SOMFY - Annual financial report 2019

07 CONSOLIDATED FINANCIAL STATEMENTS

INVENTORIES NOTE 4.4

Inventories are valued at their procurement cost, determined using the weighted average unit cost method. In particular, inventory cost measurement takes into account the following items: the gross value of raw materials and supplies includes the purchase price and ancillary expenses; – expenses incurred to bring inventories to the place they are located, and in the condition they are in, are integrated in inventory – procurement cost; manufactured products are measured at production cost, which includes consumables, direct and indirect production expenses and – depreciation charges of assets used in the manufacturing process; intragroup profits included in inventories are eliminated; – borrowing costs are not included in the cost of inventory. – The value of inventories and work in progress is impaired when their net realisable value is lower than their book value. Net realisable value is the estimated selling price under normal business conditions, after deducting estimated completion costs and estimated selling expenses.

€ thousands

31/12/19

31/12/18

Gross values Raw materials and other supplies Finished goods and merchandise

54,166 130,055 184,221 -14,626 169,596

57,499 131,253 188,752 -13,749 175,003

Total

Provisions

NET VALUES

Value 31/12/18

Net charges Exchange rate movements

Changes in consolidation scope and method

Other movements

Value 31/12/19

€ thousands

-14,626

Inventory provisions

-13,749

-802

-75

–

–

TRADE RECEIVABLES NOTE 4.5

Trade receivables are recorded at their nominal value and a provision for writedown is established when receivables are unlikely to be collected.

The Group limits its exposure to credit risk related to trade receivables by implementing internal procedures (creditworthiness study of new customers, permanent monitoring of outstanding amounts, analysis of the economic environment, etc.). Credit insurance contracts, both in France and internationally, also mitigate the consequences of customer default. Approximately 85% of sales are covered by such contracts. In accordance with IFRS 9, expected impairment losses on trade receivables are measured on the basis of an impairment table using impairment rates based on the duration of late payments. The Group’s exposure to credit risk related to trade receivables is therefore mainly influenced by the individual characteristics of each customer. The Group also takes into consideration factors that may influence the assessment of risk, in particular the economic background of certain countries in which customers are located.

€ thousands Gross value

31/12/19 150,633 -12,598 138,035

31/12/18 153,913 -13,827 140,086

Provision

NET VALUE

97

SOMFY – ANNUAL FINANCIAL REPORT 2019