NATIXIS_REGISTRATION_DOCUMENT_2017

FINANCIAL DATA Consolidated financial statements and notes

On the first-timeadoptionof IFRS, property,plant and equipment and investment property were maintained at historical cost as permitted by the options available under IFRS 1, except for property held by insurance companies which is carried at fair value throughprofit or loss. Property, plant and equipment and investment property are recordedat their purchaseprice at the acquisitiondate, including directlyattributablecosts (transferduties,fees, commissionsand registration expenses) as well as borrowing costs when these meet the criteria for capitalizationset out in IAS 23 “Borrowing Costs”. Computer software developed in-house is recognized under “Intangible assets” at its direct cost of development, which includes the related hardware costs, service costs, payroll costs directly attributable to the production and preparation of the software for use, and borrowing costs when these meet the criteriafor capitalizationset out in IAS 23“BorrowingCosts”. Expensesincurred during the developmentphase are capitalized if they meet the criteria for recognition as intangible assets set out in IAS 38: these include technical feasibility, the intention to complete the asset and use or sell it, the probability that the asset will generate future economic benefits, the availability of resources, and the ability to reliably measure the expenditure attributable to the asset’s development. Costs incurred during the research phase are not capitalized but are recognized in expenses.

Subsequent measurement After initial recognition, assets are measured at cost less accumulated depreciation, amortization and impairment losses. Investment property held by insurance companies is measured at fair value through profit or loss in accordancewith IAS 40 and IFRS 4. Fair value is obtainedusing a multi-criteriaapproachbased on the capitalization of rents at the market rate combined with a comparisonwithmarkettransactions. In accordancewith Article R.332-210-1of the French Insurance Code, a five-year appraisal is conducted by an independent expert approved by the ACPR. Between two appraisals, the market value of property is certified by experts on a half-yearly basis. Depreciation and amortization As soon as they are in a condition to be used by Natixis in the manner in which they were intended, property, plant and equipment and intangible assets are depreciated or amortized over their estimated useful lives on a straight-line, declining or increasing balance basis, whichever best reflects the pattern in which the economic benefits are consumed. The residual value of the asset is deducted from its depreciable or amortizable amount when it can be measured reliably. Natixis does not believe it can reliably measure the residual value of items other than land and non-destructiblebuildings classified as historical monuments. They are therefore assigned a residual value of zero.

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In line with IAS 16, a specific depreciation schedule is defined for each significant component of an item of property, plant and equipmentwhich has a differentuseful life or is expectedto consumefuture economicbenefitsdifferentlyfrom the item as a whole. For buildingsused in the businessand investmentproperty,the followingcomponentsand depreciationperiodshave been identified:

Component

Depreciation period

Land

N/A N/A

Non-destructible buildings classified as historical monuments

Walls, roofs and waterproofing Foundations and framework

20-40 years 30-60 years 10-20 years 10-20 years 8-15 years

External rendering

Equipment and installations Internal fixtures and fittings

Other items of property, plant and equipment are depreciated over their estimateduseful lives, generallyfive to ten years. Purchasedsoftware is amortizedon a straight-linebasis over its estimateduseful life, which in most cases is less than five years. Internally generated software is amortized over its estimated useful life, whichcannotexceedfifteen years. Other intangible assets mainly consist of components of the client portfolio, which are amortized over the term of the contracts (average term of five to eight years for the United States). The charge to write-down or amortization is recognized in the consolidated income statement under the heading “Depreciation, amortization and impairment of property, plant and equipmentand intangibleassets”.

Write-downs Assets are tested for impairment whenever there is objective evidence that they may be impaired and at least annually in the case of intangible assets with an indefinite useful life. Natixis considers whether there is any evidence of impairmentat each reporting date. When any such evidence exists, the recoverable amount of the individual asset is estimated wherever possible; otherwise the recoverable amount of the CGU to which the asset belongs.The recoverableamount is the higher of fair value less selling costs and value in use, which is the present value of future cash flows expectedto be derived from continuinguse of the asset or cash-generatingunit. If the recoverable amount of the asset or CGU is lower than its book value, an impairmentloss is recognized in income under “Depreciation, amortization and impairment of property, plant and equipment and intangible assets”. Write-downsmay be reversed if there has been a change in the conditions that initially resulted in the write-down (for example there is no longerany objectiveevidenceof impairment).

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Natixis Registration Document 2017