SOMFY - Annual Financial Report 2020

05 CONSOLIDATED FINANCIAL STATEMENTS

At 31 December 2020, as at every year-end or every time that indications of impairment exist, the Group re-examined the value of goodwill associated with Cash Generating Units. Indicators of impairment (temporary shutdowns of factories and a reduction in activity) emerged following the health crisis and led the Group to refine the impairment test assumptions of its major CGUs. The impairment tests were conducted using the discounted cash flow method and based on the business plans reviewed by the management responsible for the CGUs, in order to take into account the consequences of the current crisis and recovery assumptions. The Management Board and the Audit Committee have also ruled on the findings of these tests.

The main assumptions used are as follows: 2020 demonstrated the resilience of Somfy’s business model. – Nevertheless, it is not representative in terms of margin level since certain non-structural savings will not be renewed in future years; over the 2021 financial year, sales should increase, with a – significant base effect that is favourable over the first six months and is unfavourable over the second; within a weakened 2021 economic environment, the current – operating margin rate should return to its pre-crisis level; discount and growth to infinity rates are identical to those used – at 31 December 2019. The current environment is highly uncertain, and the above assumptions represent the Group’s current scenario. They are likely to change in line with the health and economic situation.

BREAKDOWN OF THE GOODWILL OF THE MAIN CGUS AND DETAILS OF THE MAIN ASSUMPTIONS USED FOR EACH CGU AT 31 DECEMBER 2020

Gross value

Impairment

Net value Discount rate Rate of growth to infinity

€ thousands

80,182

BFT

100,578

-20,397

10.0% 10.0%

2.0% 2.0%

1,091

Domis

1,091

–

Axis/Somfy Activités SA/Somfy Protect by Myfox

10,426

20,126

-9,700

10.0%

2.0%

– – – –

Pujol

4,975

-4,975

– – –

– – –

Neocontrol

300

-300

Lian Da iHome

8,659 1,322 2,367

-8,659 -1,322

18.0% 10.0% 10.0%

2.5% 2.0% 2.0%

2,367

Simu Other

– –

325

325

TOTAL FULLY-CONSOLIDATED COMPANIES

139,743

-45,353

94,390

–

–

O&O and Pujol Italia were merged into BFT with effect from 1 January 2020. These impairment tests led to the recognition of additional goodwill impairment of €0.7 million in relation to iHome at 30 June 2020. Following a review of the value of other goodwill, no other impairment charge was recognised during the 2020 financial year. Furthermore, no impairment was necessary in relation to assets with an unspecified life and the use of which is independent from other assets. Sensitivity analysis OTHER INTANGIBLE ASSETS NOTE 5.2

The Group conducted sensitivity analyses on the results of impairment tests using different assumptions for EBITDA ratio and discount rates. Analyses of the sensitivity of calculations 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. The total impairment of the BFT goodwill at the end of 2020 was €20.4 million (including O&O and Pujol Italia). A two-point increase in the discount rate combined with a one and a half-point decrease in the EBITDA to sales ratio in the normative flow used in the calculation of the terminal value would require an additional impairment of €1.5 million.

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).

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SOMFY – ANNUAL FINANCIAL REPORT 2020