NATIXIS - 2018 Registration document and annual financial report

5 FINANCIAL DATA

Consolidated financial statements and notes

3.4

in the net fair value of the identifiable assets, liabilities and contingent liabilities; Application of IFRS 3R to business combinations carried out a after January 1, 2010: for each business combination, Natixis chose to determine j minority interests: either based on their share in the identifiable net assets of j the acquired entity, measured at their fair value at the purchase date, and therefore without recognizing goodwill on the minority interests (partial goodwill method), or based on their fair value at the purchase date, resulting j in the recognition of goodwill, both for the Group share and the minority interests (full goodwill method); hence, goodwill is a residual item determined as the j difference between (i) the sum of the purchase price, the fair value at the purchase date of the percentage interest held in the acquired entity prior to the purchase date, and the amount of the minority interests (determined using the partial goodwill method, in the majority of cases, or the full goodwill method) and (ii) the net amount of the assets and liabilities assumed, measured at their fair value at the purchase date. Positive goodwill is recorded on a separate line on the asset side of the balance sheet if it relates to a controlled entity. It is allocated at the purchase date to one or more cash-generating units (CGUs) expected to benefit from the acquisition and is not amortized. It is tested for impairment at least once per year, and more often where there is objective evidence of impairment. The impairment test consists of comparing the carrying amount of the CGU or group of CGUs including goodwill with its recoverable value. A controlled entity’s negative goodwill is immediately recognized in income under “Change in value of goodwill”. Goodwill related to an associate or joint venture is included in the carrying amount of “Investments in associates” under assets if it is positive; however, it cannot subsequently be amortized. It is tested for impairment, at least once a year (see Note 3.2.2). If it is negative, it is immediately recognized in income under “Share in income of associates”. Specific case of business combinations carried out under joint control Combinations between entities or operations under joint control are understood to be combinations in which several operations are combined and all the interested parties (entities or operations) are ultimately controlled by the same party or parties for a relatively long period before and after the combination. Such combinations do not fall within the scope of IFRS 3R. Barring clarification of IFRS 3R on the accounting treatment of business combinations under joint control, Natixis applies a method based on historical carrying amounts to such transactions. According to this method, the difference between the price paid and Natixis’ share in the historical carrying amounts of the assets and liabilities of the acquired entity is recorded as a deduction from shareholders’ equity. In effect, in using this method, any goodwill and valuation differences resulting from the application of the acquisition method are deducted from shareholders’ equity.

Treatment of put options granted

to minority shareholders The granting of put options to minority shareholders by Natixis has no impact on the determination of Natixis’ controlling interest in the subsidiary in question as long as the option is not exercised, unless Natixis also holds an immediately exercisable call option. The granting of put options to minority shareholders has no impact on Natixis’ percentage interest in the subsidiary in question unless the put option is associated with the holding of a call option by Natixis, and the call and put options give immediate entitlement to the economic benefits attached to the underlying shares. The granting of a put option to minority shareholders which does not transfer the risks and benefits associated with the underlying shares to Natixis prior to the option’s exercising, results in the recognition of a liability equal to the estimated present value of the option’s exercise price. The corresponding receivable is booked to equity, the carrying amount is deducted from minority interests and the remainder is deducted from consolidated reserves (Group share). Subsequent changes in the liability related to adjustments to the exercise price of the put option are recorded in consolidated reserves (Group share). Income generated from minority interests subject to put options is presented in “Net income/(loss for the period—share attributable to minority interests” in the consolidated income statement. The following accounting treatment is applied to business combinations giving rise to control: IFRS 3 before revision if they are prior to January 1, 2010, a except for those that occurred before January 1, 2004. On the initial application date of IFRS, Natixis chose the option offered by IFRS 1 “First-Time Adoption” to not retrospectively restate business combinations previous to January 1, 2004 pursuant to IFRS 3; Revised IFRS 3 (IFRS 3R) if they occur after January 1, 2010. a IFRS 3R can be applied prospectively to business combinations if their acquisition date is the same or later than the adoption date of IFRS 3R. In accordance with IFRS 3 (pre- or post-revision), business combinations are recorded using the acquisition method. Under the acquisition method, the identifiable assets and liabilities of the acquired entity are measured at their fair value at the valuation date. The method used to measure minority interests and goodwill may differ depending on whether IFRS 3 or IFRS 3R is applied. Application of IFRS 3 to business combinations carried out a before January 1, 2010: minority interests are determined based on their share in the j identifiable net assets of the acquired entity, measured at their fair value at the purchase date (partial goodwill method), goodwill is the difference between the cost of the business j combination and the share of the purchasing entity’s interest Business combinations and goodwill 3.5

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Natixis Registration Document 2018