3 RISK FACTORS, INTERNAL CONTROL AND INSURANCE - Risk factors
RISKS RELATED TO ACQUISITIONS Probability: ▲ Impact: ▲ Scope covered: ●
Description of the risk Acquisitions are an integral part of the Group’s growth strategy, and more particularly that of Rubis Énergie. The risks in transactions of this nature are mainly related to difficulties or delays in the Group’s integration of acquisitions and, in particular, the implementation of information systems. Risks relating to the measurement of assets and liabilities may also emerge after the completion of an acquisition, as the quality of the information transmitted is sometimes limited in view of the local regulatory framework. Lastly, external environmental factors could influence the achievement of the anticipated synergies, namely the macroeconomic environment, trends in the specific markets on which the transaction takes place or the response of the competition. Following major acquisitions in recent years, the Group recorded significant goodwill (€1,245 million as of December 31, 2019). The Group is particularly exposed to acquisitions made in countries where discount rates are high.
Examples of risk management measures • The Management of Rubis and Rubis Énergie conduct a detailed examination of the companies or assets they plan to acquire as part of the due diligence process, in order to better understand the contingencies, anticipate the risks and integrate them into the valuation of the project . • A structured acquisition integration procedure is implemented , notably including the appointment of a Chief Executive Officer familiar with the rules and processes of the Group and the relevant business line.
• In accordance with IFRS, Rubis tests goodwill for impairment at least once a year, and whenever management identifies an indication of loss of value (see note 4.2 to the consolidated financial statements). Impairment is recognized if the recoverable value falls below the net book value, the recoverable amount being the greater of the value in use and fair value, less costs to sell. • Rubis adjusts its interest rate tables (WACC) by weighting the risk premiums associated with each country on the basis of criteria specific to its business:
independence of logistics and probability of volume losses. Other political and economic factors have a lesser impact on its activities because the products supplied by the Group meet the essential needs of populations. • The Management of Rubis and Rubis Énergie conduct detailed analysis of the investment programs of the various Group subsidiaries to ensure that the expected value creation is realistic.