While the company’s internal control procedures provide reasonable assurance of compliance with the prevailing laws and regulations, unexpected or sudden changes in certain rules (particularly regarding the establishment of trade barriers), as well as political or economic instability in certain countries, are all liable to impact the revenues and results of the Group. From a tax point of view, there are many intra-Group ﬂows requiring the existence of a transfer pricing policy compliant with French, local, and international guidelines (in particular the OECD). Adequate documentation setting forth Group policy in this regard has been put in place. R&D activity beneﬁts from the French research tax credit (crédit d’impôt recherche), which in 2014 represented €6.8 million, or 31% of the total corresponding expense, 34% of income from operations, and 47% of net income. Any signiﬁcant reduction or abrogation of this tax credit would have an impact on Group income. The changes introduced by the December 29, 2014 Budget Act for 2015 (loi de ﬁnances pour 2015) and the Supplementary Budget Acts of August 8 and December 29, 2014 for 2014 (loi de ﬁnances rectiﬁcative pour 2014) have had no impact on the beneﬁts of the research tax credit for the company. Stabilization of the research tax credit mechanism for the duration of the current French President’s ﬁve-year term of ofﬁce is one of 35 concrete measures to which the Government is committed within the framework of the National Pact for Growth, Competitiveness and Employment (Pacte national pour la croissance, la compétitivité et l’emploi). The parent company, Lectra SA, was the subject of a tax audit for the years 2010, 2011 and 2012, which was completed in 2014. The tax arrears notiﬁed by the tax administration are immaterial. The bulk of these amounts concern arrears already notiﬁed on the occasion of the previous tax audit, which had been contested by the company and were already provisioned at December 31, 2013. In the normal course of its business, the Group may be involved in various disputes and lawsuits. The Group considers that there are no governmental, judicial, or arbitral proceedings, including all proceedings of which the Group has knowledge, pending or which could threaten it, for which no provision has been made in the ﬁnancial statements and liable, either individually
or severally, to have material impacts on the ﬁnancial condition or earnings of the Group. Finally, the company is listed on Euronext and is therefore subject to stock market regulations, particularly those of the Autorité des Marchés Financiers (AMF), the French Financial Markets Authority.
4.6. Human Resources Risks