Compagnies des Alpes // 2019 Universal Registration Document

2 RISK FACTORS

Internal control procedures

Continuous control and management For all processes with an internal control guide, the Legal A ff airs, Audit and Internal Control Department: l manages the launch of self-assessment campaigns, by sending the questionnaire to the persons responsible for the processes; l analyses the responses and draws up a summary for the whole Group; l proposes action plans and shares best practices. The entities draw up and initiate compliance action plans, which must allow risks to be reduced to an acceptable level for the subsidiary. These entities incorporate relevant controls into their rules and operating procedures and methods. The establishment of action plans is the responsibility of the entity’s management and depends on the entity’s financial and human resources and priorities. Process maturity is reviewed, particularly during internal audit missions, new review campaigns or ad hoc missions conducted at entities. In addition to this highly regulated procedure for producing and communicating the half-year and annual financial statements, management of the fi nancial strategy is also supported by carrying out three projections during the year (including one interim) and by drawing up the budget and medium-term strategic plan. The Holdings Consolidation and Accounting Department, which guarantees the reliability of data at Group level, is responsible for producing this data. Now part of the Holdings Consolidation and Accounting Department, Management Control is responsible for coordinating the budgetary process and the fi ve-year medium-term plan and for analysing the performance of the Group and its entities, in close collaboration with the Operations Directors and Site Managers. Guidelines are sent to the management of each entity to ensure that the budget and medium- term plan are structured on the basis of consistent starting points that are common to the whole Group. The medium-term plans, budgets and outcomes are subject to speci fi c, in-depth analyses: comparison of data for the year with prior-year data and the budget. These analyses are discussed with the entity’s management, Operations Directors and the Executive Management. The budget serves as the reference for monthly reporting. Monthly reviews are conducted based on this reporting, and incorporate activity analyses, which are performed, in particular, with the help of speci fi c business indicators, and include comparisons between prior-year fi gures and the budget for the current year. Activity indicators, such as sales fi gures, visitor numbers for Leisure parksand the number of skier-days for Ski areas, are monitored and analysed on a weekly basis. The investment process, which aims to ensure that the fl ow of investments is consistent with the Company’s strategy, is also managed by the Management Control Department. The Finance and Cash Department, another component of the Finance Department, guarantees the security, transparency and e ffi ciency of cash and fi nancing operations. It is responsible for: l applying the funding policy and in particular managing liquidity and counterparty risk; l managing fi nancial expenses;

In particular, the system has been enriched with technical standards that are used during cross-referencing between the operational teams of the sites, in order to share best practices and expertise. Since 2013, the gradual addition of new processes to the internal control procedures has strengthened the visibility given to departments as regards risk control for key processes at each Compagnie des Alpes site. A fraud prevention system has been implemented to complete the internal control system. This comprises: l steps to raise awareness amongst employees of fi nancial fraud techniques and how they should act if they encounter attempted fraud: identity theft, protection of sensitive information, etc.; l a system for communicating cases of fraud or attempted fraud by fi nancial managers and operational sta ff of Group entities. Each noti fi cation is analysed and a prevention notice is distributed where necessary.

2.8.2 PROCEDURES RELATIVE TO THE PRODUCTION OF ACCOUNTING AND FINANCIAL INFORMATION Organisation and procedures

Accounting and fi nancial information relating to the CDA, a listed company, is drawn up by the Holdings Consolidation and Accounting Department. This department is responsible for the preparation and production of the parent-company fi nancial statements of holdings and the Group’s consolidated fi nancial statements. It therefore prepares the fi nancial section of the half-year report and the Universal Registration Document relating to the fi nancial statements as at 30 September, with due consideration for the regulatory requirements applicable to listed companies. Within this context the Holdings Consolidation and Accounting Department de fi nes the Group’s accounting standards and ensures that they are distributed and applied in accordance with the following principles: l the Financial Directors of the entities are responsible for preparing and producing the parent-company fi nancial statements for their entity. The parent-company financial statements are prepared on the basis of the accounting principles in force in the country, and are restated at the consolidated level, if necessary, to respect the accounting principles laid down by the Group, which makes it possible to guarantee the consistency of the accounting principles used for the consolidated fi nancial statements; l the formats and tools for submitting information to be consolidated are identical for all consolidated entities. The CDA prepares the consolidated fi nancial statements in accordance with IFRS. An annual schedule for the consolidated financial statements is sent to Financial Directors and Directors of all consolidated entities. Instructions on the closing of accounts are sent to them before each account closing date. The consolidation of the fi nancial statements is based on a tailored information submission system that allows the information to be processed reliably, consistently and in full within the set period. Chief Executive O ffi cers and Financial Directors of entities undertake to ensure the quality and completeness of the fi nancial information sent to the Group, including o ff -balance sheet items, by signing a representation letter.

40

Compagnie des Alpes I 2019 Universal registration document