HERMÈS - 2018 Registration document

Corporate Governance

Supervisory Board’s report on corporate governance

Duties and activities of the Audit and Risk Committee in 2018

Duties of the Audit and Risk Committee

Activities of the Audit and Risk Committee in 2018

The Audit and Risk Committee studies and prepares certain proceedings of the Supervisory Board and submits to the Supervisory Board its opinions, proposals and recommendations. In accordance with Article L. 823-19 of the French Commercial Code and without prejudice to the powers of the Board, which it does not replace, the duties of the Audit and Risk Management Committee are to: 1. With regard to preparing accounting and financial information: s s review and comment on the parent company and consolidated financial statements before they are approved by Executive Management and presented to the Supervisory Board; s s ensure that the accounting methods applied are relevant and consistent; s s verify that internal data collection and control procedures guarantee the quality of the information provided; s s review the work programme and results of internal and external audit assignments; s s monitor the process of preparing financial information and, where appropriate, make recommendations to ensure its integrity and in particular: • • ensure that the accounting methods applied are relevant and consistent, in particular to recognise material transactions, • • the examination of the financial statements must focus on significant transactions which could have given rise to conflicts of interest; s s monitor the effectiveness of internal control and risk management systems and internal audits regarding the procedures for preparing and processing accounting and financial and non-financial information, without jeopardising its independence, and in particular: • • hear internal audit and risk control managers and give its opinion on the organisation of their departments, • • be informed of the internal audit programme and receive internal audit reports and a summary of these reports on a regular basis; s s review risks and significant off-balance sheet commitments, assess the importance of failures or weaknesses reported to it and inform the Supervisory Board, where appropriate; • • during the examination of the financial statements, get a presentation by management describing risk exposure, including that of a social and environmental nature and significant off-balance sheet commitments as well as the accounting options chosen; s s review the scope of consolidated companies and, where necessary, the reasons why some companies are not included.

In 2018 the Audit and Risk Committee reviewed the following matters: s s presentation of the 2018 budget; s s prior approval by the Audit and Risk Committee of services other than the certification of financial statements provided by the Statutory Auditors; s s security system and feedback on 2017 incidents; s s review of activities related to risk management, audit and internal control in 2017; • • risk management, • • internal audit, • • internal control; s s 2018 Audit plan; s s parent company and consolidated financial statements for the year ended 31 December 2017; s s 2018 interim consolidated financial statements; s s presentation of the consensus of financial analysts on the 2017 annual results and the 2018 interim results; s s review of the press releases on 2017 revenue, 2017 annual results and 2018 interim results; s s work of the Statutory Auditors: audit approach, audit findings, presentation of the panel’s fees (including for services other than certification of the financial statements) and statement of independence; s s in camera meeting with the Statutory Auditors; s s new Group risk mapping; s s change in the timetable of publications; s s financial processes: monitoring of capital expenditure; s s update of IT risk mapping; s s result of the PwC audit on the security of payments. As part of its missions, the Audit and Risk Committee heard from the Group Chief Financial Officer, both with regard to the accounting data and treasury data, the Consolidation Director, the Audit and Risk Director, the Group Security Director, the Group IT Director, the Group Treasury Director, the Group Financial Operations and Investor Relations Director and the Statutory Auditors. The work and functioning of the Audit and Risk Committee were assessed in 2016 as part of the three-year formal self-assessment of the Supervisory Board and were deemed very satisfactory overall.

3

2018 REGISTRATION DOCUMENT HERMÈS INTERNATIONAL

189