NEOPOST_REGISTRATION_DOCUMENT_2017

5

Financial statements

Consolidated financial statements

4-4:

Other non-current financial assets

4-4-1:

Accounting principles

Other non current assets are initially recognized either at their acquisition cost including transaction costs or at the fair value of the assets used for payment. Following initial recognition, assets classified as “Assets held for trading purposes” or “Financial assets available for sale” are measured at fair value on the closing date. Gains and losses on financial assets held for trading purposes are recognized in the income statement. Gains and losses on assets available for sale are booked under

shareholders’ equity until the asset is sold or there is evidence that the asset has lost value. When this happens, the cumulative profit or loss previously recorded under shareholders’ equity is recognized in the income statement. The depreciation of financial assets available for sale is booked in the profits and losses income statement once the loss exceeds 40% of the book value during a period of eighteen consecutive months.

4-4-2:

Other non-current financial assets

31 January 2018

31 January 2017

Deposits, loans and guarantees

3.3

4.7

Pension plan net asset

35.4

29.4

TOTAL

38.7

34.1

At 31 January 2018, the deposits, loans and guarantees item notably includes a deposit for 1.1 million euros related to the liquidity contract compared with 2.2 million euros at 31 January 2017. The Group has a pension plan in the United Kingdom that shows a surplus of 31.2 million pounds sterling (35.4 million euros) at 31 January 2018 compared with 25.3 million pounds

sterling (29.4 million euros) at 31 January 2017. The change in the pension plan’s net assets is mainly related to actuarial differences. The tax rate applicable for the cash refund of this asset in the United Kingdom will be 35%. This tax effect is presented in the consolidated financial statements liabilities under deferred tax liabilities.

4-5:

Impairment test

4-5-1:

Impairment test method

Goodwill Goodwill is tested for impairment at least once a year and whenever there is any evidence of impairment. Goodwill is tested for impairment at the level of the Cash Generated Units (CGU) defined by the Group. A CGU is a business unit generating independent cash flows. In the Group’s organization, CGUs generally correspond to countries for the SME Solutions division and to product lines for the other divisions. The Group has seventeen CGUs as at 31 January 2018. Given the fact that having a reliable basis to determine the fair value less reliable costs of an asset or a group of assets is rare, unless otherwise indicated, the Group uses the value in use to measure the recoverable amount of an asset or group of assets.

Impairment tests compare the recoverable amount of a non-current asset with its net carrying amount. If the asset’s carrying amount is higher than its recoverable amount, it is written down to its recoverable amount. The recoverable amount of an asset or group of assets is the higher of its fair value less disposal costs and its value in use. Fair value less disposal costs is determined using available information to establish the best estimate of the disposal price net of the costs necessary to carry out the sale in an arm's lengh transaction between knowledgeable, willing parties. Value in use corresponds to the present value of the future cash flows expected to be derived from an asset or group of assets, taking into accounts its residual value.

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REGISTRATION DOCUMENT 2017 / NEOPOST