NATIXIS_REGISTRATION_DOCUMENT_2017
FINANCIAL DATA Consolidated financial statements and notes
Barring clarification of IFRS 3R on the accounting treatment of business combinations under joint control, Natixis applies a method based on historic carrying amount to such transactions. Accordingto this method, the differencebetween the price paid and Natixis’ share in the historic 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 differencesresulting from the application of the purchasemethodare deductedfromshareholders’equity. The carrying amounts used are those listed in the consolidated financial statementsof the ultimate parent company at the date of completionof the transaction. Transactions involving two entities controlled by Natixis and those involving an entity controlled by Natixis and an entity controlled by BPCE are considered to have been carried out by entitiesunder joint control. Principles adopted for measurement and recognition of transactions resulting in the creation of Natixis in 2006: The assets contributed by the CNCE to Natixis fall into two categories: shares in the Corporate & Investment Banking and service a subsidiaries; a portion of the cooperative investment certificates (CCIs) a conferring entitlement to the share capital of the Caisses d’Epargne. The contribution values used for consolidation purposes in respect of both categoriesof assets are the carrying amountsof these assets in the former CNCE’s consolidated financial statements,restated in accordancewith IFRS as adopted in the EuropeanUnion. Other transactionsaffectingthe structureof the Groupthat led to the creation of Natixis were accounted for by the acquisition methodfor consolidationpurposes,in accordancewith IFRS 3. Goodwill arising in connection with the above-mentioned business combinationon December 31, 2006was accountedfor as follows: Goodwill on contributed entities As the contributions were recognized at their net carrying amount under IFRS, no valuation adjustments have been recorded on the various assets and liabilities contributed. The differencebetweenthe acquisitioncost and the Group’s interest in the net assets of the contributedentities does not constitute goodwillwithin the meaningof IFRS 3, since the acquisitioncost takes into account the real value of the shares, while the contributionswere recognizedat their net carryingamount.Each of the differences observed was recognized in “Consolidated reserves”. An amount of €3.170 billion was charged against the issue premiumin this respectat December 31, 2006. Goodwill on other transactions The goodwillarising from the transactionresultingin the creation of Natixis amounted to €484 million, which breaks down as follows: €229 million on IAMG, €21 million on IXIS CIB and €8 million on Novacrédit, plus the goodwill recorded in
“Investments in associates” relating to the Caisse d’Epargne CCIs (€190 million)and the BanquePopulaireCCIs (€36 million). Since then, goodwill related to the former IXIS CIB has been totallywritten-down. In light of the sale of the cooperative investment certificates during fiscal year 2013, the associated goodwill is no longer included in the consolidated balance sheet.
Other goodwill
In 2017, goodwill increased by +€202 million, excluding translationlosses(-€201 million).
Impairment tests All items of goodwill are impaired, based on the value in use of the cash-generating units (CGUs) to which they have been allocated. For the Coface CGU, a listed entity since June 2014, which is not one of Natixis’ core businesses and which is managed on an asset basis, as in previous years, value in use was supplemented by other approaches using market data including market multiples, stock market prices and brokers’ target prices. An averagevaluationwas determinedby weighting the different approaches,with the respectiveweighting of each approachunchangedcomparedwith the previousfiscal year. On December 31, 2017, under the new strategic plan, New Dimension (see Note 9) , and in line with the creation of the new Insurance division, the InvestmentSolutions CGU was split into two separate CGUs: “Asset & Wealth Management” and “Insurance”.Goodwill related to the entities making up both of these new divisions was symmetricallyreallocated to both new CGUs. At December 31, 2016, the former Corporate Data Solutions CGU was made up of only Ellisphere and IJCOF. As these entitieswere disposedof in the first half of 2017 (see Note 3.1) , CDS no longer had any assets and its related goodwill was no longer included on the consolidated balance sheet at December 31,2017. Value in use is determined principally by discounting the expected future cash flows from the CGU (Discounted Cash Flows (DCF) method) on the basis of the five-yearmedium-term businessplans drawnup by Natixis. The followingassumptionshave been used: estimated future cash flows: forecast data drawn from a multi-yearplans establishedby the business lines and updated as part of Natixis’“NewDimension”strategicplan; perpetualgrowthrate: 2.5%for all valuations; a discount rate: use of a specific rate for each CGU: 9.7% for a Asset & Wealth Managementand 11.5% for Insurance (9.8% for Investment Solutions in 2016), 12.2% for Specialized Financial Services (11.3% in 2016), 10.8% for Coface (10.5% in 2016) and 11.4% for Corporate &InvestmentBanking (11% in 2016). The discount rates were determined by factoring in the following: for the Asset & Wealth Management, Insurance, Specialized a Financial Services and Corporate &InvestmentBankingCGUs, the risk-freeinterestrate of the Euro-Bundzone, averagedover a depth of 10 years, plus a risk premiumcalculated according to a sampleof CGU-representativecompanies;
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Natixis Registration Document 2017
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