SOLOCAL_Registration Document_2017

6

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

NOTE 7

GOODWILL

Goodwill represents the difference between the purchase cost of shares in consolidated companies, including transaction expenses, and the Group’s equity in the value of the underlying net assets at the date of acquisition. In accordance with IFRS 3 “Business Combinations”, goodwill is not amortised. It is tested for impairment at least once a year or more frequently when there is an indication that it may be impaired. IAS 36 “Impairment of Assets” requires these tests to be performed at the level of each cash generating unit (CGU) to which the goodwill has been allocated. In certain cases, CGUs may be combined if the combined CGUs represent the lowest level at which management monitors return on investment. (A cash generating unit is defined as the smallest homogeneous group of assets whose continuous use generates cash inflows that are largely independent of the cash inflows from other groups of assets To determine whether goodwill has been impaired, the consolidated net book value of the assets and liabilities of each CGU is compared to their recoverable amount. The recoverable amount is the higher of the fair value less exit costs and value in use. Fair value less exit costs is determined as the best estimate of the sale value net of exit costs in a transaction conducted under normal competitive conditions between knowledgeable, willing parties. This estimate is determined on the basis of the available market information, taking into account particular situations. The level at which the Group measures the current value of goodwill corresponds to the level of each of the sectors which are

groupings of product lines (SearchLocal + transactional, sites and programmes). The segments have been determined in compliance with IFRS 8 “Operating Segments”, and are as follows: Internet, Printed and Vocal. As at 31 December 2017, the goodwill undepreciated is fully allocated to Internet sector. The value in use applied by the Group is the present value of the future cash flows expected to be derived from the CGU, including goodwill. Cash flow projections are based on economic and regulatory assumptions and forecast trading conditions applied by the management of PagesJaunes, as follows: cash flow projections are based on the five-year business plan; cash flow projections beyond the five-year period are l extrapolated by applying a growth rate to perpetuity reflecting the expected long-term growth in the market and specific to each activity; the cash flow is discounted at rates appropriate to the nature of l the activities and countries. Goodwill impairment losses are recorded in the income l statement. If the business is intended to be sold, the recoverable amount is determined on the basis of the fair value net of exit costs. Since 2015, the level at which the Group measures the current value of goodwill corresponds to the level of each of the product lines.

Breakdown of the net value of goodwill by business sector:

Year ended 31 December 2017

Year ended 31 December 2016

Change

(in thousands of euros)

Accumulated impairments

Accumulated impairments

Gross 49,421 26,891 15,815 92,127

Net

Gross 54,201 26,891 15,815 96,907

Net

Net

Search local + Transactionnel

(1,400)

48,021 26,891 15,815 90,727

(1,400)

52,801 26,891 15,815

(4,780)

Sites

- -

- -

- -

Programmatique

Internet

(1,400)

(1,400)

95,507 (4,780)

Printed directories Other businesses

-

-

- -

-

-

- -

- -

75,282

(75,282) (76,682)

75,282

(75,282) (76,682)

TOTAL

167,409

90,727 172,189

95,507 (4,780)

The movements in the net value of goodwill can be analysed as follows:

2017

2016

(in thousands of euros)

BALANCE AT START OF YEAR

95,507 (4,780)

95,507

Acquisitions/disposals

Impairments IMPAIRMENTS

90,727

95,507

164 2017 Registration Document SOLOCAL