SOMFY_ANNUAL_FINANCIAL_REPORT_2017

MESSAGE FROM THE MANAGEMENT BOARD

Pierre RIBEIRO Group CFO, member of the Management Board

Jean Guillaume DESPATURE Chairman of the Management Board

For the second consecutive year, Somfy’s sales grew strongly, up 10.3% on a like-for-like basis. This increase was driven by a buoyant market overall and by ever greater interest from consumers in connected solutions, which also had a favourable impact on the sales of motorised systems in the Group’s historical or more mature markets (rolling shutters, exterior blinds, gates, etc.). This strong momentum across all three Activities and all regions validates Somfy’s strategy of innovation and the digital transformation of its markets. Although business profitability remained at a high level at 13.5% of sales, it declined as a result of several factors: a more aggressive pricing policy to gain market share, a negative exchange rate impact, the rise in the cost of raw materials and the integration of two newly-acquired companies. On a like-for-like basis, current operating margin would have stood at 14.3%. While intensifying its strategic investments – R&D, digitalisation of the company and the customer relationship – Somfy has remained attentive to cost control. The Group’s sound financial position has further improved, with a net financial surplus that increased from €15.5 million to €104.6 million at the end of the financial year. In 2017, Somfy continued its international expansion. In the United States, the Group passed the milestone of €100 million in sales. And in China, the Dooya brand now generates 48% of its sales on its domestic market. The digital transformation of the range now involves the products of all Activities: motorised systems and new connected devices, two of which won innovation awards at CES 2018 (a thermostat and a camera). Launched in 2015 and designed to evolve along with the Internet of Things, the Smart & Smooth RS100 rolling shutter motor consolidated its commercial success. Intended to support the Group’s performance within this new environment, the 2018-2020 strategic roadmap has already contributed to acceleration in several key areas. The interior solutions business is growing and will benefit from a significant innovation programme in 2018. Initial results of the roll-out of productivity-enhancing measures will be delivered during this financial year. And Somfy has also strengthened its relationship with end users, notably by offering solutions that are ever more open to, and interconnected with, those provided by other players in the construction industry. This is to align innovation with the expectations of consumers in line with their practices. As a result, the Group is confident in its ability to capitalise, over the next few years, on all the potential offered by the digital transformation that is underway in the construction markets. The Management Board

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SOMFY – ANNUAL FINANCIAL REPORT 2017