NEOPOST_REGISTRATION_DOCUMENT_2017

5

Financial statements

Consolidated financial statements

Note 4

Intangible assets, tangible assets and other non-current

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 and 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 2016

1,096.5

Acquisitions

33.1

Other

(16.1)

Translation difference

7.3

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

Impairment

(22.9)

Translation difference

0.8

NET GOODWILL AT 31 JANUARY 2018

1,061.5

In 2017, the goodwill gross value variation is mainly explained by the acquisition of Claritus Inc in the United States of America and by the divestments of Neosys and DMTI Spatial. The goodwill impairment is detailed in the note 4-5-2 and concerns Temando. In 2016, the goodwill variation was mainly explained by the goodwill of 29.4 million euros recorded with the acquisition of icon Systemhaus GmbH in Germany, in which 12.8 million euros were related to the earn-outs and by the recognition of the fair value of the assets and liabilities acquired with icon for an amount of (6.0) million euros. The reclassification of the distribution subsidiaries assets in Thailand, Singapore, Indonesia and Malaysia in assets held for sales had an impact of (6.5) million euros on the goodwill.

All of these acquisitions were fully paid for by the Group through its financing lines. Earn-outs are generally based on sales growth estimates and/or current income targets for two to five years after the acquisition. The amounts booked at 31 January 2018 correspond to the best estimate of the future performance of these acquisitions. As of 31 January 2018, the Group's financial statements show a debt of 11.9 million euros relative to earn-outs compared with 46.9 million euros as at 31 January 2017. Goodwill related to the earn-out recorded on Temando as at 31 January 2017 has been totally reversed (28.6 million euros) with the purchase of the remaining interests.

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REGISTRATION DOCUMENT 2017 / NEOPOST