DNFP 2019

2019 DECLARATION OF NON-FINANCIAL PERFORMANCE OF THE DESCOURS & CABAUD GROUP 33 Concentration of logistics flows The concentration of flows accentuates risks and weaknesses in the event of total or partial failure of the QUOFI (hardware - tools - industrial supplies) and industrial maintenance product logistics platforms to supply our subsidiaries and customers. Operating losses and interruption of the supply chain are therefore the main risk. For the implemented lines, the challenge is to assess the connections between their vulnerabilities and their performance, and to implement our responses in such a way as to mitigate their impact. > Risk factors and their consequences: The DESCOURS & CABAUD Group is intensifying its logistics strategy to offer the broadest possible range of products and to guarantee their availability, while managing operating costs. Our logistics flows, historically based on our outlets being supplied directly by our suppliers, are gradually being directed towards platform solutions. Henceforth these platforms will be delivering a growing proportion of our offering directly to our customers and stores. This strategy goes hand in hand with the growth in the number of logistics platforms and the volumes handled by them, which increases the potential risks incurred. These risks have multiple causes: damage to facilities, to information systems, social, climatic or environmental damage. A variety of consequences can have a significant impact on the company's earnings and image. The main impact is on the quality of service rendered to our customers. Some of them are qualified as "critical customers" due to the nature of their business, which cannot be interrupted. In addition to the financial consequences, this risk can tarnish the distributor's image and constitute a breach of contract clauses. Loss of sales results in smaller margins and consequently lower profits. The impact can also have repercussions on our suppliers (output rate, labour relations, logistics, etc.) and our service providers (transport companies), and lead to a loss of year-end bonuses. Lastly, depending on the nature of our stocks, this concentration of logistics requires us to comply with regulations governing facilities classified for environmental protection.