EXEL Industries // 2020 Universal registration document

Consolidated fi nancial statements Notes to the consolidated fi nancial statements

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 is recognized directly in “Non-recurring income/(expenses)”. Goodwill (see note 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 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. Expenditures directly related to the takeover are recognized as “Other non-recurring expenses”. At September 30, 2020, the net value of residual goodwill on the balance sheet amounted to €63,015 thousand. Intangible assets (see note 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 expenditures In accordance with IAS 38, development expenditures 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 expenditures. 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 expenditures mainly comprise payroll expenditure. Property, plant and equipment (see note 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 years for buildings; 1.4 1.5 1.6

 5 to 10 years for building improvements;  5 to 10 years for industrial equipment and machinery;  3 to 5 years for other fi xed assets (o ffi ce equipment, vehicles, etc.).

1.7

Impairment of assets

Assets with fi nite useful lives 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 of the cash-generating unit (CGU). 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 new net carrying amount and its remaining estimated useful life. This test is performed on the cash-generating unit (CGU) constituted by the assets or the smallest group of assets including the asset to be tested and generating cash in fl ows that are largely independent of those generated by other assets or groups of assets. Goodwill and fi xed assets with indeterminate useful lives: The Group performs impairment tests at least once a year, during the fourth quarter of each fi scal year and whenever there is an indication of loss of value. This impairment test is performed on each CGU to which the goodwill or the tested assets are attached. A CGU is de fi ned as a legal entity or group of subsidiaries belonging to the same business sector which generate cash fl ows which are clearly independent of the cash fl ows generated by other CGUs. The goodwill was assigned to each CGU thus de fi ned: Agricultural Spraying, Sugar Beet Harvesters, GardenWatering and Spraying, and Industrial Spraying (note 3). When the recoverable value of the CGU is below its net carrying amount, an impairment charge is recognized on the line “Non- recurring expenses”. The recoverable value of a CGU represents the higher of its fair value net of costs of disposal and value in use. Value in use is determined on the basis of the present value of future operating cash fl ows expected over a fi ve-year period and a terminal value based on a perpetuity growth rate for cash fl ow. Impacts of the initial application of IFRS 16: The analysis carried out did not lead to the identi fi cation of assets related to leases that would need to be tested independently of a CGU. Pending the expected clarifications on the practical methods of carrying out impairment tests including the restatement of IFRS 16, the Group has included the asset related to the right of use in the carrying amount of the CGU, without modifying the calculation of the discount rate.

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EXEL Industries group I 2020 Universal Registration Document

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