Annual Report Sustainable Development Report ... - Groupe SEB

Annual Report
Sustainable Development Report
Summary
2005 |

05 |
Annual Report
Profile, Key figures_01 • Chairman's message_02
Financial information_04 • Stockmarket information_08
Corporate governance_10 • A Changing sector_12
International expansion_14 • Marketing strategy_18
Being competitive_22
Sustainable Development Report
Principles_28 • Corporate responsibility_29
Shareholder relations_30 • Client and Supplier relations_31
Civic commitment_32 • Environment_33
Priorities_34 • Sharing income_36
Management bodies_37

€2,463million Sales +7.6%
Net income –21%
€103 million
Profile, Key figures
Present in French homes for more than 50 years, we have gradually extended our sphere of action around the world.
With a rich portfolio of powerful brands
and the market's most extensive product offer,
Groupe SEB is today world leader in small domestic equipment.
Our success is due chiefly to our ability to innovate
and invent for your day-to-day life in tomorrow's world.
Your world is our world
Employees worldwide 31.12.05
Operating margin stable
14,400
€262 million
€419million Financial debt 31.12.05
STRATEGIC BUSINESS AREAS
COOKWARE: frying pans, saucepans, casseroles, bakeware, oven dishes, pressure cookers, low-pressure steam pots, kitchen utensils...
ELECTRICAL COOKING: deep fryers, table-top ovens, barbecues, informal meal appliances, waffle makers, meat grills, toasters, steam cookers...
FOOD AND BEVERAGE PREPARATION: food processors, beaters, mixers, blenders, centrifugal juice extractors and small preparation equipment,
coffee makers (pod, filter and espresso), electric kettles...
PERSONAL CARE: hair-care equipment, depilators, bathroom scales, foot massage appliances...
LINEN CARE: irons and steam generators, garment steam brushes, semi-automatic washing machines...
FLOOR CARE AND HOME COMFORT: vacuum cleaners (upright or canister, with and without dust bag, compact and cordless),
fans, heaters and air purifiers...
WORLD RANKING
N° 1
Cookware • Pressure cookers • Steam irons and steam generators
Kettles • Steam cookers • Food-preparation equipment • Toasters • Electric fryers • Informal meal appliances
N° 2
Table-top ovens • Electric barbecues and grills
N° 3
Filter and espresso coffee makers
|01

Annual Report 05
While trading was very favourable
in America and Asia in 2005, your Group faced difficulty
in Europe, and saw contrasting performance which reflected
the general economic climate.
Although Group business suffered badly from continued falling
prices in European markets – still undergoing structural
change – our international operations and recent takeovers
helped us to achieve growth in sales and maintain our
operating margin. In this context, our results are satisfactory.
We continued to differentiate our brands throughout 2005
– a process begun in 2004 – notably with the re-launch of
Krups. In line with our innovation strategy, we launched 180 new
products and models. Group logistics in France were
streamlined to better serve our retail clients. We also went
ahead with adapting our industrial base in Germany and Spain.
Finally, the Group completed its coverage of the cookware
market with the acquisition of Lagostina in the top-range
segment and Panex in Brazil.
|02
All these steps will go on yielding results in 2006, notably with
continued international expansion and active development of
our recent acquisitions: we plan to launch the Lagostina brand
in 26 countries and will expand the Panex product portfolio.
In the current context of undifferentiated products and falling
prices, we are more than ever determined to focus on
innovation by regrouping and reinforcing our centres
of expertise for products and technologies. Over 200 new
products and models will be launched in 2006, giving each
of our brands a complete offer tailored to each type of market.
In this way, the Group's presence is assured in all market
segments. However, it cannot make all these products in France,
in particular certain everyday articles such as kettles, filter
coffee makers and toasters.

With consumer behaviour changing
in mature markets such as Europe, and with the gaining
strength of low-cost producer countries, the Group must
continue to adapt in order to guarantee its long-term future
and maintain its position as world market leader.
Chairman's message
In consequence, a restructuring plan involving four factories
was announced in January. The plan will affect 890 of the
Group's 7,200 jobs in France. Though painful, this adjustment
to the market is vital for our long-term future. Loyal to the
Group's corporate values, we intend to carry out this plan in the
best possible conditions from a social and human point of view.
The plan will be spread over two years to allow time to find a
solution for every person involved.
There will be no outright redundancies.
Thierry de La Tour d’Artaise
Ecully, 25 February 2006
|03
The Group is optimistic about its future: it is well armed
to meet the needs of emerging markets where the level of
equipment is still low, and where there is a demand for a better
class of product.
It is also ready to re-launch sales growth in mature markets
with its rich brand portfolio and diversified product offer.
Our optimism is built above all on the outstanding
commitment of Groupe SEB employees and shareholders –
to whom I express my warmest thanks.
Confident
in the future of the Group

NAFTA countries 14%
South America 8%
* Based on 15-member European Union
financial overview
404 327 189 331
0.8 0.6 0.3 0.5 0.5
2001
2002
2003
|04
2004
331
2004
IFRS
468 497 506 597
15.8 23.7 29.3 20.6 21.9
2001
2002
2003
2004
596
2004
IFRS
419
0.5
2005
IFRS
689
14.9
2005
IFRS
France 24%
Other EU countries* 28%
Asia and Other territories 26%
Breakdown of sales
by geographic zone
Net financial debt and gearing
Debt at 31.12 (€ millions)
� Gearing: debt-to-equity ratio
� IFRS
Return on shareholders' equity
Shareholders' equity at 1 January (€ millions)
� Return on shareholders' equity (%)
� IFRS

Financial information
Group consolidated results
CONSOLIDATED INCOME STATEMENT
At 31 December
(in € millions)
Revenue
Operating expenses
OPERATING MARGIN
Discretionary and non-discretionary profit-sharing
RECURRING OPERATING PROFIT
Other operating income and expense
OPERATING PROFIT
Finance costs
Other financial income and expense
Share of profits (losses) of associates
PROFIT BEFORE TAX
Income tax expense
Minority interests
PROFIT ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT
CONSOLIDATED BALANCE SHEET
At 31 December
ASSETS
(in € millions)
NON-CURRENT ASSETS
Inventories
Trade receivables
Current tax assets and other receivables
Cash, cash equivalents and derivative instruments
CURRENT ASSETS
TOTAL ASSETS
EQUITY AND LIABILITIES
(in € millions)
EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT
MINORITY INTERESTS
EQUITY
Long-term borrowings
Provisions and other non-current liabilities
NON-CURRENT LIABILITIES
Short-term borrowings and derivative instruments
Trade payables
Other provisions and current liabilities
CURRENT LIABILITIES
TOTAL EQUITY AND LIABILITIES
|05
2005
IFRS
2,462.9
(2,200.7)
262.2
(29.3)
232.9
(49.2)
183.7
(17.6)
(7.6)
(1.1)
157.4
(54.6)
(0.1)
102.7
2005
IFRS
848.6
449.8
630.3
86.6
53.5
1,220.2
2,068.8
2005
IFRS
801.3
1.2
802.5
104.3
228.1
332.4
368.0
303.7
262.2
933.9
2,068.8
2004
IFRS
2,288.7
(2,027.8)
260.9
(34.2)
226.7
(40.0)
186.7
(8.1)
(4.4)
-
174.2
(40.9)
(2.5)
130.8
2004
IFRS
750.5
386.0
552.0
52.0
40.4
1,030.4
1,780.9
2004
IFRS
686.4
2.4
688.8
18.6
180.7
199.3
352.3
298.3
242.2
892.8
1,780.9

Comments on
the financial statements
Sales Groupe SEB sales for 2005 amounted to
€ 2,463 million, up 7.6% at current exchange rates and by 4.9%
at constant parity. These figures include a €102 million
contribution from recently acquired companies (All-Clad for
12 months – against 5 in 2004 – Lagostina for 8 months and
Panex for 7 months), as well as a positive exchange effect
of €58 million (after three years negative) and 0.6% organic
growth (for constant structure and exchange rates).
The Group saw sharp contrasts in the overall trading
environment in 2005. In Europe, sales were affected by the
rising influx of very cheap products from Asia, which led to
increased pressure on prices and margins. However, in North
and South America and in the other countries, Groupe SEB
made rapid progress thanks to its strategy of international
expansion and reinforcement of its presence in existing
markets. Meanwhile, we returned to growth in the United
CHANGE IN THE OPERATING MARGIN (OM)
(€ millions)
261
2004
OM
+ 20
Volume
sales
-18
Product
mix and
price
-10
Purchase
cost
-6
+9
|06
+6
Overheads Currency Acqui-
impact
sitions
262
2005
OM
States after three difficult years, while we continued to make
inroads in Latin America, bolster our positions in the CIS
countries, Japan, South Korea, Central Europe and Australia,
and accelerate our expansion in new markets such as Thailand,
China and Singapore.
Trading results
The 2005 operating margin (based on IFR Standards)
stood at €262 million – virtually the same level as in 2004.
For constant structure (excluding a €6 million contribution
from recent acquisitions), the figure would have been
€256 million. This is explained by eroded profits on our
European sales due to downward pressure on prices caused
by growing competition from cheap Asian products (especially
in certain banalised ranges) and the gaining strength and
geographic spread of discount chains promoting cut-price
products.

On the other hand, a €10 million rise in purchasing costs linked
to higher prices for some raw materials was almost wholly
offset by a €9 million exchange gain.
Operating profit before financial expense stood at
€184 million, down by 1.6%. A €5 million drop in bonus and
profit-sharing was cancelled out by a €9 million rise in 'Other
income and expense'. The latter included €60 million in
restructuring charges (mainly concerning Germany and Spain),
as well as provisions for depreciation of fixed assets related to
the announced 2006-2007 French industrial restructuring plan.
Financial information
|07
At €103 million, Group net income fell back from
its level of €131 million in 2004 (IFRS). This drop was due to
a twofold rise in net financial expense (€-25 million in 2005,
against €-12 in 2004) linked to the recent acquisitions, and to
a higher tax level because the Group did not benefit from
tax-loss carryforwards as in previous years.
In the balance sheet, Group shareholders' equity
at the end of 2005 stood at €802 million, and the level of debt
was €419 million. The €88 million year-on-year rise in debt was
due mainly to the 2005 acquisitions of Lagostina and Panex,
and to a lesser extent to a higher working capital requirement.
With a ratio of net debt to shareholders' equity at 0.52 (0.48
at the end of 2004), the financial situation of the Group
is healthy and solid.
Acquisitions
A year after the acquisition of the American company All-Clad, Groupe SEB added to its fund of expertise and reinforced
its position in the cookware market by taking over Lagostina in Italy and Panex in Brazil.
Lagostina is Italy's market leader in mid-range and top-range cookware (including saucepans, casseroles, frying pans
and pressure cookers) and is known for its industrial expertise in bonded and stainless steel. A front-rank cookware
brand in France, Canada, the Benelux countries and Taiwan, this company is currently expanding in China, Hong Kong
and Japan.
The takeover of Lagostina makes Groupe SEB world leader in premium quality cookware.
Founded in 1948, Panex is Brazil's market leader in cookware, and sells locally-made frying pans, casseroles, saucepans
and pressure cookers. The takeover of Panex establishes the Group in Brazil's cookware market and opens an
opportunity to expand in the other Mercosur countries.
With Arno and Panex, Groupe SEB is now a major force in the small domestic equipment market in South America.

Breakdown of capital
at 31 December 2005
Seb share overview
|08
Treasury stock 4.4%
French private shareholders 6.5%
Founder group* 43.2%
French institutional investors 23.1%
Employees 4.2%
FFP 5.1%
* Joint reference shareholders: FÉDÉRACTIVE (a shareholder investment company) and its members for 22.86%, and VENELLE INVESTISSEMENT
(a family shareholder company) and its members for 20.38%.
Breakdown of voting rights
at 31 December 2005
* Joint reference shareholders: FÉDÉRACTIVE (a shareholder investment company) and its members for 31.49%, and VENELLE INVESTISSEMENT
(a family shareholder company) and its members for 28.37%.
Foreign investors 13.5%
Foreign investors 9.6%
French private shareholders 5.6%
Founder group* 59.9%
French institutional investors 16.3%
Employees 5.0%
FFP 3.6%
Renewal of the shareholder agreement
In November 2005, the family shareholders making up the Founder group of SEB SA signed a new shareholder
agreement, which replaced the previous one (signed on 7 November 1992 and renewed in November 1997).
In this agreement, they confirmed their intention to support the company in its long-term development and ensure
the stability of the Groupe SEB shareholder base.
The four-year agreement, renewable for identical periods, is organized around two usufruct shareholder companies
which jointly make up the reference shareholder group: FÉDÉRACTIVE, a shareholder investment company,
and VENELLE INVESTISSEMENT (formerly ACTIREF) a family shareholder company.

110
105
100
95
90
85
80
75
70
65
60
50,000
45,000
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
Average daily share transactions in 2005
For the second successive year, the SEB share
performance varied both in price and volume traded.
It nonetheless maintained its upward trend in 2005: +9% in
the first six months and +16% over the whole year (closing at
€92 on 31 December 2005). Publication of satisfactory sales
figures and increased results for 2004 helped to raise the
share price in the first quarter. In the second quarter, a dull
economic context put markets on hold, and the SEB share
remained in line with the CAC 40 index.
Stockmarket information
Stockmarket capitalization at 31.12.2005: €1,562 million
Diluted net income per share and distributed dividend (€)
Net income per share
Net dividend
First quarter 2005 Second quarter 2005 Third quarter 2005 Fourth quarter 2005
SEB share price
27,616
2,308
19,907
1,733
21,731
1,835
J|2005 F M A M J J A S O N D J|2006
* Dividend proposed to the AGM of 11 May 2006.
28,544
2,320 21,582
1,799
|09
22,499
1,946
26,370
2,209
In the second half of 2005, the share recovered
gradually to reach a closing high of €92.55 on 23 and
27 December. This recovery was helped by the announcement
of half-year and nine-month sales.
Early in 2006, publication of sales figures for 2005
hoisted the share to a new peak of €98.15, before falling back
at the end of January after the Group's announcement
on 24 January of its plan to restructure its industrial base
in France. Since then, the share has stabilized at around €89.
2001
4.59
1.82
18,647
1,627
17,043
1,535
2002
7.25
1.96
21,292
1,870
2003
9.06
2.27
15,115
1,331
19,711
1,790
2004
published
7.57
2.40
28.02.2006
43,988
4,042
2004
IFRS
8.02
2.40
� CAC 40 adjusted
� SEB share (€)
4,500
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
Average volume
� Average capital
(€ thousands)
2005
IFRS
6.27
2.40*

Groupe SEB Board of directors
Thierry de La Tour d’Artaise
Founder group – Aged 51
Chairman and Chief Executive Officer of SEB SA since 2000
Number of SEB shares held: 14,821
Tristan Boiteux (a)
Founder group, member of FÉDÉRACTIVE – Aged 43
Member of FÉDÉRACTIVE Advisory Board
Number of SEB shares held: 41,788
Damarys Braida
Founder group, member of VENELLE INVESTISSEMENT
Aged 38 – Joint Manager of VENELLE INVESTISSEMENT
Number of SEB shares held: 56,583
Pascal Castres Saint Martin
Independent Director – Aged 70
Number of SEB shares held: 385
Norbert Dentressangle (a)
Independent Director – Aged 51
Number of SEB shares held: 1,650
Philippe Desmarescaux (a)
Independent Director – Aged 67
Number of SEB shares held: 1,782
(a) (b)
FÉDÉRACTIVE
Shareholder investment company created in 2005, represented
by its Chairman, Pascal Girardot (aged 50) member of the
Founder group.
Number of shares held: 3,096,074
Hubert Fèvre
Founder group, member of FÉDÉRACTIVE – Aged 41
Member of FÉDÉRACTIVE Advisory Board
Number of SEB shares held: 180,153
(a)
Renewal to be proposed at the AGM of 11 May 2006.
(b)
Co-option to be ratified by the AGM of 11 May 2006.
|10
FFP (société Foncière, Financière et de Participations)
A holding company listed on the Paris stock exchange
and majority-held by the Peugeot family, represented
by Christian Peugeot (aged 52)
Number of SEB shares held: 857,337
Jacques Gairard
Founder group, member of VENELLE INVESTISSEMENT – Aged 66
Chairman and Chief Executive Officer of Groupe SEB from
1990 to 2000.
Member of the Management Board of VENELLE INVESTISSEMENT
Number of SEB shares held: 59,167
Philippe Lenain
Independent Director – Aged 69
Number of SEB shares held: 550
Antoine Lescure
Founder group, member of FÉDÉRACTIVE – Aged 34
Number of SEB shares held: 76,092
Frédéric Lescure
Founder group, member of FÉDÉRACTIVE – Aged 44
Number of SEB shares held: 21,632
VENELLE INVESTISSEMENT
Founder group – A family shareholder company (formerly ACTIREF)
represented by Olivier Roclore (aged 51)
Number of SEB shares held: 1,988,156
Jérôme Wittlin
Founder group, member of VENELLE INVESTISSEMENT – Aged 46
Joint Manager of VENELLE INVESTISSEMENT
Number of SEB shares held: 2,046
Each Board member is required to hold a number of shares in the SEB SA nominal share register equivalent to about two years
of attendance fees.

Real powers of control
Groupe SEB has long applied a system of corporate
governance which respects the interests of its shareholders.
The methods and functioning of the Board ensure
management transparency and real powers of control.
A collective body, the Board of Directors represents all the
shareholders and acts solely in the interests of the company.
On the proposal of the Chairman and Chief Executive
Officer, the Board of Directors decides on Group strategy and
capital expenditure, and deliberates on Group management
structures and acquisitions. To ensure the interests of
shareholders, Groupe SEB Board includes four independent
directors. The Board conducts an annual review of its
functioning.
Corporate governance
|11
Organization and functioning
of the Board
To assist it in specialist matters, the Board operates
two committees drawn from its members:
The Audit Committee
This committee comprises three members, Pascal
Castres Saint Martin as Chairman, Norbert Dentressangle and
Jérôme Wittlin (two of the three members including its
chairman are independent directors).
The committee informs the Board on the identification,
evaluation and handling of the main financial risks to which
the Group may be exposed. It is concerned in particular with
ensuring the conformity of financial reporting methods.
It assists the Board with observations or recommendations,
and participates in the preparatory procedure for appointing
statutory auditors.
The Audit Committee met on four occasions in 2005, with 92%
attendance.
The Nominations and Remuneration Committee
This committee comprises three members,
Pascal Girardot, permanent representative of FÉDÉRACTIVE,
as Chairman, Philippe Desmarescaux and Philippe Lenain
(two of the three members are independent directors).
The committee reports on its work to the Board of Directors
and makes recommendations on the makeup of the Board,
on the terms of office of directors, and on the Group's
organization and structures; it also makes proposals to the
Board on policy for the remuneration of executives, as well as
on the introduction of share subscription and purchase option
schemes, and on the terms and conditions applying to these.
This committee met on five occasions in 2005, with full
attendance.
Good practices
– adherence to the Directors' Charter and Internal Rules;
– the presence of four independent directors on the Board in 2005;
– directors' term of office limited to four years;
– renewal of Board membership by rotation, to give more say to shareholders;
– high participation: ten Board meetings in 2005 with 89% attendance;
– information: each new Board member is given a full dossier on the Group, and regular detailed
information throughout the year.

Strategic overview of
the small domestic equipment sector
World leader in small domestic equipment, Groupe SEB operates in two different,
though complementary worlds: small electrical appliances and cookware.
Both of these worlds involve the deployment of similar expertise and skills.
Both are concerned with the relevance and quality of products, brand management,
and a strong command of retail networks. Both bring the Group into close proximity with consumers.
All our brands share in your day-to-day life... Your world is our world.
A changing market
Over the last three years, our market has seen a rapid
and profound transformation, marked by three key features:
– convergence, reinforcement and globalization of retail chains;
– store shelves flooded with Asian products;
– a clear polarization of the market between entry-level
products and high-range products, with an equally sharp
divergence in prices.
This polarization of the market, which has already
been described and commented upon by the Group, sharpened
further recently. This was due largely to foreign exchange
parities, and resulted in significant changes to our trading
environment, now characterized by:
– the growing strength of extremely competitive Chinese
manufacturers who supply the entry-level segment;
– a weakening of producers who no longer command the
production chain and no longer design new products that
create added value;
– growth in top-end ranges, which has led to the emergence
of new rivals specialized in niche markets;
– acquisition opportunities for industry operators who pursue
a strategy of innovation, competitive performance, expansion
and good service.
|12
Opportunities to be seized
The still-fragmented small domestic equipment
sector has embarked on a phase of consolidation in which
Groupe SEB aims to play an active role. Its powerful brand
portfolio and vast product offer – both unrivalled in the
industry – combined with its global reach and diversity of retail
channels, give it exceptional stability and growth potential
which can be strategically exploited.
Chinese competition is today a structural reality in
our market. It is leading to a shake-up in our industry in which
it is likely that only the fittest will survive. Moreover, recent
market developments show that while the hard discount model
continued to spread in 2005, especially in Europe, it is also
reaching its limits. With prices stabilizing, some hard
discounters are now showing a renewed interest in more
worthwhile branded products to attract customers who
demand quality. Meanwhile, there is a rising demand for
top-range and even luxury products, helped by the growth
of selective distribution channels.
Some facts about our industry
Average hourly rate in China €0.5
Average hourly rate in France €25
This is a ratio of 1-to-50.

A Group well equipped to win
Looking beyond the turbulence of a European market
which is undergoing radical change, Groupe SEB is well
equipped to pursue its long-term strategy while taking full
advantage of medium-term opportunities in the small domestic
equipment market. Its four key strategic priorities – product
leadership, geographic leadership, competitive performance
and client service – are built around a twofold approach:
Rapid and responsive action in taking up these challenges will guarantee the Group's future success
and strengthen its long-term market leadership.
Home cleaning and other products 5%
Electrical cooking 15%
Food and beverage preparation 25%
A changing sector
Continue to concentrate the sector and create value
Management of ranges and brand development
Innovation
Adaptation of industrial facilities in Europe and greater use of sourcing
Reduction of operating costs
Optimization of client service
Acquisitions to concentrate the sector
Identify and develop new sources of value
Expansion in high-potential economies
Reinforcement of top ranges
Development in fast-growth product families
Diversification of distribution and use of alternative channels
Creation or exploitation of new key product categories
Acquisition or creation of new business and development of partnerships
Imports into the European Union from China
(2002-2004)
Coffee makers +14%
Hair dryers +42%
Toasters +50%
Food processors +52%
Breakdown of 2005 sales, by activity
|13
Meat grills +121%
Linen care, personal care and home comfort 28%
Cookware 27%

&
Plurality
Proximity
The 2005 trading year confirmed more than ever that its international dynamic is a key
growth driver for Groupe SEB. This global deployment, begun almost 30 years ago,
has given us a solid grounding for our constant drive
to reinforce existing positions and conquer new markets.
Europe, and in particular France, is the historical home
of Groupe SEB. In today's Europe, we market five international
brands: Krups, Rowenta, Tefal, Moulinex and Lagostina, and
two regional brands, Calor and Seb. Most European countries
are mature markets and, apart from breakthrough inventions,
the Group's European business relies heavily on the product
replacement cycle.
|14
your world is
manifold
Europe, Groupe SEB's domestic market
Austria, Belgium, Denmark, Finland, France, Germany, Great Britain, Greece, Ireland, Italy, The Netherlands,
Norway, Portugal, Spain, Sweden
• 12 factories (10 in France, 1 in Germany, 1 in Italy)
• 22 marketing companies.
In 2005, the Group's trading in Europe faced a difficult
context marked by slow consumer demand and rising
competition from low-priced entry-level articles promoted
by discount chains and certain hypermarkets. This led to
downward pressure on prices in virtually all European countries.

By contrast, growth was confirmed in the top-range segment,
which constitutes a new relay for the development of brands that
create added value. Groupe SEB aims to be a major player in this
segment, and will take full advantage of its expansion.
North America, a revival
Canada, United States, Mexico
• 3 factories (2 in the USA, 1 in Mexico)
• 4 marketing companies.
Operating in the United States since 1975 with T-Fal
nonstick cookware, the Group has gradually extended its field
of action over the years. Its long presence and experience gave
it an early insight into the American market, and the fact that
its future potential in the USA lay in strong promotion of
high-range products. Today, the Group has transformed this
potential into reality, with Rowenta as the uncontested leader
in top-range steam irons, Krups as a strong prestigious brand
in coffee appliances, and All-Clad as our specialist in premium
International expansion
|15
The BeerTender:
a product victory in Austria
In the wake of its enormous success in The Netherlands,
the BeerTender draught-beer machine took the Austrian
market by storm with 17,000 units sold in just a few weeks.
The BeerTender also helped the sales of other Krups
products, in particular its fully automatic espresso ranges.
As a result, Krups doubled its Austrian sales.
quality cookware. Trading performance in 2005 vindicated our
upmarket strategy in the United States.
Groupe SEB has also been long established in Mexico
where it holds strong positions in cookware and in certain
other product families (including steam irons, electric fryers
and blenders under the Moulinex and Tefal brands).
Trading in Mexico was sustained in 2005. In Canada, Group
sales were achieved mainly with the Tefal and Moulinex brands,
while the Krups brand is being progressively introduced.
A presentation display of Krups and All-Clad collections.
USA

South America, a new eldorado
Argentina, Brazil, Chile, Colombia, Peru, Venezuela
• 3 factories (2 in Brazil, 1 in Colombia)
• 9 marketing companies.
The 2005 trading year once again demonstrated the
enormous potential of South American markets in the small
domestic equipment sector. The Group has been operating for
several years in these markets and is steadily reinforcing its
positions with a structured offer adapted to local needs. It sells
in these markets under three of its international brands, Tefal,
Moulinex and Rowenta, and under three well-known regional
brands, Arno and Panex in Brazil, and Samurai in Colombia and
the Andean Pact countries.
Brazil remains the Group's biggest market on this
continent (accounting for over 75% of its South American sales)
and local economic conditions in the country have been
favourable in the last three years. However, business in 2005
was affected by the revaluation of the Brazilian real, as this
opens the way to imports from Asia – despite customs duty
– and hinders exports. In this more difficult context, Arno
Arno – Brazil
The Brazilian factory
makes mainly mixers,
blenders, fans, irons and
semi-automatic washing
machines.
Brazilian advertising
campaign.
|16
launched a dynamic new product drive backed by marketing
operations and powerful advertising campaigns.
Arno confirmed its leadership of the small domestic equipment
market in Brazil, where its total market share is estimated
at 30%. The year was also marked by the acquisition of Panex,
Brazil's leader in cookware. The integration of Panex is well
under way and the Group plans to quickly exploit synergies
with Arno to achieve new commercial momentum in this
market.
Argentina, Colombia and Venezuela proved by their
performance that they constitute a new springboard for the
Group, which continues to reinforce its positions and increase
its sales. In Chile, a market which is wide open to Asian imports,
and where distribution is highly concentrated, Group sales are
hamstrung by a difficult competitive context. However, future
prospects in this market are not discouraging.
Colombia
Food-preparation
equipment factory
in Colombia.
Brazil

International expansion
Other world territories, vast markets
Australia and New Zealand, the CIS countries, Central Europe, Turkey, the Middle East, Japan, China,
South Korea, Taiwan, Thailand
• 3 factories (1 in Iran, 1 in the CIS countries, 1 in China)
• 23 marketing companies.
A very mixed geographic zone which covers both
distant developed countries and emerging markets, the Group's
'Other world territories' now account for over a quarter of total
consolidated sales, against less than 20% three years ago.
Apart from their current sales performance, these countries are
a rich source of medium-term and long-term growth potential.
For this reason, the Group is deploying a strategy of rapid
expansion in these markets, based on the power of its world
brands, on a product offer matched to local needs, on dedicated
sales teams with local links, and on the use of a variety of retail
channels. The Group intends to take full advantage of the
development of these promising territories – often first-timebuyer
or first product-renewal markets – and thus go on
putting down local roots around the world.
|17
Dynamic contributions to the Group's sales growth in
2005 came from Asia (Japan, Korea, Hong Kong and Australia),
the CIS countries and Central Europe – with special mention for
Poland and the Czech Republic. Domestic trading (in local
currencies) remained buoyant in Turkey, while sales really took
off in China, even though they were far short of the targets for
this enormous market.
Japan, the strong link in 2005
With sales of €75 million, Japan is today one of the ten biggest contributors to Groupe SEB revenues.
Our operations in this country are focused on four major product families:
– T-Fal nonstick cookware, in which Japan is the world's second-largest market in value;
– pressure cookers, where the Group's traditionally solid positions have gained strength in
the last two years following the bankruptcy of a main rival in this market, in value;
– steam irons, with more advances in 2005 and market-share gains;
– electric kettles, where the Group created a new market which literally exploded in 2005 with a virtual
quadrupling of sales.
Kay LIN, SSEAC Commercial Manager
The awakening of China
Growing at a rate of between 14 and 17% a year, the small domestic equipment market in China is in boom. In the major
cities, rising living standards are accompanied by an increasing level of domestic equipment (hi-fi, home electrical
appliances, etc.), as people seek a “Western” lifestyle. This market has very high potential for us. Our priority is to
consolidate an efficient distribution network by, for example, penetrating new channels such as hypermarket chains and
specialist stores, while we continue to expand our operations in China's major cities. With this in mind, we restructured
and strengthened our sales force in 2005. This helped us to build up our relations with regional wholesalers and focus
on mass-retailer accounts and key electrical-goods specialists, while reinforcing our longstanding links with department
stores. This reorganization saw its first fruits in 2005, and sales growth is expected to continue in 2006.
China
Groupe SEB factory in
Shanghai.

your world is
aspiring
Groupe SEB has exploited its outstanding brand assets for many years with a clear strategy of differentiation
and complementary market positioning. These brands – each with its own personality – spearhead distinctive product
collections which are designed to respond to the multiple needs and aspirations
of consumers around the world.
Ambassador brands
The Group deploys a strategy of specialist well-known
brands in each of its product worlds – the worlds of cookware
and small electrical appliances – by exploiting each brand's
complementary strengths. Tefal is the global brand and an
industry benchmark in cookware. An expert in nonstick
coating technology and renowned for the variety and
originality of its offer, it targets its collections on the middle
and upper segments. In addition, in the last two years,
the Group has propelled itself into the high-class cookware
market – first with the takeover of America's prestigious
Brand values
creation
&
|18
• Five world brands
– Moulinex, Tefal, Rowenta, Krups and Lagostina.
• Regional brands
– T-Fal and All-Clad (North America);
– Arno, Panex and Samurai (South America);
– Calor and Seb (France and Belgium).
• Two product worlds.
Krups – ‘Prep Expert’
All-Clad brand, and then, in 2005, Italy's star cookware brand,
Lagostina. With the acquisition of Panex, the Group won
leadership of Brazil's cookware market.
In the world of small electrical appliances, our four showcase
brands – Moulinex, Tefal, Rowenta and Krups – span the entire
market. Each brand's distinctive values appeal to a well-defined
constituency, and each brand's identity inspires its product
catalogue, advertising, design, and targeted positioning
through selected retail channels.

Marketing strategy
Brands and innovation: a winning combination
The Group uses innovation to demarcate itself from
increasingly bland competition. It raises market standards by
offering new functional features and well-designed collections
of products that stand out for their performance and aesthetic
appeal.
In entry-level products, the Group has won back
the initiative with Moulinex, building up a competitive offer
based on the brand's values: products that are easy-to-use,
rapid, affordable and imaginative. Called the Principio range,
this palette of 18 products has a distinctive and coherent
design identity. Other Group-wide projects are under way to
develop more of these distinctive and economically viable
products.
In middle ranges, the Group's traditional segment,
Moulinex and Tefal enjoy stronghold positions. Moulinex, with
its simple, easy-to-use and efficient appliances, is an expert in
food-preparation aids ranging from mixers, beaters, centrifugal
juice extractors and blenders to the new Adventio food
processor for simultaneous preparation of solids and liquids.
Tefal's targeted approach, which evokes ingenuity and shared
pleasure, is aimed at people who enjoy being involved in
the kitchen. It combines clever storage and bright ideas for
simplifying day-to-day tasks. Its Compact and Combino ranges
designed for modern living conditions have fold-away handles
for easy stacking. Its Color Click electric kettle has a clip-on
colour-change feature, adapting to consumer’s mood.
Its Pro Minute irons and steam generators are instantly at
hand for speedy ironing. Another clever idea is the Eat'N Go
electric plate with a printed-circuit heating element for people
who need to eat where they
happen to be.
Tefal – ’Combino’
|19
In the mid-to-upper ranges, the Rowenta brand
conveys harmony, wellbeing and refinement. The Rowenta
customer demands high-performance products and places a
high value on the aesthetic. Thus, Rowenta's new Focus and
Advancer irons are an ultimate blend of ergonomics, elegance
and advanced technology. A soleplate with 400 micropores
and a special valve system ensure unrivalled steam power.
In floorcare, Rowenta highlights the technical prowess of its
vacuum cleaners: compacity, bagless technology, anti-allergy
and many other benefits. In personal care appliances,
improvements focus on wellbeing: hair dryers with an ionic
function or ceramic heating element for better hair protection,
revolving-head depilators, or digipressure foot-massage
appliances.
In top ranges, Krups – our flagship brand in this
segment – has returned in force to international markets with
truly outstanding products. A big 'coffee year' for Krups, 2005
saw it launch a whole raft of new coffee machines: these
included classic and pod espresso coffee makers and fully
automatic and combination pump machines. Moreover, Krups
plans to launch a new assortment of food-preparation
appliances in 2006. These include an advanced-function
kitchen machine, food processor and blender which are even
more powerful, silent and easy to use, with a weighing function
for certain models.
The Group's cookware offer was considerably
enriched and gained international strength with recent
acquisitions – in particular Lagostina in the top-range
segment, which plans an extensive launch programme in 2006
with four new international ranges aimed at 26 markets.
Moulinex – ‘Principio’ range
Rowenta
'Advancer' steam iron

Design and promotion: a coherent language
Together, these two modes of expression clearly state
brand values that marry tradition with modern sociocultural
trends.
The language of design – visual and tactile, direct and incisive –
gives the product its voice and its sensorial appeal. Instantly
perceived by the consumer, this affective dimension is a
powerful ally against the growing banality of the market offer.
External designers bring a distinctive approach to each brand.
Indeed, creative design is not just the prerogative of upper
ranges, as demonstrated by the Principio offer from Moulinex,
where design clearly spotlights product benefits.
Advertising and promotion also project the enduring
identity of each brand, while setting the scene for the brand's
product world.
A differentiated distribution strategy
The Group encounters a wide variety of retail formats
in most of the countries where it operates. These range from
the small neighbourhood store to hypermarkets, mail order
houses, discount retailers and Internet websites. Today, we are
seeing a strong trend to concentration of the world's major
distributors, who have considerable negotiating power.
Meanwhile, we have adapted our distribution strategy to local
trading conditions with, for example, 130 Tefal franchise outlets
in Turkey, 11 Casa Lagostina boutiques spread over several
European countries, telesales operations in South Korea,
and TV “infomercial” programmes in the United States.
In addition to our geographic adaptation, we use a
differentiated approach to distribution channels. Thus, Krups
and All-Clad in the United States serve as flagship brands with
|20
A Casa Lagostina
sales outlet.
The shape, the mood, the motto, the choice of materials are
the basic building blocks employed to get across the brand's
message. We also devote part of our budget to point-of-sale
promotion, with retail displays, demonstrations and product
stands. The Internet, easily accessible today, is another key
channel for product presentation and information, and is
increasingly appreciated by our customers.
Lagostina – 'Academy'
selective, top-quality retailers who are rapidly expanding
and who tend to demand exclusive brands and product
assortments. In hypermarkets, Moulinex, Tefal and Rowenta
position themselves in relation to a retail banner's price and
choice criteria in order to offer adapted ranges. We also pay
close attention to the rapid growth of so-called alternative
channels (i.e., other than the Group's usual outlets): telesales,
Internet shopping, and business-to-business sales.
Casa Lagostina
Being extended throughout Europe, these dedicated sales outlets will number 14 by the end of June 2006. Today, they exist
in France, Switzerland, Germany, Italy and Portugal. They accounted for more than 10% of Lagostina's total 2005 sales, which
was an increase of 30% on the previous year. Casa Lagostina stores attract a clientele that is demanding in terms of quality
and price. The chain is a powerful marketing tool because of its direct contact with the consumer, and the possibility
to demonstrate new concepts and create different product worlds. The Group will continue to open new Casa Lagostina
branches through which it will sell targeted ranges and other products and brands from its portfolio.

Marketing strategy
Moulinex
• Ease-of-use and speed • Simple architecture, trendy, young • Splashes of bright colour • Affordable by all • High-spirited tone
• Quickly done and well done • Vivacious slogan: Its playtime!
‘SuperBlender’ TV spot
Tefal
• Ingenuity and generosity • Design that spotlights functions • Warm colours
• Mass-consumer media • Innovative stance • Slogan: Ideas you can't live without!
Rowenta
• Refinement and intelligence • Aesthetic status objects • A world of harmony
• Graceful lines • Marriage of materials (mat, powder-coat or lacquer finish)
• Product benefit implied in the advertising message • Slogan: Intelligent Beauty.
'Lissima' TV spot
'Espressaria' poster
Lagostina
• Expert kitchen and elegant table
• Tradition and modernity in perfect harmony
• Choice materials and sensorial design • Italian lifestyle
• Art of living • The pleasure of being and being seen.
|21
'Thermosignal' press advert
'Lagostina' press advert
Krups
• Precision and perfectionism • Meticulous lines evoking expertise
• Proficiency and ritual
• Emphasis on press advertising • Flagship product • The delight of connoisseurs
• A stirring slogan: Beyond Reason.

your world is
on the move
As world market leader, Groupe SEB views its sector and its industry from a global standpoint.
Faced with particularly aggressive competition, the Group is responding by adapting
its industrial strategy, structures and product innovation.
Reorganizing,
to ensure our long-term business
Unlike most of its rivals who have massively relocated
their production, Groupe SEB operates 12 factories in Europe,
thus showing its desire to maintain strong centres of expertise
in this region while concentrating on three strategic priorities:
– to adapt our industrial base in Europe so that we can remain
competitive in the long-term, by specializing factories to
generate synergy and economies of scale, and by strongly
defending our technological advantage over competitors;
– to expand our competitive multi-product plants, locally based
in international markets;
Anticipation
Progress
&
|22
– to make greater use of sourcing for components or basic
products, so that we can concentrate on our strong point:
innovation.
Meanwhile, we continue to add to our wealth of expertise via
targeted takeovers which bring us mastery in new
technologies. This was the case in 2005 with our acquisition
of Lagostina in Italy and Panex in Brazil.
2005 R&D budget: €45 million
Industrial patents budget: €7 million
450 people, of which 20% in research

Being competitive
Adapting, to face the future
with confidence
The Group continued to rationalize its industrial base
in 2005.
In Germany, the Group refocused the Erbach site on mid-range
and top-range irons and simultaneously invested in measures
to improve productivity. In Spain, faced with a long lasting
sharp decline in workload at the Urnieta plant, the Group
decided to cease production and sell the factory to a Spanish
operator who undertook to re-employ part of the staff.
In January 2006, the Group announced a plan to streamline
its industrial base in France in an effort to stem a fall
in competitive performance in certain commonplace products.
This restructuring plan will involve:
– transfer of production of espresso coffee makers from
Fresnay (Sarthe) to Mayenne, some 50 kilometres away;
– the downsizing of the Vernon factory, specialized in homecleaning
appliances;
– by 2008, termination of operations at the Dampierre (Jura)
and Syndicat (Vosges) plants which currently manufacture,
respectively, kettles and electrical cooking appliances.
This reorganization will allow us to refocus
and strengthen our centres of expertise in products
and components, grouping together R&D, industrialization
and production teams.
Groupe SEB will do everything necessary to support the
890 affected staff and find solutions for each of them by
encouraging internal mobility, by seeking new operators for the
three plants concerned, by supporting efforts to create new
jobs in the local communities, and by offering early retirement
when possible.
|23
Innovating,
to guarantee an attractive offer
In addition to industrial rationalization, which is vital
for our long-term future, innovation is a key factor of
development as it helps us to stand out from our competitors
while creating value for consumers and distributors alike.
This is why we pursue an active policy of Research and
Development, which is crucial if we are to stay ahead of rivals
in both industrial processes and products. The Group
distinguishes clearly between these two functions:
– Research dedicated to breakthrough technological
innovation and focused on some 15 key projects;
– Development, based at production sites, which transforms
these new technologies into new products.
With almost 180 new products and models launched
in 2005, Groupe SEB demonstrated once again its market
leader status by challenging its rivals with totally new
functional features and an increasingly attractive offer.
These innovations included a unique super-resistant 'Top Coat'
nonstick cookware coating, the world's first hydraulic control
function for Krups espresso machines, a new motor system for
the Expert food processors, and the protective casing on the
Protect steam generator. This approach to creating added value
guarantees the originality of Groupe SEB, helping it to make all
the difference in the face of an increasingly commonplace
market offer.
Mayenne
Test laboratory and
production line for foodpreparation
equipment.

Protecting inventions,
to stay ahead of rivals
The Group pursues an active and interactive policy
of intellectual property protection, for which clear procedures
have been laid down jointly with the research, development
and marketing teams. This policy calls for strict discipline
in recording and centralizing all advances in research.
– Preliminary patent applications: this initial stage
in patent protection involves filing a set of technical
specifications with the French national patents office
(INPI*). This also enables detailed management
of knowledge and skills within the Group. In 2005,
Groupe SEB filed 340 preliminary patent applications.
– Full patent registration: with an annual average of
85 full patent registrations in the last three years,
the Group has documented its inventions and protected
its intellectual property.
The Group also takes active steps to prevent the
counterfeiting of its brands, models and registered patents
in order to guarantee the reliability and authenticity of its
products. In the last few years, the Group increased its efforts
in this area in China, where more than 50,000 articles were
seized in 2005.
* Institut National de la Propriété Industrielle
|24
Controlling costs,
to be more competitive
Rationalization of production processes also involves
strict management of costs. The Purchasing department
monitors suppliers and their conformity with the Group's
standards and demands. It has drawn up a panel of
381 suppliers (including 60 Chinese) which account for 85%
of our purchases. The reliability of panel members is regularly
reviewed. Close liaison with its suppliers, who are involved
at an early stage in projects, means that the Group can reap
substantial benefits in terms of quality, delivery deadlines,
rates and conditions of payment.
Despite the increased price of certain raw materials
in 2005, the Group performed well in this area, limiting to 1%
the year-on-year rise in its purchasing index, while it improved
its purchasing conditions in Europe and in low-cost countries.
Is-sur-Tille – Electric fryer test laboratory.
Increased use of sourcing
In recent years, Groupe SEB has been increasing its use of sourced components, sub-assemblies or finished products. This practice
of sourcing basic or low added-value products makes it possible for the Group to meet competition from low-priced products, while
it also frees the Group to concentrate on its strong point: high-tech innovation and the creation of value for the consumer.
In 2005, sourced products accounted for 25% of total Group sales, a rise on the previous year. The growing use of sourcing calls for
close liaison between the Group's research and development, industrial patents and purchasing teams. Together, they must
accurately define needs and monitor strict adherence to specifications by suppliers, while at the same time ensuring protection
of the Group's intellectual property.
Product Lifecycle Management
Idea u Research u Prototypes u Preliminary study u Detailed study u Market survey

Being competitive
Efficient flow management, for quality
service In view of the demands of retail clients and
the practice of virtual just-in-time delivery, management
of logistics and information systems has become vitally
important. Groupe SEB’s specialization of logistics platforms
in France in 2006 responds to this need to constantly improve
the Group's organization and save on administrative and
transport costs by regrouping orders and deliveries as follows:
– Orléans: small electrical appliances;
– Rumilly: cookware;
– Mions: export orders.
Pont-Évêque
Steam-iron production line.
|25
This new organization will involve the closure of the Selongey
(Côte d'Or) platform in 2006.
The Group also continues to upgrade its information
architecture around the world. In 2005, the Information
Systems and Logistics department initiated a project called
“Skyway”, involving liaison between French and Asian working
teams, designed to speed up the delivery deadlines of our
Chinese suppliers by keeping them informed of our needs,
so that they can better adapt their delivery schedules.
Luc Dohan, Chief Technology Officer
Product Lifecycle Management at the heart of innovation
The creation of a new product is a response to an idea – a marketing, functional, technical
or structural idea – but, it is also the result of a collaborative and evolving process which is
increasingly decentralized geographically. Product Lifecycle Management (PLM) is a tool which
makes it possible to follow this entire process in real-time, from the initial concept to after-sales
service, and through all the intermediate stages of product design, industrialization and
manufacturing.
The PLM database enables instant information exchange and multi-format files linked to
the entire lifecycle of a product. Introduced on a trial basis some years ago, the system was
consolidated in 2005 and is now accessible worldwide to all those involved with a project.
In a globalized context, the PLM system facilitates open-ended collaboration between internal
and external teams working on a project, while it improves the efficiency of the Development
process and boosts our productivity.
Selongey
Pressure-cooker production
line.
Rumilly
Nonstick cookware production line.
u Purchasing u Industrialization u Marketing u Logistics u Waste processing/Recycling

Sustainable Development Report
05 |
Principles_28 • Corporate responsibility_29
Shareholder relations_30 • Client and Supplier relations_31
Civic commitment_32 • Environment_33
Priorities_34 • Sharing income_36
Management bodies_37

Sustainable Development
Aware
of the challenges of today,
let us innovate
for a better future
Pledged to deep-rooted humanist values from its beginnings, Groupe SEB has grown
steadily to become world market leader in small domestic equipment. It has always
remained loyal to its principles in the conviction that no long-term corporate venture can
thrive without responding to the needs of all the stakeholders in the company.
Groupe SEB must take up new challenges today to remain competitive in the
long-term. These include changing patterns of consumer behaviour, with demand
polarized between low-priced products and premium quality ranges, along with public
preference for ethical products; an ageing labour force in Europe and issues of health
and safety at work; increasing obligations to protect the environment; the growing
demand of civil society for transparency and social accountability in corporate affairs;
the need to reorganize production in globalized markets and its human and environmental
consequences.
While it adapts its strategy, organization and operating methods to this new context,
Groupe SEB is also integrating a determined approach to Sustainable Development.
|27

Principles
Ethics
Commitment
&
Groupe SEB pursues its development on the basis of values that are deeply rooted in its history.
These values are enshrined in a corporate culture that combines high performance
and responsibility with the rules of good governance.
Shared values
The Group subscribes to values that have inspired it
since its foundation:
– high-quality work;
– team spirit;
– thoroughness;
– loyalty;
– mutual respect.
These values, and the management principles
that derive from them, are posted for all our employees
on the Groupe SEB Intranet site.
Groupe SEB's commitment
Loyal to its principles, Groupe SEB has joined
international and French partners in several initiatives
to promote sustainable development:
– the United Nations Global Compact, signed in December
2003;
– the Code of Conduct of the CECED (European Committee of
Domestic Equipment Manufacturers) signed in August 2005;
– the Diversity Charter, signed in France in October 2005.
Implementing commitments
The Global Compact and CECED principles are being
integrated into the Group's internal procedures. In 2005,
the Buyers' Code of Ethics was updated with a new clause on
the fair treatment of suppliers, and a clause on Sustainable
|28
Development was added to the Group's general purchasing
conditions. Meanwhile, the internal control team drew up
a list of criteria based on the Global Compact principles,
to include in its internal audits. Indeed, Groupe SEB has long
applied a system of corporate governance which respects
the interests of its shareholders.
Groupe SEB Sustainable Development
management
The Group created a Sustainable Development
Division in 2004 to harmonize, direct and stimulate
a collective effort in this area which would involve all
employees. A Sustainable Development Steering Committee
was set up in 2005. This committee, which meets every two
months includes representatives of the main areas of Group
activity: production and design, commercial operations,
marketing, quality and the environment, human resources
and communications, audit and finance. The Steering
Committee defines priorities for action, examines master
plans for different projects and monitors their progress.
It serves as a source of ideas and an advocate for Sustainable
Development in-house and with external working partners.
Once a quarter, the Group Executive Committee agenda
features a progress report or discussion on aspects of
Sustainable Development.
Information and exchange tools
Two new in-house media were created in 2005
specifically for Sustainable Development. The Globe News
electronic newsletter reviews developments in this field
around the world. A dedicated sustainable development forum
on the Group Intranet lets employees put questions and give
opinions.

Corporate responsibility
& Change
Equity
Groupe SEB relies on over 14,000 employees around the world for running its business.
In a rapidly changing market, it develops the skills of its working teams
and is in constant dialogue with them.
Multicultural teams
and equal treatment
Today, almost half of Groupe SEB employees
are based outside France. The Group is harmonizing its
management and human resources tools to ensure equality
of treatment for all staff, wherever they work. World-spanning
operations necessarily involve multicultural teams.
This diversity – which contributes to progress and dynamism
– is also to be found within many countries. In France, for
example, Groupe SEB signed the Diversity Charter in October
2005. A fair balance between men and women is also a key
Groupe SEB objective. As part of its Fair Process procedures,
the Group aims to spread management practices which
encourage participation and give priority to leading and
motivating working teams for better performance. Managers
also have the option to undergo a so-called 180° evaluation
of their management practices.
Intensive labour-relations dialogue
Groupe SEB has always given a high priority
to labour-relations dialogue and respected freedom
of association. In most countries where it operates, its
companies have trade unions and staff representative bodies.
Labour dialogue was particularly intense in 2005 in view
of the Group's restructuring in Europe. Staff representatives
were also closely involved in reflection on the future of
the company. Several staff information and consultation
exercises on planned organizational changes were carried
out in France in 2005.
|29
Groupe SEB Academy training
session.
Industrial reorganization: planning
ahead and supporting staff
Early in 2006, the Group announced a plan to
reorganize its industrial base in France in order to remain
competitive in the face of rivalry from Asian manufacturers.
This restructuring will be spread over two years so that
everything possible can be done to find a solution for each
of the workers concerned. To ensure advance planning and
full support for the affected staff, these proposals were
drawn up in consultation with government agencies and local
authorities. Employees are being kept fully informed and
are consulted on the progress of the plan.
Health & safety at work: a thorough
overhaul
Groupe SEB has for several years been introducing
steps to reduce work accidents and industrial illness, much
of which relates to repetitive strain injury. Improving health
and safety standards is particularly important in the French
factories, where an ageing workforce and longer working lives
make this even more necessary. At the end of 2005, a working
group made recommendations for a charter and practical
tools to put it into effect: these proposals will be discussed
more broadly with staff representatives during 2006.
Groupe SEB Colombia
Food-preparation equipment plant.
SSEAC – China
An iron production line
in Shanghai.

Shareholder relations
Confidence
Loyalty
&
Groupe SEB fosters confident and open relations with its shareholders,
aware that they are its long-term partners, and that a stable,
well-balanced shareholder base is vital to its future.
A balanced shareholder base
For Groupe SEB management, pursuing a long-term
strategy depends on the support of a well-balanced
shareholder base: this support comes from the family
founder Group, employees, French and foreign institutional
investors, and individual shareholders. While Groupe SEB is
in regular contact with financial analysts and investment
fund managers, it would also like to increase the proportion
of capital held by individual shareholders and mid-scale
investors. This is clearly signalled by the Group's decision to
join the French Federation of Investment Clubs (FFCI) in 2005.
Transparency and dialogue
Groupe SEB keeps its shareholders regularly
informed on the progress of the company via a large number
of communications including Letters to Shareholders, Annual
and half-year reports, the Annual General Meeting (AGM)
notification, the Shareholder Guide and regular financial
press notices. These documents are available on request from
the Groupe SEB Financial Communications Department, and
can be downloaded from our corporate website. Groupe SEB
also gives pride of place to dialogue and direct contact with
its shareholders. Apart from the key annual event which is the
AGM, it arranges shareholder meetings in several French
cities (Tours, Nice, Bordeaux, Nancy, Lyon and Dijon in 2005),
and factory visits to enable shareholders to learn more about
the Group's working environment and business (two visits
to the Rumilly plant in 2005). The Group also meets its
shareholders at the Actionaria stockmarket fair held in Paris
in November.
|30
Dedicated services
All individual shareholders are welcome to contact
the Shareholder Relations Department. The SEB Share
Service manages nominal shares, handles share purchase and
sale orders free of charge. It also handles dividend payments,
supply of tax forms, or share inheritance and donation
operations. Since 2005, nominal shareholders can have direct
real-time access to their account and follow up current
operations via the Internet.
Long-term dividend policy
Groupe SEB adopts a long-term approach to
remunerating its shareholders, aiming to give them a fair and
regular dividend increase when trading results permit, and
holding it stable when economic and financial circumstances
oblige. This year, after four successive years of rising
dividends, the Board of Directors will propose, at the next
Annual General Meeting, to maintain the dividend at its 2005
level (paid in respect of 2004), being €2.40 per share.
The Group also pays a supplementary dividend, equal to 10%
of the basic dividend, for all shares held in the nominal
register for two years running. It also offers its individual
shareholders special conditions for buying the Group's
products.
Actionaria Stockmarket Fair - The Groupe SEB stand.

Client and Supplier relations
Common interest
Satisfaction
&
To satisfy its customers with innovative products and services, Groupe SEB relies on carefully
chosen suppliers and on the retailers who bring its products to the market.
Shanghai
Customer advice
on the sales-floor.
Consumers: information and services
Product instruction leaflets are an essential source
of information for the customer. In 2005, Groupe SEB
updated its leaflets to make them easy to read and
understand. Some have been produced in Braille for
the visually handicapped. The leaflets are also available on
our brand websites. The Group's consumer service centres
handle questions or claims relating to products. This service
is highly developed in France, where it is staffed by
17 customer advisors based in a “Welcome Centre”
(185,000 contacts in 2005 with 80% satisfied with how they
were received). Groupe SEB decided to review the structure
of its after-sales service to improve customer satisfaction
in this area. This process, begun in France and to be extended
throughout Europe, aims for improvement in three criteria:
the time taken, the cost and the quality of repairs.
Distributors: orders delivered in time,
and on time
Quality of service is measured as a percentage rate
of orders dispatched in time from the Group's warehouses
and delivered on time to distributor depots. This rate was
maintained at around 90% in France last year, which is
an acceptable score when one considers the large number
of new products launched in the second half, and the growing
proportion of sourced products arriving from Asia on
schedules that are more difficult to control. Since 1 January
|31
2005, French distributors deal with a single commercial entity
– Groupe SEB France – for all Groupe SEB products, whatever
the brand. This ensures simplified relations with distributors
and more personalized service. The new more-centralized
logistics organization decided upon in 2005, will rationalize
logistics flows and improve service to clients: fewer delivery
trucks to handle and less administration to do.
Suppliers: clearly-defined rules
The Group's commitment to Sustainable
Development also applies to its purchasing policy. Measures
include qualitative goals specified in buyer guidelines,
a supplier awareness drive on the Group's adhesion to the
Global Compact and the CECED Code of Conduct,
a sustainable development clause added to our general
purchasing conditions, and the updating of the Buyers' Code
of Ethics. Beyond the strict selection process, Groupe SEB
requires its suppliers to abide by a number of written
undertakings, notably on the environment (an eco-statement
on non-use of hazardous substances forbidden under the
European RoHS Directive) and social conditions (a workers'
rights statement inspired by the SA 8000 international social
accountability standard). Independent compliance reviews
will be carried out in 2006 in both these areas.
Berrod SA
French Groupe SEB supplier.

Civic commitment
World citizen
Solidarity
&
Corporate sponsorship to combat social exclusion, close community links in the territories where it operates...
Groupe SEB sets a high value on social responsibility.
Combating social exclusion
In keeping with its humanist values, Groupe SEB is
gradually developing its sponsorship policy around a central
theme: the combat against social exclusion. Its efforts in this
area are currently focused mainly on France and Brazil, but
the Group plans to extend these on a larger scale. This theme
covers three priority areas for action.
First priority: social integration through access to decent
housing.
This is an important precondition for the integration of those
who are deprived or at risk of losing their self-reliance.
This is a core concern of Habitat & Humanisme, a French aid
association with which Groupe SEB began working
in partnership in 2005. The association helps people
in difficulty to find decent housing and supports their
re-integration through, for instance, social activities
organized in the community where they live.
Second priority: re-insertion in the employment market.
In this area – again in France – Groupe SEB is an active
member of the 2nd Chance Foundation which gives a helping
|32
Corporate
sponsorship
school project in
Brazil.
Since 2003, Groupe SEB has been working in
partnership with IMS (Institut du Mécénat et
de la Solidarité). This association supports companies
in four areas of social responsibility: corporate
citizenship, local community development, diversity
in the workplace, and responsible trade practices.
hand to people in repeated difficulty who are motivated to
get off to a new start in employment. The Group is also a
shareholder in the France Active investment company, which
puts up priming funds for social integration enterprises.
Finally, it participates in the Rhône-Alpes regional enterprise
network which helps people to set up their own business.
Third priority: access to education and training for the
underprivileged.
In this area, Arno, the Group's Brazilian subsidiary, has been
running a dynamic and innovative scheme for several years.
More than 70 employee volunteers take part in various
projects around Sao Paulo and Rio de Janeiro, in cooperation
with public bodies, associations, schools and other
institutions.
Local community and employment
Groupe SEB companies around the world form close
links with the local communities in which they operate.
They organize open days and take part in local events
arranged by business partners, educational institutions and
associations. Group sites also help community, educational
and sporting projects. Aware of the importance of its role
in local economic life, Groupe SEB acts responsibly when it
must restructure or even close a factory in order to be more
competitive. When this must be done, the Group takes every
measure to limit the impact on jobs by, for example,
cooperating with all local agencies to anticipate the
consequences.
Arno – Brazil
Corporate responsibility campaign.

Environment
Our planet
Caring
&
Groupe SEB takes account of the environment at every stage in the life of a product,
from the time it is made in the factory until the end of its useful life.
More than half of Groupe SEB factories
are certified ISO 14001
Since 2003, Groupe SEB has operated a worldwide
environment management system based on the ISO 14001
international standard. More than half of the Group's 35
industrial and logistic sites (77% of its French sites) were
ISO 14001 certified in 2005, and the objective is to reach a rate
of 100% by 2007. This certification process, followed up by
internal and external evaluations, includes a harmonized
data-collection system to monitor the Group's key environment
indicators and reduce pollution risk. The system was applied
worldwide in 2005.
All new products were eco-designed
in 2005
Groupe SEB's concern for the environment is not
confined to the manufacturing process. It also seeks to
reduce the impact of the products themselves on the
environment by, for example, making them more recyclable
(over 70% recyclable in 2005), eliminating hazardous
substances (RoHS Directive) and bringing down power
consumption. These criteria are taken into account right from
the drawing-board. That is what Groupe SEB calls eco-design.
Already in 2003, the Group drew up eco-design guidelines
which it built into the specifications used by its design teams
around the world. Last year, all new product projects complied
with the eco-design process which is now a central feature of
the Group's environment management system.
|33
The Krups Espresseria coffee maker,
launched in 2005, is an example of
the Groupe SEB approach to ecodesign.
– Less than 1.5 W power consumption
on stand-by.
– 70% of its weight is potentially
recyclable.
Recycling end-of-use products
Most European countries ratified the European
Directive on disposal of Waste Electrical and Electronic
Equipment (WEEE) in 2005. Each country is now required
to collect end-of-use appliances, recycling 50% of their mass
and converting 20% to other uses including energy production.
The Group is involved in this process in Europe, and notably
in France where it played a leading role in the creation of the
eco-organization Eco-Systèmes, which is responsible, as from
Spring 2006, for the collection and processing of most of this
waste. Once it is officially accredited by the authorities,
Eco-Systèmes, in which the Group is a shareholder,
will coordinate the efforts of most producers and distributors
in this field.
Limiting the impact of transport
In the area of logistics, road haulage represents
a large proportion of total transport mileage. All the Group's
contracts with haulage companies include a clause on
Sustainable Development covering, for example, vehicle
engines, the recycling of oil and fuel consumption. The Group
also tries to ensure optimum loading levels: in 2005, loading
was maintained at 92% of capacity in France. The Group uses
rail and water transport as often as feasible, for example
between Marseille and Lyon. Water transport is used for most
intercontinental cargo.

ETHICAL
Priorities
Involvement of all
employees in the Group's
ethical approach
CORPORATE
Improvement of health &
safety at work
Promotion of diversity
Priorities and action plans for the next three years
Working objectives
Employee awareness of our
commitments under the Global
Compact, the CECED Code of
Conduct and the Diversity Charter.
Apply these commitments in the
Group's day-to-day operations
Development of Introduce a Group-wide Fair
management methods in Process management reference
keeping with our framework.
corporate values
Support for employees
affected by industrial
reorganization
SOCIAL
Structuring the Group's
sponsorship strategy
Adopt a monthly reporting system
and define priorities for progress.
Draw up an action plan to cut work
accidents and industrial illness
(repetetive strain injury).
Ensure greater diversity in
working teams.
Ensure that necessary job-cuts are
carried out with every
consideration for the individuals
concerned.
Anticipate restructuring and use
training to enhance future
employability.
Combat social exclusion with
projects in harmony with the
Group's values and working
context.
|34
Main achievements
in 2005
Staff informed via the Group's
various in-house media.
Commitments included in
purchasing conditions, and initial
application of internal control
procedures.
Reporting system introduced
for the French sites.
Recommendations made by
an ad hoc working Group.
France: Diversity Charter signed.
Proposals for action drawn up by
staff representatives.
Fair Process awareness drive for
management, and start of
'180°–evaluations' for managers.
Spain: individual support given to
staff affected by the Barbastro
and Urnieta plant closures. Re-use
of the factories by new owners.
France: partnership with the
Habitat et Humanisme aid
association.
Brazil: new community education
project for the unemployed in
deprived areas (Arno).
Next steps
To strengthen this awareness and
monitor its impact.
To draw up a master document on
the Group's ethical approach.
To highlight these commitments in
our internal control procedures.
Group-wide quarterly reporting on
frequency and gravity of industrial
accidents, and reduction of these
by half.
To train and mobilize local
management and implement
our action plan.
To implement the Diversity
Charter .
Adoption of Fair Process by
managers worldwide and
integration into annual evaluation
interviews.
To use every possible means
to limit the social impact
of restructuring.
To build up existing social
partnerships and create new ones.
To initiate new projects,
particularly in training and
education.
To explore a Group sponsorship
structure.

CLIENTS/SUPPLIERS
Priorities
Involvement of its
suppliers in the Groupe
SEB Sustainable
Development effort
Satisfying clients and
customers
ENVIRONMENT
Priorities
Reducing the impact of Apply eco-design procedures.
our products on the
environment (eco-design)
Make products more easily
recyclable and repairable.
Ensuring that all the
Group sites respect the
environment
(eco-production)
Reducing carbon dioxide
emissions from
transport
(eco-logistics)
Disposal of end-of-use
products
Working objectives
Keep suppliers fully informed on
the Groupe SEB sustainable
development effort.
Meet targets for progress in
protecting the environment.
Meet our commitments in the area
of working conditions.
Improve our services to
consumers.
Ensure the best possible service
for our retail clients.
Reduce product power
consumption during use and on
stand-by.
Aim for 100% ISO 14001
certification of all the Group's
factories around the world.
Use environment performance
indicators.
Better control of carbon dioxide
emissions.
Explore non-road transport
alternatives and aim for optimum
loading rates for road haulage.
Contribute to the collection and
recycling of end-of-use domestic
electrical products.
|35
Main achievements
in 2005
Letters sent to all the Group
supplier panel explaining the
Global Compact and the CECED
Code of Conduct.
Sustainable development criteria
added to the Group's purchasing
conditions.
Introduction of an “Environment
Declaration”.
20% of the supplier panel certified
ISO 14001.
Eco-statement on non-use of
hazardous substances signed
by 96% of our suppliers.
SA 8000 social accountability
standard covered 91% of purchases
in Asia.
Product instruction leaflets
standardized and improved.
France: 90% service-satisfaction
rate.
Logistics structure streamlined.
Eco-design rules applied to 100%
of product development projects.
Recycling rate of over 70%
achieved for new products.
75% of products repairable.
Average power used by new
products in stand-by mode: less
than 3 W .
51% of factories ISO 14001
certified.
Objective achieved.
Reflections on the environment
with the Club Demeter think tank.
France: 92% loading for road
haulage.
Helped to set up eco-organizations
in Europe, notably Eco-Systèmes in
France.
Next steps
To follow through and verify
sustainable development
commitments by suppliers.
70% response rate by end 2008.
60% ISO 14001 certification of
supplier panel by end 2008.
100% of environment statements
signed.
Strengthen follow-up inspections.
SA 8000 coverage of all purchases
in Asia and 80% in South America.
Strengthen follow-up inspections.
Improving our customer welcome
service and after-sales service in
Europe.
95% service-satisfaction rate in
France and extend this quality
worldwide.
100% of products eco-designed.
75% of new products potentially
recyclable.
Maintenance of repairable rate.
Greater energy efficiency,
and stand-by power under 2 W.
ISO 14001 certification for all
factories acquired more than three
years ago.
To define environment objectives
factory-by-factory.
To define effective eco-logistics
indicators.
To aim for worldwide application
of criteria for alternatives to road
haulage.
To maintain the road haulage
loading rate at over 90% .
Follow-up of eco-organizations in
Europe.

Reserved funds: €177.7 million
Funds reserved in 2006 amount
to €177.7 million,of which:
– €106.0 million for refinancing
investments
– €9.3 million in variations of provisions linked
to business risks
– €62.4 million transferred to reserves.
Wealth Creation
Sharing
&
u
u
u
u
u
u
Groupe SEB
u
Sharing income
Banks and bondholders: €25.2 million
Financial expenses relating to interest on loans concerned mainly banking institutions
and amounted to €25.2 million in 2005.
State and local authorities: €95.8 million
The contribution of Groupe SEB in the countries where it operates amounted
to €95.8 million, broken down as follows:
• corporation tax €54.6 million;
• local taxes €41.2 million.
Shareholders: €40.4 million*
• Groupe SEB paid €40.4 million in dividends to its shareholders.
* paid in 2005 in respect of the 2004 trading year.
Employees: €525.6 million
• Groupe SEB paid €525.6 million to 14,396 employees (67% total salary, 33% social
charges). In 2006 it will pay out €29.3* million in bonus and profit-sharing
schemes in respect of 2005.
* Estimated in 2005, paid in 2006.
Clients: €2,463 million
• Groupe SEB recorded sales of €2,463 million in 2005 (including All-Clad).
Income from operations was €183.7 million and net income €102.8 million.
– Breakdown of sales:
• 52% in Europe (24% in France);
• 14% in North America;
• 8% in South America;
• 26% in Asia and other territories.
– Sourced products represented 25% of sales.
|36
Suppliers: €1,598.3 million
• Including 2,060 direct industrial suppliers.
85% of purchases were made from a panel of 381 suppliers.
NB: The 2005 figures given on this page are calculated in compliance
with the new European accounting standards: IFRS.

GROUP EXECUTIVE COMMITTEE
Thierry de La Tour d'Artaise
Chairman and CEO
François Duley
Executive Vice-President,
Continental Structures
Management bodies
Jacques Alexandre
Executive Vice-President,
Strategy and SBAs
Jean-Pierre Lac
Executive Vice-President,
Finance
STRATEGIC BUSINESS AREAS (SBAs)
Philippe Crevoisier President, Electrical cooking
Jean-Pierre Lefèvre President, Linen and Personal care,
Home comfort and Home cleaning
Christian Ringuet President, Cookware
François Sydorowicz President, Food and beverage preparation
CONTINENTAL GENERAL MANAGEMENT
Marcio Cuñha President, South America
François Duley President, Asia and other territories
Alain Grimm-Hecker President, France
Alain Gautier President, North America
Volker Lixfeld President, Northern & Central Europe
Frédéric Verwaerde President, Western Europe
Luc Dohan Chief Technology Officer
Rémi Descosse
Executive Vice-President,
Industrial Operations
Harry Touret
Executive Vice-President,
Human Resources
The Group Executive Committee defines and
implements overall Group strategy. Meeting
twice each month, it decides on consolidated
objectives, oversees strategic projects, defines
priorities and allocates resources to the
management structures in charge of Strategic
Business Areas (SBAs), Continents and Corporate
Functions.
The Group Management Board is made up of
the members of the Group Executive Committee,
the General Managers of the SBAs and
Continental Structures and the Chief Technology
Officer. It meets on average every two months to
monitor the Group's performance and results
and, if necessary, make adjustments to
commercial or industrial strategy. Serving as a
forum for exchange and reflection, the
Management Board has a consultative role and
oversees the proper functioning of the Group.
There are four Strategic Business Area (SBA)
structures, which define worldwide strategy for
their respective product families. They are in
charge of new product development, from the
design stage to industrial strategy (capital
investment, location of production, etc.), and
worldwide marketing (including ranges, pricing,
advertising resources and distribution channels).
The Continental General Management Structures
are responsible for developing the Group's
marketing positions in their respective
territories. Since 2005, the Group has six
territorial management structures: France,
Western Europe, Northern & Central Europe,
North America, South America, and Asia and
other territories. These ensure that SBA sales
and marketing strategies are implemented, and
that distribution networks ensure front-rank
market positions for the Group
in their respective territories.
The SBAs and Continental Structures are
supported by Group-wide corporate functions.
Reporting to the Executive Vice-Presidents, these
functions include Human Resources, Finance,
Strategy, Brands, Manufacturing, Technology,
Sustainable Development, Information Systems &
Logistics, Quality, Purchasing, and Legal Affairs.
Functioning as centres of expertise, these
structures ensure the execution of Group-wide
projects and effective overall Group organization.

Les 4M - Chemin du Petit Bois - BP 172
69134 Ecully Cedex - France
Tel.: (+33) (0)4 72 18 18 18 - Fax: (+33) (0)4 72 18 16 55
Shareholder Relations: (+33) (0)4 72 18 16 01
Corporate Communications: (+33) (0)4 72 18 16 40
http://www.groupeseb.com
(33) (0)1 56 88 11 11 - Photos: Jean-Michel Turpin - Coté Cour, Roland Gouy Paillier, Patrick Forestier, Véronique Vedrenne, Groupe SEB photographic archives, Graphicobsession, BananaStock, DR - Translation: anglodoc.com
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