SOMFY - Annual financial report 2019

04 MANAGEMENT BOARDMANAGEMENT REPORT

Somfy Brasil LTDA (Brazil); – Somfy China Co Ltd (China); – Somfy Egypt (Egypt); – Somfy España SA (Spain); – Somfy EV Otomasyon Sistemleri Ticaret Ltd Sti (Turkey); – Somfy GmbH (Germany); – Somfy GmbH (Austria); – Somfy Hellas SA (Greece); – Somfy India Pvt Ltd (India); – Somfy Italia SRL (Italy); – Somfy Kabushiki Kaisha (Japan); – Somfy Limited Liability Company (Russia); – Somfy Ltd (UK); – Somfy Maroc (Morocco); – Somfy Middle East Co. Ltd (Republic of Cyprus); – Somfy Nederland BV (Netherlands); – Somfy Norway AS (Norway); – Somfy PTE Ltd (Singapore); – Somfy PTY. Ltd (Australia); – Somfy SA (Switzerland); – Somfy South Africa PTY Limited (South Africa); – Somfy spol s.r.o. (Czech Republic); – Somfy spolka z ograniczona odpowiedzialnoscia (Poland); – Somfy Sweden Aktiebolag (Sweden); –

Somfy Systems Inc (USA); – Somfy Tunisie (Tunisia); – SOPEM spolka z ograniczona odpowiedzialnoscia (Poland); – Window Automation Industry SRL (Italy); – Zhejiang Lian Da Science and Technology Co., Ltd. (China). – The environmental reporting scope taken into account for the 2019 financial year includes to the following entities: BFT SpA (Italy); – Simu (France); – SITEM (Tunisia); – Somfy Activités SA (France); – SOPEM spolka z ograniczona odpowiedzialnoscia (Poland); – Window Automation Industry SRL (Italy); – Zhejiang Lian Da Science and Technology Co., Ltd. (China). – The methodologies used for the reporting of certain CSR indicators may present limitations due to: particularities of local legislation in the various countries in – which the Group is located; lack of availability of information on certain scopes; – use of estimates in the absence of assessment tools; – practicalities of collecting and processing data. – METHODOLOGY LIMITATIONS

INFORMATION ON RISKS (ARTICLE L. 225-100-1 OF THE COMMERCIAL CODE)

Epidemiological risks (example: Covid-19) and their consequences are not developed in this section but are not such as to change the Group's risk information as described in the following paragraphs (1) .

same currency). The derivative financial instruments put into place are forward foreign exchange contracts for the main currencies. The management of foreign exchange risk is covered in note 7.3 to the consolidated financial statements.

INTEREST RATE RISK

FINANCIAL RISKS —

The Group is exposed to interest rate risks. Management of the interest rate relative to Group debt is based on consolidated position and market conditions. The primary objective of the rate risk management policy is to control Group financing costs. The management of the interest rate risk is covered in note 7.3 to the consolidated financial statements.

The main financial risks to which the Group is exposed are foreign exchange, interest rate, liquidity, credit and raw material risks. According to IFRS, all derivative financial instruments are measured at their fair value. Fair value is either the market value for listed instruments, or a value provided by financial institutions in accordance with traditional criteria (over-the-counter market). The amounts covered exclusively relate to current or future transactions within the framework of the Group’s normal business activities. As part of the transposition of the MIF Directive that came into force on 1 November 2007, Somfy SA and its French subsidiaries opted for the “non-professional customers” category. Somfy’s exposure to foreign exchange risk is primarily related to its operational activities (intragroup sales of manufactured products distributed by commercial subsidiaries outside the Euro zone, these sales being denominated in local currencies and purchases denominated in local currencies). At comparable terms and conditions, the Group gives priority to natural hedges (foreign currency purchases related to sales in the FOREIGN EXCHANGE RISK

LIQUIDITY RISK

The Group must have permanent access to the necessary financial resources to allow it to finance its day-to-day activities and its investments. The Group’s liquidity risk primarily arises from the obligation to repay its existing debt, the funding of its future requirements and observance of its financial ratios. The granting of credit facilities is subject to Somfy SA’s commitments to its banking partners to comply with two types of financial covenants based on: the Group’s financial structure (net financial debt/shareholder’s – equity); and its ability to repay (net financial debt/EBITDA). – The management of liquidity risk is covered in note 7.3 to the consolidated financial statements. Credit facilities and compliance with covenants are detailed in note 7.2.2.6 to the consolidated financial statements.

See information on this subject in the press release of 23 March 2020 in chapter 10 Recent events since 2 March 2020. (1)

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SOMFY – ANNUAL FINANCIAL REPORT 2019