Vilmorin & Cie - Annual report 2017-2018

3 Management REPORT Report of the Board of Directors to the Joint Annual General Meeting (Ordinary and Extraordinary) of December 7, 2018 ANNUAL REPORT Vilmorin & Cie 92 2017-2018 Social, environmental and societal information Article 225 of the French Grenelle II law and its implementing decree of April 24, 2012 have generated obligations with regard to Vilmorin & Cie’s disclosures and verification of social, environmental and societal information. This information is presented by your Board of Directors in a separate report, in compliance with the legal provisions in force. Events occurring after the closing of the fiscal year In July 2018, through its subsidiary Vilmorin SA, Vilmorin & Cie completed the full take-over of the company AdvanSeed, whose head office is located in Odense, Denmark. AdvanSeed specializes in the breeding, production and distribution of hybrid spinach and leafy vegetable seeds. In August 2018, the company Seed Co Limited, a subsidiary of Vilmorin & Cie, reorganized its business activities. As a result of this operation, Vilmorin & Cie directly holds 29% of the company Seed Co International, previously a 100% subsidiary of Seed Co Limited. On September 5, 2018, Vilmorin & Cie was called by Arcadia Biosciences to appear before the New-York state court for failure to respect confidentiality agreements signed in 2009. The above-described proceedings have not led to any provision being made, since the group is not in a position to assess the financial risk at this initial stage. Outlook for the future Fiscal year 2017-2018 was marked by a market environment that was unstable for Vegetable Seeds and once again globally slump for Field Seeds, mainly due to the persistent low level of prices for agricultural production. In spite of this context, Vilmorin & Cie nevertheless managed to post a slight increase in business at the end of a fiscal year in which it managed to strengthen its global competitive positions. Moreover, Vilmorin & Cie confirmed its strategic orientations, especially with regard to investment in research and innovation, and to worldwide development on the professional markets of agriculture and vegetable production. Fiscal year 2018-2019 should allow Vilmorin & Cie to continue to strengthen its competitive positions in market conditions that will probably remain tense in the field seeds sector, and lacking in visibility in vegetable seeds; moreover, Vilmorin & Cie will continue to increase its measured investment in research and development, in particular in upstream technologies. Vilmorin & Cie’s vocation is to build its development based on a certain number of fundamental strategic principles defined several years ago: strong investment in research both in upstream technologies and conventional plant breeding, permanent international development of activities in the context of market globalization and consolidation, strengthening positions, or taking up new competitive positions, through perfectly targeted external growth operations, accepting or seeking partnerships in sectors where technical expertise or a critical size can boost development for the group’s companies, maintaining an original organization and management model that encourages delegated management in each Business Unit and the fulfillment of synergy between them. By adhering to this policy, Vilmorin & Cie will be able to reinforce its position as the fourth largest seed player in the world, and offer sustainable perspectives for regular growth. Procedures for internal control and risk management set up by the company General provisions for internal control Vilmorin & Cie is in full agreement with the definition of internal control as proposed by the AMF, and has adopted an approach that aims to implement its framework reference. This reference defines internal control as a provision implemented to ensure: compliance with laws and regulations, application of the instructions and orientations fixed by the General Management, efficient functioning of internal corporate processes, particularly those that have been implemented to protect its assets, the reliability of financial information, and more generally, contribute to maintaining control of its activities, and ensure the efficiency of its operations and use of its resources. As with any control system, it cannot provide an absolute guarantee that these risks are totally eliminated, and can only provide reasonable assurance with regard to the successful achievement of its objectives. Internal control primarily concerns Vilmorin & Cie’s different Business Units, and is applied to the group and its subsidiaries as part of its central management functions. As a holding structure, the Company Vilmorin & Cie plays a central role in steering internal control. Besides ensuring the coherence of general policies, its role is to coordinate, advise and control its Business Units and subsidiaries.