activity, ﬁnancial condition, ﬁnancial results (or its ability to achieve its goals) or reputation. These risks are identiﬁed by means of a continuous process, taking into account the changes in the Group’s external environment together with the organizational changes rendered necessary by the evolving nature of its markets and the macroeconomic environment. This process is overseen by the Finance Division and the Legal Affairs Department, with input from all Group operating and corporate departments. As in previous years, the Audit Committee has reviewed risks liable to have a signiﬁcant adverse impact on the company’s human capital, assets, environment, goals, together with its activity, ﬁnancial condition, or ﬁnancial results (or its ability to achieve its goals), or reputation, and considers that there are no other signiﬁcant risks than the ones discussed below. The key factor protecting the Group against macroeconomic environment risks is its business model, and in particular: – a balance of risks, which beneﬁt from natural hedging by the distribution of business activity over market sectors and geographical markets with cycles that are different from each other, and by the very large number of customers throughout the world; – a balanced revenue mix between revenues from new systems sales, the company’s growth driver, and revenues from recurring contracts, spare parts and consumables, a key factor in the company’s stability, that provide a cushion in periods of difﬁcult economic conditions. The gross proﬁt generated by recurring revenues alone covers more than 75% of annual ﬁxed overhead costs. In addition, the business model is geared to generating free cash ﬂow in excess of net income — assuming utilization or receipt of the annual research tax credit and competitiveness and employment tax credit applicable in France — enabling the Group to ﬁnance its future growth out of its own cash, with its structurally negative working capital requirement after restatement of the claim on the French Administration (Trésor public) in respect of the research tax credit and the competitiveness and employment tax credit not received (see note 14 to the consolidated ﬁnancial statements).
Finally, uncompromising ethics in the conduct of business and respect for each individual are part of the company’s core values.
4.1. Macroeconomic Environment Risks