SOLOCAL_Registration Document_2017

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

competition, the possibilities of adapting the costs to the changes in revenue or the effects of the natural attrition of the workforce; the level of the investment expenses that can be affected by the l constant change in new technologies. The values assigned to each of these parameters reflect past experience, subject to anticipated developments during the life of the plan. These parameters are the main sensitivity factors. In terms of sensitivity, an increase of 1% in the discount rate across all of the CGUs, a decrease of 1% in the perpetuity growth rate or a decrease of 1% in the margin rate of the last year of the business plans would not result in the recording of depreciation. Research and development costs Under IAS 38 “Intangible Assets”, development costs must be recognised as an intangible fixed asset when the following can be demonstrated: the technical feasibility necessary to complete the intangible l asset with a view to its being put into service or sold; the intention and financial and technical ability to complete the l development project; its capacity to use or sell the intangible asset; l the likelihood that the future economic benefits attributable to l the development costs incurred will accrue to the Company; and the cost of this asset can be reliably valued. l Research and development costs not fulfilling the above criteria are expensed in the year in which they are incurred. Significant capitalised development costs are amortised on a straight-line basis over their useful life, generally not exceeding three years. Software Software is amortised on a straight-line basis over its useful life, not exceeding five years.

Goodwill values were examined on the closure of the consolidated financial statements on the basis of business plans, a perpetual growth rate of 1.5% for the “Local Search and transactional” CGU and of 3.0% for the “Sites” and “Programmatic” CGUs and an after-tax discount rate of 9.0% for the “Local Search and transactional” CGU and 15.0% for the “Sites” and “Programmatic” CGUs. These rates are based on published sector studies. The assumptions made in determining the recoverable values are similar from one cash-generating unit to the other: these are: the revenue which reflects the number of customers, the ARPA, l the penetration rate of the offerings; costs with the levels of commercial costs required to handle the l rate of customer acquisition and renewals, the positioning of the

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NOTE 8

FIXED ASSETS

8.1

OTHER INTANGIBLE FIXED ASSETS

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Other intangible assets, consisting mainly of trademarks, licences and patents, research and development costs and software. They are stated at acquisition or production cost. When intangible assets are acquired in a business combination, their cost is generally determined when the purchase price of the company acquired is allocated based on their respective market values. When such market value is not readily determinable, cost is determined using generally accepted valuation methods based on revenues, costs or other appropriate criteria. Internally developed trademarks are not recognised in the balance sheet. Brands Trademarks having an indefinite useful life are not amortised, but are tested for impairment (see Note 8.3). Licences and patents Licences and patents are amortised on a straight-line basis over periods which correspond to the expected usage period, not exceeding twenty years.

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31/12/2017

31/12/2016

(in thousands of euros)

Total depreciation and losses of value Net value

Total depreciation and losses of value Net value

Gross value

Gross value

Software and support applications Other intangible fixed assets

376,602 18,934 395,537

(267,960)

108,642 10,200 118,842

369,321 10,336 379,657

(244,432)

124,889

(8,734)

(7,151)

3,185

TOTAL

(276,695)

(251,583)

128,074

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2017 Registration Document SOLOCAL