SOMFY - Annual financial report 2018

07 CONSOLIDATED FINANCIAL STATEMENTS

Amount at 31 December 2017 Published

Amount at 31 December 2017 Restated for operations treated in accordance with IFRS 5

Assets and liabilities at amortised cost (1) (Fair value equal to net book value)

Financial assets and liabilities (2) (Fair value

Financial assets and liabilities (3) (Fair value recognised in income statement)

Fair value hierarchy (2 & 3)

recognised in items of other comprehensive income)

€ thousands

Assets Non-current financial assets Current financial assets Cash and cash equivalents Liabilities Non-current financial liabilities Current financial liabilities Current derivatives

5,405

5,354

4,205

1,148

– –

Level 3

900 596

493 596

493

–

–

303

293 262

Level 2 Level 2

212,834

192,493

192,231

–

33,516 76,852

28,249

6,267 2,125

21,982

– –

Level 3 Level 3

3,125

1,000

The net book value of current assets and liabilities is deemed to be a reasonable approximation of their fair value due to their short-term nature. For variable rate borrowings and debt, net book value is deemed to be a reasonable approximation of their fair value. The fair value of derivative instruments and cash equivalents is established with reference to observable market data (Level 2). Non-consolidated equity investments, as well as earnouts and options related to business acquisitions are measured at their balance sheet fair value, based in particular on the future earnings prospects of the businesses acquired (Level 3). There has been no change in the method of determining fair value for any category during the period. Cash and cash equivalents Note 7.2.5 Cash includes bank balances (bank assets and overdrafts) and cash in hand. Cash equivalents are short term and very liquid deposits, easily convertible into a known amount of cash and subject to a negligible risk of unfavourable change in value.

Cash equivalents are mainly interest-bearing current accounts and term deposits with maturities of less than three months.

FINANCIAL RISK MANAGEMENT POLICY NOTE 7.3

The application of IFRS 9 “Financial Instruments” from 1 January and its impact are detailed in note 1.4.1. Foreign exchange risk The Group’s exposure to foreign exchange risk is primarily related to its operational activities (intragroup sales of manufactured products distributed by commercial subsidiaries outside the Euro zone and purchases denominated in local currencies). Almost 70% of consolidated Group sales were generated in the Euro zone in the year to 31 December 2018, unchanged from 2017. Foreign currency denominated assets represent 12% of total assets at 31 December 2018, compared with 20% at 31 December 2017. Consequently, a variation in foreign exchange rates would not have a significant effect on total assets. At comparable terms and conditions, the Group gives priority to natural hedges (foreign currency purchases related to sales in the same currency). The derivative financial instruments put into place are forward foreign exchange contracts for the main currencies. Since 1 July 2010, the Group has been applying hedge accounting to foreign currency hedging instruments. The effective portion of fair value movements is therefore taken to items of other comprehensive income and the ineffective portion is recognised in net financial income/(expense). The negative impact of the effective portion of hedges at 31 December 2018 was €0.5 million on items of other comprehensive income (€0.3 million net of deferred tax) and €0.5 million on profit and loss (transfer from equity). The ineffective portion of hedges was nil at 31 December 2018 and 2017.

31/12/18 31/12/17 Restated for

31/12/17

operations treated in accordance with IFRS 5

€ thousands

Cash

229,054 30,291

181,511 10,982

194,843 17,990

Cash equivalents CASH AND CASH EQUIVALENTS

259,345

192,493

212,834

105

SOMFY – ANNUAL FINANCIAL REPORT 2018