SOMFY_ANNUAL_FINANCIAL_REPORT_2017

07 CONSOLIDATED FINANCIAL STATEMENTS

Cash and cash equivalents Note 7.2.5

Foreign exchange risk

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.

The Group is primarily exposed to foreign exchange risk through intragroup sales of manufactured products distributed by commercial subsidiaries outside the Euro zone (these sales are denominated in local currencies) and purchases denominated in local currencies. Almost 60% of consolidated Group sales are generated in the Euro Zone. Foreign currency denominated assets represent 20% of total assets 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 applied hedge accounting to foreign currency hedging instruments. The effective portion of fair value movements is therefore taken to equity and the ineffective portion is recognised in net financial expense. The positive impact of the effective portion of hedges at 31 December 2017 was €0.9 million on equity (€0.6 million net of deferred tax) and €0.6 million on profit and loss (transfer from equity). The ineffective portion of hedges was nil at 31 December 2017 and 2016.

€ thousands

31/12/17 31/12/16 194,843 126,121

Cash

Cash equivalents

17,990

7,726

CASH AND CASH EQUIVALENTS

212,834 133,847

Cash equivalents mainly include deposits with a maturity of less than three months and Euro money market funds.

FINANCIAL RISK MANAGEMENT POLICY NOTE 7.3

The mandatory application of IFRS 9 – Financial Instruments as from 1 January 2018, and the challenges that this standard poses to the Group are detailed in note 1.4.2. The Group did not opt for the early application of IFRS 9 in its 2017 consolidated financial statements.

31/12/17 € thousands

Hedging of balance sheet items

Hedging of off-balance sheet items

Total

Fair value

Types

1,434 2,394

AUD CAD CHF CNY GBP HKD NOK PLN RUB SEK SGD THB TRY USD ILS JPY

1,434

–

43 39 28

Forward sale Forward sale Forward sale

964 427

1,430

427

–

–17,298

–8,585

–8,713

265

Forward purchase

4,396

1,183

3,212

17

Forward sale

467

320 961 444 549 551 173 511

147

21 Forward sale and put swap

3,915

2,954

–4 43 70

Forward sale Forward sale Forward sale

444

–

1,413

864

551 677 511 749 312 880

–

7 Forward purchase and put swap

504

–3

Forward sale

–

4 Forward sale and put swap

94 26

655 286

–6 –3

Forward sale Forward sale Forward sale

880

–

–36

–834

–

–834

–3

Call swap

–68

506

437

483

99

SOMFY – ANNUAL FINANCIAL REPORT 2017