SOMFY - Annual financial report 2019

04 MANAGEMENT BOARDMANAGEMENT REPORT

RELATIONSHIPS WITH SUBCONTRACTORS AND SUPPLIERS

to the personal data processed as part of this mechanism is provided to the individuals concerned. The indicator used to monitor the performance of the ethics mechanism is the number of ethics alerts reported to the Ethics Committee, which was nine in 2019 (against 12 in 2018). However, this slightly lower figure shows that the alert escalation system is working well. Of the nine alerts received, eight were admissible, six of which are closed at 31 December 2019. Somfy is also a member of the Business Ethics Group, an organisation that has set itself the task of promoting ethics and compliance in the management and governance of French companies. The Group’s Ethics Committee thus remains connected with other professionals responsible for ethical issues within companies and organisations. In addition to the Group’s Ethics Code and following the enactment of the law on transparency, the fight against corruption and the modernisation of the economy, Somfy has implemented an anti-corruption programme. In this way, the Group has formally set out mapping dedicated to the analysis of corruption related risks in each of its geographic regions, in accordance with its activities. The Group also decided to adopt the Middlenext Anti-Corruption Code of Conduct. This Code of Conduct is designed to guide business behaviour. Somfy supplemented it with several appendices in order to provide practical advice, examples and links to other procedures. In addition to these documents, e-learning materials are currently being rolled out and face-to-face training has also been introduced for those employees expected to be the most exposed. The warning system introduced in 2015 to escalate non-ethical behaviours (as mentioned above) was extended to meet the requirements of the French “Sapin 2” anticorruption legislation. Accounting controls were also implemented to detect potential fraudulent acts. Lastly, procedures are currently being rolled out to assess third parties with whom the Group already works, and prior to any new relationship. A screening tool has also been purchased in order to consult public databases reporting potentially sensitive information about its partners. Validation workflows are in the process of being configured and will allow the assessments made and resultant decisions taken to be traced. Several indicators are monitored, notably those relating to training: in France, 1,251 employees completed anti-corruption – e-learning training in 2019 within Somfy Activités SA, representing 100% of the individuals concerned and employed on the date of the campaign; in the Group’s other entities, 1,182 additional individuals – completed this same module in their native language, representing 100% of the people concerned in deployed areas and employed in the workforce on the dates of the local campaigns; 646 people judged to be more exposed to the corruption risk – received face-to-face training, as well as 194 Directors, who are ANTI-CORRUPTION PROGRAMME

Relationships with suppliers and subcontracting are important for the Group due to the nature of its industrial activity which is essentially assembly. The components of its products are all purchased. Somfy is dedicated to ensuring the entire value chain is involved in its commitment to corporate social responsibility. This policy is reflected in the new contractual framework with a view to deploying the Group’s CSR commitments in the upstream supply chain: employment, the environment, fair practices and combating corruption, conflict minerals and hazardous substances. To respect its commitments, Somfy has launched a supplier risk-management approach covering the following topics: geopolitical risks and corruption, combating modern slavery, environmental impacts of supplier processes and has mapped the risks at between 1-low risk to 4-high risk. Furthermore, in France, Somfy is a member of the organisation Thésame, where it jointly finances a programme called PEAK which develops collaborative and innovative approaches in relation to the procurement function within a sector. Somfy has jointly financed three dissertations on the subject. The indicators monitored by Somfy regarding relationships with subcontracting and suppliers are: the volume of purchases made locally, meaning within 500km of – the assembly site. In 2019, 45.9% of purchases met this criterion; the number of suppliers covered by a supplier risk analysis. In – 2019, the top five were audited, and in 2020 the top 40 should be, and in 2021 the top 80. For every component developed by a supplier, the Group requests a written undertaking relating to the European Directives REACH and ROHS. 100% of the top 80 suppliers (69% in the previous report), representing 88% of purchasing amounts, comply with REACH/ROHS requirements (results from the 2019 campaign). In accordance with the regulations adopted by the US Securities and Exchange Commission in 2012, the Group implemented its duty of diligence in respect of its supply chain, in order to ensure that the supplies used in its products do not contain any “Conflict Minerals”. Of the nine suppliers affected by “conflict minerals”, 100% are compliant. Somfy is also an Authorised Economic Operator. This quality customs label is internationally recognised (World Customs Organisation). AEO programmes around the world have become flagship Customs/Business Partnership programmes as they enable customs to share their security responsibilities with the private sector. This certification is subject to a very extensive audit not only in terms of customs, but also in relation to safety and security for compliance purposes. The terms and conditions related to this certification cover a range of issues such as: compliance with regulations and notably in relation to previous – convictions; reliability of the company’s logistics and accounting system – (including audit trail); the company’s financial solvency; – traceability of logistics flows; – securing of business partners (customers, suppliers, service – providers, etc.); IT safety and security; – overall compliance. – Being an AEO therefore means being an economic player recognised as reliable by the European and global customs authorities. QUALITY CUSTOMS LABEL

members of the various Management Committees. The roll-out of local training will continue in 2020.

As of 31 December 2019, neither Somfy nor any of its subsidiaries had been found guilty of or were under investigation in relation to corruption.

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SOMFY – ANNUAL FINANCIAL REPORT 2019