ANNUAL REPORT 2009 FINANCIAL YEAR

Transcription

1 Société anonyme with a Management Board and a Supervisory Board with a share capital de Euros Registered Office: 216 avenue Jean Jaurès Paris R.C.S. Paris ANNUAL REPORT 2009 FINANCIAL YEAR Pursuant to Articles of its general regulations, the Autorité des Marchés Financiers registered this annual report on 25 June 2009 under number R This document may only be used in support of a financial transaction if supplemented by a transaction prospectus approved by the Autorité des Marchés Financiers. It was drawn up by the issuer and its signatories are liable for its contents. It was registered, according to the provisions of the Code Monetaire et Financier, article L , by the AMF after a review of the relevance and consistency of the information provided on the company's financial position, and does not imply certification of the accounting and financial data presented. Incorporated for reference Pursuant to article 28 of the European Commission s regulation (EC) n 809/2004, dated 29 April 2004, the reader is asked to refer to the Seloger.com annual report for financial year 2008 registered by the Autorité des marches financiers on 25 June 2009 under the number R , containing the Group consolidated accounts as at 31 December 2008, drawn up in accordance with the IFRS accounting standards, the analysis of these accounts and the corresponding auditors reports, as well as the 2007 Seloger.com Annual Report registered by the AMF (Autorité des marchés financiers) on 18 November 2008 under number R , containing the Seloger.com Group consolidated accounts as at 31 December 2007 drawn up in accordance with the IFRS accounting standards, the analysis of these accounts and the corresponding auditors reports and lastly, the 2006 Annual report, registered by the Autorité des marchés financiers on 31 May under number R containing the consolidated Group accounts as at 31 December 2006 drawn up in accordance with the IFRS accounting standards, the analysis of these accounts and the corresponding auditors reports

2 1. NAME OF PERSON RESPONSIBLE Declaration of person responsible for this annual report Person responsible for information STATUARY AUDITORS Statuary auditors Reserve Auditors Fees paid to Auditors and members of their network by the Group SELECTED FINANCIAL INFORMATION RISK FACTORS Risks pertaining to the Company and Group Risks arising from uncertainties in the Internet-based classified ads sector Risks arising from the upper limits on the number of potential clients Risks arising from the Group s capacity to manage significant growth Risks arising from the Group s capacity to maintain, develop and increase its client base Risks arising from the functioning and continuity of agreements made by the Group with its clients and partners Risks arising from the launch of new services Risks arising from volatility in the Company s share price Financial risks Foreign exchange risk Interest-rate risk Liquidity risks Equity risk Risks arising from the Group's sector of activity Risks arising from the failure of the Internet or the Group s technical platform Risks arising from viruses and various forms of IT vandalism and pirating Risks arising from the cyclical nature and developments on the French property market Risks arising from the competitive environment on the market for the circulation of classified property ads in the absence of significant entry barriers Risks of dependency on providers of Group Internet server hosting and backup services Risks stemming from potential acquisitions Risks arising from the removal of intermediaries on the property market Legal risks Risks arising from intellectual property rights Risks pertaining to the role of content editor Risks arising from undertakings to buy-out minority shareholders Risks relating to regulatory provisions and subsequent changes Insurance and risk coverage INFORMATION ON THE COMPANY AND GROUP History and development of the company and Group Registered Name Place of registration and registration number Formation date and term Registered office, legal form and jurisdiction Major events in the development of the activities of the Company and the Group Founding of the Group Change in economic model with the choice of the Internet The Company refocuses on the online classified property ads business Investments GROUP BUSINESS OVERVIEW Principal Activities General presentation The Group's competitive edge The largest number of property advertisements in France

3 High awareness of the Group's websites combined with the widest audience for property advertisements on the Internet The most popular Internet marketplace for online property supply and demand in France An attractive tool for users that meets the changing trends in the ways of searching for property The essential partner for estate agents A steadfast customer base First-rate geographical coverage Mastered and innovative technology High-quality teams with vast experience in the sector Significant operational leverage offering strong profits and good cash generation prospects Strategy Capture a growing share of the marketing budget of estate agents Add to the Group's offer by seizing new growth opportunities Seize external growth opportunities The Group's products and services Classified Advertisements and Media Posting of professional property advertisements Estate agents, the Group's main customers Posting of property advertisements on the Internet Other ways of posting property advertisements Management of the property advertisements database Online advertising and partnerships Online advertising and marketing Partnerships Direct services for users Guide to property prices Services Web Agency activity The inter-agency system Marketing of transaction management software Organisation of sales Principal markets on which the Group is present General figures The general context: the property market and estate agents in France Property sales and rentals in France Estate agents The Group's principal market: professional property advertisements The huge growth in professional classified advertisements on the Internet The relative decline in print The segment of classified advertisements for new property developments The segment of property advertisements posted by individuals Major Internet expansion in France Group's market shares The Group's competitors on the Internet property advertising market Internet audience Market shares (number of property advertisements) Exceptional factors influencing the information given in sections 6.1 and Extent to which the Company is dependent on patents, licences, industrial, commercial or financial contracts or new manufacturing processes Basis for any statements made by the Company regarding its ranking Regulation ORGANISATIONAL STRUCTURE Organisational structure Reorganisations The acquisition of the company Périclès in November The acquisition of Belles Demeures in

4 8. PROPERTY, PLANTS AND EQUIPMENT Industrial Sites, properties and equipment Environmental issues that may affect the Employment of the Company's tangible fixed assets FINANCIAL POSITION AND PROFIT General introduction to the analysis of the accounts General comments Income statement items Comparison of the years 2009 and Classified Ads and Media activity Analysis Revenues Contribution margin Examination of the Services activity Turnover Contribution margin Examination of the Software Activity Comparison of depreciation, provisions and taxation for the years 2009 and Amortizations and provisions Financial expenses Tax CASH AND CAPITOL General Operational cash flow generated by activity Cash flow from investment and finance operations Investments Outstanding balance Debt as at 31 December Off-balance sheet commitments Investments Principal investments required for activity carried out during the last three fiscal years Principal current and future investments RESEARCH AND DEVELOPMENT, PATENTS AND LICENCES Research and Development Development of a single technology: ID3x technology Optimization of Group server and equipment hosting New development projects deployed in Intellectual property Databases, software and copyrights Trade marks and domain names Trade marks Domain names INFORMATION ON TRENDS Trends Publications since the end of the last fiscal year PROFIT FORECASTS OR ESTIMATES Figure Forecasts Pursue improvement in turnover Improving the Group s profitability Factors likely to affect the Group s earnings forecast ADMINISTRATIVE, MANAGEMENT AND SUPERVISORY BODIES AND GENERAL MANAGEMENT Members of the administrative, management and supervisory bodies Company s Management Board Composition of the Management Board

5 Biography of Management Board members Company Supervisory Board Composition of the Supervisory Board Biographies of Supervisory Board members Composition of Supervisory Board committees Conflicts of interest in administrative, management and supervisory bodies and general management SALARY AND BENEFITS Total amount of salary and benefits in kind allocated to executives Total amount of salary and benefits in kind allocated to Management Board members Total amount of salaries and benefits in kind allocated to Supervisory Board members Remunerations allocated to directing company officers Summary of global remunerations, options and shares allocated to directing officers Management Board Supervisory Board Summary of remunerations allocated to each directing officer Management Board Supervisory Board Attendance fees Table of stock options allocated during the fiscal year to directing company officers Table of stock options exercised during the fiscal year by directing company officers Table of performance shares awarded during the fiscal year to each directing company officer Table of performance awards available during the fiscal year to directing company officers Sums earmarked by the company and its subsidiaries for pensions, retirements and other benefits for company officers Company Stock options allocated to company officers Agreements concluded by the company with its executives or principal shareholders Loans and guarantees granted to executives OPERATION OF THE COMPANY S ADMINISTRATION, MANAGEMENT AND SUPERVISORY BODIES Organisation of the company s administration, management and supervisory bodies ORGANISATION OF THE MANAGEMENT BOARD (ARTICLE 12 OF THE ARTICLES OF ASSOCIATION) Operation of the Management Board Power and authority of the Management Board Principle Limits Organisation of the Supervisory Board (Article 13 of the Articles of Association) Operation of the Supervisory Board Power and authority of the Supervisory Board Service contracts between members of the administration, management and supervisory bodies and the Company or any of its subsidiaries Supervisory Board Committees Rules common to all permanent committees Audit Committee Duties Composition Operation Appointments and Remuneration Committee Duties Composition Operation Corporate governance Role of the Supervisory Board Members of the Supervisory Board Obligations imposed by law and by the Articles of Association Presence Competence Independence

6 Remuneration Obligation of shareholder members of the Supervisory Board Confidentiality Other obligations of Supervisory Board members Assessment Resources Expertise by means of committees Information of Supervisory Board members Transparency Internal control Report on the conditions governing the preparation and organisation of the Supervisory Board s work and on the internal control procedures implemented by the Company Procedures for determining the remuneration of company officers Statuary auditors report established according to article L of the French commercial code (Code de commerce) on the report of the of the Supervisory Board Chairman of the company seloger.com HUMAN RESOURCES Wage bill Geographical distribution Staff structure within the Group and changes thereto Overall changes in staff numbers within the Group Staff numbers by contract Change in staff numbers by social group Recruitment within the Group Dismissals, lay-offs, resignations and retirements within the Group The Group human resources policies The Group employment policy Professional development Temporary employment via agencies Professional equality Working time within the Group Absenteeism Remuneration policy within the Group Compensation Employee investment program Industrial relations within the Group Staff representation Collective bargaining agreements Professional training within the Group Health and safety within the Group Welfare within the Group Outsourcing within the Group Staff incentive schemes Incentive and profit-sharing agreements Incentive agreements Profit-sharing Company stock options Company free share award MAIN SHAREHOLDERS Identification of shareholders Breakdown of share capital and voting rights Changes in the break down of shareholders capitol and voting rights Shareholders declarations Declarations made during fiscal year Declarations from executives Declarations on threshold crossing and declarations of intent Declarations made since 1 January Declarations from executives

7 Declarations on threshold crossing and declarations of intent Voting rights of shareholders Pledges Pledges of the Company s pure registered shares Pledges of assets Shareholders pacts, lock-in contracts and actions in concert Shareholders pacts Lock-in contracts Actions in concert Agreements likely to result in a change of control of the Company TRANSACTIONS WITH AFFILIATES Business with consolidated subsidiaries Business with executives and shareholders FINANCIAL INFORMATION ON THE COMPANY'S ASSETS AND LIABILITIES, FINANCIAL POSITION AND EARNINGS Group consolidated income statement for the year ending December 31, INFORMATION ON THE COMPANY AND ACCOUNTING PRINCIPLES The Company Basis for preparing the 2009 Financial Report Consolidation principles Consolidation methods Translation of foreign subsidiaries' financial statements and foreign currency transactions Mutual transactions and accounts Goodwill ACCOUNTING RULES AND MEASUREMENT METHODS Current/non-current distinction Intangible assets Tangible fixed assets Impairment of fixed assets Other non-current financial assets Inventories Receivables Cash and cash equivalents Provisions Employee Benefits Interest-bearing liabilities Derivative instruments Minority interest buy-out obligations Deferred tax Accounting for sales Other operational income and expenses Earnings per share Use of estimates SCOPE OF CONSOLIDATION Change in scope over fiscal year Organizational Structure Scope of consolidation as at 31 December SEGMENT REPORTING Profit and loss Break down by Sector Dependence on major clients NOTES TO INCOME STATEMENT Operating income and expenses

8 4.2 Other revenues and operating expenses Financial profit (loss) Income taxes Break down of tax expense Source of deferred tax assets and liabilities in the income statement Earnings or losses per ordinary share NOTES TO THE BALANCE SHEET Valuation of intangible assets with an indefinite useful life Other non-current financial assets Inventories Net trade receivables Current tax Other current assets Cash and cash equivalents Share capital issued and reserve funds Share capital Company risk management Stock option plan and free share award scheme DIVIDENDS PAID OUT BY PARENT COMPANY FINANCIAL DEBT Repayment schedules Available credit lines Covenant management Provisions Other non-current liabilities PENSIONS AND SIMILAR COMMITMENTS Actuarial assumptions Changes in commitments during the FY Expenses/Revenues posted during FY Trade payables and other current liabilities MANAGEMENT OF RISKS RELATED TO FINANCIAL INSTRUMENTS Credit Risk Liquidity risk Exchange-rate risk Interest rate risk ADDITIONAL INFORMATION Off-balance sheet commitments Permanent head count Transactions with affiliates Transactions with consolidated subsidiaries Relations with corporate offices and shareholders Remuneration of corporate officers: Occurrences after closure Auditors' report on the consolidated financial statements for fiscal year to December 31, Auditors special report on regulated covenants and commitments Litigation and arbitrage ADDITIONAL INFORMATION Share capital Amount of share capital Securities not representing capital Share price control, treasury shares, and share buy-backs Description of share buy-back program

9 Operations linked to the share buyback Liquidity contract Other operations Summarized table of Operations Potential Capitol Marketable securities giving access to the Company s equity Stock options Free allocation of shares Maximum dilutive effect Information on the conditions governing all acquisition rights and all obligations attached to the capital subscribed, but not paid-up, or on any company aiming to increase its share capital Information about the share capital of any Group member that is subject to an option or conditional or unconditional agreement providing for it to be placed under option and details of such options (including the identity of those persons to which they relate) Changes in the share capital Authorised capital not yet issued Capital authorised by General Meeting of 28 September Articles of association Objects (Article 2 of the Articles of Association) Management of the Company Rights and obligations attached to the shares (Article 8 of the Articles of Association) Form of marketable securities issued by the Company (Article 9 of the Articles of Association) GENERAL MEETINGS (ARTICLE 15 OF THE ARTICLES OF ASSOCIATION) Clauses in the Articles of Association likely to have an impact on the occurrence of a change of control Identification of holders of marketable securities (Article 10 of the Articles of Association) Crossing of thresholds (Article 11 of the Articles of Association) Specific stipulations governing changes in the share capital Fiscal year (Article 16 of the Articles of Association) Dividends Dividends paid during the last five years Dividends and reserves distribution policy Time limit Market for Seloger.com shares Trading in Seloger.com shares Changes in listed price MAJOR CONTRACTS Contract with AOL media networks Partnership with TeleCity Contract with AMEPI Contract with Europcar Contract with Credit Agricole INFORMATION FROM THIRD PARTIES, EXPERT DECLARATIONS AND DECLARATIONS OF INTERESTS DOCUMENTS AVAILABLE TO THE PUBLIC

10 1. NAMES OF PERSONS RESPONSIBLE 1.1 PERSON RESPONSIBLE FOR THIS ANNUAL REPORT Roland Tripard, Chairman of Seloger.com Management Board 1.2 DECLARATION OF PERSON RESPONSIBLE FOR THIS ANNUAL REPORT I confirm that after taking all reasonable measures to this effect, the information contained in this annual report, to my knowledge depicts reality and does not contain any omissions of a nature to alter the scope thereof. I have received a completion letter from the statuary auditors of the accounts, in which they confirm that they conducted the audit of the information concerning the financial position and accounts given in this annual report and have read the whole of the annual report. Roland Tripard, Chairman of the Management Board 1.3 PERSON RESPONSIBLE FOR INFORMATION Ivan Tortet Administration and Finance Director Laurence Bégonin Maury Investor Relations Manager Seloger.com Seloger.com 216 avenue Jean Jaurès 216 avenue Jean Jaurès Paris Paris Telephone: contactfi@seloger.com wwwgroupe-seloger.com contactfi@seloger.com wwwgroupe-seloger.com

11 2. STATUARY AUDITORS 2.1 STATUARY AUDITORS Ernst & Young Audit Represented by Franck Sebag Member of the Compagnie Régionale de Versailles Faubourg de l Arche, 11, allée de l Arche, Paris la Défense Cedex Nanterre Trade & Companies Registry Compagnie Fiduciaire de Révision Comptable - COFIREC Represented by Yann Chaker Member of the Compagnie Régionale de Paris 35, avenue Victor Hugo, Paris Paris Trade & Companies Registry First appointed on formation of the Company on 21 October 2005, term of office expires at the end of the Shareholders General Meeting called to approve the accounts for the fiscal year ending 31 December 2011 First appointed at the members meeting on 30 November 2005, term of office expires at the end of the Shareholders General Meeting called to approve the accounts for the fiscal year ending 31 December RESERVE AUDITORS Auditex Represented by Gérard Delprat Member of the Compagnie Régionale de Versailles Faubourg de l Arche, Courbevoie Nanterre Trade & Companies Registry Thierry Simon Member of the Compagnie Régionale de Paris 169, boulevard Murat, Paris First appointed on formation of the Company on 21 October 2005, term of office expires at the end of the Shareholders General Meeting called to approve the accounts for the fiscal year ending 31 December First appointed at the members meeting on 30 November 2005, term of office expires at the end of the Shareholders General Meeting called to approve the accounts for the fiscal year ending 31 December

12 2.3 FEES PAID TO AUDITORS AND MEMBERS OF THEIR NETWORK BY THE GROUP Ernest & Young Audit COFIREC RZ Audit ( 000) Amount before VAT % Amount before VAT % Amou nt before VAT % Audit Certification and examination of consolidated and non-consolidated accounts % 78% % 45% % Issuer Incorporated subsidiaries Secondary duties 40 22% Issuer Incorporated subsidiaries Sub-total % 100% % 45% 179 TOTAL % 100% % 45% %

13 3. SELECTED FINANCIAL INFORMATION In this annual report, unless otherwise stated, the terms Company and Seloger.com mean Seloger.com and the term Group means the company and its subsidiaries. The selected financial information featured in this Chapter 3 should be read in parallel with the (i) full financial data featured in Chapter 20 of this annual report, Financial Information on the Company s Assets and Liabilities, (ii) examination of the financial position and profit of the Group featured in Chapter 9 of this annual report Financial Position and Profit" and (iii) examination of the cash flow and capital of the Group featured in Chapter 10 of this annual report, Cash and Capitol. Pro forma 2006 accounts for the 12 months are provided for reference in the Annual Report 2006 registered by the AMF on 31 May 2007 under n R Consolidated accounts for 2007 are featured in the Annual Report 2007 registered by the AMF on 18 November under number R Consolidated accounts for the year 2008 are featured in the 2008 year Annual Report registered by the AMF on 25 June 2009 under n R The key Group figures under IFRS are summarised below. Key consolidated income statement figures: ( 000) 31/12/ /12/2008 Revenues EBITDA (1) Operating Profit Net Profit (1) EBITDA is equal to the ordinary operating profit before depreciation and provisions as defined in paragraph of this annual report. It has been calculated in the same manner for the two periods shown. Key consolidated balance sheet figures: ( 000) 31/12/ /12/2008 Equity capital Non-current liabilities Of which long-term debt Current liabilities of which short-term debt Non-current assets Current assets Of which cash

14 Key consolidated cash-flow statement figures: ( 000) 31/12/ /12/2008 Cash flow from operating activities before cost of net debt and tax Change in working capital requirements Increase/decrease in cash flow Net cash flow (cash and cash equivalents less bank overdrafts)

15 4. RISK FACTORS Investors are invited to take into consideration all the information provided in this annual report, including the risk factors described in this Chapter, before deciding whether to subscribe or purchase shares in the Company. The Company has reviewed its risks and considers that only those listed in this Chapter 4 are of significance. On the registration date of this annual report, the Company considers these risks could have a significant negative impact on the group, its businesses, its financial position, earnings or outlook. The risk factors shown here in Chapter 4 are classified by decreasing order of importance. 4.1 RISKS PERTAINING TO THE COMPANY AND GROUP Risks arising from uncertainties in the Internet-based classified ads sector The internet-based classified property ads sector in which the Group operates is a relatively recent market. It is difficult to predict the future of the sector in France and it is dependent on numerous factors, particularly of a cultural, sociological or demographic nature, which may vary over a period, such as the number of property transactions carried out in France, the frequency of use of agencies for property transactions, the budgets allocated by estate agents to property advertising, classified ads and the Internet, and also the growth in internet usage. The development in these areas in France could have a significant negative impact on the business, financial position, earnings and growth outlook of the Group Risks arising from the upper limits on the number of potential clients The market for Internet property advertising is likely to reach maturity within the more or less short term, which would have the effect of capping the Group s rate of penetration on this market and amongst estate agents. The Company is not able to predict when this upper limit will be reached. Despite the existence of new growth areas in France, the Group cannot guarantee that it will be able to constantly develop and grow its existing and new client base or that the growth areas will be sufficient to compensate for the fall in growth that will stem from the maturity of the market for online classified property ads. These items are likely to have a significant negative impact on the Group s growth outlook Risks arising from the Group s capacity to manage significant growth The Group is experiencing significant growth which is reflected by a constant rise in the number of online property advertisements on its websites. However, the Group s available resources may be insufficient to meet market growth. The Group can only benefit from its growth if it is successfully managed by investing in human, technical and technological resources, as well as in other operating sectors, particularly in respect of the design of websites, maintenance, hosting, listing and the development of specific direct services to web users, factors which are also essential to its future success. If the Group is not able to manage its growth, the standard of its services, business, financial position and earnings could be affected. The Group s future success therefore depends amongst other things on its ability to: react efficiently to the rapidly-changing competitive position and market dynamic; pursue and develop its employee training, motivational and loyalisation initiatives in addition to integrating and loyalising new talent; develop and improve its operating, financial and accounting procedures, and other internal systems and controls; and continually improve its range of products and services and, if necessary, diversify its activities and

16 services Risks arising from the Group s capacity to maintain, develop and increase its client base The majority of the Group s clients is now made up of estate agents to which the Group is linked through subscription agreements, which in general, are for an unspecified term and can be terminated at one month s notice. The success of the Group s sales activities depends partly on its ability to maintain its existing relations with its current clients and partly on its ability to attract and loyalise new clients. The Group therefore endeavours to offer a full and innovative portfolio of housing-related services, notably by diversifying its range of classified ads and constantly modernising a first-rate IT and internet-based software platform by offering its clients and users a simple and efficient technical medium or by developing its specific personalised services dedicated to web users carrying out research on the property sector. However, the Group cannot guarantee that it will be able to maintain, develop and increase its base of existing and new clients. If the Group were not able to do so, this could have a significant negative impact on its business, financial position, earnings or outlook Risks arising from the functioning and continuity of agreements made by the Group with its clients and partners The Group does not have exclusivity agreements with its estate agent clients and they are free to circulate their classified property ads on websites that are in direct or indirect competition with the Group s sites. The Group cannot rule out the fact that in the future all or some of its clients may decide to circulate their classified property ads only on the Group s competitors websites by granting them exclusive rights. This situation could have a significant negative impact on the Group s business, financial position, earnings or outlook. In addition, although the Group has exclusive rights in its contractual relations with the partner portals with which it has entered into agreements for fixed periods, no guarantee can be given concerning these relations in the future as regards the operation, renewal or continuity of the agreements made. The ending, non-renewal or renewal under less favourable terms (notably in the event of the loss of exclusive rights, higher prices or the loss of visibility of the brands) of its partnership agreements or the break in its contractual relations with one of the Group's partners could have a significant negative impact on the Group s business, financial position, earnings or outlook Risks arising from the launch of new services As part of its development process, the Group plans to offer new diversified services which are closely related to its core business in order to enhance its relations with its customers and capture and loyalise the users of its websites who have different requirements in terms of services and usage. The Group cannot guarantee that the economic models of these new services will experience the same success in terms of revenue growth as the online classified property ads business is currently experiencing, nor that these new services will increase its revenues and turnover. In addition, the costs of launching and developing these new services could be high and have a significant negative impact on the Group s activity, financial position, earnings or outlook before possibly becoming a source of revenues for the Group. The failure of the launch or development of these new services could also have a significant negative impact on the Group s business, financial position, earnings or outlook Risks arising from volatility in the Company s share price The price of the Company's shares can be volatile and may be affected by various events affecting the Company, its competitors or the financial markets in general, and the online classified property ads sector in particular. The price of the Company's shares could therefore fluctuate considerably in reaction to events such as: changes in the financial earnings of the Group or the earnings of its competitors from one period to the next;

17 announcements made by the Company or its competitors relating to the launch of new products, new offers or new technologies; announcements made by competitors or other companies with similar activities or announcements regarding the online classified property ads sector; announcements relating to changes in the management team or key employees of the Group; announcements relating to changes in the Company's shareholders. In addition, the financial markets have in recent years experienced major fluctuations which have sometimes been unrelated to the earnings of the companies whose shares are listed on them. Market fluctuations and the economic climate can affect the price of the Company s shares. 4.2 FINANCIAL RISKS Foreign exchange risk The Group considers that the foreign exchange risks to which it is exposed during the course of its business are not significant, the major proportion of the transactions carried out with its clients being billed or paid in Euros. In addition, all revenues, operating expenses, investments, assets and liabilities of the Group are expressed in Euros. Nevertheless, if the Group were to significantly develop its business amongst clients whose payment currency is not the euro, the Group could experience foreign exchange risks if the parity between the various payment currencies and the euro were to develop in a manner that was significantly unfavourable to the Group Interest-rate risk At 31 December 2009, Group consolidated gross debt amounted to 38.8 million against 54 million as at 31 December Group consolidated net debt (gross debt less cash and marketable securities) as at 31 December 2009 amounted to 6 million. The Group consolidated gross debt includes a Loan initially worth 80 million. The associated covenants to which the Company is subject are described in paragraph 10.4 Debt as at 31 December 2009 of this Annual Report. The last repayment is due 30 November Interest rate applicable to the Loan was fixed at Euribor 3 months plus 1.50 % until 30 November From this date onwards the rate is as follows: if the Net Debt/ EBITDA ratio (following the definition in paragraph 10.4 hereof) is 3.25 or more, the applicable rate is Euribor 6 months plus 1.50 %; if the Net Debt/ EBITDA ratio is 2.00 or more and less than 3.25, the rate is Euribor 6 months plus 1.25%; if the Net Debt/ EBITDA ratio is less than 2.00, the rate will be Euribor 6 months plus O.75 %. As from the second semester 2008, the applied mark up rate is of 0.75% and has remained unchanged. In order to avert interest rate risk, the Group has renewed swaps contracts which expired in November 2008 and subscribed to an interest rate contract for its total debt thus benefiting from a fixed rate of 2.56%. Furthermore, the repayment schedule of financial debts as at 31 December 2009 figures in the table below: ( 000) <1 year Between 1 >5 years TOTAL

18 and 5 years Borrowing from lending establishments Other debts: finance lease Interest As at 31/12/ At the recording date of this financial report, no other credit line is under discussion. Debt on share buy backs concerns the acquisition of a 15% stake in the company Com2 Participations (which is the holding company of Périclès, see organisational chart shown in section 7.1 hereof) and is described in section hereof. The Group s general debt policy consists in hedging a maximum of its bank debt and exposure to interest-rate risk. The Group manages its interest-rate risk on a centralised basis. The hedging instruments used, independent of their definition under International Financial Reporting Standards, are mainly derivative instruments and structured derivative instruments (swaps amounting to 56 million with a term of 3 years). For more details, please refer to section 5.9 Financial Debts in the Notes to the Group s consolidated accounts at 31 December 2009 (see paragraph of this annual report) Liquidity risks At 31 December 2009, the Group consolidated debt stood at 38.8 million, of which 16 million is due in less than one year and 40 million is due in 1-5 years. The Group net debt as at the 31 December 2009 (gross debt less cash and cash equivalents) amounts to 6 million. The medium term bank loans subscribed by the Group are described in paragraph 10.4 of this annual report Debt as at 31 December 2009 of this financial report. This description of the medium-term bank loans notably includes the main financial ratios that the Company is required to meet. On the date of this annual report, the Company meets these financial ratios. The Company does not have any other credit lines and is not in the process of obtaining any other credit lines. The financial commitments ( benchmarks ) related to the Senior debt have been respected at the 30 June 2009 as well as at 31 December These benchmarks are described in section 10.4 Debt at 31 December 2009 of this annual report. The net cash flow generated by the Group's activity stood at 23.4 million at 31 December Equity risk The Company is not active on the equities market. However, under the liquidity agreement stated in paragraph of this annual report Liquidity contract, the Company may purchase and sell its own shares and for this purpose has placed a sum of 600,000 in a liquidity account. In so doing, it may experience unrealised losses on these shares or may have to sell all or part of these at less than their cost price. Bear in mind that dividend payout was not part of the Company policy until the closing of the last financial year (described in paragraph 21.3 Dividends of this annual report). During the Supervisory Board meeting held on 17 December 2009, the Chairman of the Board proposed a study on the timeliness of installing a dividend payout policy. A dividend payout would be subject to review within the framework of the Company s debt commitment. The Supervisory Board decided that 5.5 million could be paid out during fiscal year During the General

19 Meeting of shareholders planned for 27 May 2010, closing the accounts for FY 2009, the chairman will propose a resolution along these terms. 4.3 RISKS ARISING FROM THE GROUP'S SECTOR OF ACTIVITY Risks arising from the failure of the Internet or the Group s technical platform The performance and reliability of the Internet are of vital importance in order to attract and loyalise the Group's clients. The Group could therefore be affected by events beyond its control, which could result in an extended interruption of a significant portion or the whole of the Internet or the servers on which its websites are hosted. More specifically, interruptions in service and delays affecting the Internet could reduce the level of usage and therefore the level of usage of the Group's services. The Group s activity and reputation are also based on its ability to provide a satisfactory level of performance, reliability and availability of its technical platform. The Group information systems, which allow the Group to earn its revenues, and additionally serve, as a management and accounting tool, need to be available, secure and be able to support any growth in business. Problems affecting the Group's technical platform would be likely to damage its reputation amongst its trade customers and the general public. The total or partial failure of the Internet or the Group's technical platform could have a significant negative impact on its business, financial position, earnings or outlook Risks arising from viruses and various forms of IT vandalism and pirating In view of the ease of access to the Internet and the constant increase in problems relating to information system security, the Group s websites are, like all other websites, exposed to viruses, worms and various forms of IT vandalism and pirating. The Group cannot rule out the ability that it s servers may be malevolently exploited by third parties in order to circulate unsolicited mail (spam) or that it s servers may be unintentionally used to spread viruses, particularly new viruses which the anti-virus suppliers cannot yet provide protection against. An intrusion or exploitation of the vulnerabilities of the Group's information systems by a malevolent third-party could interfere with the effective operation of the systems and therefore affect the quality of service offered to the Group's clients, resulting in delays or interruptions to services lasting several hours or even several days on the Group's servers or rendering the bandwidth unavailable to users who wish to connect to the Group's websites. In addition, the Group is not in a position to provide an absolute guarantee against attempts to gain unauthorised access to information, including possibly banking details, and IT systems, or aiming to cause intentional technical dysfunctions or interruptions to the Group's IT services or against the loss or corruption of databases, software, hardware or any other computer equipment which are part of the essential assets in order to carry out the Group's activities. Although the Group endeavours to employ specific methods in order to provide protection, security and integrity of its IT systems, notably by developing regular backup systems, using specific anti-virus software such as firewalls, tested and updated on a regular basis, or by constantly testing all new programmes before they are introduced onto the IT systems, the Group cannot guarantee absolute protection against viruses, worms and other forms of IT vandalism and pirating. These various forms of IT pirating may jeopardise the confidentiality and the integrity of the personal data held on members and clients of the Group and expose the Group to losses of revenue, the risk of significant damage to its brand image and the confidence of its clients as well as exposing it to the risk of being held liable. This type of situation could require the Group to make additional investments to protect its IT systems and to remedy any damages caused which could have a considerable negative impact on its business, financial position, earnings or outlook Risks arising from the cyclical nature and developments on the French property market. The Group's earnings may be directly or indirectly affected by the cyclical nature of the French property market in which it is indirectly involved. External factors which are not dependent on the Group such as the general economic climate, the activity of competitors, international circumstances and events or changes in legislation (particularly as regards the tax position) could bring about a slowdown in the French property market. In the

20 event of a slowdown or a recession, possibly accompanied by rising interest rates, a fall in general household debt capacity or a reduction in household confidence, there could be a notable reduction in demand for property as well as a decrease in the number of property transactions. A decrease of the real estate market could directly impact Group agency clients both in their number and their activity. If the number of estate agents were to lessen considerably, notably due to receivership, this could lead to a considerable reduction in the number of Group clients and their expenses. This could have a significant negative impact on the Group's business, financial situation, earnings or outlook. On the basis of 2009 figures, a one percent decrease in classified ads clients would lead to a loss of in revenues calculated for a 12-month period Risks arising from the competitive environment on the market for the circulation of classified property ads in the absence of significant entry barriers The markets on which the Group operates are highly competitive. The growth of the Internet, and more specifically the market for online professional classified property ads, is still relatively recent and is in a constant state of evolution. The absence of significant entry barriers, notably of a technological or financial nature, means that it is easy for new competitors to suddenly emerge on this market. Various players already present on the market or newcomers could therefore adopt some aspects of the Group's economic model and become significant players in the market for classified property ads, which could reduce the Group's ability to differentiate its services from theirs and thereby jeopardise its growth prospects. Growing competition could cause prices to fall, reduce growth, reduce margins or result in the Group losing market share and these factors could have a significant negative impact on the Group's business, financial situation, earnings or outlook. In addition, in view of its growth potential, the online professional classified property ads sector may attract competitors with much greater resources then the Group or which have a very high degree of notoriety in areas of activity that are closely related to those of the Group such as generalist portals, suppliers of search engines or online auction specialists. The Group cannot rule out the fact that a new competitor may emerge one day as a major player in the French online professional classified property ads sector. Another player in the sector could in a more general way adopt a more effective competitive position than the Group and gain market share to the detriment of its development and competitive position which could have a significant negative impact on the Group's business, financial situation, earnings or outlook. Lastly, the Group may not be in a position to effectively and adequately react to the growth in competition on the markets on which it operates particularly if new products or services which may compete in a significant way with those offered by the Group were to be launched by other players in the market. This situation could have a significant negative impact on the Group s business, financial position, earnings or outlook Risks of dependency on providers of Group Internet server hosting and backup services The Group works on a regular basis with a number of service providers who play an important role in the Group's business, particularly in terms of the technical backup of the Group's files and information and the hosting of its Internet servers. A deterioration in the service provided by these service-providers (particularly in the event of an interruption or delay in the backup process or access to the Group's servers) or a total breakdown in the contractual relations with these companies could mean the Group would have to make additional investments in order to effectively backup its files and information and remedy any possible damage caused. This situation could have a significant negative impact on the Group s business, financial position, earnings or outlook Risks stemming from potential acquisitions The Group may, as part of its future development, make acquisitions or invest sums of varying amounts in related sectors

21 No guarantee can be given that the Group will successfully integrate the companies acquired, derive the anticipated synergies, maintain uniform standards, controls, procedures and policies, maintain good relations with the employees of the companies acquired or that the additional revenues generated by each acquisition will justify the price paid for that acquisition. The failure to integrate these companies could have a significant negative impact on the Group s business, financial position, earnings or outlook Risks arising from the removal of intermediaries on the property market The increase in the number of transactions carried out directly by individuals without using the services of an estate agent could result in a reduction in the Group's existing or potential clients or indeed the sums that they are prepared to spend on the type of services offered by the Group. This situation could have a significant negative impact on the Group s business, financial position, earnings or outlook. 4.4 LEGAL RISKS Subject to the provisions of paragraph 4.4 of this annual report, there is no governmental, legal or arbitration procedure, including any procedure of which the Company is aware, which is pending or with which it is threatened, which could have or has over the past 12 months had significant effects on the financial situation or profitability of the Company or the Group Risks arising from intellectual property rights Although the Group owns all the intellectual property rights needed to conduct its activities and has put in place a watchdog system in order to combat infringement of its intellectual property rights, it cannot rule out the possibility that third parties may wrongfully use and exploit the intellectual property rights owned by the Group (see paragraph 11.2 of this annual report). The Group notably owns the intellectual property rights on the seloger and immostreet names when used alone or combined with other terms, which it uses in the course of its business. Despite the procedures undertaken to protect these names in France, the possibility cannot be ruled out that third parties may infringe these names or request the cancellation of the intellectual property rights relating thereto. In view of the importance of the recognition of Group's intellectual property rights, any counterfeiting, abuse or cancellation could have a significant negative impact on the Group's business, financial situation, earnings or outlook. In addition, the possibility cannot be ruled out that third parties may develop competing technologies, which, although similar to those of the Group, do not constitute counterfeiting. In addition, it cannot be ruled out that some technologies developed by the Group and also some intellectual property rights which the Group uses may be protected under rights held by third parties. Where applicable, the defence of the Group's interests could also generate expenses such as court and representation costs and compensation payments and could result in: licensing agreements which could mean that the Group will (i) find itself in a situation of dependency on a third-party and (ii) to pay these third parties the royalties relating to these licensing agreements; or a ban on continuing to use the disputed technology or a ruling to compensate the plaintiff holding these rights. This situation could have a significant negative impact on the Group s business, financial position, earnings or outlook Risks pertaining to the role of content editor In respect of the information published on the Group's websites, the Group as the content editor, is subject to the provisions of the Law of 29 July 1881 on the freedom of the press and may be held liable for any published content deemed to be illicit or illegal. In addition, in respect of the classified property ads placed on the Group's websites, the Group uses specific

22 automated and non-automated systems to check the coherency of the advertisements that appear on its websites and endeavors to comply with all the legislative and regulatory requirements, the Group, as the content publisher, may be held liable for classified ads which appear on its websites if they are deemed to be inaccurate, illicit or illegal. This situation could have a significant negative impact on the Group s business, financial position, earnings or outlook Risks arising from undertakings to buy-out minority shareholders Regarding the acquisition of Périclès (see paragraph of this annual report), on 24 November 2006 the minority shareholders of Com2 Participations made unilateral undertakings to sell the Com2 Participations shares held by all the minority shareholders of that company to Seloger.com and Seloger.com made unilateral commitment to buy these Com2 Participations shares. These undertakings (to buy or sell shares) must be exercised by 31 December These undertakings are recorded in the accounts under other current liabilities at the discounted purchase price as a counterpart to the goodwill and are featured under paragraph 5.1 of the Notes to the Group's consolidated accounts at 31 December 2009 (see paragraph Notes to the consolidated accounts for the year ending 31 December 2009 of this annual report). Under the terms of this commitment, the Company has the option of buying the Com2 Participations shares it does not already own to date, that is to day 15% of equity and voting rights of the company Com2 Participations, from 1 July 2010 to date. Com2 Participations articles of association do not carry conditions aiming to limit (i) the legal capacity of Seloger.com to obtain the control of Périclès upon exercise of commitments stated in this annual report (ii) the control of Seloger.com over Com2 Participations and Périclès. Although the Group considers that it has taken all the necessary measures, particularly those of a legal nature, to ensure that the Company will, upon simple exercise of these undertakings, be able to buy all the shares in Com2 Participations which it does not already own on that date, the possibility cannot be ruled out that as a result of changes in French law or a challenge, even unfounded, to the validity of these undertakings, the acquisition by the Company of these Com2 Participations shares could be delayed or complicated. If, for any reason, the Company is not able to obtain all the Com2 Participations shares that it does not already own on this date, the existing minority shareholders of Com2 Participations may remain shareholders of that company after 31 December Risks relating to regulatory provisions and subsequent changes The Group is not subject to any prior authorisation to carry out its operations. Changes in legislation and regulations applicable to e-commerce in France are evolving towards a greater level of consumer protection. Although the Group considers it has sufficiently anticipated and integrated these developments, rapid or significant changes to French or European legislation could nevertheless bring about a slowdown in the Group's development and have a considerable negative impact on its activities, financial position, earnings or outlook. 4.5 INSURANCE AND RISK COVERAGE The Group has insurance cover against the risks to which it is exposed as a result of its business. All policies contain certain limitations and deductibles or the normal exemptions imposed by the market. The Group does not consider that there are any significant uninsured risks. The Group has taken out several insurance policies, the main ones being shown in the table below:

23 Type of insurance Type of risk covered Name of insurer Civil liability Occupational accidents & illness AON-AXA Professional civil liability Fire, theft, direct loss, extensions to subsidiaries, professional documents, natural disasters, water damage, glass breakage AON-AXA IT hardware Theft, fire, water damage on a declared value of 30,000 for portable equipment and 330,000 for non-portable equipment AON-AXA Company cars Company officers insurance Operating loss insurance Normal risks pertaining to the usage of vehicles for business purposes Company officers insurance Additional operating expenses as a result of fire, natural disasters, attacks and vandalism Aviva Assurances AON-AXA AON-AXA The insurance premiums paid by the Group in 2009 amounted to 167,433 over the twelve-month period

24 5. INFORMATION ON THE COMPANY AND GROUP 5.1 HISTORY AND DEVELOPMENT OF THE COMPANY AND GROUP Registered Name Registered name: Seloger.com Place of registration and registration number The Company is registered at the Paris Trade & Companies Registry under number Formation date and term The Company s N.A.F. code is 741J corporate administration. The Company was formed on 21 October 2005 for a fixed term, unless wound up early or extended, for ninety nine years with effect from its registration at the Trade & Companies Registry, that is until 7 November Registered office, legal form and jurisdiction Registered office: 216 avenue Jean Jaurès Paris, France Telephone number: The Company is a société anonyme under French law with a Management Board and Supervisory Board governed notably by the provisions of Book II of the Code de Commerce Major events in the development of the activities of the Company and the Group Founding of the Group In 1992, Messrs Denys Chalumeau, Amal Amar and Vincent Rousset founded France Télématique Diffusion, a Minitel-based electronic information publisher operating in numerous areas (property, jobs, personals, travel, cars, competitions, etc). When the Company began operations, the main Minitel sites it operated were 3615 Promovacances, 3615 Jembauche and 3615 Autorevue. In 1995, the Group acquired Pressimmo which operated the 3615 Seloger Minitel site Change in economic model with the choice of the Internet Anticipating a change in the market, from 1996 the Group reached a significant turning point in its business and decided to move towards the Internet, which the Group recognised would replace the Minitel system. Confident about the potential of the property market, the Group therefore set up an innovative multi-media based subscription system aimed at the property industry by launching, in addition to its Minitel-based publishing activities, the website which was the first French website to offer online classified property ads, and the classified property ads publication, Seloger, the purpose of which was to offer the Group's clients (namely estate agents) a paper medium for their classified ads to facilitate the transition towards a fee-based service for circulating classified property ads online. As an Internet pioneer, as early as 1998, the Group entered into a series of partnerships with certain major Internet portals such as (now and Pursuant to these partnership agreements, on the registration date of this annual report, the Group operates the property pages of these portals. In order to diversify its Internet activities, the Group launched in the same year the website. From 1999, the Group concentrated its activities on classified property ads, extending the scope to new housing

25 programmes through the SelogerNeuf magazine. Aware of the growth potential of new building programmes, the Group launched the website in In parallel, and in order to strengthen its relations with customers and to take on the role of an Internet consultant, the Group extended the range of services offered to its estate agent clients by developing a Web Agency activity. In 2000, anxious to continue its development, the Group raised initial funding from Galileo Partners, Groupe Alpha and AXA Placement-Innovation. These financial investors thereby obtained a 20% stake in France Télématique Diffusion, since renamed Poliris, as a result of a 7.6 million subscription and a 9.2 million acquisition The Company refocuses on the online classified property ads business At the end of 2001, in view of the crisis in the tourism sector and the strong growth potential in online classified property ads, the Group reached a second significant turning point in its business when it sold all its activities which were not connected to classified property ads (notably the and websites) to focus on the online classified property ads sector. In parallel, in order to assist its growth outside Paris, the Group, in conjunction with the website launched free local newspapers containing classified property ads in Lyons (Seloger 69) and Toulouse (Seloger 31). In the Lyons region, the Group also acquired the website, a regional property portal, which was then merged with the website. In 2002, in order to create the leading focal point for online classified property ads in France and to become the key venue for the supply and demand of online classified property ads in France, the Group acquired one of its competitors, ImmoStreet, which at the time operated the website. As a result of this acquisition, Europatweb and Alven Capital, which were shareholders of ImmoStreet, became shareholders of Poliris. In 2004, in partnership with the Chambres des notaires in the Paris region, the Group launched the website, the online guide to property prices. The Group also launched a local classified property ads newspaper in the Marseilles and Aix-en-Provence region (Seloger 13). In parallel, the Group placed emphasis on European growth, making its website the first platform to circulate property ads from several European countries, which can be viewed in nine languages, using an automated online translation software. In December 2004, the Group was selected by the Fichier Français Immobilier des Professionnels (FFIP) to set up and maintain a corporate IT and Internet platform for sharing exclusive mandates between estate agents (inter-agency) modelled on the Multi Listings Services in the United States. The F.F.I.P. merged with SIA in June 2009 and has since become the AMEPI. The S.I.A. ranked second among French platforms with exclusive mandates. It was under the authority of the FNAIM. In 2005, in order to further expand its services to Internet users, the Group launched a collection of downloadable guides on its websites: called Bien acheter, Financer votre logement, Location: mode d emploi and Faire construire. In November 2005, the Group restructured its shareholder base by forming a holding company notably to allow one of the founders, Vincent Rousset, and some existing investors (Galileo Partners, Groupe Alpha and AXA Placement-Innovation) to sell their stakes. On this occasion, a group of funds held by Fonds 3i acquired stakes in the Company. In November 2006, the Group acquired Périclès, which specialises in developing and marketing IT management solutions for estate agents, allowing the Group to strengthen its position as a vital partner to estate agents by offering a global communications and management service (see paragraph of this annual report). In November 2006, the Company s shares were admitted for trading on the Eurolist of NYSE-Euronext market Section B, now NYSE-Euronext. Pursuant to its development strategy on different real estate market niches, the Group acquired the company Belles Demeures, in July Belles Demeures focuses on advertising the sale and rental of luxury properties in France through its eponymous magazine and through its website (see paragraph

26 7.2.2 of this annual report). In November 2008 the Group reshuffled its managing board and engaged Roland Tripard, former director and co-founder of WStore, as Chief Executive of the company. MR. Tripard has since been appointed Chairman of the Managing Board by the Supervisory Board meeting on 20 January 2010, under the inspiration of the two Group founders. He replaced Mr. Denys Chalumeau who wished to step down from his office as Chairman of the Group Managing Board, but remain nevertheless a member of the Board. Actually, Denys Chalumeau wishes to lighten his role in the operational management but continue to take part in the Group s strategic decisions and remain involved in the process of innovation. In 2010 the Group is the leading operator of Internet websites dedicated to circulating real estate ads in France, notably through its two main websites and On 31 December 2009, nearly 2.3 million professional classified ads were posted on these two websites. In order to maintain its position as the key market place for the supply and demand of online classified property ads, the Group has endeavoured since 2001, firstly to increase its Internet audience within the framework of a profitable growth dynamic, and secondly to increase its portfolio of clients by offering estate agents the strongest Internet audience and the biggest and most visible platform for circulating property advertisements on the market. 5.2 INVESTMENTS See paragraph 10.6 of this annual report

27 6. GROUP BUSINESS OVERVIEW 6.1 PRINCIPAL ACTIVITIES General presentation The Group is the leading operator of websites dedicated to the posting of property advertisements in France, thanks to its two main websites: and At 31 December 2009, more than million property advertisements were posted on both of these two websites. The Group's ability to retain the number one position that it currently holds on the market for online property advertisements in France will depend on its capacity to attract the largest number of property advertisements and to create the widest possible audience on the Internet. With this goal in mind, the Group intends to continue to increase the number of updated property advertisements available on its websites for property hunters. In 2009, the Group achieved consolidated sales of EUR 73 million, of which the majority came from subscriptions taken out by estate agents. The Group's activities are divided as follows: Classified Advertisements and Media (around 84.4% of the consolidated sales achieved in 2009) which brings together the posting of professional property advertisements, online advertising and partnerships, as well as direct services for users; Services (around 7.3% of the consolidated sales achieved in 2009) which brings together Web Agency activity and inter-agency activities (shared property files) and software marketing; and Software (about 8.3% of consolidated sales achieved in 2009) which through Périclès, brings together the software sales activity in the form of hosting platforms used to manage the transactions of estate agents. In 2009, the Group achieved a contribution margin 1 of EUR 49.5 million of which around 89% came from the Media activity. As at 31 December 2009, the Group had 258 employees. As at 31 December 2009, for all of its activities, the Group had approximately 11,966 subscribed professional real estate clients (excluding property developers), representing more than 16,594 branches (compared with 12,029 branches as at 31 December 2008). The Group's customer base has undergone a slight decrease in the number of subscribed professional customers (11,576 as at 31 December 2007, 12,029 as at 31 December 2008, and 11,966 as at 31 December 2009) as well as in the number of branches operated by the Group's customers (excluding property developers), 15,651 as at 31 December 2007, 17,547 as at December 2008, and 16,594 as at 31 December On the basis of Group client outlets, the Group penetration rate at the end of December 2009 stands at 61% on a domestic level (80% in the Paris region and 55% in the province). This calculation is based on the total number of outlets estimated in France, i.e with located in the Paris region and in the Province. These figures were compiled through Group prospection files updated by the sales teams and take into account the liquidation rate in the real estate profession noted by Euler Hermès on 31 December The Group's main websites are: whose main purpose is to list property advertisements (sale and rental) relating to properties situated in France and to offer online services to users; 1 The contribution margin is the difference between the revenues generated by a business sector and the operational costs directly linked to the sector such as headcount and external charges

28 which is a European platform for property advertisements (sale and rental) relating to properties situated in France, Germany, Belgium, Spain, Italy, Israel, Portugal and Switzerland and whose classified advertisements can be viewed in nine languages (German, English, Chinese, Spanish, French, Italian, Dutch, Portuguese and Russia) thanks to an online translation system; which is, reserved for the sale of new property developments in France; wwwbellesdemeures.com, specialized in the sale and rental of luxury properties in France, the website is the extension of the magazine of the same name, sold in newspaper stalls. an Internet platform posting the sale and rental of small and medium sized offices, and business opportunities (trade in stock and premises of small and very small sized businesses) which offers an online guide to property prices and related premium services. The Group's websites now constitute the most popular Internet marketplace in France for meeting property supply and demand. Indeed, the Group posts the largest number of property advertisements, which are regularly updated, enabling users prospecting for a property to be certain that they have the widest possible choice in their search. The large number of properties listed enables the Group to attract the largest number of users searching for a property to its websites. The top-level position that the Group has in terms of audience and the growing reputation of its websites are the key factors that help to attract new estate agents as customers. By becoming customers of the Group, estate agents benefit from optimum visibility of their property advertisements and, in turn, increase the overall number of advertisements thereby helping to boost the audience of the Group's websites and customer awareness of these websites. Thus, the higher the audience of the Group's websites, the more estate agents are encouraged to post their classified advertisements on the Group's websites and the higher the number of property advertisements posted on the Group's websites, the greater the audience of these websites. In order to maintain this "virtuous" circle and to retain its current position, the Group endeavours to bring together the largest number of updated property advertisements and to create the widest possible audience on these websites in order to establish itself as the undisputed leader in France for online property advertisements. Collectively, these websites enable the Group to offer: users, the large number of property advertisements in France with a quasi-real-time alert system; the numerous free or premium services offered by the Group or by its partners enable users logging onto the Group's websites to access all of the services necessary for their property projects (lending institutions, vehicle hire, insurance, online estimates, etc.); estate agents and property developers, effective tools for the posting of their property advertisements principally on the Internet, together with numerous services that help to optimise this visibility and the promotion of their activities (in particular, tools for compiling statistics and geographically targeted advertisements); and advertisers and partners, effective vehicles for communicating with a qualified target enabling the Group to increase its website audience (sale of advertising space to advertisers). In addition to its Internet activities, the Group offers: users, additional ways for searching and consulting property advertisements, including, in particular, free alerts on mobiles (via the Push iphone) and premium rate telephone numbers giving priority access to the most recent classified rental advertisements; and estate agents, an Internet advice service (Web Agency) which helps them to develop their own presence and their activities on the Internet (creation of personalised websites, help with listing on search

29 engines, maintenance, hosting, etc.), the posting of classified advertisements in the magazines Belles Demeures and Seloger.neuf. Furthermore the Group subsidiary Périclès markets real estate transaction management software, situated at the heart of the estate agent's activity The Group's competitive edge The largest number of property advertisements in France Thanks to the Group's websites, users searching for a property have access to the largest number of property advertisements in France, all media considered: in December 2009, the Group's two main websites ( and listed more than million property advertisements, far more than its main competitors. This large number of property advertisements posted on the Group's websites reflects the depth of its commercial presence. As at 31 December 2009, the Group had a customer portfolio of 11,966 subscribed professional customers (excluding property developers), representing more than 16,594 branches, independent or members of the main French networks (Arthur Immobilier, Century 21, ERA, Guy Hoquet, Imogroup, Laforêt Immobilier, ORPI, etc.) High awareness of the Group's websites combined with the widest audience for property advertisements on the Internet The Group currently has domain names that are very familiar both to users searching for a property 2 and to estate agents (98% are familiar with the Group's websites compared with 87% for and 87% for 3 ) This level of awareness is reflected in a significant increase in the number of users logging onto the Group's websites 4 and is helped by the listing of the Group's websites on general search engines (such as Google), as well as by the implementation and constant development of various partnerships and related services, such as alert services by or push iphone. In January 2010, the Group's two main websites ( and recorded more than 13 million visits 5 (with average number of pages viewed per visit being 15) of which around million were unique visitors 6. In January 2010, the average time per visit was 24 minutes and 30 seconds for the unique visitors of the website compared with 5 minutes and 58 seconds for the website 9 minutes and 2 seconds for the website and 3 minutes and 57 seconds for the website the Group's main competitors The most popular Internet marketplace for online property supply and demand in France In France, the Group is the leading circulator of online property advertisements thanks to its websites which constitute the most popular Internet marketplace for meeting property supply and demand. Being the market leader enables the Group to have the largest number and most visible supply of property advertisements on the market and, therefore, to attract not only new estate agents confident that their classified 2 "Leading property-related site in terms of visitors and pages viewed" - Source: Médiamétrie e-stat, Cybermétrie, January Source: IPSOS survey July Source: Médiamétrie //NetRating, Janaury Source: Google Analytics, January Source: Médiamétrie/Nielson/NetRating January Source: Médiamétrie/Nielson/NetRating January

30 advertisements will enjoy optimum visibility but also new users confident that they have the widest possible choice in their property search. This dual leadership position (in terms of audience and number of classified advertisements posted online) places the Group in a "virtuous" circle which allows it to enhance its position on the market for online property advertisements An attractive tool for users that meets the changing trends in the ways of searching for property Faced with an extensive range of high quality property advertisements, users logging onto the Group's websites to search for property enjoy a certain number of significant, attractive and original advantages compared with print-based advertising: extensive range and easy-to-use website: using a comprehensive search engine built into the websites and users can define and, if necessary, refine their search criteria, which allows them to target the chosen properties easily and quickly (type of property, location, price range, etc.) and can obtain an extensive and customised list of property advertisements; quality advertisements and displaying of properties: the inclusion of photos and the creation of virtual visits enable users to make an initial selection of properties, thereby avoiding unnecessary visits and wasted time both for users and estate agents alike; updated properties and quasi-real-time alerts: speed of reaction is a key factor in a successful property search; alerts enable users to receive (by or by Push iphone) all the property advertisements corresponding to their search criteria as soon as these are posted on the Group's websites; users alerted by can therefore make immediate contact with the estate agent and get ahead of other people likely to be interested in the same property. The Group believes that the combination of these services increases the appeal and facilitates access to property information for users actively involved in searching for a property and constitutes an effective, simple and appropriate information tool The essential partner for estate agents The Group presents itself not only as the leader for online property advertisements but also provides estate agents with a very extensive and attractive range of additional property-related services. Indeed, besides the posting of property advertisements on the most viewed website in France, the Group, in its desire to develop customer loyalty, offers estate agents the possibility of promoting their activities on the web thanks to its related services: Web Agency (creation of personalised websites, maintenance, hosting, listing), online advertising on the Group's sites. It is with this perspective that the Group completed the acquisition, in November 2006, of transaction software via the company Périclès. Furthermore, the Group has pursued its strategy for developing related market niches with the acquisition in 2008 of the company Belles Demeures specialized in luxury property and the company Afgorabiz, specialized in offices and business opportunities. Finally, the Group has developed a segment dedicated to the builders of private homes (CMI). During the year 2009, the Group also developed a new product called Flash Agent which enables estate agents to write directly on-line and receive selected inserts containing property pictures and descriptions. Thanks to the complementarity between, on the one hand, the largest number and most visible supply of property advertisements on the market and, on the other hand, a range of related services available to estate agents, the Group believes that it is in a position to maintain and improve its relations with its current customers and to attract and retain new customers. Thus, with a customer portfolio of around 12,000 professional customers (excluding property developers), representing more than 16,000 branches as at 31 December 2009, the Group has established itself as the essential partner for estate agents wishing to develop the visibility of their property advertisements on the Internet A steadfast customer base The bulk of the Group's customers now consists of estate agents, connected to the Group by subscription contracts, which are generally one year long, tacitly renewable and can be terminated by giving one month's notice. This subscription system guarantees recurring sales for the Group and enables it to focus its efforts on acquiring new customers

31 The number of the Group s professional customers (classified advertisements activity) experienced a robust growth until December 2008, as shown in the chart below, which illustrates the changes in the number of subscribed customers (excluding property developers) between December 2004 and December The decline in the real estate market gave rise to a decrease in the customer base onwards from the second semester First-rate geographical coverage Although the Group's activities developed initially in the Paris Region, the Group has successfully expanded its activities to provincial France, (which accounted for 51.9% of Group consolidated sales in 2009 thanks to an extensive stock of classified advertisements). As at 31 December 2009, the Group posted around million property advertisements for properties in the province. In order to develop customer awareness, the Group published local specialist newspapers in certain regions that offer major potential (Aix-Marseille, Lyons, Toulouse, Brittany and Alsace). The increased usage of the Internet by real estate buyers has made paper based advertising less effective; for this reason the Group ended publications during This regional presence should enable the Group to capture the future growth in the market for online property advertisements in provincial France where Internet use lags behind the Paris Region. A diversified range of properties on the Internet The Group has created not only its two main websites specialising in property advertisements in France ( and in Europe ( but also a number of additional websites which offer users a range of diversified property-related services: price guides ( and new property developments ( ads for the sale and rental of offices and business opportunities ( and the sale and rental of luxury property ( Furthermore, thanks to the partnerships that it has formed, the Group offers users access (via web links) to numerous additional services that may be helpful to them in the achievement of their property project such as remortgaging, property loans, insurance or house moving services. The complementarity between the largest number of property advertisements in France and the various services available to users has enabled the Group to establish itself as the most popular Internet marketplace for property searching Mastered and innovative technology The Group has developed an innovative computer, software and Internet platform enabling it to operate a central database of property advertisements and to offer estate agents personalised interfaces on the Internet, compatible with the majority of software packages used by estate agents and therefore allowing for the automatic transfer of classified advertisements as well as a user-friendly and powerful user interface (particularly because of the search engines used, the network security and Internet systems put in place in order to meet requests received on the Group's web servers)

32 The Group's technological expertise also allows for constant innovation by creating new functionalities and new services both to the benefit of users (thanks, in particular, to the creation of virtual property visits on its websites and to the introduction of map searches) and customer estate agents (thanks, in particular, to the development and improvement of call tracking and compilation of statistics) High-quality teams with vast experience in the sector The Group's success is due, to a large extent, to the innovative capacity, experience and high level of complementarity between the management team, the sales team and the IT team. Within these teams, certain members have been within the Group for more than ten years and others have years of experience in the real estate and Internet sectors. All of the members of these teams have developed expertise on the market for online property advertisements and implemented innovative technologies and marketing methods that are essential to the development of the Group's strategy Significant operational leverage offering strong profits and good cash generation prospects The Group's activities serve to generate significant operational cash flows. The net cash flow generated was 23.4 million in 2009 against 26.8 million in 2008 for the Group. Given that the posting of property advertisements on the Internet is an activity where costs are largely fixed or semi-fixed (particularly for personnel costs), any increase in sales above the point at which these costs are covered results in substantial profits. Furthermore, the Group is sufficiently flexible so as to preserve high margins should its revenues become stable. The Group therefore believes that it is in a position to significantly increase its operating profits and its generation of medium-term operational cash flow, according to the increase in sales achieved. This significant increase is particularly visible in the Classified Advertisements and Media Sector (which accounted for 84% of the Group's consolidated sales in 2009) which grew by 3.5% during FY Other factors should enable the Group to maximise the operational leverage of its economic model: the diversification of its revenue sources by the permanent development of new services and products; external growth opportunities and the potential expansion of its international activity; the permanent application of strict financial discipline; and limited investment requirements STRATEGY The Group's strategy is based on the development and consolidation of its position as market leader by offering the largest number of property advertisements, which enables it to attract the largest number of users searching for a property. In order to be able to target the largest number of estate agents wishing to communicate via the medium of the Internet, the Group endeavours to maintain both the quality and the number of services offered and to consolidate its position as market leader. This leading position in terms of audience enables it to offer its customer estate agents the best possible visibility of their property advertisements while guaranteeing recurring sales and significant profitability. By focussing principally on the competitive advantages described in section above (in particular, the significant operational leverage offering strong profits and good cash generation prospects), the Group's strategy is based on the following three lines Capture a growing share of the marketing budget of estate agents According to the Group's estimations, the proportion of Internet-related expenses in the marketing budgets of estate agents remains relatively moderate but is likely to increase given the growing realisation of the effectiveness of online posting

33 The average amount invoiced per Media customer in provincial France increased from 277 in December 2008 to 291 in December 2009 (an increase of 4.8%) whereas, over the same period, the average amount invoiced per customer in the Paris Region passed from 408 to 422 (an increase of 3.4%). The higher figure for the average amount invoiced per customer in the Paris Region compared with the figure for the average amount invoiced per customer in provincial France reflects the greater market maturity in the Paris Region where the posting of professional property advertisements on the Internet is tending increasingly to match or even exceed the publication of such advertisements in the press (free and non-free). This tendency helps the Group in its efforts to raise the awareness of its customers to the services that it offers and enables it to charge higher subscriptions. The Group also believes that it has significant room for manoeuvre in terms of pricing. Indeed, the cost of online property advertisements for estate agents remains much lower than that of traditional paper-based property advertisements yet the dissemination is longer, wider and of better quality Add to the Group's offer by seizing new growth opportunities The Group intends to continue placing organic growth at the heart of its strategy by seizing new growth opportunities that offer both a high level of complementarity with its current activities and synergies that allow it to improve its profitability. The Group was a trailblazer on the market for property advertisements on the Internet by offering a wide range of services attractive to its customer estate agents (creation of personalised websites, listing, hosting, maintenance, call tracking, etc.) and to users (definition of search criteria, alerts, etc.). Aware of the importance of innovation and of renewing the services offered in order to consolidate its leading position on the French market for property advertisements on the Internet and to continue to increase awareness, the Group intends to continue to offer new services related to its core business, in particular (i) by listing new categories of classified advertisements (holiday lettings and lettings of luxury properties, commercial leases, businesses, offices) and (ii) by developing premium services aimed at estate agents (introduction of local advertising networks, development of partnerships, provision of vendor contact details, subscription fees for real estate agencies wishing to advertise via the inter-agency platform ("best deals" and premium priority alerts). During the year 2009, the Group also developed a new product called Flash Agent which enables estate agents to write directly on line and receive selected inserts containing property pictures and descriptions. The acquisition of the company Périclès, which specialises in the development and marketing of computer management solutions for estate agents, enables the Group to consolidate its position as the essential partner for estate agents by offering a comprehensive communication and management service Seize external growth opportunities The growth in the Group's market share and in the sales achieved with each customer can also be obtained by means of external growth operations to which the Group remains alert. Potential external growth operations could aim, firstly, to gain market shares in the Paris Region, in provincial France and also in Europe by pursuing a programme of targeted acquisitions in these various geographical zones and, secondly, to increase the average sales achieved with each customer. Hence the Group moved forward to acquire the companies Belles Demeures specialized in the luxury real estate market and Agorabiz, an Internet platform for offices and business opportunities in July 2008 and September 2008 respectively. The Group also intends to profit from the international positioning of Immostreet to develop and consolidate its activity on an international level and therefore enjoy a strategic position in the event of the consolidation of the sector The Group's products and services The Group is the leading operator of websites dedicated to property advertisements in France. It relies on the successful operation of its websites to offer an extensive and attractive range of Internet services

34 dedicated to real estate professionals who can therefore benefit from the Group's expertise in the design, optimisation, hosting and maintenance of their own websites. The Group has also managed to boost its audience by introducing premium services aimed at users and by selling advertising space to advertisers. The table below shows the consolidated group sales for each sector for the years 2009 and 2008 (following IFRS). Sales Break down by sector thousand Euros Classified Ads and Media Change amount % % Services:Websites, agencies and directory postings % Software Total % % Pursuant to the strategies established during several months, the Group does not wish to limit itself to the posting of classified ads, but aims to market additional services and products through its Web Agency, its software entity (Périclès) and its luxury property entity (Belles Demeures), to its customers. This strategy leaning towards the development of vertical portals (business opportunities and offices, luxury and developments) tends to proportionately lower the share of classified ads in the global sales figure. This figure dropped from 92% to 85% at the end of As a result, the Group has modified the means of calculating the average basket, in order to contain the total lines of Media revenues (developments, luxury, offices and business opportunities) and not only those stemming from the Classified Ads. From now on, the entire Group communication will use these new indicators. The table below shows the changes in the number of Group clients as well as in the average Media basket from December 2008 to December

35 December 09 September 09 June 09 March 09 December 08 Change Paris Region Number of clients Average basket (Euros) Province Number of clients Average basket (Euros) % % % % Total Number of clients % Average basket (Euros) % The table below shows a break down of the Group customers by sector: Estate agents Property developers Firms offering property-related services Users Classified advertisements Online advertising and partnerships Direct services for users Services Software * * * * * * * * * Certain customers of the Group operate several branches. The Group generally concludes one contract for each agency, regardless of the number of branches operated. Thus, as at 31 December 2009, the Group had around 11,966 subscribed professional customers (excluding property developers), representing more than 16,594 outlets. The table below shows, for the years ended 31 December 2009 and 2008, the number of outlets operated by the Group's clients in the Paris Region and in provincial France: Paris Region Provincial France Total 31/12/ /12/2008 Number of branches of the Group's customers (excluding property developers) (1) Company estimate (based on the Group's marketing literature). The real estate profession has paid a heavy toll to the financial crisis and Group estimates indicate that the total number of agencies has decreased by 17% since The Group believes there are now 27,921 outlets of which 6,814 are in the Paris region and 21,108 in the Province. Thus the Group penetration rate on a domestic level stands at 61%. The breakdown is as follows: 80% in the Paris Region and 55% in the Province.

36 Classified Advertisements and Media Posting of professional property advertisements Estate agents, the Group's main customers The service of posting professional property advertisements is the Group's core business. The Group offers its customers -estate agents -the opportunity to list and promote their property advertisements on its range of Internet media comprising the websites and the leading French web portals as well as partner websites abroad. The geographical diversity of the Group's customer estate agents The table below shows the geographical breakdown of the Group consolidated sales (years 2008 and 2009) following IFRS between the Paris Region and provincial France In thousands of Euros Amount % Amount % Paris Region % % Provincial France % % Total % % The forming of partnerships with national franchise networks As the table below shows, the Group has entered into national partnership agreements with the majority of real estate networks, such as Arthur Immobilier, Century21, Imogroup, Keops, Laforêt Immobilier, Lamy, Guy Hoquet and Orpi. Network of estate Number of agencies Group customers, as a National agencies percentage agreement Orpi * 64.3% Century * Laforet 741 * Guy Hoquet 533 * Arthur communication 306 * Era partnership These agreements allow the Group to promote its services to members of these networks and to enable each contracting agency to enjoy certain price benefits. These national partnership agreements offer the following advantages for the Group: better market knowledge; better computer compatibility for sending files containing property advertisements; and listing among the most popular French partners of real estate networks. Variability of the Group's prices On 31 December 2009, the Group offered monthly subscriptions for which the amount varies, by band and on a decreasing scale, according to the number of property advertisements published. At 31 December 2009, the

37 minimum subscription was 205 in the Paris Region (up to ten advertisements) and 115 in provincial France (up to twenty advertisements). Over a given month, each customer may change his online classified advertisements as many times as he wishes provided that the total number contractually agreed is not exceeded. Since January 2007, customers also benefit from preferential prices if they publish their classified advertisements on both and As at 31 December 2009, 29% of customers (excluding property developers) are subscribed to this combined offer. The Group's prices also vary according to the potential audience of the websites on which the classified advertisements are published. The Group's price schedule, which varies according to distribution channels, comprises three zones: Paris Region: the cost of the subscription to post 10 property advertisements on a single website ( or starts from 205 and on both websites ( and from 375; Large cities in provincial France: the cost of the subscription to post 20 property advertisements on a single website ( or starts from 175 and on both websites ( and from 270; Other cities in provincial France: the cost of the subscription to publish 20 classified property advertisements on a single website ( or starts from 115 and on both websites ( and from 210. The Group's price schedule also varies according to whether the customer is an agency or a branch and according to the related services offered by the Group, such as: Le book@nnounces: an electronic book allowing agency clients to show users the full portfolio of ads published on websites such as and Client listing in the directory of real estate professionals; hypertext clickable link to the agency site; The agency logotype is displayed with the ads from the first page of results; The seller alert and the buyer alert, which initiate alerts, as soon as the seller wishes to contact the real estate professional, or as soon as the buyer becomes interested in the property offered by the client agency. In addition to the posting of ads, clients are offered additional products by monthly subscription: Virtual visits such as the Webvisium pack which comprises photo kits, activation costs and the annual subscription for publishing all 180 views corresponding to a property, and Webvisium Magic which is a slide show which enhances the advertsiement. It displays the logotype and the client details; Flat-rate Pole Position subscriptions allowing clients to rank selected ads to top of lists on website inquiries. A vignette which enables the client to target geographically and thus develop his renown. Contracts for the posting of property advertisements are generally drawn up for one year, are tacitly renewable and can be terminated by each party provided that one month's notice is given. These contracts are invoiced on a monthly basis. The Group's customers are highly fragmented: in 2009, not one customer in the classified advertisements sector accounted for more than 625,000 in annual sales (i.e. less than 0.9% of the Group sales)

38 Posting of property advertisements on the Internet The Group posts the property advertisements of its customers principally on its websites and also on the property pages of its Internet partners

39 Seloger.com, the leading website for professional property advertisements The website gives access to the largest number of professional property advertisements covering the whole of France for all types of mandates (rentals, sales, businesses, luxury properties, etc.). As at 31 December 2009, the website listed around million professional property advertisements updated daily, posted by around 11,966 of the Group's professional customers (excluding property developers). The website arranges its property advertisements into five main categories: sale (sale, sale of luxury properties with link to the website wwwbellesdemeures.com), investment product, annuity properties); sale of new properties (link to the website itself organised into three categories: residence housing, investment, property developments); rentals (rentals, flat-sharing, student residences, short-term rentals, senior); construction of single family housing (under the heading Construire on the website). offices and businesses; (link to wwwagorabiz.com organised in six items: stock in trade, companies, office premises, shops and retail premises, other business premises, warehouses and franchises; holiday lettings

40 Each of these categories enables users to narrow their search according to different criteria (place, surface area, type of dwelling, price) so as to target the property advertisements likely to be of interest to them. Various advertisements are displayed as the search result from which users, according to the wishes of the estate agent that posted the advertisement, can view photos, click on a link to the estate agent's website, see details of the estate agent's address and telephone number and identify the exact location of the property. The website also allows users to sign up to a free alert service which enables them to receive s, in quasi-real time or every four days, with details of property advertisements corresponding to their search criteria. Based on the "housing market" concept, the website also offers additional services intended to help users in the various stages of their property project, from the initial search to moving day. These services are grouped together by themes, namely: Search, Finance, Move and Day-to-Day

41 Immostreet.com, the European platform The website is the Group's European portal for professional property advertisements launched in 2004.

42 Operating as part of a free partnership, this website brings together various European distributors of property advertisements with the aim of creating a European stock of classified advertisements from real estate professionals. The Group's partners are as follows: Portugal Belgique Italie Espagne France Suisse Allemagne Royaume Uni The website includes not only the majority of the information and professional property advertisements available on the website, but also advertisements from Germany, Belgium, Spain, Italy, Israel, Portugal and Switzerland. The professional property advertisements available on the website are also distributed on the websites of the Group's local partners in the aforementioned countries and in the United Kingdom. As at 31 December 2009, the website listed more than 1,871,000 European professional property advertisements, of which around 570,000 originated from France. The property advertisements published on the website can be viewed, thanks to automatic translation software, in nine languages (Germany, English, Chinese, Spanish, French, Italian, Dutch, Portuguese and Russian) and are published on the websites of the partners situated in the other 8 countries. The Group is the pioneer and technological operator of this European platform for bringing together and translating property advertisements. Each partner remains totally independent, maintains control over his customers and over the property advertisements that he wishes to post and remains free to promote sales from this European portal in his country

43 Selogerneuf.com, the website for classified advertisements for new property developments The website is a portal for new developments organised around residential property and investment property. At 31 December 2009, the website had a customer base that included the majority of the main operators in the real estate sector (such as Nexity, Bouygues, Kaufman and Broad, Icade/Capri, Meunier- Espace Immobilier BNP Paribas, Vinci or Eiffage, Promogim, Cogedim and Sogeprom). In December 2009, the Group listed more than 2,879 new property developments over the whole of France and estimated that the potential for classified advertisements for new property developments concerned around 4,500 ongoing property developments. Thanks to the website, the Group is ranked as an expert in new property and therefore meets the concerns of property developers wishing to be visible on one specific portal

44 Agorabiz.com, the website of classified ads for offices and business opportunities The website is a platform dedicated to company real estate: stock and trade and offices for small and medium sized businesses, as well as business opportunities

45 Bellesdemeures.com, website for luxury property The website focuses on sales and lettings in the luxury property market. On 31 December 2009, the bellesdemeures.com website offered about 12,500 professional property ads updated daily, stemming from about 450 real estate professionals, who constitute Belles Demeures customer base. The website properties are listed under eight headings. Belles Demeures Mansions Castles Manors Apartments Lofts Hunting residence Vineyards Each of these categories allows the user to target the properties likely to interest him according to different criteria (location, price range).the properties displayed as search results give access to the estate agency posting the ad via a link and provide details such as the agency address and phone number. Users can examine photos, and the exact location of the property. The website also offers users the possibility of subscribing to a free alert system with which users receive in almost real time, or every four days, property ads corresponding to his search criteria in their box. The property pages of the main Internet operators Besides the Group's specific websites ( and which publish the property advertisements of its customers, the Group benefits from the widespread circulation of property ads on the most popular French web portals

46 The Group has formed partnerships in particular with TF1 (e-tf1.fr), Capitol.fr L Express/L Expansion and Free for the posting of Seloger.com classified advertisements on its property pages. Partnerships were also formed with (i) AOL and Le Monde.fr, for the posting of website ads on the property pages of these portals Other ways of posting property advertisements At the end of 2009, 16% of the French population used a Smartphone; 73% of these claim to use their Smartphone as a terminal for Internet surfing. At this date, the total number of mobile Internet users amounts to 11.4 million people, and represents 2% of total website traffic. The Group considers this innovation fundamental to its development strategy. This explains the launching of the first iphone application using 3Gs features: a global positioning system of the user as well as delivery of push mail in September This software can be downloaded free of charge from the Apple Store. The iphone Seloger.com application gives access to more than 1 million ads on-line. It offers several features notably: A global positioning system locating the property as well as estate agencies. The iphone application informs the user in real time of offers and agencies close to his location; it provides maximum response for real estate prospection. Push mail, an exclusive Seloger.com application sends the user the latest ads at any time. It enables the user to memorize all the data related to his searches; selected ads, appointments for visits, notes and additional photos taken during visits and tools to help manage real estate prospection. At the end of December 2009, 67% of Internet traffic was generated through the Apple iphone terminal 8. Furthermore, the Group previously published professional property advertisements for certain customers in provincial France in its classified ads newspapers. The shift of the real estate customer from print to Internet has lead the Group to halt the publication of its five free newspapers during the year On certain market niches, like real estate developments and the luxury segment, print remains an efficient marketing tool. The Group therefore pursues the publication of its monthlies, Seloger.Neuf and Belles Demeures Management of the property advertisements database The creation and distribution of the database containing professional property advertisements is organised as follows. Receiving classified advertisements and visuals The Group, mindful of its customer s organisation, receives the classified advertisements and visuals (photos, drawings and virtual visits) through three separate channels: by data transfer (82% of classified advertisements received during December 2009); by online entry of details by the customer on the Group's website set up for that purpose, (18% of classified advertisements received during the same period); and by fax and manual entry of details by the Group's employees (less than 0.001% of the classified advertisements received during the same period). The compatibility of the majority of software packages used by client estate agents with the computer solutions used on the and websites means that files containing classified 8 Médiamétrie: 9 March

47 advertisements and visuals sent by client agencies are automatically forwarded without having to re-input details. This situation ensures that the classified advertisements published on the Group's websites are permanently updated in real time. Numerous computer firms have specialised in the development of software for real estate professionals. In order to increase and facilitate the transfer of estate agents' classified advertisements to the and websites and, thus, to reduce the time taken to post the classified advertisements onto those websites, the Group has entered partnership agreements over the last ten years with the publishers of these software packagers and has developed a transfer platform which makes its computer solutions compatible with those of estate agents. Today, the computer solutions on and websites are the only ones that are compatible with around 55 software packages used by agencies. Quality of classified advertisements and visuals Concerned with the quality of the classified advertisements and visuals posted on the and websites, the Group follows a control policy to check the quality of the classified advertisements and visuals received and stored on its central database, using automated filters and through consistency checks carried out by the Group's employees. Such processing constitutes a pledge of quality both for estate agents and users prospecting for a property. Posting classified advertisements and visuals Classified advertisements and visuals are placed online by transferring these from the central database to the web database, which accommodates the Group's various websites and, more generally, all of the Group's Internet media. As soon as it is placed online, each new classified property advertisement is incorporated into the free alert system by , and by mobile Internet such as the Push iphone and is immediately forwarded to the addresses of users likely to be interested in this classified advertisement. The Group sends an average of 18 million alerts every month. For further details on the technical platform and on software, see Chapter 11 ("Research and development, Patents and Licences") of this annual report

48 Online advertising and partnerships Online advertising and marketing The Group aims to capture users at the onset of their property project begins, in order to promote, not only through advertisements placed by property professionals but also through a range of other services (property loans, insurance, etc.), all the steps that are necessary for the achievement of their property project. The system of geographically targeted advertisements, which is inspired by the advertising inserts visible on print documents, enables the Group to offer customer estate agents the possibility of inserting an advertisement presenting their agency on the pages of the and websites that offer classified advertisements with the same postcode as the estate agent. For estate agents, this tool guarantees institutional and geographical visibility with users who have access to their details on the results pages displaying advertisements matching their search criteria. The Group has also optimised the sale of advertising space on its websites by transferring its advertising management to AOL Media Networks with effect from 1 February 2007, entrusting it with the marketing and promotion of advertising space for the and websites, excluding real estate professionals who are directly canvassed by the Group. In order to expand its user database, the Group has also concluded a partnership with the company Come & Stay, which specialises in direct marketing on the Internet. This partnership, through which Come & Stay is in charge of sending information messages and promotional offers to the Group's website users, enables the Group to follow-up and develop customer loyalty among those users who have declared an interest in receiving these alerts by (newsletters) and also messages from third party companies

49 Partnerships The Group has formed partnerships with firms offering ancillary services with regard to property sales and rentals. Thus, it offers the following services on both and websites : rental of removal vehicles in partnership with Europcar; personalised comparison of the financing conditions of a property project with the company Meilleurtaux.com; financing solutions for property investment projects in exclusive partnership with the Caisses Régionales du Crédit Agricole as from January 2007; tax optimization services through the Loi Scellier, avec Nexity since September Partnerships are generally invoiced on a flat-rate basis, per click (via advertising agencies or by revenue sharing). Besides the sales generated by these partnerships, the promotion of all of these services related to property projects benefits customer awareness and supplements the quality of the and websites which support and guide users throughout the duration of their property project Direct services for users The Group wishes to establish itself as the property portal whose core business is to offer users searching for a property the largest number of national and European property advertisements. The free consultation service for property advertisements enables users searching for property to obtain, using a detailed search engine incorporated into the and websites, a list of classified advertisements matching their search criteria. The advertisements displayed show the details of the estate agent that the user should contact in order to obtain additional information as well as the price, location (city/town, district), surface area, description and, where applicable, photos of the property or a virtual visit. The user has the option to refine the search criteria and save these with a view to a future consultation and to receive the free alert service. This service enables the user to receive s containing details of all advertisements matching his search criteria as soon as these are posted onto the Group's website. The user can ask at any time to stop receiving these alerts. The consultation service for property advertisements on the Group's websites is free: for sales advertisements, and for rental advertisements after the first two days of posting. A premium service enables the user, by means of the "Selogerpass" (EUR 1.34 per call plus 34 cents per minute), to access the contact details of estate agents posting advertisements for short lets lasting less than three days Guide to property prices The website, which, in particular, enables the Group to add to the information contained in its database, offers tenants, sellers or buyers, three premium tools allowing them to assess property prices online: the flash estimate which shows selling or rental prices in more than 2,000 cities across France (analytical weighting of prices per m² from a database of more than 500,000 classified advertisements per year) for a price of EUR 1.68; the personalised estimate which, from a detailed questionnaire (condition, surface area, etc.), gives an

50 estimate of selling prices, for a price of EUR 6; the record of sales which, for a price of EUR 10, contains details of property sales in the Paris Region recorded by notaries. These details are taken from the Base d'informations Économiques Notariales (B.I.E.N.) created by the notary profession Services Web Agency activity The Group offers its Internet expertise to its professional customers (independent estate agents, regional groups of agencies and national franchise networks) and offers specific services enabling them to develop their activities through the use of the Internet. Website design and operation As at 31 December 2009, the Group had created more than 2,840 personalised websites for its professional customers, enabling them to post their classified advertisements on their own website or simply to establish their presence on the Internet. The Group runs the websites along with its hosting service, attends to the maintenance, and manages the domain name and s on behalf of its customers. Since 2009, this combined offer of website design and operation is subject to a recurrent subscription by estate agency clients, making monthly payments of 86 Euros. Assistance In order to promote the websites created for its customers, the Group offers a listing service the aim of which is to improve the visibility of these websites on the Internet, in particular by listing them on the search engines most regularly used by net users, such as Google, Yahoo! France and MSN. This listing offer is subject to a recurrent subscription by estate agency clients, making monthly payments of 333 Euros