SOLOCAL_Registration Document_2017

COMMENTS ON THE FINANCIAL YEAR 5.3 Cash flows and net debt

OPERATING ACTIVITIES

INVESTING ACTIVITIES Net cash used in investing activities amounted to €40.4 million for the year ended 31 December 2017, compared to €62.0 million for the year ended 31 December 2016, mainly attributable to the following: €52.9 million for acquisitions of property, plant and equipment l and intangible assets in 2017 compared with €67.2 million in 2016; in 2017, the net cash proceeds of the site AVendreALouer.fr l which amounted to €14.8 million; in 2016, a refund of €9.0 million security deposit on two l commercial lease contracts and, a refund of €1.6 million relating to the security deposit for the lease of our former premises in Sèvres partially offset by the payment of €4.1 million for the security deposit on our new premises CityLights in Boulogne; and €0.9 million of payouts in 2016 and 2017 resulting from l earn-outs and acquisitions. FINANCING ACTIVITIES Net cash from financing activities represented an inflow of €8.5 million for the year ended 31 December 2017, compared to an inflow of €1.9 million for the year ended 31 December 2016. This change was primarily attributable to the following: in 2017, in connection with the financial restructuring (see l note 10.5 in Chapter 6), the repayment to lenders of €252.7 million, a capital increase in cash for an amount of €272.7 million and the disbursement of refinancing costs for €21.4 million; the implementation in 2017 of a sale-leaseback transaction for l €10.0 million; and in 2016, the drawing under our revolving credit line for a net l amount of €38.4 million, the repayment of €15.2 million under the cash sweep provisions of the A7 tranche of our senior facility, the repayment of another loan for €1.7 million, the treatment in debt reduction (and no longer in cash equivalents) of the redemption of part of a €12.2 million bond issue in 2015 and the disbursement of €7.0 million of refinancing costs.

Net cash from operations represented an inflow of €30.1 million for the year ended 31 December 2017, compared to an inflow of €101.6 million for the year ended 31 December 2016. This change was primarily attributable to the following: a €43.4 million decrease in EBITDA for continued activities l compared to 2016; a €15.1 million decrease in non-recurring expenses (including l restructuring costs); an increase in working capital requirement of €41.3 million in l 2017 compared to an increase of €56.8 million in 2016, a favorable change of €15.4 million between the two periods. This change was generated mainly by (i) a change, starting in 2016, in the periodicity of scheduled social contribution payments from quarterly to monthly, which translated into a one-off increase in the amount of such payments in 2016 as the Group had to cover the monthly payments of that year as well as the payment for the fourth quarter of 2015 and (ii) an increase in payables due to the franchise effect of rent from May 2016 to August 2018; partially offset by the decrease in supplier credit in connection with the decrease in external charges; a net disbursement of €55.8 million in financial interest in 2017 l compared to €36.0 million in 2016, representing an unfavorable variation of €19.8 million between the two periods mainly related to a shift in the terms of interest payments from the fourth quarter of 2016 to the first quarter of 2017 in the connection with the financial restructuring (an expense of €32 million recognized in 2016); partially offset by the decline in interest related to the debt reduction resulting from the financial restructuring; and a net disbursement of €44.6 million in respect of corporate l income tax in 2017, including €6.4 million relating to a tax adjustment in prior years related to the CIR, compared to €12.6 million in 2016, an unfavorable variation of €32.0 million. In 2016 the Group benefited from a reimbursement of the tax receivable recorded as at 31 December 2015 for an amount of €16.7 million.

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2017 Registration Document SOLOCAL