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Somfy SA Interim / Quarterly Report 2020
1677_ir_2020-09-09_5b7e222e-2592-4255-9d02-ac792aed2c85.pdf
Interim / Quarterly Report
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CONTENTS
2020 HALF-YEAR BUSINESS REPORT
- Key figures
- Sales growth by customer location
- Change in current operating result
- Change in net profit
- Net financial debt
- Alternative performance measures
- Outlook
- Highlights
- Post balance-sheet event
2020 CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
- Consolidated income statement
- Consolidated statement of comprehensive income
- Consolidated balance sheet Assets
- Consolidated balance sheet Equity and liabilities
- Consolidated statement of changes in equity
- Consolidated cash flow statement
- Notes to the consolidated financial statements
STATUTORY AUDITORS' REPORT ON THE 2020 INTERIM FINANCIAL REPORT
- Opinion on the financial statements
- Specific verification
STATEMENT FROM THE INDIVIDUAL RESPONSIBLE FOR THE 2020 HALF-YEAR FINANCIAL REPORT
2020 HALF-YEAR BUSINESS REPORT
- Key figures
- Sales growth by customer location
- Change in current operating result
- Change in net profit
- Net financial debt
- Alternative performance measures
- Outlook
- Highlights
- Post balance-sheet event
01 2020 HALF-YEAR BUSINESS REPORT
KEY FIGURES
| € millions | 30/06/20 | 30/06/19 | % change |
|---|---|---|---|
| Sales | 568.9 | 615.1 | -7.5% |
| Current operating result | 102.6 | 114.9 | -10.7% |
| Consolidated net profit | 80.9 | 91.2 | -11.3% |
| Net investments in intangible assets and property, plant and equipment |
22.5 | 24.3 | -7.5% |
| New rights-of-use assets | 7.5 | 14.1 | -46.7% |
| Cash flow | 117.7 | 117.4 | +0.2% |
| Net financial debt | -325.6 | -174.7 | — |
(-) Net financial surplus.
Founded in France in 1969, and today operating in 58 countries, Somfy is the global leader in opening and closing automation for both residential and commercial buildings.
A pioneer in the connected home, the Group is constantly innovating to guarantee comfort, wellbeing and security in the home and is fully committed to promoting sustainable development.
For 50 years, Somfy has been using automation to improve living environments and has been committed to creating reliable and sustainable solutions, which help promote better living and wellbeing for all.
SALES GROWTH BY CUSTOMER LOCATION
Group sales totalled €568.9 million for the first six months of the financial year, a decline of 7.5% (down 7.2% on a like-for-like basis) compared with the same period last year. It recorded an increase of 2.9% over the first quarter (up 2.8% on a like-for-like basis), to €291.3 million, and a fall of 16.4% over the second quarter (down 15.7% on a like-for-like basis), to €277.6 million.
The health crisis resulting from the spread of Covid-19 explains the change recorded between the two quarters and similarly conceals the very positive start to the year seen in a majority of countries (up 11.1% on a like-for-like basis over the two months to end February). The pandemic has disrupted procurement and distributions channels, as well as the production chain, since the Group had to close the majority of its manufacturing sites(1) for several weeks, in order to comply with administrative guidelines and to protect employees and the various partners.
In descending order, the most heavily impacted regions have been Southern Europe (down 22.1% on a like-for-like basis over the half-year), France (down 17.2%), Latin America (down 16.3%), Africa & the Middle East (down 13.6%), Asia-Pacific (down 10.3%), North America (down 9.3%) and Northern Europe (down 3.3%).
The other territories, namely Central and Eastern Europe, have been less impacted, due in particular to the different evolution of the pandemic, and continued to post positive growth (up 6.7% and 19.7% respectively on a like-for-like basis over the six months), thereby reflecting the vitality of their markets.
The impact of the crisis was particularly evident at the start of the second quarter, when the low point was reached, before easing significantly thereafter (down 45.4% in April and 20.3% in May, and then up 19.9% on a like-for-like basis in June).
All regions – with the exception of Latin America, which continues to be impacted due to the pandemic arriving there later – began their recovery midway through the second quarter, ending the half-year on an upward trend, significantly so in the case of Eastern Europe, France, Central Europe, Northern Europe and North America.
Sales of the equity-accounted subsidiary Dooya totalled €83.2 million over the period, a decline of 4.8% (down 3.8% on a like-for-like basis, comprising a drop of 17.0% over the first quarter and an increase of 8.4% over the second). Sales also fell in China, a country hit hard by the virus at the start of the year (down 15.7% on a like-for-like basis), but grew in the rest of the World (up 5.9%).
CHANGE IN CURRENT OPERATING RESULT
Current operating result stood at €102.6 million over the half-year, down 10.7% year on year, and represented 18.0% of sales.
The decline was due to the fall in sales caused by the health crisis at one of the key points of the year(2) . This crisis led to a shortfall in earnings due to lost sales, and caused disruption to the production and supply chains as a result of the temporary closure of several manufacturing sites. Its impact has, however, been partially offset by the savings made, notably in consultancy fees, marketing and travel, thanks to the measures undertaken at the first signs of the crisis.
(2) The second quarter is usually the most important, notably due to the seasonality of sales of awnings. It accounted for 54% of first-half sales last year compared with 49% this year, and for 28% of full-year sales.
(1) The Group suspended its operations at its production sites in Cluses and Gray, France; Galliera and Schio, Italy; and Zaghouan, Tunisia, between the end of March and mid-April.
The costs incurred by the protective measures have not had any material impact on the financial statements, even though the safety of employees and compliance with guidelines from the administrative authorities have been a priority, as well as the safeguarding of jobs. The impact of external support has also been marginal, since the Group has only made very limited use of it in some countries (excluding France).
CHANGE IN NET PROFIT
Consolidated net profit totalled €80.9 million, a decrease of 11.3%. It was reduced by a small net financial expense and benefited from a fall in corporation tax that was slightly higher than the fall in profits.
NET FINANCIAL DEBT
Shareholders' equity grew from €1,012.8 to €1,044.4 million over the half year, and the net financial surplus increased from €310.5 to €325.6 million.
The continued strength of the financial position was due to the high level of cash flow and a healthy level of working capital requirements, the result of the close monitoring of customer receivables and the clearance of products supplied to customers. Another positive is that €184.0 million in undrawn credit facilities remained available.
ALTERNATIVE PERFORMANCE MEASURES
The N/N-1 change on a like-for-like basis, current operating margin and net financial debt are Alternative Performance Measures (APMs), definitions and calculation details of which are included in note 5.3 of the notes to the consolidated financial statements.
OUTLOOK
The recovery seen at the end of the first half-year has continued over the summer in parallel with sales catching up and the replenishment of inventories in use at customer premises.
Nevertheless, both the deteriorated economic climate and the uncertain evolution of the health crisis dictate caution over the coming months and quarters, without however calling into question the Group's fundamentals, as demand for comfort in the home and the energy performance of buildings should emerge stronger from this difficult period.
As a result, the outlook communicated for the year oscillate between two points, corresponding to, firstly, a new, controlled, wave of the Covid pandemic, and secondly, to a lasting respite in the said pandemic, and as such anticipate a fall in sales of between 0 and 3% on a like-for-like basis and a current operating margin of between 15 and 17%.
In addition to maintaining profitability and financial equilibrium, the priorities remain ensuring customer satisfaction, with a special focus on service, and the health of employees.
HIGHLIGHTS
COVID-19 HEALTH CRISIS
—
DEVELOPMENT OF THE CRISIS
The Covid-19 virus first appeared in late 2019 in Wuhan, China, and spread rapidly around the world. The operations of the subsidiaries Dooya and Lian Da were disrupted in February 2020.
As of 4 March 2020 (publication of the results for the 2019 financial year), the epidemic remained localised in Asia, primarily in China.
On 11 March 2020, the WHO declared the situation caused by Covid-19 as a pandemic and lockdown measures were implemented in numerous countries – the crisis became global.
On 23 March 2020, Somfy announced the temporary suspension of operations at its French, Italian and Tunisian production sites, as well as at its logistics site in Bonneville, France, in order to protect the health of its employees in the face of the Covid-19 pandemic and to respond to the measures taken by the local authorities of the sites concerned. Temporary remote working measures were introduced to ensure continuity of service for the Group's customers and service providers.
The introduction of a safety protocol and the strengthening of protective measures allowed the Group, on 21 April 2020, to announce the partial and gradual restart of operations at the sites where they had been temporarily suspended. The Group later reviewed its position as the health and safety conditions changed. The production site in Poland continued to operate, as did the Chinese sites after an interruption in February. They are subject to the daily monitoring and assessment of their respective situations. On 13 May 2020, Somfy announced it would not be making use of the furlough schemes and various types of assistance offered by the French government, and various social measures, in order to respond to the current situation in both a positive and
constructive manner. Use of governmental assistance in countries other than France has remained marginal. The Group has also strengthened its initiatives to support charities and regional communities through the donation of equipment to help combat the pandemic and to support emergency projects to
help the homeless and victims of social exclusion. The General Meeting of Shareholders initially scheduled for 13 May 2020 was held on 24 June 2020 behind closed doors. The dividend amount paid in respect of the 2019 financial year was announced on 4 March 2020, and subsequently revised downwards.
Since mid-May, the health situation seems to have improved. Nevertheless, the Group remains very cautious and the safety protocols and protective measures continue to be applied, allowing it to gradually return to normal levels of production.
IMPACTS FOR SOMFY
It is difficult to accurately measure the impacts related to the Covid-19 crisis, since they are dispersed throughout the income statement. The impacts of the crisis are not linear and the effects on the first half-year do not allow conclusions to be drawn on the potential full-year effects. Nevertheless, the gaps in performance seen over the first half-year are primarily due to the health crisis. It may be noted that sales growth in recent years has been 6% on average.
For the six months to 30 June 2020, Group sales fell 7.2% on a like-for-like basis in relation to the same period of 2019. At the end of February 2020, it was up 11.1% cumulatively on a like-for-like basis, and fell 26.1% over the March-May period, mainly as a result of the health crisis, and then increased 19.9% in June. The fall in sales over the half-year had a knock-on effect on current operating result (18.0% of sales in 2020 against 18.7% in 2019). Costs related to the introduction of protective measures remained non-material. Net financial expense was impacted by the foreign exchange impact related to fluctuations in currencies under great pressure during the pandemic (BRL).
Indicators of impairment (temporary shutdowns of factories and a reduction in activity) emerged following the crisis and led the Group to carry out impairment tests according to the methodology set out in note 6.1.2. Excluding the residual goodwill impairment of iHome (€0.7 million as of 30 June 2020), these tests did not result in the recognition of other impairments.
The Group also conducted a review of the main isolated intangible asset and property, plant and equipment items, trade receivables and inventory, which did not result in any significant impairment in connection with the crisis.
RECOVERY SCENARIO
After several months of disruption, the Group has seen a significant upturn in sales since mid-May, which was confirmed in June and at the start of the third quarter. The second half-year should be up compared to 2019 without however significantly recouping the loss in sales seen over the first six months (estimated annual decline in sales of between 0 and 3% on a like-for-like basis) and the Group's organic growth should return to normal levels in 2022.
2020 current operating margin will most certainly be deteriorated in relation to 2019 despite the cost cutting measures implemented (recruitment freeze, postponement and discontinuation of certain projects, reduction in marketing expenditure and travel expenses, etc.), resulting in a current operating margin of between 15 and 17%. A return to pre-crisis levels should also take place in 2022 or 2023.
The current environment is highly uncertain, and the above assumptions represent the Group's current scenario. They are likely to change in line with the health and economic situation.
INFORMATION ON RISKS
The Covid-19 health crisis does not call into question the Group's business model or its fundamentals, but does compel it to adapt its processes. The risk mapping is updated regularly and will be adapted in line with the feedback relating to the management of the crisis, in particular, the introduction of rapid and tailored measures to protect its employees when epidemiological crises occur.
The assessment of risks related to currency, raw materials, liquidity and credit has not changed since 31 December 2019. Currency and raw material hedging have been adapted in line with the forecasts for the second half-year. The Group has €184 million in confirmed and undrawn credit facilities and is not in breach of any covenants. It will be in a position to meet its maturities over the next 12 months.
NEW ORGANISATIONAL STRUCTURE
—
The building industry is undergoing profound transformations with accelerated digitalisation, the need for greater energy efficiency, ever shorter innovation cycles and more. These are all challenges that Somfy has begun to tackle thanks to its Believe & Act strategic plan first implemented in 2017 but now need to take a step further.
The current organisation, whose foundations date back to 2004, has enabled the Group to expand its range of applications, becoming a pioneer of smart home solutions and expanding its geographical presence. After a decade of strong and profitable growth and progress in its main market segments, Somfy aims to accelerate in order to continue establishing its leadership in its markets.
In order to meet these challenges, on 1 January 2020 the Group has set up a new organisation guided by three major principles: a function-based architecture to support the Group's development; a customer-centric organisation with reduced interfaces to facilitate decision-making and optimise resource allocation; and finally a strong focus on the digitalisation of its products, customer relations and operations.
The first definitive act of this change is the appointment of a new Executive Committee, along with the creation of a Strategy & Insight Division, the reorganisation of the three activities that are Home & Building, Access and Connected Solutions into three Divisions: Products & Services, Engineering & Customer Satisfaction, and Operations & Supply Chain. Finally, the sales subsidiaries will be split into two new geographical areas, for greater transversality.
In addition to the new organisation, the Executive Committee – under the supervision of Jean Guillaume Despature, Chairman of the Management Board – will work on defining and implementing a new, three-year strategic plan, based on the achievements brought by the Believe & Act plan.
The roll-out of this new organisation has not been delayed by the health crisis.
CHANGES TO THE CONSOLIDATION SCOPE
— There were no major changes to the consolidation scope during the first half of 2020.
CONTINGENT LIABILITIES
— The Court of Appeal of Chambéry issued its ruling on 21 May 2019 on the dispute between Spirel employees and Somfy SA. The claims of the employees in respect of the alleged deliberate bankruptcy of Spirel and the non-material damage caused as a result of anxiety, disappointment and vexation were judged inadmissible, thereby confirming the April 2017 ruling of the High Court of Albertville. The employees filed an appeal in cassation in August 2019.
It should be noted that their claims for damages totalled €8.2 million. The liquidator of the company Spirel had also sought to have Somfy SA ordered to refund advances of €2.9 million paid by the AGS (Guarantee Fund for the Payment of Salary Claims) in the event the disposal was declared null and void.
Proceedings before the Labour Court – dismissed in 2016 and 2018 and involving the employees contesting the grounds for their dismissal and claiming damages of a substantially similar amount to that sought before the Court of Appeal – are still ongoing.
These factors do not alter the Group's risk evaluation. Consequently, it continues to qualify these risks as contingent liabilities and no provision was thus recognised in relation to these disputes at 30 June 2020.
On 5 January 2015, Somfy SA transferred its 46.1% direct and indirect equity investment in the share capital of CIAT Group to United Technologies Corporation. On 31 March 2016, United Technologies Corporation filed a complaint against the sellers of the CIAT shares under the liability guarantee for a total of €28.6 million (Somfy's share being €13.2 million). The Group considers these requests to be unfounded, and insufficiently detailed and justified. In mid-November 2017, UTC brought an action against the sellers before the Paris Commercial Court for the liability guarantee. Proceedings before the Commercial Court and the Court of Appeal are ongoing.
As the proceedings and the documentation provided by UTC currently stand, the Group continues to contest the entirety of UTC's claims and remains confident regarding the outcome of this dispute. It has qualified the risk as a contingent liability and no provision was therefore recognised at 30 June 2020.
At 30 June 2020, Somfy SA's financial statements include a receivable for deferred settlement in relation to the sale of the CIAT shares for the sum of €9.7 million. In early July 2017, Somfy SA and the other sellers brought an action against UTC before the Paris Commercial Court seeking the fulfilment of the acquisition contract and the settlement of the deferred payments falling due. These proceedings are still ongoing. Somfy SA remains confident regarding the settlement of these sums and therefore no writedown in relation to these receivables was recognised at 30 June 2020.
POST BALANCE-SHEET EVENT
No significant post-balance sheet event has occurred since 30 June 2020.
2020 CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
- Consolidated income statement
- Consolidated statement of comprehensive income
- Consolidated balance sheet Assets
- Consolidated balance sheet Equity and liabilities
- Consolidated statement of changes in equity
- Consolidated cash flow statement
- Notes to the consolidated financial statements
02 2020 CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
CONSOLIDATED INCOME STATEMENT
| € thousands | Notes | 30/06/20 6 months |
30/06/19 6 months |
|---|---|---|---|
| Sales | (5.1) | 568,893 | 615,118 |
| Other operating income | 11,271 | 8,654 | |
| Cost of sales | -202,414 | -221,811 | |
| Employee expenses | -178,605 | -182,212 | |
| External expenses | -65,110 | -77,563 | |
| EBITDA | 134,036 | 142,187 | |
| Amortisation and depreciation charges | (6.2) & (6.3) | -28,817 | -27,329 |
| Charges to/reversal of current provisions | -2,482 | 153 | |
| Gains and losses on disposal of non-current operating assets | -114 | -84 | |
| CURRENT OPERATING RESULT | 102,623 | 114,927 | |
| Other operating income and expenses | (5.2) | -96 | 60 |
| Goodwill impairment | (5.2) & (6.1.1) | -736 | -710 |
| OPERATING RESULT | 101,792 | 114,277 | |
| – Financial income from investments | 552 | 604 | |
| – Financial expenses related to borrowings | -1,481 | -1,678 | |
| Cost of net financial debt | -929 | -1,074 | |
| Other financial income and expenses | -3,038 | -824 | |
| NET FINANCIAL EXPENSE | (8.1) | -3,967 | -1,898 |
| PROFIT BEFORE TAX | 97,825 | 112,379 | |
| Income tax | (12) | -18,329 | -22,524 |
| Share of net profit/(loss) from associates | (13.1) | 1,414 | 1,333 |
| CONSOLIDATED NET PROFIT | 80,909 | 91,187 | |
| Attributable to Group share | 80,910 | 91,205 | |
| Attributable to Non-controlling interests | -1 | -18 | |
| Basic earnings per share (€) | (7.2) | 2.35 | 2.65 |
| Diluted earnings per share (€) | (7.2) | 2.35 | 2.65 |
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
| € thousands | 30/06/20 | 30/06/19 |
|---|---|---|
| Consolidated net profit | 80,909 | 91,187 |
| Movement in gains and losses on translation of foreign currency | -7,135 | 1,665 |
| Movement in fair value of foreign currency hedges | 261 | -196 |
| Movement in tax on items that may be reclassified to profit or loss | -67 | 67 |
| Items that may be reclassified to profit or loss | -6,941 | 1,536 |
| Revaluation of net liabilities of defined benefit plans | — | -1,563 |
| Movement in tax on items that will not be reclassified to profit or loss | — | 538 |
| Items that will not be reclassified to profit or loss | — | -1,025 |
| Items of other comprehensive income | -6,941 | 511 |
| Total comprehensive income for the period | 73,968 | 91,698 |
| Attributable to Group share | 73,969 | 91,716 |
| Attributable to Non-controlling interests | -1 | -18 |
CONSOLIDATED BALANCE SHEET – ASSETS
| € thousands | Notes | 30/06/20 Net |
31/12/19 Net |
|---|---|---|---|
| Non-current assets | |||
| Goodwill | (6.1.1) | 94,482 | 95,553 |
| Net intangible assets | (6.2) | 43,052 | 39,219 |
| Net property, plant and equipment | (6.3) | 290,044 | 297,314 |
| Investments in associates and joint ventures | (13.1) | 136,988 | 136,549 |
| Financial assets | (8.2.1) | 4,586 | 4,216 |
| Other receivables | (5.5.1) | 17 | 36 |
| Deferred tax assets | 22,925 | 25,305 | |
| Employee benefits | 673 | 683 | |
| Total Non-current assets | 592,768 | 598,875 | |
| Current assets | |||
| Inventories | (5.4) | 165,415 | 169,596 |
| Trade receivables | 177,985 | 138,035 | |
| Other receivables | (5.5.2) | 27,336 | 35,833 |
| Current tax assets | 21,329 | 27,724 | |
| Financial assets | (8.2.1) | 514 | 477 |
| Derivative instruments - assets | 1 | 160 | |
| Cash and cash equivalents | 442,930 | 387,547 | |
| Total Current assets | 835,511 | 759,371 | |
| TOTAL ASSETS | 1,428,279 | 1,358,246 |
CONSOLIDATED BALANCE SHEET – EQUITY AND LIABILITIES
| € thousands | Notes | 30/06/20 | 31/12/19 |
|---|---|---|---|
| Shareholders' equity | |||
| Share capital | 7,400 | 7,400 | |
| Share premium | 1,866 | 1,866 | |
| Other reserves | 954,198 | 840,282 | |
| Net profit for the period | 80,910 | 163,227 | |
| Group share | 1,044,374 | 1,012,775 | |
| Non-controlling interests | 73 | 74 | |
| Total Shareholders' equity | 1,044,446 | 1,012,849 | |
| Non-current liabilities | |||
| Non-current provisions | (10.1.1) | 8,801 | 8,548 |
| Other financial liabilities | (8.2.2) | 49,229 | 45,030 |
| Other liabilities | 1,155 | 1,296 | |
| Employee benefits | 31,971 | 30,507 | |
| Deferred tax liabilities | 16,411 | 16,240 | |
| Total Non-current liabilities | 107,566 | 101,622 | |
| Current liabilities | |||
| Current provisions | (10.1.2) | 12,221 | 11,253 |
| Other financial liabilities | (8.2.2) | 68,290 | 32,267 |
| Trade payables | 90,398 | 90,003 | |
| Other liabilities | 94,076 | 102,462 | |
| Tax liabilities | 11,193 | 7,281 | |
| Derivative instruments - liabilities | 89 | 511 | |
| Total Current liabilities | 276,267 | 243,776 | |
| TOTAL EQUITY AND LIABILITIES | 1,428,279 | 1,358,246 |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
| € thousands | Share capital* |
Share premium |
Treasury shares |
Changes in foreign exchange rates |
Consoli dated reserves |
Total share holders' equity |
Non controlling interests |
Total equity (Group share) |
|---|---|---|---|---|---|---|---|---|
| AT 31 DECEMBER 2019 | 7,400 | 1,866 | -98,054 | -2,128 | 1,103,765 | 1,012,849 | 74 | 1,012,775 |
| Total comprehensive income for the period |
— | — | — | -7,135 | 81,103 | 73,968 | -1 | 73,969 |
| Treasury share transactions |
— | — | -167 | — | 1,068 | 901 | — | 901 |
| Dividends | — | — | — | — | -42,976 | -42,976 | — | -42,976 |
| Other movements** | — | — | — | — | -296 | -296 | — | -296 |
| AT 30 JUNE 2020 | 7,400 | 1,866 | -98,221 | -9,263 | 1,142,664 | 1,044,446 | 73 | 1,044,374 |
| AT 31 DECEMBER 2018 | 7,400 | 1,866 | -99,256 | -5,083 | 989,466 | 894,394 | 64 | 894,329 |
|---|---|---|---|---|---|---|---|---|
| Total comprehensive income for the period |
— | — | — | 1,665 | 90,033 | 91,698 | -18 | 91,716 |
| Treasury share transactions |
— | — | 679 | — | 942 | 1,621 | — | 1,621 |
| Dividends | — | — | — | — | -48,094 | -48,094 | — | -48,094 |
| Other movements** | — | — | — | — | -66 | -66 | 24 | -90 |
| AT 30 JUNE 2019 | 7,400 | 1,866 | -98,577 | -3,418 | 1,032,282 | 939,553 | 70 | 939,483 |
* Share capital comprises 37,000,000 shares with a par value of €0.20 each.
** Other movements include changes to the consolidation scope, exchange rate differences on transactions involving the share capital, as well as liabilities and subsequent changes in liabilities corresponding to put options granted to holders of non-controlling interests. This item also includes the reclassification in "Equity - Group share" of the portion of comprehensive income attributable to non-controlling interests covered by a put option.
Liabilities corresponding to put options granted to holders of non-controlling interests is recognised in consideration for the non-controlling interests that are the subject of the put option, and for Group Equity, where the balance is concerned. Subsequent changes in liabilities are recognised under "Equity - Group share".
CONSOLIDATED CASH FLOW STATEMENT
| € thousands | Notes | 30/06/20 6 months |
30/06/19 6 months |
|---|---|---|---|
| Consolidated net profit | 80,909 | 91,187 | |
| Depreciation and amortisation of assets (excluding current assets) | 27,638 | 28,135 | |
| Charges to/reversals of provisions for liabilities | 303 | 19 | |
| Unrealised gains and losses related to fair value movements | -301 | 82 | |
| Unrealised foreign exchange gains and losses | 5,828 | -1,962 | |
| Income and expenses related to stock options and employee benefits | 3,460 | 2,908 | |
| Depreciation, amortisation, provisions and other non-cash items | 36,928 | 29,181 | |
| Profit on disposal of assets and others | 109 | 84 | |
| Share of net profit/(loss) from associates | -1,409 | -1,333 | |
| Deferred tax expense | 1,122 | -1,708 | |
| Cash flow | 117,659 | 117,412 | |
| Cost of net financial debt (excluding non-cash items) | 929 | 1,074 | |
| Tax expense (excluding deferred tax) | 17,207 | 24,231 | |
| Change in working capital requirements | (9.2) | -38,971 | -53,130 |
| Tax paid | -6,810 | -10,220 | |
| NET CASH FLOW FROM OPERATING ACTIVITIES (A) | 90,013 | 79,366 | |
| Acquisition-related disbursements: | |||
| – intangible assets and property, plant and equipment | -22,679 | -24,463 | |
| – non-current financial assets | -577 | -350 | |
| Disposal-related proceeds: | |||
| – intangible assets and property, plant and equipment | 193 | 159 | |
| Change in current financial assets | 346 | 1,169 | |
| Acquisition of companies, net of cash acquired | (8.2.2) | -769 | -869 |
| Interest received | 426 | 360 | |
| NET CASH FLOW FROM INVESTING ACTIVITIES (B) | -23,061 | -23,995 | |
| Increase in loans | (8.2.2) | 205 | 2 |
| Repayment of borrowings and lease liabilities | (8.2.2) | -7,326 | -7,067 |
| Dividends and interim dividends paid* | — | -48,094 | |
| Movement in treasury shares | -187 | 919 | |
| Interest paid | -1,481 | -1,685 | |
| NET CASH FLOW FROM FINANCING AND CAPITAL ACTIVITIES (C) | -8,788 | -55,924 | |
| Impact of changes in foreign exchange rates on cash and cash equivalents (D) | -2,383 | 1,443 | |
| NET CHANGE IN CASH AND CASH EQUIVALENTS (A + B + C + D) | 55,781 | 890 | |
| CASH AND CASH EQUIVALENTS AT THE START OF THE PERIOD | (9.1) | 386,190 | 253,413 |
| CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD | (9.1) | 441,971 | 254,304 |
* €43 million in dividends was paid on 2 July 2020 due to the postponement of the Annual General Meeting until the end of June.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
| 15 | NOTE 1 | HIGHLIGHTS |
|---|---|---|
| 15 | Note 1.1 | Covid-19 health crisis |
| 16 | Note 1.2 | New organisational structure |
| 16 | Note 1.3 | Changes to the consolidation scope |
| 16 | Note 1.4 | Contingent liabilities |
| 16 | NOTE 2 | POST BALANCE-SHEET EVENT |
| 16 | NOTE 3 | ACCOUNTING RULES AND METHODS |
| 16 | Note 3.1 | Compliance with accounting standards |
| 17 | Note 3.2 | Judgements and estimates |
| 17 | Note 3.3 | New applicable standards and interpretations |
| 18 | Note 3.4 | Seasonality |
| 18 | NOTE 4 | SEGMENT REPORTING |
| 19 19 |
NOTE 5 Note 5.1 |
PERFORMANCE-RELATED DATA Sales by customer location |
| 19 | Note 5.2 | Other operating income and expenses |
| 19 | Note 5.3 | Alternative performance measures |
| 20 | Note 5.4 | Inventories |
| 20 | Note 5.5 | Other non-current and current receivables |
| 21 | NOTE 6 | INTANGIBLE ASSETS AND PROPERTY, PLANT AND EQUIPMENT |
| 21 | Note 6.1 | Goodwill and impairment test |
- Note 6.2 Other intangible assets
- Note 6.3 Property, plant and equipment
NOTE 7 DIVIDENDS AND EARNINGS PER SHARE Note 7.1 Dividends
- Note 7.2 Earnings per share
- NOTE 825 FINANCIAL ITEMS
- Note 8.1 Net financial income/(expense)
- Note 8.2 Financial assets and liabilities
NOTE 9 ANALYSIS OF CASH FLOW STATEMENT
- Note 9.1 Cash and cash equivalents
- Note 9.2 Change in working capital requirements
NOTE 10 PROVISIONS AND CONTINGENT LIABILITIES
- Note 10.1 Provisions
- Note 10.2 Contingent liabilities
- NOTE 11 WORKFORCE
- NOTE 12 INCOME TAX
NOTE 13 INVESTMENTS IN ASSOCIATES AND JOINT VENTURES AND RELATED PARTIES
- Note 13.1 Investments in associates and joint ventures
- Note 13.2 Related parties
- NOTE 14 LIST OF CONSOLIDATED ENTITIES
Somfy SA is a company governed by a Management Board and a Supervisory Board, listed on Euronext Paris (Compartment A, ISIN code: FR0013199916). Founded in France in 1969, and today operating in 58 countries, Somfy is the global leader in opening and closing automation for both residential and commercial buildings. A pioneer in the connected home, the Group is constantly innovating to guarantee comfort, wellbeing and security in the home and is fully committed to promoting sustainable development. For 50 years, Somfy has been using automation to improve living environments and has been committed to creating reliable and sustainable solutions, which help promote better living and wellbeing for all. The head office is based in Cluses, Haute-Savoie, France. Somfy SA is a 52.65%-owned subsidiary of the French company J.P.J.S.
The Group's condensed consolidated IFRS financial statements for the half-year ended 30 June 2020 were prepared by the Management Board on 31 August 2020. At its meeting of 9 September 2020, the Supervisory Board, following verification and review, did not issue any observations and duly authorised their publication. Total assets were €1,428,279 thousand and consolidated net profit €80,909 thousand (Group share: €80,910 thousand).
Impacts for Somfy
NOTE 1 HIGHLIGHTS
— NOTE 1.1 COVID-19 HEALTH CRISIS
Development of the crisis
The Covid-19 virus first appeared in late 2019 in Wuhan, China, and spread rapidly around the world. The operations of the subsidiaries Dooya and Lian Da were disrupted in February 2020.
As of 4 March 2020 (publication of the results for the 2019 financial year), the epidemic remained localised in Asia, primarily in China.
On 11 March 2020, the WHO declared the situation caused by Covid-19 as a pandemic and lockdown measures were implemented in numerous countries – the crisis became global.
On 23 March 2020, Somfy announced the temporary suspension of operations at its French, Italian and Tunisian production sites, as well as at its logistics site in Bonneville, France, in order to protect the health of its employees in the face of the Covid-19 pandemic and to respond to the measures taken by the local authorities of the sites concerned. Temporary remote working measures were introduced to ensure continuity of service for the Group's customers and service providers.
The introduction of a safety protocol and the strengthening of protective measures allowed the Group, on 21 April 2020, to announce the partial and gradual restart of operations at the sites where they had been temporarily suspended. The Group later reviewed its position as the health and safety conditions changed.
The production site in Poland continued to operate, as did the Chinese sites after an interruption in February. They are subject to the daily monitoring and assessment of their respective situations.
On 13 May 2020, Somfy announced it would not be making use of the furlough schemes and various types of assistance offered by the French government, and various social measures, in order to respond to the current situation in both a positive and constructive manner. Use of governmental assistance in countries other than France has remained marginal.
The Group has also strengthened its initiatives to support charities and regional communities through the donation of equipment to help combat the pandemic and to support emergency projects to help the homeless and victims of social exclusion.
The General Meeting of Shareholders initially scheduled for 13 May 2020 was held on 24 June 2020 behind closed doors. The dividend amount paid in respect of the 2019 financial year was announced on 4 March 2020, and subsequently revised downwards.
Since mid-May, the health situation seems to have improved. Nevertheless, the Group remains very cautious and the safety protocols and protective measures continue to be applied, allowing it to gradually return to normal levels of production.
It is difficult to accurately measure the impacts related to the Covid-19 crisis, since they are dispersed throughout the income statement. The impacts of the crisis are not linear and the effects on the first half-year do not allow conclusions to be drawn on the potential full-year effects. Nevertheless, the gaps in performance seen over the first half-year are primarily due to the health crisis. It may be noted that sales growth in recent years has been 6% on average.
For the six months to 30 June 2020, Group sales fell 7.2% on a like-for-like basis in relation to the same period of 2019. At the end of February 2020, it was up 11.1% cumulatively on a like-for-like basis, and fell 26.1% over the March-May period, mainly as a result of the health crisis, and then increased 19.9% in June. The fall in sales over the half-year had a knock-on effect on current operating result (18.0% of sales in 2020 against 18.7% in 2019). Costs related to the introduction of protective measures remained non-material. Net financial expense was impacted by the foreign exchange impact related to fluctuations in currencies under great pressure during the pandemic (BRL).
Indicators of impairment (temporary shutdowns of factories and a reduction in activity) emerged following the crisis and led the Group to carry out impairment tests according to the methodology set out in note 6.1.2. Excluding the residual goodwill impairment of iHome (€0.7 million as of 30 June 2020), these tests did not result in the recognition of other impairments.
The Group also conducted a review of the main isolated intangible asset and property, plant and equipment items, trade receivables and inventory, which did not result in any significant impairment in connection with the crisis.
Recovery scenario
After several months of disruption, the Group has seen a significant upturn in sales since mid-May, which was confirmed in June and at the start of the third quarter. The second half-year should be up compared to 2019 without however significantly recouping the loss in sales seen over the first six months (estimated annual decline in sales of between 0 and 3% on a like-for-like basis) and the Group's organic growth should return to normal levels in 2022.
2020 current operating margin will most certainly be deteriorated in relation to 2019 despite the cost cutting measures implemented (recruitment freeze, postponement and discontinuation of certain projects, reduction in marketing expenditure and travel expenses, etc.), resulting in a current operating margin of between 15 and 17%. A return to pre-crisis levels should also take place in 2022 or 2023.
The current environment is highly uncertain, and the above assumptions represent the Group's current scenario. They are likely to change in line with the health and economic situation.
Information on risks
The Covid-19 health crisis does not call into question the Group's business model or its fundamentals, but does compel it to adapt its processes. The risk mapping is updated regularly and will be adapted in line with the feedback relating to the management of the crisis, in particular, the introduction of rapid and tailored measures to protect its employees when epidemiological crises occur.
The assessment of risks related to currency, raw materials, liquidity and credit has not changed since 31 December 2019. Currency and raw material hedging have been adapted in line with the forecasts for the second half-year. The Group has €184 million in confirmed and undrawn credit facilities and is not in breach of any covenants. It will be in a position to meet its maturities over the next 12 months.
NOTE 1.2 NEW ORGANISATIONAL STRUCTURE
The building industry is undergoing profound transformations with accelerated digitalisation, the need for greater energy efficiency, ever shorter innovation cycles and more. These are all challenges that Somfy has begun to tackle thanks to its Believe & Act strategic plan first implemented in 2017 but now need to take a step further.
The current organisation, whose foundations date back to 2004, has enabled the Group to expand its range of applications, becoming a pioneer of smart home solutions and expanding its geographical presence. After a decade of strong and profitable growth and progress in its main market segments, Somfy aims to accelerate in order to continue establishing its leadership in its markets.
In order to meet these challenges, on 1 January 2020 the Group has set up a new organisation guided by three major principles: a function-based architecture to support the Group's development; a customer-centric organisation with reduced interfaces to facilitate decision-making and optimise resource allocation; and finally a strong focus on the digitalisation of its products, customer relations and operations.
The first definitive act of this change is the appointment of a new Executive Committee, along with the creation of a Strategy & Insight Division, the reorganisation of the three activities that are Home & Building, Access and Connected Solutions into three Divisions: Products & Services, Engineering & Customer Satisfaction, and Operations & Supply Chain. Finally, the sales subsidiaries will be split into two new geographical areas, for greater transversality.
In addition to the new organisation, the Executive Committee – under the supervision of Jean Guillaume Despature, Chairman of the Management Board – will work on defining and implementing a new, three-year strategic plan, based on the achievements brought by the Believe & Act plan.
The roll-out of this new organisation has not been delayed by the health crisis.
NOTE 1.3 CHANGES TO THE CONSOLIDATION SCOPE
There were no major changes to the consolidation scope during the first half of 2020.
NOTE 1.4 CONTINGENT LIABILITIES
The Court of Appeal of Chambéry issued its ruling on 21 May 2019 on the dispute between Spirel employees and Somfy SA. The claims of the employees in respect of the alleged deliberate bankruptcy of Spirel and the non-material damage caused as a result of anxiety, disappointment and vexation were judged inadmissible, thereby confirming the April 2017 ruling of the High Court of Albertville. The employees filed an appeal in cassation in August 2019.
It should be noted that their claims for damages totalled €8.2 million. The liquidator of the company Spirel had also sought to have Somfy SA ordered to refund advances of €2.9 million paid by the AGS (Guarantee Fund for the Payment of Salary Claims) in the event the disposal was declared null and void.
Proceedings before the Labour Court – dismissed in 2016 and 2018 and involving the employees contesting the grounds for their dismissal and claiming damages of a substantially similar amount to that sought before the Court of Appeal – are still ongoing.
These factors do not alter the Group's risk evaluation. Consequently, it continues to qualify these risks as contingent liabilities and no provision was thus recognised in relation to these disputes at 30 June 2020.
On 5 January 2015, Somfy SA transferred its 46.1% direct and indirect equity investment in the share capital of CIAT Group to United Technologies Corporation. On 31 March 2016, United Technologies Corporation filed a complaint against the sellers of the CIAT shares under the liability guarantee for a total of €28.6 million (Somfy's share being €13.2 million). The Group considers these requests to be unfounded, and insufficiently detailed and justified. In mid-November 2017, UTC brought an action against the sellers before the Paris Commercial Court for the liability guarantee. Proceedings before the Commercial Court and the Court of Appeal are ongoing.
As the proceedings and the documentation provided by UTC currently stand, the Group continues to contest the entirety of UTC's claims and remains confident regarding the outcome of this dispute. It has qualified the risk as a contingent liability and no provision was therefore recognised at 30 June 2020.
At 30 June 2020, Somfy SA's financial statements include a receivable for deferred settlement in relation to the sale of the CIAT shares for the sum of €9.7 million. In early July 2017, Somfy SA and the other sellers brought an action against UTC before the Paris Commercial Court seeking the fulfilment of the acquisition contract and the settlement of the deferred payments falling due. These proceedings are still ongoing. Somfy SA remains confident regarding the settlement of these sums and therefore no writedown in relation to these receivables was recognised at 30 June 2020.
NOTE 2 POST BALANCE-SHEET EVENT
— No significant post-balance sheet event has occurred since 30 June 2020.
NOTE 3 ACCOUNTING RULES AND METHODS
— NOTE 3.1 COMPLIANCE WITH ACCOUNTING STANDARDS
In application of European regulation 1606/2002 of 19 July 2002, the Group's condensed consolidated financial statements have been prepared in accordance with IFRS (International Financial Reporting Standards) published by the IASB (International Accounting Standards Board), as adopted by the European Union at 30 June 2020.
These standards are available on the IASB website at https://www.ifrs.org/issued-standards/.
The accounting rules and methods applied when preparing the condensed consolidated interim financial statements are consistent with those used when preparing the consolidated annual financial statements for the year ended 31 December 2019, with the exception of IFRS and associated amendments and interpretations as adopted by the European Union and the IASB, adoption of which is mandatory for financial years beginning on or after 1 January 2020, and which the Group had not opted to adopt early (see note 3.3.1).
The condensed consolidated interim financial statements have been prepared in accordance with the international financial reporting standard IAS 34 ("Interim financial reporting"). They do not contain all disclosures and notes included in the full-year financial statements. As a result, they must be read in conjunction with the Group's consolidated financial statements at 31 December 2019.
The Group's consolidated financial statements for the year ended 31 December 2019 are available on the Group's website www.somfyfinance.com and upon request from head office.
NOTE 3.2 JUDGEMENTS AND ESTIMATES
The preparation of the consolidated financial statements requires Management to make a number of judgements, estimates and assumptions liable to affect the values of assets, liabilities, and income and expense items in the financial statements, and information provided in certain notes to the financial statements. Due to the inherently uncertain nature of the assumptions, actual results may differ from estimates. The Group reviews its estimates and assessments on a regular basis to take past experience into account and incorporate factors considered relevant under current economic conditions.
As part of the preparation of these consolidated interim financial statements, the main judgements made and the main assumptions (described in the 2019 annual financial statements) used by Management have been updated based on the latest indicators available.
At 30 June, the Group reviews its performance indicators and, if necessary, carries out impairment tests if there is any indication that an asset may have been impaired.
NOTE 3.3 NEW APPLICABLE STANDARDS AND INTERPRETATIONS
Note 3.3.1 Standards, amendments and interpretations applicable within the European Union from the financial year beginning on or after 1 January 2020
The Group has applied the following standards, amendments and interpretations as of 1 January 2020:
| Standards | Content | Application date |
|---|---|---|
| Amendment to IFRS 3 | Definition of a Business | Applicable from 1 January 2020 |
| Amendments to IAS 1 and IAS 8 | Definition of Material | Applicable from 1 January 2020 |
| Amendments to IAS 39, IFRS 7 and IFRS 9 |
Interest Rate Benchmark Reform | Applicable from 1 January 2020 |
| Amendments to the Conceptual Framework in IFRS Standards |
Amendments to References to the Conceptual Framework in IFRS Standards |
Applicable from 1 January 2020 |
These new standards have not had a material impact on the Group's results and financial position.
Note 3.3.2 Standards and interpretations whose application is not yet mandatory
| Standards | Content | Application date | |
|---|---|---|---|
| Amendments to IAS 1 | Classification of Liabilities as Current or Non-Current |
Applicable from 1 January 2023 according to the IASB, not yet approved by the EU |
|
| Amendments to IAS 16 | Property, Plant and Equipment – Proceeds before Intended Use |
Applicable from 1 January 2022 according to the IASB, not yet approved by the EU |
|
| Amendments to IAS 37 | Cost of Fulfilling a Contract | Applicable from 1 January 2022 according to the IASB, not yet approved by the EU |
|
| Amendments to IFRS 3 | Reference to the Conceptual Framework | Applicable from 1 January 2022 according to the IASB, not yet approved by the EU |
|
| Amendment to IFRS 16 | Covid-19-Related Rent Concessions | Applicable from 1 January 2020 according to the IASB, not yet approved by the EU |
|
| Annual improvements to IFRS | 2018-2020 cycle (IFRS 1, IFRS 9, IFRS 16, IAS 41) | Applicable from 1 January 2022 according to the IASB, not yet approved by the EU |
The Group did not opt for the early application of any of these new standards or amendments and is currently assessing the impact resulting from their initial application.
Detailed information is available on the following website: https://www.ifrs.org.
NOTE 3.4 SEASONALITY
The Group generally sees seasonal variations in its activities which could affect, from one half-year to another, the level of sales. As such, interim results are not necessarily indicative of the results that may be expected for the year as a whole. More than half of Somfy's sales are generated in the first half of the year. However, the 2020 financial year has been disrupted by the health crisis and seasonality effects are more difficult to measure.
NOTE 4 SEGMENT REPORTING
— Somfy includes the companies whose activities correspond to the business lines "Exterior", "Window Fashion", "Access and Security", "Controls and Sensors" and "Connected Services", and is structured around two geographic regions.
The geographic location of assets is used as sole segment reporting criterion. Management makes its decisions based on this strategic focus using reporting by geographic region as its key analysis tool.
The two geographic regions are:
– North & West;
– South & East.
AT 30 JUNE 2020
| € thousands | North & West | South & East | Intra-regional eliminations |
Consolidated |
|---|---|---|---|---|
| Segment sales | 251,166 | 462,151 | -144,424 | 568,893 |
| Intra-segment sales | -899 | -143,525 | 144,424 | — |
| Segment sales - Contribution to sales | 250,267 | 318,626 | — | 568,893 |
| Segment current operating result | 33,705 | 68,918 | — | 102,623 |
| Share of net profit/(loss) from associates | — | 1,414 | — | 1,414 |
| Cash flow | 28,415 | 89,244 | — | 117,659 |
| Net investments in intangible assets and PPE | 404 | 22,082 | — | 22,486 |
| New rights-of-use assets for the period | 2,345 | 5,165 | — | 7,510 |
| Goodwill | 2,572 | 91,910 | — | 94,482 |
| Net intangible assets and PPE | 39,266 | 293,830 | — | 333,096 |
| Investments in associates and joint ventures | — | 136,988 | — | 136,988 |
AT 30 JUNE 2019
| € thousands | North & West | South & East | Intra-regional eliminations |
Consolidated |
|---|---|---|---|---|
| Segment sales | 251,997 | 515,756 | -152,635 | 615,118 |
| Intra-segment sales | -1,329 | -151,306 | 152,635 | — |
| Segment sales - Contribution to sales | 250,669 | 364,449 | — | 615,118 |
| Segment current operating result | 30,760 | 84,167 | — | 114,927 |
| Share of net profit/(loss) from associates | — | 1,333 | — | 1,333 |
| Cash flow | 25,055 | 92,357 | — | 117,412 |
| Net investments in intangible assets and PPE | 1,442 | 22,862 | — | 24,304 |
| New rights-of-use assets for the period | 11,181 | 2,898 | — | 14,079 |
| Goodwill | 2,610 | 92,811 | — | 95,421 |
| Net intangible assets and PPE | 41,911 | 291,027 | — | 332,938 |
| Investments in associates and joint ventures | — | 134,213 | — | 134,213 |
NOTE 5 PERFORMANCE-RELATED DATA
NOTE 5.1 SALES BY CUSTOMER LOCATION
—
This presentation by customer location is supplemented by our segment reporting pursuant to IFRS 8, which is based on the geographic regions in which our assets are based, namely the North & West region and the South & East region.
| 30/06/20 6 months |
30/06/19 6 months |
Change N/N-1 |
Change N/N-1 on a |
|
|---|---|---|---|---|
| € thousands | like-for-like basis | |||
| Central Europe | 126,885 | 118,083 | 7.5% | 6.7% |
| of which Germany | 103,194 | 95,497 | 8.1% | 8.1% |
| Northern Europe | 70,412 | 73,427 | -4.1% | -3.3% |
| North America | 49,393 | 53,232 | -7.2% | -9.3% |
| Latin America | 8,168 | 11,182 | -27.0% | -16.3% |
| NORTH & WEST | 254,859 | 255,924 | -0.4% | -0.5% |
| France | 148,074 | 178,804 | -17.2% | -17.2% |
| Southern Europe | 50,662 | 64,667 | -21.7% | -22.1% |
| Africa & the Middle East | 26,726 | 31,816 | -16.0% | -13.6% |
| Eastern Europe | 59,079 | 50,654 | 16.6% | 19.7% |
| Asia-Pacific | 29,493 | 33,253 | -11.3% | -10.3% |
| SOUTH & EAST | 314,034 | 359,194 | -12.6% | -11.9% |
| TOTAL SALES | 568,893 | 615,118 | -7.5% | -7.2% |
NOTE 5.2 OTHER OPERATING INCOME AND EXPENSES
| € thousands | 30/06/20 6 months |
30/06/19 6 months |
|---|---|---|
| Charge to/reversal of non-current provisions | 277 | 177 |
| Other non-recurring items | -379 | -118 |
| – Non-current income | 275 | 236 |
| – Non-current expenses | -653 | -355 |
| Net gain/(loss) on disposal of non-current assets | 6 | — |
| OTHER OPERATING INCOME AND EXPENSES | -96 | 60 |
| GOODWILL IMPAIRMENT | -736 | -710 |
Both at 30 June 2020 and 2019, the revision of the iHome business plan led to the recognition of goodwill impairment of €0.7 million. Goodwill related to iHome is now fully written down.
NOTE 5.3 ALTERNATIVE PERFORMANCE MEASURES
Note 5.3.1 N/N-1 change on a like-for-like basis
The N/N-1 change on a like-for-like basis is calculated by applying the N-1 accounting and consolidation methods and exchange rates to the periods compared and using the N-1 scope for both financial years.
The N/N-1 change at actual accounting methods, exchange rates and consolidation scope – or change in real terms – corresponds to the change based on actual accounting and consolidation methods, exchange rates and consolidation scope.
| At 30/06/20 | Sales | Current operating result |
|---|---|---|
| N/N-1 CHANGE ON A LIKE-FOR-LIKE BASIS | -7.2% | -10.6% |
| Forex impact | -0.4% | -0.1% |
| Scope impact | — | — |
| Change in accounting method impact | — | — |
| N/N-1 CHANGE AT ACTUAL ACCOUNTING METHODS, EXCHANGE RATES AND CONSOLIDATION SCOPE |
-7.5% | -10.7% |
Note 5.3.2 Current operating margin
Current operating margin corresponds to current operating result as a proportion of sales (COR/Sales). It is an interesting performance indicator as it reflects operating profitability.
| € thousands | 30/06/20 6 months |
30/06/19 6 months |
|---|---|---|
| Current operating result | 102,623 | 114,927 |
| Sales | 568,893 | 615,118 |
| CURRENT OPERATING MARGIN | 18.0% | 18.7% |
| Note 5.3.3 Net financial debt |
Net financial debt corresponds to the difference between financial assets and financial liabilities. It notably takes into account unlisted bonds receivable, issued by certain companies in which shares are held or related entities, earnouts on acquisitions, liabilities relating to options granted to minority shareholders in fully-consolidated companies and deferred settlements of a financial nature. Not included are securities in non-controlling equity investments, deposits & guarantees and government grants. Details of the calculation of the net financial debt are provided in note 8.2.3.
NOTE 5.4 INVENTORIES
| € thousands | 30/06/20 | 31/12/19 |
|---|---|---|
| Gross values | ||
| Raw materials and other supplies | 56,487 | 54,166 |
| Finished goods and merchandise | 122,993 | 130,055 |
| Total | 179,480 | 184,221 |
| Provisions | -14,065 | -14,626 |
| NET VALUES | 165,415 | 169,596 |
| € thousands | Value 31/12/19 |
Net charges | Exchange rate movements |
Changes in consolidation scope and method |
Value 30/06/20 |
|---|---|---|---|---|---|
| Inventory provisions | -14,626 | 317 | 243 | — | -14,065 |
NOTE 5.5 OTHER NON-CURRENT AND CURRENT RECEIVABLES
Note 5.5.1 Other non-current receivables
Other non-current receivables are not material.
Note 5.5.2 Other current receivables
| € thousands | 30/06/20 | 31/12/19 |
|---|---|---|
| Gross values | ||
| Receivables from employees | 567 | 579 |
| Other taxes (including VAT) | 4,952 | 10,182 |
| Prepaid expenses | 10,622 | 6,979 |
| Other receivables | 11,195 | 18,092 |
| TOTAL | 27,336 | 35,833 |
"Other receivables" notably include current receivables on the disposal of CIAT totalling €9.7 million at both 30 June 2020 and 31 December 2019.
NOTE 6 INTANGIBLE ASSETS AND PROPERTY, PLANT AND EQUIPMENT
— NOTE 6.1 GOODWILL AND IMPAIRMENT TEST
Note 6.1.1 Goodwill
| € thousands | Value |
|---|---|
| At 1 January 2020 | 95,553 |
| Impact of changes in consolidation scope and method | — |
| Impact of changes in foreign exchange rates | -335 |
| Charge for impairment | -736 |
| AT 30 JUNE 2020 | 94,482 |
The charge for impairment related to iHome.
Note 6.1.2 Impairment test
Indicators of impairment (temporary shutdowns of factories and a reduction in activity) emerged following the crisis and led the Group to carry out impairment tests on its major CGUs. These tests led to the recognition of additional goodwill impairment of €0.7 million in relation to iHome at 30 June 2020.
The impairment tests were conducted using the discounted cash flow method and based on the business plans reviewed by the management responsible for the CGUs, in order to take into account the consequences of the current crisis and recovery assumptions. The Management Board and the Audit Committee have also ruled on the findings of these tests.
The main assumptions used are as follows:
- after several months of disruption, the Group has seen a significant upturn in sales since mid-May, which was confirmed in June and at the start of the third quarter. The second half-year should be up compared to 2019 without however significantly recouping the loss in sales seen over the first six months (estimated annual decline in sales of between 0 and 3% on a like-for-like basis) and the Group's organic growth should return to normal levels in 2022;
- 2020 current operating margin will most certainly be deteriorated in relation to 2019 despite the cost cutting measures implemented (recruitment freeze, postponement and discontinuation of certain projects, reduction in marketing expenditure and travel expenses, etc.), resulting in a current operating margin of between 15 and 17%. A return to pre-crisis levels should also take place in 2022 or 2023;
- discount and growth to infinity rates are identical to those used at 31 December 2019.
| € thousands | Gross value | Impairment | Net value | Discount rate | Rate of growth to infinity |
|---|---|---|---|---|---|
| BFT | 92,564 | -12,278 | 80,287 | 10.0% | 2.0% |
| O&O | 7,574 | -7,574 | — | — | — |
| Domis | 1,091 | — | 1,091 | 10.0% | 2.0% |
| Axis/Somfy Activités SA/Somfy Protect by Myfox |
20,126 | -9,700 | 10,426 | 10.0% | 2.0% |
| Pujol | 5,680 | -5,680 | — | — | — |
| Neocontrol | 313 | -313 | — | — | — |
| Lian Da | 8,768 | -8,768 | — | — | — |
| iHome | 1,450 | -1,450 | — | 18.0% | 2.5% |
| Simu | 2,367 | — | 2,367 | 10.0% | 2.0% |
| Other | 312 | — | 312 | 10.0% | 2.0% |
| TOTAL FULLY-CONSOLIDATED COMPANIES |
140,244 | -45,762 | 94,482 | — | — |
The current environment is highly uncertain, and the above assumptions represent the Group's current scenario. They are likely to change in line with the health and economic situation.
Sensitivity analysis
The Group has conducted sensitivity analyses on the results of impairment tests using different assumptions for EBITDA ratio and discount rate.
Analyses of the sensitivity of calculations to assumptions considered individually, including changes deemed reasonably possible in these assumptions, have highlighted scenarios where the recoverable value would fall below the book value of assets subject to the tests, therefore requiring additional impairment of the latter.
The total impairment of the BFT goodwill at 30 June 2020 was €12.3 million. A one-point increase in the discount rate combined with a two and a half-point decrease in the EBITDA to sales ratio in the normative flow used in the calculation of the terminal value would require an additional impairment of €1.1 million.
NOTE 6.2 OTHER INTANGIBLE ASSETS
| € thousands | Allocated intangible assets |
Develop ment costs |
Patents and brands |
Software | Other intangible assets |
In progress and advance payments |
Total |
|---|---|---|---|---|---|---|---|
| Gross value at 1 January 2020 | 9,791 | 37,045 | 4,149 | 56,048 | 2,393 | 10,358 | 119,784 |
| Acquisitions | — | — | 6 | 151 | 3 | 8,251 | 8,410 |
| Disposals | — | -854 | -29 | -387 | -127 | — | -1,397 |
| Impact of changes in foreign exchange rates |
-32 | -20 | -8 | -71 | -2 | — | -134 |
| Impact of changes in consolidation scope and method |
— | — | — | — | — | — | — |
| Other movements | — | 1,566 | — | 1,926 | — | -3,492 | — |
| AT 30 JUNE 2020 | 9,759 | 37,737 | 4,118 | 57,666 | 2,266 | 15,117 | 126,664 |
| Accumulated amortisation at 1 January 2020 |
-8,030 | -22,188 | -3,581 | -45,058 | -1,707 | — | -80,565 |
| Amortisation charge for the period |
-469 | -2,054 | -201 | -1,818 | -9 | — | -4,550 |
| Disposals | — | 854 | 29 | 386 | 127 | — | 1,396 |
| Impact of changes in foreign exchange rates |
29 | 20 | 5 | 51 | 1 | — | 107 |
| Impact of changes in consolidation scope and method |
— | — | — | — | — | — | — |
| Other movements | — | — | — | — | — | — | — |
| AT 30 JUNE 2020 | -8,470 | -23,368 | -3,747 | -46,438 | -1,588 | — | -83,612 |
| NET VALUE AT 30 JUNE 2020 | 1,289 | 14,369 | 371 | 11,228 | 679 | 15,117* | 43,052 |
* Including €7.0 million in development expenses in progress.
| Land | Buildings | Right of-use assets Land and buildings |
Plant, machi nery and tools |
Right of-use assets Plant, machi nery and tools |
Other property, plant and equip ment |
Right of-use assets Other property, plant and equip |
In progress and advance payments |
Total | |
|---|---|---|---|---|---|---|---|---|---|
| € thousands | ment | ||||||||
| Gross value at 1 January 2020 |
16,623 | 150,903 | 71,504 | 293,648 | 1,178 | 69,136 | 10,998 | 19,355 | 633,344 |
| New right-of-use assets | — | — | 4,806 | — | 159 | — | 2,545 | — | 7,510 |
| Acquisitions | — | 243 | — | 2,325 | — | 1,080 | — | 9,414 | 13,063 |
| Disposals | — | -12 | -1,472 | -3,965 | -94 | -2,105 | -999 | — | -8,648 |
| Impact of changes in foreign exchange rates |
-258 | -903 | -511 | -1,715 | -2 | -694 | -151 | -173 | -4,409 |
| Impact of changes in consolidation scope and method |
— | — | — | — | — | — | — | — | — |
| Other movements | — | 290 | — | 5,636 | — | 410 | — | -6,336 | — |
| AT 30 JUNE 2020 | 16,365 | 150,520 | 74,326 | 295,929 | 1,240 | 67,827 | 12,393 | 22,260 | 640,860 |
| Accumulated depreciation at 1 January 2020 |
-1,227 | -79,077 | -17,216 | -186,063 | -290 | -48,120 | -4,037 | — | -336,030 |
| Depreciation charge for the period |
-127 | -2,995 | -4,846 | -10,485 | -167 | -3,426 | -2,221 | — | -24,267 |
| Disposals | — | 10 | 1,222 | 3,721 | 94 | 2,056 | 902 | — | 8,006 |
| Impact of changes in foreign exchange rates |
41 | 42 | 173 | 725 | 1 | 437 | 57 | — | 1,476 |
| Impact of changes in consolidation scope and method |
— | — | — | — | — | — | — | — | — |
| Other movements | — | — | — | — | — | — | — | — | — |
| AT 30 JUNE 2020 | -1,313 | -82,020 | -20,668 | -192,102 | -362 | -49,053 | -5,299 | — | -350,816 |
| NET VALUE AT 30 JUNE 2020 |
15,052 | 68,500 | 53,658 | 103,827 | 878 | 18,774 | 7,095 | 22,260 | 290,044 |
At 30 June 2020, uncapitalised lease expenses relating to services and short-term or low-value leases are broken down as follows: €0.7 million in respect of property lease expenses, €0.8 million in respect of vehicle lease expenses and €0.5 million in respect of other lease expenses.
The downward rent adjustments following the Covid-19 crisis are not material. They are recognised in the income statement as a negative variable lease rent.
Since 2019, the Group has applied IFRIC provisions over the enforceable duration of the leases.
NOTE 7 DIVIDENDS AND EARNINGS PER SHARE
— NOTE 7.1 DIVIDENDS
The gross dividend proposed at the AGM of 24 June 2020 called to approve the 2019 financial statements was €1.25. It was paid on 2 July 2020.
NOTE 7.2 EARNINGS PER SHARE
| Basic earnings per share | 30/06/20 6 months |
30/06/19 6 months |
|---|---|---|
| Net profit - Group share (€ thousands) | 80,910 | 91,205 |
| Total number of shares (1) | 37,000,000 | 37,000,000 |
| Treasury shares* (2) | 2,618,989 | 2,614,446 |
| Number of shares used in calculation (1) - (2) | 34,381,011 | 34,385,554 |
| BASIC EARNINGS PER SHARE (€) | 2.35 | 2.65 |
* Representing all treasury shares held by Somfy SA.
| Diluted earnings per share | 30/06/20 6 months |
30/06/19 6 months |
|---|---|---|
| Net profit - Group share (€ thousands) | 80,910 | 91,205 |
| Total number of shares (1) | 37,000,000 | 37,000,000 |
| Treasury shares** (2) | 2,551,347 | 2,550,867 |
| Number of shares used in calculation (1) - (2) | 34,448,653 | 34,449,133 |
| DILUTED EARNINGS PER SHARE (€) | 2.35 | 2.65 |
** Free shares are excluded.
Diluted earnings per share take into account shares allocated free of charge when determining the "number of shares used in calculation".
NOTE 8 FINANCIAL ITEMS
— NOTE 8.1 NET FINANCIAL INCOME/(EXPENSE)
| € thousands | 30/06/20 6 months |
30/06/19 6 months |
|---|---|---|
| Cost of net financial debt | -929 | -1,074 |
| – Financial income from investments | 552 | 604 |
| – Financial expenses related to borrowings | -1,481 | -1,678 |
| ● Of which financial charges related to IFRS 16 | -496 | -529 |
| Effect of foreign currency translation | -4,883 | -942 |
| Other | 1,845 | 117 |
| NET FINANCIAL EXPENSE | -3,967 | -1,898 |
Net financial expense was €4.0 million for the six months to 30 June 2020, compared with an expense of €1.9 million for the period ended 30 June 2019. The fall was mainly due to an increase in unrealised exchange rate losses on foreign currency receivables and payables (BRL in particular), partly offset by a higher reversal of the provisions on Garen's financial assets (€1.9 million in 2020 compared with €0.3 million in 2019).
NOTE 8.2 FINANCIAL ASSETS AND LIABILITIES
Note 8.2.1 Financial assets
| € thousands | Equity invest ments |
Loans | Deposits and guarantees |
Other | Current and non-current financial assets |
Realisable within 1 year |
Non-current financial assets |
|---|---|---|---|---|---|---|---|
| At 1 January 2020 | 1,958 | 285 | 2,447 | 3 | 4,693 | 477 | 4,216 |
| Increase | 463 | 1 | 114 | 1 | 579 | 2 | 577 |
| Decrease | — | -346 | — | — | -346 | -346 | — |
| Net change in impairment | — | 1,915 | — | — | 1,915 | — | 1,915 |
| Impact of changes in foreign exchange rates |
— | -1,885 | -39 | — | -1,924 | -5 | -1,918 |
| Impact of changes in consolidation scope and method |
— | — | — | — | — | — | — |
| Fair value recognised in items of other comprehensive income |
— | — | — | — | — | — | — |
| Other movements | — | 182 | — | — | 182 | 386 | -204 |
| AT 30 JUNE 2020 | 2,421 | 152 | 2,523 | 4 | 5,100 | 514 | 4,586 |
| Non-current financial assets | 2,421 | 88 | 2,076 | — | 4,586 | — | — |
| Current financial assets | — | 64 | 447 | 4 | 514 | — | — |
Financial assets realisable within one year mainly comprise short-term deposits.
Note 8.2.2 Financial liabilities
| € thousands | Borro wings from credit institu tions |
Lease liabilities |
Other borro wings and financial liabilities |
Total liabilities from financing activities |
Bank over drafts |
Current and non current financial liabilities |
Due within 1 year |
Non current financial liabilities |
|---|---|---|---|---|---|---|---|---|
| At 1 January 2020 | 924 | 51,998 | 23,018 | 75,940 | 1,357 | 77,297 | 32,267 | 45,030 |
| Increase in loans | — | 6 | 199 | 205 | 3 | 208 | 201 | 7 |
| Repayment of borrowings and lease liabilities |
-162 | -7,164 | — | -7,326 | -1,598 | -8,924 | -9,219 | 295 |
| Other movements related to business acquisitions |
— | — | -769 | -769 | — | -769 | -769 | — |
| Total cash movements | -162 | -7,158 | -570 | -7,890 | -1,596 | -9,485 | -9,787 | 302 |
| Impact of the revaluation of put options | — | — | 75 | 75 | — | 75 | — | 75 |
| Impact of changes in foreign exchange rates |
— | -447 | -16 | -463 | 1,198 | 736 | 1,161 | -425 |
| New lease liabilities | — | 7,510 | — | 7,510 | — | 7,510 | — | 7,510 |
| Adjustments to lease liabilities with no cash impact |
— | -339 | — | -339 | — | -339 | — | -339 |
| Dividends payable | — | — | 42,976 | 42,976 | — | 42,976 | 42,976 | — |
| Impact of changes in consolidation scope and method |
— | — | — | — | — | — | — | — |
| Other movements | — | — | -1,251 | -1,251 | — | -1,251 | 1,673 | -2,924 |
| Total non-cash movements | — | 6,724 | 41,784 | 48,508 | 1,198 | 49,706 | 45,810 | 3,896 |
| AT 30 JUNE 2020 | 762 | 51,565 | 64,232 | 116,559 | 959 | 117,518 | 68,290 | 49,229 |
| Non-current financial liabilities | 599 | 44,169 | 4,461 | 49,229 | — | 49,229 | — | — |
| Current financial liabilities | 163 | 7,396 | 59,771 | 67,330 | 959 | 68,290 | — | — |
Other borrowings and financial liabilities include the debt relating to the put options granted to the holders of non-controlling interests and to earnouts, which amounted to €21.1 million at 30 June 2020 and €23.0 million at 31 December 2019, as well as to dividends payable of €43.0 million at 30 June 2020.
At 30 June 2020, the financial liabilities include the fair value of the put option granted to the Dooya partners, the amount of which is equal to the difference between the estimated contractual value that would result from the exercise of the put option and the fair value of the portion corresponding to the underlying assets. The liability derivative was stable at €16.6 million.
The subsequent fair values of liabilities corresponding to put options granted to holders of non-controlling interests are recognised in equity.
Note 8.2.3 Analysis of net financial debt
Net financial debt is defined in note 5.3.3.
| € thousands | 30/06/20 | 31/12/19 |
|---|---|---|
| Financial liabilities included in net financial debt calculation | 117,518 | 77,297 |
| – of which liabilities related to lease agreements (IFRS 16) | 51,565 | 51,998 |
| – of which dividends payable | 42,976 | — |
| Financial assets included in net financial debt calculation | 152 | 285 |
| – Marketable securities | — | — |
| – Loans | 152 | 285 |
| – Miscellaneous | — | — |
| Cash and cash equivalents | 442,930 | 387,547 |
| NET FINANCIAL DEBT | -325,563 | -310,535 |
| Liabilities related to put options and earnouts | 21,062 | 23,015 |
| RESTATED NET FINANCIAL DEBT | -346,625 | -333,550 |
NOTE 9 ANALYSIS OF CASH FLOW STATEMENT
— NOTE 9.1 CASH AND CASH EQUIVALENTS
| € thousands | 30/06/20 6 months |
30/06/19 6 months |
|---|---|---|
| CASH AND CASH EQUIVALENTS AT THE START OF THE PERIOD | 386,190 | 253,413 |
| Cash and cash equivalents at the start of the period | 387,547 | 259,345 |
| Bank overdrafts | -1,357 | -5,932 |
| CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD | 441,971 | 254,304 |
| Cash and cash equivalents at the end of the period | 442,930 | 261,511 |
| Bank overdrafts | -959 | -7,207 |
NOTE 9.2 CHANGE IN WORKING CAPITAL REQUIREMENTS
| € thousands | 30/06/20 6 months |
30/06/19 6 months |
|---|---|---|
| Net decrease/(increase) in inventory | 2,108 | 633 |
| Net decrease/(increase) in trade receivables | -43,052 | -61,220 |
| Net (decrease)/increase in trade payables | 996 | 8,648 |
| Net movement in other receivables and payables | 977 | -1,191 |
| CHANGE IN WORKING CAPITAL REQUIREMENTS | -38,971 | -53,130 |
NOTE 10 PROVISIONS AND CONTINGENT LIABILITIES
— NOTE 10.1 PROVISIONS
Note 10.1.1 Non-current provisions
| € thousands | Provisions for guarantees |
Provisions for litigation |
Provision for agents |
Provisions for liabilities and charges |
Total 2020 |
|---|---|---|---|---|---|
| At 1 January 2020 | 5,111 | 968 | 465 | 2,005 | 8,548 |
| Charges | 170 | 673 | 16 | 88 | 947 |
| Used reversals | -235 | -154 | -43 | -54 | -486 |
| Unused reversals | — | -71 | -1 | -86 | -158 |
| Impact of changes in foreign exchange rates | -54 | — | — | 3 | -51 |
| Impact of changes in consolidation scope and method | — | — | — | — | — |
| Other movements | — | — | — | — | — |
| AT 30 JUNE 2020 | 4,992 | 1,416 | 437 | 1,956 | 8,801 |
Note 10.1.2 Current provisions
| € thousands | Provisions for guarantees |
Provisions for litigation |
Provisions for liabilities and charges |
Total 2020 |
|---|---|---|---|---|
| At 1 January 2020 | 4,889 | 1,821 | 4,543 | 11,253 |
| Charges | 69 | 492 | 2,469 | 3,031 |
| Used reversals | -516 | -40 | -1,130 | -1,686 |
| Unused reversals | — | -85 | -34 | -119 |
| Impact of changes in foreign exchange rates | -29 | -3 | -225 | -257 |
| Impact of changes in consolidation scope and method | — | — | — | — |
| Other movements | — | -797 | 797 | — |
| AT 30 JUNE 2020 | 4,413 | 1,388 | 6,420 | 12,221 |
NOTE 10.2 CONTINGENT LIABILITIES
All the Group's contingent liabilities are listed in the Highlights.
NOTE 11 WORKFORCE
— The Group's workforce at 30 June 2020, including temporary and part-time employees recorded on a full-time equivalent basis, was as follows:
| 30/06/20 | 30/06/19 | |
|---|---|---|
| Average workforce | 6,679 | 6,546 |
| End of period workforce | 6,857 | 6,646 |
NOTE 12 INCOME TAX
—
| € thousands | 30/06/20 6 months |
30/06/19 6 months |
|---|---|---|
| Profit before tax | 97,825 | 112,379 |
| Share of expenses on dividends | 1,444 | 1,391 |
| Goodwill impairment | 736 | 710 |
| Reclassification of CVAE to Income tax | -2,039 | -1,914 |
| Reclassification of CIR to Other operating income | -3,004 | -3,118 |
| Other | 1,100 | 1,038 |
| Permanent differences | -1,763 | -1,893 |
| Net profit taxed at reduced rate | -16,635 | -18,979 |
| Net profit taxable at standard rate | 79,426 | 91,507 |
| Tax rate in France | 32.02% | 34.43% |
| Tax charge recalculated at the French standard rate | 25,435 | 31,506 |
| Tax at reduced rate | 1,718 | 2,942 |
| Difference in standard rate in foreign countries | -11,714 | -13,158 |
| Tax losses for the year, unrecognised in previous periods, deficits used | 484 | -369 |
| Effect of the rate difference | -11,230 | -13,527 |
| Tax credits | -573 | -1,294 |
| Other taxes and miscellaneous | 2,979 | 2,897 |
| GROUP TAX | 18,329 | 22,524 |
| Effective rate | 18.74% | 20.04% |
02 2020 CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
The results taxed at a reduced rate involve royalties, which were taxed at 10.33%.
The main countries that contributed to the difference in the tax rate were Tunisia (€5.7 million), the United States (€0.6 million), Germany (€0.4 million), Poland (€2.0 million), other European countries (€2.3 million) and Middle Eastern countries (€0.3 million). Tax credits were primarily affected by the SOPEM tax credit (Poland): €0.6 million at 30 June 2020 and €1.3 million at 30 June 2019. Other taxes and miscellaneous items include in particular the French Corporate Value-Added Contribution (CVAE), which amounted to €2.1 million at 30 June 2020 and €1.9 million at 30 June 2019.
NOTE 13 INVESTMENTS IN ASSOCIATES AND JOINT VENTURES AND RELATED PARTIES
— NOTE 13.1 INVESTMENTS IN ASSOCIATES AND JOINT VENTURES
| € thousands | 30/06/20 | 31/12/19 |
|---|---|---|
| Investments in associates and joint ventures at the beginning of the period | 136,549 | 132,781 |
| Changes in consolidation scope and method | — | — |
| Share of profit/(loss) from associates | 1,414 | 3,846 |
| Dividends paid | — | — |
| Changes in foreign exchange rates | -996 | 384 |
| Other | 21 | -462 |
| INVESTMENTS IN ASSOCIATES AND JOINT VENTURES AT THE END OF THE PERIOD | 136,988 | 136,549 |
"Investments in associates and joint ventures" consists of investments in Dooya (€136.3 million) and Arve Finance (€0.7 million).
Dooya's performance over the first six months was as follows:
| € thousands | 30/06/20 | 30/06/19 |
|---|---|---|
| Income statement | ||
| Sales | 84,900 | 89,164 |
| Current operating result | 3,168 | 3,416 |
| Net profit | 2,019 | 1,906 |
At 30 June 2020, given the current crisis, the Group reviewed the value of its shareholding in Dooya in light of impairment indicators (temporary shutdowns of factories and reduced activity).
A discount rate of 12.5% and a growth to infinity rate of 2.75% were used as part of the impairment test, as at 31 December 2019. No impairment charge was recorded during the first half of 2020.
A one and a half-point increase in the discount rate combined with a two and a half-point decrease in the EBITDA to sales ratio in the normative flow used to calculate the terminal value could lead to an approximately €1.2 million impairment loss on equity-accounted securities.
NOTE 13.2 RELATED PARTIES
Associates are companies over which the Group has a significant influence or exercises joint control and which are consolidated using the equity method. Transactions with related parties are made on arm's length terms.
Group purchases from Dooya totalled €1.7 million over the six months to 30 June 2020, €4.0 million over the 12 months to 31 December 2019 and €1.8 million over the 6 months to 30 June 2019. Group trade payables with Dooya stood at €1.0 million at 30 June 2020, €0.6 million at 31 December 2019 and €0.9 million at 30 June 2019.
Transactions with other related parties involved negligible amounts.
NOTE 14 LIST OF CONSOLIDATED ENTITIES
| — | ||||
|---|---|---|---|---|
| Company name | Head office | % control 30/06/20 |
% interest 30/06/20 |
% interest 31/12/19 |
| Somfy SA | 74300 Cluses (France) | (parent company) |
(parent company) |
(parent company) |
| Fully-consolidated companies | ||||
| Somfy Activités SA | Cluses (France) | 100.00 | 100.00 | 100.00 |
| CMC | Cluses (France) | 100.00 | 100.00 | 100.00 |
| Somfybat | Cluses (France) | 100.00 | 100.00 | 100.00 |
| Domis SA | Rumilly (France) | 100.00 | 100.00 | 100.00 |
| SITEM | Zaghouan (Tunisia) | 100.00 | 100.00 | 100.00 |
| SITEM Services | Zaghouan (Tunisia) | 100.00 | 100.00 | 100.00 |
| SOPEM spolka z ograniczona odpowiedzialnoscia | Niepolomicie (Poland) | 100.00 | 100.00 | 100.00 |
| Somfy Eastern Europe Area sp zoo | Warsaw (Poland) | 100.00 | 100.00 | 100.00 |
| Somfy Ltd | Yeadon (United Kingdom) | 100.00 | 100.00 | 100.00 |
| Somfy PTY. Limited | Rydalmere (Australia) | 100.00 | 100.00 | 100.00 |
| Somfy Automation Services PTY Ltd | Rydalmere (Australia) | 100.00 | 100.00 | 100.00 |
| N.V Somfy S.A | Zaventem (Belgium) | 100.00 | 100.00 | 100.00 |
| Somfy Brasil LTDA | Osasco (Brazil) | 100.00 | 100.00 | 100.00 |
| Neocontrol Soluções em Automação LTDA | Belo Horizonte (Brazil) | 100.00 | 100.00 | 100.00 |
| Neocontrol US LLC | Orlando (United States) | 100.00 | 100.00 | 100.00 |
| Somfy Colombia SAS | Bogota (Colombia) | 100.00 | 100.00 | 100.00 |
| Somfy Argentina S.R.L. | San Fernando (Argentina) | 100.00 | 100.00 | 100.00 |
| GABR Participações LTDA | São Paulo (Brazil) | 100.00 | 100.00 | 100.00 |
| Somfy GmbH (Germany) | Rottenburg (Germany) | 100.00 | 100.00 | 100.00 |
| HIMOTION BV | Leiden (Netherlands) | 100.00 | 100.00 | 100.00 |
| Somfy GmbH (Austria) | Elsbethen-Glasenbach (Austria) |
100.00 | 100.00 | 100.00 |
| Somfy Kereskedelmi Kft | Vecsés (Hungary) | 100.00 | 100.00 | 100.00 |
| Somfy spolka z ograniczona odpowiedzialnoscia | Warsaw (Poland) | 100.00 | 100.00 | 100.00 |
| Somfy spol s.r.o. | Prague (Czech Republic) | 100.00 | 100.00 | 100.00 |
| Somfy S.R.L. | Tărlungeni (Romania) | 100.00 | 100.00 | 100.00 |
| Somfy Limited Liability Company | Moscow (Russia) | 100.00 | 100.00 | 100.00 |
| Somfy SIA | Riga (Latvia) | 100.00 | 100.00 | 100.00 |
| Limited Liability Company Somfy | Kiev (Ukraine) | 100.00 | 100.00 | 100.00 |
| Somfy Bulgaria AD | Sofia (Bulgaria) | 100.00 | 100.00 | 100.00 |
| Chusik Hoesa Somfy | Seongnam (Korea) | 100.00 | 100.00 | 100.00 |
| Somfy Italia SRL | Milan (Italy) | 100.00 | 100.00 | 100.00 |
| Somfy Nederland BV | Hoofddorp (Netherlands) | 100.00 | 100.00 | 100.00 |
| Somfy España SA | Cornella de Llobregat (Spain) | 100.00 | 100.00 | 100.00 |
| Automatismos Pujol SL | Sant Fruitos de Bages (Spain) | 100.00 | 100.00 | 100.00 |
| Automatismos Pujol Portugal Lda | Coimbra (Portugal) | 100.00 | 100.00 | 100.00 |
| SAP SRL | Pomezia (Italy) | — | — | 100.00 |
| Somfy Systems Inc | Dayton (United States) | 100.00 | 100.00 | 100.00 |
| Somfy SA (Suisse) | Bassersdorf (Switzerland) | 100.00 | 100.00 | 100.00 |
| Somfy Sweden Aktiebolag | Malmö (Sweden) | 100.00 | 100.00 | 100.00 |
| Somfy Norway AS | Skedsmokorset (Norway) | 100.00 | 100.00 | 100.00 |
| Company name | Head office | % control 30/06/20 |
% interest 30/06/20 |
% interest 31/12/19 |
|---|---|---|---|---|
| Somfy PTE Ltd | Singapore | 100.00 | 100.00 | 100.00 |
| Somfy (Thailand) Co., Ltd | Bangkok (Thailand) | 100.00 | 100.00 | 100.00 |
| Somfy Taiwan Co Ltd | Taipei (Taiwan) | 100.00 | 100.00 | 100.00 |
| Asian Capital International Limited | Hong Kong | 100.00 | 100.00 | 100.00 |
| Sino Global International Holdings Limited | Hong Kong | 100.00 | 100.00 | 100.00 |
| Sino Link Trading Limited | Hong Kong | 100.00 | 100.00 | 100.00 |
| Somfy Asia-Pacific Co Ltd | Hong Kong | 100.00 | 100.00 | 100.00 |
| Somfy Co Limited | Hong Kong | 100.00 | 100.00 | 100.00 |
| Somfy China Co Ltd | Shanghai (China) | 100.00 | 100.00 | 100.00 |
| Zhejiang Lian Da Science and Technology Co., Ltd | Huzhou (China) | 95.00 | 95.00 | 95.00 |
| Somfy Middle East Co. Ltd | Limassol (Republic of Cyprus) | 100.00 | 100.00 | 100.00 |
| Somfy Egypt | Cairo (Egypt) | 100.00 | 100.00 | 100.00 |
| Sisa Home Automation Ltd | Rishon Le Zion (Israel) | 100.00 | 100.00 | 100.00 |
| Somfy Maroc | Casablanca (Morocco) | 100.00 | 100.00 | 100.00 |
| Somfy Hellas SA | Acharnai (Greece) | 100.00 | 100.00 | 100.00 |
| Somfy EV Otomasyon Sistemleri Ticaret Ltd Sti | Istanbul (Turkey) | 100.00 | 100.00 | 100.00 |
| Somfy South Africa PTY Limited | Cape Town (South Africa) | 100.00 | 100.00 | 100.00 |
| Somfy Tunisie | Tunis (Tunisia) | 100.00 | 100.00 | 100.00 |
| Somfy Services | Tunis (Tunisia) | 50.00 | 50.00 | 50.00 |
| Somfy Mexico, S.A. DE C.V. | Tlalnepantla (Mexico) | 100.00 | 100.00 | 100.00 |
| Syservmex SRL DE CV | Tlalnepantla (Mexico) | 100.00 | 100.00 | 100.00 |
| Somfy Kabushiki Kaisha | Tokyo (Japan) | 100.00 | 100.00 | 100.00 |
| Somfy India Pvt Ltd | New Dehli (India) | 100.00 | 100.00 | 100.00 |
| Somfy Saudi Arabia | Jeddah (Saudi Arabia) | 75.00 | 75.00 | 75.00 |
| PROMOFI BV | Hoofddorp (Netherlands) | 100.00 | 100.00 | 100.00 |
| FIGEST BV | Hoofddorp (Netherlands) | 100.00 | 100.00 | 100.00 |
| Somfy LLC | Dover (United States) | 100.00 | 100.00 | 100.00 |
| Somfy ULC | Halifax (Canada) | 100.00 | 100.00 | 100.00 |
| Simu | Arc-les-Gray (France) | 100.00 | 100.00 | 100.00 |
| Simu GmbH | Iserlohn (Germany) | 100.00 | 100.00 | 100.00 |
| Window Automation Industry SRL | Galliera (Italy) | 100.00 | 100.00 | 100.00 |
| Overkiz | Épagny Metz-Tessy (France) | 96.63 | 96.63 | 96.63 |
| Overkiz Asia Co. Limited | Hong Kong | 96.63 | 96.63 | 96.63 |
| Opendoors | Cluses (France) | 100.00 | 100.00 | 100.00 |
| iHome Systems (Asia) Limited | Hong Kong | 100.00 | 100.00 | 100.00 |
| iHome Systems (Thailand) Co. Ltd | Bangkok (Thailand) | 100.00 | 100.00 | 100.00 |
| Somfy Automation Malaysia Sdn. Bhd | Kuala Lumpur (Malaysia) | 100.00 | 100.00 | 100.00 |
| Somfy Protect by Myfox | Labège (France) | 100.00 | 100.00 | 100.00 |
| SEM-T | Cluses (France) | 100.00 | 100.00 | 100.00 |
| DSG Coordination Center SA | Geneva (Switzerland) | 100.00 | 100.00 | 100.00 |
| BFT SpA | Schio (Italy) | 100.00 | 100.00 | 100.00 |
| Automatismes BFT France | Saint-Priest (France) | 100.00 | 100.00 | 100.00 |
| BFT Group Italiberica de Automatismos SL | Granollers (Spain) | 99.02 | 99.02 | 99.02 |
| BFT Antriebssysteme GmbH | Oberasbach (Germany) | 100.00 | 100.00 | 100.00 |
| BFT Automation UK Ltd | Stockport (United Kingdom) | 100.00 | 100.00 | 100.00 |
02 2020 CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
| Company name | Head office | % control 30/06/20 |
% interest 30/06/20 |
% interest 31/12/19 |
|---|---|---|---|---|
| BFT Benelux SA | Nivelles (Belgium) | 100.00 | 100.00 | 100.00 |
| BFT Adria d.o.o. | Drazice (Croatia) | 100.00 | 100.00 | 100.00 |
| BFT Polska sp zoo | Zielonka (Poland) | 100.00 | 100.00 | 100.00 |
| BFT Americas Inc. | Boca Raton (United States) | 100.00 | 100.00 | 100.00 |
| BFT Portugal SA | Coimbra (Portugal) | 100.00 | 100.00 | 100.00 |
| BFT Automation (South) Ltd | Swindon (United Kingdom) | 100.00 | 100.00 | 100.00 |
| BFT Automation Australia PTY | Wetherill Park (Australia) | 100.00 | 100.00 | 100.00 |
| BFT CZ Sro | Prague (Czech Republic) | 100.00 | 100.00 | 100.00 |
| O&O SRL | Soliera (Italy) | 100.00 | 100.00 | 100.00 |
| BFT Veneto SRL | Schio (Italy) | 100.00 | 100.00 | 100.00 |
| BFT Otomasyon Kapi | Istanbul (Turkey) | 100.00 | 100.00 | 100.00 |
| BFT Istanbul | Kocaeli (Turkey) | 100.00 | 100.00 | 100.00 |
| BFT Greece | Athens (Greece) | 100.00 | 100.00 | 100.00 |
| BFT Automation Ireland | Dublin (Ireland) | 100.00 | 100.00 | 100.00 |
| BFT Automation Systems PTL | Hyderabad (India) | 51.00 | 51.00 | 51.00 |
| Pujol Italia SRL | Schio (Italy) | 100.00 | 100.00 | 100.00 |
| BFT Middle East FZO | Dubai (United Arab Emirates) | 100.00 | 100.00 | 100.00 |
| BFT Auto Gate and Door (Shanghai) Co. Ltd | Shanghai (China) | 100.00 | 100.00 | 100.00 |
| BFT Gates and Doors SRL | Bucharest (Romania) | 100.00 | 100.00 | 100.00 |
| BFT Automation New Zealand | Auckland (New Zealand) | 100.00 | 100.00 | 100.00 |
| BFT Sud-Est | Saint Laurent du Var (France) | 100.00 | 100.00 | 100.00 |
| Equity-accounted companies | ||||
| Arve Finance | Cluses (France) | 50.17 | 50.17 | 50.17 |
| Hong Kong CTLT Trade Co., Limited | Hong Kong | 70.00 | 70.00 | 70.00 |
| Ningbo Dooya Mechanic and Electronic Technology Co Ltd |
Ningbo (China) | 70.00 | 70.00 | 70.00 |
| Shanghai Zhengshang Co., Ltd | Shanghai (China) | 70.00 | 70.00 | 70.00 |
| Shanghai Branch | Shanghai (China) | 70.00 | 70.00 | 70.00 |
| Hui Gong Intelligence Technology Ltd | Shanghai (China) | 70.00 | 70.00 | 70.00 |
| New Unity Limited | Hong Kong | 70.00 | 70.00 | 70.00 |
| Dooya Sun Shading Technology Co. Ltd | Ningbo (China) | 70.00 | 70.00 | 70.00 |
| Ningbo Sleepwell Co Ltd | Ningbo (China) | 70.00 | 70.00 | 70.00 |
| Baixing Co Ltd | Ningbo (China) | 70.00 | 70.00 | 70.00 |
| Shanghai Goodnight | Ningbo (China) | 70.00 | 70.00 | 70.00 |
03 STATUTORY AUDITORS' REPORT ON THE 2020 INTERIM FINANCIAL REPORT
34 Opinion on the financial statements
34 Specific verification
03 STATUTORY AUDITORS' REPORT ON THE 2020 INTERIM FINANCIAL REPORT
To the Shareholders,
In compliance with the assignment entrusted to us by your General Meeting and pursuant to Article L. 451-1-2 III of the French Monetary and Financial Code, we have conducted:
- a limited review of the accompanying condensed consolidated interim financial statements of the company Somfy SA, for the period from 1 January to 30 June 2020;
- a review of the information disclosed in the half-year business report.
These condensed consolidated interim financial statements were prepared under the responsibility of your Management Board on 31 August 2020, based on the information available at this date within a changing environment related to the Covid-19 crisis and the challenges of understanding its impacts and the future outlook. It is our responsibility to express an opinion on these financial statements on the basis of our limited review.
OPINION ON THE FINANCIAL STATEMENTS
We have conducted our limited review in accordance with the professional auditing standards applicable in France. A limited review consists principally of making inquiries of persons responsible for financial and accounting matters and applying analytical procedures. The scope is substantially less than an audit conducted in accordance with the professional auditing standards applicable in France. Consequently, this review can only provide reasonable assurance, to a lesser degree than an audit, as to whether the interim financial statements are free of material misstatements.
Based on our limited review, nothing has come to our attention that would challenge the compliance of the condensed consolidated interim financial statements with IAS 34 – a standard of the IFRS framework relating to interim financial reporting as adopted within the European Union.
SPECIFIC VERIFICATION
We have also verified the information disclosed in the half-year business report, prepared at 31 August 2020, commenting on the condensed consolidated interim financial statements, which were the subject of our limited review.
We have no observation to make with regard to the fairness of such information and its consistency with the condensed consolidated interim financial statements.
Lyon, 9 September 2020 The Statutory Auditors
KPMG Audit A division of KPMG SA Stéphane Devin Partner
ERNST & YOUNG et Autres Sylvain Lauria Partner
04 STATEMENT FROM THE INDIVIDUAL RESPONSIBLE FOR THE 2020 HALF-YEAR FINANCIAL REPORT
04 STATEMENT FROM THE INDIVIDUAL RESPONSIBLE FOR THE 2020 HALF-YEAR FINANCIAL REPORT
I certify that, to the best of my knowledge, the condensed consolidated interim financial statements have been prepared in accordance with applicable accounting standards and give a true and fair view of the net equity position, financial position and financial performance of the company and all companies included in the consolidation, and that the half-year business report gives a true and fair view of the significant events that occurred during the first six months of the financial year, their impact on the financial statements, the main transactions conducted between related parties, as well as a description of the major risks and uncertainties for the remaining six months of the financial year.
Cluses, 9 September 2020
Pierre Ribeiro Member of the Management Board and Chief Financial Officer
Cover photo: @Somfy Activités SA/iStock
SOMFY SA 50 AVENUE DU NOUVEAU-MONDE BP 152 - 74307 CLUSES CEDEX - FRANCE TEL.: +33 (0) 4 50 96 70 00 www.somfy-group.com