SOMFY - Annual financial report 2018

04 MANAGEMENT BOARD MANAGEMENT REPORT

For 50 years our growth model has remained unchanged

Closer to our End Users

We implement a strategy of profitable growth with a view to building and expanding our markets. Our growth model is based on independence, continuity, anticipation and the global-local alliance. By implementing these fundamental principles, we can act with confidence with all our stakeholders: customers, employees, partners, suppliers, shareholders, civilian society. Independence Somfy seeks to take control of its future by establishing relevant partnerships and alliances. To retain freedom of choice and reinforce its competitive advantages, Somfy is determined to take control of the fundamental aspects of its operations: expertise in solutions and related technologies, operational excellence, control of distribution and its brands and financial control. Continuity With a long-term vision and stable shareholding structure, Somfy seeks to ensure the continuity of both its strategy and teams, while continuously adapting to a rapidly changing world. This consistency and longevity inspire confidence in the Group’s employees, partners and customers. Anticipation Anticipation has always been fundamental to Somfy. Its founders anticipated the advent and growth of a new market, even before demand existed for it. Since that time, Somfy has nurtured a rigorous culture of anticipation throughout the organisation, to act boldly and remain one step ahead in leveraging both developments and opportunities. This specific feature has been recognised by our industry, our partners and our external stakeholders. Internally, it is a core competency required of all our employees. Global-local Alliance Somfy seeks to combine local vitality with the strength of a global approach, which it makes available to all entities. The Group’s growth thrives on close relationships with its customers, the characteristics of each of its markets and the different cultures of the company’s employees. Somfy’s particular organisation and operating principles allow both our teams working closely with our customers and our cross-functional teams to share the same vision and common strategic objectives. Somfy is aware that its markets are evolving rapidly due to changes in lifestyles and working patterns, the increasing digitalisation of homes and buildings and smartphone connectivity. These changes demand rapid responses and innovative solutions. Nowadays, the Group’s ambition is to offer sustainable, purpose-designed responses which are energy efficient, offer comfort and security and make its vision of better living spaces for all a reality. The Group has identified four strategic drivers to help it achieve these objectives: GROUP STRATEGY

We must support our users by ensuring a smooth, always-on experience of the digital world, connecting with them both digitally and on an emotionally appealing level through a strong Somfy brand, the preferred choice of our users and customers at each stage of their journey. In a a home connected by our solutions and related services, they experience a place in which they are free to invent their own new uses. Bolder on the Interior markets Somfy seeks to offer innovative products that meet the needs of an emerging mass market and which strengthens its leadership in both residential and non-residential markets. Stronger on operational excellence These new markets demand that we reduce the development time and time-to-market of our products and consequently work together to optimise our processes and internal agility to ensure optimum customer satisfaction and build sustainable business models with them as a foundation for profitable growth. Better Together We make the Somfy Spirit a reality, namely our desire to fulfil our vision and improve employee experience through empowerment and professional development while working towards sustainable and shared growth. Somfy favours flat organisation (few levels of middle management), driven by local markets and customers, which puts the emphasis on local dynamic, while drawing on the Group’s global strength. Somfy’s organisation is not set in stone. It is flexible and adapts to the Group’s strategic challenges and the development of its markets. The Group is organised around human-scale operational units (geographical business units, activities business units, brands, industrial sites, etc.). They are grouped into management entities (Business & Marketing Areas, Activities, etc.). These operational units and management entities rely on cross-company functions. Value-creating operational units Operational units create value through developing, producing and selling our solutions. They are structured around a single homogenous mission and remain on a human scale. They are given as many levers as possible to put forward and implement their strategy, to allow them the freedom to give their best and promote excellence within their scope. They develop know-how and specific skills which are used for value creation. They are founded on the basic principle of subsidiarity. Powers are delegated to the operational units enabling them to take decisions that affect them. Transparency, performance and cooperation are expected in return. BASIC ORGANISATIONAL PRINCIPLES OF SOMFY

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SOMFY – ANNUAL FINANCIAL REPORT 2018