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

6.4.3 Breakdown of net deferred tax by type

31/12/2017

31/12/2016

31/12/2015

(in thousands of euros)

Differences related to consolidation adjustments Actuarial gains and losses

-364

-67

155

Software depreciation and amortization of revalued software packages Fair value of amortizable allocated intangible assets

1,518 -4,238

2,213 -4,063

2,775 -4,580

Financial derivatives

- -

- -

16

Finance leases

-

Discounting of employee profit-sharing

78

175 -16

223

Tax-drive provisions

-33

-430

Foreign exchange differences recognized in shareholders’ equity

-

-

-

Capitalized tax losses

4,446

13,795

6,886

Other

255

95

273

Temporary differences from tax returns Provision for retirement benefits Provision for employee profit-sharing

1,771

1,826

2,107

-

141

204

Provision for “Organic” tax

36

38

45

Differences in depreciation period

- -

- - -

- -

Provisions on securities

4

Activated research tax credits

1,271

543

Capitalized tax losses

15,064

31,104

28,737

Other Total

236

93

1,230

20,039

45,333

38,185

The €4.4Ǿmillion capitalization in the consolidated financial statements is attributable to the Axway Software entity. The capitalization of Axway Software’s tax losses carried forward amounted to €7.1Ǿmillion at 31ǾDecember 2016. Capitalization in the amount of €15.1Ǿmillion in the parent company financial statements was attributable to the Axway Inc. entity (including Appcelerator Inc absorbed by Axway Inc). At 31ǾDecember 2016, €31.1Ǿmillion of tax losses carried forward were recognized as assets for Axway Inc, and for Appcelerator Inc, the amount capitalized at that date was €6.5Ǿmillion. Forecasts of future taxable profits, justifying recognition of tax losses as assets, were determined on the basis of substantiating evidence, with detailed estimates in a 5-year business plan for Axway SoftwareǾSA and Axway Inc. When the acquisition cost of acquiring Systar was allocated inǾ2014 (known today as Axway Software), €17.7Ǿmillion in

intangible assets identified as amortizable and allocated separately from goodwill were recognized. As at 31ǾDecember 2017, the net value of these intangible assets stood at €11.1Ǿmillion, generating a deferred tax liability of €3.2Ǿmillion. This deferred tax liability is mostly offset by the recognition of deferred tax assets and €4.4Ǿmillion of tax losses carried forward. At 31ǾDecember 2017, no tax loss carry-forwards were recognized as assets following the acquisition of Syncplicity. As regards the cotisation sur la valeur ajoutée des entreprises (CVAE) component of the contribution économique territoriale (CET), the Group has decided to recognize this component under corporate income tax in order to ensure consistency with the treatment of similar taxes in other countries. This approach is also consistent with the position adopted by Syntec Informatique and made public on 10ǾFebruary 2010.

6.4.4 Deferred tax assets not recognized by the Group

31/12/2017

31/12/2016

31/12/2015

Tax losses carried forward Temporary differences

19,228

24,979

24,654

481

1,033

1,447

Total

19,709

26,012

26,101

137

AXWAY - 2017 REGISTRATION DOCUMENT