Plastic Omnium - 2020 Universal Registration Document

RISK FACTORS AND MANAGEMENT Internal control procedures and risk management www.plasticomnium.com PLASTIC OMNIUM UNIVERSAL REGISTRATION DOCUMENT 2020 68 $ " $" !" %" # " # $ 2.2 OBJECTIVES OF THE COMPANY CONCERNING INTERNAL CONTROL AND RISK MANAGEMENT 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 stakeholders in the Company, in accordance with the tasks assigned to them. Compagnie Plastic Omnium SE’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 SE’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 SE’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 SE 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 SE, the parent company of the Plastic Omnium Group. It describes in particular 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 SE 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 SE comprises three business lines: Intelligent Exterior Systems, Clean Energy Systems and HBPO. Under the supervision and control of Compagnie Plastic Omnium SE’s senior management, these three business lines 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 within the Group is based partly upon compliance with the rules and principles of its internal control framework. This system is also based on the use of procedures enabling it to continuously improve the management of the main risks it may face. The organization of the system involves all Company employees. However, its oversight and controls are performed by the following seven key functions: senior management, the Risk Management Department and the ● Internal Control and Compliance Committee, which monitor the system; the operational management teams of each business line, the ● Corporate Departments and the Internal Audit Department, which represent three distinct levels of control; the Board of Directors. ● Senior management of Compagnie Plastic Omnium SE sets the guidelines for organizing and running the internal control and risk management system. It is 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 Chief Executive Officer, the Managing Director, the Deputy Chief Executive Officer and Director of Finance, the General Secretary and Legal Director and Chairman of the Internal Control and Compliance Committee, the Director of Human Resources and Communication, the Executive Vice President Sustainable Development, the Director of Procurement Performance and the Managing Directors of the various business lines. 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 Group sales and marketing, organization, investment, legal and human resources issues, health, safety and the environment, Research and Development, mergers and acquisitions, and financing. Each month, it analyzes the results and balance sheets of all business lines and subsidiaries, including trends in respect of capital expenditure and working capital compared with the prior year’s position 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. It analyzes the five-year strategic plans for each business line and the Group. These plans are then used in preparing the budget, which is definitively adopted in November each year.