SOMFY // 2022 Annual Report

05 CONSOLIDATED FINANCIAL STATEMENTS

– the “assessment” stage, ending in the choice of a solution, often the selection of a licence; – the “study” and “realisation” stages, resulting in a decision to implement the roll-out of the solution; – the “implementation” stage, ending in the transfer of the application to support services. This is the software roll-out. This software is particularly related to the roll-out ofIT systems. Development expenses incurred during the “study” and “realisation” stages may be capitalised if all criteria defined by IAS 38 are complied with. ready-to-use software , that is software whose operation by – the Group is not subject to a five-stage project. It is amortised on a straight-line basis over four years. PATENTS Only acquired patents and related filing expenses are capitalised. Patents are amortised on a straight-line basis over their legal protection period. Costs of renewal of patents are included in costs for the year. DEVELOPMENT COSTS Development costs are recognised as balance sheet assets when all criteria defined by IAS 38 are met: – project technical feasibility; – intention to complete the intangible asset so that it is available for use or sale; – ability to use or sell the intangible asset; – generation of future economic benefits; – availability of resources; – ability to reliably measure the expenditure attributable to the intangible asset during its development. Only development costs generated by projects dedicated to the development of new products and conducted in five stages are capitalised, as follows: – the “assessment” stage, consisting in the production of assessment elements enabling the Group to make the decision to launch the project or not;

– the “pre-study” stage, whose objective is to select technical solutions, validate product feasibility and the marketing strategy to place the product on the market; – the “study” stage, which enables to set the definition of the product, as well as industrial and marketing resources; – the “realisation” stage, which consists in qualifying the product, establishing industrial resources in production facilities, as well as marketing resources. This stage also defines project closing criteria; – the “launch” stage, featuring product manufacturing and the qualification of industrial and marketing resources. The first two stages, entitled “assessment” and “pre-study” are research phases. Expenses incurred are thus recognised as costs for the financial year. Development expenses incurred during the “study” and “realisation” stages may be capitalised if all criteria defined by IAS 38 are complied with. Capitalised development costs are amortised on a straight-line basis, depending on the useful life of the asset from the date of its commissioning (four to ten years, depending on the type of product developed). The value of projects in progress is recognised as an intangible asset in progress, until the “launch” stage, which marks the beginning of project roll-out. No residual value is recognised at Group level to determine the basis for amortisation of intangible assets. Subsequent expenditures are generally recognised as expenses for the financial year. CUSTOMER RELATIONSHIPS Customer relationships are estimated and recorded as an asset on the balance sheet as part of business combinations. These intangible assets are amortised over theierstimated value in use. BRANDS Brands are estimated and recorded as an asset on the balance sheet as part of business combinations. These intangible assets have indefinite lives and are tested for impairment within the CGU to which they belong at least annually.

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SOMFY – ANNUAL REPORT 2022