www.se.com Schneider Electric Universal Registration Document 2021 8 Integrated report Schneider Electric delivered a strong performance in 2021, what were the highlights? In 2021 the key theme was growth, driven both by strong market dynamics and our strategic choices and positioning. Our revenues of EUR 28.9 billion were an all-time high, up +12.7% organically. We delivered a strong improvement in our adjusted EBITA margin which increased by +1.4pts organically, reaching 17.3%, a new record, and surpassing our target of ‘around 17%’ one year early. We achieved this through good leverage on the higher volumes of 2021, a strong focus on price in the face of inflationary pressures, and continued progress on our operational efficiency plans. The strong operational performance coupled with a reduction in restructuring costs resulted in net income of EUR 3.2 billion, an increase of +51% over 2020. We delivered Free Cash Flow of EUR 2.8 billion, reflecting strong operational cash flow but also increased working capital requirements at the end of the year due to the strong external demand environment and some supply chain shortages. We retain a strong focus on shareholder returns, and we continue our track-record of progressive dividends for a 12 th year, increasing our proposed dividend by +12% to EUR 2.90 per share. What were the biggest challenges you faced in 2021 and what do you expect in 2022? Global supply chains came under pressure in 2021, impacting not just Schneider, but across multiple industries and geographies. While the heightened external demand is supportive of future growth, it did present some temporal challenges in customer deliveries for the year and came with associated higher costs both in freight and the sourcing of some components. Our unique global supply chain set-up helped us to navigate these challenges with agility, using lessons learned from 2020, and leveraging our multi- hub model. We also faced the ongoing challenge of a global health crisis, which limited our ability to access customer sites, impacting our Services organization. I want to take the opportunity to thank our customer facing teams, and those working in our factories and distribution centers, for all they did in putting our customers first in these challenging times. For 2022, we expect these challenges to persist, with cost inflation the new reality and pressures on global supply chains not yet over. We endeavor to meet these challenges with agility, always putting customers at the forefront of our thinking. What is the outlook for Schneider Electric in 2022? In 2022, we start-out on the scalable growth journey outlined in our Capital Markets Day. We expect 2022 Adjusted EBITA growth of between +9% and +13% organic. This strong and sustainable performance would be achieved through a combination of topline organic growth, targeted at between +7% and +9%, and Adjusted EBITA margin up +30 bps to +60 bps organic. This implies Adjusted EBITA margin of around 17.6% to 17.9% for 2022. You held a Capital Markets Day in 2021. What will drive shareholder value in the coming years? At the CMD, we set our 2022-2024 targets and longer-term ambitions. Between 2022 and 2024 we expect organic revenue growth of between +5% to +8%, on average, and a continued improvement of our adjusted EBITA margin of between +30bps to +70bps organic, annually. We expect this to translate into a step-up in our Free Cash Flow, over-time, to around EUR 4 billion by 2024. We upgraded our longer-term ambitions to at least 5% organic growth in revenues on average across the economic cycle with an opportunity to further expand adjusted EBITA margin and Free Cash Flow beyond 2024. These ambitions represent a step-change in performance from past years, driven by long-term trends of digitization for efficiency, and electrification for sustainability that are pervasive across the end- markets we serve. We expect opportunities in these end-markets to remain dynamic, and for growth to be augmented by our focus on Software, Services and Sustainability. As we move into a period of scalable and sustainable growth, our revenue profile is shifting; becoming more digital and more resilient. We expect an evolution in contribution from our Digital Flywheel, moving towards c.60% of Group revenues by 2025, from c.50% today. Within this, our strategic focus on more Software & Services is expected to drive an increase of +5pts on these elements, to c.23% of Group revenues by 2025. Software & Services also presents an opportunity for revenues to be more sticky, more resilient and with a greater proportion to be recurring in nature, increasing by +15pts to c.45% recurring by 2025. As CFO, I am excited with the opportunities that lie ahead of us, we have the portfolio, the technologies and the great people required to enable sustainable growth for years to come, as we remain committed to generating further value for all of our stakeholders. Hilary Maxson, Chief Financial Officer An interview with Chief Financial Officer, Hilary Maxson