Euskaltel,S.A

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Euskaltel,S.A EUSKALTEL,S.A. Consolidated Annual Accounts 31 December 2016 Consolidated Directors’ Report 2016 (together with the Independent Auditor's Report) (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) KPMG Auditores S.L. Torre Iberdrola Plaza Euskadi, 5 Planta 7a 48009 Bilbao Independent Auditor's Report on the Consolidated Annual Accounts (Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) To the Shareholders of Euskaltel, S.A. Report on the Consolidated Annual Accounts We have audited the accompanying consolidated annual accounts of Euskaltel, S.A. (the "Company") and its subsidiaries (the "Group"), which comprise the consolidated balance sheet at 31 December 2016 and the consolidated income statement, consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and consolidated notes. Directors' Responsibility for the Consolidated Annual Accounts The Directors are responsible for the preparation of the accompanying consolidated annual accounts in such a way that they give a true and fair view of the consolidated equity, consolidated financial position and consolidated financial performance of Euskaltel, S.A. and subsidiaries in accordance with International Financial Reporting Standards as adopted by the European Union (IFRS-EU) and other provisions of the financial reporting framework applicable to the Group in Spain, and for such internal control that they determine is necessary to enable the preparation of consolidated annual accounts that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express an opinion on these consolidated annual accounts based on our audit. We conducted our audit in accordance with prevailing legislation regulating the audit of accounts in Spain. This legislation requires that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated annual accounts are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated annual accounts. The procedures selected depend on the auditor's judgement, including the assessment of the risks of material misstatement of the consolidated annual accounts, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the preparation of the consolidated annual accounts by the Company's Directors in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated annual accounts taken as a whole. KPMG Auditores S.L., a limited liability Spanish company and a Entered into the Spanish Official Register of Auditors with number member firm of the KPMG network of independent member firms S0702, and the Spanish Institute of Registered Auditors’ list of affiliated with KPMG International Cooperative ("KPMG companies with reference No. 10. International"), a Swiss entity. Reg. Mer Madrid, T. 11.961, F. 90, Sec. 8, H. M -188.007, Inscrip. 9 Tax identification number (N.I.F.): B-78510153 2 We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the accompanying consolidated annual accounts give a true and fair view, in all material respects, of the consolidated equity and consolidated financial position of Euskaltel, S.A. and subsidiaries at 31 December 2016 and of their consolidated financial performance and consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union, and other provisions of the financial reporting framework applicable in Spain. Report on Other Legal and Regulatory Requirements The accompanying consolidated directors' report for 2016 contains such explanations as the Directors of Euskaltel, S.A. consider relevant to the situation of the Group, its business performance and other matters, and is not an integral part of the consolidated annual accounts. We have verified that the accounting information contained therein is consistent with that disclosed in the consolidated annual accounts for 2016. Our work as auditors is limited to the verification of the consolidated directors' report within the scope described in this paragraph and does not include a review of information other than that obtained from the accounting records of Euskaltel, S.A. and subsidiaries. KPMG Auditores, S.L. (Signed on original in Spanish) Enrique Asla García 24 February 2017 Consolidated Annual Accounts and Directors’ Report for the year ended 31 December 2016 (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) EUSKALTEL, S.A. AND SUBSIDIARIES Consolidated Balance Sheet at 31 December 2016 (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) (Expressed in thousands of Euros) ASSETS Notes 31.12.2016 31.12.2015 NON-CURRENT ASSETS 2,119,220 2,184,772 Goodwill 5 591,442 591,442 Intangible assets 6 181,327 184,317 Property, plant and equipment 7 1,192,345 1,243,778 Financial assets 8 7,226 7,516 Deferred tax assets 13 146,880 157,719 CURRENT ASSETS 221,118 97,622 Inventories 9 4,134 3,532 Trade and other receivables 8 47,765 63,906 Current tax assets 13 5,777 3,602 Other current assets 6,152 3,211 Cash and cash equivalents 8 157,290 23,371 TOTAL ASSETS 2,340,338 2,282,394 EQUITY AND LIABILITIES Notes 31.12.206 31.12.2015 EQUITY Capital and reserves 10 741,735 702,569 Capital 455,536 455,536 Share premium 207,604 207,604 Retained earnings 102,735 40,858 (Own shares) (1,363) (1,429) Interim dividend paid during the year (22,777) - Other comprehensive income (64) (64) Equity attributable to equity holders of the Parent 741,671 702,505 Non-controlling interests 423 419 742,094 702,924 NON-CURRENT LIABILITIES 1,388,140 1,439,009 Non-current payables 12 1,302,235 1,353,009 Provisions 1,741 1,711 Other financial liabilities 12 7,537 8,007 Deferred tax liabilities 13 76,627 76,282 CURRENT LIABILITIES 210,104 140,461 Current payables 12 59,362 1,231 Trade and other payables 12 109,288 121,545 Current tax liabilities 13 2,032 - Provisions 1,059 1,059 Other current liabilities 38,363 16,626 TOTAL EQUITY AND LIABILITIES 2,340,338 2,282,394 Derio, 22 February 2017 1 EUSKALTEL, S.A. AND SUBSIDIARIES Consolidated Income Statement for the year ended 31 December 2016 (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) (Expressed in thousands of Euros) Notes 2016 2015 Revenues 14.1 561,426 334,375 Work performed by the entity and capitalised 6 & 7 11,121 5,793 Supplies 14.2 (129,163) (71,261) Other operating income 360 431 Personnel expenses 14.3 (38,365) (28,593) Other operating expenses 14.4 (132,192) (90,689) Amortisation and depreciation 6 & 7 (147,827) (85,446) Impairment (312) 2,137 RESULTS FROM OPERATING ACTIVITIES 125,048 66,747 Finance income 37 192 Finance cost (47,891) (56,391) NET FINANCE COST 14.5 (47,854) (56,199) PROFIT BEFORE INCOME TAX 77,194 10,548 Income tax 13 (15,049) (3,311) PROFIT FOR THE YEAR 10 62,145 7,237 Profit for the year attributable to equity holders of the Parent 62,145 7,241 Profit for the year attributable to non-controlling interests - (4) 62,145 7,237 Earnings per share (Euros) 0.41 0.06 Derio, 22 February 2017 2 EUSKALTEL, S.A. AND SUBSIDIARIES Consolidated Statement of Comprehensive Income for the year ended 31 December 2016 (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) (Expressed in thousands of Euros) Notes 2016 2015 a) Consolidated profit/(loss) for the period 13 62,145 7,237 Items to be reclassified to the income statement b) Income and expense recognised directly in consolidated equity 13 - (88) Cash flow hedges - (123) Tax effect - 35 c) Amounts transferred to the consolidated income statement 13 - 4,571 Cash flow hedges - 6,349 Tax effect - (1,778) TOTAL COMPREHENSIVE INCOME FOR THE YEAR 62,145 11,720 Attributable to equity holders of the Parent 62,145 11,724 Attributable to non-controlling interests - (4) 62,145 11,720 Derio, 22 February 2017 3 EUSKALTEL, S.A. AND SUBSIDIARIES Consolidated Statement of Changes in Equity for the year ended 31 December 2016 (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) (Expressed in thousands of Euros) Equity attributable to equity holders of the Parent Other Registered Share Retained Interim Non- Own shares comprehensive Subtotal controlling Total capital premium earnings dividend income interests Closing 379,613 79,390 193,034 - (4,547) - 647,490 - 647,490 balance, 2014 Other comprehensive - - 7,241 - 4,483 - 11,724 (4) 11,720 income Transactions with shareholders Acquisition - - - - - - - 423 423 of subsidiaries Own shares - - 60 (1,429) - - (1,369) - (1,369) Capital 75,923 179,178 (3,408) - - - 251,693 - 251,693 increases Dividends - (50,964) (156,069) - - - (207,033) - (207,033) Closing 455,536 207,604 40,858 (1,429) (64) - 702,505 419 702,924 balance, 2015 Other comprehensive - - 62,145 - - - 62,145 - 62,145 income Transactions with shareholders Own shares - - (284) 66 - - (218) - (218) Dividends - - - - - (22,777) (22,777) - (22,777) Other - - 16 - - - 16 4 20 movements Closing 455,536 207,604 102,735 (1,363) (64) (22,777) 741,671 423 742,094 balance, 2016 Derio, 22 February 2017 4 EUSKALTEL, S.A.
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