EXEL industries - 2019 Universal Registration Document

Consolidated fi nancial statements Notes to the consolidated fi nancial statements

at the date of the takeover, constitutes an excess value recognized as a non-current asset in the consolidated balance sheet under the heading “Goodwill”. At the takeover date, the Group may opt to recognize the new business combination using the partial goodwill method or the full goodwill method. In the case of full goodwill, the non-controlling interests are measured at fair value and the Group recognizes goodwill on the total of identi fi able assets and liabilities. Expenditure directly related to the takeover are recognized as “Other non-recurring expenses”. At September c 30, 2019, the net value of residual goodwill on the balance sheet amounted to €65,191 c thousand. Intangible assets (see note c 4) The other intangible assets appear on the balance sheet at their historical cost. They are amortized on a straight-line basis over their estimated useful life. Development costs In accordance with IAS c 38, development costs are not capitalized by the Group for several reasons: „ when these expenditures are incurred, the technical feasibility of completing the intangible asset so that it will be available for use or sale is not certain; „ the Group is not able to demonstrate how the intangible asset will generate probable future economic bene fi ts. In particular, it is di ffi cult to demonstrate the existence of a market (or evaluate the duration) for production resulting from these development costs. In e ff ect, the Group is constantly developing new innovations in its market and the potential of these developments is still unknown or even non-existent at that particular time. These costs mainly comprise payroll expenditure. Property, plant and equipment (see c note c 5) Property, plant and equipment are recognized in the balance sheet at acquisition cost or their contribution value. These assets are depreciated according to the straight line method applied on the basis of their corresponding estimated useful lives. Comparable depreciation rates are applied by all companies as follows: „ 20 to 30 c years for buildings; „ 5 to 10 c years for building improvements; „ 5 to 10 c years for industrial equipment and machinery; „ 3 to 5 c years for other fi xed assets (o ffi ce equipment, vehicles, etc.). Impairment of assets The Group reviews its main tangible and intangible non-current assets on each closing date to identify any impairment when it appears, from events or circumstances, that their carrying value could be higher than their recoverable value. Recoverable value is de fi ned as the higher of fair value net of costs of disposal and value in use on the basis of future cash fl ows discounted to their present value (discounted cash fl ows - DCF) derived from use of the assets. After recognizing this provision, the asset is maintained in the balance sheet at its net carrying amount after impairment. In the case of depreciable assets, the depreciation expense is calculated on the basis of the newnet carrying amount and its remaining estimated useful life. 1.5 1.6 1.7

Pursuant to the provisions of IFRS c 16 relating to the modified retrospective approach, comparative data for fi scal year 2018 that will be presented with respect to the data from the fi scal year 2019 will not be restated. The Group has completed surveying the leases in its subsidiaries and the analyzes performed allow us to value the right-of-use assets (or lease liability) as an being less than €20 c million, at October c 1, c 2019, in the Group’s consolidated fi nancial statements. IFRIC c 23 – c Uncertainty over income tax treatment, applicable to open fiscal periods from January c 1, c 2019 The IFRIC c 23 interpretation was approved by the European Union on October c 23, 2018, and will be applicable for open fi scal years from January c 1, 2019. The interpretation covers how to determine income tax related elements when there is uncertainty on the treatment used by an entity in this area, in the light of the applicable tax laws. The Group will evaluate the IFRIC c 23 impacts in its fi nancial statements but does not expect a material impact following the implementation of that interpretation. The consolidated financial statements of EXEL Industries were approved by the Board of Directors on 12/17/2019. Companies over which EXEL Industries exercises exclusive control are fully consolidated. Exclusive control is defined as an ability to govern directly or indirectly the fi nancial and operating policy decisions of the enterprise so as to bene fi t from its activities. It is generally presumed to exist when the Group has more than 50% of the voting rights of the controlled company. Companies in which EXEL Industries exercises a material in fl uence are accounted for using the equity method. Signi fi cant in fl uence is an ability to participate in the fi nancial and operating policy decisions of an enterprise though without exercising control over its policies. It is presumed to exist when the Group directly or indirectly holds between 20% and 50% of the voting rights. Receivables, payables, and reciprocal assets and liabilities are fully eliminated between fully consolidated companies as well as intra-Group pro fi ts and losses (dividends, capital gains, margins on inventory). Business combinations Business combinations are recognized on the basis of the acquisition method of accounting, according to the principles of IFRS c 3 – Business Combinations. The possible assets, equity and liabilities of the acquired company are recognized at their fair value. The di ff erence between the acquisition cost and the proportionate share acquired of the fair value of the assets and liabilities on the acquisition date is recognized under “Goodwill”. This goodwill is not amortized and is tested for impairment whenever there are indications of loss, and at least once a year (see below). If the acquisition cost is less than the fair value of the acquiree’s assets and liabilities, the residual amount of negative goodwill (badwill) is recognized directly in “Non-recurring income/(expenses)”. Goodwill (see note c 3) For fully consolidated companies, the di ff erence between the fair value of the counterparty transferred and the share attributable to the Group of net fair value of the acquired assets and liabilities existing 1.3 1.4 1.2 Basis of consolidation & scope (see c note c 2)

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EXEL Industries Group I 2019 Universal Registration Document

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