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even pandemics. Such events could negatively affect Group sales
revenue or cause a substantial increase in expenses required to cover
system maintenance or repair. However, thanks to the diversity of
these sites (44), no more than 10% of the LISI Group’s overall activity
can be exposed given that the dispersion of the geographic footprint
shows that the destruction of the largest site could not concern more
than 10% of the Group’s total sales revenue and margin.
2.1.2
I
Acquisitions
In order to manage any risks related to the integration of newly-
acquired companies and to ensure the transferal of Group
management principles, the LISI Group’s policy is to acquire a total or
at least strong majority controlling stake in the capital of any potential
acquisitions. Any substantial acquisition or sale plan is subject to
approval by the Board of Directors. All the Group’s acquisitions are the
subject of an in-depth audit of the risk areas at the target company.
Generally speaking, the Group sets up mixed teams with internal and
external experts. WITH the exception of “Ankit”, a joint venture partner
in India, the Group has a very large majority holding in all these units
and 100% in the majority.
2.2
I
STRATEGIC RISKS
These risks are identified as major risks likely to compromise durably
the completion of the strategic plan as described in paragraph 1.1. All
identified risks which are classified in the “HIGH RISK” category of
occurrence are the subject of insurance coverage (cf. paragraph 3)
or of a corrective action plan and are treated as a priority by the
managements of the various divisions.
2.3
I
ENVIRONMENTAL RISKS
The LISI Group is committed to protecting the environment while
manufacturing its products. Any negative impact resulting from its
activities is minimal, and specific attention is paid to water, energy
and waste management.
Its industrial and environmental policy aims to manage its major risks,
which are:
–
–
the risk of fire and its potential impact on affected sites or their
environment;
–
–
the risk of soil or water table pollution.
This risk management policy involves:
–
–
the ongoing improvement of the fire protection of the sites, which
are subject to annual monitoring and visits;
–
–
investment in protection, with the installation of sprinkler systems
or upgrading of existing systems;
–
–
pollution risk prevention: the Group is implementing an appropriate
prevention policy.
As part of the manufacturing sites’ compliance program, and in
the absence of any ongoing legal disputes, the Group has made
provisions for an overall sum of €8.5 million. To prevent soil pollution
on old sites, monitoring activities are carried out in concert with the
local authorities, on the one hand, and implementing retrofitting work,
on the other hand.
A provision of €3.3 million has been recorded for 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. This treatment has
been used to treat more than 40.3 tons of solvents (TCE equivalents).
The estimated amount at December 31, 2016 facilitates handling of
treatment in accordance with the techniques recommended by our
advisors. Liaison with the authorities has led to the swift closure of
the soils file and to the acceptance of measures taken with regard to
the deepest waters.
Furthermore, provisions for soil and building remediation were
recorded on the French sites of LISI AEROSPACE (€3.5 million) and
LISI AUTOMOTIVE (€1.7 million).
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 the Global
Compact. Commitment No. 7 states that “businesses are encouraged
to apply the precautionary approach to environmental challenges”.
Commitment No. 8 plans to undertake “initiatives to promote greater
environmental responsibility”.
Finally, Commitment No. 9 promotes “the development and
dissemination of environmentally friendly technologies”. To comply
with this commitment, LISI AUTOMOTIVE has set up three specific
measures: standardization of practices and defining of indicators,
risk management organized around the COSO benchmark and
implementation of action plans for environmental safety.
The environmental preventive measures are described in Chapter 6,
paragraphs 2 and 4.
2.4
I
LEGAL RISKS
The Group is involved in a limited number of legal proceedings with
third parties (not customers). All these disputes have been reviewed
with our Auditors and the most significant were appreciated by
the Audit Committee. Generally speaking, all legal positions are
determined and reviewed by third-party and in-house specialists.
EXCEPT for the disputes referred to above, for a period covering
at least the last 12 months, no governmental, legal, or arbitration
Risk factors
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