ABC arbitrage : Release of the annual financial report as of 31.12.2024

               Consolidated financial statements                                                                > 49

              Statutory auditors’ report on the statutory financial statements                                  >                                                                        98

              Non-financial information provided on a voluntary basis                        > 105

              Statutory auditors’ fees                                                                                 > 146

  Certification by the person responsible for the annual financial report > 148

1.  Presentation of the company and its activities in 2024................................................................................................................ 5

1.1.  Group activity and profitability....................................................................................................................................................5

1.2.  Business activity and parent statutory financial statements of ABC arbitrage............................................................................7

1.3.  Research and Development activity............................................................................................................................................ 7

1.4.  Subsidiaries, Equity Interests and Branches................................................................................................................................ 8

1.5.  Human Resources......................................................................................................................................................................11

1.6.  Appropriation of earnings and distribution policy.....................................................................................................................12

2.  Corporate Governance...............................................................................................................................................................13

2.1.  General context and reference code......................................................................................................................................... 13

2.2.  Composition of the Board of Directors......................................................................................................................................13

2.3.  Conditions for preparing and organising the work of the Board............................................................................................... 17

2.4.  Remuneration Policy for Executive Corporate Officers..............................................................................................................22

2.5.  Delegations of Authority and Powers to the Board of Directors............................................................................................... 30

2.6.  Other Information..................................................................................................................................................................... 31

3. 

3.1.  Reference Texts..........................................................................................................................................................................34

3.2.  Parties Responsible for Internal Control and Risk Management............................................................................................... 34

3.3.  Risk Management Framework...................................................................................................................................................35

3.4.  General Organisation of Internal Control.................................................................................................................................. 40

3.5.  Organisation of Financial and Accounting Information Preparation..........................................................................................41

4.  ABC arbitrage shares................................................................................................................................................................. 43

4.1.  Life of the share and share buyback program........................................................................................................................... 43

4.2.  Distribution of company share capital.......................................................................................................................................44

4.3.  Dividend policy.......................................................................................................................................................................... 44

5.  Other elements......................................................................................................................................................................... 45

5.1.  Sponsorship............................................................................................................................................................................... 45

5.2.  Payment periods........................................................................................................................................................................46

5.3.  Sumptuary expenditures: Article 223 quater of the French General Tax Code......................................................................... 46

5.4.  Post-closing events.................................................................................................................................................................... 46

6.  Outlook.....................................................................................................................................................................................47

1. Presentation of the company and its activities in 2024

                    1.1.     Group activity and profitability

The key figures relating to the Group's activity are summarised in the table below:

*Management fees include the services invoiced by the Group’s asset management companies to the Quartys and ABCA Funds Ireland structures.

In accordance with IFRS standards, consolidated revenue from ordinary activities as at 31 December 2024 amounts to 51.5 million euros. The consolidated net accounting profit is up 62.9% compared with 31 December 2023, reaching 26.8 million euros. 

The Return on Equity (ROE) stands at 16.4% as at 31 December 2024, compared with 10.6% as at 31 December 2023.

Macroeconomic context and market conditions:

The year 2024 was marked by alternating phases of optimism and tension on financial markets, influenced by complex economic, monetary and geopolitical dynamics.

A start to the year marked by low volatility and resilience

The first months were characterised by historically low volatility, generally bullish US markets, and significant divergences between geographical areas. Asian indices followed divergent paths (strong rise in the Nikkei, decline in the Hang Seng). Solid performances by major technology firms (the “Magnificent 7”) supported the rise in US and European markets. However, this optimism was tempered by uncertainties surrounding the Fed’s monetary policy path, particularly following its initial announcements of the year.

Rising uncertainty and renewed volatility in spring

From April onwards, markets experienced an initial correction driven by a more uncertain macroeconomic environment. US inflation remained high, dampening hopes of rate cuts, while geopolitical tensions in the Middle East heightened investor caution. Despite this, markets showed resilience, particularly in May and June, buoyed by solid economic data and robust consumer spending in the United States and Europe. Volatility remained contained, though sector and regional divergences persisted.

A turbulent summer with a volatility spike in August

The summer marked a turning point with a sharp rise in volatility in August (VIX close to 40%), triggered by growing fears of a global economic slowdown, continued monetary policy uncertainty, and heightened geopolitical tensions. US and Asian markets experienced sharp movements, with a sudden drop in indices followed by a swift rebound, supported by strong corporate earnings and easing pressure on the labour market. Realised volatility peaked at 30% before rapidly normalising.

Autumn shaped by political uncertainty and central bank decisions

September and October saw a return to moderate volatility (VIX around 20), although investors remained cautious amid monetary policy decisions and macroeconomic tensions. The Fed began a double rate cut, prompting a rebound in markets at the end of the quarter. Meanwhile, the announcement of a major economic stimulus plan in China and political developments in Japan influenced Asian index performance.

The US elections and a mixed end to the year

November was dominated by electoral uncertainty in the United States. Donald Trump’s victory revived fears of a return to protectionism, impacting international markets, particularly in Asia. However, US markets rebounded, especially small caps (+11%), while realised volatility in the US fell to a historically low level.

In December, markets moved unevenly, with US equities under pressure following the Fed’s rate cut and a cautious outlook for 2025. In contrast, European markets benefited from a more stable environment. In Asia, Chinese fiscal stimulus measures supported investor confidence, although geopolitical tensions in South Korea added a layer of uncertainty.

Summary

The year 2024 was characterised by alternating periods of euphoria and caution, shaped by expectations around monetary policy and macroeconomic events:

●     A first half marked by low volatility and bullish markets, driven by tech and strong economic fundamentals.

●     A more challenging summer, with locally increased volatility in August and more hesitant markets due to growing uncertainties.

●     A mixed final quarter, shaped by the US elections, central bank decisions, and divergent economic dynamics across major regions.

Despite episodes of tension, market resilience prevailed, with indices showing the ability to rebound quickly after each stress phase.

The following can be retained as the main market parameters for the year: 

                   1.2.    Business activity and parent statutory financial statements of ABC arbitrage

The key elements of ABC arbitrage’s activity are summarised in the table below^[1]:

The company ABC arbitrage’s profit for the year remains stable. This stability nonetheless conceals two opposing effects of similar magnitude in absolute value:

●     On the one hand, a decrease in financial income of 5.6 million euros, mainly due to a lower dividend inflow;

●     On the other hand, an exceptional item resulting in a reversal of 5.7 million euros (exceptional income and current tax). For further information, refer to §4.7. Income tax in the consolidated financial statements.

                   1.3.    Research and Development activity

The Group has always invested in research and development (R&D). Faced with a quantitative asset management industry that continues to grow, the Group decided to strengthen this area when it launched the strategic plan “ABC 2022” presented in March 2020. This development involves recruitment and technological investment to enable the launch of new projects and the optimisation of existing strategies. The main objectives were to enhance the Group’s management capacity and to develop strategies capable of delivering better performance during low-volatility periods induced by central bank interventions.

This trajectory has been reinforced by the strategic plan “Springboard 2025”, presented in March 2023, under which the

Group’s research teams and efforts will be further expanded in order to continue developing strategies launched under “ABC 2022” and to identify new ones, with the aim of strengthening the Group’s profit-generation capacity and ensuring its long-term profitability.

The increase in staff costs and IT expenditure is a direct consequence of these activities.

                  1.4.     Subsidiaries, Equity Interests and Branches

General framework reminder:

ABC arbitrage is the parent holding company of the Group. As such, it provides transversal services – in particular through its finance and internal audit, legal, human resources and communication departments – to all its subsidiaries, which are themselves organised around two core areas of expertise: “investment entities” and asset management companies.

The companies ABC arbitrage Asset Management and ABC arbitrage Asset Management Asia are the Group’s asset management companies and are detailed below:

●     ABC arbitrage Asset Management develops and implements alternative arbitrage strategies using quantitative and systematic models, and operates on major listed markets worldwide. The alternative strategies deployed consist of a combination of transactions designed to generate profit by exploiting only inefficiencies that may arise between different financial markets. The selection of instruments is based on a mechanical, mathematical or statistical intervention method. The resulting positions and/or exposures may vary very quickly and over very short cycles.

●     ABC arbitrage Asset Management Asia also executes alternative arbitrage strategies using quantitative and systematic models. It also conducts research and development of strategies, albeit to a much lesser extent.

The company Quartys carries out financial instrument trading activity. It is an “investment entity”:

●     which has obtained funds from its parent company for the purpose of providing investment management

services;

●     whose activity consists of allocating its equity to maximise the risk/return profile, with returns in the form of capital gains and/or investment income; 

●     which evaluates and assesses the performance of all its investments based on fair value. 

Its added value therefore lies in the timely allocation of risk across the different strategies it selects and calibrates, as well as in the quality of the service providers it selects.

Given the exception to the consolidation principle provided by IFRS 10, the Group’s interests in theABCA Funds Ireland investment funds and in Quartys are presented as financial assets measured at fair value through profit or loss.

ABCA Funds Ireland is a qualifying Irish Alternative Investment Fund established in 2011 and currently comprises two sub-funds: ABCA Opportunities Fund and ABCA Reversion Fund.

2024 Highlights:

The Group’s 2024 result is broadly in line with market indicators for volatility, volume and M&A activity. The second half of the year saw a noticeable increase in business momentum compared with H2 2023, supported by periods of more favourable volatility. The Group also observed structural progress in strategies launched under the ABC 2022 plan and encouraging opportunities in those introduced under Springboard 2025. The rebound in activity in digital assets and their high volatility during the last quarter also contributed to the result. Investments in research and development made since 2020 are beginning to bear fruit and are helping the Group remain resilient in what continues to be a challenging environment. These factors explain most of the increase in “Revenue from Ordinary Activities”. On a more marginal level, the higher interest income on deposits used in the Group’s activities also contributed to the rise.

Looking at the detail:

●     The net profit of Quartys, a financial instrument trading company, amounted to 29.4 million euros in 2024, compared to 20.6 million euros in 2023. This increase is primarily due to the robustness of the quantitative models, which generated substantial gains despite the difficult market conditions described above – highlighting the value of the investments made – as well as prudent management of cash collateral, which took advantage of higher average interest rates.

●     ABCA Funds Ireland, an Alternative Investment Fund, had assets of 153 million euros as at 31 December 2024:

○ The ABCA Opportunities Fund (91 million euros in assets), designed to embody ABC arbitrage’s “All Weather” fund, underwent changes in the final quarter of 2024, incorporating a panel of strategies on Futures instruments and reintroducing statistical arbitrage strategies. In 2024, the fund delivered a positive performance of 8.15% (NAV EUR Shares). This performance is very encouraging and, incorporating these developments, the Group is optimistic about making this an attractive fund aligned with the expectations of institutional and professional investors. Performance was largely driven by the second half, amid more favourable market conditions: increased M&A activity and heightened volatility phases enabled statistical strategies to capture returns.

○ The ABCA Reversion Fund (62 million euros in assets), designed to benefit from volatility, posted a slightly positive performance of 0.77% in 2024. In the first half, the fund performed well in the first four months but deteriorated towards the end of the period. The medium-term segment of the “mean reversion” strategies underperformed due to a lack of opportunities and local decoupling in Asia and Europe. The second half was mixed, with alternating gains and losses. A notable impact was the geopolitical uncertainty affecting the commodities segment, which weighed on the fund’s overall result.

●     The Group’s asset management companies, ABC arbitrage Asset Management and ABC arbitrage Asset Management Asia, saw their management fees increase by 3.1 million euros in 2024 compared to the previous year. This increase was mainly due to fees invoiced to Quartys for implementing trading strategies and consulting services related to the design of its models, totalling +4.1 million euros. At the same time, fees from management and performance charged to the funds fell by -1 million euros, primarily due to outflows in 2024. Client assets under management totalled 265 million euros as at 31 December 2024, compared to 343 million euros as at 31 December 2023.

The Group remains committed to developing a diversified range of investment funds and increasing its assets under management. In this regard, and drawing on the extensive R&D work carried out by ABC arbitrage Asset Management and ABC arbitrage Asset Management Asia, the capacity of the ABCA Funds Ireland sub-funds allows for nearly one billion euros in assets under management. 

ABC arbitrage Asset Management, authorised by the French Financial Markets Authority (Autorité des Marchés

Financiers – AMF) as a portfolio management company for third parties since 2004 (no. GP-04 00 00 67), and as an

Alternative Investment Fund Manager (AIFM) under Directive 2011/61/EU since 22 July 2014, is the Group’s main asset management company. It deploys its expertise through alternative investment funds (AIFs), portfolio management mandates, and investment strategy advisory services for qualified investors and professional clients.

On 23 July 2019, the company obtained an extension of its licence to include the management of complex financial instruments and, on 17 September 2019, the AMF granted it a marketing passport for France. It was also authorised to market its services in Switzerland on 17 July 2019.

For the 2024 financial year, ABC arbitrage Asset Management generated revenue of 20.878 million euros, compared to 17.911 million euros in 2023, representing a significant increase of nearly 17%. This growth is mainly due to the rise in management fees billed, for the reasons mentioned above, and reflects two opposing effects:

●     An increase in revenue from billing Quartys for the implementation of trading strategies, with an impact of +3,951 thousand euros.

●     A decline in revenue from management and performance fees charged to ABCA Funds Ireland, mainly due to net outflows during the year, with an impact of -814 thousand euros.

●     Marginal impacts from a slight decrease in revenue from the re-invoicing of services provided to Quartys (such as quantitative model research, implementation, or operational services), with a total impact of -170 thousand euros.

Investments continued in order to further develop expertise in equity derivatives, ETFs, and digital assets, thereby maximising adaptability to market conditions. The company posted a net result of -3,260 thousand euros as at 31 December 2024, compared to -974 thousand euros as at 31 December 2023.

ABC arbitrage Asset Management Asia, previously registered with the Monetary Authority of Singapore (MAS) as a Registered Fund Management Company (RFMC), has continued to develop the Group’s activities in Asian markets. As part of its expansion, it has been authorised since 2022 by the MAS to operate as a Licensed Fund Management Company (LFMC), thereby lifting previous restrictions on the maximum amount of assets under management.

For the 2024 financial year, revenue amounted to 1.008 million euros, compared to 0.984 million euros in 2023, representing a decrease of approximately -2.4%. This change is explained by two opposing factors:

●     A decrease in revenue from management and performance fees charged to ABCA Funds Ireland and to the Bespoke Alpha MAC mandate, mainly due to net outflows during the year, with an impact of -150 thousand euros.

●     An increase in revenue from billing Quartys for the implementation of trading strategies, with an impact of +174 thousand euros.

Its net result was -2.097 million euros as at 31 December 2024, compared to -1.534 million euros in 2023, representing a decline of -0.563 million euros. This is mainly due to an increase in operating expenses in 2024 compared with 2023, including a rise in fixed and variable remuneration following an increase in the average headcount. Its contribution to the Group is in line with initial expectations, and ongoing structuring efforts offer promising prospects, particularly in terms of scaling up headcount and expertise — both of which will be essential to support an increase in assets under management, a prerequisite for this entity to reach breakeven.

As a reminder, and as mentioned above, client assets under management stood at 265 million euros as at 31 December 2024, compared to 343 million euros as at 31 December 2023, representing a -22.7% decrease.

                   1.5.     Human Resources

The Group’s average headcount in 2024 stood at approximately 112 people, compared to 105 in 2023.

In 2024, personnel expenses rose significantly, by nearly 46% compared with 2023. In line with the investments described in the Springboard 2025 business plan, the Group’s average headcount increased by 6.5% between 2023 and 2024, leading to a corresponding increase in gross fixed salaries.

Furthermore, in a context of significantly improved performance — current operating income rose by over 30% — the variable component of remuneration was higher in 2024, also contributing to the increase in personnel costs. 

Management remains strongly committed to long-term staff engagement and to aligning interests with those of shareholders. To this end, it has sought to introduce various forms of equity-based incentives, staggered over time, to support the company’s development, secure in-house expertise, and help contain fixed costs in a highly competitive environment. 

As part of the “ABC 2022” and “Springboard 2025” plans, the Group carried out the following operations:

Performance share plans alive

* Based on actual net income for that period and given the continuing presence requirement, the number of stock options which should be definitively granted by the end of the first semester of 2025.

Stock options subscription plans alive

For all plans:

The allocated quantities will be zero if annual results are below 15 million euros, then will increase progressively according to a linear curve. For example, under the APE-3.1/2023 plan, if annual results amount to 20 million euros over the entire period, 33% of capital-based benefits would be definitively granted. If annual results reach 25 million euros over the same period, 67% of capital-based benefits would be definitively granted.

The expense related to the granted plans is recognised over the vesting period. This expense, which is offset in equity, is calculated based on the total value of the plan, as determined on the grant date by the Board of Directors.

In accordance with IFRS 2, an expense of 562 thousand euros, including 84 thousand euros in employer contributions, has been recognised for the 2024 financial year, based on the estimated number of probable shares across the various aforementioned programs. As a reminder, 306 thousand euros was recognised in 2023, and 240 thousand euros in 2022. This expense is related to the progress of existing programs, taking into account the achieved results, along with the new plans introduced in June 2024.

The realised loss on share buybacks used during the 2024 financial year amounted to 240 thousand euros, compared to 878 thousand euros in 2023 and 2,809 thousand euros in 2022.

Since the company’s incorporation in 1995, a total of 10,766,178 new shares have been issued as a result of equity-based instruments granting access to capital awarded to employees (18% of the share capital).

                  1.6.     Appropriation of earnings and distribution policy

As at 31 December 2024, the share capital of ABC arbitrage is composed of 59,608,879 fully paid ordinary shares with a nominal value of 0.016 euro each. There was no change in the share capital during the 2024 financial year, and the information is therefore identical to that provided as at 31 December 2023.

As at 31 December 2024, Basic Consolidated Earnings per Share (EPS^[2]) and Net Statutory Profit stand at:

Consolidated financial statements data

Statutory financial statements data

As a reminder, executive management proposed to the Board of Directors the progressive implementation of a quarterly distribution in place of the usual semi-annual distribution introduced three years ago. Following approval by the General Meeting on 7 June 2024, two interim dividends of 0.10 euro per share were paid in October and December 2024.

Lastly, the Board of Directors had also expressed its intention, subject to the necessary decisions, to implement an interim dividend of 0.10 euro per share in respect of 2024 results during the second half of April 2025, in order to establish this quarterly distribution policy. The Board of Directors confirmed this intention by approving the payment of an interim dividend of 0.10 euro on 24 April 2025. 

2. Corporate Governance

                   2.1.     General context and reference code

The governance rules applied are based essentially on common sense and aim to strike a balance between implementing value-adding, risk-mitigating processes and the simplicity required by a structure of the size of the ABC arbitrage Group.

Since 2009, the Board of Directors has referred to the Corporate Governance Code for Small and Mid-Cap Companies promoted by MiddleNext, which since September 2016 has become the MiddleNext Corporate Governance Code and is recognised as a reference code by the Autorité des Marchés Financiers (AMF). This code was revised in September 2021. 

The MiddleNext Code is available on theMiddlenextwebsite.

ABC arbitrage is an active member of the MiddleNext association through its participation in various working and idea-sharing groups. It aligns itself with the community of French small and mid-cap listed companies, notably in the belief that good governance practices must be adapted to the specific needs of each structure depending on factors such as shareholder structure or company size, in order to ensure governance that is not merely formal but aligned with the company’s actual operations. Dominique CEOLIN, Chairman and CEO of ABC arbitrage, is a member of the MiddleNext Board of Directors.

                  2.2.     Composition of the Board of Directors

The Board of Directors brings together a range of perspectives from executive management deeply involved in the day-to-day running of the company, from reference shareholders safeguarding strategic decisions, and from external members who provide diverse experience, objectivity, and independent judgement.

This diversity of backgrounds and interests offers the best guarantee of the quality of the Board’s work and decisions, to the benefit of the company’s corporate purpose and its stakeholders.

As at 31 December 2024, the Board of Directors of ABC arbitrage comprises five members. A censor has participated occasionally in meetings since the end of 2021.

As the proportion of share capital held by employees in collective form is less than 3%, there is no Board member elected by employees. A representative of the Social and Economic Committee (CSE) attends Board meetings in an advisory capacity.

The terms of office of the members of the Board of Directors are as follows:

The members of the Board of Directors possess the necessary experience and expertise to fulfil their mandates.

Dominique CEOLIN, Chairman and Chief Executive Officer, is a qualified actuary from the Institut des Actuaires Français and holds a DEA (postgraduate degree) in Mathematics and Computer Science. In 1994, he contributed to the development of the “Domestic Arbitrage” activity at ABN AMRO Securities France. In 1995, he joined the founding team of ABC arbitrage and continues to bring his experience to the Group.

Aubépar Industries, a longstanding shareholder, represented by Xavier CHAUDERLOT, co-founder of the Group, is one of the company’s largest shareholders with just under 12% of the share capital. He combines industry expertise with perspective on day-to-day operational activities.

David HOEY, originally from Ireland, holds a master’s degree in Accounting and Finance with an IT option from the BBS School (University of Limerick). After four years at Crédit Agricole, he joined the founders of ABC arbitrage in 1996. Since then, he has played an active role in the Group’s strategic development and in growing its core business.

The other directors are independent in accordance with the definition provided by the MiddleNext Corporate Governance Code.

Sophie GUIEYSSE is a graduate of École Polytechnique and École Nationale des Ponts et Chaussées. She also holds an MBA from the Collège des Ingénieurs. After beginning her career in urban development and public infrastructure at the Ministry of Equipment and in ministerial offices, she went on to serve as Human Resources Director in several major French and international groups including LVMH, CANAL+, and Richemont. She also has extensive experience as a board member and committee participant (GO Sport, Groupe Rallye, TVN [Poland], Maisons du Monde and Compagnie Financière Richemont [Switzerland]). She is also a member of the Remuneration Committees of Deezer and the Paris 2024 Olympic Games Organising Committee.

Isabelle MAURY holds a Master’s in Financial Techniques from ESSEC, a postgraduate degree in Banking and Finance, and a Master's in Applied Modelling for Economics and Management from Université Paris X. She began her career in audit at Deloitte and held several operational positions in investment banking within three major banking groups (Crédit Lyonnais, Société Générale, Groupe BPCE – Natixis). She became Chief Risk Officer of Banque Populaire in 2007, then of Groupe BPCE in 2009, joining its Executive Committee and overseeing risk management and governance, regulatory programmes, supervisory relations, and compliance at Natixis. In 2017, she founded IM7 Consulting, advising executives on professionalising governance, managing supervisory relationships, supporting crisis situations, and enhancing the effectiveness of risk, audit, and compliance functions. Since 2017, she has also been a trainer at the Institut Français des Administrateurs and Sciences Po. 

Jean-François DROUETS, a graduate of HEC and holder of a postgraduate degree in Notarial Law, is a Chartered Surveyor and the founding Chairman of Catella Valuation Advisors, a real estate valuation and advisory firm, subsidiary of the Swedish Catella Group. He contributes his business expertise.

The Board of Directors has made use of the option to invite any third party to participate in its meetings as a censor, either occasionally or on a regular basis, in an advisory capacity, to enrich its discussions. Jean-François DROUETS, who has served as a censor since the General Meeting of 10 June 2022, marking the end of his term as a director, attended one meeting of the Board of Directors in 2024.

A representative of the Social and Economic Committee (CSE), Antoine ROBILLARD, attends all meetings of the Board of Directors. Antoine ROBILLARD joined the Group on 1 April 2016 and works as a legal counsel specialising in securities law.

In accordance with the company’s articles of association, each member of the Board of Directors must hold at least one thousand shares by the end of their first year in office.

Application of the principle of gender balance:

As at 31 December 2024, women represented 40% of the Board of Directors. Excluding founding shareholder directors, women accounted for 100% of the Board (2 out of 2 members). For comparison, following the 2024 General Meetings, women held 47%^[3] of board seats in SBF 120 companies..

Independent directors:

The definition of an independent director is based on Recommendation No. 3 of the MiddleNext Code, namely:

●     not to be an employee or executive corporate officer of the company or of a Group company, and not to have held such a position in the past five years;

●     not to have had, over the past two years, and not to currently have, a significant business relationship with the company or its Group⁴ ;

●     not to be a reference shareholder of the company or hold a significant percentage of voting rights; ● not to have close family ties or a close relationship with a corporate officer or a reference shareholder; ● not to have been the company's statutory auditor during the past six years.

Recommendation No. 3 of the MiddleNext Code recommends that the Board of Directors should include at least two independent members. As at 31 December 2024, the Board of Directors includes two independent directors, as specified in the aforementioned table.

Term of office:

The four-year term of office is suited to the specific characteristics of the company, within the legal limits, and is therefore in line with Recommendation No. 11 of the MiddleNext Code.

Conflicts of interest and ethics:

Dominique CEOLIN is the Chairman and Chief Executive Officer of ABC arbitrage. The combination of roles has been discussed by the members of the Board of Directors, and the principles of separation of duties have been reviewed, particularly to ensure that sufficient checks and balances exist such that this dual role does not pose a risk to the Group.

Board has requested that the Ethics Officer, Gaëtan FOURNIER, report directly to it on any matter that may appear irregular or constitute a conflict of interest. In 2024, no such events were brought to the Board's attention by the Ethics Officer, the Chairman, or any Board member. A register of conflicts of interest (existing, confirmed, or potential) is maintained and updated regularly to ensure rigorous monitoring of such situations.

Furthermore, the internal regulations of the Board of Directors explicitly state that each member is required, from the start of their term and throughout its duration, to assess whether they may be in a situation of potential, apparent, or actual conflict of interest. In such cases, the concerned director must present a description of the situation to the Board at its next meeting. The director concerned must refrain from voting on any deliberation relating to or affected by the conflict.

At the beginning of each Board meeting, the Board reviews the situation of each of its members to ensure their independence and to identify any potential conflicts of interest. On this occasion, each director declares on their honour that they are not in a situation of conflict of interest which has not already been declared to the Board.

Respect for codes of ethics and applicable regulations is a key concern of the members of the Board of Directors, in accordance with Recommendations No. 1 and No. 2 of the MiddleNext Code, relating respectively to the ethics of board members and the absence of conflicts of interest.

This vigilance is reinforced by the expectations of investors in the funds offered by the management company ABC arbitrage Asset Management. In 2024, 50% of investors by number in ABCA Funds Ireland, representing 90% of the subscribed amounts, submitted due diligence questionnaires to the portfolio management company, systematically including questions regarding the existence, over the past five years, of any criminal, civil or administrative investigations or proceedings involving the company, any affiliated company, or any key person or employee thereof.

Selection of directors:

Applications for appointment to the Board of Directors are considered directly during the plenary session. Several meetings are then organised between the candidate and the independent directors, in the absence of the Chairman. The appointment as censor is then decided by all directors, allowing the candidate to familiarise themselves with the Board’s work before a formal proposal for appointment is submitted to the General Meeting.

Each proposal for appointment or renewal of a directorship is the subject of a separate resolution, in line with Recommendation No. 10 of the MiddleNext Code, enabling shareholders to vote freely on the composition of the Board of Directors. The list of mandates, as well as a description of the experience and expertise of the director whose appointment or renewal is proposed, is available on theGroup’swebsite.

               2.3.     Conditions for preparing and organising the work of the Board

Internal regulations:

On 7 December 2010, the Board of Directors adopted internal regulations outlining the main principles governing its operation. These internal regulations, which are regularly updated, comply with the recommendations and criteria of the MiddleNext Corporate Governance Code, as well as the model regulations published by MiddleNext.

They specify the roles and powers of the Board of Directors and certain rules applicable to directors, in addition to statutory and legal provisions. These internal regulations are strictly internal to the company and shall in no way override the legislative and regulatory provisions governing companies or the articles of association of ABC arbitrage.

The internal regulations of the Board of Directors are available on thecompany’swebsite.

most recent update to the internal regulations was made on 16 October 2023. The changes introduced are

consistent with the latest version of the Corporate Governance Code published by MiddleNext in September 2021.

Establishment of committees:

In accordance with Recommendation No. 7 of the MiddleNext Code, we hereby report on the company’s approach to specialised committees.

An Audit Committee, a Strategic Committee and a CSR Committee have been established by the Board of Directors. Their composition is decided on a case-by-case basis depending on the subject matter. These committees meet at the request of either the executive management or any member of the Board of Directors.

Audit Committee

The Audit Committee currently consists of three directors, including one independent member. It has been chaired by

Isabelle MAURY since 10 June 2022. The other members are Xavier CHAUDERLOT, representing Aubépar Industries, and David HOEY. Other directors and the executive management may also attend meetings by invitation of the Chair of the Audit Committee.

The responsibilities and functioning of the committee, as defined in the MiddleNext Code, are set out in the Audit Committee Charter signed in 2019. Without prejudice to the powers of the Board, the Audit Committee has three main responsibilities:

●     Firstly, the committee monitors issues related to the preparation and control of accounting and financial information. It oversees the financial reporting process and, where appropriate, makes recommendations to ensure its integrity. It reviews the draft half-yearly and annual consolidated financial statements of the Group, the annual financial statements of ABC arbitrage, as well as the presentation made by management describing risk exposures and significant off-balance-sheet commitments, along with the accounting options applied;

●     Secondly, the Audit Committee ensures the existence and effectiveness of internal control systems, internal audit, and the management of the most significant risks the Group may face in the course of its activities. Following the strengthening of its risk-monitoring responsibilities, it carries out at least once a year a comprehensive review of the main risks to which the Group may be exposed;

●     Thirdly, the committee monitors the statutory audit of the Group’s annual and half-yearly consolidated financial statements and the company’s annual accounts, ensures the independence of the statutory auditors and, more generally, oversees the performance of their engagement.

The members of the committee have financial and accounting expertise and are familiar with the Group’s industry. Their skills and backgrounds allow the committee to carry out its mission with the necessary experience. The Audit Committee adopted a charter on 3 December 2019 to reflect the additional responsibilities assigned to it following the audit reform effective from 17 June 2016.

The Audit Committee met on 18 March 2025 for the approval of the 2024 annual financial statements. All committee members attended. Gaëtan FOURNIER, General Secretary, and Dominique CEOLIN were also present at the invitation of the Chair. The committee also met on 19 September 2024 to review the Group’s 2024 half-year financial statements, with all members in attendance, along with Gaëtan FOURNIER. A third meeting was held on 5 December 2024, focused on the internal control system, review of the risk map, and review of the audit plan from the statutory auditors ahead of the 2024 year-end closing.

Audit Committee reported its conclusions and those of the statutory auditors to the Board of Directors. It also explained to the Board how the statutory audit contributes to the integrity of financial reporting and clarified the role it played in the process. This integrity was further ensured through the following measures:

●     The Group does not assign any engagement other than statutory audit to its auditors. The Audit Committee confirmed with the Finance Department that all requests for non-audit services were submitted to the committee for prior approval.

●     The Audit Committee ensured that the audit firms submitted their reports to the committee before final issuance. The committee discussed key audit matters with the firms and found no particular concerns regarding the Group’s internal control system or accounting framework.

Throughout 2024, the Audit Committee worked to fulfil its support and advisory role to the Board of Directors. After each meeting, it reported its findings and summaries to the Board and made recommendations on specific areas of attention, which were subsequently discussed.

Beyond its core responsibilities, the Audit Committee also reported to the Board on the following matters:

●     Review of the draft Annual Financial Report;

●     Review of the draft financial reports prepared by the executive management;

●     Review of the Corporate Governance Report;

●     Monitoring of key risk areas and the internal control system, including updates to the risk map;

●     Oversight of the statutory auditors’ independence, including obtaining a written statement;

●     Review of the audit approach proposed by the statutory auditors (fees, process, risk coverage, etc.);  ● Oversight of cash management;

●     Assessment of the consistency of the remuneration policy.

Prior to the financial statement approval meeting, the Audit Committee receives a detailed report on all significant matters for the period, particularly those raised internally or by the statutory auditors during the audit process.

During the two meetings relating to the 2024 half-year and full-year closings, the following points were notably addressed:

●     Review of the Group’s operational performance:

○ Analysis of results in the market context;

○ Ongoing strategic considerations;

○ Analysis of significant developments concerning Group companies;

○ Risk description and analysis for business activities;

○ Evolution of the operational structure and relationships with key counterparties;

●     Accounting, regulatory, and tax changes;

●     Workforce developments, remuneration policy, and capital-related programmes;

●     Ongoing social and tax litigation;  

●     Share price performance of ABC arbitrage; ● Distributable profit. 

Strategic Committee

The Strategic Committee is tasked with advising the Board of Directors on the company’s and the Group’s strategic directions, development policy, and any other significant strategic matters referred to it by the Board. It is also responsible for reviewing in detail and giving its opinion to the Board on matters submitted to it regarding major investment, external growth, divestment, or disposal operations.

committee is composed of all members of the Board of Directors and may be assisted by external participants selected for their specific expertise. It meets as often as necessary to fulfil its responsibilities.

During the 2024 financial year, the Strategic Committee met twice, on 8 February and 14 November 2024, notably to monitor the implementation of the “Springboard 2025” business plan. 

CSR Committee 

The creation of the CSR Committee was decided in 2023 by the members of the Board of Directors, and its first meeting was held on 13 October 2023. Since then, the committee, chaired by independent director Sophie GUIEYSSE, has actively pursued its work in coordination with the other specialised committees, in line with Recommendation No. 8 of the MiddleNext Corporate Governance Code.

Over the course of its meetings, the CSR Committee defined its strategic priorities, particularly in terms of value sharing, ensuring a balance between employee remuneration, shareholder risk-taking, and the investments needed to ensure the company’s long-term sustainability. These priorities, which are regularly discussed and refined, continue to be approved by the members of the Board. At its most recent meeting, the committee also addressed several key topics: regulatory monitoring and its financial implications, gender equality and related legal obligations, and the impact of socially responsible investment on fundraising strategy.

Board meetings:

Based on the work of the Strategic Committee in particular, the Board of Directors defines the company’s and the Group’s main strategic directions. The Board also actively participates in the strategic development of the subsidiaries. Subject to powers expressly assigned to shareholder meetings and within the limits of the company’s corporate purpose, the Board handles any matters concerning the proper operation of the company and decides on such matters through its deliberations.

To enable the maximum number of directors to attend Board meetings, the provisional meeting schedule is set several months in advance, and any changes are made in consultation with a view to ensuring the greatest possible attendance. In 2024, the attendance rate for members of the Board of Directors was 100%.

The Board of Directors has never been prevented from meeting or deliberating due to lack of quorum. All decisions were made unanimously after discussion.

Members of the Board are convened to meetings at the company’s registered office by any means – in practice by email, fax or orally. Prior to each meeting, members receive an agenda and, where necessary, any preparatory documents, in accordance with Recommendation No. 4 of the MiddleNext Code, so they have all the information needed to properly carry out their responsibilities. Discussions are always conducted with the aim of fostering exchange among all directors based on complete, concise, clear and relevant information, with a focus on key strategic matters.

All deliberations are recorded in minutes entered in a dematerialised record book.

In addition, in accordance with Article L.823-17 of the French Commercial Code, the statutory auditors are invited to attend every meeting concerning the approval of financial statements. They were therefore present at the Board meeting of 19 September 2024 for the approval of the half-year accounts and at the meeting of 20 March 2025 for the approval of the 2024 annual accounts.

During the 2024 financial year, the Board of Directors met five times, thus complying with Recommendation No. 5 of the MiddleNext Code. The meetings were held on: 21 March 2024, 25 April 2024, 7 June 2024, 19 September 2024 and 5 December 2024. The other committees met as follows during the 2024 financial year:

As part of the implementation of the share buyback programme authorised by the Combined General Meeting of 7 June 2024, the Chief Executive Officer's authority is limited to a treasury commitment of 500,000 euros. Beyond this amount, the Chief Executive Officer must obtain authorisation from the Board of Directors. No other limitations have been imposed by the Board on the powers of the Chief Executive Officer.

In accordance with Recommendation No. 22 of the MiddleNext Code, the Board of Directors has discussed areas of vigilance at various Board meetings and remains attentive to any developments in this respect. Furthermore, the Board deliberates annually on the company’s policy regarding professional and pay equality. 

Significant decisions during the 2024 financial year:

The Board of Directors monitored ongoing projects within the company and the Group and oversaw their general progress. The Board also discussed the vigilance points identified by the MiddleNext Corporate Governance Code that were deemed relevant to the context of ABC arbitrage Group.

The Board's main activities in 2024 included:

●     Review of the annual and half-year financial statements;

●     Consideration and approval of the financial communication materials;

●     Approval of the management report;

●     Consideration of the reports submitted by the Audit, Remuneration and Strategic Committees;

●     Review of the corporate governance report by the Board on the conditions for preparing and organising its work, and on the internal control procedures implemented by the company during the 2024 financial year;

●     Status of regulated agreements;

●     Preparation of the Combined Annual General Meeting of 7 June 2024;

●     Approval of the special report on the share buyback programme and other securities giving access to capital;

●     Approval of the report on proposed resolutions to the General Meeting;

●     Approval of the report on stock options and performance share awards;

●     Approval of the table of delegated powers and authorities granted by the General Meeting to the Board of Directors in respect of capital increases;

●     Implementation of the share buyback programme, block repurchases and monitoring of the buyback account;

●     Implementation of the distribution of the final 2023 dividend;

●     Final allocation of performance shares and definition of new performance-based allocation plans;

●     Deliberation on the policy for professional and gender pay equality;

●     Approval of the ABC arbitrage Group 2024 half-year financial statements;

●     Strategic orientations of the CSR Committee;

●     Implementation of the capital distribution paid in October 2024;

●     Implementation of the capital distribution paid in December 2024;

●     Decision on whether or not to pay an additional employee profit-sharing amount for the 2024 financial year;

●     Setting of directors’ remuneration and variable remuneration for operational officers;

●     Evaluation of the work of the Board of Directors;

●     Review of the succession plan;

●     Review of the vigilance points from the MiddleNext Code;

Procedures relating to regulated and ordinary agreements:

In accordance with Article L.22-10-12 of the French Commercial Code, the Board of Directors, at its meeting of 19 March 2020, adopted a charter intended, on the one hand, to recall the legal and regulatory framework applicable to agreements and, on the other, to formalise the internal procedure for identifying regulated agreements and assessing ordinary agreements concluded under normal terms and conditions.

This procedure applies prior to the conclusion of any agreement that may qualify as a regulated agreement, as well as in the event of any amendment, renewal, or termination of such an agreement. It also enables the identification of any ordinary agreement concluded under normal conditions.

Board evaluation:

In line with Recommendation No. 13 of the MiddleNext Code, a questionnaire assessing the work of the Board of Directors was submitted to the directors. The results of this questionnaire served as the basis for a discussion held during the Board meeting of 5 December 2024 regarding the functioning of the Board and its committees, as well as the preparation of its work.

The Board noted the progress made over the past two financial years and identified additional areas for improvement for 2025.

               2.4.    Remuneration Policy for Executive Corporate Officers

This report of the Board of Directors on the ex post remuneration policy for all corporate officers, including directors, for the 2024 financial year, will be submitted to shareholder approval in accordance with Article L.22-10-8 of the French Commercial Code.

The remuneration of ABC arbitrage’s executive corporate officers is also determined with reference to the principles set out in the MiddleNext Corporate Governance Code, as updated in September 2021.

The elements of the remuneration policy presented below are the subject of draft resolutions submitted to the approval of the General Meeting of shareholders, ruling under the quorum and majority conditions required for Ordinary General Meetings. Should the General Meeting not approve these resolutions, the previous remuneration policy, approved at the General Meeting of 7 June 2024 (ex ante vote), will continue to apply. The Board of Directors must then submit to the next General Meeting a draft resolution outlining a revised remuneration policy, stating how shareholder votes and, where applicable, comments expressed during the General Meeting, have been taken into account.

Regarding the elements of the remuneration policy for 2025 (ex ante vote), a specific report by the Board of Directors will be made available to shareholders together with the meeting notice.

Executives are subject, like all Group employees, to the internal policy on conflict of interest management, which includes instructions that employees must follow in order to identify, prevent and manage conflicts of interest.

At the beginning of each session, the Board reviews the situation of each of its members to ensure their independence and to identify any potential conflict of interest. On this occasion, each director formally declares that they are not in a situation of conflict of interest that has not already been reported to the Board of Directors.

Compliance with codes of ethics and regulations is a central concern for the members of the Board of Directors, in accordance with Recommendations No. 1 and No. 2 of the MiddleNext Code, relating respectively to the ethics of Board members and the absence of conflicts of interest.

The remuneration policy for corporate officers is reviewed annually by the Board of Directors. As part of this process, the Remuneration Committee submits its recommendations to the Board.

Remuneration policy for corporate officers as approved by the Board of Directors and submitted to an ex ante vote by shareholders in accordance with Article L.22-10-8 of the French Commercial Code, at the General Meeting of 7 June 2024:

The remuneration policy serves the company’s corporate interest and contributes to its business strategy as well as its long-term sustainability.

Remuneration takes into account employee working and pay conditions within the company. The principles of the remuneration policy are applied consistently to both management and staff: a controlled fixed salary, variable remuneration linked to actual financial results and a qualitative assessment of the work performed, and equity-based incentives tied to long-term performance criteria and based on a personal commitment to shareholder engagement. Accordingly, the Board of Directors ensures compliance with the seven principles set out in Recommendation No. 16 of the MiddleNext Code for determining remuneration, namely: comprehensiveness, balance, benchmarking, consistency, clarity, measurability and transparency.

Remuneration is primarily performance-based and calculated on the basis of net income, thus taking into account all charges borne by shareholders, including executive remuneration itself. Furthermore, remuneration is determined in relation to each individual’s operational responsibilities.

Remuneration of Directors:

Fixed remuneration of directors and the chairman of the board allocated by the General Meeting of Shareholders

In accordance with the law, the total amount of remuneration for directors is set by the General Meeting of Shareholders. The individual amount of directors’ remuneration is determined by the Board of Directors, usually during meetings held in March (for ex post) and April (for ex ante), and as often as necessary.

For reference, the General Meeting of 10 June 2022 resolved to set the maximum total remuneration to be allocated to members of the Board of Directors at 120,000 euros for the 2022 financial year and subsequent years, until decided otherwise, with the Board of Directors being responsible for approving the individual allocation of this remuneration each year.

The Board of Directors decided to assign a fixed amount to each type of meeting. Remuneration is therefore based on the director’s actual attendance and effective contribution to the work of the Board, in accordance with Recommendation No. 12 of the MiddleNext Code.

This remuneration policy applies to corporate officers newly appointed or whose term of office is renewed. Excluding any technical or preparatory work remunerated in the form of services, members of the Board of Directors are paid in accordance with the following remuneration scale and procedures:

The actual remuneration is definitively set following discussions within the Board of Directors. Indeed, certain directors may choose to waive all or part of their remuneration. Accordingly, the Chairman of the Board of Directors, Dominique CEOLIN, has decided to limit the payment of his remuneration to 2,000 euros per year.

Exceptional remuneration

No director received any exceptional remuneration for the financial year ended 31 December 2024.

Benefits in kind

No director benefits from any form of benefit in kind.

Guiding principles of the remuneration policy for ABC arbitrage executives:

It is recalled that the principles of the remuneration policy are applied consistently to both management and employees (see sub-section “Remuneration policy for corporate officers submitted to an ex ante vote by shareholders in accordance with Article L.22-10-8 of the French Commercial Code, at the General Meeting of 7 June 2024” above).

The Group’s executive remuneration principles were established in the early 2000s and remain unchanged to this day: remuneration is essentially performance-based and calculated on the basis of net income, thereby including all costs borne by shareholders, including executive remuneration itself. In addition, remuneration is determined in relation to each individual’s operational responsibilities.

Lastly, in accordance with Recommendation No. 21 of the MiddleNext Code, the Board of Directors ensures that performance share and stock option plans are not excessively concentrated on ABC arbitrage’s corporate officers. Accordingly, no beneficiary may be granted more than 15% of the shares or options under any single plan. The final award of shares is subject to performance conditions that reflect the Group’s medium- to long-term interests.

Fixed remuneration

As a reminder, Dominique CEOLIN – Chairman and Chief Executive Officer – resigned from his salaried position on 28 February 2018. Since that date, there has been no combination of salaried and corporate officer status. All benefits related to salaried employment therefore no longer apply. Fixed remuneration under the corporate mandate for 2024 amounts to 210,000 euros per year.

Variable remuneration

The remuneration of Dominique CEOLIN, Chairman and Chief Executive Officer, is based on a variable bonus that rewards performance.

The determination of the variable remuneration for 2024, including those arising from collective company agreements, was proposed by the Board of Directors and approved by the shareholders at the General Meeting of 7 June 2024, based on the following criteria:

I.          Quantitative calculation:

The Board of Directors proposes variable remuneration indexed to the Group’s consolidated net income (“CNI”), calculated as follows:

A.   If the CNI is less than 11 million euros, no variable remuneration other than that arising from collective company agreements is determined;

B.   If the CNI is between 11 and 19 million euros: variable remuneration is calculated on a linear basis so that the total remuneration up to a CNI of 19 million euros is capped at 275,000 euros;

C.   If the CNI exceeds 19 million euros: 2.2% of the portion of CNI exceeding 19 million euros is added to the aforementioned amount.

In line with the Group’s commitments to value sharing between employees and shareholders, the variable remuneration proposed for 2024 has been significantly reduced in the 11 to 19 million euros CNI range. The Board of Directors also notes the lowering of the thresholds for triggering variable remuneration, from 16 million euros (lower bound) and 23 million euros (upper bound) to 11 million euros and 19 million euros respectively, for all Group employees.

In accordance with the discussions held by the Board of Directors, the parameters of the Chairman and Chief Executive Officer’s remuneration have been adjusted so that his compensation package remains structured around the former performance thresholds mentioned above (16M€ and 23M€), in order to avoid benefiting from this change.  

II.        Qualitative criteria:

Once the mechanical calculation has been carried out, the Board of Directors proposes to complement its assessment by considering four qualitative criteria. These four criteria have been among the Group’s strategic objectives for several years and have been reaffirmed with the launch of the new “Springboard 2025” business plan. These criteria are regularly discussed during Board meetings.

●     Evaluation method

The Board of Directors wishes to rely on key performance indicators monitored by the Group. These indicators are quantifiable and are also the subject of regular evaluation reports, in order to allow for the most objective assessment possible of the achievement of these qualitative objectives. The Board wishes to be able to discuss and decide without applying a mechanical calculation to the level of the key performance indicators. Each criterion will therefore carry a weighting of 25% within the overall assessment score, on a base of 100. The Board of Directors emphasises that no mechanical calculation will be applied to these qualitative criteria, but rather a general evaluation of each criterion.

●     Selected criteria

A.   Social and Societal dimension of CSR – qualitative assessment in 2024 based on the following indicators: a. Unforced turnover rate of the Group’s workforce

b.    Involvement in societal life outside ABC arbitrage (Mid-Small ecosystem, governance, etc.)

c.    Gender equality – current situation and measures implemented

B.   Environmental dimension of CSR – assessment of the environmental aspect through the implementation of CO₂ measures within the activities of ABC arbitrage Group and monitoring of those measures

C.   Risk Management – evaluation of the ratio of operational incidents monitored and the related explanations

D.   Scalability – monitoring of the gross profit per employee ratio to ensure the Group’s efficiency

● Impact of decisions by the Board of Directors

Beyond the fact that all variable bonuses are subject to the discretionary decision of the Board of Directors, the Board’s decision based on the evaluation of these qualitative criteria may only affect part §I. Quantitative calculation-C of the variable bonuses mentioned above. This part will be adjusted by a multiplier coefficient composed of the sum of the four assessed criteria. By definition, this coefficient cannot exceed 1, thereby confirming that these qualitative criteria can only leave the initial calculation based solely on CNI unchanged or reduced.

Mandate Bonus

The spirit of the agreements entered into with executive corporate officers is to allow the company to undergo a total or partial change in management under conditions that do not jeopardise its stability. The Board of Directors therefore attaches particular importance to ensuring that a difference of opinion with an executive allows it to alter the composition of the company’s management under predetermined conditions, even where both parties previously shared a common view of the company’s interests and had a constructive relationship.

The mandate bonus compensates for the responsibility and precarious nature of the corporate officer role. As from the 2022 financial year, it is paid through two channels:

●     An annual mandate bonus of 10,000 euros (ten thousand euros) will be paid each year to Dominique CEOLIN, Chairman and Chief Executive Officer, following the General Meeting approving the financial statements;

●     In the event of non-renewal of the Chairman and Chief Executive Officer’s mandate or dismissal at the company’s initiative, a supplementary mandate bonus will be paid, such that the total amount received under the mandate reaches 140,000 euros (one hundred and forty thousand euros).

In return, the executive formally waives any right to claim severance pay at the end of the mandate, whatever the reason, except in the case of termination under humiliating or offensive circumstances.

No benefit will be granted to the Chairman and Chief Executive Officer on account of the termination or change of his duties, in accordance with Recommendation No. 19 of the MiddleNext Code.

Approval of the Chief Executive Officer’s remuneration

The General Meeting, ruling pursuant to Article L.22-10-34 of the French Commercial Code, approves the fixed, variable and exceptional remuneration elements awarded for the past financial year, forming the total remuneration and all benefits in kind relating to the mandate of Mr CEOLIN, Chief Executive Officer.

In accordance with the Sapin II Law, the PACTE Law, and the Ordinance of 27 November 2019, the variable and exceptional remuneration of corporate officers is subject to both ex ante and ex post approval by the General Meeting. 

Non-compete clause and compensatory indemnity

Given the nature of the duties of the Chairman and Chief Executive Officer — involving exposure to know-how, confidential and strategic information, and business partners within the fields of arbitrage trading and alternative asset management — he shall, in the event of termination of his last mandate within the Group (regardless of the cause or initiator), be prohibited from exercising on his own behalf, via an intermediary, or for another individual or legal entity, any role related to the design and/or execution of arbitrage trading strategies, or any alternative asset management activity, whether for proprietary trading or on behalf of third parties, that could compete with any existing activities of the ABC arbitrage Group at the date of departure.

The Chairman and Chief Executive Officer has also undertaken not to use, to the detriment of any ABC arbitrage Group company, any confidential processes, methods or proprietary information acquired during or in connection with the exercise of his duties.

This non-compete obligation shall apply for a period of ten months from the effective end of the Chairman and Chief Executive Officer’s last mandate within the ABC arbitrage Group. It shall apply to all financial markets on which arbitrage strategies were deployed as of the end of the mandate and, in particular — though not exhaustively — to Europe and North America. It shall also cover portfolios and clients that the executive may have managed.

In return for this non-compete obligation, the Chairman and Chief Executive Officer shall receive, irrevocably and as from the effective cessation of his duties, a gross compensatory indemnity equal to 33% of the average annualised amount of gross variable bonuses received over the last 24 months of his mandate, capped at a total of 120,000 euros gross. This non-compete indemnity payable at the end of the mandate is in addition to any amounts received under the same heading during the term of the mandate, as indicated in this report.

This compensatory indemnity shall be paid in ten monthly instalments, subject to the condition precedent of receiving, by any means, quarterly proof of compliance with this clause^[4].

No defined benefit supplementary or complementary pension commitments

In accordance with Recommendation No. 20 of the MiddleNext Code, no supplementary or complementary pension commitment on a defined benefit basis has been established for the benefit of the Chairman and Chief Executive Officer. The Board of Directors has clearly expressed its opposition to any such commitment.

Remuneration for the Chairman and Chief Executive Officer’s directorship 

The General Meeting sets the overall annual amount of remuneration allocated to the members of the company’s Board of Directors.

The Board of Directors has decided to allocate a fixed amount per type of meeting, in accordance with the scale set out above, and votes each year on the individual allocation of remuneration based on the actual attendance and contribution of each director to the work of the Board, in line with Recommendation No. 12 of the MiddleNext Code.

The Chairman and Chief Executive Officer agrees each year to limit the payment of his remuneration in this respect to 2,000 euros.

No benefits in kind The Chairman and Chief Executive Officer receives no benefits in kind.

Grant of options or performance shares

The Chairman and Chief Executive Officer is eligible for free share and stock option plans set up by the company for the benefit of Group employees and executives. Any free shares or share purchase or subscription options granted are subject to performance conditions set by the Board of Directors.  

Summary of trading in the company’s securities by directors and related restrictions

●     Closed periods

In the interests of transparency and the prevention of insider trading, corporate officers are required to observe a blackout period on ABC arbitrage shares from the first day of the financial year until the day following the publication of the annual results, and from 1 July until the day following the publication of the half-year results.

This means that during these periods, members of the Board must refrain, in accordance with legal provisions, from carrying out any transactions in ABC arbitrage shares.

●     Transaction reporting obligation

Transactions carried out by corporate officers must be reported to the company and published on the website of the Autorité des Marchés Financiers (AMF). The disclosure threshold is set at 20,000 euros per calendar year. This applies to both equity and debt securities, as well as derivatives and financial instruments linked to such securities. Notifications must be sent to the AMF and to ABC arbitrage within three working days of the transaction date.

In 2024, the directors and corporate officers of the company carried out the following transactions in ABC arbitrage shares:

* Holding owned at 50,01% by Dominique Ceolin

Remuneration elements paid during the 2024 financial year or awarded in respect of the same year, submitted to an ex post vote by shareholders at the General Meeting of 7 June 2024:

In accordance with Article L.22-10-8 of the French Commercial Code, the total remuneration of executive corporate officers, as described below, complies with the remuneration policy approved at the General Meeting of 7 June 2024.

Directors’ Remuneration:

The remuneration paid in 2024 by ABC arbitrage to the directors amounts to 96,930 euros and breaks down as follows:

Chairman and Chief Executive Officer’s Remuneration:

●     Mr. Dominique CEOLIN

The remuneration in euros awarded or granted in respect of the 2024 financial year, as well as the remuneration in euros paid during the 2024 financial year to Dominique CEOLIN, executive corporate officer of the listed company, compared with that of the two previous financial years, in respect of his duties (mandate), excluding remuneration for directorships in Group companies not fully consolidated, is as follows:

●     Pay Ratios and Evolution

In accordance with the provisions of Article L.22-10-9, I 7° of the French Commercial Code, the table below presents the five-year evolution of the ratio between the total remuneration of the Chairman and Chief Executive Officer and both the average and median full-time equivalent remuneration of employees of the Economic and Social Unit comprising the employees of ABC arbitrage and ABC arbitrage Asset Management. It also shows the evolution of these remuneration levels and the related performance criteria.

The employees considered are those of the Economic and Social Unit, i.e. all employees in France who were continuously employed throughout the year. Employee remuneration includes fixed and variable compensation as well as bonuses, all amounts paid during the 2024 financial year. The same applies to the remuneration of executive corporate officers, in order to ensure consistency in the criteria used to determine these ratios.

(1) Evolution observed in year N compared to year N-1. The variable bonuses are included in these calculations.

               2.5.     Delegations of Authority and Powers to the Board of Directors

The General Meeting of 7 June 2024 decided to set the total nominal amount of capital increases, whether immediate and/or future, that may be carried out under the delegations and authorisations granted pursuant to the nineteenth and twentieth resolutions adopted by the General Meeting of 9 June 2023, as well as the fifteenth, sixteenth and seventeenth resolutions adopted by the present General Meeting, at 200,000 euros, it being specified that this ceiling may be increased, where applicable, by the nominal amount of shares to be issued in order to preserve, in accordance with legal and regulatory provisions and, where applicable, relevant contractual stipulations, the rights of holders of securities giving access to shares.

               2.6.     Other Information

Shareholders’ participation in the General Meeting:

Any shareholder, regardless of the number of shares held, has the right to participate in the General Meeting of Shareholders under the applicable legal and regulatory conditions.

In accordance with Articles L.225-106 and L.22-10-39 of the French Commercial Code, if not attending the meeting in person, any shareholder may choose one of the following three options:

● appoint any individual or legal entity of their choice as proxy, including the chairman of the meeting; ● send a proxy to the company without naming a representative; ● vote by post.

Shareholders may obtain, under the legal and regulatory conditions, the documents provided for under Articles R.225-81 and R.225-83 of the French Commercial Code (the annual accounts, explanatory statements for proposed resolutions, etc.) upon request sent to the company’s registered office.

The documents to be presented at the meeting are made available on the company’s website (abc-arbitrage.com) in accordance with Article R.225-73 of the French Commercial Code, no later than twenty-one days prior to the meeting.

Shareholders may submit written questions to the Board of Directors. These must be sent in compliance with legal and regulatory requirements, no later than four days prior to the meeting.

Shareholders meeting the legal and regulatory requirements may request the inclusion of draft resolutions or additional items on the agenda. Such requests must be sent in accordance with the legal and regulatory provisions, no later than twenty-five days prior to the meeting.

Dominique CEOLIN, Chief Executive Officer of the company, regularly meets with significant shareholders outside the General Meeting, to allow for constructive exchanges in line with Recommendation No. 14 of the MiddleNext Code.

Succession Plan:

In accordance with Recommendation No. 17 of the MiddleNext Code, Dominique CEOLIN, Chairman and Chief Executive Officer, presents the succession plan to the Board of Directors once a year.

This plan was notably:

●     Amended during the 2023 financial year, following the end of David HOEY’s term as Deputy CEO at the close of the General Meeting of 9 June 2023 and his appointment as a member of the Board of Directors from the same date;

●     Presented again to the Board of Directors at the end of 2024.

Regulated agreements:

No regulated agreements have been signed to date, nor has any agreement been concluded between a shareholder holding more than 10% of the capital and voting rights of ABC arbitrage and an executive or subsidiary thereof.

Information that may have an impact in the event of a public offer (takeover or exchange):

In accordance with Article L.22-10-11 of the French Commercial Code regarding “information that may have an impact in the event of a takeover or exchange offer”, this management report includes the following information:

3. Risks and Internal Control

The internal control procedures in force within the various Group companies aim to:

●     Ensure that management actions and transaction execution, as well as employee behaviour, fall within the framework defined by the orientations set for the company’s activities by its governing bodies, by applicable laws and regulations, and by the company’s internal values, standards, and rules;

●     Prevent and control risks resulting from the company’s activities and the risks of errors or fraud;

●     Verify that the accounting, financial and management information communicated to the company’s governing bodies genuinely reflects the activity and situation of the company and the Group companies; ● Ensure the management of identified risks.

From a broader perspective, the internal control system is intended to provide shareholders and investors with reasonable assurance that the objectives set by the Board of Directors, as part of the strategy agreed with shareholders, are achieved under sufficient conditions of security, risk and process control, and compliance with applicable standards. As with any control system, it cannot, however, provide absolute assurance that such risks are entirely eliminated.

                3.1.    Reference Texts

The regulatory and normative references to which the internal control system of ABC arbitrage Group seeks to conform are as follows:

●     The texts applicable to French companies whose securities are admitted to trading on a regulated market, in particular the General Regulation of the AMF and the internal control reference framework published by the

AMF;

●     The texts applicable to French asset management companies, including the General Regulation of the Autorité des Marchés Financiers (AMF), the code of ethics of the Association Française de la Gestion financière (AFG), and the AIF Rulebook for managed AIFs.

               3.2.     Parties Responsible for Internal Control and Risk Management

Two teams within the Group are responsible for supervising the operational teams: the “Finance/Internal Control” team and the “Market Risk” team.

The boards of directors of the ABC arbitrage Group companies are fully empowered to request any information they deem necessary. Their key contacts on risk management matters are Gaëtan FOURNIER, Group Secretary General, and Dominique CEOLIN, Chairman and Chief Executive Officer.

The “Finance/Internal Control” team:

This team reports directly to General Management and, upon request, to the boards of directors of the Group companies. It is composed of six employees.

The team is responsible for developing and maintaining documentation specifying the resources used to ensure the internal control system functions properly, coherently, and effectively. It organises and contributes to both permanent and periodic control activities.

Through regular meetings with each team across the different Group entities, internal control verifies the existence of and compliance with procedures outlining the operational processes of each team.

Given the Group’s size, its work, findings, and improvement proposals are discussed in formal meetings with the relevant team leads and company management.

This team is also responsible for the Group’s financial control. As such, it validates, at each accounting close, entries recorded manually or automatically in the information system by operational teams.

These verifications are performed:

●     Using supporting documents through exhaustive or sample-based controls; ● Via analytical reviews.

The checks performed by the “Finance/Internal Control” team are documented in a balance sheet file that is subject to external audit by the statutory auditors on a semi-annual basis.

The “Market Risk” team:

The “Market Risk” team reports directly to ABC arbitrage’s Secretary General, who liaises with the Chairman and CEO and the boards of directors. This team consists of four employees.

Its key responsibilities include:

●     Monitoring risk limits (exposures, hedging discrepancies, etc.) set by the management committee or the Group’s

clients;

●     Modelling, evaluating, and monitoring extreme risks (stress testing, scenario analysis); ● Monitoring and optimising capital usage; ● Analysing trading strategies.

Members of the Investment Risks team ensure that all management procedures and limits are properly adhered to and immediately escalate any breaches to the management committee. They communicate daily with the traders, who are responsible for first-level controls.

Critical controls—addressing primary risks—are performed in real time, and a daily summary of any breaches is submitted to the management committee after the US market closes.

The head of the Investment Risks team meets with the management committee as often as necessary and at least once per week. A quarterly report is also submitted to the management committee and the Chairman and CEO of ABC arbitrage.

The Compliance Officer:

The Compliance Officer is responsible for organising the application of professional conduct rules as defined by financial industry standards. These rules are designed to guarantee the quality and integrity of the services provided and, in doing so, to support business development. In collaboration with all relevant individuals and teams, the Compliance Officer ensures their implementation and is responsible for oversight.

               3.3.     Risk Management Framework

The Internal Control team prepares and monitors a risk matrix. This matrix details how all departments and the Group’s infrastructure classify and mitigate identified risks.The risk matrix is presented to the Audit Committee and approved annually by the Board of Directors. This presentation includes the methodology used and the assessment of each risk category.

Two teams are involved in the risk management system: the Market Risk team and the Finance and Internal Control team. All monitoring and control measures are aimed at managing and identifying areas for improvement to reduce the risks inherent to the Group’s activities. These areas for improvement are highlighted through recommendations issued following permanent and periodic control themes.It is important to note that the various business lines represent the first line of defence in risk management and control.

The nature and extent of the risks arising from the financial instruments to which the Group is exposed are detailed below.

The positions taken (hereinafter referred to as “Exposure(s)” or “Position(s)”) include equities or equity derivatives, such as warrants, put warrants or convertible bonds, as well as derivatives such as futures, options, currencies, and fund units (hereinafter collectively referred to as “Financial Instruments”), the majority of which are traded on active markets, whether regulated or not. A group of related Exposures constitutes a Quantitative Model.

A Quantitative Model aims to benefit from an unjustified price difference between several Financial Instruments. The Group considers only those differences as “unjustified” that can be objectively measured by a mathematical or statistical process, without any guarantee of future convergence.

Positions may be held with a custodian, as a receivable or payable vis-à-vis a counterparty, or in synthetic form (CFDs, swaps).

The Group is exposed to various financial and non-financial risks: market risk, credit and counterparty risk, liquidity risk, operational risk, and other risks.

ABC arbitrage has defined and communicated a general risk management framework to its subsidiaries. Each subsidiary board uses this framework to build its own policy.The Group monitors the implementation and effectiveness of controls within the subsidiaries with the support of executive management and control functions (market risk and internal control).

The Group uses leverage under its financing agreements with counterparties, allowing it to take on larger Exposures than it could otherwise.

Exposures taken individually carry a risk of capital loss. The maximum loss on long equity positions is limited to their fair value. The maximum loss on long futures positions is limited to their notional value. The maximum loss on short positions in equities or futures is theoretically unlimited.

Market Risk:

Market risk is the risk that the fair value or future cash flows of Positions will fluctuate due to changes in the prices of Financial Instruments. It includes price risk, interest rate risk, and foreign exchange risk.

Equity Risk

Equity risk, or price risk, arises mainly from uncertainty regarding future prices of Financial Instruments held. It represents the potential loss the Group could suffer due to adverse price movements on its Financial Instruments Exposures.

This risk is not related to overall unfavourable developments in financial markets, such as a crash, but to the occurrence of an adverse event linked to the specific operation initiated. By nature, the risks linked to Quantitative Models are independent from each other. The Group mitigates them through diversification, by operating across as many trades and types of Financial Instruments as possible, and across multiple geographic areas.

The risk is monitored daily by the Market Risk team through position alert monitoring and the implementation of stress tests to track any potential deviations. All alerts are escalated to the Management Committee, which adjusts limits accordingly.

Interest Rate Risk

Interest rate risk refers to changes in the price or valuation of a Financial Instrument resulting from variations in interest rates.

In most Quantitative Models, the amount of the long position is approximately equal to the amount of the short position. In such cases, this risk is generally negligible. When a specific Position carries material interest rate risk, this risk is systematically hedged.

This risk is monitored by the “Financial Operations” team using a dedicated cash management and interest rate optimisation tool. The Market Risk team also performs monthly monitoring of interest rate risk by strategy and by currency.

Foreign Exchange Risk

The Group’s Exposures may be denominated in currencies other than the euro. As a result, fluctuations in exchange rates against the reference currency may positively or negatively affect their value.

Foreign exchange risk is systematically hedged by buying or selling the relevant currency (or exposure to the currency). The only residual risk is second-order: the profit generated in a particular currency may fluctuate if not converted into euros. The Group regularly converts profits into euros, and is thus only marginally exposed to this risk.

The Market Risk team calculates daily foreign exchange exposure by strategy portfolio. Alerts are issued to the relevant Business Units when necessary.

Operational Risk:

Operational risk is the risk of internal failure. These failures may stem from technical, human or external factors. This risk is managed proactively, with transactions governed by written procedures and strict internal controls. However, such controls do not offer absolute protection, and vigilance must remain constant as this is a structural risk inherent to the Group’s business.

The Group follows a risk-based approach, identifying all sensitive elements likely to cause operational failure in its risk matrix. Several levels of control are implemented (level one, one bis, two, and three). These controls are conducted regularly, and their outcomes systematically reviewed to reassess the risk classifications.

For example, strategy environments are configured based on automated referencing of official external data sources. The Analysis and Investigation team monitors the consistency of internal and external data used by traders. The IT & Development and Trading teams perform strategy testing in development environments separate from production, significantly reducing configuration or data usage errors. The Market Risk team defines applicable limits for each strategy, submitted for validation by the Management Committee. The Execution Support team conducts compliance tests on counterparties to regularly assess their reliability and ability to execute orders in the market.

In the event of business continuity issues, the IT & Development team has implemented a Business Continuity and Disaster Recovery Plan, which includes real-time replication of critical data and daily backup of less sensitive information.

An incident reporting and tracking system is in place, covering all types of incidents (human, technical, external). It ensures rapid resolution and the implementation of a remediation plan to prevent recurrence. A summary is presented to the Executive Committee every six months.

Liquidity Risk:

Liquidity risk is the risk that the Group’s assets cannot be converted into cash quickly enough to meet its obligations, or only under materially disadvantageous conditions. The Group’s Exposures mainly consist of Financial Instruments listed on active (if not regulated) markets and are highly liquid. The Group’s obligations mainly consist in the need to post Collateral to support its Exposures. The volume of potential Exposures is contractually limited by the assets transferred as Collateral.

The Group’s Exposures are constantly monitored in accordance with agreements entered into with counterparties, ensuring the Group has broad flexibility in its operations and a high level of readily available liquidity. Furthermore, given the liquidity of Positions, it is easy to reduce the need for Collateral by decreasing the volume of Exposures.

The Group prioritises intervention in highly liquid products; any exception to this rule must be submitted to the Management Committee for a decision. The “Market Risk” team sets exposure limits calibrated to the liquidity risk.

Credit and Counterparty Risk:

Credit and counterparty risk is the risk that a third party, whose financial condition deteriorates, may fail to meet a contractual obligation to pay the Group a sum of money or deliver a certain quantity of securities.

For its market operations, the Group mainly acts as a client of brokers (“Brokers”), credit institutions and investment firms (“Counterparties”). All such institutions are subject to specific oversight by the competent authorities in their home country to ensure their solvency.

The Financial Instruments traded by the Group are executed on active (if not regulated) markets and are generally cleared through a central counterparty. As a result, the risk of default by Brokers is considered low, since the central counterparty guarantees the settlement of the transaction, and Financial Instruments are not delivered to Counterparties until the Broker has either made or received payment.

When settling transactions in Financial Instruments, Counterparties act as custodians, creditors or debtors, or as counterparties for synthetic products (CFDs, swaps) for the Group. In general, Positions held with a custodian are very limited. Nearly all the Group’s assets are pledged or collateralised in favour of Counterparties (hereinafter “Collateral”), which may reuse them (“reuse”). Under applicable regulations, Counterparties are required to return the reused assets or equivalent assets upon first request.

Risks related to the use of a Counterparty include:

●     Interruption or termination of services offered by the Counterparty, which reserves the right to modify or discontinue services;

●     Increased custody fees on Positions charged by the Counterparty;

●     Failure to return assets used by the Counterparty due to market events;

●     Failure to repay amounts due by the Counterparty following default;

●     Incorrect valuation of debt and/or assets pledged as collateral.

The Group manages counterparty risk through the widespread use of standard contractual agreements (netting and collateral agreements), daily monitoring of Counterparty ratings, and ongoing efforts to diversify its banking relationships while balancing the benefits of volume concentration.

The Group mainly operates through regulated markets (cleared via central counterparties), which helps mitigate this risk.

Due diligence questionnaires are issued before selecting any intermediary. Prime broker concentration is tested, and Counterparties used by the Group are subject to compliance checks by the Execution Support team to regularly assess their reliability and ability to route orders to the market (see operational risk section). The Market Risk team monitors counterparty risk and performs a review of maximum potential losses through stress testing.

Other Risks:

Compliance and Legal Risk

LCompliance risk is the risk of failing to identify and/or correctly comply with applicable laws and regulations governing the Group's activity. Such failure may lead to malfunctions, financial losses, or sanctions (judicial, disciplinary, administrative, etc.). A permanent regulatory watch is in place via an external service provider supporting the Group's Legal and Tax team.

This risk is monitored by the “Legal” team, which performs legal and regulatory watch. This work enables the Compliance and Internal Control team, with the support of operational departments, to implement regulatory requirements and ensure reporting to the relevant authorities. Additionally, the “Compliance and Internal Control” team provides advisory support to all teams within the Group on compliance-related matters and raises awareness about their obligations

Conflict of Interest Risk

The risk of conflicts of interest is the risk of facing situations where the interests of a client or a Group entity may conflict with those of another client, another Group entity, or one of its employees.

To prevent such situations, the Group has implemented:

●     An internal policy on conflict of interest management, including instructions that employees must follow to identify, prevent and manage conflicts;

●     Strict procedures and rules governing order handling and the primacy of client interest. The Group’s asset management companies strictly adhere to financial market rules and ensure equal treatment of orders. Orders transmitted to the market are pre-allocated and time-stamped.

This risk is mitigated by the presence of a dedicated internal control team and the establishment of management committees responsible for validating or proposing any strategy that falls outside usual frameworks. These committees involve representatives from the Market Risk, Analysis and Investigation, and Legal and Tax teams. More generally, the code of ethics is presented to each new employee and reiterated annually. Regular controls are in place to cover this risk.

The Group also mitigates this risk by working exclusively with professional clients, who receive the Group's Due Diligence Questionnaire annually, which outlines its ethical principles. All potential conflicts of interest are recorded in a dedicated register and reviewed by the Compliance team, which prepares an analysis note to confirm or dismiss any presumed conflict.

Climate Change Risk

Given its business model, ABC arbitrage Group has not identified any significant financial risk linked to climate change. However, the Group is aware of its responsibility and seeks to incorporate environmental considerations into its daily operations.

The Group’s environmental policy is detailed in Part III of the voluntarily provided Non-Financial Information Report, included in the Annual Financial Report.

As mentioned above, the Group has not identified any significant financial risk linked to climate change. Nevertheless, it conducts awareness initiatives, and its CSR task force considers and anticipates potential effects.

               3.4.     General Organisation of Internal Control

To address the previously identified risks, ABC arbitrage Group has implemented the following components within its internal control framework:

Clear and accessible functional and hierarchical organisation charts 

These provide an overall view of the Group’s structure and ensure appropriate segregation of duties.

Documented procedures describing management processes 

Procedures are drafted by employees from the various departments to clarify data flows, required documents, decision-making steps, record-keeping, and necessary controls. These procedures reflect the management company’s expertise in delivering its core business. 

Management rules

Management rules are defined by senior management in collaboration with the Market Risk department when initiating any new category of quantitative models. These rules provide all stakeholders with a consistent framework regarding position limits, maximum loss thresholds, leverage, and other parameters.

Regular controls are in place to ensure that limits are established, reviewed on a regular basis, and strictly observed.

A tailored information system 

The information system is the cornerstone of the organisation. Designed to meet the specific needs of the business, it enables a large number of automatic controls and the generation of daily management reports. It also allows for the implementation of certain IT restrictions to minimise operational errors in workflows. The system has been developed and is maintained by the management company’s internal teams. 

Permanent traceability 

All elements of the production and operational chain are logged and archived within the Group’s systems to ensure full traceability of operations.

Accountability of operational staff

Risk management and first-level controls are carried out close to the operational teams so that they assume responsibility for applying control rules and ensuring compliance with existing risk limits and internal standards.

Segregation of duties between processing and control functions 

To prevent the risk of collusion or unintentional errors, key operational functions must be separated. Accordingly, the functions of authorisation, processing, recording and accounting are clearly divided between different operational departments.

Where the Group’s small size results in unavoidable overlaps, control reporting is made directly to the Board of Directors or General Management, and decisions are taken collectively.

Limited delegations of authority

Only the Chief Executive Officer holds general authority to represent any ABC arbitrage Group company. A general delegation exists in the event of absence, and special delegations may be granted to department heads, limited to the needs of their function.

Ethical measures

All employees are considered potentially exposed to sensitive information or conflicts of interest, and therefore the rules applicable to all are designed to reduce the risk of misuse or inappropriate behaviour.

The internal code of conduct sets out:

●     Rules governing confidential, privileged, or sensitive information;

●     Blackout periods on ABC arbitrage share trading, established by senior management in accordance with the company’s internal timeline, in order to avoid any controversy or personal judgement over activity during sensitive periods (e.g. ahead of earnings releases).

The Group has also consistently ensured that it maintains a significant reserve of available cash to deal with severely disrupted market conditions. It has never encountered any issues with financing or access to credit.

The Group’s entities occupy premises that are well suited to the technical requirements of a trading floor and facilitate efficient information flows throughout the organisation.

               3.5.     Organisation of Financial and Accounting Information Preparation

ABC arbitrage Group prepares both statutory and consolidated financial statements on an annual basis. These accounts are prepared by the Finance/Internal Control department, reviewed by the Audit Committee, and approved by the Board of Directors. In addition, the Group publishes consolidated accounts on a half-yearly basis.

The statutory and consolidated accounts have consistently been certified without qualification by the statutory auditors.

The accounting control framework, overseen by the Finance/Internal Control department, has been designed to ensure that ABC arbitrage Group’s information system and its associated reference frameworks comply with regulatory requirements, particularly with regard to audit trail integrity and continuity.

Reconciliation and freeze of entries:

A dedicated internal module named “Transactions” stores, at two levels, the nature and specific details of each transaction (direction, security type and description, trade date, value date, quantity, price, commissions, broker mnemonic, deposit account, etc.).

The first level is accessible to traders for transaction input.

The second level is accessible to post-trade financial operators for transaction validation, based on confirmations received from counterparties.

This module serves as a dynamic interface between traders and financial operators, ensuring clear segregation of duties between input and validation functions.

All data flows that result in accounting entries are protected by IT controls that prevent any modification or deletion, thereby ensuring the integrity and finality of the records.

These safeguards apply to transactions entered by traders. Once validated by the financial operators (i.e., reconciled with broker confirmations), transactions become non-editable.

The same applies to settlement and delivery processes: once confirmed and reconciled with counterparties, transactions and associated accounting entries are locked.

All journal entries initially recorded in draft mode are definitively frozen after accounting validation as of a predefined “freeze date”.

Finally, the monthly general ledger entries are processed using accounting software approved by the tax authorities. An annual closing procedure is applied to the total of recorded movements, at the latest before the end of the following accounting period.

Non-operational activity entries are entered directly into the accounting software.

Account setup and modification:

Permissions to create or modify account data are restricted to two designated and authorised individuals: one business user and one IT systems administrator. They are responsible for the integrity of account master data (e.g. account number, label, etc.).

Accounting entry schemes:

For automatic accounting entries, predefined accounting schemes are in place. The transaction type and third party designation, as validated by the financial operator, trigger the posting of the relevant accounting flow. These flows cannot be modified retrospectively and are not available for manual entry. As a result, such flows are automatically subject to documentary controls by the relevant operational departments.

For manual entries, which are strictly limited in terms of transaction types, predefined schemes also exist to guide and constrain the data entry process.

In addition, the Finance/Internal Control department is involved in the implementation of any new or complex operation in order to assess the appropriate accounting treatment and, where necessary, to seek prior validation from the statutory auditors to facilitate their future audit work.

Restricted selection lists:

All application interfaces offer predefined drop-down menus for user selections. These lists are restrictive, designed to speed up data entry, minimise typographical errors, and prevent inconsistencies. Lists are dynamically updated for all users once approval is granted by both authorised individuals.

This applies in particular to reference data such as currencies or securities, selection of accounts based on third parties (clients, brokers, prime brokers, etc.), and profit-impacting accounts depending on the type of operation.  Second-level controls by the “Finance/Internal Control” department:

Day-to-day monitoring is carried out on a continuous basis by the operational middle-office and back-office teams, in particular to ensure that transactions initiated through management systems are correctly reflected in the accounting tools.

As previously mentioned, the ‘Finance/Internal Control’ department is responsible for conducting second-level controls. This involves validating, on a sample basis, during each accounting close and prior to the involvement of the statutory auditors, the accuracy of entries posted—either manually or automatically—into the information system by the operational teams. This validation is performed using external documentation or consistency checks.

The department formalises its controls through the preparation of the balance sheet file and ensures that the summary documents accurately reflect the underlying accounting records.

The Group’s internal control framework is designed to support its sustainable and profitable development. It therefore focuses on the prevention and management of risks inherent to its activities and aims, in particular, to ensure the reliability of the financial and accounting information provided to shareholders.

Senior management remains committed to continuously improving and modernising the internal control system, while remaining aware that it does not offer absolute protection and that maintaining constant vigilance in this area is essential.

4. ABC arbitrage shares

               4.1.     Life of the share and share buyback program

As at 31 December 2024, the share capital amounted to 953,742 euros, divided into 59,608,879 ordinary shares. The average daily liquidity over the year was 61,537 shares, representing nearly 256 thousand euros in daily trading volume. On 31 December 2024, the ABC arbitrage share closed at 4.79 euros. The nominal value per share is 0.016 euro. 

The Combined General Meeting of 7 June 2024 set the maximum purchase price at 12 euros per share, subject to adjustments to reflect the impact of capital-related transactions.

The number of shares that may be acquired by the company may not exceed 10% of its share capital, potentially adjusted for any capital transactions prior to the General Meeting of 7 June 2024. The total amount that the company may allocate to the repurchase of its own shares, under the programme authorised by the meeting, may not exceed 20 million euros. Any transaction involving cash outflows equal to or exceeding 500 thousand euros, outside the liquidity agreement, requires the prior authorisation of the Board of Directors.

The treasury shareholding outside the liquidity agreement as at 31 December 2023, consisting of 68,603 shares, was fully used to cover share-based payments during the 2024 financial year. In addition, 415,267 shares were purchased to cover the allocation of 29,383 performance shares and the exercise of reserved offers for 223,551 shares. As a result, the treasury shareholding as at 31 December 2024 amounted to 230,936 shares.

               4.2.     Distribution of company share capital

Under Article L. 233-13 of the French Commercial Code, the Board of Directors is required to disclose the names of shareholders whose holdings exceed the statutory disclosure thresholds at December 31, 2024. There was no significant change in the shareholding breakdown in 2024:

* Holding owned at 50.01% by Dominique CEOLIN

** Operational management and department heads of the Group, excluding Dominique CEOLIN

As at 31 December 2024, the company held 304,991 treasury shares with a gross value of 1,318 thousand euros, compared with 141,541 treasury shares with a gross value of 788 thousand euros as at 31 December 2023. The free float represented 50.91% of the shareholding as at 31 December 2024.

In accordance with the provisions of Article L225-102 of the French Commercial Code, there was no employee shareholding under collective management as at 31 December 2024.

               4.3.     Dividend policy

The table below shows dividends paid in respect of the last three fiscal years:

All of these dividends qualified for the 40% tax relief available to individual shareholders resident in France for tax purposes, except for the €0.20 per share in 2021, €0.01214 per share in 2020, €0.20 per share in 2019, as these amounts are reimbursements of share premiums.

The Combined General Meeting of 7 June 2024 resolved not to distribute any final dividend in respect of the 2023 financial year. Taking into account the two interim payments of 0.10 euro per share each, made in October and December 2023, together with a further interim dividend of €0.10 per share paid in April 2024, the total distribution for the 2023 financial year amounts to 0.30 euro per share.

On 19 September 2024, the Board of Directors approved the payment of two (2) interim dividends of €0.10 per share each, payable exclusively in cash. The ex-dividend dates were 9 October and 3 December 2024, with payment dates on 11 October and 5 December 2024, respectively. The total amount of these two operations, based on the number of ABC arbitrage shares entitled to payment, amounted to 11.9 million euros.

5. Other elements

                5.1.    Sponsorship

In a constantly evolving world, where ambitious projects drive its teams every day, the Group remains open to new horizons, passions, and adventures. It also seeks to engage with individuals who are driven by personal challenges, whether sporting, academic or professional. Stepping outside the everyday, exploring new perspectives, and embracing innovation and personal achievement: such are the goals of ABC arbitrage through its “passion-led partnerships”. An approach that not only enriches the Group’s own journey, but also offers a fresh perspective on its business and its teams.

As part of its internal and external communications policy, ABC arbitrage has for many years run a sponsorship programme as the ‘Title Partner’ of skipper Jean-Pierre Dick and his sailing team ‘Absolute Dreamer’. From 2018 to 2022, the company supported the development of the Easy To Fly, an 8-metre catamaran designed by the skipper. In 2022, Jean-Pierre Dick returned to traditional offshore racing, with ABC arbitrage’s support, and won the Route du Rhum in the Rhum Mono category. In 2023, he continued to shine, winning the Caribbean 600 in his category and setting a new record for the Bermuda to Lorient Atlantic crossing. In 2024, ABC arbitrage continues to support the skipper in his upcoming challenges.

ABC arbitrage has also been supporting, for several years, the development of a “Young Talents Club” in both sport and the arts, bringing together three other champions who share the Group’s values, each in their respective fields. In return, ABC arbitrage’s visual identity may be displayed on their equipment (surfboard, golf outfit, etc.) and other communication materials. These young talents are:

●     Charly Quivront, surfer and 2022 French Champion;

●     Charlotte Liautier, professional golfer on the Ladies European Tour;

●     Mathieu Latour, wildlife photographer and filmmaker, whose project ‘Regards d’extinction’ – 300 face-to-face portraits of endangered species – was unveiled in 2023. Mathieu Latour also contributed to ‘Vivant’, the documentary by Yann Arthus-Bertrand.

Since the 2014/2015 academic year, ABC arbitrage has also provided financial support to Maisons des Jeunes Talents, an equal opportunity initiative run by the Primonial Group Foundation. This association aims to support talented scholarship students in their preparatory studies and entrance exams to top Parisian schools.

Each year, two young women are mentored by ABC arbitrage employees, who provide moral support, academic guidance (methodology and general knowledge), and an introduction to the professional world (understanding corporate life and its codes), depending on the students’ needs. Mentors may also assist in finding internships and job opportunities by opening their networks and sharing professional insight.

Through this partnership, the Group aims to facilitate access for the next generation – especially young women – to scientific studies, and hopes, in its own way, to contribute to France’s continued excellence and international recognition in these fields.

The Group has also contributed to the development of Basis.point, a charitable initiative launched by the Irish investment fund industry, which works to improve access to training and educational opportunities for disadvantaged young people in Ireland.

The total cost of sponsorships and donations for the 2024 financial year amounts to 118 thousand euros.

               5.2.     Payment periods

All trade payables outstanding at December 31, 2024 were payable no later than thirty days from the end of the month.

               5.3.     Sumptuary expenditures: Article 223 quater of the French General Tax Code

On December 31, 2024, we acknowledged the absence of non-deductible expenses mentioned in article 39-4, 4° of the French General Tax Code.

               5.4.     Post-closing events

There are no post-closing events to report.

6. Outlook

With the 2024 financial year, ABC arbitrage marks its 30th consecutive year with an average ROE exceeding 15%. In the first quarter of 2025, the markets have been influenced by the presidential transition in the United States. Notably since mid-February, in light of the new geopolitical and economic-military context, volatility has returned to levels close to its historical average. Despite stable assets under management, the Group is benefiting both from the endogenous progress achieved in 2024 and from current market conditions. As such, for the first quarter of 2025, ABC arbitrage is experiencing an activity pace above the 2024 average, by approximately 10%.

In this final year of the “Springboard 2025” plan, the Group is continuing to roll out its strategic roadmap, maintaining R&D investment in support of strategy diversification. As the year draws to a close, the accumulation of global concerns combined with high valuations in certain sectors is significantly increasing the likelihood of sustained volatility. Should this situation persist, it would, as always, be favourable to the Group’s activities. Nevertheless, central banks are expected to remain active throughout 2025. This environment will naturally be taken into consideration in the development of the next strategic plan, which will begin in 2026 and be presented at the start of the next financial year. In the meantime, the current financial year will provide the Group with an opportunity to continue delivering on the commitments of the “Springboard 2025” plan and to build upon the progress made in 2024.

The Board of Directors

March 20, 2025

(1)    The amount reported in respect of the 2023 distributed profit comprises two interim dividends of 0.10 euro per share paid in October and December 2023, together with an interim dividend of 0.10 euro per share paid in April 2024. The total distribution for the 2023 financial year therefore amounts to 0.30 euro per share.

(2)    The amount reported in respect of the 2024 distributed profit comprises the payment of two interim dividends of 0.10 euro per share each, distributed in October and December 2024, representing 11,874 thousand euros taking into account treasury shares held on the ex-dividend dates. These were followed by a third interim dividend of 0.10 euro per share, scheduled for payment on April 24, 2025. In addition to these interim dividends, a final dividend of 0.04 euro per share is proposed by the Board of Directors for payment in July 2025, bringing the total distribution for the 2024 financial year to 0.34 euro per share^[5].

Consolidated balance sheet - Assets

Consolidated balance sheet - Liabilities

Consolidated statement of income

Statement of comprehensive income

1. Accounting principles and policies.......................................................................................................................... 55

1.1. Fixed assets................................................................................................................................................................................................ 56

1.1.1. Intangible assets and property and equipment....................................................................................................................... 56

1.1.2. Right of use..................................................................................................................................................................................... 56

1.2. Fair value of financial instruments......................................................................................................................................................... 57

1.3. Portfolio revenue...................................................................................................................................................................................... 58

1.4. Dividend income....................................................................................................................................................................................... 58

1.5. Share-based payment.............................................................................................................................................................................. 58

1.6. Provisions................................................................................................................................................................................................... 58

1.7. Corporate income tax............................................................................................................................................................................... 59

1.8. Income from investment services fees................................................................................................................................................. 59

1.9. Financial statement presentation.......................................................................................................................................................... 59

1.9.1. Consolidation principles............................................................................................................................................................... 59

1.9.2. Earnings per share......................................................................................................................................................................... 60

1.10. Alternative performance indicators.................................................................................................................................................... 60

2. Consolidation scope and principles......................................................................................................................... 61

3. Notes to the balance sheet.................................................................................................................................... 62

3.1. Intangible assets and property and equipment.................................................................................................................................. 62

3.2. Other non-current financial assets........................................................................................................................................................ 63

3.3. Financial assets and liabilities at fair value through profit or loss.................................................................................................... 63

3.4. Guarantees granted.................................................................................................................................................................................. 63

3.5. Other receivables and payables............................................................................................................................................................. 64

3.6. Consolidated equity.................................................................................................................................................................................. 64

3.6.1. Share-based payment ABC 2022 and Springboard 2025........................................................................................................ 64

3.6.2. Distribution dividend in 2023...................................................................................................................................................... 65

3.6.3. Dividend distributions in respect of the 2024 financial year................................................................................................. 65

3.6.4. Treasury stock................................................................................................................................................................................ 65

3.7. Provisions................................................................................................................................................................................................... 66

3.8. Liabilities representing the lease payment obligation - IFRS 16....................................................................................................... 66

4. Notes to the statement of income.......................................................................................................................... 67

4.1. Net gains on financial instruments at fair value through profit or loss........................................................................................... 67

4.2. Investment services fees......................................................................................................................................................................... 68

4.3. Other revenues.......................................................................................................................................................................................... 68

4.4. Other purchases and external expenses............................................................................................................................................... 68

4.5. Payroll costs............................................................................................................................................................................................... 68

4.6. Cost of risk.................................................................................................................................................................................................. 69

4.7. Corporate income tax............................................................................................................................................................................... 69

5. Risk factors......................................................................................................................................................... 70

5.1. Market risk................................................................................................................................................................................................. 72

5.2. Credit and counterparty risk................................................................................................................................................................... 73

5.3. Liquidity risk............................................................................................................................................................................................... 73

5.4. Operational risk......................................................................................................................................................................................... 74

5.5. Other risks.................................................................................................................................................................................................. 74

6. Complementary information................................................................................................................................. 75

6.1. Related party transactions...................................................................................................................................................................... 75

6.2. Post-closing events................................................................................................................................................................................... 75

6.3. Fees paid to the Statutory Auditors....................................................................................................................................................... 75

1. Accounting principles and policies

The financial year covers the period from January 1 to December 31, 2024. The annual consolidated financial statements are presented in euros.

The consolidated financial statements were approved by the Board of Directors on March 20, 2025, and certified by the two statutory auditors: BM&A and Deloitte & Associés.

The consolidated financial statements of the ABC arbitrage Group (hereinafter the "Group") have been prepared in accordance with the IFRS (International Financial Reporting Standards) framework issued by the IASB (International Accounting Standards Board) as adopted in the European Union as of December 31, 2024.

The standards and interpretations mandatorily applicable from January 1, 2024, have no significant impact on the Group's consolidated financial statements as of December 31, 2024.

Amended IFRS Accounting Standards in Force for the Current Financial Year:

For the current financial year, the Group has applied a number of amendments to IFRS accounting standards issued by the IASB.

Regarding the introduction of new standards and interpretations adopted by the IASB and mandatorily effective from January 1, 2024, their adoption has had no significant impact on the disclosures or amounts presented in these financial statements.

Below is the list of amended IFRS accounting standards in force for the relevant period:

●     Amendments to IAS 1:

○ Classification of liabilities as current or non-current liabilities;

○ Classification of liabilities as current or non-current liabilities – Deferral of the effective date; ○ Non-current liabilities with covenants;

●     Amendments to IAS 7 and IFRS 7: Supplier finance arrangements;

●     Amendment to IFRS 16: Lease liability arising from a sale and leaseback transaction.

New Amended IFRS Accounting Standards Issued but not yet effective:

As of the authorization date of these financial statements, the Group has not applied the following new amended IFRS accounting standards, which have been published but are not yet effective^[6]:

●     Amendments to IAS 1: Lack of convertibility; 

●     Amendments to IFRS 9 and IFRS 7: Classification and measurement of financial instruments;

●     IFRS 18: Presentation and disclosures in financial statements;

The Group and its activities do not appear to be affected by these amendments, and therefore, no significant impact is expected upon their entry into force.

The financial statements are presented in euros, which is the functional currency of the Group's entities.

The preparation of the financial statements may require the Group to make estimates and assumptions that could impact the amounts of assets and liabilities as well as those of income and expenses. The underlying estimates and assumptions are based on past experience and other factors deemed reasonable given the circumstances. They serve as

a basis for the judgment exercised in determining the carrying amounts of assets and liabilities, which cannot be directly derived from other sources. 

In preparing the consolidated financial statements, ABC arbitrage has considered the impact of climate change, particularly in the context of the information required in the "Voluntarily Provided Non-Financial Information" section of the Annual Financial Report. This consideration has not had a material impact on the judgments and estimates made by the Group.

The final amounts reported in the Group’s future financial statements may differ from the values currently estimated. These estimates and assumptions are continuously reviewed.

As the Group’s activities are neither seasonal nor cyclical, the financial year’s results are not influenced in this respect. The external market conditions encountered are inherently random. They are presented in the management report to provide context for the results achieved in each financial year.

The Group follows an industrial approach, focusing exclusively on the design of quantitative and systematic models that exploit market inefficiencies to help eliminate them and, at its own scale, contribute to market liquidity and efficiency.  Its primary objective is to deliver profitability each year within a defined risk framework while investing the necessary resources to ensure sustainable growth.

Summary of Key Events:

The market parameters observed during the 2024 financial year follow similar patterns to those seen in 2023. However, a subtle increase in volatility and trading volumes was observed in the second half of the year, enabling the Group to make the most of its historical strategies. The Group thus continues to face both low volatility and a slowdown in M&A activity but has nonetheless managed to leverage its investments to deliver an encouraging result, highlighting structural progress. This partly explains the increase in the "Current Activity Income" recorded. Furthermore, the average rise in interest rates, along with investments aimed at optimising deposits, had a positive impact on the remuneration of the "Cash Collateral" required for the Group's activities (see §3.4. Guarantees granted).

                 1.1.     Fixed assets 

                              1.1.1.     Intangible assets and property and equipment

Intangible and tangible fixed assets acquired are recorded on the balance sheet at their acquisition cost, and depreciation is calculated using the straight-line method based on their estimated useful life.

The depreciation periods generally applied by the company are as follows:

●     Intangible assets: 1 to 5 years;

●     IT equipment: 3 to 5 years;

●     Furniture and fixtures: 5 to 10 years.

Depreciation expenses are recorded under the "Depreciation, Amortization, and Provisions" line item in the income statement.

                             1.1.2.     Right of use

IFRS 16, which relates to lease contracts, requires the lessee to recognize on its balance sheet:

● An asset representing the right-of-use of the leased asset; and ● A liability representing the obligation to make lease payments.

Thus, a depreciation expense for the asset must be presented separately from the interest expense related to the liability in the income statement.

Leases with a term of less than one year and pure service contracts are not subject to adjustments.

                1.2.    Fair value of financial instruments

The positions taken (hereinafter referred to as "Exposure(s)" or "Position(s)") involve either equities or equity derivatives, such as warrants, guaranteed value certificates, or convertible bonds, as well as dematerialised digital assets ("Digital Assets"), derivatives such as futures, options, exchange-traded funds ("ETFs"), currency exposures, and investment fund units. This asset universe (hereinafter referred to as "Financial Instruments") is, for the most part, traded on active markets, which may be regulated or unregulated. A set of related Exposures constitutes a quantitative model (hereinafter referred to as "Quantitative Model").

A Quantitative Model aims to take advantage of an unjustified price difference between multiple Financial Instruments. The Group considers "unjustified" only those differences that can be objectively measured through a mathematical or statistical process, without any guarantee of eventual convergence.

Positions may be held with a custodian, in the form of a receivable or liability towards a counterparty, or in a synthetic format (e.g., CFDs, swaps).

The Group holds only Financial Instruments for trading purposes, which must therefore be classified under the IFRS category "Fair Value Through Profit or Loss".

The fair value hierarchy consists of the following levels:

●     Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities;

●     Level 2: Data other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e., prices) or indirectly (i.e., data derived from prices);

●     Level 3: Data related to the asset or liability that are not based on observable market data (i.e., unobservable inputs).

Financial assets and liabilities classified as "Fair Value Through Profit or Loss" are measured and recognised using the trade date accounting principle. At initial recognition, they are recorded at fair value and subsequently re-measured at fair value at each valuation date.

To value its portfolio of financial instruments, an entity must use the assumptions that market participants would apply when determining the price of the asset or liability, considering that these participants act in their best economic interest.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal market, or in the most advantageous market if no principal market exists, at the valuation date under current market conditions (i.e., the "exit price"), whether that price is directly observable or estimated using another valuation technique.

IFRS 13 also specifies that fair value must incorporate all risk components considered by market participants.

In applying IFRS 13 and considering the economic reality of trading Financial Instruments, the "Exit Price" used to value the financial instrument portfolio is a price that reflects both bid and ask prices (i.e., the midpoint of the Bid/Ask spread, to obtain a Mid Price). This price is determined at the last hour of common continuous trading for the securities within a Quantitative Model or within the shortest possible time interval.

In the absence of an active market, fair value will be determined using valuation techniques.

A financial instrument is considered to be quoted in an active market if prices are readily and regularly available from an exchange, a broker, a deal maker, an industry sector, a pricing service, or a regulatory agency, and if these prices represent actual transactions occurring regularly in the market under normal competitive conditions.

In accordance with IAS 32, cash and securities receivables and cash and securities liabilities for each market counterparty are offset, provided they are related, fungible, certain, liquid, and due. The decision to offset aims to provide a more accurate representation of the Group’s financial position and assets. It does not impact the financial result.

Financial assets and liabilities held for trading purposes are therefore measured at their fair value at the reporting date and recorded on the balance sheet under "Financial assets or liabilities at fair value through profit or loss". Changes in fair value are recognised in the income statement under "Net gains or losses on financial instruments measured at fair value through profit or loss".

The Group derecognizes a financial asset or liability when the contractual rights to the cash flows related to the asset or liability expire, or when the Group transfers the contractual rights to receive the cash flows related to the asset or liability while also transferring substantially all the risks and rewards associated with the ownership of the financial asset.

                1.3.    Portfolio revenue

Equity income is recognised as it is received. Tax credits and any related tax refunds associated with the income are included in portfolio income.

               1.4.     Dividend income

Income from equity investments is recognised upon detachment.

                1.5.    Share-based payment

The Group has granted employees stock subscription or purchase options and performance shares. Upon the exercise of these rights, ABC arbitrage issues new shares through a capital increase or sells previously repurchased shares to its employees.

IFRS 2, which governs share-based payments, requires the recognition of a personnel expense equal to the fair value of the services provided by employees in exchange for the equity instruments they are to receive.

               1.6.     Provisions

A provision is recognised when the Group has a legal or constructive obligation resulting from a past event, which is likely to require an outflow of resources embodying economic benefits to settle the obligation, and when the amount of the obligation can be reliably estimated.

When the risk materializes or the expense occurs, the previously recognised provision, if it does not represent a net increase in assets, cannot be maintained as such and must be deducted from the recognised expense. However, if the actual expense is lower than the provision and the remaining balance is no longer required, the excess provision is then recognised as income and classified under the same category as the original provision expense.

                1.7.     Corporate income tax

The income tax expense corresponds to the current tax adjusted for the deferred tax of the consolidated entities. Deferred taxes are calculated on all temporary differences of a fiscal nature or related to consolidation adjustments. Deferred tax assets and liabilities are calculated using the liability method, applying enacted or substantially enacted tax rates that will be in effect when the temporary differences reverse. They are not subject to discounting.

The recoverability of deferred tax assets is reviewed regularly and may lead to the derecognition of previously recognised deferred tax assets if necessary.

               1.8.     Income from investment services fees

In applying IFRS 15, which sets out the principles for recognizing revenue from contractual relationships, the different types of revenue within the Group are as follows:

●     Intragroup billing of commissions due by Quartys to portfolio managers for the right to use strategies and their implementation.

Additionally, the Group generates commission revenue from investment fund management and other mandates, for which fees are invoiced and categorised as follows:

●     Management fees, calculated monthly based on assets under management and then invoiced and recognised quarterly;

●     Performance fees, calculated monthly on the excess performance beyond the historical high watermark, then invoiced and recognised annually or upon redemption.

               1.9.     Financial statement presentation

                             1.9.1.     Consolidation principles

The amendment to IFRS 10 "Consolidated Financial Statements", endorsed by Regulation (EU) No. 1174/2013, established the definition of an "investment entity" and introduced an exception to the consolidation principles for certain subsidiaries of entities meeting this definition, requiring them to measure their investments at fair value through profit or loss instead of consolidating them.

A parent company must determine whether it qualifies as an "investment entity", meaning an entity that, obtains funds from one or more investors to provide them with investment management services; commits to its investors that its business purpose is to invest funds solely to generate returns in the form of capital appreciation and/or investment income; and evaluates and measures the performance of substantially all of its investments on a fair value basis.

The amendment to IFRS 10 and IAS 28, endorsed by Regulation (EU) No. 2016/1703, clarified that only subsidiaries that operate as an extension of the parent investment entity’s business activities and are not themselves investment entities must be fully consolidated. Thus, all subsidiaries that qualify as investment entities must be measured at fair value. The application of these standards qualifies ABC arbitrage as an "investment entity", which impacts the accounting treatment of its holdings as follows:

●     Investments in Quartys and ABCA Funds Ireland are presented as financial assets at fair value through profit or loss, as both entities qualify as investment entities based on their activities.;

●     Investments in ABC arbitrage Asset Management and ABC arbitrage Asset Management Asia, the Group’s asset management companies, remain fully consolidated, as they provide services related to the Group’s investment activities without themselves qualifying as investment entities. 

                            1.9.2.     Earnings per share

Diluted earnings per share correspond to the net income for the year, attributable to the Group, divided by the number of shares as of December 31, 2024, adjusted for the maximum estimated impact of the conversion of dilutive instruments into ordinary shares.

             1.10.     Alternative performance indicators 

The Group monitors the following alternative performance indicators, which are not directly defined by IFRS standards. These indicators provide additional relevant information for shareholders in analyzing the contribution of the Group’s two main areas of expertise (investment entities and asset management companies) to the Group’s results, performance, financial position, and potential future revenues.

These indicators are also used internally for performance analysis. Since they are not defined by IFRS, they are not directly comparable to similarly named indicators used by other companies. Furthermore, they are not intended to replace or take precedence over IFRS indicators as presented in the financial statements.

Return on Equity (ROE) or Net Return Percentage measures the financial profitability of shareholders' equity. Net return is calculated using the following formula:

ROE% = 100 x (Net income / Closing shareholders' equity)

Gross Return Percentage measures the profitability level of invested funds and capital. Gross return is calculated using the following formula: 

Gross Return% = 100 x (Operating income from core business / Closing shareholders' equity)

ROE and Gross Return are key indicators representing the profitability of the investment activity monitored by the Group.

The Group’s Client Assets – also referred to as Assets Under Management (AUM) – represent the total value of financial assets managed by the Group’s asset management companies. They correspond to the maximum capital available to finance client-held positions.

This indicator, which is not directly linked to the financial statements, serves as a forward-looking measure of the management fees the Group is expected to receive.

2. Consolidation scope and principles

The companies ABC arbitrage, ABC arbitrage Asset Management, and ABC arbitrage Asset Management Asia are consolidated using the full consolidation method.

The companies ABC arbitrage Asset Management and ABC arbitrage Asset Management Asia are the Group's asset management companies.

The Group's investment in Quartys^[7] and the sub-funds of ABCA Funds Ireland is presented as financial assets at fair value through profit or loss.

The percentage of interest is presented as follows:

The company Quartys engages in the trading of financial instruments.

ABCA Funds Ireland is a Qualified Alternative Investment Fund under Irish law, established in 2011. As of December 31, 2024, its total assets amount to 153.5 million, consisting of two funds:

●     ABCA Opportunities Fund with 90.9 million euros in assets under management.

●     ABCA Reversion Fund with 62.6 million euros in assets under management.

3. Notes to the balance sheet

                3.1.    Intangible assets and property and equipment

Gross Value

Amortisation and depreciation

Net Value

Fixed assets are depreciated using the straight-line method over their expected useful life. Depreciation expenses are recorded under the "Depreciation, Amortization, and Provisions" line item in the income statement. 

Right of use - IFRS 16

Fixed assets are depreciated using the straight-line method over their expected useful life. Depreciation expenses are recorded under the "Depreciation, Amortization, and Provisions" line item in the income statement.

The application of IFRS 16 results in the recognition of right-of-use assets on the balance sheet for lease contracts entered into by the Group. As of December 31, 2024, these primarily consist of occupied office premises. The corresponding liabilities are recorded as long-term and short-term financial debt, depending on their maturity.

As a reminder, ABC arbitrage signed a new commercial lease as a tenant in early 2022 for the premises located at 18 rue du Quatre Septembre, 75002 Paris, with a fixed term of six years, effective from January 1, 2022.

As such, an asset corresponding to the IFRS 16 right-of-use was recognised at the end of 2021 for 5.2 million euros, with a corresponding lease liability^[8].

Following the rent increase, in accordance with its indexation benchmark, an additional asset of 274 thousand euros was recognised. The depreciation expense for the right-of-use asset amounted to 1,003 thousand euros for the 2024 financial year.

               3.2.     Other non-current financial assets

As of December 31, 2024, this item consists of 405 thousand euros in deposits and guarantees paid.

               3.3.     Financial assets and liabilities at fair value through profit or loss

As of December 31, 2024, the breakdown of financial instruments held as assets or liabilities by the Group, measured at fair value according to the fair value hierarchy as described in note §1.2. Financial Instruments at Fair Value Through Profit or Loss, is as follows:

As of December 31, 2024, financial assets at fair value through profit or loss classified as Level 2 include investments in

Quartys and the sub-funds of ABCA Funds Ireland, which are not fully consolidated under IFRS 10, as specified in note §1.9.1. Consolidation Principles, but are instead measured at fair value through profit or loss. These assets are classified as Level 2 because their values are not directly observable in an active market. However, their net asset value (NAV) consists of exposures to Level 1 financial instruments listed on active markets, whose values are directly observable.

No transfers occurred between different levels of the fair value hierarchy during the 2024 financial year. Additionally, long and short positions in Financial Instruments are detailed in note §5. Risk Factors.

Cash balances earn interest at a variable rate indexed to market reference rates, which can be either positive or negative.

For reference, as of December 31, 2023, the classification was as follows:

               3.4.     Guarantees granted

The vast majority of the assets recorded under "Financial assets at fair value through profit or loss" are pledged or mortgaged in favor of counterparties, as explained in note §5.2. Credit and Counterparty Risks.

               3.5.     Other receivables and payables

The maturities of receivables and liabilities are presented in note §5.3. Liquidity Risk. Their breakdown is as follows:

Receivables primarily consist of accrued invoices for management fees recognised in the second half of the year. Tax receivables mainly comprise tax credits and VAT refunds, pending reimbursement.

Tax and social liabilities primarily relate to bonuses, profit-sharing, and incentive payments due to the Group’s employees, amounting to 7 million euros, as well as liabilities to social security organizations. 

Suppliers are generally paid within thirty days, end of month.

               3.6.     Consolidated equity

                            3.6.1.     Share-based payment ABC 2022 and Springboard 2025

Performance share plans alive

* Based on actual net income for that period and given the continuing presence requirement, the number of stock options which should be definitively granted by the end of the second semester of 2025.

Stock options subscription plans alive

For all plans:

The allocated quantities will be zero if annual results are below 15 million euros, then will increase progressively according to a linear curve. For example, under the APE-3.1/2023 plan, if annual results amount to 20 million euros over the entire period, 33% of capital-based benefits would be definitively granted. If annual results reach 25 million euros over the same period, 67% of capital-based benefits would be definitively granted.

The expense related to the granted plans is recognised over the vesting period. This expense, which is offset in equity, is calculated based on the total value of the plan, as determined on the grant date by the Board of Directors.

In accordance with IFRS 2, an expense of 562 thousand euros, including 84 thousand euros in employer contributions, has been recognised for the 2024 financial year, based on the estimated number of probable shares across the various aforementioned programs. As a reminder, 306 thousand euros was recognised in 2023, and 240 thousand euros in 2022. This expense is related to the progress of existing programs, taking into account the achieved results, along with the new plans introduced in June 2024.

The realised loss on share buybacks used during the 2024 financial year amounted to 240 thousand euros, compared to 878 thousand euros in 2023 and 2,809 thousand euros in 2022.

                            3.6.2.     Distribution dividend in 2023

The combined general meeting held on June 7, 2024, decided not to distribute any remaining balance for the 2023 financial year. Given the two payments of 0.10 euro per share each, made in October and December 2023, along with an interim dividend of 0.10 euro per share paid in April 2024, the total distributions for the 2023 financial year amount to

0.30 euro per share. 

                            3.6.3.     Dividend distributions in respect of the 2024 financial year

At its meeting on 19 September 2024, the Board of Directors decided to pay two (2) interim dividends of 0.10 euro per share each, to be paid exclusively in cash. The ex-dates were 9 October and 3 December 2024, with payment dates on 11 October and 5 December 2024 respectively. The total amount of these two distributions, based on the number of ABC arbitrage shares entitled to payment, amounted to 11.9 million euros.

At its meeting on 20 March 2025, the Board of Directors approved the payment of an additional interim dividend of 0.10 euro per share, with an ex-date of 22 April 2025 and payment on 24 April 2025. Finally, the Board of Directors will propose to the General Meeting of 6 June 2025 the payment of a final dividend of 0.04 euro per share, to be distributed in July 2025. The aforementioned additional interim dividend and the proposed final dividend would bring the remaining distribution for the 2024 financial year to 0.14 euro per share, i.e. approximately 8.3 million euros.

Including these additional amounts, the total distribution for the 2024 financial year would amount to 0.34 euro per share, or 20.2 million euros.

As at 31 December 2024, the share capital stood at 953,742 euros, divided into 59,608,879 fully paid-up shares with a nominal value of 0.016 euro each. The share capital was unchanged from 31 December 2023.

                           3.6.4.     Treasury stock

During the 2024 financial year, as part of the liquidity contract signed with Kepler Cheuvreux, ABC arbitrage sold 239,957 shares at an average price of 4.55 euros and repurchased 241,074 shares at an average price of 4,29 euros.

For information, the treasury stock held outside the liquidity contract as of December 31, 2023, amounting to 68,603 shares, was fully used to cover share-based payments during the 2024 financial year.

Additionally, 415,267 shares were purchased to cover 29,383 shares for performance share allocations, and 223,551 shares for the exercise of reserved offers^[9].

As of December 31, 2024, the company holds a total of 304,991 treasury shares^[10] with a gross value of 1,318 thousand euros, compared to 141,541 treasury shares with a gross value of 788 thousand euros as of December 31, 2023.

In accordance with IFRS standards, ABC arbitrage shares held by the Group are deducted from consolidated equity.

               3.7.     Provisions  

Provisions for risks and charges were nil as of December 31, 2024, as well as December 31, 2023. The activities conducted by ABC arbitrage Group companies have a broad international scope, either directly or indirectly, on behalf of third parties. As a result, each subsidiary is exposed to uncertainties, as well as changes in taxation and regulations in countries outside its jurisdiction. The Group monitors these risks—particularly those related to transfer pricing, withholding tax, transaction taxes, and duties—and regularly assesses them at fair value, in compliance with applicable accounting standards. 

The company Quartys has been subject to a review by the Swiss Federal Tax Administration (AFC) regarding its requests for reimbursement of withholding tax¹² for the years 2016 to 2019, extended through 2024. In a decision issued on August 29, 2024, the AFC intends to deny reimbursement requests amounting to 7.6 million Swiss francs, approximately 8.1 million euros.

The company formally contested the decision with the tax authorities on September 30, 2024, providing its observations on the matter, thereby initiating the litigation phase. Exchanges with the tax administration will continue through responses to observations before progressing to various appeals. As of today, discussions are still ongoing, and the outcome remains uncertain. Beyond its own assessment, the company has relied on the opinions of its legal and tax advisors. In accordance with the applicable regulations, the company maintains its conclusion that no provision for tax risk is required.

               3.8.     Liabilities representing the lease payment obligation - IFRS 16

Lease liabilities primarily consist of obligations related to the Paris office premises, as presented in §3.1. Intangible and Tangible Fixed Assets. As a reminder, a new lease agreement with a fixed term of six (6) years was signed in 2022. The discount rate used to assess the lease liability is 1.03%. 

4. Notes to the statement of income

               4.1.     Net gains on financial instruments at fair value through profit or loss

The "Net gains on financial instruments measured at fair value through profit or loss" amounted to 29,367 thousand euros as of December 31, 2024, compared to 20,603 thousand euros as of December 31, 2023.

The "Net gains on financial instruments measured at fair value through profit or loss" include all income, expenses, and charges directly related to the trading activity of Financial Instruments held for trading purposes, primarily comprising net fair value gains and losses from Quartys and the sub-funds of ABCA Funds Ireland, integrated in accordance with IFRS

10. These net fair value gains include:

●     Dividends and dividend compensation payments;

●     Capital gains and losses on disposals of financial instruments at fair value through profit or loss;

●     Market value fluctuations of held or owed financial instruments;

●     Interest income and expenses;

●     Carrying costs or borrowing costs related to financial instruments;

●     Foreign exchange differences;

●     Any other income or expense directly related to transactions; ● General operating, administrative, and overhead expenses.

The company Quartys has been subject to a review of its withholding tax refund requests submitted to the Swiss Federal Tax Administration for the years 2016 to 2019, extended through 2024. As stated in §3.7. Provisions for Risks and Charges, the Group monitors the various mentioned risks and, beyond its own assessment, has relied on the opinions of its legal and tax advisors. The company maintains its conclusion that no provision for tax risk is required, as the risk is considered less likely than probable. 

However, given the elapsed time, the difficulty in recovering these amounts in the near future, and the recent increase in interest rates, which has a non-negligible impact, the Group, in accordance with IFRS 13, has discounted the amount of the unrecovered receivable, amounting to 8.1 million euros over six years, to reflect its fair value as of December 31, 2024. This resulted in an impact of -0.35 million euros on the income statement for the year, directly included in the "Net gains on financial instruments measured at fair value through profit or loss" line item. This adjustment adds to the impairment of -1.35 million euros recognised as of December 31, 2023, in Quartys' accounts, bringing the total impairment to -1.70 million euros to date. 

               4.2.    Investment services fees

Management fees amount to 21,443 thousand euros as of December 31, 2024, compared to 18,313 thousand euros as of December 31, 2023, and are broken down as follows:

* Commissions arising from the investment of Group entities within the ABCA Funds Ireland structure.                             

 ** Capital collected within the framework of collective management or management mandates.                

Management fees include the services billed by the Group’s asset management companies to Quartys, ABCA Funds Ireland, and the investment management mandate, as detailed in note §1.8. Commission income from investment services. 

               4.3.     Other revenues

Other operating income amounts to 673 thousand euros as of December 31, 2024, compared to 898 thousand euros as of December 31, 2023, primarily consisting of income from subleasing office space, standard administrative services, and the impact of positive interest rates on cash held in administrative accounts. 

              4.4.     Other purchases and external expenses

Purchases and external expenses amount to 7,505 thousand euros as of December 31, 2024, compared to 7,466 thousand euros as of December 31, 2023, and are broken down as follows:

* Related to the leases inferior to one year in the subsidiaries, with the indirect costs such as cleaning, maintenance, repairs                          

               4.5.     Payroll costs

The average headcount of the Group for the 2024 financial year was 112 employees, compared to 105 in 2023.

Fixed and variable salaries, including gross profit-sharing and incentive schemes, corporate mandates, and director remuneration, amount to 14.9 million euros as of December 31, 2024, compared to 10.2 million euros as of December 31, 2023.

Related social security contributions amount to 5 million euros as of December 31, 2024, compared to 2.9 million euros as of December 31, 2023.

For informational purposes, given the performance level achieved in the 2024 financial year, the provisioned bonus amount, related to the aforementioned variable compensation, stands at 5.1 million euros for the period, including social security contributions, compared to 1 million euros for the 2023 financial year.

In parallel, other indirect personnel costs amount to 0.6 million euros as of December 31, 2024, compared to

0.2 million euros as of December 31, 2023. For example, these costs primarily include: Contributions to the Social and Economic Committee (CSE), Meal vouchers, Inter-company childcare expenses, Occupational health services, Depreciation expenses on right-of-use assets (in accordance with IFRS 16) for employee housing at ABC arbitrage Asset Management Asia, etc.

The Group does not offer any post-employment benefits^[11], and other long-term benefits are classified as "defined contribution" plans, carrying no future commitments, as the employer's obligation is limited to the regular payment of contributions.

              4.6.     Cost of risk

The cost of risk as of December 31, 2024, is nil, as it was on December 31, 2023.

               4.7.     Corporate income tax 

The balance of this item is positive at the end of the 2024 financial year due to a reversal of provisions. Indeed, a tax provision of 5.7 millions euros had been set aside in June 2021. The risk was extinguished on December 31, 2024. This extinction results in an exceptional accounting reversal, which directly improves the net income for the 2024 financial year.

The difference between the actual tax rate recorded in the consolidated financial statements -27.61% and the theoretical tax expense, calculated by applying the applicable rate to the consolidated pre-tax result, highlights the following impacts:

ABC arbitrage is the parent company of a tax consolidation group formed with ABC arbitrage Asset Management since January 1, 2004.

The tax consolidation group has adopted an agreement in which tax expenses are borne by both the parent and subsidiary companies as if there were no tax consolidation. As a result, this tax expense is calculated based on each entity’s own taxable income, after deducting all carryforward losses from previous years.

Tax savings achieved by the group through these losses are retained by the parent company and considered an immediate gain for the financial year.

As a precaution, given the uncertainty of future visibility, deferred tax assets on recognised tax losses are not recorded.

5. Risk factors

The Group is exposed to various financial and non-financial risks, including market risks, credit and counterparty risks, liquidity risks, operational risks, and other risks.

ABC arbitrage has outlined and communicated a general risk management framework to its subsidiaries, within which each subsidiary's board of directors develops its own policy.

The Group monitors the implementation and effectiveness of controls within its subsidiaries with the support of executive directors and the market risk control and internal control functions.

The Group employs leverage as part of its financing agreements with counterparties, allowing it to take on larger exposures than if it were acting alone.

Individually, these exposures carry a risk of capital loss. The maximum loss on long equity exposures is limited to the fair value of these positions. The maximum loss on long exposures in futures contracts is limited to the notional value of the contracts. The maximum loss on short exposures, whether in equities or futures contracts, is theoretically unlimited.

The exposures recorded under “Financial assets at fair value through profit or loss” and “Financial liabilities at fair value through profit or loss” are detailed as follows:

Net position of assets

Net position of liabilities

Net position of assets and liabilities

N.B : Long and short exposures indicate that the Group has taken a position benefiting from an increase or decrease, respectively, in the price of financial instruments.

The geographical breakdown of exposures as of December 31, 2024, is as follows:

This geographical breakdown is determined based on the absolute value of exposures at the reporting date, categorised by trading venue, which are then grouped by geographical region.

                5.1.     Market risk 

Market risk is the risk that the fair value or future cash flows of positions fluctuate due to increases or decreases in the prices of financial instruments and includes, in particular, price risk, interest rate risk, and foreign exchange risk.

Equity risk

Equity risk, or price risk, primarily arises from the uncertainty surrounding the future prices of financial instruments held. It represents the potential loss the Group could incur due to possible price movements in its exposures to financial instruments.

The risk is never linked to an unfavorable evolution of financial markets, such as the occurrence of a market crash, but rather to the realization of an adverse event related to the initiated transaction. By nature, risks associated with "Quantitative Models" are independent of one another.

The risk is therefore mitigated through diversification, as the Group spreads its exposure across the largest possible number of transactions and financial instrument types, as well as multiple geographical regions.

The risk is never linked to an unfavorable evolution of financial markets, such as the occurrence of a market crash, but rather to the realization of an adverse event related to the initiated transaction. By nature, risks associated with "Quantitative Models" are independent of one another. The risk is therefore managed through pooling, as the Group diversifies across the largest possible number of transactions and financial instrument types, as well as multiple geographical regions.

As of December 31, 2024, the aggregated VaR of the Group's exposures amounts to 3 million euros, the same as on December 31, 2023. The calculation parameters used are a 99% confidence level, a 1-year historical model, and a 1-day holding period.

Interest rate risk 

Interest rate risk corresponds to the variation in the price or valuation of a financial instrument resulting from a change in interest rates.

In most "Quantitative Models", the amount of the long position is equal to the amount of the short position. In such cases, the risk is generally negligible. When a specific position carries a significant interest rate risk, it is systematically hedged. As a result, no sensitivity analysis is presented.

Foreign exchange risk 

The Group's exposures may be denominated in currencies other than the euro. As a result, currency fluctuations relative to the reference currency can have either a positive or negative impact on their value.

Foreign exchange risk is systematically hedged by buying or selling the relevant currency or through exposure to the currency. The only remaining risk is a second-order effect: the profit generated in a particular currency may fluctuate if it is not converted into euros. The Group regularly converts its profits into euros, thus maintaining only a minimal exposure to foreign exchange risk.

As of December 31, 2024, a 2% appreciation of the euro against all currencies, with all other variables remaining constant, would have resulted in an increase in net assets of 41 thousand euros. Conversely, a 2% depreciation of the euro against all currencies would have had the opposite effect, all else being equal.

               5.2.     Credit and counterparty risk

This is the risk that a counterparty, whose financial situation deteriorates, may be unable to fulfill a contractual obligation to the Group by making a payment or delivering a specified quantity of securities.

For its market operations, the Group primarily acts as a client of "Brokers", credit institutions, and investment firms, collectively referred to as "Counterparties".

All these institutions are subject to specific regulatory oversight by the authorities in their respective countries to ensure their solvency.

The financial instruments traded by the Group are on active markets, most of which are regulated, with settlement generally carried out through a Clearing House.

The risk of broker default is therefore considered minimal, as the Clearing House guarantees the settlement of the transaction. Financial instruments are not delivered to counterparties until the broker has made or received the payment.

Counterparties, when settling transactions on financial instruments, act as custodians, creditors or debtors, or as counterparties for synthetic products (e.g., CFDs, Swaps) for the Group. Generally, the positions held with a custodian are very limited. Almost all of the Group’s assets are pledged or collateralised in favor of the counterparties (hereinafter referred to as "Collateral"), which may use them for their own account under the principle of reutilization. In accordance with regulations, they are required to return the "reutilised" assets or equivalent assets upon first request.

The risks associated with the use of a Counterparty are as follows:

●     Interruption or termination of services provided by the Counterparty, which reserves the right to modify or discontinue the services it offers;

●     Increase in custody costs for positions charged by the Counterparty;

●     Non-return of assets used by the Counterparty due to market events; ● Non-payment of amounts owed by the Counterparty in the event of default; ● Misvaluation of the debt and/or assets pledged as collateral.

The Group manages counterparty risk by implementing standardised contractual agreements — such as netting and collateral agreements — and by conducting rigorous daily monitoring of counterparties' credit ratings. Additionally, the Group follows a prudent approach by maintaining multiple banking relationships to diversify risk while continuously weighing the cost benefits of volume concentration.

The maximum exposure to credit risk is stated in the net amounts of financial instruments presented in note §5. Risk Factors.

               5.3.     Liquidity risk

This is the risk that the Group's assets may not be readily convertible into liquidity quickly enough to meet its commitments or that such conversion can only be achieved under materially adverse conditions.

The Group's exposures, which primarily consist of financial instruments listed on active and mostly regulated markets, exhibit very high liquidity. As a result, the Group's main commitments primarily involve providing the necessary collateral to support these exposures. Additionally, the volume of possible exposures is contractually limited by the assets transferred as collateral.

As of December 31, 2024, the liquidity schedule is as follows:

* Financial assets at fair value through profit and loss classified between one and three months are equity participations in Quartys subsidiary and sub-fund ABCA Funds Ireland, that are presented at fair value following the IFRS 10 reglementation (Cf. note §1.9.1. Consolidation principles), since value of these participations are not recoverable below one month for the parent company ABC arbitrage. However, net assets of these companies are essentially constituted with expositions to level 1 financial instruments listed on active markets, with a liquidity clearly below one month.

               5.4.     Operational risk

This refers to the risk of internal failure, which may be caused by material or human errors. Examples of such failures, though not exhaustive, include an IT security breach exposing the company to cybersecurity risks or an unintended exposure being taken.

For the 2024 financial year, losses related to operational incidents represent 1.06% of profits, compared to 0.25% in the 2023 financial year.

This risk is managed proactively through position-taking governed by written procedures and rigorous internal controls. However, it is not an absolute safeguard, and constant vigilance is required, as this risk is inherently structural to the Group’s activities.

               5.5.     Other risks

Compliance risk, including legal risk

Compliance risk refers to the failure to identify and/or properly adhere to the applicable regulations governing the Group’s activities. This may result in operational disruptions, financial losses, or sanctions of a judicial, disciplinary, or administrative nature, among others.

A permanent monitoring system is in place within the Group’s legal and tax team.

Conflict of interest risk

The risk of conflicts of interest refers to the risk of facing situations where the interests of a client or a Group company may conflict with those of another client, a Group company, or one of its employees.

To prevent conflicts of interest, the Group has implemented:

●     An internal conflict-of-interest management policy, which includes guidelines that employees must follow to identify, prevent, and manage conflicts of interest;

●     Strict procedures and rules governing order processing, ensuring the primacy of client interests. The Group’s asset management companies strictly adhere to financial market regulations and prohibit any infringement on the equal treatment of orders. In particular, orders transmitted to the market are pre-allocated and time-stamped.

Transactions between Group companies are conducted under normal market conditions.

6. Complementary information

               6.1.     Related party transactions

As of December 31, 2024, the figures related to Aubépar Industries are not significant. Regarding the information related to Quartys^[12], please refer to the following notes:

●     The mention of holdings in these respective companies in §3.3. Financial assets and liabilities at fair value through profit or loss;

●     Their net gains at fair value through profit or loss in §4.1. Net gains on financial instruments measured at fair value through profit or loss;

●     The investment services invoiced to them by the Group’s asset management companies in §4.2. Fees from investment services;

●     The breakdown of holdings in these companies within the liquidity schedule in §5.3. Liquidity risks.

               6.2.     Post-closing events

No post-closing events are to be reported.

               6.3.     Fees paid to the Statutory Auditors

* Without ABC arbitrage Asset Management Asia whose 2024 accounts have been audited by the company Crowe Horwath First Trust (audit fees of

17 thousand euros).                                                   

ABC Arbitrage

18, rue du 4 Septembre, 75002 Paris

___________________________________

Statutory auditors' report  on the consolidated financial statements

Year ended December 31, 2024

ABC Arbitrage

Statutory auditors' report  on the consolidated financial statements

Year ended December 31, 2024

_______________________________

To the Annual General Meeting of ABC arbitrage,

Opinion

In compliance with the engagement entrusted to us by the Annual General Meeting, we have audited the accompanying consolidated financial statements of ABC arbitrage for the year ended December 31, 2024. 

In our opinion, the consolidated financial statements give a true and fair view of the assets and liabilities and of the financial position of the Group as of 31 December 2024 and of the results of its operations for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union.

The audit opinion expressed above is consistent with our report to the Audit Committee.

Basis for Opinion

Audit Framework

We conducted our audit 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 opinion.

Our responsibilities under those standards are further described in the Statutory Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of our report.

Independence

We conducted our audit engagement in compliance with independence requirements of the French Commercial Code (code de commerce) and the French Code of Ethics (code de déontologie) for statutory auditors, for the period from 1 January 2024 to the date of our report, and specifically we did not provide any prohibited non-audit services referred to in Article 5(1) of Regulation (EU) No 537/2014.

Key Audit Matters

In accordance with the requirements of Articles L.821-53 and R.821-180 of the French Commercial Code (Code de commerce) relating to the justification of our assessments, we inform you of the key audit matters relating to risks of material misstatement that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period, as well as how we addressed those risks.

These matters were addressed in the context of our audit of the consolidated financial statements as a whole and in forming our opinion thereon, and we do not provide a separate opinion on specific items of the consolidated financial statements.

_■  Fair value measurement of financial instruments

The group develops, implements and proposes stock market arbitrage strategies.

As described in the note 1.2 “Fair value of financial instruments” of the consolidated financial statements, Financial instruments at fair value through profit or loss are managed under these strategies relate to equity or equity derivatives, derivatives such as futures, options, currencies and investment fund units.

These financial instruments are held by Quartys Limited and sub-funds of ABCA Funds Ireland Plc.

Within these entities, as part of the application of IFRS 13 "Fair Value Measurement", the group determines the fair value of a financial instrument as the price "Exit Price” (mid-price between Bid Price and Ask Price). It determined at the last common trading time of the securities making up an arbitrage model or with the shortest possible time interval.

The ABC arbitrage group's investments in Quartys

Limited and ABCA Funds Ireland plc as of December 31, 2024 amounted to €151,658 thousand as detailed in note 3.3 "Financial assets and liabilities at market value by profit or loss" of the notes to the consolidated financial statements.

As part of these investments, your group's exposures on financial instruments and derivatives amounts to € 1 579 120 in long positions and € 1 518 954 in short positions, as described in Note 5 "Risk factors" of the notes to the consolidated financial statements.

Given the importance of the financial instrument portfolios in the group's consolidated financial statements, we consider that the fair value measurement of these instruments used in the context of arbitrage strategies is a key audit matter.

Our work consisted, involving in our team members with special expertise in financial instruments and information systems, and supervising the auditors of Quartys Ltd and ABCA Funds Ireland Plc, to:

●      Assess the consistency of the valuation principles of your group's instruments with IFRS 13 "Measurement of fair value";

●      Review the IT control system relating to the collection of prices from external sources to value positions;

●      Review the operational IT controls relating to the reconciliation of positions with brokers;

●      Assess management's data and assumptions on which the pricing of financial instruments is based, through the following procedures, performed on a sample of financial instruments in the portfolio:

○ Comparison of the group's prices with price data from external sources (e.g. Bloomberg);

○ In the event of a temporal difference in quotation between the securities making up the arbitrage model, specific tests are carried out to analyse the quotation differences.

We have also examined the information given in notes 1.2, 3.3 and 5 to the consolidated financial statements relating to financial instruments at fair value through profit or loss.

_■  Tax risks and potential related liabilities

Finally, we have examined the information provided in notes 1.6, 1.7 and 3.7 of the notes to the consolidated financial statements relating to tax risks and related contingent liabilities.

Specific Verifications

We have also performed, in accordance with professional standards applicable in France, the specific verifications required by laws and regulations of the information relating to the Group given 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.

Report on Other Legal and Regulatory Requirements

Format of preparation of the consolidated financial statements included in the annual financial report

We have also verified, in accordance with the professional standard applicable in France relating to the procedures performed by statutory auditors regarding the annual and consolidated financial statements prepared in the European single electronic format, that the preparation of the consolidated financial statements included in the annual financial report mentioned in Article L. 451-1-2, I of the French Monetary and Financial Code (Code monétaire et financier), prepared under the President’s responsibility, complies with the single electronic format defined in Commission Delegated Regulation (EU) No. 2019/815 of 17 December 2018. Regarding consolidated financial statements, our work includes verifying that the tagging thereof complies with the format defined in the above-mentioned regulation.

On the basis of our work, we conclude that the preparation of the consolidated financial statements included in the annual financial report complies, in all material respects, with the European single electronic format.

Appointment of the Statutory Auditors

We were appointed as statutory auditors of ABC arbitrage by annual general meeting held on May 27, 2009 for Deloitte & Associés and by annual general meeting held on June 9, 2023 for BM&A.

As at December 31, 2024, Deloitte & Associés was in the 16th year of total uninterrupted engagement, and BM&A in the 2nd year.

Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with International Financial Reporting Standards as adopted by the European Union and for such internal control as Management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. 

In preparing the consolidated financial statements, Management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless it is expected to liquidate the Company or to cease operations. 

The Audit Committee is responsible for monitoring the financial reporting process and the effectiveness of internal control and risk management systems and where applicable, its internal audit, regarding the accounting and financial reporting procedures.

The consolidated financial statements were approved by the Board of Directors.

Statutory Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

Objectives and audit approach

Our role is to issue a report on the consolidated financial statements. Our objective is to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with professional standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users made on the basis of these consolidated financial statements.

As specified in Article L. 821-55 of the French Commercial Code (Code de commerce), our statutory audit does not include assurance on the viability of the Company or the quality of management of the affairs of the Company.

As part of an audit conducted in accordance with professional standards applicable in France, the statutory auditor exercises professional judgment throughout the audit and furthermore: 

●  Identifies and assesses the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, designs and performs audit procedures responsive to those risks, and obtains audit evidence considered to be sufficient and appropriate to provide a basis for his opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control;

●  Obtains an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal control;

●  Evaluates the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by Management in the consolidated financial statements;

●  Assesses the appropriateness of Management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. This assessment is based on the audit evidence obtained up to the date of his audit report. However, future events or conditions may cause the Company to cease to continue as a going concern. If the statutory auditor concludes that a material uncertainty exists, there is a requirement to draw attention in the audit report to the related disclosures in the consolidated financial statements or, if such disclosures are not provided or inadequate, to modify the opinion expressed therein;

●  Evaluates the overall presentation of the consolidated financial statements and assesses whether these statements represent the underlying transactions and events in a manner that achieves fair presentation;

●  Regarding the financial information of persons or entities included in the scope of consolidation, obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. The statutory auditor is responsible for the direction, supervision and performance of the audit of the consolidated financial statements and for the opinion expressed on these consolidated financial statements.  

Report to the Audit Committee

We submit a report to the Audit Committee which includes in particular a description of the scope of the audit and the audit program implemented, as well as the results of our audit. We also report, if any, significant deficiencies in internal control regarding the accounting and financial reporting procedures that we have identified.

Our report to the Audit Committee includes the risks of material misstatement that, in our professional judgment, were of most significance in the audit of the consolidated financial statements of the current period and which are therefore the key audit matters, that we are required to describe in this report. 

We also provide the Audit Committee with the declaration provided for in Article 6 of Regulation (EU) N° 537/2014, confirming our independence within the meaning of the rules applicable in France such as they are set in particular by Articles L.821-27 to L.821-34 of the French Commercial Code and in the French Code of  Ethics (code de déontologie) for statutory auditors. Where appropriate, we discuss with the Audit Committee the risks that may reasonably be thought to bear on our independence, and the related safeguards. 

Paris and Paris-La Défense, April 17, 2025

The Statutory Auditors

French original signed by

                                                            BM&A                                                                             Deloitte & Associés 

Pascal RHOUMY             Julien KOSCIEN      

Balance Sheet – Assets

Balance Sheet – Liabilities