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DOCUMENTS SPECIFIC TO THE SHAREHOLDERS’ GENERAL MEETING
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LISI 2015 FINANCIAL REPORT
1.4
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REMUNERATION AND BENEFITS IN KIND
The principles and rules governing corporate officers’
remuneration, which are submitted and suggested to the Board
by the Compensation Committee each year, are detailed in
Chapter 7 of the Annual Report, which deals with the corporate
governance policy. It describes in particular the information
referred to in Article L. 225-100-3 of the French Commercial
Code and tables prescribed by the AFEP-MEDEF Code.
1.5
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INTERNAL AUDIT REPOSITORY
In 2011, the Internal Audit Department developed a new
internal audit repository, which is based on a self-assesment
questionnaire with 130 questions covering all processes in the
internal audit manual: Purchasing, Capital Expenditures, Sales,
Inventories, Cash, and Human Resources.
In 2015, this questionnaire was reviewed in order to improve
internal control standards. Accordingly, an additional process
comprising 24 questions was introduced for the control of our
IT systems.
Audits have been used since 2012 to validate (or invalidate) the
level of internal audit achieved in each of the business units;
they have continued throughout the whole of 2015 with 13 audit
tasks completed.
Given the stiffening of internal control requirements, as
described above, we thus noted a slight drop in the Group sites'
internal control ratings in 2015:
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15 sites (as against 19 in 2014), achieving a score above 90%
(expressed as a percentage of the number of compliances
against the standard reference);
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15 sites achieved a score between 80% and 90% (versus 13 in
2014).
Making a total of 30 sites scoring above 80% (versus 32 in 2014).
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Of the seven remaining sites (versus 4 in 2014), four had a
score between 77% and 79%, while three sites were below 75%.
Note that the Tangiers site was included in the scope of internal
control in 2015.
The consolidated score was 86% versus 87.8% in 2014. We
estimate that the addition of the IT Management section
brought down the score by around two points. Consequently,
on a like-for-like basis, the level of internal control remained
stable year-on-year.
Risk mapping
The main risks identified in the context of the budget and
strategicplanning inthemediumtermbelong to four categories:
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Market risks to be anticipated as accurately as possible within
all divisions:
–– possible effects of over-stocking based on the current
contracts;
–– strong downward pressure on non-contractual prices;
–– missed opportunities on major new markets;
–– marginalization due to insufficient size in a context of
market player concentration.
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Industrial challenges:
–– essential productivity programs to be carried out to sustain
certain industrial processes and maintain competitiveness
in high cost areas, sometimes accompanied by reconversion
in the more attractive segments of the business;
–– launches of new products which are technically very
challenging;
–– increasingly sophisticated customer requirements
impossible to achieve.
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Security risks regarding assets on certain sites: flooding, fire
detection and fire prevention, for which relocation projects
are under study and or underway.
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Installations deemed critical for which prevention and
security plans must be initiated.
Deployment of audit and risk mapping software
For Internal Audit, 2014 was a year of computerization, with
the successful deployment of software dedicated to the
computerization of the Internal Audit Questionnaire as well as
risk mapping.
In 2015, a fewminor developments enabled the dedicated teams
to master the solution, which is now fully operational.
Fraud
The LISI Group has had to deal with an ever increasing level
of attempted fraud in 2015, largely consisting of misuse of
identity. The alert procedure initiated in 2013 is still in force.
Profitability assessment of major investments
As part of the procedure for investment commitments
described in the internal audit manual, audits for measuring
the achievement of criteria (Payback and ROI) are routinely
performed on a polling basis within two years after the
completion of major projects for the Group.