ANNUAL FINANCIAL REPORT 2014

Transcription

1 A French société anonyme with share capital of 200, Registered office: 30 rue de la Victoire Paris Paris Trade and Companies Register No.: ANNUAL FINANCIAL REPORT 2014 (Article L of the AMF General Regulation) 1

2 SUMMARY DECLARATION OF THE RESPONSIBLE EXECUTIVES 4 Page PART 1 MANAGEMENT REPORT OF THE BOARD OF DIRECTORS 5 Situation of the Group during the financial year 5 Outlook and foreseeable business trends for the Group 8 Consolidated financial statements 9 Risk factors 15 Information relative to social, environmental and societal performance ( Grenelle II ) 15 Separate financial statements 16 Information on directors 19 Information on the Company s shares and shareholders 27 Subsidiaries and investments 35 Agreements referred to in Articles L et seq. of the French Commercial Code 37 Subsequent events 38 Financial results of the last five financial years 39 PART 2 CORPORATE GOVERNANCE 40 Chairman s report on the functioning of the Board of Directors and on internal 40 control procedures relating to the preparation and processing of accounting and financial information Statutory Auditors report prepared pursuant to Article L of the French 69 Commercial Code on the report of the Chairman of the Board of Directors of Viadeo SA in respect of the year ended 31 December

3 Page PART 3 CORPORATE SOCIAL RESPONSIBILITY 71 Report on the social, environmental and societal performance 71 (Annex of Part 1 relating to the management report of the Board of Directors) Report of the independent body on the social and environmental information 93 PART 4 FINANCIAL STATEMENTS 97 Consolidated financial statements (financial statements and notes) 97 Separate financial statements (financial statements and notes) 171 Table of Statutory Auditors fees 204 Statutory Auditors report on the consolidated financial statements 206 Statutory Auditors report on the annual financial statements 208 Statutory Auditors special report on regulated agreements and 211 commitments 3

4 DECLARATION OF THE RESPONSIBLE EXECUTIVES Persons responsible for the Annual Financial Report Mr Dan Serfaty, co-founder, Chairman and Chief Executive Officer of the Company; Mr Thierry Lunati, co-founder, Deputy Chief Executive Officer. DECLARATION OF THE PERSONS RESPONSIBLE FOR THE ANNUAL FINANCIAL REPORT We hereby certify that, to the best of our knowledge, the financial statements were prepared in accordance with applicable accounting standards and give a fair view of the assets, financial position and results of the Company and all consolidated companies, and that the attached management report provides a fair view of the business trends, earnings and financial situation of the Company and all consolidated companies, together with a description of the principal risks and uncertainties they face. Paris, 29 April 2015 Jean-Paul Alves Chief Financial Officer Dan Serfaty Chairman and CEO 4

5 PART 1 MANAGEMENT REPORT OF THE BOARD OF DIRECTORS To the shareholders, We are pleased to present the management report of the Board of Directors, pursuant to the provisions of Article L of the French Commercial Code. Your Board of Directors has called this general shareholders meeting to report to you on the activity of the Company and its subsidiaries during the year ended 31 December 2014, and to submit for your approval the consolidated and separate financial statements in respect of that year. The reports of the Statutory Auditors and the Board of Directors were made available to you within the legal timeframe. Your Board of Directors, at its meeting of 28 April 2015, examined and approved the consolidated and separate financial statements for the year ended 31 December The consolidated financial statements of the Viadeo Group have been prepared in accordance with IFRS. The Chairman of the Board of Directors also reports, in a report attached to this report (Part 2), on the composition of the Board, including the application of the principle of balanced representation of women and men, the conditions governing the preparation and organisation of the work of the Board and the internal control and risk management procedures implemented by the Company pursuant to Article L of the French Commercial Code. 1.1 Situation of the Group during the fiscal year ended Presentation of activities Viadeo allows professional users, by signing up to the website free of charge, to create a profile and develop a professional network. Although Viadeo has members across the world, the Group focuses its efforts in a number of key geographical regions, such as France and China, where it leads the market in terms of the number of registered members. It has adopted a differentiated strategy consisting of taking local characteristics into account (known as a multi-local strategy). Presence on a professional social network (PSN) such as Viadeo addresses multiple needs: - managing your career (promoting your visibility on the web to other members of the network and recruiters, and facilitating contact for employment applications or replies to job postings); - identifying new business opportunities (identifying companies and finding out who their decision-makers are); - maintaining a link with contacts in order to monitor their professional activity and have an accessible, up-to-date online address book. 5

6 PSNs also draw on a concept common to generalist social networks: the social graph. This enables links to be forged between members and allows those links to be used to access other contacts through recommendations, thus multiplying the possible interactions. From a business perspective, while they can be used for various means, their use is currently centred mainly on recruitment services. Viadeo allows client companies to rapidly identify professionals (either in or seeking employment) who meet their recruitment criteria and/or circulate job postings in order to contact them. Moreover, the accessible data is richer than the data shown on job boards (contacts network, detailed career history, skills, activity on the network, etc.). PSNs are also a shop window for these businesses, which can also use Viadeo to communicate about their products or company. The Group s activities are divided into three separate lines of revenue: online member subscriptions; the sale to companies of recruitment and training services; the sale of marketing and advertising services Highlights of the year 2014 was a pivotal year in Viadeo s development. IPO of the Company on the regulated market of Euronext Paris The Company s July 2014 IPO increased shareholders equity by a significant 32.7 million. This breaks down as a capital increase of 22 million and the conversion of convertible bonds, issued in early 2014, in the amount of 10.7 million. This transaction enjoyed support from major shareholders including Bpifrance Participations, Idinvest and Ventech, which marked their confidence in the Company s development plans by subscribing to the capital increase and converting their bonds into shares. Change in revenue from Corporate activities At the time of its IPO, the Group laid out its strategy of ramping up its activities for professionals, resulting in an increase of over 9% in Corporate revenue in 2014 (+ 1.2 million). These activities include the following business lines: - sale of recruitment and training services to companies; - sale of marketing and advertising services. Threshold crossed of 65 million members worldwide At the end December 2014, the Viadeo Group had over 65 million members worldwide, including nearly 10 million in France and more than 25 million in China. 6

7 2014 was a year of robust growth in terms of registered members, with between 400,000 and 600,000 new members per month on average over the period. The Group accordingly increased its membership base by more than 8.5 million in 2014, of which more than 1 million in France and 6.4 million in China. Success in the platform s technological developments Building on investments made in 2012 and 2013 to modernise the technology platform, the Group launched many new products in 2014 for members and customers of Corporate services, and in terms of Mobile applications. Mobile activity is growing rapidly in the field of recruitment and training services. A total of 20% of mobile users visit the Job & Career section, with more than 520,000 consultations of job offers giving rise to more than 25% of the applications received by Viadeo recruiters Human resources As of 31 December 2014, the Group s workforce totalled 299 people, compared with 447 at the end of Following the IPO, the headcount grew in the finance and HR departments in order to support business growth. By contrast, the workforce was reduced in technical functions following the completion of technical developments on the new Viadeo platform and the liquidation of the subsidiary Soocial BV (Netherlands). The closure of the Senegalese, Spanish, Italian and Mexican subsidiaries, and the mothballing of the Indian subsidiary resulted in the elimination of 68 jobs in marketing and sales functions in 2013 and

8 1.2 Outlook and foreseeable business trends for the Group Promising business momentum on the Corporate business lines in 2015 In view of the growth of the order book of over 20% in recruitment services and nearly 199% in marketing and advertising services in 2014, the Group is anticipating robust revenue on these business lines in Continued development in the Group s strategic geographical markets For 2015, the Group has confirmed the continuation of its multi-local strategy, in which its development is focused on France, China, Russia and the CIS (Commonwealth of Independent States) countries, and North and West Africa (mainly Morocco, Tunisia, Algeria and Senegal). In late 2014, it announced plans to continue its development and rapidly conquer a substantial membership base in order to cement its critical mass and increase the monetisation of its audience. This strategy will involve alliances, partnerships with local investors and any other transactions enabling the development of the business. In Russia, following the decision of our partner Sanoma to withdraw from the area, a change in the ownership of the share capital of our Russian subsidiary Viadeo Independent Media LLC ( VIM LLC ) is expected in the first half of On 3 April 2015, the Group, which aims to continue its development in Russia, signed a Share Purchase Agreement (SPA) on the 50% of our subsidiary Viadeo Independent Media BV ( VIM BV ) previously held by Independent Media Holding BV, with a view to selling the shares in turn to a Russian partner in order to maintain a local presence considered essential to the success of operations in this area. Pursuant to the SPA, the conditions precedent having been lifted, the transaction was completed on 24 April Lastly, in Africa, the Group s strong position in French-speaking countries will be maintained, with the possibility of making acquisitions or forging alliances as a means of obtaining local structures and imposing the Group as a leading operator in each country. Massive communication campaign in 2015 Following the investment phases resulting in the modernisation of the Group s technological platform, and in view of the new positioning around Corporate solutions, the Group launched a massive communication campaign in France in 2015 to reaffirm its leadership and its key status on all issues related to careers. Targeting all people on the job market, and using 360 media (digital, TV, press, billboards), communication will take the form of successive campaigns conducted throughout

9 1.3 Consolidated financial statements Revenue The consolidated revenue from operating activities of the Viadeo Group totalled 28.0 million in 2014, compared with million in the previous year, breaking down as follows: Online subscriptions Marketing and advertising Recruitment and training Other The revenue generated by the Viadeo platform (Viadeo geographical segment) mainly includes revenue generated in France and Africa. In 2014, these areas represented 96% of the Group s consolidated revenue from operating activities. The remainder was derived from the Tianji platform (China geographical segment). At the present time, the Group has not launched any monetisation activities among its members in the rest of the world. Revenue from Corporate activities increased by 9.1% in 2014 financial year. Revenue from recruitment and training services increased by 6.0% over the year ( 8,635 million in 2014, compared with 8,143 million in 2013). Revenue from marketing and advertising services grew by more than 14% to 5,373 million at 31 December 2014 (compared with 4,695 million in 2013). Breakdown of revenue from operating activities by business line (in thousands of euros) Change Recruitment/Training services 8,635 8, % Marketing/Advertising services 5,373 4, % Online subscriptions 13,497 15, % Revenue 27,505 28, % Other revenue 499 2, % Revenue from operating activities 28,004 30, % 9

10 Breakdown of revenue by quarter Revenue by quarter (in thousands of euros) Change Q1 6,751 7, % Q2 6,793 7, % Q3 6,315 6, % Q4 7,645 7, % Billings Commercial momentum in Recruitment and training services intensified in the middle of 2014, with billings up 5% over the year compared with 2013: (in thousands of euros) Change Billings for Recruitment and training services 9,138 8,728 +5% Order book by Corporate activity Recruitment and training services On this business line, the sustained growth of the order book (+20% over the year) should allow the confirmation of the positive momentum achieved in 2014 going forward. (in thousands of euros) 31/12/ /12/2013 Change Recruitment and training services 3,324 2, % Marketing and advertising services (in thousands of euros) 31/12/ /12/2013 Change Marketing and advertising services 1, % EBITDA In line with the strategy announced at the time of the IPO, consolidated EBITDA improved by 4.5 million in 2014, from a negative 7.8 million to a negative 3.2 million. The improvement was particularly pronounced in the Viadeo geographical segment (France, rest of Europe, USA and Morocco), where EBITDA rose by 3.7 million from a negative 1.95 million in 2013 to a positive 1.86 million in In the Tianji segment (China), still in the investment phase, EBITDA was a negative 5.01 million at end- 2014, compared with a negative 5.9 million in

11 The positive trend in EBITDA is attributable in large part to a decline in personnel expenses and other external expenses. Personnel expenses fell sharply in the Viadeo and Tianji (China) segments alike, from 22.9 million in 2013 to 17.7 million in 2014 (see 1.1.3). The reduction in other external expenses ( 8.4 million in 2014, compared with 10.9 million in 2013) is attributable to a fall in costs relating to IT services, impacting the income statement by negative 1.8 million, as well as lower rental expenses following the liquidation of certain subsidiaries at the end of 2013 and the renegotiation of rent for the premises occupied by Tianji and APVO (- 0.5 million) Share-based payments The IFRS 2 expense totalled 1.3 million in 2014, an increase of 0.3 million compared with The increase breaks down as: - an increase of 0.2 million relative to the BCE 3a plan, the expiry date of which was extended in 2014 to 31 December 2019; - a reduction of 0.1 million relating to the BCE 4 plan, the vesting of which was completed in April 2014; - an increase of 0.2 million relating to the BCE 5 plan, awarded in June The benefit recognised in 2013 was pro rated, contrary to that recognised in Operating income The Group s operating income accordingly improved from a loss of 14.1 million to a loss of 10.1 million, an improvement of 4 million Net financial income/(expense) In 2014, net financial income/(expense) was a loss of 2.2 million, compared with a loss of 0.2 million in the previous year. The variation of 2.0 million is attributable to the cost of converting bonds in June 2014 (non-recurring expense of 3.1 million) and financial income resulting from significant fluctuations of the euro-dollar exchange rate in the accounts of Californian subsidiary APVO. 11

12 1.3.6 Net profit/(loss) Thanks to the 4.0 million improvement in operating income, and despite a non-recurring financial expense of 3.1 million, the net profit/(loss) from continuing operations for the year for the Group was stable at a loss of 13.5 million in 2014, compared with a loss of 13.1 million in Note the reversal of a provision for deferred tax in the amount of 0.8 million in the year ended 31 December 2014, in view of the profit generated by US subsidiary APVO for the year Information on the consolidated balance sheet data Non-current assets As of 31 December 2014, the Group s non-current assets amounted to 24.9 million, compared with 23.3 million as of 31 December They mainly comprise: goodwill ( 5.8 million as of 31 December 2014, compared with 5.2 million as of 31 December 2013); intangible assets ( 10.0 million as of 31 December 2014, compared with 7.8 million as of 31 December 2013); property, plant and equipment ( 0.8 million as of 31 December 2014, compared with 1.3 million as of 31 December 2013); other non-current financial assets ( 1.4 million as of 31 December 2014, compared with 1.8 million as of 31 December 2013); non-current tax receivables ( 1.6 million as of 31 December 2014, stable compared with 31 December 2013); deferred tax assets ( 5.1 million as of 31 December 2014, compared with 5.3 million as of 31 December 2013). The change in intangible assets during the year was characterised mainly by the capitalisation of the development costs of professional networking platforms in the amount of 4.9 million, largely offset by depreciation and amortisation of 4.3 million over the period. The Group did not recognise deferred tax assets in respect of losses generated in France or China. As regards the APVO subsidiary (USA), the amount of deferred tax assets recognised as of 31 December 2014 was 2.6 million. This is justified by the taxable profits anticipated in the coming three fiscal years. Current assets As of 31 December 2014, the Group s current assets amounted to 31.5 million, compared with 11.3 million as of 31 December They mainly comprise: trade receivables ( 6.3 million as of 31 December 2014, compared with 6.2 million as of 31 December 2013); 12

13 other current receivables ( 0.8 million as of 31 December 2014, compared with 0.6 million as of 31 December 2013); cash and cash equivalents ( 24.4 million, compared with 4.5 million as of 31 December 2013). The change in cash and cash equivalents during the year represents an increase of 19.9 million. Consolidated shareholder s equity As of 31 December 2014, consolidated shareholders equity amounted to 32.0 million, compared with 10.5 million as of 31 December The change in shareholders equity during the period was attributable mainly to: the consolidated loss of 13.5 million for the year; translation differences relating to foreign subsidiaries in the amount of 1.5 million; the cash capital increase in the amount of 18.9 million; the capital increase by conversion of convertible bonds in the amount of 13.7 million; the consideration for the expense related to share-based payments in the amount of 1.3 million. Non-current liabilities As of 31 December 2014, the Group s non-current liabilities amounted to 1.9 million, compared with 2.5 million as of 31 December They mainly consist of loans ( 0.9 million as of 31 December 2014, compared with 1.1 million as of 31 December 2013), provisions ( 0.2 million as of 31 December 2014, compared with 0.3 million as of 31 December 2013) and deferred income to be recognised in more than one year ( 0.9 million as of 31 December 2014, compared with 0.8 million as of 31 December 2013). Current liabilities Current liabilities amounted to 22.5 million as of 31 December 2014, compared with 21.6 million as of 31 December They comprise: - trade payables ( 12.4 million as of 31 December 2014, compared with 10.2 million as of 31 December 2013); - borrowings with maturities of less than one year ( 0.8 million as of 31 December 2014, compared with 2.5 million as of 31 December 2013); - other current provisions ( 0.9 million as of 31 December 2014, compared with 0.7 million as of 31 December 2013); 13

14 - other current liabilities ( 8.5 million as of 31 December 2014, compared with 8.1 million as of 31 December 2013). These items are mainly deferred income in the amount of 8.3 million as of 31 December 2014, compared with 7.9 million as of 31 December Off-balance sheet commitments Lease obligations on buildings The Company occupies its headquarters in France under a commercial lease. Future rent and expenses until the end of the next three-year lease period break down as follows as of 31 December 2014: less than one year: 1.0 million; more than one year and less than five years: 1.2 million. Rent recognised as an expense during the year ended 31 December 2014 amounted to 1.0 million. The Group has pledged investment securities in the amount of 0.5 million as security for the commercial lease. The investments in question are presented under non-current financial assets. The Group has signed two property leases for a term of three full consecutive years for its business in China (Tianji). Rents for the year amounted to 0.5 million, and future expenses within one year to 0.4 million. Lastly, the Group has signed a lease for its premises in the United States, for which the commitment in respect of future expenses is not material. Pledges and other collateral The Viadeo Group has pledged its business goodwill as collateral for the repayment of a bank loan in the amount of 0.2 million in the consolidated balance sheet. As of 31 December 2014, the Viadeo Group was in compliance with all banking covenants relating to this loan Research and development activity After a year devoted almost exclusively to the development and implementation of the new platform in 2013, the research and development activity turned its focus in 2014 to the launch of new products ( Let s meet and Face to Face, among others). Also noteworthy was the overhaul of the Dashboard, the Company pages and the Employment space on Mobile applications. At Tianji, R&D activity was focused on the development of a new mobile application. 14

15 1.4 Description of the principal risks and uncertainties faced by the Group The risks to which the Group is exposed are described in the document de base dated end-may The types of risk and their nature had not changed as of the time of writing of this report, with the exception of liquidity risk, which has been extended to the medium term by virtue of the funds raised by the Group during its IPO on the regulated market of Euronext Paris on 2 July There are no governmental, legal or arbitration proceedings, including any proceedings which the Company is aware of, which are left unresolved or pending, and which are liable to have, or have had a significant impact on the Group s financial position and profitability during the last 12 months. 1.5 Information relative to social, environmental and societal performance ( Grenelle II ) French Law No of 12 July 2010, known as Grenelle II, and its implementing decree published on 24 April 2012 amending Article L of the French Commercial Code set out the mandatory information to be included in the annual management report and introduce the obligation of having the social, environmental and societal information contained therein verified by an independent third party. In respect of 2014, and pursuant to the decision of the French Accreditation Committee (COFRAC) to prohibit the involvement of a panel of Statutory Auditors in the performance of the assignment of the independent third party, Grant Thornton was the sole auditor appointed by the Company to proceed with the verification of this information. To facilitate its reading, social, environmental and societal information is the subject of a dedicated report (part 3) appended to this management report, of which it is an integral part. 15

16 1.6 Separate financial statements Summary of the trading environment and significant events in 2014 The highlights for the Company and the Group are presented in section 1.1 above. The financial statements of the parent company Viadeo SA are an integral part of this report. The accounting policies are identical to those used during the previous year. A reminder of the financial statements for the previous year is provided for comparison purposes. During the year ended 31 December 2014, revenue amounted to 22,984,631, compared with 28,310,122 in the previous year. External expenses amounted to 9,292,442, compared with 11,321,787 in the previous year. Wages and salaries amounted to 11,527,619, compared with 13,327,917 in the previous year. Payroll charges amounted to 5,114,748, compared with 5,977,665 in the previous year. Taxes and similar charges amounted to 601,625 euros, compared with 727,142 in the previous year. Depreciation and amortisation expense amounted to 1,376,744, compared with 1,647,773 in the previous year. The year-end workforce was 188, compared with 222 at the end of the previous year. Operating expenses amounted to 27,955,027, compared with 33,041,448 in the previous year. Operating income was a loss of 3,619,268, compared with a loss of 3,755,374 in the previous year. The recurring profit/(loss) before tax, taking into account financial losses totalling 2,657,719, was a loss of 961,548, compared with a loss of 6,002,611 in the previous year. Exceptional income/(expense) for the year was an expense of 3,073,482, compared with an expense of 208,569 in the previous year. After taking into account a corporate tax credit of 535,527, the result for the year ended 31 December 2014 was a loss of 3,484,834, compared with a loss of 5,424,965 in the previous year. Liabilities recorded as of 31 December 2014, with the comparison with the end of 2013, are summarised in the following table: 16

17 Item (in thousands of euros) 31/12/ /12/2013 Trade and other payables 4,101 2,836 Tax and social security liabilities. Personnel 1,148 1,075. Social security bodies 1,442 1,624. State, income taxes. State, taxes on revenue State guaranteed bonds. Other taxes, duties and similar Liabilities on fixed assets and related accounts Other liabilities 1,980 2,598 Deferred income 3,652 2,409 Total 13,617 11, Annual Financial Report Expenses not deductible for tax purposes Pursuant to Article 223 (c) of the French Tax Code, please note that the financial statements for the past fiscal year do not take into account expenses that are not deductible for income tax purposes under Article 39-4 of the aforementioned Code. Table of results for the last five financial years Pursuant to Article R the French Commercial Code, the summary table of results for the last five years is included in section 1.12 of this report. Proposed appropriation of net income We ask you to approve the annual financial statements (balance sheet, income statement and notes) as presented, showing a loss of 3,484,834, which we propose to carry forward in full, bringing retained losses account to a total of 3,484,834. The Company s shareholders equity accordingly amounted to 61,135,545 as of 31 December Payment of dividends To comply with the provisions of Article 243 (a) of the French Tax Code, we inform you that no dividends have been paid in any of the last three fiscal years. Supplier payment terms Pursuant to Article L of the French Commercial Code, introduced by Law No on the modernisation of the economy and its implementing decree, companies must, from the year beginning 1 January 2009, disclose payment terms for their suppliers. The table below gives details of the amount of trade payables as of 31 December 2014 and 31 December 2013 by maturity: 17

18 Trade and other payables 31/12/ /12/2013 In thousands of euros Less than or equal to 30 days 1,514 1,036 Between 30 and 60 days Over 60 days(1)

19 1.7 Information on directors Composition of the Board of Directors As of the date of the financial statements, the Company s Board of Directors was comprised of eight directors and two observers. Dan Serfaty, Chairman of the Board of Directors and CEO, and Thierry Lunati, Deputy CEO, fulfil the functions of executive directors. The membership of the Board of Directors is set out in Part 2 (section 2.1 Corporate governance) of this document Other corporate offices Please refer to Part 2 (section 2.1 Corporate governance) of this document Compensation of the members of the Board of Directors Amount of attendance fees In accordance with the law, the amount of annual attendance fees payable to directors is set by the general shareholders meeting. The combined shareholders meeting of 21 May 2014 decided to set the amount of attendance fees allocated to members of the Board of Directors in respect of 2014 and for each subsequent year at 50,000, until decided otherwise by the ordinary shareholders meeting. By decision of the Board of Directors on 10 February 2015, it was decided not to pay attendance fees in respect of the year ended 31 December Compensation and benefits of any kind awarded non-executive directors of Viadeo Please be informed that no compensation or benefits in kind were paid by the Company or companies of the Group to any of the non-executive directors during the 2013 and 2014 financial years Compensation of directors Pursuant to Article L of the French Commercial Code, we hereby report on the total compensation and benefits in kind paid to each director during the past year, both by the company and by the companies controlled by the Company within the meaning of Article L of the French Commercial Code. The information below is established by reference to the Corporate Governance Code for Small and Midcaps, as published in December 2009 by MiddleNext and validated as a code of reference by the 19

20 French Financial Markets Authority (Autorité des Marchés Financiers AMF) (the MiddleNext Code ). This code is available on the MiddleNext website ( The total compensation paid in 2014 financial year by Viadeo SA and the companies it controls to each of the directors of Viadeo SA is presented in the tables below: Table 1 Summary of compensation and founders warrants (BSPC) awarded to each executive director (in thousands of euros) Name FY 2014 FY 2013 Dan Serfaty Chairman and Chief Executive Officer Compensation due in respect of the fiscal year (see Table 2) Value of multi-year variable compensation awarded during the financial year - - Value of founders warrants (BSPCE) allocated during the financial year - - Value of free shares allocated during the financial year - - TOTAL Thierry Lunati Deputy Chief Executive Officer Compensation due in respect of the fiscal year (see Table 2) Value of multi-year variable compensation awarded during the financial year - - Value of founders warrants (BSPCE) allocated during the fiscal year - - Value of free shares allocated during the financial year - - TOTAL TOTAL The Board of Directors, at its meeting of 25 February 2014, appointed Dan Serfaty as Chairman and CEO and Thierry Lunati as Deputy CEO, whereas prior to that date, Mr Lunati had been Chairman and CEO and Mr Serfaty had been Deputy CEO. 20

21 Table 2 Summary of compensation of each director (in thousands of euros) FY 2014 FY 2013 Name Amounts due in respect of 2014 Amounts paid in respect of 2014 Amounts due in respect of 2013 Amounts paid in respect of 2013 Dan Serfaty Chairman and Chief Executive Officer Annual fixed compensation(1) Variable annual compensation Multi-year variable compensation Exceptional compensation(3) (fully reinvested in Viadeo SA securities) Attendance fees Benefits in kind TOTAL Thierry Lunati Deputy Chief Executive Officer Annual fixed compensation(2) Variable annual compensation Multi-year variable compensation Exceptional compensation(3) (fully reinvested in Viadeo SA securities) Attendance fees Benefits in kind TOTAL TOTAL DIRECTORS (1) The Board of Directors, on the recommendation of the Appointment and Compensation Committee dated 27 August 2014, decided to set the gross annual fixed component of the compensation of Dan Serfaty from 1 September 2014 at 96,000 in his capacity as Chairman and CEO of Viadeo SA and 250,000 in his capacity as General Manager of Tianji Boren Technology Ltd (Beijing). In addition to each of these components of fixed compensation, Mr Serfaty is eligible for a variable portion in a maximum amount of 25,000, awarded in respect of targets related to the activity of the respective companies, as set by the Appointment and Compensation Committee. (2) Regarding Thierry Lunati, and on the recommendation of the Appointment and Compensation Committee dated 17 September 2014, the Board of Directors decided to set the gross annual fixed component of compensation from 1 September 2014 at 96,000 in his capacity as Deputy CEO of Viadeo SA and 250,000 in his capacity as Director of APVO Corp (San Francisco). In 21

22 addition to each of these components of fixed compensation, Mr Lunati is eligible for a variable portion in a maximum amount of 25,000, awarded in respect of targets related to the activity of the respective companies, as set by the Appointment and Compensation Committee. (3) As announced in the document de base filed with the AMF in May 2014, the Board of Directors, at its meeting of 26 May 2014, unanimously decided to grant the Chairman and CEO and Deputy CEO special bonuses of a maximum of 100,000 following the Company s IPO. The amount paid to each director was fully reinvested in Viadeo securities on the day of the IPO, i.e. 4 July 2014, at a unit price of per share. These amounts are in addition to the fees levied by KDS Associés SARL and Kadomi SARL, of which Dan Serfaty and Thierry Lunati are co-manager and manager respectively. In 2014 financial year, KDS Associés SARL received payment in respect of services provided by Dan Serfaty and invoiced under the agreement between the company and KDS Associés for the provision of technical assistance services. The conclusion of this agreement was approved by the general shareholders meeting of 26 June 2007, and is described in the special report of the Statutory Auditors. The amount of the fees invoiced was 67,000 for 2013 and 164,500 for During the same year, Kadomi SARL invoiced fees for services provided by Thierry Lunati and performed under the assistance agreement for the technical and functional development of the Viadeo.com website. The conclusion of the contract was also approved by the general shareholders meeting of 26 June 2007, and is also described in the special report of the Statutory Auditors. The amount of fees invoiced was 322,000 for 2013 and 164,500 for Table 3 Table of attendance fees and other compensation received by non-executive directors (mandataires sociaux non dirigeants) None Table 4 Stock options granted to each executive director (dirigeant mandataire social) by the Company or any company within the Group during the financial years ended 31 December 2013 and 2014 None Table 5 Stock options exercised by each executive director (dirigeant mandataire social) during the financial year None Table 6 Free shares granted to each executive director (dirigeant mandataire social) during the financial years ended 31 December 2013 and 2014 None Table 7 Free shares granted that became available for each executive director (dirigeant mandataire social) during the financial years ended 31 December 2013 and 2014 None 22

23 Table 8 History of stock options granted to executive directors Summary table of founders warrants (BCE) granted during the period and in previous periods: Creation BCE 01 BCE 02 BCE 03 BCE 04 BCE 05 EGM 27/08/2007 EGM 27/08/2007 EGM 06/07/2009 EGM 30/06/2010 EGM 29/06/2012 Original maturity 31/08/ /12/ /12/ /12/ /09/ /06/ /12/2023 Modified maturity Extension of the maturity to 31/08/2017 following the decision of the EGM of 29/06/2012 Extension of the maturity to 31/12/2017 following the decision of the EGM of 29/06/ Number granted (1) 28,466 7,846 8,245 9,180 15,000 Number granted (2) 711, , , , ,000 Features (1) Right to subscribe for one new share at a price of Right to subscribe for one new share at a price of Right to subscribe for one new share at a price of Right to subscribe for one new share at a price of Right to subscribe for one new share at a price of Features (2) Right to subscribe for one new share at a price of Right to subscribe for one new share at a price of Right to subscribe for one new share at a price of Right to subscribe for one new share at a price of Right to subscribe for one new share at a price of Conditions of exercise Present as employee or corporate officer Present as employee or corporate officer Present as employee or corporate officer Present as employee or corporate officer Present as employee or corporate officer 23

24 Vesting period Exercisable immediately BCE 02 warrants may be exercised by their holders in the proportion of (i) one-third of the number subscribed from the date of the third anniversary of the holder s employment contract, another third from the date of the fourth anniversary of the holder s employment contract, and the final third from the fifth anniversary of the holder s employment contract until 31 December 2017, and (ii) on the condition that the beneficiary is still employed by the Company at the exercise date. BCE 03 warrants may be exercised by their holders in the proportion of (i) one-third of the number subscribed from the date of the third anniversary of the holder s employment contract, another third from the date of the fourth anniversary of the holder s employment contract, and the final third from the fifth anniversary of the holder s employment contract until 31 December 2014, and (ii) on the condition that the beneficiary is still employed by the Company at the exercise date BCE 04 warrants may be exercised by their holders in the proportion of (i) one-third of the number subscribed from the date of the first anniversary of the subscription, another third from the date of the second anniversary of the subscription, and the final third from the third anniversary of the subscription until 31 December 2017, and (ii) on the condition that the beneficiary is still an employee or director of the Company at the exercise date BCE 05 warrants may be exercised by the beneficiary in the proportion of: - one-third from the first anniversary of the grant, - one-third from the second anniversary of the grant, one-third from the third anniversary of the award, and (ii) on the condition that the beneficiary is still an employee or director of the Company at the exercise date. Beneficiaries Management Management/Employees Management/Employees Management/Employees Management/Employees (1) The figures shown do not take into account the 25-for-1 stock split approved by the combined shareholders meeting of 21 May (2) The figures shown take into account the 25-for-1 stock split approved by the combined shareholders meeting of 21 May Option series Number of options granted (1) Number of options granted (2) Grant date Expiry date Exercise price (1) Exercise price (2) Fair value at grant date (1) Charge in 2012 financial year in k Charge in 2013 financial year in k Charge in 2014 financial year in k BCE 01 * 28, ,650 27/08/ /08/ BCE 02 * 7, ,150 BCE 03 8, ,125 06/12/ /02/ /02/ /09/ /03/ /12/ /12/ BCE 04 9, ,500 05/07/ /10/ /12/ /12/ /12/ BCE 05 15, ,000 10/09/ /09/ ,074 Total 68,737 1,718, ,270 * The expiry dates of BCE 01 and BCE 02 were extended by the extraordinary general shareholders meeting of 29/06/2012. The fair value of the options indicated in the above table corresponds to that of the extended options (on the date the plans were changed). (1) The figures shown do not take into account the 25-for-1 stock split approved by the combined shareholders meeting of 21 May (2) The figures shown take into account the 25-for-1 stock split approved by the combined shareholders meeting of 21 May

25 Extending the vesting period of the BCE 01 and BCE 02 plans increases their fair value measured immediately before and after the change. In accordance with IFRS 2, the Group included the incremental fair value granted in the measurement of the amount recognised for services received in exchange for the equity instruments. The incremental fair value granted is the difference between the fair value of the modified equity instrument and the fair value of the original equity instrument, both measured at the date of the change. Expenses related to BCE 01 and BCE 02 in the 2012 financial year correspond to the incremental fair value of these two options recognised fully and immediately in profit or loss. Change in options in 2014 BCE 01 BCE 02 BCE 03 BCE 04 BCE 05 Warrants outstanding as of 1 January 2014 Warrants granted during the year Cancelled or lapsed warrants Exercised warrants 711, ,000 (1,125) (7,428) 155, , ,000 (27,875) (13,140) (33,418) (4,338) (42,250) Warrants outstanding as of 31 December ,650 93, ,610 87, ,750 Table 9 Stock options granted to the ten non-director employees (salariés non mandataires sociaux) who received the largest number of options and options exercised by those employees Weighted average price 2014 Number of entitlements granted to the 10 nondirector group employees whose number of entitlements granted is the highest (total number) - None Number of entitlements exercised/acquired/waived by the 10 nondirector group employees whose number of entitlements is the highest (total number) ,678 BCE 02, 11,515 BCE 03 and 1,006 BCE 04 granting entitlement to subscribe for 19,199 shares Table 10 History of free share allocations Not applicable 25

26 Table 11 Conditions for compensation and other benefits granted to executive directors (dirigeants mandataires sociaux) Executive directors (dirigeants mandataires sociaux) Employment contract Supplementary pension scheme Compensation or benefit due or liable to be due in respect of a termination or change of position Compensation relating to a noncompetition clause YES NO YES NO YES NO YES NO Dan Serfaty (1) Chairman and Chief Executive Officer X X X X (2) Date term of office started First appointed: 22 June 2006 Last renewed: 28 February 2011 Date term of office ends At the close of the general shareholders meeting held to approve the financial statements for the year ending 31 December 2016 Thierry Lunati (1) Deputy Chief Executive Officer X X X X (2) Date term of office started First appointed: 22 June 2006 Last renewed: 28 February 2011 Date term of office ends At the close of the general shareholders meeting held to approve the financial statements for the year ending 31 December 2016 The Board of Directors has authorised the combination of employment contracts in the Company s subsidiaries with a director position in the Company for Dan Serfaty, Chairman and Chief Executive Officer, and Thierry Lunati, Deputy Chief Executive Officer. (1) The Board of Directors meeting of 25 February 2014 appointed Mr Dan Serfaty as Chairman and Chief Executive Officer and Mr Thierry Lunati as Deputy Chief Executive Officer. Until that date, Mr Lunati was Chairman and Chief Executive Officer and Mr Serfaty was Deputy Chief Executive Officer. The date first appointed given in the table is the date of initial appointment to their previous respective positions, it being specified that the duration of their respective terms of office as Company director has not been amended. (2) Undertaking not to compete incumbent on Dan Serfaty and Thierry Lunati for a period of 12 months following the termination of their respective duties as General Manager of Tianji 26

27 Boren Technology Ltd (Beijing) and Director of APVO Corporation (San Francisco), equivalent to the amount of their fixed annual compensation. 1.8 Information on the Company s shares and shareholders For more information on the share capital of Viadeo SA, see Note 11 to the consolidated financial statements Composition of share capital Share capital amounts to 200,563. It is divided into 10,028,159 shares fully subscribed and paid up, with a par value of This excludes unexercised stock warrants and share options granted to certain investors and certain individuals who may or may not be Company employees. Statement of changes in share capital: Number In euros of shares Situation as of 1 January , , Exercise of founders warrants (BSPCE) Exercise of share warrants (BSA) Situation as of 31 December , Exercise of founders warrants (BSPCE) 24, Exercise of share warrants (BSA) 0 Increase in the par value of shares 47, for-1 stock split 7,568,472 Conversion of convertible bonds 831,691 16,634 IPO 1,287,737 25,755 Situation as of 31 December ,028, ,563 As of 31 December 2014 the number of Viadeo SA shares held in treasury was: - 25,619 shares acquired under the liquidity contract; - 107,421 shares held following the liquidation of CBC. The voting rights of each shareholder are equal to the number of shares held by each of them. Double voting rights have not been authorised. 27

28 1.8.2 Major shareholders The table below provides the list of shareholders owning more than 10% of the share capital and voting rights. Name of shareholder Number of shares held Percentage of share capital/ Voting rights Idinvest Partners 1,372, % AV3 1,330, % CBC 1,124, % Ventech Capital 3 1,114, % Shares in CBC were classified as available-for-sale assets held by Viadeo SA in In 2014, they were offset by shareholders equity Threshold crossing No threshold crossing was brought to the attention of the Company during 2014 financial year Delegation of authority and powers granted by the general shareholders meeting to the Board of Directors and still valid Issue resolutions adopted by the combined shareholders meeting of 21 May 2014, ruling on an extraordinary basis, are summarised below: Period of validity/ Expiry Ceiling Price calculation procedures Delegation of authority granted to the Board with a view to increasing the capital through the issue of ordinary shares or any securities giving immediate or future access to share capital with preferential subscription rights* Delegation of authority granted to the Board with a view to increasing the capital through the issue of ordinary shares or any securities giving access to share capital with removal of preferential subscription rights and public offering as well as with the option to introduce preferential rights 26 months 140,000(1) 26 months 140,000(1) N/A Please refer to (2) Delegation of authority granted to the Board with a view to increasing the capital through the issue of ordinary shares or any securities giving access to share capital with removal of preferential subscription rights, to eligible investors or to a limited circle of investors* 26 months 140,000(1) no more than 20% of share capital per 12-month period Please refer to (3) Authorisation given to the Board, in the event of the issue of shares or 26 months no more than 10% Please refer to 28

29 Period of validity/ Expiry Ceiling Price calculation procedures any securities giving access to share capital with removal of shareholders preferential subscription rights, to set the issue price at no more than 10% of the share capital and within the limits set by the general shareholders meeting* of the share capital (4) Delegation of authority granted to the Board with a view to increasing the number of securities to be issued in the event of a capital increase with, or without preferential subscription rights, decided by virtue of previous delegations of power 26 months no more than 15% of the initial issue(1)(5) Same price as the initial issue Delegation of authority to the Board with a view to issuing ordinary shares or securities giving access to the Company s share capital, in the event of a public offering involving an exchange component, initiated by the Company* 26 months 140,000(1) Delegation of power granted to the Board for the purpose of increasing the capital in compensation for contributions in kind involving equity securities or securities giving access to the share capital of third-party companies outside of a public exchange offer* 26 months 140,000, no more than 10% of the existing share capital on the date of the transaction under consideration(1) Delegation of authority granted to the Board with a view to increasing the capital through the incorporation of premiums, reserves, profits or other items, the issue and allocation of bonus shares or by raising the par value of existing shares or by combining these two procedures* 26 months 400,000 Authorisation granted to the Board with a view to granting stock options for the subscription or purchase of shares 38 months 1,000,000 shares (6) Please refer to (7) Authorisation granted to the Board with a view to granting existing or new bonus shares 38 months 1,000,000 shares and no more than 10% of the share capital (6) Delegation of authority to be granted to the Board for the purposes of issuing bonus founders warrants [BSPCE] to the Company s employees and executives Delegation of authority to be granted to the Board of Directors for the purpose of issuing and allocating warrants to (i) observers and members of the Company s Board of Directors in office on the allocation date of the warrants, who are not employees or executives of the Company or any of its subsidiaries or (ii) persons connected by a services or consulting contract to the Company or any of its subsidiaries or (iii) members of any committee liable to be established by the Board of Directors, who are not employees or executives of the Company or any of its subsidiaries 18 months 18 months 1,000,000 ordinary Please refer to shares(6) (8) 1,000,000 ordinary Please refer to shares(6) (9) 29

30 Period of validity/ Expiry Ceiling Price calculation procedures Authorisation granted to the Board with a view to the company buying back its own shares* 18 months 10% of the share capital 10% of the share capital Authorisation granted to the Board with a view to reducing the share capital by cancelling shares within the context of the authorisation to buy back treasury shares* * Subject to the non-retroactive condition precedent of completion of the IPO. 18 months 10% of the share capital per 24- month period 10% of the share capital per 24-month period (1) These amounts are not cumulative. The maximum overall ceiling authorised by the shareholders meeting for share capital increases at par value is set at 140,000. (2) The issue price will be calculated as follows: as regards the capital increase to be completed upon the admission to trading and initial listing of the Company s shares on the regulated market of Euronext in Paris, the subscription price of one new share will be calculated by matching the shares offered with subscription orders placed by investors using the bookbuilding technique ; subsequent to the admission to trading and the first listing of the Company s shares on the regulated market of Euronext in Paris, the issue price will be at least equal to the weighted average share price on the three trading days prior to the setting of said issue price less, where appropriate, the legally authorised discount (currently 5%) corrected in the case of any difference in the possession date (date de jouissance), provided that the issue price of the securities giving access to share capital will be such that the amount immediately received by the Company plus, where appropriate, the amount likely to be received by it at a later date, for each share issued as a result of the issue of such securities, will be at least equal to the issue price defined above. (3) The issue price will be at least equal to the weighted average share price on the three trading days prior to the setting of said issue price less, where appropriate, the legally authorised discount (currently 5%) corrected in the case of any difference in the possession date (date de jouissance), provided that the issue price of securities giving access to share capital will be such that the amount immediately received by the Company plus, where appropriate, the amount likely to be received by it at a later date, for each share issued as a result of the issue of such securities, will be at least equal to the issue price defined above. (4) Up to the limit of 10% of the share capital of the Company (as of the date of the transaction) per 12-month period, the Board of Directors may deviate from the price-setting conditions provided 30

31 for by the aforementioned resolutions and set the issue price of the ordinary shares and/or the securities giving immediate or future access to the share capital, as follows: the issue price of the ordinary shares will be at least equal to the weighted average share price on the five trading sessions prior to the setting of said issue price, less a maximum 15% discount, if applicable, provided that this may, under no circumstances, be less than the par value of one share of the Company on the issue date of the shares in question; the issue price of securities giving access to capital will be such that the amount immediately received by the Company plus, if applicable, the amount likely to be received by it at a later date, for each share issued as a result of the issue of such securities, will be at least equal to the issue price defined in the paragraph above. (5) 15% or any other percentage that may have been set by applicable regulations. (6) These amounts are not cumulative. The maximum overall ceiling authorised by the shareholders meeting for issues of securities giving access to share capital is set at 1,000,000 shares. (7) The purchase or subscription price per share will be set by the Board of Directors on the date on which the option is granted, as follows: (i) as long as the shares have not been admitted for trading on a regulated market in the European Union or on a stock exchange in Switzerland, or on the Nasdaq National Market or the New York Stock Exchange in the US, the subscription or purchase price will be calculated in accordance with Article L of the French Commercial Code and shall be at least equal to the price per share used for the Company s last capital transaction, unless the Board has taken a duly substantiated decision to the contrary; (ii) should the Company s shares be admitted for trading on a regulated market in the European Union or on a stock exchange in Switzerland, or on the Nasdaq National Market or the New York Stock Exchange in the US, the Board may set the purchase or subscription price in reference to the sale price of one share at closing on the regulated market the day before the Board s decision to grant the Options. The purchase or subscription price may not, however, under any circumstances be less than ninety five percent (95%) of the average share price on the 20 trading sessions preceding the date on which the Board took the decision to grant the options; provided that when an option enables its beneficiary to purchase shares previously purchased by the Company, its exercise price, without prejudice to the above clauses and in accordance with applicable legal provisions, may also not be less than 80% of the average price paid by the Company for all the shares previously purchased by it. (8) When a BSPCE is exercised, the share subscription price will have been set by the Board on the BSPCE grant date as follows: 31

32 (i) (ii) until the Company s shares are admitted to any stock market or exchange, each founders warrant (BSPCE) will allow for the subscription of one ordinary share with a par value of 0.02 at an exercise price set by the Board on the allocation date of the BSPCE, as follows: o if a capital increase took place during the period of validity of this authorisation, through the issue of ordinary shares, the exercise price will, for a six-month period from the date of said capital increase, be at least equal to the subscription price of one ordinary Company share under said capital increase, o if no ordinary shares are issued during the six-month period preceding the allocation of the BSPCE but a capital increase takes place less than six months prior to the allocation of the BSPCE through the issue of preferred shares or securities giving future access to a percentage of share capital, the Board will calculate and set the exercise price by taking into consideration the rights conferred by equity securities or securities thus issued compared with the rights conferred by ordinary shares, o if no ordinary shares, preference shares or securities giving future access to a percentage of share capital are issued within the six months prior to the BSPCE grants, the exercise price will be set, mutatis mutandis, in accordance with Article L of the French Commercial Code, taking into account the price per share used for the Company s last capital transaction, unless the Board has taken a duly substantiated decision to the contrary, it being specified that, when calculating the exercise price, the Board will not take into account the capital increases resulting from the exercise of warrants, stock options or free share allocations; when the Company s shares are admitted to trading on a stock market or exchange, the exercise price, to be set by the Board when the BSPCE are granted, shall be at least equal to the weighted average share price of the last 20 trading sessions prior to the date on which said BSPCE are granted by the Board. (9) The exercise price of warrants (BSA) will be set by the Board on their allocation date, as follows: (i) until the shares are admitted to trading on any stock market or exchange, each BSA will allow for the subscription of one ordinary share with a par value of 0.02 at an exercise price set by the Board on the allocation date of the BSA, as follows: (a) if a capital increase took place during the period of validity of this authorisation, through the issue of ordinary shares, the Exercise Price will, for a six-month period from the date of said capital increase, be no less than the subscription price of one ordinary Company share under said capital increase, (b) if no ordinary shares are issued during the six-month period preceding the allocation of the BSA but a capital increase takes place less than six months prior to the allocation of the BSA through the issue of preferred shares or securities giving future access to a percentage of share capital, the Board will calculate and set the exercise price by taking into consideration the rights conferred by equity securities or securities thus issued 32

33 compared with the rights conferred by ordinary shares, 2014 Annual Financial Report (c) if no ordinary shares, preference shares or securities giving future access to a percentage of share capital are issued within the six months prior to the BSA grants, the exercise price will be set, mutatis mutandis, in accordance with article L of the French Commercial Code, taking into account the price per share used for the Company s last capital transaction, unless the Board has taken a duly substantiated decision to the contrary, it being specified that, when calculating the exercise price, the Board of Directors will not take into account the capital increases resulting from the exercise of warrants, stock options or free share allocations; (ii) as long as the Company s shares will be admitted to trading on a stock market or exchange, the exercise price, to be set by the Board when the BSA are granted, shall be at least equal to the weighted average share price on the last 20 trading sessions prior to the date on which said BSA were granted by the Board Employee shareholdings For the purposes of this section, the term Group refers to the Company and its consolidated companies within the meaning of Article L of the French Commercial Code. As of 31 December 2014, the Group s personnel held no Viadeo SA shares as part of a company savings plan or company mutual fund as referred to in Article L of the French Commercial Code List of transactions on Viadeo SA shares by directors Since the date of the initial public offering on the regulated market of Euronext Paris, no directors, executives, senior managers or persons to whom they are closely related have purchased or sold Viadeo SA shares Elements liable to have an impact in case of a takeover bid (Article L of the French Commercial Code) 1) Information on the structure and breakdown of share capital and voting rights is provided above in section of this report. 2) None of the restrictions set out in the bylaws on the exercise of voting rights and transfer of shares or the clauses of any agreements brought to the knowledge of the Company pursuant to Article L of the French Commercial Code would be liable to have an impact in the event of a takeover bid. 3) The main shareholders of the Company are identified in section of this report. 33

34 4) The Company has no knowledge of any agreements between shareholders that would be liable to entail restrictions on the transfer of shares or the exercise of voting rights. 5) The rules applicable to the appointment and replacement of members of the Board of Directors and the amendment of the bylaws are not liable to have an impact in the event of a takeover bid. 34

35 1.9 Subsidiaries and investments The Group consists of Viadeo SA, which owns the following companies: Viadeo SA: created in December 2005 under the name VIADUC, the Group s parent company and registered office, Viadeo SA is the decision-making and support centre for the Group. The Company is also home to some of the development teams for the Viadeo platform. In this context, Viadeo SA issues the invoices for the income related to the recruitment and training solutions, the marketing services, and also for all of the Group s marketing subsidiaries (excluding China) on the basis of the operating rights granted to it by its US subsidiary, APVO Corporation. APVO Corporation ( APVO ): created in 2010, this San Francisco-based subsidiary is home to all of the Group s technological assets for the Viadeo platform (excluding China), including the website and membership database. In this capacity, this entity issues the invoices for the income related to premium subscriptions (online subscriptions) and grants the Company operating rights for other activities, namely, at this date, Recruitment and Training and Marketing and Advertising. 35

36 Tianji group: the Tianji group in China was acquired by the Company in February It has a dedicated platform and its own infrastructures (technical and product development, marketing, sales and support functions), and is made up of three companies: Wayson Technology Development Limited ( Wayson ) is a Hong Kong law holding company, incorporated on 10 October 2007 and wholly-owned by the Company. Wayson owns 100% of the capital of Tianji Boren Technology Development (Beijing) Co., Ltd. ( Boren ), a company under Chinese law, formed on 18 December Beijing Yingke Times Information Technology Co., Ltd. ( Yingke, together with Wayson and Boren, the Tianji group ) is a company under Chinese law, formed on 12 August Yingke owns Tianji, the Chinese professional social network. Apna Circle Infotech Private Limited ( ApnaCircle ): acquired at the end of 2009, ApnaCircle is developing a professional social network in India. As part of the strategic re-evaluation of the Group s assets, the Board of Directors of the Company decided, during its meeting held on 18 June 2013, to discontinue ApnaCircle s activities as of 1 July Apna Circle has currently been mothballed ahead of its liquidation. The members, integrated in the Viadeo platform, are now managed from the Company s head office. Viadeo Independent Media B.V. ( Viadeo IM ): this Dutch company is a joint venture created with the Russian media group Sanoma in October 2011 (the company and Sanoma each own 50%). Viadeo IM handles business development for the Viadeo platform in Russia and Russian-speaking countries through the Russian subsidiary Viadeo Independent Media LLC ( VIM ). Viadeo Maroc SARL ( Viadeo Maroc ): created in August 2011, this subsidiary handles business development for Viadeo in Sub-Saharan Africa and the Maghreb. Viadeo Limited: created in 2007, this English subsidiary comprises the Group s support activities for emerging markets. Sabri SARL: this subsidiary comprises a support activity for preparing one-off receptions organised by the Group. In addition, the Group holds a non-consolidated interest of 11% in ChinaBizNetwork Corp. (CBC), a holding company for the legacy shareholders of the Chinese business network Tianji. The assets of CBC consist solely of equity securities held in the Company. The Group s scope of consolidation is set out in detail in the notes to the consolidated financial statements. Investments and takeovers The Company did not make any investments or takeovers within the meaning of Article L of the French Commercial Code in

37 1.10 Agreements referred to in Articles L et seq. of the French Commercial Code Agreements approved during the year Guarantee agreement At the time of the IPO of Viadeo SA, a guarantee agreement was authorised by the Board of Directors at its meeting of 1 July 2014 and signed on the same day between Viadeo SA, Jefferies International Limited and Société Générale, as joint lead managers and joint bookrunners, Oddo & Cie, as co-lead manager, and some shareholders of Viadeo SA wishing to sell shares in the Company as part of the offer. Directors concerned: Thierry Lunati, Dan Serfaty, Idinvest Partners, Ventech and Bpifrance Participations Agreements signed in previous years that continued in 2014 Agreement with Kadomi SARL Under the terms of a service agreement dated 1 October 2006 and two amendments approved on 26 May 2010 and 26 May 2014 respectively, Kadomi SARL invoiced our Company an amount of 164,500 excluding tax for its work in 2014 financial year. Agreement with KDS SARL Under the terms of a service agreement dated 15 December 2005 and two amendments approved on 26 May 2010 and 26 May 2014 respectively, KDS SARL invoiced our Company an amount of 164,500 excluding tax for its work in 2014 financial year. Loan agreement with CBC On 27 October 2011, Viadeo granted CBC a loan of US$75,150 at an interest rate of 5% per annum. This loan will be repaid upon CBC s liquidation. 37

38 1.11 Subsequent events In Russia, following the decision of our partner Sanoma to withdraw from the area, a change in the ownership of the share capital of our Russian subsidiary Viadeo Independent Media LLC ( VIM LLC ) is expected in the first half of On 3 April 2015, the Group, which aims to continue its development in Russia, signed a Share Purchase Agreement (SPA) on the 50% of our subsidiary Viadeo Independent Media BV ( VIM BV ) previously held by Independent Media Holding BV, with a view to selling the shares in turn to a Russian partner in order to maintain a local presence considered essential to the success of operations in this area. Pursuant to the SPA, the conditions precedent having been lifted, the transaction will be finalised in May As requested by the Board of Directors of Viadeo SA, the Company has appointed BNY Mellon as custodian bank and Jones Day as legal counsel to launch an ADR programme (level 1) in the United States. The approval of the SEC was obtained on 27 April 2015, and the programme is now effective. 38

39 1.12 Table of results for the last five fiscal years 2014 Annual Financial Report Nature of indications/periods 31/12/ /12/ /12/ /12/ /12/2010 Duration of the financial year 12 months 12 months 12 months 12 months 12 months I Financial position at end of year a) Share capital 200, , ,157 91,990 88,814 b) Number of shares issued 10,028, , , , ,755 c) Bonds convertible into shares II Comprehensive results of operations a) Net revenue 22,984,631 28,310,122 23,268,804 20,943,430 16,424,088 b) Earnings before tax, depreciation, amortisation and provisions (5,941,411) (3,057,925) (1,576,392) (592,703) 6,405,486 c) Income tax (550,197) (786,215) (739,355) (662,975) (397,709) b) Earnings after tax, but before depreciation, amortisation and provisions (5,391,214) (2,271,710) (837,037) 70,272 6,803,195 e) Earnings after tax, depreciation, amortisation and provisions (3,484,834) (5,424,965) (3,205,702) 1,253,485 4,354,993 f) Amounts of profits distributed g) Employee profit-sharing III Earnings per share a) Earnings after tax, but before depreciation and amortisation n/a n/a n/a b) Earnings after tax, depreciation, amortisation and provisions n/a n/a n/a 5 17 c) Dividend paid per share n/a n/a n/a n/a n/a IV Personnel a) Number of employees b) Total payroll 11,527,619 13,327,917 10,468,645 7,860,987 5,390,671 c) Amounts paid for employee benefits 5,114,748 5,977,665 4,769,413 3,628,273 2,304,083 39

40 PART 2 Chairman s report on the functioning of the Board of Directors and on internal control procedures relating to the preparation and processing of accounting and financial information in respect of 2014 financial year (pursuant to Article L of the French Commercial Code) To the shareholders, Pursuant to the provisions of the Financial Security Act of 1 August 2003, I hereby report to you, in my capacity as Chairman of the Board of Directors, on the composition of the Board, including the application of the principle of balanced representation of women and men, the conditions of the preparation and organisation of the work of the Board and the internal control and risk management procedures implemented by the Company. The report also reviews the implementation of the recommendations of the MiddleNext Corporate Governance Code for Small and Midcaps published in December 2009 (hereinafter the MiddleNext Code ), lists any provisions that have been rejected, and provides the reasons for which they have been rejected. This report, together with the 2014 management report, has been prepared in accordance with the provisions of Article L of the French Commercial Code, and was reviewed and approved by the Board of Directors at its meeting of 28 April It is available on the Company s website, in accordance with Articles L of the French Commercial Code and of the AMF General Regulation. A special report presents the Statutory Auditors observations on the information contained in this report concerning internal control and risk management procedures relating to the preparation and processing of accounting and financial information. For the purposes of the Chairman s report, unless otherwise stated, the term Group refers to the Company and its consolidated companies within the meaning of Article L of the French Commercial Code. 2.1 Corporate governance As part of the process of admission to trading of the Company s shares on the regulated market of Euronext Paris in 2014, the Company undertook a review of its governance. Committed to basing its governance on best practice, the Company s Board of Directors considered that the MiddleNext Code was best suited to its size and structure. The Board of Directors, at its meeting of 26 May 2014, approved the use of the MiddleNext Code as the reference code in terms of corporate governance, with the aim of gradually complying with its key provisions. For the sake of transparency and public information, and with a view in particular to the admission of its shares to trading on the regulated market of Euronext Paris, the Company initiated a general review of its corporate governance practices. 40

41 The table below summarises the recommendations with which the Company is not in full or partial compliance, as well as the justifications provided, in accordance with Article L of the French Commercial Code: Recommendations of the MiddleNext Code Practices and justification of the Company Combination of an employment contract with a director position The Board of Directors has authorised the combination of employment contracts in the Company s subsidiaries with a director position in the Company for Dan Serfaty, Chairman and Chief Executive Officer, and Thierry Lunati, Deputy Chief Executive Officer. Presence of independent members on the Board of Directors The composition of the Board of Directors does not comply with the MiddleNext recommendation that requires the presence of at least two independent members when the Board is composed of more than six members. In view of the number of directors comprising the Company s Board of Directors, these committees should include two independent members, which is not currently the case. The Company intends to make its best efforts to comply on this point during the coming year. Assessment of the work performed by the Board To date, the Company s Board of Directors has not assessed its working and operating methods. This issue will be on the agenda of a Board meeting in the coming financial year, in order to establish the timeframe for this evaluation, which could take the form of a self-assessment. In accordance with the commitment made in the document de base registered with the AMF on 27 May 2014 under number I , the Company has made the internal rules established by its Board of Directors on 26 May 2014 available on the Company s website ( 41

42 2.1.1 Administrative and management bodies Company management Composition and functioning Created in the form of a French société à responsabilité limitée, the Company was converted into a French société anonyme with a Board of Directors at the general shareholders meeting of 22 June The Board of Directors, which met for the first time on 22 June 2006, decided not to separate the duties of Chairman and Chief Executive Officer. It also appointed a Deputy Chief Executive Officer. On 25 February 2014, the Board of Directors decided to appoint Dan Serfaty as Chairman and Chief Executive Officer and Thierry Lunati as Deputy Chief Executive Officer of the Company. The following is an excerpt of the bylaws of the Company relating to its general management (Article 14 of the bylaws): Responsibility for the Company s general management is undertaken either by the Chairman of the Board of Directors or by another natural person appointed by the Board of Directors and bearing the title of Chief Executive Officer. The Chief Executive Officer is vested with the broadest powers to act on behalf of the Company under any circumstance. The Chief Executive Officer s powers are exercised within the bounds of the corporate purpose and without prejudice to those powers expressly vested by law in shareholders meetings and in the Board of Directors. The CEO represents the Company in its relations with third parties. The Company is also bound by acts of the Chief Executive Officer not falling within the remit of the corporate purpose, unless it can prove that the third party knew that the act went beyond said purpose or that, under the circumstances, it could not fail to have been aware of this fact. Publication of the bylaws does not, of itself, constitute sufficient proof thereof. The Chief Executive Officer may not be more than 70 years of age. The Chief Executive Officer will be deemed to have resigned should this age limit be reached. The Chief Executive Officer s mandate would, however, be extended to the next Board meeting at which the new Chief Executive Officer would be appointed. Should the Chief Executive Officer also be a director, the term of office as Chief Executive Officer may not exceed that as director. The Board of Directors may dismiss the Chief Executive Officer at any time. Should the dismissal be decided without just cause, it may give rise to the payment of compensation, unless the Chief Executive Officer takes over the duties of Chairman of the Board of Directors. The Board of Directors chooses, by simple majority vote of those directors present or represented, between the two operating procedures listed below. 42

43 Shareholders and third parties are informed of this choice in accordance with legal and regulatory requirements. The Deputy Chief Executive Officer or officers may be dismissed at any time by the Board of Directors, on the proposal of the Chief Executive Officer. Should the dismissal be decided without just cause, it may result in the payment of compensation. Deputy Chief Executive Officers may not be more than 70 years of age. Should a Chief Executive Officer reach the age limit, he or she will be assumed as resigning from his or her position. The Deputy Chief Executive Officer s mandate would, however, be extended to the next Board meeting at which the new Deputy Chief Executive Officer would be appointed. Should the Chief Executive Officer cease to perform, or be prevented from performing, his or her duties, unless decided otherwise by the Board of Directors, the Deputy Chief Executive Officer or officers will remain in office and will retain their powers until the new Chief Executive Officer is appointed. Principles and rules for determining the compensation of directors The Company applies all the recommendations of the MiddleNext Code regarding the compensation of executive and non-executive directors. Detailed information about such compensation and its presentation are included in the Board s management report for the year ended 31 December At its meeting on 10 February 2015, the Board of Directors confirmed that the directors have waived the allocation of attendance fees in respect of 2014 financial year. The Company did not make any provisions for the payment of pensions, retirement funds and other advantages in favour of directors and executives Board of Directors a Composition The Board of Directors has eight directors and two observers. Changes in the Board s composition occurred during 2014 financial year: 1 July 2014: resignation of Sébastien Brault from his position as observer; 25 July 2014: appointment by A Capital of a new permanent representative, André Lösekrug; 6 August 2014: resignation of Derek Ling from his position as director; 27 August 2014: resignation of William Henry Johnston from his position as director. 43

44 List of positions held within the Group Name Position Operational functions and other positions within the Group Date first appointed and date last renewed First appointed as director: general shareholders meeting of 22 June 2006 Last renewed as director: general shareholders meeting of 28 February 2011 Dan Serfaty Chairman of the Board of Directors and Chief Executive Officer Chairman of APVO Director of Wayson Technology Development Ltd Term of office expires: after the general shareholders meeting called to rule on the financial statements for the financial year ending 31 December 2016 Appointed as Chairman and Chief Executive Officer: Board of Directors meeting of 25 February 2014, for the duration of his term as director First appointed as director: general shareholders meeting of 22 June 2006 Last renewed as director: general shareholders meeting of 28 February 2011 Thierry Lunati Director and Deputy Chief Executive Officer Technical director Term of office expires: after the general shareholders meeting called to rule on the financial statements for the financial year ending 31 December 2016 Appointed as Chairman and Chief Executive Officer: Board of Directors meeting of 25 February 2014 AV3 represented by Olivier Lazar Director None First appointed: general shareholders meeting of 22 June 2006 Last renewed: general shareholders meeting of 28 February 2011 Term of office expires: after the general 44

45 shareholders meeting called to rule on the financial statements for the financial year ending 31 December 2016 First appointed: general shareholders meeting of 22 June 2006 Idinvest Partners (formerly AGF Private Equity) represented by Benoist Grossmann Director None Last renewed: general shareholders meeting of 28 February 2011 Term of office expires: after the general shareholders meeting called to rule on the financial statements for the financial year ending 31 December 2016 First appointed: general shareholders meeting of 22 June 2006 Ventech represented by Alain Caffi Director None Last renewed: general shareholders meeting of 28 February 2011 Term of office expires: after the general shareholders meeting called to rule on the financial statements for the financial year ending 31 December 2016 China Biznetwork Corp represented by William Melton Director None First appointed: general shareholders meeting of 2 September 2009 Term of office expires: after the general shareholders meeting called to rule on the financial statements for the financial year ending 31 December 2014 Bpifrance Participations (formerly FSI) represented by Jean d Arthuys Director None First appointed: general shareholders meeting of 25 April 2012 Term of office expires: after the general shareholders meeting called to rule on the financial statements for the financial year ending 31 December 2017 A Capital Switch SARL represented by André Lösekrug Director None First appointed: general shareholders meeting of 21 May 2014 Term of office expires: after the general shareholders meeting called to rule on the financial statements for the financial year ending 31 December

46 Two observers, both founders of entities acquired by the Company and as such experts in their field, also attend Board of Directors meetings: Yogesh Bansal (co-founder of ApnaCircle); Sabeer Bhatia (co-founder of ApnaCircle). They were all appointed by the general shareholders meeting of 28 February 2011 for a period of six financial years expiring at the close of the general shareholders meeting called to rule on the financial statements for the fiscal year ending 31 December The business address of the Chairman and Chief Executive Officer and the Deputy Chief Executive Officer is the registered office of the Company. The business addresses of the other directors are as follows: AV3: 30 rue de la Victoire, Paris; Idinvest Partners: 117 avenue des Champs-Elysées, Paris; Ventech: 47 avenue de l Opéra, Paris; China Biznetwork Corp: 2086 Hunters Crest Way, Vienna va (United States); Bpifrance: avenue du Général Leclerc, Maisons-Alfort Cedex; A Capital Switch SARL: 2 avenue Charles de Gaulle, L-1653 Luxembourg. The expertise and management experience of these persons comes from various salaried and senior management positions they have held in the past. No family ties exist between the persons mentioned above. Over the last five years, none of the above persons: has been found guilty of fraud; has been involved in a bankruptcy, receivership or liquidation in their position as director or administrator; has been banned from managing a company; has been subject to any official public incrimination or sanctions by statutory or regulatory authorities. 46

47 Other current executive positions (outside the Group) Other current executive positions outside the Group Dan Serfaty Thierry Lunati Co-manager Director Manager Manager Nature of executive position Company KDS ASSOCIES SARL CHINA BIZNETWORK CORP (CBC) FINANCIERE MARLU SC Kadomi SARL AV3 (Olivier Lazar) Chief Executive Officer Manager Permanent representative of Angyal on the Board of Directors Permanent representative of Angyal on the Board of Directors Permanent representative of Amplegest on the Board of Directors AMPLEGEST SA SCI OK VEP DIRECTANNONCES SA PROMETIS SA SICAV MARIGNAN Director WINAMAX Director SIGFOX Director KANTOX Idinvest Partners (formerly AGF Private Equity) (Benoist Grossmann) Chief Executive Officer Director Chairman Member of the executive board Holding Entreprises & Patrimoine II 2010 Holding Entreprises & Patrimoine Annapurna Capital IDINVEST PARTNERS 47

48 Other current executive positions outside the Group Ventech (Alain Caffi) Nature of executive position Permanent representative of Ventech on the Board of Directors Permanent representative of Ventech on the management board Permanent representative of Ventech on the Board of Directors Permanent representative of Ventech on the Board of Directors Permanent representative of Ventech on the Board of Directors Permanent representative of Ventech on the Board of Directors Permanent representative of Ventech on the Board of Directors Permanent representative of Ventech on the Board of Directors Chairman of the executive board Observer Observer Manager AUGURE BELIEVE EYEKA IN COM WEBEDIA CURSE SOJEANS SHOPMIUM Company VENTECH OKTOGO PIXONIC VENTECH CHINA SARL China Biznetwork Corp (William Melton) Director Director Manager E4E TARANG TECHNOLOLGY GLOBAL INTERNET VENTURES LLC ST MICROELECTRONICS Bpifrance Participations (formerly FSI) (Jean d Arthuys) Permanent representative of Bpifrance Participations on the Board of Directors Permanent representative of Bpifrance Participations on the Board of Directors Permanent representative of Bpifrance Participations on the Board of Directors Permanent representative of Bpifrance Participations on the Board of Directors TALEND EUTELSAT SARENZA 48

49 Directors and observers biographies Dan Serfaty is the co-founder and CEO of Viadeo. He oversees all Viadeo operations at an international level. Viadeo s basic premise was first developed in 2000 when Dan Serfaty teamed up with two friends (one of whom was Thierry Lunati, co-founder of Viadeo) at Creadev, a fund owned by the Mulliez family. Together, they went on to launch an innovative concept in the private equity world - Agregator, an entrepreneurs club that aggregated and valued private company shares to fund the expansion of member companies. On the back of this success, and armed with a network 400 members, Viadeo first emerged in Prior to founding Viadeo, Dan Serfaty was involved in a string of entrepreneurial ventures including the formation and turnaround of several companies in the tourism sector and the creation of a company specialising in the distribution of textile products from Asia. Dan is a graduate of HEC (École des Hautes Études Commerciales). Thierry Lunati co-founded Viadeo alongside Dan Serfaty. He oversees Viadeo s technology strategy. The first steps towards Viadeo s creation were taken in 2000 when Thierry and Dan launched Agregator, an entrepreneurs club that aggregated and valued private company shares to fund the expansion of member companies. That same year, Thierry also co-founded TBX Trade, an innovative stock exchange online trading solution. Previously, Thierry had been involved in several company start-ups, including Forlog, an IT training company, and the search engine Lokace in 1993, which quickly became a benchmark in the sector and was sold to Infosources less than two years later. In 1996, Thierry also co-founded the online portal and webmail service Caramail that was purchased by Lycos in Thierry is a graduate of École Centrale de Paris and HEC. Olivier Lazar (permanent representative of AV3): in July 2012, Olivier Lazar became CEO of Amplégest, an entrepreneurial management company specialising in three main areas: private management (wealth consulting, discretionary management, etc.), asset management (Eurozone, Small and Midcap, and flexible, top-down activity management) and family office services. Before joining Amplégest, Olivier was Chairman of the executive board at Olympia Capital Gestion from 1995 to 2012, a company providing fund management for private clientele, and previously worked as head of Banque OBC s Asset Management department for more than eight years. During his career, Olivier Lazar has also led several projects on behalf of Banque Louis- Dreyfus, World Promotions, and OTTO Lazar SA. 49

50 Benoist Grossmann joined Idinvest Partners in He was appointed a member of the executive board in 2003 and operates mainly in the Internet sector. Before joining Idinvest Partners, Benoist worked for several venture capital funds for over ten years. He was a partner at Viventures from 1998 to 2002 and worked as Investment Manager at La Financière de Brienne. He had previously spent over ten years working as a laser systems specialist at EDF, NASA and Thomson-CSF Optronique, for whom he invented five patents and authored some twenty publications. The holder of a Ph.D. in physics from Université de Paris VI and an MBA from the Institut d Études Politiques de Paris, Benoist is currently on the Boards of Viadeo, Sigfox, Withings and Winamax and was previously on the Boards of Criteo, Dailymotion and Meetic. In 1998, Alain Caffi founded Ventech, a company dedicated to providing IT solutions for businesses and is now a Partner. Alain has 18 years of experience working for a diverse range of private equity companies. He has particularly strong experience in the organisation of syndicates, corporate governance and crisis management as well as the organisation of mergers and acquisitions and initial public offerings. In 1986, Alain was involved in the launch of the NATIXIS investment fund, which became one of the leading private equity firms in France. Alain currently sits on the Boards of many internet companies including Viadeo. William Melton is co-founder of Global Internet Ventures, a private equity firm specialising in new technology. A leading entrepreneur in integrating technology into the financial world, he has founded several companies including Verifone in 1981 and CyberCash in He also founded the Melton Foundation, an international community devoted to combining exceptional young talent with new technologies. William Melton is an active investor in and board member of multiple young businesses in the ICT sector. Jean d Arthuys has been a member of the Executive Committee at France s Strategic Investment Fund (FSI) since June Now a part of BPI, the Group aims to foster economic growth and competitiveness and to serve public interest by responding to the capital requirements of French businesses. After graduating from HEC, he built his career within media and digital roles, most notably at the heart of the M6 group, where he became a member of the executive board in 1999 after having been in charge of development from 1996 to He served more recently as Chairman and CEO of television channels Paris Première and W9 (in 2004 and 2005 respectively) and, owing to his considerable experience in digital media, has since been an administrator at TPS, Sportfive, and Newsweb, and Chairman and CEO of the French soccer club Les Girondins de Bordeaux. From 2007 to 2010 he acted as a partner at PAI Partners, in charge of media, Internet, and telecoms. 50

51 André Lösekrug-Pietri is the founder and managing partner of A Capital, a private equity fund investing in European companies to intensify their growth in emerging markets, particularly in Asia. André was previously a co-founder of CEL Partners, a growth fund dedicated to China, and developed Jaccar Capital Fund (for Vietnam and China). He began his career at Aérospatiale-Airbus in Toulouse. He has dual French and German nationality, and is a graduate of HEC, the International MBA programme at Michigan Business School and the Global Leadership and Public Policy programme at the Harvard Kennedy School. He is a French Foreign Trade Advisor and was named Young Global Leader by the World Economic Forum (Davos). Yogesh Bansal is the founder of ApnaCircle, an Indian professional social network acquired by the Viadeo Group and integrated into the Viadeo platform. Before establishing ApnaCircle.com, Yogesh Bansal carried out market research on social networks. In the earlier stages of his career, Yogesh Bansal worked at McKesson Inc, a company providing innovative healthcare services. As a true entrepreneur, he is involved in many community activities in India and his work has been published a number of times. Yogesh Bansal holds an MBA from the University of North Carolina. Indian IT mogul Sabeer Bahtia co-founded Hotmail in He was Chairman and CEO of the company until it was acquired by Microsoft in In 2007, he became a member of the Board of Directors of ApnaCircle. Following ApnaCircle s acquisition by Viadeo in 2009, Sabeer joined Viadeo s Management Committee. Saaber s success has been acknowledged by many awards and prizes, including being named by TIME Magazine as one of the People to Watch in International Business in

52 b Conditions of preparation and organisation of the Board s work 2014 Annual Financial Report The Board of Directors meets as often as required in the Company s interest. Meetings are held at any place indicated in the notice, but preferably at the registered office. Board members are called to meetings by letter, fax or at least five (5) days prior to each meeting. The Board may also be convened by any other means, even orally, if all sitting Board members are present or represented at the meeting. All documents or draft documents needed to inform them about the agenda and the issues to be discussed by the Board must be sent, delivered or made available to Board members a reasonable time prior to the meeting. In addition, the Board is informed at its meetings of the Company s financial position, cash position and commitments. Once every year, the Board reviews its operations. At least once every three years, it conducts a formal assessment, with the assistance of an external consultant if necessary. This assessment is intended to ensure that important issues are properly prepared and discussed, and to measure the contribution of each member in the work of the Board, notably with regard to their skills and commitment. Board members may participate in Board meetings by videoconference or by telecommunication. This form of participation is not applicable for the approval of the annual financial statements, including the consolidated financial statements and the management report. The means used must enable the proper identification of participants and ensure their effective participation. The minutes must make mention of participation of members of the Board by videoconference or by telecommunication. 52

53 c Bylaws relating to the Company s Board of Directors Composition of the Board of Directors The Company is run by a Board made up of natural persons or legal entities, numbers being set by the ordinary shareholders meeting in accordance with legal requirements. At their time of appointment, all legal entities are required to designate a natural person as their permanent representative on the Board of Directors. The term of office for the permanent representative is the same as for the legal entity director being represented. When a legal entity dismisses its permanent representative, it is also responsible for finding a replacement. The same applies in the event of the death or resignation of the permanent representative. Directors have a six-year term of office. The director s term of office comes to an end at the close of the general shareholders meeting to approve the financial statements for the year just ended and held in the year in which said directorship is due to expire. Directors can always be re-elected. They can be dismissed at any time by decision of the general shareholders meeting. In the event of a vacancy becoming available as a result of death or resignation from one or more seats on the Board, the Board of Directors may make temporary appointments in the interim period between two general shareholders meetings. Any appointments made by the Board, by virtue of the above, are subject to ratification by the next ordinary general shareholders meeting. Failing ratification, resolutions adopted and acts performed by the Board at an earlier date nonetheless remain valid. If the number of directors falls below the legal minimum, the remaining directors shall immediately convene an ordinary general shareholders meeting with a view to making up the Board s numbers. Company employees may be appointed as directors. Their employment contracts must, however, correspond to actual jobs. In such case, the benefits of the employment contract will not be lost. No more than one-third of the directors currently in post may be bound to the Company by an employment contract. No more than one-third of the directors currently in post may be over 70 years of age. If this limit is exceeded during the course of a term of office, the oldest director is automatically deemed to have resigned at the close of the next general shareholders meeting. 53

54 Meetings of the Board of Directors Directors are called to board meetings by the Chairman of the Board. Meetings may be convened by any means, whether verbally or in writing. The Chief Executive Officer, the Deputy chief executive office or two members of the Board of Directors may also ask the Chairman to convene a board meeting on a specific agenda. Moreover, if the Board has not met for over two months, one third or more of directors may ask the Chairman to convene a board meeting on a specific agenda. The Chairman may not refuse this request. If a works committee has been set up, the representatives of this committee, appointed in accordance with the provisions of the French Labour Code, shall be invited to attend all board meetings. Board meetings take place at the Company s registered office or at any other venue in France or outside France. For the Board s decisions to be valid, at least half of its members shall be in attendance. Board of Directors decisions will be taken by majority vote. In the event of a tied vote, the Chairman has the casting vote. The internal rules adopted by the Board of Directors notably state that directors taking part in board meetings by means of video or teleconferencing shall be deemed to be in attendance when calculating the quorum and majority, in accordance with prevailing regulations. This provision does not apply to the adoption of the decisions referred to in Articles L and L of the French Commercial Code. Directors receive the information needed to perform their duties and fulfil their mandates and may ask to be supplied with any further documents which they deem appropriate. Directors may authorise other directors to represent them at board meetings by letter, telegram, telex, fax, or any other means of telecommunication, but each director may only hold one proxy per meeting. Copies or extracts of decisions taken by the Board of Directors are duly authenticated by the Chairman of the Board of Directors, the Chief Executive Officer, directors temporarily acting as Chairman or any proxy duly authorised to this end. 54

55 Powers of the Board of Directors The Board of Directors determines the Company s business strategy and oversees its implementation. Without prejudice to the powers expressly vested in shareholders meetings and within the bounds of the corporate purpose, the Board deals with any issues involving the smooth operation of the Company and takes decisions on any related matters. In its relations with third parties, the Company is also bound by acts of the Board of Directors not falling within the remit of the corporate purpose, unless it can prove that the third party knew that the act went beyond said purpose or that, under the circumstances, it could not fail to have been aware of this fact. Publication of the bylaws does not, of itself, constitute sufficient proof thereof. The Board of Directors carries out any checks and controls that it deems appropriate. Furthermore, the Board of Directors exercises special powers vested in it by the law. Observers The ordinary general shareholders meeting may, at the suggestion of the Board of Directors, appoint observers. The Board of Directors may also appoint observers directly, subject to ratification by the next general shareholders meeting. The observers form a Board. They are chosen freely on the basis of their skills. They are appointed for a six-year term, ending at the close of the ordinary shareholders meeting called to approve the financial statements for the year just ended. The advisory board studies the issues submitted for review by the Board of Directors or its Chairman. Observers attend board meetings and take part in decision-making solely on a consultative basis. Their absence is never cause for the validity of such decisions to be called into question. They are called to meetings under the same terms as directors. The Board of Directors may compensate observers using the attendance fees granted to the board members by the general shareholders meeting. 55

56 d Report of the activity of the Board during 2014 financial year 2014 Annual Financial Report Internal rules were adopted by the Board of Directors at its meeting of 26 May Among other items, these internal rules list the business principles and obligations of the members of the Company s Board of Directors. All directors undertake to maintain their independence of thought, judgement and action, and to participate actively in the Board s work. They will inform the Board of any conflicts of interest they may face. Furthermore, the Board reiterated the applicable regulations pertaining to the dissemination and use of inside information and specified that its members should refrain from performing securities transactions when they have inside information. Each director must declare any transactions carried out directly or indirectly on the Company s securities to the Company and the AMF. The Board of Directors has, in the form of A Capital Switch SARL, represented by André Lösekrug, an independent director within the meaning of the provisions of the MiddleNext Corporate Governance Code, insofar as A Capital Switch SARL, represented by André Lösekrug: is neither an employee nor executive director (mandataire social dirigeant) of the Company or of one of its subsidiaries, and has not been in the last three years; is not a significant customer, supplier or banker of the Company or its group, or for which the Company or its group comprises a significant portion of its business; is not a reference shareholder in the Company; has no close family ties with a director (mandataire social) or reference shareholder; has not been an auditor of the Company in the last three years. The number of meetings of the Board of Directors takes into account the various events that punctuate the Company s life. Accordingly, the Board of Directors meets as often as is required by the Company s current position. During the year ended 31 December 2014, the Company s Board of Directors met 12 times, and the average attendance rate for board members was 70.7%. The Board also includes two observers, namely Yogesh Bansal and Sabeer Bhatia. Observers are called to meetings of the Board under the same conditions as directors. They accordingly benefit from a right to information prior to board meetings, under the same terms as board members. They attend board meetings in a consultative capacity only. The Company aims to make its best efforts to comply promptly with the law of 27 January 2011 on the balanced representation of men and women on Boards of Directors. 56

57 2.1.2 Special committees Audit committee By decision of the Board of Directors on 26 May 2014, the Company has established an Audit Committee for an indefinite period. The members of the Audit Committee set out their committee s operating rules in internal rules approved on the same day. The main terms of the Audit Committee s internal rules are set out below. Composition The Audit Committee comprises at least two members appointed by the Board of Directors after the Appointment and Compensation Committee has given its opinion. The members of the Audit Committee are chosen from among the members of the Board of Directors and, as far as possible, two-thirds of them are independent members, with at least one of them having special financial or accounting skills, it being specified that all members have a minimum level of proficiency in terms of financial and accounting expertise. At the time of writing, the members of the Audit Committee were: Bpifrance Participations, director, represented by Jean d Arthuys; A Switch Capital SARL, director, represented by André Lösekrug, independent member of the Board with specific expertise in accounting and finance. It is stipulated as necessary that the members of the Audit Committee are members of the Board of Directors not performing management duties. Duties The Audit Committee is responsible for: monitoring the financial reporting process; monitoring the effectiveness of internal control and risk management systems; monitoring the statutory audit of annual and consolidated financial statements; issuing a recommendation on the Statutory Auditors proposed for appointment by the general shareholders meeting and reviewing the terms for their payment; monitoring the independence of Statutory Auditors; assessing the conditions for the use of derivatives; regularly monitoring the status of significant disputes; assessing the Company s procedures in terms of receiving, keeping and processing complaints related to accounting matters and accounting checks performed internally, to questions related to accounting checks and the documents provided by employees on an anonymous and 57

58 confidential basis, and which may challenge accounting practices or those related to accounting checks; and more generally, to provide advice and make appropriate recommendations in the abovementioned areas. Functioning The Audit Committee meets at least four times a year, with the Statutory Auditors if the committee s Chairman considers it useful, based on a schedule determined by the Chairman, to assess the annual, half-yearly and, where appropriate, quarterly consolidated financial statements, based on an agenda approved by the Chairman and sent to the Audit Committee members no later than seven days before the meeting. The Committee also meets at the request of its Chairman, two of its members, or the Chairman of the Company s Board of Directors. The Audit Committee can hear all members of the Company s Board of Directors and perform all internal and external audits on all subjects which it considers appropriate to its duties. The Chairman of the Audit Committee shall inform the Board of Directors of such hearing beforehand. In particular, the Audit Committee may hear people who contribute to the financial reporting or auditing process (administrative and financial director, and main officers of the financial department). The Audit Committee hears the Statutory Auditors. It may hear them without any Company representatives being present. Reports and activity reports for the prior year The Chairman of the Audit Committee ensures that the ommittee s summary reports to the general shareholders meeting enable the latter to be fully informed, thereby facilitating its deliberations. During the year ended 31 December 2014, the Company s Audit Committee met twice, and the average attendance rate of the members of the Audit Committee was 75% Appointment and Compensation Committee Composition By decision of the Board of Directors on 26 May 2014, the Company has established an Appointment and Compensation Committee. The members of this committee set out their committee s operating rules in internal rules approved by the Board of Directors on 26 May The main terms of the Appointment and Compensation Committee s internal rules are described below. Wherever possible, the Appointment and Compensation Committee comprises at least two members of the Board of Directors, appointed by the latter. Furthermore, wherever possible, the majority of its members are independent members. 58

59 It is stipulated as necessary that no director performing management duties within the Company can be a member of the Appointment and Compensation Committee. At the time of writing, the members of the Appointment and Compensation Committee were as follows: Idinvest Partners, director, represented by Benoist Grossmann; the company Ventech, director, represented by Mr Alain Caffi. Duties The Appointment and Compensation Committee is notably tasked with: in terms of appointments: o o o o o presenting recommendations on the composition of the Board of Directors and its Committees to the Board of Directors, proposing to the Board of Directors, on a yearly basis, the list of its members who may be qualified as independent members in accordance with the criteria set out by the MiddleNext Corporate Governance Code, preparing a succession plan for the Company s executives and helping the Board of Directors appoint and assess executives, preparing a list of people who may be recommended as directors, preparing a list of members of the Board of Directors who may be recommended as members of a Committee of the Board of Directors; in terms of compensation: o o assessing the main objectives proposed by general management in terms of the compensation of the Company s non-executive directors, including free share allocations, share subscription and purchase option plans, reviewing the compensation of non-executive directors, including free share and stock option plans, pension, health and welfare schemes, and benefits in kind; making recommendations and propositions to the Board of Directors regarding: o o compensation, pension, health and welfare schemes, benefits in kind, and other financial entitlements, including those of directors in the event of termination of employment. The committee proposes compensation amounts and structures, in particular the rules for determining the variable portion taking into account the Company s strategy, goals and results, in addition to market practices, free share allocations, share subscription and purchase option plans, together with any other similar profit-sharing mechanism and, in particular, registered shares allotted to directors eligible for such a mechanism; assessing the total amount of attendance fees and their distribution system among directors, together with the terms for reimbursement of expenses incurred by the members of the Board of Directors; 59

60 2014 Annual Financial Report preparing and presenting reports, where applicable, pursuant to the internal rules of the Board of Directors; making any other recommendation which may be requested by the Board of Directors in terms of compensation. Generally speaking, the Appointment and Compensation Committee provides any advice and recommendations relevant to the above-mentioned issues. Operating procedures The Appointment and Compensation Committee meets at least four times a year, based on a schedule determined by its Chairman and following an agenda approved by its Chairman and provided to the members of the Appointment and Compensation Committee at least seven days before the meeting. It also meets at the request of its Chairman, two of its members, or the Board of Directors. All non-executive directors who are not members of the Appointment and Compensation Committee may freely participate in its meetings. If the Chairman of the Company s Board of Directors is not a committee member, he/she may be invited to participate in the Committee meetings. The Committee invites the Chairman to present his/her propositions. He/she does not have voting rights and may not attend deliberations regarding his/her own situation. The Appointment and Compensation Committee may request the Chairman of the Board of Directors to receive assistance from any Company executive with expertise that may facilitate the handling of an agenda item. The Chairman of the Appointment and Compensation Committee or the Chairman of the meeting must point out that any person participating in discussions must comply with confidentiality obligations. Reports and activity reports for the prior year The Chairman of the Appointment and Compensation Committee ensures that the committee s summary reports to the general shareholders meeting enable the latter to be fully informed, thereby facilitating its deliberations. During the year ended 31 December 2014, the Company s Appointment and Compensation Committee met twice, and the average attendance rate of the members of the Appointment and Compensation Committee was 100% Other governance questions The provisions relating to the participation of shareholders at meetings are contained in Title IV of the bylaws, which are available at the Company s headquarters. The information referred to in Article L of the French Commercial Code liable to have an impact in the case of public offer is set out in the management report of the Board of Directors. Furthermore, and for the record, the following commitments were made during the Company s IPO: 60

61 Abstention undertaking Under the terms of the Underwriting Agreement, the Company undertakes not to issue, offer, sell, or grant a promise to sell, either directly or indirectly (notably in the form of trading in derivatives with shares as the underlying assets), shares or securities giving access through conversion, exchange, redemption, presentation of a warrant or any other method to the allotment of securities issued or to be issued in the future representing a portion of the Company s share capital, nor to publicly declare the intention to proceed to one or more of the transactions referred to hereinabove, from the date of signature of the Underwriting Agreement until the expiration of a period of 180 days following the date of settlement/delivery of the shares issued in the context of the Offering, (i.e. until 4 January 2015), unless with the prior written agreement of the Joint Lead Managers and Joint Bookrunners notified to the Company. It is specified in this regard that (i) the shares issued for the Offering, (ii) all transactions carried out in the context of a share buyback programme in accordance with the law and regulations, as well as with applicable market rules, (iii) the securities that may be issued, offered or transferred to the employees or corporate officers of the Company and of the companies in its group under the terms of future plans, already authorised on this date, or which will be authorised by the Company s general shareholders meeting, and (iv) the Company s securities issued in the context of a merger or acquisition of securities or assets of another entity, provided that the beneficiary of these securities agrees to take over this undertaking for the remaining term and provided that the total number of securities of the Company issued in this case does not exceed 5% of the capital, are excluded from the scope of this abstention agreement. Founding directors lock-up undertaking The Company s two founders who own shares and founders warrants have made an undertaking to the Underwriters not to offer, pledge, loan, transfer, sell or promise to sell, directly or indirectly, without the prior agreement of the Joint Lead Managers and Joint Bookrunners, (i) 100% of the shares they own on the Offering settlement/delivery date or that they might come to hold in the event that AV3 is wound up, restructured or otherwise, for a period of 180 calendar days following the settlement/delivery date of the Company s shares, (ii) 90% of the shares they own on the Offering settlement/delivery date, for an additional 180 calendar days following the 180-day period referred to above; this includes the shares they are entitled to subscribe by virtue of their founders warrants. It is specified in this regard that the following are excluded from the scope of these lock-up undertakings: (a) the sale of the Sold Shares, in order to finance the increase in the equity stake in the Company of the founders concerned, (b) all transactions on the Company s shares in the context of a tender offer on the Company s securities, (c) all transactions on the Company s shares acquired on the market subsequent to the initial listing of the Company s shares. This undertaking was made by Dan Serfaty, Thierry Lunati, Karen Serfaty and their respective asset holdings. Lock-up undertaking by the Company s main financial shareholders Bpifrance Participations, the investment funds managed by Idinvest Partners and the fund managed by Ventech (collectively holding more than 33.04% of the share capital before the IPO) have each made an 61

62 undertaking to the Underwriters not to offer, pledge, loan, transfer, sell or promise to sell, directly or indirectly, without the prior agreement of the Joint Lead Managers and Joint Bookrunners, (i) 100% of the shares they own on the Offering settlement/delivery date, for a period of 180 calendar days following the settlement/delivery date of the Company s shares, (ii) 66% of the shares they own on the Offering settlement/delivery date, for the period of 90 calendar days following the 180-day period referred to hereinabove, and (iii) 33% of the shares they own on the Offering settlement/delivery date, for an additional 90 calendar days following the 90-day period referred to hereinabove, nor to enter into any other contract or transaction having an equivalent financial effect, nor to publicly declare the intention to proceed to one or more of the transactions referred to hereinabove. It is specified in this regard that the following are excluded from the scope of these lock-up undertakings: (a) the sale of the Sold Shares, (b) all transactions on the Company s shares in the context of a tender offer on the Company s securities, (c) all transactions on the Company s shares subscribed in the context of the Offering or acquired on the market subsequent to the initial listing of the Company s shares and (d) any sale by (i) an investment fund to another investment fund managed by the same management company, or (ii) a legal entity to any legal entity which, directly or indirectly through one or more entities, controls or is controlled by the seller, or is controlled, directly or indirectly by the one or more entities, by a person who controls the seller, directly or indirectly by one or more entities. Lock-up undertaking by the Company s other main shareholders The Company s main shareholders other than the founders and financial investors referred to above (that collectively own more than 52.46% of the share capital before the IPO) have each made an undertaking to the Underwriters not to offer, pledge, loan, transfer, sell or promise to sell, directly or indirectly, without the prior agreement of the Joint Lead Managers and Joint Bookrunners, 100% of the shares they own on the Offering settlement/delivery date, for a period of 180 calendar days following the settlement/delivery date of the Company s shares, nor to enter into any other contract or to conduct any transaction having an equivalent financial effect, nor to publicly declare the intention to proceed to one or more of the transactions referred to hereinabove. It is specified in this regard that the following are excluded from the scope of these lock-up undertakings: (a) the sale of the Sold Shares, (b) all transactions on the Company s shares in the context of a public offering on the Company s securities, (c) all transactions on the Company s shares subscribed in the context of the Offering or acquired on the market subsequent to the initial listing of the Company s shares and (d) any sale by (i) an investment fund to another investment fund managed by the same management company, or (ii) a legal entity to any legal entity which, directly or indirectly through one or more entities, controls or is controlled by the seller, or is controlled, directly or indirectly by one or more entities, by a person who controls the seller, directly or indirectly by one or more entities. The fund managed by A Capital Management also made a similar undertaking for a period of 540 calendar days following the settlement/delivery date of the Company s shares. The starting date of all the periods specified in section is 4 July 2014, the settlement/delivery date of the Offering. 62

63 2.2 Internal control Internal control is a system that includes a set of resources, behaviours, procedures and actions adapted to the specific characteristics of each company and the Group taken as a whole, which: contributes to the control of its activities, the effectiveness of its operations and the efficient use of its resources; enables it to take appropriate account of significant risks, whether operational, financial or compliance. Internal control aims to ensure: compliance with laws and regulations; the application of instructions and guidelines set by the executive board; the proper functioning of the internal processes of each company, particularly those contributing to the safeguarding of its assets; the reliability of financial information; the prevention and control of risks identified in relation to the Group s activities; the optimisation of operating activities. However, there are inherent limitations in any internal control system, including uncertainties in the external environment, the exercise of individual judgement or the cost effectiveness of implementing new controls. The summary information on the internal control procedures in place, described in this report, focus on the significant elements liable have an impact on the financial and accounting information published by the Viadeo Group. The rules of internal control implemented within the Group are laid down by the senior management. In particular, they draw on the AMF recommendation dated 9 January 2008 and amended on 22 July 2010 ( Reference framework for risk management and internal control systems for small caps and midcaps ). The Company currently has internal control procedures relative to the reliability of accounting and financial information: To ensure the sustained increase of business activities through organic and external growth, the Company will strengthen its financial and accounting teams in France and abroad, in order to: monitor the financial statements issued by the Group s subsidiaries; strengthen the application of financial and internal control procedures implemented within the Group; speed up the production and analysis of the main performance and control indicators implemented within the framework of monthly reporting. 63

64 The teams at headquarters also supervise and assist with the preparation of financial statements for each of the Group s companies and each business activity. Ad hoc financial audits are conducted at the subsidiaries during the year in order to ensure reliable management forecasts and financial closing. This audit function is currently performed by the Group s administrative and financial director. Likewise, the Company may call on external experts if certain issues (accounting and tax issues, for example) require a particular skill for calculating or selecting the method most suited to presenting the relevant financial information. The Company produces all the financial statements for its French and foreign companies internally. However, the most significant companies (France, China, USA, Russia and Morocco) are assisted by local experts where necessary. IFRS compliance is ensured internally with the support of experts from well-known accounting firms. The main options for closing the parent company (France and abroad) and consolidated financial statements are described and shared with the Statutory Auditors before the financial year end General provisions The Group has a set of measures to control and reduce the risks that may affect the achievement of objectives. These measures come notably in the form of procedures, instructions, means of supervision, authorisations and delegations of authority. The system has deep roots within the Group and covers all of its activities and processes. The internal control system accordingly comprises an integrated framework, the key information being included in Confluence, the knowledge base used by the Group. This base is fuelled by all group services (finance, human resources, IT, products and marketing). Projects are carried out by teams working close to customers in order to provide them with solutions promptly. To help teams respond swiftly and to allow each operational unit to make the necessary decisions, a decentralised organisation is in place within the Group. The table below summarises the main roles expected of each category of players. Actors Management Roles expected in internal control - Initiates and inculcates the internal control system by communicating clearly on it. - Is responsible for its deployment within the Group and its proper operation. - Ensures the adequacy of the internal control system with the Group s strategy and its risks. Operational management Operational and functional staff - Is responsible for its deployment within its scope and its proper operation. - Ensures the alignment of the internal control system with the structure, strategy or tactics, and the organisation of its scope. - Take an active part in the implementation of the internal control system. - Perform activities and operations in compliance with the established internal control system. - Inform management of malfunctions and helps search for corrective measures. Audit Committee - Ensures the existence of a coherent internal control system compatible with the Group s strategy and 64

65 its risks. - Approves the internal audit plan, is regularly informed of audit findings and recommendations implemented. - Ensures the effective operation of the risk management process related to the preparation of financial information. The system is complemented by the intervention of external actors, including the Statutory Auditors. The auditors are not, as part of their legal assignment, stakeholders of the internal control and risk management systems. They review them, and independently form an opinion on their appropriateness. They conduct an annual inspection of the Group as part of their statutory audit of the consolidated financial statements and the separate financial statements of group companies. In accordance with French law on commercial companies, Viadeo s consolidated and separate financial statements are audited by two auditors, which carry out a joint review of all financial statements, procedures for their establishment and certain internal control procedures relating to the preparation of accounting and financial information. The auditors present their observations on the Chairman s report on internal control procedures relating to the preparation and processing of accounting and financial information, and certify the establishment of other information required by law. 65

66 2.2.3 Internal control objectives Internal control at Viadeo is a system that aims to gain reasonable assurance within the Group of the following: compliance with the laws and regulations applicable to the Group s subsidiaries and establishments; the effective application of internal procedures, policies and directives, and best practice set by the Group s general management; the safeguarding of the Group s assets; the reliability and sincerity of the financial and accounting information provided to social bodies and published; the prevention and control of risks identified in relation to the Group s activities; the optimisation of operating activities Components of the internal control system Procedures Budget and management control A framework note laying down the general objectives of the budget is set by the Group s management in September each year in respect of the subsequent fiscal year. The Group s various operating units prepare and present management with their strategy and annual budget in the final quarter. The budget is then presented to and approved by the Board of Directors. An updated budget is established in the course of the second quarter of each year. In the third quarter, au update is provided on the previously defined bases. The monthly analysis of the various key reporting indicators allows the Finance Department to analyse the differences between the implementation and forecasts, exposing any significant errors by crosschecking and analysing various key performance indicators. Consolidation The consolidated financial statements of the Group are prepared in accordance with International Financial Reporting Standards ( IFRS ) from the accounting data prepared under the responsibility of the Group s Finance Department. Particularly significant items are subject to centralised work; as such, regular testing of the value of assets held by the Company, disposals and acquisitions are performed by the Group s Finance Department. 66

67 Accounting The Group s Finance Department coordinates the closing work on accounts and issues instructions to subsidiaries when necessary. It also meets regularly with the Statutory Auditors to present particular and significant operations for the year and the options chosen within the framework of the accounting standards in force. Financing and cash The Group monitors the monthly cash position of each subsidiary in France and internationally. This work also covers cash forecasts and an examination of the main related flows. Investments An investment authorisation procedure is applied to all subsidiaries of the Group and covers all categories of investments. Insurance The list of insurable risks and the policy for covering these risks are controlled by the Group s Finance Department. Communication of results The preparation and validation of media statements and investor presentations concerning the presentation of the Group s results are governed by a specific procedure involving management, the Finance Department, the Strategy Department and the Statutory Auditors Identification, analysis and management of risks Section 1.4 of the management report reviews the main risks to which the Group is exposed. 67

68 action plan The Company intends to continue implementing measures to develop a risk identification and assessment system and associated control procedures. As such, at its meeting of 27 August 2014, the Audit Committee approved the establishment of a disaster recovery plan that would restore the Viadeo Group s central support functions, thereby minimising the impact of a possible disaster on the Group s activity. Under the plan, the Audit Committee has decided that the priority support functions in the event of a disaster recovery procedure are finance, human resources and the commercial back office. The plan subsequently provides for the restoration of IT infrastructures dedicated to other services of the Company. This plan will focus on the following topics: definition of the disaster recovery strategy, priority action to be taken; the scope of critical resources for the functioning of the Company that must be available or restored in the event of a disaster (communications, premises, means of payment); the people strictly necessary for the realisation of the disaster recovery plan; the disaster recovery timetable of the various departments in order to minimise the impact on the Company s activity. The Audit Committee aims to be in a position to present a disaster recovery plan to the Board during fiscal

69 Report of the Statutory Auditors prepared pursuant to Article L of the French Commercial Code on the report of the Chairman of the Board of Viadeo SA for the year ended 31 December 2014 To the shareholders, In our capacity as Statutory Auditors of Viadeo, and pursuant to the provisions of Article L of the French Commercial Code, we hereby report on the report prepared by the Chairman of your Company in accordance with the provisions of Article L of the French Commercial Code in respect of the year ended 31 December The Chairman is required to prepare and submit for approval to the Board of Directors a report describing the internal control and risk management procedures implemented within the Company and providing the other information required by Article L of the French Commercial Code relating notably to corporate governance procedures. It is our responsibility: to provide you with our observations on the information contained in the Chairman s report on internal control and risk management procedures relating to the preparation and processing of accounting and financial information; and to certify that the report includes the other information required by Article L of the French Commercial Code, it being stipulated that it is not our responsibility to verify the fairness of this other information. We conducted our work in accordance with professional standards applicable in France. Information concerning internal control and risk management procedures relating to the preparation and processing of accounting and financial information Professional standards require that we plan and perform the audit to assess the fairness of the information concerning the internal control and risk management procedures relating to the preparation and processing of financial and accounting information contained in the report of your Chairman. These procedures notably include: 69

70 examining the internal control and risk management procedures relating to the preparation and processing of accounting and financial information underlying the information presented in the Chairman s report and the existing documentation; reviewing the work done to prepare this information and existing documentation; determining whether any major deficiencies in internal control relevant to the preparation and processing of accounting and financial information identified in the course of our assignment are properly disclosed in the Chairman s report. Based on our work, we have no comment to make on the information given on the internal control and risk management procedures of the Company relating to the preparation and processing of accounting and financial information as presented in the report of the Chairman of the Board of Directors, established under the provisions of Article L of the French Commercial Code. Other information We certify that the report of the Chairman of the Board of Directors includes the other information required by Article L of the French Commercial Code. Paris and Paris La Défense, 29 April 2015 The Statutory Auditors Grant Thornton French Member of Grant Thornton International KPMG Audit IS Vincent Frambourt Jean-Pierre Valensi 70

71 PART 3 CORPORATE SOCIAL RESPONSIBILITY Report on social, environmental and societal information (Annexe of Part 1 relating to the management report of the Board of Directors) French Law No of 12 July 2010, known as Grenelle II, and its implementing decree published on 24 April 2012 amending Article L of the French Commercial Code set out the mandatory information to be included in the annual management report and introduce the obligation of having the social, environmental and societal information contained therein verified by an independent third party. Pursuant to the decision of the French Accreditation Committee (COFRAC) to prohibit the involvement of a panel of auditors in the performance of the assignment of the independent third party, Grant Thornton was the sole auditor appointed by the Company to proceed with the verification of this information. Given the Company s recent initial public offering, 2014 financial year is the first year for which a report has been prepared on social, environmental and societal information. The Group has mobilised internal resources to collect data so as to provide as complete and coherent a vision as possible of the required information and actions, given its midcap status and its organisation. The provisions of the Grenelle II law provide that if certain information cannot be given or does not appear relevant, the report may mention this, specifying the recommendations of the selected framework and the consultation arrangements. This report was reviewed by the Audit Committee at its meeting of 24 April 2015, prior to the meeting of the Board of Directors, which approved it. 3.1 Methodological note on HR and environmental information Tools used/process for reporting data The workforce is monitored via Cegid Business in France and HRIS in the United States. Training hours and environmental indicators are monitored via Excel files. Timeline The information published below corresponds to a calendar year (from 1 January to 31 December 2014). 71

72 Reporting scope of the report on the social, environmental and societal performance ( CSR report) Unless otherwise stated, the information published below corresponds to entities based in France, the rest of Europe, the United States and Morocco. Work is currently being done to increase the reliability of data in respect of the Tianji group (China). These data have therefore not been included in this report, with the exception of the total workforce. The methodology used for collecting the information included in this report is set out below. The four employees of Sabri SARL are excluded from the HR reporting scope. The Lyon office, consisting of two employees, is not included in the reported environmental data. Definitions of reported data Unless otherwise stated in the report, the items of the CSR report take into account: - Employees: permanent contracts, fixed-term contracts and combined work-study contracts are included in the workforce. People on maternity leave or extended absence are also included. However, trainees and agents are excluded. Employees and their breakdown are shown as of 31 December Entries and departures: the reported data cover all entries and departures in Change from a fixed-term to a permanent contract is not recorded as an entry, as opposed to change from a professional development contract to a permanent contract. - The absenteeism rate is calculated by dividing the total number of hours of absence over the period under review by the number of theoretical hours worked. It takes into account absences due to illness and/or following an accident. Maternity, paternity and parental leave are excluded from the calculation of absenteeism. - Accidents: the calculation is based solely on commuting accidents. No accidents or injuries related to business travel occurred in Days of absence due to illness or an accident: the calculation is expressed in working days. - Training: the reporting scope is the same as for the workforce. Training is conducted in face-toface mode, whether delivered in-house or by external bodies. All hours reported are charged to the training budget. - Greenhouse Gas Emissions (GHG) associated with travel: the reported data cover the entire CSR reporting scope (France, rest of Europe, USA, Morocco). - Energy consumption and GHG emissions related to energy: the reported data correspond to buildings located in France, the US, Morocco, and data centres located in the United States. The emission factors used are those of the ADEME Bilan Carbone v

73 3.2 Social information A) Employment a- Total workforce by type of employment contract as of 31 December December 2014 France United States China Africa Other Europe Permanent Fixed-term Work-study contracts TOTAL As of 31 December 2014, the average age of employees was 33 years (total scope excluding China). > 45 years years years years years < 25 years Femmes Hommes Women Men b- Total workforce and breakdown of employees by gender 31 December 2014 France United States China Africa Other Europe TOTAL Men NA 1 1 TOTAL Women 75 2 NA 2 0 TOTAL NA

74 Over the last two years, the representation of women within the Viadeo Group has tended to increase. The Management Committee had three women members in c- Hires and dismissals 2014 France United States China Africa Other Europe Number of entries 55 4 NA 1 0 Number of departures 91 7 NA 2 2 There were 25 dismissals in 2014 financial year, of which 21 in France, 2 in the USA and 2 in Europe. In accordance with its development plan, Viadeo focused much of its hiring in 2014 on its technical and commercial departments. Staff movements recorded over the same period resulted from the end of the technological transformation dating back to 2013 (migration to a new platform and changes in work methodologies). d- Compensation and career development A new system of variable compensation was implemented at the beginning of 2014 for the whole of the population covered, representing 56% of the workforce. The aim is to harmonise the system within and between departments, and to align employees interests with the Company s results and collective goals. Terms of consideration of items of variable compensation The variable portion of the compensation is divided into three parts: - corporate objectives; - self-management; - individual qualitative and quantitative objectives. During 2014 financial year, a new variable compensation structure was also introduced for commercial employees. In conjunction with this process, the Group introduced pay scales based on expertise and experience, by department, so as to harmonise the compensation policy. Wage increases are individual and consistent, both by category (managers, employees, technicians and supervisors) and between men and women. 74

75 The Group s objective for 2015 is to extend the implementation of items of variable compensation to all employees. Changes in the compensation policy take into account benchmarking studies conducted by the Group. The aim is to retain talent. Working hours In August 2014, Viadeo signed a new agreement on working hours, pursuant to changes in the collective agreement. - employees, technicians and supervisors, and non-autonomous managers: working week of 37 hours plus 10 rest days (RTT) on average; - autonomous managers: package of 218 days worked per year. An agreement on on-call periods has also been in force within the Group since July This agreement determines the hours and terms of compensation for on-call periods, for technical staff in France and the United States. B) Absenteeism Absence The rate of absence amounted to 5.5% in France in 2014, broken down as follows: % sickness/commuting accidents (absenteeism rate); % maternity/paternity leave. In terms of days of absence, this represents a cumulative 1,907 days not worked, all reasons combined. The concept of sick leave is different in the United States. Employees acquire an entitlement of nine sick days per year. They can use these days when they or their children are sick, without needing to present any proof. In 2014, a total of 44 sick days were claimed, or an average of four days per employee. No sick leave was recorded in Morocco or the rest of Europe in

76 C) Robust social dialogue and Company agreements Viadeo aims to maintain proactive and constructive dialogue, notably towards its employees. In accordance with the law, professional elections are held in France every four years. The most recent elections were held on 7 January 2014, and led to the establishment of a works council consisting of eight managerial employees and two non-managerial employees. Ordinary meetings of the works council are held once a month. During these meetings, the works council is informed and consulted on strategic and organisational issues affecting the Group s employees. The quality of the social dialogue led to the signing in 2014 of the collective agreement on the duration and organisation of working time. It is planned to sign an agreement on telework and to extend the gender equality plan in The 7 January 2014 elections also resulted in the appointment of two managerial employees as staff delegates. A monthly meeting is held to discuss individual cases. The Committee on health, safety and working conditions ( HSC ), consisting of one member, meets quarterly. It is involved in the development and implementation of the Group s safety policy. To assess the performance and set objectives for each employee, in accordance with the business strategy, half-yearly individual appraisal interviews are organised within the Group. Lastly, scheduled and/or informal events are regularly held to promote the cohesion and well-being of teams, notably: - All Hands: meetings involving all available employees held once every fortnight. These meetings deal with the operational news of the Viadeo Group in terms of products and marketing, as well as technological developments. - Quarterly Meetings: meetings held to allow Viadeo s management to present the results and strategy of the Group to all employees. They are often accompanied by a theme party or a day of team building to promote cohesion between teams and celebrate success. - Integration Day: Integration Days are held once a month. On average, they bring together 15 new employees from all Viadeo departments around a cooking workshop and a series of presentations made by the members of Viadeo s Executive Committee. Their purpose is to improve understanding of the Group s strategy, its businesses and the role of each department in the structure. At the time of writing, the following agreements were in place within Viadeo: - collective agreement on the duration and organisation of working time; - agreement on on-call payments; 76

77 - action plan on gender equality. Viadeo is currently negotiating an intergenerational agreement, and expects to sign an agreement on teleworking in D) Workplace safety: a priority In collaboration with workplace inspectors, the occupational doctor and the HSC, the Viadeo Group has implemented an action plan to raise employee awareness of the critical issue of safety. To do this, a personalised risk assessment specific to Viadeo has been conducted. Risks are listed in the UORAD (Unique Occupational Risk Assessment Document). This document gives rise to an occupational risk prevention programme run each year, as well as work to improve working conditions in cooperation with the HSC. Viadeo ensures that its premises are equipped to ensure the safety and hygiene essential to all employees, notably in terms of: - cleaning of premises/toilets; - removal of obstructions from common areas, emergency exits and fire escapes, etc.; - verification and regular maintenance of technical and electrical installations; - ventilation/sanitation of premises; - lighting; - heating/air conditioning; - design of workstations (computers, desks, chairs, headsets, etc.); - signing (building plan, emergency exits, fire escapes, etc.); - emergency equipment (first aid box, etc.); - first aid assistance (training, sufficient numbers of first aid officers per floor). In accordance with the safety requirements prevailing in France, the Company conducted two fire drills during the period. Workplace accidents No workplace accidents or occupational diseases were recorded within the Group in E) Training policy undertaken to strengthen the motivation and skills of employees Training is a major challenge for Viadeo. Operating in a highly innovative sector, the Group aims to give each employee the resources necessary to advance within the Group, and to further his or her skills and expertise. In 2014, training expenses totalled 115,295, or 1.05% of the gross payroll. Training efforts broke down as follows: - personal development: 5%; - languages: 6%; 77

78 - management: 34%; - profession: 51%; - safety: 4%. All socio-professional categories within the Group had access to training in 2014: - 72 people were trained, 40% of the average workforce; - 26 women (36% of employees trained); - 46 men (64% of employees trained) Annual Financial Report Only French employees were trained in 2014, as no requests were made by employees in San Francisco or Casablanca. Access to training by category Number of % of average trainees workforce Employees, technicians and supervisors % Managers % 72 40% Breakdown of training conducted in 2014 by field 70% 60% 50% 40% 30% 20% 10% 0% 63% 28% 33% 29% 44% 44% 50% 0% 50% Product development Sales Marketing Finance Mobile 78

79 Number of people trained as a percentage of the total workforce by age bracket in % 70% 60% 50% 40% 30% 20% 10% 0% 74% 10% 13% 0% 4% < 20 years years years years 50 years Number of people trained by seniority in 2014 > 5 years 42% 3 to 5 years 72% 1 to 3 years 38% < 1 year 8% 0% 10% 20% 30% 40% 50% 60% 70% 80% 79

80 Breakdown of training conducted in 2014 by field 34% Profession 47% Management Personal development 5% Safety 14% Breakdown of hours of training provided in 2014 by field Breakdown by hours Number of hours Management 1,092 Profession 777 Languages 189 Personal development 45 Safety 31 Total 2,404 80

81 Evaluation of training by employees trained Unsatisfied 0% Not very satisfied 7% Very satisfied 38% Satisfied 55% Employees who were not very satisfied with the training (7% of cases) generally cited the training period (too long) or the excessively theoretical aspect of the training. Strategic thrusts for continuation of the policy of ramping up managers skills (16 people trained in 2013/2014 and 5 new enrolments in 2015 to date); - implementation of training for employees ahead of a functional or geographical transfer in order to assist them in assuming their new position; - continued efforts on training employees in speaking English; - identification and implementation of individual training action for employees (staff development and professional training) to promote adaptation to their jobs and the development of their skills; - refresher courses in fire safety for employees already trained (safety training). 81