SOMFY - Annual financial report 2019

07 CONSOLIDATED FINANCIAL STATEMENTS

The restatement of leases leads to an increase in operating result, financial expenses, non-current assets and financial liabilities. The Group’s lease agreements are relatively standard. The impact of this new standard primarily concerns the property leases relating to Somfy’s various worldwide facilities and motor vehicle leases. The Group has a number of industrial or IT equipment leases of less significance. The Group has adopted this standard with effect from 1 January 2019; for periods up to 31 December 2018, IAS 17 applies. Concerning transitional provisions, the standard is applied in a simplified retrospective manner. This method consists of recognising the cumulative effect of first-time adoption as an adjustment to opening equity, taking the right-of-use asset as equal to the amount of lease obligations. At the transition date, the Group opted to apply the simplified approach under which existing contracts need not be reassessed to determine whether they contain leases, with IFRS 16 only being applied to contracts previously classed as leases. Contracts that had not been identified as leases under IAS 17 and IFRIC 4 were not reassessed to determine whether they contained leases within the meaning of IFRS 16. It follows that the definition of a lease within the meaning of IFRS 16 has only been applied to contracts entered into or amended on or after 1 January 2019. Somfy has opted to adopt the exemptions provided for short-term leases and low-value assets. Leases with a term of 12 months or less, as well as those relating to low-value assets (US$5,000 or less), have therefore not been restated and the corresponding lease payments continue to be recognised in operating expenses. Leases relating to low-value assets mainly concern small items of IT equipment. The lease term is defined on a case-by-case basis and corresponds to the non-cancellable period of the lease taking into account any optional periods that are reasonably certain to be exercised. The discount rate used to calculate the lease liability for each asset is determined based on the marginal borrowing rate at the date of first-time adoption of IFRS 16 (1 January 2019). This is the rate of interest the lessee would have to pay to borrow the funds needed to acquire the asset over the residual term of the contract and in a similar economic environment.

Impact of first-time adoption on existing leases on 1 January 2019 The impact of this first-time adoption on existing leases at 1 January 2019 was €42.1 million on non-current assets and financial debt and €14.1 million on EBITDA for the financial year. The impact on shareholders’ equity, current operating result and net profit is not material. € thousands 01/01/19 Assets Net property, plant and equipment 42,105 TOTAL ASSETS 42,105 Liabilities Other non-current financial liabilities 30,671 Other current financial liabilities 11,434 TOTAL LIABILITIES 42,105 The reconciliation of IAS 17 lease commitments at 31 December 2018 and the lease liability recognised at 1 January 2019 is as follows:

€ thousands Operating lease commitments at 31/12/18 Adjustment to lease terms and agreements Weighted marginal borrowing rate at 01/01/19

54,704 -5,613

2.9%

Discounting effect

-3,848

Exemptions applied to short-term leases and low value assets

-3,138

LEASE LIABILITY AT 01/01/19

42,105

The liability in respect of leases previously classed as finance leases under IAS 17 has been reclassified as an opening lease liability (see note 7.2.2.1). Similarly, for these leases, the book value of right-of-use assets has been determined as the value of the underlying leased asset calculated under IAS 17. Main impacts at 31 December 2019 The main impacts of applying IFRS 16 to the financial statements at

31 December 2019 are as follows: CONSOLIDATED INCOME STATEMENT

31/12/19

IFRS 16 impacts

€ thousands

EBITDA

262,394

14,084

Amortisation and depreciation charges

-57,642

-13,699

Current operating result Net financial expense Consolidated net profit

204,830

385

-5,066

-1,064

163,209

-681

89

SOMFY – ANNUAL FINANCIAL REPORT 2019