Assystem - 2018 Register document

2

RISK GOVERNANCE AND MANAGEMENT

RISK FACTORS

2.2 RISK FACTORS

Risk category

Identified risk

Change

J J J J

Risks related to certain geographic regions

Risk of volatility in revenue and operating profit

Risk of unforeseen costs for fixed-price contracts and erosion of operating profit

Operational risks

Financial risks

Liquidity/financing risks

HR risks

Risk of losing key skills/not retaining talent

N

Risks related to information systems

Risk that data is not available or is corrupted

J

Legal, regulatory and tax risks

Risk of non-compliance

J Stable — N Increase

2.2.1

RISKS RELATED TO THE ECONOMIC ENVIRONMENT

Type

Impact

Risk reduction measures

Risk of political, social and economic instability in some of the geographic areas in which the Group operates. Risk that the markets and geographic areas in which the Group operates may have a dilutive effect on margins.

Risk of volatility in revenue and operating profit.

The revenue and operating profit generated in these geographic areas have a relatively limited impact overall as the Group generates over 80% of its revenue in Western Europe. Close monitoring of ongoing projects and new business by the management of the division concerned and regularly relaying information to members of the management team. Review of gross margins for ongoing projects and new business. Specific process for selecting projects and submitting bids (financial review of key project elements, in particular projected revenue and margins and margin on completion for fixed-price projects) and authorisation by designated managers. Contract review process at the level of the business units and the Group executive management team, with a specific focus on multi-year projects. Client creditworthiness investigations conducted when new contracts are taken on, and regularly re-conducted for contracts or clients already in the portfolio. Members of the Group’s accounting teams carry out the credit management function in order to regularly monitor the collection of trade receivables, track progress in the collection of outstanding receivables, and issue the necessary reminders. Procedure drawn up and applied for prior authorisation of recurring capital expenditure (primarily for software). This procedure sets out the authorised signatories within the operating entity and requires signature by one or even two members of the management team for capital expenditure in excess of a given threshold. Capital expenditure (i.e. investments excluding external growth) represents between 1% and 2% of the Group’s consolidated revenue, which is normal in Assystem’s industry, and means that exposure to risks related to this expenditure is limited. The Board of Directors is systematically informed of, and holds discussions on, any potential acquisitions of equity interests or other external growth investments, once these have been assessed by the Group’s executive and operations teams.

Erosion of gross margin and, ultimately, of operating profit.

Risk that contracts entered into do not generate sufficient margins.

Negative impact on gross margin and, ultimately, on operating profit.

Risk of non-recovery of trade receivables.

Negative impact on realisable and available assets and on operating profit.

Risk that investments made do not generate the expected returns.

Negative impact on cash flows and operating profit.

26

ASSYSTEM

REGISTRATION DOCUMENT 2018