of article L. 441-6-1 of the said Code, is incompletely discussed in the management report. Consequently, we cannot attest to their accuracy and fair presentation or their agreement with the separate financial statements.

Corporate governance report

We hereby certify the inclusion, in the Board of Directors' report on corporate governance, of information required by articles L. 225-37-3 and L. 225-37-4 of the French Commercial Code.

Concerning the information given pursuant to the requirements of article L. 225-37-3 of the French Commercial Code relating to remunerations and benefits received by the Directors and any other commitments made in their favour, we have verified its consistency with the financial statements, or with the underlying information used to prepare these financial statements, and, where applicable, with the information obtained by your Company from companies controlling or controlled by your Company. Based on this work, we attest the accuracy and fair presentation of this information.

Concerning the information relating to factors that your Company considers likely to have an impact in the event of a public tender or exchange offer, provided in application of the provisions of article L. 225-37-5 of the French Commercial Code, we verified its compliance with the documents from which it was taken and which were provided to us. On the basis of this work, we have no observations to make regarding this information.

Other information

Pursuant to French law, we have verified that the required information concerning the acquisition and takeover of control and the identity of shareholders and holders of the voting rights has been properly disclosed in the management report.

Information resulting from other legal and regulatory obligations

Appointment of statutory auditors

We were appointed statutory auditors of PRODWAYS GROUP by the Articles of Association of 13 March 2014, for RSM Paris and by the ordinary shareholders' meeting of 5 May 2017 for PricewaterhouseCoopers Audit.

At 31 December 2018, RSM Paris was in the fifth year of its assignment without interruption, and PricewaterhouseCoopers Audit in its second year, and two years for each firm since the Company's securities were admitted for trading on a regulated market.

Responsibilities of management and those in charge of corporate governance in relation to the separate financial statements

It is management's responsibility to prepare fair and accurate separate financial statements in compliance with French accounting principles, and to implement the internal control procedures that it deems necessary for the preparation of separate financial statements free of any material misstatements, whether resulting from fraud or errors.

In preparing the financial statements, it is management's responsibility to assess the Company's ability to continue as a going concern, to present, where relevant, the necessary information relating to the going concern and to apply the going concern principle of accounting, unless there are plans to liquidate or cease the Company's activity.

These financial statements have been approved by the Board of Directors.

Statutory auditors' responsibilities regarding the audit of the separate financial statements

Audit objective and approach

We are tasked with preparing a report on the financial statements. Our objective is to obtain reasonable assurance that the financial statements, taken as a whole, are free of material misstatements. Reasonable assurance means a high level of assurance, however without any guarantee that an audit conducted in accordance with professional standards will systematically detect any material misstatement. Misstatements may be the result of fraud or errors, and are considered material when, individually or combined, they can be reasonably expected to impact economic decisions taken based on the financial statements.

As set out in article L.823-10-1 of the French Commercial Code, our assignment to certify the financial statements does not involve guaranteeing the sustainability or quality of the management of your Company.

As part of an audit conducted in accordance with professional standards applicable in France, the Statutory Auditor exercise their professional judgement throughout the entire audit. Furthermore:

• z identifies and assesses the risk of material misstatement in the financial statements, whether the result of fraud or errors, defines and implements audit procedures to address such risks, and gathers adequate and appropriate information on which to form an opinion. The risk of not detecting a material misstatement resulting from fraud is higher than that of a material misstatement resulting from an error, given that fraud may imply collusion, falsification, wilful omissions, false statements or the circumvention of internal control;
• z acknowledges internal control processes relevant to the audit, in order to define suitable audit procedures, and not for the purpose of expressing an opinion on the effectiveness of such internal control;
• z assesses the appropriateness of the accounting methods adopted and the soundness of accounting estimates made by management, as well as information concerning them provided in the financial statements;
• z assesses the appropriateness of management's application of the going concern principle and, based on the information obtained, whether there is significant uncertainty with regard to events or circumstances that could jeopardise the Company's ability to continue as a going concern. This assessment is founded on information obtained up until the date of the report, it being specified, however, that subsequent circumstances or events may jeopardise business continuity. If the auditor identifies significant uncertainty, they highlight such uncertainty in their report by drawing readers' attention to the corresponding information presented in the financial statements, or, if this information has not been provided or is not relevant, issues certification with reserves or a refusal to certify;
• z assesses the overall presentation of the financial statements and determines whether they provide a true and fair reflection of the underlying transactions and events.

Paris and Neuilly-sur-Seine, 11 April 2019

The statutory auditors

RSM Paris Statutory Auditing Company Member of the Compagnie Régionale de Paris Stéphane MARIE Partner

PRICEWATERHOUSECOOPERS AUDIT Statutory Auditing Company Member of the Compagnie Régionale de Versailles INFORMATION ABOUT THE COMPANY, ITS SHARE CAPITAL AND SHAREHOLDERS

4.1		INFORMATION ABOUT THE COMPANY	120
	4.1.1	General information	120
	4.1.2	Corporate charter and Articles of Association	120
4.2		SHARE CAPITAL	122
	4.2.1	Total subscribed share capital and potential share capital	122
	4.2.2	Treasury shares	124
		4.2.3 Additional information on the share capital	125

4.3	SHAREHOLDING
	4.3.1	Breakdown of share capital and voting rights	128
	4.3.2	Voting rights of the major shareholders	128
	4.3.3	Controlling shareholders	128
		4.3.4 Information liable to have an impact in the event of a public offer	128
	4.3.5	Employee shareholding	128
4.4	FINANCIAL COMMUNICATION (FINANCIAL AGENDA, SHARE PERFORMANCE, DIVIDEND POLICY, ETC.)
			129
	4.4.1	Stock market information	129

• 4.4.2 129 Dividend policy
• 4.4.3 130 Information documents

4.1 INFORMATION ABOUT THE COMPANY

4.1.1 General information

Company name

The Company's name is PRODWAYS GROUP.

Place of registration and registration number

The Company is registered with the Paris Trade and Companies Register under number 801 018 773.

Code ISIN FR0012613610 – PWG

Date of incorporation and term

The Company was incorporated on 7 March 2014 for a period of 99 years from the date of its registration with the Trade and Companies Register on 13 March 2014, i.e. until 12 March 2113, except in the event of extension or early dissolution.

Registered office, legal form and applicable law

The Company is a société anonyme (public limited company) with a Board of Directors governed by French law whose operation is primarily subject to articles L.225-1 et seq. of the French Commercial Code.

The head office of the Company is located at 19 rue du Quatre-Septembre, 75002 Paris, France.

The contact information for the Company is as follows:

Telephone: +33 (0) 1 44 77 94 77

Fax: +33 (0) 1 44 77 89 77

Email: IR@prodways.com

Website: www.prodways-group.com

4.1.2 Corporate charter and Articles of Association

Corporate object

As set forth in (article 3 of the Articles of Association), the Company's purpose is:

• z the acquisition for its own account by purchase, subscription, exchange or otherwise and management of capital investments in any French or foreign company existing now or in the future regardless of their legal form or purpose;
• z any provision of service or advice in any field to its investees and subsidiaries, including any hiring of personnel, in particular for its subsidiaries and investees;
• z and generally enter into any transactions that are directly or indirectly related to these purposes or to similar or related purposes or that might aid in their application or development.

Provisions of the Articles of Association, a charter or regulations related to the members of administrative, management and supervisory bodies

The Articles of Association of PRODWAYS GROUP stipulate that the Board of Directors consists of three members at least and 18 at the most, except where this is waived pursuant to the law in the event of a merger.

Throughout the Company's lifetime, Directors are appointed, reappointed or removed by the ordinary shareholders' meeting. They may always be re-elected for new terms.

Each Director serves for a term of three years that ends after the ordinary shareholders' meeting called for the purpose of approving the financial statements of the preceding financial year and held in the year in which their term expires.

Directors can be natural or legal persons. At the time of appointment, legal persons must appoint a permanent representative who is subject to the same conditions and obligations and incurs the same liability as if he or she were a Director in his/her own name, without prejudice to the joint and several liability of the legal entity he or she represents.

The Article of Association allow, as the case may be, the appointment of employee Directors on the Board of Directors.

The Board of Directors elects a Chairman among its members who are natural persons. The Board of Directors sets the Chairman's compensation and the length of tenure, which cannot exceed his/her term of office as Director. article 14 of the Articles of Association sets a maximum age limit for the Chairman (75 years old).

The Board of Directors prepares and presents the half-yearly and annual financial statements and convenes the shareholders' meetings.

Meetings of the Board of Directors may be held as often as is necessary in the Company's interest. The Internal Regulations provide that meetings may be held by videoconference or by other telecommunication means in accordance with the regulatory requirements for holding meetings.

Quorum is achieved by half of the members of the Board of Directors and decisions are made by a majority vote of the members in attendance or represented by other Directors of the Board.

The Directors' powers are those as defined by law and have not been limited either by statute or at the time of appointment by the Board of Directors.

The Chief Executive Officer may be assisted by the Deputy Chief Executive Officers who are vested with the same powers. If the Chief Executive Officer is a Director, he or she is appointed for the length of his or her term of office as Director. The same applies for the Deputy Chief Executive Officer.

Rights, privileges and restrictions attaching to each class of existing shares

There are no privileges or restrictions attached to certain shares or classes of shares.

"With respect to the percentage of share capital that they represent, double voting rights are conferred upon all fully paid-up shares which have been held in registered form for at least two(2) years in the name of the same holder. In the event of a share capital increase by incorporating reserves, profits or premiums, this double voting right will be attached on the date of their issuance to the new registered shares allotted free of charge to a shareholder in consideration for the old shares giving rise to such right."(Extract from article 12 of the Articles of Association).

Steps necessary to amend shareholders' rights

The shareholders' rights may be amended by an extraordinary shareholders' meeting and, where necessary, after having been ratified by the special shareholders' meeting for shareholders benefiting from special advantages.

General shareholders' meetings

Shareholders' meetings are convened and deliberate under the terms and conditions set by the law.

Shareholder resolutions are made at ordinary, extraordinary or special shareholders' meetings depending on the type of decision.

Shareholders' meetings are convened by the Board of Directors, or, failing that, by those individuals named by the French Commercial Code, particularly the statutory auditors or a court-appointed agent as provided by law.

Meetings are held at the head office or in any other location stated in the convocation.

Shareholders' meetings are convened as provided by the regulations in force.

Any shareholder, regardless of the number of shares he or she holds, has the right to attend and vote at the shareholders' meetings, whether in person, by proxy, or by remote voting, under the conditions and within the time limits laid down by the regulations in force.

Shareholders may, under the conditions laid down by the legislation in force, send their voting form by mail for any shareholders' meeting, either as a printed paper copy or, on a decision by the Board of Directors recorded in the meeting notice and the convening notice, as an electronic copy.

Shareholders may, on a decision by the Board of Directors, attend and vote at any shareholders' meeting by means of video-conference or any means of telecommunication, under the conditions laid down by the regulations in force. This decision is included in the meeting notice published in the Bulletin des Annonces Légales Obligatoires (B.A.L.O.). These shareholders are thereupon considered to be in attendance at the meeting, for the purpose of counting the quorum and majority.

Postal voting forms and proxies granted to be represented at a meeting may include an electronic signature by the shareholder or his or her legal or court-appointed representative, in the form of a process in compliance with the requirements of article 1316-4, sub-paragraph 2, of the French Civil Code, namely a reliable identification process guaranteeing its connection with the instrument to which it relates.

All shareholders have the right to access the documents required to be able to make an informed decision on the Company's management and situation.

The laws and regulations determine the type of documents as well as how they are sent and made available to shareholders.

The officers of the meeting certify as accurate the attendance sheet, duly signed by the attending shareholders and their proxies and to which shall be appended the powers of attorney awarded to each proxy and, where applicable, the vote-by-mail forms.

The meetings are presided over by the Chairman of the Board of Directors or, in his or her absence, by a Deputy Chairman or another Director specially appointed for this purpose by the Board. Failing such measures, the shareholders' meeting appoints the Chairman of the meeting itself.

The duties of scrutineer shall be performed by the two shareholders, present and accepting such duties, who hold the largest number of shares, either on their own behalf or as proxy-holders. The officers so appointed shall appoint the Secretary, who does not need to be a shareholder.

The minutes of the meetings will be prepared and copies or excerpts of the proceedings will be certified in accordance with law.

Ordinary and extraordinary shareholders' meetings, acting according to the corresponding conditions of quorum and majority required by legal provisions, shall exercise the powers conferred on them by law." (Extract from article 23 of the Articles of Association)

Crossing of ownership thresholds

The Company's Articles of Association include an obligation to report crossing the thresholds of 2%, 3% and 4%.

"In addition to the applicable regulation governing the crossing of thresholds, any physical or legal person who, alone or together, comes to hold or ceases to hold, in any manner whatsoever, a number of shares representing more than 2%, 3% or 4% of the capital or voting rights, is required to notify the Company within a period of ten calendar days from the crossing of one of these thresholds, of the number of shares, securities giving access to the capital and voting rights attached thereto, that it holds. For the purposes of application of this statutory obligation, the participation thresholds are determined under the same conditions as legal participation thresholds.

In the event of non-compliance with the statutory requirement, the shares exceeding the undeclared fraction shall be deprived of voting rights for any shareholders' meeting held up until the expiry of a period of two years following the date of regularisation, at the request, recorded in the minutes of the shareholders' meeting, of one or more shareholders holding 5% at least of the share capital."

(Extract from article 10 of the Articles of Association)

Terms and conditions in the Company's Articles of Association regarding modifications to share capital which are more restrictive than the law

The Company's Articles of Association do not contain any provisions concerning modifications of share capital which are more restrictive than those provided under the law.

4.2 SHARE CAPITAL

4.2.1 Total subscribed share capital and potential share capital

At 31 December 2018, the Company's share capital was €25,407,821.50 divided into 50,815,643 fully paid-up shares, each with a par value of €0.50.

Allocations of free shares

1/ Plans in effect at 31 December 2018

Free share allocation plans were set up in February and December 2016. As at 2 April 2019, under these plans, there are 262,380 potential shares for which the performance conditions have been met. These shares will vest to the beneficiaries who fulfil the continued employment condition at 15 April 2019.

	FREE SHARES
Date of general shareholders' meeting authorising the Free Shares allocations	28 September 2015
Date of the Board of Directors' vote to grant the Free Shares	17 February 2016	9 December 2016 (plan effective as of 9 December 2016)	9 December 2016 (plan effective as of 30 December 2016)
Maximum number of shares authorised	5% of the share capital at the date of grant
Number of free shares allocated	632,200	478,400	10,100
of which total number that may be acquired by the current corporate officers of the Company	-	-	-
Number of recipients not corporate officers (at first)	198	237	1
Dates and terms of vesting	See below	See below	See below
Cumulative number of allocated free shares cancelled or voided	632,200	18,000	-
Number of free shares outstanding at 31 December 2018	-	252,280	10,100

Free shares known as Performance Shares are subject to the following conditions:

a) Vesting period

The Vesting Period ends on 15 April 2019.

Provided the vesting conditions referred to in Section (b) below are met, the performance shares will vest on the first business day following the expiration of the Vesting Period (the "Vesting Date").

b) Vesting conditions

The vesting of the performance shares on the Vesting Date is subject to meeting the cumulative conditions as to liquidity, performance and continued employment (the "Vesting Conditions").

Liquidity conditions

The vesting of the Performance Shares was subject to a liquidity condition that was achieved with the Company's initial public offering in May 2017.

Performance condition

Vesting of the Performance Shares is subject to (i) fulfilling performance conditions related to Group's revenues and EBITDA in the IFRS consolidated financial statements of the Group for financial years 2016, 2017 and 2018 and (ii) for certain beneficiaries named by the Board of Directors and for only a portion of the Performance Shares granted to them, the Company's market capitalisation.

The performance condition was met with respect to performance for the 2017 financial year and the Company's market capitalisation.

Continued employment condition

Unless the Board of Directors decides otherwise, the performance shares will vest only if the recipient is still a corporate officer or employee of the Company or a Group company at the end of the Vesting Period.

For the 2016 plans, the total number of ordinary shares that may be created by the exercise of all instruments giving access to the share capital is 262,380 shares, or a maximum dilution of approximately 0.52% of the share capital. The dilution of voting rights would be identical (without taking double voting rights into account).

2/ New plan decided in 2019

A new free share allocation plan was introduced in January 2019. Under this plan, there are 802,800 potential shares, subject to continued employment and/or performance conditions and share price.

	FREE SHARES
Date of general shareholders' meeting authorising the Free Shares allocations	13 June 2018
Date of the Board of Directors' vote to grant the Free Shares	31 January 2019
Maximum number of shares authorised	5% of the share capital at the date of grant
Number of free shares allocated	802,800
of which total number that may be acquired by the corporate officers of the Company	135,000
Number of recipients not corporate officers (at first)	445
Dates and terms of vesting	See below
Cumulative number of allocated free shares cancelled or voided	-
Number of free shares outstanding at 31 December 2018	-

Free shares known as Performance Shares are subject to the following conditions:

2.1/ Collective plan for 396 people (19,800 shares)

a) Vesting period

The Vesting Period ends on 1 February 2021.

Provided the vesting conditions referred to in Section (b) below are met, the performance shares will vest on the first business day following the expiration of the Vesting Period (the "Vesting Date").

b) Vesting conditions

The vesting of Performance Shares on the Vesting Date is subject only to compliance with the continued employment condition at 1 February 2021.

Continued employment condition

Unless the Board of Directors decides otherwise, the performance shares will vest only if the recipient is still a corporate officer or employee of the Company or a Group company at the end of the Vesting Period.

2.2/ Selective plan for 50 people (783,000 shares)

a) Vesting period

The Vesting Period expires on 1 February 2021 (one-third of the shares subject to 2019 performance conditions), 1 February 2022 (one-third of the shares subject to 2020 performance conditions) and 1 February 2023 (one-third of the shares subject to 2021 performance conditions).

Provided the vesting conditions referred to in Section (b) below are met, the performance shares will vest on the first business day following the expiration of the Vesting Period (the "Vesting Date").

b) Vesting conditions

The vesting of the performance shares on the Vesting Date is subject to meeting the cumulative performance and continued employment conditions (the "Vesting Conditions").

Performance condition

The vesting of the Performance Shares is subject to (i) compliance with performance conditions related to the levels of operating income in the Group's IFRS consolidated financial statements for financial years 2019, 2020 and 2021 (85% of shares) or (ii) the level of the Company's share price as at 31 December 2019, 2020 and 2021 (15% of shares).

Continued employment condition

Unless the Board of Directors decides otherwise, the performance shares will vest only if the recipient is still a corporate officer or employee of the Company or a Group company at the end of the Vesting Period.

For the 2019 plans, the total number of ordinary shares that may be created by the exercise of all instruments giving access to the share capital is 802,800 shares, or a maximum dilution of approximately 1.58% of the share capital. The dilution of voting rights would be identical (without taking double voting rights into account).

For all of the plans (2016 and 2019), the total number of ordinary shares that may be created by the exercise of all instruments giving access to the share capital is 1,065,180 shares, or a maximum dilution of approximately 2.10% of the share capital. The dilution of voting rights would be identical (without taking double voting rights into account).

There are no potential shares relating to stock option, stock warrant or free share allocation plans, or other securities that may be convertible, exchangeable or associated with stock warrants, or acquisition rights and/or obligations attached to subscribed but not paid-up capital.

4.2.2 Treasury shares

Share buybacks

The share buyback in 2018 took place under the authorisations granted by the shareholders' meeting of 21 March 2017 and the shareholders' meeting of 13 June 2018.

a) Number of shares bought and sold during the financial year in accordance with articles L.225-208, L.225-209 and L.225-209-1 of the French Commercial Code and average purchase and sale price

In 2018, 402,581 PRODWAYS GROUP shares were repurchased by the Company under the authorisation granted by the shareholders' meeting of 21 March 2017 at an average price of €4.022 per share for a total cost of €1,619,368.

In 2018, 387,462 PRODWAYS GROUP shares were sold at an average price of €4.059per share under the liquidity contract.

b) Trading charges

In 2018, trading charges consisted solely of fees under the liquidity contract, which amounted to €12,000.

c) The number of shares registered in the Company's name at the end of the financial year and their value at purchase price – fraction of the share capital that they represent

At 31 December 2018, PRODWAYS GROUP held 49,723 treasury shares (representing 0.098% of its share capital) recorded at €175,394 in the statement of financial position (€128,285 at the stock market price of €2.58 on the same date).

All of the shares are owned to stabilise the stock market price.

The above number of shares and figures are given on the basis of a nominal value of €0.50 per share and 50,815,643 shares making up the share capital at 31 December 2018.

Treasury shares are recorded in the balance sheet of PRODWAYS GROUP SA under "Marketable securities".

d) Cancellation of company shares during the 2018 financial year

In 2018, the Company did not use the authorisation granted by the shareholders' meeting of 21 March 2017 and the shareholders' meeting of 13 June 2018 to reduce the share capital by cancelling shares owned by the Company, up to 10% of the capital for every 24-month period.

e) Number of shares potentially used

Repurchased shares may be used to:

• z transfer shares when exercising the rights attached to securities giving access to the share capital by reimbursement;
• z grant stock options to employees;
• z cancel all or part of the shares thus repurchased;
• z provide securities in payment or exchange for acquisitions;
• z stabilise the share's stock market price.

f) Potential reallocation for other purposes decided during the 2018 financial year

None.

Renewal of the share repurchase programme – Description of the share repurchase programme

Shareholders will be asked at the shareholders' meeting of 7 June 2019 to authorise the Board of Directors, with power to sub-delegate, to renew the Company's share repurchase programme (fourteenth resolution).

The purpose of this authorisation is to enable the Company to trade in its own shares, as provided for by law, in order to:

• z stimulate the secondary market or the liquidity of Company shares through the intermediary of an investment service provider under a liquidity contract that complies with the Code of Ethics as recognised by the French Financial Markets Authority (AMF);
• z retain the purchased shares and subsequently allocate them in payment or exchange in potential external growth transactions, in respect of market practices approved by the AMF;
• z provide coverage for stock option plans and/or free share allotments (or similar plans) for Group employees and/or corporate officers as well as all share allotments to Group or Company savings plans (or similar plans), under profit-sharing schemes and and/or all other forms of share allotment to Group employees and/or corporate officers;
• z allot shares upon the exercise of rights linked to securities giving access to the share capital through reimbursement, conversion, exchange, presentation of a warrant or by any other method;
• z cancel shares purchased, subject to the authorisation granted by a shareholders' meeting;
• z more generally, carry out any objective authorised by law or any market practice approved by market authorities.

This authorisation falls within the legal scope of article L.225-209 of the French Commercial Code:

• z it would be valid for a maximum period of 18 months and, as from its adoption by the shareholders' meeting and for the remaining balance, it would cancel and replace any prior delegation of authority to the Board of Directors to allow the Company to trade in its own shares;
• z the maximum amount of shares which the Board of Directors may acquire cannot exceed 10% of the total number of shares forming the share capital, with the understanding that the Company may not hold more than 10% of the shares forming the share capital at any time;

z the maximum purchase price per share would be set at €20.

In the event that the capital is increased through capitalisation of reserves and allocation of free shares, as well as in the event of a share split, reverse share split or any other transaction affecting equity, the shareholders' meeting would delegate to the Board of Directors the power to adjust the aforementioned prices in such a way as to allow for the impact of such transactions on the share value.

It is understood that these transactions should be performed in compliance with the rules laid down by articles 241–1 to 241-7 of the AMF's General Regulation on market trading conditions and timing.

4.2.3 Additional information on the share capital

TABLE OF THE HISTORY OF THE DEVELOPMENT OF THE COMPANY'S SHARE CAPITAL

Date	Transactions	Number of shares before	Number of shares after	Par value (in euros)	Additional paid-in capital (in euros)	Share capital after (in euros)
13 March 2014	Founding of the Company	5,000	5,000	€1	-	5,000
	24 November 2014 Share capital increase in cash	5,000	7,967,290	€1	-	7,967,290
29 December 2014	Capital increase by the issue of shares as remuneration for the contribution of shares of PRODWAYS	7,967,290	15,717,290	€1	-	15,717,290
12 June 2015	Share capital increase in cash	15,717,290	16,896,535	€1	+ 13,820,751.40	16,896,535
21 March 2017	2-for-1 split in the par value of the shares	16,896,535	33,793,070	€0.50	-	16,896,535
12 May 2017	Share capital increase in cash and through conversion of all convertible bonds (Company IPO)	33,793,070	48,237,529	€0.50	+ 58,037,765.70	24,118,764.50
22 May 2017	Share capital increase in cash and through conversion of all convertible bonds (Company IPO)	48,237,529	49,823,057	€0.50	+ 6,472,707.52	24,911,528.50
3 November 2017	Share capital increase as remuneration for the contribution of Avenao Solutions 3D shares	49,823,057	50,815,643	€0.50	+ 5,455,565.02	25,407,821.50

TABLE AT 28 MARCH 2018 OF CURRENTLY VALID DELEGATIONS ON SHARE CAPITAL INCREASES GRANTED TO THE BOARD OF DIRECTORS BY THE SHAREHOLDERS' MEETING

Date	Delegation	Validity	Maximum nominal amount	Use
Shareholders' meeting of 13/06/2018 (12th resolution)	Delegation of authority to increase the share capital by incorporating reserves, profits, premiums or other sums by issuing and allocating free shares or by raising the nominal value of existing shares or by a combination of these two procedures	26 months	€3,000,000	None
Shareholders' meeting of 13/06/2018 (13th resolution)	Delegation of authority to increase the share capital by issuing ordinary shares or securities giving access immediately or in future to the share capital with pre-emptive rights	26 months	€6,000,000(1) €30,000,000(1) (debt securities giving access to the share capital)	None
Shareholders' meeting of 13/06/2018 (14th resolution)	Delegation of authority to increase the share capital immediately or in future by issuing ordinary shares or equity securities giving access to other equity securities or rights to the allocation of debt securities and/or securities giving access to equity securities issued, without pre-emptive rights by way of a public offering	26 months	€6,000,000(1) €30,000,000(1) (debt securities giving access to the share capital)	None
Shareholders' meeting of 13/06/2018 (15th resolution)	Delegation of authority to increase the share capital immediately or in future by issuing ordinary shares or equity securities giving access to other equity securities or rights to the allocation of debt securities and/or securities giving access to equity securities issued as part of a public offering in favour of qualified investors or a limited group of investors as defined by article L.411-2-II of the French Monetary and Financial Code	26 months	€4,000,000(1) (subject to the statutory limit, currently set at 20% of the share capital in any 12-month period) €20,000,000 (debt securities giving access to the share capital)	None
Shareholders' meeting of 13/06/2018 (16th resolution)	Authorisation granted to the Board of Directors in the event of an issue of shares or any securities giving access to the share capital without pre-emptive rights to set the issue price up to a limit of 10% of the share capital and within the limits set by the shareholders' meeting	26 months	Not to exceed 10% of the share capital	None
Shareholders' meeting of 13/06/2018 (17th resolution)	Authorisation granted to the Board of Directors to increase the amount of issues decided on pursuant to the 13th to 15th resolutions in case of excess demand	26 months	Not to exceed 15% of the initial issue or any other percentage set by the regulations in force	None
Shareholders' meeting of 13/06/2018 (18th resolution)	Delegation of authority to issue ordinary shares and/or transferable securities giving access to the share capital of the Company, as consideration for non-cash transfers of securities giving access to share capital	26 months	10% of share capital(1)	None

Date	Delegation	Validity	Maximum nominal amount	Use
Shareholders' meeting of 13/06/2018 (19th resolution)	Delegation of authority to increase the share capital through the issue, immediately or in future, of ordinary shares or equity securities giving access to other equity securities or rights to the allocation of debt securities and/or securities giving access to equity securities issued, without pre-emptive rights, in favour of a category of persons who will underwrite the Company's equity securities that might result therefrom in connection with an equity line of financing	18 months	€4,000,000(1) €20,000,000(1) (debt securities giving access to the share capital)	None
Shareholders' meeting of 13/06/2018 (20th resolution)	Authorisation to grant stock options to employees and/or corporate officers of the Company or affiliated companies	38 months	5% of the existing share capital at the date of grant(2)	None
Shareholders' meeting of 13/06/2018 (21th resolution)	Authorisation to allocate existing or future free shares to employees and/or certain company officers	38 months	5% of the share capital at the date of grant(2)	Free shares were granted under the terms of the free share allocation plans of 31 January 2019 described in Section 4.2.1 of the annual report

(1) Charged against the overall nominal ceiling set by the 13th resolution, i.e. €6,000,000 (or €30,000,000 for issues of debt securities giving access to the share capital). This cap does not apply to debt securities whose issue may be decided or authorised by the Board of Directors in accordance with article L.228-40 of the French Commercial Code.

(2) The total number of shares that can be allocated by the Board of Directors free of charge under the 21st resolution of the shareholders' meeting of 13/06/2018 and the total number of shares to which any options granted by the Board of Directors pursuant to the authorisation given in the 20th resolution of the shareholders' meeting of 13/06/2018 may carry rights.

4.3 SHAREHOLDING

4.3.1 Breakdown of share capital and voting rights

The share capital and voting rights break down as follows:

	December 2018			December 2017
	Shares	% of share of capital	Voting rights exer cisable at the share holders' meeting(1)	% of voting rights exer cisable at the Share holders' Meeting	Shares	% of share of capital	Voting rights exer cisable at the share holders' meeting(1)	% of voting rights exer cisable at the Share holders' meeting
GROUPE GORGÉ(1)	28,767,733		56.61% 28,767,733	56.67%	28,767,733		56.61% 28,767,733	56.65%
FIMALAC DÉVELOPPEMENT	3,403,508	6.70%	3,403,508	6.70%	3,403,508	6.70%	3,403,508	6.70%
SAFRAN CORPORATE VENTURES	907,894	1.79%	907,894	1.79%	907,894	1.79%	907,894	1.79%
BPIFRANCE PARTICIPATIONS	750,000	1.48%	750,000	1.48%	750,000	1.48%	750,000	1.48%
Treasury shares	49,723	0.10%	-	-	34,604	0.07%	-	-
Public	16,936,785		33.33% 16,936,785	33.36%	16,951,904		33.36% 16,951,904	33.38%
TOTAL	50,815,643		100%50,765,920		100% 50,815,643		100%50,781,039	100%

(1) Voting rights exercisable at the shareholders' meeting do not include treasury shares. The number of theoretical votes may be obtained by adding the number of votes exercisable at the shareholders' meeting to the number of treasury shares.

To the Company's knowledge, since the reporting date, no significant changes in shareholding have occurred and there are no shareholders, other than those mentioned above, directly or indirectly holding 5% or more of the Company's share capital or voting rights.

4.3.2 Voting rights of the major shareholders

In accordance with the Company's Articles of Association, PRODWAYS GROUP shares held in registered form for more than two years carry double voting rights. These double voting rights apply from the initial listing of the Company's shares on the Euronext regulated market in Paris on 12 May 2017.

GROUPE GORGÉ registered its shares in its name and should therefore, after two consecutive years of registration after the Company's initial public offering, receive double voting rights, as would any shareholder in a similar situation.

To the Company's knowledge no shareholder's or other agreement exists that could result in a change of control of the Company.

4.3.3 Controlling shareholders

The Company is controlled, within the meaning of article L.233-3 of the French Commercial Code, by GROUPE GORGÉ.

GROUPE GORGÉ intends to remain the Company's primary, long-term shareholder.

The presence of independent Directors on the Board of Directors of PRODWAYS GROUP makes it possible to ensure that GROUPE GORGÉ's control over the Company is not abused.

4.3.4 Information liable to have an impact in the event of a public offer

Holders of shares registered in their names for more than two years enjoy double voting rights.

The Company is controlled by GROUPE GORGÉ.

The Company's Articles of Association do not contain any mechanisms for delaying, postponing or preventing a change of control.

4.3.5 Employee shareholding

The Group's existing stock option plans, free share allocation plans and stock warrant plans are described in Note 5.4 to the consolidated financial statements and Section 4.2.1 of the annual report.

In accordance with article L.225-102 of the French Commercial Code, it should be noted that at 31 March 2019:

• z no employees' shares were held under collective management;
• z 1,065,180 PRODWAYS GROUP shares were likley to be acquired by Group employees under free share allocation plans.

4.4 FINANCIAL COMMUNICATION (FINANCIAL AGENDA, SHARE PERFORMANCE, DIVIDEND POLICY, ETC.)

4.4.1 Stock market information

CHANGES IN SHARE PRICES AND VOLUMES TRADED ON EURONEXT IN 2018

Month	Highest (in euros)	Lowest (in euros)	Number of shares traded	Share capital (in euros)
January 2018	5.19	4.65	766,000	3,775,252
February 2018	4.90	4.04	1,572,651	7,290,629
March 2018	4.65	4.22	1,089,945	4,852,025
April 2018	4.69	4.00	1,320,035	5,602,108
May 2018	4.69	4.06	768,475	3,330,254
June 2018	4.65	4.12	603,702	2,688,524
July 2018	4.58	4.04	795,743	3,415,404
August 2018	4.45	4.08	415,183	1,766,078
September 2018	4.50	4.01	609,379	2,595,374
October 2018	4.12	2.67	2,146,092	6,987,272
November 2018	3.60	2.97	1,371,967	4,358,979
December 2018	3.28	2.08	1,027,160	2,654,451
January 2019	3.23	2.31	955,947	2,803,581
February 2019	3.22	2.98	525,626	1,635,996

Source: Euronext.

Information on PRODWAYS GROUP shares

PRODWAYS GROUP shares have been listed on EURONEXT Paris since 12 May 2017. PRODWAYS GROUP joined Compartment C which includes listed companies with a market capitalisation below €150 million.

Since 2 October 2017, PRODWAYS GROUP has met all the eligibility criteria for the French PEA-SME tax-efficient investment regime (in accordance with Decree 2014-283), meaning it has fewer than 5,000 employees and annual revenue of less than €1,500 million or total assets of less than €2,000 million.

PRODWAYS GROUP shares have been included in the SRD long-only deferred settlement list since 27 December 2017. The SRD long-only listing should help improve trading liquidity.

4.4.2 Dividend policy

The Company intends to pay dividends when results permit, but it has not defined a systematic policy with respect to the apportionment of its profits between dividends and the financing of its operations.

No dividends have been paid since the creation of the Company; the Board of Directors will not propose payment of a dividend to the shareholders' meeting of 7 June 2019.

4

4.4.3 Information documents

The Company communicates with its shareholders primarily via its website (www.prodways-group.com), its Twitter account and the financial wire agency Actusnews.

The quarterly, half-yearly and annual financial results are disclosed in press releases according to the indicative timetable below:

• z Q1 2019 revenue: 25 April 2019;
• z shareholders' meeting: 7 June 2019;
• z Q2 2019 revenue: 25 July 2019;
• z HY 2019 financial results: 18 September 2019;
• z Q3 2019 revenue: 24 October 2019;
• z Q4 2019 revenue: end February 2020.

Meetings with analysts and investors and a conference call with a Q&A session dedicated to the Group's financial analysts take place just after the publication of results. The 2018 financial results were announced on 3 April 2019 and the 2019 first half financial results will be announced on 18 September 2019.

Throughout the period of validity of the annual report, the following documents may be consulted at the Company's head office:

• z the Company's Articles of Association;
• z all reports, correspondence and other documents included or mentioned in this annual report;
• z the issuer's historical financial information for each of the two financial years prior to the publication of the annual report.

The annual reports are available from the head office of the Company, 19, rue du Quatre-Septembre, 75002 Paris (France), and from the website www.prodways-group.com. The Company's press releases are relayed via professional distribution services (ACTUSNEWSWIRE) and can be viewed on the main stock market sites accessible to the public, such as BOURSORAMA, BOURSIER. COM, EURONEXT, etc.

The Company's website contains all of PRODWAYS GROUP's up-to-date financial information. All PRODWAYS GROUP press releases are readily available on it, as are all documents of relevance to shareholders such as underlying documents, annual reports, half-year consolidated financial statements and information on share buybacks.

PRODWAYS GROUP participates in small and/or mid cap events and road shows as well as other events throughout the year at which the Company presents its activities and results to analysts, investors and shareholders. The Group also organises investor and analyst meetings at relevant trade shows during the year and at its main operating sites (specifically PRODWAYS' Tech Centre).

A Securities Service directly administers fully registered shares free of charge. Shareholders who wish to register their securities in this form may send their request to CACEIS Financial Services, 14, rue Rouget-de-Lisle, 92862 Issy-les-Moulineaux Cedex 09, France, or to their own financial advisor.

Our shareholder/investor contact, ACTUS FINANCE (52, rue de Ponthieu – 75008 Paris), is available for all questions about news and the various press releases about the Group.

OUR VALUES, OUR EMPLOYEES AND OUR CSR COMMITMENTS

5.1	GENERAL APPROACH AND METHODOLOGY
	5.1.1	Specific context of the Statement of Non-Financial Performance	132
	5.1.2	PRODWAYS GROUP CSR commitments	132
	5.1.3	Our Business model	133
	5.1.4	The CSR risks and issues of PRODWAYS GROUP	134
5.2		3D PRINTING: A PRODUCTION METHOD THAT MEETS THE CHALLENGES OF SUSTAINABLE DEVELOPMENT	135
5.3		BUILDING A MAJOR PLAYER IN TECHNOLOGICAL INNOVATION	135
	5.3.1	Innovation: the heart of the Group's strategy	136
	5.3.2	Co-innovation and knowledge sharing	136
5.4		MEDICAL: AN AREA OF STRATEGIC DEVELOPMENT FOR PRODWAYS GROUP	137
	5.4.1	Medical industry requirements	137
	5.4.2	Sponsorships	137

5.5		COMMITMENTS TO ITS EMPLOYEES	138
	5.5.1	Investing in sustainable and responsible relationships with employees	138
	5.5.2	Promoting learning opportunities	140
	5.5.3	Workplace health, safety and well-being, a commitment for all employees	141
5.6		ACTIVITIES WITH LIMITED IMPACT ON CLIMATE CHANGE AND THE ENVIRONMENT	142
	5.6.1	Resource and product end-of-life management	142
	5.6.2	Employee travel	143
	5.6.3	Energy consumption	143
5.7		REPORT BY THE INDEPENDENT THIRD-PARTY ENTITY ON THE CONSOLIDATED STATEMENT OF NON-FINANCIAL PERFORMANCE IN THE MANAGEMENT REPORT	144

5.1 GENERAL APPROACH AND METHODOLOGY

5.1.1 Specific context of the Statement of Non-Financial Performance

In accordance with article R.225-105 of the French Commercial Code, PRODWAYS GROUP produces a Statement of Non-Financial Performance for the Group's scope of consolidation. This statement is verified by an independent third-party entity.

Completion of this Statement of Non-Financial Performance is a new step that is part of the ongoing improvement of PRODWAYS GROUP's social, environmental and economic commitments.

Scope of reporting

The information presented in this report is consolidated and relates to the French subsidiaries with more than 50 employees at 31 December 2018, of which there were five at that date, versus three in 2017. At the end of 2018, these subsidiaries represented 74% of the workforce and 82% of the Group's revenue, versus 83% of the workforce and 89% of revenue in 2017. For practical and organisational reasons within the Group, it seemed relevant to retain this materiality threshold.

CSR indicator reporting method

The production of CSR (Corporate Social Responsibility) indicators requires a system to report information to the Financial Department of its parent company GROUPE GORGÉ Financial Department. A protocol that describes CSR indicators in a precise, consistent manner has been established.

5.1.2 PRODWAYS GROUP CSR commitments

In 2018, to give greater depth to the assessment of its CSR issues and risks, PRODWAYS GROUP conducted a materiality analysis, with the assistance of an external consultant, to anticipate the requirements, risks and opportunities related to sustainable development issues, and our responsibilities vis-à-vis our stakeholders.

This analysis was conducted in several stages:

• z establishment of sector benchmarks;
• z identification of the main issues using internal resources, including risk mapping;
• z organisation of internal workshops with operational staff to verify issue relevance;
• z the collection of CSR data by the GROUP GORGÉ Financial Department.

This work made it possible to identify and prioritise the Group's environmental, social and societal challenges based on:

• z stakeholder expectations;
• z their impact on the Group's activity.

The listing of these risks revealed three levels of potential risks: moderate, high and capital.

PRODWAYS GROUP assessed its challenges and the contribution of its mission and its social and environmental initiatives to the 2030 Agenda for Sustainable Development adopted by the UN in 2015. This programme consists of 17 Sustainable Development Goals (SDGs).

The SDGs are emerging as the new global priority framework and their adaptation for companies by the Global Compact, the WBCSD and the GRI is a new comprehensive and sustainable CSR framework with which the Group hopes to comply.

5.1.3 Our Business model

PRODWAYS GROUP is a specialist in industrial and professional 3D printing with a unique positioning as an integrated player. The Group has developed right across the 3D printing value chain (software, 3D printers, materials, parts & services) with a high value added technological industrial solution to meet the digital challenges of industry. The Group is targeting the aerospace and healthcare sectors as a priority.

The solutions developed by the Group make it possible to reduce the consumption of raw materials and create new sustainable production methods. In addition, the Group's activities have a low impact on the environment and climate change and are part of a sustainable development strategy.

The Group's detailed business model is presented in the Section 1.2 "Overview of the Group and its businesses" of this annual report. The following diagram gives the Group's stakeholders an overview of its value creation model.

	Our resources	Our results and achievements / our value creation
Financial capital	Stability guaranteed by a majority family shareholder (GROUPE GORGÉ) A solid financial structure	z +75% growth in revenue z Growth in profitability and cash generated by operations z 2 acquisitions in 2018
Industrial/societal capital	8 technology centres in France and abroad A network of industrial and university partners	Help our customers innovate and support them in their digital transformation z Development of thermoplastic parts with L'ORÉAL z Rapid Additive Forging with NEXTEAM GROUP Innovation for healthcare: development of custom-made prostheses for audiology, podiatry and dentistry
Intellectual capital	€3.3 million of R&D expenditure	13 patents filed z z Innovative new product launches: ProMaker V10 ceramic 3D printer, ProMaker LD-20
Human capital	28% engineers and executives in 3 countries	87 hires on permanent employment contracts z z 448 hours of training
Environmental capital	1,830m3 of water 176 MWh of gas consumed 2,150 MWh of electricity consumed	z A moderate environmental footprint z Technologies enabling resources used in production to be saved

5.1.4 The CSR risks and issues of PRODWAYS GROUP

The issues related to PRODWAYS GROUP's activity were attributed to the various Sustainable Development Goals to monitor the Group's CSR contribution and measure actions and their related performance.

PRODWAYS GROUP materiality matrix

The PRODWAYS GROUP materiality matrix represents the CSR issues identified as priorities for the Group. The Group's materiality analysis identified five priority issues, corresponding to six Sustainable Development Goals. These 5 issues reflect the risks and opportunities identified during the risk analysis.

SDG	CSR issue
	3D printing: a production method that meets the challenges of sustainable development
	Building a major player in technological innovation
	z Medical: an area of strategic development for PRODWAYS GROUP z Workplace health, safety and well-being, a commitment for all employees
	Attracting and shaping talent
	Investing in sustainable and responsible relationships with employees
	Activities with limited impact on climate change

5.2 3D PRINTING: A PRODUCTION METHOD THAT MEETS THE CHALLENGES OF SUSTAINABLE DEVELOPMENT

3D printing is considered an environmentally-friendly technology because of its additive process, which means that only the raw material necessary to manufacture a part is used. Due to the nature of its activity, PRODWAYS GROUP contributes to reducing the consumption of raw materials.

3D printing, also called additive manufacturing, consists of creating physical objects by superimposing different layers of material. This manufacturing process is mostly computer-assisted using digital files (this is called Computer Aided Design, or CAD). Once the object is finalised by the operator for that file, it is sent to special software that cuts it into slices and sends it to the printer, which deposits or solidifies material (depending on the materials and techniques used) layer by layer until the final piece is obtained.

3D printing differs from traditional manufacturing techniques such as machining, carving, milling and drilling. These traditional manufacturing techniques use blocks of material (steel, aluminium, titanium, etc.) and processes to eliminate everything deemed unnecessary to obtain the final shape of the part (this is called subtractive manufacturing). With the 3D printing technique, objects are formed by adding material, which allows users to overcome the constraints of a mould, sheet metal plate or block of metal.

PRODWAYS GROUP's Rapid Additive Forging technology can manufacture blank parts in titanium that are close to the geometry of the final part, which will then be sent for final machining. This avoids considerable losses of material as shavings which can represent up to 95% of the metal block with traditional machining processes.

By offering the option of printing custom-made parts on demand, manufacturers and consumers can repair objects that would otherwise be thrown out because a part is no longer available.

3D printing also means that production sites can be relocated nearer customers, thus reducing transport emissions. In 2018, PRODWAYS GROUP was awarded the Made In France prize by Reporter d'Espoir for the theme Employment, Ecology, Relocation: the promises of 3D printing.

Thanks to the new possibilities offered, this manufacturing process is appreciated by all industrial trades, in particular by the aerospace industry, for the rapid prototyping of complex geometric parts, and by the medical industry, for the manufacture of several different parts on a single production line.

The Group is positioned in the majority of its activities as a designer and assembler, and it has set up recycling processes for materials, namely the powders and liquid resins used. Accordingly, its activities do not directly cause any major environmental hazards.

5.3 BUILDING A MAJOR PLAYER IN TECHNOLOGICAL INNOVATION

Since its creation, PRODWAYS GROUP has had a reputation for its ability to innovate using know-how and thanks to significant Research and Development efforts. The Group has devoted a significant portion of its resources to Research and Development to develop and improve its lines of 3D printers and equipment and find new applications for additive manufacturing. These efforts enable the Group to maintain its position as a respected player in technological innovation in the additive manufacturing sector.

5.3.1 Innovation: the heart of the Group's strategy

Born from the meeting of Dr. André-Luc ALLANIC, a world-renowned expert in additive manufacturing, with the industrialist Raphaël GORGÉ, innovation has always formed the very DNA of PRODWAYS GROUP.

The Group has eight technology centres dedicated to specific areas of involvement and a team of engineers dedicated to the development of future applications.

The Group's research focuses on 3 key areas:

• z machines;
• z materials;
• z medical prostheses (dental, audiology, podiatry).

The Group focuses its efforts on mass production applications, particularly the medical, aeronautics and jewellery sectors, where the benefits of 3D printing are significant.

This ability to innovate has enabled the Group to develop several leading innovations in 2018, including the new ProMaker V10 ceramic 3D printing machine and the MOVINGLight® ProMaker LD-20 machine.

In 2018, €3.3 million was allocated to R&D, which represents 5.4% of revenue, compared to €1.9 million and 5.6% of revenue in 2017.

The Group makes major investments in research and development to maintain and further develop its competitive edge. The Group files patent applications when necessary to protect patentable technical, technological and commercial breakthroughs.

As a result, PRODWAYS GROUP holds a portfolio of 13 patent families to protect the material formulas and the proprietary DLP® MOVINGLight® technology developed in its own 3D printers.

5.3.2 Co-innovation and knowledge sharing

PRODWAYS GROUP bases its vision of innovation on openness and partnership, along several dimensions.

Co-innovation with customers and the additive manufacturing ecosystem

In 2018, INITIAL and L'OREAL joined forces to accelerate the development of thermoplastic parts through 3D printing. This new method of production incorporates sustainable development issues.

The Group has also set up a partnership with the aeronautical machine tool operator NEXTEAM GROUP around the innovative Rapid Additive Forging technology for the 3D printing of titanium parts for the aeronautical and other sectors. R&D resulted in a reduction of over 80% in material loss compared to traditional machining techniques.

To strengthen its supply of additive manufacturing materials, the Group has set up numerous partnerships with leading chemists such as BASF, ARKEMA and A. SCHULMAN.

Entrepreneurial partnerships through joint ventures with start-ups

In 2015, PRODWAYS GROUP invested in the USINE IO incubator, a technological innovation space that provides inventors, entrepreneurs, SMEs and large companies with machine resources, a centre of technical expertise and networking in order to design, prototype and prepare the industrialisation of objects. Thanks to a concept unique in Europe, USINE IO disrupts the way in which start-ups, SMEs and large industrial groups innovate by supporting them from the idea to the object.

Sharing knowledge with as many people as possible

As an additive manufacturing expert in France, the Group tries, through meetings, conferences and round tables, to initiate knowledge about its activities with associations, business clubs, students or any other audience that may take an interest in the Group's activities. By attending these types of events, the Group seeks to promote the role of middle-market companies in France and support French innovation. The Group also participates in technical conferences at trade shows or events dedicated to additive manufacturing such as the Journée de la Fabrication Additive, in which it participates.

5.4 MEDICAL: AN AREA OF STRATEGIC DEVELOPMENT FOR PRODWAYS GROUP

A 3D printer dedicated to medical applications allows the printing of objects that are smaller (like teeth) or have thinner walls. Whether a hospital, university or research laboratory, many medical institutions are interested in 3D printing technologies.

In the medical sector, 3D printing makes it possible to (i) plan surgeries using accurate anatomical models made from scanners or MRIs, (ii) develop custom implants or prostheses, (iii) use 3D-printed models for medical education, and (iv) bio-print live tissues for drug testing and implant placement.

By making it possible to print unique, custom parts at a reduced price, the use of 3D printing has grown very quickly in this industry.

Within its "Products" division, PRODWAYS GROUP houses medical activities that produce medical prostheses through 3D printing:

• z INTERSON PROTAC has been an important player in audiology for over 40 years. The Company produces customised hearing aid tips and Personal Protection Equipment (PPE) hearing protectors;
• z CRISTAL is a dental prosthesis laboratory;
• z PODO 3D produces 3D printed orthopaedic and comfort insoles under the "SCIENTIFEET" brand, sold to podiatrists.

In addition, PRODWAYS GROUP has developed a range of 3D printers and materials specifically dedicated to the dental sector. Its additive manufacturing expertise in the dental industry is part of its partnership with the biggest names in the sector such as Dreve, DELTAMED or DENTOSMILE. It is also associated with leading dentists and top-tier international providers.

The machines are specially designed for their application and are adapted to the biocompatible materials used in various sectors. For example, the Group developed PLASTCure, a biocompatible material perfectly suited to surgical modelling.

5.4.1 Medical industry requirements

The medical industry is highly regulated. To meet its stringent requirements, the Group has put in place a quality system based on standards and certifications.

In addition, the Group must meet the European standards for Personal Protective Equipment (PPE) for noise protection earplugs (EU 2016/425). The new European regulations require stricter compliance procedures, continuous monitoring of the production process and a guarantee of quality.

As a medical raw material supplier, the Group is also subject to EN 9001 and REACH Regulations. In accordance with regulations, the Group controls the risks related to raw materials and informs its users.

5.4.2 Sponsorships

INTERSON PROTAC is a sponsor of the AuditionSolidarité. Org association, whose goal is to work to improve auditory well-being for as many people as possible.

As part of its sponsorship, INTERSON PROTAC donates €1.00 to the Audition Solidarité association for each pair of customised Pianissimo® sold and €0.50 for each standard Pianissimo® sold. INTERSON PROTAC also supports the association in humanitarian missions abroad. A team of hearing professionals are working around the world in schools for deaf and hearing-impaired children to equip all children and train teachers on site for daily monitoring. As part of its missions, INTERSON PROTAC provides Audition Solidarité with expertise in the manufacture of hearing aid eartips and donates materials and accessories.

5.5 COMMITMENTS TO ITS EMPLOYEES

With the growth of its activities, the Group has undertaken sustained recruitment efforts in recent years. The recruitment of key skills is one of the Group's challenges.

5.5.1 Investing in sustainable and responsible relationships with employees

PRODWAYS GROUP pays close attention to its relationships with its employees, access to quality health services for all and the application of a sustainable and attractive employment policy.

5.5.1.1 Employment policy

In high technology sectors innovation – and therefore talent – determines the successes of tomorrow. This is why the development of human potential is a priority for PRODWAYS GROUP. In recent years, the Group has experienced strong growth in its workforce, through external growth in particular. A common HR policy is being developed at Group level.

Total Group workforce and geographic distribution

The total workforce is the number of people present within the Group at 31 December 2018 who are bound by a permanent contract, a fixed-term contract or a trainee contract. Part-time workers are counted as one person.

The following indicators (with the exception of the table below) relate to the total Group workforce for the selected subsidiaries, totalling 337 employees in 2018 (74% of the total and 61% on a comparable basis). Indicators for 2017 related to 3 subsidiaries totalling 193 employees.

	Systems		Products		Corporate		Total
	2018	2017	2018	2017	2018	2017	2018	2017
Executives and engineers	101	100	54	46	4	3	159	149
Technicians and supervisors	73	22	71	69	-	-	144	91
Employees	43	43	67	54	-	-	110	97
Workers	24	15	23	23	-	-	47	38
TOTAL	241	180	215	192	4	3	460	375

In France, the Group operates in many regions. Through its activities, the Group is a local and sustainable job provider.

Gender distribution by socioprofessional categories

	Men		Women		Total
(%)	2018	2017	2018	2017	2018	2017
Managers and higher professional positions	27	30	5	8	32	38
Technicians and supervisors	24	28	9	15	33	42
Employees	15	11	13	8	28	20
Workers	2	-	4	-	7	-
Apprentices	1	-	-	-	1	-
TOTAL	69	69	31	31	100	100

Distribution by age

(%)	2018	2017
Less than 30 years old	26	20
30 to 39 years old	34	31
40 to 49 years old	23	31
50 to 59 years old	16	18
60 years old and over	1	1

5.5.1.2 Recruitment policy

General recruitment policy

As the Group is positioned in high-tech activities that most often require its employees to have special know-how and/or expertise, it prefers to recruit in the form of permanent contracts, so as to retain knowledge and know-how. In fact, in 2018, permanent employment contracts represent 97% of the total workforce and 82% of hires.

	2018	2017
Hires*:	106	47
z of which permanent employment contracts	87	34
z of which fixed-term employment contracts	18	13
z of which trainee contracts	1	-

* Excluding transfer between Group entities.

We note that over the year, a 125% increase in hires compared to the previous year was related in particular to the entry of new companies into the scope of reporting.

The table below breaks down departures by reason.

	2018	2017
Departures	89	42
z for economic reasons	-	1
z for other reasons	6	2
z end of contract, retirement, resignation, termination by mutual agreement	83	39

In 2018, the Group had a turnover rate of 25.6% compared to 16.4% in 2017. This increase is mainly linked to newly consolidated entities and the higher turnover of their businesses.

Non-discriminatory hiring policy

PRODWAYS GROUP is convinced that a diversity of profiles is an asset for the Company. The Group is committed to being a responsible employer and takes care to ensure that its conduct and practices are exemplary. For this reason, it is committed to preventing any form of discrimination in hiring.

In 2018, 2.1% of the PRODWAYS GROUP's total workforce was disabled.

	2018	2017
Number of disabled employees	7	3

Integration of young graduates and the Group's employment policy

PRODWAYS GROUP promotes its innovative activities on social networks through several of its subsidiaries using both LinkedIn and Twitter. With this presence, it can relay important information about the markets in which it operates, share trends, communicate about the latest contracts awarded to it, announce new solutions or trade show attendance, publish job offers, and so on.

The Group attends a number of student events, including those at the École Centrale Marseille, to approach engineering students seeking to join the Group for internships of three to seven months.

Since 2014, several engineering students who had spent their final-year internship in the Group have been offered permanent contracts on completion of their internships.

Trade fairs also provide an opportunity to meet potential candidates and an applications box is always made available whenever we take part in fairs. Several Group companies have initiated recruitment webinars during which they present the Group's various businesses.

In 2018, the Group had 25 new interns and apprentices, ie. 7.4% of its workforce.

	2018	2017
Employees on a work-study contract	2	4
Interns	23	15

5.5.1.3 Gender parity

Within PRODWAYS GROUP, women represent nearly 31% of the workforce.

In 2018, they represented 16% of managers.

The employment of women varies according to the divisions. Thus, the "Systems" division, which represents 52% of the Group's workforce, employs 12% of women whereas the "Products" division which represents 48% of the Group's workforce, employs 73% of women.

(%)	2018	2017
Total workforce (% women)	31	31
Executives (% women)	5	8
Non-executives (% women)	26	23
Permanent employment contract workers (% women)	29	31
Fixed-term contract workers (% women)	2	1

Gender distribution remains relatively constant from year to year.

Actions implemented to promote gender parity

As regards gender parity, the Group's actions are organised around four concepts: professional promotion, remuneration, professional training and work/family balance.

Two of the Group's subsidiaries have signed agreements on equal pay for men and women.

Work/life balance measures also benefit gender parity as they enable both parents to handle family responsibilities. Agreements for work/life balance are currently being negotiated and include measures such as:

• z "sick children" leave;
• z better consideration of the constraints of personal life through scheduling of work meetings on adapted schedules and telecommuting;
• z voluntary part-time;
• z continued remuneration of men during paternity leave.

Moreover, the composition of the Board of Directors of the Company complies with the rules on gender equality set out in law 2011-103. The PRODWAYS GROUP's Board of Directors is concerned to ensure equality of treatment between men and women in its subsidiaries.

5.5.1.4 Remuneration policy and financial benefits

Each subsidiary has its own wage policy and makes its own independent decisions regarding the wage developments of its employees, depending on its field of business and growth or its own constraints, salary evolution of its employees. To maintain employee loyalty, in 2016, the Group set up free share allocation plans for all Group employees present as of the date of the decision to allocate shares and free share allocation plans for a limited number of employees. A new plan was implemented at the beginning of 2019.

Overview of remuneration

	2018	2017
Gross remuneration	13,336	7,837
Social security contributions	5,632	2,995
Pension liabilities: compensation paid and IAS 19 provision	114	75
Shareholding plans, profit-sharing	-	-
Total	18,968	10,907

5.5.2 Promoting learning opportunities

The development of know-how and innovation is a priority in the skills management policy of the Group given its rapid evolution in a constantly growing 3D printing market.

Thanks to a training and development policy, employees can learn a skill while furthering their personal and professional development.

The Group's subsidiaries are developing their own training policies. The human resource management policy on training is focused on two types of training:

• z training to adapt to a workstation and/or related to job advancement and job retention;
• z skills development training.

During 2018, nearly 1,353 hours of training were provided. The share of people trained increased to 25% of the workforce, representing 16 training hours on average per trained employee.

	2018	2017
Number of hours of training provided	1,353	695
Rate of access to training	25	17
Average number of hours per employee	16	17
Number of persons trained	83	42
Budget (thousands of euros)	59	29

Skills development training

3D printing skills do not always exist outside the Group. To meet its needs, the Group sometimes sets up internal training programmes. INTERSON PROTAC trains each employee internally in hearing aid technology.

AVENAO offers its employees the chance to earn professional qualification certificates (CQPs) specific to technical positions to obtain certification; thus AVENAO trains all of its technicians so that they can develop additional skills.

In addition, all AVENAO salespeople receive training from DASSAULT SYSTEMES and its young managers receive external training.

OUR VALUES, OUR EMPLOYEES AND OUR CSR COMMITMENTS Commitments to its employees

5.5.3 Workplace health, safety and well-being, a commitment for all employees

Each Group company has its own workplace health and safety issues, depending on its activity. In addition, Group companies do not have facilities that are subject to the regulations for facilities classified for environmental protection (ICPE).

Workplace health and safety policies are managed within each Company in the Group depending on its field of business and its own constraints. The assessment of health and safety risks in relation to employees is set out in a document drawn up by each company. Employees are also informed of these risks through the CHSCT (Committee for Health, Safety and Working Conditions), in companies where such a Committee exists. Customised training is provided based on the risks monitored by employees, especially for hazardous or polluting products.

Some of the Group's activities require the storage and handling of hazardous products. The concerned companies implement the safety procedures recommended for the handling and storage of such products.

For example, INITIAL handles potentially hazardous powders (explosion risks), which may pose a health hazard when inhaled. Strict handling and storage procedures have been put in place.

Similarly, the use of DLP® or lasers requires certain handling precautions to protect the health of the employees concerned. The collection and recycling of potentially polluting materials is entrusted to specialised service providers.

PRODWAYS GROUP Health and Safety policy performance

	224018	2017
Number of workplace accidents with stoppage	2	4
Number of days lost	24	25
Frequency rate	3.77	15.35
Severity rate	0.05	0.23

GROUP registered 2 workplace accidents which included stoppages. Frequency and severity rates were significantly lower than 2017.

The very satisfactory results demonstrate the high quality of safety management in the Group and the quality of the related training.

PRODWAYS GROUP produces and uses Personal Protective Equipment (PPE). Thus, in the INITIAL subsidiary, operators have been equipped with PODO 3D "Scientifeet" brand 3D printed orthopaedic insoles to improve employee comfort and reduce foot pain. A business study in partnership with occupational physicians, a podiatrist and an applied biomechanics laboratory has been launched. INTERSON PROTAC, a specialist in audiology, sells hearing

protection for industry to protect employees from noise in open-plan offices or factories, and it has equipped several of the Group's subsidiaries.

5.6 ACTIVITIES WITH LIMITED IMPACT ON CLIMATE CHANGE AND THE ENVIRONMENT

Given its activities, the Group has a limited impact on climate change and the environment, but deploys actions as soon as possible to reduce its environmental impact.

5.6.1 Resource and product end-of-life management

5.6.1.1 End-of-life management of raw materials and waste

In its production activities, the Group only assembles components purchased from suppliers and produces a limited quantity of waste.

Consumption of raw materials

The main raw materials used by the subsidiaries of PRODWAYS GROUP are:

• z Polyamides
• z Thermoplastics
• z Plaster

Part production activities use whenever possible recycled polymer powders. Thus, the INITIAL subsidiary uses used powders to produce new PODO 3D printed "Scientifeet" insoles.

Raw material (tonnes)	2018	2017
Powder and resins	50	42
Plaster	7.3	N/A

Waste management

The three main types of waste produced by PRODWAYS GROUP are:

• z Polyamides
• z Thermoplastics
• z Plaster

End-of-life waste management actions and partnerships have been established in the majority of subsidiaries. INTERSON PROTAC has created an Environmental Charter so that it can be a responsible company, protect the environment and further integrate economic and environmental priorities into all aspects of its business.

All hazardous waste generated by the subsidiaries is collected and processed in accordance with the regulations in force. Powders and resins are recycled via a specialised waste management circuit.

Quantity of waste produced (tonnes)	2018	2017
Powders and resins	22	24
Plaster	6.5	N/A

The amounts of metal shavings and polluted content (oils and solvents) were negligible.

5.6.1.1 Water consumption

Water is used for sanitary and industrial purposes. Group companies are not located in areas of water stress and their water supply is provided by the public drinking water system.

In addition, simple measures to limit water waste have been taken in several Group companies, such as the installation of water saving devices.

	2018	2017
Water consumption (m3 )	1,830	1,131

The change in consumption is mainly due to newly consolidated companies.

Scope of energy consumption indicators

The coverage rate for data relating to energy consumption, water and greenhouse gas emissions represents 100% of total surfaces occupied by panel companies. Direct GHG emissions relate to natural gas consumption and vehicle fleets, and indirect GHG emissions relate to electricity consumption.

Identification of main sources of GHG emissions

The Group has identified the vehicle fleet as the main source of direct C02 emissions. And the main source of indirect emissions is electricity consumption related to buildings and machines.

5.6.2 Employee travel

A policy has been in place since 2015 to reduce business travel by the Group's employees. Now, internal video conferencing and phone conferencing are commonplace, as well as more widespread use of public transport. Some subsidiaries have invested in the installation of electric charging stations to encourage employees to use electric vehicles. Employee carpooling has also been promoted within the Company.

In 2018, emissions related to subsidiaries' vehicle fleets totalled 360 teq CO2.

	2018	2017
GHG emissions related to vehicle fleets
(teq CO2.)	360	N/A

	2018	2017
Gas consumption (MWh PCS)	176	208
Electricity consumption (MWh)	2,150	1781

The change in consumption is mainly due to newly consolidated companies.

Summary of greenhouse gas emissions

CO2 equivalent emissions were 519 tonnes in 2018, 69% of which relates to the vehicle fleets.

	2018	2017
GHG emissions related to vehicle fleets (teq CO2.)	360	N/A
GHG emissions from gas (t. CO2 eq.)	36	46
GHG emissions from electricity (teq CO2.)	123	86
Total CO2 emissions	519	131

	2018	2017
Direct GHG emissions (teq CO2)	396	46
Indirect GHG emissions (teq CO2)	123	86
Total CO2 emissions	519	131

5.6.3 Energy consumption

Most gas and electricity consumption is generated by site heating and the powering of mainly small industrial equipment. To limit its energy consumption, INITIAL, the Group's main industrial site, recovers the heat emitted by its 3D printer fleet via a heat network. This facility allows it to heat its premises using the energy generated by its 3D printer fleet.

The Group occasionally invests in new energy-efficient installations such as lighting automation.

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5.7 REPORT BY THE INDEPENDENT THIRD-PARTY ENTITY ON THE CONSOLIDATED STATEMENT OF NON-FINANCIAL PERFORMANCE IN THE MANAGEMENT REPORT

To the Shareholders,

Corporate responsibility

It is the Board of Directors' responsibility to prepare a Statement that complies with the legal and regulatory provisions, including a presentation of the business model, a description of the main non-financial risks, a presentation of the policies with regard to these risks and the results of these policies, including key performance indicators.

The Statement was prepared by applying the Company's procedures (hereafter the "Framework") for which the significant elements are presented in the Statement.

Independence and quality control

Our independence is defined by the provisions in article L. 822-11-3 of the French Commercial Code and the profession's Code of ethics. In addition, we have implemented a quality control system including documented policies and procedures that aim to ensure compliance with ethical rules, professional standards and the applicable legal and regulatory texts.

Independent third-party entity responsibility

Based on our work, it is our responsibility to provide a reasoned opinion expressing a conclusion of moderate assurance on:

• z the Statement's compliance with the provisions in article R. 225-105 of the French Commercial Code;
• z the truthfulness and fairness of the information provided in application of paragraph 3 of I and II of article R. 225 105 of the French Commercial Code, namely, the results of the policies, including key performance indicators and actions, relating to the main risks, hereafter the "Information".

It is not our responsibility to express an opinion on:

• z the Company's compliance with the other applicable legal and regulatory provisions, notably in terms of the vigilance plan and the fight against corruption and tax evasion;
• z the compliance of products and services with applicable regulations.

Nature and scope of work

Our work described below was conducted in accordance with the provisions of article A. 225 1 et seq. of the French Commercial Code determining the terms and conditions according to which the independent third-party entity conducts its assignment and with ISAE 3000 - Assurance engagements other than audits or reviews of historical financial information.

We conducted work to enable us to assess the compliance of the Statement to the regulatory provisions and the true and fair view of the Information:

• z we acknowledged the activity of all of the companies included in the consolidation scope, the presentation of the main social and environmental risks associated with this activity;
• z we assessed the appropriateness of the Framework with regard to its relevance, completeness, reliability, neutrality and understandability, by taking into consideration, where applicable, good sector practices;
• z we checked that the Statement covers each information category stipulated in III of article L. 225 102 1 in social and environmental terms;
• z we checked that the Statement presents the business model and the main risks related to the activity for all entities included in the consolidation scope, including, where relevant and proportionate, the risks created by its business relations, products or services and the policies, actions and results, including the key performance indicators;
• z we checked, where relevant in view of the main risks or policies presented, that the Statement presents the information stipulated in II of article R. 225-105;
• z we assessed the process to select and validate the main risks;
• z we enquired into the existence of internal control and risk management procedures implemented;
• z we assessed the consistency of the results and key performance indicators selected in view of the main risks and policies present;
• z we checked that the Statement covers the consolidated scope, namely all of the companies included in the consolidation scope, in accordance with article L. 233-16 with the limits stipulated in the Statement(1);
• z we assessed the collection process implemented by the entity to ensure the completeness and true and fair view of the Information;

⁽¹⁾ The accreditation scope is available on the website www.cofrac.fr.

OUR VALUES, OUR EMPLOYEES AND OUR CSR COMMITMENTS Rapport de l'organisme tiers indépendant, sur la déclaration consolidée de performance extra-financière

• we implemented for the key performance indicators and other quantitative results that we considered to be the most important(1) z :
• z analytical procedures to check the correct consolidation of the collected data and the consistency of their changes;
• z detail tests based on surveys, to check the correct application of the definitions and procedures and reconcile the data with the supporting documents. This work was carried out for a selection of contributing entities(2) covering between 24% and 59% of the consolidated data for the key performance indicators and results selected for these tests;
• z we consulted documentary sources and conducted interviews to substantiate the qualitative information (actions and results) that we considered to be the most important(3);
• z we assessed the consistency of the entire Statement compared to our knowledge of the Company.

We believe that the work we have conducted in exercising our professional judgement enables us to express moderate assurance; a higher level of assurance would have required more extensive verification work.

Means and resources

Our work mobilised the skills of 4 people and took place between November 2018 and April 2019.

We called upon the help of our experts in sustainable development and corporate social responsibility to complete this assignment. We conducted interviews with the people responsible for preparing the Statement.

Conclusion

Based on our work, we found no material misstatement that would cause us to believe that the Statement of non-financial performance is not presented in accordance with applicable regulatory provisions and that the Information, as a whole, is presented in a fair manner in compliance with the Framework.

Neuilly-sur-Seine, 11 April 2019 Independent third-party entity

Grant THORNTON

Vincent Papazian Partner

5

French member of Grant Thornton international

⁽¹⁾ Quantitative social information: total headcount and breakdown by gender, age and region; recruitments; departures (of which dismissals); number of accidents with work stoppage; number of days lost for accidents with work stoppage; theoretical number of hours worked; frequency rate; severity rate; number of training hours; number of people trained. Quantitative environmental information: water consumption; electricity consumption; gas consumption; fuel consumption; direct GHG emissions; indirect GHG emissions; amount of waste generated; amount of raw materials consumed.

⁽²⁾ AS3D and 3D Servicad.

⁽³⁾ Qualitative information relating to the following sections: "Integration of graduates and the Group's employer policy"; "Building a major player in technological innovation".

INFORMATION ON THE SHAREHOLDERS' MEETING OF 7 JUNE 2019

6.1	REPORT OF THE BOARD OF DIRECTORS PRESENTING THE RESOLUTIONS SUBMITTED TO THE COMBINED SHAREHOLDERS' MEETING OF 7 JUNE 2019	148
6.2	DRAFT RESOLUTIONS FOR THE ORDINARY AND EXTRAORDINARY SHAREHOLDERS' MEETING OF 7 JUNE 2019	152
	Agenda	152
	Draft resolutions	152
6.3	REPORTS OF THE STATUTORY AUDITORS PRESENTED TO THE SHAREHOLDERS' MEETING Statutory auditors' special report on regulated agreements and commitments Statutory auditors' report on capital reduction	157 157 157
	Statutory auditors' report on the delegation of competence to increase the capital within the framework of an equity financing line	158
	Report of the statutory auditors on the issue of shares and/or transferable securities giving access to the capital reserved for subscribers to Company savings plans	159

6.4 OTHER REPORTS BY THE BOARD OF DIRECTORS PRESENTED TO THE SHAREHOLDERS' MEETING OF 7 JUNE 2019 160

Management report	160
Board of Directors' corporate governance report prepared in accordance with article L.225-37 et seq. of the French Commercial Code	160
Special report by the Board of Directors prepared in accordance with article L.225-197-4 of the
French Commercial Code	160

6.1 REPORT OF THE BOARD OF DIRECTORS PRESENTING THE RESOLUTIONS SUBMITTED TO THE COMBINED SHAREHOLDERS' MEETING OF 7 JUNE 2019

1. Approval of the separate and consolidated financial statements for the financial year ended 31 December 2018 – Approval of non-tax-deductible expenses and charges (first and second resolutions)

We ask you to approve the separate financial statements for the financial year ended 31 December 2018 showing a profit of €2,749 thousand, and the consolidated financial statements for the financial year ended 31 December 2018 showing net income (Group share) of -€5,454 thousand.

We also ask you to approve the total amount of the expenses and charges referred to in article 39–4 of the French General Tax Code, namely the sum of €0 and the corresponding tax.

2. Appropriation of income for the year (third resolution)

The appropriation of the Company's income that we are proposing complies with the law and our Articles of Association.

We propose to appropriate the income for the 2018 financial year as follows:

• z origin:
  • z profit for the financial year €2,749,344.25;
• z appropriation:
  • z legal reserve €1,707,390.57,
  • z retained earnings: €1,041,953.68.

We therefore ask you not to resolve on the payment of any dividend.

In accordance with article 243 bis of the French General Tax Code, we remind you that no dividend payout was made in respect of the last three financial years.

3. Approval of regulated agreements and commitments (fourth and fifth resolutions)

In the fourth resolution, we request you to approve each of the agreements covered by article L.225-38 of the French Commercial Code duly authorised by the Board of Directors.

In the fifth resolution, we request you, in accordance with article L.225-42-1 of the French Commercial Code, to approve the Company's commitment to pay, where applicable, compensation to the Chief Executive Officer in return for his non-compete undertaking.

These commitments and undertakings are presented to you in the special report from the statutory auditors related to them shown in Chapter 2.5 of the Registration Document and which will be presented to you in the meeting.

4. Appointment of new Directors (sixth, seventh and eighth resolutions)

In order to strengthen the Company's governance, we request that you appoint Ms Michèle LESIEUR as a Director of the Company for a period of three years expiring following the ordinary shareholders' meeting called to approve the financial statements of the financial year ending 31 December 2021 (sixth resolution).

The skills and experience of Michèle LESIEUR are presented in Chapter 2 of the Registration Document. Michèle LESIEUR would be independent with regard to the independence criteria of the Middlenext Governance Code.

We also request you to appoint Mr Loïc LE BERRE as a Director of the Company for a period of three years expiring following the ordinary shareholders' meeting called to approve the financial statements of the financial year ending on 31 December 2021 (seventh resolution).

The skills and experience of Mr Löic LE BERRE are presented in Chapter 2 of the Registration Document. He represents the majority shareholder GROUPE GORGÉ and will therefore not be independent with regard to the independence criteria of the Middlenext Governance Code.

We also request you to appoint Mrs Céline LEROY as a Director of the Company for a period of three years expiring following the ordinary shareholders' meeting called to approve the financial statements of the financial year ending on 31 December 2021 (eighth resolution).

The skills and experience of Mrs Céline LEROY are presented in Chapter 2 of the Registration Document. She represents the majority shareholder GROUPE GORGÉ and will therefore not be independent with regard to the independence criteria of the Middlenext Governance Code.

5. Setting the amount of Directors' fees (ninth resolution)

The shareholders' meeting of 2018 allocated Directors' fees to the Board of Directors of an overall amount of €30,000 from 1 January 2018. According to the Company's current remuneration policy, only independent Directors not remunerated elsewhere by the Group or by a shareholder that they represent may receive Directors' fees.

In order to take into account the presence of independent Directors within the Board of Directors and to enable, where applicable, the future appointment of new independent Directors, we propose to bring this amount to €60,000 from 1 January 2019.

6. Approval of the payment of variable and exceptional remuneration due pursuant to the 2018 financial year for executive corporate officers (Say on pay ex post) (tenth and eleventh resolutions)

Your Board prepared a report on corporate governance presenting the remuneration due with respect to the 2018 financial year to Raphaël GORGÉ in his capacity of Chairman and Chief Executive Officer until 4 October 2018, then in his capacity of Chairman of the Board of Directors, and to Olivier STREBELLE in his capacity of Chief Executive Officer from 4 October 2018 (see Section 2.2 of the annual report).

Pursuant to article L.225-37-2 of the French Commercial Code, we ask you to approve the fixed, variable and exceptional components of the total remuneration and benefits in kind paid or allocated to Raphaël GORGÉ for the prior financial year in his capacity as Chairman and Chief Executive Officer and then as Chairman of the Board of Directors (tenth resolution) and to Olivier STREBELLE in his capacity as Chief Executive Officer (eleventh resolution). The payment of variable and exceptional remuneration with respect to the 2018 financial year to executive corporate officers depends upon the approval by an ordinary shareholders' meeting of the components of the remuneration of the corporate officer concerned.

7. Approval of the remuneration policy for executive corporate officers (Say on pay ex ante) (twelfth and thirteenth resolutions)

Pursuant to article L.225-37-2 of the French Commercial Code, the Board prepared a report on corporate governance presenting the criteria for determining, distributing and allocating the fixed, variable or exceptional components of the total remuneration and benefits in kind attributable to the Chairman of the Board of Directors (namely, currently Raphaël GORGÉ) and to the Chief Executive Office (namely, currently Olivier STREBELLE), for the 2019 financial year (see Section 2.2 of the annual report).

After reviewing this report, we ask you to approve the principles and criteria for determining, distributing, and allocating the fixed, variable, and exceptional components of the total remuneration and benefits in kind attributable to the Chairman of the Board of Directors (twelfth resolution) and to the Chief Executive Officer (thirteenth resolution).

8. Proposal to renew the authorisation for implementing the share repurchase programme (fourteenth resolution) and authorisation for the related share capital reduction (fifteenth resolution)

We propose that you authorise the Board of Directors, for a period of 18 months, to purchase shares of the Company, on one or more occasions, at the times it will determine, within the limit of 10% of the number of shares comprising the share capital, adjusted where appropriate in order to take account of any increase or reduction of capital that may occur during the term of the programme.

This authorisation would cancel the authorisation granted to the Board by the shareholders' meeting of 13 June 2018 in its tenth ordinary resolution.

Acquisitions may be made to:

• z stimulate the secondary market or the liquidity of Company shares through the intermediary of an investment service provider under a liquidity contract that complies with the Code of Ethics as recognised by the French Financial Markets Authority;
• z retain the purchased shares and subsequently allocate them in payment or exchange in potential external growth transactions, in respect of market practices approved by the AMF;
• z provide coverage for stock option plans and/or free share allotments (or similar plans) for Group employees and/or corporate officers as well as all share allotments to Group or Company savings plans (or similar plans), under profit-sharing schemes and and/or all other forms of share allotment to Group employees and/or corporate officers;
• z allot shares upon the exercise of rights linked to securities giving access to the share capital through reimbursement, conversion, exchange, presentation of a warrant or by any other method;
• z cancel shares purchased, subject to the authorisation granted by a shareholders' meeting;
• z more generally, carry out any objective authorised by law or any market practice approved by market authorities.

These share purchases may be carried out by any means, including by acquisition of blocks of shares, and at times that the Board deems appropriate.

The Company reserves the right to use option mechanisms or derivatives in line with applicable regulations.

We propose that you set a maximum purchase price of €20 per share and consequently, that you set the maximum amount of the operation at €101,631,280.

As a consequence of the cancellation objective, we ask you to authorise the Board of Directors, for a period of 24 months, to cancel, at its sole discretion, on one or more occasions, within the limit of 10% of the capital, calculated on the day of the cancellation decision, excluding any shares cancelled during the preceding 24 months, the shares that the Company holds or may hold as a result of repurchases under its programme to repurchase shares, and to reduce the share capital accordingly, in accordance with the legal and regulatory provisions in force (fifteenth resolution).

The description of the share repurchase programme set out in article 241–2 of the General Regulations of the French Financial Markets Authority is published in the terms set out in article 221–3 of said Regulations and contains all useful additional information for your information about this repurchase programme (see Section 4.2.2 of the annual report).

9. Financial delegations

The Board of Directors wishes to have the necessary powers to make all issues, should it think fit that may be required for the development of the Group's activities. The financial delegations approved during the shareholders' meeting of 13 June 2018 are still valid until mid-2020 with the exception of the delegation enabling the Board to proceed, where applicable, with a capital increase by issue of ordinary shares, equity securities giving access to other equity securities or giving rights to the allocation of debt securities and/or securities giving access to equity securities to be issued, without pre-emptive subscription rights for the benefit of a category of persons who will underwrite the Company's equity securities that might result therefrom in connection with an equity line of financing.

The meeting is therefore requested to renew this single delegation under the conditions presented below.

9.1 Delegation of powers to the Board to increase the share capital through the issue, immediately or in future, of ordinary shares or equity securities giving access to other equity securities or rights to the allocation of debt securities, and/or securities giving access to equity securities issued, without pre-emptive subscription rights for the benefit of a category of persons who will underwrite the Company's equity securities that might result therefrom in connection with an equity line of financing (sixteenth resolution)

This delegation will authorise the Board to increase capital through the issue of ordinary shares or equity securities giving access to other equity securities or rights to the allocation of debt securities, and/or securities giving access to equity securities issued, without preemptive rights in favour of a category of persons who will underwrite the Company's capital securities that might result therefrom in connection with an equity line of financing.

Such a delegation could be used by the Company to set up an equity line with which the Company could increase its financial flexibility alongside the other financing tools it may already have in place.

Under this delegation, we ask you to cancel the preemptive rights of ordinary shareholders to equity securities giving access to other equity securities or giving rights to the allocation of debt securities and/or any transferable securities issued in favour of the following category of persons: any credit institution, investment service provider, or member of an investment banking syndicate or any investment fund or Company undertaking to guarantee the completion of the capital increase or of any issue that may eventually result in a capital increase that could be completed pursuant to this delegation in the context of the setup of an equity line of financing.

For the bearers of transferable securities thus issued, this delegation is, as of right, an express waiver by shareholders of their preemptive rights to the shares to which these transferable securities will give right.

The total number of share capital increases that may be carried out immediately and/or in future under this delegation cannot exceed €4,000,000 or its exchange value in foreign currency to which ceiling will be added, as the case may be, the additional amount of shares issued to preserve the rights of security holders and other rights giving access to the share capital, in accordance with the law and any applicable contractual stipulations.

The maximum nominal amount of debt securities that may be issued under this delegation will be set at €20,000,000 (or exchange value if the issue is in another currency).

The issue price of the shares issued under this delegation will be determined by the Board of Directors and will be at least equal to the weighted average price of the last three trading sessions preceding the setting of the price, less a discount, if any, not to exceed 30% corrected in the case of any difference in the settlement date. Furthermore, it is specified that (i) in the event that securities giving access to the share capital are issued, the issue price of the shares likely to result from their exercise, conversion or exchange may be priced, if appropriate, at the discretion of the Board of Directors, using a formula defined by the Board and subsequently applicable to the issue of said securities (for example, at the time of their exercise, conversion or exchange), to which the aforementioned maximum discount may be applied, if the Board of Directors deems it appropriate, at the application date of said formula (and not at the issue date of the security), and (ii) the issue price of securities giving access to the share capital that may be issued pursuant to this resolution will be such that proceeds received immediately by the Company, plus those likely to be received on the exercise or conversion of said securities, shall be for each share issued as a result of issuing these securities, at least equal to the aforementioned minimum amount.

The 30% discount on the issue price of the shares or transferable securities allows the Company to have greater flexibility in the context of negotiations that could take place with institutions should the Company wish to set up this equity line of financing.

This delegation would have be for a period of 18 months.

9.2 Delegation of authority to increase the share capital for the benefit of members of a Company savings plan (seventeenth resolution)

We submit this resolution for your approval, in order to comply with the provisions of article L.225-129-6 of the French Commercial Code, pursuant to which the extraordinary shareholders' meeting must also vote on a resolution to increase the share capital under the conditions laid down by articles L.3332-18 et seq. of the French Labour Code, when it delegates its authority to carry out a capital increase in cash. As the meeting is called to vote on a delegation for a share capital increase in cash, it must therefore also vote on a delegation for the benefit of members of a Company savings plan, with the observation that inclusion on the agenda of this delegation for the benefit of members of a Company savings plan also allows the Company to satisfy its three-year obligation included in the aforementioned provisions.

As part of this delegation, we propose that you authorise the Board of Directors to increase the share capital, on one or more occasions, by the issuance of ordinary shares or securities giving access to Company capital for the benefit of members of one or more Company or Group savings plans set up by the Company and/or the French or foreign companies related to it under the conditions of article L.225-180 of the French Commercial Code and article L.3344-1 of the French Labour Code.

Pursuant to the provisions of article L.3332-21 of the French Labour Code, the Board of Directors may decide on the allocation, free of charge, to beneficiaries of shares to be issued or already issued or other securities giving access to the Company's share capital to be issued or already issued, in connection with (i) the matching contribution that may be paid pursuant to Company or Group savings plan regulations, and/or (ii), where applicable, the discount.

In accordance with the law, the shareholders' meeting would remove shareholders' pre-emptive subscription rights.

The maximum nominal amount of share capital increases that may be made by using the delegation is 1% of the amount of share capital reached upon the Board's decision to realise this increase, where this amount is independent of any other limit set on delegating a capital increase. To this amount would be added, where applicable, the additional amount of the ordinary shares to be issued to maintain, in accordance with the law and with any applicable contractual provisions regarding other adjustment cases, the rights of holders of marketable securities giving entitlement to the Company's capital securities.

This delegation would be for a period of 26 months.

It should be noted that, in accordance with the provisions of article L.3332-19 of the French Labour Code, the price of the shares to be issued cannot be more than 20% (or 30% when the non-availability provided for by the plan pursuant to articles L.3332-25 and L.3332-26 of the French Labour Code is greater than or equal to ten years) less than the average of the opening prices quoted for the share during the 20 trading sessions prior to the decision of the Board of Directors relating to the capital increase and the corresponding issuance of shares, nor higher than this average.

The Board of Directors would have, within the limits defined above, the necessary powers to set the conditions for the issuance(s), acknowledge completion of the resulting capital increases, make the corresponding changes to the Articles of Association, charge, at its sole initiative, the costs of the capital increases to the amount of related premiums and withdraw from this amount the sums necessary to bring the legal reserve to one-tenth of the new capital after each increase, and more generally, do all that is necessary in such matters.

However, insofar as this delegation seems to it neither relevant nor appropriate, the Board of Directors suggests that you reject it.

9.3 Authorisations for individual employee shareholding

As the authorisations enabling the Board to allocate stock options or free shares are still valid and the ceilings for the authorisations remain sufficient in spite of the new free share allocation plans put in place on 31 January 2019, we propose that you renew them during a subsequent shareholders' meeting.

The Board invites you to approve, by your vote, the text of the resolutions that it proposes, with the exception of the seventeenth resolution.

On 1 April 2019 The Board of Directors

6.2 DRAFT RESOLUTIONS FOR THE ORDINARY AND EXTRAORDINARY SHAREHOLDERS' MEETING OF 7 JUNE 2019

Agenda

Ordinary resolutions

• 1) Approval of the separate financial statements for the financial year ended 31 December 2018 – approval of non-tax-deductible expenses and charges.
• 2) Approval of the consolidated financial statements for the financial year ended 31 December 2018.
• 3) Appropriation of income for the financial year.
• 4) Special report of the statutory auditors on regulated agreements and commitments and approval of those agreements (agreement on the takeover of employment contracts concluded between PRODWAYS GROUP, GROUPE GORGÉ and the Chief Executive Officer).
• 5) Special report of the statutory auditors on regulated agreements and commitments and approval of those agreements (compensation planned in return for the non-compete undertaking by the Chief Executive Officer).
• 6) Appointment of Mrs Michèle LESIEUR as Director.
• 7) Appointment of Mr Löic LE BERRE as Director.
• 8) Appointment of Mrs Céline LEROY as Director.
• 9) Modification of the amount of Directors' fees.
• 10) Approval of the fixed, variable and exceptional components of the total remuneration and benefits in kind paid or allocated to Raphaël GORGÉ in his capacity as Chairman and Chief Executive Officer, then Chairman of the Board of Directors for the 2018 financial year.
• 11) Approval of the fixed, variable and exceptional components of the total remuneration and benefits in kind paid or allocated to Olivier STREBELLE in his capacity as Chief Executive Officer for the 2018 financial year.
• 12) Approval of the policy on the remuneration of the Chairman of the Board of Directors.
• 13) Approval of the policy on the remuneration of the Chief Executive Officer.
• 14) Authorisation to be given to the Board of Directors for the Company to repurchase treasury shares pursuant to article L.225-209 of the French Commercial Code (share repurchase programme), duration of the authorisation, objectives, term and conditions, ceiling.

Extraordinary resolutions

• 15) Authorisation to be given to the Board of Directors with the aim of cancelling shares repurchased by the Company pursuant to article L.225-209 of the French Commercial Code.
• 16) Delegation of powers to be given to the Board to increase the share capital through the issue, immediately or in future, of ordinary shares or equity securities giving access to other equity securities or rights to the allocation of debt securities, and/or securities giving access to equity securities issued, without pre-emptive rights for the benefit of a category of persons who will underwrite the Company's equity securities that might result therefrom in connection with an equity line of financing.

17) Delegation of authority to be given to the Board of Directors to increase capital by issuing ordinary shares and/or securities giving access to share capital with cancellation of shareholders' pre-emptive subscription rights for the benefit of members of a Company savings plan pursuant to articles L.3332-18 et seq. of the French Labour Code.

Ordinary resolutions

18) Powers for formalities.

Draft resolutions

Ordinary resolutions

■ First resolution – Approval of the separate financial statements for the year ended 31 December 2018 – Approval of non-tax-deductible expenses and charges

The shareholders' meeting, ruling under the quorum and majority conditions for ordinary shareholders' meetings, after having taken note of the reports by the Board of Directors and statutory auditors for the financial year ended 31 December 2018 approves, as they were presented, the annual financial statements as of this date, showing a profit of €2,749,344.25.

The shareholders' meeting specifically approves the total, amounting to €0, of the expenses and charges referred to in article 39–4 of the French General Tax Code, and the corresponding tax.

■ Second resolution – Approval of the consolidated financial statements for the financial year ended 31 December 2018

The shareholders' meeting, ruling under the quorum and majority conditions for ordinary shareholders' meetings, after having taken note of the reports by the Board of Directors and statutory auditors on the consolidated financial statements as at 31 December 2018, approves those financial statements as they were presented, returning a loss (Group share) of -€5,454 thousand.

■ Third resolution – Appropriation of income for the financial year

The shareholders' meeting, ruling under the quorum and majority conditions for ordinary shareholders' meetings, on the proposal of the Board of Directors, decides to appropriate the income for the year ended 31 December 2018, as follows:

• z origin:
  • z profit for the financial year €2,749,344.25;
• z allocation:
  • z legal reserve €1,707,390.57,
  • z retained earnings: €1,041,953.68.

In accordance with article 243 bis of the French General Tax Code, the shareholders' meeting notes it was reminded that no dividend payout was made in respect of the last three financial years.

■ Fourth resolution – Special report of the statutory auditors on regulated agreements and commitments and approval of those agreements (agreement on the takeover of employment contracts concluded between PRODWAYS GROUP, GROUPE GORGÉ and the Chief Executive Officer)

Ruling under the quorum and majority conditions for ordinary shareholders' meetings on the special report from the statutory auditors on the regulated agreements and commitments as presented, the general meeting approves the agreement on the takeover of employment contracts concluded between PRODWAYS GROUP, GROUPE GORGÉ and the Chief Executive Officer.

■ Fifth resolution – Special report of the statutory auditors on regulated agreements and commitments and approval of those agreements (compensation planned in return for the non-compete undertaking by the Chief Executive Officer)

Ruling under the quorum and majority conditions for ordinary shareholders' meetings on the special report by the statutory auditors on the regulated agreements and commitments as presented, the shareholders' meeting approves the commitment of the Company corresponding to the payment, where applicable, of compensation in return for the non-compete undertaking by the Chief Executive Officer.

■ Sixth resolution – Appointment of Mrs Michèle LESIEUR as Director

The shareholders' meeting, ruling under the quorum and majority conditions for ordinary shareholders' meetings, resolves to appoint Michèle LESIEUR as Director for a term of three years ending at the close of the shareholders' meeting to be held in 2022 to approve the financial statements for the financial year ending 31 December 2021.

■ Seventh resolution – Appointment of Mr Löic LE BERRE as Director

The shareholders' meeting, ruling under the quorum and majority conditions for ordinary shareholders' meetings, resolves to appoint Mr Löic LE BERRE as Director for a term of three years ending at the close of the shareholders' meeting to be held in 2022 to approve the financial statements for the financial year ending 31 December 2021.

■ Eighth resolution – Appointment of Mrs Céline LEROY as Director

The shareholders' meeting, ruling under the quorum and majority conditions for ordinary shareholders' meetings, resolves to appoint Mrs Céline LEROY as Director for a term of three years ending at the close of the shareholders' meeting to be held in 2022 to approve the financial statements for the financial year ending 31 December 2021.

■ Ninth resolution – Allocation of Directors' fees – Fixing the amount of Directors' fees

The shareholders' meeting, ruling under the quorum and majority conditions for ordinary shareholders' meetings, having taken note of the report by the Board of Directors, sets the total amount of Directors' fees allocated to the Board of Directors at €60,000 a year, until further resolution, from the year starting 1 January 2019.

■ Tenth resolution – Approval of the fixed, variable and exceptional components of the total remuneration and benefits in kind paid or allocated for the financial year ending 31 December 2018 to Raphaël GORGÉ, as Chairman and Chief Executive Officer, then Chairman of the Board of Directors since 4 October 2018

The shareholders' meeting, ruling under article L.225-100 paragraph II of the French Commercial Code, having reviewed the special report of the Board of Directors, approves the fixed, variable and exceptional components of the total remuneration and benefits in kind paid or allocated for the financial year ended 31 December 2018 to Raphaël GORGÉ, Chairman and Chief Executive Officer until 4 October 2018, then Chairman of the Board of Directors, as presented in this report (see Section 2.2 of the annual report).

■ Eleventh resolution – Approval of the fixed, variable and exceptional components of the total remuneration and benefits in kind paid or allocated for the financial year ending 31 December 2018 to Olivier STREBELLE, as Chief Executive Officer

The shareholders' meeting, ruling under article L.225-100 paragraph II of the French Commercial Code, having reviewed the special report of the Board of Directors, approves the fixed, variable and exceptional components of the total remuneration and benefits in kind paid or allocated for the financial year ended 31 December 2018 to Olivier STREBELLE in his capacity as Chief Executive Officer since 4 October 2018, as presented in this report (see Section 2.2 of the annual report).

■ Twelfth resolution – Approval of the remuneration policy of the Chairman of the Board of Directors

The shareholders' meeting, ruling under the quorum and majority conditions for ordinary shareholders' meetings, having reviewed the report of the Board of Directors on the remuneration policy for corporate officers established in accordance with article L.225-37-2 of the French Commercial Code, approves the principles and criteria for determining, distributing and allocating the fixed, variable and exceptional components of the total remuneration and benefits in kind that may be allocated to the Chairman of the Board of Directors, by virtue of his office, as presented in this report.

■ Thirteenth resolution – Approval of the remuneration policy of the Chief Executive Officer

The shareholders' meeting, ruling under the quorum and majority conditions for ordinary shareholders' meetings, having reviewed the report of the Board of Directors on the remuneration policy for corporate officers established in accordance with article L.225-37-2 of the French Commercial Code, approves the principles and criteria for determining, distributing and allocating the fixed, variable and exceptional components of the total remuneration and benefits in kind that may be allocated to the Chief Executive Officer by virtue of his office, as presented in this report.

■ Fourteenth resolution – Authorisation to be given to the Board of Directors for the Company to buy its own shares in accordance with article L.225-209 of the French Commercial Code

The shareholders' meeting, ruling under the quorum and majority conditions for ordinary shareholders' meetings, noting the report of the Board of Directors, authorises the latter, for a period of 18 months, in accordance with articles L.225-209 et seq. of the French Commercial Code to purchase, on one or more occasions, at times it will determine, shares in the Company, up to a maximum of 10% of the number of shares comprising the share capital, adjusted where appropriate to take account of any capital increase or reduction that may occur during the term of the program.

This authorisation cancels the authorisation granted to the Board by the shareholders' meeting of 13 June 2018 in its tenth ordinary resolution.

Acquisitions may be made to:

• z stimulate the secondary market or the liquidity of Company shares through the intermediary of an investment service provider under a liquidity contract that complies with the Code of Ethics as recognised by the French Financial Markets Authority;
• z retain the purchased shares and subsequently allocate them in payment or exchange in potential external growth transactions, in respect of market practices approved by the AMF;
• z provide coverage for stock option plans and/or free share allotments (or similar plans) for Group employees and/or corporate officers as well as all share allotments to Group or Company savings plans (or similar plans), under profit-sharing schemes and and/or all other forms of share allotment to Group employees and/or corporate officers;
• z allot shares upon the exercise of rights linked to securities giving access to the share capital through reimbursement, conversion, exchange, presentation of a warrant or by any other method;
• z cancel shares purchased, subject to the authorisation granted by a shareholders' meeting;
• z more generally, carry out any objective authorised by law or any market practice approved by market authorities.

These share purchases may be carried out by any means, including by acquisition of blocks of shares, and at times that the Board deems appropriate.

The Company reserves the right to use option mechanisms or derivatives in line with applicable regulations.

The maximum purchase price is set at €20 per share. In case of operations on the capital, including division or grouping of shares or a free allocation of shares, the aforementioned amount will be adjusted in the same proportions (multiplier coefficient equal to the ratio of the number of shares composing the capital before the operation and the number of shares after the operation).

The maximum amount of the transaction is thus set at €101,631,280 (corresponding to 10% of the share capital as at 1 April 2019, at a maximum price of €20 per share).

The shareholders' meeting grants all powers to the Board of Directors for the purpose of carrying out these operations, to approve the terms and conditions, to conclude all agreements and execute all formalities.

Extraordinary resolutions

■ Fifteenth resolution – Authorisation to be given to the Board of Directors to cancel shares repurchased by the Company in accordance with article L.225-209 of the French Commercial Code

The shareholders' meeting, having noted the report by Board of Directors and the report by the statutory auditors:

• 1) authorises the Board of Directors to cancel, at its sole discretion, on one or more occasions, within the limit of 10% of the capital, calculated on the day of the cancellation decision, excluding any shares cancelled during the preceding 24 months, the shares that the Company holds or may hold as a result of repurchases under article L.225-209 of the French Commercial Code, and to reduce the share capital accordingly, pursuant to the laws and regulations in force;
• 2) sets the period of validity of this authorisation at twenty-four months starting from the date of this meeting;
• 3) gives the Board of Directors all powers to carry out the transactions required for such cancellations and the related reductions in share capital, amend the Company Articles of Association as a result, and complete all required formalities.

■ Sixteenth resolution – Delegation of powers to be given to the Board to increase the share capital through the issue, immediately or in future, of ordinary shares or equity securities giving access to other equity securities or with rights to the allocation of debt securities and/or securities giving access to equity securities issued, without pre-emptive rights for the benefit of a category of persons who will underwrite the Company's equity securities that might result therefrom in connection with an equity line of financing

The shareholders' meeting, ruling under the quorum and majority conditions for ordinary shareholders' meetings, having taken note of the report of the Board of Directors and the report of the statutory auditors, in accordance with articles L.225-129 et seq. of the French Commercial Code, specifically articles L.225-129-2, L.225-129-4, L.225-135, L.225-138 and L.228-91 et seq.:

1) delegates to the Board of Directors its powers to approve the issue, in one or more instalments, in the proportions and at the times it deems appropriate, in France or abroad, in euros, foreign currency or any other unit of account established in reference to a set of currencies, of ordinary shares or equity securities giving access to other equity securities or giving right to the allocation of debt securities and/or marketable securities (including all debt securities) giving access to equity securities issued;

• 2) resolves that the marketable securities issued can consist of debt securities, can be associated with the issue of such securities or allow the issue thereof as intermediate securities;
• 3) decides to cancel the pre-emptive rights of ordinary shareholders to equity securities giving access to other equity securities or giving rights to the allocation of debt securities and/or any transferable securities to be issued in favour of the following category of persons: any credit institution, investment service provider, or member of an investment banking syndicate or any investment fund or company undertaking to guarantee the completion of the capital increase or of any issue that may eventually result in a capital increase that could be completed pursuant to this delegation in connection with an equity line of financing;
• 4) duly notes that where necessary this delegation entails the waiver by shareholders of their pre-emptive rights to any shares to which these securities give access;
• 5) decides that the total nominal amount of share capital increases that may be carried out immediately and/or in future under this delegation cannot exceed €4,000,000 or its exchange value in foreign currency to which ceiling will be added, as the case may be, the additional amount of shares issued to preserve the rights of security holders and other rights giving access to the share capital, in accordance with the law and any applicable contractual stipulations;
• 6) resolves to set at €20,000,000 (or exchange value if the issue is in another currency) the maximum nominal amount of debt securities that can be issued under this delegation, given that:
  • z this amount will be supplemented where applicable by any above-par redemption premium,
  • z this ceiling does not apply to debt securities referred to in articles L.228-40, L.228-36-A and L.228-92 paragraph 3 of the French Commercial Code whose issue is decided or authorised by the Board of Directors under the conditions set out in article L.228-40 of said code or, in other cases, under the conditions determined by the Company in accordance with article L.228-36-A of said code;
• 7) the issue price of the shares issued under this delegation will be determined by the Board of Directors and will be at least equal to the weighted average price of the last three trading sessions preceding the setting of the price, less a discount, if any, not to exceed 30% corrected in the case of any difference in the settlement date. Furthermore, it is specified that (i) in the event that securities giving access to the share capital are issued, the issue price of the shares likely to result from their exercise, conversion or exchange may be priced, if appropriate, at the discretion of the Board of Directors, using a formula defined by the Board and subsequently applicable to the issue of said

securities (for example, at the time of their exercise, conversion or exchange), to which the aforementioned maximum discount may be applied, if the Board of Directors deems it appropriate, at the application date of said formula (and not at the issue date of the security), and (ii) the issue price of securities giving access to the share capital that may be issued pursuant to this resolution will be such that proceeds received immediately by the Company, plus those likely to be received on the exercise or conversion of said securities, shall be for each share issued as a result of issuing these securities, at least equal to the aforementioned minimum amount;

• 8) specifies that the delegation thus conferred on the Board is valid for a period of eighteen months from this shareholders' meeting;
• 9) decides that the Board of Directors will have all powers, with the option of sub-delegation pursuant to the law, to implement, under the conditions set by law and the Articles of Association, this delegation in order specifically to:
  • z decide the amount of share capital increase, the issue price (determined per the pricing conditions recorded above) and the amount of the premium that may, as applicable, be requested at issue,
  • z set the dates, conditions and procedures of any issue as well as the form and features of the shares or marketable securities giving access to the share capital issued, set the vesting date, which may be retroactive, of the shares or marketable securities giving access to the share capital issued and their method of payment,
  • z set the list of beneficiaries in the aforementioned category of persons and the number of shares to be allocated to each of them,
  • z at its sole initiative and when it deems appropriate, charge the costs, duties and fees incurred by the capital increases carried out under the delegation mentioned in this resolution, against the amount of premiums related to these transactions and withdraw, from the amount of these premiums, the sums necessary to bring the legal reserve to one-tenth of the new share capital after each increase,
  • z note the completion of each share capital increase and amend the Articles of Association accordingly,
  • z in general enter into any agreement to ensure the success of the planned issues, take all measures and carry out all formalities required for the issue and listing of and trade in the securities issued under this delegation as well as the exercise of the rights attached thereto,
  • z make any decision with a view to admitting the securities and marketable securities thus issued to any market on which the Company's shares are admitted for trading.

■ Seventeenth resolution – Delegation of authority to be given to the Board of Directors to increase the share capital by issuing ordinary shares and/or securities giving access to share capital without pre-emptive rights for the benefit of members of a company savings plan pursuant to articles L.3332-18 et seq. of the French Labour Code

The shareholders' meeting, having noted the report of the Board of Directors and the special report of the statutory auditors pursuant to articles L.225-129-6, L.225-138-1 and L.228-92 of the French Commercial Code, and L.3332-18 et seq. of the French Labour Code:

• 1) delegates its powers to the Board of Directors, if the latter sees fit and at its sole discretion, to increase the share capital on one or more occasions, by issuing ordinary shares or transferable securities giving access to capital securities to be issued by the Company to members of one or more Company or Group savings plans set up by the Company and/or French or foreign companies related to it under the terms of article L.225-180 of the French Commercial Code and article L.3344-1 of the French Labour Code;
• 2) waives for the benefit of these individuals the pre-emptive subscription rights to shares which may be issued pursuant to this delegation;
• 3) sets the period of validity of this authorisation at twenty-six months starting from the date of this delegation;
• 4) limits the maximum nominal amount of share capital increases that may be made by using this delegation to 1% of the amount of share capital reached upon the Board's decision to effectuate this increase. This amount is independent of any other limit set on delegating a capital increase. To this amount will be added, where applicable, the additional amount of the ordinary shares to be issued to maintain, in accordance with the law and with any

applicable contractual provisions regarding other adjustment cases, the rights of holders of marketable securities giving entitlement to the Company's capital securities;

• 5) decides that the price of the shares to be issued, pursuant to paragraph 1/ of this delegation of powers, shall not be more than 20% lower – or 30% lower if the lock-in period prescribed by the plan pursuant to articles L.3332-25 and L.3332-26 of the French Labour Code is greater than or equal to ten years – than the average of the opening prices quoted for the share during the 20 trading sessions prior to the decision of the Board of Directors relating to the capital increase and the corresponding issue of shares, nor shall that price be higher than this average;
• 6) decides, pursuant to the provisions of article L.3332-21 of the French Labour Code, that the Board of Directors may resolve to allocate free of charge, to the beneficiaries defined in the first paragraph above, shares to be issued or already issued, or other securities giving access to the Company's share capital to be issued or already issued, for (i) the bonus payment that may be made under Company or Group savings plan rules, and/or (ii), where applicable, the discount;
• 7) notes that this delegation cancels and replaces any prior delegation of powers having the same purpose.

The Board of Directors may or may not implement this delegation, take all measures and carry out all necessary formalities.

Ordinary resolutions

■ Eighteenth resolution – Powers for formalities

The shareholders' meeting, ruling under the quorum and majority conditions for ordinary shareholders' meetings, grants all powers to the bearer of an example, a copy or an extract of these minutes in order to accomplish all filing and publicity formalities required by law.

6.3 REPORTS OF THE STATUTORY AUDITORS PRESENTED TO THE SHAREHOLDERS' MEETING

Statutory auditors' special report on regulated agreements and commitments

See Section 2.5.2 of the annual report.

Statutory auditors' report on capital reduction

To the Shareholders,

As statutory auditors of your Company and pursuant to the assignment set forth in article L. 225-209 of the French Commercial Code in case of capital reduction through the cancellation of shares purchased, we have drawn up this report intended to inform you of our assessment of the causes and conditions of the proposed capital reduction.

Your Board of Directors proposes that you delegate to it, for a period of 24 months from the date of this meeting, all powers to cancel, up to a limit of 10% of its capital, per 24-month period, the shares purchased pursuant to the implementation of a purchase authorisation by your company for its own shares within the framework of the provisions of the aforementioned article.

We conducted the procedures we deemed necessary in accordance with the professional guidelines of the French National Institute of statutory auditors (Compagnie Nationale des Commissaires aux Comptes) relating to this mission. These procedures require us to examine whether the causes and conditions of the proposed capital reduction, of a nature not to impair the equality of shareholders, are regular.

We have no matters to report on the causes and conditions of the proposed capital reduction.

Neuilly-sur-Seine and Paris, 11 April 2019

The statutory auditors

RSM Paris Stéphane Marie

PricewaterhouseCoopers Audit David Clairotte

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Statutory auditors' report on the delegation of competence to increase the capital within the framework of an equity financing line

(Shareholders' meeting of 7 June 2019 – 16th resolution)

To the Shareholders,

As statutory auditors of your Company and in execution of the assignment stipulated in articles L. 228-92 and L. 225-135 et seq. of the French Commercial Code, we hereby present our report on the proposed delegation of authority to the Board of Directors to decide on an issue with cancellation of the preferential subscription rights reserved for any credit institution, investment service provider, or member of an investment banking syndicate or any investment fund or company undertaking to guarantee the completion of the capital increase or of any issue that may eventually result in a capital increase that could be completed pursuant to this delegation in the context of implementing an equity line of financing, that you are asked to approve.

Based on its report, your Board of Directors asks you to grant it a delegation of authority for a period of 18 months, to decide on the issue of ordinary Company shares or equity securities giving access to other equity securities or giving right to the allocation of debt securities and/or marketable securities (including all debt securities) giving access to the equity securities issued without any preferential subscription rights to the securities issued. If applicable, it will determine the final terms and conditions of this transaction.

The overall nominal amount of the capital increases which may be carried out immediately or in the future may not exceed €4,000,000.

The overall nominal amount of the marketable securities representing debt securities which may be issued may not exceed €20,000,000.

It is the responsibility of the Board of Directors to prepare a report in compliance with articles L. 225-113 et seq. of the French Commercial Code. Our role is to report to you on the fairness of the financial information extracted from the financial statements, on the proposal to waive the preferential subscription rights and on certain other information concerning these transactions, set out in this report.

We conducted the procedures we deemed necessary in accordance with the professional guidelines of the French National Institute of statutory auditors (Compagnie Nationale des Commissaires aux Comptes) relating to this mission. These procedures consisted in verifying the contents of the report from the Board of Directors on this transaction and the process for setting the issue price of the future securities.

Subject to reviewing at a future date the terms and conditions of any issues of shares or securities granting access to the share capital that may be decided upon, we have no comments to make on the process for setting the issue price of the future securities, set out in the report of the Board of Directors.

As indicated in the Board of Directors' report, the cancellation of preferential subscription rights would be in favour of any credit institution, investment service provider, or member of an investment banking syndicate or any investment fund or company undertaking to guarantee the completion of the capital increase or of any issue that may eventually result in a capital increase that could be completed pursuant to this delegation in the context of implementing an equity line of financing. This description does not appear to us to comply with the provisions of article L. 225-138 of the French Commercial Code providing for the possibility of reserving capital increases to categories of persons satisfying determined characteristics insofar as the shareholders' meeting does not sufficiently nor precisely specify the identification criteria for the category to which the beneficiaries of the envisaged issue belong.

As a result, we cannot give our opinion on the proposed cancellation of preferential subscription rights made to you.

Pursuant to article R. 225-116 of the French Commercial Code, we will prepare an additional report, as required, when the Board of Directors makes use of this delegation.

Neuilly-sur-Seine and Paris, 11 April 2019

The statutory auditors

PricewaterhouseCoopers Audit David Clairotte

RSM Paris Stéphane Marie

Report of the statutory auditors on the issue of shares and/or transferable securities giving access to the capital reserved for subscribers to Company savings plans

(Shareholders' meeting of 7 June 2019 – 17th resolution)

To the Shareholders,

As statutory auditors of your Company and pursuant to the assignment set forth in articles L. 228-92 and L. 225-135 et seq. of the French Commercial Code (Code de commerce), we hereby present our report on the proposed delegation of authority to your Board of Directors to decide an increase in the share capital, through issues of shares or securities granting access to the share capital, with cancellation of preferential subscription rights, reserved for subscribers to one or more Company savings plans implemented within the Group, comprising the Company and the French and foreign companies falling within the consolidation scope of the Company's financial statements pursuant to article L. 225-180 of the French Commercial Code and article L. 3344-1 of the French Labour Code (Code du travail), a transaction that your are being asked to approve.

The maximum nominal amount of the capital increase likely to result from this issue is set at 1% of the amount of the share capital reached upon the Board's decision to carry out this increase.

This share capital increase is subject to your approval pursuant to the provisions of article L. 225-129-6 of the French Commercial Code and articles L. 3332-18 et seq. of the French Labour Code.

Based on its report, your Board of Directors is asking that you grant it full powers, for a period of twenty-six months commencing from the date of this shareholders' meeting, to decide an issue with cancellation of your preferential subscription rights to the transferable securities to be issued. When appropriate, it will set the final terms and conditions of these issues.

It is the responsibility of the Board of Directors to prepare a report in compliance with articles R. 225-113 et seq. of the French Commercial Code. Our role is to express an opinion on the fair presentation of the quantified financial information drawn from the accounts, on the proposal to cancel preferential subscription rights and on certain other information concerning this issue, contained in this report.

We conducted the procedures we deemed necessary in accordance with the professional guidelines of the French National Institute of statutory auditors (Compagnie Nationale des Commissaires aux Comptes) relating to this mission. These procedures consisted in verifying the contents of the report from the Board of Directors on this transaction and the process for setting the issue price of the future securities.

Subject to reviewing at a future date the terms and conditions of any issues of shares or securities granting access to the share capital that may be decided upon, we have no comments to make on the process for setting the issue price of the future securities, set out in the report of the Board of Directors.

As the definitive terms and conditions of the share capital increase have not been set, we do not express an opinion thereon and, as such, on the proposed cancellation of preferential subscription rights on which you are asked to decide.

Pursuant to article R. 225-116 of the French Commercial Code, we will prepare an additional report, as required, when the Board of Directors makes use of this authorisation.

Neuilly-sur-Seine and Paris, 11 April 2019 The statutory auditors

PricewaterhouseCoopers Audit David Clairotte

RSM Paris Stéphane Marie

6.4 OTHER REPORTS BY THE BOARD OF DIRECTORS PRESENTED TO THE SHAREHOLDERS' MEETING OF 7 JUNE 2019

Management report

See concordance table in Chapter 7.3.3 of the annual report.

Board of Directors' corporate governance report prepared in accordance with article L.225-37 et seq. of the French Commercial Code

See concordance table in Chapter 7.3.4 of the annual report.

Special report by the Board of Directors prepared in accordance with article L.225-197-4 of the French Commercial Code

Report concerning the free share allocation plans of 2016

Dear Shareholders,

In its only resolution, the extraordinary shareholders' meeting of 28 September 2015 authorised the Board of Directors to allocate existing or future free shares, on one or more occasion, in accordance with articles L.225-197-1 and L.225-197-2 of the French Commercial Code, amounting to 5% of the share capital to:

• z salaried employees of the Company or entities that are directly or indirectly affiliated with it under article L.225-197-2 of the French Commercial Code;
• z and/or corporate officers meeting the conditions laid down in article L.225-197-1 of the French Commercial Code.

As a result of this authorisation. the Board of Directors prepared a number of free share allocation plans in 2016 to involve all and in particular key employees in the Group's performance.

The Board prepared a report on the 2016 allocations and presented this to the combined shareholders' meeting of 21 March 2017.

The vesting period for the free share allocation plans of 2016 expires on 15 April 2019. The presence condition must be examined at this date; the liquidity condition of the plans is already fulfilled; the performance conditions are partially fulfilled solely for the December 2016 plans. Vesting is in progress as detailed in Section 4.2 of the annual report.

On 1 April 2019 The Board of Directors

Report concerning the free share allocation plans of 2019

Dear Shareholders,

Pursuant to article L.225-197-4 of the French Commercial Code, we are pleased to present you the information on the allocation of free shares to the employees and Directors of PRODWAYS GROUP during the year ended 31 December 2019.

Pursuant to the provisions of article L.225-197-5 of the French Commercial Code, this report will also be presented to the ordinary shareholders' meeting of GROUPE GORGÉ, as parent company of PRODWAYS GROUP.

In its 21st resolution, the extraordinary shareholders' meeting of PRODWAYS GROUP of 13 June 2018 authorised the Board of Directors to allocate existing or future free shares of the Company, on one or more occasions, in accordance with articles L.225-197-1 and L.225-197-2 of the French Commercial Code, amounting to 5% of the share capital to:

• z salaried employees of the Company or entities that are directly or indirectly affiliated with it under article L.225-197-2 of the French Commercial Code;
• z and/or corporate officers meeting the conditions set by article L.225-197-1 of the French Commercial Code.

As a result of this authorisation, the Board of Directors of PRODWAYS GROUP set up free share allocation plans. In compliance with the law, you will find below the information relating to these free share allocations of PRODWAYS GROUP approved by the Board of Directors.

On 31 January 2019, the Board of Directors approved two free share allocation plans:

• z a free share allocation plan for all employees of PRODWAYS GROUP and its subsidiaries with their registered offices in France (the collective plan); and
• z a free performance share allocation plan for the benefit of certain employees and corporate officers of the Company and its French and foreign subsidiaries (the selective plan).

The allocation of free shares under the collective plan

The collective free share allocation plan approved by the Board of Directors on 31 January 2019 whose aim is to reward all employees for the Group's performance and value creation, provides for the free allocation of 19,800 shares for the benefit of all employees of PRODWAYS GROUP and its majority-owned subsidiaries with their registered offices in France. These shares were allocated equally between the 396 employees of the Company and its French subsidiaries, with 50 shares per employee.

The plan is explained in more detail in the table below:

Number of shares allocated	Vesting Period/ Duration of the lock-up period	Total number of recipients	Allocation conditions and criteria	Origin of the shares to be allocated	Value of shares
19,800	From 31 January 2019 to 1 February 2021 No lock-up period	368	z No Group performance condition z Condition of continued employment on 1 February 2021	New shares to be issued	Based on the share's closing price on 31 January 2019 (i.e. €3.17): €62,766

The allocation of free shares under the selective plan

The selective free performance share allocation plan approved by the Board of Directors on 31 January 2019 whose aim is to retain key employees and link them to the Group's performance and value creation, provides for the free allocation of 783,800 performance shares for the benefit of certain employees and corporate officers of PRODWAYS GROUP or its French and foreign subsidiaries.

The plan is explained in more detail in the table below:

Total number of shares allocated	Vesting period / Duration of the lock-up period	Total number of recipients	Allocation conditions and criteria	Origin of the shares to be allocated	Value of shares
783,000	31 January 2019 to 1 February 2021, then on 1 February 2022 and lastly 1 February 2023 No lock-up period, except for executive corporate officers	50	z Performance condition based on the Group's consolidated operating income for the 2019, 2020 and 2021 financial years Or z Performance condition based on the Company's share price at 31 December of 2019, 2020 and 2021 And z Condition of continued employment at each intermediate vesting period (1 February 2021, 1 February 2022 and 1 February 2023)	New shares to be issued	Based on the share's closing price on 31 January 2019 (i.e. €3.17): €2,482,110

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Additional information pursuant to article L.225-197-4 of the French Commercial Code

The tables below have been prepared in accordance with the requirements of article L.225-197-4 of the French Commercial Code:

Free allocation of shares, on this date in 2019, to corporate officers of PRODWAYS GROUP, or by companies affiliated within the meaning of article L.225-197-2 of the French Commercial Code

Corporate officers concerned	Number of shares	Value
Olivier STREBELLE (Chief Executive Officer)	135,000	Based on the share's closing price on 31 January 2019 (i.e. €3.17): €427,950

Free allocation of shares to corporate officers of PRODWAYS GROUP, on this date in 2019, by controlled companies within the meaning of article L.233-16 of the French Commercial Code, for terms of office and positions performed by the said corporate officers within the said controlled companies None

List of the ten employees of PRODWAYS GROUP SA, that are not corporate officers, to which the largest number of shares has been allocated on this date in 2019 by PRODWAYS GROUP and by the companies indicated in article L. 225-197-2 of the French Commercial Code

The Company only has 5 employees.

Employees	Number of shares allocated	Value (euros)
A	30,000 (selective plan) and 50 (collective plan)	Based on the share's closing price on 31 January 2019 (i.e. €3.17): €95,258.50
B	25,000 (selective plan) and 50 (collective plan)	Based on the share's closing price on 31 January 2019 (i.e. €3.17): €79,408.50
C	20,000 (selective plan) and 50 (collective plan)	Based on the share's closing price on 31 January 2019 (i.e. €3.17): €63,558.50
D	5,000 (selective plan) and 50 (collective plan)	Based on the share's closing price on 31 January 2019 (i.e. €3.17): €16,008.50
E	50 (collective plan)	Based on the share's closing price on 31 January 2019 (i.e. €3.17): €158.50

Breakdown of shares between beneficiary categories

	Collective plan	Selective plan	Total	% of shares by beneficiary category
Corporate officers	-	505,000	505,000	62.9%
Employees	19,800	278,000	297,800	37.1%
Total	19,800	783,000	802,800	100 %

The Board of Directors 31 January 2019

7.1		INFORMATION CONCERNING THE STATUTORY AUDITORS	164
7.2	PERSON RESPONSIBLE FOR THE INFORMATION		164
	7.2.1	Person responsible for the annual report containing the annual financial report	164

7.2.2 Statement by the person responsible for the annual report 164

CONCORDANCE TABLES		165
7.3.1	Concordance table – Annual financial report	165
7.3.2	Concordance table – Consolidated management report pursuant to articles L.225-100 et seq. of the French Commercial Code	165
7.3.3	Concordance table – Corporate governance report pursuant to article L.225-37 of the French Commercial Code	167

7.1 INFORMATION CONCERNING THE STATUTORY AUDITORS

Principal statutory auditors

PRICEWATERHOUSECOOPERS AUDIT

Member of the Versailles Regional Association of statutory auditors

Represented by David CLAIROTTE

63, rue de Villiers – 92200 Neuilly-Sur-Seine

Statutory Auditor of the Company appointed by the combined shareholders' meeting of 5 May 2017 for a term of six years to expire at the end of the shareholders' meeting called to approve the financial statements for the financial year ending 31 December 2022 (first appointment).

RSM PARIS

Member of the Versailles Regional Association of statutory auditors

Represented by Stéphane MARIE

26 rue Cambacérès, 75008 Paris, France

Statutory Auditor of the Company appointed under the Articles of Association dated 13 March 2014 for a term of six years to expire at the end of the shareholders' meeting called to approve the financial statements for the financial year ending 31 December 2019 (first appointment).

Alternate statutory auditors

FIDINTER

26 rue Cambacérès, 75008 Paris, France

Alternate Statutory Suditor of the Company appointed under the Articles of Association dated 13 March 2014 for a term of six years to expire at the end of the shareholders' meeting called to approve the financial statements for the financial year ending 31 December 2019 (first appointment).

7.2 PERSON RESPONSIBLE FOR THE INFORMATION

7.2.1 Person responsible for the annual report containing the annual financial report

Mr Olivier STREBELLE as Chief Executive Officer of PRODWAYS GROUP SA.

7.2.2 Statement by the person responsible for the annual report

"I certify that, to my knowledge, the financial statements have been prepared in accordance with applicable accounting standards and give a true and fair view of the assets and liabilities, financial situation and earnings of the Company and of all the companies included in the scope of consolidation, and that the management report (incorporated by reference in the annual report, according to the concordance tables on pages 165 to 167) fairly presents the business trends, earnings and financial situation of the Company and of all the companies included in the scope of consolidation, as well as a description of the main risks and uncertainties they face."

Signed in Paris, 11 April 2019 The Chief Executive Officer

7.3 CONCORDANCE TABLES

7.3.1 Concordance table – Annual financial report

This annual report includes all sections of the annual financial report listed under article L.451-1-2 of the French Monetary and Financial Code, as well as article 222–3 of the French Financial Markets Authority (Autorité des Marchés Financiers – AMF) General Regulations. The documents referred to in article 222–3 of the aforementioned General Regulations and the corresponding sections of this annual financial report are specified below:

	Annual financial report (article L.451-1-2 of the French Monetary and Financial Code and article 222–3 of the General Regulations of the AMF)	Chapter/Section	Page
1.	Separate financial statements	3.2	106-114
2.	Consolidated financial statements	3.1	62-100
3.	Management report	See concordance table in Section 7.3.2	165
4.	Statement by the person responsible for the annual financial report	7.2.2	164
5.	Statutory auditors' report on the separate financial statements	3.2.5	115-117
6.	Statutory auditors' report on the consolidated financial statements	3.1.7	101-103
7.	Statutory auditors' special report on regulated agreements and commitments	2.5.2	57
8.	Board of Directors' corporate governance report (article L.225-37 of the French Commercial Code)	See concordance table in Section 7.3.3	167

7.3.2 Concordance table – Consolidated management report pursuant to articles L.225-100 et seq. of the French Commercial Code

This annual report includes the items from the management report referred to in articles L.225-100 et seq. and L.232-1 of the French Commercial Code and the corporate governance report pursuant to articles L.225-37 et seq. of the French Commercial Code.

	Consolidated management report	Chapter/Section	Page
I	Business activities and risks
1.	Position and activity of the Company over the past year	1.5.3	23
2.	Results of the activity of the Company, its subsidiaries and companies under its control	1.4	20-22
3.	Key financial performance indicators	1.1	8-9
4.	Key non-financial performance indicators	1.1 and 5	8-9, 132-143
5.	Analysis of changes to the business, its results and financial position	1.4.1, 1.4.2	20-22
6.	Significant events occurring between the closing of the financial year and the date the management report was drawn up	1.3.4, Note 12.3 to the consolidated financial statements and Note 9.2 to the separate financial statements	19, 99, 114
7.	Trends and outlook	Chairman and CEO's Message, 1.3.2	2, 18
8.	Research and development activities	1.3.3, 1.6.1, Note 6.2 to the consolidated financial statements	19, 25-26, 85
9.	Significant new shareholdings or controlling interests acquired during the year in companies with head offices on French territory	1.2.3, 1.2.4, 1.3.1, Note 2.2 to the consolidated financial statements	16-18, 72-73
10.	Statement of existing branches	N/A	-

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	Consolidated management report	Chapter/Section	Page
II	Internal control and risk management procedures
11.	Main risks and uncertainties	1.6	25-33
12.	Main features of the Company's internal control and risk management procedures for preparing and processing financial and accounting information	2.6	58-59
13.	Information on financial risks relating to the effects of climate change and presentation of the steps taken to mitigate such risks through a low-carbon strategy	1.6.6, 5.1.4	33, 134
14.	Information on the use of financial instruments (policy and hedging)	Note 8 to the consolidated financial statements, Note 5 and 7 to the separate financial statements	91-94, 109-111, 112
III	Statement of non-financial performance
IV	Shareholders and share capital
15.	Shareholder structure and changes occurring during the year	4.2, 4.3	122-125, 125-128
16.	Employee share ownership statement	4.3.5	128
17.	Repurchase and resale by the Company of its treasury shares	4.2.2	124-125
18.	Names of controlled entities and interests held	Note 13 to the consolidated financial statements	100
19.	Transfers of shares to regularise cross-shareholdings	N/A	-
20.	Trading in Company shares by senior managers and persons with close ties to them	2.1.4	43
21.	Information on stock option plans granted to corporate officers and employees	2.4, Note 5.4 to the consolidated financial statements	55, 83-84
22.	Information on free shares allocated to corporate officers and employees	2.4, Note 5.4 to the consolidated financial statements	55, 83-84
V	Corporate governance report (Art. L.225-37 et seq. of the French Commercial Code)	See concordance table below	167
VI	Other information
23.	Non-tax-deductible expenses and expenses added back following a tax adjustment	1.5.2	23
24.	Table of financial results for the last five financial years	1.5.5	24-25
25.	Total dividends and other income paid out over the previous three financial years	1.5.3, 4.4.2, 6.1	23, 129, 148-151
26.	Orders or financial penalties for anti-competitive practices	N/A	-
27.	Amount of intercompany loans granted under article L.511-6-3a of the French Monetary and Financial Code	N/A	-
28.	Works council opinion on changes to the Company's financial and legal structure	N/A	-
29.	Payment times for trade receivables and payables	1.5.4	23

7.3.3 Concordance table – Corporate governance report pursuant to article L.225-37 of the French Commercial Code

	Corporate governance report	Chapter/Section	Page
1.	Composition of the Board of Directors	2.1	36-42
2.	Presentation of the members of the Board of Directors, list of their offices and positions	2.1	36-42
3.	Conditions for the preparation and organisation of the Board of Directors' work	2.1.7	43-44
4.	Gender balance on the Board of Directors	2.1.3	43
5.	Forms of Executive Management	2.1.6	43
6.	Limitations of CEO powers	2.1.6	43
7.	Principles and criteria for the determination, distribution and allocation of remuneration, benefits in kind and commitments made to executive corporate officers	2.2	45-54
8.	Individual remuneration of executive corporate officers for the past financial year
9.	Reference to a Corporate Governance Code	2.3	54-55
10.	Information on factors liable to have an impact in the event of an IPO	4.3.4	128
11.	Summary table of valid financial delegations and their eventual use	4.2.3	125-127
12.	Special arrangements for shareholder participation in shareholders' meetings	2.4	55
13.	Agreements entered into between an executive or major shareholder and a subsidiary	2.5, Note 5.5 to the consolidated financial statements	56, 84-85

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This document is printed in compliance with ISO 14001.2004 for an environmental management system.

19, rue du Quatre-Septembre 75002 Paris Tél. : +33(0)1 44 77 94 77 www.prodways-group.com