SCH2017_DRF_EN_Livre.indb

Message from Jean-Pascal Tricoire Chairman and CEO

2017 was a great year for Schneider Electric, with a return to growth in all our businesses, and in every geography. Net income, adjusted EBITA and cash flow all rose to record levels as we pursued our strategic priorities.

2017: exceptional results, and a return to growth Schneider Electric’s revenues rose to EUR24.7 billion in 2017, representing an organic growth of +3.2% overall, comprising +5.9% in our Industrial Automation business and +2.3% in Energy Management. All our geographical zones grew: +6% in Asia Pacific (driven by China and India), +2% in Western Europe and North America, and +3% in the rest of the world. In our Industrial Automation business, growth accelerated on the machine segment as well as in our discrete and hybrid plant systems. Energy Management grew on the back of an expanding residential and commercial building sector, our growing data center solution sales and synergies with automation in industry and infrastructure. Both benefitted from the growing adoption of EcoStruxure, our IoT- enabled architecture and platform. Cross- selling between our Energy Management and Industrial Automation businesses grew to new levels, as we systematically propose integrated solutions for energy and operations optimization to our customers. We drove our adjusted EBITA to an organic growth of +9%, resulting in a record high value and a margin of 14.8%, an organic improvement of 90 basis points. We also continued to work on our company portfolio, strengthening our focus on core

We kept developing our field and digital services and scored mid-single digit growth in both product and service orders. Product revenues were up +4.3% organically in 2017. We incorporated more software into our EcoStruxure architecture and platform and accelerated our development in this field with the acquisition of IGE+XAO (a leader in design software for electrical installations), and the combination of our industrial software business and AVEVA (an engineering software developer). With AVEVA, we are creating a global leader in industrial software, with scale and relevance in key markets, and an extensive technology portfolio. Our objective to “ Simplify ” and speed up our processes, focusing on what brings most value to customers, led to lower costs in support functions and manufacturing. We made good progress in our drive to “ Digitize ,” with a +24% increase vs. 2016 in the number of connected assets and a +36% increase vs. 2016 in the number of unique connected customers. Under the banner of “ Innovate ”, 2017 was a remarkable year for our open, interoperable EcoStruxure architecture and platform, with its growing innovation portfolio of IoT-enabled connected products, edge control and apps, analytics and services. EcoStruxure delivers enhanced value around safety, reliability, efficiency, sustainability and connectivity, which bring major improvements to buildings, data centers, industry and infrastructure. To “ Step Up, ” Schneider Electric sharpened its focus on training, engaging employees and empowering them to contribute to our mission. Initiatives like our new Global Family Leave Policy reinforced our commitment to gender diversity and inclusion, and once again earned Schneider Electric

(EPS) at EUR3.85. This translated in a record high free cash flow , standing at EUR2.25 billion, confirming our progress in free cash flow conversion, once again above 100%. We continue to retur n cash to our shareholders by investing c.EUR1bn through mid-2019 in share buybacks and proposing a progressive dividend of EUR2.20 per share (+8%), representing more than 50% of our net income. We are bringing our customers integrated and digitized solutions, based on EcoStruxure, to help them navigate 2 growing trends : “ energy transition ” – the shift towards more sustainable and more efficient power; and “ digital transformation ” – the adoption of increasingly automated and data-driven technologies. 2017 was the third year of our “ Schneider Is On ” program, which focuses on 5 key objectives – Do More, Simplify, Digitize, Innovate and Step Up – to better serve our customers and our partners. We certainly continued to “ Do More ,” with more than 100 new products launched in 2017, and in the process, we earned numerous international design awards. OUR AMBITION IS TO ENSURE THAT «LIFE IS ON» FOR EVERYONE, EVERYWHERE AND AT ALL TIMES Schneider Is On: more benefits for customers and all our stakeholders

businesses, with the acquisition of ASCO Power Technologies, AVEVA and IGE+XAO, and the disposal of non-core assets, such as Telvent DTN. As a result, the Group’s full-year net profit reached an all-time high of EUR2.15 billion (up 23% on 2016), yielding record earnings per share

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2017 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

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