BIC - 2018 Registration document

RISKS

Risk management and internal control procedures implemented by the Company Risk management and internal control procedures

Internal Control procedures 2.4.2.4. Internal Control procedures related to the a) preparation of accounting and financial information published by the Company The accounting and financial information used internally for management, or for external reporting, is prepared in compliance with the IFRS (International Financial Reporting Standards) as adopted by the European Union. The information follows a bottom-up reporting process from the local statutory accounts data to the consolidated/management set of financial statements. This reporting is performed using consolidation software following every monthly closing. The finance teams of the subsidiary, under the control of their respective Finance and Operations Directors, report information to the business unit finance teams and then report to the BIC Group. This reported package is audited by the local External Auditors for the significant entities. Statutory Auditors prepare memorandums and a synthesis of significant comments for the BIC Group. Cost controllers work closely with operations and report to local Management and functionally to the continent/category Financial Director. The BIC Group developed a Controllers’ Manual of policies and internal procedures that was presented and communicated to the Finance Directors of the subsidiaries. This review is ongoing, with key policies and procedures updated and validated by functional managers as needed. When a new policy is created or an update or enhancement is made to an existing policy, the information is communicated via an “Internal Control bulletin” posted on the employee intranet and is also cascaded by the Leadership Team to all subsidiaries. The reporting procedures within the BIC Group are the following: the BIC Group finance information system allows preparation ● of statutory consolidations and management consolidations within the same reference frame; the BIC Group also uses a detailed sales reporting system. A ● monthly reconciliation is prepared between the sales reporting and financial information systems. Any meaningful variance is explained; the BIC Group financial information system is used in all the ● subsidiary companies, which allows an analysis at each level of reporting (subsidiaries, continents, Group or by category of products) starting from the same source data and according to the same reporting format; the BIC Group internal financial information is analyzed ● monthly and compared with the budget at the subsidiary level and the Leadership Team also reviews the consolidated data and the related analysis monthly; an analysis is performed between the budget, the forecasts ● and the strategic plan and is reviewed by the Leadership Team; the consolidated financial information is validated by the ● Group Chief Financial Officer. Significant issues are reviewed with the Chairman of the Board and the Chief Executive Officer; the Audit Committee validates this information and provides ● the Board of Directors with a report if necessary;

the External Auditors are involved in the validation performed ● on a yearly basis of the production process of financial information. The account closing process includes the following in particular: the fixing and circulation of accounting rules by the Group ● Finance through the Group Accounting Manual; the preparation and sending of a calendar and instructions to ● the affiliates by the Consolidation Department at each monthly closing; the existence of a checklist with the corresponding tasks to be ● performed by the subsidiary for the account closing; the signature of an internal representation letter by the ● subsidiary for the annual closing. The purpose of this representation letter is to assess the compliance of financial statements: it lists controls, actions and assertions critical to the proper completion of Group financial reporting. Other internal control procedures b) As already mentioned, internal control within BIC Group is decentralized. It is then the responsibility of each organization (subsidiary, department, category, continent, etc.) to establish the relevant procedures in all concerned sectors to support the objectives and definition of internal control. However, as a global framework, the Group Controllers Manual provides the general guidelines to be satisfactorily adopted, following adaptation, at the respective level of internal control. The BIC Group’s main procedures are described below: Purchasing and capital investment procedures The constant emphasis in these procedures is upon the commitment authorization. This initial step is the main driver for the rest of the process, from the acknowledgement of receipt of the purchased goods or service, to the payment of vendors. The BIC Group has accordingly implemented an authorization matrix that identifies the level of responsibilities required in accordance with the amount to be committed. All authorizations are expected to be formalized on the appropriate form or through the IT systems. The delegation of authority matrix is regularly updated according to changes in the BIC Group organization. This approval process is the foundation of the three-way-match procedure followed within the BIC Group. Starting with an approved purchase order, it requires that matching is performed at the following stages: at the delivery/service rendering with the proof of delivery or ● completion; when receiving the supplier’s invoice for generation of ● payment. The three-way match process assures the segregation of duties principle and allows clear tracking of the validity of transactions throughout the purchasing process. In terms of capital expenditure, an additional step is required for the purchase initiator. Prior to any investment, specific documentation is prepared to gather all necessary data such as description and return on investment features, approvals in accordance with the level of commitment and a post-acquisition audit schedule.

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• BIC GROUP - 2018 REGISTRATION DOCUMENT •