Derichebourg // 2020-2021 Universal Registration Document

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factors and internal control Risk factors

Change ( vs. prev. yr)

Risks

Risk management systems

Operating risks

5. Significant difficulties in upgrading the operational system, and dependence on IT personnel who have accumulated knowledge about operational systems (purchasing, stock, etc.) and how they work. 6. A major event in the Recycling business (strike, fuel shortage, prolonged flooding, etc.) could lead to a prolonged breakdown in the logistics chain. 7. Prolonged unavailability of industrial equipment without back-up: certain sorting or refining equipment is located at only one Group site. Its prolonged unavailability could significantly affect the Group’s business. 8. Major accident at a recycling center (explosion, fire, physical injury, etc.) or a natural disaster (earthquake, flood, etc.) interrupting operations.

Support from an independent project management firm to document and improve the official system description (official operating methods based on the knowledge of internal IT consultants). Business spread over different sites, so that an alternative can quickly be found if a site is no longer able to operate. The Group has a policy of regularly maintaining its facilities. Intermediate products could be sold in their current condition on less favorable terms. The Group has a workplace safety policy (see section 3.3.1) in order to protect its employees. None of the Group’s sites handles more than 10% of volumes. Moreover, volumes may be diverted to sites that are geographically close. Finally, the Group has insurance programs designed to cover any insurable financial consequences in the event of any losses. The aeronautical industry relies on several successive checks of operations. The Derichebourg Aeronautics Services subsidiary has a quality policy, and its customer verifies the implementation of this policy. A special insurance policy has been taken out. The Group has implemented several action plans in this area: - regular contact at all levels of Airbus; - Airbus supplier management policy; - diversification to other customers (Boeing) to reduce dependence on Airbus; - State aid scheme (long-term furlough) in the event of a pandemic and cessation of business activity. The number of strike days is historically low. The Group endeavors to maintain a high quality professional working environment with accessible management. The Group benefits from an agile internal structure where the number of key roles is relatively limited.

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9. The subsidiary Derichebourg Aeronautics Services carries out the assembly or quality inspection of a large number of aircrafts. In the event of an air accident involving an aircraft on which Derichebourg Aeronautics Services has worked, it could be deemed to be liable. 10. Significant decline in revenue generated by Derichebourg Aeronautics Services with Airbus, whether through loss of confidence or a decline in Airbus’ own volume of business.

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11. A major strike affecting a number of service activities.

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12. The success of the Group’s operations depends in particular on the skills, know-how and involvement of management. The Chief Executive Officer, the Deputy Chief Executive Officer and the directors of the Group’s main businesses are essential to the smooth running of operations. The departure or prolonged unavailability of one of them could be detrimental to the Group. 13. The Group exports a significant share of the tonnages of ferrous or non-ferrous metals that it processes. The majority of volumes exported do not require complicated formal procedures. Some exports have to undergo specific formalities (notifications). In the context of a changing regulatory environment, the export of goods that do not comply with specifications could occur, leading to goods being returned and/or fines being applied. 14. The TGAP (French general tax on polluting activities) collected when shredding residues are sent to landfill could increase significantly and the opportunities for landfill be reduced. Should this situation arise, the Group’s profits could be affected.

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Regulatory risks

Documents accompanying exported goods are subject to particular care and are prepared by people specializing in this area.

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The regulations now provide for priority access to efficient sorting centers. The Group believes that its shredding centers will be eligible for this priority access. The compensation for this priority access will probably be the reservation of annual landfill capacity, with a commitment to pay for the reserved capacity. The Group is working to improve the sorting of fractions that are currently not recyclable (light shredding residue and induction waste) as part of one of the CSR targets that it has set itself (see section 3.5). The success of these initiatives requires commercial streams to be identified that are capable of using the various by-products.

DERICHEBOURG 2020/2021 Universal Registration Document 43