SOLOCAL_Registration Document_2017

FINANCIAL STATEMENTS 6.2 Annual financial statements for the financial years ended 31 December 2016 and 2017

Key audit matter

Handling the key audit matter

We have noted the process used by the Company to assess the recoverable value of equity interests and the controls put in place. Our work in particular consisted in: obtaining activity and cash flow forecasts, as well as l other data and parameters supporting the valuations (discounting rates, revenue multiples and EBITDA for comparable companies, DCF, etc.); reviewing consistency with the economic environment of l the assumptions made by Management, in association with our valuation experts; comparing the data used in carrying out impairment l tests on equity interests with the source data for each entity; ensuring the arithmetic accuracy of the recoverable l value calculations adopted by the Company. We have also assessed the appropriateness of the information set out in Note 3.2 to the annual financial statements.

Valuation of equity interests and related receivables As at 31 December 2017, equity interests are posted in the balance sheet at a net book value of €2,301 million, i.e. 95.1% of total assets. Related receivables account for €2 million. As stated in Note 2.2 to the annual financial statements, impairment is recognised if its value is higher than the recoverable value as determined by SoLocal Group’s management, while taking into account each equity interest’s specific characteristics of on the basis of various criteria: market value, calculated on the basis of revenue multiples or the EBITDA of comparable companies, or the value in use determined by discounting cash flows (“DCF”) adjusted for net debt. Key assumptions for DCF valuations include: growth and profitability outlooks, as well as cash flows from business plans that cover a sufficiently long period, which is generally 5 years. Beyond this period, cash flows are extrapolated using a perpetual growth rate that reflects the forecast long-term growth rate of the market for each specific business activity, the cash flows being discounted by using rates appropriate to the nature of the business and the country of operation. Given the value of the equity interests in the balance sheet, the complexity of the models used and their sensitivity to variations of the data and assumptions on which the estimates are based, notably the discounted cash flows, we have considered the correct valuation of the recoverable value of the equity interests as a key audit matter. Financial restructuring During the first quarter of 2017, SoLocal Group implemented the financial restructuring decided during the General Shareholders’ Meeting of 15 December 2016, as a result of which the Group’s debt was divided by three. Following this restructuring, the share capital and issue premiums were increased by €762 million. The Company also issued mandatory convertible bonds (“MCB”) in an amount of €18 million, classified as financial liabilities. The accounting implications of these operations are described in Notes 3.4 and 3.5 to the financial statements. Given the amounts and the complexity of the refinancing operations, and the special character of the accounting processes required by French standards, we considered that the financial restructuring overall represented a key audit matter. Key audit matter

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Handling the key audit matter

We noted the detailed conditions of each of the operations involved in the financial restructuring. Our work in particular consisted in: analysing all the legal documentation relating to each of l the operations: capital increases, debt cancellation, issue of new debt and the MCB; reviewing the correct entry of the operations in the l annual financial statements; reviewing, on a test basis, the costs incurred for these l operations, and the appropriateness of the portion deducted from equity. We also reviewed the appropriateness of the information set out in Note 3.4 of the notes to the annual financial statements.

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2017 Registration Document SOLOCAL