LISI FINANCIALREPORT2013 I
83
RISKFACTORS
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2.3
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ENVIRONMENTALRISKS
The LISI Group is committed to protecting the environment whilst
manufacturing its products. Any negative impact resulting from its
activities isminimal, and specific attention is paid towater, energy and
wastemanagement.
Its industrial and environmental policy aims tomanage itsmajor risks,
whichare:
-the risk of fire and its potential impact on affected sites or their
environment.
-theriskofsoilorwatertablepollution.
Thisriskmanagementpolicy involves:
-theongoing improvement of the fireprotectionof the sites,whichare
subjecttoannualmonitoringandvisits,
- investment in protection, with the installation of sprinkler systems or
upgradingofexistingsystems.
-pollution risk prevention: the Group is implementing an appropriate
preventionpolicy.
As part of the manufacturing sites’ compliance program, and in the
absenceofanyongoing legaldisputes,theGrouphasmadeprovisionsfor
anoverall sumof€13.7m.Concretemeasuresarebeing taken toprevent
soil pollutiononold sites, including carryingoutmonitoringactivities in
concertwith the local authorities, on the onehand, and implementing
retrofittingwork,ontheotherhand.
More specifically, a sum of €4.4 million has been established which
relates to the assessed cost of decontaminating the Torrance site
(California – USA) which suffered TCE (solvent) pollution several years
ago (before 1975). The process that is currently in progress involves
pumping and filtering underground water downstream from the site.
Thistreatmenthasbeenusedtotreatmorethan32tonsofsolvents (TCE
equivalents). The estimated amount at December 31, 2013, facilitates
handlingof treatment inaccordancewith the techniques recommended
byouradvisors.Liaisonwiththeauthoritieshas ledtotheswiftclosureof
thesoils fileand to theacceptanceofmeasures takenwith regard to the
deepestwaters.
As part of the Social and Environmental Responsibilities requirements,
LISI AUTOMOTIVE undertakes to reduce the impact of its activities on
the environment and to ensure healthy, safe working conditions for
all its employees and service providers, as part of theGlobal Compact.
CommitmentNo. 7 states that "businesses areencouraged toapply the
precautionary approach to environmental challenges". Commitment
No. 8 plans toundertake "initiatives topromote greater environmental
responsibility".
Finally,CommitmentNo.9promotes"thedevelopmentanddissemination
of environmentally friendly technologies". In order to comply, LISI
AUTOMOTIVEhasimplementedthreespecificmeasures:standardization
of practices and definition of indicators, risk management organized
around the COSO benchmark and implementation of action plans for
environmentalsafety.
2.4
|
LEGALRISKS
The Group is involved in a limited number of legal proceedings with
thirdparties (notcustomers).All thesedisputeshavebeenreviewedwith
our Auditors and the most significant were appreciated by the Audit
Committee. Generally speaking, all legal positions are determined and
reviewedbythird-partyand in-housespecialists.
Exceptforthedisputesreferredtoabove,foraperiodcoveringat leastthe
last twelvemonths, no governmental, legal, or arbitrationproceedings
(includinganyproceedingsofwhichtheGroup isaware,which ispending
or of which it is threatened) are to be reported thatmay have or have
recently had significant effects on the Group's financial situation or
profitability.
2.5
|
IT-RELATEDRISKS
For eachof itsdivisions, theGrouphas identifiedan IT safeguardaction
plan likelytobe implemented intheeventofaseriousfailure. Inaddition,
theGrouphas insured risksof interruptionsandmalfunctions, or forced
use,of its ITsystemswithaspecificpolicy.
2.6
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OTHERRISKS
2.6.1Rawmaterialsrisks
The LISI Group is potentially exposed to changes in the costs of the
rawmaterials (steel, alloys, plastics, aluminum, and titanium) used in
the course of its business activities. Nevertheless, theGroup estimates
that such price increases are unlikely to impact negatively on its profit
margins. Indeed, some commercial contracts include price-revision
formulae which allow selling prices to be varied in accordance with
changes to rawmaterial costs. Suppliers work to limited time frames
basedonguaranteed-pricecontacts.AtDecember31,2013,theLISIGroup
usesno financial instruments tomanage its futureexposure tochanges
in the costs of such rawmaterials. It can still benefit from agreements
withsuppliers tohedgeagainstannualormulti-yearperiods to limit the
impactof fluctuations inoreprices.
2.6.2Energy-relatedrisks
To cover its energy costs, theGroupentered intoa supply contractwith
electricity company EDF for its French sites (due to expire in 2015). For
foreignsites, similaragreementshavealsobeenestablished inGermany
andtheUnitedKingdom.
