MAROC_TELECOM_REGISTRATION_DOCUMENT_2017

FINANCIAL REPORT

Consolidated financial statements at 31 December 2015, 2016 and 2017

1.3.7 Foreign-currency translation Foreign-currency transactions are initially recorded in the functional currency at the exchange rate prevailing on the date of the transaction. At the end of the period, monetary assets and liabilities denominated in a foreign currency are translated into the functional currency at the exchange rate prevailing on that date. All translation differences are recognized in profit or loss for the period. 1.3.8 Translation of financial statements for foreign activities Assets and liabilities relating to foreign activities, including goodwill and fair-value adjustments arising from consolidation, are translated into Moroccan dirhams at the exchange rate prevailing at the end of the period. Income and expenses are translated into dirhams at the average exchange rate over the period. Foreign exchange differences arising from translation are recorded as foreign currency translation differences, as a separate component of shareholders’ equity. OTHER INTANGIBLE ASSETS Intangible assets acquired separately are recorded at cost, and intangible assets acquired in connection with a business combination are recorded at their fair value at the acquisition date. Subsequent to initial recognition, the historical cost model is applied to intangible assets that are amortized when they are ready for use. Depreciation is recorded for assets with limited useful life. The useful lives are reviewed at each closing. The estimated useful lives are between 2 and 5 years. IAS 38 does not recognize brands, subscriber bases and market segments generated internally as intangible assets. Licenses for the operation of telecommunications networks are recorded at historical cost and are amortized on a straight-line basis as of the effective date of the service for the period of validity of the license. The Maroc Telecom Group chose not to use the option offered by IFRS 1 to choose to measure certain intangible assets at fair value on Januaryb1, 2004 at this date. Expenditures posted to intangible enterprises are capitalized only if they enhance the future economic benefits associated with the asset. Other expenses are recognized as expenses when incurred. 1.3.9.2 RESEARCH AND DEVELOPMENT COSTS Research costs are expensed when incurred. Development expenses are capitalized when the project can reasonably be considered feasible. 1.3.9 Assets 1.3.9.1

On the acquisition date, goodwill is measured as the difference between: – the fair value of the consideration transferred plus the amount of noncontrolling interest in the acquiree, and, in a business combination achieved in stages, the acquisition-date fair value of the equity interest held previously by the acquirer in the acquiree; and – the net amount on the acquisition date for identifiable assets acquired and liabilities assumed. The fair-value measurement of noncontrolling interests increases goodwill up to the share attributable to the noncontrolling interests, thereby resulting in the recognition of full goodwill. The purchase price and its allocation must be completed within 12 months of the acquisition date. If goodwill is negative, it is recognized as profit directly in profit or loss. After the acquisition date, goodwill is measured at its initial amount, less any recorded impairment losses. The following principles also apply to business combinations: – beginning on and after the acquisition date, to the extent possible, goodwill is allocated to each cash-generating unit likely to benefit from the business combination; – any adjustment to the purchase price is recorded at fair value on the acquisition date, and any subsequent adjustment after the purchase-price allocation period is recognized in profit or loss; – acquisition-related costs are recognized as expenses when incurred; – in the event of acquisition of an additional interest in a consolidated subsidiary, Maroc Telecom recognizes the difference between the acquisition cost and the carrying value of noncontrolling interests as a change in equity attributable to shareholders of Maroc Telecom; – goodwill is not amortized. BUSINESS COMBINATIONS PRIOR TO JANUARY 1, 2009 Pursuant to IFRS 1, Maroc Telecom elected not to restate business combinations that occurred before Januaryb1, 2004. IFRS 3, as published by the IASB in Marchb2004, had already retained the acquisition method. Its provisions, however, differed from those of the revised standard on the following main points: – noncontrolling interests were measured on the basis of their proportionate share in the acquired net identifiable assets; the option of fair-value measurement did not exist; – contingent consideration was recognized in the cost of acquisition only if payment was likely to occur and the amounts could be measured reliably; – costs attributable directly to the acquisition were recognized under the cost of the business combination; – In the event of acquisition of an additional interest in a consolidated subsidiary, Maroc Telecom recognizes as goodwill the difference between the acquisition cost and the carrying value of acquired noncontrolling interests.

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MAROC TELECOM ____ 2017 Registration Document