DNFP 2019

2019 DECLARATION OF NON-FINANCIAL PERFORMANCE OF THE DESCOURS & CABAUD GROUP 30 Monitoring external growth - Development of synergies The DESCOURS & CABAUD Group has expanded toa largeextent throughexternal growth. Thesemergers or alliances with other companies have enabled it to expand more quickly, by acquiring existing companies. External growth has developed in recent years, more particularly through establishments outside France. |In 2019, DESCOURS & CABAUD made 3 acquisitions in France, 18 internationally, including 16 in Europe and 2 in North America. The Group has set a goal to increase its share of turnover in international markets to 40% of total group sales by the end of 2020. The Group saw growth in its turnover from 15% in 2014 to more than 35% at end- 2019, putting us well on our way to reaching this goal. These external growth operations consolidate the Group’s strategy, which aims to strengthen its leadership in industrial supplies and Personal Protective Equipment (PPE), as well as its geographical footprint in North America. This development also enables the Group to access new markets and take on an international dimension more quickly. It also enables the Group to gain the resources, skills and know-how that it is lacking. However it is essential to ensure the continuity of the positions acquired in this process and, in particular, the key resources the company has acquired. The companies acquired - and consolidated - by DESCOURS & CABAUD are selected on the basis of 3 decisive parameters. Firstly, they must share the entrepreneurial values that make up our DNA and that guarantee customers a very high level of service and commitment. Secondly, they must also contribute to achieving the profitability targets of a family-owned group such as ours. Finally, they must generate added business value on our B2B markets, while at the same time anticipating developments and ensuring a medium/long-term position. > Risk factors and their consequences: The risks of failing to integrate and monitor acquired companies can arise at all levels: commercial, purchasing, the supply chain, finance, tax, human resources, IT, legal. These risks may be reflected in many ways, such as the loss of customers, delisting or changes in unsustainable conditions made by one or more suppliers, with regard to sector risks. However, the risks may also relate to people, in particular when the employees of an acquired company, lacking visibility after the acquisition, resign due to uncertainty regarding their professional future. It is also important to remember that a majority of the risks can also be identified before the acquisition, in particular during the audit period. These risks must be addressed and monitored immediately after the acquisition of the company (e.g. compliance relating to buildings, communication of regulations, mandatory posting of information, data security, etc…). In order to minimise the risks mentioned previously, DESCOURS & CABAUD attaches utmost importance to the proper integration of companies joining the Group and has implemented a comprehensive organisational structure as well as resources responsible for global integration monitoring. These teams use their experience and know-how both to guard against each of the risks mentioned above, and to help define the appropriate actions and strategies for the integration of companies joining the Group. The Group set up a formalised integration process in 2018, which was enhanced at the beginning of 2019. This process starts when the takeover contracts are signed, or even before that point, depending on their complexity and stakes, in order to guarantee the best possible management of risks.