BIC_REGISTRATION_DOCUMENT_2017

GROUP PRESENTATION Risk factors

Risks related to competition / Concentration of distribution

Risks related to anti-smoking measures Lighters represent a significant part of the Group’s net sales (35% in 2017). 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 Group. However, the quality of BIC lighters remains the decisive driver for continuous growth in the lighter market. Risks related to manufacturing sites As a result of its manufacturing activities, the Group may potentially be exposed to events of various origins (such as natural disasters, accidents or economic/social/political turmoil) that could disrupt or interrupt a site’s activity. Since the Group is dependent on its production facilities to maintain and develop its sales, the interruption of a production site could have a negative impact on the Group’s business. The Group has therefore put in place a pro-active approach to industrial risk prevention through regular audits of protection mechanisms and investment in equipment in buildings and production tools. In addition, each category pursues a policy of diversification in terms of geography and production capacity. Moreover, a strong social climate and careful management of supplies, as well as continuity plans ensuring the presence or restoration of critical functions, mitigate the potential impact and minimize the occurrence of such events. The Group has also taken out insurance programs (see below, “Insurance – Coverage of any risks to which the issuer may be exposed” ). Risks related to IT and technology The 2016 Information Technology risk assessments and intrusion testing have been completed. In 2017 we entered into an annual pattern of intrusion testing. The second tests have been completed, demonstrating a significant improvement over last year. Solutions have been implemented to issues identified during these second intrusion tests. In addition to the intrusion tests, several other initiatives related to cyber security have been implemented: full on-site audit of all lighters factories. All findings have been ● implemented. In 2018 we will expand these on-site audits to Stationery and Shavers factories; anti-Phishing system, preventing fraudulent mails from reaching ● their recipients and providing e-learning on protection against phishing; implementation of secured data sharing platforms, enabling ● sharing of sensitive information in a fully secured manner.

While most end-customers of the Group are individual consumers, the 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 Group’s dependence on fewer retailers and further intensify competition leading to potential market share losses. However, the 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. The BIC Group strategy focuses particularly on generating sales growth. BIC 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 forecast to grow at a slower pace in the next few years, succeeding in developing markets is a strategic objective for the Group as we continue to strengthen in this region. Therefore, the Group aims to continue its expansion in developing markets. Risks related to experienced employees and skills The Group has specific skills through experienced resources especially in manufacturing processes and business practices. The loss of experienced employees could slow down the implementation of Group development plans. It could also result in the inability to implement the Group’s strategy. The Group therefore focuses on identifying, developing and managing experienced resources. Succession plans based on a detailed analysis of Group’s resources have been prepared and implemented. Additionally, employee training is given specific attention through dedicated programs (see Chapter 2, section 2.4 “Our social responsibility to our employees” page 74). Risks related to concentration on developed markets

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BIC GROUP - 2017 REGISTRATION DOCUMENT