AS AN INVESTOROUR APPROACH AS RESPONSIBLE INVESTORS

SYCOMORE HAPPY@WORK

SYCOWAY2018RE

PORT

Report published on June 30th 2018 pertaining to the Sycomore Happy@Work fund.

2

This report concerns the Sycomore Happy@Work fund, a portfolio of stocks selected

on the basis of “sustainable development” criteria and certified as a Socially

Responsible Investment (SRI label developed and supported by the French Economy

& Finance Ministry). It should be read together with Sycomore AM’s “Sycoway as

an Investor” report. This publication provides details on the sustainable development

criteria applied to the fund’s investment process and on the sustainable development

performance of our investments in 2018.

This report meets the requirements of the SRI Label on the disclosure of the fund’s

environmental, social, governance and human rights performance. It complements

the AFG-FIR-Eurosif Transparency Code applicable to SRI-labelled funds, which

provides details on the methods and means deployed for the management

of SRI strategies. For purposes of consistency, the report also complies with the

requirements of Article 173-VI of law n°2015-992 of August 17th 2015 on the

“energy transition for green growth”. Sycomore has chosen to publish these reports

for all of its SRI-labelled funds.

For more information on the methods and resources used for the sustainable

development-driven analysis of the companies that make up our investment universe,

please consult Sycomore AM’s “Sycoway as an Investor” report.

INTRODU CTI ION

SYCOMORE HAPPY@WORK 2018 REPORT

3SYCOMORE HAPPY@WORK

2017 REPORT

OUR ENGAGEMENTand VOTING at shareholders’ meetings P9-1003Identifying IMPACTS P1104

SYCOMORE HAPPY@WORK, SRI-LABELLED fund P4-501Sustainable performance of SYCOMORE HAPPY@WORK P6-802

SUMMA RY

SYCOMORE HAPPY@WORK, SRI-LABELLED fund01

AN SRI-LABELLED FUND, WITH SUSTAINABLE DEVELOPMENT-DRIVEN INVESTMENT DECISIONS

Created in 2015, Sycomore Happy@Work invests in European companies that pay particular attention to the value of their human capital, recognising its role as a primary driver for sustainable performance. Stock selection is based on thorough fundamental analysis, including embedded sustainable development research; social factors are given particular importance. This analysis process draws on the SPICE model, described in our ESG (Environment, Social and Governance)(1) Integration Policy. Recommendations from experts, human capital managers, employees and on-site visits provide further input.

4SYCOMORE HAPPY@WORK 2018 REPORT (1) Our ESG Integration Policy is available on our website.

Our

FUND

For more information on the fund’s exclusion and selection process, please consult the Transparency Code. The main characteristics of the strategy are available on the Fund’s dedicated page 5

SYCOMORE HAPPY@WORK 2018 REPORT

EXC

LUSI

ON

SELE

CTI

ON

DIA

LOG

UE

On-site visits, employee satisfaction surveys, external reviews and rankings

01

02

03

04

05

SPICE RATING AND CONTROVERSIES

SPICE rating People controversies > 2 Pointsor SPICE controversies > 10 Points< 3/5

Executive vision, crisis & growth management,health & safety

INTEGRATION OF HUMAN ISSUES � 3/5

Purpose, empowerment, skills, relations, equity

HAPPY@WORK ENVIRONMENT � 3/5

EMPLOYEE SURVEYS AND REVIEWS � 3/5

ENGAGEMENT WITH PORFOLIO COMPANIES

Sharing of best practices, transparency and continual improvement

Exclusion of main ESG risks: this screening is designed to remove companies displaying poor management of sustainable development challenges or weak performances in this area, with particular attention paid to human capital management. These risks can weaken the resilience of companies and jeopardise their competitiveness. Details of the exclusion criteria are provided in the graph below; they are determined based on the SPICE rating and controversial issues.

Selection of companies with exemplary social practices: the objective of this screening is to identify companies that clearly prioritise human issues and foster employee fulfilment and engagement, recognising that these factors are key to their sustainable performance. Screened companies are required to meet the selection criteria shown in the graph below:

In keeping with the fund’s object ive, the investment universe of Sycomore Happy@Work is screened based on the fol lowing cri teria. These include sustainable development considerations:

Our

SCREE NI NG

0%

5%

10%

15%

20%

25%

30%

35% 35%

11%

18%

20172018 20172018

24%

Our SPICE fundamental analysis model(2) is one of the main tools used to assess the sustainable development performance of our investments.

As of December 31st 2018, the weighted SPICE ratings of investments held in the Sycomore Happy@Work fund are noticeably higher than those of the benchmark. The fund’s People rating of 3.7/5 versus 3.3 for the Euro Stoxx(3) index is a direct upshot of the selection criteria applied to the strategy.

This performance is also measured using specific indicators focused on social, environment, governance and human rights issues. In light of the fund’s selection criteria, social indicators will naturally display better results.

As far as social challenges are concerned, we look at the headcount over 3 years: we assess a company’s ability to create employment based on the change (positive or negative) in cumulated staff numbers over the past 3 financial years. The indicator includes changes in headcount due to acquisitions or disposals. As of end 2018, the fund displays a notable headcount growth over three years (+24%) compared to the index (+18%). The decline compared to 2017 is due to the fund’s growth in AUM, which has led the team to invest in larger capitalisations - closer to those that make up the index - and with rather more limited growth prospects. Once again, Voltalia stood out as the main relative contributor with an organic headcount growth of +314% over 3 years. The jobs created benefited young graduates qualified in the fields of engineering, technology, sales and marketing. The quality of this growth can be observed through other criteria. Brunello Cucinelli (+43% headcount growth over 3 years) is contributing to job creation in rural Italy (the Solomeo area in particular).

6

Sustainable performance of SYCOMORE HAPPY@WORK02

3,73,3

3,43,6

3,2

2,93,4

3,13,4

3,7

2018

3,83,3

3,43,7

2,83,6

3,13,5

3,83,2

Governance

People

Society & Suppliers

Environment

S P I C E

2017

Sycomore Happy@WorkEuroStoxx

(2) SPICE for Society & Suppliers, People, Investors, Clients and Environment. For more information on our fundamental analysis model, please consult our ESG Integration Policy, available on our website.

(3) DJ EuroStoxx Total Return, dividends reinvested: launched on December 31st 1991, this index measures the performance of listed stocks in Eurozone countries. With around 300 constituents, the index uses the float of each stock to determine its weight.

SycomoreHappy@WorkEuroStoxx

EMPLOYMENTHeadcount over 3 years

Coverage ratio 2018 (weight): 93% - H@W/ 98% EuroStoxxCoverage ratio 2018 (number): 93% - H@W / 96% EuroStoxx

SYCOMORE HAPPY@WORK 2018 REPORT

SPICE

RA TI NG

Our

INDICA TORS

As far as human rights are concerned, we look at the percentage of companies having drawn up a formal policy: we assess corporate engagement on human rights issues by looking at whether the company has defined a strategy and implemented a relevant policy. To this effect, we have selected an indicator provided by Bloomberg identifying companies that communicate on the implementation of a policy relating to human rights. Note that we have not chosen an indicator based on the controversies that affect the company. We consider that the number of controversies is neither representative of a company’s engagement, nor of the means deployed in addressing human rights issues: the number of controversies depends on the size of the company and on its media exposure and does not necessarily reflect the procedures implemented with a view to addressing the controversial event. As far as the Sycomore Happy@Work fund is concerned, the human rights policy formalisation indicator is higher than that of the EuroStoxx index and has risen considerably compared to 2017, however coverage ratios are also low. As such, increasing these coverage ratios will be an area marked for improvement.

On Governance issues, we examine the percentage of women at Executive level: the difference between the percentage of women on the Executive Board and in the total headcount is a meaningful indicator of the company’s ability to promote diversity and equal opportunities within the organisation. Although many companies report on the percentage of women in management positions, these disclosures relate to varying levels in the company hierarchy and the underlying “management” positions often differ from one company to the next. In order to use homogeneous data that can be cumulated at fund level, we have opted for the percentage of women on the Executive Board. In 2018, the feminization of executive boards in the companies owned by Sycomore Happy@Work is slightly higher than in the index, though the percentage of women in the headcount is slightly lower. These results should however be used with caution, due to the low coverage ratios for these data on portfolio companies. In light of this, improving the coverage ratio has been earmarked as an area for improvement. Note also that we have engaged with several portfolio companies on the issue of diversity in 2018 (see chapter on Engagement).

7

Sycomore Happy@Work

For more information, please refer to the ESG performance reports and the related protocol on our website.

14%

16%

37%

36%

2018

35%13%

37%

SycomoreHappy@Work

EuroStoxx 11%

2017

MALE/FEMALE DIVERSITY Feminization of Executive Board

HUMAN RIGHTS Percentage of companies with a

human rights policy

Coverage ratio 2018 (weight): 63% (payroll) and 69% (executive) for H@W 87% et 96% - EuroStoxx

Coverage ratio 2018 (number): 50% (payroll) and 59% (executive) for H@W 81% et 95% - EuroStoxx

Coverage ratio 2018 (weight): 67% - H@W / 95% - EuroStoxxCoverage ratio 2018 (number): 54% - H@W / 90% - EuroStoxx

20182017

SycomoreHappy@Work

86%

EuroStoxx

88%

SycomoreHappy@Work

97%

EuroStoxx

93%

SYCOMORE HAPPY@WORK 2018 REPORT

Percentage of women on payroll

Percentage of women on payrollPercentage of women on executive board

Percentage of women on executive board

No policy

No policy

Policy in place

Policy in place

8

Sustainable performance of SYCOMORE HAPPY@WORK02

-1%-2%

2017(5) 2018(6)

2017(5)/2018(6)

-100% 100%

Happy@Work

EuroStoxx

4%

Coverage ratio 2018 (weight): 98% - H@W / 99% - EuroStoxxCoverage ratio 2018 (number): 97% - H@W / 97% - EuroStoxx

(4) Net Environmental Contribution: developed by Sycomore AM in partnership with I Care&Consult and Quantis, the NEC measures the extent to which a company’s business model is aligned with the environmental and energy transition and global warming targets, business by business. For more information, please consult our Natural Capital Strategy available on our Responsible Approach page.

(5) NEC 1.0 calculated by Sycomore AM, I Care&Consult and Quantis on the basis of 2017 and 2018 data. (6) NEC ß calculated by Sycomore AM, I Care&Consult and Quantis on the basis of 2016 and 2017 data.

NET ENVIRONMENTAL CONTRIBUTION

SYCOMORE HAPPY@WORK 2018 REPORT

Sur l’environnement, la NEC : On Environmental issues, the NEC: we assess the alignment of our investments with the environmental and energy transition through the Net Environmental Contribution®. As of December 31st 2018, the NEC(4) of Sycomore Happy@Work stood at +4% vs. -1% for the EuroStoxx. Note that this indicator is not among the fund’s primary objectives; as a result, it is likely to evolve as a result of our stock picking. For example, for the past two years, two sustainable development players feature among the leading contributors to the fund’s NEC: Bonduelle, which specialises in vegetable-based products – a food type that is less harmful to the environment than meat products; and Wessanen, with a product offer that was 96% vegetarian and 78% organic in 2018.

9

OUR ENGAGEMENT and VOTING at shareholders’ meetings 03

Engaging with companies is a key tenet of our role as investors:

Meeting the management and conducting on-site company visits are particularly important aspects of our research effort. Our objective is to gain a deep understanding of the company based on the realities of its operations and the vision of its executives.

When preparing our votes at shareholders’ meetings, we discuss our voting intentions with the companies concerned and inform them of our voting policy and of the best practices we wish to promote.

In 2018, we formally engaged with 28 portfolio companies (see breakdown below) having identified 59 areas for improvement. 32 of these were directly related to corporate governance (the I pillar in our SPICE analysis). In the majority of cases, this engagement process takes place ahead of the shareholder meetings – a period that is particularly suited to holding these discussions with companies. The main issues that were raised include executive compensation and the structure of the Board of Directors.

The list of companies we engaged with is available in appendix.

These talks enable us to identify and recommend best practices, notably in areas of governance, human rights, or on social, societal and environmental issues. We encourage companies to integrate these challenges as a core strategic axis, and to improve transparency on the means in place and the results achieved.

I54%

E5%

S17%

P20%

C3%

Society & Suppliers

People

Investors

Clients

Environment

S

P

I

C

E

SYCOMORE HAPPY@WORK 2018 REPORT

DIA LOGUE

Our

ENG AGME NT initiatives

10SYCOMORE HAPPY@WORK 2018 REPORT

OUR ENGAGEMENT and VOTING at shareholders’ meetings03

Our

ENG AGME NT initiatives

Beyond the shareholder engagement initiated ahead of the annual meetings, we launched an engagement campaign on gender equality in order to identify the best practices and encourage companies that are lagging on issues such as female representation in management or executive teams, and wage equality. We conducted 11 exclusive formal meetings with companies that have reached different stages of advancement on these issues: talking with the most advanced players in the field seems the key to ensuring the pragmatic sharing of best practices with players that are lagging in this area. Below are two interesting examples:

The Seb Group is a clear leader in matters of gender equality, notably thanks to the strong promotion and diversity practices implemented within the group and the results achieved in the area of wage equality.

While there remains room for improvement in terms of female representation at executive level (0% on the executive committee, 18% in the 180 key positions in 2017), the initiatives that have been set up helped to generate improvements that can be felt at the lowest echelons of management: 38% of women held management positions in 2017, versus 42% in the overall headcount.

The group has chosen to address the issue of diversity from a global perspective, without focusing exclusively on male-female equality: according to our contacts within the company, offering initiatives exclusively addressed to women can be counter-productive and accentuate divisions. It was observed that a number of positive discrimination mechanisms in favour of women could demotivate men. Furthermore, stereotypes are strong within the company – with men and women – and the solutions need to be implemented communally and involve men as much as women. Seb’s policy therefore includes a variety of aspects, including training the Human Resources (HR) and managers on the issue of stereotypes, assisting women with self-censorship and the creation of mixed junior/senior working pairs.

Looking at the resolution of wage gaps, which was achieved in 2012, the fact that the action plans were driven by HR, and not by team managers was one of the key factors behind its success.

To drive progress, the Seb group pays particular attention to discussions with the most advanced players, identified for each individual topic, covering all types of businesses and industries.

OUR ENGAGEMENT and VOTING at shareholders’ meetings 03

Voltalia is facing a particularly interesting set of challenges.

The first is inherent to the sector, as the Energy industry is particularly male-dominated at present. The percentage of women in the overall headcount at end 2018 stood at around 30%. In this respect, the proportion of women serving on the executive board is rather satisfactory at 25%. Nevertheless, the sector also stands out for the positions held by women: administration and finance rather than technical management roles.

The second touches upon the size of the company, which is still limited – with 547 employees at end 2018 – and the fast pace of business development and headcount growth (320% growth over the past five years). The HR department was only recently structured; no pro-active policy for the promotion of women has been set up so far. The group is starting to think about the best approach for promoting diversity, at all levels and across the teams.

The company has identified two key stages in the life of an employee: recruitment – Voltalia is already considering a rule that would make at least one female CV compulsory in any recruitment process; and maternity/paternity – as employees tend to be rather young – during which the group is thinking of making paternity leave compulsory.

We also suggested that the company take part in the promotion of technical/vocational training for girls, in high schools for instance: working ahead of the recruitment process is one of the keys to improving female representation in the pool of candidates and future recruits.

We also reminded the group of the importance of disclosing more information on indicators relating to gender equality and required by the new law of September 5th 2018 on the “freedom to choose one’s future career”.

Finally, a strategy-related issue was broached: the company’s management takes human criteria into account when selecting opportunities. Womens’ rights are addressed on the same terms as corruption.

Other examples of engagement initiatives on themes of responsible taxation or the moderation of executive pay are detailed in our Sycoway as an Investor report.

11SYCOMORE HAPPY@WORK

2018 REPORTOur Engagement Policy is available on our website.

12SYCOMORE HAPPY@WORK 2018 REPORT

OUR ENGAGEMENT and VOTING at shareholders’ meetings03

In order to play an active role in shareholder democracy, we vote systematically at all shareholders’ meetings held for companies owned by the portfolio. We also physically attend some of the meetings.

In 2018, we voted at 97% of the shareholder s’meetings for companies held in the portfolio (the remaining 3% is a position we had sold a few days prior to the shareholders’ meeting):

OUR VOTING AT SHAREHOLDERS’ MEETINGS

80%of shareholders’

meetings with at least one

vote against or abstention

66shareholders’ meetings, or

1,188 résolutions

21%votes against or abstentions

Onthe appointments

of directors

16% votes against/abstentions

Onexecutive

compensation

30% votes against/abstentions

Our Voting Policy and 2018 Proxy Voting Report are available on our website.

13For more information on the methodology used to calculate indicators, please refer to the Reporting Protocol available on our website.

Looking beyond the sustainable development performance of our investments, our objective is to account for the contribution of our investments to a sustainable economy.

For the Sycomore Happy@Work fund and in keeping with its selection criteria, we have published specific information on how value is shared among portfolio holdings. We believe that a company can only generate sustainable value if this value is shared fairly among its different stakeholders. To observe this breakdown, we modelise the percentage of value distributed to each stakeholder. We pay particular attention to the share received by the employees in the companies concerned, as this is a key factor in their sustainable development performance. In 2018, 66% of the value created by portfolio companies was distributed to employees, versus 55% for EuroStoxx index constituents.

Looking at positive practices in the field of compensation, Burberry was the first manufacturer and distributor within the luxury industry to obtain the “UK Living Wage Employer” accreditation in 2015, thereby ensuring that workers are paid decent wages, adjusted to the local cost of living. The 1000mercis company aims to ensure equal treatment for all employees and to align the interests of the company with those of its workforce by allowing staff to become shareholders with no seniority conditions. The Eiffage group has implemented training sessions for all staff members to ensure they understand the implications of employee share ownership. In order to clear up any myths and to support the dedicated training in place since 2016, the company has also created a 500-member outreach team responsible for providing regular information and answering any queries.

42%vs 20% EuroStoxx

Companies partly owned by

employees

1,8%

Average employee stock ownership ratio for portfolio companies partly

owned by their staff

SYCOMORE HAPPY@WORK 2018 REPORT

Identifying IMPACTS 04FOCUS ON PEOPLE

How value is shared between stakeholders

Coverage ratio (weighting): 92,6% - H@W 95,0% - EuroStoxx

Coverage ratio (number): 89,7% - H@W 95,4% - EuroStoxx

We also appreciate employee stock ownership as an effective way for companies to foster long-term employee engagement and enable them to share in the company’s success. We monitor this indicator as part of the investment process for Sycomore Happy@Work: it is one of the factors that helps us assess the level of equity within the firm under analysis. In 2018, 42% of portfolio companies had set up employee shareholder schemes:

TOP 3

Percentage of capital owned by employees

Actionnaires : dividendes

Etat : impôts et taxesCollaborateurs : salaires et traitements

Créanciers : frais financiers

Entreprise : réserve

SYCOMOREHAPPY@WORK 66%

14%

3%

8%

9%

Actionnaires : dividendes

Etat : impôts et taxesCollaborateurs : salaires et traitements

Créanciers : frais financiers

Entreprise : réserve

55%

5%

15%

11%

14%

EUROSTOXX

CON TRI BUTIO NS

Employees: wages and other compensationCompany: reservesCreditors: financial costsState: taxesShareholders: dividends

14 AVENUE HOCHE - 75008 PARIS - WWW.SYCOMORE-AM.COMSYCOMORE HAPPY@WORK 2018 REPORT14

Entreprises Society & Suppliers People Investors Clients Environment

Aumann 1

Axa 1

Biomérieux 2

Bureau Veritas 1

Cogelec 1

Danone 1

Devoteam 1

EssilorLuxottica 3 2

FNAC 3 3 1 1 3

Heineken 1

Hopscotch Groupe 2

Legrand 1

Maisons du Monde 2

Mediawan 3

Medicrea 1

1000mercis 1

Ontex 3

salesforces.com 1

SAP 1

Schneider 1 1

SCOR 2

Seb 1

Smurfit Kappa 3

Soitec 2

Sopra-Steria 2

Technogym 2 1 1

Voltalia 3

AppendixLIST OF COMPANIES WITHIN THE SYCOMORE HAPPY@WORK FUND TO WHICH AREAS FOR IMPROVEMENT WERE RECOMMENDED IN 2018