SOMFY // 2022 Annual Report

05 CONSOLIDATED FINANCIAL STATEMENTS

PROVISIONS AND CONTINGENT LIABILITIES NOTE 9 — PROVISIONS NOTE 9.1

Accounting principle Note 9.1.1

an insurance contract for instance, the repayment is recognised as a separate asset but only if repayment is virtually certain. The provision charge is taken to the income statement, net of any repayment. In order to cover costs inherent in guarantees given to customers, the Group recognises a provision for charges. This provision represents the estimated amount, based on statistics of charges recognised in the past, as a result of repairs during the guarantee period. At each year-end, this provision is reversed for the actual amount of services rendered recorded as expenses for the financial year. If the impact of the time value of money is significant, provisions are discounted on the basis of a rate after tax which reflects the specific risks of the liability. Where a provision is discounted, the increase in the provision relating to the discounting is recorded as an operating expense. Provisions are notably set aside to cover the following: –product risks: warranties related to products and individualised risks linked with specific quality issues; – commercial risks: disputes with customers and suppliers; – restructuring costs; – other tax, social and miscellaneous risks.

This includes commitments with an uncertain maturity date or amounts resulting from restructuring operations, litigations or other risks. A provision is established when the Group has a current obligation (legal or constructive) resulting from a past event and when future cash outflows can be measured reliably. The Group is party to a number of litigation and arbitration proceedings with third parties or with the tax authorities of certain countries in the normal course of its business. Provisions are recorded for these proceedings when a legal, contractual or constructive obligation exists at the end of the reporting period with respect to a third party, it is probable that an outflow of resources embodying economic benefits will be required in order to settle the obligation with no consideration in return, and a reliable estimate can be made of this obligation. Similarly, if the Group has uncertainties concerning the tax treatment it has adopted in respect of certain events or transactions, provisions are recognised if it is probable that the Group’s tax liabilities would be reassessed in the event of a tax audit. A provision for restructuring is recognised when there is an obligation toward third parties, originating from a Management decision materialised before year-end by the existence of a detailed and formal plan, which has been announced to the personnel affected or their representatives. When the Group expects full or part repayment of an expense that was the subject of a provision, by way of the existence of

Detailed information Note 9.1.2

Product risks Commercial risks

Provisions for restructuring

Other risks

Total 2022

€ thousands

26,016 23,844 -5,286 -5,882

At 1 January 2022

15,887 18,077 -2,844 -3,717

4,522

706

4,900 1,976

Charges

659

3,132

Used reversals Unused reversals

-1,757 -1,662

-47

-638 -326

-178

-32

Impact of foreign exchange rates

-61

-17

9

36

- -

Impact of changes in consolidation scope and method

-

-

- -

-

Other movements

983

-545

-438

AT 31 DECEMBER 2022 Non-current provisions

28,325

1,200

3,623

5,511 1,901 3,610

38,660

7,276

147

-

9,324

Current provisions

21,050

1,053

3,623

29,336

The net increase in provisions is mainly the result of a €2.7 million provision in connection with the Russian-Ukrainian crisis (provisions for restructuring – see Highlights) and provisions of€11.9 million inconnection with quality issues (product risks). Some of which are covered by insurance refunds receivable totalling €7.2 million, recognised under other current receivables over the period (see note 4.6.1).

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SOMFY – ANNUAL REPORT 2022