SECTION 1 -

Development of performance products
The Group faces different risks with respect to performance products than with respect to its
employee and public benefits products. In general, no income tax or social security tax exemption
applies to performance products. When the Group introduces a new Performance product for which
no established market exists, the Group will be exposed to the risks of an emerging product market.
In addition, the Group might not be able to develop new revenue sources, such as fees and
commissions for related services, strategy conception or the management of incentives and rewards
programs for its customers.
External growth strategy
The Group’s strategy depends partly on external growth, especially through acquisitions.
However, the Group may not be able to identify promising acquisition targets or may fail to conduct
acquisitions at the right time or under favorable conditions.
Moreover, in order to receive the approval of the competition authorities for its acquisitions
in certain countries, New Services may be required to accept conditions, such as the divestment of
certain assets or business segments.
The main risks attached to growth by acquisition are as follows: (i) the business plan
assumptions underlying the Group’s valuations may not be appropriate, especially those relating to
synergies and consumer demand; (ii) the Group may not be able to successfully integrate the acquired
companies, their technologies, their product ranges and/or their employees; (iii) the Group may be
unable to hold on to key staff and customers of the acquired company and (iv) the Group may need to
increase its level of debt to finance these acquisitions. As a result, the Group may not realize the
expected returns on future or current acquisitions in the projected timeframe or at expected levels.
Intangible assets
3.2.3 Risks arising from the Group’s structure
The Group conducts annual impairment tests on goodwill and other intangible assets. As of
December 31, 2009, net intangible assets on the Group’s pro forma balance sheet totaled €99 million
and goodwill amounted to €557 million. The Group believes its 2009 pro forma financial statements
fairly and accurately reflect its assets and its financial condition. However, the Group cannot rule out
that future events that are, by definition, unpredictable and could cause the Group to write‐down
certain of these intangible assets, will not occur. Due to the value of the intangible assets on its
balance sheet, significant write‐downs could have a negative effect on the Group’s financial position
and results of operations for the fiscal year in which such expenses are recognized.
Tax risks
As a global company, the Group is subject to tax legislation in a large number of countries,
and it conducts its business under a variety of regulatory regimes. Because tax regulations in the
countries where the Group does business are sometimes unclear or imprecise, it must base decisions
related to its organizational structure, conduct of business and tax status on its interpretation of local
tax regulations, with no guarantee that such interpretations will not be called into question by the
local tax authorities. Although the Group is not subject to any tax audits as of the date of this
prospectus that would challenge its interpretation of these regulations, the Group cannot guarantee
that the tax authorities will not challenge these interpretations in the future.
77