Compagnie des Alpes - 2017 Registration Document

5 FINANCIAL INFORMATION

Consolidated financial statements

This in particular applies to (see Note 1.14): z usage rights: the intangible rights to operate the ski lifts of ADS (Les Arcs/Peisey), SEVABEL (Les Menuires), SCV Domaines Skiables (Serre Chevalier), GMDS (Flaine), STVI (Val-d’Isère) and DAL (Les Deux Alpes); z the concession for the use of the highway interchange giving access to Parc Astérix, which expires in 2086 (see Note 1.14 below);

z and the right to use the Futuroscope brand until 2026. Intangible assets and other use rights to assets, the duration of which is directly linked to a concession agreement or lease, are amortised up to the date of expiry of such contracts.

1.13 PROPERTY, PLANT AND EQUIPMENT Items of property, plant and equipment are recognised on the balance sheet at their amortised cost. Investment subsidies are deducted from the gross amount of the assets giving rise to them. Items of property, plant and equipment that are in use are depreciated on a straight-line basis, broken down by component on the basis of their estimated useful lives as follows:

Durations

Buildings

20 to 30 years 10 to 20 years 15 to 30 years 10 to 40 years 5 to 40 years 3 to 10 years 40 years

Improvements

Ski lifts

Ski run and trail works

Rides

Equipment (other than ski lifts and rides)

Other items of property, plant and equipment (including theme decor and wax figures in Musée Grévin)

Assets classified as held in concession are: z assets supplied by the granting authority which are to be returned at the end of the concession; z assets supplied by the operator which are to be placed at the granting authority’s disposal at the end of the concession (typically in exchange for payment to the operator). Transfers for no consideration from the granting authority and assets under leasing contracts are not recognised in the Group’s balance sheet. A provision is funded on the liability side of the balance sheet (major repair provisions) for periodic maintenance of these facilities. The Company’s other assets, which are not connected with the concession, and which don’t meet these criteria are classified as directly-owned assets. Conditions governing return to granting authorities When concession agreements expire, it is generally expected that the concession assets acquired by the operator will be recovered by the granting authority in return for a payment. This payment is based on various calculation methods set out in the contracts. It is at least equal to their net book value. Main concession agreements Concessions granted by municipalities, and municipalities groups and associations The main concession agreements of consolidated Group companies are as follows: z Société des Téléphériques de la Grande Motte (STGM) - Tignes: Concession granted by the municipality of Tignes, initially for the period from 5 September 1988 to 30 September 2016 (28 years), and extended in 1998/1999 for an additional 10 years to 31 May 2026. z Société d’Aménagement de la Station de La Plagne (SAP) - La Plagne: Concession granted by the Syndicat Intercommunal de la Grande Plagne (SIGP, grouping of several municipalities), initially for the period

The range of depreciable periods is due to the diversity of assets involved. The shortest periods are for more rapidly replaced components ( e.g. , scenery for different types of rides), while the longest periods apply to infrastructure. Residual values and useful lives of assets are reviewed and, if necessary, adjusted at each reporting date. CONCESSIONS Compagnie des Alpes is a major player in the leisure sector in Europe, particularly in the operation of ski areas. The operation of ski areas in France is governed by the legal framework established in the French Mountain Act ( Loi Montagne ) of 9 January 1985, concerning the development and protection of mountainous regions. These ski areas are for the most part subject to concession agreements between CDA subsidiaries and local municipalities. The operator holds a concession agreement with a municipality or group of municipalities. These agreements govern the relations between the granting authority and the operator with regard to all operating aspects of a ski area (capital expenditure, commercial and pricing policies, legal risks, etc.). On this basis, the operator is responsible for making the capital expenditure over the life of the concession required to keep the facilities in good operating condition and implement its commercial and pricing policy. In return, the operator is authorised to collect from users, on the basis of a public rate grid, income from the sale of ski lift passes. Some CDA Group companies (STGM, ADS, SAP, SCV and GMDS) continue to pay leasing contract fees for ski lifts provided by the granting authorities. However, this system is gradually being replaced by concession agreements. In fact, the operators replace, at their own expense, obsolete equipment held under leasing contracts, with the new equipment coming under concession agreements. The CDA Group has analysed the characteristics of its contracts and the nature of the services provided, and concluded that these contracts do not fall within the scope of IFRIC 12 on service concession agreements. Accordingly, the CDA Group recognises assets associated with ski lift concessions as a separate component of property, plant, and equipment. They are broken down and amortised in accordance with the same rules applied to property, plant and equipment owned by the Group itself. 1.14

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Compagnie des Alpes I 2017 Registration Document