Assystem - 2018 Register document

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RISK GOVERNANCE AND MANAGEMENT

RISK FACTORS

expenses). At 31 December 2018 the provision totalled €16.4 million, including €13.5 million for the reassessed amount and €2.4 million for potential late payment penalties. An extra €0.3 million was added to the provision in 2018 for additional potential late payment penalties (recognised under financial expenses).

However, Assystem France set aside a provision in its 2015 financial statements (which was therefore included by Assystem in its consolidated financial statements) covering 50% of the risk concerned. The risk relating to this dispute was transferred by Assystem France to Assystem SA at 31 December 2016, with Assystem France paying Assystem SA compensation corresponding to the provisioned amount. At 31 December 2017, the provision recognised by Assystem SA was increased to cover the full amount of the risk and the potential late payment penalties in view of the receipt at end-2017 of the payment notice for the reassessed amount. The corresponding expense recognised in Assystem’s 2017 consolidated financial statements was €8.8 million, breaking down as €6.7 million for the actual reassessed amount (recorded under non-recurring expenses) and €2.1 million for late payment penalties potentially due at 31 December 2017 (recognised under financial

2.2.7

INDUSTRIAL AND ENVIRONMENTAL RISKS

Due to the nature of its activities, the Group has no significant direct impact on the environment. In the nuclear sector, the Group provides only knowledge-based services and is not authorised to operate any nuclear facilities as defined in the applicable regulations. The Group’s environmental policies and strategies are set out in Chapter 3 of this Registration Document relating to non-financial performance.

2.2.8

RISKS RELATED TO ACQUISITIONS

Type

Impact

Risk reduction measures

Risk that acquired companies may not generate operating profit in line with the Group’s objectives and expectations. Risk that acquired companies may have committed acts that do not comply with the applicable laws and regulations on corruption and influence peddling.

Dilutive impact on operating profit. Group profitability/performance objectives not met.

A post-acquisition support plan is drawn up for companies that are newly acquired by the Group. One of Assystem’s priorities after acquiring a company is to implement the Group’s reporting systems so that it can rapidly monitor changes in results and generation of cash flow and take any appropriate corrective measures. During the due diligences performed prior to acquisitions, a specific audit is now carried out to detect any cases of corruption or influence peddling.

Financial risks, criminal legal risks, image risks.

At the date of this Registration Document, the Group had not identified any other significant risks.

2.2.9 INSURANCE STRATEGY The Group’s insurance strategy includes a pro-active risk prevention and protection approach and the coverage of major risks in all of its business areas and sectors. To cover these risks, Assystem has taken out a professional and operating liability insurance policy for its French and international subsidiaries. The professional liability insurance policy acts as umbrella insurance providing protection against any losses and amounts of claims that are not covered – or not fully covered – by the local insurance policies of Group entities located outside France.

Assystem also has construction insurance to cover any claims under the ten-year warranty that it may be required to give for building works in accordance with French legislation. Coverage amounts vary depending on the type of risks and risk exposure concerned. The Group’s insurance strategy is managed and overseen by the Legal Affairs & Compliance Department, which: ● proposes solutions to the Group executive management team for transferring risks to the insurance market; ● negotiates, sets up and manages insurance programmes for the Group as a whole and reports to the executive management on the actions it takes and the costs it incurs in relation to insurance;

● manages insurance claims.

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ASSYSTEM

REGISTRATION DOCUMENT 2018