Corporate principles & Compliance

AN ETHICAL AND RESPONSIBLE LAND DEFENSE PLAYER

KNDS France's responsibility is essential in the relationships that the group maintains with all stakeholders, whether they are customers, suppliers, shareholders and, of course, employees.

This approach, taken into account in the strategic orientations, contributes as much to maintain relations of trust and transparency between the group and its partners as to improve its performances in the defense sector in France and Europe. It relies on a certain number of mechanisms and initiatives, notably concerning risk management and the reinforcement of internal control, our environmental policy, and the development of long-lasting partnerships with our suppliers.

This corporate responsibility is reflected in the five values it promotes internally: fulfillment of commitments, safety, quality, team spirit, ethics and compliance.

For any request about CSR, please contact DirectionFinanceRSE@knds.fr.

INTEGRITY

At KNDS France, ethics is a fundamental value, shared by all employees and subject of a clear and constant commitment of the top management.

KNDS France is committed to setting an example for the land defense industry in its production model and across the entire value chain. KNDS France organizes procedures to manage the risk of corruption and applies the necessary vigilance over its third parties with regard to corporate responsibility (suppliers, customers, sales partners, industrial partners, etc.)

As part of this commitment, KNDS France supports the principles of the United Nations Global Compact and the IFBEC Global Business Principles, which represent a benchmark of the highest ethical standards worldwide.

KNDS’s Ethics Charter provides guidelines on ethics and the values shared by all members of KNDS, so that all employees can refer to it in all circumstances.

In accordance with the Sapin II law, the Code of Conduct confirms KNDS France’s commitment to preventing and detecting corruption. The Code of Conduct defines and illustrates the different types of prohibited behaviors, based on the risks identified by the corruption risk mapping. A summary of the Code of Conduct is also available on the website for third parties of the company.

Finally, the Code of Conduct is supplemented by detailed policies and procedures which inform every employee on the rules and processes to apply in order to avoid the risks of corruption and influence peddling.

Employees, customers, suppliers or other third parties who detect or suspect facts contrary to the Code of Conduct or any reprehensible act, violation or illegal action that could harm KNDS France and its subsidiaries, any individual or any other entity, may report them confidentially to the Ethics Correspondent using the KNDS France whistleblowing system:

• By phone: +33 (0) 1 72 78 17 93

• By mail: To Ethics Correspondent,

KNDS France,

13 Route de la Minière,

78034 Cedex Versailles, France

alerte-ethique@knds.fr

ORGANIZATION AND GOVERNANCE

The general approach of the ethics and compliance program is overseen by KNDS France’s Ethics and Compliance Committee, which is under the responsibility of the Chief Executive Officer.

The Chief Compliance Officer, who reports to the Chief Finance Officer and has direct access to the Chief Executive Officer of KNDS France, is responsible for defining and deploying KNDS France's compliance program. As such, he defines the policies and procedures adapted to the risk mapping and designs trainings and actions necessary for the implementation and the transmission of a culture of integrity.

The Compliance Department is supported by a network of Compliance Correspondents.

KNOW YOUR PARTNERS

KNDS France carries out periodic and appropriate compliance due diligence depending on the foreseen agreements with its various third parties (suppliers, customers, sales partners, industrial partners, joint-venture partners, etc.) and their corruption risk level.

Compliance due diligence is an integral part of the decision-making processes of KNDS France.

KNDS France also introduces business ethics clause in its contracts, including, if necessary, a right to audit and terminate contracts to ensure compliance with applicable anti-corruption regulations.

GIFTS AND HOSPITALITY

The Gifts and Hospitality Policy applies to all employees of KNDS France and its subsidiaries.

Any gifts or hospitality shall be strictly limited to a mark of courtesy and shall not be intended to influence behavior or remunerate a service.

All employees shall ensure that any gifts or hospitality offered to and received from a third party comply with applicable laws and regulations, as well as with internal rules, notably concerning the pre-approval threshold.

Employees shall refuse any advantage from third parties that could affect their objectivity and professional judgment.

CHARITABLE CONTRIBUTION AND SPONSORSHIP

Sponsorships and charitable contributions shall aim to support a project or an organization whose values are shared by KNDS France and its subsidiaries.

KNDS France and its subsidiaries prohibit all forms of political contributions, although this is legal in certain countries.

In certain circumstances, charitable contribution and sponsorship operations, although governed by strict legal and tax rules, may constitute corruption offences for both companies and beneficiaries.

For this purpose, organizations benefiting from sponsorship and charitable contribution are subject to KNDS France's compliance due diligence.

AWARENESS AND TRAINING

Employees are the key players in preventing the risk of corruption within the Group. As such, they shall be trained to recognize a situation at risk and react effectively.

An intranet section dedicated to compliance gives employees access to all KNDS France ethics and compliance procedures and policies.

All employees shall complete an e-learning training on the Code of conduct, and the Compliance Department organizes training sessions for employees at risk.

The Compliance Department is available to answer any questions employees may have about the compliance program (référent-ethique@knds.fr).

MONITORING AND MANAGING OUR PROGRAM

The Compliance Department is responsible for enhancing the compliance program according to legislative developments and best practices, and for monitoring the application of third-party due diligence process.

The compliance program includes an internal control to prevent risk in operations.

The Internal Audit Department carries out periodic independent audits of KNDS France compliance processes in order to assess the effectiveness of internal controls and procedures, and to enable KNDS France to strengthen them.

ENVIRONMENTAL COMMITMENT

For the past several years, we have been committed to a responsible approach to the environment, based on an integrated management system for health, safety, quality and the environment. Our Environmental policy is deployed to all sites and all our brands are ISO 14001 certified, the reference standard for environmental management. This approach ensures our full environmental responsibility and meets the needs of customers, by involving all employees and suppliers. Each year, we implement a program of continuous improvement of our situation with regard to the risks and opportunities related to our activities, taking into account the entire life cycle of our products. Our progress is regularly measured. As part of the reduction of greenhouse gas emissions, in addition to our recurrent actions to reduce energy consumption, we have implemented, with the assistance of a partner company, a program to offset greenhouse gas emissions CO2 by replanting trees. Moreover, projects for the preservation of biodiversity are integrated into site maintenance activities with, for example, the establishment of eco-grazing or nesting boxes to ensure biological control of processionary caterpillars to limit the use of pesticides. New biodiversity-related studies will be launched soon: the establishment of beehives, solutions to control invasive plants at certain sites, etc.

QUALITY

The quality management system set up within the group is the guiding principle of our employees' daily action. Its objective is to contribute to the full satisfaction of our customers and partners, by winning over new customers and/or markets, through performance, innovation and the achievement of the objectives established with our customers and shareholders, by developing company-wide talents and involving everyone in company performance. This repository is flexible and adjustable so that each brand of the group adapts it to the specificities of its activity. Annual reviews are organized to encourage improvements to be made in relation to the practices observed, both internally and externally. To continually improve our actions in order to better satisfy customers by respecting our compliance commitments, deadlines and costs, reducing non-quality costs, improving the compliance rate of our deliverables, promoting the exchange of best practices, optimizing employee safety and reducing our environmental footprint is the ultimate goal of the Quality Management System implemented within KNDS France.

SAFETY

Safety at work, KNDS France's permanent commitment

As a responsible industrialist, the group has been committed for several years to preserving the health and safety of its women and men. Safety and health at work is the primary concern of all employees. Our common goal is to move towards "zero accidents or occupational diseases". This commitment was confirmed in 2017 with the signing by the Chairman and Chief Executive Officer of a general health, safety, quality and environment policy letter.

In particular, we are committed to implementing the following key principles: Safety and Health is at the top of our agenda, Any injury can be avoided, regardless of the environment, Management is responsible for defining, communicating and complying with safety rules Respect for these safety rules and exemplarity must prevail for everyone: we are all responsible for our own safety, but we must also ensure the safety of others, Act continuously on the identification, control and reduction of situations and behaviors that pose risks to health and safety. We are working for the adoption of safe behaviors and to ensure a deep and lasting impregnation of a culture of safety.

RISK MANAGEMENT

Risk management and strengthening internal control

The group is permanently improving its risk management. Having drawn up a risk map, we have extracted the major risks given their impact, their probability of occurrence and the means implemented to limit them. In addition to this mapping, which is reviewed periodically, we carry out spot audits.

To ensure good risk management, our company is systematically involved upstream in the negotiation of high-stake contracts. We also handle the litigations and disputes of the group's companies.

More generally, to better understand and limit the risks associated with our business, we rely on a set of systems: standards, quality organization, internal audits, safety of people, goods and the environment, access and document protection, external controls, etc.

DIVERSITY AND INCLUSION

For KNDS France, equality and the absence of discrimination are fundamental principles. As a result, we are committed at all levels to creating a work environment where everyone is respected, valued and appreciated for who they are.

The group's approach is to attract, retain and develop the best talents to support our global strategy. This commitment to inclusion and diversity enables the company to grow sustainably and profitably, while creating a supportive environment for all of our people. Ideas and innovations are the result of group work, discussions, experiences and very diverse contexts. We want to foster a work environment that draws its richness from the great diversity of our employees, our customers and the communities in which we live and work. The professional equality index between women and men should allow all companies to move to an obligation of result in terms of equality between women and men. This logic has already existed within the Group since 2007, through 5 areas of progress: ensure or compensate for any differences in remuneration for equal positions, implement a policy of equality in terms of annual salary increases, implement a policy of equality in terms of individual promotions, neutralize the effects of maternity leave during annual salary increase periods and promote women's access to positions of responsibility in the company.

This year, KNDS France obtains a score of 74/100.

SUPPLIER RELATIONS

Development of partnerships with our suppliers

We have integrated the need for a long-term relationship with our suppliers into our overall purchasing strategy. The quality of this relationship is a strategic element of end customer satisfaction. Establishing the most transparent possible climate of trust with our suppliers is at the heart of our concerns.

The Purchasing Department wants to drive a collaborative relationship. Indeed, our purchasing policy allows the selection of the best suppliers, based on reciprocal commitments and a precise definition of the responsibilities and associated risks. Suppliers are thus involved in achieving our company's quality, cost, time and performance objectives.

We are committed to promoting the French industrial fabric, representing more than 85% of our annual purchasing commitments. We also pay special attention to SMEs that make up 40% of our panel. This attention is materialized by a 30-day payment term policy, by the prevention of economic dependency and by the creation of a "Progress and Supplier Relations" service, dedicated to the deployment and monitoring of good supplier customer relations practices.

In this context, we are adherents to and signatories of several charters and pacts, to develop and perfect partnerships with our suppliers, particularly with SMEs:

the SME Pact (https://www.pactepme.org/)

the SME Defense Pact / Bilateral Agreement MOI / MINARM (http://www.achats.defense.gouv.fr/Pacte-Defense-PME,141145)

the Innovative SME Charter

Responsible Supplier Relations Charter, of which KNDS France is a signatory (http://www.relations-fournisseur-responsables.fr/le-label-relations-fournisseur-responsables/)

These commitments aim to bring together major customers to discuss best practices around five major topics: innovation, the adaptation of rules, the effects of levers, governance and partnership relations with their SME / SMI suppliers.

In view of these commitments, the presence of an internal mediator contributes to the improvement of equitable relations and partnerships with our suppliers. In the event of a dispute between a supplier and this latter's interlocutor, and after unsuccessfully attempting to resolve the dispute with the interlocutor or any other relevant contact within the group, the supplier may refer the matter to the internal mediator to find a solution acceptable to both parties.

Lastly, an acquisition ethics charter has been in force since 2015. It is divided into two parts: one for the players of the acquisition process, the other for suppliers. It aims to remind everyone of the fundamental principles to ensure business climate sustainability.