executive management bodies...danone (1979-1984), kellogg’s (1984-1994), diageo-foods/sara lee...

Financial and Directors’ Report 2019 - 97

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Corporate governance statementIn2019, theCompanyadhered to theprinciples laidout in the2009BelgianCodeofCorporateGovernance (“Code2009”),which is availableatwww.corporategovernancecommittee.be. Since 1 January2020, theCompanyadheres to thenew2020versionoftheCode,alsoavailableonthesamesite.Since1January2006,theCompanypublishesitsGovernanceCharteron www.dieteren.com. When applying the principles of the Code, the Company takes however into consideration the specificshareholder structure of the Company, whose stability has been ensured by the majority family shareholding since 1805.Exceptionstothe2009Codearesetoutonpage101.

1. Composition and Functioning of the Board and Executive Management Bodies1.1.BOARDOFDIRECTORS1.1.1.CompositionTheBoardofDirectorsconsistsof:- sixnon-executiveDirectors,appointeduponproposalofthefamilyshareholders;- fivenon-executiveDirectors,fourofwhomareindependent,chosenonthebasisoftheirexperience;

The Chairman andDeputy Chairmen of the Board are selected among theDirectors appointed upon proposal of the familyshareholders.FourfemaledirectorssitontheBoard.

1.1.2.RolesandactivitiesWithoutprejudicetoitslegalandstatutoryattributionsandthoseoftheGeneralMeeting,theroleoftheBoardofDirectorsisto:

- determinetheCompany’sstrategyandvalues;- approveitsplansandbudgets;- decideonmajorfinancialtransactions,acquisitionsanddivestmentsconcerningtheGroupanditsmainsubsidiaries;- ensurethatappropriateorganizationstructures,processesandcontrolsareinplacetoachievetheCompany’sobjectives

andmanagetheassociatedrisk;- appointthedirectorsproposedbytheCompanytotheBoardsofthemainsubsidiaries;- appointandrevoketheCEOand,basedonaproposalbysaidCEO,theothermembersoftheExecutiveCommitteeandthe

CEOSoftheGroup’sactivities,anddeterminetheirremuneration;- monitorandreviewday-to-daymanagementperformance;- supervisecommunicationswiththeCompany’sshareholdersandtheotherinterestedparties;- approvetheCompany’sstatutoryandconsolidatedfinancialstatements,aswellassetthedividendwhichwillbeproposed

totheGeneralMeeting.Inthatframework,theBoardofDirectorsintendstomaintainitsongoingpolicyofprovidingthelargestpossibleself-financing,whichhassupportedthegroup’sdevelopment,withaviewtostrengthenitsequitycapitalandtomaintainqualityfinancialratios.Absentmajorunforeseenevents,theBoardwillensureastableand,resultspermitting,steadilygrowingdividend.

98 - Financial and Directors’ Report 2019

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CompositionoftheBoardofDirectorson31December2019

JoinedBoard

inend of

mandate

Nicolas D’Ieteren (44)1

ChairmanoftheD’IeterenBoardofDirectors,ChairmanofBelronGroupSABSc Finance&Management (University of London); Asia Int’l Executive Program andHumanResourcesManagementinAsiaProgram(INSEAD).LedprojectsatBentleyGermanyandPorscheAustria. From2003 to 2005, finance director of a division of TotalUK. Since 2005,managingdirector of Nayarit.

2005 June2024

OlivierPérier(48)1 DeputyChairmanoftheBoardandChairmanoftheStrategicCommitteeMaster’s degree in architecture and urban planning (ULB). Executive Programme for theAutomotive Industry (Solvay Business School). International Executive, Business Strategy AsiaPacific and International Directors Programmes; Certificate in Global Management (INSEAD).FoundingpartnerofthearchitecturalfirmUrbanPlatform.ManagingdirectorofSPDG,aprivateholdingcompany,since2010.Chairman,memberofadvisoryorsupervisoryboardsofvariousventure capital companies.

2005 June2023

ChristineBlondel(61)

IndependentDirectorEcolePolytechnique(France),MBA(INSEAD).ManagementConsultantatProcter&Gamblefrom1981to1984,DirectorattheWendelInternationalCentreforFamilyEnterpriseatINSEAD(until2007),AdjunctprofessoratINSEADandNova(Portugal).Advisortofamilybusinesses.

2009 June2021

CBManagement IndependentDirector–Permanentrepresentative:CécileBonnefond(64)MBA European Business School & Senior Executive Program IMD Lausanne. Danone (1979-1984),Kellogg’s(1984-1994),Diageo-Foods/SaraLee(1995-2001).LVMH:CEOofVeuveClicquot(2001-2008),BonMarché(2009-2010).Presidentandco-investoratPiper&CharlesHeidsieckchampagnes (2011-2015). Since 2015, sits on boards of listed and family-run companies.ConsultantforBPIFrance.

2018 June2022

SophieGasperment(55)

IndependentDirectorGraduateofESSECandInsead.JoinedL’Oréalin1986.BecameGeneralManageratL’OrealUKin2000andthenExecutiveChairmanandCEOofTheBodyShopInternational.InternationalTradeAdvisorfrom2005to2013.In2014,becameGroupGeneralManagerofFinancialCommunication&StrategicProspectivefortheL’OréalGroup.Since2019,IndependentDirector(othermandates:Accor,CimpressandKingfisherplc),SenioradvisortotheBCG,andAngelinvestor.

2018 June2022

GEMAsprl1 Non-executiveDirector–Permanentrepresentative:MichelAllé(69)Civilengineerandeconomist(ULB).JoinedCobepain1987,memberofitsExecutiveCommittee(1995-2000). CFO of Brussels Airport (2001-2005). CFO of SNCBHolding (2005-2013). CFO ofSNCB(2013-2015).DirectorofEliaandChairmanoftheBoardsofEPICSTherapeuticsandDIM3.ProfessoratULB.

2014 June2022

PascalMinne(69) Non-ExecutiveDirectorLawdegree(ULB),MasterinEconomics(Oxford).FormerpartnerandChairmanofPwCBelgium(until2001).DirectorofthePetercamgroupuntil2015.VariousDirectorships.EmeritusProfessoratULB.

2001 June2022

Nayarit Participationss.c.a.1

Non-ExecutiveDirector–Permanentrepresentative:FrédéricdeVuyst(46)BachelorofLaw(UniversitédeNamur),BABusiness&BScFinance(LondonMetropolitan,SchoolofBusiness).ManagingDirectorCorporate&InvestmentBankingatBNPParibasBelgiumuntil2008. Head of Business Development Investment Banking et Management Board CorporateBankingatBNPParibasFortisuntil2012.Sincethen,CEOatNayaritParticipationsandvariousdirectorships.

2001 June2022

Pierre-Olivier Beckerssprl

IndependentDirector–Permanentrepresentative:Pierre-OlivierBeckers(59) MasterinManagementSciences(LSM),Louvain-la-Neuve.MBAHarvardBusinessSchool.CareeratDelhaizeGroup (1983-2013).Chairmanof theExecutiveCommitteeandmanagingdirectorofDelhaizeGroup (1999-2013).Chairmanof theBelgianOlympicand InterfederalCommitteesince2004.Memberof the InternationalOlympicCommittee (IOC)andChairmanof itsAuditCommittee. Chairman of the Coordinating Committee for the 2024 Paris Olympics. Variousdirectorships. Advisor to and investor in various recently-formed companies.

2014 June2022

s.a.deParticipation etdeGestion(SPDG)1

Non-executiveDirector–Permanentrepresentative:DenisPettiaux(51)Civil engineer in physics and Executive Master in Management (ULB). Member of SPDGexecutive committee, in chargeof finance and a non-executivememberof variousBoards ofDirectors, advisory boards and investment committees. Joined Coopers & Lybrand in 1997.Until 2008, Director of PricewaterhouseCoopers Advisory in Belgium. Until 2011, Director ofPricewaterhouseCoopers Corporate Finance in Paris.

2001 June2022

MichèleSioen(54)1 Non-ExecutiveDirectorDegreeineconomics.CEOofSioenIndustries,alistedcompanyspecialisedintechnicaltextiles.Honorary Chairmanof the FEB. VariousDirectorshipsof Belgian companies, notably Immobel,Sofina,FedustriaandGuberna.

2011 June2023

(1) Director appointed upon proposal of family shareholders.


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TheBoard ofDirectorsmeets at least six times a year. Additionalmeetings are held occasionally if necessary. The Board ofDirectors’decisionsaretakenbyamajorityofthevotes,theChairmanhavingacastingvoteincaseofatie.In2019,theBoardmet11times..AllDirectorsattendedthemeetingsthatwerefixedinadvance,aswellasthemoreoccasionalmeetingswiththeexceptionof:MrPierre-OlivierBeckers,MrsChristineBlondel,MrsCécileBonnefond,MrsSophieGasperment,andMrPascalMinne,whowereallexcusedforonemeeting,andMrsMichèleSioen,whowasexcusedforthreemeetings.

1.1.3.TenureofDirectorsThemandateofMrNicolasD’Ieterenwasrenewedforaperiodof5yearsattheAGMof6June2019,andthemandatesofMrOlivierPérierandMrsMichèleSioenwererenewedatthesameAGMforaperiodof4years.

1.1.4.CommitteesoftheBoardofDirectors

Composition(at31/12/2019) AuditCommittee1 NominationsandRemunerationCommittee1

Chairman PascalMinne Nicolas D’IeterenMembers ChristineBlondel2 Pierre-OlivierBeckers³

FrédéricdeVuyst4 ChristineBlondel²DenisPettiaux5 SophieGasperment²

OlivierPérier

(1) Given their respective education and management experience in industrial and financial companies, the members of the Audit Committee and the members of the Nominations and Remuneration Committee, possess the expertise required by law in accounting and audit law for the former and in remuneration policy for the latter.

(2) Independent Director(3) Permanent representative of Pierre-Olivier Beckers sprl. Independent Director(4) Permanent representative of Nayarit Participations s.c.a.(5) Permanent representative of SPDG s.a.

TheAuditCommitteemet5timesin2019.ThesemeetingswereheldinthepresenceoftheAuditor.Allofitsmembersattendedallofthemeetings.

TheNominationsandRemunerationCommitteemet4timesin2019.Allofitsmembersattendedallofthemeetings.

TheStrategicCommitteemet10timesin2019.

EachCommitteereportedonitsactivitiestotheBoard.

1.1.5.FunctioningoftheCommittees

Audit Committee On31December2019,theAuditCommitteewascomprisedoffournon-executiveDirectors,ofwhichoneindependentDirector.TheAuditCommittee’sprimaryroleistomonitortheCompany’sfinancialinformationandsupervisetheriskmanagementandinternalcontrolssystemsoftheCompanyanditsmainentities.TheCommitteereviewstheauditor’sreportsonthehalf-yearandannualfinancialstatementsoftheCompany,ofBelronandofMoleskine.TheAuditCommitteemeetsatleastfourtimesayear,includingatleastonceeverysixmonthsinthepresenceoftheAuditor,andreportsonitsactivitiestotheBoardofDirectors.Atleastonespecificmeetingisdedicatedtothesupervisionoftheriskmanagementandinternalcontrolssystems.TheAuditorKPMG,appointedbytheOrdinaryGeneralMeetingof1June2017,hasoutlinedthemethodologyforauditingthestatutoryandconsolidatedstatementsaswellastheapplicablematerialityandreportingthresholds.TheCommittee’scharteradoptedbytheBoardissetoutinAppendixIoftheGovernanceCharterpublishedontheCompany’swebsite.

Nominations and Remuneration CommitteeOn31December2019,theNominationsandRemunerationCommitteewascomprisedoffiveDirectors,includingtheChairmanoftheBoard,whopresidesoverthemeetings,theDeputyChairmanandthreeindependentDirectors.ThemissionsoftheARCareasfollows:

- TomakeproposalstotheBoardconcerningappointmentsofnon-executiveDirectors,theCEO,andbasedonaproposalbythelatter,theothermembersoftheExecutiveCommitteeandtheCEOsoftheGroup’smainentities,and ensure that the companyhasofficial,rigorousandtransparentprocedurestosupportthesedecisions.

- TomakeproposalstotheBoardregardingtheremunerationofthenon-executiveDirectors,theCEO,and,basedonaproposalbythelatter,theothermembersoftheExecutiveCommitteeandtheCEOsoftheGroup’smainentities,andensurethatthecompanyhasofficial,rigorousandtransparentprocedurestosupportthesedecisions.


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- Toregularlyreviewtheprocedures,principlesandpoliciesrelatingtotheappointmentandremunerationofmanagersintheGroup’smainactivitiesandtheCorporateteam,andtocoordinatewiththeNominationsandRemunerationCommitteesthatalreadyexistwithintheGroup’smainentities

- .TopreparetheremunerationreportandcommentonitduringtheAnnualGeneralMeeting

TheCommitteemeetsat least fourtimesayearand reportson itswork to theBoardofDirectors.TheCommittee’sCharteradoptedbytheBoardissetoutinAppendixIIoftheGovernanceCharteravailableontheCompany’swebsite.

Strategic CommitteeTheStrategicCommittee,whichbecameaspecialisedCommitteeoftheBoardon28February2019,meetsatleastonceamonthandbringstogethertheChairmanandDeputyChairmanoftheBoard,twoDirectorsrepresentingthefamilyshareholdersandtheGroupCEO.TheothermembersoftheExecutiveCommitteearepermanentmembers.AttheleveloftheGroupanditssubsidiaries,theCommittee’smissionistoconsidertheGroup’sdevelopmentpriorities,,toanalysethelong-termstrategiesandobjectivesoftheGroup,toexaminetheprogressofstrategicprojects,toanalysefutureinvestmentsanddivestments,tomonitorprogressoftheGroup’sbusinesses,andtopreparestrategicpointsfordiscussionatBoardmeetings.TheCommittee’sCharter,adoptedbytheBoard,issetoutinAppendixIIIoftheCompany’sGovernanceCharteravailableontheCompany’swebsite.

Policy for transactions and other contractual relationships not covered by the legal provisions on conflicts of interest Directorsandmanagersarenotauthorisedtoprovidepaidservicesortopurchaseorsellgoods,directlyorindirectly,toorfromthecompanyor itsgroupcompanieswithintheframeworkof transactionsnotcoveredbytheirmandatesorduties,withoutthespecificconsentoftheBoardofDirectors,exceptfortransactionsrealisedinthenormalcourseofbusinessoftheCompany.TheyaretoconsulttheChairmanortheGroupCEO,whoshalldecidewhetheranapplicationforderogationcanbesubmittedtotheBoardofDirectors.Ifso,theywillnotifythedetailsofthetransactiontothecompanysecretary,whowillensurethattheapplicablerulesarecompliedwith.Suchtransactionsshallonlybeauthorisedifcarriedoutatmarketconditions.

Evaluation of the Board and its Committees TheBoardanditsCommitteesassessonaregularbasis,andatleastonceeverythreeyears,theirsize,composition,procedures,performanceand their relationshipswith themanagement, aswell as the individual contributionofeachDirector tooverallfunctioning,inordertoconstantlyimprovetheeffectivenessoftheiractionsandthecontributionofsaidactionstothegroup’sproper governance.TheBoardanditsCommitteesunderwentanewevaluationduringthefirstquarterof2019.ThisprocesswasconductedwiththehelpofanoutsideprofessionalwhointerviewedallDirectorsandmembersoftheExecutiveCommittee.AsummaryoftheinterviewswaspresentedtotheBoardalongwithclearrecommendationsfortheBoard’sconsideration.

1.2.GROUPEXECUTIVEMANAGEMENTThemembersoftheExecutiveCommitteeareresponsiblefortheday-to-daymanagementoftheCompany.On31December2019,theGroupExecutiveCommitteewascomprisedoftheGroupCEO(ChairmanoftheGroupExecutiveCommittee)andtheGroupCFO.

CompositionoftheExecutiveCommitteeon31December2019 Startofmandate

FrancisDeprez(54)

ChairmanoftheExecutiveCommitteeandCEODiploma in Applied Economic Sciences (UFSIA Anvers) and Master’s in BusinessAdministration (HarvardBusinessSchool).Associate (1991-1998)andPartner (1998-2006)atMcKinsey&CompanyBelgium. In theDeutscheTelekomGroup, servedasManagingDirectoroftheCenterforStrategicProjects(2006-2011),ChiefStrategyandPolicyOfficerofDeutscheTelekomAG(2007–2011),memberoftheSupervisoryBoardsof T-Mobile International (2007-2009) and of T-Systems International (2008-2011),ChiefExecutiveOfficerofDetecon InternationalGmbh(2011-2016).DirectorshipsatBelronandMoleskine.

2019(CEO)

2016 (as a memberof

theExecutiveCommittee)

ArnaudLaviolette(58)

MemberoftheExecutiveCommittee–ChiefFinancialOfficerMaster inEconomicSciences(UCL).Worked inbankingforalmost25years,headofCorporateFinance,CorporateClientsandBoardmemberatINGBelgiqueuntil2013.Investment manager at GBL from 2013 to June 2015. Directorships at Belron andMoleskine.ExternalDirectoratRossel.

2015

ThemembersoftheGroupExecutiveCommitteeactcollegially.AttheGrouplevel,theyareinchargeoforigination,monitoringanddevelopingtheGroup’sactivitiesintermsofstrategy,humanresources,finance,financialcommunication,investorrelations,accountingconsolidation,treasury,M&A,Sustainabilityandlegalandfiscalmatters.


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1.3.EXECUTIVEMANAGEMENTOFTHEFOURBUSINESSESTheD’IeterenGroupowns fourbusinesseswhicheachhave their ownexecutivemanagement structure: automobile vehicledistributioninBelgium(D’IeterenAuto),Belron,MoleskineandD’IeterenImmo.

D’IeterenAuto,whichisanoperationaldepartmentofD’IeterenSA/NVwithoutseparatelegalstatus–ismanagedbytheCEOofD’IeterenAuto,reportingtotheGroupCEO.TheCEOofD’IeterenAutochairsamanagementcommitteecomprisingsixothermembersresponsibleforRetail,Finance,Operations,Research&Marketing,Brands&NetworkManagement,NewMobilityandHumanResources&Campus.

Belron,ofwhichD’Ieterenowned54.85%ofthevotingrightson31December2019,hasaBoardofDirectorsconsistingof6members:3whoareappointedbytheCompany,2appointedbyCD&R(minorityshareholderinBelron)andtheCEOofBelron.TheBelronBoardofDirectorsischairedbytheChairmanoftheCompany’sBoard.

Moleskine,afully-ownedsubsidiaryofD’Ieteren,isgovernedbyaBoardofDirectorsconsistingof6members:4appointedbytheCompanyandtheMoleskineCEOandCFO.

D’IeterenImmo,a100%subsidiaryofD’Ieteren,ismanagedbyaBoardcomprisedof4Directors:3appointedbytheCompanyandtheCEOofD’IeterenImmo.

1.4.EXTERNALAUDITThe external audit is conducted by KPMGRéviseurs d’Entreprises, represented byAlexis Palm,whosemandate to audit thestatutoryandconsolidatedaccountsfor2017,2018and2019wasrenewedattheGeneralMeetingof1June2017.ThetotalfeeschargedbytheStatutoryAuditorandlinkedcompaniesfortheworkcarriedoutin2019onbehalfofD’IeterenSA/NVandlinkedcompaniesamountedtoEUR4,2million,excludingVAT.Detailsofthefeesareincludedintheannexeofthe2019ConsolidatedFinancialStatements(page71).

2. DiversityD’IeterenaimstoputdiversityattheheartofitsBoardandExecutiveCommittee.Thismeanshavingdirectorswhodifferintermsnotonlyoftheirbackground,education,ageandgender,butalsointheirindependence,experienceandprofessionalexpertise.Suchdiversitywillensurearangeofperspectives,insightsandthecriticalthinkingthatareessentialtoenablingefficientdecision-makingandgoodgovernance.EnhancingdiversityattheBoardandExecutiveCommitteelevelsalsoincreasesthepoolofpotentialcandidatesandhelpstoattractandretaintalent.

TheNominationsandRemunerationCommitteereviewsandassessesthecompositionoftheBoardofDirectorsandtheExecutiveCommittee,andadvisestheBoardontheappointmentofnewBoardmembersandExecutiveCommitteemembers,aswellastherenewalofanyexistingmandates.Duringthisprocess,theNominationsandRemunerationCommitteeconsiderscandidatesonmerit,withoutlosingsightoftheneedfordiversity(includingcriteriasuchasbackground,education,age,gender,independence(forpotentialBoardmembers),professionalskills,lengthofserviceanddifferingprofessionalandpersonalexperience).

Derogationstothe2009belgiancorporategovernancecodeThecompanyderogatesfromtheCodeonthefollowingprinciples:

>DEROGATIONTOPRINCIPLE2.2.ThegroupofDirectorsappointeduponproposalofthefamilyshareholdersisinapositiontodominatedecisionstakenbytheBoardofDirectors.Incompanieswherefamilyshareholdersholdamajorityofthesharecapital,thefamilyshareholdersdonothave,asdoothershareholders,theopportunitytoselltheirsharesiftheydonotagreewiththeorientationsdefinedbytheBoard.TheirjointormajorityrepresentationontheBoardenablesthemtoinfluencetheseorientations,therebyensuringtheshareholdingstabilitynecessarytotheprofitableandsustainablegrowthoftheCompany.ThepotentialrisksforcorporategovernanceresultingfromtheexistenceofahighdegreeofcontrolbythemajorityshareholderontheactivitiesoftheBoardcanbemitigated,ontheonehand,bytheappropriateuseofthispowerbytheDirectorsconcernedinrespectofthelegitimateinterestsofthecompanyandofitsminorityshareholdersand,ontheotherhand,bythelong-termpresenceofseveralnon-executiveDirectorsnotrepresentativeofthefamilyshareholding,whichensuresgenuinedialogueontheBoard.

>DEROGATIONTOPRINCIPLES5.2./4AND5.3./1The composition of the Audit Committee,which includes at least one independent Director, derogates from the BelgianCorporateGovernanceCode,whichrecommendsthepresenceofamajorityof independentDirectors.This isbecausetheBoardbelievesthatanin-depthknowledgeofthecompanyisatleastasimportantasindependentstatus.


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[1] The required number is rounded up to the nearest whole number.

Intermsofgenderdiversity,theBoardofDirectorsaimstocomplywithlegalrequirementsbyhavingatleastonethirdoftheunderrepresentedgenderontheBoard[1].This targetwasachievedon31May2018withthenominationof twonewfemaledirectors.TheBoardcurrentlyhas11members,fourofwhomarewomen.

Referenceismadetosection1oftheCorporateGovernanceStatementregardingotherdiversitycriteria(age,lengthofservice,educationandprofessionalexperience)inrelationtothemembersoftheBoardofDirectorsandtheExecutiveCommitteeasof31December2019.

3. Remuneration report 3.1.DETERMINATIONOFREMUNERATIONPOLICYANDINDIVIDUALAMOUNTSFORMANAGERS

ThepolicyandtheindividualremunerationoftheCompany’snon-executiveDirectorsandexecutivemanagementofthecompanyare determined by the group’s Board of Directors based on the recommendations of the Nominations and RemunerationCommittee.

D’Ieteren’sNominationsandRemunerationCommittee,whichreliesontheproposalsof theCEOwhen itconcernstheothermembersoftheExecutiveCommittee,reviewsthefollowingelementsattheendofeachyearandsubmitsthefollowingtotheBoardforapproval:• theremunerationofthenon-executiveDirectorsforthefollowingyear;• thevariableremunerationofthemembersoftheExecutiveCommitteeforthepastyear,takingintoaccountanyannualor

multi-annualcriteriarelatedtotheperformanceoftheCompanyand/orthatofthebeneficiaries;• anychangestothefixedremunerationofthemembersoftheExecutiveCommitteeandtheirtargetedvariableremuneration

forthefollowingyear,andassociatedperformancecriteria.

TheBoardintendstomaintainthisprocedureforthetwoyearsfollowingtheyearunderreview.CertainelementsoftheExecutiveCommitteemembers’remunerationwillbereviewedfortheyears2020andbeyondinordertoensurecompliancewithBelgium’supdated2020CorporateGovernanceCode.

3.2.REMUNERATIONOFNON-EXECUTIVEDIRECTORS

TheCompanyimplementsaremunerationpolicydesignedtoattractandretainontheBoardnon-executiveDirectorswithawidevarietyofexpertiseinthevariousareasnecessaryfortheprofitablegrowthoftheCompany’sactivities.TheseDirectorsreceiveanidenticalfixedannualremuneration,independentoftheirpresenceatBoardmeetings.SomeDirectorsareentitledtoafixedremunerationforrenderingspecificservicessuchasChairmanorDeputyChairmanoftheBoard,orforparticipatinginoneormoreBoardcommittees.Thetotalamountoftheseremunerationsisshowninthefollowingtable.Thenon-executiveDirectorsdonotreceiveanyremunerationrelatedtotheCompany’sperformance.

Fortheyearended31December2019,atotalofEUR1,350,000waspaidtothenon-executiveDirectorsbytheCompany,brokendownasillustratedinthetablebelow.Nootherbenefitorremuneration,loanorguaranteewasgrantedtothembyD’Ieterenoritssubsidiaries.

2019(inEUR) Baseremuneration SpecialisedCommittees Totalremuneration

D’Ieteren N. 250,000 All in 250,000

PérierO. 200,000 All in 200,000

P.-O.Beckerssprl 70,000 35,000 105,000

BonnefondC. 70,000 70,000

BlondelC. 70,000 70,000 140,000

GaspermontS. 70,000 35,000 105,000

Gema(M.Allé) 70,000 70,000

MinneP. 70,000 60,000 130,000

Nayarit(deVuyst) 70,000 35,000 105,000

SioenM. 70,000 70,000

SPDG(D.Pettiaux) 70,000 35,000 105,000

Total 1,080,000 270,000 1,350,000

[1] The required number is rounded up to the nearest whole number.


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3.3.REMUNERATIONOFTHEEXECUTIVEMANAGERS

Generalprinciples

At31December2019,theexecutivemanagementteamwascomposedofmembersoftheExecutiveCommittee,namelyFrancisDeprez(CEO)andArnaudLaviolette(CFO).FrancisDeprez,whowasalreadyamemberoftheExecutiveCommittee,wasappointedCEOon1July2019.

Thegrouphasitsownremunerationpolicyforattractingandretainingmanagerswiththeappropriatebackgroundandmotivatingthembymeansofappropriate incentives.Thispolicy isbasedonexternal fairnesscriteria,measured intermsofcomparablepositionsoutsidethegroup,andoninternalfairnesscriteriabetweencolleagueswithintheCompany.

The policy aims to position total individual remuneration of themembers of the Executive Committee around themedianremunerationforpositionsofsimilarresponsibilityincomparableBelgianorforeigncompanies,asbenchmarkedbyindependentexperts.ThemostrecentbenchmarkingdatesfromJanuary2016. Descriptionofthevariouscomponents

TheCEOcontractofFrancisDeprez,applicablefrom1July2019,comprisesthefollowingremunerationcomponents:- an‘all-in’annualfixedbaseremunerationofEUR700,000,whichincludesbenefitsofallkindsrelatedtotheprovisionof

companycarsandamobilephone;- avariableremunerationcomprising: •anannualvariableremuneration,withatargetsetatapproximately70%ofthefixedremuneration; •andalong-termincentiveplanintheformofshareoptions.

TheCompanyalsocoversthecontributionstodisability, lifeinsuranceandpensionschemesforthebenefitoftheCEOforanannualamountofEUR115,000.

TheremunerationoftheothermembersoftheExecutiveCommitteecomprises:

- afixedannualall-inbaseremuneration,consistingofbenefitsofallkindsrelatedtotheprovisionofcompanycarsandmobilephones.

- avariableremunerationcomprising: •anannualvariableremuneration,withatargetatabout60%ofthefixedshort-termremuneration,and; •along-termincentiveplanintheformofshareoptions.

TheCompanyalsocoversthecontributionstodisability,lifeinsuranceandpensionschemesforthebenefitofthemembersoftheExecutiveCommittee.

Asregardsthephasingofthepaymentofthecomponentsofthisvariableremunerationovertime,theCompanycomplieswiththelegalrequirementsintermsofrelativeproportionsrelatingto:- thetargetannualvariableremuneration,whichshallnotexceed50%ofthetotalvariableremunerationandwhich,adjusted

accordingtowhetherperformancecriteriahavebeenmet,ispaidatthebeginningoftheyearfollowingthatinwhichtheserviceswereprovided;

- thelong-termvariableremunerationgrantedintheformofshareoptions,whichcanbeexercisedattheearliestfromthefourth year following the year in which they were allocated.

The allocation of the variable remuneration depends on the compliance with collective quantitative performance criteria(consolidatedresultcomparedwiththebudget,whichincludesalltheobjectivesandmissionsapprovedbytheBoardofDirectorswithaviewtocreatinglong-termvalue)andqualitativeindividual(relatedtothejobdescription)andcollective(relatedtothedevelopmentandexecutionofthegroup’sstrategy,tothedevelopmentofitshumanandfinancialresources,andtotheconductofspecifickeyprojects)criteria.Theannualbonuscanvaryfrom0%to150%ofthetargetinEUR,dependingontheresultoftheannualperformanceappraisal.

Atthestartoftheyearafterthatforwhichtheremunerationinquestionisbeingallocated,theperformanceoftheinterestedpartiesisassessedbytheBoard,ontherecommendationoftheNominationsandRemunerationCommittee,anduponproposalbytheCEOwhenitconcernstheothermembersoftheExecutiveCommittee,inaccordancewiththeagreedperformancecriteria.

Thelong-termincentiveplanforthemembersoftheExecutiveCommitteeconsistsofD’Ieterenstockoptions,thenumbertobedecidedbytheBoardofDirectorsafteraproposalbytheNominationsandRemunerationCommittee.


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TheseoptionsgivetherighttoacquireexistingsharesoftheCompanyatanexercisepricethatcorresponds,foreachplan,eithertotheaveragepriceoverthe30calendardaysprecedingtheofferdate,ortotheclosingpriceontheworkingdayprecedingtheofferdate,asdecidedbytheChairmanoftheBoardofDirectorsontheworkingdayprecedingthelaunchoftheplan.

Theseoptionsmaybeexercisedfrom1Januaryofthe4thyearfollowingthedatetheyweregrantedandupuntiltheendofthetenthyearfollowingtheirgranting,withtheexceptionofapproximately1-monthperiodsprecedingthereleaseofthefull-yearandhalf-yearfinancialresults.Theactualexerciseoftheoptionsdependsontheevolutionofthesharepricefromthebeginningoftheexerciseperiod.Additionaldetailsontheshareoptionplansareprovidedinnote(???)oftheconsolidatedfinancialstatements.

RemunerationallocatedtotheExecutiveCommitteefor2019

ThefollowingtablesummarisesthevariouscategoriesofExecutiveCommitteeremunerationallocatedfor2019.

2019(inEUR) CEO(1)Othermembersof

ExecutiveCommittee(2) Total

Fixedremuneration

552,350

822,518 1,374,868

Short-termvariableremuneration(2)

300,000

593,000 893,000

Contributiontodisability,pensionandlifeinsurance

86,250

183,500 269,750

(1) The remuneration of the CEO includes all remuneration paid to (i) the former group CEO up to 7 April 2019 and (ii) to the new group CEO from 1 July 2019.(2) The remuneration of the other members of the Executive Committee includes the remuneration paid to the new group CEO prior to his appointment on 1 July 2019.

Moreover,130,000shareoptionsweregrantedtothemembersoftheExecutiveCommitteeforthefiscalyear2019,atstrikepriceofEUR33.19perD’Ieterenshare,allocatedasfollows:

2019 Grantedoptions

AxelMiller(formerCEO) 50,000

FrancisDeprez(newCEO) 40,000

ArnaudLaviolette(CFO) 40,000

DetailsoftheshareoptionsbelongingtomembersoftheExecutiveCommitteethatwereexercisedorexpiredduring2019canbefound in note [xx]oftheconsolidatedfinancialstatements.

AseverancepaymentofEUR1,850,000wasgrantedtotheformerCEOonhisdepartureon8April2019.Thepaymentamountstolessthan18monthsofremuneration(includingfixedremuneration,short-termvariableremunerationandcontributionstodisability,pensionandlifeinsurance).ThissumisjustifiedbasedoncomparablemarketpracticesandthegoodperformanceoftheCompanyintheperiodwhenhewasCEO.

Maincontractualconditionsconcerningthedepartureofexecutivemanagementandtherighttoclaimreimbursementforallorpartofthevariableremuneration

Barringcasesofunprofessionalconduct,incapacityorgrossnegligence,thecontractsofExecutiveCommitteemembersallowfor12 months of severance pay.

At31December2019,thesecontractsdonotcontainclaw-backclausesthatareapplicableifthevariableremunerationhasbeenallocatedonthebasisoffalseinformation.


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4. Internal controls and risk management systemsD’Ieterenanditsactivitiesoperateinaconstantlychangingenvironmentwhichexposesthemtomultiplerisks.Inordertoprotecttheirreputationwhileensuringsustainablesuccessandtheachievementofcorporatetargets,D’Ieterenanditsactivitieshaveinplacecomprehensiveriskmanagementandinternalcontrolsystemswhich:

• Identifyrisksatanearlystage;• Assesstheprobabilityandpotentialimpactoftherisks;• Putmitigatingmeasuresinplace.

Wemanageourrisksfollowingtheprincipleofthreelinesofdefence:

• Attheoperationallevelofeachactivity;• Riskmanagement,compliance&legal;• Internal Audit.

4.1.RISKMANAGEMENTGOVERNANCESTRUCTUREANDRESPONSIBILITIESThe organizational structure at the level of D’Ieteren and the activities ensures the appropriate delegation of authorities tomanagementandaseparationofduties.

4.1.D’IeterenGroup

4.1.1.1. BoardofDirectors

4.1.1.2. AuditCommittee1

4.1.1.3. ExecutiveCommittee

Board Board

Audit Committee1)

Audit Committee1)

Management Committee


INTE

RNALAUDIT

RISK

MANAGEM

ENTAT

OPE

RATIONALLE

VEL

4.1.2.1. D’IeterenAuto

4.1.2.2. D’IeterenImmo

RISKOWNERSRISKOWNERS

Board Board

Audit Committee

Audit Committee


Management CommitteeRI

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RSIG

HTANDAS

SURA

NCE

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RNALAUDIT

RISK

MANAGEM

ENTAT

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VEL

4.1.2.3. Belron

4.1.2.4. Moleskine

RISKOWNERSRISKOWNERS

RISKIdentificationEvaluationMitigationMonitoring

DIRECTION&

OVERSIGHT

1 D’Ieteren Group, D’Ieteren Auto and D’Ieteren Immo have the same Audit Committee.


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4.1.1.D’Ieteren

4.1.1.1. Board of DirectorsTheBoardperformsitscontroldutiesby(i)ensuringthatD’Ieteren’sactivitiescorrectlyperformtheirowncontroldutiesandthatCommitteesentrustedwithspecialsurveyandcontroltasks(suchastheAuditCommitteeandRemunerationCommittee)areputinplaceandfunctionproperlyand(ii)ensuringthatreportingproceduresareimplementedtoallowtheBoardtofollowuptheentities’activitiesatregularintervals,notablyregardingtheriskstheyface.

4.1.1.2. Audit Committee TheBoardofDirectorsisassistedbytheAuditCommitteeintheexerciseofitscontrolresponsibilitiesforthecompany’sentities,inparticularwithrespecttothefinancialinformationdistributedtoshareholdersandtothirdpartiesandthemonitoringofthedifferentriskmanagementandinternalcontrolmechanisms.

TheGroupAuditCommitteereceivesregularreportsontheworkcarriedoutbytheAuditCommitteesofeachactivitybeforeitselfreportingtotheBoard.

TheindependenceoftheheadofInternalAuditisensuredbydirectreportingtotheAuditCommitteeandCFO.

4.1.1.3. Executive Committee Themembers of the Executive Committee act collegially and are responsible for, amongst other,monitoring of theGroup’sbusinesses, strategy, human resources, financial communication, investor relations, account consolidation, managementinformationsystems,treasury,M&A,legalandtaxmatters.

4.1.2.Attheleveloftheactivities

4.1.2.1. D’Ieteren AutoD’IeterenSAisthelegalentityofD’IeterenandD’IeterenAuto.D’IeterenAuto’sBoardofDirectorsmeetsatleastquarterly.TheAuditCommittee,whichisthesameforD’IeterenandD’IeterenAutoconveneseveryquarter.

Divisionaldirectorsareresponsibleforriskmanagementonaday-to-dayoperationallevel.D’IeterenAuto’simportoperationsarecertifiedbyISO9001:2015.

4.1.2.2. D’Ieteren ImmoTherealestateassetsandoperationsofD’IeterenAutoaregroupedunderasinglelegalentity(D’IeterenImmoSA).IthasitsownBoardofDirectorsandManagementCommittee.IthasnospecificAuditCommittee.

4.1.2.3. Belron Belronusesthe‘3-LinesofDefence’modeltomanagebusinessandfinancialrisk:

• 1stLine-BusinessUnitsperformingregularinternalcontrolactivities;• 2ndLine-OversightandstandardsettingfunctionsatBelronlevel;• 3rdLine-IndependentAssurers,includingexternalauditors.

The 3-Line model, which provides the framework for risk management activities throughout Belron, is supported by RiskManagementProgrammeswhichareusedbyeachBusinessUnittoassessandbenchmarkthemanagementofthemainrisks.

4.1.2.4. MoleskineMoleskine’s risk management relies on the following organizational model aimed at ensuring adequate identification,measurement,managementandmonitoringofthemainrisks:

• RisksaremonitoredbytheAuditCommittee,whichmetfourtimesin2019.TheAuditCommitteeischairedbyD’Ieteren’sCFOanditincludesMoleskine’sCFO,otherad-hocmembers(bothfromMoleskineandfromD’IeterenGroup)andMoleskine’sInternal AuditManager as permanent observer. The Committee approves the RiskMap prepared by the Internal AuditManagerafterhavinggatheredinputsfromtheleadershipandtheshareholder’srepresentatives;

• TheInternalAuditplan,alsoapprovedbytheAuditCommittee,referstotheRiskMapinplanningitsactivities.TheresultsofthemonitoringactivitiesarecontainedintheAuditreportstotheAuditCommittee.TheInternalAuditManagerreportshierarchicallytoMoleskine’sCFOwhoisalsoamemberoftheBoard;


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• Inaddition to the internalmodel,Moleskinehasalsoanexternal SupervisoryBody thatoversees the functioningofandthecompliancewiththe“Organizational,ManagementandControlModel”adoptedtopreventcrimesprovidedforintheLegislativeDecreeno.231/2001;

• The outcomeof the Supervisory Body’s activities is summarized every sixmonths in a report sent toMoleskine’s BoardofDirectors.TheSupervisoryBody iscomposedofthreemembersofwhichtwoexternalsandMoleskine’s InternalAuditManager.

4.2.RISKMANAGEMENTPROCESS

4.2.1.Riskidentification/mappingEachactivityidentifiesitskeybusinessandfinancialrisksbyassessingfactorsthatcouldhaveanadverseimpactonthefutureoperationsandfinancialreturnsofthebusiness.Externalandoperationalriskfactorsareassessedintermsofthescaleoftheirimpactandtheprobabilityoftheiroccurrence,withparticularattentiongiventothemostimportantones.RisksarecategorisedasGovernance/Compliance,Strategic,OperationalorFinancial.

Eachactivityconductsanannualriskreviewandupdates itsriskregistertoreflectthe impactofeachriskandthemeasuresproposedtomitigatethem.ThisapproachformsthecornerstoneofD’Ieteren’sriskmanagementactivities,whichaimstoensurethatthemajorrisksfacedbytheGrouphavebeenidentifiedandassessed,andthattherearecontrolseitherinplaceorplannedto manage them.

TheprocessincludesthereviewofinternalandexternalAuditplans(includingITAuditmissionsandfraudrisks),strategicplans,annualbudgetsandmonthlyfinancialresultsandkeyperformanceindicators.Theadoptionofaccountingproceduresensurestheconsistency,integrityandaccuracyofthecompany’sfinancialrecords.

4.2.2.ReviewandexecutionofmitigatingplansFollowingtheannualriskreviewprocess,measuresare implementedtomitigatethe identifiedrisksandcontrolmissionsareprioritizedbasedontheriskprofile.TheexecutionoftheplansissupervisedbyInternalAuditteams.

Mitigating actions include for instance the regular reporting and reviewof all significant treasury transactions andfinancingactivities,proceduresfortheauthorisationofcapitalexpenditure,countryvisitsanddiscussionswithlocalmanagement.Somerisksaremitigatedbyenvironmentalandsocialactionsinitiatedbytheactivities.

4.2.3.ReportingTheInternalAuditManagersofMoleskineandD’IeterenAutoreportregularlytotheirrespectiveAuditCommittees.AtBelron,theoutcomeoftheworkcarriedouttoassesstheeffectivenessandefficiencyofriskmanagementpracticesacrossthecompanyisreportedtobothlocalandregionalmanagementandtotheBelronAuditCommittee,whichmeetregularlyduringtheyear.

Reportingincludesanassessmentofthemitigatingactionsandrecommendations.TheChairmenoftheAuditCommitteespresenttheriskmanagementreporttotheirBoard.ControlissuesthatarisefrominternalandexternalauditstogetherwithanyadditionalmattersarebroughttotheattentionoftheAuditCommittees.

AttheGrouplevel,theHeadofInternalAuditreportsonaquarterlybasistotheAuditCommittee.


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Risk of deficient governance (management, functioning of the committees, decision-making process and/or risk management).

GOVERNANCE

Risk that laws and regulations governing listed companies are breached. D’Ieteren is subject to regulations related to communication, financial reporting, transparency, insider trading and corporate governance (see previous risk).

Risk related to volatility on the equity markets.

LISTINGANDCOMMUNICATION

Risks related to capital allocation decisions (investments in existing operations, acquisitions/disposals, dividend policy, share buybacks). Risks related to the timing of those decisions. The availability of investment/divestment opportunities is subject to macroeconomic and market conditions.

Climate changes could significantly impact some businesses in the future hereby impacting capital allocation decisions.

CAPITALALLOCATION

POTENTIALIMPACT

Failure to achieve long-term strategic objectives.Failuretocomplywithapplicablelawsandregulations.Adversefinancialandreputationalimpact,claimsandfines.

MITIGATINGACTIONS

D’IeterenadherestotheBelgianCodeofCorporateGovernancewhiletakinginto account the unique structure ofitssharecapital,withfamilyshareholdersowningthemajorityoftheshares.TheCorporateGovernanceCharter provides clear guidelines for the decision-making process and delegationofauthority.

POTENTIALIMPACT

A drop in D’Ieteren’s share price and marketcapitalization.

Significantfinesiflawsorregulationsarebreached.Lossofconfidenceonthe part of investors and analysts.

MITIGATINGACTIONS

Theconsolidationprocessisbasedonacentralizedaccountingsoftwaretoensureconsistencyacrosstheparticipations.D’Ieteren’sConsolidationteamchecksthatthefinancialfiguresofitsactivitiespresentacomplete,accurateandreliablereflectionoftheirfinancialperformanceandposition.

Thefinancialreportsandpressreleases related to the full year and half-yearresultsarereviewedbyExecutiveCommitteemembers,theAuditCommittee,theexternalauditorandtheBoardofDirectorspriortopublication.

POTENTIALIMPACT

Disappointingshareholdervaluecreationandsharepriceunderperformance.Lossofconfidenceon the part of investors and analysts.

Write-downsandimpairmentlossesinthe income statement.

MITIGATINGACTIONS

D’Ieterenisafamilyofbusinesseswith a long-term focus. D’Ieteren aimsatfullcontrol,amajoritystakeortheoptiontogainamajoritystakeinitsparticipations.Everymaterialinvestmentissubjecttoanin-depthduediligence.whichisreviewedbyanInvestmentCommittee,theStrategicCommitteeandtheBoard.

D’IeterenstartedtoincludeanESGanalysis as part of the due diligence process.

D’Ieteren’sExecutiveCommitteemembersareboardmembersattheleveloftheparticipations.

4.3.1. D’IETEREN

Governance/compliance Governance/compliance Strategic

4.3.MAINRISKS


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Risks arising from a lack of financial resources.

Risks related to fiscal regulations.

LIQUIDITYANDTAXES

Risks related to deficient governance (e.g. corporate organization, functioning of the committees, decision-making process and risk management). Deficient governance could lead to inadequate decisions and failure to comply with applicable laws andregulations.

ORGANIZATION

Risk that unethical behaviour (inside or outside the company) may harm the company and/or third parties.

ETHICS

POTENTIALIMPACT

InsufficientfinancialresourcesmayhampertheimplementationofD’Ieteren’s investment strategy.

MITIGATINGACTIONS

D’Ietereninvestsinactivitieswhilemaintainingasolidfinancialstructure.D’Ieteren’sactivitiesarefinancedindependently through non-recourse debt.Inotherwords,D’Ieterendoesnotprovideguaranteesforthebenefitofitsparticipations.

Attheendof2019,D’Ieteren’s(excludingBelron,D’IeterenAutoandMoleskine)netcashpositionamountedEUR1,516.4million(postIFRS16).

Financialflexibilityisensuredthrougha prudent cash management policy.

Controlprocessesfortaxregulationcompliance include internal reviews andexternalaudits.

POTENTIALIMPACT

Adversereputationalandfinancialimpactincludingclaimsandfines.

Failure to achieve targetswhenmajordecisionsaretakenwithoutbeingadequatelychallenged/authorized.

MITIGATINGACTIONS

Governancepoliciesarewidelycommunicatedandtheirapplicationisaudited.Clearallocationofresponsibilitiesanddecision-makingpower (e.g. at the level of D’Ieteren AutoversusD’Ieteren).

POTENTIALIMPACT

Abreachoflegalprovisionsandunethicalbehaviour(e.g.disrespectforhumanrights,discrimination,corruption,fraudandconflictsofinterest)couldseriouslydamageD’IeterenAuto’sreputationandresults.Disrespectfulandinappropriatebehaviourmayalsohaveanegativeimpactontheworkingatmosphere.

MITIGATINGACTIONS

D’Ieteren Auto’s code of conduct (“TheWayWeWork”)coversamongstotherthebehaviourintheworkplace,healthandsafety,conflictsofinterest,communicationwiththepublic,confidentiality,gifts/entertainmentandtherelationshipwithsuppliers.

Preventivemeasuresareinplaceincludingpsychosocialriskdetectionandreporting.

Thefirstphaseof‘LeadingtheD’IeterenAutoWay’,whichaimstoreinforcethecorporatevalues,hasbeenlaunchedin2019atthelevelofthemanagementcommittees.Itwillbeimplementedthroughouttheorganisationin2020-2021.

4.3.2.D’IETERENAUTO

Financial Governance/compliance Governance/compliance


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Risks related to breaches of European and Belgian competition laws that prohibit anticompetitive practices (e.g. agreements between two or more independent market operators which restrict competition) and the abuse of dominance. Anti-competitivepractices include vertical agreements(factories-importer-dealer) and horizontal agreements (between competitors).

COMPETITIONLAW

Risks due to unfavourable changes in automotive or mobility policies (regarding energy, climate, environment, taxation, …) at regional, national and/or European level.

Risks related to four megatrends: automated, connected, electric and shared mobility.

Risks related to changing customer behaviour and the rising success of multimodality. Customers compare the total cost of vehicle ownership versus the total cost of mobility.

SECTORTRENDS,REGULATIONSANDPOLICIES

Risks related to the loss of one or more distributioncontracts with Volkswagen Group and Yamaha. Risk that Volkswagen Group or Yamaha might take strategic decisions (e.g. pricing, design, type of engines) that are detrimental to D’Ieteren Auto’s competitive position. Risk that Volkswagen will bypassD’Ieteren.

RELATIONSHIPWITHVOLKSWAGENGROUPANDYAMAHA

POTENTIALIMPACT

Aninfringementofcompetitionlawcouldresultinlegalproceedings,finesup to 10% of consolidated revenues anddamagestoaffectedcompetitors.It may also severely harm D’Ieteren Auto’sreputationandresultinthelossofdistributioncontracts.

MITIGATINGACTIONS

TheLegalDepartmentinforms,advisesand monitors. A document with guidelines lists thepotentialrisksandappropriatebehaviourtomitigatethem.

POTENTIALIMPACT

Changesinregulationsmayimpactthevolumeofvehiclessoldand/orleasedontheBelgianmarket.Negativeimpact on margins.

Thegrowingpenetrationofalternativepowertrains(hybrid,electricvehicles,…)andadvanceddriverassistancesystemsmayhaveanegativeimpact on the sales of spare parts andrevenuesfrombodyworkandmaintenance.

MITIGATINGACTIONS

D’Ieteren Auto’s vision aims at supportingcitizens’sociallifethroughamorefluid,accessibleandsustainablemobility.LabBox,asubsidiaryofD’Ieteren,exploresandtestsnewmobilitysolutions(e.g.Poppy,anenvironmentallyfriendlysharedmobilityserviceinBrusselsandAntwerp,andSkipr,aMobilityasaServiceapplication).

Therisingpenetrationofelectricvehicles and new digital products createnewopportunities.ElectricbyD’Ieteren(EDI),forexample,offerschargingsolutionsforelectricvehiclesat home or at work and gives access to the largest European network of chargingstations.

POTENTIALIMPACT

Negativefinancialimpact,redundanciesandreputationaldamage.

MITIGATINGACTIONS

TherelationshipwithkeysuppliersisbasedonD’IeterenAuto’sabilityto demonstrate its added value throughstate-of-the-artlogistics,theprofessionalizationoftheBelgiandealernetworkandin-depthknowledgeoftheBelgianmarket.Atrust-basedrelationshipallowsD’IeterenAutotobeinformedatanearlystageofVolkswagenGroup’sorYamaha’sdecisions.

Governance/compliance Strategic Strategic


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Risks related to the Magellan project which aims to prepare D’Ieteren for the future of mobility. It includes the development of new activities and expansion into adjacent activities. For example, Lab Box develops new mobility solutions and EDI (Electric D’Ieteren Solutions) offers intelligent charging solutions for electric vehicles and a trading desk for second hand vehicles will be launched in 2020.

Risks related to new software/IT systems such as CROSS (Dealership Management Software) and Clips (management of spare parts).

MAJORPROJECTS

Risk that D’Ieteren Auto fails to attract, motivate and retain skilled people.

TALENT&LEADERSHIP

Risks related to failure or interruption of critical IT services and applications.Cyber-attacks (e.g. phishing, malware). Loss of confidentiality and integrity (e.g. customer, employee and cost price data). Dataleaks (e.g. customer data). Non-compliance with GDPR or other regulatory obligations.Unintentional internal user actions.

ITINFRASTRUCTURE,DATA,DIGITALANDCYBERSECURITY

POTENTIALIMPACT

Theabove-mentionedprojectsentailsignificantfinancialandreputationalrisks.

MITIGATINGACTIONS

ThegovernancerelatedtoMagellanprojectshasbeendefinedandaTransformationOfficehasbeenputinplace in order to assure the follow-up andimplementationoftheinitiatives.ChangeManagershavebeenalsoidentifiedandaretrainedinprojectmanagement.

POTENTIALIMPACT

The loss of know-how due to the departure of key personnel could lead to a loss of revenues and costs. D’IeterenAuto’scompetitivepositionmaysufferifitfailstoattractandretain talents that are needed to prepare itself for the changes in the mobilitysector.

MITIGATINGACTIONS

Anattractiveemployerbrandtoattractnew talent. Personal and professional development through appraisals and coaching.TheCaReerModelincreasestransparencyintermsofexpectations,skillsandresults,whileofferingcareeropportunitiesacrossthebusiness.ASuccession Plan is under review for key positions.MySkillCamp,theLearning&ContentManagementplatformallowsemployees to learn autonomously. Create a learning mindset to prepare D’Ieteren Auto for the future.

POTENTIALIMPACT

Businessdisruption/interruption.Negativeimpactonsalesandfinancialresults.Reputationaldamage.Lossoftrustofcustomers,factoriesand employees.Fines (up to 4% of the annual turnover)fornon-GDPRcompliance.

MITIGATINGACTIONS

Technical/softwarecontrols(e.g.firewalls,antivirus).Physicalcontrols(e.g. security doors for computer rooms,badgereaders).AppointmentofaDataProtectionOfficerandaChiefInformationSecurityOfficer.Communicationtoimproveemployeeawareness. Training for high risk profileemployeeswhohaveaccesstopersonaldata.Actionstoprotectdata and ensure compliance with GDPRincludingassessment,animplementationprogramanddatacartography. A roadmap to enforce controlsthatprotectagainstcyberthreats and prevent compliance breaches.Acyberroadmaphasbeendefinedandisbeingimplemented.

Strategic Operational Operational


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Health and safety risks related to the use of potentially dangerous machinery and chemicals, the work environment, the handlingof goods and psychological issues (burn-out and stress). Fire risks related to infrastructure and activities.

Risks related to a pandemic (e.g. COVID-19).

HEALTHANDSAFETY

Risks related to the distribution of polluting combustion vehicles, transportation, the handling of chemicals and waste. See D’Ieteren Immo for the environmental impact related to the buildings.

ENVIRONMENT

Risks related to the preparation of financial information. Risks related to incorrect financial information and/or non-compliance with relevant standards.

FINANCIALINFORMATION

POTENTIALIMPACT

Non-compliance with safety regulationsandinternalpolicies.Injuries,penalties,fines,reputationaldamageanddisruptionoftheactivities.Health&safetyissuescouldresultinanincreaseinabsenteeism.

MITIGATINGACTIONS

Zero-tolerance policy regarding breachesofsafetystandards.Thesafety department carries out risk assessments,monitorsprotectionmeasures (e.g. the use of safe tools andmachineryandprotectiveequipment)andorganisesworkshopsonfirepreventionandhealthandsafetyissuessuchasergonomics,firstaid,thesafeuseofchemicalsandelectrical risks. Employees can count onhelpfromanexternalpreventionadvisor in the case of psychological issues.

Intheeventofapandemic,adequatemeasures(e.g.homeworking,temporaryclosureofsites)aretakento protect employees and customers. Thecompanycomplieswithnationalhealthsafetyinstructions.

POTENTIALIMPACT

Breachofenvironmentallaws,finesandreputationalimpact.

MITIGATINGACTIONS

D’IeterenAuto’scleanvehicleofferissettoexpandsignificantlyasVolkswagenGroupaimsatover80newelectricmodels,including50pureelectricmodelsby2025.

Workingfromhomeandenvironmentallyfriendlymobilitysolutionsareofferedtoemployees.

LabBox,a100%subsidiary,exploresinnovativemobilityservices.

Employees are trained to correctly sort and collect waste. Periodic site visitsbyaprojectcoordinatorofthemainwastecollector(Suez)fortheoptimizationoftheon-sitewastemanagement.Wastecontainerparkson several sites.

POTENTIALIMPACT

MisrepresentationofD’IeterenAuto’sfinancialperformancetoinvestorsand other stakeholders. Regulatory scrutiny.Reputationaldamage.

MITIGATINGACTIONS

ThefinancialstatementsarepreparedbyD’IeterenAuto’saccountingdepartment in accordance with the InternationalFinancialReportingStandards(IFRS).TheconsolidationisperformedonacentralizedaccountingIT system to ensure consistency and adequacyofaccountingpolicieswiththoseofD’Ieteren.Thefinancialinformationprocessesarecoveredbyspecificprocedures,follow-upchecksandrulesofvalidation.Theapplicationof IFRS is discussed with the Statutory AuditorandintheAuditCommittee.

Operational Operational Financial


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Risks related to the residual value of leasing vehicles at D’Ieteren Lease (100% owned by VDFin). D’Ieteren Lease is exposed to fluctuations in selling prices at the end of the leasing contract. Residual values reflect changes in demand (e.g. shift away from diesel engines, rising popularity of SUV’s), regulations, taxation and macro-economic factors.

RESIDUALVALUES(D’IETERENLEASE)

Risks related to the financing of Volkswagen D’Ieteren Finance (VDFin), a provider of retail finance, operating leases and financial leases. VDFin also provides financing to the dealer network.

Note: VDFin is a joint venture between D’Ieteren (50% stake minus one share) and Volkswagen Financial Services (a subsidiary of Volkswagen group).

LIQUIDITYANDINTERESTRATES(VDFIN)

Risks related to increasingly stringent environmental regulations. Risks related to environmental permits.

ENVIRONMENT

POTENTIALIMPACT

Negativefinancialimpact:leasingcontractsmayturnouttobeunprofitableifresidualvaluesdrop.

MITIGATINGACTIONS

D’IeterenLeasecontinuouslymonitorsthe second-hand vehicle market. Residual values are analysed on a quarterlybasistotakeintoaccountrecent sales results and new model launches. Provisions are also reviewed andadjustedifnecessaryonaquarterlybasis.

POTENTIALIMPACT

InsufficientfinancingatcompetitiveinterestrateswouldbedetrimentaltoVDFin’scompetitivepositionandfinancialperformance.

MITIGATINGACTIONS

VolkswagenFinancialServices,asubsidiaryofVolkswagengroup,hasdiversifiedsourcesoffinancingandprovidesfinancingtoVDFinatmarketconditionswhileensuring permanent access to liquidity.

Standard&Poor’sgivesVolkswagenFinancialServicesAGacreditratingofA-2oncommercialpaperandaBBB+ratingonseniorunsecuredloans.

TheControlling&TreasurydepartmentofVDFincloselymonitorsthecostoffinancinginordertominimizetheriskrelatedtomarketconditionsandtheassetandliabilitymanagement(ALM)policyensuresthattheinterestrate is well managed.

POTENTIALIMPACT

Reputationaldamage.Highercoststosatisfyregulatoryrequirements.

MITIGATINGACTIONS

D’IeterenImmoiscommittedtoareductionofitsenvironmentalfootprint.Overrecentyears,variousmeasureshavebeenimplementedaimedatusingenergymoreefficientlywhileintegratingalternativeenergysources such as solar panels and co-generationunitsthatproducenotonlyelectricitybutalsoheatforbuildings.

D’IeterenImmoisimplementinganewsustainabilitystrategyafterhavingchosen8objectivesfromtheSustainableDevelopmentGoals.Itwillassess its current and future assets in functionofthose8objectivesafterhavingdefinedclearcriteria.

Financial Financial Governance/Compliance

4.3.3.D’IETERENIMMO


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Risks related to the financial health of the builders and contractors. Risks related to safety on the building sites. Risks related to cost overruns

CONSTRUCTIONPROJECTS

Risks related to occupancy rates. D’Ieteren Auto is by far the main tenant (93% of total rental income) of D’Ieteren Immo’s real estate.

OCCUPANCYRATE

Risks related to breaches of legislation and regulation. The key legislative risks faced by Belron relate to competition law, GDPR, anti-bribery, health & safety, social law and tax compliance.

LEGALANDREGULATORY

POTENTIALIMPACT

Bankruptcyofabuilderorcontractormayresultinstoppageorinterruptionoftheconstructionprocess,delayedrentalincome,lawsuitsandadditionalcosts.Itisdifficulttofindcontractorswhoarewillingtotakeoveraprojectfromaninsolventpeer.Reputationaldamage if an accident occurs on a buildingsite.Costoverrunshaveanegativeimpactonaproject’sreturnon investment.

MITIGATINGACTIONS

Thorough screening of the contractors. Forexample,Graydonreportsareconsultedwhenlargeprojectsareundertaken and insurance coverage is taken.

AsafetycoordinatorisassignedbyD’Ieteren Immo. Duringsitemeetingscontractorsarerepeatedly reminded of the safety requirements.

Projectsarecarefullyscrutinizedbeforebeingapproved.D’IeterenImmohasnotonlyexpertiseindealershiprealestatebutalsoinothersegments(e.g.offices,retailandresidential).

POTENTIALIMPACT

Lossofrevenuesandextracostsiftheoccupancy rate declines.

MITIGATINGACTIONS

Diversificationoftherealestateassets(e.g.residential,commercial,workshops,offices).Focusonmultifunctionalsitesthatcanbedeveloped for various purposes. UnoccupiedspaceisrentedouttoothertenantsbesidesD’IeterenAuto.Some dealership sites that are no longerusedbyD’IeterenAutoaresold.

POTENTIALIMPACT

ThereputationofBelron,itsoperatingbusinessesandbrandsmaybeadverselyaffectedbyabreachoflegislationorregulation.

MITIGATINGACTIONS

Establishedpolicies,proceduresandguidancerelatedtolegislationandregulationareregularlyupdatedandpromoted through on-site workshops.

The legal department reviewscontractsandbusinessactivitiesandperformslegalaudits.Outcomesarising from their assurance work are separately reported to the Audit Committeeand/ortheBoard.

Advice and opinions are also sought fromexternalcounselasandwherethought appropriate.

Operational Operational Governance/Compliance

4.3.4.BELRON


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Risks related to unethical behaviour from within and/or external to the company which may harm the business and/or third parties.

ETHICS

Risks related to major projects, including the Fit for Growth project.

MAJORPROJECTS

Risks related to new and emerging technologies. The technological complexity of vehicles (and vehicle glass) continues to gather pace, typified by the growing popularity of Advanced Driver Assistance Systems (ADAS) and the need to recalibrate the sensors.

TECHNOLOGY

POTENTIALIMPACT

Reputationor(intangible)assetsmaybeaffectedwereemployees,customers,suppliersoragentstocommit unethical or fraudulent acts forpersonalgain,orwereBelrontobeconsideredjointlyresponsibleforanysuchactperpetratedbyathirdparty.Unethicalbehaviourmaynegativelyimpact working atmospheres and furtherdamagebusinessperformance.

MITIGATINGACTIONS

A‘Genuine’GuidingPrinciplesinitiative,ledbytheBelronGroupPeople&Leadershipfunction,setsoutthewaythingsaredoneatBelron.Thishelps underpin the genuine approach to‘thewaywework’,guidedbyitsethicalprinciplesofintegrity,respect and trust.

POTENTIALIMPACT

TheFitforgrowthprojectisfocusedonboostingthefinancialperformanceofBelronandincludesmultiplesworkstreamsfocusingongrowth,profitabilityandwaysofworking.TheabilityofBelrontoachieveitsgrowthandprofitambitionisfundamentallydependent on the success of this project.

MITIGATINGACTIONS

Belronhasestablishedacomprehensive programme management approach for the Fit for Growthproject.Eachworkstreamhasanexecutiveresponsibleforitssuccesswithoverallco-ordinationoftheprojectbeingcontrolledbyamemberoftheGroupExecutivecommittee.Financialandnon-financialperformancemetricshavebeendeveloped for each work stream which arecollected,reviewedandacteduponmonthly.Additionalcapabilityisbeingintroducedwherenecessary,notablyinthefieldsofHRandIT.

POTENTIALIMPACT

Failure to adapt to technological advancements and developments mayimpactBelron’sabilitytoreturnvehicles to the motorist in a safe conditionandhaveanadverseimpactontheleadershippositionheldbyBelron.

MITIGATINGACTIONS

Inadditiontoitsbroadgeographicalspreadanditscross-nationaloperatingplatforms,Belronisaworldleaderinassessing and understanding the ever-changing technological advancements in vehicles and vehicle glass.

ThecentralBelronTechnicalteamcomprisesindividualswithexpertisein Advanced Driver Assistance Systems andtherecalibrationthereof.ThecalibrationprocessisdeterminedbyBelronTechnicalandcheckedaspartoftheRisk&Assuranceprocess.

Governance/Compliance Strategic Strategic


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Risks related to the vehicle glass repair and replacement markets including industry, macro-economic and technological factors. As with any business, Belron may be impacted by external factors, including general economic conditions, climate, changes in government policy and consumer behaviour.

MARKETS

Risks related to employee hiring, engagement, development and staff-turnover.

TALENTANDLEADERSHIP

Risks related to information security (including payment card processing, data purge and data discovery, VPN and firewalls and legislative compliance).

Evolving threat of cyber-crime including attacks on systems and infrastructure, or those of key third parties.

Risk related to IT implementations.

ITINFRASTRUCTURE,DATA,DIGITALANDCYBERSECURITY

POTENTIALIMPACT

Negativeimpactongrowth,salesandfinancialresults.

MITIGATINGACTIONS

Globalandlocalcountrydevelopmentsareactivelymonitoredandfedintoaplanning process. This process allows earlyanticipationofthesetrendsorswiftreactionstosuddenevents,forexampleclimaticconditions,providingmanagementwithabaseformakingdecisions regarding the range of productsandservicesoffered,theirpricingandtheoptimumsizeoftheoperationalplatform.

The workforceatBelronishighlyskilledandcompetentand,throughitsinspiringleadership,thebusinessiswellpositionedtorecognisechangeandadapttooptimisetheresultingopportunities.

POTENTIALIMPACT

Theinabilitytocontinuetoidentify,attractandretainthebestpeoplecouldhaveanegativeimpactonthecontinuedsuccessoftheBelronbusiness,itsreputation,itsservicelevelsanditsfinancialperformance.

MITIGATINGACTIONS

Thebusinessregularlymonitorsthelevels of Employee Engagement and respondseffectivelytotheresults.Employee performance is regularly reviewed,withcontinuingspecificinitiativesrelatedtosuccessionplanning,leadershippotentialandongoing development.

Belronmeasuresandimprovestheperformance of its leaders through itsExecutiveWinningBehavioursprogrammes.

Employeeretentionismanagedthroughtheofferofacompetitivecompensationpackagethatisregularlybenchmarkedagainstmarketpractices,goodcareerprospects,regularfeedbackandemployeesatisfactionsurveys.

POTENTIALIMPACT

Failure or protracted loss of IT functionality,denialofservice,oraninabilitytoaccessdatacouldsignificantlyimpaircustomerservicelevels,adverselyimpactfinancialresultsanddamagereputation.

MITIGATINGACTIONS

BusinessunitsimplementgeneralITcontrols,whichincludemeasurestohelp to prevent unauthorised access and inappropriate use of systems.

Disaster recovery plans are developed and tested.

An annual review (drawn from internationallyrecognisedITgovernance,practiceandservicemanagementframeworks)isundertakenatallbusinessunitstoassessthedesignandoperationofITcontrols.Anyactionsarisingarethenaddressedbymanagement.

Operatingbusinessesaddressanyidentifiedvulnerabilitiesfrom(externalandinternal)penetrationtestswhichare performed independently.

Strategic Operational Operational


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Risks related to the loss of major accounts. The Belron business model depends on constantly achieving high customer satisfaction levels which also reflect very positively on Key Account partners.

KEYACCOUNTS

Risks related to safety and health of the employees and members of the public through the established, day to day business operations (including glass repair and replacement through its service centers or mobile fleets, its supply chain sites, or driving at work).

Risks related to a pandemic (e.g. COVID-19).

HEALTHANDSAFETY

Risks related to the sourcing of vehicle glass, polyurethane, repair resin and other products through a strategic (primary) supplier, and risks in the operational supply chain to deliver consistent capability from any of the Belron distribution centers or responses to customers’ contacts through its call centers.

In particular, the possible impact of border controls in Europe post Brexit or trade tariffs between the US and China.

SUPPLYCHAINANDSERVICEDELIVERY

POTENTIALIMPACT

LossofKeyAccountpartners,includinginsurersandfleets,couldadverselyimpact sales and performance and impairtheabilityofthebusinesstoacquire new accounts.

MITIGATINGACTIONS

Belronmaintainsacloserelationshipwithitsinsurance,fleetandleaseKeyAccountsandiscommittedtobeingopen and honest in all its dealings.

EachKeyAccounthasaSalesteam‘owner’whoexecutesplanswithclearobjectivestostrengthenrelationships.TheseplansareoverseenbySalesDirectors within each country and forthelargestKeyAccounts,theseplansareoverseenbytheBelronSales&Marketingteam.KeyAccountsperform their own audits in some countries.Belronconstantlyandextensivelymonitorscustomersatisfactionthrough ‘Net Promoter Score’ assessments over its service levels.

POTENTIALIMPACT

Non-compliance with safety regulationsandinternalpolicies,processes and procedures could lead toseriousinjurytoouremployeesortothirdparties.

MITIGATINGACTIONS

ThekeyfittingstepsarecodifiedwithintheBelron’WayofFitting’processes.Safetystandardsareembeddedinthis‘WayofFitting’throughits‘QualitystartswithSafety’procedures.Thesemethods,specialisttools,training courses and assessments are developed and implemented across all locations.Eachbusinessisresponsibleforimplementingmeasurestocomplywithnationalsafetyrequirementsand standards and many of them aresupportedbydedicatedHealth&Safetypersonnel.Intheeventofapandemic,adequatemeasures(e.g.homeworking,temporaryclosureofsites)aretakentoprotectemployeesand customers.

Extensivetrainingprogrammesforallits technicians are delivered through locallybasedtechnicalteams.Anycustomer complaints are thoroughly followed-up.Actionstorectifyanyissuesarecapturedandarefed-backintothecontentofglobaltrainingprogrammes.

POTENTIALIMPACTA temporary loss of one of the distributioncentersorcallcentersorthelossofakeysupplier,forexampleasaresultofafireorothernaturalhazard,couldresultinbusinessdisruption.Thiscoulddamageestablishedcustomerservicelevelsandimpactfinancialperformance

MITIGATINGACTIONSThe Supplier Code of Conduct sets out the underlying principles on which supplychainrelationshipsatBelronarebased.

A strategy to diversify sourcing from glass,repairresinandaccessorymanufacturers and suppliers.

AspartoftheservicedeliveryBusinessContinuityPlansaredesignedtoensurecontinuityofoperationsshouldasignificantadverseeventoccur.Belronplacespropertydamage/businessinterruptioninsurancetocoverthemaximumpotentiallossofanyofitsmajordistributioncentersorcall centers and its property insurers performregular,routineinspectionsofall key sites.

ThebusinesshasspecificallyidentifiedtherisksassociatedwithadisruptiveBrexitandhasdevelopedcontingencyplans.TheimpactoftradetariffsbetweentheUSandChinaisbeingpartiallymitigatedthroughdiversifyingsources of supply.

Operational Operational Operational


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The risk of a breakdown of fundamental financial and treasury processes and controls.

PROCESSESANDCONTROLS

Risks related to fluctuations in foreign exchange rates. Risks related to funding, liquidity and changes in interest rates.

FOREIGNEXCHANGERATES,INTERESTRATES&LIQUIDITY

Risks related to economic downturns.

Risk related to business concentration, in particular in the Wholesale channel where Moleskine supplies “bricks-and-mortar” retailers who are under pressure from online retailers and changing consumer behavior.

TRADINGCONDITIONS

POTENTIALIMPACT

Negativeimpactonresults,alackoffinancialresourcestoexecutethestrategy and a detrimental impact uponthereputationofthebusiness.

MITIGATINGACTIONS

Regularfinancialperformancemonitoring.Businessunitsimplementinternalfinancialcontrolsincludingsegregationofdutiesanddelegationofauthoritiesoverallkeyfinancialprocesses.

Treasurypoliciesarecommunicated,withtheBelronGroupTreasuryoverseeingactivityonaregularbasis.

Internalfinancialcontrolsprotectbusinessassetsandensureeffectivestewardship (including internal and externalreporting).InadditiontoannualassessmentsoffinancialcontrolsconductedbybothBelronanditsbusinessunits,theexternalauditorsreviewthekeyfinancialcontrols.

POTENTIALIMPACT

Adverseforeignexchangeratefluctuationscouldhaveanegativeimpactonsalesandresults.Difficultytorenewfundinginadversefinancialmarkets.Alackoffinancialresourcestoexecutethestrategy,whichinturnmay have a detrimental impact on the reputationofthebusiness.

MITIGATINGACTIONS

IneachcountrywhereBelronhasoperations,revenuesandcostsincurred are primarily denominated intherelevantlocalcurrency,andprincipallyinUSD,EURandGBP,therebyprovidinganaturalcurrencyhedge.Whereverpossible,thepolicyis to hedge investments that are made inforeigncurrencieswithdebtinthesame currency.

Belronaimstogenerateastrongfreecashflowandmanagesliquidityriskbymaintainingsufficientcashandfundingavailable.

TheexposuretovariableinterestratesarisingontheTermLoanfacilitiesarehedged through a series of interest rate swaps.

POTENTIALIMPACT

An economic downturn could have anegativeimpactondemandfordiscretionaryconsumergoodsandputlargedistributorsandretailersunderpressure.Negativefinancialimpact.

MITIGATINGACTIONS

Moleskineiscontinuouslymonitoringemerging trends and mindstyle changes.Innovationmitigatestheimpact from economic downturns. Macro-economicrisksarealsomitigatedthroughgeographicdiversificationgivenMoleskine’spresence in 114 countries.

Risks related to customer concentrationhaveslightlyincreasedin 2019 s the direct channels were underpressure.In2019,thetop5customers represented 23% of total company sales.

Countrieswithadirectdistributionmodel represent more than 65% of sales.

Financial Financial Strategy

4.3.5.MOLESKINE


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Risks related to the implementation of the multi-category/multi-channel strategy.

IMPLEMENTATION

Risks related to the supply chain and outsourced production. Risks related to trade barriers and tariffs. Risk related to Inventory high levels

SUPPLYCHAINANDINVENTORYMANAGEMENT

The risk of a breakdown of the fundamental processes and controls: quality standard settings, product development, marketing and communication and procurement for services. Fraud risk related to the retail processes.

PROCESSESANDCONTROLS

POTENTIALIMPACT

Poorexecutionofthestrategycouldleadtoreputationaldamageandfinanciallosses.

MITIGATINGACTIONS

Moleskinehasputinplaceanactionplantomakeitsretailactivitiesprofitableincludingadetailedstore-by-storeanalysis,closureofunderperformingstores,thelaunchof a new store format and the implementationofbestpractices.

Moleskinedecidedtoimprovethecustomerexperience,throughtheimplementationofanewe-commercemodel.

POTENTIALIMPACT

Revenuesandresultscouldsufferifthemanufacturersfailtofulfilthecontractualobligationsintermsoftiming.Tradebarriersandtariffscouldalsohaveanegativeimpactonresults.

Financialimpactrelatedtoexcess/obsoleteinventories.

MITIGATINGACTIONS

New suppliers are currently under evaluationtosecuresuppliersbackup,toreducetheriskrelatedtotradetariffsandbusinesscontinuity.

Mitigatingactionstoreduceinventory:selectivebuyingstrategy,de-stockinginitiativesofoldinventory,reviewofthephaseout/outofcatalogueprocess. ImprovedHQSupplychainorganizationthroughnewSupplychainDirectorhavingstartedinSeptember2019.

POTENTIALIMPACT

Negativeimpactontheeffectivenessandefficiencyoftheprocessesanddetrimentalimpactonthereputationofthebusiness.

MITIGATINGACTIONS

Qualityassuranceandqualitycontrolare under assessment in order to design and implement an improved process.

Internalcontrolsystem,segregationofdutiesanddelegationofauthoritiesover those processes are under review.

Strategy Operational Operational


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Risks related to Moleskine’s capacity to attract, motivate and retain skilled people.

TALENT&LEADERSHIP

Risks related to failure or interruption of critical IT services and applications.

Cyber-attacks (e.g. phishing, malware).

ITINFRASTRUCTURE,DATA,DIGITALANDCYBERSECURITY Risks related to data leaks (e.g.

customer data). Non-compliancy with GDPR or other regulatory obligations related to the treatment of personal data. Unintentional internal user actions.

DATAPRIVACY

POTENTIALIMPACT

HighturnoverinMoleskinepersonnel.InabilitytoexecuteMoleskine’sstrategy.Negativefinancialimpact.

MITIGATINGACTIONS

In2019,Moleskine’sPeopleStrategyfocusedprimarilyonreconnectingandengagingstaffwiththecompany’spurpose.Topursuethisobjective,theexecutiveteamhasidentifiedtheCultureProjectastheprimemotorforembracingandmanifestingthecompany’s purpose in everyday life.ThroughtheCultureProject,Moleskine’svalueshavebeensharedgloballywithMoleskine’steams. Moleskine’stotalrewardsystemincludesflexiblebenefitsandasmartworkingenvironment.Moleskine’s‘hiringfromwithin’and‘horizontaljobrotation’approachcontinuestobeencouraged.

POTENTIALIMPACT

Businessdisruption.Negativeimpactonsalesandfinancialresults.Reputationaldamage.

MITIGATINGACTIONS

Technical/softwarecontrols (e.g.firewalls,antivirus).

Avulnerabilityassessmentwasconductedin2019andremediationsforhighpriorityvulnerabilitiesareimplemented.

POTENTIALIMPACT

Reputationalimpact.Lossoftrustofcustomers,factoriesandemployees.FinesbreachofGDPRregulation.

MITIGATINGACTIONS

ActionstoprotectdataandtobecompliantwithGDPRincludingpoliciesand procedures and training of high riskprofileemployeeswhohaveaccess to personal data.

AnexternalDataProtectionOfficermonitors the compliance of the MoleskineDatatreatmentprocessesthroughtheriskbasedauditplan.



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Compliance risk related to relevant regulations and laws.

LEGAL

Risks related to the environmental impact of Moleskine’s operations and products.

ENVIRONMENT

Risks related to safety and health of the employees and customers. Risks related to a pandemic (e.g. COVID-19).

HEALTHANDSAFETY

POTENTIALIMPACT

Breachoflawsandregulationscanresultinfinesandreputationaldamage.

MITIGATINGACTIONS

The legal department oversees legal risks with regulatory assessment and implementationofremediations. HRDepartmentisresponsibletomanageandmonitorlaborlawissues,withthesupportofexternallaborlawadvisors.

POTENTIALIMPACT

Breachofenvironmentallaws,finesandreputationalimpact.

MITIGATINGACTIONS

MostofMoleskine’senvironmentalimpact is related to its supply chain. Thecompanymitigatestheimpactofits products through various measures. Forexample,theMoleskinenotebooksare made of acid- and chlorine free paper and Forest Stewardship Council (FSC)-certificationensuresthat100%ofMoleskine’spaperproductsare made of paper that comes fromresponsibly-managedforests.Moleskinedevelopsproductsthataredesignedtobereusedandwastefulpackaging is kept to a minimum.

In2019-2020,MoleskinehasrealizedaLifecycleanalysisforoneofitsmainproducts(theclassicalnotebook)inordertobetterunderstandtherootsof its environmental impact and how to tackle them.

POTENTIALIMPACT

Non-compliance with health and safetyregulations/instructionscouldleadtoseriousillnessesorinjuries,reputationaldamageandpenalties.

MITIGATINGACTIONS

Thecompanycomplieswithnationalhealthsafetyinstructions.Intheeventofapandemic,adequatemeasures(e.g.homeworking,temporaryclosureofsites)aretakentoprotectemployees and customers.



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Risks related to the preparation of financial information. Risks related to delays in the financial closing.

FINANCIALINFORMATIONPROCESS

POTENTIALIMPACT

MisrepresentationofMoleskine’sfinancialperformancetoitsstakeholders.

Negativeimpactonthedecision-makingprocessbecauseofinadequateand/ordelayedinformation.

MITIGATINGACTIONS

ThefinancialstatementsarepreparedbyMoleskine’sfinancedepartmentinaccordancewiththeInternationalFinancialReportingStandards(IFRS)andD’IeterenGroup’saccountingpolicies. Thefinancialinformationprocessesincludespecificprocedures,follow-upchecksandrulesofvalidation.

TheapplicationofIFRSisdiscussedwith the Statutory Auditor and in the AuditCommittee.

Severalactionswereimplementedin 2019 to speed up management reportingandthefinancialclosingprocess.

Financial Financial

Risks related to fluctuations in foreign exchange rates.

FOREIGNEXCHANGERATES

POTENTIALIMPACT

Adverseforeignexchangeratefluctuationscouldhaveanegativeimpact on sales and results.

MITIGATINGACTIONS

Pricelistsareupdatedtoreflectforeignexchangeratefluctuations.Theprocurement strategy aims to match the currencies of purchases and sales.

Moleskinehasadoptedasystemthatmakesitpossibletomonitorexposuretoforeignexchangeratefluctuationswithgreaterreliability,inparticularwithregardstotradereceivablesandpayables.Ithastheobjectivetohedgemajorexposurethroughforwardcurrency purchase and sale contracts.


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5. Capital Information5.1.DENOMINATOR

At31December2019 Number Relatedvotingrights

Ordinaryshares 55,302,620 55,302,620

Participatingshares 5,000,000 5,000,000

Total 60,302,620

5.2.SHAREHOLDINGSTRUCTURE

At31December2019 Insharecapital Invotingrights

Familyshareholders 57.50% 61.02%

of which Nayarit Group 31.99% 35.56%

of which SPDG Group 25.50% 25.46%

Treasuryshares 2.73% 2.50%

Freefloat 39.78% 36.48%

Free float39,78%

Treasury shares2,73%

Family shareholders

57,50%


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5.3.DISCLOSUREOFSIGNIFICANTSHAREHOLDINGS(TRANSPARENCYLAW)IncompliancewithArticle14paragraph4ofthelawof2May2007onthedisclosureofsignificantshareholdings,theshareholdingstructuresuchasitresultsfromthelatestnotificationreceivedbytheCompany(on16January2020,seenoteabove)ispresentedinNote21ofthefinancialstatement(page61).TheCompanyisnotawareofanysubsequentnotificationmodifyingtheinformationpresentedinthisNote.

5.4.ELEMENTSTHATCANHAVEANINFLUENCEINCASEOFATAKEOVERBIDONTHESHARES OFTHECOMPANYInaccordancewithArticle74§7of theLawof1April2007ontakeoverbids, theCompanyreceivedon20February2008anotificationfromtheNayaritgroup(whosemembersarelistedinNote21oftheConsolidatedFinancialStatements,page61),whichmentionsthat,eitherseparatelyoractinginconcertwithotherpeople,on30September2007,thisgroupheldmorethan30%ofthevotingsharesissuedbytheCompany.Thisnotificationremainsrelevantatthedateofthisreport.

TheExtraordinaryGeneralMeetingof6June2019renewedtheauthorityoftheBoard:

• ToincreasethesharecapitalonceorseveraltimesbynomorethanEUR60million.ThecapitalincreasestobedecideduponintheframeworkoftheauthorisedcapitalcanbemadeeitherincashorinkindwithinthelimitssetbyBelgium’sCompaniesandAssociationsCode,orbyincorporationofavailableaswellasnon-availablereservesorasharepremiumaccount,withorwithoutthecreationofnewshares,eitherpreferenceorothershares,withorwithoutvotingrightsandwithorwithoutsubscriptionrights.TheBoardofDirectorsmay limitorwaive, intheCompany’sbest interestand inaccordancewiththeconditionsdeterminedbythelaw,thepreferentialsubscriptionrightstothecapitalincreasesitdecidesupon,includinginfavourofoneormoredeterminedpersons;

• To issue,within the framework of the authorised capital, convertible bonds, subscription rights or financial instruments,whichmaygrantrightstoCompanyshares,undertheconditionsdefinedbytheCompaniesandAssociationsCode,uptoamaximum,suchthattheamountofthecapitalincreasesthatmightresultfromtheexerciseoftheabove-mentionedrightsandfinancialinstrumentsdoesnotexceedthelimitoftheremainingauthorisedcapital,asthecasemaybewithouttakingintoaccount(seemymail)thepreferentialsubscriptionrightsofbondholders.

WithoutprejudicetotheauthorisationsgiventotheBoardofDirectorsdescribedintheprecedingparagraphs,theExtraordinaryGeneralMeetingof1June2017alsorenewedtheauthorityoftheBoardofDirectors,forarenewable3-yearperiod,toproceed–intheeventoftakeoverbidsontheCompany’ssharesandprovidedtherequirednotificationhasbeenmadebytheFSMAwithin3yearsofthedecisionoftheGeneralMeeting–withcapitalincreasesbycontributioninkindorincash,asthecasemaybewithouttalkingintoaccountthepreferentialsubscriptionrightsofshareholders;

TheExtraordinaryGeneralMeetingof31May2018alsoapprovedtherenewalofthe5-yearauthorizationgrantedtotheBoardconcerningtheacquisition,transferorcancellationofownsharesunderlegalconditions,notablytocoverstockoptionplansformanagers of the Company.

IntheeventofariskofseriousandimminentharmoccurringtotheCompany,theBoardofDirectorshastheauthoritytotransfertreasuryshareseitheronthemarketorthroughasaleunderthesameconditionstoallshareholders incompliancewiththeapplicablelegalconditions.Thisauthorisationapplies,underthesameconditions,tothepurchaseortransferofsharesheldintheCompanybyitssubsidiariesasstatedinarticles7:221to7:225oftheCompaniesandAssociationsCode.

The rulesgoverning theappointmentand replacementofBoardmembersand theamendmentof theCompany’sarticlesofassociationarethoseprovidedforbytheCompaniesandAssociationsCode.

executive management bodies...danone (1979-1984), kellogg’s (1984-1994), diageo-foods/sara lee...

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