2017 Registration Document SOLOCAL 1 MESSAGE from the CHAIRMAN of the BOARD of DIRECTORS and CHIEF EXECUTIVE OFFICER of SOLOCAL GROUP
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2017 REGISTRATION DOCUMENT CONTENT 1 SOLOCAL, LOCAL DIGITAL PARTNER 5 COMMENTS ON THE FINANCIAL TRUSTED BY BUSINESSES 9 YEAR 129 1.1 History and development 10 5.1 Selected financial information 130 1.2 Business overview 10 5.2 Financial review 132 1.3 Overview of the sector 21 5.3 Cash flows and net debt 140 1.4 Strategy 28 5.4 Significant change in financial or trading 1.5 Organizational structure 30 position 142 5.5 Investments 143 5.6 Overview and current trends 2 RISK FACTORS 31 and objectives 143 2.1 Risks Related to our Business and Strategy 32 2.2 Risks Related to our Indebtedness 6 FINANCIAL STATEMENTS 145 and Market Risks 39 6.1 Consolidated financial statements 2.3 Legal Proceedings 40 for the years ended 31 December 2016 2.4 Insurance and risk management 42 and 2017 146 2.5 Regulations 43 6.2 Annual financial statements for the financial years ended 31 December 2016 and 2017 187 3 CORPORATE SOCIAL RESPONSIBILITY 47 7 INFORMATION ON THE COMPANY 3.1 SoLocal Group, a company responding to AND ITS CAPITAL 229 the digital transformation 48 7.1 General information on the Company 230 3.2 Social responsibility 51 7.2 Memorandum and Articles of Association 231 3.3 Environmental responsibility 63 7.3 Share capital 238 3.4 Societal responsibility 71 7.4 Main shareholders 244 3.5 Outlook 78 7.5 Dividend distribution policy 254 3.6 CSR contacts 79 7.6 Main related-party transactions 254 3.7 Appendix 1 – Note on methodology 79 7.7 Significant contracts 258 3.8 Appendix 2 – Concordance table 83 3.9 Appendix 3 - Independent Third Party's report 89 8 ADDITIONAL INFORMATION 259 8.1 Persons responsible for the Reference 4 CORPORATE GOVERNANCE 91 Document 260 8.2 Statutory Auditors 260 4.1 Administrative and general management bodies 92 8.3 Documents made available to the public 261 4.2 Functioning of the Board 8.4 Financial forecast calendar 261 and the Committees 98 8.5 Concordance table 261 4.3 Compensation and benefits 123 Glossaries 265 2017 REGISTRATION DOCUMENT This Reference Document (Document de référence) was filed with the French financial markets authority (Autorité des marchés financiers — AMF) on 26 April 2018 pursuant to Article 212-13 of its General Regulations. It may be used in connection with an offering of securities if accompanied with a prospectus (note d’opération) approved by the AMF. This document was prepared by the issuer and is binding on its signatories. This document is a free translation into English of the original French “Document de référence”, referred to as the “Registration Document”. It is not a binding document. In the event of a conflict of interpretation, reference should be made to the French version, which is the authentic text. 2017 Registration Document SOLOCAL 1 MESSAGE FROM THE CHAIRMAN OF THE BOARD OF DIRECTORS AND CHIEF EXECUTIVE OFFICER OF SOLOCAL GROUP DEAR SHAREHOLDER, 2017 was a decisive year for SoLocal, with the completion of the financial restructuring which allowed our Group to reduce its debt burden by two-thirds, and the initiation of a new governance. In February 2018, thanks to our improved financial position and the arrival of a new management team, the Group presented its new strategy, SoLocal 2020 , a three-year plan that aims to engage the company into a profound transformation and enable it to fully capitalize on its assets. Following the financial restructuring, and thanks to your commitment and support, the composition of the Board of Directors has been completely overhauled, with the new additions of multi-disciplinary and complementary skills and acknowledged digital expertise. All of our directors are now independent (except for the director representing employees) and 40% are women. We pay particular attention to good corporate governance, which creates the conditions for efficient management, and to taking account PIERRE DANON of the expectations and interests of all stakeholders. Chairman of the Board of Directors The composition of the Executive Committee has also of SoLocal Group changed significantly, and we now have a new management team committed to successfully transforming the company and ensuring it returns to sustainable and profitable growth. The Group’s financial performance in 2017 illustrates the effort expended immediately by this new team to contain and reduce costs, as indicated by the At a time French businesses are set decrease in external expenses in the second half of 2017. to accelerate their digitalization and develop SoLocal has all the assets, some of them unique in France, the use of increasingly digitalized solutions to become the leading local digital partner to French to retain and win market shares, SoLocal must companies and help them accelerate their growth: media evolve even more quickly and effectively in order with strong audiences, powerful geolocated data, scalable to fully realize its potential. technology platforms, sales force across France, privileged partnerships with GAFAM (Google, Apple, Facebook, Amazon and Microsoft/Bing) and many talents (experts in data, developers, digital marketing, etc.). 2 2017 Registration Document SOLOCAL SoLocal has everything it takes to become the leading local digital partner to French businesses: media with strong audiences, ERIC BOUSTOULLER powerful geolocated data, scalable technology Chief Executive Officer of SoLocal Group platforms, sales coverage across France, privileged partnerships with GAFAM and many talents. Throughout 2018, we will accelerate the transformation process of the company by developing around three key pillars to create value: l repositioning our product range to ensure that it meets customer needs. Small and large companies alike need digital visibility on all media. They need to be able to locate new users at all times and target their advertizing messages accurately and in real time. And they all want a universal presence, not just on our media but on all available internet platforms. Our Group will transition from an offering centred on its PagesJaunes proprietary media to a full web offering; l reinventing our two media, PagesJaunes and Mappy, to offer an enhanced user experience. The aim is to strengthen the relevance of local search (traditional search) using data that enables greater customization, and to boost user Our Group began its transformation over the last few years. engagement via new services (opinions, recommendations, However, at a time French companies are set to accelerate appointment scheduling, etc.); their digitalization and develop the use of increasingly digital l adapting our organization to refocus on customers and solutions to retain and win market shares, SoLocal must users because ensuring their satisfaction is key to our evolve even faster and more radically to develop its full transformation and success. We will thus create a new potential and impose itself as the main local digital partner omni-channel customer journey (field sale, telesales and for French companies. online sale) and concentrate on a single application to allow You can rely on the commitment of each member of our customers to monitor their audiences and digital activity management team, who all have faith in the company’s directly. To increase agility, the former Business Units prospects and are all invested in implementing this new will be eliminated, support functions will be centralized, strategy. locations streamlined, management lines simplified, We thank you for your commitment and for the trust you and certain activities consolidated. This would entail the placed in us at our recent General Meeting on 9 March 2018. reduction of some 1,000 positions in 2018-2019, of which approximately 800 positions in 2018 and 200 positions in 2019, and the implementation of a redundancy plan (“Plan de Sauvegarde de l’Emploi”). In parallel, within the context of our restructuring plan, we plan to create approximately Éric Boustouller, Chief Executive Officer 100 new positions involving new digital skills. Pierre Danon, Chairman of the Board of Directors 2017 Registration Document SOLOCAL 3 2016 2017 VS 16 OVERVIEW 2017 The local digital partner for all 638 businesses in supporting their growth Digital 636 0% Print 164 120 -27% TOTAL 801 756 -6% 2.4 billion € € 756 million visits (1) in revenues 2017 (1) 2017 VS 16 2016 2017 > 450,000 55% (3) websites reach Revenues 801 756 -6% produced (2) Recurring sta costs (363) (367) +1% Recurring net > 50,000 external expenses (207) (192) -7% 469,000 TOTAL 231 196 -15% customers campaigns per year 31/12/2016 4 million 150,000 pros listed daily updates 1,097 31/12/2017 Net debt 332 Financial leverage 4.7x 1.7x Cash position 91 86 (1) Continued activities. (2) Including store locators. (3) Source: Médiamétrie, October 2017, reach is defined as the number of unique visitors of a website expressed as a percentage of a reference population over a given period (scope: France). 4 2017 Registration Document SOLOCAL 2017 KEY FIGURES REVENUES (1) In millions of euros 2016 2017 VS 16 2017 638 Digital 636 0% Print 164 120 -27% TOTAL 801 756 -6% RECURRING EBITDA (1) (2) In millions of euros 2017 VS 16 2016 2017 Revenues 801 756 -6% Recurring sta costs (363) (367) +1% Recurring net external expenses (207) (192) -7% TOTAL 231 196 -15% NET DEBT AND CASH POSITION In millions of euros 31/12/2016 1,097 31/12/2017 Net debt 332 Financial leverage 4.7x 1.7x Cash position 91 86 (1) Continued activities. (2) EBITDA calculated as Group revenues, less staff costs and net external expenses. 2017 Registration Document SOLOCAL 5 A COMPANY IN TRANSFORMATION 2017 A BUSINESS