SOMFY // 2022 Annual Report

05 CONSOLIDATED FINANCIAL STATEMENTS

FINANCIAL ITEMS NOTE 7 — NET FINANCIAL INCOME/(EXPENSE) NOTE 7.1

Financial assets are initially recognised at historical cost, which corresponds to the fair value of the price paid, plus transaction costs, with the exception of assets measured at fair value through the income statement, whose transaction costs are recognised in the income statement. ASSETS MEASURED AT AMORTISED COST Fixed income securities purchased with the intent of holding them until maturity are classified in this category. They are measured at amortised cost using the effective interest rate method. Amortised cost is measured by taking into account any discount received or premium paid at acquisition, over the period running from the acquisition to the maturity date. Profits and losses are recognised in the income statement when assets are derecognised or their value is impaired. The same applies to writedown charges. This category also includes deposits and guarantees and other non-current receivables, trade receivables, certain other current receivables and cash and cash equivalents not classified as assets held for trading (term deposits). They are measured at amortised cost using the effective interest rate method. Long-term loans and receivables, non-interest bearing or bearing a lower interest rate than market interest rate, are discounted if amounts are significant. Potential impairment losses are recognised in the income statement. In addition, writedown charges are established when there is an objective indication that the value of the asset may have been impaired as a result of an event arising after its initial recognition. This account primarily comprises guarantees and deposits paid to various lenders. ASSETS MEASURED AT FAIR VALUE THROUGH ITEMS OF OTHER COMPREHENSIVE INCOME OR THROUGH THE INCOME STATEMENT Group investments in companies over which it neither has control, nor significant influence, nor joint control, are recognised as financial assets measured at fair value according to two possible accounting treatments: – changes in fair value are recognised in Items of Other comprehensive income in the statement of comprehensive income, and in Other reserves in shareholders’ equity, with no possibility of transferring them to the income statement in the event of disposal. In the latter case, only dividends are recognised in the income statement; – changes in fair value, as well as the disposal gain or loss are recognised in the income statement. The choice between these two methods must be made for each investment from initial recognition and is irreversible. Other assets (in particular marketable securities) are measured at fair value, changes in which are recognised in the income statement.

Accounting principle Note 7.1.1

Net financial income/(expense) comprises the following two items: – cost of net financial debt. Includes all income/expense from net financial debt or financial surplus constituents over the period, including income/loss on interest rate hedges: – other financial income and expenses. These include income and expenses of a financial nature but neither of an operational nature nor a constituent of the cost of net financial debt.

Detailed information Note 7.1.2

€ thousands

31/12/22

31/12/21

Cost of net financial debt

-1,351

-2,610

– Financial income from investments

3,941

764

– Financial expenses related to borrowings

-5,293

-3,374

of which financial ● charges related to IFRS 16

-873

-851

Effect of foreign currency translation

-6,232

-567

Other

-91

2,283

NET FINANCIAL INCOME/(EXPENSE)

-7,673

-893

Net financial expense for 2022 came in at -€7.7 million, mainly consisting of -€6.2 million in effects of foreign currency translation. In 2021, this item consisted of the reversal of a €3.6 million provision in connection with the repayment of the Garen loans and -€0.6 million in effects of foreign currency translation. The cost of net financial debt decreased as a result of higher returns on financial investments.

FINANCIAL ASSETS AND LIABILITIES NOTE 7.2

Financial assets Note 7.2.1

Accounting principle Note 7.2.1.1 Financial assets are classified into the following categories based on the asset ownership business model and the characteristics of its contractual cash flows: – assets measured at amortised cost; –assets measured at fair value through items of other comprehensive income; – assets measured at fair value through the income statement.

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SOMFY – ANNUAL REPORT 2022