SOMFY - Annual financial report 2018

07 CONSOLIDATED FINANCIAL STATEMENTS

The application scope of the standard covers all contracts with customers. Leases, insurance contracts and financial instruments are covered by other standards. Somfy conducts its business activities in a sector involving the production and marketing of electrical equipment for the opening, closing, and securing of homes and buildings. The sale of products constitutes the vast majority of Group revenue. In this commercial relationship, the Group acts on its own behalf and not as an agent. Given that sales of products usually represent the only performance obligation of the contracts, revenue is recognised in such cases at the time when control over the goods is transferred to the purchaser, i.e. when the delivery or dispatch is effective, resulting in no change to the previous treatment under IAS 18. Somfy does not act as a principal in the transport of its products, which is entrusted to specialised businesses. The commercial terms and conditions offered by Group entities provide for payment for products sold within a period which is significantly less than one year; there is therefore no need to adjust the amount of payments received from customers to take into account the effects of a financing component. The warranties offered to purchasers cover defects in the design or manufacture of products. They do not provide the customer with any service other than the assurance that the product is free from defect and therefore continue to be recognised in accordance with IAS 37 “Provisions, Contingent Liabilities and Contingent Assets”. The amount that Somfy actually receives as consideration for the products delivered, as well as the revenue from sales recorded in the income statement may vary due to deferred discounts agreed by contractual agreements or at the start of commercial campaigns. These discounts will be paid to the customer at the end of the reference period subject to the achievement of the objectives set for the relevant period. Their value is determined using the expected value method, similar to previous practice. Some projects may combine products and services. Nevertheless, the service component is currently not material and only represents 0.58% of total revenue.

The Group has selected the aggregate impact transition method, which had no impact on the opening balance sheet at 1 January 2018 without having applied transitional relief measures. “Financial Instruments” IFRS 9 IFRS 9 “Financial Instruments”, which replaces IAS 39 “Financial Instruments: Recognition and Measurement”, includes revised provisions regarding the classification and measurement of financial instruments, a new expected credit loss model for calculating impairment of financial assets, new hedge accounting obligations, broadens the scope of financial instruments eligible for hedge accounting, and new provisions for the treatment of changes in debt terms without derecognition. The provisions concerning the classification and impairment of financial instruments and those concerning changes in debt terms are applicable retrospectively. Furthermore, the Group has chosen not to restate retrospective data for 2017. The provisions concerning hedge accounting are applicable prospectively, with the exception of the impact of hedging costs, which is restated retrospectively. The application of IFRS 9 had no material impact on the Group’s financial statements. Equity investments, which were previously classified as available-for-sale assets and recognised at fair value through items of other comprehensive income, are now recognised at fair value through profit or loss or, optionally, through items of other comprehensive income. In addition, the change in impairment of receivables based on expected losses led to a non-material impact. Cash flow hedge relationships that are classified as efficient under IAS 39 remain classified as hedge relationships following the application of IFRS 9. Lastly, the new provisions concerning the treatment of changes in debt terms without derecognition had no impact at 1 January 2018. Other new standards had no material impact on the Group’s results and financial position.

Standards, amendments and interpretations whose application is not yet mandatory Note 1.4.2

Standards

Content

Application date

IFRS 16

Leases

Applicable from 1 January 2019

Business Combinations, Definition of a Business Prepayment Features with Negative Compensation

Applicable from 1 January 2020 according to the IASB, not yet approved by the EU

Amendment to IFRS 3

Amendment to IFRS 9

Applicable from 1 January 2019

Applicable from 1 January 2020 according to the IASB, not yet approved by the EU Applicable from 1 January 2019 according to the IASB, not yet approved by the EU Applicable from 1 January 2019 according to the IASB, not yet approved by the EU Applicable from 1 January 2020 according to the IASB, not yet approved by the EU Applicable from 1 January 2019 according to the IASB, not yet approved by the EU

Amendments to IAS 1 and IAS 8

Definition of Material

Plan Amendment, Curtailment or Settlement

Amendments to IAS 19

Long-term Interests in Associates and Joint Ventures

Amendments to IAS 28

Amendments to the Conceptual Framework in IFRS Standards

Conceptual framework

Annual improvements to IFRS

2015-2017 cycle

IFRIC 23

Uncertainty over Income Tax Treatments

Applicable from 1 January 2019

The Group did not opt for the early application of any of these new standards or amendments and is currently assessing the impact resulting from their initial application. Detailed information is available on the following website: http://www.ifrs.org

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SOMFY – ANNUAL FINANCIAL REPORT 2018