Schneider Electric SE — Annual Report 2020

Feb 11, 2021

FULL YEAR FINANCIAL REPORT Full year period ended December 31, 2020

Consolidated Financial Statements Full-Year Management Report

1. Consolidated statement of income

(in millions of euros except for earnings per share)	Note	Full Year 2020	Full Year 2019
Revenue	3	25,159	27,158
Cost of sales		(15,003)	(16,423)
Gross profit		10,156	10,735
Research and development	4	(718)	(657)
Selling, general and administrative expenses		(5,512)	(5,840)
Adjusted EBITA *	3	3,926	4,238
Other operating income and expenses	6	(210)	(411)
Restructuring costs		(421)	(255)
EBITA **		3,295	3,572
Amortization and impairment of purchase accounting intangibles	5	(207)	(173)
Operating income		3,088	3,399
Interest income		14	39
Interest expense		(126)	(168)
Finance costs, net		(112)	(129)
Other financial income and expense	7	(166)	(132)
Net financial income/(loss)		(278)	(261)
Profit from continuing operations before income tax		2,810	3,138
Income tax expense	8	(638)	(690)
Income of discontinued operations, net of income tax	1	-	(3)
Share of profit/(loss) of associates	12	66	78
PROFIT FOR THE PERIOD		2,238	2,523
attributable to owners of the parent		2,126	2,413
attributable to non controlling interests		112	110
Basic earnings (attributable to owners of the parent) per share (in euros per share)	19	3.84	4.38
Diluted earnings (attributable to owners of the parent) per share (in euros per share)	19	3.81	4.33

* Adjusted EBITA (Earnings Before Interest, Taxes, Amortization of Purchase Accounting Intangibles). Adjusted EBITA corresponds to operating profit before amortization and impairment of purchase accounting intangible assets, before goodwill impairment, other operating income and expenses and restructuring costs.

** EBITA (Earnings Before Interest, Taxes and Amortization of Purchase Accounting Intangibles). EBITA corresponds to operating profit before amortization and impairment of purchase accounting intangible assets and before goodwill impairment.

Other comprehensive income

(in millions of euros)	Note	Full Year 2020	Full Year 2019
Profit for the year		2,238	2,523
Other comprehensive income:
Translation adjustment		(1,649)	333
Cash-flow hedges		(125)	26
Income tax effect of cash flow hedges	19	(18)	(7)
Net gains/(losses) on financial assets		(5)	(4)
Income tax effect of gains/(losses) on financial assets	19	1	-
Actuarial gains/(losses) on defined benefit plans	20	(123)	(408)
Income tax effect of actuarial gains/(losses) on defined benefit plans	19	21	82
Other comprehensive income for the year, net of tax		(1,898)	22
of which to be recycled in income statement		(1,792)	352
of which not to be recycled in income statement		(106)	(330)
TOTAL COMPREHENSIVE INCOME FOR THE YEAR		340	2,545
attributable to owners of the parent		271	2,400
attributable to non controlling interests		69	145

2. Consolidated statement of cash flows

(in millions of euros)	Note	Full Year 2020	Full Year 2019
Profit for the year		2,238	2,523
Losses/(gains) from discontinued operations		-	3
Share of (profit)/losses of associates		(66)	(78)
Income and expenses with no effect on cash flow:
Depreciation of property, plant and equipment	11	698	701
Amortization of intangible assets other than goodwill	10	512	474
Impairment losses on non-current assets		54	63
Increase/(decrease) in provisions	21	266	56
Losses/(gains) on disposals of assets		(10)	206
Difference between tax paid and tax expense		(137)	(2)
Other non-cash adjustments		96	66
Net cash provided by operating activities		3,651	4,012
Decrease/(increase) in accounts receivables		326	22
Decrease/(increase) in inventories and work in progress		(153)	209
(Decrease)/increase in accounts payable		344	(41)
Decrease/(increase) in other current assets and liabilities		267	80
Change in working capital requirement		784	270
TOTAL I - CASH FLOWS FROM OPERATING ACTIVITIES		4,435	4,282
Purchases of property, plant and equipment	11	(485)	(506)
Proceeds from disposals of property, plant and equipment		55	38
Purchases of intangible assets	10	(332)	(338)
Net cash used by investment in operating assets		(762)	(806)
Acquisitions and disposals of businesses, net of cash acquired & disposed	2	(2,393)	(79)
Other long-term investments		11	59
Increase in long-term pension assets		(106)	(90)
Sub-total		(2,488)	(110)
TOTAL II - CASH FLOWS FROM / (USED IN) INVESTING ACTIVITIES		(3,250)	(916)
Issuance of bonds	22	2,444	964
Repayment of bonds	22	(500)	(500)
Sale/(purchase) of own shares		(50)	(266)
Increase/(decrease) in other financial debt		1,032	(1,078)
Increase/(decrease) of share capital	19	43	168
Transaction with non-controlling interests *	2	1,141	-
Dividends paid to Schneider Electric's shareholders	19	(1,413)	(1,296)
Dividends paid to non-controlling interests		(112)	(117)
TOTAL III - CASH FLOWS FROM / (USED IN) FINANCING ACTIVITIES		2,585	(2,125)
TOTAL IV - NET FOREIGN EXCHANGE DIFFERENCE		(403)	(18)
TOTAL V - EFFECT OF DISCONTINUED OPERATIONS		-	(59)
INCREASE/(DECREASE) IN NET CASH AND CASH EQUIVALENTS: I +II +III +IV +V		3,367	1,164
Net cash and cash equivalents, beginning of the period	18	3,395	2,231
Increase/(decrease) in cash and cash equivalents		3,367	1,164
NET CASH AND CASH EQUIVALENTS, END OF THE PERIOD	18	6,762	3,395

* In 2020, the Group received EUR 1,141 million of cash from AVEVA's minority interests, following the increase of capital realized by the latter, to finance the on-going acquisition of OSISoft (Note 2).

3. Consolidated balance sheet

Assets

(in millions of euros)	Note	Dec. 31, 2020	Dec. 31, 2019
NON-CURRENT ASSETS:
Goodwill, net	9	19,956	18,719
Intangible assets, net	10	5,033	4,647
Property, plant and equipment, net	11	3,619	3,680
Investments in associates and joint ventures	12	598	533
Non-current financial assets	13	776	645
Deferred tax assets	14	1,984	2,004
TOTAL NON-CURRENT ASSETS		31,966	30,228
CURRENT ASSETS:
Inventories and work in progress	15	2,883	2,841
Trade and other operating receivables	16	5,626	5,953
Other receivables and prepaid expenses	17	2,094	2,087
Current financial assets		18	19
Cash and cash equivalents	18	6,895	3,592
TOTAL CURRENT ASSETS		17,516	14,492
Assets held for sale & discontinued operations		-	283
TOTAL ASSETS		49,482	45,003

Liabilities

(in millions of euros)	Note	Dec. 31, 2020	Dec. 31, 2019
EQUITY:	19
Share capital		2,268	2,328
Additional paid in capital		2,248	3,134
Retained earnings		17,648	16,034
Translation reserve		(1,541)	65
Equity attributable to owners of the parent		20,623	21,561
Non controlling interests		3,104	1,579
TOTAL EQUITY		23,727	23,140
NON-CURRENT LIABILITIES:
Pensions and other post-employment benefit obligations	20	1,708	1,806
Other non-current provisions	21	930	940
Non-current financial liabilities	22	8,196	6,405
Deferred tax liabilities	14	917	1,021
Other non-current liabilities		1,109	883
TOTAL NON-CURRENT LIABILITIES		12,860	11,055
CURRENT LIABILITIES:
Trade and other operating payables		4,664	4,215
Accrued taxes and payroll costs		3,413	3,147
Current provisions	21	1,000	794
Other current liabilities		1,558	1,428
Current debt	22	2,260	979
TOTAL CURRENT LIABILITIES		12,895	10,563
Liabilities held for sale & discontinued operations		-	245
TOTAL EQUITY AND LIABILITIES		49,482	45,003

4. Consolidated statement of changes in equity

(in millions of euros)	Number of shares (thousands)	Capital	Additional paid-in capital	Treasury Shares	Retained earnings	Trans lation reserve	Equity attributable to owners of the parent	Non controlling interests	Total
Dec. 31, 2018	579,169	2,317	2,977	(2,982)	18,703	(233)	20,782	1,482	22,264
IFRIC 23 impact					(223)		(223)		(223)
Jan. 1, 2019	579,169	2,317	2,977	(2,982)	18,480	(233)	20,559	1,482	22,041
Profit for the year					2,413		2,413	110	2,523
Other comprehensive income					(311)	298	(13)	35	22
Comprehensive income for the year	-	-	-	-	2,102	298	2,400	145	2,545
Capital increase	2,676	10	151				161		161
Exercise of performance shares	224	1	6				7		7
Dividends					(1,296)		(1,296)	(117)	(1,413)
Change in treasury shares				(266)			(266)		(266)
Share-based compensation ex pense					148		148	6	154
Other					(152)		(152)	63	(89)
Dec. 31, 2019	582,069	2,328	3,134	(3,248)	19,282	65	21,561	1,579	23,140
Profit for the year					2,126		2,126	112	2,238
Other comprehensive income					(249)	(1,606)	(1,855)	(43)	(1,898)
Comprehensive income for the year	-	-	-	-	1,877	(1,606)	271	69	340
Capital increase			43				43		43
Exercise of performance shares							-		-
Dividends					(1,413)		(1,413)	(112)	(1,525)
Change in treasury shares	(15,000)	(60)	(929)	(50)	989		(50)		(50)
Share-based compensation ex pense					140		140	5	145
Other					71		71	1,563	1,634
Dec. 31, 2020	567,069	2,268	2,248	(3,298)	20,946	(1,541)	20,623	3,104	23,727

5. Notes to the consolidated financial statements

Contents

Note 1	Accounting policies .	8
Note 2	Changes in the scope of consolidation .	18
Note 3	Segment information .	19
Note 4	Research and development	21
Note 5	Impairment losses, depreciation and amortization expenses	21
Note 6	Other operating income and expenses	21
Note 7	Other financial income and expenses	22
Note 8	Income tax expenses	22
Note 9	Goodwill	22
Note 10	Intangibles assets	23
Note 11	Property, plant and equipment	25
Note 12	Investments in associates and joint ventures	26
Note 13	Non-current financial assets	27
Note 14	Deferred taxes by Nature .	28
Note 15	Inventories and work in progress .	28
Note 16	Trade accounts receivable	29
Note 17	Other receivables and prepaid expenses	30
Note 18	Cash and cash equivalents .	30
Note 19	Shareholder's equity	30
Note 20	Pensions and other post-employment benefit obligations	34
Note 21	Provisions for contingencies and charges	37
Note 22	Total current and non-current financial liabilities	38
Note 23	Classification of financial instruments	40
Note 24	Employees	46
Note 25	Related parties transactions .	47
Note 26	Commitments and contingent liabilities	47
Note 27	Subsequent events	47
Note 28	Statutory Auditors' fees	47
Note 29	Consolidated companies	49

All amounts in millions of euros unless otherwise indicated.

The following notes are an integral part of the consolidated financial statements.

The Schneider Electric Group's consolidated financial statements for the financial year ended December 31, 2020 were authorized for issue by the Board of Directors on February 10, 2021. They will be submitted to shareholders for approval at the Annual General Meeting of April 28, 2021.

The Group's main businesses are described in Chapter 1 of the Universal Registration Document.

COVID-19 pandemic

Impact of the spread of the COVID-19 and Strategy of the Group

The COVID-19 pandemic and the actions taken in response to its spread have resulted in disturbances to the Group's business operations, and supply chain in the course of the year.

In this context, the Group has been coordinating its teams globally, regionally and locally to ensure business continuity and focused on the following key elements : health, business continuity, cash & costs, rebound with customers, taking care of communities through the launch of "Tomorrow Rising Fund".

While the first initiatives included ensuring the health and safety of its employees, the Group also adapted some facilities to assist in the production of essential medical equipment. The supply chain organization instituted a global management team that has been tracking evolution of the situation in real time. The Group focused on enhancing the digital customer experience, while establishing communities and partnerships, and provided multiple digital interactions and trainings to customers across the world. The Group also accelerated its medium term cost efficiency plan, and implemented specific tactical savings across the organization, leveraging its multi-local model.

Government grants

The Group did not benefit from significant grants established by the countries impacted by the pandemic, and chose not to resort to the exceptional liquidity support schemes proposed by the French state to overcome the crisis. The Group however benefited from deferral of payment of various tax and social charges accross the world, generating temporary positive cash impact that will be compensated in 2021.

Risks and uncertainties

The Group demonstrated the agility and resilience of its global supply chain while coordinating and regionally managing supply chain organization to enable quick decision making and flexibility. The crisis did not reveal new risks factors for the Group.

Liquidity and balance sheet position

At December 31, 2020, the Group has a total liquidity of around EUR 10.7 billion, including cash & cash equivalents and undrawn available committed credit lines. The Group has sufficient liquidity for debt repayments, funding acquisitions that have been already announced, and its operations for at least the year to come. The Group working capital was assessed with the same accounting policies, principles and methodologies used for the full year 2019 consolidated financial statements. There was no material impairment booked in the income statement as at December 31, 2020.

Impairment of assets

The Group expects to emerge strong from the crisis and recover its sales & margin level in the near perspective, and has therefore restated its adjusted EBITA margin ambition for 2022.

The Group performed the annual impairment test of all the Cash Generating Units (CGUs) using the same methodology as the one used on previous periods, and described in note 1.11. Following the performance of these tests, the Group concluded that there was no risk of impairment at December 31, 2020. The respective headrooms have not been significantly impacted by the crisis.

NOTE 1 Accounting policies

1.1- Accounting standards

The consolidated financial statements have been prepared in compliance with the international accounting standards (IFRS) as adopted by the European Union as of December 31, 2020. The same accounting methods were used as for the consolidated financial statements for the year ended December 31, 2019.

The following standards and interpretations that were applicable during the period did not have a material impact on the consolidated financial statements as of December 31, 2020:

• amendments to IFRS 16 Leases Covid 19-Related Rent Concessions;
• amendments to IFRS 3 Business Combinations;
• amendments to IFRS 9, IAS 39 and IFRS 7 Interest Rate Benchmark Reform;
• amendments to IAS 1 and IAS 8 Definition of Material;
• annual improvements to References to the Conceptual Framework in IFRS Standards.

The Group did not apply the following standards and interpretations for which mandatory application is subsequent to December 31, 2020:

• standards adopted by the European Union:
• – amendments to IFRS 4 Contracts Deferral of IFRS 9;
• – amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 Interest Rate Benchmark Reform- Phase 2.
• standards not yet adopted by the European Union:
• – IFRS 17 Insurance Contracts
• – amendments to IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or Non-current;

• – amendments to IFRS 3 Business Combinations;

• – amendments to IAS 16 Property, Plant and Equipment;

• – amendments to IAS 37 Provisions, Contingent Liabilities and Contingent Assets;
• – Annual Improvements 2018-2020.

The Group is currently assessing the potential effect on the Group's consolidated financial statements of the standards not yet applicable as of December 31, 2020. At this stage of analysis, the Group does not expect any material impact on its consolidated financial statements.

Effects of IFRS 16

Leases Covid 19-Related Rent Concessions

On 28 May 2020, the IASB issued Covid-19-Related Rent Concessions - amendment to IFRS 16 - Leases. The amendments provide relief to lessees from applying IFRS 16 guidance on lease modification accounting for rent concessions arising as a direct consequence of the Covid-19 pandemic. As a practical expedient authorized by the amendment, Schneider Electric elected, for the concessions that meet the amendment's criteria, not to assess whether a Covid-19 related rent concession from a lessor is a lease modification. The amendment applies to annual reporting periods beginning on or after 1 January 2020. This amendment had no significant impact on the consolidated financial statements of the Group and the total incentives provided by lessors for the Group amount to around 2 million euros.

IFRIC decision - Lease term and useful life of non removable leasehold improvements

The November 2019 IFRIC decision has been applied by the Group as of December 2020 with retroactive effect. For this purpose, remaining useful life of leasehold improvements have been compared to the duration defined for IFRS 16 on a case by case basis. Furthermore, all contracts classified as short term leases because considered as not enforceable beyond 12 months were reviewed, to ensure that the most probable duration was considered as the IFRS 16 duration. Any deviation identified has been adjusted and the total impact of those corrections is not significant for the Group.

1.2- Basis of presentation

The financial statements have been prepared on a historical cost basis, except for derivative instruments and certain financial assets, which are measured at fair value. Financial liabilities are measured using the amortized cost model. The book value of hedged assets and liabilities, under fair-value hedge, corresponds to their fair value, for the part corresponding to the hedged risk.

1.3- Use of estimates and assumptions

The preparation of financial statements requires Group and subsidiary management to make estimates and assumptions that are reflected in the amounts of assets and liabilities reported in the consolidated balance sheet, the revenues and expenses in the statement of income and the commitments created during the reporting period. Actual results may differ.

These assumptions mainly concern:

• the measurement of the recoverable amount of goodwill, property, plant and equipment and intangible assets (Note 1.8 and 1.9) and the measurement of impairment losses (Note 1.11);
• the measurement of the recoverable amount of non-current financial assets (Note 1.12 and Note 13);
• the realizable value of inventories and work in progress (Note 1.13);
• the recoverable amount of trade and other operating receivables (Note 1.14);
• the valuation of share-based payments (Note 1.20);
• the calculation of provisions or risk contingencies (Note 1.21);
• the measurement of pension and other post-employment benefit obligations (Note 1.19 and Note 20);
• the recoverability of deferred tax assets related to tax loss carryforward (Note 14).

1.4- Consolidation principles

Subsidiaries, over which the Group exercises exclusive control, either directly or indirectly, are fully consolidated.

Group investments in entities controlled jointly with a limited number of partners, such as joint ventures and companies over which the Group has significant influence ("associates") are accounted for by the equity method. Significant influence is presumed to exist when more than 20% of voting rights are held by the Group.

Companies acquired or sold during the year are included in or removed from the consolidated financial statements as of the date when effective control is acquired or relinquished.

Intra-group balances and transactions are eliminated.

The list of consolidated main subsidiaries, joint ventures and associates can be found in Note 29.

The reporting date for all companies included in the scope of consolidation is December 31, with the exception of certain immaterial associates accounted for by the equity method. For the latter however, financial statements up to September 30 of the financial year have been used (maximum difference of three months in line with the standards).

1.5- Business combinations

Business combinations are accounted for using the acquisition method, in accordance with IFRS 3 - Business Combinations. Acquisition costs are presented under "Other operating income and expenses" in the statement of income.

All acquired assets, liabilities and contingent liabilities are recognized at their fair value at the acquisition date, the fair value can be adjusted during a measurement period that can last for up to 12 months from the date of acquisition.

The excess of the cost of acquisition over the Group's share in the fair value of assets and liabilities at the date of acquisition is recognized in goodwill. Where the cost of acquisition is lower than the fair value of the identified assets and liabilities acquired, the badwill is immediately recognized in the statement of income.

Goodwill is not amortized, but tested for impairment at least annually and whenever there is an indication that it may be impaired (see Note 1.11 below). Any impairment losses are recognized under "Amortization expenses and impairment losses of purchase accounting intangible assets".

1.6- Translation of the financial statements of foreign subsidiaries

The consolidated financial statements are prepared in euros.

The financial statements of subsidiaries that use another functional currency are translated into euros as follows:

• assets and liabilities are translated at the official closing rates;
• income statement, backlog and cash flow items are translated at average annual exchange rates.

Gains or losses on translation are recorded in consolidated equity under "Cumulative translation reserve".

The Group applies IAS 29 - Financial Reporting in Hyperinflationary Economies to the Group's subsidiaries in hyperinflation countries (Venezuela and Argentina). The impacts are not significant for the Group in 2020.

1.7- Foreign currency transactions

Foreign currency transactions are recorded using the exchange rate in effect at the transaction date or at the hedging rate. At the balance sheet date, monetary items in foreign currency (eg. payables, receivables, etc.) are translated into the functional currency of the entity at the closing rate or at the hedging rate. Gains or losses on translation of foreign currency transactions are recorded under "Net financial income/ (loss)". Foreign currency hedging is described below, in Note 1.23.

However, certain long-term receivables and loans to subsidiaries are considered to be part of a net investment in a foreign operation, as defined by IAS 21 - The effects of changes in foreign exchange rates. As such, the impact of exchange rate fluctuations is recorded in equity and recognized in the statement of income when the investment is sold or when the long-term receivable or loan is reimbursed.

1.8- Intangible assets

Intangible assets acquired separately or as part of a business combination

Intangible assets acquired separately are initially recognized in the balance sheet at historical cost. They are subsequently measured using the cost model, in accordance with IAS 38 - Intangible Assets.

Intangible assets (mainly trademarks, technologies and customer lists) acquired as part of business combinations are recognized in the balance sheet at fair value at the combination date, appraised externally for the most significant assets and internally for the rest, and that represents its historical cost in consolidation. The valuations are performed using generally accepted methods, based on future inflows.

Intangible assets are generally amortized on a straight-line basis over their useful life or, alternatively, over the period of legal protection. Amortized intangible assets are tested for impairment when there is any indication that their recoverable amount may be less than their carrying amount.

Amortization expenses and impairment losses on intangible assets acquired in a business combination are presented on a separate statement of income line item, "Amortization expenses and impairment losses of purchase accounting intangible assets".

Trademarks

The trademarks fair value is determined using the royalty method at the date of acquisition.

Trademarks acquired as part of a business combination are not amortized when they are considered to have an indefinite life.

The criteria used to determine whether or not such trademarks have indefinite lives and, as the case may be, their lifespan, are as follows:

• brand awareness;
• outlook for the brand in light of the Group's strategy for integrating the trademark into its existing portfolio.

Non-amortized trademarks are tested for impairment at least annually and whenever there is an indication they may be impaired. When necessary, an impairment loss is recorded.

Internally-generated intangible assets

Research and development costs

Research costs are expensed in the statement of income when incurred. Development costs for new projects are capitalized if, and only if:

• the project is clearly identified and the related costs are separately identified and reliably monitored;
• the project's technical feasibility has been demonstrated and the Group has the intention and financial resources to complete the project and to use or sell the resulting products;
• the Group has allocated the necessary technical, financial and other resources to complete the development;
• it is probable that the future economic benefits attributable to the project will flow to the Group.

Development costs that do not meet these criteria are expensed in the financial year in which they are incurred.

Before the commercial launch, capitalized development projects are tested for impairment at least annually. From the date of the commercial launch, capitalized development projects are amortized over the lifespan of the underlying technology, which generally ranges from three to ten years. The amortization expenses of such capitalized projects are included in the cost of the related products and classified into "Cost of sales" when the products are sold.

As for development-related assets which are in the amortization period, they are tested for impairment in case an impairment risk has been identified.

Software implementation

External and internal costs relating to the implementation of Enterprise Resource Planning (ERP) applications are capitalized when they relate to the programming, coding and testing phase. They are amortized over the applications' useful lives. In accordance with paragraph 98 of IAS 38, the SAP bridge application currently being rolled out within the Group is amortized using the production unit method to reflect the pattern in which the asset's future economic benefits are expected to be consumed. Said units of production correspond to the number of users of the rolled-out solution divided by the number of target users at the end of the roll-out.

1.9- Property, plant and equipment

Property, plant and equipment is primarily comprised of land, buildings and production equipment and is carried at cost, less accumulated depreciation and any accumulated impairment losses, in accordance with the recommended treatment in IAS 16 - Property, plant and equipment.

Each component of an item of property, plant and equipment with a useful life that differs from that of the whole item is depreciated separately on a straight-line basis. The main useful lives are as follows:

• buildings: 20 to 40 years;
• machinery and equipment: 3 to 10 years;
• other: 3 to 12 years.

The useful life of property, plant and equipment used in operating activities, such as production lines, reflects the related products' estimated life cycles.

Useful lives of items of property, plant and equipment are reviewed periodically and may be adjusted prospectively if appropriate. The depreciable amount of an asset is determined after deducting its residual value, when the residual value is material.

Depreciation is expensed in the period and included in the production cost of inventory or the cost of internally-generated intangible assets. It is recognized in the statement of income under "Cost of sales", "Research and development costs" or "Selling, general and administrative expenses", as the case may be.

Items of property, plant and equipment are tested for impairment whenever there is an indication they may be impaired. Impairment losses are charged to the statement of income under "Other operating income and expenses".

Since 2019, property, plant and equipment also includes right-of-use assets, in accordance with the recommended treatment in IFRS 16 - Leases, and as described in the following note.

1.10- Leases

The Group has adopted IFRS 16 on January 1, 2019, according to the modified retrospective approach.

Scope of the Group's contracts

The lease contracts identified within all the Group entities fall under the following categories:

• real estate: office buildings, factories, and warehouses;
• vehicles: cars and trucks;
• forklifts used mainly in factories or storage warehouses.

The Group has retained the exemption for low-value assets (i.e.assets with a cost lower than USD 5,000). Thus, the defined scope does not include small office or IT equipment, mobile phones or other small equipment, which all correspond to low-value equipment. Shortterm contracts (i.e. less than 12 months without purchase option) are also exempted under the standard. In this case, for example, for occasional vehicle or accommodation rentals.

Rental obligation:

At the inception date of the lease, the Group recognizes the lease liabilities, measured at the present value of the lease payments to be made over the term of the lease. The present value of payments is calculated mainly using the marginal borrowing rate of the contracting entity's country, at the contract starting date.

Rental payments include fixed payments (net of rental incentives receivable), variable payments based on an index or rate and amounts that should be paid under residual value guarantees. Besides, the simplification allowing not to split services components has not been elected by the Group. Therefore, only the rents are taken into account in the lease payments.

Lease payments also include, when applicable, the exercise price of a purchase option reasonably certain to be exercised by the Group and the payment of penalties for the termination of a lease, if the term of the lease takes into account the fact that the Group has exercised the termination option.

Variable lease payments that are not dependent on an index or rate are recognized as an expense in the period in which the event or condition that triggers the payment occurs.

After the start date of the contract, the amount of rental obligations is increased to reflect the increase in interest and reduced for lease payments made.

In addition, the carrying amount of the lease liabilities is revalued in the event of a reassessment or modification in the lease (e.g. change in the term of the lease, change in lease payments, application of annual indexation, etc.).

The obligation is recorded under other current debt and other non-current liabilities.

Right-of-use assets:

The Group accounts for the assets related to the right-of-use on the lease starting date (i.e. the date on which the underlying asset is available). Assets are measured at cost, less accumulated amortization and impairment losses, and adjusted for the revaluation of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities, initial direct costs incurred and lease payments made on or before the effective date, minus lease inducements received. They are recognized as tangible assets, in the Balance Sheet. Unless the Group is reasonably certain that it will become the owner of the leased asset at the end of the lease term, the recorded right-of-use assets are depreciated using the linear method over the shortest period of time between estimated life of the underlying asset and the duration of the lease. The assets related to the right-of-use are subject to depreciation.

Determining the duration of contracts:

The duration of the Group's contracts varies according to geographies.

The real estate contracts have variable durations depending on the countries and local regulations. Vehicles and forklifts are generally contracted between 3 and 6 years.

In certain geographies, the Group's real estate contracts offer unilateral options for termination of contracts (particularly in France with contracts 3-6-9).

According to the recommendation of IFRIC, on a case by case analysis and based on Real Estate teams' expertise, experience strategy and projects, the Group is determining the most probable duration to perform our calculations. In the majority of cases, the duration chosen is the enforceable duration of the real estate contracts, in particular on the most strategic buildings and factories.

IFRS 16 debt by maturity:

(in millions of euros)	Dec. 31, 2020	Dec. 31, 2019
2020	-	258
2021	250	201
2022	208	182
2023	165	138
2024	122	105
2025	86	71
2026	67	56
2027	55	45
2028 and beyond	125	74
TOTAL	1,078	1,130

1.11- Impairment of assets

In accordance with IAS 36 - Impairment of Assets, the Group assesses the recoverable amount of its long-lived assets as follows:

• for all property, plant and equipment subject to depreciation and intangible assets subject to amortization, the Group carries out a review at each balance sheet date to assess whether there is any indication that they may be impaired. Indications of impairment are identified based on external or internal information. If such an indication exists, the Group tests the asset for impairment by comparing its carrying amount to the higher of fair value minus costs to sell and value in use;
• non-amortizable intangible assets and goodwill are tested for impairment at least annually and whenever there is an indication that the assets may be impaired.

Value in use is determined by discounting future cash flows that will be generated by the tested assets. These future cash flows are based on Group management's economic assumptions and operating forecasts presented in business plans over a period generally not exceeding five years, and then extrapolated based on a perpetuity growth rate. The discount rate corresponds to the Group's Weighted Average Cost of Capital (WACC) at the measurement date. The WACC stood at 6.8% at December 31, 2020 (6.9% at December 31, 2019). This rate is based on (i) a long-term interest rate of 0.53%, corresponding to the average interest rate for 10-year OAT treasury bonds over the past few years, (ii) the average premium applied to financing obtained by the Group in 2020, and is completed by, for CGUs WACC only, (iii) the weighted country risk premium for the Group's businesses in the countries in question.

The perpetuity growth rate is 2%, unchanged from the previous financial year.

Impairment tests are performed at the level of the Cash-Generating Unit (CGU) to which the asset belongs. A cash-generating unit is the smallest group of assets that generates cash inflows that are largely independent of the cash flows from other assets or groups of assets. The cash-generating units are Low Voltage, Medium Voltage, Industrial Automation and Secure Power. CGUs net assets were allocated to the CGUs at the lowest possible level on the basis of the CGU activities to which they belong; the assets belonging to several activities were allocated to each CGU (Low Voltage, Medium Voltage and Industrial Automation mainly).

The WACC used to determine the value in use of each CGU was 7.4% for Low Voltage, 7.7% for Medium Voltage, 7.6% for Secure Power, and 7.5% for Industrial Automation.

Goodwill is allocated when initially recognized. The CGU allocation is done on the same basis as used by Group management to monitor operations and assess synergies deriving from acquisitions.

Where the recoverable amount of an asset or CGU is lower than its book value, an impairment loss is recognized for the excess of the book value over the recoverable value. The recoverable value is defined as the highest value between the value in use and the fair value less costs to sell. Where the tested CGU comprises goodwill, any impairment losses are firstly deducted from goodwill.

1.12- Non-current financial assets

Investments in non-consolidated companies are initially recorded at their cost of acquisition and subsequently measured at fair value. The fair value of investments listed in an active market may be determined reliably and corresponds to the listed price at balance sheet date (Level 1 from the fair value hierarchy as per IFRS 7).

IFRS 9 standard allows two accounting treatments for equity instruments:

• change in fair value is recognized through "Other Comprehensive Income" in the comprehensive income statement, and in equity under "Other reserves" in the balance sheet, with no subsequent recycling in the income statement even upon sale. • change in fair value, as well as gain or loss in case of sale, are recognized in the income statement.

The election between those two methods is to be made from inception for each equity investment and is irrevocable.

Venture capital (FCPR) / Mutual funds (SICAV) are recognized at fair value through income statement, in accordance with IFRS 9.

Loans, recorded under "Non-current financial assets", are carried at amortized cost. In accordance with IFRS 9, a depreciation is booked from inception to reflect the expected credit risk losses within 12 months. In case of significant degradation of the credit quality, the initial level of depreciation is modified to cover the entire expected losses over the remaining maturity of the loan.

1.13- Inventories and work in progress

Inventories and work in progress are measured at the lower of their initial recognition cost (acquisition cost or production cost generally determined by the weighted average price method) or of their estimated net realizable value.

Net realizable value corresponds to the estimated selling price net of remaining expenses to complete and/or sell the products. Inventory impairment losses are recognized in "Cost of sales". The cost of work in progress, semi-finished and finished products, includes the cost of materials and direct labor, subcontracting costs, all production overheads based on normal manufacturing capacity and the portion of research and development costs that are directly related to the manufacturing process (corresponding to the amortization of capitalized projects in production and product and range of products maintenance costs).

1.14- Trade and other operating receivables

Trade and other operating receivables are depreciated according to the simplified IFRS 9 model. From inception, trade receivables are depreciated to the extent of the expected losses over their remaining maturity.

The credit risk of trade receivables is assessed on a collective basis country by country, as the geographical origin of receivables is considered representative of their risk profile. Countries are classified by risk profile using the assessment provided by an external agency. The provision for expected credit losses is evaluated using (i) the probabilities of default communicated by a credit agency, (ii) historical default rates, (iii) aging balance, (iv) as well as the Group's assessment of the credit risk considering actual guarantees and credit insurance.

Once it is known with certainty that a doubtful receivable will not be collected, the doubtful account and its related depreciation are written off through the income statement.

Accounts receivable are discounted in cases where they are due in over one year and the discounting impact is significant.

1.15- Assets held for sale and liabilities of discontinued operations

Assets held for sale are no longer amortized or depreciated and are recorded separately in the balance sheet under "Assets held for sale" at the lower of its amortized cost and net realizable value.

1.16- Deferred taxes

Deferred taxes, related to temporary differences between the tax basis and accounting basis of consolidated assets and liabilities, are recorded using the balance sheet liability method, based on tax rates and tax rules enacted before the balance sheet date. The effect of any change in the tax rate is recognised in the income statement, apart from changes relating to items initially recognised directly in equity.

Future tax benefits arising from the utilization of tax loss carry forwards (including amounts available for carry forward without time limit) are recognized only when they can reasonably be expected to be realized. The carrying amount of deferred tax assets is tested for impairment at each balance sheet date and an impairment loss is recognised to the extent that it is no longer probable that sufficient taxable profits will be available against which the deferred tax asset can be fully or partially offset.

Deferred tax assets and liabilities are not discounted and are recorded in the balance sheet under non-current assets and liabilities. Deferred tax assets and liabilities related to the same unit and which are expected to reverse in the same period are offset.

1.17- Cash and cash equivalents

Cash and cash equivalents presented in the balance sheet consist of cash, bank accounts, term deposits of three months or less and marketable securities traded on organized markets. Marketable securities are short-term, highly-liquid investments that are readily convertible to known amounts of cash at maturity. They notably consist of bank deposits, commercial paper, mutual funds and equivalents. Considering their nature and maturities, these instruments represent insignificant risk of changes in value and are treated as cash equivalents.

1.18- Schneider Electric SE shares

Schneider Electric SE shares held by the parent company or by fully consolidated companies are measured at acquisition cost and deducted from equity.

Gains/(losses) on the sale of own shares are canceled from consolidated reserves, net of tax.

1.19- Pensions and other employee benefit obligations

Depending on local practices and laws, the Group's subsidiaries participate in pension, termination benefit and other long-term benefit plans. Benefits paid under these plans depend on factors such as seniority, compensation levels and payments into mandatory retirement programs.

Defined contribution plans

Payments made under defined contribution plans are recorded in the income statement, in the year of payment, and are in full settlement of the Group's liability. As the Group is not committed beyond these contributions, no provision related to these plans has been booked. In most countries, the Group participates in mandatory general plans, which are accounted for as defined contribution plans.

Defined Benefit plans

Defined Benefit plans are measured using the projected unit credit method.

Expenses recognized in the statement of income are split between operating income (for service costs rendered during the period) and net financial income/(loss) (for financial costs and expected return on plan assets).

The amount recognized in the balance sheet corresponds to the present value of the obligation, and net of plan assets.

When this is an asset, the recognized asset is limited to the present value of any economic benefit due in the form of plan refunds or reductions in future plan contributions.

Changes resulting from periodic adjustments to actuarial assumptions regarding general financial and business conditions or demographics (i.e., changes in the discount rate, annual salary increases, return on plan assets, years of service, etc.) as well as experience adjustments are immediately recognized in the balance sheet as a separate component of equity in "Other reserves" and in comprehensive income as "Other comprehensive income/loss".

Other commitments

Provisions are funded and expenses recognized to cover the cost of providing health-care benefits for certain Group retirees in Europe and the United States. The accounting policies applied to these plans are similar to those used to account for Defined Benefit pension plans.

The Group also funds provisions for all its subsidiaries to cover seniority-related benefits (primarily long service awards for its French subsidiaries). Actuarial gains and losses on these benefit obligations are fully recognized in profit or loss.

1.20- Share-based payments

The Group grants performance shares to senior executives and certain employees.

Pursuant to the application of IFRS 2 - Share-based payments, these plans are measured on the date of grant and an employee benefits expense is recognized on a straight-line basis over the vesting period, in general three or four years depending on the country in which it is granted.

The Group uses the Cox-Ross-Rubinstein binomial model to measure these plans.

For performance shares and stock options, this expense is offset in the equity. In the case of stock appreciation rights, a liability is recorded corresponding to the amount of the benefit granted, re-measured at each balance sheet date.

As part of its commitment to employee share ownership, Schneider Electric gave its employees the opportunity to purchase shares at a discounted price (Note 19).

1.21- Provisions and risk contingencies

A provision is recognized when it is probable that the Group has a present legal or constructive obligation as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. If the loss or liability is not likely and cannot be reliably estimated, but remains possible, the Group discloses it as a contingent liability. Provisions are calculated on a case-by-case or statistical basis, and discounted when the impact from discounting is significant.

Provisions are primarily set aside to cover:

• economic risks: these provisions relate to probable tax risks arising on positions taken by the Group or its subsidiaries. Each position is assessed individually and not offset, and reflects the best estimate of the risk at the end of the reporting period. Where applicable, it includes any late-payment interest and fines. In accordance with IFRIC 23 - Uncertainty over income tax treatments, provisions covering uncertainties over income tax treatment are presented under "Accrued taxes and payroll costs" as of 1st of January 2019;
• customer risks: provisions for customer risks mainly integrate the provisions for losses at completion for some of long term contracts. Provisions for expected losses are fully recognized as soon as they are identified;
• product risks: these provisions comprise
• – statistical provisions for warranties: the Group funds provisions on a statistical basis for the residual cost of Schneider Electric product warranties not covered by insurance. The provisions are estimated with consideration of historical claim statistics and the warranty period;
• – provisions to cover disputes concerning defective products and recalls of clearly identified products.
• environmental risks: these provisions are primarily funded to cover clean-up costs. The estimation of the expected future outflows is based on reports from independent experts;
• restructuring costs, when the Group has prepared a detailed plan for the restructuring and has either announced or started to implement the plan before the end of the year. The estimation of the liability include only direct expenditure arising from the restructuring.

1.22- Financial liabilities

Financial liabilities primarily comprise bonds, commercial paper and short and long-term bank borrowings. These liabilities are initially recorded at fair value, from which any direct transaction costs are deducted. Subsequently, they are measured at amortized cost based on their effective interest rate.

1.23- Financial instruments and derivatives

Risk hedging management is centralized. The Group's policy is to use derivative financial instruments exclusively to manage and hedge changes in exchange rates, interest rates or prices of certain raw materials. The Group uses instruments such as FX forwards, FX options, cross currency swaps, interest rate swaps and commodities future, swaps or options, depending on the nature of the exposure to be hedged.

All derivatives are recorded in the balance sheet at fair value with changes in fair value recorded in the statement of income, except when they are qualified in a hedging relationship.

Foreign currency hedges

The Group periodically enters into FX derivatives to hedge the currency risk associated with foreign currency transactions. Whenever possible, monetary items (except specific financing items) denominated in foreign currency carried in the balance sheet of Group companies are hedged by rebalancing assets and liabilities per currency through FX spots realized with Corporate Treasury (natural hedge). The FX risk is thus aggregated at Group level and hedged with FX derivatives. When FX risk management cannot be centralized, the Group contracts FX forwards to hedge operating receivables and payables carried in the balance sheet of Group companies. In both cases, the Group does not apply hedge accounting because gains and losses generated on these FX derivatives naturally offset within "Net financial income/(loss)" with gains or losses resulting from the translation at end-of-year rates of payables and receivables denominated in foreign currency.

The Group also hedges future cash flows, including recurring future transactions and planned acquisitions or disposals of investments. In accordance with IFRS 9, these are treated as cash flow hedges. These hedging instruments are recognized at fair value in the balance sheet. The portion of the gain or loss on the hedging instrument that is determined to be an effective hedge is accumulated in equity, under "Other reserves", and then recognized in the income statement when the hedged item affects profit or loss.

The Group also hedges FX risk financing receivables or payables (including current accounts and loans with subsidiaries) using FX derivatives than can be documented either in Cash Flow Hedge or Fair Value Hedge depending on the nature of the derivative.

The Group may also designate FX derivatives or borrowings as hedging instruments of its investments in foreign operations (net investment hedge). Changes of value of those hedging instruments are accumulated in equity and recognized in the statement of income symmetrically to the hedged items.

The Group documents FX derivative based on the spot rate. The Group adopted the cost of hedging option offered by IFRS 9 to limit volatility in the statement of income related to forward points:

• For FX derivatives hedging an item on the balance sheet: Forward points are amortized in statement of income on a straight-line basis. Forward points related to FX derivatives hedging financing transactions are included in "Finance costs, net";
• For FX derivatives hedging future transactions not yet recorded on the balance sheet: Forward points are recorded in the statement of income when the hedged transaction impacts the statement of income.

Interest rate hedges

Interest rate swaps allow the Group to manage its exposure to interest rate risk. The derivative instruments used are financially adjusted to the schedules, rates and currencies of the borrowings they cover. They involve the exchange of fixed and floating-rate interest payments. The differential to be paid (or received) is accrued as an adjustment to interest income or expense over the life of the agreement. The Group applies hedge accounting as described in IFRS 9 for interest rate swaps. Gains and losses on re-measurement of interest rate swaps at fair value on the balance sheet are recognized in equity (for Cash Flow Hedges) or in profit or loss (for Fair Value Hedges).

Borrowings hedged by an interest rate derivative in a fair value hedge are reevaluated at fair value for the portion of risk being hedged, with offsetting entry in the statement of income.

Cross-currency swaps may be presented both as foreign exchange hedges and interest rate hedges depending on the characteristics of the derivative.

Commodity hedges

The Group also purchases commodity derivatives including forward purchase contracts, swaps and options to hedge price risks on all or part of its forecast future purchases. Under IFRS 9, these qualify as cash flow hedges. These instruments are recognized in the balance sheet at fair value at the period-end (mark to market). The effective portion of the hedge is recognized separately in equity (under "Other reserves") and then recognized in income (gross margin) when the underlying hedge affects consolidated income. The effect of this hedging is then incorporated in the cost price of the products sold.

Shares hedges

Schneider Electric shares are hedged in relation to last Stock Appreciation Rights granted to US employees before 2012 using derivatives documented in cash flow hedge.

Time value of options documented in a hedging relationship is recorded using the same approach used for forward points. Any ineffectiveness arising from a derivative documented in a hedging relationship is recorded in "Net financial income/(loss)".

Cash flows from financial instruments are recognized in the consolidated statement of cash flows in a manner consistent with the underlying transactions.

1.24- Revenue recognition

The Group's revenues primarily include transactional sales and revenues from services, and system contracts (projects).

Some contracts may include the supply to the customer of distinct goods and services (for instance contracts combining build followed by operation and maintenance). In such situations, the contract is analyzed and segmented into several components ("performance obligations"), each component being accounted for separately, with its own revenue recognition method and margin rate. The selling price is allocated to each performance obligation in proportion to the specific selling price of the underlying goods and services. This allocation should reflect the share of the price to which Schneider Electric expects to be entitled in exchange for the supply of these goods or services.

Revenue associated with each performance obligation identified within a contract is recognized when the obligation is satisfied, i.e. when the control of the promised goods or services is transferred to the customer.

The following revenue recognition methods can be applied:

Recognition of revenue at a point of time

Revenue from sales is recognized at a point of time, when the control of the promised goods or services is transferred to the customer. This method is applicable for all transactional sales and for specific services such as spare parts deliveries, or on-demand services.

Recognition of revenue over time

To demonstrate that the transfer of goods is progressive and recognize revenue over time, the following cumulative criteria are required:

• the goods sold have no alternative use, and
• enforceable right to payment (corresponding to costs incurred, plus a reasonable profit margin) for the work performed to date exists, in the event of early termination for convenience by the customer.

When these criteria are fulfilled, revenue is recognized using the percentage-of-completion method, based on the percentage of costs incurred in relation to total estimated costs of the performance obligation. The cost incurred includes direct and indirect costs relating to the contracts.

Expected losses on contracts are fully recognized as soon as they are identified.

Penalties for late delivery or for the improper execution of a contract are recognized as a deduction from revenue.

This method is applicable for systems contracts (projects) as the constructed assets are highly customized, and thus the Group would incur significant economic losses to redirect the built solutions to other customers.

Revenue from the majority of services contracts is recognized over time, as the customer simultaneously receives and consumes the benefits of the services provided. When costs incurred are stable over the contract's period, revenue is linearized over the contract's length.

Provisions for the discounts offered to distributors are accrued when the products are sold to the distributor and recognized as a deduction from revenue. Certain Group subsidiaries also offer cash discounts to distributors. These discounts and rebates are deducted from sales. Consolidated revenue is presented net of these discounts and rebates.

Backlog and balance sheet presentation

Backlog (as disclosed in Note 3) corresponds to the amounts of the selling price allocated to the performance obligations that are unsatisfied (or partially unsatisfied) at closing date.

The cumulated amount of revenue accounted for, less progress payments and accounts receivable (presented on a dedicated line of the balance sheet) is determined on a contract-by-contract basis. If this amount is positive, the balance is recognized under "contract assets" in the balance sheet. If it is negative, the balance is recognized under "contract liabilities" (see Note 16). Reserves for onerous contracts (socalled reserves for loss at completion) are excluded from contract assets and liabilities and presented among the "provisions for customer risks" item.

1.25- Earnings per share

Earnings per share are calculated in accordance with IAS 33 - Earnings Per Share.

Diluted earnings per share are calculated by adjusting profit attributable to equity holders of the parent and the weighted average number of shares outstanding for the dilutive effect of the exercise of stock options outstanding at the balance sheet date. The dilutive effect of stock options is determined by applying the "treasury stock" method, which consists of taking into account the number of shares that could be purchased, based on the average share price for the year, using the proceeds from the exercise of the rights attached to the options.

1.26- Statement of cash flows

The consolidated statement of cash flows has been prepared using the indirect method, which consists of reconciling net profit to net cash provided by operations. The opening and closing cash positions include cash and cash equivalents, comprised of marketable securities, net of bank overdrafts and facilities.

NOTE 2 Changes in the scope of consolidation

The list of main consolidated companies can be found in Note 29.

2.1- Scope variations

Acquisitions & disposals of the period

Acquisitions

RIB Software SE

On February 13, 2020, the Group announced its intention to launch a voluntary public tender for the acquisition of 100% of the shares of RIB Software SE for a total valorisation of EUR 1.5 billion. On March 25, 2020, the Group acquired approximately 9.99% of the capital of the company, outside the takeover offer. On July 10, 2020, the Group announced the successful completion of the voluntary public takeover offer. As of December 31, 2020, the Group owns 87.64% of the capital of RIB Software, fully consolidated within Energy Management reporting segment. The consideration paid amounts EUR 1,075 million (net of cash acquired).

The purchase accounting resulting from the acquisition is not completed at the closing date. As of December 31, 2020, the net purchase accounting adjustments amount to EUR 228 million, and result mainly of the identification of intangible assets (technologies, trademark and customer relationship). The preliminary Goodwill recognised amounts to EUR 1,114 million as of December 31,2020.

The Group holds a put option agreement on 9.1% of minority interests, valued at EUR 137 million (EUR 29 per share), with a maturity in 2024. This debt has been recognised within "Other non-current liabilities".

ProLeit

On August 4, 2020, the Group acquired ProLeiT AG and fully consolidated in Industrial Automation reporting segment since August 1, 2020. The consideration paid amounts in cash EUR 84 million (net of cash acquired). As of December 31, 2020, the Group recognized intangible assets for a preliminary amount of EUR 31 million (technologies, trademark and customer relationship), and an amount of Goodwill of EUR 91 million.

Larsen & Toubro

On May 1st, 2018, Schneider Electric, partnering with Temasek, a global investment company headquartered in Singapore, reached an agreement to buy Larsen & Toubro's Electrical & Automation business.

On August 31, 2020, the Group completed the transaction to combine Schneider Electric India's Low Voltage and Industrial Automation Products business and Larsen and Toubro ("L&T") Electrical and Automation business, for a consideration paid of EUR 1,571 million. Temasek took 35% stake in the combined business for EUR 530 million. The partnership with Temasek resulted in the dilution of the Group's interests within Schneider Electric India's Low Voltage and Industrial Automation Products business, and in the recognition of a gain of EUR 191 million in the Group share of equity.

L&T is fully consolidated since September 1, 2020, and reports within the Energy Management reporting segment.

The purchase accounting as per IFRS 3R is not completed as of December 31, 2020. The net adjustment of the opening balance sheet is EUR 316 million, resulting mainly from the booking of a preliminary amount of identifiable intangible assets (mainly customer relationship, technology and trademark), and the assessment of some contingent liabilities (mainly related to risks identified on contracts). This adjustment is subject to change in 2021, notably with the ongoing valuation of the environmental risks. The preliminary Goodwill recognised amounts to EUR 1,020 million as of December 31,2020.

Planon

On December 17, 2020, the Group has successfully completed the strategic minority investment in Planon Beheer B.V. (Planon), a leading software provider in Building & Workplace management. As of December 31, 2020, the Group owns 25% of Planon Beheer B.V., which will be accounted under the equity method in 2021. The consideration paid amounts in cash EUR 113 million.

OSIsoft, LLC.

On August 25, 2020, AVEVA Group Plc, which is fully consolidated within Industrial Automation reporting segment, announced the proposed acquisition of OSIsoft. LLC. for a consideration of USD 5.0 billion. OSIsoft is a global leader in real-time industrial operational data software and services. For the year ended December 31,2019, OSIsoft recognised a revenue of USD 470 million and adjusted EBIT of USD 125 million.

AVEVA has received all antitrust and regulatory clearances required ahead of completion of the acquisition, except for the approval of the Committee on Foreign Investment in the United States (CFIUS). The deal is expected to close in the course of March 2021. The deal will be funded by USD 4.4 billion of cash consideration, of which USD 3.5 billion have already been raised via rights issued to existing shareholders (including Schneider Electric), and USD 0.9 billion from existing cash. The remainder will be funded by a USD 0.6 billion share consideration to be issued to Estudillo Holdings Corp. As of December 31, 2020, the cash received from AVEVA's minority interests amounts to EUR 1.1 billion.

Disposals

On October 24, 2019, the Group agreed to establish a Joint Venture with the Russian Direct Investment Fund ("RDIF"), to further strengthen the long-term outlook for the Group's Electroshield Samara business which was consolidated under Energy Management reporting segment and generated revenues of EUR 168 million in 2019.

The transaction with the Russian Direct Investment Fund ("RDIF") was closed on January 20, 2020. The new Joint Venture is accounted for as an equity method investment in 2020.

Follow-up on acquisitions and divestments occurred in 2019 with significant effect in 2020

Acquisitions

No significant acquisition occurred during 2019.

Disposals

On March 25, 2019, the Group announced having entered exclusive negotiations with Transom Capital Group regarding the sale of its Pelco business. On May 24, 2019, the sale of Pelco, which was previously reported within the Energy Management reporting segment, was finalized.

On December 5, 2019, the Group announced having signed an agreement with Vinci Energies regarding the sale of Converse Energy Projects GmbH, which was reported within the Energy Management reporting segment. On December 30, 2019, the sale was finalized.

2.2- Impact of changes in the scope of consolidation on the Group cash flow

Changes in the scope of consolidation at December 31, 2020, decreased the Group's cash position by a net EUR 2,393 million outflow, as described below:

(in millions of euros)	Full Year 2020	Full Year 2019
Acquisitions	(2,441)	(172)
of which RIB Software SE	(1,075)	-
of which L&T	(983)	-
of which others	(383)	-
Disposals	48	93
FINANCIAL INVESTMENTS NET OF DISPOSALS	(2,393)	(79)

The net investment related to Larsen & Toubro for EUR 983 million pertains to the consideration paid by the Group for the acquisition of L&T net of cash acquired and net of the cash contribution received from Temasek for EUR 530 million. The remaining cash outflow is mainly due to RIB Software SE, ProLeiT and Planon acquisitions.

NOTE 3 Segment information

The Group is organized into two reporting segments as follows:

Energy Management leverages a complete end-to-end technology offering enabled by EcoStruxure and gathers three operating segments: Low Voltage, Medium Voltage and Secure Power that all share the same objective of managing efficiently and reliably the energy and have similar economic characteristics. The Group's go-to-market is oriented to address customer needs across its four end-markets of Buildings, Data Centers, Industry and Infrastructure, supported by a worldwide partner network.

Industrial Automation includes Industrial Automation and Industrial Control activities, across discrete, process & hybrid industries.

Expenses concerning General Management that cannot be allocated to a particular segment are presented under "Central functions & digital costs".

Operating and reporting segment data is identical to that presented to the board of directors, which has been identified as the main decision-making body for allocating resources and evaluating segment performance. Performance and decisions on the allocation of resources are assessed by the board of directors and are mainly based on Adjusted EBITA.

Share-based payment is presented under "Central functions & digital costs".

The board of directors does not review assets and liabilities by business.

The same accounting principles governing the consolidated financial statements apply to segment data.

Details are provided in the Management Report.

3.1- Information by reporting segment

Full Year 2020

(in millions of euros)	Energy Management	Industrial Automation	Central functions & digital costs	Total
Backlog	7,231	1,765	-	8,996
Revenue	19,344	5,815	-	25,159
Adjusted EBITA	3,634	992	(700)	3,926
Adjusted EBITA (%)	18.8%	17.1%		15.6%

Full Year 2019

(in millions of euros)	Energy Management	Industrial Automation	Central functions & digital costs	Total
Backlog	6,399	1,705	-	8,104
Revenue	20,847	6,311	-	27,158
Adjusted EBITA	3,842	1,141	(745)	4,238
Adjusted EBITA (%)	18.4%	18.1%		15.6%

3.2- Information by region

The geographic regions covered by the Group are:

• Western Europe;
• North America (including Mexico);
• Asia-Pacific;
• Rest of the World (Eastern Europe, Middle East, Africa, South America).

Non-current assets include net goodwill, net intangible assets and net property, plant and equipment.

(in millions of euros)	Western Europe	of which France	Asia Pacific	of which China	North America	of which USA	Rest of the World	Total
Revenue by country market	6,636	1,512	7,509	4,009	7,241	6,303	3,773	25,159
Non-current assets as of Dec. 31, 2020	12,676	1,889	5,517	960	9,103	6,651	1,312	28,608
(in millions of euros)	Western Europe	of which France	Asia Pacific	of which China	North America	of which USA	Rest of the World	Total
Revenue by country market	7,132	1,666	7,808	3,906	7,874	6,789	4,344	27,158
Non-current assets as of Dec. 31, 2019	11,584	1,870	4,167	970	9,965	7,316	1,330	27,046

Moreover, the Group follows the share of new economies in revenue:

Full Year 2020 (in millions of euros)			Full Year 2019
Revenue - Mature countries	14,763	59%	15,901	59%
Revenue - New economies	10,396	41%	11,257	41%
TOTAL	25,159	100%	27,158	100%

Mature countries gather mainly Western Europe and North American countries.

NOTE 4 Research and development

Research and development costs are as follows:

(in millions of euros)	Full Year 2020	Full Year 2019
Research and development costs in costs of sales	(378)	(408)
Research and development costs in R&D costs *	(718)	(657)
Capitalized development costs	(311)	(303)
TOTAL RESEARCH AND DEVELOPMENT COSTS **	(1,407)	(1,368)

* Including EUR 50 million of research and development tax credit in full year 2020 and EUR 54 million in full year 2019

** Excluding amortization of R&D costs capitalized

Amortization expenses of capitalized development booked in the cost of sales, amounted to EUR 245 million in 2020 and EUR 243 million in 2019.

NOTE 5 Impairment losses, depreciation and amortization expenses

(in millions of euros)	Full Year 2020	Full Year 2019
Depreciation and amortization included in cost of sales	(534)	(521)
Depreciation and amortization included in selling, general and administrative expenses	(469)	(481)
Amortization expenses of purchase accounting intangible assets	(207)	(173)
Impairment losses of purchase accounting intangible assets	-	-
IMPAIRMENT LOSSES, DEPRECIATION AND AMORTIZATION EXPENSES	(1,210)	(1,175)

NOTE 6 Other operating income and expenses

Other operating income and expenses are as follows:

(in millions of euros)	Full Year 2020	Full Year 2019
Gains/(losses) on assets disposals	(4)	(1)
Gains/(losses) on business disposals & assets impairment	(13)	(289)
Costs of acquisitions and integrations	(169)	(98)
Others	(24)	(23)
OTHER OPERATING INCOME AND EXPENSES	(210)	(411)

In 2020, the costs of aquisition and integrations are mainly related to the ongoing major acquisitions of the year (L&T, RIB Software SE as well as OSIsoft, the latter being expected to close in early 2021).

NOTE 7 Other financial income and expenses

(in millions of euros)	Full Year 2020	Full Year 2019
Exchange gains and losses, net	(36)	(49)
Financial component of defined benefit plan costs	(47)	(53)
Dividends received	5	37
Fair value adjustment of financial assets	(3)	11
Other financial expenses, net	(85)	(78)
OTHER FINANCIAL INCOME AND EXPENSES	(166)	(132)

NOTE 8 Income tax expenses

Wherever the regulatory environment allows it, the Group entities file consolidated tax returns. Schneider Electric SE files a consolidated tax return with its French subsidiaries held directly or indirectly through Schneider Electric Industries SAS.

8.1- Analysis of income tax expense

(in millions of euros)	Full Year 2020	Full Year 2019
Current taxes	(785)	(724)
Deferred taxes	147	34
INCOME TAX (EXPENSE)/BENEFIT	(638)	(690)

8.2- Tax reconciliation

(in millions of euros)	Full Year 2020	Full Year 2019
Profit attributable to owners of the parent	2,126	2,413
Income tax (expense)/benefit	(638)	(690)
Non-controlling interests	(112)	(110)
Share of profit of associates	66	78
Income of discontinued operations, net of income tax	-	(3)
Profit before tax	2,810	3,138
Geographical weighted average Group tax rate	23.2%	23.4%
Theoretical income tax expense	(652)	(733)
Reconciling items :
Tax credits and other tax reductions	31	147
Impact of tax losses	8	(53)
Other permanent differences	(25)	(51)
INCOME TAX (EXPENSE)/BENEFIT	(638)	(690)
EFFECTIVE TAX RATE	22.7%	22.0%

The Company's consolidated income from continuing operations being predominantly generated outside of France, theoretical tax expense from continuing operations is reconciled above from the Company's weighted-average global tax rate (rather than from the French domestic statutory tax rate).

NOTE 9 Goodwill

9.1- Main items of goodwill

Group goodwill is broken down by CGUs as follows:

Dec. 31, 2020 (in millions of euros)		Dec. 31, 2019
Energy Management:	12,831	11,210
Low Voltage	7,981	6,040
Medium Voltage	1,780	1,957
Secure Power	3,070	3,213
Industrial Automation	7,125	7,509
TOTAL GOODWILL	19,956	18,719

The Group performed the annual impairment test of all the Cash Generating Units (CGUs) using the same methodology as the one used on previous periods, and described in Note 1.11.

Impairment tests performed in 2020 did not trigger any impairment losses on the CGUs' assets. Following the crisis, the update of business plans did not impact significantly the respective headrooms and the values of long term assets.

The sensitivity analysis on the test hypothesis shows that no impairment losses would be recognized in each of the following scenarios, for each CGU:

• a 0.5 point increase of the discount rate;
• a 1.0 point decrease in the growth rate;
• a 0.5 point decrease in the margin rate.

9.2- Movements during the year

The main movements during the year are summarized as follows:

Dec. 31, 2020 (in millions of euros)		Dec. 31, 2019
Net goodwill at opening	18,719	18,373
Acquisitions	2,287	64
Disposals	-	(33)
Reclassifications	-	(3)
Translation adjustment	(1,050)	318
NET GOODWILL AT END OF PERIOD	19,956	18,719
including cumulative impairment	(367)	(366)

Acquisitions

Goodwill generated by acquisitions made during the year totaled EUR 2,287 million and was mainly related to RIB and L&T acquisitions, described in Note 2.1.

Impairment tests performed on all the Group's CGUs have not led to goodwill impairment losses being recognized.

Other changes

Translation adjustments mainly concern goodwill in US dollar and UK pound sterling.

NOTE 10 Intangibles assets

10.1- Change in intangible assets

Gross value

(in millions of euros)	Trademarks	Software	Development Projects (R&D)	Acquired technologies and customer relationships	Other	Total
Dec. 31, 2018	3,004	890	3,123	2,842	246	10,105
Acquisitions	-	22	303	-	13	338
Translation adjustments	36	4	19	76	9	144
Reclassifications	-	45	7	-	(52)	-
Changes in scope of consolidation and other	(450)	(43)	(137)	(227)	(14)	(871)
Dec. 31, 2019	2,590	918	3,315	2,691	202	9,716
Acquisitions	-	19	311	-	2	332
Translation adjustments	(166)	(31)	(100)	(223)	(48)	(568)
Reclassifications	-	53	(64)	-	11	-
Changes in scope of consolidation and other	71	5	16	824	(1)	915
Dec. 31, 2020	2,495	964	3,478	3,292	166	10,395

Amortization and impairment

(in millions of euros)	Trademarks	Software	Development Projects (R&D)	Acquired technologies and customer relationships	Other	Total
Dec. 31, 2018	(748)	(791)	(1,912)	(1,580)	(200)	(5,231)
Depreciations	-	(51)	(243)	(171)	(9)	(474)
Impairments	-	-	(70)	-	-	(70)
Translation adjustments	1	(2)	(12)	(30)	(4)	(47)
Reclassifications	-	-	-	-	-	-
Changes in scope of consolidation and other	327	43	126	243	14	753
Dec. 31, 2019	(420)	(801)	(2,111)	(1,538)	(199)	(5,069)
Depreciations	(4)	(53)	(245)	(201)	(9)	(512)
Impairments	-	-	(8)	-	(9)	(17)
Translation adjustments	-	23	72	93	54	242
Reclassifications	-	-	-	-	-	-
Changes in scope of consolidation and other	-	(3)	-	(3)	-	(6)
Dec. 31, 2020	(424)	(834)	(2,292)	(1,649)	(163)	(5,362)

Net value

(in millions of euros)	Trademarks	Software	Development Projects (R&D)	Acquired technologies and customer relationships	Other	Total
Dec. 31, 2018	2,256	99	1,211	1,262	46	4,874
Dec. 31, 2019	2,170	117	1,204	1,153	3	4,647
Dec. 31, 2020	2,071	130	1,186	1,643	3	5,033

In 2020, change in intangible assets is mainly related to the acquisitions of "L&T" and of RIB Software SE.

The amortization expenses and impairment losses of intangible assets other than goodwill restated in statutory cash flow are as follows:

(in millions of euros)	Full year 2020	Full year 2019
Depreciation expenses of intangibles assets other than goodwill	512	474
Impairments losses of intangible assets other than goodwill	17	70
TOTAL *	529	544

* Includes depreciation & impairment of intangible assets from purchase price allocation for EUR 207 million for the year 2020 (EUR 173 million in 2019)

10.2- Trademarks

At December 31, 2020, the main trademarks recognized were as follows:

(in millions of euros)	Dec. 31, 2020	Dec. 31, 2019
APC (Secure Power)	1,512	1,650
Clipsal (Low Voltage)	160	159
Asco (Low Voltage)	102	111
Aveva (Industrial Automation)	78	83
L&T (Low Voltage)	58	-
Invensys - Triconex and Foxboro (Industrial Automation)	45	49
Digital (Industrial Automation)	43	45
Other	73	73
TRADEMARKS	2,071	2,170

All the above trademarks are considered to have an indefinite life. In 2020, the Group reviewed the value of the main trademarks in accordance with valuation model describe in Note 1.8 - Intangibles assets. Particularly, APC brand was tested using the royalty relief method. The future cash flows used are based on Group management's economic assumptions and operating forecasts presented in Secure Power's business plan, and then extrapolated based on a perpetuity growth rate of 2%.

Impairment tests carried out on main trademarks in 2020 did not show any impairment risk.

The sensitivity analysis on the test hypothesis shows that no impairment losses would be recognized in the following scenarios:

• a 0.5 point increase in the discount rate;
• a 1.0 point decrease in growth rate;
• a 0.5 point decrease in the royalty rate.

NOTE 11 Property, plant and equipment

Changes in property, plant and equipment in 2020 are mainly related to the scope changes mentioned in the Note 2 and include the impacts of IFRS 16 - Leases.

Gross value

(in millions of euros)	Land	Buildings	Machinery and equipments	Other	Rights of use of assets (IFRS 16)	Total
Dec. 31, 2018	150	1,867	4,509	1,096	-	7,622
IFRS 16 first application	-			-	1,242	1,242
Jan. 1, 2019	150	1,867	4,509	1,096	1,242	8,864
Acquisitions	-	38	137	336	187	698
Disposals	(2)	(48)	(178)	(41)	(25)	(294)
Translation adjustments	1	22	41	15	3	82
Reclassifications	-	106	121	(235)	-	(8)
Changes in scope of consolidation and other	(8)	(42)	(65)	(17)	-	(132)
Dec. 31, 2019	141	1,943	4,565	1,154	1,407	9,210
Acquisitions / Increase	3	44	91	361	296	795
Disposals / Decrease	(2)	(41)	(158)	(78)	(57)	(336)
Translation adjustments	(12)	(79)	(183)	(64)	(71)	(409)
Reclassifications	(2)	66	193	(262)	-	(5)
Changes in scope of consolidation and other	53	57	89	35	44	278
Dec. 31, 2020	181	1,990	4,597	1,146	1,619	9,533

Amortization and impairment

(in millions of euros)	Land	Buildings	Machinery and equipments	Other	Rights of use of assets (IFRS 16)	Total
Dec. 31, 2018	(20)	(972)	(3,534)	(575)	-	(5,101)
IFRS 16 first application	-	-	-	-		-
Jan. 1, 2019	(20)	(972)	(3,534)	(575)	-	(5,101)
Depreciation and impairment	(1)	(91)	(254)	(64)	(294)	(704)
Reversals	1	34	173	34	2	244
Translation adjustments	-	(11)	(33)	(7)	-	(51)
Reclassifications	-	(38)	24	22	-	8
Changes in scope of consolidation and other	2	8	56	8	-	74
Dec. 31, 2019	(18)	(1,070)	(3,568)	(582)	(292)	(5,530)
Depreciation and impairment	(1)	(85)	(245)	(67)	(306)	(704)
Reversals	1	29	137	46	4	217
Translation adjustments	(3)	29	130	25	16	197
Reclassifications	-	(4)	2	10	-	8
Changes in scope of consolidation and other	(2)	(21)	(49)	(24)	(6)	(102)
Dec. 31, 2020	(23)	(1,122)	(3,593)	(592)	(584)	(5,914)

Net value

(in millions of euros)	Land	Buildings	Machinery and equipments	Other	Rights of use of assets (IFRS 16)	Total
Dec. 31, 2018	130	895	975	521	-	2,521
Dec. 31, 2019	123	873	997	572	1,115	3,680
Dec. 31, 2020	158	868	1,004	554	1,035	3,619

Reclassifications primarily correspond to assets put into use.

The cash impact of purchases of property, plant and equipment in 2020 was as follows:

(in millions of euros)	Full year 2020	Full year 2019
Increase in property, plant and equipment	(795)	(698)
Of which non-cash impact related to IFRS 16	296	187
Changes in receivables and liabilities on property, plant and equipment	14	5
TOTAL	(485)	(506)

The depreciation and impairment of property, plant and equipment restated in the statement of cash flows were as follows:

(in millions of euros)	Full year 2020	Full year 2019
Depreciation of property, plant and equipment	698	701
Impairment of property, plant and equipment	6	3
TOTAL	704	704

NOTE 12 Investments in associates and joint ventures

Investments in associates and joint ventures can be analyzed as follows:

(in millions of euros)	Delixi Sub-Group	Fuji Electrics	Electroshield Samara *	Sunten Electric Equipments	Other	Total
% of interest
Dec. 31, 2019	50.0%	36.8%		25.0%
Dec. 31, 2020	50.0%	36.8%	60.0%	25.0%
CLOSING VALUE DEC. 31, 2018	269	136	-	45	80	530
Net Income/(loss)	65	9	-	1	3	78
Dividends distribution	(15)	(6)	-	(7)	(10)	(38)
Perimeter changes	-	-	-	-	(45)	(45)
Translation impacts & others	1	2	-	3	2	8
CLOSING VALUE DEC. 31, 2019	320	141	-	42	30	533
Net Income/(loss)	73	5	(15)	4	(1)	66
Dividends distribution	(18)	(2)	-	-	(2)	(22)
Perimeter changes	-	-	33	-	3	36
Translation impacts & others	(8)	(4)	(8)	(2)	7	(15)
CLOSING VALUE DEC. 31, 2020	367	140	10	44	37	598

* In 2020, Schneider Electric established a Joint Venture for Electroshield Samara, fully consolidated until 2019, with the Russian Direct Investment Fund (RDIF).

NOTE 13 Non-current financial assets

Non-current financial assets, primarily comprising investments, are detailed below:

				Dec. 31, 2020			Dec. 31, 2019
(in millions of euros)	% of interest	Acquisitions disposals	Fair value through P&L	Fair value through Equity	FX & others	Fair value	Fair value
LISTED FINANCIAL ASSETS:
NVC Lighting		(6)	-	(3)	-	-	9
PLEJD		(6)	-	(1)	-	-	7
Gold Peak Industries Holding Ltd	4.4%	-	-	(1)	-	2	3
TOTAL LISTED FINANCIAL ASSETS		(12)	-	(5)	-	2	19
UNLISTED FINANCIAL ASSETS:
Funds
Foundries		51	1	7	1	146	86
FCPR Aster II (part A, B, C and D)	38.3%	-	1	-	(12)	36	47
Sensetime & Stalagnate Fund China		7	-	-	-	40	33
FCPR Growth	100.0%	(23)	-	-	-	-	23
FCPR SEV1	100.0%	-	(2)	-	-	20	22
SICAV SESS	63.1%	-	-	-	-	11	11
FCPI Energy Access Ventures Fund	30.4%	5	(2)	-	1	13	9
SICAV Livehoods Fund SIF	15.2%	-	(1)	-	-	3	4
Direct investments
Planon	25.0%	113	-	-	-	113	-
Alpi	100.0%	-	-	-	-	26	26
Star Charge	1.5%	15	-	-	-	15	-
Raise Fundation	4.8%	-	-	-	-	9	9
Easydrive	51.0%	-	-	-	(8)	-	8
Schneider Electric Energy Access	81.1%	1	-	-	-	4	3
Itris Automation	100.0%	-	-	-	-	3	3
Others (Unit gross value lower than EUR 3 million)		1	-	-	-	8	7
TOTAL UNLISTED FINANCIAL ASSETS		170	(3)	7	(18)	447	291
PENSIONS ASSETS		(3)	4	(93)	(13)	146	251
OTHER		(5)		(1)	103	181	84
TOTAL NON-CURRENT FINANCIAL AS SETS		150	1	(92)	72	776	645

Changes in fair value for listed financial assets are recorded through "Other Comprehensive Income" since 2017 (Note 1.12). Gains or losses realized upon sale will be maintained in "Other Comprehensive Income" (no recycling in income statement).

The fair value of investments quoted in an active market corresponds to the stock price on the balance sheet date.

"Others" include mainly loans to non-consolidated companies, and securities given to third parties.

NOTE 14 Deferred taxes by Nature

Deferred taxes by type can be analyzed as follows:

(in millions of euros)	Dec. 31, 2020	Dec. 31, 2019
Tax loss carryforwards (net)	738	722
Provisions for pensions and other post-retirement benefit obligations (net)	371	347
Non-deductible provisions and accruals (net)	405	332
Differences between tax and accounting depreciation on tangible assets (net)	37	5
Differences between tax and accounting amortization on intangible assets (net)	(934)	(892)
Differences on working capital (net)	171	203
Other deferred tax assets/(liabilities) (net)	279	266
TOTAL NET DEFERRED TAX ASSETS/(LIABILITIES)	1,067	983
of which total deferred tax assets	1,984	2,004
of which total deferred tax liabilities	917	1,021

Deferred tax assets recorded in respect of tax losses carried forward at December 31, 2020 essentially concern France (EUR 577 million). These deficits can be carried forward indefinitely, and have been activated using the rate of 25.83%, in accordance with the applicable rate in the expected consumption horizon of 8 years. Unrecognised deferred tax losses amount EUR 176 million as of December 31, 2020, and are mainly related to Spain.

NOTE 15 Inventories and work in progress

Inventories and work in progress changed as follows:

(in millions of euros)	Dec. 31, 2020	Dec. 31, 2019
COST:
Raw materials	1,240	1,205
Production work in progress	235	228
Semi-finished and finished products	1,085	1,127
Finished goods	516	402
Solution work in progress	167	167
INVENTORIES AND WORK IN PROGRESS AT COST	3,243	3,129
IMPAIRMENT:
Raw materials	(191)	(130)
Production work in progress	(6)	(4)
Semi-finished and finished products	(151)	(142)
Finished goods	(8)	(7)
Solution work in progress	(4)	(5)
IMPAIRMENT LOSS	(360)	(288)
NET:
Raw materials	1,049	1,075
Production work in progress	229	224
Semi-finished and finished products	934	985
Finished goods	508	395
Solution work in progress	163	162
INVENTORIES AND WORK IN PROGRESS, NET	2,883	2,841

NOTE 16 Trade accounts receivable

(in millions of euros)	Dec. 31, 2020	Dec. 31, 2019
Accounts receivable	4,482	4,819
Unbilled revenue	1,231	1,137
Notes receivable	308	223
Advances to suppliers	115	233
Accounts receivable at cost	6,136	6,412
Impairment	(510)	(459)
ACCOUNTS RECEIVABLE, NET	5,626	5,953
On time	4,906	5,135
Less than one month past due	389	391
One to two months past due	150	179
Two to three months past due	85	124
Three to four months past due	46	58
More than four months past due	50	66

Accounts receivable result from sales to end-customers, who are widely spread both geographically and economically. Consequently, the Group believes that there is no significant concentration of credit risk.

In addition, the Group takes out substantial credit insurance and uses other types of guarantees to limit the risk of losses on trade accounts receivable.

Changes in provisions for impairment of short and long-term trade accounts receivable were as follows:

Full year 2020 (in millions of euros)		Full year 2019
Provisions for impairment on January 1	(459)	(479)
Additions	(141)	(107)
Utilizations	91	58
Reversal of surplus provisions	51	38
Translation adjustments	37	(6)
Changes in scope of consolidation and other	(89)	37
PROVISIONS FOR IMPAIRMENT ON DECEMBER 31	(510)	(459)

The contracts assets and liabilities, respectively reported within the "Trade and other operating receivables" and "Trade and other operating payables", are as follows:

(in millions of euros)	Dec. 31, 2020	Dec. 31, 2019
Unbilled revenue (contract assets)	1,231	1,137
Contract liabilities	(1,193)	(1,069)
NET CONTRACT ASSETS	38	68

NOTE 17 Other receivables and prepaid expenses

(in millions of euros)	Dec. 31, 2020	Dec. 31, 2019
Other receivables	632	680
Other tax receivables	1,198	1,097
Derivative instruments	107	75
Prepaid expenses	157	235
OTHER RECEIVABLES AND PREPAID EXPENSES	2,094	2,087

NOTE 18 Cash and cash equivalents

(in millions of euros)	Dec. 31, 2020	Dec. 31, 2019
Marketable securities	1,942	1,560
Negotiable debt securities and short-term deposits	2,275	193
Cash	2,678	1,839
Total cash and cash equivalents	6,895	3,592
Bank overdrafts	(133)	(197)
NET CASH AND CASH EQUIVALENTS	6,762	3,395

Non-recourse factorings of trade receivables were realized in 2020 for a total amount of EUR 100 million, compared with EUR 132 million in 2019.

NOTE 19 Shareholder's equity

19.1- Capital

Share capital

The company's share capital at December 31, 2020 amounted to EUR 2,268,274,220 represented by 567,068,555 shares with a par value of EUR 4, all fully paid up.

At December 31, 2020, a total of 593,189,057 voting rights were attached to the 567,068,555 shares outstanding. Schneider Electric's capital management strategy is designed to:

• ensure Group liquidity;
• optimize its financial structure;
• optimize the weighted average cost of capital.

The strategy must also ensure the Group has access to different capital markets under the best possible conditions. Factors taken into account for decision-making purposes include objectives expressed in terms of earnings per share, ratings or balance sheet stability. Finally, decisions may be implemented depending on specific market conditions.

Changes in share capital and cumulative number of shares

Changes in share capital since December 31, 2018 were as follows:

(in number of shares and in euros)	Cumulative number of shares	Share capital
CAPITAL AT DEC. 31, 2018	579,168,769	2,316,675,076
Exercise of stock options	223,768	895,072
Employee share issue	2,676,018	10,704,072
CAPITAL AT DEC. 31, 2019	582,068,555	2,328,274,220
Cancellation of own shares	(15,000,000)	(60,000,000)
Employee share issue	-	-
CAPITAL AT DEC. 31, 2020	567,068,555	2,268,274,220

* Cancellation of 15 million treasury shares on May 31, 2020

On May 31, 2020, the Group decided to cancel 15 million of treasury shares, decreasing the share premium account by EUR 929 million. On November 24, the Group issued a sustainability-linked convertible bond with a nominal amount of EUR 650 million. This zero-coupon bond of maturity date in 2026 offers investors a premium (0.5% of nominal amount) in case the company underperforms sustainability objectives. The equity component of this convertible bonds has been valued at EUR 43 million and has been recognised in "Additional paid-in capital".

19.2- Earnings per share

	Full Year 2020			Full Year 2019
(in thousands of shares and in euros per share)	Basic	Diluted	Basic	Diluted
Common shares (Net of treasury shares and own shares)	553,767	553,767	551,067	551,067
Performance shares	-	135	-	6,449
Bonds convertible into shares	-	3,684	-	-
AVERAGE WEIGHTED NUMBER OF SHARES	553,767	557,586	551,067	557,516
Earnings per share before tax	5.07	5.04	5.69	5.63
EARNINGS PER SHARE	3.84	3.81	4.38	4.33

19.3- Dividends paid and proposed

In 2020, the Group paid out the 2019 dividend of EUR 2.55 per share, for a total of EUR 1,413 million.

At the Shareholders' Meeting of April 28, 2021, shareholders will be asked to approve a dividend of EUR 2.60 per share for fiscal year 2020. At December 31, 2020 Schneider-Electric SE had distributable reserves in an amount of EUR 4,126 million (versus EUR 6,379 million at the previous year-end), not including profit for the year.

19.4- Share-based payments

Current stock grant plans

The Board of Directors of Schneider Electric SE and later the Management Board have set up performance shares plans for senior executives and certain employees of the Group. The main features of these plans were as follows at December 31, 2020:

	Date of the		End of	Number of shares	Grants cancelled because
Plan no.	Board Meeting	Vesting date	lock-up period	initially granted	objectives not met
Plan 24	03/23/2016	03/23/2020	03/23/2020	27,042	-
Plan 26	03/23/2016	03/23/2020	03/23/2020	2,291,200	549,233
Plan 28	03/24/2017	03/24/2020	03/24/2021	25,800	117
Plan 29	03/24/2017	03/24/2020	03/24/2020	2,405,220	280,113
Plan 29 bis	10/25/2017	10/25/2020	10/25/2020	32,400	3,089
Plan 30	03/26/2018	03/26/2021	03/26/2021	25,800	2,383
Plan 31	03/26/2018	03/26/2022	03/26/2022	2,318,140	231,501
Plan 31 bis	10/24/2018	10/24/2021	10/24/2021	28,000	-
Plan 32	03/26/2019	03/28/2022	03/28/2023	25,800	4,983
Plan 33	03/26/2019	03/28/2022	03/29/2022	2,313,650	128,228
Plan 34	07/24/2019	07/25/2022	07/26/2022	87,110	3,020
Plan 35	10/23/2019	10/24/2022	10/25/2022	17,450	-
Plan 36	03/24/2020	03/24/2023	03/24/2024	18,000	-
Plan 37	03/24/2020	03/24/2023	03/27/2023	2,095,740	26,750
Plan 37 bis	10/21/2020	10/23/2023	10/24/2023	103,051	-
TOTAL				11,814,403	1,229,417

Rules governing the performance shares plans are as follows:

• to receive the shares, the grantee must generally be an employee or corporate officer of the Group. Vesting is also conditional on the achievement of performance criteria;

• the vesting period is three to four years;

• the lock-up period is zero or one year.

Outstanding shares

In respect of subscription vesting conditions for current performance shares plans, Schneider Electric SE has not created shares in 2020 and used existing treasury shares. Changes in the number of outstanding number of shares in 2020 were as follow:

Plan no.	Number of performance shares at Dec. 31, 2019	Number of shares granted or to be granted	Number of shares cancelled in 2020	Number of performance shares at Dec. 31, 2020
Plan 24	27,042	(27,042)		-
Plan 26	1,760,282	(1,741,967)	(18,315)	-
Plan 28	25,800	(25,683)	(117)	-
Plan 29	2,154,870	(2,125,107)	(29,763)	-
Plan 29 bis	31,800	(29,311)	(2,489)	-
Plan 30	25,800		(2,383)	23,417
Plan 31	2,194,990	(3,400)	(104,951)	2,086,639
Plan 31 bis	28,000			28,000
Plan 32	25,800		(4,983)	20,817
Plan 33	2,290,580	(2,900)	(102,258)	2,185,422
Plan 34	86,320		(2,240)	84,080
Plan 35	17,450			17,450
Plan 36		18,000		18,000
Plan 37		2,095,740	(26,750)	2,068,990
Plan 37 bis		103,051	(190)	102,861
TOTAL	8,668,734	(1,738,619)	(294,439)	6,635,676

For performance shares to vest, the grantee must be an employee or corporate officer of the Group. In addition, vesting of some performance shares is conditional on the achievement of annual objectives based on financial indicators.

Valuation of performance shares

In accordance with the accounting policies described in Note 1.20, the performance shares plans have been valued based on an average estimated life of 3 to 5 years using the following assumptions:

• a discount rate of between (0.8)% and 1.0%, corresponding to a risk-free rate over the life of the plans (source: Bloomberg).

Based on these assumptions, the expense recorded under "Selling, general and administrative expenses" breaks down as follows:

(in millions of euros)	Full year 2020	Full year 2019
Plan 22	-	3
Plan 24	-	-
Plan 25 & 25 bis	1	2
Plan 26 & 26 bis	10	14
Plan 28	-	1
Plan 29 & 29 bis	9	42
Plan 30	1	1
Plan 31 & 31 bis	41	43
Plan 32		-
Plan 33	42	33
Plan 34	-	-
Plan 35	1	-
Plan 36	-	-
Plan 37 & 37 bis	28	-
TOTAL	133	139

In 2020, the Group also recorded an additional expense of EUR 12 million in relation with AVEVA subgroup's performance shares plan, bringing the total Group expense to EUR 145 million.

^• a pay-out rate of between 2.4% and 3.5%;

Worldwide Employee Stock Purchase Plan

Every year, Schneider Electric gives its employees the opportunity to become group shareholders thanks to employee share issues. Employees in countries that meet legal and fiscal requirements have been proposed the classic plan.

Under the classic plan, employees may purchase Schneider Electric shares at a 15% discount to the price quoted for the shares on the stock market. Employees must then hold their shares for five years, except in certain cases provided for by law. The share-based payment expense recorded in accordance with IFRS 2 is measured by reference to the fair value of the discount on the locked-up shares. The lockup cost is determined on the basis of a two-step strategy that involves first selling the locked-up shares on the forward market and then purchasing the same number of shares on the spot market (i.e., shares that may be sold at any time) using a bullet loan.

This strategy is designed to reflect the cost the employee would incur during the lock-up period to avoid the risk of carrying the shares subscribed under the classic plan. The borrowing cost corresponds to the cost of borrowing for the employees concerned, as they are the sole potential buyers in this market. It is based on the average interest rate charged by banks for an ordinary, non-revolving personal loan with a maximum maturity of five years granted to a natural person with an average credit rating.

Year 2020

On April 20, 2020, the Management Board took the exceptionnal decision to cancel this year employee share issues as part of its strategy to deal with the impacts of the Covid-19 pandemic.

Year 2019

The table below summarizes the main characteristics of the 2019 plan, the amounts subscribed, the valuation assumptions and the plan's cost:

	Full Year 2019
(in millions of euros)	%	Value
Plan characteristics:
Maturity (years)		5
Reference price (euros)		70.9
Subscription price (euros)		60.26
Discount	15.0%
Amount subscribed by employees		161.3
Total amount subscribed		161.3
Total number of shares subscribed (million of shares)		2.7
Valuation assumptions:
Interest rate available to market participant (bullet loan) *	3.1%	-
Five-year risk-free interest rate (euro zone)	0.3%	-
Annual interest rate (repo)	1.0%	-
Value of discount (a)	15.0%	28.5
Value of the lock-up period for market participant (b)	26.4%	50
TOTAL EXPENSE FOR THE GROUP (a) - (b)		-
Sensitivity:
decrease in interest rate for market participant **	(0.5)%	5.2

* Average interest rate charged on an ordinary, non-revolving personal loan, with a five-year maturity to an individual with an average credit rating.

** A decline in the interest rate for market participants reduces the lock-up cost and increases the expense booked by the issuer.

In 2019, Schneider Electric gave its employees the opportunity to purchase shares at a price of EUR 60.26 per share, as part of its commitment to employee share ownership, on April 16th, 2019. This represented a 15% discount to the reference price of EUR 70.90 calculated as the average opening price quoted for the share during the 20 days preceding the Management Board's decision to launch the employee share issue.

Altogether, 2.7 million shares were subscribed, increasing the Company's capital by EUR 161 million as of July 10, 2019. Due to significant changes in valuation assumptions, specifically the interest rate available to market participant, the value of the lock-up cost is higher than the discount cost since 2012. Therefore, the Group did not recognize any cost related to the transaction.

19.5- Schneider Electric SE shares

At December 31, 2020, the Group held 12,741,481 Schneider Electric shares in treasury stock, which have been recorded as a deduction from retained earnings.

The Group has repurchased 650,307 shares for a total amount of EUR 50 million in 2020.

19.6- Income tax recorded in equity

Total income tax recorded in Equity amounts to EUR 251 million as of December 31, 2020 and can be analyzed as follows:

(in millions of euros)	Dec. 31, 2020	Dec. 31, 2019	Change in tax
Cash-Flow hedges	30	48	(18)
Available-for-sale financial assets	(6)	(7)	1
Actuarial gains/(losses) on defined benefits obligations	230	209	21
Other	(3)	(3)	-
TOTAL	251	247	4

19.7- Non-controlling interests

The main contributor is AVEVA, for which 38.6% of the shares correspond to non-controlling interests for the Group. Aveva, which remains a listed company, is publishing its financial statements on regular basis.

NOTE 20 Pensions and other post-employment benefit obligations

The Group has set up various post-employment benefit plans for employees covering pensions, termination benefits, healthcare, life insurance and other benefits, as well as long-term benefit plans for active employees.

Defined Benefit Pension Plans

The Group's main Defined Benefit pension plans are located in the United Kingdom (UK) and the United States (US). They respectively represent 64% (2019: 63%) and 21% (2019: 22%) of the Group's total Defined Benefit Obligations (DBO) on pensions. The majority of benefit obligations under these plans, which represent 93% of the Group's total commitment at December 31, 2020, are partially or fully funded through payments to external funds. These funds are never invested in Group assets.

United Kingdom

The Group companies operate several Defined Benefit pension plans in the UK. The main one is related to the Invensys Pension Scheme. Pensions payable to employees depend on average final salary and length of service within the Group. These plans are registered schemes under UK tax law and managed by independent Boards of Trustees. They are closed to new entrants, and for most of them, the vested rights were frozen as they have been replaced by Defined Contributions plans.

These plans are funded by employer contributions, which are negotiated every three years based on plan valuations carried out by independent actuaries, so that the long term financing services are ensured.

In relation to risk management and asset allocation, the Board of Trustees'aims of each plan are to ensure that it can meet its obligations to the plan's beneficiaries both in the short and long term. The Board of Trustees is responsible for the plan's long-term investment strategy and defines and manages long-term investment strategies to reduce risks, including interest rate risks and longevity risks. A certain proportion of assets hedges the liability valuation change resulting from the interest rates evolution. Those assets are primarily invested in fixed income investments, particularly intermediate and longer term instruments.

Following the agreement reached with the Trustee of the Invensys Pension Scheme on February 2014, Schneider Electric SE guaranteed all obligations of the Invensys subsidiaries which participate in the scheme, up to a maximum amount of GBP 1.75 billion. As of December 31, 2020, plan assets exceed the value of obligations subject to this guarantee and thus this guarantee cannot be called.

Schneider UK pension plans contain provisions of pension called Guaranteed Minimum Pension ("GMP"). GMPs were accrued for individuals who subscribed to the State Second Pension prior to April 6, 1997. Historically, there was an inequality in the benefits between male and female members concerning GMP.

A High Court case concluded on October 26, 2018, confirmed that all UK pension plans must equalize "GMPs" between men and women. In the light of these events and new information, the Group updated the related assumptions, leading to a net experience adjustment in "Other Comprehensive Income" of EUR 56 million. Following a further High Court ruling in November 2020, an additional net experience adjustment of EUR 7 million was recognized in other comprehensive income in 2020.

United States

The United States' subsidiaries operate several Defined Benefit pension plans. These plans are closed to new entrants, frozen to future accruals and have been replaced by Defined Contributions plans. Pensions payable to employees depend on the average final salary and the length of service within the Group.

Each year, the Group companies contribute a certain amount to the Defined Benefit pension plans. This amount is determined actuarially and is comprised of service costs, administrative expenses and payments toward any existing deficits. Since the plans are closed and frozen, there is generally no service cost component.

The companies delegate various responsibilities to Pension Committees. These committees define and manage long-term investment strategies to reduce risks, including interest rate risks and longevity risks. A certain proportion of assets hedges the liability valuation change, resulting from the interest rates evolution. Those assets are primarily invested in fixed income investments, particularly intermediate and longer term instruments.

Assumptions

Actuarial valuations are generally performed each year. The assumptions used vary according to the economic conditions prevailing in the country concerned, as follows:

	Group weighted average rate		Of which United Kingdom		Of which United States
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2020	Dec. 31, 2019
Discount rate	1.57%	2.18%	1.40%	2.06%	2.42%	3.26%
Rate of compensation increases	2.52%	3.16%	3.46%	3.34%	n.a	n.a

The discount rate is determined on the basis of the interest rate for investment-grade (AA) corporate bonds or, if a liquid market does not exist, government bonds with a maturity that matches the duration of the benefit obligation. In the United States, the average discount rate is determined on the basis of a yield curve for AA and AAA investment-grade corporate bonds.

In the Euro zone, the discount rate currently stands at 0.5%.

20.1- Changes in provisions for pensions and other post-employment benefit obligations

Annual changes in obligations, the market value of plan assets and the corresponding assets and provisions recognized in the financial statements can be analyzed as follows:

(in millions of euros)	DBO benefit obligations	Plan assets	Asset ceiling	Net Liability
Dec 31, 2018	(8,911)	7,901	(187)	(1,197)
Service cost	(50)	-	-	(50)
Past service cost	10	-	-	10
Curtailments and settlements	(1)	-	-	(1)
Interest cost	(267)	-	(5)	(272)
Interest income	-	219	-	219
Net impact in P&L, (expense)/profit	(308)	219	(5)	(94)
of which UK	(152)	163	(5)	6
of which US	(84)	50	-	(34)
Benefits paid	532	(468)	-	64
Plan participants' contributions	(5)	5	-	-
Employer contributions	-	80	-	80
Changes in the scope of consolidation	5	-	-	5
Actuarial gains/(losses) recognized in equity	(1,024)	539	77	(408)
Translation adjustment	(354)	357	(8)	(5)
Other changes	-	-	-	-
Dec. 31, 2019	(10,065)	8,633	(123)	(1,555)
of which UK	(6,312)	6,556	(123)	121
of which US	(2,209)	1,539	-	(670)
Service cost	(54)	-	-	(54)
Past service cost	-	-	-	-
Curtailments and settlements	1	(1)	-	-
Interest cost	(204)	-	(2)	(206)
Interest income	-	159	-	159
Net impact in P&L, (expense)/profit	(257)	158	(2)	(101)
of which UK	(119)	118	(2)	(3)
of which US	(69)	38	-	(31)
Benefits paid	554	(500)	-	54
Plan participants' contributions	(6)	6	-	-
Employer contributions	-	106	-	106
Changes in the scope of consolidation	(8)	-	-	(8)
Actuarial gains/(losses) recognized in equity	(796)	621	52	(123)
Translation adjustment	562	(503)	6	65
Other changes	-	-	-	-
Dec. 31, 2020	(10,016)	8,521	(67)	(1,562)
of which UK	(6,370)	6,459	(67)	22
of which US	(2,140)	1,535	-	(605)

The total present value of Defined Benefit Obligations breaks down as follows between wholly or partly funded plans and wholly unfunded plans:

(in millions of euros)	Dec. 31, 2020	Dec. 31, 2019
Present value of wholly or partly funded benefit obligation	(9,356)	(9,350)
Fair value on plan assets	8,521	8,633
Effect of assets ceiling	(66)	(123)
Net position of wholly or partly funded benefit obligation	(901)	(840)
Present value of wholly or partly unfunded benefit obligation	(661)	(715)
NET LIABILITY FROM FUNDED AND UNFUNDED PLANS	(1,562)	(1,555)
Balance Sheet impact:
surplus of plans recognized as assets*	146	251
provisions recognized as liabilities	(1,708)	(1,806)

* The surplus of plans recognized as assets represents the assets in excess of the liabilities, generally assumed to be recoverable, and after applying any asset ceiling

Changes in gross items recognized in equity were as follows:

(in millions of euros)	Full year 2020	Full year 2019
Actuarials (gains)/losses on Defined Benefit Obligations arising from demographic assumptions	(6)	(37)
Actuarials (gains)/losses on Defined Benefit Obligations arising from financial assumptions	853	989
Actuarials (gains)/losses on Defined Benefit Obligations from experience effects	(51)	72
Actuarials (gains)/losses on plan assets	(621)	(539)
Effect of asset ceiling	(52)	(77)
TOTAL RECOGNIZED IN EQUITY DURING THE PERIOD	123	408
of which UK	(111)	(162)
of which US	(5)	(70)

Plans asset allocation:

(in millions of euros)	Dec. 31, 2020	Dec. 31, 2019
Equity	9%	11%
Bonds	80%	74%
Others	11%	15%
TOTAL	100%	100%

20.2- Sensitivity analysis

The effect of a ± 0.5% change in the discount rate on the 2019 Defined Benefit Obligations is as follows:

		Total		United Kingdom		United States		Rest of the World
(in millions of euros)	+0.5%	-0.5%	+0.5%	-0.5%	+0.5%	-0.5%	+0.5%	-0.5%
DBO Impact	(653)	736	(441)	498	(121)	133	(91)	105

NOTE 21 Provisions for contingencies and charges

(in millions of euros)	Economic risks	Customer risks	Products risks	Environmental risks	Restructuring	Other risks	Provisions
Dec. 31, 2018	732	73	467	300	122	437	2,131
of which long-term portion	499	50	144	265	13	282	1,253
IFRIC 23 reclassification *	(448)						(448)
Additions	51	13	199	10	256	87	616
Utilizations	(40)	(14)	(120)	(18)	(225)	(105)	(522)
Reversals of surplus provisions	(2)	(4)	(43)	(2)	(4)	(3)	(58)
Translation adjustments	2	1	6	5	-	7	21
Changes in the scope of consol idation and other	(3)	7	(10)	(2)	2	-	(6)
Dec. 31, 2019	292	76	499	293	151	423	1,734
of which long-term portion	155	50	139	256	11	329	940
Additions	35	33	322	8	324	128	850
Utilizations	(43)	(26)	(172)	(17)	(208)	(132)	(598)
Reversals of surplus provisions	(10)	-	(11)	(3)	(2)	(7)	(33)
Translation adjustments	(19)	(12)	(24)	(22)	(7)	(30)	(114)
Changes in the scope of consol idation and other	20	83	16	-	(8)	(20)	91
Dec. 31, 2020	275	154	630	259	250	362	1,930
of which long-term portion	161	103	137	226	15	288	930

* Following IFRIC 23 application described in Note 1 starting January 2019, income tax provisions are now reclassified in accrued taxes.

Provisions are recognized following the principles described in Note 1.21.

Reconciliation with cash flow statement - the increase and decrease in provisions retreated at statutory cash flow were as follows:

(in millions of euros)	Full year 2020	Full year 2019
Increase of provision	850	616
Utilization of provision	(598)	(522)
Reversal of surplus provision	(33)	(58)
Provision variance including tax provisions but excluding employee benefit obligation	219	36
Employee benefit obligation net variance contribution to plan assets	47	20
INCREASE/(DECREASE) IN PROVISIONS IN CASH-FLOW STATEMENT	266	56

NOTE 22 Total current and non-current financial liabilities

The breakdown of net debt is as follows:

(in millions of euros)	Dec. 31, 2020	Dec. 31, 2019
Bonds	8,773	6,888
Other bank borrowings	32	22
Employee profit sharing	-	2
Short-term portion of bonds	(600)	(500)
Short-term portion of long-term debt	(9)	(7)
NON-CURRENT FINANCIAL LIABILITIES	8,196	6,405
Commercial paper	1,302	-
Accrued interest	43	41
Other short-term borrowings	173	234
Drawdown of funds from lines of credit	-	-
Bank overdrafts	133	197
Short-term portion of convertible and non-convertible bonds	600	500
Short-term portion of long-term debt	9	7
SHORT-TERM DEBT	2,260	979
TOTAL CURRENT AND NON-CURRENT FINANCIAL LIABILITIES	10,456	7,384
CASH AND CASH EQUIVALENTS	(6,895)	(3,592)
NET DEBT	3,561	3,792

22.1- Breakdown by maturity

		Dec. 31, 2020	Dec. 31, 2019
(in millions of euros)	Nominal	Interests	Nominal
2020	-	-	996
2021	2,260	92	599
2022	673	77	710
2023	1,295	58	796
2024	996	49	995
2025	1,045	41	1,044
2026	1,396	35	742
2027 and beyond	2,791	23	1,502
TOTAL	10,456	375	7,384

22.2- Breakdown by currency

(in millions of euros)	Dec. 31, 2020	Dec. 31, 2019
Euro	9,537	6,239
US Dollar	698	793
Brazilian Real	13	66
Indian Rupee	112	45
Sterling Pound	-	32
Russian Rouble	-	29
Algerian Dinar	23	20
Chilian Peso	-	18
Other	73	142
TOTAL	10,456	7,384

22.3- Bonds

(in millions of euros)	Dec. 31, 2020	Dec. 31, 2019	Interest rate	Maturity
Schneider Electric SE 2020	-	500	3.625% fixed	July 2020
Schneider Electric SE 2021	600	599	2.500% fixed	September 2021
Schneider Electric SE 2022	651	710	2.950% fixed	September 2022
Schneider Electric SE 2023	498	-	0.000% fixed	June 2023
Schneider Electric SE 2023	797	796	1.500% fixed	September 2023
Schneider Electric SE 2024	996	995	0.250% fixed	September 2024
Schneider Electric SE 2025	745	744	0.875% fixed	March 2025
Schneider Electric SE 2025	300	300	1.841% fixed	October 2025
Schneider Electric SE 2026 (OCEANEs)	651	-	0.000% fixed	June 2026
Schneider Electric SE 2026	745	742	0.875% fixed	December 2026
Schneider Electric SE 2027	496	-	1.000% fixed	April 2027
Schneider Electric SE 2027	743	742	1.375% fixed	June 2027
Schneider Electric SE 2028	758	760	1.500% fixed	January 2028
Schneider Electric SE 2028	793	-	0.250% fixed	March 2029
TOTAL	8,773	6,888

Schneider Electric SE has issued bonds on different markets:

• in the United States, through a private placement offering following SEC 144A rule, for USD 800 million worth of bonds issued in September 2012, at a rate of 2.95%, due in September 2022;
• as part of its Euro Medium Term Notes (EMTN) program, bonds traded on the Luxembourg stock exchange. Issues that had not yet matured as of December 31, 2020 are as follow:
• – EUR 600 million worth of bonds issued in September 2013, at a rate of 2.5%, maturing in September 2021;
• – EUR 500 million worth of bonds issued in June 2020, at a rate of 0.0%, maturing in June 2023;
• – EUR 800 million worth of bonds issued in September 2015 at a rate of 1.50%, maturing in September 2023;
• – EUR 800 million worth of bonds issued in September 2016, at a rate of 0.25%, maturing in September 2024;
• – EUR 200 million worth of bonds issued in July 2019, at a rate of 0.25%, maturing in September 2024;
• – EUR 750 million worth of bonds issued in March 2015, at a rate of 0.875%, maturing in March 2025;
• – EUR 200 million and EUR 100 million worth of Climate bonds issued successively in October and December 2015, at a rate of 1.841%, maturing in October 2025;
• – EUR 750 million worth of bonds issued in December 2017, at a rate of 0.875%, maturing in December 2026;
• – EUR 500 million worth of bonds issued in April 2020, at a rate of 1.00%, maturing in April 2027;
• – EUR 750 million worth of bonds issued in June 2018, at a rate of 1.375%, maturing in June 2027;
• – EUR 500 million worth of bonds issued in January 2019 and EUR 250 million worth of bonds issued in May 2019, at a rate of 1.500%, maturing in January 2028;
• – EUR 800 million worth of bonds issued in March 2020, at a rate of 0.25%, maturing in March 2029.

In addition, the Group has issued a bond that is convertible into or exchangeable for a new or existing shares (OCEANEs) for EUR 650 million at a rate of 0.00%, maturing in June 2026. The OCEANE has a debt component, assessed on inception date on the basis of the market interest rate applied to an equivalent non-convertible bond, is recognized in non-current financial debts and an optional component recognized in equity. At end of December 2020, the debt component is evaluated to EUR 652 million and the optional component to EUR 42 million.

The initial conversion and/or exchange ratio of the Bonds is one share per Bond with a nominal value set at EUR 176. According to Sustainability-Linked Financing Framework, if the average sustainability performance score (calculated as the arithmetic average of the scores of the three key performance indicators) does not reach a certain level by December 31, 2025, the Group will pay an amount equal to 0.50% of the face value.

The three key performance indicators from the 11 new Schneider Sustainability Impact (SSI) 2021-2025 indicators are the following:

• Climate : Deliver 800 megatons of saved and avoided CO2 emissions to our customers;
• Equality : Increase gender diversity, from hiring to front-line managers and leadership teams (50/40/30);
• Generation : Train 1 million underprivileged people in energy management.

The detailed rating methodology and approach are presented in the Group's Sustainability-Linked Financing Framework.

For all those transactions, issue premium and issue costs are amortized per the effective interest rate method.

22.4- Reconciliation with cash flow statement

Non-cash variations
(in millions of euros)	Dec. 31, 2019	Cash variations	Scope impacts	Forex impacts	Dec. 31, 2020
Bonds	6,888	1,944	-	(59)	8,773
Bank overdrafts and other borrowings	496	1,177	10	-	1,683
TOTAL CURRENT AND NON-CURRENT FINANCIAL LIABILITIES	7,384	3,121	10	(59)	10,456

22.5- Other information

As of December 31, 2020, the Group had confirmed credit lines of EUR 3,975 million including 2,475 maturing after December 2021, all unused .

Loan agreements and committed credit lines do not include any financial covenants or credit rating triggers in case of downgrading in the company's long-term debt.

NOTE 23 Classification of financial instruments

The Group uses financial instruments to manage its exposure to fluctuations in interest rates, exchange rates and metal prices. Financial assets and liabilities can be classified at the fair value following the hierarchy levels below:

• 1. Level 1: market value (non-adjusted) on active markets, for similar assets and liabilities, which the company can obtain on a given valuation date;
• 1. Level 2: data other than the market rate available for level 1, which are directly or indirectly observable on the market;
• 1. Level 3: data on the asset or liability that are not observable on the market.

23.1- Balance sheet exposure and fair value hierarchy

(in millions of euros)	Carrying amount	Fair value through P&L	Fair value through equity	Financial assets/liabilities measured at amortized cost	Fair value	Fair value hierarchy
ASSETS:
Listed financial assets	2	-	2	-	2	Level 1
Venture capital (FCPR)/mutual funds (SICAV)	84	84	-	-	84	Level 3
Other unlisted financial assets	363	-	363		363	Level 3
Other non-current financial assets	327	-	-	327	327	Level 2
TOTAL NON-CURRENT ASSETS	776	84	365	327	776
Trade accounts receivables	5,626	-	-	5,626	5,626	Level 2
Current financial assets	18	18	-	-	18	Level 2
Marketable securities	1,942	1,942	-	-	1,942	Level 1
Derivative instruments - foreign currencies	84	60	24	-	84	Level 2
Derivative instruments - interest rates	-	-	-	-	-	Level 2
Derivative instruments - commodities	23	-	23	-	23	Level 2
Derivative instruments - shares	1	-	1	-	1	Level 2
TOTAL CURRENT ASSETS	7,694	2,020	48	5,626	7,694
LIABILITIES:
Long-term portions of non convertible bonds *	(7,522)	-	-	(7,522)	(7,955.6)	Level 1
Long-term portions of convertible bonds *	(651)	-	-	(651)	(652.4)	Level 2
Other long-term debt	(23)	-	-	(23)	(23)	Level 2
TOTAL NON-CURRENT LIABILITIES	(8,196)	-	-	(8,196)	(8,631)
Short-term portion of bonds *	(600)	-	-	(600)	(611)	Level 1
Short-term debt	(1,660)	-	-	(1,660)	(1,660)	Level 3
Trade accounts payable	(4,664)	-	-	(4,664)	(4,664)	Level 2
Other	(54)	-	-	(54)	(54)	Level 2
Derivative instruments - foreign currencies	(19)	(19)	-	-	(19)	Level 2
Derivative instruments - interest rates	-	-	-	-	-	Level 2
Derivative instruments - commodities	-	-	-	-	-	Level 2
Derivative instruments - shares	-	-	-	-	-	Level 2
TOTAL CURRENT LIABILITIES	(6,997)	(19)	-	(6,978)	(7,008)

	Dec. 31, 2020

* The majority of financial instruments listed in the balance sheet are accounted at fair value, except for bonds, for which the amortized cost in the balance sheet represents EUR 8,773 million compared to EUR 9,219 million at fair value.

Dec. 31, 2019

(in millions of euros)	Carrying amount	Fair value through P&L	Fair value through equity	Financial assets/liabilities measured at amortized cost	Fair value	Fair value hierarchy
ASSETS :
Listed financial assets	19	-	19	-	19	Level 1
Venture capital (FCPR)/mutual funds (SICAV)	116	116	-	-	116	Level 3
Other unlisted financial assets	175	-	175	-	175	Level 3
Other non-current financial assets	335	-	-	335	335	Level 2
TOTAL NON-CURRENT ASSETS	645	116	194	335	645
Trade accounts receivables	5,953	-	-	5,953	5,953	Level 2
Current financial assets	19	19	-	-	19	Level 2
Marketable securities	1,560	1,560	-	-	1,560	Level 1
Derivative instruments - foreign currencies	63	50	13	-	63	Level 2
Derivative instruments - interest rates	-	-	-	-	-	Level 2
Derivative instruments - commodities	8	-	8	-	8	Level 2
Derivative instruments - shares	4	4	-	-	4	Level 2
TOTAL CURRENT ASSETS	7,607	1,633	21	5,953	7,607
LIABILITIES :
Long-term portions of bonds*	(6,388)	-	-	(6,388)	(6,738)	Level 1
Other long-term debt	(17)	-	-	(17)	(17)	Level 2
TOTAL NON-CURRENT LIABILITIES	(6,405)	-	-	(6,405)	(6,755)
Short-term portion of bonds*	(500)	-	-	(500)	(500)	Level 1
Short-term debt	(479)	-	-	(479)	(479)	Level 3
Trade accounts payable	(4,215)	-	-	(4,215)	(4,215)	Level 2
Other	(44)	-	-	(44)	(44)	Level 2
Derivative instruments - foreign currencies	(30)	(23)	(7)	-	(30)	Level 2
Derivative instruments - interest rates	-	-	-	-	-	Level 2
Derivative instruments - commodities	(2)	-	(2)	-	(2)	Level 2
Derivative instruments - shares	-	-	-	-	-	Level 2
TOTAL CURRENT LIABILITIES	(5,270)	(23)	(9)	(5,238)	(5,270)

* The majority of financial instruments listed in the balance sheet are accounted at fair value, except for bonds, for which the amortized cost in the balance sheet represents EUR 6,888 million compared to EUR 7,238 million at fair value.

23.2- Derivative instruments

Dec. 31, 2020

(in millions of euros)	Accounting qualification	Maturity	Nominal sales	Nominal purchases	Fair Value	Carrying amount in assets	Carrying amount in liabilities	Of which carrying amounts in OCI
Forwards contracts	CFH	< 1 year	242	(147)	1	10	(9)	1
Forwards contracts	CFH	< 2 years	19	(24)	-	1	(1)	-
Forwards contracts	CFH	> 2 years	7	(1)	-	-	-	-
Forwards contracts	FVH	< 1 year	997	(1,098)	25	30	(5)	1
Forwards contracts	NIH	< 1 year	1,102	-	21	21	-	22
Forwards contracts	Trading	< 1 year	536	(2,425)	7	11	(4)	-
Cross currency swaps	CFH	< 1 year	-	(159)	11	11	-	-
TOTAL FX DERIVATIVES			2,903	(3,854)	65	84	(19)	24
Forwards contracts	CFH	< 1 year	-	(249)	23	23	-	23
Commodities derivatives			-	(249)	23	23	-	23
Options	CFH	< 1 year	-	(1)	1	1	-	1
Shares derivatives			-	(1)	1	1	-	1
TOTAL			2,903	(4,104)	89	108	(19)	48

Dec. 31, 2019

(in millions of euros)	Accounting qualification	Maturity	Nominal sales	Nominal purchases	Fair Value	Carrying amount in assets	Carrying amount in liabilities	Carrying amounts in OCI
Forwards contracts	CFH	< 1 year	127	(126)	-	3	(3)	-
Forwards contracts	CFH	< 2 years	10	(23)	-	-	-	-
Forwards contracts	CFH	> 2 years	4	(4)	-	-	-	-
Forwards contracts	FVH	< 1 year	1,236	(1,028)	45	49	(4)	-
Forwards contracts	NIH	< 1 year	1,191	-	10	10	-	10
Forwards contracts	Trading	< 1 year	525	(3,299)	(18)	1	(19)	-
Cross currency swaps	CFH	< 2 years	-	(108)	(4)	-	(4)	(4)
TOTAL FX DERIVATIVES			3,093	(4,588)	33	63	(30)	6
Forwards contracts	CFH	< 1 year	-	(233)	6	8	(2)	6
Commodities derivatives			-	(233)	6	8	(2)	6
Options	CFH	< 1 year	-	(4)	4	4	-	-
Shares derivatives			-	(4)	4	4	-	-
TOTAL			3,093	(4,825)	43	75	(32)	12

23.3- Foreign currency hedges

Since a significant proportion of affiliates' transactions are denominated in currencies other than the affiliate's functional currency, the Group is exposed to currency risks. If the Group is not able to hedge these risks, fluctuations in exchange rates between the functional currency and other currencies can have a significant impact on its results and distort year-on-year performance comparisons. As a result, the Group uses derivative instruments to hedge its exposure to exchange rates mainly through FX forwards and natural hedges. Furthermore, some long-term loans and borrowings granted to the affiliates are considered as net investment in foreign operations according to IAS 21.

Schneider Electric's currency hedging policy is to protect its subsidiaries against risks on transactions denominated in a currency other than their functional currency. Hedging approaches are detailed in Note 1.23.

The breakdown of the nominal of FX derivatives related to operating and financing activities is as follows:

			Dec. 31, 2020
--	--	--	---------------

(in millions of euros)	Sales	Purchases	Net
USD	1,913	(1,013)	900
CNY	5	(651)	(646)
EUR	201	(658)	(457)
DKK	13	(143)	(130)
SGD	351	(248)	103
SEK	1	(151)	(150)
JPY	9	(44)	(35)
CHF	52	(201)	(149)
AED	8	(69)	(61)
BRL	-	(97)	(97)
CAD	9	(98)	(89)
AUD	13	(74)	(61)
SAR	40	(6)	34
RUB	68	-	68
NOK	13	(6)	7
GBP	77	(125)	(48)
ZAR	40	(8)	32
HKD	13	(41)	(28)
Others	77	(220)	(143)
TOTAL	2,903	(3,854)	(951)

23.4- Interest rate hedges

Interest rate risk on borrowings is managed at the Group level, based on consolidated debt and taking into consideration market conditions to optimize overall borrowing costs. The Group uses derivative instruments to hedge its exposure to interest rates through swaps or cross-currency swaps. Cross-currency swaps may be presented both as foreign exchange hedges and interest rate hedges depending on the characteristics of the derivative.

The Group did not use any derivative instrument to hedge its exposure to interest rates during the fiscal year 2020.

		Dec. 31, 2020			Dec. 31, 2019
(in millions of euros)	Fixed Rates	Floating rates	Total	Fixed Rates	Floating rates	Total
Total current and non-current financial liabilities	8,773	1,683	10,456	6,888	496	7,384
Cash and cash equivalent	-	(6,895)	(6,895)	-	(3,592)	(3,592)
NET DEBT BEFORE HEDGING	8,773	(5,212)	3,561	6,888	(3,096)	3,792
Impact of Hedges	-	-	-	-	-	-
NET DEBT AFTER HEDGING	8,773	(5,212)	3,561	6,888	(3,096)	3,792

23.5- Commodity hedges

The Group is exposed to fluctuations in energy and raw material prices, in particular steel, copper, aluminum, silver, lead, nickel, zinc and plastics. If the Group is not able to hedge, compensate for or pass on to customers any such increased costs, this could have an adverse impact on its results. The Group has, however, implemented certain procedures to limit exposure to rising non-ferrous and precious raw material prices. The Purchasing departments of the operating units report their purchasing forecasts to the Corporate Finance and Treasury department. Purchase commitments are hedged using forward contracts, swaps and, to a lesser extent, options.

All commodities instruments are futures and options designated as cash flow hedge under IFRS standards, of which:

(in millions of euros)	Dec. 31, 2020	Dec. 31, 2019
Carrying amount	23	6
Nominal amount	(249)	(233)

23.6- Share-based payment

Schneider Electric shares are hedged (cash flow hedges) in relation to the Stock Appreciation Rights granted to US employees. Details are as follows :

(in millions of euros except for the number of shares)	Dec. 31, 2020	Dec. 31, 2019
Outstanding shares	24,224	83,500
Carrying amount	1	4
Nominal amount	(1)	(4)

23.7- Financial assets and liabilities subject to netting

In accordance with IFRS 7 standards, this section discloses financial instruments that are subject to netting agreements.

Dec. 31, 2020

(in millions of euros)	Gross amounts	Gross amounts offset in the statement of financial position	Net amounts presented in the statement of financial position	Related amounts not offset in the statement of financial position	Net amounts as per IFRS 7
Financial assets	107	-	107	15	92
Financial liabilities	19	-	19	15	4

Dec. 31, 2019

(in millions of euros)	Gross amounts	Gross amounts offset in the statement of financial position	Net amounts presented in the statement of financial position	Related amounts not offset in the statement of financial position	Net amounts as per IFRS 7
Financial assets	83	-	83	21	62
Financial liabilities	31	-	31	21	10

The Group trades over-the-counter derivatives with tier-one banks under agreements which provide for the offsetting of amounts payable and receivable in the event of default by one of the contracting parties. These conditional offsetting agreements do not meet the eligibility criteria within the meaning of IAS 32 for offsetting derivative instruments recorded under assets and liabilities. However, they do fall within the scope of disclosures under IFRS 7 on offsetting.

23.8- Counterparty risk

Financial transactions are entered with carefully selected counterparties. Banking counterparties are chosen according to the customary criteria, including the credit rating issued by an independent rating agency.

Group policy consists of diversifying counterparty risks and periodic controls are performed to check compliance with the related rules. In addition, the Group takes out substantial credit insurance and uses other types of guarantees to limit the risk of losses on trade accounts receivable.

23.9- Financial risk management

Foreign currency risk arises from the Group undertaking a significant number of foreign currency transactions in the course of operations. These exposures arise from sales in currencies other than the Group's presentational currency of Euro.

The main exposure of the Group in terms of currency exchange risk is related to the US dollar, Chinese Yuan and currencies linked to the US dollar. In 2020, revenue in foreign currencies amounted to EUR 20.1 billion (EUR 21.6 billion in 2019), including around EUR 6.6 billion in US dollars and EUR 3.7 billion in Chinese yuan (respectively EUR 7.2 and EUR 3.6 billion in 2019).

The Group manages its exposure to currency risk to reduce the sensitivity of earnings to changes in exchange rates. The financial instruments used to hedge the Group's exposure to fluctuations in exchange rates are described above.

The table below shows the impact of a 10% change in the US dollar and the Chinese Yuan against the Euro on Revenue and Adjusted EBITA. It includes the impact from the translation of financial statements into the Group's presentation currency, and assumes no scope impact.

Dec. 31, 2020

(in millions of euros)	Increase/(decrease) in average rate	Revenue	Adj. EBITA
USD	10%	665	86
	(10)%	(604)	(78)
CNY	10%	372	95
	(10)%	(338)	(87)

Dec. 31, 2019

(in millions of euros)	Increase/(decrease) in average rate	Revenue	Adj. EBITA
USD	10%	728	105
	(10)%	(661)	(96)
CNY	10%	360	91
	(10)%	(328)	(82)

NOTE 24 Employees

24.1- Employees

The Group average number of permanent and temporary employees is as follows:

(number of employees)	Full year 2020	Full year 2019
Production	81,470	79,337
Administration	73,996	71,960
TOTAL AVERAGE WORKFORCE	155,466	151,297
of which Europe, Middle-East, Africa and South America	67,549	69,414
of which North America	32,633	32,640
of which Asia-Pacific	55,284	49,243

24.2- Employee benefit expense

(in millions of euros)	Full year 2020	Full year 2019
Payroll costs	(7,082)	(7,120)
Profit-sharing and incentive bonuses	(57)	(59)
Stock options and performance shares	(145)	(154)
EMPLOYEE BENEFITS EXPENSE	(7,284)	(7,333)

24.3- Benefits granted to senior executives

In 2020, the Group paid EUR 2.1 million in attendance fees to the members of its Board of directors. The total amount of gross remuneration, including benefits in kind, paid in 2020 by the Group to the members of Senior Management, excluding executive directors, totaled EUR 28.1 million, of which EUR 7.6 million corresponded to the variable portion.

During the last three financial years, 741,000 performance shares have been allocated, excluding Corporate Officers. No stock options have been granted during the last three financial years. Performance shares were allocated under the 2020 long-term incentive plan. Since December 16, 2011, 100% of performance shares are conditional on the achievement of performance criteria for members of the Executive Committee.

Net pension obligations with respect to members of Senior Management amounted to EUR 17 million at December 31, 2020 (EUR 15 million at December 31, 2019).

Please refer to Chapter 4 Section 5 of the Universal Registration Document for more information regarding the members of Senior Management.

NOTE 25 Related parties transactions

25.1- Associates

Companies over which the Group has significant influence are accounted through the equity method. Transactions with these related parties are carried out on arm's length terms.

Related party transactions were not material in 2020.

25.2- Related parties with significant influence

No transactions were carried out during the year with members of the supervisory board or management board. Compensation and benefits paid to the Group's top senior executives are described in Note 24.

NOTE 26 Commitments and contingent liabilities

26.1- Guarantees and similar undertakings

The following table discloses the maximum exposure on guarantees given and received:

(in millions of euros)	Dec. 31, 2020	Dec. 31, 2019
Market counter guarantees *	3,367	3,178
Pledges, mortgages and sureties **	117	113
Other commitments given	253	291
GUARANTEES GIVEN	3,737	3,582
Endorsements and guarantees received	54	49
GUARANTEES RECEIVED	54	49

* On certain contracts, customers require some commitments to guarantee that the contract will be fully executed by the subsidiaries of the Group. The risk linked to the commitment is assessed and a provision for contingencies is recorded when the risk is considered probable and can be reasonably estimated. Market counter guarantees also include the guaranteed obligations towards pension schemes.

** Some loans are secured by property, plant and equipment and securities lodged as collateral.

26.2- Contingent liabilities

As part of its normal operations, the Group is exposed to a number of potential claims and litigations. Except for those for which it is probable that the Group will incur a liability and for which a provision is established for such outcome (see Note 21), the Group is not aware of other potentially material claims and litigations.

Specifically, the Group has not been advised to date of any claim or allegations related to the investigation conducted in France by French public agencies. The Group is fully cooperating with the French authority on this matters. Besides, the antitrust investigation conducted by public agencies in Spain has been closed.

NOTE 27 Subsequent events

There is no subsequent event to mention.

NOTE 28 Statutory Auditors' fees

Fees paid by the Group to the statutory auditors and their networks:

Full Year 2020

(in thousands of euros)	EY	%	Mazars	%	Total
Audit
Statutory auditing	11,241	96%	9,061	96%	20,302
o/w Schneider Electric SE	106		106		212
o/w subsidiaries	11,135		8,955		20,090
Related audit services ("SACC")	265	2%	412	4%	677
o/w Schneider Electric SE	241		-		241
o/w subsidiaries	24		412		436
Audit sub-total	11,506	98%	9,473	100%	20,979
Non-audit services	275	2%	21	0%	296
TOTAL FEES	11,781	100%	9,494	100%	21,275

Full Year 2019

(in thousands of euros)	EY	%	Mazars	%	Total
Audit
Statutory auditing	10,909	94%	8,191	90%	19,100
o/w Schneider Electric SE	106		106		212
o/w subsidiaries	10,803		8,085		18,888
Related audit services ("SACC")	292	3%	849	9%	1,141
o/w Schneider Electric SE	236		23		259
o/w subsidiaries	56		826		882
Audit sub-total	11,201	97%	9,040	99%	20,241
Non-audit services	327	3%	115	1%	442
TOTAL FEES	11,528	100%	9,155	100%	20,683

NOTE 29 Consolidated companies

The main companies included in the Schneider Electric Group scope of consolidation are listed below:

Europe Fully consolidated Austria 100 100 NXT Control GmbH Austria 100 100 Schneider Electric Austria GmbH Austria 100 100 Schneider Electric Power Drives GmbH Schneider Electric Systems Austria GmbH Austria 100 100 Schneider Electric Bel LLC Belarus 100 100 Belgium 100 100 Schneider Electric Belgium NV/SA Belgium 100 100 Schneider Electric Energy Belgium SA Belgium 100 100 Schneider Electric ESS BVBA Belgium 100 100 Schneider Electric Services International SPRL Bulgaria 100 100 Schneider Electric Bulgaria EOOD
Croatia 100 100 Schneider Electric d.o.o
Czech Republic 98.3 98.3 Schneider Electric a.s.
Czech Republic 100 100 Schneider Electric CZ sro
Schneider Electric Systems Czech Republic sro Czech Republic 100 100
Ørbaekvej 280 A/S Denmark 100 100
Denmark 100 100 Schneider Electric Danmark A/S
Denmark 100 100 Schneider Electric IT Denmark ApS
Estonia 100 100 Schneider Electric Eesti AS
Finland 100 100 Schneider Electric Finland Oy
Finland 100 100 Schneider Electric Fire & Security OY
Finland 100 100 Schneider Electric Vamp Oy
France 100 100 Behar sécurité
France 100 100 Boissière Finance
Construction Electrique du Vivarais France 100 100
France 100 100 Dinel
France 100 100 Eckardt
France 100 100 Eurotherm Automation
France 100 100 France Transfo
France 67.9 67.9 IGE+XAO SA
France 100 100 Merlin Gerin Alès
France 100 100 Merlin Gerin Loire
France 100 100 Muller & Cie
France 100 100 Newlog
Rectiphase France 100 100
France 99 99 Sarel - Appareillage Electrique
France 100 100 Scanelec
France 100 100 Schneider Electric Alpes
France 100 100 Schneider Electric Energy France
France 100 100 Schneider Electric France
France 100 100 Schneider Electric Industries SAS
France 100 100 Schneider Electric International
France 100 100 Schneider Electric IT France
Schneider Electric Manufacturing Bourguebus France 100 100
Schneider Electric SE (Mother company) France 100 100
France 100 100 Schneider Electric Solar France
France 100 100 Schneider Electric Systems France
France 100 100 Schneider Electric Telecontrol

(in % of interest)		Dec. 31, 2020	Dec. 31, 2019
Schneider Toshiba Inverter Europe SAS	France	60	60
Schneider Toshiba Inverter SAS	France	60	60
Société d'Appareillage Electrique Gardy	France	100	100
Société d'Application et d'Ingenierie Industrielle et Informatique SAS - SA3I	France	100	100
Société Electrique d'Aubenas	France	100	100
Société Française de Construction Mécanique et Electrique	France	100	100
Société Française Gardy	France	100	100
Systèmes Equipements Tableaux Basse Tension	France	100	100
Transfo Services	France	100	100
Transformateurs SAS	France	100	100
ABN GmbH	Germany	100	100
Eberle Controls GmbH	Germany	100	100
Merten GmbH	Germany	100	100
ProLeit AG	Germany	100	-
RIB GmbH	Germany	87.6	-
Schneider Electric Automation GmbH	Germany	100	100
Schneider Electric Holding Germany GmbH	Germany	100	100
Schneider Electric GmbH	Germany	100	100
Schneider Electric Investment AG	Germany	100	-
Schneider Electric Real Estate GmbH	Germany	100	100
Schneider Electric Sachsenwerk GmbH	Germany	100	100
Schneider Electric Systems Germany GmbH	Germany	100	100
Schneider Electric AEBE	Greece	100	100
Schneider Electric Energy Hungary LTD	Hungary	100	100
Schneider Electric Hungaria Villamossagi ZRT	Hungary	100	100
SE - CEE Schneider Electric Közep-Kelet Europai KFT	Hungary	100	100
Schneider Electric Ireland Ltd	Ireland	100	100
Schneider Electric IT Limited	Ireland	100	-
Schneider Electric IT Logistics Europe Ltd	Ireland	100	100
Validation technologies (Europe) Ltd	Ireland	100	100
Eliwell Controls S.r.l.	Italy	100	100
Eurotherm S.r.l.	Italy	100	100
Schneider Electric Industrie Italia Spa	Italy	100	100
Schneider Electric Spa	Italy	100	100
Schneider Electric Systems Italia Spa	Italy	100	100
Uniflair Spa	Italy	100	100
Lexel Fabrika SIA	Latvia	100	100
Schneider Electric Baltic Distribution Center	Latvia	100	100
Schneider Electric Latvija SIA	Latvia	100	100
UAB Schneider Electric Lietuva	Lithuania	100	100
Industrielle de Réassurance SA	Luxembourg	100	100
American Power Conversion Corporation (A.P.C.) BV	Netherlands	100	100
APC International Corporation BV	Netherlands	100	100
APC International Holdings BV	Netherlands	100	100
Schneider Electric Logistic Centre BV	Netherlands	100	100
Schneider Electric Manufacturing The Netherlands BV	Netherlands	100	100
Schneider Electric Systems Netherlands BV	Netherlands	100	100
Schneider Electric The Netherlands BV	Netherlands	100	100

(in % of interest)		Dec. 31, 2020	Dec. 31, 2019
ELKO AS	Norway	100	100
Eurotherm AS	Norway	100	100
Lexel Holding Norge AS	Norway	100	100
Schneider Electric Norge AS	Norway	100	100
Elda Eltra Elektrotechnika S.A.	Poland	100	100
Eurotherm Poland Sp. Z.o.o.	Poland	100	100
Schneider Electric Industries Polska Sp. Z.o.o.	Poland	100	100
Schneider Electric Polska Sp. Z.o.o.	Poland	100	100
Schneider Electric Systems Sp. Z.o.o.	Poland	100	100
Schneider Electric Transformers Poland Sp. Z.o.o.	Poland	100	100
Schneider Electric Portugal LDA	Portugal	100	100
Schneider Electric Romania SRL	Romania	100	100
AO Schneider Electric	Russia	100	100
DIN Elektro Kraft OOO	Russia	100	100
FLISR LLC	Russia	100	100
OOO Potential	Russia	100	100
OOO Schneider Electric Zavod Electromonoblock	Russia	100	100
Schneider Electric Innovation center LLC	Russia	100	100
Schneider Electric Systems LLC	Russia	100	100
Schneider Electric URAL LLC	Russia	100	100
Schneider Electric DMS NS	Serbia	100	100
Schneider Electric Srbija doo Beograd	Serbia	100	100
Schneider Electric Slovakia Spol SRO	Slovakia	100	100
Schneider Electric Systems Slovakia SRO	Slovakia	100	100
Schneider Electric d.o.o.	Slovenia	100	100
Manufacturas Electricas SA	Spain	100	100
Schneider Electric Espana SA	Spain	100	100
Schneider Electric IT Spain, SL	Spain	100	100
Schneider Electric Systems Iberica S.L.	Spain	100	100
AB Crahftere 1	Sweden	100	100
AB Wibe	Sweden	100	100
Elektriska AB Delta	Sweden	100	100
Elko AB	Sweden	100	100
Eurotherm AB	Sweden	100	100
Lexel AB	Sweden	100	100
Schneider Electric Buildings AB	Sweden	100	100
Schneider Electric Distribution Centre AB	Sweden	100	100
Schneider Electric Sverige AB	Sweden	100	100
Telvent Sweden AB	Sweden	100	100
Feller AG	Switzerland	83.7	83.7
Gutor Electronic GmbH	Switzerland	100	100
Schneider Electric (Schweiz) AG	Switzerland	100	100
Schneider Electric Ukraine	Ukraine	100	100
Andromeda Telematics Ltd	United Kingdom	100	100
Aveva Group plc	United Kingdom	61.4	60
Avtron Loadbank Worldwide Co., Ltd	United Kingdom	100	100
BTR Property Holdings Ltd	United Kingdom	100	100
CBS Group Ltd	United Kingdom	100	100

(in % of interest)		Dec. 31, 2020	Dec. 31, 2019
Eurotherm Ltd	United Kingdom	100	100
Imserv Europe Ltd	United Kingdom	100	100
Invensys Holdings Ltd	United Kingdom	100	100
M&C Energy Group Ltd	United Kingdom	100	100
N.J. Froment & Co. Limited	United Kingdom	100	100
Samos Acquisition Company Ltd	United Kingdom	100	100
Schneider Electric (UK) Ltd	United Kingdom	100	100
Schneider Electric Buildings UK Ltd	United Kingdom	100	100
Schneider Electric Controls UK Ltd	United Kingdom	100	100
Schneider Electric IT UK Ltd	United Kingdom	100	100
Schneider Electric Ltd	United Kingdom	100	100
Schneider Electric Systems UK Ltd	United Kingdom	100	100
Serck Control and Safety Ltd	United Kingdom	100	100
Accounted for by equity method
Aveltys	France	51	51
Delta Dore Finance SA (sub-group)	France	20	20
Energy Pool Development	France	25	25
Schneider Lucibel Managed Services SAS	France	47	47
Möre Electric Group A/S	Norway	34	34
Custom Sensors & Technologies Topco Limited	United Kingdom	30	30
ZAO Gruppa Kompaniy Electroshield	Russia	60	-
North America
Fully consolidated
Power Measurement Ltd.	Canada	100	100
Schneider Electric Canada Inc.	Canada	100	100
Schneider Electric Solar Inc.	Canada	100	100
Schneider Electric Systems Canada Inc.	Canada	100	100
Viconics Technologies Inc.	Canada	100	100
Electronica Reynosa, S. de R.L. de C.V.	Mexico	100	100
Industrias Electronicas Pacifico, S.A. de C.V.	Mexico	100	100
Invensys Group Services Mexico S.C.	Mexico	100	100
Schneider Electric IT Mexico, S.A. de C.V.	Mexico	100	100
Schneider Electric Mexico, S.A. de C.V.	Mexico	100	100
Schneider Electric Systems Mexico, S.A. de C.V.	Mexico	100	100
Schneider Industrial Tlaxcala, S.A. de C.V.	Mexico	100	100
Schneider Mexico, S.A. de C.V.	Mexico	100	100
Schneider R&D, S.A. de C.V.	Mexico	100	100
Square D Company Mexico, S.A. de C.V.	Mexico	100	100
Telvent Mexico, S.A. de C.V.	Mexico	100	100
Adaptive Instruments Corp.	United States	100	100
American Power Conversion Holdings Inc.	United States	100	100
ASCO Power GP, LLC	United States	100	100
ASCO Power Services, Inc.	United States	100	100
ASCO Power Technologies, L.P.	United States	100	100
Foxboro Controles S.A.	United States	100	100
Invensys LLC	United States	100	100
Lee Technologies Puerto Rico, LLC	United States	100	100

(in % of interest)		Dec. 31, 2020	Dec. 31, 2019
Power Measurement, Inc.	United States	100	100
Pro-Face America, LLC	United States	100	100
Schneider Electric Buildings Americas, Inc.	United States	100	100
Schneider Electric Buildings Critical Systems, Inc.	United States	100	100
Schneider Electric Buildings, LLC	United States	100	100
Schneider Electric Digital, Inc.	United States	100	100
Schneider Electric Engineering Services, LLC	United States	100	100
Schneider Electric Grid Automation, Inc.	United States	100	100
Schneider Electric Holdings, Inc.	United States	100	100
Schneider Electric IT America Corp.	United States	100	100
Schneider Electric IT Corporation	United States	100	100
Schneider Electric IT Mission Critical Services, Inc.	United States	100	100
Schneider Electric IT USA, Inc.	United States	100	100
Schneider Electric Motion USA, Inc.	United States	100	100
Schneider Electric Solar Inverters USA, Inc.	United States	100	100
Schneider Electric Systems USA, Inc.	United States	100	100
Schneider Electric USA, Inc.	United States	100	100
SE Vermont Ltd	United States	100	100
Siebe Inc.	United States	100	100
SNA Holdings Inc.	United States	100	100
Square D Investment Company	United States	100	100
Stewart Warner Corporation	United States	100	100
Summit Energy Services, Inc.	United States	100	100
Veris Industries LLC	United States	100	100
Asia-Pacific
Fully consolidated
Clipsal Australia Pty Ltd	Australia	100	100
Clipsal Technologies Australia Pty Limited	Australia	100	100
Nu-lec Industries Pty. Limited	Australia	100	100
Scada Group Pty Limited	Australia	100	100
Schneider Electric (Australia) Pty Limited	Australia	100	100
Schneider Electric Australia Holdings Pty Ltd	Australia	100	100
Schneider Electric IT Australia Pty Ltd	Australia	100	100
Schneider Electric Solar Australia Pty Ltd	Australia	100	100
Schneider Electric Systems Australia Pty Ltd	Australia	100	100
Serck Controls Pty Limited	Australia	100	100
Tamco Electrical Industries Australia Pty Ltd	Australia	65	-
Beijing Leader & Harvest Electric Technologies Co. Ltd	China	100	100
CITIC Schneider Electric Smart Building Technology (Beijing) Co. Ltd	China	51	51
Clipsal Manufacturing (Huizhou) Ltd	China	100	100
FSL Electric (Dongguan) Limited	China	54	54
Proface China International Trading (Shanghai) Co. Ltd	China	100	100
Schneider (Beijing) Medium & Low Voltage Co., Ltd	China	95	95
Schneider (Beijing) Medium Voltage Co. Ltd	China	95	95
Schneider (Shaanxi) Baoguang Electrical Apparatus Co. Ltd	China	70	70
Schneider (Suzhou) Drives Company Ltd	China	90	90
Schneider (Suzhou) Enclosure Systems Co Ltd	China	100	100

(in % of interest)		Dec. 31, 2020	Dec. 31, 2019
Schneider (Suzhou) Transformers Co. Ltd	China	100	100
Schneider Automation & Controls Systems (Shanghai) Co., LTD	China	100	100
Schneider Busway (Guangzhou) Ltd	China	95	95
Schneider Electric (China) Co. Ltd	China	100	100
Schneider Electric (Xiamen) Switchgear Co. Ltd	China	100	100
Schneider Electric (Xiamen) Switchgear Equipment Co., Ltd	China	100	100
Schneider Electric Equipment an Engineering (X'ian) Co., Ltd	China	100	100
Schneider Electric IT (China) Co., Ltd	China	100	100
Schneider Electric IT (Xiamen) Co., Ltd.	China	100	100
Schneider Electric Low Voltage (Tianjin) Co. Ltd	China	75	75
Schneider Electric Manufacturing (Chongqing) Co. Ltd	China	100	100
Schneider Electric Manufacturing (Wuhan) Co. Ltd	China	100	100
Schneider Great Wall Engineering (Beijing) Co. Ltd	China	100	100
Schneider Shanghai Apparatus Parts Manufacturing Co. Ltd	China	100	100
Schneider Shanghai Industrial Control Co. Ltd	China	80	80
Schneider Shanghai Low Voltage Term. Apparatus Co. Ltd	China	75	75
Schneider Shanghai Power Distribution Electric Apparatus Co. Ltd	China	80	80
Schneider Smart Technology., Ltd	China	100	100
Schneider South China Smart Technology (Guangdong) Co. Ltd.	China	100	100
Schneider Switchgear (Suzhou) Co, Ltd	China	58	58
Schneider Wingoal (Tianjin) Electric Equipment Co. Ltd	China	100	100
Shanghai ASCO Electric Technology Co., Ltd	China	100	100
Shanghai Foxboro Co., Ltd	China	100	100
Shanghai Invensys Process System Co., Ltd	China	100	100
Shanghai Schneider Electric Power Automation Co. Ltd	China	100	100
Shanghai Tayee Electric Co., LTD	China	74.5	74.5
Telvent - BBS High & New Tech (Beijing) Co. Ltd	China	-	80
Tianjin Merlin Gerin Co. Ltd	China	-	75
Wuxi Proface Co., Ltd	China	100	100
Zircon Investment (Shanghai) Co., Ltd	China	74.5	74.5
Clipsal Asia Holdings Limited	Hong Kong	100	100
Clipsal Asia Limited	Hong Kong	100	100
Fed-Supremetech Limited	Hong Kong	54	54
Himel Hong Kong Limited	Hong Kong	100	100
Schneider Electric (Hong Kong) Limited	Hong Kong	100	100
Schneider Electric Asia Pacific Limited	Hong Kong	100	100
Schneider Electric IT Hong Kong Limited	Hong Kong	100	100
Eurotherm India Private Ltd	India	100	100
Luminous Power Technologies Private Ltd	India	100	100
Schneider Electric India Private Ltd	India	65	100
Schneider Electric Infrastructure Limited	India	75	75
Schneider Electric IT Business India Private Ltd	India	100	100
Schneider Electric President Systems Ltd	India	79.5	79.5
Schneider Electric Private Limited	India	100	100
Schneider Electric Solar India Private Limited	India	100	100
Schneider Electric Systems India Private Limited	India	100	100
PT Schneider Electric Indonesia	Indonesia	100	100
PT Schneider Electric IT Indonesia	Indonesia	100	100

(in % of interest)		Dec. 31, 2020	Dec. 31, 2019
PT Schneider Electric Manufacturing Batam	Indonesia	100	100
PT Schneider Electric Systems Indonesia	Indonesia	95	95
PT Tamco Indonesia	Indonesia	65	-
Schneider Electric Japan, Inc.	Japan	100	100
Schneider Eletcric Solar Japan Inc.	Japan	100	100
Schneider Electric Systems Japan Inc.	Japan	100	100
Toshiba Schneider Inverter Corp.	Japan	60	100
Eurotherm Korea Co., Ltd.	Korea	100	100
Schneider Electric Korea Ltd.	Korea	100	100
Schneider Electric Systems Korea Limited	Korea	100	100
Clipsal Manufacturing (M) Sdn. Bhd.	Malaysia	100	100
Gutor Electronic Asia Pacific Sdn. Bhd.	Malaysia	100	100
Henikwon Corporation Sdn Bhd	Malaysia	65	-
Huge Eastern Sdn. Bhd.	Malaysia	100	100
Schneider Electric (Malaysia) Sdn. Bhd.	Malaysia	30	30
Schneider Electric Industries (M) Sdn. Bhd.	Malaysia	100	100
Schneider Electric IT Malaysia Sdn. Bhd.	Malaysia	100	100
Schneider Electric Systems (Malaysia) Sdn. Bhd.	Malaysia	100	100
Tamco Switchgear (Malaysia) Sdn Bhd	Malaysia	65	-
Schneider Electric (NZ) Limited	New Zealand	100	100
Schneider Electric Systems New Zealand Limited	New Zealand	100	100
American Power Conversion Land Holdings Inc.	Philippines	100	100
Clipsal Philippines, Inc.	Philippines	100	100
Schneider Electric (Philippines) Inc.	Philippines	100	100
Schneider Electric IT Philippines Inc.	Philippines	100	100
Schneider Electric Asia Pte. Ltd.	Singapore	100	100
Schneider Electric Export Services Pte Ltd	Singapore	100	100
Schneider Electric IT Logistics Asia Pacific Pte. Ltd.	Singapore	100	100
Schneider Electric IT Singapore Pte. Ltd.	Singapore	100	100
Schneider Electric JV2 Holdings Pte. Ltd.	Singapore	65	-
Schneider Electric Overseas Asia Pte Ltd	Singapore	100	100
Schneider Electric Singapore Pte. Ltd.	Singapore	100	100
Schneider Electric South East Asia (HQ) Pte. Ltd.	Singapore	100	100
Schneider Electric Systems Singapore Pte. Ltd.	Singapore	100	100
Schneider Electric Lanka (Private) Limited	Sri Lanka	100	100
Schneider Electric Systems Taiwan Corp.	Taiwan	100	100
Schneider Electric Taiwan Co., Ltd.	Taiwan	100	100
Pro-Face South-East Asia Pacific Co., Ltd.	Thailand	100	100
Schneider (Thailand) Limited	Thailand	100	100
Schneider Electric CPCS (Thailand) Co., Ltd.	Thailand	100	100
Schneider Electric Solar Thailand	Thailand	100	-
Schneider Electric Systems (Thailand) Co. Ltd.	Thailand	100	100
Clipsal Vietnam Co. Ltd	VietNam	100	100
Invensys Vietnam Ltd	VietNam	100	100
Schneider Electric IT Vietnam Limited	VietNam	100	100
Schneider Electric Manufacturing Vietnam Co., Ltd	VietNam	100	100
Schneider Electric Vietnam Co. Ltd	VietNam	100	100
Accounted for by equity method

(in % of interest)		Dec. 31, 2020	Dec. 31, 2019
Delixi Electric LTD (sub-group)	China	50	50
Sunten Electric Equipment Co., Ltd	China	25	25
Fuji Electric FA Components & Systems Co., Ltd (sub-group)	Japan	36.8	36.8
Foxboro (Malaysia) Sdn. Bhd.	Malaysia	49	49
Rest of the World
Fully consolidated
Himel Algerie	Algeria	100	100
Schneider Electric Algerie	Algeria	100	100
Schneider Electric Argentina S.A.	Argentina	100	100
Schneider Electric Systems Argentina S.A.	Argentina	100	100
American Power Conversion Brasil Ltda.	Brazil	-	100
Eurotherm Ltda.	Brazil	100	100
Schneider Electric Brasil Automação de Processos Ltda.	Brazil	100	100
Schneider Electric Brasil Ltda.	Brazil	100	100
Schneider Electric IT Brasil Industria e Comercio de Equipamentos Eletronicos Ltda.	Brazil	100	100
Steck da Amazonia Industria Electrica Ltda.	Brazil	100	100
Steck Industria Electrica Ltda.	Brazil	100	100
Telseb Serviços de Engenharia e Comércio de Equipamentos Eletrônicos e Telecomu nicações Ltda	Brazil	100	100
Inversiones Schneider Electric Uno Limitada	Chile	100	100
Marisio S.A.	Chile	100	100
Schneider Electric Chile S.A.	Chile	100	100
Schneider Electric Systems Chile Limitada	Chile	100	100
Schneider Electric de Colombia S.A.S.	Colombia	100	100
Schneider Electric Systems Colombia Ltda.	Colombia	100	100
Schneider Electric Centroamerica Limitada	Costa Rica	100	100
Invensys Engineering & Service S.A.E.	Egypt	51	51
Schneider Electric Distribution Company	Egypt	87.4	87.4
Schneider Electric Egypt SAE	Egypt	91.9	91.9
Schneider Electric Systems Egypt S.A.E	Egypt	60	60
L&T Electricals & Automation FZE	United Arab Emirates	65	-
Schneider Electric DC MEA FZCO	United Arab Emirates	100	100
Schneider Electric FZE	United Arab Emirates	100	100
Schneider Electric Systems Middle East FZE	United Arab Emirates	100	100
Schneider Electric (Kenya) Ltd	Kenya	100	100
Kana Controls General Trading & Contracting Company W.L.L	Kuwait	31.9	-
Schneider Electric Services Kuweit	Kuwait	49	49
Schneider Electric East Mediterranean SAL	Lebanon	96	96
Delixi Electric Maroc SARL AU	Morocco	100	100
Schneider Electric Maroc	Morocco	100	100
Schneider Electric Free Zone Enterprise	Nigeria	100	-
Schneider Electric Nigeria Ltd	Nigeria	100	100
Schneider Electric Systems Nigeria Ltd	Nigeria	100	100
Schneider Electric O.M LLC	Oman	100	100
Schneider Electric Pakistan (Private) Limited	Pakistan	80	80
Schneider Electric Peru S.A.	Peru	100	100
Schneider Electric Systems del Peru S.A.	Peru	100	100
L&T Electricals & Automation Saudi Arabia Company Ltd.	Saudi Arabia	65	-

(in % of interest)		Dec. 31, 2020	Dec. 31, 2019
Schneider Electric Plants Saudi Arabia Co.	Saudi Arabia	100	100
Schneider Electric Saudi Arabia For Solutions & Services Co	Saudi Arabia	100	100
Schneider Electric System Arabia Co., LTD	Saudi Arabia	100	100
Schneider Electric South Africa (Pty) Ltd	South Africa	74.9	74.9
Uniflair South Africa (Pty) Ltd	South Africa	100	100
Gunsan Elektrik	Turkey	100	100
Himel Elektric Malzemeleri Ticaret A.S	Turkey	100	100
Schneider Elektrik Sanayi Ve Ticaret A.S.	Turkey	100	100
Schneider Enerji Endustrisi Sanayi Ve Ticaret A.S	Turkey	100	100

MANAGEMENT REPORT FOR THE PERIOD ENDED DECEMBER 31, 2020

Consolidated financial statements

Business and Statement of Income highlights

Acquisitions & disposals of the period

Acquisitions

RIB Software SE

On February 13, 2020, the Group announced its intention to launch a voluntary public tender for the acquisition of 100% of the shares of RIB Software SE for a total valorisation of EUR 1.5 billion. On March 25, 2020, the Group acquired approximately 9.99% of the capital of the company, outside the takeover offer. On July 10, 2020, the Group announced the successful completion of the voluntary public takeover offer. As of December 31, 2020, the Group owns 87.64% of the capital of RIB Software, fully consolidated within Energy Management reporting segment. The consideration paid amounts EUR 1,075 million (net of cash acquired).

The purchase accounting resulting from the acquisition is not completed at the closing date. As of December 31, 2020, the net purchase accounting adjustments amount to EUR 228 million, and result mainly of the identification of intangible assets (technologies, trademark and customer relationship). The preliminary Goodwill recognised amounts to EUR 1,114 million as of December 31,2020.

The Group holds a put option agreement on 9.1% of minority interests, valued at EUR 137 million (EUR 29 per share), with a maturity in 2024. This debt has been recognised within "Other non-current liabilities".

ProLeit

On August 4, 2020, the Group acquired ProLeiT AG and fully consolidated in Industrial Automation reporting segment since August 1, 2020. The consideration paid amounts in cash EUR 84 million (net of cash acquired). As of December 31, 2020, the Group recognized intangible assets for a preliminary amount of EUR 31 million (technologies, trademark and customer relationship), and an amount of Goodwill of EUR 91 million.

Larsen & Toubro

On May 1st, 2018, Schneider Electric, partnering with Temasek, a global investment company headquartered in Singapore, reached an agreement to buy Larsen & Toubro's Electrical & Automation business.

On August 31, 2020, the Group completed the transaction to combine Schneider Electric India's Low Voltage and Industrial Automation Products business and Larsen and Toubro ("L&T") Electrical and Automation business, for a consideration paid of EUR 1,571 million. Temasek took 35% stake in the combined business for EUR 530 million. The partnership with Temasek resulted in the dilution of the Group's interests within Schneider Electric India's Low Voltage and Industrial Automation Products business, and in the recognition of a gain of EUR 191 million in the Group share of equity.

L&T is fully consolidated since September 1, 2020, and reports within the Energy Management reporting segment.

The purchase accounting as per IFRS 3R is not completed as of December 31, 2020. The net adjustment of the opening balance sheet is EUR 316 million, resulting mainly from the booking of a preliminary amount of identifiable intangible assets (mainly customer relationship, technology and trademark), and the assessment of some contingent liabilities (mainly related to risks identified on contracts). This adjustment is subject to change in 2021, notably with the ongoing valuation of the environmental risks. The preliminary Goodwill recognised amounts to EUR 1,020 million as of December 31,2020.

Planon

On December 17, 2020, the Group has successfully completed the strategic minority investment in Planon Beheer B.V. (Planon), a leading software provider in Building & Workplace management. As of December 31, 2020, the Group owns 25% of Planon Beheer B.V., which will be accounted under the equity method in 2021. The consideration paid amounts in cash EUR 113 million.

OSIsoft, LLC.

On August 25, 2020, AVEVA Group Plc, which is fully consolidated within Industrial Automation reporting segment, announced the proposed acquisition of OSIsoft. LLC. for a consideration of USD 5.0 billion. OSIsoft is a global leader in real-time industrial operational data software and services. For the year ended December 31,2019, OSIsoft recognised a revenue of USD 470 million and adjusted EBIT of USD 125 million.

AVEVA has received all antitrust and regulatory clearances required ahead of completion of the acquisition, except for the approval of the Committee on Foreign Investment in the United States (CFIUS). The deal is expected to close in the course of March 2021. The deal will be funded by USD 4.4 billion of cash consideration, of which USD 3.5 billion have already been raised via rights issued to existing shareholders (including Schneider Electric), and USD 0.9 billion from existing cash. The remainder will be funded by a USD 0.6 billion share consideration to be issued to Estudillo Holdings Corp. As of December 31, 2020, the cash received from AVEVA's minority interests amounts to EUR 1.1 billion.

Disposals

On October 24, 2019, the Group agreed to establish a Joint Venture with the Russian Direct Investment Fund ("RDIF"), to further strengthen the long-term outlook for the Group's Electroshield Samara business which was consolidated under Energy Management reporting segment and generated revenues of EUR 168 million in 2019.

The transaction with the Russian Direct Investment Fund ("RDIF") was closed on January 20, 2020. The new Joint Venture is accounted for as an equity method investment in 2020.

Follow-up on acquisitions and divestments occurred in 2019 with significant effect in 2020

Acquisitions

No significant acquisition occurred during 2019.

Disposals

On March 25, 2019, the Group announced having entered exclusive negotiations with Transom Capital Group regarding the sale of its Pelco business. On May 24, 2019, the sale of Pelco, which was previously reported within the Energy Management reporting segment, was finalized.

On December 5, 2019, the Group announced having signed an agreement with Vinci Energies regarding the sale of Converse Energy Projects GmbH, which was reported within the Energy Management reporting segment. On December 30, 2019, the sale was finalized.

Exchange rate changes

Fluctuations in the euro exchange rate had a negative impact in one-year period ended December 31, 2020, decreasing consolidated revenue by EUR (741) million due mainly to the negative effect of multiple currencies (mainly U.S. dollar, Brazilian Real, Indian rupee, Chinese Yuan) compared to the Euro and a negative impact decreasing adjusted EBITA by EUR (191) million.

Results of Operations

The following table sets forth our results of operations for 2020 and 2019:

(in millions of euros except for earnings per share)	Full Year 2020	Full Year 2019	Variance
Revenue	25,159	27,158	(7.4)%
Cost of sales	(15,003)	(16,423)	(8.6)%
Gross profit	10,156	10,735	(5.4)%
% Gross profit	40.4%	39.5%
Research and development	(718)	(657)	9.3%
Selling, general and administrative expenses	(5,512)	(5,840)	(5.6)%
EBITA adjusted *	3,926	4,238	(7.4)%
% EBITA adjusted	15.6%	15.6%
Other operating income and expenses	(210)	(411)	(48.9)%
Restructuring costs	(421)	(255)	65.1%
EBITA **	3,295	3,572	(7.8)%
% EBITA	13.1%	13.2%
Amortization and impairment of purchase accounting intangibles	(207)	(173)	19.7%
Operating income	3,088	3,399	(9.1)%
% Operating income	12.3%	12.5%
Interest income	14	39	(64.1)%
Interest expense	(126)	(168)	(25.0)%
Finance costs, net	(112)	(129)	(13.2)%
Other financial income and expense	(166)	(132)	25.8%
Net financial income/(loss)	(278)	(261)	6.5%
Profit from continuing operations before income tax	2,810	3,138	(10.5)%
Income tax expense	(638)	(690)	(7.5)%
Income of discontinued operations, net of income tax	-	(3)	(100.0)%
Share of profit/(loss) of associates	66	78	(15.4)%
PROFIT FOR THE PERIOD	2,238	2,523	(11.3)%
attributable to owners of the parent	2,126	2,413	(11.9)%
attributable to non controlling interests	112	110	1.8%
Basic earnings (attributable to owners of the parent) per share (in euros per share)	3.84	4.38	(12.3)%
Diluted earnings (attributable to owners of the parent) per share (in euros per share)	3.81	4.33	(12.0)%

* Adjusted EBITA (Earnings Before Interest, Taxes, Amortization of Purchase Accounting Intangibles). Adjusted EBITA corresponds to operating profit before amortization expenses and impairment loss of purchase accounting intangible assets, before goodwill impairment, other operating income and expenses and restructuring costs.

** EBITA (Earnings Before Interest, Taxes and Amortization of Purchase Accounting Intangibles). EBITA corresponds to operating profit before amortization and impairment of purchase accounting intangible assets and before goodwill impairment.

Revenue

Consolidated revenue totaled EUR 25,159 million for the period ended December 31, 2020, down (7.4)% on a current structure and currency basis from the year-earlier period.

Organic growth was negative for (4.7)%, acquisitions and disposals accounted for (0.2)% and the currency effect for (2.5)%.

Evolution of revenue by reporting segment

The following table sets forth our revenue by business segment for the one-year periods ended December 31, 2020 and 2019:

(in millions of euros)	Energy Management	Industrial Automation	Total
Full Year 2020	19,344	5,815	25,159
Full Year 2019	20,847	6,311	27,158

Energy Management generated revenues of EUR 19,344 million, equivalent to 77% of the full year revenues and was down (4.5)% organically in 2020, impacted across all regions by the effects of the pandemic with a return to positive growth in the second half-year led by China and the U.S. There was continued demand for Residential and Small building offers throughout the year, and it was a key component of growth in the second half-year. Commercial & Industrial Buildings (CIB) activity restarted in most regions following the strict lockdowns in the first half of the year, and the Group saw continued demand across specialized areas such as Hospitals and Healthcare, Life Science and Digital Buildings. Data Center continued on a positive demand trend, for both large and small installations, but revenue growth was impacted by the high base of comparison. The Group experienced a mixed picture in Industry & Infrastructure end-markets, where Industry remained challenged in part due to a low oil price and the impacts of COVID-19 on mid and late-cycle investment, while Infrastructure remains positively oriented due to the Group's offers for Electrical Utilities (including Smart Grids and Microgrids) and in Transportation.

Industrial Automation generated revenues of EUR 5,815 million, equivalent to 23% of the full year revenues and was down (5.3)% organically in 2020, impacted across all regions by the effects of the pandemic. The Process & Hybrid end-market remained challenged due to the low oil price, and the impacts of COVID-19 on mid- and late-cycle investment but was supported by strong performance from offers for industrial software, which finished the year strongly. Certain hybrid segments including Consumer Packaged Goods also performed well. Product and System offerings into Discrete end-markets performed better than in Process markets, with the relative recovery in the second half of the year due in part to strong OEM demand in China. Services showed good traction across automation end-markets, though with Field Services impacted in the first semester by restrictions on site access. The Group's digitally enabled services performed well in a year where there was greater need for remote access and predictive maintenance.

Gross margin

Gross profit was down (3.2)% organically in 2020, but with the gross margin improving by +60 basis points organically to 40.4% in 2020 mainly driven by net price and productivity.

Support Function costs: Research and development and selling, general and administrative expenses

Research and development expenses, net of capitalized development costs and excluding research and development costs booked in costs of sales, increased by 9.3% from EUR 657 million for 2019 to EUR 718 million for 2020. As a percentage of revenues, the net cost of research and development is increasing slightly to (2.9)% of revenues for one-year period ended December 31, 2020 (2.4% for 2019).

Total research and development expense, including capitalized development costs and development costs reported as cost of sales (see Note 4 to the Consolidated Financial Statements) increased by 2.9% from EUR 1,368 million for 2019 to EUR 1,407 million for 2020. As a percentage of revenues, total research and development expenses increased slightly to 5.6% for 2020 (5.0% for 2019).

In 2020, the net effect of capitalized development costs and amortization of capitalized development costs amounts to EUR 66 million on operating income (EUR 60 million in 2019).

Selling, general and administrative expenses decreased by (5.6)% to EUR 5,512 million for 2020 (EUR 5,840 million for 2019). As a percentage of revenues, selling, general and administrative expenses increased slightly to 21.9% for 2020 (21.5% for 2019).

Combined, total support function costs, that is, research and development expenses together with selling, general and administrative costs, totaled EUR 6,230 million for 2020 compared to EUR 6,497 million for 2019, a decrease of (4.1)%. Support functions costs to sales ratio increases at 24.8%.

Other operating income and expenses

For 2020, other operating income and expenses amounted to a net expense of EUR 210 million, mainly due to costs of acquisitions and integrations for EUR 169 million. These cots are mainly related to the major acquisitions of the year (L&T, RIB Software SE as well as OSIsoft, the latter being expected to close in early 2021).

Restructuring costs

For 2020, restructuring costs amounted to EUR 421 million compared to EUR 255 million for 2019, attributed mainly to Support Function Costs improvement initiatives.

EBITA and Adjusted EBITA

We define adjusted EBITA as EBITA before restructuring costs and before other operating income and expenses, which includes acquisition, integration and separation costs. We define EBITA as earnings before interest, taxes and amortization of purchase accounting intangibles. EBITA comprises operating profit before amortization and impairment of purchase accounting intangible assets and before goodwill impairment.

Adjusted EBITA amounted to EUR 3,926 million for 2020, compared to EUR 4,238 million for 2019, an organic decrease of (3.6)%. As a percentage of revenues, adjusted EBITA remains stable at 15.6% but margin improved 20 bps organically.

EBITA decreased from EUR 3,572 million for 2019 to EUR 3,295 million in 2020. As a percentage of revenues, EBITA remains almost stable at 13.1% in 2020 (13.2% for 2019).

Adjusted EBITA by business segment

The following table sets out EBITA and adjusted EBITA by business segment:

Full Year 2020

(in millions of euros)	Energy Management	Industrial Automation	Central functions & digital costs	Total
Backlog	7,231	1,765	-	8,996
Revenue	19,344	5,815	-	25,159
Adjusted EBITA	3,634	992	(700)	3,926
Adjusted EBITA (%)	18.8%	17.1%		15.6%

On December 31, 2020, the total backlog to be executed in more than a year amounts to EUR 639 million.

Full Year 2019

(in millions of euros)	Energy Management	Industrial Automation	Central functions & digital costs	Total
Backlog	6,399	1,705	-	8,104
Revenue	20,847	6,311	-	27,158
Adjusted EBITA	3,842	1,141	(745)	4,238
Adjusted EBITA (%)	18.4%	18.1%		15.6%

On December 31, 2019, the total backlog to be executed in more than a year amounted to EUR 663 million.

Energy Management generated an adjusted EBITA of EUR 3,634 million, or 18.8% of revenues, up c. 30 bps organic (up 40 bps reported), thanks to a strong contribution from productivity, a positive mix impact, and net price improvement (inclusive of raw material tailwinds), along with cost saving actions taken throughout the year. These positive impacts more than compensated for the impact of decreasing volumes. The performance included an improvement of c. +120bps organic in the second semester for which net price and productivity were the main contributing factors.

Industrial Automation generated an adjusted EBITA of EUR 992 million, or 17.1% of revenues, down c. (30) bps organic (down (1.0) pt reported), due mainly to the impact of decreasing volumes and cost inflation, which were partly offset by a strong contribution from productivity and net price improvement (inclusive of raw material tailwinds), along with cost saving actions taken throughout the year. The performance included an improvement of c. +120bps organic in the second half of the year for which net price and productivity were the main contributing factors.

Central Functions & Digital Costs in 2020 reduced by (6)% to EUR 700 million (EUR 745 million in 2019), remaining stable as a percentage of Group revenues at 2.8% (2.7% of Group revenues in 2019). Within Central Functions and Digital Costs, the corporate cost element has been decreasing at a higher rate than the remainder where digital and cybersecurity remain a focus of investment. Corporate costs remain at around 0.8% of Group revenues.

Operating income (EBIT)

Operating income or EBIT (Earnings Before Interest and Taxes), decreased from EUR 3,399 million for 2019 to 3,088 million for 2020, a decrease of (9.1)%.

Net financial income/loss

Net financial loss amounted to EUR 278 million for 2020, compared to EUR 261 million for 2019. Financial result remains relatively stable year-on-year, the decrease of the cost of net financial debt (from EUR 129 million in 2019 to EUR 112 million in 2020) being fully compensated by a decrease of the dividends received from non-consolidated investments.

Tax

The effective tax rate was 22.7% for 2020, and 22% for 2019. The corresponding income tax expense meanwhile decreased from EUR 690 million for 2019 to EUR 638 million for 2020.

Share of profit/ (losses) of associates

The share of associates was a EUR 66 million profit for 2020, compared to EUR 78 million profit for 2019.

Non-controlling interests

Minority interests in net income for 2020 totaled EUR 112 million, compared to EUR 110 million for 2019. This represents the share in net income attributable, in large part, to the minority interests of AVEVA.

Profit for the period (to owners of the parent)

Profit for the period attributable to the equity holders of our parent company amounted to EUR 2,126 million for 2020, compared to EUR 2,413 million profit for 2019.

Earnings per share

Earnings per share amounted to EUR 3.84 per share for 2020 and EUR 4.38 per share for 2019.

Comments to the consolidated Cash-flow

The following table sets forth our cash-flow statement for 2020 and 2019:

(in millions of euros)	Note	Full Year 2020	Full Year 2019
Profit for the year		2,238	2,523
Losses/(gains) from discontinued operations		-	3
Share of (profit)/losses of associates		(66)	(78)
Income and expenses with no effect on cash flow:
Depreciation of property, plant and equipment	11	698	701
Amortization of intangible assets other than goodwill	10	512	474
Impairment losses on non-current assets		54	63
Increase/(decrease) in provisions	21	266	56
Losses/(gains) on disposals of assets		(10)	206
Difference between tax paid and tax expense		(137)	(2)
Other non-cash adjustments		96	66
Net cash provided by operating activities		3,651	4,012
Decrease/(increase) in accounts receivables		326	22
Decrease/(increase) in inventories and work in progress		(153)	209
(Decrease)/increase in accounts payable		344	(41)
Decrease/(increase) in other current assets and liabilities		267	80
Change in working capital requirement		784	270
TOTAL I - CASH FLOWS FROM OPERATING ACTIVITIES		4,435	4,282
Purchases of property, plant and equipment	11	(485)	(506)
Proceeds from disposals of property, plant and equipment		55	38
Purchases of intangible assets	10	(332)	(338)
Net cash used by investment in operating assets		(762)	(806)
Acquisitions and disposals of businesses, net of cash acquired & disposed	2	(2,393)	(79)
Other long-term investments		11	59
Increase in long-term pension assets		(106)	(90)
Sub-total		(2,488)	(110)
TOTAL II - CASH FLOWS FROM / (USED IN) INVESTING ACTIVITIES		(3,250)	(916)
Issuance of bonds	22	2,444	964
Repayment of bonds	22	(500)	(500)
Sale/(purchase) of own shares		(50)	(266)
Increase/(decrease) in other financial debt		1,032	(1,078)
Increase/(decrease) of share capital	19	43	168
Transaction with non-controlling interests *	2	1,141	-
Dividends paid to Schneider Electric's shareholders	19	(1,413)	(1,296)
Dividends paid to non-controlling interests		(112)	(117)
TOTAL III - CASH FLOWS FROM / (USED IN) FINANCING ACTIVITIES		2,585	(2,125)
TOTAL IV - NET FOREIGN EXCHANGE DIFFERENCE		(403)	(18)
TOTAL V - EFFECT OF DISCONTINUED OPERATIONS		-	(59)
INCREASE/(DECREASE) IN NET CASH AND CASH EQUIVALENTS: I +II +III +IV +V		3,367	1,164
Net cash and cash equivalents, beginning of the period	18	3,395	2,231
Increase/(decrease) in cash and cash equivalents		3,367	1,164
NET CASH AND CASH EQUIVALENTS, END OF THE PERIOD	18	6,762	3,395

* In 2020, the Group received EUR 1,141 million of cash from AVEVA's minority interests, following the increase of capital realized by the latter, to finance the on-going acquisition of OSISoft (Note 2).

Operating Activities

Net cash provided by operating activities before changes in operating assets and liabilities reached EUR 3,651 million for 2020, decreasing compared to EUR 4,012 million for 2019. It represents 14.5% of revenues for 2020 (14.8% of revenues from 2019).

Change in working capital requirement generated EUR 784 million in cash in 2020, compared to EUR 270 million in 2019.

In all, net cash provided by operating activities increased from EUR 4,282 million in 2019 to EUR 4,435 million in 2020.

Investing Activities

Net capital expenditure, which includes capitalized development projects, decreased, at EUR 762 million for 2020, compared to EUR 806 million for 2019, and representing 3% of sales in 2020 stable compared to 2019.

Free cash-flow (cash provided by operating activities net of net capital expenditure) amounted to EUR 3,673 million in 2020 versus EUR 3,476 million in 2019.

Cash conversion rate (free cash-flow over net income attributable to the equity holders of the parent company on continuing operations) was 173% in 2020 versus 144% in 2019.

The acquisitions net of disposals represented a cash out of EUR 2,393 million (net of acquired cash) for 2020, compared with EUR 79 million for 2019. Those amounts correspond mainly to the acquisitions and disposals described in Notes 2.1 and 2.2 of the Consolidated Financial Statements (Chapter 5).

Financing Activities

Net cash flow from financing activities amounted to EUR 2,585 million during the year 2020, compared to a use of EUR 2,125 million during the year 2019, mainly due to changes in net debt and to the cash received from AVEVA's minority interests following the increase of capital realized by the latter to finance the on-going acquisition of OSISoft.

The net cash inflow from other financial debts amounted to EUR 1,032 million in 2020, compared to a net cash outflow of EUR 1,078 million in 2019. The 2020 inflow is mainly due to a net commercial paper issuance of EUR 1,302 million.

The dividend paid by Schneider Electric was EUR 1,413 million in 2020, compared with EUR 1,296 million in 2019.

Review of the parent company financial statements

In 2020, Schneider Electric SE posted an operating loss of EUR 17 million compared with EUR 15 million the previous year.

Interest expense net of interest income amounted to EUR 65 million versus EUR 62 million the previous year.

Current loss amounted to EUR 64 million in 2020 compared with an income of EUR 15 million in 2019.

The net income stood at EUR (31) million in 2020 compared with EUR 57 million in 2019, mainly due to the dividends of EUR 50 million received in 2019.

Equity before appropriation of net profit amounted to EUR 6,607 million at December 31, 2020 versus EUR 9,007 million at the previous year-end, after taking into account 2020 profit and dividend payments of EUR 1,413 million.

2021 Targets

Though the uncertainty emanating from the COVID-19 crisis remains, the Group expects the following trends in each of its main endmarkets and geographies, driving growth in 2021.

By end-market :

• Buildings: Strong growth expected in Residential markets, and good growth in specialized areas of Non-Residential, including warehouse and healthcare
• Data Center: a continuation of robust demand is expected, leading to strong growth
• Infrastructure: Good growth is expected in the Utilities segment, supported by strong project execution, with continued demand for the Group's offers in relation to Smart Grid
• Industry: Strong growth expected in short-cycle, led by OEM demand. Mid- and late-cycle to remain impacted in the near-term, with Hybrid segments better oriented.

By geographic market:

• North America: Strong growth expected for the region, including in both Residential and Data Center markets. Mid- and late-cycle industrial markets to remain challenged in the near-term, while short-cycle expected to grow well. Continued softness expected in Mexico
• Asia Pacific: Strong growth expected for the region; China to continue growth momentum, with good traction across most endmarkets and segments. The rest of the region to see continued improvement, supported by a recovery in Global trade
• Western Europe: Good recovery to continue in the region, led by Residential and Data Center end-markets. Discrete automation markets are expected to perform better than Process & Hybrid. Green Deal stimulus could start to contribute towards the end of the year
• Rest of the World: Strong growth expected overall for the region, although with performance contrasted by country. Rising commodity prices are expected to be supportive of growth in certain countries.

The Group expects positive growth in aggregate in 2021 as it continues to deploy its strategic priorities in key markets.

The Group targets 2021 Adjusted EBITA growth between +9% and +15% organic. The target would be achieved through a combination of organic revenue growth and margin improvement, currently expected to be :

• Revenue growth of +5% to +8% organic
• Adjusted EBITA margin up +60bps to +100bps organic

This implies Adjusted EBITA margin of around 16.1% to 16.5% (including scope based on transactions completed in 2020 and FX based on current estimation).