BIC - 2018 Registration document

RISKS

Operational and financial risks

STRATEGIC AND OPERATIONAL RISKS Risks related to Group acquisitions

Risk Identification

Risk Mitigation

Part of the BIC Group’s strategy is to grow through acquisitions. An acquisition may allow for geographical expansion or reinforcement of existing categories. Business integration of an acquired company is one of the key elements of success.

Following an acquisition, the BIC Group deploys a highly qualified management team to monitor the progress of the integration on a regular basis. In addition to monitoring the integration plans, the team reviews the alignment of systems, processes and procedures with the BIC Group’s standards for the acquisition to become a successful integration.

Risks related to competition/Concentration of distribution

Risk Identification

Risk Mitigation

While most end-customers of the BIC Group are individual consumers, the BIC Group sells most of its products to major mass-market retail chains. The retail distribution market is subject to further consolidation with rationalization of SKU’s (stock keeping units) and possible expansion of private label SKU’s. This continued trend of consolidation/rationalization processes could translate into a further reduction in the number of retail chains and in their corresponding assortments. It could consequently increase the BIC Group’s dependence on fewer retailers and further intensify competition leading to potential market share losses.

However, the BIC Group’s international presence, its powerful Brand and the diversity of its distribution channels help to mitigate its exposure to market concentration and competitors’ rationalization. BIC is closely monitoring sales and demands of distributors and pursues its efforts to differentiate its products from its competitors, emphasizing innovative and economical solutions and positioning itself to satisfy end-consumer needs. BIC continues to nurture its relationships with key customers to better anticipate and meet customer demands.

Risks related to concentration on developed markets

Risk Identification

Risk Mitigation

The BIC Group strategy focuses particularly on generating sales growth. The BIC Group has been present for many years in developed markets, where Group’s perspectives depend mainly on its ability to increase market share and profitability. As European and North American economies are forecasted to grow at a slower pace in the next few years, succeeding in developing markets is a strategic objective for the BIC Group as we continue to strengthen in this region.

Therefore, the BIC Group aims to continue its expansion in developing markets through internal and external growth.

Risks related to anti-smoking measures

Risk Identification

Risk Mitigation

Lighters represent a significant part of the Group’s net sales (35% in 2018). Part of the Group’s Lighter business is related to the sales of tobacco products. The tobacco industry is subject to increasingly stringent regulations around the world, mainly in developed countries. Anti-smoking campaigns and devices, such as e-cigarettes, and further restrictions in public places, could have a potential impact on the growth and profitability of the BIC Group.

However, the quality of BIC lighters remains the decisive driver for continuous growth in the lighter market. The sale of reliable utility lighters is also an advantage for the BIC Group.

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• BIC GROUP - 2018 REGISTRATION DOCUMENT •