EXEL industries - 2019 Universal Registration Document

Report on Corporate Governance

Internal control and risk management procedures

Persons and organizational units involved Given its authority and its supervisory and strategic role, our Board of Directors is themain actor in our internal control and risk management system, assisted by our Committees. Executive Management is provided by a Chief Executive Officer, assisted by three Deputy Chief Executive O ffi cers, in collaboration with the Board of Directors. All these individuals spend time in the subsidiaries to ensure their proper functioning and to meet with their Chief Executive O ffi cer and his or her management team. All three Deputy Chief Executives also hold operational posts in subsidiary companies. The Group’s Executive Management is vested with the broadest powers to act in all circumstances in the name of the Company. It exercises its powers within the limits set by the Company’s corporate purpose and subject to the powers expressly granted by law to Shareholders’ Meetings and the Board of Directors. Procedures within our subsidiaries Internal controls for accounting and finance purposes, and risk management procedures exist within each subsidiary. Within the guidelines set by the Group, each subsidiary has full autonomy with respect to the management of marketing, employee-related issues, fi nance and risk. The Chief Executive O ffi cer of a subsidiary, who has corporate o ffi cer status, is responsible for the day-to-day application of internal control and risk management procedures. The subsidiary therefore has all resources required to: „ monitor its performance and management; „ ensure e ff ective risk management. Executive Management of the Group is responsible for the e ff ectiveness of the controls put in place in the subsidiaries and requires that they be strengthened if deemed necessary. Corporate Finance Department The process of fi nancial closings is organized on the basis of a plan established by the Finance Department, under the supervision of the Executive Management, and approved by the Board of Directors. This plan is for each of our subsidiaries which remain responsible for their fi nancial statements. Each subsidiary prepares its own budget, half-year and annual fi nancial statements and de fi nes its cash fl ow requirements. The Group’s Finance Department is responsible for producing the annual and consolidated fi nancial statements. This process is undertaken using a dedicated reporting and consolidation system. The Group’s Finance Department dictates the format and quality of the reporting and the accounts prepared by each of our subsidiaries. It also ensures Group procedures are properly applied by subsidiaries for consistency in the fi nancial statements. It coordinates and rules on the cash fl ow management decisions of each of our subsidiaries on the basis of the Group’s Corporate Cash Flow Agreement. The Group has also developed an internal control self-evaluation process based on a questionnaire measuring whether the fundamental rules and procedures are being correctly implemented within the Group’s most significant entities. This questionnaire is completed once every year. It is sharedwith Executive Management, the Finance Department, the Chief Executive O ffi cer of the subsidiary and the Group’s Audit Committee.

Opportunity and risk management (ORM) To ensure the sustainability of its operating activities, the Group ensures that the appropriate risk prevention and risk management procedures are in place, together with methods for seizing opportunities. The Board of Directors has established an ORMprocess, responsibility for which was assigned to the Group’s Chief Executive O ffi cer. The Group and every subsidiary have set up a steering committee, led by its own Chief Executive O ffi cer. This committee is responsible for drawing up a list of all the actions and means for reducing risks and seizing opportunities. The Group Chief Executive delivered a summary report to the Board of Directors on December c 17, 2019, which approved it and took note of the actions that had been taken. Corporate Social Responsibility (CSR) To ensure corporate social responsibility (CSR) issues are taken into account, our Executive Management has set up a working group. Its job of bringing together information from the subsidiaries and presenting the new statement of non- fi nancial performance has been improved compared to last year: the data are more reliable and the task of collecting, consolidating and auditing has been more e ffi cient. As in previous years, this statement was externally audited for the purposes of certi fi cation and a reasoned opinion on the fairness of the information. It was approved by the Board of Directors on December c 17, c 2019, and incorporated into the Universal Registration Document. Group Insurance Policies and Legal Disputes The Group negotiates and centralizes its various insurance contracts andmanages any legal disputes and claims. To ensure that operations always complywith regulations, the Group’s Legal Department works with specialized attorneys and experts. It centralizes and coordinates legal matters for all Group subsidiaries. It also manages and monitors litigation cases in close collaboration with the subsidiaries involved. Anti-corruption code of conduct To ensure that the Group complies with anti-corruption laws, the Group’s parent company has rolled out, in a number of initiatives, a code of conduct applicable to all of the Group’s subsidiaries (see Statement of Non-Financial Performance in the management report). In conclusion, it is important to bear in mind that the Group is a mid- size, international, family-operated and family-owned enterprise of French origin. The Group’s goal is to expand in its markets through a policy of constant innovation and an international growth strategy. For this reason, the Board of Directors ensures that governance is sound and ethical. The Group’s employees are given responsibility and proper motivation, and act with respect for our founding values.

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