SOLOCAL_Registration Document_2017

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FINANCIAL STATEMENTS 6.1 Consolidated financial statements for the years ended 31 December 2016 and 2017

Costs of obtaining contracts The variable portion of the remuneration of the sales force can l no longer be considered as an incremental cost directly linked to the acquisition of contracts identified in terms of IFRS 15. These costs will now be recognised directly as expense at the l time when they are incurred. Costs of executing contracts The analysis has led us to conclude that applying IFRS 15 will not l have any impact on the recognition of the costs of executing contracts which will be booked directly as expense except for directories that have not yet been distributed IFRS 16 “Leases” In January 2016, the IASB published IFRS 16 “Leases” which replaces IAS 17. This new standard introduces a single recognition model for most leases of which the duration is greater than 12 months, consisting for the beneficiary of the contract, when the asset included in the lease can be identified, and who controls the use of this asset, to recognise as an asset on its balance sheet a right of use offset by the recognition as a liability on the balance sheet of a financial debt. Moreover, the rents for these leases must be accounted for partly as depreciation in the operating results, and partly as financial expenses in financial income. This standard will be applicable to financial years commencing from 1 January 2019. The Group is continuing to examine the impact of this standard in order to determine its impacts on the financial statements and the modifications that it could lead to in the information communicated. For information, the amount of operating lease commitments as at 31 December 2017 is €138.3 million. Research tax credit (CIR) Recognised in the past as a reduction to profit tax, the research tax credit is recognised starting on 1 January 2017 as a grant in application of the provisions of IAS 20. The amount of the Research Tax Credit was recognised as at 31 December 2017 in the following way: the portion linked to development expenses recognised as an asset is presented as a reduction to the book value of these expenses for €2.9 million, which is an effect of €1.5 million as a decrease to depreciation and amortisation; the portion linked to other expenses recognised as expense is presented as reduction in external expenses of €0.1 million. Financial year 2016 was restated in a similar manner by the impact, of an amount of €1.4 million, concerns only depreciation and amortisation, the external expense portion is not significant. Other information 1.2.2

Foreign currency The principles covering the measurement and recognition of transactions in foreign currencies are set out in IAS 21 “Effects of Changes in Foreign Exchange Rates”. In accordance with this standard, transactions in foreign currencies are converted by the subsidiary into its operating currency at the exchange rate of the transaction date. Monetary assets and liabilities are re-measured at each balance sheet date. The corresponding revaluation differences are recorded on the income statement: in operating income for commercial transactions; l in financial income or expenses for financial transactions. l Seasonal variations The activities of the Group are not subject to seasonal effects per se, note however that in order to optimise costs, the dates of publication of the printed directories (which determine the recognition of income and related expenses) may vary from one quarter to the next, as each printed directory appears only once a year. Preparation of the financial statements In order to prepare the financial statements, the Management of the Group is required to make estimates and assumptions which have an effect on the amounts presented as assets and liabilities, the contingent liabilities at the date of preparation of the financial statements and the amounts presented as income and expenses for the financial year. The Management continuously evaluates these estimates and assessments on the basis of its past experience, as well as various other factors deemed reasonable, which combine to form the basis of its assessment of the book value of the assets and liabilities. This includes in particular goodwill, acquisition costs of contracts, share-based payments, restructuring costs and the valuation of pension liabilities. The actual results could differ appreciably from these estimates, if the actual outcome differs. The accounting policies applied for the financial year ending 31 December 2017 are in accordance with the provisions of international accounting standards as adopted by the European Union as at 31 December 2017 and unless mentioned otherwise in the Notes (cf. Notes 2 to 17), these methods have been applied permanently for all financial years presented. Finally, where a specific transaction is not covered by any standards or interpretations, the Management of the Group applies judgement to define and apply accounting methods which will provide relevant and reliable disclosures, ensuring that the financial statements: present a true and fair view of the financial position, the financial l performance and the cash flow of the Group; reflect the economic substance of transactions; l

are neutral,; l are prudent; l and are complete in all material respects. l

154 2017 Registration Document SOLOCAL