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 annual financial statements 2017

The contributed software was recognized at the net carrying amount recorded in Sopra Group’s financial statements at 31ǾDecember 2000. It is amortized on a straight-line basis over 3,5 or 10Ǿyears. The Cyclone and Tumbleweed software was recognized at the purchase cost, which was calculated by an independent expert in the USA. Amortization for the Cyclone software is over six years for accounting purposes and one year for tax purposes. The Tumbleweed software is amortized over 12Ǿyears. The LiveDashboard software is amortized over eight years. The intellectual property contributed by Systar was totally amortized by the end ofǾ2014. Business goodwill The business goodwill comes from the partial contribution of assets from the EAI (Enterprise Application Integration) division as well as from the transfer of all Systar’s assets. Business goodwill has unlimited useful life and is not systematically amortized. If appropriate, a provision may be made for impairment. Amortization applied prior to 1ǾJanuary 2001 in the financial statements of Sopra Group has been retained in the balance sheet assets. The Company performs impairment testing on its business goodwill at each year-end and whenever indication of impairment loss is identified. Property, plant and equipment Property, plant and equipment are stated in the balance sheet at their acquisition cost or the pre-transfer carrying amount. Depreciation is based on the straight-line method according to the useful economic lives of each non-current asset category as follows:

and an analysis of the growth and profitability outlook, is lower than the carrying amount in the financial statements. The analysis of the growth outlook may involve an estimate based on discounted cash flows. In this case, cash flows are determined on the basis of available data and five-year forecasts. A growth rate in perpetuity of 2.2% is applied from the start of the sixth year. The cash flows resulting from these forecasts are then discounted using a rate of 9.6%. Revenue Services provided within the scope of the Group’s software package operations include: ● the right of use (license) of the software packages and solutions provided; ● ancillary services: installation, settings, adaptation, training,Ǿetc. a. In general, separate contracts are concluded with clients for licenses and maintenance on the one hand, and ancillary services on the other hand In this situation, the various elements comprising contracts are accounted for as follows: ● the license fee is recognized when delivery takes place, which is deemed to be the case when all contractual obligations have been fulfilled, i.e. when any remaining services to be provided are insignificant and not liable to endanger the customer’s acceptance of the goods supplied or services rendered; ● maintenance is generally billed in advance and is recognized on a time basis; ● ancillary services are generally provided on the basis of time spent and are recognized when performed, i.e. in general when invoiced (see paragraphǾd.). Ancillary services are sometimes performed within the scope of fixed-price contracts in which case they are then recognized using the percentage of completion method described in paragraphǾe below. b. Sometimes, contracts comprising multiple elements (license, maintenance, ancillary services,betc.) may be negotiated on a fixed-price basis In this situation, the amount of revenue attributable to the license is obtained by the difference between the total contract amount and the fair value of its other components, i.e. maintenance and ancillary services. The fair value of the other components is determined when possible on the basis of the list prices applying in the case of a separate sale or alternatively, on the basis of management’s best estimate. The residual amount attributed to the license is recognized at the time of delivery. ● maintenance;

5

Fixtures and fittings Equipment and tooling

5 to 10 years 3 to 5 years 5 to 10 years

Furniture and office equipment

Equity investments On initial recognition, equity investments are recognized at their acquisition or subscription price. The carrying amount of equity investments corresponds to their value-in-use. Impairment is recognized if the value-in-use of equity investments, which includes the net assets of subsidiaries (see paragraphǾ2.1)

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AXWAY - 2017 REGISTRATION DOCUMENT