SOMFY - Annual financial report 2018

07 CONSOLIDATED FINANCIAL STATEMENTS

ANALYSIS OF CASH FLOW STATEMENT NOTE 8 —

The cash flow statement is prepared using the indirect method: this method presents the reconciliation of net profit with the net cash generated by operations over the year. Cash and cash equivalents at the beginning and end of the year include cash and cash equivalents, which consist of investment instruments, less bank overdrafts and outstanding items.

CASH AND CASH EQUIVALENTS NOTE 8.1

CHANGE IN WORKING CAPITAL REQUIREMENTS NOTE 8.3

€ thousands

31/12/18 31/12/17

€ thousands

31/12/18 31/12/17

CASH AND CASH EQUIVALENTS AT THE START OF THE PERIOD Cash and cash equivalents at the start of the period CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD Cash and cash equivalents at the end of the period Bank overdrafts

Net decrease/(increase) in inventory Net decrease/(increase) in trade receivables Net (decrease)/increase in trade payables Net movement in other receivables and payables

-12,109 -17,356

212,564 126,249

6,322 -15,791

212,834 133,847

4,266 8,874

-269 -7,598

15 2,655

253,413 212,564

CHANGE IN WORKING CAPITAL REQUIREMENTS

-1,506 -21,618

259,345 212,834

Bank overdrafts

-5,932

-269

COMPANIES ACQUISITIONS AND DISPOSALS, NOTE 8.4 NET OF CASH ACQUIRED OR DISPOSED OF In 2018, net cash flow from acquisitions consisted mainly of the partial payment of one of Somfy Protect by Myfox's earnouts for €5.6 million, as well as the acquisition of the remaining 49% of iHome's capital for €0.9 million and the remaining 39% of Neocontrol's capital for €0.5 million.

INTANGIBLE ASSETS AND PROPERTY, PLANT NOTE 8.2 AND EQUIPMENT Receivables and liabilities related to intangible assets and property, plant and equipment are included in investing activities in the cash flow statement and decreased by €0.6 million in the year ended 31 December 2018 compared with an increase of €0.4 million in 2017. During 2018, the Group acquired intangible assets and property, plant and equipment totalling €57.8 million, compared with €57.1 million in 2017. Net of cash receipts related to disposals of intangible assets and property, plant and equipment, investments totalled €57.3 million in 2018 compared with €56.0 million in 2017. PROVISIONS AND CONTINGENT LIABILITIES NOTE 9 — PROVISIONS NOTE 9.1 This includes commitments with an uncertain maturity date or amounts resulting from restructuring operations, litigations or other risks. A provision is established when the Group has a current obligation (legal or constructive) resulting from a past event and when future cash outflows can be measured reliably. The Group is party to a number of litigation and arbitration proceedings with third parties or with the tax authorities of certain countries in the normal course of its business. Provisions are recorded for these proceedings when a legal, contractual or constructive obligation exists at the end of the reporting period with respect to a third party; it is probable that an outflow of resources embodying economic benefits will be required in order to settle the obligation with no consideration in return, and a reliable estimate can be made of this obligation. Similarly, if the Group has uncertainties concerning the tax treatment it has adopted in respect of certain events or transactions, provisions are recognised if it is probable that the Group’s tax liabilities would be reassessed in the event of a tax audit. A provision for restructuring is recognised when there is an obligation toward third parties, originating from a Management decision materialised before year-end by the existence of a

detailed and formal plan, which has been announced to the personnel affected or their representatives. When the Group expects full or part repayment of an expense that was the subject of a provision, by way of the existence of an insurance contract for instance, the repayment is recognised as a separate asset but only if repayment is virtually certain. The provision charge is taken to the income statement, net of any repayment. In order to cover costs inherent in guarantees given to customers, the Group recognises a provision for charges. This provision represents the estimated amount, based on statistics of charges recognised in the past, as a result of repairs during the guarantee period. At each year-end, this provision is reversed for the actual amount of services rendered recorded as expenses for the financial year. If the impact of the time value of money is significant, provisions are discounted on the basis of a rate after tax which reflects the specific risks of the liability. Where a provision is discounted, the increase in the provision relating to the discounting is recorded as an operating expense.

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SOMFY – ANNUAL FINANCIAL REPORT 2018