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LISI 2017 FINANCIAL REPORT
RISK FACTORS
5
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 €5.6 million. To prevent soil pollution on old sites,
monitoring activities are carriedout in concertwith the local authorities,
on the one hand, and implementing retrofitting work, on the other hand.
A provision of €1.5 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 41 tons of solvents (TCE equivalents). The estimated amount
at December 31, 2017 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 (€1.6 million) and
LISI AUTOMOTIVE (€1.3 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 AUTOMOTIVEhas set up three specificmeasures:
standardizationofpracticesanddefiningofindicators,riskmanagement
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 proceedings
(including any proceedings of which the Group is aware, which is
pending or of which it is threatened) are to be reported that may have or
have recently had significant effects on the Group’s financial situation
or profitability. The amount of provisions for legal risks found at
December 31, 2017 is not material.
2.5
I
IT-RELATED RISKS
For each of its divisions, the Group has identified an IT safeguard action
plan likely to be implemented in the event of a serious failure. In addition,
the Group has insured risks of interruptions and malfunctions, or forced
use, of its IT systems with a specific policy.
2.6
I
OTHER RISKS
2.6.1 Rawmaterials risks
The LISI Group is potentially exposed to changes in the costs of the raw
materials (steel, alloys, plastics, aluminum, and titanium) used in the
course of its business activities. Nevertheless, the Group 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 raw material costs. Suppliers work to limited time frames
based on guaranteed-price contacts. At December 31, 2017, the LISI
Group used financial instruments to manage its future exposure to
changes in the price of Nickel. The amounts hedged are not significant.
It can also benefit from agreements with suppliers to hedge against
annual or multi-year periods to limit the impact of fluctuations in certain
ore prices.
* LISI joined the Global Compact at the end of 2017. See chapter 6.1.