NEOPOST - 2018 Registration document

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Financial statements

Consolidated financial statements

Note 4

Intangible assets, tangible assets and non-current financial assets

4-1:

Goodwill

4-1-1:

Accounting principles

Commitment to purchase non-controlling interests In accordance with IAS 39, sell options granted to minority shareholders are recognized as debt measured at the estimated exercise price of the option. The relevant portion of subsidiaries’ net assets is transferred from “non-controlling interests” to “other financial debts”. The non-controlling interests’ share of net income is unchanged and still reflects the proportion owned by minorities. The recognition in goodwill of the difference between the strike price of the option and the value of non-controlling interests is booked under shareholders’ equity.

In accordance with IFRS 3, business combinations are recognized using the acquisition method. At the date on which control of a company is taken, the assets, liabilities and contingent liabilities acquired are measured at fair value. Any variance between the cost of acquiring the shares and the acquirer’s share of this revalued net asset value constitutes goodwill. Any negative goodwill is recognized immediately in the income statement after confirmation of the nature of this negative goodwill and its constituent components. Goodwill is not amortized but is subject to an annual impairment test as described in note 4–5.

4-1-2:

Changes in goodwill

Gross goodwill at 31 January 2017

1,120.8

Acquisitions

14.0

Exit from consolidation scope

(6.1)

Translation difference

(45.0)

Gross goodwill at 31 January 2018

1,083.7

Acquisitions

94.9

Exit from consolidation scope

(31.4)

Other

(0.1)

Translation difference

21.6

Gross goodwill at 31 January 2019

1,168.7

Cumulative impairment

(41.4)

NET GOODWILL AT 31 JANUARY 2019

1,127.3

In 2018, the gross goodwill variation is explained by (i) the provisional goodwill recorded on the acquisition of Parcel Pending in the United States for 94.9 million euros (111.6 million United States dollars), out of which 12.8 million are related to earn-outs (15.0 million United States dollars); (ii) the disposal of the relative value of Quadient Data USA goodwill for 30.5 million euros and (iii) the classification of the relative value of Quadient Data Netherlands goodwill in assets held for sale for 0.9 million euros. Neopost acquired 100% of the shares of Parcel Pending, a leader in the American parcel locker market, a nascent and fast growing market. Parcel Pending is mainly provider in residential, commercial, retail and universities in the United States and Canada. In 2018, Parcel Pending revenue exceeded 30.0 million United States dollars and posted a positive current operating income. The acquisition price stood above 100.0million United States dollars. In 2017, the goodwill gross value variation was mainly explained by the acquisition of Claritus in the United States of America and by the divestments of Neosys and DMTI Spatial.

The goodwill impairment for an amount of 41.4 million euros as at 31 January 2019 is detailed in the note 4–5-2 and concerns Temando. The impairment at the beginning of the financial year amounted to 22.1 million euros and was also related to Temando. All the acquisitions were fully paid for by the Group through its cash and/or financing lines. Earn-outs are based on sales estimates targets for two years after the acquisition. The amounts booked at 31 January 2019 correspond to the best estimate of the future performance of these acquisitions. As of 31 January 2019, the Group’s financial statements show a debt of 13.3 million euros related to earn-outs compared with 11.9 million euros as at 31 January 2018. As of 31 January 2019, this debt is totally related to the acquisition of Parcel Pending (15.0 million United States dollars).

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REGISTRATION DOCUMENT 2018 / NEOPOST