SOMFY - Annual financial report 2019

07 CONSOLIDATED FINANCIAL STATEMENTS

Other non-current liabilities Note 4.7.2

€ thousands

31/12/19

31/12/18

Other operating liabilities Other non-operating liabilities

162

127

1,133 1,296

1,125 1,252

TOTAL

INTANGIBLE ASSETS AND PROPERTY, PLANT AND EQUIPMENT NOTE 5 — GOODWILL AND IMPAIRMENT TESTS NOTE 5.1

Goodwill Note 5.1.1

Goodwill is measured using the method described in note 2.3. Goodwill is subject to impairment tests at least once annually, or more frequently when events or changes in circumstances indicate that the goodwill has been impaired (indication of impairment, see note 5.1.2). Recognised impairment cannot be reversed.

€ thousands

Value

A Cash Generating Unit is the smallest group of assets to which the asset belongs, which generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. CGUs have been identified within the Group. They primarily comprise the Group’s legal entities that have been acquired through merger and acquisition transactions. An impairment test involves comparing the recoverable amount of the CGU with its book value. The recoverable amount of an asset is measured at the higher of its fair value, after deduction of disposal costs, and its value in use. If the recoverable amount exceeds the net book value of the CGU at period end, no impairment is recognised. However, if this amount is lower than the net book value, an impairment loss equal to the difference is recognised in priority against goodwill. This impairment loss may not be reversed. Fair value after deduction of disposal costs is the amount obtainable from the sale of an asset in an arm’s length transaction between knowledgeable, willing parties, after deducting disposal costs. Value in use is determined based on cash flows, which are estimated using plans or budgets over a maximum period of five years; the cash flows beyond that date are extrapolated by applying a constant or decreasing rate of change, and are discounted by using long-term post-tax market rates, which reflect the market’s estimates of the time value of money and the specific risks inherent to the assets. In certain cases, cash flows can be estimated over longer periods, to be justified CGU by CGU. At 31 December 2019, 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. Cash flows are evaluated based on budgets and three-year forecasts for companies which operate in a market they know and understand well. Generally, these are companies whose strategies are not expected to change greatly. On the other hand, the period is extended to five years for companies in emerging markets, for which the growth potential and maturity are further away.

At 1 January 2018

196,842

Impact of changes in consolidation scope and method Impact of changes in foreign exchange rates

-90,027

-446

Charge for impairment AT 31 DECEMBER 2018

-10,143 96,225

Impact of changes in consolidation scope and method Impact of changes in foreign exchange rates

–

45

Charge for impairment AT 31 DECEMBER 2019

-717

95,553

The charge for impairment of €0.7 million relates to iHome. For reference, at 31 December 2018, the change of consolidation method had a €90.5 million negative impact on Dooya and a €0.5 million positive impact on Neocontrol. The charges for impairment related to Somfy Protect by Myfox and Neocontrol were €9.7 million and €0.4 million respectively. Impairment tests Note 5.1.2 IAS 36 defines the procedures to be applied by a company to ensure that the net book value of its assets does not exceed their recoverable amount, that is the amount to be recovered from the use or the disposal of the assets. Except for goodwill and intangible assets with an indefinite life, which require systematic annual impairment tests at year-end, the recoverable amount of an asset is estimated every time there is an indication that the asset may be impaired. A recoverable amount is estimated for each individual asset. If it is not possible to do so, assets are brought together in Cash Generating Units (CGUs), whose recoverable amount is subsequently measured.

99

SOMFY – ANNUAL FINANCIAL REPORT 2019