SOLOCAL_Registration Document_2017

5

COMMENTS ON THE FINANCIAL YEAR 5.2 Financial review

continued to migrate to digital offerings. This business accounted for 16% of total revenues in 2017.

ANALYSIS OF REVENUES

5.2.2.1

Revenues In 2017, revenues stood at €755.8 million, down -5.7% compared to 2016: Internet revenues of €636 million in 2017 were stable (-0.3%) l compared with 2016 and accounted for 84% of total revenues in 2017. The growth of the Digital Marketing business (+18.1%) offset the decrease in the Local Search (-5.8%), which was due to the negative impact of the financial restructuring on sales and to the slower than expected ramp-up of the new Search products; audience growth: Internet visits in 2017 were up +2% to l 2.4 billion compared with 2016. The mobile audience increased by +12%, and accounted for 40% of the total audience; Local Search revenues: -5.8% to €461.3 million in 2017 l compared with 2016: Local Search ARPA: -1% to €984 in 2017 compared with 2016. l This slowdown is mostly due to the impact on sales of the financial restructuring finalisation in Q4 2016, especially with large accounts, Number of customers: -5% to 469 thousand in 2017 compared l with 2016; Digital Marketing revenues: revenues increased by +18.1% to l €174.5 million in 2017 compared with 2016, thanks to an acceleration of the Group’s innovative offerings, including websites (Premium and Privilege websites) and AdWords (Booster Contact offering). Digital Marketing revenues accounted for 23% of total revenues in 2017; Print & Voice revenues, which amounted to €120 million in 2017, l were down -26.6% compared with 2016, as customers and users

ANALYSIS OF RECURRING EBITDA

5.2.2.2

Net external expenses Net external expenses decreased by -7.3%, or -€15.1 million, to -€192.4 million in 2017 compared to -€207.4 million in 2016. External expenses represented 25.5% of revenues in 2017. The decrease was primarily attributabe to a reduction in the Group's communication expenses, as well as reduced production costs of the Print & Voice activities and cost control of our field sales. Staff expenses Staff expenses increased by +1.3% to -€367.5 million in 2017 compared to -€362.9 million in 2016. Staff costs represented 48.6% of revenues in 2017. Recurring EBITDA Recurring EBITDA amounted to €196.0 million in 2017, down -15.2% versus 2016, mainly due to the decrease in revenues partially offset by the decrease in net external expenses. The EBITDA to revenues margin reached 25.9% in 2017, a limited decrease of 2.9 points versus 2016. Internet recurring EBITDA decreased by -9.2%, or -€17.2 million, to €170.4 million in 2017 compared to €187.6 million in 2016. Print & Voice recurring EBITDA decreased by -41.0%, or -€17.8 million, to €25.6 million in 2017 compared to €43.4 million in 2016.

ANALYSIS OF THE OTHER ITEMS OF THE INCOME STATEMENT

5.2.2.3

Recurring operating income The table below shows the Group’s recurring operating income for continued activities as at 31 December 2017 and as at 31 December 2016:

SoLocal Group

Continued activities

Change recurring 2017/2016

As at 31 December 2017

As at 31 December 2016 (1)

(in millions of euros)

Non recurring

Non recurring

Total Recurring

Total Recurring

EBITDA

182.7

196.0

(13.3)

226.0

231.0

(5.0)

-15.2%

As % of revenues

24.2% 25.9%

- -

28.2% 28.8%

- -

Depreciation and amortization

(64.2) 118.5

(64.2) 131.8

(56.6) 169.4

(56.6) 174.4

+13.4% -24.4%

OPERATING INCOME

(13.3)

(5.0)

As % of revenues 15.7% 17.4% -1.8% 21.1% 21.8% -0.6% 2016 restated for the retrospective application of IAS 20 concerning research tax credits (see Note 5.2.2.2) and Turnover Tables. 2015 (1) (see Note 6.2 in Chapter 6) not restated for these elements. Depreciation and amortization for the Group stood at -€64.2 million depreciation charges resulting from capital expenditures from in 2017 compared to -€56.6 million in 2015, an increase of previous financial years. -€7.6 million (+13.4%). This increase resulted from the increase in

134 2017 Registration Document SOLOCAL