AXWAY_REGISTRATION_DOCUMENT_2017

AXWAY GROUP AND ITS BUSINESS ACTIVITIES

CORPORATE RESPONSIBILITY

CORPORATE GOVERNANCE

CONSOLIDATED FINANCIAL STATEMENTS

2017 ANNUAL FINANCIAL STATEMENTS

CAPITAL AND AXWAY SOFTWARE STOCK

INFORMATIONS ADMINISTRATIVES ETbJURIDIQUES

COMBINED GENERAL MEETING OFb6bJUNEb2018

Notes to the financial statements

IFRSǾ 9 changes the method for measuring the value of exchange-risk and interest-rate risk hedges carried out using option-based derivative instruments. Thus, changes in their time values will be recognized in Other comprehensive income, and the time value at the date when the hedging relationship is designated will be amortized over the period during which the derivative instrument may impact profit. The Group considers that this change will have no material impact on its financial statements. The Group plans to apply IFRSǾ 9 as of 1Ǿ January 2018 retroactively for those periods of fiscal yearǾ2017 that will be presented in comparison with those of fiscal yearǾ2018. In SeptemberǾ 2016, Axway launched a transition project aimed at applying IFRSǾ15 Revenue from Contracts with Customers as of 1ǾJanuary 2018. It mainly consists of: ● a first diagnostic phase to identify potential divergences arising from the application of the new rules, with figures; ● a second phase of implementing the potential changes. At the same time, Axway took part in the discussions with the other main French industry players under the aegis of the Syntec Numérique trade association, to identify the issues raised by the application of the new rule, and derive uniform interpretations and treatments. A mapping ofǾ 2016 revenue by income type and profile arose from the diagnostic phase to identify the divergences. The standard contract clauses that could impact revenue recognition were also thoroughly identified. In the categories that could cause divergence, sample contracts, that were sufficiently representative and covered a highly significant portion of revenue, were identified for subsequent analysis. The samples comprised contracts in progress at 1ǾJanuary 2017 and whose performance was continuing beyond that date, and any new contract signed during the 2017 fiscal year. Thus, licensing and maintenance contracts, fixed- price contracts, service contracts including a transitional or transformation phase, together with Software as a Service contracts, were analyzed from the standpoint of the methodology proposed in the standard. ● IFRSǾ15 Revenue from Contracts with Customers sets out a five-step framework for analyzing customer contracts, as follows: 1. identify the contract with the customer; 2. identify the performance obligations in the contract; 3. determine the transaction price; 4. apportion the transaction price to the performance obligations in the contract; 5. recognize revenue. ● IFRSǾ15 Revenue from Contracts with Customers,

During the analysis required by each of these stages, divergences from the application of the current standards were identified in individual cases involving a limited number of contracts. Stage 2 of IFRSǾ 15 defines that service obligations in a contract are distinct from each other if they can be taken in isolation and if they are specific to the purposes of the contract in question. Application of these principles to the Axway contracts did not cause any divergence to be observed. Particular attention was given to services provided to enable the future performance of contracts. This was the case for the set-up phases for delivery of services in SaaS mode. These services could either be non-distinct, in which case a corresponding asset will be amortized over the duration of the performance obligations to which they refer, or they could be distinct, and recognized when control is transferred to the customer. The analysis led to the conclusion that no change should be made to the method currently applied for recognizing revenue. In stages 3 and 4, IFRSǾ 15 specifies the method for determining the transaction price of a contract and then its apportionment to the different performance obligations that it includes. Thus, the following form an integral part of the transaction price: ● the variable facilities granted to the customer, such as discounts, penalties or bonuses, in accordance with their respective probability of occurrence; ● financing components included in the contract, such as the granting of payment terms in excess of one year, which results in distinguishing a financial element of revenue to be presented separately from sales revenue; ● consideration payable to the customer which cannot be identified as separate services performed by the customer under the contract; Lastly, once the customer contract and its performance obligations have been identified and measured, stageǾ 5 defines and applies the method for recognizing revenue under the contract. The analysis concluded by finding no divergence. The Group will apply IFRSǾ15 at 1ǾJanuary 2018 retroactively for those periods of fiscal yearǾ2017 which will be presented in comparison with those of fiscal yearǾ2018. ● Amendments to IFRSǾ 15 Revenue from Contracts with Customers. ● Amendments to IFRSǾ4 on insurance contracts, “Applying IFRSǾ9 Financial Instruments with IFRSǾ4”. Application of IFRSǾ16 Leases is compulsory as of 1ǾJanuary 2019. The Group has decided not to apply this standard early as of 1ǾJanuary 2018. This standard will require the lessee to recognize a right of use under assets and a rental liability. The Group undertook a diagnostic project and will then implement the new rules, including identification of transitional procedures. The Group has chosen not to apply these standards and interpretations in advance. ● non-cash consideration. ● IFRSǾ16 Financial Instruments.

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AXWAY - 2017 REGISTRATION DOCUMENT