SOMFY_ANNUAL_FINANCIAL_REPORT_2017

07 CONSOLIDATED FINANCIAL STATEMENTS

The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, pricing service or regulatory agency, and those prices represent regularly occurring market transactions. These instruments are classified as Level 1.

The fair values of financial instruments that are not traded in an active market ( e.g . over-the-counter derivatives) are determined using valuation techniques. These different valuation techniques maximise the use of observable market data, where available, and rely little on the Group’s estimates. The instrument is classified as Level 2 if all elements required to calculate the fair value of an instrument are observable. If one or more of the principal pricing elements is not based on observable market prices, the instrument is classified as Level 3.

Amount at 31 December 2017

Loans and receivables (Fair value equal to net book value)

Assets available for sale (Fair value recognised in reserves)

Assets held for trading (Fair value recognised in income statement)

Fair value (Fair value recognised in reserves)

Fair value (Fair value recognised in income statement)

€ thousands

Assets Non-current financial assets

5,405

4,256

1,148

– – –

– –

– –

900 596

Current financial assets

900

– – –

Current derivative instruments Cash and cash equivalents Liabilities Non-current financial liabilities

–

303

293

212,834

212,572

262

–

–

33,516 76,852

11,534 20,757

– –

– –

21,982 56,095

– –

Current financial liabilities

Amount at 31 December 2016

Loans and receivables (Fair value equal to net book value)

Available assets for sale (Fair value recognised in reserves)

Assets held for trading (Fair value recognised in income statement)

Fair value (Fair value recognised in reserves)

Fair value (Fair value recognised in income statement)

€ thousands

Assets Non-current financial assets

2,588

2,254

334

– – – – – – –

– – 4 –

– – – –

747

Current financial assets

747

– – – – – –

4

Current derivative instruments Cash and cash equivalents Liabilities Non-current financial liabilities Current financial liabilities Current derivative instruments

–

133,847

133,847

35,374 83,235

13,680 24,496

21,694 58,739

– –

379

–

92

287

There were no interest rate swaps at 31 December 2017. 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 securities available for sale, which mainly comprise unlisted equity securities, it is not deemed possible to reliably measure their fair value. They are therefore recognised at cost and written down if applicable. 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). Potential earnouts 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.

98

SOMFY – ANNUAL FINANCIAL REPORT 2017