Vilmorin & Cie - Annual report 2017-2018

Management REPORT 3 Report of the Board of Directors to the Joint Annual General Meeting (Ordinary and Extraordinary) of December 7, 2018 ANNUAL REPORT Vilmorin & Cie 93 2017-2018 In order to do so, within its Corporate Finance Department it has an internal audit service, and a financial control service; this system is completed by the missions of the Risk and Insurance Management Department, now forming part of the Governance, Risks, and Compliance Department (G.R.C.), which groups legal affairs, safety- security and quality management, among others. An internal auditing charter was implemented a number of years ago, based on the definitions, the “Code of Ethics” and the “Core Principles for the Professional Practice of Internal Auditing” of the IIA (Institute of Internal Auditors). Moreover, reporting standards have been defined in accordance with a standard format integrating different levels of analysis and a summary of how to follow different recommendations. During the course of fiscal year 2017-2018, audits were conducted in direct association with the group’s global risks map, and included reviews of internal control. These missions resulted in regular follow-up on recommendations. The Business Units and subsidiaries define and implement operational procedures adapted to their specific situations. Rules for managing and defining functions and procedures in the companies and the group constitute the reference for implementing and applying rules for internal control. Furthermore, a system to delegate powers and signatures, initiated for Vilmorin & Cie, has been set up in each company. Development of a risk management system General principles for the management of risks The objective of risk management is to create and preserve Vilmorin & Cie’s value, assets and reputation, by integrating risk/ opportunity analysis into decision-making and contributing to process control. It also aims to mobilize employees around a common vision of risks and to spread the risk culture throughout all Vilmorin & Cie’s entities. Since fiscal year 2008-2009, Vilmorin & Cie has had a global risk management organization based on a risk management network at Group and Business Unit level and an Audit and Risk Management Committee whose missions and composition are set out in detail in section 2.3. Specialized Committees of the Annual Report. Vilmorin & Cie has gradually developed an operational approach to managing its risks, which is described in section 1.7. Risk factors of the Annual Report. This is a process implemented by the Group and its Business Units and managed by the Risk Management and Insurance Department within the G.R.C. Department. Over the course of fiscal year 2017-2018, Vilmorin & Cie’s risk management network was developed and structured with different roles defined within the Group (risk owners, risk domain coordinators), with risk coordinators and risk processing managers in each Business Unit. The G.R.C. Department reports to the Executive Committee on risk mapping and the major risks. Vilmorin & Cie’s Executive Committee plays an essential role in risk management, and validates priorities and major orientations in terms of risk management. Identification of the main risks The risk mapping process is based on a formal methodology that can be used to define a shared language and assessment criteria harmonized between Vilmorin & Cie’s different activities and operational entities. This mapping is regularly updated in collaboration with those involved in the risk management system at Group and Business Unit level. The risks identified are classified into risk domains and are set down in detail in risk sheets included in the new Risk Management Information System (RMIS) deployed during fiscal year 2017- 2018. Risks likely to have major consequences for Vilmorin & Cie are handled and monitored by the risk management network and reported to the Executive Committee. The risk management methodology and the main risk factors identified for Vilmorin & Cie are described in more detail in section 1.7. Risk factors of the Annual Report. As mentioned above, this risk mapping is naturally used to establish the internal audit program. Financial risks related to the effects of climate change For several years now, Vilmorin & Cie has been implementing various actions to measure and reduce its impact on climate change. These are presented in the Board of Directors’ report on social, environmental and societal information. During fiscal year 2017-2018, work was carried out with all Business Units to define and implement a structured and objective environmental strategy. Climate change could eventually have an aggravating impact on certain risk factors already identified by Vilmorin & Cie and described in section 1.7. Risk factors of the Annual Report, in particular risks related to research, procurement and also environmental risks. However, climate change did not emerge as a risk factor in its own right in Vilmorin & Cie’s risk mapping, which was updated in 2017- 2018. In its strategy, Vilmorin & Cie already takes into account the future effects of climate change by adapting its research on varieties adapted to the climate.