SOMFY - Annual Financial Report 2020

05 CONSOLIDATED FINANCIAL STATEMENTS

FINANCIAL RISK MANAGEMENT POLICY NOTE 7.3

Foreign exchange risk

Somfy’s exposure to foreign exchange risk is primarily related to its operational activities (intragroup sales of manufactured products distributed by commercial subsidiaries outside the Euro zone, these sales being denominated in local currencies and purchases denominated in local currencies). Almost 70% of consolidated Group sales were generated in the Euro zone in the year to 31 December 2020, unchanged from 31 December 2019. Foreign currency denominated assets represent 11.5% of total assets at 31 December 2020, compared with 12.8% at 31 December 2019. 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. The Group is vigilant in its assessment of the risk related to foreign exchange within a market environment that is challenging. Currency hedging continues to be adapted in line with forecasts and market trends. Since 1 July 2010, the Group has been applying hedge accounting to foreign currency hedging instruments. The effective portion of fair value movements is therefore taken to items of other comprehensive income and the ineffective portion is recognised in net financial income/(expense). Foreign exchange hedges are adapted in line with forecasts. The impact of the effective portion of hedges at 31 December 2020 was nil on items of other comprehensive income and was not material on profit and loss (transfer) at a negative €0.1 million. Since indirect exposure to exchange rate fluctuations is low, implementation of amendments to IFRS 9, IAS 39 and IFRS 7 (IBOR reform) will have no material impact on the hedging instruments used. The ineffective portion of hedges was nil at 31 December 2020 and 2019.

Foreign exchange hedges by currency

Contract nominal value

31/12/20 € thousands

Sales 7,367 3,262 4,073

Purchases

Net total

Fair value

7,367 3,262 2,870

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

– –

-186

7

-1,203 -17,451 -4,001 -4,173

43

-17,451 -4,001

– –

262

29

5,949

10,122

-28

462 409

809 409

-347

27

– – – – – – – – –

-1

3,929 2,925 1,028 2,407 2,522 1,181 2,173 1,289 565

3,929 2,925 1,028 2,407 2,522 1,181 2,173 1,535 565

-29

25

-35

-118

-5 -7

-21 -98

-247

-2 -3

381

381

– –

2,271 -8,475 11,064

2,271

-70

–

-8,475

-342 -554

46,961

-35,897

135

SOMFY – ANNUAL FINANCIAL REPORT 2020