SOMFY_ANNUAL_FINANCIAL_REPORT_2017

07 CONSOLIDATED FINANCIAL STATEMENTS

BREAKDOWN OF THE GOODWILL OF THE MAIN CGUS AND DETAILS OF THE MAIN ASSUMPTIONS USED FOR EACH CGU AT 31 DECEMBER 2017

Gross value Impairment

Net value Discount rate Rate of growth to infinity

€ thousands

81,077

BFT

94,021

–12,943 –7,574

10.0%

2.0%

–

O&O

7,574 1,091 1,153 5,680

–

–

1,091 1,153

Domis

– –

10.0% 10.0%

2.0% 2.0%

Axis/Somfy Activités SA

–

Pujol

–5,680

–

–

90,508

Dooya LianDa Myfox iHome Simu Other

90,508

–

12.5%

2.5%

–

8,900

–8,900

–

–

18,973

18,973

– – – –

14.0% 15.0% 10.0% 10.0%

2.0% 2.5% 2.0% 2.0%

1,343 2,367

1,343 2,367

330

330

TOTAL FULLY-CONSOLIDATED COMPANIES

231,939

–35,097

196,842

–

–

Following a review of the value of the goodwill, no impairment charge was recognised during the 2017 financial year. Furthermore, no impairment was necessary in relation to assets with an indefinite life and the use of which is independent from other assets.

A six percentage point decrease of the EBITDA to sales ratio in the normative flow used in the calculation of the terminal value would have required an impairment of €0.2 million.

Sensitivity analysis The Group conducted sensitivity analyses on the results of impairment tests using different assumptions for EBITDA ratio and discount rate. Analyses of the sensitivity to assumptions considered individually, including changes deemed reasonably possible in these assumptions, have highlighted scenarios where the recoverable value would fall below the book value of assets subject to the tests, therefore requiring additional impairment of the latter: a one percentage point increase in the discount rate could result – in a €2.1 million impairment of Dooya’s goodwill. A one and a half percentage point decrease of the EBITDA to sales ratio in the normative flow used in the calculation of the terminal value would have required an impairment of €0.3 million; the total impairment of the BFT goodwill at the end of 2017 was – €12.9 million. A one and a half percentage point increase in the discount rate would result in an additional impairment of €1.6 million. A three and a half percentage point decrease of the EBITDA to sales ratio in the normative flow used in the calculation of the terminal value would have required an additional impairment of €1.6 million; a half percentage point increase in the discount rate could result – in a €0.4 million impairment of Myfox’s goodwill. A one and a half percentage point decrease of the EBITDA to sales ratio in the normative flow used in the calculation of the terminal value would have required an impairment of €0.7 million; a three percentage point increase in the discount rate could – result in a €0.2 million impairment of iHome’s goodwill.

OTHER INTANGIBLE ASSETS NOTE 5.2

Intangible assets acquired by the Group are recognised at historical cost, after deduction of accumulated amortisation and potential writedown. Intangible assets primarily comprise: SOFTWARE Internally-developed software is recognised on the balance sheet when the following two conditions are met simultaneously: it is probable that the future economic benefits attributable – to the software will flow to the company; and its cost or value can be measured reliably. – Conditions defined by IAS 38 in terms of development cost capitalisation must also be met (including project technical feasibility, intention to complete the software and availability of resources). The Group owns two major types of software: Software subject to a five-stage development project and – rolled out in several countries is amortised on a straight-line basis over ten years. The five stages characterising the implementation of this type of IT projects are as follows: the “initiation” stage, ending in a decision to carry out or not – an IT solution research to meet a specific issue;

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SOMFY – ANNUAL FINANCIAL REPORT 2017