SCH2017_DRF_EN_Livre.indb

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Business review Review of the consolidated financial statements

2. Review of the consolidated financial statements

2.1 Review of business and consolidated statement of income Acquisitions & divestments in 2016

Discontinued operations On April 20, 2017, the Group announced the disposal of its Solar activity. At the end of this ongoing process, the Group will have a minority representation on Solar’s board. This activity used to be reported within the Low Voltage (Building) business segment of Schneider Electric. Solar activity net income (EUR(25) million) and the estimated loss incurred from the disposal of the business (EUR(69) million) have been reclassified to discontinued operations in the Group consolidated financial statements. The comparative information has been restated. Changes in foreign exchange rates Changes in foreign exchange rates relative to the euro had a negative impact over the year. This effect amounts to negative EUR388 million on consolidated revenue and to negative EUR124 million on adjusted EBITA (1) . Revenue On December 31 st , 2017, the consolidated revenue of Schneider Electric totaled EUR24,743 million, an increase of 1.2% at current scope and exchange rates compared to EUR24,459 million on December 31 st , 2016. This variance breaks down into an organic increase of 3.2%, a net scope effect of -0.4% and a negative exchange rate effect of -1.6%, primarily due to the depreciation of the US dollar and the Chinese yuan against the euro. The Industrial Automation (Industry) business generated revenues of EUR5,816 million, or 24% of the consolidated total. This represents an increase of +6.0% on a reported basis and an increase of +5.9% on a like-for-like basis. Industrial Automation reported growth in all the regions, with a strong performance in products and OEM, driven by channel initiatives. Process Automation get back to growth as O&G stabilized and benefits from good dynamics in some process & hybrid segments. Western Europe grew across the region as OEM demand remain favorable. In Germany, Industrial automation posted strong growth thanks to product sales through partners and good project execution. In Asia-Pacific, Industrial Automation was up due to continued strength in industrial demand from machine manufacturers and end-users, with notably China performing strongly. North America was up with the US and Canada growing while Mexico declined. Rest of the World was up, driven mainly by Middle-East.

On December 14, 2015, Schneider Electric announced that it has signed an agreement to sell its Transportation business, to Kapsch TrafficCom AG. On March 31 st , 2016, the transaction was finalized with a final sale price established at EUR31 million. No acquisitions occurred in 2016 that had a significant impact on the 2017 financial statements.

Acquisitions & divestments during the year

On April 3 rd , 2017, the Group announced that it has signed an agreement to sell its Telvent DTN business, to TBG AG. On May 31 st , 2017, the transaction was finalized with a final base sale price established at USD900 million. On July 27 th 2017, Schneider Electric announced that it has signed an agreement to acquire Asco Power Technologies (“ASCO”), a leader in the Automatic Transfer Switch (“ATS”) market for a consideration of circa USD1,250 million in an all cash transaction. The transaction was finalized on October 31 st , 2017. ASCO has been consolidated in full consolidation method in the Low Voltage (Building) business since November 1 st , 2017.

Changes in revenue by operating segment

2.2

The Low Voltage (Building) business generated revenues of EUR10,812 million, or 43% of the consolidated total. This represents an increase of +3.3% on a reported basis, and an increase of +4.4% on a like-for-like basis, with growth across all regions, supported by new product launches and commercial actions. Final Distribution & Wiring Devices reported a solid growth. The Group’s offers for Commercial & Industrial Buildings markets grew across all regions, in particular in North America. Focus on Energy Efficiency contributed to growth in Western Europe across countries and in Asia. China and Rest of the World posted a strong growth.

(1) Adjusted EBITA (Earnings Before Interest, Taxes, Amortization of Purchase Accounting Intangibles) is earnings EBITA before amortization and impairment of intangible assets from acquisitions, impairment of goodwill, other operating income and expenses and restructuring costs.

2017 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

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