APC 2014 Annual Report Download - page 42

1OVERVIEW OF THE GROUP’S STRATEGY, MARKETS AND BUSINESSES
RISK FACTORS
and an A3 credit rating from Moody’s. The Group’s liabilities and of our liquidity facilities, we could be required to repay the sums
their terms and conditions are described in note24 of Chapter5. due on some of these facilities.
In line with the Group’s overall policy of conservatively managing Moreover, anticipated reimbursement provisions exist for certain
liquidity risk and protecting our financial position, when negotiating financing and lines of credit in case of change of control. Under
new liquidity facilities the Group avoids the inclusion of clauses that these provisions, the debt holders may demand repayment if a
would have the effect of restricting the availability of credit lines, shareholder or shareholders acting together hold more than 50%
such as covenants requiring compliance with certain financial of the company’s shares, for the majority of contracts, and this
ratios. As of December31, 2014, Schneider ElectricSE had no event triggers a downgrading of the company’s rating. As of
financing or confirmed lines of credit that were subject to December31, 2014, EUR4.8billion of the Group’s financing and
covenants requiring compliance with financial ratios. lines of credit had these types of provisions.
The loan agreements or lines of credit for some of our liquidity
facilities include cross-default clauses. If we were to default on any
Legal risks
Our products are subject to varying national and
development, and launch technical and economic resources. Such
costs could have a significant impact on the profitability and cash
international standards and regulations
and cash equivalents of the Group. The business reputation of
Our products, which are sold in national markets worldwide, are Schneider Electric could also be negatively impacted.
subject to regulations in each of those markets, as well as to To prevent these risks, Schneider Electric has implemented quality
various supranational regulations (sales restrictions, tariffs, tax procedures at the level of design, development and production of
laws, security standards,etc.). Changes to any of these regulations its products, systems and solutions. In case of product returns, the
or standards or their applicability to the Group’s business could type and source of the failures are analyzed and corrective actions
lead to lower sales or increased operating costs, which would are implemented. The Group has also put in place insurance
result in lower earnings and profitability. coverage to cover its civil liability and the risk of product recalls
Our products are also subject to multiple quality and safety (see section 1.7 Risk factors on Insurance policy).
controls and regulations, and are governed by both national and
The development and success of the
supranational standards. The majority of our products comply with
world-recognized International Electrotechnical Commission (IEC)
Group’sproducts depends on its ability
standards as well as with the applicable rules in the European
Union, and in particular the REACH and RoHs rules. Any necessary
toprotect its intellectual property rights
capital investments or costs of specific measures for compliance The future success of Schneider Electric depends to a significant
with new or more stringent standards and regulations could have a extent on the development and protection of patents, knowledge
negative impact on Group operations. and trademarks («intellectual property rights»). Third parties may
In addition, in the majority of the markets on which its products are also infringe its intellectual property rights, and the Group may
sold, Schneider Electric is subject to national and supranational have to expend significant resources monitoring, protecting and
regulations governing competition. If the Group is implicated in enforcing its rights. If we fail to protect or enforce our intellectual
these areas, this could have a significant impact on the Group’s property rights, our competitive position could suffer, which could
businesses, results and financial position. However, to mitigate have a material adverse effect on our business. In addition, the
these risks, the Group completed its «Principles of Responsibility» unauthorized use of intellectual property rights remains difficult to
by implementing a GLOBAL COMPETITION LAW POLICY that has control, particularly in foreign countries whose laws do not always
been widely rolled out within the Group, together with a training effectively ensure the protection of these rights. They could be
program set up by the Legal Affairs Department. counterfeited or used without the consent of Schneider Electric,
which could have a material adverse effect on our reputation and
Risks related to products sold
operating profit.
To mitigate this risk, the patents developed or purchased by the
In addition, in case of malfunction or failure of one of its products, Group are tracked by the Industrial Property team within the
systems or solutions, Schneider Electric could incur liability arising FinanceandControl - Legal Affairs Department. All intellectual
from any resulting tangible or intangible damages, or personal property queries are centralized and managed by this team for the
injury. Similarly, the Group could incur liability based on errors in whole Group and in coordination with the other
the design of a product, system or solution or because of a FinanceandControl - Legal Affairs Departments it ensures that the
malfunction related to the interface with other products or systems. Group’s interests are defended throughout the world. The same
The failure of a product, system or solution may involve costs approach and organization applies for the Group’s brands
related to the product recall, result in new expenditures for portfolio.
40 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC