AXWAY_REGISTRATION_DOCUMENT_2017

CORPORATE RESPONSIBILITY AXWAY GROUP AND ITS BUSINESS ACTIVITIES Notes to the annual financial statements 2017

CORPORATE GOVERNANCE

CONSOLIDATED FINANCIAL STATEMENTS

2017 ANNUAL FINANCIAL STATEMENTS

CAPITAL AND AXWAY SOFTWARE STOCK

INFORMATIONS ADMINISTRATIVES ETbJURIDIQUES

COMBINED GENERAL MEETING OFb6bJUNEb2018

● The fair value of the share subscription options awarded under Plan No.Ǿ3 was determined using the same binominal model and the following assumptions: average expected life of 4.5 to 6Ǿyears; expected volatility of 29.44%; dividend yield of 1.39% and risk-free interest rate of 2.48%. Expected volatility was determined on the basis of the volatility expected for securities in comparable sectors. ● The average closing share price inǾ2017 was €27.29.

● The amount recognized in respect ofǾ2017, in accordance with the method indicated in NoteǾ1.16 “Share-based payments”, was (-)€165.82Ǿthousand. This reversal of current expense relating to the valuation of services provided by beneficiaries in exchange for the decision not to grant stock options was recorded in the income statement. No non-recurring expenses were recognized in relation to the cost of services rendered by employees benefiting from share subscription options whose right to exercise their options was maintained despite their departure from the Group inǾ2017.

2.4 Provisions for contingencies and losses

Amount at thebstart of thebfiscal year

Reversals (provisions used)

Reversals (provisions unused)

Amount at the end of the fiscal year

Provisions

(in thousands of euros)

Provisions for disputes

735

611

623

70

653

Provisions for foreign exchange losses Provisions for retirement benefits

2,874 6,433

9,192

-

2,874

9,192 6,699

428

162 160

- -

Provisions for restructuration

203

- -

43

Provisions for tax

1,140

-

713

427

Total

11,385

10,231

946

3,657

17,013

Provisions were recorded chiefly in relation to financial risks arising from retirement benefit commitments, exchange rate losses, Human Resources disputes, and litigation related to the tax audit. The total commitment for retirement benefits amounted to €5,327Ǿ thousand. The cumulative amount of unrealized actuarial differences on the balance sheet at year-end 2017 was (-)€1,372Ǿthousand (see NoteǾ1.2). Assumptions relating to procedures for departures take into account changes in legislation in order to reflect the Group’s best estimates at the reporting date: ● the Social Security Financing Act forǾ2008 introduced a contribution to be paid by the employer as part of the benefits due to an employee whose retirement is at the request of the employer. This contribution amounts to 50% and applies irrespective of the age of the employee; ● effective from 1ǾJanuary 2009, an employer may no longer unilaterally require employees to retire unless they have reached the age of 70. For employees between the ages of 65 and 70, the employer may not make any retirement decisions of its own accord before asking the employees whether or not they would like to retire voluntarily.

These successive changes are considered by the Group as changes in actuarial assumptions for the following reasons: ● the changes introduced by the new legal provisions do not have a direct impact on the gross amount received by employees; ● the agreements in existence as of the effective date of the law were not amended: benefits awarded to employees may change at a later date once a new agreement has been concluded; ● the abolition of a departure procedure and the institution of the contribution on the severance indemnity payable in the event of employer-imposed retirement entail revision by the Group of its actuarial assumptions. Other assumptions such as turnover, mortality and discount rate are updated regularly to refine the calculation of retirement commitments.

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AXWAY - 2017 REGISTRATION DOCUMENT

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