Plastic Omnium - 2018 Registration Document

1 PRESENTATION OF PLASTIC OMNIUM AND ITS BUSINESSES Risk factors and control PLASTIC OMNIUM 2018 REGISTRATION DOCUMENT 37 INTERNAL CONTROL AND RISK MANAGEMENT PROCEDURES 1.7.2 OBJECTIVES OF THE COMPANY’S INTERNAL CONTROL AND RISK MANAGEMENT SYSTEM Definition and objectives of internal control and risk management Internal control and risk management are the responsibility of senior management, and require the involvement of all stake-holders in the Company, in accordance with the tasks assigned to them. Compagnie Plastic Omnium’s internal control and risk management systems are designed to ensure: compliance with applicable laws and regulations; ● effective and controlled implementation of guidelines and objectives ● set by senior management, particularly with regard to risk; the smooth running of Compagnie Plastic Omnium’s internal processes, ● particularly those relating to the safeguarding of the Group’s assets in the broadest sense; the reliability of financial information; ● the commitment of Company employees to shared values and a shared ● vision of the risks they are helping to control. Internal control and risk management systems play a critical role in Compagnie Plastic Omnium’s management. However, they cannot provide an absolute assurance that the Company’s objectives will be achieved or that all risks will be eliminated. Compagnie Plastic Omnium is actively working to reinforce its internal control and risk management systems as part of a continuous improvement process that relies in particular on the Implementation Guide to the Reference Framework of the Autorité des Marchés Financiers (AMF). Scope of this report This report describes the internal control system of Compagnie Plastic Omnium, the parent company of the Plastic Omnium Group. It therefore focuses on the procedures intended to guarantee the reliability of the consolidated financial statements and the Company’s control over entities in which it has a majority interest. Compagnie Plastic Omnium regularly reviews and assesses the operations of significant investments over which it exercises joint control, and uses all of its influence to ensure that these entities comply with its internal control requirements. SUMMARY DESCRIPTION OF THE INTERNAL CONTROL AND RISK MANAGEMENT SYSTEM Organization Compagnie Plastic Omnium comprises three businesses: Intelligent Exterior Systems, Clean Energy Systems and HBPO. Under the supervision and control of Compagnie Plastic Omnium’s senior management, these three businesses each have independent responsibility for implementing the means and resources necessary to achieve the financial targets set in their annual budgets approved by senior management. Organization of the internal control and risk management system The internal control and risk management system deployed within the Group is based on the rules and principles of its internal control framework and the implementation of processes aimed at continuously improving the management of the main risks to which it may be exposed. The organization of the system involves all Company employees. However, its oversight and controls are performed by the following seven key functions: the senior management, the Risk Management Department and the ● Internal Control Committee, which monitor the system; the operational management teams of each Division, corporate ● departments and the Internal Audit Department, which represent three distinct levels of control; the Board of Directors. ● The senior management of Compagnie Plastic Omnium sets the guidelines for organizing and running the internal control and risk management system. They are assisted in this task by the Executive Committee, which has management and decision-making powers with regard to the Company’s business. It is composed of the Chairman-CEO, Co-CEO, the Chief Operating Officer, the Deputy CEO and Director of Strategy and Development, Deputy CEO and Director of Finance, General Secretary – Legal Director and Chairman of the Internal Control Committee, Director of Human Resources, Director of Communication, Scientific Director and the Executive Directors of the various Group businesses. It meets once a month to review the Group’s business performance and recent developments, and to discuss its outlook. It addresses cross-business issues such as sales and marketing, organization, investment, legal and Human Resources issues, safety and the environment, Research and Development, mergers and acquisitions, and financing. Each month, it analyzes the results and balance sheets of all businesses and subsidiaries, including trends in respect of capital expenditure and working capital compared with the situation of the prior year and monthly budget projections. It also reviews three-month forecasts for the consolidated income statement and balance sheet, and plays a pro-active role in steering the Group’s management. It also validates updates of current-year forecasts. Every June, it analyzes the strategic five-year plans for each Group business and the Group. These plans are then used in preparing the budget, which is definitively adopted in December each year. The Internal Control Framework The cornerstone of Compagnie Plastic Omnium’s internal control system is its Internal Control Framework, which sets out the rules and principles applicable to the companies it controls. It comprises a Code of Conduct, the Group’s Internal Control Rules and Procedures and an Accounting and Financial Procedures Handbook. The Code of Conduct: in addition to its economic responsibilities, Compagnie Plastic Omnium attaches great importance to human rights and rules conducive to sustainable development. Compagnie Plastic Omnium is a signatory of the UN Global Compact, a set of principles that stand alongside the Plastic Omnium Code of Conduct to exemplify the spirit of responsibility that has always encouraged the Group’s commitment. Together, these texts highlight the values governing individual and collective conduct that Compagnie Plastic Omnium aims to promote, and which determine the fundamental principles in which the rules and procedures of its internal control system are rooted. In 2010, Compagnie Plastic Omnium adopted a