KEOLIS S.A. FINANCIAL REPORT 2017 CONTENTS

1. MANAGEMENT REPORT ...... 3 Management Report of the Board of Directors at the Annual General Meeting

on 3 May 2018...... 4

Appendix 1...... 9

Appendix 2...... 11

Appendix 3...... 33

2. CONSOLIDATED FINANCIAL STATEMENTS ...... 34

Key figures for the Group...... 35

Consolidated financial statements...... 36 Notes to the consolidated financial statements...... 41 Statutory auditors’ report on the consolidated financial statements...... 93

3. UNAUDITED MANAGEMENT FINANCIAL STATEMENTS...... 96

Key figures...... 97

Income statement...... 98

Statement of financial position...... 99

Statement of cash flows...... 100

4. ANNUAL FINANCIAL STATEMENTS ...... 101

Financial statements at 31 December 2017...... 103

Notes to the Annual Financial Statements...... 106 Information on subsidiaries and non-consolidated investments...... 119 Statutory auditors’ report on the financial statements...... 133 1. MANAGEMENT REPORT | S.A. 2017

1. MANAGEMENT REPORT CONTENTS A MANAGEMENT REPORT OF THE BOARD 3 n CONDITION 2: ENGAGEMENT WITH OUR OF DIRECTORS AT THE ANNUAL GENERAL MEETING CUSTOMERS AND OTHER STAKEHOLDERS. . . . 16 ON 3 MAY 2018 ...... 4 3.1. Stakeholders ...... 16 n HIGHLIGHTS OF THE FINANCIAL YEAR...... 4 3.2. Partnerships...... 17 n n CONSOLIDATED FINANCIAL STATEMENTS. . . . . 6 4 COMMITMENT TO OUR CUSTOMERS: SAFETY AND ACCESSIBILITY ...... 18 n ANNUAL FINANCIAL STATEMENTS...... 6 4.1. Customer Experience...... 18 n SUBSIDIARIES AND HOLDINGS...... 6 4.2. Accessibility...... 19 n NOTIFICATION OF MAJOR HOLDINGS 1 n COMMITMENT TO OUR EMPLOYEES: AND ACQUISITIONS OF CONTROL ...... 6 SAFETY, DIVERSITY AND INCLUSION ...... 20 n RESEARCH AND DEVELOPMENT ACTIVITY...... 6 5.1 Health and safety in the workplace ...... 20 ...... n FORESEEABLE TRENDS AND FUTURE OUTLOOK . 6 5.2. Diversity and Inclusion 21 5.3. Gender equality ...... 22 n SIGNIFICANT EVENTS SINCE 5.4. Employing people with a disability ...... 23 THE END OF THE YEAR...... 7 5.5. Combating discrimination...... 23 n NON-FINANCIAL INFORMATION ...... 7 5.6. Other employment data ...... 24 n INFORMATION ON SUPPLIER 5.7. Organisation of work ...... 25 PAYMENT DEADLINES...... 7 5.8. Organisation of social dialogue...... 25 5.9. Training ...... 25 n ALLOCATION OF PROFIT ...... 8 6 n COMMITMENT TO THE ENVIRONMENT: n SHAREHOLDINGS ...... 8 ENERGY, WASTE AND WATER ...... 27 n EMPLOYEE SHARES IN COMPANY CAPITAL . . . . . 8 6.1. Energy efficiency...... 27 n AGREEMENTS COVERED BY ARTICLE 6.2. Reducing impact on the climate ...... 29 L. 225-38 OF THE COMMERCIAL CODE ...... 8 6.3. Waste management ...... 30 n DIRECTORS AND CONTROL OF THE COMPANY. . . . 8 6.4. Water consumption...... 30 7 n COMMITMENT TO REGIONS: SOLIDARITY, B APPENDIX 1 EDUCATION AND CULTURE...... 31 REPORT ON COMPANY GOVERNANCE...... 9 7.1. Solidarity...... 31 7.2. Education ...... 31 APPENDIX 2 C 8 n CONCLUSION AND OUTLOOK...... 32 NON-FINANCIAL DATA...... 11

1 n METHODOLOGY ...... 11 1.1. Background ...... 11 D APPENDIX 3 1.2. Scope and reference period...... 11 TABLE OF EARNINGS FOR THE PAST 1.3. List of information and definitions...... 12 FIVE FINANCIAL YEARS...... 33 2 n CONDITION 1: COMPLIANCE WITH THE GROUP GENERAL RULES AND POLICIES ...... 13 2.1. The Konformité programme...... 13 2.2. The Safety Policy...... 14 2.3. The Group Environment Policy...... 14 2.4. The Diversity and Inclusion Policy ...... 14 2.5. The Purchasing Policy ...... 15

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1. MANAGEMENT REPORT | KEOLIS S.A. 2017

MANAGEMENT REPORT OF THE BOARD OF DIRECTORS A AT THE ANNUAL GENERAL MEETING ON 3 MAY 2018 Ladies and Gentlemen, (Qatar) and the Pudong metro (China). The Group lost the rail franchise in the United Kingdom. We have convened this Ordinary Annual General Meeting, in ■■ The year was also marked by the turnaround of the Boston accordance with legal, regulatory and statutory requirements to and Las Vegas contracts, while in Continental Europe, report to you on the activities of our Company during the year results failed to improve. ended 31 December 2017 and submit for your approval the annual and consolidated accounts of that year. Acquisitions and investments

In addition, your Auditors will also read their reports to you. In France, the Group acquired the companies Les Coccinelles and Les Kangourous 2 (Greater Paris) which provide transport For our part, we are at your disposal to provide any clarification services to people with reduced mobility (PRM). and further information that you might find desirable. Outside France, the Group acquired Compagnie des Autobus We will review below, successively, the various items of informa- Liégeois in Belgium and the company Goolwa (school buses) in tion as required by applicable regulations. Australia.

The company’s financial position n HIGHLIGHTS OF THE FINANCIAL YEAR At 31 December 2017, the Group had net financial debt of €246 million, chiefly comprising a borrowing facility arranged with its Keolis S.A. carried out a share capital increase of €65,981,400 shareholder GROUPE KEOLIS S.A.S. for €93 million, and exter- which was fully subscribed to and paid for by its shareholder nal borrowings contracted in France and other countries which GROUPE KEOLIS S.A.S., through the issuance of 5,498,450 mature between now and 2025. new shares. To manage its liquidity risk, the Group uses bank overdrafts, Business activity and development short term financing facilities and daily liquid investments.

France The Group manages its counterparty risk by only borrowing from ■■ The group recorded solid commercial results, with the full- banks falling within the “Authorised” bank category. This cate- year revenue of contracts won amounting to €761 million. gory is defined according the banks’ ratings and their participa- In the Major Networks division, the Lille and Rennes tion towards the financing of the Group. contracts were renewed with profitable conditions. Among its Large City networks, the Group had its contract renewed As a result of its operational, financial and investment activities, in Caen and Amiens, and also won a new contract in the Group is exposed to the following financial market risks: Besançon. Keolis however lost the Lorient and Montbéliard ■■ Interest rate risk; networks. In the French Regions and Greater Paris, contract ■■ Foreign exchange risk; renewal was generally satisfactory. ■■ Commodities risk. ■■ Measured by value, the offensive bids won by the Group compensated for the defensive contracts that were lost. To manage this exposure, the Group uses standard, liquid and ■■ Passenger revenue on city contracts held up well, with market-available derivative financial instruments: 4.6% growth across Keolis’ 14 largest city transport ■■ forward and futures sales and purchases; networks compared to their 2016 figure. ■■ swaps; ■■ call options; International ■■ put options used in combination with call options to provide ■■ Outside France, the Group’s business grew significantly, symmetric or asymmetric collars. with the launch of a number of new operations: tram networks in Manchester (United Kingdom) and Aarhus The Group’s interest rate risk exposure results from its financial (Denmark), the TWN rail network (Germany), train and bus debt, part of which is subject to variable interest rates. It is the- networks in Zwenzwoka and Almere (Netherlands), the refore exposed to rate rises. The objective of risk management Foothill bus network (United States), the multimodal network is to protect the Group’s financial income/expense from an in Newcastle (Australia), the extension of the Gold Coast increase in interest rates, while taking advantage of any decrease tram network (Australia), the launch of the in rates to the greatest possible extent. (India) and the wins of the and tram network

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The Group also makes investments in foreign entities. To cover The portfolio impact of contracts won and lost stands at +€101.2 the foreign exchange risks engendered by these investments, million, comprising €(29.7) million in France (losses of the Tadao the Group uses derivative financial instruments to maintain a contract in Lens/Béthune, Keolis Alençon and the Caen PRM reference exchange rate defined for the year. transport service, which were partly compensated by the T11 Transkeo tram-train with Transilien and the wins of Côte Basque- The Group is exposed to the risk of fluctuation in the price of Adour and PAM 94), and +€130.9 million abroad (in particular, diesel. This risk is partially hedged in the concession contracts the wins of Manchester in the United Kingdom, in the signed with public transport authorities. For the remaining expo- Netherlands, Newcastle in Australia and Foothill in the USA.). sure, the Group implements a hedging policy using derivative Organic growth within existing contracts stands at +€190.3 or financial instruments whose objective is to minimise the volatility +3.9%, comprising +€63.8 million in France (Major networks of Group profits. +€29.6 million, Large City networks +€13.6 million, Regions +€16.1 million, Greater Paris +€0.8 million and Other +€3.7 Main risks and uncertainties million), +€127.0 million for international activities (United Kingdom +€4.3 million, Continental Europe +€32.2 million, North The Group conducts its business in a constantly-evolving eco- America +€58.5 million, Australia +€30.7 million, Regions for nomic, competitive and technical environment. Identifying and Development +€1.4 million), and €(0.6) million in the corporate anticipating risks and finding ways of controlling them lie at the holding company. heart of the Group’s concerns. Organic growth of turnover including portfolio growth amounts to +€291.4 million or +6.0%. The Group’s geographical footprint, its status as a market leader and key player on different modes of transport, and the nature Consolidated recurring EBITDA stands at €259.9 million, up by of the passenger transportation business all entail both intrinsic €18.4 million, or 7.6%, on 2016. and external risks for the Group. The foreign exchange impact is stable at €(0.1) million. The technical impact is negative at €(2.2) million. ■■ Continuity risks are caused by sudden and serious events The consolidation scope effect improves recurring EBITDA by which affect business continuity and potentially harm its €2.6 million, including +€0.6 million in France (Les Coccinelles image and credibility. This could be the case, for example, and Les Kangourous 2), and +€2.0 million internationally (Skyport with a major passenger accident, a terrorist attack or a in Canada, Autobus Liégeois and Cars Gembloutois in Belgium). widespread data hack. The portfolio impact of contracts won and lost amounts to +€4.0 ■■ Performance risks are a threat to the company’s results. million, of which €(2.8) million in France (notably the loss of They arise from operational management issues, such as Tadao, partly compensated by win of Côte Basque-Adour), and an inability to win key contracts, a lack of necessary exper- +€6.9 million outside France (in particular Manchester in the tise in the complexity of railway operations, an inadequacy United Kingdom, Utrecht and Almere in the Netherlands). of skills to match needs, and non-compliance with regula- Organic growth within existing contracts amounts to +€14.0 tory requirements. million or +5.8%, comprising €18.3 million in France (Major ■■ Transformational risks threaten the future of the company networks +€11.5 million, Large city networks +€1.4 million, and necessitate deep and rapid corrective action. This type Regions +€1.4 million, Greater Paris €(3.7) million and Other of risk can be illustrated by poor capitalisation of data, the +€7.8 million), €(0.6) million for international activities (United arrival of new unlicensed market players and a partly non- Kingdom +€1.1 million, Continental Europe €(17.7 million), North mature matrix organisation. America +€12.7 million, Australia +€1.8 million, Regions for Development +€1.5 million), and €(3.8) million in the corporate In the perspective of managing these risks rigorously, the Group holding company. has introduced a risk monitoring and control system sponsored Organic growth of recurring EBITDA including portfolio growth by the members of the Executive Committee. is +€18.0 million or 7.5%.

The Group’s financial results Recurring operating profit amounts to €94.5 million, an impro- vement of €27.0 million or 39.9% in relation to 2016. The Group’s recurring turnover for 2017 amounts to €5,138.6 million, an increase of €272.6 million, or +5.6%, on 2016. Net income (Group share) for 2017 amounts to €39.4 million as The currency impact is negative at €(24.9) million in particular against €24.0 million in 2016. against sterling, the Swedish krone and the American dollar. There is a negative technical effect of €(6.9) million due to the Free cash flow generation with application of IFRS 10-11 effects of IFRIC 12. amounts to €(95.4) million in 2017. Excluding acquisitions, it The consolidation scope effect is positive at +€13 million, inclu- stands at €(84.7) million, compared to the ex-acquisition free ding +€3.7 million in France (Les Coccinelles and Les cash flow of +€62.4 million in 2016, thus representing a decline Kangourous 2), and +€9.3 million abroad (Skyport in Canada, of €(147.1) million. This can be mainly attributed to the change Autobus Liégeois and Cars Gembloutois in Belgium, Goolwa in in the variation of working capital. Australia).

5 1. MANAGEMENT REPORT | KEOLIS S.A. 2017

The Group’s net debt with application of IFRS 10-11 amounts Acquisition of companies abroad / Shareholding investments to €246.5 million at end of December 2017 compared with Name Date Percentage €276.3 million at end of December 2016. Excluding acquisitions, Compagnie des Autobus 100% Eurobus it stands at €234.9 million compared with €221.3 million at end Liégeois 31/01/2017 Holding of December 2016. Keolis China Limited (ex PPBT Hong-Kong) 05/01/2017 100% Keolis S.A. Keolis (Wuhan) Public n Transport Operation CONSOLIDATED FINANCIAL Management Co Ltd. (ex 05/01/2017 100% Keolis S.A. STATEMENTS PPBT Wuhan)

Establishment of companies in France The consolidated financial statements are prepared in accor- dance with IFRS as adopted by the European Union. Name Date Percentage KLP 19 31/12/2017 100% Keolis S.A. Revenue from ordinary activities amounts to €5,160.2 million. KLP 20 31/12/2017 100% Keolis S.A. KLP 21 31/12/2017 100% Keolis S.A. After taking into account all operating costs, operating profit after investments under the equity method amounts to €93.2 million. KLP 22 31/12/2017 100% Keolis S.A. KLP 23 31/12/2017 100% Keolis S.A. Net profit (group share) for the year ending 31 December 2016 KLP 24 31/12/2017 100% Keolis S.A. amounts to €39.4 million.

Establishment of companies abroad n ANNUAL FINANCIAL STATEMENTS Name Date Percentage 51% Hamad RKH Qitarat LLC 30/07/2017 Trading Group LLC The financial statements of the Company are prepared in accor- 49% RDK dance with French GAAP. 100% Keolis S 6 Pty 10/08/2017 Downer Bus & Ltd Coachlines Pty Ltd Operating profit/(loss), including share of joint ventures, stands 100% Keolis at (€20,011) thousand. Keolis Rail Quebec Inc. 15/08/2017 Canada Inc. Keolis Asia Pte. Ltd 06/09/2017 100% Keolis S.A. The Company recorded a financial loss of €(73,525) thousand. 74.99% Autocars Orléans Express Operations REM SEC 20/10/2017 Inc. After the posting of an exceptional profit of €4,737 thousand and 0.01% Keolis Rail a corporate income tax credit of €18,017 thousand, Keolis’ Quebec 19.99% Autocars financial statements show a net loss of (€70,782) thousand. Maintenance REM SEC 25/10/2017 Orléans Express n SUBSIDIARIES AND HOLDINGS n RESEARCH AND DEVELOPMENT ACTIVITY The table attached to our balance sheet provides all the necessary information concerning our company’s subsidiaries and holdings. The company did not incur any research-related expenditure during the year. Many development activities for new products and services are, however, carried out closer to the operational n NOTIFICATION OF MAJOR HOLDINGS managers to ensure their ability to meet market requirements. AND ACQUISITIONS OF CONTROL The corresponding expenses are not isolated in profit or loss and have not been specifically monitored. During the financial year 2017, Keolis S.A. acquired or took control of: n Acquisition of Companies in France /Shareholding investments FORESEEABLE TRENDS AND Name Date Percentage FUTURE OUTLOOK Les Coccinelles 31/03/2017 100% Keolis S.A. In France, 2018 will be a busy year for the Group, with six 100% Les contracts up for renewal among its city networks (Tours, Orleans, Les Kangourous 2 31/03/2017 Coccinelles Nimes, Brest, Angers and Aix-en-Provence). The main avenues for growth in France, in the medium term, are targeted acquisitions in the increasingly concentrated suburban market and ongoing preparations in light of the Île-de-France market opening up to competition.

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Outside France, the Group will continue to pursue its profit reco- sheet or net revenue exceeds 100 million euros and whose ave- very in Boston and at KTA (Las Vegas, USA), implement turna- rage number of permanent employees during the financial year round plans in Germany, Sweden and at GTR (UK) and continue exceeds 500, is obliged to publish its non-financial data in its to seek productivity gains in all areas and all countries. management report. The group will additionally mobilise for the MR4 contract at (Australia) and the Doha contract in Qatar, and will moni- For the benefit of readers, we publish all of this information in the tor the performance of the many contracts it won in 2017. chapter “Non-financial data” appended to this document.

In accordance with legislation and regulations in force, the infor- n SIGNIFICANT EVENTS SINCE THE mation supplied in this appendix is verified by an independent END OF THE YEAR third-party body certifying the existence and validity of the dis- closed information. Its report is at the disposal of the Annual There are no significant post-balance sheet events to report. General Meeting.

Furthermore, four Keolis subsidiaries will publish their own non- n NON-FINANCIAL INFORMATION financial data insofar as they attain the thresholds for the applica- tion of the abovementioned article 225. These subsidiaries are In application of article 225 of the Act of Parliament of 12 July 2010 Keolis Bordeaux Métropole, Keolis Lille, Keolis Lyon and Keolis on the national commitment to the environment, the so-called Rennes. “Grenelle II”, Keolis S.A., as a non-listed company whose balance n INFORMATION ON SUPPLIER PAYMENT DEADLINES

In accordance with articles L 441-6-1 and D 441-4 of the Commercial Code, we breakdown, as at the end of the last financial year, the balance of amounts owing to our suppliers and owed by our customers by due date: Total (1 0 days 91 days 1 - 30 days 31 - 60 days 61 - 90 days day and Invoices received and not paid at year end (indicative) and more more) (A) Overdue payment brackets Number of invoices 1,231 - - - - 511 Total value of invoices (incl. VAT) 8,274 68 191 34 1,507 1,800 Percentage of total value of purchases (excl. VAT) for the year 11.0% 0.1% 0.3% 0.0% 2.0% 2.4% Percentage of total turnover (excl. VAT) for the year ------(B) Invoices not included in (A) relating to disputed or non-booked liabilities Number of invoices not included Value of invoices not included (excl. VAT) (C) Reference payment due date used (contractual or legal) ✓❑ Contractual due date Due date used to calculate overdue payments ❑ Legal due date

Total (1 0 days 91 days 1 - 30 days 31 - 60 days 61 - 90 days day and Invoices issued and not settled at year end (indicative) and more more) (A) Overdue payment brackets Number of invoices 195 - - - - 406 Total value of invoices (incl. VAT) 19,476 1,629 360 324 3,789 6,102 Percentage of total value of purchases (excl. VAT) for the year ------Percentage of total turnover (excl. VAT) for the year 9.4% 0.8% 0.2% 0.2% 1.8% 3.0% (B) Invoices not included in (A) relating to disputed or non-booked receivables Number of invoices not included Value of invoices not included (excl. VAT) (C) Reference payment due date used (contractual or legal) ✓❑ Contractual due date Due date used to calculate overdue payments: ❑ Legal due date

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n ALLOCATION OF PROFIT n EMPLOYEE SHARES IN COMPANY CAPITAL We propose to allocate the loss for the year, amounting to €70,781,998.78 to Retained Earnings; the new balance of which On 31 December 2017, there were no employee shares in the will become €(74,954,553.54). Company’s capital.

We additionally propose that the negative balance of Retained Earnings be fully assigned to Other Reserves, reducing their n AGREEMENTS COVERED BY ARTICLE amount to €57,083,810.67. L. 225-38 OF THE COMMERCIAL CODE In accordance with legal requirements, you are requested to note that the amount of the dividend distributed and that of the cor- You will be read the Statutory Auditors’ report on agreements responding dividend tax credit for the three previous financial made during the fiscal year and authorised by your Board pur- years were as follows: suant to Article L.225-38 of the Commercial Code.

n DIRECTORS AND CONTROL OF THE COMPANY

Situation of board directors’ mandates

We inform you that Mr Michel Lamboley, a director appointed as a representative of the shareholders, has resigned from his posi- Dividend Distributed income eligible for the allowance Distributed income not eligible for the allowance FINANCIAL YEAR tion as director. You will be asked to appoint Mrs Kathleen Wantz O’Rourke to replace him, for the remaining duration of her pre- 2016 Nil - - decessor’s term of office, i.e. until 3 March 2022.

Mrs Patricia Meunier, a director appointed as an employee repre- sentative, died at the end of 2017. In accordance with legal and 2015 Nil - - regulatory provisions currently in force, her successor Mrs Fabienne Jousni now sits on the Board of Directors as employee €19,130,937.70 representative, for the remaining duration of the term of office of 2014 - €19,130,937.70 €4.90 per share the other employee representatives, i.e. until 3 March 2022.

We hope that you will approve the above proposals and vote the Non-tax-deductible expenses resolutions to be submitted to you. We inform you that in the course of the past financial year, non- tax-deductible expenses, within the meaning of Articles 223 quater and 223 quinquies of the General Tax Code, totalled €277 THE BOARD OF DIRECTORS thousand. n SHAREHOLDINGS

On 31 December 2017, GROUPE KEOLIS S.A.S. owned 100% of the capital.

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APPENDIX 1 B REPORT ON COMPANY GOVERNANCE

1. Mode of exercise of the General Management

We report, in accordance with Article 148 of the Decree of 23 March 1967, that your Board of Directors has opted to combine the functions of Chairman of the Board and CEO.

Mr Jean-Pierre Farandou was re-appointed Chairman and CEO during the Board of Directors’ deliberations of 3 March 2016.

2. Terms of office and functions exercised by each of the executive officers

We list hereafter the terms of office and functions performed in all companies by each executive officer during the year:

Jean-Pierre FARANDOU Michel LAMBOLEY Chairman & CEO and Keolis S.A. Director Keolis S.A. Director Director KEOLIS LYON President / Sole Member of GROUPE KEOLIS S.A.S. the Executive Board Director KEOLIS LILLE Chairman of Board of UNION DES TRANSPORTS Director KEOLIS BORDEAUX METROPOLE Directors PUBLICS ET FERROVIAIRES Director LION / SENECA FRANCE (until 30/06/2017) Director TRANSPOLE Chairman of Board of ORCHESTRE NATIONAL (since 19/10/2017) Directors D’ILE-DE-FRANCE Director EUROBUS HOLDING (Belgium) (until 31/07/2017) Director KEOLIS ESPANA

Isabelle BALESTRA Arnaud VAN TROEYEN Director Keolis S.A. Director Keolis S.A. Director KEOLIS LILLE Chief Executive STE DE GESTION DE Director TRANSPOLE L'AEROPORT D'ANGERS- (since 19/10/2017) MARCE (since 05/01/2017) Director and Chairman STE. D’EXPLOITATION Bruno DANET of Board of Directors AEROPORT ALBERT PICARDIE Director Keolis S.A. Managing Director and STÉ D’EXPLOITATION AEROPORT Director INSTITUT KEOLIS Member of the DOLE JURA Management Board Chairman INSTITUT KEOLIS Director ONEPARK Chief Executive KEOLIS BORDEAUX Company Director KEOMOTION Director KEOLIS BORDEAUX (until 17/10/2017) METROPOLE Member of Strategy DRIVERLITE Director KEOLIS RENNES Committee (since 08/12/2017) Member of Strategy KEOLIS SANTE Committee (since 04/07/2017) Xavier HUBERT Member of the Keolis Nederland B.V. Director Keolis S.A. Supervisory Board Director KEOLIS RENNES Director KEOLIS ORLEANS VAL DE LOIRE Marc HINFRAY Director KDR VICTORIA PTY LTD Staff representative Director Keolis S.A. Director KDR GOLD COAST PTY LTD Director KEOLIS DOWNER PTY LTD

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Patricia MEUNIER Éric PATOUX Employee Director Keolis S.A. Employee Director Keolis S.A. Director KEOLIS ALPES MARITIMES Operational Director STE DES TRANSPORTS DE Director KEOLIS BAIE DES ANGES L’AGGLOMERATION DE (until 01/01/2017) CHAUNY Member of Administrative KEOLIS ARTOIS-GOHELLE Board Director KEOLIS AMIENS

3. List of agreements entered into directly or through third parties, between an executive director or a shareholder holding more than 10% of the voting rights of the Company, and another company in which the Company directly or indirectly holds a share in excess of 50%, notwithstanding ordinary transactions concluded at normal terms and conditions.

Nil.

4. Summary of currently valid delegations of powers and authorities granted by the general assembly of shareholders with regard to capital increases, in application of articles L. 225-129-1 and L. 225-129-2 of the Commercial Code, and mentioning the use made of these delegations during the financial year.

Nil.

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APPENDIX 2 C NON-FINANCIAL DATA

Keolis, a leading public transport provider, operates and maintains urban, suburban and inter-urban transport networks on behalf of more than 300 contracting authorities (Public Transport Authorities, public or private clients) whose end customer is the passenger. Keolis is headquartered in Paris. The Group’s activities extend to 16 countries (Australia, Belgium, Canada, China, Denmark, France, Germany, India, Luxembourg, the Netherlands, Norway, Portugal, Qatar, Sweden, the United Kingdom and the United States). Keolis S.A. is wholly-owned by GROUPE KEOLIS S.A.S., which itself is 70%-owned by SNCF and 30%-owned by Caisse de Dépôt et Placement du Québec (CDPQ). Keolis contributes to sustainable development through a wide range of corporate initiatives and has injected these projects into its corporate programme KeoLife. The different aspects of Keolis’ Social Responsibility are thus shared between the Departments concerned. The Health, Safety and Environment department is responsible for its overall coordination. Social Responsibility is an item on the agenda of Keolis’ Executive Committee at least once a year in order to review work undertaken, approve new initiatives and select topics for emphasis. In addition to this, Keolis draws on discussions with its internal and external stakeholders to define the strategy and recommendations for the entire Group.

1 n METHODOLOGY A table illustrating the correlation between this publication and the various guidelines can be obtained on request from 1.1. Background [email protected] 2017 is the fourth year in which non-financial data is published in the Keolis S.A. financial report, in accordance with Article 225 1.2. Scope and reference period of the Act of 12 July 2010 on the national commitment to the Non-financial data is consolidated on the same scope as Keolis environment. The entity concerned is Keolis S.A., a non-listed S.A’s financial data (excluding EFFIA S.A., Technical Assistance company for which the balance sheet total or net revenue is in and subsidiaries for which Keolis is not the majority shareholder). excess of 100 million euros and in which the average number of This reporting scope is referred to hereafter as “Group”, “the permanent employees throughout the financial year exceeds Keolis Group” or “Keolis”. 500. The list of themes to be covered appears in Article 225- 105-1 of the French Commercial Code. The scope of consolidation for employee and social data is the calendar year, from 1 January to 31 December, and applies to This publication is structured in alignment with the Keolis Group’s 100% of the Group headcount. Social Responsibility strategy which, using the international standard ISO26000 as a framework, sets out two conditions The reference period for environmental data is the also calendar and four commitments: year, from 1 January to 31 December. If this is not the case, rules ■■ Condition 1: Compliance with the Group General Rules and for estimation or consolidation on a deferred timescale are pro- Policies. posed to subsidiaries in the set of indicators. ■■ Condition 2: Engagement with our customers and other In 2016, environmental data was calculated from data covering stakeholders. 84% of Group staff, represented by 98 subsidiaries. In 2017, it ■■ Commitment to our customers: safety and accessibility. covers 85% of Group staff represented by 98 subsidiaries. The ■■ Commitment to our employees: safety, diversity and inclu- list of subsidiaries covered may be obtained on request from sion [email protected] ■■ Commitment to the environment: energy, waste and water ■■ Commitment to regions: solidarity, education and culture. Quantitative information is supplied for the last two calendar years, from 1 January to 31 December 2016 and 2017. To cater to the expectations of our stakeholders, this publication also incorporates the principles of the international standard GRI (Global Reporting Initiative) G4, first level “In accordance – core”.

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1.3. List of information and definitions Total number of resignations: Cumulative number of resigna- tions during the year . The list below provides definitions for each set of quantitative data and the reporting scope when smaller than that stated in Payroll: Personnel expenditure, including wages and social point 1.2 above. charges, duties and taxes on remuneration and other personnel expenses (ancillary costs, directors’ fees, employee profit sha- New quantitative data has been added; this appears in italics in ring, temporary staff and staff on secondment). the list below. The data for these items is only available for 2017. Change in payroll: Change in payroll between years Y and Y-1 Some items of data published in the 2016 Keolis S.A. financial in gross value and expressed as a percentage. report and reproduced in this publication have been adjusted to account for corrections/additions supplied after the publication Percentage of part-time employees: Percentage of of last year’s report. These are indicated in the rest of this publi- employees with a part-time contract in the total workforce as at cation by an asterisk appended to the updated figure. Where 31 December. relevant, significant differences are explained in the main text. Percentage of drivers/transport staff: Percentage of driver Quantitative data frequently appears alongside information of a employees in the total Group workforce as at 31 December. qualitative nature in order to provide additional details as to the applicable policy and/or the variation between years Y and Y-1. Percentage of woman drivers/transport staff in total workforce: Percentage of women driver employees in the total When specific themes appearing in article 225-105-1 of the number of drivers/transport employees in the Group . French Commercial code are not considered relevant, an expla- nation is provided for this in the main text. Total number of training hours (excluding Sweden): Total number of hours of training given to employees. 1.3.1 Employment Number of employees having received training (excluding Workforce: Workforce registered as at 31 December. Sweden): Total number of employees who followed at least one training course during the year, specifying the number of Breakdown of workforce by geographical zone: Breakdown employees with a managerial status in France and considered by country of workforce registered as at 31 December. as managers abroad.

Breakdown of workforce by age bracket: Breakdown of Total number of workers with a disability (number of total registered Group and Keolis S.A. workforces by age brac- employees - France): Number of workers with a disability ket. registered as at 31 December, listed as part of the mandatory annual declaration of the employment of workers with a disabi- Percentage of women in the total workforce: Percentage lity submitted to the Agefiph (DOETH) in France. of women registered in the total workforce of the Group and Keolis S.A. Rate of absence for sick leave: Number of hours of absence due to sickness/number of hours worked, expressed proportio- Percentage of women managers in the total number of nately to the entry and departure dates of the employee (part- managers (France): Percentage of women managers in the time work on health grounds included). total number of managers in France and in Keolis S .A . Industrial action rate (France): Number of days of industrial Percentage of women managers in the total number of action per employee in the year . managers (International): Percentage of women managers in the total number of managers (excluding France and Keolis Workplace accident frequency rate (France): Frequency of S .A) . workplace accidents declared per quarter leading to at least one Total number of new employees: Cumulative number of new day of leave. This rate represents the average number of work- employee entries for the year, (including the integration of new place accidents leading to leave by a group of employees having subsidiaries), regardless of type of employment contract. worked one million hours over the period considered. NB: This rate includes violent behaviour. It does not take into account all Total number of departures: Cumulative number of depar- ongoing dispute procedures. tures for the year, regardless of the reason for leaving, including the loss of subsidiaries during the year. Severity rate of workplace accidents (France): Severity of accidents. Calculated by assessing the total number of leave Total number of dismissals: Cumulative number of departures days due to workplace accidents, excluding the day of the acci- during the year relating to dismissals. dent itself. This represents the number of days compensated for 1,000 hours worked, in other words the number of days lost due

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to temporary invalidity for 1,000 hours worked. Traction energy consumption for commercial railway use (in TOE): Quantity of traction energy purchased within the fra- 1.3.2. Environment mework of commercial services provided by rail (electrical or thermal traction), dead mileage included, expressed in tonnes Number of employees covered by an ISO14001 certifica- of oil equivalent (TOE). tion: Number of employees registered in the workforce at 31 December exercising an ISO 14001 certified activity (i.e. the Energy consumption of company facilities (in TOE): number of employees concerned by the area of application Quantity of energy consumed or purchased on the sites, exclu- assessed by the certification body). ding traction energy, expressed in tonnes of oil equivalent (TOE).

Percentage of employees covered by an ISO 14001 certi- GHG emissions from commercial transport and company fication:Percentage of employees exercising an ISO14001 facilities: Greenhouse Gases emitted by the corresponding use certified activity as a proportion of the total Group workforce. of energy, expressed in tonnes of CO2 equivalent.

Total quantity of hazardous waste: Tonnage of hazardous 1.3.3. Community waste produced over the year in question, regardless of the type of processing. Hazardous waste is waste defined as such in the Number of pupils benefitting from an awareness initiative: regulations applicable to the production site. Number of pupils covered by an awareness initiative at school carried out by one or several employees from the subsidiary Total quantity of non-hazardous waste: Tonnage of non- concerned. hazardous waste produced over the year in question, regardless of the type of processing. Non-hazardous waste is waste defi- Total purchases made from SSE (France): Total purchases ned as such in the regulations applicable to the production site. made over the year from organisations working in the social and supportive economy (“économie sociale et solidaire”), divided Quantity of hydrocarbon sludge: Tonnage of waste from into organisations offering people with a disability access to hydrocarbon/water separators. work, helping people into a job and others, expressed in euros excluding VAT . Percentage of recovered hazardous waste: Percentage of hazardous waste recovered over the year in question, regardless of the type of processing. Recovery is a type of waste processing 2 n CONDITION 1: COMPLIANCE WITH operation defined as such in the regulations applicable to the THE GROUP GENERAL RULES AND production site. POLICIES

Percentage of recovered non-hazardous waste: The Keolis Group has organised these commitments into seve- Percentage of non-hazardous waste recovered over the year in ral policies: Safety, Diversity and Inclusion, Konformité, question, regardless of the type of processing. Recovery is a Environment and Purchasing. They are all reproduced in the type of waste processing activity defined as such in the regula- Group General Rules and in its corporate programme. tions applicable to the production site. 2.1. The Konformité programme Total water consumption: Volume of drinking water pur- The Keolis Group has for many years asserted its commitment chased by the subsidiary over the period in question, charged in the area of fair business practice and its rejection of all forms to buildings, processes, and maintenance of tracks (including in of corruption. The Group voluntarily established the “Konformité” particular planted tram lines). programme in 2013 which calls on all employees to work and exercise their duties in compliance with legislation and business Share of water consumption in water-shortage areas (per ethics. The “Konformité” programme covers three areas appli- country): Percentage of drinking water consumption in Keolis cable in all subsidiaries: strict compliance with free and fair com- countries where water stress is very high (between 40 and 80%) petition, prevention of corruption and fraud, and the protection or extremely high (over 80%). of personal data. A Konformité section for use by all employees was opened on Traction energy consumption for commercial vehicle the Group’s social platform. fleets (in TOE, excluding rail): Quantity of energy purchased Everyone can consult all of the programme’s reference docu- within the framework of commercial services (dead mileage ments. With regard to the prevention of corruption, the main included), expressed in tonnes of oil equivalent (TOE). The vehi- guidelines provided to the Group’s managers are: cles concerned are those operated/owned by the company ■■ The Guide for Ethical Business Conduct, used for commercial services, on behalf of others (passengers, ■■ The brochure “Konformité at a Glance”, Public Transport Authorities, other transport providers, corporate ■■ The practical guide “The Right Attitudes to prevent corrup- customers). The indicator incorporates all means of transport tion”. (bus, coach, metro, tram, trolleybus).

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In addition, the Group defined three procedures which managers environment, on their route or on assignment. This policy is divided are responsible for following, with the possibility of adjustments into ten chapters: outside France where necessary, to comply with local law if it is ■■ Develop a strategy, governance and safety leadership so stricter: that our culture excels and our practices are exemplary, in ■■ Gifts and hospitality, particular through continuous improvement initiatives; ■■ Sponsorship and Charitable contributions, ■■ Clearly define the organisation, the roles and responsibilities ■■ Relations with business partners. in the company and stakeholders; ■■ Proactively identify sources of danger and mitigate risks in In 2017, the Group continued to pursue its anti-corruption initia- compliance with regulations, standards, rules and practices; tives by taking into consideration the provisions of the French ■■ Develop rules and procedures that are accessible and Act of 9 December 2016 on transparency, the fight against administrated in an effective document management tool corruption and the modernisation of economic life, known as the for our service activities, our actions, those of our sub- Sapin 2 Act. contractors and partners and for the safety of visitors; ■■ Define and regularly reassess the management of emer- A memo from the Group President was circulated to all the gency situations and the required service continuity resulting Group’s senior managers to remind them of the necessity of from it; ensuring that the programme was properly applied and adapted ■■ Develop and maintain skills and knowledge through training, in all of the Group’s entities, by: prevention and communication, also towards passengers ■■ distributing the Guide to Ethical Business Conduct and the general public; ■■ making the targeted employees follow the anti-corruption ■■ Guarantee the safety of assets and goods managed or training module placed under our responsibility; ■■ applying the Group Guide to Relations with Business ■■ Conduct the necessary inquiries in the event of incidents, Partners accidents or warning signs so as to identify the appropriate ■■ applying the Group Policy for Charitable Contributions and measures, develop return on experience, draw conclusions Sponsorship and deploy them in the company; ■■ establishing an internal procedure for gifts and hospitality, ■■ Develop quantitative and quality performance indicators following Group directives and measurable objectives; ■■ guaranteeing the traceability of initiatives conducted. ■■ Ensure that the continuous appraisal of safety is compliant and efficient through regular verifications and audits. Further action was also taken to reinforce the commitment of line management in deploying and effectively applying Group proce- The initiatives and results are presented in the following chapters: dures. The Keolis Ethics and Compliance Committee continues “Safety and security of passengers and third parties” and “Health to convene periodically to discuss subjects of topical interest. & Safety in the workplace.”

Awareness and training initiatives continued in 2017. The anti- 2.3. The Group Environment Policy refers to six commitments corruption training module aimed at Keolis S.A. managers all and is applicable to all of its activities (operations, maintenance, over the world was followed by 1,663 employees representing business activities, administration): 80% of the initial target. This training course which promotes ■■ Fulfilling its obligations based on regulatory requirements rules, best practices and the right attitudes to adopt will be and other contractual or voluntary commitments with its repeated again in 2018. stakeholders; In accordance with the new requirements of the Sapin 2 Act, the ■■ Protecting the environment by controlling its environmental Keolis Group will open a new whistleblowing system at the impact and reducing pollution; beginning of 2018 entitled “Keolis Ethic Line.” ■■ Engaging in a dynamic movement of continuous improve- This system offers a simple and totally secure procedure for ment; employees and temporary staff to report events of which they ■■ Improving its energy efficiency have been personally made aware and which fall within the ■■ Increasing its waste recovery rate; scope of the legal provisions. The procedure will initially be open ■■ Controlling its water consumption. to all entities in France following notification and consultation of staff representative bodies. International entities may also Initiatives and results are presented in the following chapter: become members of the group procedure if their national legis- “Commitment to the environment: energy, waste and water.” lation so allows. Whistleblowing alerts will be treated in full confidentiality. 2.4. The Diversity and Inclusion Policy of the Keolis Group lays down five commitments: 2.2. The Safety Policy of the Keolis Group states that safety is ■■ Comply with employment law in the regions in which the a fundamental topic and value for the Group and all of its Group is established and with international standards rela- subsidiaries. This applies to all employees who are required to take ting to respect for Human rights and fundamental freedoms, into consideration their health and safety as well as those of their non-discrimination and non-harassment and the promotion colleagues, customers and any other people in their working of professional equality ■■ Create a fair and inclusive working environment where each

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employee feels valued for their skills in their job, their com- (employees, sub-contractors, product or service users) and the mitment and their performance; environment. ■■ Respect each person, their dignity and their culture within the limitations of health and safety imperatives and internal The Group’s Purchasing Policy is supplemented by three com- regulations; mitments to promote Sustainable and Supportive Purchasing: ■■ Adopt an open and empathic attitude towards each person considered individually to understand their needs and ■■ The first relates to the supportive economy and local soli- expectations; darity, promoting the use of sheltered work organisations ■■ Promote diversity and professional gender equality towards as suppliers, contributing to the social economy community our stakeholders. and reaffirming a local presence. At group level, Keolis promotes the development of initia- Initiatives and results are presented in the following chapter: tives relating to the social and supportive economy towards “Diversity and Inclusion” its subsidiaries. With regard to the sheltered work sector, the Keolis group 2.5. The Purchasing Policy is a partner of the Association Handéco (see “Partnerships” The Purchasing Charter defines the general principles relating to paragraph below). This partnership gives French subsidia- purchasing within the Group and sets out rules regarding ethics ries access to information on organisations in the sector, an and behaviour applicable to all internal and external actors online directory of firms and a dedicated purchasing plat- involved in the purchasing process. All employees acting on form on which to publish their tenders. behalf of the Group or one of its subsidiaries must be familiar Furthermore, Keolis has subscribed to the UBIZZ offer. This with, comply with and promote its principles in the interests of tool (a web platform) offers Keolis better visibility of the firms fairness and transparency. approached and helps the group to compile its list of bene- In accordance with the Group’s CSR commitments, all ficiary units in France. A framework agreement was also employees involved in purchasing must promote sustainable concluded with the sheltered work organisation “Imprimerie development with their business partners. All employees Solidaire”. Furthermore, temporary employment companies involved in a purchasing process must therefore pass on these under framework agreements also promote disability and concerns to their own suppliers and sub-contractors, encourage access to work by offering, whenever possible, assign- suppliers to develop a social and environmental progress plan, ments to people out of work. and ensure compliance with national laws, regulations and inter- national agreements concerning the protection of individuals

In 2017, Keolis thereby spent more than €22 million on purchases from organisations working in the Social and Supportive Economy (SSE):

Article Subject of decree 2017 data 2016 data Indicator code

Total purchases made from SSE organisations: Disabilities 1,989,018 - (associations temping agencies and sheltered work sector) (in euros) Total purchases made from SSE organisations: Vocational (employment outreach Taking social and 19,995,120 - integration environmental issues firms, temporary employment I-3-c-1 outreach firms and associations) into consideration in (in euros) the purchasing policy Total purchases made from SSE organisations: other (associations, 291,765 - SCOP and cooperatives, etc .) (in euros) Total purchases made from SSE 22,275,902 - organisations (in euros)

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■■ The second commitment incorporates several factors into the duration of contracts (taxation and welfare contribu- the procurement process: Keolis’ environment policy, risks tions, detailed list of foreign workers, etc.) to the safety of people and goods, and the protection of our data and know-how. For purchasing conducted locally such as security, cleaning, Keolis includes analysis criteria relating to the environment gardening or certain IT purchases, the group Purchasing and safety when it draws up certain sets of purchasing Department offers subsidiaries specific purchasing kits specifications. containing recommendations relating to social responsibi- During supplier consultation phases, candidates are asked lity. These purchasing lines are significant items in subsidiary to provide a presentation of their firm with a specific focus expenditure and require a close relationship. on their corporate responsibility policy. Keolis’ supplier selection questionnaire includes several questions on the Furthermore, following the entry into force of new laws on environment and safety that are relevant to the purchasing the corporate duty of vigilance and the fight against corrup- segment concerned. In addition to regulations, specific tion (known as the Sapin 2 Act), the Group Purchasing attention is paid to the product life-cycle in terms of energy Department, in association with other departments (Legal, consumption, circular economy (recycling reuse and waste Internal Audit, HSE and HR) is organising working groups processing) and risk of pollution. to identify and assess the level of CSR risk by purchasing A number of specific clauses relating to waste processing category in four areas: and care for the environment also written into framework ●● Human rights and fundamental freedoms agreements on sensitive products (in particular vehicle manu- ●● the Environment facturers, batteries, tyres, lubricants, etc.). Product selection ●● Health and safety in the workplace takes into account the presence of labels or certification. ●● Corruption. In the area of safety, Keolis ensures that purchased pro- ducts comply with regulations, in particular in the areas of In parallel, the Purchasing Department is working on the road safety and occupational health and safety. The third implementation of a solution to assess its suppliers’ CSR commitment relates to generalising the total cost approach, risks. Initially, the study will be conducted in France, before ensuring transparency and equality of treatment of suppliers being extended to all of the group’s international regions. and reducing the risk of reciprocal dependence and of monopoly. 3 n CONDITION 2: ENGAGEMENT WITH Over the past few years, many supplier listings have been OUR CUSTOMERS AND OTHER developed in line with this second commitment: STAKEHOLDERS ●● Vehicles running on alternative fuels have been listed. This applies to both company vehicles and vehicles 3.1. Stakeholders used for transport provision Each subsidiary produces their own stakeholder maps. These ●● A ‘green’ range of cleaning products, an organic part maps not only identify stakeholders but help to ascertain their degreasing washer, printers with Imprim’Vert certifica- expectations. This allow some complaints or disputes to be tion or from the sheltered work sector, have also been averted or certain misunderstandings to be rectified. Projects listed. These initiatives have been reinforced recently may also be co-created with stakeholders according to their to take into consideration the fight against CMR subs- nature. tances, which translated into listing a biodegradable Keolis also provides its subsidiaries with tools and methods to coolant and distributors of industrial supplies that offer allow them to enter into and/or organise dialogue with their own a range of “green” products. stakeholders. They are thus provided with a mapping model and ●● To reduce fuel consumption, Keolis also recommends prioritisation criteria to be used depending on the challenges and using “ecofuel” lubricants. the goal of the dialogue entered into. This includes a list of stake- ●● A new supplier has been listed for the reconditioning holders split into three categories: contract stakeholders (PTAs, of particulate filters; this comes in addition to the recent employees, suppliers), nationwide stakeholders (institutions, initiatives already conducted in the area of the circular ministry, etc.) and local stakeholders (associations, residents, economy such as re-treading tyres, processing waste etc.). Subsidiaries are also supplied with a template of the “rules and the practice of “standard exchange”. of the game” in their engagement with their stakeholders.

■■ The third commitment relates to generalising the total cost At Group level, Keolis brought together its external stakeholders approach, ensuring transparency and equality of treatment in October 2017 for the seventh consecutive year: association of suppliers and reducing the risk of reciprocal dependence representatives, central government, Public Transport and of monopoly. Authorities, trade federations, firms and experts. Keolis designed this dialogue event in the aim of obtaining feedback from these Since 2016, in the aim of achieving better control of supplier stakeholders about our activities, our stances and our corporate risk and pursuant to regulations on undeclared labour, programme. Members of the Executive Committee were also Keolis has introduced an online supplier monitoring solution involved. At this 2017 event, discussions took place around the to collect documents and monitor their updates throughout subject of diversity and secularism.

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3.2. Partnerships Laboratoire de Mobilité Inclusive Keolis has entered into several partnerships to achieve progress Inclusive Mobility Laboratory and engage in dialogue around its social responsibility: Founded at the initiative of Wimoov and Total, the goal of the Laboratoire de la Mobilité Inclusive is to bring together major Points d’Information Mutualisés Multi-Services (PIMMS) actors in mobility – private and public sector, civil society – to Shared Multi-Service Information Offices analyse the difficulties faced by the most vulnerable members of PIMMS are places for local contact and social solidarity where the population, and put forward solutions. Keolis has been an community workers, professionals in social liaison, help people active contributor to these exchanges since 2015 alongside in their dealings with public services. PIMMS also aim to create other partners such as ADEME (French environment agency), career development paths for these community workers to help CGET (General Commissariat for Territorial Equality), Fondation them into sustainable and qualified employment. Keolis is one MACIF and Pôle emploi. of the founding members of the PIMMS national union, esta- blished in 1998. Fédération des Usagers de la Bicyclette (FUB) Bicycle Users Federation Association de Coopération pour le Développement et Keolis is a partner of FUB. Founded in 1980, FUB is an associa- l’Amélioration des Transports Urbains et périurbains tion which promotes cycling as a means of everyday transport, (Codatu) by linking up local associations, lobbying government organisa- Cooperation for the Development and Improvement of Urban tions and running public communication campaigns. Keolis has and Suburban Transport Association been part of this partnership for several years, with the aim of Through its activities, Codatu aims to promote dialogue being attentive to the needs of cyclists and working locally with between major urban transport stakeholders to leverage all of cycle stakeholders. its skills to promote the improvement in transport conditions in towns and cities in the south of France. Keolis is partnering Défense Mobilité Codatu with the aim of acting for viable mobility in growing The partnership established between Keolis and Défense towns. Every year, Keolis funds a grant and welcomes a student Mobilité, the career transition department of the French Ministry from the Master’s degree programme in Transport and of Defence, has enabled more than 650 former Armed Forces Sustainable Mobility in African cities. This offers valuable staff to join our group since 2009. exchange on operating circumstances which vary widely from Communication will be stepped up towards this unit so as to one country to another. promote opportunities in the different job areas offered by Keolis, in particular that of maintenance. France Nature Environnement (FNE) FNE is the French federation of environmental and nature protec- Service Militaire Volontaire de la Marine tion associations, active all over France, on the mainland, in over- Voluntary Military Service of the Navy seas territories and in Europe. In their partnership which started On 21 June 2017, the Keolis group signed a partnership with in 2013, France Nature Environnement and Keolis work together the voluntary military service of the Navy. Through this agree- on all issues relating to mobility, a subject which can be found at ment, Keolis supports young people with few or no qualifications the crossroads of economic, social and environmental concerns. in entering the world of work, and offers them the means to get into a job. Handeco Handeco is a charity founded in 2008 at the initiative of the Partnership with a disabled athlete largest French associations and federations involved in helping Arnaud Assoumani is a disabled athlete who has been spon- people with disabilities. Handeco promotes the use of sheltered sored by Keolis since his first world title in 2007. For several work organisations. It provides firms with a purchasing platform years, this partnership has enabled Keolis to raise awareness on which to post requests for proposals from this sector, and among its employees through specific meetings and publicity. also publishes a supplier directory. The partnership with Handeco, set up in 2015, contributes to Fondation SNCF spreading the commitment to sustainable and supportive pur- Keolis joined the SNCF Foundation in 2016 to promote the chasing across the Group’s entities. values of the group and reassert its regional, national and inter- national roots. Handéo In 2017 Keolis and the SNCF Foundation contributed to funding Handéo is an association which acts to improve support to the following NGOs and associations: people with a disability and senior citizens and offer them better ■■ “Western Chances” in Australia offers grants to around 100 access to community life. young people from Melbourne; This partnership was established in 2016 under the label ■■ “Aide et Action”, in India, helps migrant children and families “Cap’Handéo Services de mobilité”. This is defined by quality whose children suffer from a mental disability; guidelines describing the basic minimum service expected in ■■ “Zellidja” promotes equality of opportunity and the advan- order to provide guaranteed and safe mobility so as to make the cement of women in France by giving travel grants to 120 service offering easier to understand and more accessible by young people. people with a disability.

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4 n COMMITMENT TO OUR through the intermediary of committees, focus groups, with CUSTOMERS: SAFETY AND employees, on interactive platforms to exchange idea and via ACCESSIBILITY calls for projects and partnerships to engage with start-ups.

As Keolis is convinced that shared mobility is a powerful lever for 4.1.2. Smart Choices the sustainable development of a region, its first commitment is In an aim to satisfy inhabitants in each region, Keolis has deve- to passengers. loped unique expertise in designing transport service offers. This expertise can lead to the transformation of a transport network 4.1. Customer Experience to make it both more efficient and more attractive to customers. Under the impact of a fast-changing public transport market – This method is based on observing the customer and on a wide increasingly individual and flexible solutions for proactive citizens range of diagnostic tools developed by the Group which offer an – Keolis is evolving within in its profession and asserting its status in-depth analysis of the existing service offer and of the region’s as an operator and integrator of all forms of everyday transport. specific characteristics. In 2017, emphasis was placed on the Our ambition is to co-design a humanised form of mobility offe- complementarity between public transport and new mobility ring ever greater “mobile well-being”. The Customer Experience, solutions (carpooling, car sharing) to improve territorial coverage currently undergoing major transformation, is at the centre of the and offer customers an end to end transport solution. concerns of Public Transport Authorities to whom Keolis is requi- red to prove its excellence. To gain in agility, Keolis deploys an active policy partnering 2016 was marked by the ambition to create a common and French and international start-ups. Leveraging their innovation differentiating discourse on the Customer Experience. This tan- potential, the Group co-creates new mobility solutions and ser- gible and collaborative programme is based on three concrete vices with them. promises and elements of proof: Collective Design, Smart In the area of collaborative mobility, Keolis continued to develop Choices and Richer Experience. In 2017, Keolis increased the carpooling, in partnership with the firm Instant System. This number of examples of this, and deployed the 2016 pilots in responsive and multi-modal car-sharing solution that supple- other networks. ments public transport is already operational in Bordeaux and is currently being deployed in Bayonne, Caen, Dijon, Lille and 4.1.1. Collective Design Rennes. To design an efficient transport service and thus encourage the mobility of people, Keolis makes a point of acting upstream, Keolis believes that the customer journey is not just a matter of observing individuals behind the passenger flows. To do this, the time spent by the passenger in our vehicles. Keolis thinks like Keolis conducts national and local research studies entitled its passengers: from door to door. This approach includes for Keoscopie, examining passengers’ life and travel patterns to example walking, renting a bike or using a bike-share bike. 2017 gain a better understanding of the needs of each passenger in saw the introduction of bike-share electric bikes in Laval and each region. This continuous observation is an educational tool Orleans, the takeover of the bike-share service previously ope- on which Keolis draws to highlight the suitability of its proposals rated by Clear Channel in Dijon, the launch of bike rental services and thus enlist support for change. in Chaumont, Arras, Sarrebourg, etc. in 2017, Keolis continued to pursue its actions in favour of In April 2017, Keolis presented the findings of the first internatio- pedestrian multimodal interchange routes. When creating trans- nal survey conducted by its observatory for digital mobility at the portation hubs, pedestrian signage offers easy connections and UNESCO headquarters in Paris. Keolis and its partner Netexplo smoother pedestrian circulation. studied 13 major world cities (Abidjan, Boston, Dubai, Hong Finally, in 2017, Egis was designated the winner of a “New mobi- Kong, Hyderabad, London, Lyon, Melbourne, Montréal, São lity” call for projects issued by Grand Paris. With its new partner Paulo, Shanghai, Stockholm and Tokyo) and analysed 400 solu- Flexinéo Cmabulle, Keolis is conducting a six-month experiment tions collected during this world tour, from the most essential to on a solution to assist families for travel to school and outside the most disruptive. The survey revealed three major expecta- school. tions shared by all passengers regardless of their cultural and regional specificities: real-time, ultra-personalisation and step- Every passenger at some point requires assistance to get direc- by-step coaching. In view of these three universal expectations, tions, find a departure time or buy their ticket. Keolis responds Keolis defined the 10 criteria to satisfy for a successful mobility to this expectation by providing and mastering the entire service experience in the smart city. This enables the group to support chain (both digital and human) on all channels. As human contact cities today in the co-construction of the “smart mobility” of the is the preferred channel for a great many passengers who are future. unfamiliar with digital technology, the Group attaches conside- rable importance to the presence of its teams and of the quality In addition to these initiatives, Keolis employees and the econo- of customer contact demonstrated by its drivers and its staff in mic community also have a vital role to play upstream in the stations. design of service offerings. Public Transport Authorities them- In 2017, Keolis went even further with the deployment of the selves are increasingly interested in, and use, these co-construc- M-ticket across the entire Orleans network. Keolis Orleans is the tion approaches. Keolis’ objective is to encourage the emergence first subsidiary to offer an exhaustive version - for networks of innovations shared by all stakeholders. With customers, equipped with a travelcard system - of the digital solution “Plan

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Book Ticket”. This offers passengers the opportunity to plan their 4.2. Accessibility journey, buy their ticket (book) and also validate it (ticket) through When a public transport authority selects Keolis to operate its a single digital application. This application had already been public transport network, it entrusts Keolis with much more than deployed in around 10 French networks in a less extensive ver- just the management of vehicles and infrastructure. It also sion. assigns Keolis with a public service mission. Keolis perceives this role as being at the service of all of its audiences and offering In accordance with the Keolis value “We Care”, Keolis subsidia- them equal access to its networks. This ambition, which is part ries’ external communications are also steered towards passen- of its commitment in the area of social responsibility, requires that gers’ concerns. By avoiding the jargon specific to the transport transport be reinvented to take into consideration all situations world, the network comes across as something which makes of vulnerability, whether permanent or temporary, which anyone life easy and supports their plans and desires. On all communi- could face one day. cations channels (advertising, website, mobile apps, customer- facing staff, leaflets, etc.) the Keolis discourse places emphasis To rise to this challenge, Keolis makes universal accessibility a on the promise to provide every customer with the customised permanent requirement and a reflex for each of its employees. passenger experience that fulfils their own expectations. Keolis believes that the keys to winning over and retaining customers Keolis strives to raise its employees’ awareness to the issues of are creating the desire to ride the network and creating bonds. accessibility and to constantly reinforce its expertise in particular Each contact with the customer is an opportunity to create new through its partnership with Handéo and which launched its label travelling wants and offer the customer new services tailored to “Cap’Handéo service de mobilité” at the end of 2016. The their patterns and needs. unique objective of this approach is to enable everyone to get around, smoothly and simply, every day. Keolis Montargis was 4.1.3. Richer Experience the first city network to receive certification in 2017. Beyond the service offer, being able to count on accessible, reliable, comfortable clean and welcoming transport is a key Communication and information are two major vectors that factor to win the trust of the passenger. make transport more accessible, particularly during disruption. Keolis believes that service quality has three purposes: Keolis signed a framework agreement with Elioz, a firm which ■■ Obtain passenger loyalty by showing them every day that works to improve the inclusion of the deaf and hard of hearing they matter; in society, by offering a call centre staffed by experienced ope- ■■ Act as a partner to the local authority by delivering on com- rators qualified in sign language, real-time transcription of the mitments and improving service; spoken word and cued speech. This service is offered at Keolis ■■ Instil a “customer mind set” at the centre of the firm and the Caen and Bayonne under their “accessibility for all” policy. desire for progress. The PAM 75 service, available to Parisians with reduced mobility To make our passengers want to travel on our networks, we and operated by Keolis, develops connected mobility. These have to know how to accompany them, with the right personal vehicles transport nearly 800 disabled passengers a day. attitudes and a welcoming posture. Customer relations can only be effective if they are rooted in a genuine customer culture. This In 2017, Keolis signed a series of agreements with local asso- is what has led several Group subsidiaries such as Lyon Orleans, ciations. For example, in Caen, to provide easier mobility during Hyderabad or Melbourne to co-design programmes with their disruption, Keolis signed a partnership with Handuo Tandem. employees to develop the service spirit in the workforce. This association allows users of paratransit services to discover Managers are the leading ambassadors of this spirit, both inter- the public transport network, improving their independence. nally towards their own teams and externally by regularly coming Similarly, in Lyon, the KPMR Rhone service appointed Médialys into contact with customers (meetings with passengers, “mys- to conduct accompanied journeys on the TCL city transit tery passenger” operations, etc.). The objective here is to help network. Médialys is a service association which helps and everyone gain better insight into the expectations of passengers assists public transport users in the Greater Lyon area. Also in so as to make the right decisions to improve their satisfaction. its role as an employment outreach association, the people working at Médialys receive specific support to help them build By capitalising on the trust of our passengers and on our ges- a career path, resolve certain social difficulties, and finally pro- tures of consideration for our customers, Keolis continues to gress gradually into sustainable employment. develop more opportunities to contribute to the high points of cities’ calendars and to its economic and cultural vitality. The Outside France, Keolis continues to deploy similar actions to objective is also to make good use of the time spent in transport offer better access to vulnerable passengers through the new and make it enjoyable. Keolis strives to support and promote contracts that it won in 2017 such as in Melbourne and in actions, projects or events in regions and cities, and draws atten- Montréal. In Belgium with its subsidiary Melkior, Keolis already tion to them through partnerships or communications cam- offers a taxi service using specially-adapted vehicles to accom- paigns. modate people with reduced mobility, sold at the same fares as regular taxi services. In London a network of ambassadors helps people with reduced mobility to get around. These ambassadors

19 1. MANAGEMENT REPORT | KEOLIS S.A. 2017

are tasked with providing real-time information on network prevent accidents and projectile attacks. These are deployed in accessibility and physically assisting passengers in their journey. Dijon, Bordeaux, Lille and Orleans. Keolis also conducts initiatives to prevent antisocial behaviour 4.3. Safety and security of passengers and third parties by teenagers and young people through visits to schools. In 2017, 59,122 school pupils received a Keolis visit. Within the scope of the Keolis Group’s activities, the safety of passengers and third parties refers to the safety of operations Gender equality has been designated as the “Major National relating to passenger transport services. Security, on the other Cause” of the five-year presidential term by the French pres- hand, means prevention and measures enforced to prevent ident. One of the government’s priorities is to fight against sexist violent or aggressive behaviour and attacks on the company’s and sexual abuse, in particular in the public domain. activities from outside the organisation. As part of the National Plan against sexual harassment and sexual abuse in public transport, the group’s subsidiaries carried In 2017 several initiatives were developed in a range of transport out a range of initiatives such as exploratory walks, the introduc- modes. To guarantee the safety of tion of on-demand stops, and awareness campaigns relating to passengers in London, a digital tool to assess skills and sexual harassment. In September 2017, Keolis Bordeaux knowledge helps to improve operators’ proficiency in safety rules, Métropole launched a campaign against sexual harassment and whether working on the network or in operations control centres. sexual abuse. An external communications campaign was published to designate and flag sexist behaviour. An information Keolis became involved in an innovation project funded by the campaign towards staff was also conducted in parallel to remind MAIF foundation to improve the safety of school transport. This them of the legal framework and set out the right practices to project aims to apply the “nudge” approach (which received the adopt towards this type of situation. The same type of campaign Nobel Prize for economics in 2017) based on behavioural ana- was also carried out in Tours and in Lyon over the course of the lysis. The aim is to substantially increase the number of high year. school pupils who attach their seatbelt. Keolis Lyon is also the first French city transport network to have implemented the principle of exploratory walks which began in Keolis also provided its French subsidiaries with a range of pre- 2015. Exploratory walks consist of carrying out a diagnostic of vention tools. For example, a communications kit entitled a risk or feeling of insecurity on a given route by small groups of “Guaranteeing safe transport to our passengers” was deployed women. These walks take place twice a year and have helped, in June 2017. This disseminates best practices and lists the for example, to improve communication on the network against tasks that the driver should carry out before, during and after the sexual harassment (awareness campaign, a guide to sexual transport service. Several new training programmes were also harassment), convert certain stops and roads or improve the deployed on the theme of safety, security and fare dodging. One way that victims of sexual harassment are dealt with. deals with risk management and another with crisis manage- ment; these were deployed towards more than 100 subsidiary In 2017, Keolis stepped up its actions relating to anti-terrorism. managers. Driving training was also enhanced by two further New subsidiary directors, operating directors in charge of secu- programmes: managing road risk in the event of loss of grip, rity, “seedlings” (young graduates following the Keolis incubator delivered on a private circuit, and the “educational coach” which course) and around 20 IKeS correspondents (Keolis Security trains drivers in dealing with fire, evacuating a vehicle in an acci- Institute) were given training on this subject, on the duty of vigi- dent situation, and administering first aid, all through specific lance, and on how to inform authorities when necessary. This role-play situations. awareness course, conducted as part of the French “Vigipirate” security programme also gave them access to security reports Keolis’ contribution to security comes in the form of tackling fare supplied by the French national defence and security agency, evasion and antisocial behaviour through the following actions: SGDNS. reinforced patrols by inspection teams on the ground, the increase in video surveillance, targeted communication cam- paigns, the intervention of liaison officers to resolve any conflicts, 1 n COMMITMENT TO OUR the increase of its participation in community outreach offices EMPLOYEES: SAFETY, DIVERSITY (PIMMS) and the maintenance of close relations with law enfor- AND INCLUSION cement bodies and the public prosecutor in particular in the form of partnership agreements. 5.1 Health and safety in the workplace Guaranteeing the safety of employees and subcontractors is our Keolis implements a number of measures to protect passen- obligation in all of the Keolis group’s activities. gers, staff, sensitive facilities, rolling stock information and com- All employees are asked to ensure that they and their colleagues munications means. are safe in their work activities. The group’s policy requires that Since 2015, several networks have equipped their inspectors risks for teams are clearly identified before all else, and that with personal safety cameras in the stated aim of protecting protection measures are strictly applied. This approach gua- them from antisocial and violent behaviour. rantees accident prevention. It develops and adapts collective New front-facing cameras are now fitted to trams in order to or individual protection measures. The group’s vision remains

20 1. MANAGEMENT REPORT | KEOLIS S.A. 2017

that of “zero harm” which is a guide for the everyday actions and Another important initiative related to a structured approach to commitment of the entire management, chain with the aim of deal with the risk of falling asleep while driving. Its principles and getting as close to zero harm as possible. processes were validated on networks such as Dijon and Nimes before being deployed more widely in France and abroad. It The approach to harmonise maintenance management prac- addresses all of the measures which could be taken, such as for tices, entitled “KHIM”, fully contributes to Keolis’s safety objec- example encouraging a healthy lifestyle or incorporating rest tive. Through this approach, teams are required to apply the periods into rostering. same essential safety rules whether working on a bus in Perth, a tram in Manchester, the electrical power supply on the Lille Keolis signed an “Employee Safety on the Road” charter with metro or a rail switch on the Boston railway network. The method the French Ministry of the Interior and Ministry of Employment. introduces the “five-minute safety brief” to remind people of the Alongside SNCF and a large number of other firms, Keolis rules to apply or share situations that employees have encoun- undertakes to continue the work it has started on preventing and tered that might have led to an accident. reducing employees’ road accidents (home-work journey and driving as part of professional duties for drivers in particular). In 2017, a survey was conducted on a perimeter of subsidiaries encompassing more than 70% of occupational accidents which The charter comprises on seven main principles: happened in France. This survey studied the causes and cir- ■■ Prohibiting the use of a telephone while driving unless in an cumstances, the consequences of accident situations, and emergency finally the associated organisation and management. It ■■ Zero alcohol on the road concluded that nearly 84% of accidents happened in operational ■■ Wearing a seat belts and revenue protection activities. This survey led to the experi- ■■ Obeying speed limits mentation of a scheme to develop the safety culture which will ■■ Including breaks in the calculation of journey times be extended to other subsidiaries in 2018 and 2019. It aims to ■■ Promoting road safety training involve managers and employees so as to reduce the number ■■ Encouraging motorbike drivers to use better protection. of accidents by making them aware of the vigilance that they should exercise and of the essential protection measures that they should apply.

Article Subject of decree 2017 data 2016 data Indicator code

– workplace 46.06 44.21 Workplace accident frequency accidents, notably Keolis S.A.: 0.00 Keolis S.A.: 2.86 rate II-1-d-1 their frequency and severity, and 4.49 4.29 Severity rate of workplace occupational illness Keolis S.A.: 0.04 Keolis S.A.: 0.07 accidents

5.2. Diversity and Inclusion Guideline objectives have also been defined to assist subsidia- Since 2016, the introduction of Diversity and Inclusion pro- ries in building action plans to help them improve and carry out grammes has been incorporated within the Group’s corporate their actions in a perspective of continuous progress (regulatory programme entitled Keolife. This is a common framework for all compliance, definition of objectives and indicators, initiatives to subsidiaries for the deployment of specific projects. Keolis encourage diversity, promoting and spreading the approach, ensures that its subsidiaries share the group’s commitments in etc.). the area of diversity and inclusion, and support them to gua- rantee equality between all employees wherever they may be. When subsidiaries reach the highest performance level in the Keolife guidelines, they receive certification in gender and/or As part of the support, a self-assessment tool is provided to diversity quality, delivered by an external audit office. subsidiaries to allow them to assess their performance level in terms of diversity and inclusion.

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5.3. Gender equality

Code Subject of decree 2017 data 2016 data Indicator article

19.8 % Group 22.2 % France 40.3 % Keolis S.A. 16.8 % International 12.4 % Sweden 16.8 % Australia 24.5 % USA 13.5 % Belgium Percentage of women in the total 16.8 % Denmark - workforce by country 15.7 % Netherlands 16.5 % United Kingdom – Total workforce 26.7 % Canada and breakdown 19.8 % Germany of employees by I-1-a-1 10.2 % India gender, age and 30.3 % Norway geographical 50.0 % United Arab location Emirates Percentage of women managers 35.9% - in the total number of managers Keolis S.A. 36.4 % (France) Percentage of women managers International 24.3% - in the total number of managers 17.5 % Percentage of women in the total France 19.5 % - number of drivers/transport staff International 14.8 %

The Keolis Group has conducted initiatives in the area of gender through recruitment campaigns, open days, human resource equality for more than ten years. process reviews and partnerships with specialist employment agencies. Since the project was launched, the number of Keolis’ four main objectives in the field of professional gender women working at Keolis Downer has risen by 67%. Keolis equality are as follows: Downer now has 20% of women in its workforce. ■■ 1. Achieve gender mix in the workforce in all specialities; ■■ 2. Guarantee women better access to positions of res- In 2017, Keolis Hyderabad became the first Indian company to ponsibility; obtain GEEIS. To gain this certification, the company conducted ■■ 3. Make all employees aware of the importance of gender a series of initiatives to increase the percentage of women in the equality and inclusion; subsidiary. For example, it produced and published a film focusing ■■ 4. Ensure that the principle of equal pay is applied in all on the opportunity of maintaining a work-life balance when wor- subsidiaries: “same work, same pay”. king in the company. It also concluded an agreement with police to make female employee journeys from home to work safer. in 2016 Keolis became the first passenger transport group to obtain the Gender European Equality and International Standard Keolis employees have the opportunity to act effectively in favour (GEEIS) which is awarded to companies which undertake action of equality regardless of their job, by becoming a member of one to promote gender equality. Through its subsidiaries, Keolis has of the internal equality and diversity networks (Keolis Pluriel in also held the French “gender equality” certification delivered by France, WoW - Women on Workforce in India, WIN in the USA). the French standards agency AFNOR since 2009. Keolis Pluriel is an ambassador for the “SNCF au Féminin” network which has 6,300 members in France and is one of the To date, 18 Keolis subsidiaries have obtained GEEIS and/or the largest internal networks in terms of membership and budget in French gender equality label. 33% of group employees are thus France. covered by a professional gender equality certification. The WIN (Women Initiative Network) at Keolis Commuter Services (Boston) promotes increased female participation, from Among the certified subsidiaries, Keolis Downer (Melbourne) the make-up of teams in the subsidiary to supplier firms. It pro- particularly distinguished itself through its project “Driven motes mutual aid between members and mentoring. It also aims Women.” Since 2013, the Australian subsidiary has developed to attract more women to the transport sector by supporting a programme to attract more female applicants to driving jobs female entrepreneurship.

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Keolis ensures that it applies equal pay between men and The group also promotes its commitments to gender equality women across its entire organisation. In France, category pay outside the company. grids are applied in all subsidiaries to prevent any risk of inequa- lity between holders of the same job. For employees to whom Keolis is a founding member of the gender equality think tank category grids do not apply (exclusively management functions), Arborus. studies are regularly conducted to measure the pay gap between men and women. The latest study conducted at the beginning The group took part for the second year running in the Women’s of 2016 with equal pacE, assessed the pay gap at -4.2% Forum Global Meeting. The chairman of the Board of Directors, between women and men. Jean-Pierre Farandou, spoke at a workshop on the inclusive In international subsidiaries a managerial pay monitoring system organisation of the future. Laurent Kocher, Executive Director for will be implemented. Marketing, Innovation and Services, and Benjamin Cardoso, director of LeCab, also contributed their expertise during round In accordance with its legal obligations, its convictions and its tables. Finally, seven female employees also took part in various commitments, the Group decided in 2017 to include more workshops organised over two days. women in the membership of boards of directors of companies governed by French law under S.A. or S.A.S. status, controlled As explained in the previous chapter illustrating its commitments by Keolis S.A. to passengers, Keolis continued to conduct initiatives for female passengers on public transport in 2017.

5.4. Employing people with a disability

Article Subject of decree 2017 data 2016 data Indicator code

1,470 – measures 1,422.79 Keolis S.A.: 5 implemented in Keolis S.A.: 5.08 Total number of workers with a I-1-f-2 => expressed favour of employing => expressed in disability in number of disabled people number of units employees

Keolis ensures that all of its French and international operational encourage disability declarations and support people who could subsidiaries fulfil their legal obligations in relation to disability as be recognised as being disabled workers. required by local legislation. Many subsidiaries, which play a major role in their communities, undertake proactive awareness- As a transport operator, Keolis also plays a major role in terms raising and social inclusion actions to fight against all forms of of mobility solutions for those with disabilities. The Keolis Group discrimination and exclusion. is the leading carrier of passengers with reduced mobility in Keolis Rennes is the first public transport operator to have sig- France. Results for 2017 are presented in the previous chapter ned an agreement with Agefiph, the French association whose relating to commitment to passengers. remit includes helping to get disabled people into sustainable employment in private sector companies. 5.5. Combating discrimination The Group is committed to promoting the employment of young Keolis also works on supporting these disabled workers in adap- people, seniors with experience or those changing career path, ting their workstation and including them within the collective job-seekers, disabled workers and people of different nationali- working environment. ties and cultural backgrounds. For several years, Keolis has developed essential partnerships with organisations such as In 2017, through its partnership with Arnaud Assoumani, Keolis Cap Emploi, Pôle Emploi and local missions to help people who raised the awareness of its HR population to company spirit, face difficulties when entering the workforce. With the aim of disability and performance during a seminar dedicated to group offering new opportunities to people over the age of 50 and to human resources. This awareness was also deployed at the people in career transition, Keolis works with regional units spe- Keolis Caen subsidiary during its company seminar. In parallel, cialised in career transition services, the ministry of Defence or 302 employees received disability awareness training during the French national police. courses organised in 2017. More of these awareness campaigns will be conducted and Keolis raises awareness among its managerial staff on their promoted through digital tools provided to our operational sub- arrival in the Group through the induction course WelKome then sidiaries. throughout their career, about the Group’s commitments to equality and diversity and how this translates into action in their In 2018, Keolis wishes to launch an awareness initiative to everyday work.

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5.6. Other employment data Subject of Article 2017 data 2016 data Indicator code decree Number of 61,012 56,740 employees including 1,553 Keolis S.A. including 1,558 Keolis S.A. registered as at 31 December 34,648 France 33,390 France incl. 1,553 Keolis S.A. including 1,558 Keolis S.A. 6,201 Sweden 6,431 Sweden 4,642 Australia 4,128 United States 4,325 United States 3,908 Belgium 3,214 Belgium 2,534 Australia 1,553 Denmark 1,492 Denmark Total number of – Total workforce 2,167 Netherlands 1,721 Netherlands employees per and breakdown 1,978 UK 1,182 UK country of employees 879 Canada 837 Canada by gender, 621 Germany 441 Germany I-1-a-1 age and 658 India 511 India geographical 122 Norway 127 Norway location - China 31 China 4 United Arab 7 United Arab Emirates Emirates Group Keolis S.A. Group Keolis S.A. 1,868 (3%) 87 (6%) < or = 25 years 1,824 (3%) 81 (5%) < or = 25 years 4,289 (7%) 214 (14%) 26 to 30 years 4,157 (7%) 229 (15%) 26 to 30 years 5,856 (10%) 252 (16%) 31 to 35 years 5,537 (10%) 248 (16%) 31 to 35 years 6,694 (11%) 243 (16%) 36 to 40 years 6,150 (11%) 239 (15%) 36 to 40 years Number of 7,825 (13%) 241 (16%) 41 to 45 years 7,629 (13%) 207 (13%) 41 to 45 years employees per 8,779 (15%) 208 (13%) 46 to 50 years 8,440 (15%) 248 (16%) 46 to 50 years 9,651 (16%) 161 (10%) 51 to 55 years 9,404 (17%) 148 (9%) 51 to 55 years age bracket 8,653 (15%) 109 (7%) 56 to 60 years 8,229 (15%) 125 (8%) 56 to 60 years 4,059 (7%) 34 (2%) 61 to 65 years 3,737 (7%) 28 (2%) 61 to 65 years 1,780 (3%) 4 (0%) Over 65 years 1,633 (3%) 5 (0%) Over 65 years 19.8% 19.9% % of women in Keolis S.A.: 40.3% Keolis S.A.: 39.7% the total workforce 11,888 10,487 Total number of of which 5,927 France of which 6,235 France new employees of which 261Keolis S.A. of which 314 Keolis S.A. Total number 5,768 exc. end of fixed term 10,178 of departures, – new hires and contracts I-1-a-2 of which 6,033 France excluding expiring dismissals of which 3,187 France of which 281 Keolis S.A. fixed-term of which 175 Keolis S.A. contracts 1,503 1,240 Total number of of which 820 France of which 769 France dismissals of which 16 Keolis S.A. of which 15 Keolis S.A.. 2,740 Total number of Of which 1,005 France - resignations Of which 83 Keolis S.A. 3,052.1 2,913.4 Payroll in € million – remuneration % of change in I-1-a-3 +4.76% + 3.29 % and its variation payroll Change in payroll 138.7 92.8 in € million

The perimeter used to express the number of departures was modified in 2017 to include departures due to the end of fixed term contracts. To compare with the published data from 2016, the number of departures in 2017 excluding the end of fixed term contracts is 6,617 for the group, including 3,415 in France and 223 for Keolis S.A.

24 1. MANAGEMENT REPORT | KEOLIS S.A. 2017

5.7. Organisation of work

Article Subject of decree 2017 data 2016 data Indicator code

16.7% 18.6% Percentage of part-time – organisation of Keolis S.A. 2.5% Keolis S.A. 2.7% employees I-1-b-1 working time 67.9% 67.6% Percentage of driver employees Keolis S.A. 0% Keolis S.A. 0% 6.03% 5.88% II-1-b-1 – rate of absence Rate of absence for sick leave Keolis S.A. 1.59% Keolis S.A. 1.34%

Absenteeism is an issue monitored locally by each Keolis Group subsidiary. In addition to local action plans, Keolis Group has defined, via its corporate programme, joint areas for progress in order to permanently control the rate of absence and ensure the well-being of employees. Time has been spent better defining the roles and responsibilities of local managers and developing their skills. The regular monitoring of absence has also become one of their tasks.

5.8. Organisation of social dialogue Each Group subsidiary has employee representative bodies in accordance with local legislation. However, the structure, prerogatives and obligations of these bodies vary greatly from one country to the next, depending on nationally applicable legislation.

In France, the management of each subsidiary chairs these representative bodies and can negotiate company-wide agreements with the subsidiary’s trade union delegates. All French subsidiaries with over 50 employees have a works council and committees for health, safety and working conditions (CHSCT). The Keolis Group ensures that all subsidiaries have the necessary tools for their representative bodies to operate in optimal condi- tions. It regularly contributes to subjects that may have an impact on the road and urban transport sector and provides updates on the legal environment through regular meetings and a two-monthly employee newsletter.

The Keolis Group has an agreement concerning the functioning of its European Works Council. This committee brings together staff representatives from all the European countries in which the Group operates (number of union representatives proportionate to the country workforce). The European Works Council meets twice a year and currently comprises 15 members of six different nationalities. On the basis of a jointly written agenda, debates mainly revolve around the groups economic and financial situation, its strategic orientations and other themes such as safety and social responsibility. Excluding training days (two days in 2017) and preparatory meetings, the operating costs of Keolis is European Works Council amounted to €152,000 in 2017.

In addition to its national and European bodies, Keolis wishes to conduct a group level survey on employee engagement, which will be deployed in 2018 in France and in 2019 abroad.

Article Subject of decree 2017 data 2016 data Indicator code

– Organisation of social dialogue, in particular I-1-c-1 staff information 0.33 - Industrial action rate consultation and bargaining procedures

5.9. Training The Keolis Group considers training as a tool to benefit its employees’ development at every stage of their career path. In 2017, 3.60% of payroll was invested in training, representing more than three times the French legal obligation. Keolis commits to developing the skills of each employee according to their area of expertise in order to foster their career deve- lopment, facilitate internal mobility and master key skills for the Group’s growth. Training has therefore been designed according to a logical career path and is aimed at all managerial and non-managerial staff. For example, in 2017, several new programmes were

25 1. MANAGEMENT REPORT | KEOLIS S.A. 2017

deployed on the theme of safety, security and revenue protection (see previous section: “Safety and security of passengers and third parties”). The deployment of the training module on anti-corruption also continued in 2017 (see previous paragraph: “the Konformité programme”).

Keolis furthermore continued to develop its Incubator courses designed to recruit and train future young managers in different specialities (operations, marketing, passenger rail and maintenance) by creating a new incubator in security and revenue protection. These courses, lasting one year, include practical training on transport and time spent in the subsidiaries to give them the oppor- tunity to become familiar with the professions and activities covered by the company. In 2017, Keolis welcomed 30 new “seedlings”.

Keolis intends to accelerate the reinforcement of the company culture, the development of a common base of expertise in all Group countries and the support provided to the Group in setting up in new markets. Furthermore, to accompany the digital transformation strategy, the group launched a wide-ranging training programme in 2017 to help people become accustomed to digital technology, aimed at all group employees. This is a first time that this type of programme addressing all employees is deployed in a transport operator. The ambition for 2018 is that 20% of employees obtain their digital passport.

Article Subject of decree 2017 data 2016 data Indicator code

1,217,285 1,021,132 of which Keolis S.A.: of which Keolis S.A.: Total number of hours of training 38,778 35,940 32,988 34,118 Number of employees having of which Keolis S.A.: of which received training 950 Keolis S.A.: 998 – total number of I-1-e-2 training hours Total number of managers having 1,002 - received training (France) Total number of managers having International 276 - received training Percentage of payroll spent on 3.60% - training

The increase in the number of hours of training in 2017 is related to better reliability of feedback of data from international subsidia- ries (excluding Sweden). The number of hours of training in this perimeter has risen by 50% and represents 52% of hours of training followed by group employees.

Training is developed in partnership with the Keolis Training Institute. Various training modules have been added to the Keolis training catalogue to meet Group subsidiaries’ specific needs in terms of the environment. Environmental issues are also incorporated into the compulsory training course for Group drivers and in the WelKome induction course for all new Keolis S.A. managers. In 2017, Institut Keolis welcomed 1,645 people, delivering the equivalent of 13,046 hours on HSE subjects. A range of internal communication channels promote environmental approaches: newsletters, an intranet and its collaborative social platform and the KeoLife Week, an opportunity for subsidiaries to share their experiences and promote ground-level initiatives.

26 1. MANAGEMENT REPORT | KEOLIS S.A. 2017

6 n COMMITMENT TO THE ENVIRONMENT: ENERGY, WASTE AND WATER

As a public transport operator, Keolis is fully conscious of its contribution to protecting the environment and has a duty to lead by example. As public transport is by definition a more environmentally friendly alternative to the use of private vehicles, controlling the environmental impact of its activities has been singled out as a major commitment in the Group’s social responsibility strategy.

The environment approach of the Group, chiefly based on the feedback from its subsidiaries, has been certified ISO14001 for the past three years. In 2017, this certification covered 17 Group subsidiaries. This grouped certification has instigated a genuine dynamic around the three commitments restated in the Group’s environment policy: improve its energy efficiency, increase its waste recovery rate and control its water consumption.

Article Subject of decree 2017 data 2016 data Indicator code

– organisation of the company to take Number of employees covered 21,673 18,693 environmental issues by ISO14001 certification into account and, I-2-a-1 where applicable, assessment or certification Percentage of employees programmes in terms 35.52% 32.95% covered by ISO14001 of the environment certification

Keolis updates its mapping tool of risks relating to social responsibility. This provides an opportunity to requalify the notion of risk to the environment and thus assess its criticality in view of the group’s activities.

Food waste, noise disturbance and the protection of biodiversity are not significant environmental issues for the Group. Where relevant, these themes can be addressed locally, according to the situation encountered (applicable regulations, complaints by residents, establishment of a company canteen on site, protected species nearby, etc.). The Group’s service activity does not entail the substantial consumption of raw materials and does not have a significant impact on land use. These subjects are therefore not major environmental issues for the Group.

6.1. Energy efficiency Energy consumption is the main environmental impact of our activities. Improving our energy efficiency is one of the objectives of Keolis Group’s environment policy.

To support energy transition, Keolis works in three main areas:

■■ Improvement of behaviour Eco-driving is a major contributor to reducing the fuel consumption of vehicles. Simulator training raises bus, coach and tram drivers’ awareness of the benefits of eco-driving. Smooth driving improves customer comfort and saves fuel, without having any impact on commercial speed. Keolis has also listed a range of products suitable for buses and coaches called “Konfort”, to view how driving affects consumption by mea- suring acceleration and braking. Today no fewer than 4,190 vehicles are equipped with an eco-driving assistant (Konfort or similar).

■■ Measuring and controlling the energy efficiency of entrusted assets The Group’s environmental approach includes as a minimum the monitoring and control of the energy consumption for buildings and commercial vehicle traction.

27 1. MANAGEMENT REPORT | KEOLIS S.A. 2017

Article Subject of decree 2017 data 2016 data Indicator code

Traction energy consumption 294,251 283,389* for commercial vehicle fleets (excluding rail) in TOE – energy consumption, measures taken Traction energy consumption I-2-c-3 to improve energy 54,470 51,936 for commercial railway use in efficiency and use of TOE renewable energies Energy consumption of 23,398 22,089* company facilities in TOE Total energy consumption in 372,119 357,414* TOE

The increase in the consumption of traction energy is proportional to the associated number of kilometres.

The 10% increase in the electricity consumption of facilities is the reason behind the variation in facilities’ energy consumption. This is caused by structural changes which four major group subsidiaries underwent in 2017 (new maintenance workshops, start-up of new contracts) and masks the positive effects of good practices implemented in the group’s other subsidiaries (better resource management, staff awareness, etc.).

In total, the group’s energy consumption represents 5 kWh/kilometre travelled.

Traction energy data for 2016 (excluding rail) has been significantly updated in relation to the previous publication. This is because new tools to control consistency have resulted in international data becoming more reliable. This particularly applies to data from Keolis Transit America (USA) being updated.

■■ Supporting Public Transport Authorities in their approaches to improve the environmental performance of their fleet and/or building renovations. Keolis deploys its tailored PTA support approach in three stages, taking into consideration the changing legal environment and in alignment with its safety culture. Keolis analyses and designs the most suitable service in connection with the existing service offer and the limitations imposed by each contract, deploys its services whilst supporting the public transport authority and passengers, then capitalises on lessons learned so as to share its experience with other contracting authorities and improve service. For several years, Keolis has invested in a range of solutions to reduce the environmental impacts of its activities, often being a forerunner in the field. The solutions implemented are tailored to the local context and the fleet: alternative energies, particle filters, recovery systems or energy saving systems. Keolis is particularly active in this field, leveraging the entire range of alternative energies, such as bio-fuels, ethanol, products from the gas sector and electrical energy. In 2017, Keolis operated nearly 3,600 vehicles running on alternative fuels, breaking down by fuel type as follows: 827 Biodiesel, 143 Bioethanol, 517 Biogas, 216 Diester, 1,217 NGV (including at least 428 containing a fraction of biogas), 242 electric (including 130 trolleybuses in Lyon), 31 GPL and 363 hybrid. Keolis is continuing its actions in this field through active technological intelligence with manufacturers and equipment suppliers to identify and possibly develop solutions to optimise the environmental performance of the vehicle fleet. In Châlons-en-Champagne, the public transport authority chose to incorporate 30% of Diester into the diesel of its buses and its river shuttle. By choosing this biofuel, the city authority has halved its greenhouse gas emissions, while also supporting the local economy: producers of rapeseed have a new sales opportunity, and livestock farmers can feed their animals on the rape seed cake by-product. To go even further, Keolis is currently testing a hybrid bus on behalf of the PTA which combines Diester with an electric engine. Designed by Iveco and tested on the network’s , this 12-metre hybrid bus charges its batteries when braking. Its electric drive enables the Urbanway bus to travel emission-free speeds of up to 19 km/h. Buildings consume far less energy than operated vehicles. Keolis nonetheless takes action to optimise energy consumption in a range of areas: heating, air-conditioning, hot water production, lighting and auxiliary equipment (ventilation, pumps), as well as machine tools and air compressors.

28 1. MANAGEMENT REPORT | KEOLIS S.A. 2017

6.2. Reducing impact on the climate Greenhouse emissions produced by Group activities are proportional to the energy consumption of commercial vehicles, the Group’s leading source of emissions, and to energy use by buildings (heating, lighting). The emission factors used mainly come from the French carbon base and the International Energy Agency. Full details of these factors are available on request from [email protected].

The tasks of measuring and reducing GHG emissions are mainly carried out by subsidiaries either on a voluntary basis or in com- pliance with regulations. This is because reduction action plans must be defined and assessed locally, in particular due to the quantity and variety of contracts and types of network operated. Actions to reduce emissions are to be estimated and assessed by way of an indicator which includes the notion of trip or traveller

(CO2 emissions per trip/per passenger.km). The Greenhouse Gas Emissions Statement for public transport must apply to a given geographical zone. Modal shift from private car to public transport can thus be measured. This helps to show that public transport is a solution to reduce global GHG emissions.

Article Subject of decree 2017 data 2016 data Indicator code

GHG emissions from 929,547 888,056* commercial traction (excluding

rail) in TCO2e

– greenhouse gas GHG emissions from I-2-d-1 emissions; 212,614 203,963 commercial rail traction in

TCO2e GHG emissions of company 74,946 66,128* facilities in TCO2e 1,217,107 1,158,147* Total GHG emissions

The increase in greenhouse gas emissions relating to traction is proportional to the increase in kilometres. The increase in electricity consumption of international facilities is the main reason behind the change in GHG emissions of company facilities. The electrical mix of the countries concerned has a high carbon footprint.

In total, in 2017, the group’s GHG emissions represent 1,412 g CO2e/km travelled.

Adapting to climate change is not an immediate or major issue for the Keolis Group. As a public transport player, the Group may make recommendations for policy making, but is not a direct decision-maker in investments and other choices made by Public Transport Authorities.

However, Keolis is established in countries which are already facing the consequences of climate change. Keolis builds on its returns on experience, circulated to all Group subsidiaries, and implements contingency procedures for emergency situations. The major floods experienced in 2016 helped to formalise a return experience which was then shared among all group subsidiaries. In Australia, the three operational subsidiaries have set up very substantial rainwater collection and storage systems so as to be prepared for severe droughts. Similarly, Keolis Commuter Services in Boston has introduced a “snow plan” to anticipate occurrences of blizzards and snow storms according to their intensity.

29 1. MANAGEMENT REPORT | KEOLIS S.A. 2017

6.3. Waste management The Group’s Environment policy has three specific goals, one of which is to increase its a waste recovery rate To this end, the Health, Safety & Environment Department provides Group subsidiaries with specific tools, to help them better manage their waste.

Article Subject of decree 2017 data 2016 data Indicator code

Tonnes of hazardous waste 5,713 4,464* produced 2,950 2,070 Of which hydrocarbon sludge – measures to prevent, 7,684 7,927* I-2-b-2 recycle and eliminate waste Percentage of hazardous waste 71% 70%* recovered Percentage of non-hazardous 60% 52%* waste recovered

Waste recovery rates are improving thanks to initiatives implemented in several subsidiaries, in particular Nottingham Trams in the UK and Keolis Commuter Services in Boston. The latter has deployed a “zero sort recycling programme” in 16 entities which resul- ted in them increasing their local recovery rate by more than 100% for non-hazardous and hazardous waste.

6.4. Water consumption Controlling water consumption is one of the three specific objectives of our Environment policy.

Locally, Group subsidiaries use drinking water as well as recycled and/or rain water to wash vehicles. In 2017, 93 facilities were equipped with a vehicle washing water recycling system and 59 with a rainwater collection system.

Several Keolis Group subsidiaries are located in water-stressed countries, i.e. Australia and Belgium (according to the World Resources Institute).

Article Subject of decree 2016 data 2015 data Indicator code

Volume of water purchased – water consumption 1,083,282 719,684* 3 and water supply in m I-2-c-1 depending on local Share of water consumption in 13% 13% factors water-stressed areas

The increase in water consumption is due to the inclusion in the consolidation scope of consumption relating to track maintenance (in particular watering of tram track beds). This water consumption item represents 35% of total group consumption in 2017.

Excluding change in consolidation scope, water consumption decreased by 2% between 2016 and 2017, chiefly due to detection of leaks between 2016 and 2017 but also thanks to the introduction best practices (vehicle cleaning procedure reviewed by Autocars Planche, awareness initiatives introduced by Keolis Côte d’Azur, etc.).

Water consumption data for 2016 has been substantially modified in comparison with the previous publication. This is because control consistency tools have enabled the reporting scope to be updated, and in particular to remove the water consumption from rainwater harvesting in Gold Coast in Australia and consumption related to the upkeep of tram tracks in Keolis Angers.

30 1. MANAGEMENT REPORT | KEOLIS S.A. 2017

7 n COMMITMENT TO REGIONS: SOLIDARITY, EDUCATION AND CULTURE.

Keolis has integrated an “Active involvement in the local community” project into its corporate programme. Its aim is to standardise practices by allowing each subsidiary to build its own binding and reasoned partnership strategy. The main guidelines of these strategies are shared by the Group and its subsidiaries: be consistent with the “Konformité” programme (see Prerequisite 1), allow each subsidiary to build its own approach and allow the Group to promote (internally and externally) the sub- sidiaries’ partnership actions.

Keolis started up a partnership in 2015 with Biom Work to enable subsidiaries to measure their contribution to sustainable deve- lopment in the region in the areas of employment, public services and environmental conservation. The result is expressed as a percentage of the turnover redistributed over the region. Seven Group subsidiaries took part in this assessment and the results often surpassed the 70% bar. This indicates that 70% of the turnover of these Keolis subsidiaries is acknowledged as being of public utility.

7.1. Solidarity Since 2010, Keolis has been presenting annual awards as part of “Actions for solidarity” (Coups de coeur solidaires). These awards created in 2016 under the aegis of the SNCF Foundation, enable Keolis to shine a light on to the commitment of its employees to associations acting in favour of vulnerable or underprivileged people. The relevance and eligibility of submissions are assessed according to the following criteria: the target audience, social and partnership dimensions, viability and originality, and the creation of social bonds. The Keolis judging panel comprising members of Group departments convened in June and decided to reward the voluntary actions of ten employees who had entered their project this year: ■■ Three charities supported by employees at Keolis Lille: Solid’Ailes, which supports vulnerable people in bringing their career plan to fruition, becoming independent or finding work; l’association de Gestion des Centres Sociaux Culturels Belencontre & Phalempins which uses digital technology to support inclusion, and Basket Club Loossois which aims to develop and promote sport for all. ■■ Two charities to promote the quality of life of children with illnesses and their families: Parentraide Cancer with the organisation of collective workshops aimed at parents affected by illness and the hospitalisation of their child in paediatric oncology, sup- ported by a Keolis Gironde employee; and l’Association de Zoothérapie de Côte d’or represented by an employee of Keolis Dijon Mobilité which organises therapeutic activities assisted by an animal. ■■ Two charities supported by Keolis Bordeaux Metropole employees: A l’asso citoyen, and the association Ombre et lumière 33, Patronage Sainte Jeanne de Lestonnac, which organise holidays for underprivileged children from 8 to 11 years of age; and the association Entr-Autres which offers work experience to young people with a disability. ■■ The charity CIP75, which uses photography as a means of entering employment in the agricultural and market gardening sector, represented by an employee from Keolis head office. ■■ The charity Rêve d’Enfants du Calaisis which enables children with intellectual disabilities and autistic tendencies to go on an outing on the theme of breadmaking, supported by an employee from the North East regional division.

These associations received grants from the SNCF Foundation to help to conduct their initiatives and projects aimed at vulnerable members of the population.

7.2. Education Keolis raises awareness among its future passengers and the citizens of the future: ■■ by speaking in primary, secondary and high schools, ■■ by organising class visits to depots, ■■ by contributing to awareness initiatives or publications.

There are several aims to these actions: ■■ improve knowledge about public transport, ■■ increase awareness about fighting fare evasion and antisocial behaviour, ■■ highlighting public transport as a way of reducing a region’s impact on the environment.

31 1. MANAGEMENT REPORT | KEOLIS S.A. 2017

Article Subject of decree 2017 data 2016 data Indicator code

b) Relations with people or organisations with an interest in the Number of pupils covered I-3-b-2 company’s activities 59,122 64,155 by an awareness initiative at […] school – Sponsorship or charitable contributions;

The decrease in the number of pupils covered by an awareness initiative can be explained by some programmes which take place every two years such as in the Gold Coast subsidiary in Australia.

8 n CONCLUSION AND OUTLOOK

Keolis is continuing to pursue its efforts in the deployment and application of this strategy, across the 16 countries in which it is established. This diversity, whether cultural, technical or contractual in nature, enables the Group to enhance its experience and to capitalise on and share its best practices in the field of Social Responsibility throughout the world, in a perspective of continuous improvement.

A survey was conducted among 55 French and international subsidiaries of the group (representing 78% of group turnover) in summer 2017. This survey provided a snapshot of the initiatives conducted locally by subsidiaries relating to social responsibility. These initiatives address themes such as sustainable and supportive purchasing, visits to schools, diversity and environmental actions. The findings of this survey will allow the sharing of best practices and improve support given to subsidiaries which have not yet started to take action.

In 2017, in accordance with new legal requirements1, the Keolis Group updated its mapping of risks relating to social responsibility.

The exercise was carried out jointly by several group departments to benefit from different perspectives and expertise and ensure that the results are properly incorporated into the risk management work currently underway. It is planned to ask for input from internal and external stakeholders at the beginning of 2018. According to the findings, Keolis will adjust its social responsibility strategy and associated action plans.

The new whistleblowing system entitled “Keolis Ethic Line” should incorporate themes addressed in the Act on the duty of vigilance.

1 Act no. 2017-399 of 27 March 2018 on the duty of vigilance of mother companies and order principles, and decree no. 2017-1265 of 9 August 2017 taken as appli- cation of the ordinance no. 2017-1180 of 19 July 2017 relating to the disclosure of non-financial information by certain large companies and certain large groups.

32 1. MANAGEMENT REPORT | KEOLIS S.A. 2017

APPENDIX 3 D TABLE OF EARNINGS FOR THE PAST FIVE FINANCIAL YEARS

(Arts. 133, 135 and 148 of the Commercial Companies Decree)

2017 2016 2015 2014 2013

1 - Capital at end of period a) Share capital 412,832,676 346,851,276 46,851,276 46,851,276 46,851,276 b) Number of ordinary shares outstanding 34,402,723 28,904,273 3,904,273 3,904,273 3,904,273 c) Number of future shares to be created - by conversion of bonds - through the exercise of subscription rights

2 - Transactions and earnings for the period a) Share capital 206,126,031 200,348,991 196,787,773 186,836,372 175,946,238 b) Earnings before tax, profit sharing, depreciation 24,876,154 (8,566,084) 13,568,616 14,909,693 48,656,168 and provisions c) Tax (tax credit) on profits (18,017,119) (17,212,644) (15,388,189) (15,845,019) (10,378,714) d) Employee profit sharing for the year - - - - - e) Earnings after tax, profit sharing, depreciation (70,781,999) (4,172,555) 37,599,518 25,151,149 38,731,482 and provisions f) Distributed earnings - - - 19,130,938 19,130,938

3 - Earnings per share a) Earnings after tax, but before allocations to 1.25 0.30 7.42 7.88 15.12 depreciation and provisions b) Earnings after tax and allocations to (2.06) (0.14) 9.63 6.44 9.92 depreciation and provisions c) Dividend paid on each share (Net dividend) - - - 4.90 4.90

4 - Staff a) Average numbers employed 1,511 1,480 1,408 1,363 1,262 b) Payroll 105,422,972 98,964,303 92,565,343 90,570,432 83,312,146 c) Amounts paid in welfare benefits (Social Security, 48,950,895 45,765,523 43,295,106 42,962,595 38,219,435 company benefits, etc.)

33 2. CONSOLIDATED FINANCIAL STATEMENTS | KEOLIS S.A. 2017

2. CONSOLIDATED FINANCIAL STATEMENTS

CONTENTS A KEY FIGURES FOR THE GROUP...... 35 5 n NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION ...... 60 5.1. Goodwill...... 60 B CONSOLIDATED FINANCIAL STATEMENTS ...... 36 5.2. Other intangible assets ...... 62 1 n INCOME STATEMENT...... 36 5.3. Immobilisations corporelles...... 63 n 2 STATEMENT OF COMPREHENSIVE INCOME. . . . 37 5.4. Investments under the equity method ...... 64 3 n STATEMENT OF FINANCIAL POSITION ...... 38 5.5. Current and non-current financial assets ...... 65 ...... 4 n STATEMENT OF CHANGES IN EQUITY ...... 39 5.6. Inventories 65 5.7. Trade and other receivables...... 66 5 n STATEMENT OF CASH FLOWS...... 40 5.8. Cash and cash equivalents ...... 66 5.9. Equity ...... 66 C NOTES TO THE CONSOLIDATED 5.10. Financial debt and long-term borrowings. . . . . 67 FINANCIAL STATEMENTS ...... 41 5.11. Financial assets and liabilities by category . . . . 70 1 n GENERAL INFORMATION ...... 41 5.12. Risk management and financial derivatives . . . . 72 2 n SUMMARY OF SIGNIFICANT 5.13. Provisions...... 77 5.14. Operating liabilities and other debt...... 82 ACCOUNTING POLICIES...... 41 2.1. Accounting guidelines ...... 41 6 n OTHER COMMITMENTS NOT RECOGNISED 2.2. Changes in accounting principles ...... 41 IN THE STATEMENT OF FINANCIAL POSITION 2.3. Use of Management estimates AND CONTRACTUAL COMMITMENTS ...... 83 in the application of the Group’s accounting 7 n DISPUTES ...... 84 standards ...... 43 8 n RELATED PARTY TRANSACTIONS ...... 84 2.4. Accounting principles...... 44 8.1. Transactions with GROUPE KEOLIS S.A.S. n 3 HIGHLIGHTS OF THE FINANCIAL YEAR ...... 55 and Groupe EFFIA...... 84 4 n NOTES TO THE CONSOLIDATED 8.2. Transactions with joint ventures and associates . 84 INCOME STATEMENT...... 56 8.3. Remuneration of the Group’s key managers . . . . 84 4.1. Staff costs ...... 56 9 n POST BALANCE SHEET EVENTS...... 84 4.2. Other operating income...... 56 10 n CONSOLIDATION SCOPE ...... 85 4.3. Operating profit...... 56 10.1. Subsidiaries ...... 85 4.4. EBITDA calculation...... 57 10.2. Joint ventures and associates...... 92 4.5. Share in net profit for the year from investments under the equity method ...... 57 STATUTORY AUDITORS’ REPORT 4.6. Financial income / (expense) ...... 57 ON THE CONSOLIDATED FINANCIAL STATEMENTS. . . . . 93 4.7. Taxation...... 58

34 2. CONSOLIDATED FINANCIAL STATEMENTS | KEOLIS S.A. 2017

A KEY FIGURES FOR THE GROUP

(€ million) Note 31/12/2017 31/12/2016 (2)

Revenue 5,138.6 4,866.0 n Revenue France 2,700.7 2,670.4 n Revenue International 2,437.8 2,195.6 Revenue net of sub-contracting 4,944.7 4,676.6 Recurring EBITDA 4.4 259.9 241.4 EBITDA 4.4 240.7 223.2 Recurring operating profit 4.3 94.5 67.5 Operating profit before investments under equity method 67.6 42.1 Operating profit after investments under equity method 93.2 67.5 Profit after tax from continuing operations 41.0 18.4 Profit attributable to equity shareholders 39.4 24.0 Total equity 615.5 515.4 of which attributable to equity shareholders 553.3 463 .7 Net cash flows from operating activities 147.5 239.8 Industrial investments 185.2 183.0 Net financial debt (cash surplus) (1) 246.5 276.3

(1) Cash surpluses are presented in brackets. (2) The retrospective application of IFRS 9 has no effect on the Group’s key figures in 2016

35 2. CONSOLIDATED FINANCIAL STATEMENTS | KEOLIS S.A. 2017

B CONSOLIDATED FINANCIAL STATEMENTS 1 n INCOME STATEMENT

(€ million) Note 31/12/2017 31/12/2016 (1) (2)

Revenue 5,138.6 4,866.0 Other income from operations 21.6 15.4 INCOME FROM CONTINUING OPERATIONS 5,160.2 4,881.4 Sub-contracting (193.9) (189.4) Purchases consumed and external expenses (1,665.5) (1,532.2) Taxes (15.4) (14.5) Staff costs, incentive schemes, profit-sharing 4.1 (3,052.1) (2,913.4) Other operating income 4.2 61.3 49.8 Other operating expense (32.8) (29.1) Net provisions on current assets (2.0) 0.2 Net depreciation and other provisions charged (172.7) (191.9) Profit/(loss) on recurring fixed asset disposals (0.1) (1.8) Amortisation of grants received 7.5 8.4 RECURRING OPERATING PROFIT 94.5 67.5 Other non-recurring income 4.3 11.3 4.7 Other non-recurring expense 4.3 (29.6) (21.8) Depreciation and provisions on contractual rights 4.3 (8.6) (8.2) OPERATING PROFIT/LOSS BEFORE INVESTMENTS UNDER EQUITY METHOD 67.6 42.1 Profit/(loss) from associates 4.5 25.6 25.4 OPERATING PROFIT/(LOSS) AFTER INVESTMENTS UNDER EQUITY METHOD 93.2 67.5 Net cost of financial borrowing 4.6 (8.3) (10.7) Other financial income 4.6 5.1 1.6 Other financial expense 4.6 (8.4) (12.4) FINANCIAL INCOME (EXPENSE) (11.6) (21.4) PROFIT BEFORE TAX 81.6 46.2 Taxation 4.7 (40.6) (27.8) PROFIT FOR THE YEAR 41.0 18.4 CONSOLIDATED NET PROFIT 41.0 18.4 Profit attributable to non-controlling interests (1.7) 5.6 PROFIT ATTRIBUTABLE TO GROUP 39.4 24.0

(1) See note 2.24.28 on changes in presentation of reversals of provisions used (2) The retrospective application of IFRS 9 has no effect on the 2016 income statement

36 2. CONSOLIDATED FINANCIAL STATEMENTS | KEOLIS S.A. 2017

2 n STATEMENT OF COMPREHENSIVE INCOME

(en millions d’euros) 31/12/2017 31/12/2016 (2)

PROFIT FOR THE YEAR 41.0 18.4 Actuarial gains and losses on defined benefit pension schemes (6.7) (2.9) Unrealised gains (losses) relating to the revaluation at fair value of non-consolidated investments (6.4) - Tax on actuarial gains and losses on defined benefit pension schemes 0.9 (1.2) ITEMS THAT WILL NOT BE RECLASSIFIED TO PROFIT OR LOSS (12.2) (4.1) Translation differences and others (1) (6.6) (1.6) Unrealised gains and losses (0.2) 6.9 on financial hedging instruments (0.2) 8 .0 on available-for-sale assets (2) - (1.1) Tax on items that may be reclassified to profit or loss 0.1 (2.7) ITEMS THAT MAY BE RECLASSIFIED TO PROFIT OR LOSS (6.8) 2.6 TOTAL GAINS AND LOSSES RECOGNISED DIRECTLY IN EQUITY (19.0) (1.5) TOTAL COMPREHENSIVE INCOME FOR THE YEAR 22.0 16.8 of which attributable to: - Equity shareholders 23.5 18.4 - Non-controlling interests (1.6) (1.6)

(1) Mainly comprising the impact of depreciation of the Australian dollar amounting to -€4.9 million in 2017. (2) Following the application of the IFRS 9 standard retrospectively from 1 January 2017, unrealised gains and losses relating to the revaluation at fair value of strategic investments have been transferred from “Items that may be reclassified to profit or loss” to “Items that will not be classified to profit or loss”.

37 2. CONSOLIDATED FINANCIAL STATEMENTS | KEOLIS S.A. 2017

3 n STATEMENT OF FINANCIAL POSITION

ASSETS Note 31/12/2017 31/12/2016 (€ million) Goodwill 5.1 287.4 289.0 Other intangible assets 5.2 211.7 208.2 Property, plant and equipment 5.3 770.6 752.6 Investments under the equity method 5.4 36.2 37.6 Non-current financial assets 5.5 285.2 214.4 Deferred tax asset 4.7 105.7 86.9 NON-CURRENT ASSETS 1,696.8 1,588.7 Inventories and work in progress 5.6 103.2 92.1 Trade receivables 5.7 441.3 372.9 Other receivables 5.7 514.2 466.2 Current financial assets 5.5 19.5 20.3 Cash and cash equivalents 5.8 276.5 301.6 CURRENT ASSETS 1,354.6 1,253.1 TOTAL ASSETS 3,051.5 2,841.8

LIABILITIES Note 31/12/2017 31/12/2016 (€ million) Share capital 5.9 412.8 346.9 Reserves and premiums 5.9 101.0 92.8 Net profit/(loss) attributable to Group 5.9 39.4 24.0 EQUITY ATTRIBUTABLE TO GROUP 553.3 463.7 Reserves attributable to non-controlling interests 60.6 57.4 Profit for the year attributable to non-controlling interests 1.7 (5.6) EQUITY 615.5 515.4 Non-current provisions 5.13 190.2 194.5 Non-current financial debt 5.10 394.9 329.8 Deferred tax liability 4.7 102.2 77.3 NON-CURRENT LIABILITIES 687.3 601.6 Current provisions 5.13 45.9 51.7 Current financial debt 5.10 74.4 130.7 Bank borrowings 5.8 166.9 157.8 Trade payables and other liabilities 5.14 1,461.4 1,384.6 CURRENT LIABILITIES 1,748.6 1,724.8 TOTAL LIABILITIES 3,051.5 2,841.8

38 2. CONSOLIDATED FINANCIAL STATEMENTS | KEOLIS S.A. 2017

4 n STATEMENT OF CHANGES IN EQUITY

RESERVES AND OTHER Items that may be reclassified to profit

or loss

(€ million)

Share capital Share Reserves Translation differences Other un- gainsrecognised / (losses), net gains /Other unrealised (losses), net, not re- or loss classifiable to profit Sub-total equity Total AT 31 DECEMBER 2015 46.9 174.7 (3.8) (4.8) (10.7) 155.5 202.3 Attributable to Keolis S.A. shareholders 46.9 124.4 (5.1) (4.8) (10.7) 103.9 150.8 Attributable to minority shareholders in subsidiaries - 50.3 1.3 - - 51.5 51.5 Dividends paid to Keolis S.A. shareholders ------Capital increase by creation of receivable 300.0 - - - - - 300.0 Other changes - (5.4) - - - (5.4) (5.4) OPERATIONS ATTRIBUTABLE TO KEOLIS S.A. SHAREHOLDERS (A) 300.0 (5.4) - - - (5.4) 294.6 Dividends paid to minority shareholders in subsidiaries - (2.5) - - - (2.5) (2.5) Change in shareholdings in subsidiaries without gaining/ losing control - 4.3 - - - 4.3 4.3 OPERATIONS ATTRIBUTABLE TO MINORITY SHAREHOLDERS IN SUBSIDIARIES (B) - 1.8 - - - 1.8 1.8 Net profit for the year restated (1) - 18.4 - - - 18.4 18.4 Gains / (losses) recognised directly in equity - - (1.6) 4.1 (4.1) (1.6) (1.6) COMPREHENSIVE INCOME (C) - 18.4 (1.6) 4.1 (4.1) 16.8 16.8 CHANGE IN THE YEAR (A+B+C) 300.0 14.8 (1.6) 4.1 (4.1) 13.2 313.2 Attributable to Keolis S.A. shareholders 300.0 18.6 (5.7) 4.2 (4.1) 13.0 313.0 Attributable to minority shareholders in subsidiaries - (3.8) 4.1 (0.1) - 0.2 0.2 AT 31 DECEMBER 2016 (1) 346.9 189.5 (5.4) (0.7) (14.8) 168.6 515.4 Attributable to Keolis S.A. shareholders 346.9 143.0 (10.8) (0.6) (14.8) 116.8 463.7 Attributable to minority shareholders in subsidiaries - 46.5 5.4 (0.1) - 51.8 51.8 Dividends paid to Keolis S.A. shareholders ------Share capital increase through creation of receivable 66.0 - - - - - 66.0 Other changes - 0.1 - - - 0.1 0.1 OPERATIONS ATTRIBUTABLE TO KEOLIS S.A. SHAREHOLDERS (A) 66.0 0.1 - - - 0.1 66.1 Dividends paid to minority shareholders in subsidiaries - (1.6) - - - (1.6) (1.6) Capital increase subscribed to by minority shareholders - 13.5 13.5 13.5 Change in shareholdings in subsidiaries leading to gain/loss of control - 0.9 - - - 0.9 0.9 Change in shareholdings in subsidiaries without gaining/ losing control - (0.6) - - - (0.6) (0.6) OPERATIONS ATTRIBUTABLE TO MINORITY SHAREHOLDERS IN SUBSIDIARIES (B) - 12.1 - - - 12.1 12.1 Profit for the year - 41.0 - - - 41.0 41.0 Gains / (losses) recognised directly in equity - - (6.6) 1.0 (13.5) (19.1) (19.1) COMPREHENSIVE INCOME (C) - 41.0 (6.6) 1.0 (13.5) 21.9 21.9 CHANGE IN THE YEAR (A+B+C) 66.0 53.2 (6.6) 1.0 (13.5) 34.2 100.1 Attributable to Keolis S.A. shareholders 66.0 39.5 (3.5) 0.9 (13.3) 23.7 89.6 Attributable to minority shareholders in subsidiaries - 13.7 (3.1) - (0.2) 10.5 10.5 AT 31 DECEMBER 2017 412.8 242.7 (12.0) 0.3 (28.3) 202.7 615.5 Attributable to Keolis S.A. shareholders 412.8 182.5 (14.3) 0.4 (28.1) 140.4 553.3 Attributable to minority shareholders in subsidiaries - 60.2 2.3 (0.1) (0.2) 62.2 62.2

(1) Following the application of the IFRS 9 standard retrospectively from 1 January 2017, unrealised gains and losses relating to the revaluation at fair value of strategic investments have been transferred from “Items that may be reclassified to profit or loss” to “Items that will not be classified to profit or loss”.

39 2. CONSOLIDATED FINANCIAL STATEMENTS | KEOLIS S.A. 2017

5 n STATEMENT OF CASH FLOWS

(€ million) Note 31/12/2017 31/12/2016

Operating profit before investments under equity method 4.3 67.6 42.1 Non-cash items 4.4 173.1 181.1 EBITDA 4.4 240.7 223.2 Elimination of provisions on current assets 2.0 (0.2) Changes in working capital (89.9) 41.1 Tax paid (5.3) (24.3) A) NET CASH FROM OPERATING ACTIVITIES 147.5 239.8 Capital expenditure (185.2) (183.0) Proceeds from the sale of tangible and intangible assets 14.8 21.9 Investment grants received 11.7 10.1 Change in financial assets for concessions (IFRIC 12) (0.4) (11.5) Financial investments (99.9) (56.8) Proceeds from disposal of financial assets 13.9 1.0 Cash flows on changes in reporting scope 2.0 3.5 B) FLUX NET DE TRÉSORERIE LIÉS AUX OPÉRATIONS D’INVESTISSEMENT (242.9) (214.7) FREE CASH FLOW (A +B) (95.4) 25.1 Net dividends paid (1.7) (2.5) Net dividends received 26.8 24.6 Change in equity (other transactions with shareholders) 79.5 6.5 New borrowings 173.6 132.9 Borrowings repaid (196.7) (64.8) Interest received 1.1 1.2 Interest paid (9.6) (12.6) Change in other financial debts - 0.2 Other (4.4) (7.8) C) NET CASH FROM FINANCING ACTIVITIES 68.6 77.6 D) FOREIGN EXCHANGE TRANSLATION DIFFERENCES (7.4) (3.2) CHANGE IN CASH AND CASH EQUIVALENTS (A+B+C+D) (34.2) 99.5 Cash and cash equivalents at beginning of period 5.8 143.8 44.2 Cash and cash equivalents at end of period 5.8 109.6 143.8 CHANGE IN CASH AND CASH EQUIVALENTS (34.2) 99.6

40 2. CONSOLIDATED FINANCIAL STATEMENTS | KEOLIS S.A. 2017

NOTES TO THE CONSOLIDATED FINANCIAL C STATEMENTS 1 n GENERAL INFORMATION

The company Keolis S.A. and its subsidiaries (“the Group”) develop transport service solutions tailored to local conditions: auto- matic metros, trams, trains, buses, coaches, river and sea ferries, self-hire bikes, etc. Keolis exports its multi-modal expertise to 16 countries around the world.

The company Keolis S.A., the Group’s holding company, is a société anonyme (public limited company) registered and domiciled in France, with its registered office located at 20/22, rue Le Peletier, 75320 Paris Cedex 09.

The consolidated financial statements of the Group for the financial year ended 31 December 2017 were approved by the Board of Directors on 1 March 2018.

The financial statements of the Group are fully consolidated into those of GROUPE KEOLIS S.A.S. which SNCF fully consolidates. The Group has chosen not to manage rounding discrepancies; consequently, some small differences may appear

2 n SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2.1. Accounting guidelines The Group’s consolidated financial statements as at 31 December 2017 have been prepared in accordance with IFRS (standards and interpretations) published by IASB as adopted by the European Union and rendered mandatory from 1st January 2017. They are available at this site: http://ec.europa.eu/internal_market/accounting/ias/index_fr.htm

In the absence of borrowing or equity instruments traded on a regulated market, the Group chose not to publish information on earnings per share (IAS 33), or information about operating segments (IFRS 8).

2.2. Changes in accounting principles

Application of standards, amended standards and interpretations that are mandatory as of 1st January 2017

Date of application Standard Summary description (annual period or interpretation starting on or after) IAS 7 amendments Initiatives on disclosures. IASB: 29/01/2016 EU: 09/11/2017 Group: 01/01/2017 IAS 12 amendments Recognition of deferred tax assets for unrealised losses IASB: 19/01/2016 EU: 09/11/2017 Group: 01/01/2017

There is no material impact arising from the application of these standards.

Standards, amendments to standards and interpretations applied early The Keolis S.A. Group decided to apply stages 1 and 2 of the standard “IFRS 9 – financial instruments” in advance at 1 January 2017. The Group has chosen not to present comparatives, as the standard (IFRS 9.7) authorises, insofar as this retroactive application has no impact whatever on the income statement, the statement of financial position or the statement of cash flows as presented in the Keolis S.A. financial report as at 31 December 2016.

41 2. CONSOLIDATED FINANCIAL STATEMENTS | KEOLIS S.A. 2017

“IFRS 9 – Financial instruments” amends the principles for the measurement and recognition of financial instruments in three stages: ■■ Classification and measurement of financial assets, ■■ Impairment of financial assets, ■■ And on hedge accounting. The provisions in IAS 39 concerning financial liabilities are in the main basically unchanged in IFRS 9: they will therefore continue to be measured at amortised cost. Application of this standard is mandatory for statements relating to financial years starting on or after 1 January 2018. However, the Group has chosen to apply stages 1 and 2 in advance as of financial year 2017: ■■ Application of the stage 1: Using the principles of IFRS 9, Keolis carried out an analysis of financial assets so as to break them down according to the valuation categories described in the standard: ●● Either at amortised cost ●● Or at fair value, the change of which affects the profit or loss, or the equity (Other items of comprehensive income) The two criteria used to determine how financial assets should be classified and measured are the management method applied for these assets, and the characteristics of their contractual cash flows.

The change in the classification of financial assets is presented in the following table showing the balance sheet transition from 31 December 2016 to 1 January 2017.

31/12/2016 01/01/2017 Equity instruments

(€ million) Total Total Derivative assets Derivative assets amortised cost by P&L Loans and receivables Deposits and guarantees FV in P&L Securities available for sale recyclables FV OCI non Concession financial assets Concession financial assets Deb t instruments measured atDeb t instruments measured

Total non-consolidated assets > 1 year 33.6 33.6 3.0 30.6 33.6 Total Loans and Receivables 6.6 30.0 36.7 36.7 36.7 Derivative Assets 2.3 2.3 2.3 2.3 Concession financial assets <1 year 162.2 162.2 162.2 162.2 CURRENT AND NON- CURRENT FINANCIAL 6.6 33.6 30.0 2.3 162.2 234.8 3.0 30.6 36.7 2.3 162.2 234.7 ASSETS Loans and receivables < 1 year - - 18.2 2.1 - 20.3 - - 18.2 2.1 - 20.3 Loans and receivables > 1 year 6.6 33.6 11.8 0.2 162.2 214.4 3.0 30.6 18.4 0.2 162.2 214.4

■■ Application of stage 2: the new standard requires that entities recognise expected losses of credit as soon as they are recorded in the statement of financial position. The majority of the Group’s customer receivables comprises receivables from public authorities, with a high collection rate. Keolis has not identified any significant impact resulting from this second stage of the IFRS 9 standard. ■■ Application of stage 3 is currently under consideration: The Keolis Group continues to apply IAS 39 in the field of hedge accounting, as the standard permits. Assessments conducted to date have not revealed any significant impact on the 2017 financial year. Keolis has not yet determined the date at which it will apply this stage of the standard.

42 2. CONSOLIDATED FINANCIAL STATEMENTS | KEOLIS S.A. 2017

Standards, amendments to standards and interpretations not subject to early application

The Group has not applied the following standards to its 2017 consolidated accounts:

Date of application Standard or Expected Summary description (annual period interpretation impact starting on or after) Annual IFRS 12 “Disclosure of Interests in Other Entities” – Clarification The Group IASB: 01/01/2018 Improvements of the scope of the disclosure requirements. does not EU: Not adopted (2014-2016 cycle) IFRS 1: “First-time Adoption of IFRS” – removal of short-term anticipate Group: pending to IFRS exemptions for first-time adopters. any adoption IAS 28: “Investments in Associates and Joint Ventures” - significant measuring investments at fair value through profit or loss on an impact investment-by-investment basis. IFRS 15: "Revenue This new standard aims to provide a single model for Currently IASB: 01/01/2018 from Contracts with recognising turnover for all types of contracts irrespective of the being EU: 09/11/2017 Customers" sector of activity. Organised around five key steps, the model is measured Group: pending based on the transfer of control which can be continuous or adoption immediate. The notion of transfer of risks and benefits is no longer determinant. The income is recognised at the time of supply of the promised goods or services in an amount that reflects the consideration expected in return. IFRS 16 "Leases" This new standard concerns the recognition of lease Currently IASB: 01/01/2019 agreements and will replace the current IAS 17 standard. being EU: 31/10/2017 It consists of recognition by lessees of all lease agreements of measured Group: 01/01/2019 longer than 1 year as finance leases by recording a fixed asset (right-of-use) offset by a debt under liabilities. Recognition by the lessor remains similar to IAS 17.

The impacts of application of these new standards are currently being assessed.

2.3. Use of Management estimates in the application of Finally, in the absence of standards or interpretations applicable the Group’s accounting standards to a specific transaction, Group management must use its best judgement to define and implement accounting methods that In order to draw up the Group’s accounts in accordance with provide the most relevant and reliable information, to ensure that IAS 8 - Accounting Policies, Changes in Accounting Estimates the financial statements: and Errors, management must make estimates and assump- ■■ present a true and fair view of the Group’s financial position tions, notably based on ongoing action plans on certain opera- and cash flows; tions, affecting the amounts stated in the financial statements. ■■ reflect the economic reality of the transactions. Management has to revise such estimates in the light of changes in the circumstances on which they are based or further to new information. Management also has to exercise judgement in how accounting methods are applied. As a result, future estimates may be different from those adopted as of 31 December 2017.

The estimates and assumptions primarily concern the lengths of contractual relations, asset impairment tests, deferred tax assets and financial instruments, as well as provisions, in particular provisions for pensions, litigation and losses on contracts and recognition of amounts to be received and penalties to be paid arising from contractual relationships.

43 2. CONSOLIDATED FINANCIAL STATEMENTS | KEOLIS S.A. 2017

2.4. Accounting principles Year-end closing timing differences 2.4.1. General measurement method For companies whose financial year does not end on 31st The assets and liabilities in the Group’s consolidated financial December, interim financial statements as at 31st December are statements are measured and recognised according to various established. measurement bases authorised by IFRS, primarily the historical cost basis of accounting, with the exception of derivative finan- Transactions eliminated in the consolidated financial sta- cial instruments and financial assets held for trading purposes tements or classified as AFS (available for sale), which are measured at Transactions between consolidated companies which have an fair value. impact on their balance sheet or income statement are elimina- ted. Losses on transactions between consolidated companies 2.4.2. Methods of consolidation that are indicative of value impairment are not eliminated. IAS 12 Subsidiaries are recognised in the consolidated statements from “Income Taxes” applies to temporary differences resulting from the date on which control thereof reverted to the Group. They the elimination of profits and losses on intra-group transactions. are derecognised from the date on which the Group ceased to control them. The income and expenses of the companies are 2.4.3. Translation of transactions and financial state- included in the Group’s income statement from the date that ments of foreign companies control was taken, and up to the date on which the Group lost control. Translation of the financial statements of foreign compa- nies Fully consolidated subsidiaries The financial statements of consolidated foreign subsidiaries, All the Group’s subsidiaries are companies it exclusively controls whose functional currency is different from the euro which is the directly or indirectly. The Group’s consolidated financial state- reporting currency, are translated on the following bases: ments include the assets, liabilities, income and expenses of ■■ assets and liabilities are translated at the official exchange these companies. rates prevailing at the year-end date; Exclusive control exists when Keolis S.A. has power over the ■■ income and expenses are translated at the average rate for entity, is exposed or has rights to variable returns, and has the the period, unless exchange rates fluctuate significantly; ability to affect those returns. In ascertaining whether there is ■■ goodwill and fair value adjustments recognised on the control, account is taken of the established rules of governance acquisition of companies whose functional currency is not and the rights held by the other shareholders in order to ensure the euro are considered to be the assets and liabilities of that they are merely protective in nature. Potential voting rights, such companies: they are thus stated in the functional cur- whether immediately exercisable or convertible, including those rency of the said companies and converted at the closing held by another entity, are also analysed to determine those rate of each period; conferring substantive rights in the assessment of power, in ■■ the resulting foreign exchange translation differences are accordance with IFRS 10 “Consolidated Financial Statements”. recognised in consolidated equity under the item “foreign exchange translation reserves”. Associates and joint ventures consolidated under the equity method Translation of foreign currency transactions Entities in which the Group exerts significant influence without The functional currency of Group companies is their local cur- exercising control are associates. Significant influence is presu- rency. Transactions denominated in foreign currency are trans- med when the Group holds upwards of 20% of the voting rights. lated by the subsidiaries into their functional currency at the rate Under the equity method, investments in associates or joint of exchange prevailing at the transaction date. ventures are capitalised in the consolidated balance sheet at Monetary assets and liabilities denominated in foreign currency their cost of acquisition. The Group’s share of income (loss) of are translated into euros at the last official year-end exchange associates or joint ventures is recognised in profit or loss, whe- rate. The corresponding exchange differences are recorded in reas its share of post-acquisition movements in reserves is reco- financial income (expense). gnised in reserves. Post-acquisition movements are posted in adjustment to the value of the investment. The Group’s share of 2.4.4. Business combinations an associate’s or a joint venture’s losses is recognised up to the The Group has applied IFRS 3 (Revised) since 1st January 2010. limit of the carrying amount of the investment as well as any possible long-term share. Additional losses are not booked as A business combination is understood to involve the obtaining provisions, unless the Group is legally or implicitly required to of control. Upon acquisition of a controlling interest, the acquirer support the said associate or joint venture. recognises the fair value of the acquired assets and liabilities of the acquired entity and also assesses the goodwill or profit from Non-controlling investments them. A non-controlling investment is the share of interest in a subsi- diary which is not directly attributable to the parent company. Non-controlling interests are recognised according to the fol- Non-controlling investments are recognised at fair value on the lowing options for each combination: takeover date. ■■ either based on their share in the fair value of the assets and

44 2. CONSOLIDATED FINANCIAL STATEMENTS | KEOLIS S.A. 2017

liabilities acquired (the so-called partial goodwill method); Negative goodwill is recognised in the income statement on the ■■ or at fair value of the shareholding (the so-called complete date of acquisition. goodwill method). 2.4.6. Commitments to repurchase the non-controlling Acquisition costs are expensed in the year. interests in a subsidiary The Group has given promises to non-controlling shareholders For a takeover in several stages, the investment held prior to the of certain fully consolidated subsidiaries to repurchase their establishment of control is revalued at its fair value on the date shares. of takeover and any profit or loss arising therefrom is recognised in the operational profit or loss after gains or losses from dispo- These purchase commitments (firm or conditional) of non- sals. controlling interests do not transfer risks and benefits. They are recognised in financial debts against a reduction of those ear- Commitments linked to earn-out clauses are measured at their nings attributable to non-controlling interests. fair value on the acquisition date. Where the value of the commitment exceeds the amount of earnings attributable to non-controlling interests the balance is Adjustments to the cash consideration during the twelve months recognised in equity attributable to Group shareholders. after the date of acquisition must be analysed in order to deter- mine: The fair value of non-controlling interest buyout commitments is ■■ if the adjustment is linked to new factors occurring since the reviewed at each financial accounting period end. A change in acquisition of control: counterpart in profit for the year; the corresponding financial liability is booked against equity. ■■ if the adjustment is the result of new information collected This provision applies to commitments to purchase non-control- enabling fine-tuning of the valuation on the takeover date: ling interests issued after the application date of revised IFRS 3, counterparty in goodwill. i.e. 1st January 2010. For those issued before that date, the change in valuation will be A subsequent change of debt corresponding to additional consi- booked against the associated goodwill. deration beyond the twelve month period is booked in profit for the year. 2.4.7. Service concession arrangements

After the acquisition of control, purchases/disposals without loss Presentation of the IFRIC 12 interpretation of control are treated as transactions between shareholders and An arrangement is included in the scope of interpretation of IFRIC therefore directly through equity. 12, where the assets used to carry out the public service are controlled by the grantor. Control is presumed when the two 2.4.5. Goodwill conditions below are met: Goodwill on acquisition represents the excess of the cost of an ■■ the grantor controls or regulates the public service, i.e. it acquisition over the share acquired by the Group of the fair value controls or regulates the services that must be rendered, of the acquired assets and liabilities of the acquired entity on the through the infrastructure covered by the concession and date of acquisition. determines to whom and at what price the service shall be rendered; and The goodwill recognised for an associate is included in the value ■■ the grantor controls the infrastructure on termination of the of the investment in it under “Investments under the equity contract, i.e. the right to regain possession of the infrastruc- method”, in the statement of financial position. ture at the end of the contract.

Corrections or adjustments may be made to the fair value of In its public transport activities, the Group is notably the holder assets, liabilities and contingent liabilities acquired in the twelve of outsourced public service contracts. months following the acquisition, when new information arises affecting facts and circumstances which were in evidence at this In France, the Group operates outsourced public service date of acquisition. Goodwill is then corrected with retroactive contracts, mainly in the form of operate and maintain (O&M) effect. Beyond that date, any change in assets acquired and contracts whereby the operator is responsible for operating and liabilities assumed is recognised in the income statement. If the maintaining facilities owned and funded by local and regional information is a result of events occurring after the date of acqui- authorities – public transport authorities (PTAs). sition, the changes are recognised in profit for the year. As goodwill cannot be amortized, it undergoes impairment tests Pursuant to the interpretation of IFRIC 12, in this case, the ope- every year or at more frequent intervals when events or changes rator cannot include the infrastructure controlled by the grantor in circumstances indicate possible loss in value (see 2.4.10). in its balance sheet as tangible assets, but either as an intangible asset (“intangible asset model”) and/ or as a financial asset Goodwill is allocated to cash generating units or groups thereof (“financial asset model”): which are likely to benefit from synergies resulting from aggre- ■■ the “intangible asset model” applies where the operator gation as described in note 2.4.10. receives a right to charge users for the public service and

45 2. CONSOLIDATED FINANCIAL STATEMENTS | KEOLIS S.A. 2017

thus bears a financial risk; 2.4.8. Intangible assets excluding goodwill ■■ the “financial asset model” applies where the operator Intangible assets are shown in the statement of financial position obtains an unconditional right to receive cash or other finan- at their acquisition cost less the accumulated amortisation and cial asset, either directly or indirectly through guarantees impairments. given by the grantor on the amount of cash payments from the public service. The remuneration is independent of the Intangible assets mainly consist of patents, licences, trademarks, extent to which the public uses the infrastructure. rights under contracts, pension plan assets, software and ser- Where the service is provided using infrastructure rented from a vice concession intangible assets as defined by IFRIC 12. third party and controlled by the grantor, the Group has reco- gnised payments of fixed and variable fees in the IFRIC 12 asset In the event of a successful bid, the Group capitalises mobilisa- valuation. tion costs, which meet capitalisation criteria, from the point at which it is almost certain that the contract will be awarded. The Financial asset model corresponding contract asset is amortised over the life of the In service concessions, the operator receives an unconditional contract. right if the grantor gives it a contractual guarantee to pay: ■■ amounts specified or determined in the contract; or When the Group completes an acquisition, the contractual rela- ■■ the shortfall, if any – between the amount received from tionship between the acquired company and its client (the public users of the public service and specified or determinable transport authority) is assessed at fair value and recognised amounts in the contract. separately from the goodwill as a contractual right satisfying the qualifying criteria of IAS 38 and IFRS 3 revised. Financial assets stemming from the application of the IFRIC 12 interpretation are recorded in the statement of financial position Where their useful life is defined, intangible assets are amortised under “Non-current financial assets” detailed in Note 5.5. They on a straight-line basis over periods corresponding to their are recognised at amortised cost and repaid. expected useful life. The amortisation method and useful lives are revised at least each financial year or when necessary. The The financial income, calculated on the basis of the effective rate estimated useful lives are as follows: of interest, the equivalent of the project’s internal rate of return, ■■ Trademarks: between five and fifteen years; is recognised as revenue. ■■ contractual rights: two to twenty years, corresponding to their estimated useful life, allowing for a contract renewal Intangible asset model rate when the Group has a high renewal rate in the Cash The intangible asset model applies where the operator is paid Generating Unit (CGU) concerned; by users or does not receive any contractual guarantee from the ■■ software: one to five years; grantor on the amount to be collected. The intangible asset ■■ service concession assets: amortised over the term of the corresponds to the right granted by the grantor to the operator contract (see 2.4.7); to charge users for the public service. ■■ contract assets, amortised over the life of the contract. Intangible assets resulting from the application of the IFRIC 12 ■■ Where their useful life is indefinite, intangible assets are not interpretation are booked in the statement of financial position amortised. under the heading “Other intangible fixed assets” detailed in Note 5.2. These assets are amortised straight-line over the term 2.4.9. Property, plant and equipment of the contract. Expenditure on property, plant and equipment by the Group is Within the framework of the intangible asset model, revenues recognised as an asset at its acquisition cost where it satisfies include: the following criteria: ■■ Turnover as and when assets or infrastructures under ■■ it is likely that the future economic benefits relating to the construction are completed; asset will fall to the Group; ■■ Remuneration relating to the provision of services. ■■ the cost of the asset can be reliably measured.

Mixed or bifurcation model Property, plant and equipment are shown in the statement of Application of the financial asset model or the intangible asset financial position at their acquisition cost less the accumulated model is based on the existence of guarantees of payment given depreciation and impairments. The cost includes the asset’s by the grantor. purchase or production cost and all the costs directly incurred in making it usable. However, certain contracts may include a payment commitment from the grantor which partially covers the investment, with the Items of property, plant and equipment cease to be recognised balance covered through fees charged to users. as assets when they are derecognised (through disposal or retirement), or when no future economic benefit is expected from In this case, the amount guaranteed by the grantor is recognised their use or disposal. Any gain or loss arising from the dereco- as a financial asset and the balance as an intangible asset. gnition of an asset from the statement of financial position (the difference between the net income from disposal and the asset’s

46 2. CONSOLIDATED FINANCIAL STATEMENTS | KEOLIS S.A. 2017

carrying amount) is recognised in the income statement in the are as follows: the existence of an automatic ownership transfer period of its retirement. clause or a transfer option; the conditions under which this clause may be exercised; a comparison between the length of Given the nature of the Group’s business, the activities of the the lease and the estimated life of the asset; the uniqueness of different subsidiaries do not include holding investment property the asset used, and a comparison of the present value of the assets. minimum payments under the agreement with the fair value of the asset. Subsequent expenditure Subsequent expenditure incurred in replacing property, plant or Recognition of finance leases equipment is recognised under PPE only if it satisfies the fore- At the point of initial recognition the assets treated as finance going general criteria and qualify as components. leases are posted as tangible assets, with a corresponding finan- Otherwise, this expenditure is recognised in the income state- cial debt. The asset is recognized at the fair value of the asset at ment as incurred. the start of the lease or, if it is lower, the present value of the minimum payments under the lease. Through its public passenger transport activity, the Group incurs multiyear expenditure on heavy maintenance and major servicing Recognition of operating leases operations on its light rail (underground railway, tramway) and Payments made under operating lease agreements are reco- passenger rail rolling stock. These are capitalised as assets as a gnised as expenses in the income statement. component overhaul, which is subsequently depreciated. Furthermore, expenditure which relates to refurbishments or Government investment grants leads to an increase in productive capacity and modifications Government grants wholly or partly covering the cost of investing bringing new functionality or that extend lifespans are contribu- in an asset are recognised as “Trade payables and other liabili- tions that can be qualified as operator assets. ties” and systematically written down in the income statement over the useful lives of the assets concerned. Depreciation The residual values and useful lives of the assets are reviewed 2.4.10. Impairment of capitalised assets and non-finan- and, where applicable, adjusted, annually or whenever lasting cial assets changes arise in operating conditions. The Group performs systematic impairment tests annually (or To date, the residual values at the end of the useful life are more frequently where value impairment is indicated) of goodwill regarded as immaterial. and other intangible assets that have indefinite useful lives, and therefore cannot be depreciated. Land is not depreciated. Other property, plant and equipment items are depreciated using the straight line method. The esti- For property, plant and equipment, and intangible assets with mated useful lives are as follows: finite useful lives, which are therefore depreciated or amortised, Buildings 15 - 20 years an impairment test is only conducted where impairment is indi- cated. Equipment and tooling 5 - 10 years Cash Generating Units (CGUs) are the smallest group of assets Office equipment and furniture 5 - 10 years generating cash flows largely independently of other asset Vehicles: groups. Such units or groups of units correspond to activities in France, and internationally are mainly classed by country. Cars 5 years Coaches and buses 10 - 15 years For testing purposes, the assets are aggregated within CGUs in accordance with IAS 36 “Impairment of Assets”. Rolling stock 15 - 30 years

These tests compare the net carrying amount of assets with their Lease agreements recoverable amount, which is the higher of the fair value less the As part of its various operations, the Group uses assets made potential sales costs or the value in use of the asset. In the available through lease agreements. absence of any fair value observable on an organised market, These lease agreements are the subject of an analysis based on the recoverable value of the CGUs is determined on the basis of the situations described and indicators provided in IAS 17 to their value in use. determine whether they are operating lease agreements or finance leases. The carrying amount of each asset group tested is compared Finance leases are agreements that transfer almost all of the risks with its value in use defined as the sum of the net cash flows and benefits of the relevant asset to the lessee. All the lease arising from the latest forecasts for each of the CGUs, drawn up agreements that do not comply with the definition of a finance using the main assumptions and procedures set out below: lease are classified as operating lease agreements. ■■ medium-term plan and budgets over a 5-year timeframe, The main indicators examined by the Group to assess whether drawn up by Management on the basis of growth and pro- a lease agreement transfers almost all of the risks and benefits fitability assumptions taking account of past performance,

47 2. CONSOLIDATED FINANCIAL STATEMENTS | KEOLIS S.A. 2017

foreseeable developments in the economic environment Equity instruments and the expected development of markets; An equity instrument under the terms of IAS 32 offers its holder ■■ extrapolation of the net cash flow of the last year or the a residual right to the assets of an entity after deduction of the average of cash flows over the five previous years by liabilities, without the issuer of the instrument being obliged: applying the growth assumptions stated in note 5.1; ■■ to give them cash or any other financial asset, ■■ discounted future value of the cash flows arising from these ■■ or to exchange financial instruments under terms which plans at a rate determined using the weighted average cost would be potentially unfavourable to them. of capital (WACC) of the Group. Equity instruments within the Keolis Group relate to non-conso- Value impairment is recognised in the income statement, under lidated investments. The Keolis Group has irrevocably selected other non-recurring expense, if the carrying amount of a cash- the classification of its equity assets, either in the category of generating unit or group of such units is greater than its recove- securities whose fair value varies in equity in “Items which will not rable amount. The value impairment is allocated first to the be recycled in profit/loss - FVOCI” with no option to recycle in goodwill apportioned to the CGU or CGU group tested, then to profit/loss (this is the case for strategic investments in entities the other assets of the CGU or CGU group in proportion to their created under public/private partnerships, and historic invest- carrying amount. ments on the date of the first application), or in the category of securities whose corresponding variations in fair value pass in This allocation must not result in the carrying amount of an indi- the income statement. vidual asset being lower than its fair value, value in use or zero. Debt instruments Impairment losses allocated to acquisition goodwill cannot be Debt instruments are defined by standard IAS 32 as being finan- reversed, unlike the impairment losses of other property, plant cial instruments that do not come within the definition of equity and equipment and intangible assets. instruments mentioned above. The Group analyses the cash flows generated by the instrument In the event of an impairment loss being reversed, the asset’s and Management’s intentions with regard to these investments, carrying amount is capped at the carrying amount, net of any in order to determine the classification of the financial instru- depreciation or amortisation without taking into account any ments according to the following three categories: value impairment recognised in prior periods. When an impair- ■■ Debt instrument valued at amortised cost “hold to collect”: ment loss or a reversal of an impairment loss has been reco- this means debt instruments whose cash flows represent gnised, the depreciation charge is adjusted for future periods so interest or repayment of capital on specific dates (com- that the adjusted carrying amount of the asset, less its residual pliance with “basic loan” criteria), and that the Management value, if any, is spread systematically over the remaining useful intends to retain to maturity. life. ■■ Debt instruments valued at the Fair Value by Equity (“Other Items in Comprehensive Income”) recycled in profit/loss at 2.4.11. Financial assets the time of the sale “hold to collect and sell”: these are debt Purchases and sales of financial assets are accounted for at their instruments whose cash flows represent interest or repay- transaction date, the date on which the Group is committed to ment of capital on specific dates (compliance with “basic the purchase or sale of the asset. On initial recognition, financial loan” criteria), and that the Management intends sell in the assets are recognised in the statement of financial position at fair medium term. value plus the transaction costs directly attributable to the acqui- ■■ Debt instruments valued at Fair Value in profit/loss “hold to sition or issue of the asset (except for the category of financial sell”: these are assets measured at fair value, for which transaction costs are ●● either debt instruments whose cash flows represent recognised directly in the income statement). interest or repayment of capital on specific dates (com- pliance with “basic loan” criteria), and that the Financial assets are derecognised from the statement of financial Management intends to sell in the short term. position to the extent that entitlements to future cash flows have ●● or debt instruments where it cannot be contractually expired or have been transferred to a third party, and the Group asserted that the cash flows represent interest or has transferred virtually all the risks and benefits or the control of repayment of capital on specific dates. such assets. Financial assets, the maturity (or intended holding period) of which exceeds one year, are recognised under “Non- In the case of instruments with a debt component and an equity current financial assets”. component, IFRS 9 no longer authorises their separation: an analysis of the instrument will lead to its being classified in one In applying the standard IFRS 9, the Group determines the clas- of the two categories. For example, loans convertible into shares sification of financial assets, on the date of initial recognition, into are classified in the category of debt instruments whose varia- one of the accounting categories provided for, according to the tions in fair value pass in the income statement. management model applied for these assets and the characte- ristics of the contractual cash flows (“basic loan” criteria).

48 2. CONSOLIDATED FINANCIAL STATEMENTS | KEOLIS S.A. 2017

Impairment of financial assets with negligible risk of a change in value, maturing less than three When financial assets are first recognised, the Group considers months from the date of acquisition. the expected credit losses not only on the basis of an objective indication but also with regard to statistics arising from its past 2.4.15. Corporate income tax experience. Keolis S.A. and its French subsidiaries are part of the tax peri- Accordingly, the initial value of a financial asset depends on the meter of its parent company GROUPE KEOLIS S.A.S. Other tax level of credit risk at its initial recognition. consolidation regimes also exist abroad. The effect of these Subsequently, a loss of value is recognised on an asset or a regimes is recognised in the income statement. group of financial assets not measured at fair value, in the case The income tax expense or income includes the current tax of a significant credit risk or where there is an objective indication expense or income and the deferred tax expense or income. Tax of impairment arising from one or more events that have occur- is recognised in profit for the year unless it relates to items that red since the initial recognition of the asset, and where such an are directly recognised under equity, in which case, the tax is impairing event has an impact on the estimated future cash flows recognised under equity. from the financial asset or group of financial assets, and if its carrying value is higher than its estimated recoverable value. Current tax is the estimated amount of tax due on the taxable The measurement of trade receivables is described in note profit for the period. It also includes adjustments to the amount 2.4.13. of tax payable in respect of previous periods. Deferred tax is calculated for each individual entity using the 2.4.12. Inventories balance sheet approach, on the temporary differences between Inventories consist mainly of consumables and miscellaneous the carrying amount of the assets and liabilities and their taxation goods or supplies used for the maintenance and upkeep of base, including assets of which the Group has possession under vehicles or intended for resale. finance lease agreements. These inventories are valued at purchase cost. Impairment is recognised to reduce the purchase cost (determined using the Measurement of deferred tax assets and liabilities depends on weighted average cost (WAC) method or the First-in, First-out whether the Group expects to recover or to pay the carrying (FIFO) method) to the net realisable value if lower. Pursuant to amount of the assets and liabilities, under the variable-carry- IAS 2, the net realisable value is the estimated sale price in the forward method, using the rates of taxation that were adopted normal course of business, less the estimated cost for comple- or virtually adopted at the reporting date. A deferred tax asset is tion and realisation of the sale. only recognised or maintained as an asset to the extent that the Group is likely to benefit from future taxable profits to which the 2.4.13. Trade receivables and other debtors related deductible temporary difference may be imputed. Trade receivables and receivables from other debtors are initially recognised at their fair value which, in most cases is their nomi- Deferred tax assets and liabilities are not discounted. nal value, given the generally short payment times. The carrying amount is subsequently measured where required at an amor- Deferred tax assets and liabilities are offset in each taxable entity tised cost using the effective interest rate method, less any when it recovers the asset and settles the liability on the same impairment losses. due date, subject to the following conditions being met: When the trade debt is first accounted for, the Group considers ■■ legally enforceable right to offset, the potential expected credit losses not only on the basis of an ■■ intention to settle, objective indication but also with regard to statistics arising from ■■ schedule of payments. its past experience. In view of the low credit risk borne by its customers (mainly public Deferred tax liabilities are recognised for all taxable temporary authorities), the Keolis Group applies the simplified method for differences, with the exception of certain differences between trade receivables and states that the expected credit loss on the values of the Group’s proportionate interests in the net assets recognition of the receivable is negligible. (See paragraph 2.2). of subsidiaries, joint ventures and associates and their tax values. This exception applies espacially to the income of subsidiaries If there is subsequently an objective indication of impairment or yet to be distributed, should distribution thereof to shareholders a risk that the Group may be unable to collect all the contractual generate taxation; if the Group has decided not to distribute amounts (principal plus interest) on the date set in the contractual profits retained by the subsidiary in the foreseeable future, no payment schedule, an impairment loss is recognised in the deferred tax liabilities are recognised. income statement. This allowance is equal to the difference between the carrying amount and the estimated recoverable 2.4.16. Borrowings and financial debt future cash flows, discounted at the original effective rate of All borrowings are initially recognised at fair value, less the related interest. borrowing costs. Thereafter, they are recognised at amortised cost, using the effective interest rate method, with the difference 2.4.14. Cash and cash equivalents between the cost and the redemption value recognised in the This item includes cash, sight deposits and other short-term income statement over the term of the borrowings. deposits as well as other easily convertible liquid instruments

49 2. CONSOLIDATED FINANCIAL STATEMENTS | KEOLIS S.A. 2017

The effective interest rate is the rate used to obtain the original veness of the hedging relationship prospective to the date carrying amount of a loan by discounting the future cash inflows of establishment, and retrospective to each financial close. or outflows over the loan’s term. The original carrying amount of This effectiveness must be reliably measured and fall within the loan includes the transaction costs of the operation and any 80% and 125%. issuance premiums. Interest rate, foreign exchange and commodity derivative finan- When a debt is reimbursed early, any non-amortised costs are cial instruments are entered into with first-class bank counter- recognised as expenses. parties in accordance with the Group’s counterparty risk management policy. Consequently, the counterparty risk can be In the event that a loan is renegotiated, standard IFRS 9 stage 1 regarded as negligible. lays down that the original interest rate is maintained, and an immediate impact is recognised in the income statement Interest rate risks relating to the variable rate portion of amounting to the difference between the expected contractual its financial debt flows prior to amendment, and the expected contractual flows The Group’s interest rate risk exposure results from its financial after amendment. The Keolis Group did not suffer any impact debt. The Group covers this risk by using derivative financial from this stage of the standard at 31 December 2017. instruments.

2.4.17. Derivative financial instruments The objective of the risk management is to protect the Group’s The Group uses derivative financial instruments to manage financial income/(expense) from an increase in interest rates, exposure to financial market risks resulting from its operational, while taking advantage of a decrease in rates to the greatest financial and investment activities: extent possible. ■■ Interest rate risk; The interest rate hedging policy implemented consists in favou- ■■ Foreign exchange risk; ring fixed rate derivative financial instruments. The management ■■ Commodities risk. horizon adopted is usually a rolling five years, but this can be greater dependent upon the hedging requirement. The derivative financial instruments are measured and reco- gnised at fair value in the statement of financial position on the The derivative financial instruments which the Group uses are date they are established, then on each financial year end date. standard, liquid and available on the market, namely: ■■ swaps; Fair value is measured by using standard valuation methods and ■■ cap calls; is based on the mid-market conditions commonly used in the ■■ sales of caps to unwind an existing cap or to realise a cap markets. The market data used is Level 2 data, as described in spread; IFRS 13. ■■ floor puts if tied with cap calls to create a symmetrical or asymmetrical collar; The treatment of the gains and losses under the fair value reva- ■■ floor calls, in particular to buy back floors that constitute luation depends on whether or not the derivative instrument is asymmetrical collars; considered a hedging instrument and the nature of the hedged ■■ swaption calls; item. ■■ swaption puts if tied with calls to constitute swaption collars.

The changes in fair value of derivative financial instruments that Derivative financial instruments eligible for hedge accounting are are not eligible for hedge accounting are recognised under finan- recognised under cash flow hedges. The derivative financial cial income/(expense). instruments that are not eligible are recognised under trading.

Certain derivative financial instruments are eligible for one of the Changes in the intrinsic value of derivative financial instruments three hedge accounting categories defined in IAS 39: recognised under cash flow hedges are entirely recognised ■■ Fair value hedge; within equity (OCI - other comprehensive income). The other ■■ Cash flow hedge; items are recognised as financial income/(expense): ■■ Net investment hedge. ■■ changes in fair value of derivative financial instruments not eligible for hedge accounting (for example, the asymmetrical They are recognised in accordance with hedge accounting rules. portion of collars); ■■ changes in the time value of all derivative financial instru- The criteria to apply hedge accounting are mainly: ments; ■■ general hedging documentation that describes the Group’s ■■ option premiums. exposure to the various financial risks and its hedging stra- tegy, Foreign exchange risk ■■ a hedging relationship clearly established on the date on The Group has put in place intra-group loans denominated in which each derivative financial instrument is established, foreign currency and recognised in current accounts. In order to ■■ the use of effectiveness testing to demonstrate the effecti- cover the resulting foreign exchange risk, the Group uses deri-

50 2. CONSOLIDATED FINANCIAL STATEMENTS | KEOLIS S.A. 2017

vative financial instruments which allow it to fix the exchange rate Derivative financial instruments eligible for hedge accounting are of these intra-group loans. recognised under cash flow hedges. The derivative financial instruments that are not eligible are recognised under trading. The Group also makes net investments in the capital of its foreign subsidiaries in local currency. To cover the foreign exchange risks Changes in the intrinsic value of derivative financial instruments engendered by these investments, the Group uses derivative recognised under cash flow hedges are entirely recognised financial instruments in controlled amounts. Management’s within equity (OCI). The other items are recognised as financial objective is to protect the balance sheet values of these invest- income/(expense): ments in local currency. The foreign exchange hedging policy ■■ changes in fair value of derivative financial instruments not implemented to achieve this objective consists of maintaining a eligible for hedge accounting (for example, the asymmetrical reference exchange rate defined for the year. portion of collars); ■■ changes in the time value of all derivative financial instru- The derivative financial instruments used by the Group are stan- ments; dard, liquid and market-available: ■■ the contango/backwardation component, corresponding ■■ forward and futures sales and purchases; to the price difference between the forward price for swaps ■■ foreign exchange swaps; (or exercise price for options) and the spot price; ■■ call options; ■■ option premiums. ■■ put options in combination with call options to provide sym- metric or asymmetric collars. 2.4.18. Provisions

Some derivative financial instruments held by the Group are Provisions for pension and post-employment commit- eligible for net investment hedge accounting as described in IAS ments (IAS19 revised) 39. The derivative financial instruments that are not eligible are The Group offers its employees various fringe benefits while they recognised under trading. are in employment or after employment. These benefits arise under the legislation applicable in certain countries and under Changes in the intrinsic value of derivative financial instruments contractual arrangements concluded by the Group with its recognised under net investment hedges are entirely recognised employees, and are either defined contribution plans or defined within equity (OCI). The other items are recognised as financial benefit plans. income/(expense): ■■ changes in fair value of derivative financial instruments not (a) Defined contribution plans eligible for hedge accounting (for example, the asymmetrical Defined contribution plans are characterised by payments to portion of collars); organisations that discharge the employer from any subsequent ■■ changes in the time value of all derivative financial instru- obligation, with the organisations taking responsibility for paying ments; employees their entitlements. Hence, once the contributions are ■■ option premiums. paid, no liability is reported in the Group’s financial statements.

Commodities price risks (b) Defined benefit plans Due to their transportation activities as operators of light vehicle Defined benefit plans refer to plans providing post-employment fleets (coaches and buses), the Group’s subsidiaries must make benefits other than defined contribution plans. The Group has a substantial and regular purchases of diesel. The Group is duty to accrue provisions for the benefits to be paid to serving consequently exposed to a risk in the fluctuation of the price of members of its staff, and to pay the benefits of former members diesel, a risk which is partially hedged in the concession contracts of its staff. In substance, the actuarial and investment risks lie signed with public transport authorities. For the remaining expo- with the Group. sure, the Group implements a hedging policy using derivative These plans mainly concern the following: financial instruments whose objective is to minimise the volatility ■■ pension commitments: pension annuity plans, retirement of Group profits. gratuities, other retirement commitments and additional pension benefits; For this purpose, the Group uses standard, liquid and market- ■■ other long term benefits: long service awards. available derivative financial instruments, namely: ■■ swaps; Description of commitments under defined benefit plans ■■ cap calls; Apart from ordinary, statutory schemes, the Group provides, ■■ cap puts to unwind an existing cap or to realise a cap according to country and local legislation, retirement gratuity spread; schemes (France), defined benefit pension schemes (United ■■ floor puts if tied with cap calls to create symmetrical or Kingdom and Canada) and pensioners’ health benefit schemes asymmetrical collars; (Canada and USA). ■■ floor calls, in particular to buy back floors that constitute asymmetrical collars. In France, retirement gratuities paid to the employee on leaving employment are determined according to the national collective

51 2. CONSOLIDATED FINANCIAL STATEMENTS | KEOLIS S.A. 2017

labour agreement or the company agreement applying in the In France, long service medals are valued on the same basis as business. The following are the two main collective labour agree- pension commitments, with the exception of the recognition of ments applied within the Group: actuarial gains and losses. Actuarial gains and losses are reco- ■■ “Convention collective des transports publics urbains” gnised in the income statement. (CCN_3099) – the national collective labour agreement for urban public transport; ■■ “Convention collective des transports routiers” (CCN_3085) Other types of provisions – the national road-haulage collective labour agreement. Provisions are accrued where at the end of the reporting period: ■■ These schemes are partly financed by insurance policies. ■■ there is a present legal or implicit obligation towards third Their value is measured over the average term of the policies parties arising from a past event; (20 years) except in the case of Keolis S.A., which is mea- ■■ there is a probability that an outflow of resources embodying sured on a perpetuity basis. economic benefits will be required to settle this obligation; ■■ a reliable estimate can be made of the amount. Annual actuarial evaluations of the commitments of the defined benefit schemes are carried out each year end primarily by inde- In the context of its activity, the Group is generally subject to a pendent actuaries. contractual obligation to carry out multiyear heavy maintenance and major servicing operations on facilities managed under a Commitments for pensions, additional pension benefits and public service agreement. The resulting maintenance and repair retirement gratuities are measured using a method that takes costs are analysed in accordance with IAS 37 on provisions and, account of the projected final end-of-career salaries (termed the where applicable, provisions are accrued for heavy maintenance Projected Unit Credit Method) on an individual basis, which is and major servicing and also for lossmaking contracts where the based on assumptions of discount rates and expected long- unavoidable costs incurred to meet the contractual obligation term yields from the funds invested for each country, and on are greater than the economic benefits of the contract. assumptions regarding life expectancy, staff turnover, trends in pay, annuity revaluations and the discounted value of payable In cases of restructuring, an obligation is accrued in so far as the sums. The specific assumptions for each plan take local econo- restructuring has been announced and is the object of a detailed mic and demographic factors into account. formalised plan or has been started prior to the reporting date. Provisions due in more than one year are discounted whenever The value entered in the statement of financial position under the impact is material. provisions “pensions and other employment benefits” is the difference between the discounted value of the future obligations 2.4.19. Payments in shares and similar payments and the fair value of the pension plan assets intended to cover The Group has no share option plans or share purchase war- them. Where the result of this calculation is a net commitment, rants for the benefit of its members of staff. an obligation is recognised as a liability in the statement of finan- cial position. 2.4.20. Trade payables and other accounts payable When bids are won in France or abroad, the asset representing Trade payables and other accounts payable are measured at pension rights and all other employee benefits recognised at the their fair value at initial recognition, which in most cases is their start of the franchise is determined on the basis of the amount nominal value, and otherwise at the amortised cost. Short-term of pension liabilities and other employee benefits over the esti- payables are recognised at their nominal amount unless dis- mated life of the contract. counting at the market rate would have a material impact. In the event of long payment delays, the suppliers’ debt is dis- Actuarial gains/losses relating to post-employment benefits counted. resulting from experience and changes in actuarial assumptions are recognised directly in equity in the year in which they are Other payables include deferred revenues, corresponding to incurred and are off set against the increase or decrease of the income received for services not yet provided, and investment obligation. They are set out in the statement of comprehensive grants not yet credited in the income statement. income. 2.4.21. Revenue and other business income In the income statement, the cost of service earned during the Revenue and other business-related income are measured at financial year is included in the operating profit. the fair value of the consideration received or accrued.

The interest cost in respect of the discounting of pensions and They are measured net of discounts and commercial benefits similar obligations, and the income relating to the expected yields given, where the service has been provided. No income is reco- from the pension plan assets, are recognised under financial gnised where there exists significant uncertainty as to the reco- income and expense. verability of the consideration receivable or the costs incurred or to be incurred in relation to the service, and where the Group The actuarial calculations for pension and similar commitments remains involved in managing the income. are mainly performed by independent actuaries. The revenue from urban passenger transport companies is

52 2. CONSOLIDATED FINANCIAL STATEMENTS | KEOLIS S.A. 2017

recognised according to the terms of the contract signed with Income and expenses, charges to depreciation and provisions the public transport authority, taking account of all additional on non-recurring items include all non-recurring operations clauses and any vested rights (indexation clauses, etc). where costs are significant: this applies in particular to offensive bids, restructuring costs, disposal gains or losses on assets The same applies for revenue from intercity passenger transport other than transport equipment, the amortisation of contractual companies, and other activities not under contract, recognised rights and startup costs in a new country or zone, and to other according to the services provided. items that are by their nature non-recurring.

Revenues include fees from value added services arising from Effects of changes in scope recognised directly in income the Group’s knowhow. These activities (excluding transportation) include: mainly relate to the management of airports and bike rental. ■■ direct acquisition costs in the case of a takeover; ■■ effects of revaluations, at fair value on the acquisition date, Other business-related income covers fees for services consis- of non-controlling interests previously acquired in the case ting mainly of revenues classified by the Group as incidental, as of an acquisition in stages; well as the remuneration of concession financial assets. ■■ subsequent earn-outs; ■■ profit or loss from divestments of holdings which lead to a 2.4.22. Other operating expenses change in the method of consolidation as well as, where Since they are a recurrent feature of the activity, losses or gains applicable, the revaluation effects of retained non-controlling on sales of transport equipment are recognised on a separate interests. line, and included in profit from continuing operations. 2.4.26. EBITDA calculation 2.4.23. Other operating income EBITDA is calculated based on operating profit/(loss), plus or Other operating income mainly comprises the CICE (tax credit minus the profit or loss on asset disposals, the amounts repre- for competitiveness and employment), which was created to senting depreciation and amortisation, increases and reversals help companies finance their competitiveness, in particular of provisions and the share of grant income released. through investment, research, innovation, recruitment, prospec- Recurring EBITDA corresponds to EBITDA less material non- tion of new markets, environmental transition and replenishment recurring items. of their working capital. It applies to remuneration not exceeding two and a half times the minimum wage that the companies pay 2.4.27. Financial income / (expense) their employees in the course of the calendar year. In 2017, the Financial expenses include interest on borrowings and financial tax credit rate remained unchanged at 6%. debt calculated using the effective interest rate method, the cost of early loan repayments or of cancelling credit lines, the financial The CICE is deducted from corporate income tax due for the interest not directly attributable to the operating margin and the year during which the remuneration used for the calculation of financial cost of discounting non-current liabilities. the tax credit was paid. Any non-deducted credit is treated as a receivable from the State and can be used to pay tax due in the Financial income includes income from deposits of cash or cash three years following that in which the credit was earned. At the equivalents and dividends received from non-consolidated com- end of this period, any remaining non-deducted amount is reim- panies. bursed to the company. Other financial income and expense include net foreign exchange The Group holds the view that the CICE is a type of public sub- gains and losses, bank commissions on credit transactions sidy within the application of IAS 20, insofar as it is used for booked as an expense and their rebilling as income, changes in financing working capital related expenditure. The CICE is reco- the fair value of derivative financial instruments when they are to gnised under operating subsidies in the line “Other operating be recognised in the income statement and are recognised income” of the consolidated income statement. respectively as financial income or expenses on transactions, with the exception of changes in the fair value of hedging deri- 2.4.24. Recurring operating profit vatives which are recorded on the same line as the transaction Recurring operating profit corresponds to the whole of the hedged within operating profit. Therefore, any change in the fair expenses and income arising from the Group’s recurring opera- value of derivatives, when they are not eligible for hedge accoun- ting activity before financing activities, the earnings of associates, ting, and the change in value of the ineffective portion for cash activities discontinued or being sold and taxation. flow hedging are recognised in the financial result.

2.4.25. Operating profit or loss All interest on borrowings is recognised as a financial expense Operating profit includes recurring operating profit and all tran- as and when incurred. sactions not directly related to the normal conduct of business, but that cannot be directly attached to any other item in the income statement.

53 2. CONSOLIDATED FINANCIAL STATEMENTS | KEOLIS S.A. 2017

2.4.28. Change in the presentation of the reversals of provisions used As from financial year 2017, reversals of provisions used are henceforth presented in the income statement on the line ”Net depre- ciation and other provisions charged“. In 2016, the reversals were presented in each of the corresponding expense lines. This changed presentation has no effect on the aggregates of the 2016 income statement.

Impact of change in presentation 31/12/2016 31/12/2016 (€ million) of reversals of pro forma provisions used

Revenue 4,866.0 - 4,866.0 Other income from operations 15.4 - 15.4 Income from continuing operations 4,881.4 - 4,881.4 Sub-contracting (189.4) - (189.4) Purchases consumed and external expenses (1,532.2) (5.2) (1,537.4) Taxes (14.5) - (14.5) Staff costs, incentive schemes, profit-sharing (2,913.4) (3.2) (2,916.6) Other operating income 53.2 - 53.2 Other operating expense (25.9) (2.9) (28.8) Net provisions on current assets 0.2 - 0.2 Net depreciation and other provisions charged (191.9) 11.3 (180.6) Profit/(loss) on recurring fixed asset disposals (1.8) - (1.8) Amortisation of grants received 8.4 - 8.4 Recurring operating profit 74.1 - 74.1 Operating profit/loss 28.5 - 28.5 Profit/(loss) from associates 25.4 - 25.4 Operating profit/(loss) after investments under equity method 53.9 - 53.8 Financial income (expense) (34.4) - (34.4) Profit before tax 19.4 - 19.4 Profit for the year (8.4) - (8.4) PROFIT ATTRIBUTABLE TO GROUP (2.8) - (2.8)

54 2. CONSOLIDATED FINANCIAL STATEMENTS | KEOLIS S.A. 2017

3 n HIGHLIGHTS OF THE FINANCIAL YEAR

Keolis and Île-de-France Mobilités signed 20 bus operation contracts in the Île-de-France region. Each of these contracts will run for four years covering the 2017-2020 period, generating cumulative turnover of approximately 750 million euros. These contracts further reinforce Keolis’s status as a major mobility operator in France’s leading economic region.

Elsewhere in France, Keolis was awarded the transport concession contract for the Côte Basque-Adour joint municipal region, for a term of six years and nine months. The Group also won an offensive bid for the Greater Besançon metropolitan area. Furthermore, Keolis had its contracts renewed in Lille, Rennes, Caen, Amiens and Quimper.

Outside France, Keolis reinforced is position in Belgium though the acquisition of the Compagnie des Autocars Liégeois.

Also outside France, the year was prolific in terms of commercial activity with a lot of offensive and defensive bid wins and the start-up of new networks: the takeover of operations in Manchester (tram, United Kingdom), Aarhus (tram, Denmark), Teutoburger-Wald-Network (passenger rail, Germany), Zwenzwoka and Almere (passenger rail and buses, Netherlands), the win of Foothill (buses, United States), the launch of Newcastle (multimodal, Australia), the renewal of Melbourne (tram, Australia), the Gold Coast network extension (tram, Australia), the start-up of Hyderabad (automatic metro, India), and the wins of contracts in Doha (metro, Qatar) and Pudong (automatic metro, China).

55 2. CONSOLIDATED FINANCIAL STATEMENTS | KEOLIS S.A. 2017

4 n NOTES TO THE CONSOLIDATED INCOME STATEMENT

4.1. Staff costs

Staff costs

(€ million) 31/12/2017 31/12/2016

Wages and social charges (2,781.2) (2,450.3) Taxes on remuneration (67.0) (66.1) Other staff expenses (1) (203.9) (397.0) TOTAL (3,052.1) (2,913.4)

(1) Other staff expenses include incentive schemes and profit sharing.

Average number of employees

(number of people) (eq. full time) 31/12/2017 31/12/2016 Managers 2,588 2,102 Supervisory and technical staff 8,354 5,981 Clerical and manual employees, drivers 46,849 45,817 TOTAL 57,791 53,899

Employee numbers are now presented in terms of number of people whereas they were expressed as full-time equivalents in 2016. In 2016, the number of people working for Keolis was 55,318.

4.2. Other operating income Under the CICE, the Group received €57.7 million in 2017 compared to €49.7 million in 2016.

4.3. Operating profit

(€ million) 31/12/2017 31/12/2016

RECURRING OPERATING PROFIT 94.5 67.5 Non-recurring costs of offensive bids (6.1) (4.6) Amortisation of contractual rights and trademarks (8.6) (8.2) Other non-recurring items (12.2) (12.6) n Net reorganisation expenses (10 .7) (13 .0) n Change in provisions for contract losses 2 6. 3 0. n Other (4 .1) (2 .6) TOTAL NON-RECURRING ITEMS (26.9) (25.4) OPERATING PROFIT BEFORE INVESTMENTS UNDER EQUITY METHOD 67.6 42.1

56 2. CONSOLIDATED FINANCIAL STATEMENTS | KEOLIS S.A. 2017

4.4. EBITDA calculation

(€ million) 31/12/2017 31/12/2016

OPERATING PROFIT 67.6 42.1 Net depreciation and other provisions charged 172.7 191.9 Depreciation and provisions on non-recurring items 7.8 8.1 Amortisation of grants received (7.5) (8.4) Reversals of operating provisions utilised on recurring items (1) - (11.1) Reversals of provisions utilised on non-recurring items (1) - (1.3) Profit/(loss) on fixed asset disposals 0.1 1.8 EBITDA 240.7 223.2 Non-recurring income and expense (2) 19.1 18.2 RECURRING EBITDA 259.9 241.4

(1) Reversals of utilised provisions are now presented within net depreciation and other provisions charged (2) Non-recurring income and expense include significant offensive bid costs, major restructuring expenses and other significant exceptional items.

4.5. Share in net profit for the year from investments under the equity method

(€ million) 31/12/2017 31/12/2016

Govia (UK) 25.4 19.7 First / Keolis Transpennine (UK) 0.7 5.4 Other associates (France) 0.2 0.2 Other associates (international, excluding UK) (0.7) - TOTAL JOINT VENTURES AND ASSOCIATES 25.6 25.4

4.6. Financial income / (expense)

(€ million) 31/12/2017 31/12/2016

Net cost of financial debt (8.3) (10.7) n of which Cost of gross financial debt (9 .7) (11 .8) n of which Income from cash and cash equivalents 1 4. 1 1. Other financial income and charges 5.1 1.6 n of which revaluation of securities 0 5. - Other financial charges (8.4) (12.4) n of which foreign exchange impact (0 .1) (4 .3) FINANCIAL INCOME / (EXPENSE) (11.6) (21.4)

57 2. CONSOLIDATED FINANCIAL STATEMENTS | KEOLIS S.A. 2017

4.7. Taxation

The 2017 tax charge breaks down as follows.

(€ million) 31/12/2017 31/12/2016

CURRENT TAX EXPENSE (35.8) (38.4) Tax payable for the period (35.9) (38.5) Adjustments in respect of prior years 0.1 0.1 DEFERRED TAX INCOME (4.8) 10.6 Deferred tax for the period (3.0) 11.1 Impairment loss on deferred tax asset (1.7) (0.6) TAX EXPENSE FOR THE YEAR (40.6) (27.8)

In 2016 and 2017, the Group opted to present a reconciliation of its effective rate at 34.43%.

The reconciliation between the legal rate of taxation in France and the effective rate is as follows:

31/12/2017 31/12/2016 In % In € million In % In € million PROFIT FOR THE YEAR 41.0 18.4 Neutralisation of Profit/(loss) from associates (25.6) (25.4) Neutralisation of Taxation 40.6 27.8 PROFIT BEFORE TAX AND BEFORE PROFIT/(LOSS) FROM ASSOCIATES 56.0 20.8

Theoretical tax using the legal rate of French taxation 34.43% (19.3) 34.43% (7.2) French / foreign taxation rate differentials 4.52% (2.5) -7.10% 1.5 Rate change in France and the USA (1) 8.63% (4.8) 24.14% (5.0) Recognition of deferred taxes on intangible assets -2.64% 1.5 -19.07% 4.0 Effect of reduced rates and changes in tax rates 0.18% (0.1) 0.00% - Adjustment in respect of tax for prior years -0.18% 0.1 -0.48% 0.1 Other permanent differences 11.47% (6.4) 12.39% (2.6) Crédit d’Impôt Compétitivité Emploi -35.47% 19.9 -82.37% 17.1 Effect of direct taxation (CVAE) 11.48% (6.4) 38.12% (7.9) Unrecognised deferred tax assets 40.05% (22.4) 133.72% (27.8) EFFECTIVE RATE OF TAXATION 72.46% (40.6) 133.78% (27.8)

(1) The changes in the corporate income tax rates in France (25.83% from 2022) provided for in the new French Finance Act and in the USA generated net decreases of 0.7 million euros and 4.2 million euros respectively in the deferred tax asset balance at end of 2017.

Unrecognised deferred tax assets in 2017 mainly relate to France, North America, Germany and the Netherlands.

Deferred tax included within non-current assets and liabilities breaks down as follows:

(€ million) 31/12/2017 31/12/2016

DEFERRED TAX ASSETS 105.7 86.9 Less than one year 11.2 10.6 More than one year 94.5 76.3 DEFERRED TAX LIABILITIES (102.2) (77.3) Less than one year (12.5) (12.7) More than one year (89.6) (64.6)

58 2. CONSOLIDATED FINANCIAL STATEMENTS | KEOLIS S.A. 2017

Unused losses amounted to €601.9 million at 31 December 2017 of which €461.9 million were not recognised, taking into account assumptions on the usability of these losses within available time limits, which would represent a deferred tax asset of €159 million.

At each financial year end, the Group assesses for each tax entity the probability of its having taxable profits against which to offset its deferred tax assets or to use available unrecognised tax credits. In making this assessment, the Group takes account of, among other factors, past and present taxable profit, and the companies’ prospects for making future taxable profits.

The change in the net deferred taxes recorded in the statement of financial position breaks down as follows:

(€ million) Net position

OPENING BALANCE ON 1 JANUARY 2017 9.6 Recognised in equity 0.5 Recognised in profit for the year (4.6) Effect of consolidation scope changes (2.9) Foreign exchange translation difference and other movements 0.6 CLOSING BALANCE ON 31 DECEMBER 2017 3.5

(€ million) Net position

OPENING BALANCE ON 1 JANUARY 2016 7.2 Recognised in equity (3.9) Recognised in profit for the year 10.6 Effect of consolidation scope changes (4.8) Foreign exchange translation difference and other movements 0.6 CLOSING BALANCE ON 31 DECEMBER 2016 9.6

Net deferred taxes by type are as follows:

(€ million) 31/12/2017 31/12/2016

Purchase accounting asset revaluations (49.3) (49.7) Staff benefits 36.8 40.4 Tax losses 32.2 44.0 Other (16.2) (25.1) CLOSING BALANCE ON 31 DECEMBER 2017 3.5 9.6

59 2. CONSOLIDATED FINANCIAL STATEMENTS | KEOLIS S.A. 2017

5 n NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION

5.1. Goodwill

Changes in carrying amount

Continental North France Australia Total (€ million) Europe America At 1 January 2017 112.8 104.6 34.8 36.7 289.0 Acquisitions (1) 2.5 0.5 1.0 (0.4) 3.6 Disposals - - - - - Impairment loss for the period - - - - - Foreign exchange translation differences and others 0.5 (0.3) (1.8) (3.6) (5.2) At 31 December 2017 115.7 104.9 34.1 32.7 287.4 Of which gross value 116 .2 104 .9 34 .3 42 .6 297.9 Of which accumulated amortisation and impairment charges (0 .4) - (0 .2) (9 .8) (10.5)

(1) The variation in acquisitions in France mainly relates to the acquisition of Les Coccinelles on 31 March 2017.

Continental North France Australia Total (€ million) Europe America At 1 January 2016 92.9 104.2 36.9 33.3 267.3 Acquisitions (1) 18.8 0.8 (2.8) 1.8 18.6 Disposals - - - - - Impairment loss for the period - - - - - Foreign exchange translation differences and others 1.1 (0.3) 0.7 1.6 3.0 At 31 December 2016 112.8 104.6 34.8 36.7 289.0 Of which gross value 113 .2 104 .6 35 .1 47 .6 300.6 Of which accumulated amortisation and impairment charges (0 .4) - (0 .2) (10 .9) (11.6)

(1) The additional goodwill recorded in 2016 arises principally from the acquisition of Transports Meyer on 11 January 2016.

60 2. CONSOLIDATED FINANCIAL STATEMENTS | KEOLIS S.A. 2017

Impairment testing Les principales hypothèses retenues pour les tests de perte de valeur sont les suivantes :

Discount rate The discount rate used is based on the average cost of capital reflecting current market assessments of the time value of money and the risks specific to the tested asset.

The average weighted cost of capital has been determined by a combination of two methods: the “Capital Asset Pricing Model” (CAPM) method and the weighted average cost of capital method for comparable listed companies. Taking into account these factors, the costs of capital used to discount future cash flows were as follows: WACC 31/12/2017 31/12/2016 KEOLIS 4.49% 4.70% United Kingdom 4.96% 4.70% Sweden 4.73% 4.70% Canada 4.96% 4.70% Denmark 4.49% 4.70% Netherlands 4.25% 4.70% Belgium 4.49% 4.70% Australia 5.20% 4.70% Norway 4.25% 4.70% United States 4.96% 4.70% Germany 4.49% 4.70% France 4.49% 4.70%

These discount rates are rates after tax applied to cash flows after tax. Use thereof results in recoverable amounts identical to those obtained by using pre-tax rates applied to non-taxable cash flows, in accordance with IAS 36.

Long-term growth rates The growth rates applied to the main cash-generating units or groups thereof were as follows: Infinite growth rates 31/12/2017 31/12/2016 KEOLIS 2.00% 2.00% United Kingdom 2.21% 2.00% Sweden 2.11% 2.00% Canada 2.21% 2.00% Denmark 2.00% 2.00% Netherlands 1.89% 2.00% Belgium 2.00% 2.00% Australia 2.32% 2.00% Norway 1.89% 2.00% United States 2.21% 2.00% Germany 2.00% 2.00% France 2.00% 2.00%

Sensitivity of recoverable amounts Sensitivity tests on groups of cash-generating units were carried out by varying the long-term growth rates or the WACC (weighted average cost of capital). A 0.5% decrease in the indefinite growth rate leaves a positive margin between the value in use and the carrying amount of cash- generating units. A 0.5% increase in the discount rate leaves a positive margin between the value in use and the carrying amount of cash-generating units.

61 2. CONSOLIDATED FINANCIAL STATEMENTS | KEOLIS S.A. 2017

5.2. Other intangible assets

(€ million) (1) Authorisations, Patents and Software Trademarks Concession assets Contract assets Other Total Contractual rights At 1 January 2017 28.8 4.0 101.0 3.3 11.9 59.2 208.2 Acquisitions 15.7 - - 1.0 12.1 10.4 39.2 Assets disposed of and scrapped - - - - - (0.1) (0.1) Amortisation (16.6) (0.4) (8.0) (18.0) (1.7) (5.4) (50.0) Changes in reporting scope 0.4 - 4.8 - - 1.7 6.9 Foreign exchange translation differences and other movements 5.1 (0.5) (3.1) 13.7 - (7.6) 7.7 At 31 December 2017 33.4 3.1 94.7 - 22.3 58.3 211.8 Of which gross value 131 .7 5 3. 137 .9 98 .3 52 .9 67 .4 493.6 Of which cumulative depreciation and impairment losses (98 .4) (2 .2) (43 .1) (98 .3) (30 .6) (9 .2) (281.9)

(€ million) (1) Authorisations, Patents and Software Trademarks Concession assets Contract assets Other Total Contractual rights At 1 January 2016 32.7 4.3 96.1 16.0 5.4 49.4 203.9 Acquisitions 12.0 - 0.3 2.0 7.2 20.2 41.7 Assets disposed of and scrapped - - - - - (0.3) (0.3) Amortisation (17.8) (0.4) (7.8) (14.6) (0.6) (6.4) (47.7) Changes in reporting scope - - 11.0 - - (1.5) 9.6 Foreign exchange translation differences and other 1.9 0.1 1.3 - - (2.2) 1.1 movements2 At 31 December 2016 28.8 4.0 101.0 3.3 11.9 59.2 208.2 Of which gross value 120 .4 6 1. 137 .2 87 .5 40 .8 60 .5 452.5 Of which cumulative depreciation and impairment losses (91 .6) (2 .1) (36 .2) (84 .2) (28 .9) (1 .3) (244.3)

(1) See note 2.4.8 for definition of contract assets

62 2. CONSOLIDATED FINANCIAL STATEMENTS | KEOLIS S.A. 2017

5.3. Property, plant and equipment

(€ million) Land & Developments Buildings Equipment and tooling Transport equipment PPE under construction Other Total

At 1 January 2017 37.2 79.3 32.6 509.9 27.2 66.3 752.6 Acquisitions 1.9 9.2 10.8 115.9 33.8 26.0 197.6 Assets disposed of and scrapped (0.4) (2.2) (0.2) (10.9) - (0.6) (14.4) Depreciation (1.3) (9.9) (8.2) (110.2) - (18.7) (148.3) Changes in reporting scope 1.1 - - 4.3 - 0.1 5.4 Foreign exchange translation differences and other movements (0.6) 1.5 1.2 (0.2) (21.2) (3.0) (22.3) At 31 December 2017 37.8 77.9 36.3 508.8 39.8 70.1 770.6 Of which gross value 46 4. 171 .9 110 .7 1 247 2. 39 .8 193 .8 1,809.7 Of which cumulative depreciation and impairment losses (8 6). (93 .9) (74 .5) (738 .4) - (123 .7) (1,039.1)

(€ million) Land & Developments Buildings Equipment and tooling Transport equipment PPE under construction Other Total

At 1 January 2016 37.8 78.1 34.1 489.2 15.5 56.7 711.4 Acquisitions 2.1 6.7 7.3 127.1 23.5 26.6 193.3 Assets disposed of and scrapped (0.7) (0.4) (0.1) (19.9) - (0.4) (21.4) Depreciation (2.3) (11.0) (9.5) (102.7) - (18.1) (143.8) Changes in reporting scope - 0.8 1.2 7.3 - 0.5 9.8 Foreign exchange translation differences and other movements 0.3 5.1 (0.3) 9.0 (11.8) 1.0 3.4 At 31 December 2016 37.2 79.3 32.6 509.9 27.2 66.3 752.6 Of which gross value 47 0. 164 .9 106 .0 1,193 0. 27 .2 180 .3 1,718.4 Of which cumulative depreciation and impairment losses (9 7). (85 6). (73 .4) (683 .1) - (114 .0) (965.8)

Finance leases At 31 December 2017, finance leased assets included within assets in the statement of financial position comprised: Transport Land and Buildings Total (€ million) equipment Net book value of finance leased fixed assets 132.3 10.7 143.1

Schedule of minimum finance lease payments

(€ million) 1 year 1 to 5 years > 5 years Total Principal 40.8 88.3 13.6 142.7 Interest - 4.7 0.4 5.1 FINANCE LEASE PAYMENTS 40.8 93.0 14.0 147.8

63 2. CONSOLIDATED FINANCIAL STATEMENTS | KEOLIS S.A. 2017

5.4. Investments under the equity method The Group holds several investments in joint ventures and associates, notably in the United Kingdom, consolidated under the equity method. The changes in the value of these investments during the financial year can be explained by the items below:

(€ million) 31/12/2017 31/12/2016

AT 1 JANUARY 37.6 39.4 Net profit attributable to Group 25.6 25.4 Profit/(loss) from investments under equity method 25.6 25.4 Change in fair value affecting equity - - Foreign exchange translation differences 0.5 (2.6) Dividends paid (26.6) (24.6) Changes in consolidation scope & other (0.9) - AT 31 DECEMBER 36.2 37.6

The financial elements relating to significant joint ventures are presented below at 100% of their values: 31/12/2017 31/12/2016

(€ million) & subsid’s First / Keolis Transpennine Others associates Total Govia & subsid’s First / Keolis Transpennine Others associates Total

Non-current assets 62.3 - NA NA 52.6 0.3 NA NA Net WCR 31.2 5.3 NA NA 41.9 3.7 NA NA Equity 90.3 5.4 NA NA 91.9 4.1 NA NA Inc. Net profit 72.6 1.5 NA NA 56.9 12.1 NA NA Non-current liabilities 3.2 - NA NA 2.6 (0.1) NA NA Net assets 90.3 5.4 NA NA 91.9 4.1 NA NA Reconciliation of financial data with value of investments under equity method Group share of net assets 31.6 2.4 2.2 36.2 32.2 1.8 3.6 37.6 Net book value of investments 31.6 2.4 2.2 36.2 32.2 1.8 3.6 37.6

With regard to Govia’s activities of in the UK, operating companies are required under contract to retain a level of liquidity such that the public service can be guaranteed in the event of the operator’s insolvency. This requires the operator to maintain a Liquidity Maintenance Ratio. The required amount is equal to a certain number of weeks of direct costs relating to the activity and must be maintained until the end of the franchise. This requirement means that the majority of the cash held by Govia under operational companies cannot be qualified as transferable to the Go-Ahead group, the majority shareholder in Govia. As such, the net cash position at year end is presented in net working capital. However, the net assets held by the Keolis Group in the UK in Govia, amounting to €28.5 million at 31 December 2017, are fully available.

64 2. CONSOLIDATED FINANCIAL STATEMENTS | KEOLIS S.A. 2017

5.5. Current and non-current financial assets

Equity instruments Debt instruments measured at measured at

(€ million) “Fair value” by Profit/loss “Fair value by” OCI innot recyclable P&L Amortised cost by profit/loss by “Fair Value” Profit/Loss Derivative assets Concession financial assets Total

At 31 December 2017 Gross value 3.5 25.7 111.2 - 1.6 162.6 304.7 Impairment ------Net value 3.5 25.7 111.2 - 1.6 162.6 304.7 n Of which less than 1 year - - 17.9 - 1.6 - 19.5 n Of which more than 1 year 3.5 25.7 93.4 - - 162.6 285.2

Equity instruments Debt instruments measured at measured at

(€ million) “Fair value” by Profit/loss “Fair value by” OCI innot recyclable P&L Amortised cost by profit/loss by “Fair Value” Profit/Loss Derivative assets Concession financial assets Total

At 31 December 2017 Gross value 3.0 30.6 36.7 - 2.1 162.2 234.5 Impairment ------Net value 3.0 30.6 36.7 - 2.1 162.2 234.5 n Of which less than 1 year - - 18.2 - 2.1 - 20.3 n Of which more than 1 year 3.0 30.6 18.4 - - 162.2 214.2

The increase in debt instruments comprises new credit facilities granted to EFFIA Holding for €31.2 million and KEOMOTION for €49.6 million.

5.6. Inventories

(€ million) 31/12/2017 31/12/2016

Gross inventories 108.5 96.5 Provisions (5.2) (4.4) NET INVENTORIES 103.3 92.1

65 2. CONSOLIDATED FINANCIAL STATEMENTS | KEOLIS S.A. 2017

5.7. Trade and other receivables

(€ million) 31/12/2017 31/12/2016

Trade receivables 442.7 374.5 Advances and down payments on orders 10.0 8.8 Amortisation of accounts receivable (11.4) (10.5) TRADE RECEIVABLES 441.3 372.9 Receivables from staff and welfare agencies 3.6 4.4 Central government and local authorities 309.6 271.8 Prepayments 21.4 21.5 Other(1) 180.7 169.7 Depreciation of other debtors (1.2) (1.1) OTHER RECEIVABLES 514.2 466.2

(1) Other receivables for 2017 include €67 million representing the Australian Department for Transport’s guarantee on extra holiday rights; these rights appear under liabilities as payables to staff.

5.8. Cash and cash equivalents

Analysis by type

(€ million) 31/12/2016 31/12/2016

Cash 271.3 293.7 Short term investments 5.1 7.9 TOTAL RECOGNISED AS ASSETS 276.5 301.6 Bank overdrafts (166.8) (157.8) NET CASH AND CASH EQUIVALENTS 109.6 143.8

Cash equivalents include highly liquid short term investments that are easily convertible into a known amount of cash and present no significant risk of loss of value.

The Group takes the view that its UCITS classified by the AMF (French financial markets authority) as “euro money-market” meet the criteria necessary to classify them as cash equivalents.

In 2017, the Group carried out several transactions to monetise trade receivables. The amount of receivables thus monetised was €28.1 million at 31 December 2017 versus €44.4 million at 31 December 2016.

In 2017, as in previous years, the receivable arising from the CICE implemented by the French government and recognised by French consolidated tax groups was subject to a “Dailly” sale made by GROUPE KEOLIS S.A.S.

5.9. Equity

Share capital and share premium At 31 December 2017, the share capital was €412.8 million, comprising 34,402,273 ordinary shares with a nominal value of 12 euros each. No diluting instrument was issued during the financial year ended 31 December 2017.

The Group’s borrowing contracts do not include any mandatory gearing ratio clauses.

Treasury shares At 31 December 2017, Keolis S.A. held no treasury shares and was not a party to any purchase or sale option relating to Keolis S.A. shares.

66 2. CONSOLIDATED FINANCIAL STATEMENTS | KEOLIS S.A. 2017

Distributable reserves and earnings At 31 December 2017, Keolis S.A. held distributable reserves and earnings of €132.0 million. The Group recorded a loss for the year amounting to €70.8 million.

Non-controlling interests The main investments not giving control are Keolis Downer, KDR Victoria Pty Ltd, Keolis Commuter Services LLC and Australian Transit Enterprises.

Foreign exchange translation reserve The following were the main exchange rates against the euro used for the 2017 and 2016 financial years:

2017 2016 Average rate Closing rate Average rate Closing rate Pound Sterling 0.876834 0.887200 0.819483 0.856200 Australian Dollar 1.472852 1.534600 1.488282 1.459600 Danish Crown 7.438615 7.444900 7.445189 7.434400 Swedish Crown 9.633786 9.843800 9.468901 9.552500 Norwegian Crown 9.326170 9.840300 9.290600 9.086300 US Dollar 1.129877 1.199300 1.106903 1.054100 Canadian Dollar 1.464183 1.503900 1.465879 1.418800 Indian Rupee 73.556827 76.605500 74.371692 71.593500

5.10. Financial debt and long-term borrowings In 2017 two credit lines were was arranged by Keolis S.A.: ■■ a loan of €20 million to finance rolling stock, arranged and drawn down on 7 December 2017, repayable in instalments over 8 years. This loan is fully hedged by a derivative financial instrument; ■■ a loan of €7 million, arranged and drawn down in December 2017, repayable in instalments over 3 years.

Financial debt breakdown by type

At 31 December 2017 Amounts in the (€ million) statement of financial Term Rates position Finance leasing 1.8 2018 Variable rates Finance leasing 39.0 2018 Fixed rates Owed to non-controlling shareholders (put option) - 2018 - Derivatives 0.9 2018 - Loans 17.5 2018 Fixed rates Loans 15.3 2018 Variable rates SUBTOTAL LESS THAN 1 YEAR 74.4 Finance leasing 4.9 2019-2029 Variable rates Finance leasing 97.0 2019-2029 Fixed rates Employee profit-sharing 0.4 2019-2021 Fixed rates Derivatives - - - Loans 93.9 2019-2029 Fixed rates Loans 198.7 2019-2029 Variable rates SUBTOTAL MORE THAN 1 YEAR 394.9 TOTAL 469.3

67 2. CONSOLIDATED FINANCIAL STATEMENTS | KEOLIS S.A. 2017

At 31 December 2016 Amounts in the (€ million) statement of financial Term Rates position Finance leasing 1.5 2017 Variable rates Finance leasing 32.0 2017 Fixed rates Owed to non-controlling shareholders (put option) 1.0 2017 - Derivatives 0.8 2017 - Loans 27.7 2017 Fixed rates Loans 67.7 2017 Variable rates SUBTOTAL LESS THAN 1 YEAR 130.7 Finance leasing 3.0 2018-2028 Variable rates Finance leasing 95.2 2018-2028 Fixed rates Employee profit-sharing 0.5 2018-2020 Fixed rates Derivatives 0.2 - Loans 54.6 2018-2028 Fixed rates Loans 176.3 2018-2028 Variable rates SUBTOTAL MORE THAN 1 YEAR 329.8 TOTAL 460.5

Financial debt breakdown by maturity

Maturity

(€ million) After 2018 2019 2020 2021 2022 2023 - Total 2028 2028

Finance leasing 40.8 39.5 30.0 10.2 8.7 13.6 - 142.7 Other liabilities 33.6 82.3 44.0 13.7 128.4 13.6 11.1 326.7 TOTAL 74.4 121.8 74.0 23.9 137.0 27.2 11.1 469.3

68 2. CONSOLIDATED FINANCIAL STATEMENTS | KEOLIS S.A. 2017

Statement of changes in financial debt

(€ million) 31 /12/ 2016 Restated Increase Decrease Changes in scope reporting Impact of exchange rate Other 31/12/2017

Finance leasing 33.5 12.1 (7.0) (0.8) (0.5) 3.5 40.8 Owed to non-controlling shareholders (put option) 1.0 - - (1.0) - - - Derivatives 0.8 - - - - 0.1 0.9 Loans 95.4 1.9 (88.8) 0.9 (1.7) 25.0 32.7 SUBTOTAL, LESS THAN 1 YEAR 130.7 14.0 (95.7) (0.9) (2.2) 28.6 74.4 Owed to non-controlling shareholders (put option) ------Finance leasing 98.2 39.6 (31.8) (1.2) (2.0) (0.9) 101.9 Employee profit-sharing 0.5 - - - - - 0.4 Derivatives 0.2 - - - - (0.2) - Loans 230.8 172.0 (69.4) 2.0 (15.1) (27.7) 292.6 SUBTOTAL, MORE THAN 1 YEAR 329.8 211.6 (101.2) 0.7 (17.1) (28.9) 394.9 TOTAL 460.5 225.6 (197.0) (0.2) (19.3) (0.3) 469.3

Mandatory financial ratios Contracts held by Keolis S.A. do not require compliance with any specific financial ratios.

The Group’s contracts, and those of its subsidiaries, include cross acceleration clauses. If the Group or, under certain conditions, its largest subsidiaries do not comply with their commitments, lending institutions may claim default and early reimbursement of a major portion of the Group’s debt.

Taking account of the spread of this financing among various subsidiaries and the quality of the Group’s liquidity resources, the existence of these clauses does not create a material risk to the Group’s financial situation.

In 2014 the Group introduced monitoring of the financial ratios relating to the financing of the Group and its subsidiaries in order to anticipate any adverse changes to these ratios.

69 2. CONSOLIDATED FINANCIAL STATEMENTS | KEOLIS S.A. 2017

5.11. Financial assets and liabilities by category

31/12/2017 Total Financial instruments Fair value

Balance sheet item and instrument class € million Non-current Current Net book value of class in statement of financial position At fair value through equity Loans, receivables, debt at amortised cost At fair value through and loss profit Qualified as hedging Fair value of the class Level 1 Level 2 Level 3 Net financial debt Other loans and receivables 93.4 17.9 111.2 - 111.2 - - 111.2 - 111.2 - 111.2 Financial assets for concessions 162.6 - 162.6 - 162.6 - - 162.6 - 162.6 - SUB-TOTAL OF LOANS AND RECEIVABLES 255.9 17.9 273.8 - 273.8 - - 273.8 - 273.7 - 111.2 Pension assets ------Available for sale (AFS) assets 29.1 - 29.1 29.1 - - - 29.1 - 10.3 18.8 - Assets at fair value, recognised in profit and loss ------Positive fair value of hedging instruments - 0.1 0.1 - - - 0.1 0.1 - 0.1 - 0.1 Positive fair value of trading derivatives - 1.7 1.7 - - 1.7 - 1.7 - 1.7 - 1.7 Cash and cash equivalents - 276.4 276.4 - - 276.4 - 276.4 5.1 271.4 - 276.4 TOTAL CURRENT AND NON- CURRENT FINANCIAL ASSETS 285.0 296.0 581.0 29.1 273.8 278.1 0.1 581.0 5.1 557.1 18.8 389.4 Bank borrowings 292.5 32.3 324.8 - 324.8 - - 324.8 - 324.8 - 324.8 Finance leasing 101.9 40.8 142.7 - 142.7 - - 142.7 - 142.7 - 142.7 SUB-TOTAL OF BORROWINGS 394.3 73.2 467.5 - 467.5 - - 467.5 - 467.5 - 467.5 of which: - measured at amortised cost 394 .3 73 .2 467 .5 - 467 .5 - - 467 .5 - 467 .5 - 467 5. - subject to fair value hedge accounting ------measured according to the "fair value" option ------Negative fair value of hedging instruments - 0.4 0.4 - - - 0.4 0.4 - 0.4 - 0.4 Negative fair value of trading derivatives - 0.5 0.5 - - 0.5 - 0.5 - 0.5 - 0.5 BORROWINGS AND FINANCIAL DEBT 394.3 74.0 468.4 - 467.5 0.4 0.4 468.3 - 468.4 - 468.4 Bank loans and overdrafts - 167.4 167.4 - 167.4 - - 167.4 - 167.4 - 167.4 Debts relating to commitments to purchase non-controlling interests ------TOTAL CURRENT AND NON-CURRENT FINANCIAL 394.3 241.4 635.8 - 634.9 0.4 0.4 635.6 - 635.7 - 635.8 LIABILITIES

GROUP NET FINANCIAL DEBT 301.0 (54.6) 246.4 - 523.6 (277.7) 0.4 246.4 (5.1) 251.5 - 246.4

70 2. CONSOLIDATED FINANCIAL STATEMENTS | KEOLIS S.A. 2017

31/12/2016 Financial instruments Total Fair value

Balance sheet item and instrument class € million Non-current Current Net financial debt At fair value through equity Loans, receivables, debt at amortised cost At fair value through and loss profit Qualified as hedging Net book value of class in statement of financial position Fair value of the class Level 1 Level 2 Level 3 Other loans and receivables 18.4 18.2 36.7 - 36.7 - - 36.7 36.7 - 36.7 - Financial assets for concessions 162.2 - - - 162.2 - - 162.2 162.2 - 162.2 - SUB-TOTAL OF LOANS AND RECEIVABLES 180.6 18.2 36.7 - 198.9 - - 198.9 198.9 - 198.9 - Available for sale (AFS) assets 33.4 - - 33.4 - - - 33.4 33.4 - - 33.4 Assets at fair value, recognised in profit and loss ------Positive fair value of hedging instruments 0.2 - 0.2 - - - 0.2 0.2 0.2 - 0.2 - Positive fair value of trading derivatives - 2.1 2.1 - - 2.1 - 2.1 2.1 - 2.1 - Cash and cash equivalents - 301.6 301.6 - - 301.6 - 301.6 301.6 7.9 293.7 - TOTAL CURRENT AND NON- CURRENT FINANCIAL ASSETS 214.3 321.9 340.5 33.4 198.9 303.6 0.2 536.2 536.2 7.9 495.0 33.4 Bank borrowings 230.8 94.9 325.7 - 325.7 - - 325.7 325.7 - 325.7 - Finance leasing 98.2 33.5 131.7 - 131.7 - - 131.7 131.7 - 131.7 - SUB-TOTAL OF BORROWINGS 329.1 128.4 457.5 - 457.5 - - 457.5 457.5 - 457.5 - of which: - measured at amortised cost 329 .0 128 .5 457 .5 - 457 .5 - - 457 .5 457 .5 - 457.5 - - subject to fair value hedge accounting ------measured according to the "fair value" option ------Negative fair value of hedging instruments 0.2 0.8 1.0 - - - 1.0 1.0 1.0 - 1.0 - Negative fair value of trading derivatives ------BORROWINGS AND FINANCIAL DEBT 329.3 129.2 458.5 - 457.5 - 1.0 458.5 458.5 - 458.5 - Bank loans and overdrafts - 158.3 158.3 - 158.3 - - 158.3 158.3 - 158.3 - Debts relating to commitments to purchase non-controlling interests - 1.0 - 1.0 - - - 1.0 1.0 - - 1.0 TOTAL CURRENT AND NON-CURRENT FINANCIAL 329.3 288.5 616.8 1.0 615.8 - 1.0 617.8 617.8 - 616.8 1.0 LIABILITIES

GROUP NET FINANCIAL DEBT 310.6 (34.4) 276.3 - 579.1 (303.7) 0.8 276.3 276.3 (7.9) 284.1 -

71 2. CONSOLIDATED FINANCIAL STATEMENTS | KEOLIS S.A. 2017

5.12. Risk management and financial derivatives The Group uses derivative financial instruments to manage exposure to financial market risks resulting from its operational, financial and investment activities: ■■ Interest rate risk; ■■ Foreign exchange risk; ■■ Commodities risk.

As at 31 December 2017, the Group held derivative instruments: ■■ eligible for hedge accounting and recognised as cash flow hedges (CFH); ■■ or non-eligible for hedge accounting and recognised in trading.

Fair values are calculated by using standard valuation methods and on a basis of mid-market conditions commonly used in the financial markets. The market data used is level 2 under the terms of IFRS 13.

The impacts on performance and the financial position of derivatives are presented in the table below: Other comprehensive income Latent financial (€ million) account (OCI) (reclassifiable as income/ income) (expense)

Fair value at Fair value at Underlying asset Hedge accounting 31/12/2016 Change (1) Reclassified (2) Change (3) 31/12/2017 Interest rates CFH (0.7) (0.1) 0.5 - (0.4) Interest rates Trading - - - - - TOTAL INTEREST RATES (0.7) (0.1) 0.5 - (0.4) Currency Net investment hedge - - - - - Currency Trading 1.9 - - (0.8) 1.1 TOTAL CURRENCY 1.9 - - (0.8) 1.1 Commodities CFH 2.4 0.2 (0.7) - 2.0 Commodities Trading (0.2) - - 0.1 (0.1) TOTAL COMMODITIES 2.2 0.2 (0.7) 0.1 1.8 TOTAL 3.5 0.1 (0.2) (0.7) 2.7

(1) Changes in market values, which have impacted the other comprehensive income account (reclassifiable reserves) for the financial year. (2) Reclassifications from equity have had a negative impact of €1.0 million on EBITDA and a positive impact of €0.5 million on financial income / (expense). (3) Changes in market values that have impacted financial income/ expense for the financial year.

Derivative instruments are recognised in the statement of financial position at their fair value for the following amounts:

31/12/2017 31/12/2016

(€ million) Non- Non- current Current Total current Current Total Derivative assets Cash flow hedges - 1.9 1.9 0.2 2.9 3.1 Fair value hedges ------Transaction hedges - 1.6 1.6 - 2.0 2.0 Net foreign investment hedges ------TOTAL DERIVATIVE INSTRUMENTS - ASSETS - 3.5 3.5 0.2 4.9 5.1 Derivative liabilities Cash flow hedges - 0.4 0.4 0.2 1.4 1.6 Fair value hedges ------Transaction hedges - 0.5 0.5 - 0.1 0.1 Net foreign investment hedges ------TOTAL DERIVATIVE INSTRUMENTS - LIABILITIES - 0.9 0.9 0.2 1.5 1.7

72 2. CONSOLIDATED FINANCIAL STATEMENTS | KEOLIS S.A. 2017

Management of interest rate risk The exposure of the Group to interest rate risk stems from its net financial debt. The Group covers this risk by using derivative financial instruments.

Derivative financial instruments eligible for hedge accounting are recognised under cash flow hedges. The derivative financial ins- truments that are not eligible are recognised under trading.

The breakdown of the Group’s net debt is as follows:

(€ million) At 31 December 2017 At 31 December 2016

Financial debt and long term borrowings 469.3 459.5 Cash and cash equivalents (109.6) (143.8) Accrued interest receivable (0.3) - Loans and receivables (81.9) (6.6) Deposits and guarantees (29.0) (30.0) Derivative assets (1.6) (2.3) Profit sharing (0.4) (0.5) NET FINANCIAL DEBT 246.4 276.3

The Group is exposed to interest rate variability on the variable rate portion of its net financial debt.

The interest rate breakdown of financial debt and borrowings before and after derivative instruments (hedging and transaction) is as follows:

Initial debt structure Structure after IFRS hedging (€ million) 31/12/2016 31/12/2016 31/12/2017 restated 31/12/2017 restated Fixed rate 247.8 210.0 337.7 281.4 Variable rate 221.6 249.5 131.7 178.1 TOTAL BORROWINGS AND DEBT 469.3 459.5 469.3 459.5

Analysis of sensitivity

At 31 December 2017, on the basis of a constant net debt, a variation of 50 basis points in market interest rates would have chan- ged the annual borrowing cost as follows.

+50 bp +50 bp -50 bp -50 bp (€ million) Income Reclassified Income Reclassified

Variable rate financial derivatives (after effect of fair value hedges) (1.5) - 1.2 - Liabilities at fair value by option - - - - Derivatives not qualifying as hedges - - - - Derivatives qualifying as cash flow hedges - 1.1 - (1.2) ANALYSIS OF SENSITIVITY (1.5) 1.1 1.2 (1.2)

73 2. CONSOLIDATED FINANCIAL STATEMENTS | KEOLIS S.A. 2017

Derivative financial instruments on interest rates are recorded in the statement of financial position at their fair value for the following amounts: Fair value in the balance sheet as at Fair value in the balance sheet as at 31/12/2017 31/12/2016

(€ million) Cash flow hedge Fair value hedge Trading Hedge of a net investment in a operationforeign TOTAL Cash flow hedge Fair value hedge Trading Hedge of a net investment in a operationforeign TOTAL Fixed-rate receiver swaps 0.1 - - - 0.1 0.3 - - - 0.3 DERIVATIVE INSTRUMENTS ASSETS 0.1 - - - 0.1 0.3 - - - 0.3 Fixed-rate receiver swaps - - - - - 0.3 - - - 0.3 Fixed-rate payer swaps 0.4 - - - 0.4 0.7 - - - 0.7 DERIVATIVE INSTRUMENTS LIABILITIES 0.4 - - - 0.4 1.0 - - - 1.0 INTEREST RATE NET POSITION (0.4) - - - (0.4) (0.7) - - - (0.7)

The nominal amounts of derivative financial instruments are detailed below:

31/12/2017 31/12/2016 (€ million) Net long term Net short Net long term Net short debt term debt debt term debt Fixed-rate receiver swaps - - - - Fixed-rate payer swaps 78.4 11.5 61.0 10.0 Index swaps - - - - Interest rate options - - - -

All of the interest rate hedging instruments held at 31 December 2017 mature between 2018 and 2025.

Foreign exchange risk management The Group has put in place intra-group loans denominated in foreign currency and recognised in current accounts. In order to cover the resulting foreign exchange risk, the Group uses derivative financial instruments which allow it to fix the exchange rate of these intra-group loans.

The derivative financial instruments held by the Group are considered trading instruments under IAS 39.

74 2. CONSOLIDATED FINANCIAL STATEMENTS | KEOLIS S.A. 2017

Derivative financial instruments are recognised in the statement of financial position at their fair value at the following amounts: Fair value in the balance sheet as at Fair value in the balance sheet as at 31/12/2017 31/12/2016

(€ million) Cash flow hedge Fair value hedge Trading Hedge of a net investment in a operationforeign TOTAL Cash flow hedge Fair value hedge Trading Hedge of a net investment in a operationforeign TOTAL Currency swaps - - 1.6 - 1.6 - - 2.0 - 2.0 DERIVATIVE ASSETS - - 1.6 - 1.6 - - 2.0 - 2.0 Currency swaps - - 0.5 - 0.5 - - 0.1 - 0.1 DERIVATIVE LIABILITIES - - 0.5 - 0.5 - - 0.1 - 0.1 NET POSITION / FOREIGN EXCHANGE - - 1.1 - 1.1 - - 1.9 - 1.9

The derivative financial instruments hedge mainly transactions in the following currencies: AED, AUD, CAD, DKK, GBP, NOK, SEK, and USD.

All of the foreign exchange hedging derivatives held at 31 December 2017 mature in 2018.

Management of risk of fluctuations in commodities prices Within the scope of its activities, the Group is exposed to a risk of fluctuation in the price of certain commodities, in particular diesel. The Group covers this risk by using derivative financial instruments. In 2017 Keolis hedged 80% of exposed diesel volumes;

Derivative financial instruments eligible for hedge accounting are recognised under cash flow hedges as described by IAS 39. The derivative financial instruments that are not eligible are recognised under trading.

The derivative instruments are recognised in the statement of financial position at their fair value at the following amounts:

Fair value in the balance sheet Fair value in the balance sheet as at 31/12/2017 as at 31/12/2016

(€ million) Cash flow hedge Fair value hedge Trading TOTAL Cash flow hedge Fair value hedge Trading TOTAL Swaps on petroleum products 1.7 - - 1.7 2.8 - - 2.8 Foreign exchange futures - assets 0.2 - - 0.2 - - - - DERIVATIVES ON COMMODITIES - ASSETS 1.9 - - 1.9 2.8 - - 2.8 Swaps on petroleum products - - - - 0.6 - - 0.6 Diesel options - liabilities ------0.1 0.1 DERIVATIVES ON COMMODITIES - LIABILITIES - - - - 0.6 - 0.1 0.7 NET POSITION ON COMMODITIES 1.9 - - 1.9 2.2 - (0.1) 2.1

75 2. CONSOLIDATED FINANCIAL STATEMENTS | KEOLIS S.A. 2017

At 31 December 2017 the commodity price derivatives represent a volume of 37,331 tonnes:

Maturing in less Maturing in 1 to 5 Volumes in tonnes than a year years

Swaps and tunnels on diesel reference 31,878 5,453

Counterparty risk The transactions generating a potential counterparty risk for the Group are as follows: ■■ cash deposits; ■■ derivative financial instruments; ■■ trade receivables.

In 2013, the Group established and implemented a counterparty risk procedure for bank counterparties relating to its investments and derivative financial instruments. This procedure is based on the principles set out below: ■■ Definition of three categories within which the Group’s bank counterparties are divided: ●● Authorised Banks; ●● Banks under supervision; ●● Non-Authorised Banks. ■■ These categories are defined based on criteria specific to banks (rating) or Keolis (Group financing). ■■ Cash investments and derivative financial instruments are only undertaken with counterparties that belong to the “Authorised Banks” category; ■■ The portfolio of cash investments complies with weighting restrictions; ■■ The “fair value at risk” (fair value in favour of the Group) of the portfolio of derivative financial instruments is monitored regularly so as to spread the risk over various counterparties; ■■ The banks and categories are monitored regularly. If a bank that is a Group counterparty is removed from the “Authorised Bank” category, the portfolio of derivative financial instruments is restructured so as to comply once again with the category criteria.

At 31 December 2017: ■■ All the investments made and all the derivative financial instruments held by the Group were established with bank counter- parties in the “Authorised Bank” category; ■■ The analysis of fair values at risk indicates that there is no major counterparty risk to report.

Finally, the credit and debit valuation adjustment calculations for the counterparty risk, as required by IFRS 13, indicate that the counterparty risk related to the valuation of the Group’s portfolios of derivative financial instruments is negligible.

Liquidity risk On 28 April 2017, after securing the approval of all of the banks, Keolis extended the maturity date of its €900 million syndicated loan by a year to 11 June 2022. The €900 million syndicated loan is available to GROUPE KEOLIS S.A.S. and Keolis S.A. At 31 December 2017, the available, confirmed and undrawn syndicated credit facility is €300 million.

In December 2017, a credit line was arranged by Keolis S.A. to finance the acquisition of rolling stock: a loan of €20 million, arran- ged and drawn down on 7 December 2017, repayable in instalments over 8 years. This loan is fully hedged by a derivative financial instrument.

In December 2017, a loan of €7 million was arranged by Keolis S.A. repayable in instalments over 3 years, replacing a previous loan of the same type and for the same amount. This loan is not hedged: it is incorporated into the calculation of total debt contracted by GROUPE KEOLIS S.A.S.

76 2. CONSOLIDATED FINANCIAL STATEMENTS | KEOLIS S.A. 2017

The following table shows the reimbursement schedule Keolis S.A.’s credit lines (excluding the syndicated loan) and the profile of the corresponding forecasted interest charges after taking into account interest rate hedging.

From 3 to 5 (€ million) < =1 year 2 years years > 5 years

Financial debt 10.3 8.0 112.2 10.9 Debt expense (1.2) (1.1) (2.5) (0.2) n of which interest rate hedges (0.2) (0.2) (0.3) (0.1)

The forecasted interest charges on the debt are calculated on the gross debt on the basis of the interest rate on 31 December 2017, to which is added the Group’s interest margin.

The Group ensures that it has sufficient resources to meet its financial obligations. To do so, each year the Group prepares a table of projected cash flows several years into the future to identify financing requirements and their seasonality.

5.13. Provisions

Analysis by type

At 31 December 2017 At 31 December 2016 (€ million) More Less More Less than a than a Total than a than a Total year year year year Pensions 139.1 7.0 146.2 133.6 7.1 140.7 Other employee benefits 26.8 0.8 27.6 30.4 0.9 31.4 Employment and tax risks 9.8 22.6 32.5 12.2 18.7 30.9 Losses on contract termination and loss-making contracts - - - 2.6 - 2.6 Contract fines - - - - 2.3 2.3 Major repairs and maintenance 6.4 13.8 20.2 7.6 21.2 28.8 Other 8.1 1.7 9.8 8.1 1.6 9.6 TOTAL 190.2 45.9 236.3 194.5 51.7 246.3

77 2. CONSOLIDATED FINANCIAL STATEMENTS | KEOLIS S.A. 2017

Movements during the financial year

At 1 January Changes in Other At 31 (€ million) Charges Reversals reporting December 2017 scope movements 2017

Pensions 140.7 11.4 (14.3) 0.1 8.3 146.2 Other employee benefits 31.4 2.4 (2.0) - (4.3) 27.6 Employment and tax risks 30.9 13.0 (12.3) 0.6 0.3 32.5 Losses on contract termination and loss- 2.6 - (2.6) - - - making contracts Contract fines 2.3 - (2.3) - - - Major repairs and maintenance 28.8 2.8 (11.7) - 0.3 20.2 Other 9.7 2.8 (2.7) 0.6 (0.6) 9.8 TOTAL 246.3 32.4 (47.9) 1.3 4.0 236.3

At 1 January Changes in Other At 31 (€ million) Charges Reversals reporting December 2016 scope movements 2016

Pensions 134.1 10.4 (7.8) 1.0 3.0 140.7 Other employee benefits 31.8 2.8 (0.9) - (2.3) 31.4 Employment and tax risks 28.0 13.8 (11.3) 0.2 0.2 30.9 Losses on contract termination and loss- 5.0 0.6 (3.0) - - 2.6 making contracts Contract fines 2.9 2.3 (2.9) - - 2.3 Major repairs and maintenance 33.5 3.5 (8.2) - - 28.8 Other 9.4 2.8 (2.6) - - 9.7 TOTAL 244.7 36.2 (36.7) 1.2 0.9 246.3

Pensions and similar benefits The amount of commitments recognised in the statement of financial position breaks down as follows:

(€ million) At 31 December 2017 At 31 December 2016

Commitments recorded in the statement of financial position: Pensions and other post-employment benefits 146.3 140.7 Other employee benefits 27.6 31.4 TOTAL 173.9 172.1 n Non-current 166.1 164.1 n Current 7.8 8.0

78 2. CONSOLIDATED FINANCIAL STATEMENTS | KEOLIS S.A. 2017

Pensions and other post-employment benefits

Actuarial assumptions

The following are the main actuarial assumptions adopted in evaluating pension commitments under the defined benefit schemes:

At 31 December 2017 At 31 December 2016

(per cent) France Canada France Canada

Discount rate 0.88 3.25 1.21 3.45 Rate of increase in salaries 2.40-7.00 N/A 2.00-7.00 N/A Expected rate of return on assets 0.88 3.45 1.21 3.30

The plan assets break down as follows:

At 31 December 2017 At 31 December 2016 (€ million) France Canada France Canada Equities 0.1 1.2 0.1 5.3 Bonds 0.4 5.5 0.3 - Real estate - - - 1.9 Other 0.1 0.1 0.1 -

The sensitivity to discount rates, in relation to the assumptions adopted is as follows:

Commitment at Service cost 2018 Financial cost 2018 (€ million) 31/12/2017

discount rate less 0.25% 152.2 10.2 1.1 discount rate (base assumption) 146.3 9.8 1.5 discount rate plus 0.25% 143.5 9.4 1.8

Commitments recorded in the statement of financial position

The commitments recognised in the statement of financial position break down as follows:

(€ million) At 31 December 2017 At 31 December 2016

Present value of non-financed liabilities 142.8 138.8 Present value of financed liabilities 10.6 9.7 PRESENT VALUE OF TOTAL LIABILITIES 153.4 148.4 Fair value of pension scheme assets (7.2) (7.7) Asset plan ceiling (Canada) 0.2 - PRESENT VALUE OF NET LIABILITIES RECOGNISED 146.3 140.7

79 2. CONSOLIDATED FINANCIAL STATEMENTS | KEOLIS S.A. 2017

Analysis of changes in liabilities and assets

The net present value of the liabilities comprises:

(€ million) 31/12/2017 31/12/2016

NET PRESENT VALUE OF LIABILITIES AT 1 JANUARY 148.4 141.3 Service cost 9.0 8.2 Financial cost (including Franchise Adjustment) 1.9 2.2 Benefits paid (10.5) (7.8) Employee contributions - - Changes in pension schemes 0.6 - Actuarial gains/(losses) 7.1 2.7 Foreign exchange translation difference (0.4) 0.8 Effect of changes in consolidation scope (2.8) 1.1 Effect of reductions and pension scheme settlements - - NET PRESENT VALUE OF LIABILITIES AT 31 DECEMBER 153.4 148.4

The fair value of the assets comprises:

(€ million) 31/12/2017 31/12/2016

FAIR VALUE OF PENSION PLAN ASSETS AT 1 JANUARY 7.7 7.2 Expected return on assets 0.2 0.2 Actuarial gains/(losses) on pension fund returns 0.3 0.4 Employer contributions 0.1 0.2 Employee contributions - - Benefits paid (0.6) (0.7) Foreign exchange translation differences (0.4) 0.4 Effect of changes in consolidation scope - - Effect of reductions and pension scheme settlements (0.2) - FAIR VALUE OF PENSION PLAN ASSETS AT 31 DECEMBER 7.0 7.7

The following are the actuarial gains and losses both in the light of experience and due to changes in actuarial assumptions:

(€ million) 31/12/2017 31/12/2016

Impact of changes in assumptions 6.0 3.0 Losses/(gains) in the light of experience 0.8 (0.7) ACTUARIAL LOSSES/(GAINS) FOR THE YEAR 6.9 2.3

The following is the geographical breakdown of the liabilities and assets:

At 31 December 2017 (€ million) France Canada Total Present value of the liabilities 146.8 6.6 153.4 Fair value of pension scheme assets (0.5) (6.7) (7.2) Franchise Adjustment / Assets ceiling (Canada) - 0.2 0.2 NET PRESENT VALUE OF NET OBLIGATIONS 146.3 - 146.3

80 2. CONSOLIDATED FINANCIAL STATEMENTS | KEOLIS S.A. 2017

Benefit cost for the financial year

The cost of benefits recognised in the income statement breaks down as follows:

(€ million) 31/12/2017 31/12/2016

Service cost 9.0 8.2 Interest cost 1.9 2.2 Expected return on assets (0.2) (0.2) Effect of changes in consolidation scope 0.6 - Effect of reductions and pension scheme settlements 0.2 - TOTAL EXPENSE RECOGNISED IN THE INCOME STATEMENT 11.4 10.2

The service cost is recognised within staff expenses. The interest cost on liabilities and the expected return on the pension scheme assets are recognised as financial expense and financial income respectively.

Change in the net commitment recorded as a liability in the statement of financial position

(€ million) 31/12/2017 31/12/2016

OPENING PROVISION AT 1 JANUARY 140.7 134.1 Change in consolidation scope (2.9) 1.1 Benefit cost for the financial year 11.4 10.2 Used benefits / (Contributions paid) (10.0) (7.3) Provision charged to/(reversed from) equity 6.9 2.3 Foreign exchange translation differences 0.1 0.4 CLOSING PROVISION AT 31 DECEMBER 146.3 140.7

The cumulative movements in charges/(reversals) recognised directly in equity are as follows:

(€ million) 31/12/2017 31/12/2016

CUMULATIVE OPENING BALANCE OF CHARGES/(REVERSALS) 38.8 38.8 Actuarial (gains) / losses for the year 6.9 2.3 Foreign exchange translation differences and other changes - 0.2 CUMULATIVE CLOSING BALANCE OF CHARGES/(REVERSALS) 51.5 41.3

Variations for the current financial year and for the three previous ones:

(€ million) 31/12/2017 31/12/2016 31/12/2015 31/12/2014

Present value of liabilities 153.3 148.4 141.3 127.5 Fair value of pension scheme assets (7.2) (7.7) (7.2) (8.1) Franchise adjustment / Asset ceiling (Canada) 0.2 - - - Surplus (deficit) of the pension scheme 146.3 140.8 134.1 119.4 Adjustments related to experience 0.8 (0.7) 2.2 2.2

81 2. CONSOLIDATED FINANCIAL STATEMENTS | KEOLIS S.A. 2017

Other employee benefits

Description of commitments and actuarial assumptions Other employee benefits mainly consist of long-service awards to employees working in France and healthcare expenses of employees in the USA who have taken early retirement. These schemes are not funded by external assets (e.g. insurance policies). The obligations arising from these defined benefit schemes are measured using the same methods and assumptions as for the pension schemes.

The actuarial gains and losses arising from both experience and due to changes in actuarial assumptions are immediately recognised in the income statement for the financial year.

Analysis of movements in obligations

Change in Foreign exch (€ million) 01/01/2017 Charge Reversals scope transl. diff & other 31/12/2017

France – long service awards 16.9 1.9 (1.0) (0.8) (0.3) 16.7 USA – healthcare expenses of early- 14.5 0.7 - - (4.3) 10.8 retired employees TOTAL 31.4 2.5 (1.0) (0.8) (4.6) 27.6

The change in the USA related to the provision for healthcare expenses recorded as part of the Boston tender award, counterba- lanced by the recording of an intangible asset depreciated over the contract’s duration.

5.14. Operating liabilities and other debt

(€ million) At 31 December 2017 At 31 December 2016

Trade receivables: advances and deposits received 35.6 68.5 Trade payables 599.8 552.6 Payables to PPE suppliers 43.6 40.8 Payables to staff 491.1 468.5 Central government and local authorities 79.3 72.7 Deferred income 97.1 98.0 Other 114.9 83.6 TOTAL 1,461.4 1,384.7

82 2. CONSOLIDATED FINANCIAL STATEMENTS | KEOLIS S.A. 2017

6 n OTHER COMMITMENTS NOT RECOGNISED IN THE STATEMENT OF FINANCIAL POSITION AND CONTRACTUAL COMMITMENTS

(€ million) At 31 December 2017 At 31 December 2016

Unutilised credit lines 22.8 11.2 Guarantees given to secure debt 15.7 50.2 Guarantees given for operating commitments 827.9 696.7 TOTAL COMMITMENTS MADE AND GUARANTEES GIVEN, EXCLUDING OPERATING LEASES 843.6 746.9

The amount of railway path access entitlements within the “Guarantees given for operating commitments” is €99.6 million at 31 December 2017 compared to €69.2 million at 31 December 2016.

The future minimum payments on operating lease contracts break down as follows:

(€ million) At 31 December 2017 At 31 December 2016

Less than one year 192.5 188.6 One to five years 679.3 591.0 More than five years 373.0 314.0 TOTAL 1,244.9 1,093.5

Future commitments linked to leases primarily relate to the rental of transport equipment and buildings. They comprise €909.4 million internationally and €335.5 million in France. IT equipment rental contracts are in place for immaterial values.

France

Rental contracts Contracts entered into on vehicles (buses and coaches) relate to average durations of: ■■ 7 to 8 years for buses and coaches, ■■ 3 or 4 years for minibuses.

The manufacturer’s buyback undertaking corresponds to the estimated market value of the vehicle at the end of the rental period. Most of these contracts are entered into directly by the subsidiaries, with a guarantee signed by Keolis S.A. in favour of the financing bodies. This guarantee takes the form of an undertaking to continue the rental and binds Keolis S.A. only in terms of the payment of the rental amounts that remain due under the contract if the subsidiary defaults. In return, the financing body undertakes to keep the related vehicles available to the Group.

Outside France We distinguish between railway contracts and bus contracts.

Railway contracts Railway rental contracts are entered into for the term of the franchise.

Rentals under leases due in less than one year amount to €19.4 million.

Rentals under leases due in more than one year depend on the end date of each of the railway or similar franchises. They amount to €504.4 million

Bus and coach contracts Rental instalments outstanding on these contracts amount to €211.9 million. As in France, Keolis S.A. is required to provide guarantees of rental payments on behalf of its foreign subsidiaries.

83 2. CONSOLIDATED FINANCIAL STATEMENTS | KEOLIS S.A. 2017

7 n DISPUTES 9 n POST BALANCE SHEET EVENTS

The estimates and underlying assumptions relating to current Nil. disputes are continuously re-examined. In particular, current disputes and litigation, especially with tax administrations or relating to appeals on tenders or on warranty claims, have been examined by the management with its advisers and lawyers for the purpose of assessing the risk they entail to the measurement of assets or liabilities.

The impact of changes in accounting estimates is recognised during the period of the change where they only affect that period, or during the period of the change and subsequent periods where the latter are also affected by the change. Risks are measured at fair value and where appropriate a provi- sion is made in the accounts (see note 5.13).

8 n RELATED PARTY TRANSACTIONS

Keolis S.A. is wholly owned by GROUPE KEOLIS S.A.S. 69.69% of GROUPE KEOLIS S.A.S. is owned by SNCF Participations and 30.00% by Caisse de Dépôt et Placement du Québec.

SNCF is a public company with an industrial and commercial activity whose capital is entirely owned by the French State.

8.1. Transactions with GROUPE KEOLIS S.A.S. and Groupe EFFIA Transactions with GROUPE KEOLIS S.A.S. mainly correspond to general management services. Transactions with Groupe EFFIA correspond to sub-contracting services.

8.2. Transactions with joint ventures and associates Transactions with joint ventures and associates are performed according to normal market conditions.

8.3. Remuneration of the Group’s key managers The key managers in the Group are defined as being the com- pany officers and directors of Keolis S.A. and the members of the Executive Committee. Remuneration and other short-term benefits paid to these directors amounted to €4.8 million for 9 people in 2017 compared to €4.1 million for 9 people in 2016.

No directors’ fees were allotted to members of the Group’s management or executive committees.

There are no outstanding advances or credit facilities extended to members of the Group’s management or executive commit- tees.

84 2. CONSOLIDATED FINANCIAL STATEMENTS | KEOLIS S.A. 2017

10 n CONSOLIDATION SCOPE

At 31 December 2017, the consolidation scope included:

10.1. Subsidiaries

% of Name Country Method of consolidation shareholding Aerobag France Fully consolidated (FC) 100.00% Aerolignes* France Fully consolidated (FC) 100.00% Aerolis France Fully consolidated (FC) 100.00% Aéroport Angers Marcé France Fully consolidated (FC) 100.00% Aéroport de Troyes Barberey France Fully consolidated (FC) 100.00% Aerosat France Fully consolidated (FC) 85.00% Airelle France Fully consolidated (FC) 100.00% Autocars Delion SAS France Fully consolidated (FC) 100.00% Autocars Eschenlauer France Fully consolidated (FC) 100.00% Autocars Planche France Fully consolidated (FC) 100.00% Autocars Striebig France Fully consolidated (FC) 100.00% Caennaise de Services* France Fully consolidated (FC) 100.00% Cariane Littoral France Fully consolidated (FC) 100.00% Cars de Bordeaux France Fully consolidated (FC) 100.00% Cars Planche France Fully consolidated (FC) 100.00% Cie Tpts Méditerranéens* France Fully consolidated (FC) 100.00% Compagnie du Blanc Argent France Fully consolidated (FC) 99.43% Entreprise Charles Caron France Fully consolidated (FC) 100.00% Gep Vidal France Fully consolidated (FC) 100.00% Holding Striebig France Fully consolidated (FC) 100.00% Institut Keolis France Fully consolidated (FC) 100.00% Interhone France Fully consolidated (FC) 100.00% Keolis France Fully consolidated (FC) 100.00% Keolis Abbeville France Fully consolidated (FC) 99.02% Keolis Agen France Fully consolidated (FC) 100.00% Keolis Aix-Les-Bains France Fully consolidated (FC) 100.00% Keolis Alençon France Fully consolidated (FC) 100.00% Keolis Alès France Fully consolidated (FC) 100.00% Keolis Alpes Maritimes France Fully consolidated (FC) 100.00% Keolis Amiens France Fully consolidated (FC) 100.00% Keolis Angers France Fully consolidated (FC) 100.00% Keolis Arles* France Fully consolidated (FC) 100.00% Keolis Armor France Fully consolidated (FC) 100.00% Keolis Arras France Fully consolidated (FC) 100.00% Keolis Artois France Fully consolidated (FC) 100.00% Keolis Atlantique France Fully consolidated (FC) 100.00% Keolis Auch France Fully consolidated (FC) 100.00% Keolis Aude France Fully consolidated (FC) 100.00% Keolis Baie des Anges France Fully consolidated (FC) 100.00% Keolis Bassin de Pompey France Fully consolidated (FC) 100.00%

85 2. CONSOLIDATED FINANCIAL STATEMENTS | KEOLIS S.A. 2017

% of Name Country Method of consolidation shareholding Keolis Beaune France Fully consolidated (FC) 100.00% Keolis Besançon Mobilités France Fully consolidated (FC) 100.00% Keolis Besançon* France Fully consolidated (FC) 99.96% Keolis Blois France Fully consolidated (FC) 100.00% Keolis Bordeaux France Fully consolidated (FC) 99.99% Keolis Bordeaux Métropole France Fully consolidated (FC) 100.00% Keolis Boulogne sur Mer France Fully consolidated (FC) 100.00% Keolis Bourgogne France Fully consolidated (FC) 99.50% Keolis Brest France Fully consolidated (FC) 100.00% Keolis Bus Verts France Fully consolidated (FC) 100.00% Keolis Caen France Fully consolidated (FC) 100.00% Keolis Caen Mobilités France Fully consolidated (FC) 100.00% Keolis Calvados France Fully consolidated (FC) 100.00% Keolis Camargue France Fully consolidated (FC) 100.00% Keolis Centre France Fully consolidated (FC) 100.00% Keolis Châlons-en-Champagne France Fully consolidated (FC) 99.24% Keolis Charente Maritime France Fully consolidated (FC) 99.98% Keolis Château Thierry France Fully consolidated (FC) 100.00% Keolis Châteauroux France Fully consolidated (FC) 100.00% Keolis Châtellerault France Fully consolidated (FC) 100.00% Keolis Chaumont France Fully consolidated (FC) 100.00% Keolis Chauny - Tergnier France Fully consolidated (FC) 100.00% Keolis Chauny-Tergnier-La Fère Scolaire France Fully consolidated (FC) 100.00% Keolis Cherbourg France Fully consolidated (FC) 100.00% Keolis CIF France Fully consolidated (FC) 99.99% Keolis Conseil et Projets France Fully consolidated (FC) 100.00% Keolis Côte Basque - Adour France Fully consolidated (FC) 100.00% Keolis Côte d’Azur France Fully consolidated (FC) 100.00% Keolis Creil France Fully consolidated (FC) 100.00% Keolis Dijon France Fully consolidated (FC) 100.00% Keolis Dijon Mobilités France Fully consolidated (FC) 70.00% Keolis Drôme Ardèche France Fully consolidated (FC) 100.00% Keolis Drouais France Fully consolidated (FC) 100.00% Keolis en Cévennes France Fully consolidated (FC) 99.19% Keolis Epinal France Fully consolidated (FC) 100.00% Keolis Eure et Loir France Fully consolidated (FC) 100.00% Keolis Garonne France Fully consolidated (FC) 100.00% Keolis Gascogne France Fully consolidated (FC) 100.00% Keolis Gironde (ex SNCOA) France Fully consolidated (FC) 100.00% Keolis Grand Tarbes France Fully consolidated (FC) 100.00% Keolis Ille et Vilaine France Fully consolidated (FC) 100.00% Keolis Languedoc France Fully consolidated (FC) 100.00% Keolis Laval France Fully consolidated (FC) 100.00% Keolis Laval Mobilités France Fully consolidated (FC) 100.00% Keolis Lille France Fully consolidated (FC) 100.00%

86 2. CONSOLIDATED FINANCIAL STATEMENTS | KEOLIS S.A. 2017

% of Name Country Method of consolidation shareholding Keolis Littoral France Fully consolidated (FC) 100.00% Keolis Lorient France Fully consolidated (FC) 100.00% Keolis Lyon France Fully consolidated (FC) 100.00% Keolis Manche France Fully consolidated (FC) 100.00% Keolis Maritime France Fully consolidated (FC) 99.00% Keolis Maritime Brest France Fully consolidated (FC) 100.00% Keolis Marmande France Fully consolidated (FC) 100.00% Keolis Mobilité Hauts-de-Seine France Fully consolidated (FC) 100.00% Keolis Mobilité Paris France Fully consolidated (FC) 100.00% Keolis Mobilité Roissy France Fully consolidated (FC) 100.00% Keolis Mobilité Val-de-Marne France Fully consolidated (FC) 100.00% Keolis Montargis France Fully consolidated (FC) 100.00% Keolis Montélimar France Fully consolidated (FC) 100.00% Keolis Montluçon France Fully consolidated (FC) 100.00% Keolis Morlaix France Fully consolidated (FC) 100.00% Keolis Narbonne France Fully consolidated (FC) 100.00% Keolis Narbonne Mobilités France Fully consolidated (FC) 100.00% Keolis Nevers France Fully consolidated (FC) 100.00% Keolis Nîmes France Fully consolidated (FC) 100.00% Keolis Nord Allier* France Fully consolidated (FC) 100.00% Keolis Normandie Seine France Fully consolidated (FC) 100.00% Keolis Obernai France Fully consolidated (FC) 100.00% Keolis Oise France Fully consolidated (FC) 100.00% Keolis Orléans France Fully consolidated (FC) 100.00% Keolis Orly Airport France Fully consolidated (FC) 100.00% Keolis Orly Rungis France Fully consolidated (FC) 100.00% Keolis Oyonnax France Fully consolidated (FC) 100.00% Keolis Pays d’Aix France Fully consolidated (FC) 100.00% Keolis Pays de Montbéliard France Fully consolidated (FC) 100.00% Keolis Pays des Volcans France Fully consolidated (FC) 100.00% Keolis Pays Nancéien France Fully consolidated (FC) 100.00% Keolis Pays Normands France Fully consolidated (FC) 100.00% Keolis PMR Rhône France Fully consolidated (FC) 100.00% Keolis Porte de l'Isère France Fully consolidated (FC) 100.00% Keolis Pyrénées France Fully consolidated (FC) 95.16% Keolis Quimper France Fully consolidated (FC) 100.00% Keolis Rennes France Fully consolidated (FC) 100.00% Keolis Réseau Départemental Sud Oise France Fully consolidated (FC) 100.00% Keolis Roissy Airport France Fully consolidated (FC) 100.00% Keolis Roissy Services Aéroportuaires France Fully consolidated (FC) 100.00% Keolis Saint-Malo France Fully consolidated (FC) 100.00% Keolis Saintes France Fully consolidated (FC) 100.00% Keolis Seine Essonne France Fully consolidated (FC) 100.00% Keolis Seine Maritime France Fully consolidated (FC) 100.00% Keolis Seine Sénart France Fully consolidated (FC) 100.00%

87 2. CONSOLIDATED FINANCIAL STATEMENTS | KEOLIS S.A. 2017

% of Name Country Method of consolidation shareholding Keolis Seine Val de Marne France Fully consolidated (FC) 100.00% Keolis Somme France Fully consolidated (FC) 100.00% Keolis Sud Allier France Fully consolidated (FC) 100.00% Keolis Sud Lorraine France Fully consolidated (FC) 100.00% Keolis Touraine France Fully consolidated (FC) 100.00% Keolis Tours France Fully consolidated (FC) 100.00% Keolis Travel Services France Fully consolidated (FC) 100.00% Keolis Trois Frontières France Fully consolidated (FC) 100.00% Keolis Urbest France Fully consolidated (FC) 100.00% Keolis Val d' Oise France Fully consolidated (FC) 100.00% Keolis Val de Maine France Fully consolidated (FC) 100.00% Keolis Val de Saone France Fully consolidated (FC) 100.00% Keolis Val Hainaut France Fully consolidated (FC) 96.32% Keolis Velizy France Fully consolidated (FC) 100.00% Keolis Versailles France Fully consolidated (FC) 100.00% Keolis Vesoul France Fully consolidated (FC) 100.00% Keolis Vichy France Fully consolidated (FC) 100.00% Keolis Voyages France Fully consolidated (FC) 100.00% Keolis Yvelines France Fully consolidated (FC) 100.00% Les Autobus d'Arcachon France Fully consolidated (FC) 100.00% Les Cars du Bassin de Thau France Fully consolidated (FC) 100.00% Les cars Roannais France Fully consolidated (FC) 100.00% Les Coccinelles France Fully consolidated (FC) 100.00% Les Courriers Catalans France Fully consolidated (FC) 100.00% Les Courriers Du Midi France Fully consolidated (FC) 100.00% Les Kangourous 2 France Fully consolidated (FC) 100.00% Les Transports Dunois France Fully consolidated (FC) 100.00% Loisirs et Voyages France Fully consolidated (FC) 100.00% Millau Cars France Fully consolidated (FC) 100.00% Monnet Tourisme* France Fully consolidated (FC) 100.00% Monts Jura Autocars France Fully consolidated (FC) 100.00% Ormont Transport France Fully consolidated (FC) 100.00% Pacific Car France Fully consolidated (FC) 100.00% Prioris France Fully consolidated (FC) 100.00% Réseau en Vosges France Fully consolidated (FC) 70.00% S.T.2.L. Westeel France Fully consolidated (FC) 100.00% S.T.E.F.I.M. France Fully consolidated (FC) 100.00% SAP Cariane Provence France Fully consolidated (FC) 100.00% SCAC France Fully consolidated (FC) 100.00% SCAC Bagnis France Fully consolidated (FC) 100.00% SEA Albert-Picardie France Fully consolidated (FC) 50.96% Setver* France Fully consolidated (FC) 100.00% SFD France Fully consolidated (FC) 100.00% Société d'Exploitation de l'Aéroport Dole Jura France Fully consolidated (FC) 51.00% Sodetrav France Fully consolidated (FC) 95.08%

88 2. CONSOLIDATED FINANCIAL STATEMENTS | KEOLIS S.A. 2017

% of Name Country Method of consolidation shareholding STCAR* France Fully consolidated (FC) 100.00% Sté Rennaise Transports et Services France Fully consolidated (FC) 100.00% Sté Transports Robert France Fully consolidated (FC) 100.00% Sté Transports Services Aéroportuaires France Fully consolidated (FC) 100.00% TPR France Fully consolidated (FC) 100.00% Transports de la Brière France Fully consolidated (FC) 60.10% Transports Evrard France Fully consolidated (FC) 100.00% Train Bleu St Marcellin France Fully consolidated (FC) 100.00% Trans Val de Lys France Fully consolidated (FC) 99.99% Transévry France Fully consolidated (FC) 55.62% Transkeo France Fully consolidated (FC) 51.00% Transpole France Fully consolidated (FC) 100.00% Transports Daniel Meyer France Fully consolidated (FC) 100.00% Var Tour France Fully consolidated (FC) 94.97% Voyages Autocars Services France Fully consolidated (FC) 100.00% Voyages Chargelègue France Fully consolidated (FC) 100.00% Voyages Dourlens France Fully consolidated (FC) 100.00% Voyages Fouache SAS France Fully consolidated (FC) 100.00% Voyages MONNET France Fully consolidated (FC) 100.00% Voyages Striebig* France Fully consolidated (FC) 100.00% VTS Roissy* France Fully consolidated (FC) 100.00% Keolis Deutschland COKG Germany Fully consolidated (FC) 100.00% Keolis Deutschland Verwaltung Germany Fully consolidated (FC) 100.00% Schloemer Verkehrsbetrieb Gmbh Germany Fully consolidated (FC) 100.00% Striebig Deutschland Germany Fully consolidated (FC) 100.00% Striebig Gmbh Germany Fully consolidated (FC) 100.00% Australian Transit Enterprises Pty Ltd Australie Fully consolidated (FC) 51.00% Pty Ltd Australie Fully consolidated (FC) 51.00% Hornibrook Transit Management Pty Ltd Australie Fully consolidated (FC) 51.00% KD Hunter Pty Ltd Australie Fully consolidated (FC) 51.00% KDR Gold Coast Pty Lta Australia Fully consolidated (FC) 51.00% KDR Victoria Pty Ltd Australia Fully consolidated (FC) 51.00% Keolis Australia Pty Australia Fully consolidated (FC) 100.00% Keolis Downer Australia Fully consolidated (FC) 51.00% Keolis Downer Bus and Coachlines Property Pty Ltd Australia Fully consolidated (FC) 51.00% Keolis Downer Bus and Coachlines Pty Ltd Australia Fully consolidated (FC) 51.00% Link SA Pty Ltd Australia Fully consolidated (FC) 51.00% Pty Ltd Australia Fully consolidated (FC) 51.00% South West Transit Pty Ltd Australia Fully consolidated (FC) 51.00% Southlink Pty Ltd Australia Fully consolidated (FC) 51.00% Autobus de Genval Belgium Fully consolidated (FC) 100.00% Autobus Dony Belgium Fully consolidated (FC) 100.00% Autobus Dujardin Belgium Fully consolidated (FC) 100.00% Autobus Lienard Belgium Fully consolidated (FC) 100.00% Cardona-Deltenre Belgium Fully consolidated (FC) 100.00%

89 2. CONSOLIDATED FINANCIAL STATEMENTS | KEOLIS S.A. 2017

% of Name Country Method of consolidation shareholding Cars Gembloutois Belgium Fully consolidated (FC) 100.00% CINTRA Belgium Fully consolidated (FC) 100.00% CINTRAL Belgium Fully consolidated (FC) 100.00% Compagnie des Autobus Liégeois Belgium Fully consolidated (FC) 100.00% De Turck BVBA Belgium Fully consolidated (FC) 100.00% Eltebe Belgium Fully consolidated (FC) 100.00% Eurobus Holding Belgium Fully consolidated (FC) 100.00% Eurobussing Brussels Belgium Fully consolidated (FC) 100.00% Eurobussing Wallonie Belgium Fully consolidated (FC) 100.00% Flanders Bus Belgium Fully consolidated (FC) 100.00% Garage du Perron Belgium Fully consolidated (FC) 100.00% Gino Tours Belgium Fully consolidated (FC) 100.00% Heyerick Belgium Fully consolidated (FC) 100.00% Joye Belgium Fully consolidated (FC) 100.00% Keolis Vlaanderen Belgium Fully consolidated (FC) 100.00% Kibel Belgium Fully consolidated (FC) 100.00% L.I.M. Collard-Lambert Belgium Fully consolidated (FC) 100.00% Le Cinacien Belgium Fully consolidated (FC) 100.00% N.V. Autobusbedrijf Bronckaers Belgium Fully consolidated (FC) 100.00% N.V. Autobussen De Reys Belgium Fully consolidated (FC) 100.00% NV Aotocars De Boeck Belgium Fully consolidated (FC) 100.00% Picavet Belgium Fully consolidated (FC) 100.00% Pirnay Belgium Fully consolidated (FC) 100.00% Ramoudt Tours Belgium Fully consolidated (FC) 100.00% Reniers & C° Belgium Fully consolidated (FC) 100.00% S.A.D.A.R. Belgium Fully consolidated (FC) 100.00% Satracom Belgium Fully consolidated (FC) 100.00% Sophibus Belgium Fully consolidated (FC) 100.00% SPRL Bertrand Belgium Fully consolidated (FC) 100.00% SPRL Taxis Melkior Belgium Fully consolidated (FC) 100.00% SPRL Truck Bus Repair* Belgium Fully consolidated (FC) 100.00% SPRL Voyages F. Lenoir Belgium Fully consolidated (FC) 100.00% STACA (KBO) Belgium Fully consolidated (FC) 100.00% T.C.M. Cars Belgium Fully consolidated (FC) 100.00% Transports Penning Belgium Fully consolidated (FC) 100.00% Trimi Belgium Fully consolidated (FC) 100.00% Van Rompaye NV Belgium Fully consolidated (FC) 100.00% Voyages Doppagne Belgium Fully consolidated (FC) 100.00% Voyages Nicolay Belgium Fully consolidated (FC) 100.00% West Belgium Coach Company* Belgium Fully consolidated (FC) 100.00% Développement GOE Canada Fully consolidated (FC) 100.00% Keolis Canada Inc Canada Fully consolidated (FC) 100.00% Keolis Grand River L.P Canada Fully consolidated (FC) 100.00% Keolis China China Fully consolidated (FC) 100.00% Keolis Wuhan China Fully consolidated (FC) 100.00%

90 2. CONSOLIDATED FINANCIAL STATEMENTS | KEOLIS S.A. 2017

% of Name Country Method of consolidation shareholding Keolis Danmark Denmark Fully consolidated (FC) 100.00% Etablissement Abu Dhabi United Arab Emirates Fully consolidated (FC) 100.00% Keolis España Spain Fully consolidated (FC) 100.00% Keolis America Inc. USA Fully consolidated (FC) 100.00% Keolis Commuter Services LLC USA Fully consolidated (FC) 60.00% Keolis Rail Service America USA Fully consolidated (FC) 100.00% Keolis Rail Service Virginia USA Fully consolidated (FC) 100.00% Keolis Transit America USA Fully consolidated (FC) 100.00% Keolis Hyderabad Mass Rapid Transit System Private Limited India Fully consolidated (FC) 100.00% Kilux Luxembourg Fully consolidated (FC) 100.00% AS Norway Fully consolidated (FC) 100.00% Keolis Nederland Holding Netherlands Fully consolidated (FC) 100.00% Syntus Netherlands Fully consolidated (FC) 100.00% Keolis UK United Kingdom Fully consolidated (FC) 100.00% Keolis-Amey Docklands Ltd United Kingdom Fully consolidated (FC) 70.00% KeolisAmey Metrolink United Kingdom Fully consolidated (FC) 60.00% Nottingham Trams Ltd United Kingdom Fully consolidated (FC) 80.00% CSG Commuter Security Sweden Fully consolidated (FC) 100.00% Keolis Nordic Sweden Fully consolidated (FC) 100.00% Keolis Spår AB Sweden Fully consolidated (FC) 100.00% Keolis Sverige Sweden Fully consolidated (FC) 100.00%

* Companies removed from the consolidation scope on 31 December 2017

91 2. CONSOLIDATED FINANCIAL STATEMENTS | KEOLIS S.A. 2017

10.2. Joint ventures and associates

% of Name Country Method of consolidation shareholding Albatrans France Equity method (EM) 36.20% CTCOP France Equity method (EM) 50.00% Orgebus France Equity method (EM) 50.00% RDK France France Equity method (EM) 50.00% STA Chauny* France Equity method (EM) 50.00% Scodec France Equity method (EM) 35.00% TICE France Equity method (EM) 19.00% Trans Pistes France Equity method (EM) 40.00% Transports de l'agglomération de Metz Métropole France Equity method (EM) 25.00% Netlog Germany Equity method (EM) 33.00% Shanghai Keolis Public Transport Operation Management Co. China Equity method (EM) 49.00% Wuhan Tianhe Airport Transport Center Operation and Management co. LTD China Equity method (EM) 40.00% Prometro Portugal Equity method (EM) 20.00% RDK LLC (Qatar) Qatar Equity method (EM) 50.00% First / Keolis Holdings Limited United Kingdom Equity method (EM) 45.00% First / Keolis Transpennine United Kingdom Equity method (EM) 45.00% First / Keolis Transpennine Holding Ltd United Kingdom Equity method (EM) 45.00% Govia United Kingdom Equity method (EM) 35.00% Limited United Kingdom Equity method (EM) 35.00% London Midland United Kingdom Equity method (EM) 35.00% London&South Eastern Railway - LSER United Kingdom Equity method (EM) 35.00% New Southern Railway United Kingdom Equity method (EM) 35.00% Southern Railway Ltd United Kingdom Equity method (EM) 35.00% Thameslink Rail Limited United Kingdom Equity method (EM) 35.00%

* Companies removed from the consolidation scope on 31 December 2017

92 2. CONSOLIDATED FINANCIAL STATEMENTS | KEOLIS S.A. 2017

This is a translation into English of the statutory auditors’ report on the consolidated financial statements of the Company issued in French and it is provided solely for the convenience of English speaking users . This statutory auditors’ report includes information required by European regulation and French law, such as information about the appointment of the statutory auditors or verification of the management report and other documents provided to shareholders . This report should be read in conjunction with, and construed in accordance with, French law and professional auditing standards applicable in France .

PricewaterhouseCoopers Audit Ernst & Young Audit 63 rue de Villiers Tour First - TSA 14444 92208 Neuilly-sur-Seine Cedex 92037 Paris-La Défense Cedex 672 006 483 R.C.S. Nanterre S.A.S. à capital variable 344 366 315 R.C.S. Nanterre Commissaire aux Comptes Membre de la compagnie régionale de Versailles Commissaire aux Comptes Membre de la compagnie régionale de Versailles

STATUTORY AUDITORS’ REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS (FOR THE YEAR ENDED 31 DECEMBER 2017)

To the Shareholders Indépendance Keolis We conducted our audit engagement in compliance with inde- 20-22 rue le Peletier pendence rules applicable to us, for the period from January 1st 75009 Paris 2017 to the date of our report and specifically we did not provide any prohibited non-audit services referred to in Article 5(1) of Opinion Regulation (EU) No 537/2014 or in the French Code of ethics (code de déontologie) for statutory auditors. In compliance with the engagement entrusted to us by your annual general meeting, we have audited the accompanying Justification of Assessments consolidated financial statements of Keolis SA for the year ended December 31, 2017. In accordance with the requirements of Articles L.823-9 and L.823-7 of the French Commercial Code (code de commerce) In our opinion, the consolidated financial statements give a true relating to the justification of our assessments, we bring to your and fair view of the assets and liabilities and of the financial attention the following. position of the Group as at 31 December 2017 and of the results of its operations for the year then ended in accordance with Change in accounting method International Financial Reporting Standards as adopted by the As part of our assessment of the accounting rules and methods European Union. followed by your company, we ensured of the correct application by anticipation on January 1st 2017 of part 1 and part 2 of IFRS Basis for Opinion 9 as described in the note 2.2 to the consolidated financial sta- tements. Audit Framework We conducted our audit in accordance with professional stan- Accounting estimates dards applicable in France. We believe that the audit evidence ■■ Keolis carries out impairment tests out impairment tests on we have obtained is sufficient and appropriate to provide a basis goodwill and indefinite life assets and also assesses whe- for our opinion. ther there is any indication of impairment on non-current assets, as described in notes 2.4.10 and 5.1 to the conso- Our responsibilities under those standards are further described lidated financial statements. We have examined the in the Statutory Auditors’ Responsibilities for the Audit of the methods used to carry out this impairment test as well as Financial Statements section of our report. the corresponding cash flow forecasts and assumptions,

93 2. CONSOLIDATED FINANCIAL STATEMENTS | KEOLIS S.A. 2017

and have verified that the notes to the consolidated financial Statutory Auditors’ Responsibilities for the Audit of the statements provide appropriate disclosures. Consolidated Financial Statements ■■ Note 2.4.18 specifies the valuation methods for provisions for pensions and other employee benefits. An evaluation of Objectives and audit approach these provisions was carried out by independent actuaries. Our work consisted in examining the data and assumptions Our role is to issue a report on the consolidated financial state- used and verifying that note 5.13 to the consolidated finan- ments. Our objective is to obtain reasonable assurance about cial statements provides appropriate disclosures. whether the consolidated financial statements as a whole are ■■ Notes 2.3 and 2.4.18 specify the methods used to take into free from material misstatement. Reasonable assurance is a high account the risks relating to ongoing litigation and contracts. level of assurance, but is not a guarantee that an audit conduc- Our work consisted in examining the procedures used by ted in accordance with professional standards will always detect the Company to identify and assess these risks and the a material misstatement when it exists. Misstatements can arise accounting treatment applied and in assessing the resulting from fraud or error and are considered material if, individually or estimates. in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these These matters were addressed in the context of our audit of the consolidated financial statements. consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on As specified in Article L.823-10-1 of the French Commercial specific items of the consolidated financial statements. Code (code de commerce), our statutory audit does not include assurance on the viability of the Company or the quality of mana- Verification of the Information Pertaining to the Group gement of the affairs of the Company. Presented in the Management Report As part of an audit conducted in accordance with professional As required by law we have also verified in accordance with standards applicable in France, the statutory auditor exercises professional standards applicable in France the information professional judgment throughout the audit and furthermore: pertaining to the Group presented in the management report of the Board of Directors. ■■ Identifies and assesses the risks of material misstatement of the consolidated financial statements, whether due to We have no matters to report as to its fair presentation and its fraud or error, designs and performs audit procedures res- consistency with the consolidated financial statements. ponsive to those risks, and obtains audit evidence conside- red to be sufficient and appropriate to provide a basis for Responsibilities of Management and Those Charged his opinion. The risk of not detecting a material misstate- with Governance for the Consolidated Financial ment resulting from fraud is higher than for one resulting Statements from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal Management is responsible for the preparation and fair presen- control. tation of the consolidated financial statements in accordance with International Financial Reporting Standards as adopted by ■■ Obtains an understanding of internal control relevant to the the European Union and for such internal control as manage- audit in order to design audit procedures that are appro- ment determines is necessary to enable the preparation of priate in the circumstances, but not for the purpose of consolidated financial statements that are free from material expressing an opinion on the effectiveness of the internal misstatement, whether due to fraud or error. control.

In preparing the consolidated financial statements, management ■■ Evaluates the appropriateness of accounting policies used is responsible for assessing the Company’s ability to continue as and the reasonableness of accounting estimates and rela- a going concern, disclosing, as applicable, matters related to ted disclosures made by management in the consolidated going concern and using the going concern basis of accounting financial statements. unless it is expected to liquidate the Company or to cease ope- rations. ■■ Assesses the appropriateness of management’s use of the going concern basis of accounting and, based on the audit The Audit Committee is responsible for monitoring the financial evidence obtained, whether a material uncertainty exists reporting process and the effectiveness of internal control and related to events or conditions that may cast significant risks management systems and where applicable, its internal doubt on the Company’s ability to continue as a going audit, regarding the accounting and financial reporting proce- concern. This assessment is based on the audit evidence dures. obtained up to the date of his audit report. However, future The consolidated financial statements were approved by the events or conditions may cause the Company to cease to Board of Directors. continue as a going concern. If the statutory auditor concludes that a material uncertainty exists, there is a requi-

94 2. CONSOLIDATED FINANCIAL STATEMENTS | KEOLIS S.A. 2017

rement to draw attention in the audit report to the related ■■ Obtains sufficient appropriate audit evidence regarding the disclosures in the consolidated financial statements or, if financial information of the entities or business activities such disclosures are not provided or inadequate, to modify within the Group to express an opinion on the consolidated the opinion expressed therein. financial statements. The statutory auditor is responsible for the direction, supervision and performance of the audit of ■■ Evaluates the overall presentation of the consolidated finan- the consolidated financial statements and for the opinion cial statements and assesses whether these statements expressed on these consolidated financial statements. represent the underlying transactions and events in a man- ner that achieves fair presentation.

Neuilly-sur-Seine and Paris-La-Défense, March 12, 2018

PricewaterhouseCoopers Audit Ernst & Young Audit

Françoise Garnier-Bel Jérôme Guirauden

95 3. UNAUDITED FINANCIAL STATEMENTS | KEOLIS S.A. 2017

3. UNAUDITED FINANCIAL STATEMENTS

The Group considers that the following financial statements, prepared without applying IFRS 10 and 11, are accurate indicators of the operational and financial performances of the Group. They should be considered as an additional source of information and are in no way a substitute for other strictly accounting-related forms of the measurement of operational and financial performance as presented in the consolidated financial statements and the notes thereto, or referred to in the financial report.

The management accounts as at 31 December 2017 have not been audited. CONTENTS

1 n KEY FIGURES...... 97

2 n INCOME STATEMENT...... 98

3 n STATEMENT OF FINANCIAL POSITION ...... 99

4 n STATEMENT OF CASH FLOWS...... 100

96 3. UNAUDITED FINANCIAL STATEMENTS | KEOLIS S.A. 2017

A UNAUDITED FINANCIAL STATEMENTS

1 n KEY FIGURES

(€ million) 31/12/2017 31/12/2016

Revenue 6,242.7 5,990.5 n Revenue France 2,706.1 2,675.3 n Revenue International 3,536.6 3,315.2 Revenue net of sub-contracting 6,045.6 5,797.9 Recurring EBITDA 295.9 277.5 EBITDA 281.7 257.5 Recurring operating profit 131.2 101.3 Profit after tax from continuing operations 41.0 18.5 Profit attributable to equity shareholders 39.5 24.2 Total equity 615.6 515.4 of which attributable to equity shareholders 552.9 463 .7 Net cash flows from operating activities 156.5 232.1 Industrial investments 198.7 193.8 Net financial debt (cash surplus) 41.7 35.8

97 3. UNAUDITED FINANCIAL STATEMENTS | KEOLIS S.A. 2017

2 n INCOME STATEMENT

(€ million) 31/12/2017 31/12/2016

Revenue 6,242.7 5,990.5 Other income from operations 21.6 16.2 INCOME FROM CONTINUING OPERATIONS 6,264.2 6,006.7 Sub-contracting (197.1) (192.6) Purchases consumed and external expenses (2,420.3) (2,288.5) Taxes (16.0) (15.0) Staff costs, incentive schemes, profit-sharing (3,358.1) (3,226.7) Other operating income 61.3 49.8 Other operating expense (28.6) (44.3) Net provisions on current assets (1.4) (0.5) Net depreciation and other provisions charged (182.2) (195.8) Profit/(loss) on recurring fixed asset disposals 1.7 (1.1) Amortisation of grants received 7.7 9.3 RECURRING OPERATING PROFIT 131.2 101.3 Other non-recurring income 11.3 4.7 Other non-recurring expense (32.7) (23.6) Depreciation and provisions on contractual rights (8.6) (8.2) OPERATING PROFIT/LOSS BEFORE INVESTMENTS UNDER EQUITY METHOD 101.2 74.1 Profit/(loss) from associates (0.7) 0.0 OPERATING PROFIT/(LOSS) AFTER INVESTMENTS UNDER EQUITY METHOD 100.5 74.1 Net cost of financial borrowing (8.3) (10.4) Other financial income 8.4 5.2 Other financial expense (11.8) (15.9) FINANCIAL INCOME (EXPENSE) (11.7) (21.1) PROFIT BEFORE TAX 88.9 53.0 Taxation (47.8) (34.5) PROFIT FOR THE YEAR 41.0 18.5 CONSOLIDATED NET PROFIT 41.0 18.5 Profit attributable to non-controlling interests (1.5) 5.6 PROFIT ATTRIBUTABLE TO GROUP 39.5 24.2

98 3. UNAUDITED FINANCIAL STATEMENTS | KEOLIS S.A. 2017

3 n STATEMENT OF FINANCIAL POSITION

ASSETS 31/12/2017 31/12/2016 (€ million) Goodwill 290.3 292.5 Other intangible assets 212.6 208.9 Property, plant and equipment 790.5 769.5 Investments under the equity method 1.8 2.2 Non-current financial assets 285.2 214.5 Deferred tax asset 77.8 59.1 NON-CURRENT ASSETS 1,658.2 1,546.6 Inventories and work in progress 107.7 97.6 Trade receivables 479.4 411.2 Other receivables 597.0 556.9 Current financial assets 14.2 15.0 Cash and cash equivalents 499.1 560.8 CURRENT ASSETS 1,697.4 1,641.5 TOTAL ASSETS 3,355.6 3,188.1

LIABILITIES 31/12/2017 31/12/2016 (€ million) Share capital 412.8 346.9 Reserves and premiums 100.5 92.6 Net profit/(loss) attributable to Group 39.5 24.2 Equity attributable to Group 552.9 463.7 Reserves attributable to non-controlling interests 61.2 57.4 Profit for the year attributable to non-controlling interests 1.5 (5.6) EQUITY 615.6 515.4 Non-current provisions 190.2 194.6 Non-current financial debt 396.1 331.0 Deferred tax liability 75.6 50.4 NON-CURRENT LIABILITIES 661.9 576.0 Current provisions 45.9 51.7 Current financial debt 85.9 143.0 Bank borrowings 166.9 157.8 Trade payables and other liabilities 1,779.4 1,744.2 CURRENT LIABILITIES 2,078.1 2,096.7 TOTAL LIABILITIES 3,355.6 3,188.1

99 3. UNAUDITED FINANCIAL STATEMENTS | KEOLIS S.A. 2017

4 n STATEMENT OF CASH FLOWS

(€ million) 31/12/2017 31/12/2016

Operating profit before investments under equity method 101.2 74.1 Non-cash items 180.5 183.4 EBITDA 281.7 257.5 Elimination of provisions on current assets 1.4 0.5 Changes in working capital (119.1) 8.7 Tax paid (7.5) (34.6) A ) NET CASH FROM OPERATING ACTIVITIES 156.5 232.1 Capital expenditure (198.7) (193.8) Proceeds from the sale of tangible and intangible assets 16.7 22.6 Investment grants received 12.1 10.3 Change in financial assets for concessions (IFRIC 12) (0.4) (11.5) Financial investments (99.9) (55.7) Cash flows on changes in reporting scope 1.7 3.5 Proceeds from disposal of financial assets 13.9 1.0 B) NET CASH FROM INVESTING ACTIVITIES (254.6) (223.7) FREE CASH FLOW (98.0) 8.3 Net dividends paid (1.7) (2.5) Net dividends received 0.2 0.1 Change in equity (other transactions with shareholders) 79.5 6.5 New borrowings 173.6 135.0 Borrowings repaid (197.1) (64.5) Interest received 1.8 2.7 Interest paid (10.3) (13.8) Change in other financial debts - 0.2 C) NET CASH FROM FINANCING ACTIVITIES 41.5 55.8 D) FOREIGN EXCHANGE TRANSLATION DIFFERENCES (14.3) (47.4) CHANGE IN CASH AND CASH EQUIVALENTS (A+B+C+D) (70.8) 16.7 Cash and cash equivalents at beginning of period 403.0 386.3 Cash and cash equivalents at end of period 332.2 403.0 CHANGE IN CASH AND CASH EQUIVALENTS (70.8) 16.7

100 4. ANNUAL FINANCIAL STATEMENTS | KEOLIS S.A. 2017

4. ANNUAL FINANCIAL STATEMENTS CONTENTS A ANNUAL FINANCIAL STATEMENTS 5 n NOTES ON THE BALANCE SHEET...... 110 AT 31 DECEMBER 2017...... 102 5.1. Fixed assets ...... 110

1 n BALANCE SHEET AT 31/12/2017 ...... 102 5.2. Receivables ...... 111 5.3. Details of prepayments and deferred income. . . . 112 2 n INCOME STATEMENT AT 31/12/2017 ...... 104 5.4. Exchange differences on receivables and payables in foreign currencies...... 112 B NOTES TO ANNUAL FINANCIAL 5.5. Equity...... 112 STATEMENTS ...... 106 5.6. Provisions...... 113 1 n SIGNIFICANT EVENTS 5.7. Liabilities...... 114

OF THE FINANCIAL YEAR...... 106 6 n NOTES ON THE INCOME STATEMENT...... 115 2 n ACCOUNTING PRINCIPLES, 6.1. Analysis of turnover ...... 115 RULES AND METHODS ...... 106 6.2. Details of other income and expenses...... 115 2.1. Intangible assets...... 106 6.3. Transfers of expenses ...... 115 2.2. Tangible assets ...... 106 6.4. Financial income and expense...... 115 2.3. Financial assets...... 107 6.5. Exceptional income and expense ...... 116 2.4. Receivables and payables...... 107 6.6. Corporate income tax...... 116

2.5. Marketable securities...... 107 7 n OTHER INFORMATION...... 117 2.6. Cash...... 107 7.1. Financial commitments...... 117 2.7. Provisions for contingencies and charges . . . . . 107 7.2. Pension and long service award commitments .117 2.8. Employee benefits ...... 107 7.3. Leasing commitments...... 117 2.9. Profit from joint ventures...... 107 7.4. Contractual obligations...... 118 2.10. Tax status ...... 107 7.5. Number of employees ...... 118 2.11. Crédit d’Impôt pour la Compétitivité 7.6. Remuneration of directors ...... 118 et l’Emploi (CICE)...... 108 7.7. Post balance sheet events ...... 118 3 n USE OF ASSESSMENTS IN THE PREPARATION 7.8. Identity of the consolidating company ...... 118 OF FINANCIAL STATEMENTS ...... 108

4 n FINANCIAL INSTRUMENTS...... 108 STATUTORY AUDITORS’ REPORT 4.1. Interest rate risk relating to the variable rate ON THE FINANCIAL STATEMENTS...... 133 portion of its financial debt...... 108 4.2. Currency risk ...... 108 4.3. Commodity price risks...... 109

101 4. ANNUAL FINANCIAL STATEMENTS | KEOLIS S.A. 2017

ANNUAL FINANCIAL STATEMENTS A AT 31 DECEMBER 2017

1 n BALANCE SHEET AT 31/12/2017

Depreciation & Gross amortisation 31/12/2017 31/12/2016

(In euros) ASSETS Uncalled subscribed capital - - - - INTANGIBLE ASSETS Preliminary expenses 35,273 35,273 - - Development costs - - - - Concessions, patents and related rights 88,850,132 65,628,470 23,221,662 19,688,296 Goodwill - - - - Other intangible assets 25,951,348 - 25,951,348 25,063,279 Advances, down payments for intangible assets - - - - PROPERTY, PLANT AND EQUIPMENT Land 9,358,087 1,553,583 7,804,504 7,805,678 Buildings 40,845,607 10,900,904 29,944,704 21,905,045 Technical facilities, equipment, machinery 1,727,978 975,356 752,622 146,599 Other property, plant and equipment 16,555,152 ,13,683,536 2,871,616 3,754,197 PPE under construction 2,086,836 - 2,086,836 9,006,828 Advances and down payments 35,000 - 35,000 606,800 NON-CURRENT FINANCIAL ASSETS Shareholdings under the equity method - - - - Other shareholdings 1,053,365,571 189,919,759 863,445,812 882,528,543 Receivables from shareholdings 385,246,193 8,855,327 376,390,866 318,919,410 Other long-term investments 188,361 7,622 180,738 180,738 Loans 570,978 - 570,978 657,690 Other non-current financial assets 1,720,488 - 1,720,488 1,692,811 TOTAL FIXED ASSETS (I) 1,626,537,006 291,559,832 1,334,977,174 1,291,955,914 INVENTORIES AND WORK IN PROGRESS Raw materials, supplies - - - - Production in progress (goods) - - - - Production in progress (services) - - - - Semi-finished and finished goods - - - - Goods - - - - Advances and down payments on orders 123,775 - 123,775 162,819 TRADE RECEIVABLES Trade receivables and accounts receivable 49,038,408 433,070 48,605,338 49,951,376 Other receivables 224,645,797 38,089,232 186,556,565 192,595,734 Subscribed called non paid-up capital - - - - MISCELLANEOUS Marketable securities held for trading 235,051 235,051 235,055 Cash 6,120,637 6,120,637 63,121,383 ACCRUALS Prepaid expenses 1,081,480 1,081,480 1,211,679 TOTAL CURRENT ASSETS (II) 281,245,148 38,522,302 242,722,846 307,278,046

Unrealised losses on foreign exchange (III) transactions 4,806,041 - 4,806,041 3,583,026 TOTAL ASSETS (I+II+III) 1,912,588,194 330,082,133 1,582,506,061 1,602,816,986

102 4. ANNUAL FINANCIAL STATEMENTS | KEOLIS S.A. 2017

FY 2017 FY 2016

(In euros) LIABILITIES Share capital or individual capital 412,832,676 346,851,276 Additional paid-in capital - - Revaluation reserves (1) 1,901,431 1,845,363 Legal Reserve 4,685,128 4,685,128 Statutory or contractual reserves - - Regulated reserves - - Other reserves 132,038,364 131,601,875 Retained earnings brought forward (4,172,555) NET PROFIT/(LOSS) FOR THE YEAR (70,781,999) (4,172,555) Investment grants 742,445 742,445 Regulated provisions 1,652,546 1,536,257 TOTAL EQUITY (I) 478,898,036 483,089,789 Provisions for contingencies 5,519,642 4,345,007 Provisions for charges 3,322,435 1,922,477 TOTAL PROVISIONS (II) 8,842,077 6,267,484 DEBTS Convertible bond issues - - Other bond issues - - Bank borrowings (2) 139,423,989 145,094,107 Loans and other financial debts 250,095,290 213,692,103 Customer advances and down payments 39,067 39,067 OPERATING LIABIITIES Trade payables and related accounts 33,102,233 44,681,646 Tax and social security liabilities 53,269,967 50,010,795 MISCELLANEOUS LIABLITIES Liabilities on assets and related receivables 7,876,862 10,493,755 Other liabilities 608,435,326 637,382,289 ACCRUALS Deferred income - - LIABILITIES AND ACCRUALS (III) 1,090,242,734 1,101,393,762 Unrealised gains on foreign exchange transactions (IV) 2,523,214 12,065,951 TOTAL LIABIITIES (I TO IV) 1,582,506,061 1,602,816,986

(1) Revaluation reserves incorporated in equity 1,901,431 1,845,363 (2) Including bank overdrafts and bank credit balances 139,423,989 145,094,107 Amounts payable after one year 52,921,196 35,431,281 Amounts due within one year 86,502,793 109,662,826

103 4. ANNUAL FINANCIAL STATEMENTS | KEOLIS S.A. 2017

2 n INCOME STATEMENT AT 31/12/2017

(In euros) 31/12/2017 31/12/2016

OPERATING REVENUE Sales of goods - - Sales of services 206,126,031 200,348,991 NET REVENUE 206,126,031 200,348,991 Production held as inventory - - Capitalized production 4,350,682 6,069,987 Operating grants - 8,190 Reversal of depreciation, provision and expense transfers 4,758,314 5,753,631 Other income 8,307,697 7,780,135 TOTAL OPERATING INCOME (I) 223,542,724 219,960,933 Stock purchases (including customs duties) 808 22 Change in inventory of goods - - Purchase raw materials, other supplies (including customs duties) 226,341 - Change in inventory purchases (raw materials and supplies) - - Other purchases and operating expenses 75,043,145 79,619,887 Taxes and similar payments 9,627,412 9,403,449 Wages and salaries 105,422,972 98,964,303 Welfare contributions 49,636,655 46,628,806 OPERATING ALLOWANCES On capital/fixed assets: depreciation expense 14,253,824 11,888,349 On current assets:charges to provisions 184,122 373,161 Other charges 513,807 5,664,150 TOTAL OPERATING EXPENSES (II) 254,909,085 252,542,126, OPERATING PROFIT / LOSS (I - II) (31,366,361) (32,581,193) JOINT VENTURES Attributed profit or transferred loss (III) 15,991,665 17,048,599 Loss borne or transferred profit (IV) 4,636,372 4,169,954 FINANCIAL INCOME Financial income from shareholdings 13,138,743 12,644,729 Other marketable and receivables from capitalized assets - - Other interest and similar income 6,278,143 3,669,338 Reversal of provisions charged and expense transfers 22,841,506 34,267,852 Foreign exchange gains 28,545,239 14,534,732 Net gains on sales of marketable securities 671 TOTAL FINANCIAL INCOME (V) 70,803,631 65,117,322 FINANCIAL EXPENSES Changes to depreciation and provisions 120,794,455 37,592,678 Interest and similar expenses 5,671,877 6,362,117 Foreign exchange losses 17,862,750 20,187,504 Net expenses on sales of marketable securities - - TOTAL FINANCIAL EXPENSES (VI) 144,329,082 64,142,299 FINANCIAL INCOME / (EXPENSE) (V-VI) (73,525,452) 975,023 RECURRING PROFIT BEFORE TAX AND EXCEPTIONAL ITEMS (I-II+III-IV+V-VI) (93,536,520) (18,727,525)

104 4. ANNUAL FINANCIAL STATEMENTS | KEOLIS S.A. 2017

(In euros) 31/12/2017 31/12/2016

EXCEPTIONAL GAINS Exceptional gains on operations 5,574,115 982,000 Exceptional gains on equity transactions 8,191,359 11,092,114 Reversal of provisions charged and expense transfers 3,050,967 1,958,640 TOTAL EXCEPTIONAL GAINS (VII) 16,816,441 14,032,754 EXCEPTIONAL LOSSES Exceptional losses on operations 5,134,848 4,255,277 Exceptional losses on equity transactions 2,374,445 10,188,123 Exceptional charges to depreciation and provisions 4,569,747 2,247,029 TOTAL EXCEPTIONAL LOSSES (VIII) 12,079,040 16,690,429 EXCEPTIONAL INCOME / (LOSS) (VII-VIII) (V - VI) 4,737,402 (2,657,674) Employee profit-sharing (IX) - - Corporate income tax (X) (18,017,119) (17,212,644) TOTAL INCOME (I+III+V+VII) 327,154,460 316,159,608 TOTAL CHARGES (II+IV+VI+VIII+IX+X) 397,936,459 320,332,162 NET PROFIT / (LOSS) (70,781,999) (4,172,555)

105 4. ANNUAL FINANCIAL STATEMENTS | KEOLIS S.A. 2017

NOTES TO ANNUAL FINANCIAL B STATEMENTS

1 n SIGNIFICANT EVENTS OF THE 2 n ACCOUNTING PRINCIPLES, RULES FINANCIAL YEAR AND METHODS

Capital Increase The financial statements are prepared in accordance with rules Keolis S.A. issued 5,498,450 new shares of €12 nominal value. laid down by the general chart of accounts in accordance with GROUPE KEOLIS S.A.S. subscribed to the totality of this regulation ANC N° 2014-03 dated 5 June 2014 amended by the increase in share capital amounting to €65,981,400. regulation ANC 2016-06, of the French Accounting Standards Authority (Autorité des Normes Comptables) and principles Subscription to the capital increases of subsidiaries generally accepted in the profession. Pursuant to regulations on the trade’s practices relating to the financial capacity of public passenger transportation businesses, General conventions were applied in compliance with the pru- Keolis S.A. subscribed to capital increases in its subsidiaries in dence principle, in accordance with the basic assumptions of: 2017 for a total amount of €31,330,102,58. ■■ continuity of operations; ■■ consistency of accounting methods from one year to ano- “Better fortunes” obtained ther; Following subsidies granted by Keolis S.A. to its subsidiaries in ■■ independence of financial years. prior financial years containing “return to better fortune” clauses, an entitlement amounting to €1,466,696 was recognised under The basic method used to value the items in the accounts is the exceptional income / loss at 31/12/2017. historical costs method. In preparing the financial statements, the adjustments to the (In euros) general accounting plan PGC (articles 111-1 and 831-1/1) were Subsidiary name Better fortunes obtained not used. Keolis Touraine 900,000 The main accounting policies used are described below. Keolis Côte d’Azur 200,000 Keolis Evrard 182,907 2.1. Intangible assets Keolis Brest 110,000 Intangible assets are valued either at cost of acquisition, or when produced, at their production cost or revalued amount, accor- Keolis Montluçon 29,650 ding to legal requirements. Keolis Mobilité Roissy 24,139 This item mainly concerns the cost of systems’ software acqui- Keolis Saint Malo 20,000 red which is amortized over 5 years for IT projects and 3 years TOTAL 1,466,696 for desktop software. Intangible assets in progress correspond to expenditure in connection with the implementation of IT projects, and therefore include all expenses that can be directly attributed to projects and which are necessary in creating, producing and preparing the asset in order to be able to function with the use intended by management.

2.2. Tangible assets Tangible assets are valued at their acquisition cost (purchase price and incidental expenses) or their production cost.

106 4. ANNUAL FINANCIAL STATEMENTS | KEOLIS S.A. 2017

Methods and depreciation periods are: subject to a provision for liabilities, unrealised foreign exchange gains are not recorded in the income statement. Duration Method 2.5. Marketable securities Buildings 15 to 20 years Linear These are recorded at their acquisition cost. Where applicable, Equipment and tooling 5 to 10 years Linear an impairment is recorded for each line of securities of a similar Office equipment and furniture 5 to 10 years Linear nature, in order to bring their value to their average closing price, Automotive equipment or their probable trading value for unlisted securities.

n New Vehicles 2.6. Cash • Commercial vehicles (GVM 5 years Linear Cash balances in foreign currencies are converted at the closing under 3.5 t.) exchange rate of the financial period. Foreign exchange diffe- • Coaches and buses 10 to 15 years Linear rences resulting from this adjustment with the transaction date n Used Vehicles 2 to 14 years Linear exchange rate appear under “foreign exchange translation dif- ferences”. 2.3. Financial assets 2.7. Provisions for contingencies and charges Equity and other investments A provision for contingencies and charges is recorded when the Equity investments are recorded at acquisition cost. If the acqui- company has a legal or implicit obligation to a third party arising sition value is greater than the inventory or utility value, an impair- from a past event, whose amount can be reliably estimated and ment is recognised for the difference. For each of the holdings, where it is probable that its settlement will cause an uncompen- the utility value is determined on the basis of a range of valuation sated outflow of resources. methods (discounted cash flow, revalued net position). 2.8. Employee benefits Technical losses from mergers Employee benefits include payments due on retirement and long Following adoption of regulation ANC 2015-06, technical losses service awards. from mergers and the transfer of all assets and liabilities concer- Evaluations of these obligations are carried out annually using ning financial assets are allocated in the balance sheet to a “mer- the projected unit credit method. ger losses on financial assets” account. They correspond to the negative difference between the net assets and liabilities received The main actuarial assumptions used for the assessment of and the net carrying amount of the investment in the absorbed employee benefits are as follows: company. For each of the investments, the inventory value is ■■ Discount rate 0.88% determined by taking into account the future cash flows that the ■■ Long-term expected inflation rate 1.75% activity may generate. An impairment is recorded, where neces- ■■ Rate of salary increases 6.1% sary, which may not be reversed. ■■ Mobility rate 6.3% Other financial assets are stated at their acquisition cost. Where ■■ Type of retirement At the initiative of the employee applicable, an impairment is recorded if their utility value falls ■■ Mortality table INSEE TD/TV 2012-2014 below their acquisition cost. These commitments appear under off-balance sheet commit- Receivables related to equity and current accounts ments. Receivables related to equity and current accounts are recorded at nominal value. 2.9. Profit from joint ventures When equities are fully depreciated and the net assets of the The profit or loss from joint ventures in which Keolis S.A. holds subsidiary is negative, an impairment of all receivables related to an interest are recorded under “Attributed profit or transferred equity and current accounts is recorded due to the risk of loss loss” and “Loss borne or transferred profit”. of these receivables following the transfer or cessation of the activities of the subsidiary. 2.10. Tax status The results of the company are integrated within the framework 2.4. Receivables and payables of a tax group. The Group’s tax parent company is the Company Receivables are recorded at their nominal value. GROUPE KEOLIS S.A.S. Procedures provide that tax is calcu- Where applicable, a depreciation is recognised whenever there lated as if the company were taxed separately. is a risk of non-recovery. Receivables and payables in foreign currencies are converted at Any savings achieved by the parent company from the tax losses the year-end exchange rate of the functional currency. Foreign and long-term capital losses of the subsidiary are taken by the exchange differences resulting from this adjustment with the former in its income statement. However, these are reallocated transaction date exchange rate appear under “foreign exchange to the subsidiary as and when it generates future profits. translation differences”. Unrealised foreign exchange losses are

107 4. ANNUAL FINANCIAL STATEMENTS | KEOLIS S.A. 2017

2.11. Crédit d’Impôt pour la Compétitivité et l’Emploi Interest rate, foreign exchange and commodities derivative finan- (CICE) cial instruments are traded with first-class bank counterparties The CICE, which is a tax credit, is recognised as a deduction in accordance with the Group’s counterparty risk management from corporate income tax. policy. Consequently, the counterparty risk can be regarded as negligible.

3 n USE OF ASSESSMENTS IN THE 4.1. Interest rate risk relating to the variable rate portion PREPARATION OF FINANCIAL of its financial debt STATEMENTS A credit line was arranged by Keolis S.A. in 2017 to finance rolling stock: a loan of €20 million, drawn down on 7 December 2017, For the preparation of annual accounts, Keolis S.A. management repayable in instalments over 8 years. This loan is fully hedged may be required to make estimates and assumptions that affect by a derivative financial instrument. the book value of assets and liabilities, revenues and expenses as well as information on assets and liabilities. Actual results In December 2017, a loan of €7 million was arranged by Keolis could differ substantially from these estimates. S.A. repayable in instalments over 3 years, replacing a previous loan of the same type and for the same amount. This loan is not The estimates and underlying assumptions are made from past hedged: it is incorporated into the calculation of total debt experience and other factors considered reasonable in the cir- contracted by GROUPE KEOLIS S.A.S. cumstances. They serve as the basis for the exercise of judg- ment required in determining the carrying amounts of assets and At 31 December 2017, the available, confirmed and undrawn liabilities that cannot be obtained directly from other sources. syndicated credit facility is €300 million. This credit line is avai- Actual values may differ from these estimates. lable to GROUPE KEOLIS S.A.S. and Keolis S.A. The estimates and underlying assumptions are reviewed on an ongoing basis. In particular, disputes and litigation in progress or The distribution of debt between fixed and variable rates, exclu- with employees, that have been subject to review by the mana- ding and including the derivatives portfolio is respectively: gement with their advisers or lawyers in order to reflect the risk Split excluding derivatives on the valuation of assets or liabilities. (in € million) 31/12/2017 31/12/2016 Variable rates 48.4 29.2 The impact of changes in accounting estimates is recorded Fixed rates - - during the period of change if it affects only that period or during the period of change and future periods if they are also affected by the change. Split including derivatives (in € million) 31/12/2017 31/12/2016 Variable rates 9.3 7 4 n FINANCIAL INSTRUMENTS Fixed rates 39.1 22.2

The application on 1 January 2017 of Regulation no. 2015-05 relating to financial futures and hedging operations, did not have 4.2. Currency risk a significant impact on the financial statements of Keolis S.A. The Group has put in place intra-group loans denominated in foreign currency and recognised in current accounts. In order to Keolis S.A. uses derivative financial instruments to manage its cover the resulting foreign exchange risk, the Group uses deri- exposure to financial risks resulting from its operation, financial vative financial instruments which allow it to fix the exchange and investing activities: rates of these intra-group loans. ■■ interest rate risk; ■■ foreign exchange risk; The derivative financial instruments used by Keolis S.A. are stan- ■■ commodities risk. dard, liquid and market-available: ■■ forward and futures sales and purchases; At the year end, unrealized gains are not recognised. Unrealised ■■ foreign exchange swaps. losses are booked except when they relate to instruments qua- lified as hedges entered into in one of the following two cases: Loans and borrowings are revalued on the closing date to the ■■ to hedge underlying items in the balance sheet which have closing price. The revaluation differences, positive or negative, not been revalued; are recorded as financial income. In the same way for consis- ■■ to hedge future cash flows expected in a future year, under tency, the variation in value of these derivative financial instru- the principle of matching the accounting impact in the same ments subscribed to cover these intra-group loans is also financial year. recorded in financial income.

The gains and losses realised are reported in the same income statement as the income and expenses on the hedged item.

108 4. ANNUAL FINANCIAL STATEMENTS | KEOLIS S.A. 2017

Loan hedges that were still open at 31 December 2017 are as For this purpose, the Group uses standard, liquid and market- follows: available derivative financial instruments, namely: ■■ swaps; Hedging instruments Nominal Maturity ■■ cap calls; ■■ cap puts to unwind an existing cap or to realise a cap Forward sell AUD / EUR AUD 0.3M 2018 swaps spread; ■■ floor puts if tied with cap calls to create symmetrical or Forward sell CAD / EUR CAD 40.1 M 2018 swaps asymmetrical collars; Forward sell DKK / EUR DKK 344.6 M 2018 ■■ floor calls, in particular to buy back floors that constitute swaps asymmetrical collars. Forward sell GBP / EUR GBP 5.5 M 2018 swaps At 31 December 2017 the commodity price derivatives represent Forward purchase SEK / SEK 489.5 2018 a volume of 27,320 tonnes. EUR swaps Maturing Maturing Forward sell USD / EUR USD 115.3 M 2018 in less than a swaps Volumes in tonnes in 1 to 5 years year Swaps and tunnels on 4.3. Commodity price risks diesel reference 22,520 4,800 Due to their transportation activities as operators of light vehicle fleets (coaches and buses), the Group’s subsidiaries must make substantial and regular purchases of diesel. The Group is consequently exposed to a risk in the fluctuation of the price of diesel, a risk which is partially hedged in the concession contracts signed with public transport authorities. For the remaining expo- sure, the Group implements a hedging policy using derivative financial instruments whose objective is to minimise the volatility of Group profits.

109 4. ANNUAL FINANCIAL STATEMENTS | KEOLIS S.A. 2017

5 n NOTES ON THE BALANCE SHEET

5.1. Fixed assets

Gross values

Transfers Gross value at Gross value at Increase Decrease between (in € thousand) start of year end of year items

INTANGIBLE ASSETS Concessions, patents, licences 75,206 9,181 - 4,498 88,885 Other intangible assets 25,063 5,386 - (4,498) 25,951 TANGIBLE ASSETS Land and development 9,359 - (1) - 9,358 * dont 2 478 K€ d’écart de conversion des créances rattachées à des titres de participation ** dont 6 208 K€ de cessions de- on titres own liées land aux transmissions universelles27,339 de patrimoine - (7) 9,678 37,010 Buildings - on other land 1,808 - - 1,808 - general facilities 1,861 - - 167 2,028 Plant, equipment, tooling 835 693 (407) 607 1,728 Office and computer equipment and furniture 15,470 1,085 - - 16,555 Assets under construction 9,007 2,925 - (9,845) 2,087 Prepayments and downpayments on assets 607 35 - (607) 35 FINANCIAL ASSETS Holdings 1,316,501 169,038 (46,927) - 1,438,612 Other fixed investments 188 - - - 188 Loans and other financial assets 2,351 - (60) - 2,292 GRAND TOTAL 1,485,595 188,343 (47,401) - 1,626,537

Assets under construction Intangible assets in progress relate mainly to the design, development and deployment of new operations, payroll and maintenance software solutions. Implementation is carried out by internal and external teams. Tangible assets under construction mainly relate to real estate.

Participations Les principales acquisitions de l’exercice sont: ■■ Groupe Omnibus : €3,942 thousand ■■ Aérolis: €1,000 thousand ■■ Keolis Nord Allier: €150 thousand

The main subscriptions by Keolis S.A. to the capital of its subsidiaries are: ■■ Keolis America: €20,002 thousand ■■ Keolis Lille: €7,490 thousand ■■ Keolis Alpes Maritimes: €6,219 thousand ■■ Aérolis: €4,500 thousand ■■ Keolis Pays d’Aix: €3,600 thousand ■■ Keolis Lyon: €2,400 thousand ■■ GrandLink: €1,875 thousand ■■ GoldLink: €1,462 thousand ■■ Keolis Brest: €1,100 thousand ■■ Keolis Caen Mobilité: €1,090 thousand

110 4. ANNUAL FINANCIAL STATEMENTS | KEOLIS S.A. 2017

The major decreases in the year come from disposals and liquidations. They are as follows: ■■ One Park: €1,750 thousand ■■ Forcity SAS: €249 thousand ■■ Travel Mania: €3 thousand

Receivables related to investments The major increases in the year are: ■■ KeoMotion: €49,593 thousand ■■ EFFIA Holding: €31,183 thousand ■■ Aérolis: €7,581 thousand ■■ Keolis America: €7,280 thousand ■■ Keolis Dijon Mobilité: €7,000 thousand ■■ Keolis Bordeaux Métropole: €1,522 thousand

The main decreases in the year: ■■ Keolis Spar: €15,755 thousand ■■ Keolis Lille: €5,800 thousand ■■ EFFIA St Etienne: €5,395 thousand

Depreciation and amortisation

Amortissements Amortissements Augmentations Diminutions (€ thousand) début d’exercice fin d’exercice

INTANGIBLE ASSETS Tangible assets 55,518 10,146 - 65,664 LAND AND DEVELOPMENT Terrains et agencements sur terrains 1,500 - - 1,500 - on own land 6,107 1,688 (7) 7,788 Buildings - on other land 1,135 100 - 1,235 - general facilities 1,860 17 - 1,877 Plant, equipment and tooling 689 324 (37) 975 Other tangible assets 11,716 1,968 - 13,684 TOTAL 78,525 14,241 (44) 92,723

5.2. Receivables

Due in less than Due in more than Gross amount (in € thousand) one year one year

FIXED ASSETS Receivables related to investments 385,246 3,374 381,872 Loans 759 - 759 Other financial assets 1,720 - 1,720 CURRENT ASSETS Prepayments and deposits made 124 124 - Trade receivables and related accounts 49,038 49,038 - Other receivables (1) 224,646 224,646 - Deferred charges 1,081 1,081 - TOTAL 662,614 278,263 384,351

(1) Other receivables: these include in particular €125,491 thousand of current accounts and €15,858 thousand of share of profits from joint ventures.

111 4. ANNUAL FINANCIAL STATEMENTS | KEOLIS S.A. 2017

Details of accrued income at 31 December 2017 (in € thousand) Accrued interest on advances and current accounts 3,448 Customer invoices outstanding 22,576 Supplier credit notes outstanding 34 Accrued income from bank 214 Tax and social security receivables 299 “Better Fortunes” obtained 1,467 Othe accrued income 4,112 TOTAL 32,150

5.3. Details of prepayments and deferred income

Details of prepaid expenditure at 31 December 2017 (in € thousand) Rent and charges 1,081 TOTAL 1,081

5.4. Exchange differences on receivables and payables in foreign currencies Keolis S.A. has intra-group loans or borrowings denominated in foreign currencies. These loans and borrowings are converted at the closing exchange rate of each currency on 31 December. At 31 December 2017, Keolis recognised: ■■ €4,806 thousand of unrealised losses ■■ €2,523 thousand of unrealised gains.

5.5. Equity

Amount at Allocation Profit Capital Other Amount at (in € thousand) 31/12/2016 2017 31/12/2017 increase movements 31/12/2017

Capital 346,851 - - 65,982 - 412,833 Revaluation difference 1,845 - - - 56 1,901 Legal reserve 4,685 - - - - 4,685 Retained earnings - (4,173) - - - (4,173) Other reserves 131,602 - - - 436 132,038 Profit for the year (4,173) 4,173 (70,782) - - (70,782) Regulated provisions 1,536 - - - 116 1,653 Investment grants 742 - - - - 742 TOTAL 483,089 - (70,782) 65,982 608 478,898

The General Meeting of 18 April 2017 allocated the loss of the 2016 financial year, amounting to (€4,172,554,76), as follows:

(€ thousand) Profit/(loss) for the year (4,173) Retained earnings brought forward - DISTRIBUTABLE PROFIT (4,173) Other reserves - TOTAL (4,173) Dividends paid - Retained earnings (4,173) Other reserves -

112 4. ANNUAL FINANCIAL STATEMENTS | KEOLIS S.A. 2017

Share capital At 31 December 2017, capital is fixed at the sum of 412,832,676 euros divided into 34,402,723 shares of nominal value of €12.

Regulated provisions Regulated provisions notably include €1,255 thousand for depreciation, including €116 thousand charged in the year.

5.6. Provisions

At start of Transfers At year (in € thousand) year Increase Decrease between Other end items REGULATED PROVISIONS 1,536 117 - - - 1,653 PROVISIONS FOR CONTINGENCIES AND LOSSES Provisions for disputes 762 154 (202) - - 714 Provisions for foreign exchange losses 3,583 4,806 (3,583) - - 4,806 Provisions for charges 896 4,453 (3,096) - - 2,253 Provisions for long service awards 1,027 69 (26) - - 1,070 ASSET DEPRECIATION Goodwill ------Land 54 - - - - 54 Depreciation of investments 114,865 92,059 (15,026) - (1,978)(2) 189,920 Depreciation of other financial assets 196 8,673 (6) - - 8,863 Depreciation of client accounts 439 - (6) - - 433 Other depreciation (1) 27,058 15,256 (4,225) - - 38,089 TOTAL 150,416 125,587 (26,170) - (1,978) 247,855

(1) composed primarily of write-downs of Group current accounts. (2) The decrease in depreciation concerns the transfer of all assets and liabilities from SETVER and TRANSEVRY to Keolis S.A.

Reversals of provisions used amount to €721 thousand, including €37 thousand related to provisions for disputes.

Depreciation of investments The major increases in the year are: ■■ Keolis Lille €65,981 thousand ■■ STA €5,705 thousand ■■ Aérolis €5,500 thousand ■■ Voyages Autocars Services €4,370 thousand ■■ Keolis Roissy Airport €3,419 thousand ■■ SEM VFD €1,737 thousand

The major decreases in the year are: ■■ Keolis Pays d’Aix €5,010 thousand ■■ Kisio Solution €2,879 thousand ■■ GEP Vidal €2,086 thousand ■■ Keolis Baie des Anges €1,152 thousand

113 4. ANNUAL FINANCIAL STATEMENTS | KEOLIS S.A. 2017

5.7. Liabilities

Between 1 and 5 Gross amount Up to 1 year (in € thousand) years

Bank borrowings (1) 139,424 86,503 52,921 Loans and other financial debts 250,095 820 249,275 Trade payables and related accounts 33,141 33,141 - Tax and social security debts 53,270 53,270 - Debts on assets and related accounts 7,877 7,877 - Other liabilities (2) 608,435 608,435 - TOTAL 1,092,242 790,046 302,196

1) Includes €86,464 thousand of creditor bank balances. (2) Other liabilities: include short-term current account deposits and cash pooling from subsidiaries of €599,801 thousand.

Details of accrued liabilities at 31/12/2017

(in € thousand) Accrued interest on advances and current accounts 534 Supplier invoices not received 30,905 Tax and social security liabilities 38,332 Discounts and rebates 1,860 TOTAL 71,631

Details of borrowing

Other bond issues and borrowing Borrowings can be broken down as follows:

(in € thousand) Loans from credit institutions 52,921 Creditor bank balances 86,464 Interest accrued on loans and financial liabilities 38 TOTAL 139,424

Loans and other financial debts Sont regroupés dans ce poste :

(in € thousand) Current account advances to subsidiaries 249,275 Guarantee deposits received on rented property 283 Other financial liabilities 537 TOTAL 250,095

114 4. ANNUAL FINANCIAL STATEMENTS | KEOLIS S.A. 2017

6 n NOTES ON THE INCOME STATEMENT

6.1. Analysis of turnover The Company generates the vast majority of its revenue in France. Revenue generated abroad amounts to 15,505,930 euros.

6.2. Details of other income and expenses (in € thousand)

Other operating income Gains on diesel hedging 1,288 Supplier discounts 7,019 Other 0 TOTAL 8,307

Other operating expenses Losses on diesel hedging (474) Royalties 717 Other 197 TOTAL 440

6.3. Transfers of expenses (in € thousand)

Government vocational training agency refunds 328 Insurance 4,116 Other 1 TOTAL 4,445

6.4. Financial income and expense

(in € thousand) Income Expense Balance

Income from investments 239 - 239, Depreciation and provisions, net of reversals 22,842 (120,794) (97,953) Interest on current accounts 12,900 (1,910) 10,990 Interest on loans - (694) (694) Foreign exchange gains / (losses) 28,545 (17,863) 10,682 Income from sale of marketable securities - - - Technical gains/(losses) on mergers 1,947 - 1,947 Other financial income and expense 4,331 (3,067) 1,264 TOTAL 70,804 (144,329) (73,525)

115 4. ANNUAL FINANCIAL STATEMENTS | KEOLIS S.A. 2017

6.5. Exceptional income and expense

(in € thousand) Income Expense Balance

Staff related expenditure - (5,135) (5,135) Income / (loss) from intangible asset disposals - - - Income / (loss) from tangible asset disposals 798 (372) 426 Income / (loss) from financial asset disposals 7,394 (2,002) 5,391 Other exceptional income (inc. better fortunes on 2011 subsidies (1)) - - - Depreciation and provisions, net of reversals 3,051 (4,570) (1,519) Other exceptional items 5,574 - 5,574 TOTAL 16,816 (12,079) 4,737

(1) See details of return to better fortunes, page p106

6.6. Corporate income tax The corporate income tax for the year consists of:

(in € thousand) Profit before tax Tax due Net profit

Current (93,537) - (93,537) Exceptional 4,737 - 4,737 CICE - (17,620) 17,620 Other tax credits - (397) 397 TOTAL (88,799) (18,017) (70,782)

Increase and reduction in future tax liabilities The deferred tax bases are as follows: Deferred tax Deferred tax base at Increase Decrease base at 31 (€ thousand) 1 January 2017 December 2017 PROVISIONS AND DEFERRED CHARGES Provisions for foreign exchange losses 3,583 4,806 (3,583) 4,806 Other provisions 613 - (447) 166 Other temporary differences Contribution Sociale de Solidarité 614 647 (613) 647 Translation difference - liability 12,066 2,523 (12,066) 2,523 Translation difference - asset (3,583) 3,583 (4,806) (4,806) Income subject to deferred taxation - - - - Other 51 - - 51 TOTAL 13,343 11,559 (21,515) 3,387

116 4. ANNUAL FINANCIAL STATEMENTS | KEOLIS S.A. 2017

7 n OTHER INFORMATION

7.1. Financial commitments

Other financial commitments A credit line was arranged by Keolis S.A. in 2017 to finance rolling stock: a loan of €20 million, drawn down on 7 December 2017, repayable in instalments over 8 years. This loan is fully hedged by a derivative financial instrument.

In December 2017, a loan of €7 million was arranged by Keolis S.A. repayable in instalments over 3 years, replacing a previous loan of the same type and for the same amount. This loan is not hedged: it is incorporated into the calculation of total debt contracted by GROUPE KEOLIS S.A.S.

At 31 December 2017, the available, confirmed and undrawn syndicated credit facility is €300 million. This credit line is available to GROUPE KEOLIS S.A.S. and Keolis S.A.

At 31 December 2017, the portfolio of guarantees and securities given by Keolis S.A. breaks down as follows.

Bank guarantees (guarantees and endorsements): €415.2 million Parent company guarantee: €1,256.5 million

7.2. Pension and long service award commitments

Retirement payments The amount of pension liabilities at 31 December 2017 stood at €34,103 thousand. This sum is not provided for in the annual financial statements and appears under financial commitments.

Long service awards The amount provisioned in the annual financial statements at 31 December 2017 relating to long service awards stands at €1,065 thousand.

7.3. Leasing commitments

The booking as capital assets and depreciation of goods financed by leasing would have resulted in the following values at 31 December 2017:

ASSETS UNDER LEASE Depreciation charges

(€ thousand) Initial cost In year Accumulated Net value

Land 278 - - 278 Buildings 1,813 4 1,521 292 Transport equipment 912 27 882 30 TOTAUX 3,003 31 2,403 600

Commitment at 31 December 2017 are as follows:

LEASING Rentals paid Rentals yet to be paid COMMITMENTS

Between 1 Residual Up to 1 Total to be In year Accumulated year and 5 + 5 years purchasing (in € thousand) year paid years price

Terrains- constructions - 1,239 13 51 83 147 149 Matériel de transport - 2,574 - - - - - TOTAUX - 3,813 13 51 83 147 149

117 4. ANNUAL FINANCIAL STATEMENTS | KEOLIS S.A. 2017

7.4. Contractual obligations The operating leases taken out mainly by Keolis S.A. subsidiaries on vehicles (coaches and buses) are signed with financial institutions for periods not exceeding eight years; the residual value is equal to the projected market value at the end of the rental period. Rentals excluding VAT still outstanding at 31 December 2017 amounted to €229.2 million.

Keolis S.A. provides an undertaking to continue the rental in terms of the payment of the rental amounts that remain due under the contract if the subsidiary defaults. In return, the financing body undertakes to keep the related vehicles available to the Group.

7.5. Number of employees The average headcount can be broken down as follows: 31/12/2017 31/12/2016 Executives 1,320 1,285 Supervisors and technicians 164 167 Employees 27 28 TOTAL 1,511 1,480

7.6. Remuneration of directors No directors’ fees are allotted to members of the Group’s management or executive committees.

Remuneration of members of management bodies No remuneration was paid to members of the Group’s management bodies during 2017.

7.7. Post balance sheet events There are no significant post-balance sheet events to report.

7.8. Identity of the consolidating company The Company belongs to a Group whose consolidating company is GROUPE KEOLIS S.A.S., incorporated and domiciled in France, under SIRET number 49432127600037, headquartered at 20/22 Rue Le Peletier, 75009 Paris.

The consolidated accounts of GROUPE KEOLIS S.A.S. are established in accordance with articles L 233-16 to L 233-28 of the French Commercial Code.

118 4. ANNUAL FINANCIAL STATEMENTS | KEOLIS S.A. 2017

Information on subsidiaries and non-consolidated investments (position at 31 December 2017)

DETAILED INFORMATION ON SHAREHOLDINGS WHOSE CARRYING AMOUNTS EXCEED 1% OF THE CAPITAL OF THE COMPANY REQUIRED TO PUBLISH ITS FINANCIAL STATEMENTS

A - SUBSIDIARIES (AT LEAST 50% OF CAPITAL HELD BY THE COMPANY)

Equity at

31 December 2016 (€ thousand)

in credit at 31/12/2016 31/12/2016 Percentage Percentage Gross value of and not refunded not and of capital held at securities held at held securities Net carryingNet value Other 31 December31 2017 December31 2017 Share 31 December31 2017 Companies or groups equity by the Company at capital 31 December31 2017 December31 2017 Net profit or loss(-) of securities held at Loans and advances and Loans Dividends collectedDividends financial year year ended financial Revenue for excl. VAT guararantees suppliedguararantees the 2017 financialthe 2017 year Amount of deposits and deposits of Amount for financial year ended granted by the Company of companies during Company the by

1) French subsidiaries Keolis Chalons en Champagne 148 1,026 99.24 861 861 -3,277 7,037 385 0 Chemin des Grèves - BP 68 - 51000 Chalons-en-Champagne Keolis Oyonnax 90 16 99.98 90 90 -140 1,993 13 0 Rue de la Tuilerie - 01100 Arbent Keolis Château-Thierry 25 23 100.00 25 25 -3 2,078 2 0 5 rue Vallée - 02400 Château-Thierry Keolis Chauny-Tergnier 45 56 100.00 45 45 -704 1,650 32 0 150 avenue Jean Jaurès - 02300 Chauny Keolis Montluçon 197 192 100.00 197 197 -980 5,271 39 0 Rue des Canaris - 03100 Montluçon Keolis Sud Allier 325 1,953 100.00 6,374 6,374 976 6,396 117 0 14 boulevard Alsace Lorraine - 03300 Cusset Keolis Vichy 300 599 100.00 660 660 -534 3,459 38 0 Boulevard Alsace Lorraine - 03300 Cusset Keolis Alpes Maritimes 220 587 99.79 8,201 8,201 6,573 2,168 153 0 840 Avenue Emile Hugues - 06140 Vence Keolis Garonne 98 596 100.00 1,968 1,968 234 6,964 -174 0 ZI de Bonzom - 09270 Mazères

Société de gestion de l'Aéroport 10 -34 100.00 10 10 34 0 -1 0 de Troyes en Champagne 20-22 rue Le Peletier - 75009 Paris Keolis Aude 1,783 -448 100.00 2,857 2,857 2,944 10,032 277 0 Pech Loubat - 11000 Narbonne Keolis Narbonne Mobilité 870 -825 100.00 870 40 -374 5,906 -93 0 Avenue de Pech Loubat - 11000 Narbonne Cedex Keolis Aveyron 126 193 100.00 624 200 -290 1,515 37 0 ZA Saint Martin - 8 Impasse de l'Aigoutal - 12100 Creissels Keolis Cote d'Azur 290 525 100.00 289 289 -948 3,373 89 0 59, rue de la Buffa - 06000 Nice

119 4. ANNUAL FINANCIAL STATEMENTS | KEOLIS S.A. 2017

Equity at

31 December 2016 (€ thousand)

in credit at 31/12/2016 31/12/2016 Percentage Percentage Gross value of and not refunded not and of capital held at securities held at held securities Net carryingNet value Other 31 December31 2017 December31 2017 Share 31 December31 2017 Companies or groups equity by the Company at capital 31 December31 2017 December31 2017 Net profit or loss(-) of securities held at Loans and advances and Loans Dividends collectedDividends financial year year ended financial Revenue for excl. VAT guararantees suppliedguararantees the 2017 financialthe 2017 year Amount of deposits and deposits of Amount for financial year ended granted by the Company of companies during Company the by

Keolis Baie des Anges 7,305 -7,281 100.00 11,230 3,607 -333 12,456 -397 0 742 route de Grenoble - 06200 Nice Keolis Camargue 58 151 99.97 2,889 208 -142 0 132 0 20, rue de la Villette - 69328 Lyon Société Transports Robert 38 3,366 99.96 821 821 -2,450 8,885 485 0 31 avenue José Nobre - BP 57 - 13500 Martigues Société Autocars de Provence 46 1,442 99.97 840 0 3,855 11,266 357 0 289 rue des Roseaux - 13320 Bouc Bel Air Keolis Pays d'Aix 5,010 -6,186 100.00 8,610 8,610 -2,650 36,211 -2,454 0 Rue des roseaux - Quartier du verger - 13320 Bouc Bel Air SCAC 4,168 -4,056 100.00 5,447 0 364 3,280 -566 0 398 Avenue du Mistral - ZI ATHELIA - 13600 - La Ciotat Keolis Calvados 1,100 4,120 100.00 1,152 1,152 -5,776 5,410 792 0 19, chemin de Courcelle - BP 127 - 14128 Mondeville Keolis Bus Verts 1,100 2,658 100.00 1,100 1,100 -7,497 28,385 1,492 0 19 chemin de Courcelles – 14120 Mondeville Keolis Pays Normands 276 477 100.00 1,268 1,268 -173 3,186 132 0 ZI la Madeleine, rue de l'Ile du Marais Carentan - 50500 Carentan Keolis Caen 1,065 4,260 100.00 2,251 2,251 -7,125 53,962 523 0 15 rue de la Geôle - 14000 Caen Keolis Littoral 4,259 -2,784 100.00 4,258 4,258 -1,836 14,575 657 0 2 avenue du Pont Neuf - 17300 Rochefort Keolis Saintes 140 98 100.00 139 139 -601 2,767 30 0 Rue des Perches - ZI Charriers - 17100 Saintes Compagnie du Blanc Argent 279 1,593 99.41 4,139 4,139 -1,677 5,709 548 0 Gare de Romorantin - 41200 Romorantin Keolis Centre 5,541 -4,770 100.00 5,643 0 237 3,719 -531 0 86 rue du village d'En Haut - 18230 Saint Doulchard Keolis Bourgogne 153 4,320 99.50 1,917 1,917 -5,964 12,774 1,116 0 17, rue du Bailly - ZI Dijon Saint Apollinaire - 21000 Dijon Keolis Beaune 60 0 100.00 60 60 228 1,274 17, rue du Bailly - ZI Dijon Saint Apollinaire - 21000 Dijon Keolis Dijon 1,206 1,471 100.00 1,414 1,414 -5,248 66,247 549 0 49, rue des ateliers - 21000 Dijon

120 4. ANNUAL FINANCIAL STATEMENTS | KEOLIS S.A. 2017

Equity at

31 December 2016 (€ thousand)

in credit at 31/12/2016 31/12/2016 Percentage Percentage Gross value of and not refunded not and of capital held at securities held at held securities Net carryingNet value Other 31 December31 2017 December31 2017 Share 31 December31 2017 Companies or groups equity by the Company at capital 31 December31 2017 December31 2017 Net profit or loss(-) of securities held at Loans and advances and Loans Dividends collectedDividends financial year year ended financial Revenue for excl. VAT guararantees suppliedguararantees the 2017 financialthe 2017 year Amount of deposits and deposits of Amount for financial year ended granted by the Company of companies during Company the by

Keolis Dijon Mobilité 1,200 0 70.00 830 830 -13,311 0 49, rue des ateliers - 21000 Dijon Monts Jura Autocars 2,329 -26 100.00 10,196 10,196 1,263 23,783 137 0 4, rue Berthelot - 25000 Besançon Keolis Pays Montbéliard 546 403 100.00 542 542 -1,580 17,147 109 0 CD 126 La Chamotte - 25420 Voujeaucourt Keolis Urbest 640 495 100.00 801 801 -1,206 1,100 154 0 4 rue Berthelot - 25000 Besançon Keolis Drôme Ardèche 573 2,772 100.00 3,507 3,507 -4,541 11,422 602 0 26, rue Laurent de Lavoisier - 26800 Portes-lès-Valence Keolis Montélimar 47 11 100.00 47 47 -133 143 -101 0 8 avenue de la Feuillade - ZA du Meyrol - 26200 Montélimar Keolis Eure 467 3,961 100.00 1,555 1,555 -1,506 14,948 834 0 2 rue Lakanal - ZI n° 2 - 27031 Evreux Keolis Eure et Loir 538 2,750 100.00 2,363 2,363 -3,253 12,779 614 0 Les Fenots - 28100 Dreux Keolis Drouais 82 145 100.00 82 82 348 4,412 53 0 Les Fenots - 28100 Dreux Keolis Quimper 259 214 100.00 257 257 -3,186 12,318 49 0 1 Rond Point de Quistinidal - 29000 Quimper Keolis Brest 6,626 -6,622 100.00 7,718 7,718 -3,745 39,594 -1,185 0 7 rue Ferdinand de Lesseps - 29806 Brest Keolis Morlaix 59 92 96.00 57 57 -1,125 2,587 76 63 ZI de Kérivin - 29600 St Martin des Champs Keolis Maritime Brest 8 -397 100.00 8 0 1,125 8,932 389 0 1 rue Eperon - Port de Commerce - BP 80713 - 29200 Brest Keolis en Cévennes 97 48 99.19 95 0 -100 82 2 0 389 chemin du Viguet - 30100 Alès Keolis Alès 120 59 100.00 120 120 -1,494 9,442 88 389 chemin du Viguet - 30100 Alès

Sté des Transports en Commun 750 1,731 100.00 1,090 1,090 -9,238 46,054 246 0 Nimois 388 rue Robert Bompard - 30000 Nîmes Keolis Auch 168 -96 100.00 221 221 152 1,683 -144 0 7 Place de la Libération - 32000 Auch

121 4. ANNUAL FINANCIAL STATEMENTS | KEOLIS S.A. 2017

Equity at

31 December 2016 (€ thousand)

in credit at 31/12/2016 31/12/2016 Percentage Percentage Gross value of and not refunded not and of capital held at securities held at held securities Net carryingNet value Other 31 December31 2017 December31 2017 Share 31 December31 2017 Companies or groups equity by the Company at capital 31 December31 2017 December31 2017 Net profit or loss(-) of securities held at Loans and advances and Loans Dividends collectedDividends financial year year ended financial Revenue for excl. VAT guararantees suppliedguararantees the 2017 financialthe 2017 year Amount of deposits and deposits of Amount for financial year ended granted by the Company of companies during Company the by

Les Cars de Bordeaux 264 989 49.97 379 379 248 9,190 269 0 8, rue d'Artagnan - 33000 Bordeaux Keolis Gironde 684 9,184 90.65 6,658 6,658 -8,616 16,848 920 0 ZA les Artigons Issac - 33160 Saint Médard en Jalles Autobus d'Arcachon 217 2,490 100.00 2,931 2,931 -2,151 3,301 310 0 1431 bd de l'Industrie - 33260 La Teste de Buch Keolis Bordeaux Métropole 5,000 9,837 100.00 5,000 5,000 -35,981 211,874 5,927 0 12 boulevard Antoine Gautier – 33000 Bordeaux Keolis Bordeaux 18,058 -7,851 100.00 18,058 10,000 -9,118 0 101 0 12 Boulevard Antoine Gautier - 33000 Bordeaux Keolis Narbonne 200 18 100.00 200 200 561 3,888 Avenue de Pech Loubat - 11100 Narbonne Les Courriers du Midi 2,039 1,918 100.00 5,117 5,116 -1,895 19,716 248 0 9, rue de l'Abrivado - BP 85121 - 34073 Montpellier Cedex 3 Keolis Languedoc 90 1,945 99.98 899 899 -2,128 6,340 589 0 927, avenue Joliot Curie - 30000 Nîmes Cars du Bassin de Thau 278 630 100.00 278 278 -1,071 4,260 231 0 21 av de la Méditerranée - Lieu dit Etang d'Ingril - 34110 Frontignan-La Peyrade Keolis Armor 1,505 10,184 78.21 12,755 12,755 -5,889 43,565 1,489 0 26, rue du Bignon - CS 27403 - 35135 Chantepie

Société Rennaise de Transports & 43 107 100.00 44 44 -1,117 3,446 32 0 Services Handistar 26 rue Bignon - 35135 Chantepie Keolis Saint Malo 461 117 100.00 461 461 -1,694 9,015 5 0 rue des Rougeries BP 70548 - 35405 Saint Malo Cedex Keolis Rennes 3,738 -3,105 100.00 4,536 4,536 -10,445 114,712 -1,014 0 Rue Jean Marie Huchet - CS94001 - 35040 Rennes Keolis Châteauroux 170 115 100.00 169 169 263 5,204 23 0 6 allée de la Garenne - ZI - 36000 Châteauroux Keolis Touraine 6,087 -3,258 100.00 7,472 7,472 -1,811 14,864 -20 0 Impasse de Florence - 37700 St Pierre des Corps Keolis Tours 1,910 803 100.00 1,906 1,906 -12,005 59,279 340 0 Avenue de Florence - 37700 Saint Pierre des Corps

122 4. ANNUAL FINANCIAL STATEMENTS | KEOLIS S.A. 2017

Equity at

31 December 2016 (€ thousand)

in credit at 31/12/2016 31/12/2016 Percentage Percentage Gross value of and not refunded not and of capital held at securities held at held securities Net carryingNet value Other 31 December31 2017 December31 2017 Share 31 December31 2017 Companies or groups equity by the Company at capital 31 December31 2017 December31 2017 Net profit or loss(-) of securities held at Loans and advances and Loans Dividends collectedDividends financial year year ended financial Revenue for excl. VAT guararantees suppliedguararantees the 2017 financialthe 2017 year Amount of deposits and deposits of Amount for financial year ended granted by the Company of companies during Company the by

Train Bleu St Marcellin 274 -8 99.97 594 594 -29 1,547 -33 0 3 impasse Claude Charon - 38160 St Marcellin Voyages Monnet 537 -1,451 100.00 2,505 0 1,019 -19 -107 0 Route de Grenoble - 38590 St Etienne de St Geoirs Keolis Porte d'Isère 300 314 100.00 300 300 -1,976 9,379 314 Avenue du Lemand - 38090 Villefontaine

Sté d'exploitat de l'aéroport Dole 50 91 51.00 26 0 250 2,420 48 0 Jura 33 place de la Comédie - 39000 Lons Le Saunier Keolis Gascogne 135 394 52.89 594 594 715 5,939 -185 0 215 Route de Benquet - ZA de la Téoulière - 40280 Saint Pierre du Mont Keolis Blois 878 -645 100.00 1,117 1,117 -1,579 10,020 -328 0 9 rue Alexandre Vezin - 41000 Blois Les Cars Roannais 156 2,408 100.00 374 374 -3,114 3,654 257 0 ZI les Guérins - 42120 Le Coteau Cars Planche 94 712 100.00 874 0 -428 3,655 -294 0 10 boulevard Duguet - 42600 Savigneux Keolis Atlantique 2,076 5,880 100.00 9,926 9,926 -1,786 34,111 805 0 3, rue de la Garde - ZI Bois Briand - 44300 Nantes Transports de la Brière 92 611 59.80 1,221 1,221 -96 3,095 -284 0 7, rue Pierre Vergniaud - Penhoet - 44600 Saint - Nazaire Keolis Voyages 8 67 100.00 7 7 -20 3,026 9 0 3, rue de la Garde-Zone de Bois Briand - 44300 Nantes Keolis Montargis 163 125 100.00 163 163 -693 4,240 40 0 16 rue de la Baraudière - 45700 Villemandeur Keolis Orléans Val de Loire 802 1,508 100.00 802 802 2,645 68,034 471 0 64 rue Pierre Louget- 45800 Saint Jean de Braye Keolis Agen 224 102 100.00 224 224 -1,363 7,125 65 0 Rue Georges Clemenceau - 47240 Bon Encontre Keolis Marmande 135 119 100.00 135 135 -313 1,996 59 0 Impasse Doumayne - ZA de Girauflat - 47200 Marmande Keolis Val de Maine 35 7 100.00 35 35 -96 1,164 6 0 Rue du Bois Rinier - ZI Saint Barthélémy - 49124 Saint Barthélémy d'Anjou

123 4. ANNUAL FINANCIAL STATEMENTS | KEOLIS S.A. 2017

Equity at

31 December 2016 (€ thousand)

in credit at 31/12/2016 31/12/2016 Percentage Percentage Gross value of and not refunded not and of capital held at securities held at held securities Net carryingNet value Other 31 December31 2017 December31 2017 Share 31 December31 2017 Companies or groups equity by the Company at capital 31 December31 2017 December31 2017 Net profit or loss(-) of securities held at Loans and advances and Loans Dividends collectedDividends financial year year ended financial Revenue for excl. VAT guararantees suppliedguararantees the 2017 financialthe 2017 year Amount of deposits and deposits of Amount for financial year ended granted by the Company of companies during Company the by

Société de Gestion de l'Aéroport 8 -293 100.00 8 0 1,109 1,262 -101 0 d'Angers Marcé Aéroport d'Angers-Marcé - 49140 Marcé Keolis Angers 922 2,424 100.00 921 921 -9,955 56,971 449 0 Rue du Bois Rinier - 49124 Saint Barthélémy d'Anjou Keolis Manche 497 1,643 100.00 3,102 3,102 -2,668 5,256 522 0 La Fosse Yvon - 50440 Beaumont Hague Keolis Cherbourg 299 132 100.00 382 382 -1,575 9,421 83 0 491 rue de la Chasse aux Loups - 50110 Tourlaville Keolis Chaumont 149 131 100.00 149 149 -670 3,174 31 0 Rue du Vieux Moulin - 52000 Chaumont Keolis Laval Mobilité 369 184 100.00 368 368 -504 8,629 88 0 Centre JM Moron - rue Henri Batard - BP 0909 - 53009 Laval Cedex Keolis Laval 100.00 369 369 -2,586 4,078 Centre JM Moron - rue Henri Batard - BP 0909 - 53009 Laval Cedex Keolis Sud Lorraine 2,575 1,689 100.00 2,576 2,576 -4,358 25,285 1,420 0 1 rue de la Sablière - 54136 Bouxières Aux Dames Keolis Bassin de Pompey 95 42 100.00 95 95 -472 1,763 4 0 3 rue de la Sablière - 54136 Bouxières Aux Dames Keolis Lorient 489 84 100.00 563 0 -5,898 31,017 -34 0 Boulevard Yves Demaine - 56323 Lorient Cedex Keolis Maritime Lorient 10 854 99.00 10 10 -1,057 2,199 138 0 1 rue Yves Montand - 56260 Larmor-Plage Keolis 3 Frontières 1,976 5,011 100.00 5,869 5,869 -7,238 32,529 1,450 0 5 rue de l'Abbé Grégoire - 57050 Metz Keolis Nevers 324 23 100.00 324 324 -1,835 6,570 -35 0 120 route de Marzy - 58000 Nevers Trans Val-de-Lys 1,101 4,602 100.00 2,027 2,027 -8,947 23,276 1,301 0 ZA de la nouvelle énergie - Rue de l'énergie prolongée - 59560 Comines Keolis Val Hainaut 165 3,225 96.32 3,222 3,222 -4,627 6,186 660 0 36, rue Ernest Macarez - 59300 Valenciennes Keolis Lille 57,994 -63,309 100.00 65,981 0 42,968 315,462 -17,074 0 Château Rouge - 276 avenue de la Marne - 59700 Marcq en Baroeuil

124 4. ANNUAL FINANCIAL STATEMENTS | KEOLIS S.A. 2017

Equity at

31 December 2016 (€ thousand)

in credit at 31/12/2016 31/12/2016 Percentage Percentage Gross value of and not refunded not and of capital held at securities held at held securities Net carryingNet value Other 31 December31 2017 December31 2017 Share 31 December31 2017 Companies or groups equity by the Company at capital 31 December31 2017 December31 2017 Net profit or loss(-) of securities held at Loans and advances and Loans Dividends collectedDividends financial year year ended financial Revenue for excl. VAT guararantees suppliedguararantees the 2017 financialthe 2017 year Amount of deposits and deposits of Amount for financial year ended granted by the Company of companies during Company the by

Transports Evrard 1,320 827 100.00 8,450 0 3,374 10,364 165 0 304 avenue du Tremblay- ZI de Vaux - 60100 Creil Keolis Oise 183 9,879 100.00 4,027 4,027 3,676 21,612 75 0 21, avenue Felix Louat - 60300 Senlis Keolis Alençon 38 -62 100.00 38 0 -40 2,724 1 0 20 rue Ampère - 61000 Alençon Keolis Arras 581 102 100.00 669 669 -3,546 11,424 94 0 Rue Mongolfier ZI Est - 62000 Arras Keolis Artois Gohelle 908 1,461 99.99 677 0 -4,073 55,864 466 0 59 avenue Van Pelt - 62300 Lens Caron Voyages 2,160 -1,623 100.00 2,465 103 -100 3,199 -33 0 Resurgat 1 - 64 Boulevard industriel - 62230 Outreau Voyages Dourlens 531 -366 100.00 1,171 0 -984 2,650 -204 0 ZAL n°3 - rue de Belle Vue - 62700 Bruay La Buissiere Voyages Fouache 400 1,273 100.00 4,301 4,301 281 4,724 -187 0 1321 route Nationale - 62117 Brebières Keolis Boulogne sur Mer 359 230 100.00 559 559 -617 18 0 46/48 Rue des Canonniers - 59000 Lille Westeel Voyages 3,325 1,786 100.00 5,520 5,520 -3,536 20,824 1,099 0 2, rue F. Jiolat - 62430 Sallaumines Loisirs et Voyages 914 3,319 100.00 4,254 4,254 -3,540 11,508 892 0 ZI de l'Industrie - 63600 Ambert TPR 521 -78 100.00 2,250 2,250 119 4,012 15 0 Chemin de la Saligue - 64140 Lons Keolis Pyrénées 1,367 1,211 95.16 2,626 2,626 -89 12,733 456 0 Quartier Lasbats - Route de Pau - 65420 Ibos Keolis Grand Tarbes 179 99 100.00 747 747 -969 4,905 32 0 Centre Kennedy - Rue Jean Loup Chretien - 65000 Tarbes Les Courriers Catalans 2,160 -1,560 100.00 3,401 600 -475 -18 0 7 rue Jean Perrin - 66000 Perpignan Transports GEP Vidal 1,074 -686 100.00 2,327 2,327 844 3,766 -42 0 7, rue Jean Perrin - 66000 Perpignan

Compagnie des Transports de 100.00 78 78 -80 Perpignan 20-22 rue Le Peletier - 75009 Paris Holding Striebig 2,540 -2,489 100.00 11,495 11,495 160 6 -2,820 0 198 avenue de Strasbourg – 67170 Brumath

125 4. ANNUAL FINANCIAL STATEMENTS | KEOLIS S.A. 2017

Equity at

31 December 2016 (€ thousand)

in credit at 31/12/2016 31/12/2016 Percentage Percentage Gross value of and not refunded not and of capital held at securities held at held securities Net carryingNet value Other 31 December31 2017 December31 2017 Share 31 December31 2017 Companies or groups equity by the Company at capital 31 December31 2017 December31 2017 Net profit or loss(-) of securities held at Loans and advances and Loans Dividends collectedDividends financial year year ended financial Revenue for excl. VAT guararantees suppliedguararantees the 2017 financialthe 2017 year Amount of deposits and deposits of Amount for financial year ended granted by the Company of companies during Company the by

Keolis Obernai 31 15 100.00 31 31 -153 656 3 0 7 rue de la Gare - 67210 Obernay Cedex Autocars Striebig 1,200 58 100.00 2,100 2,100 1,352 18,824 241 198 avenue de Strasbourg – 67170 Brumath Autocars Eschenlauer 300 540 90.97 1,600 1,600 -744 6,325 173 0 Route de Dresenheim - 67620 Soufflenheim Autocars Planche 5,000 15,837 100.00 6,567 6,567 -14,707 29,950 2,089 0 69 rue du Champ du Garet - 69400 Arnas Keolis PMR Rhône 1,639 -713 100.00 1,639 1,639 -719 3,774 -68 0 ZI La Bandonnière - 4, rue Maurice Audibert - 69800 Saint-Priest Interhône Alpes 40 2,287 100.00 38 38 -2,257 963 163 0 69, rue du Champ du Garet - BP 80157 - Arnas - 69655 Villefranche sur Saône Keolis Lyon 53,946 -50,673 100.00 56,398 56,398 -54,913 374,102 -2,932 0 19, boulevard Vivier Merle - 69212 Lyon Cedex 03 Keolis Val de Saône 953 1,150 99.27 1,006 1,006 -1,646 10,907 358 0 30, rue de Guerlande - Zone Verte - 71880 Chatenay le Royal Keolis Aix Les Bains 540 -299 100.00 540 0 -342 -5 0 1700 boulevard Lepic - 73100 Aix Les Bains Keolis Mobilité Paris 162 1,357 100.00 162 162 -213 14,054 320 0 58 averue des Terroirs de France - 75012 Paris Institut Keolis 37 4,062 100.00 37 37 -4,589 10,089 1,584 0 20-22 rue Le Peletier - 75009 Paris Keolis Seine Maritime 185 6,169 100.00 5,631 5,631 -6,804 16,942 1,204 0 55/57, le Nid de Verdier - 76400 Fécamp Les Courriers de l'Ile-de-France 344 35,062 99.99 560 560 12,344 104,378 2,739 0 34, rue de Guivry - 77980 Le Mesnil-Amelot Airelle 6,108 -11,311 100.00 6,104 0 4,421 -42 0 1 à 9 avenue Francois Mitterand - Immeuble Le Jade - 93200 Saint Denis Keolis Roissy Airpot 3,419 -2,896 100.00 3,419 0 1,200 9,615 -199 0 Rue de Paris Lieu-dit La Maladrerie - 77990 Mesnil Amelot Aerosat 50 1,792 85.00 43 43 -1,806 0 160 0 Rue des Acacias - 77990 Le Mesnil Amelot

126 4. ANNUAL FINANCIAL STATEMENTS | KEOLIS S.A. 2017

Equity at

31 December 2016 (€ thousand)

in credit at 31/12/2016 31/12/2016 Percentage Percentage Gross value of and not refunded not and of capital held at securities held at held securities Net carryingNet value Other 31 December31 2017 December31 2017 Share 31 December31 2017 Companies or groups equity by the Company at capital 31 December31 2017 December31 2017 Net profit or loss(-) of securities held at Loans and advances and Loans Dividends collectedDividends financial year year ended financial Revenue for excl. VAT guararantees suppliedguararantees the 2017 financialthe 2017 year Amount of deposits and deposits of Amount for financial year ended granted by the Company of companies during Company the by

Keolis Mobilité Roissy 324 -155 100.00 424 0 -4,137 8,790 13 0 34 rue de Guivry - 77990 Le Mesnil Amelot

Keolis Roissy Services 180 -26 100.00 210 0 -945 7,920 0 Aeroportuaires Rue de Paris - Lieu-dit La Maladrerie - 77990 Le Mesnil Amelot

Cie des Transports Collectifs de 40 2,019 50.00 20 20 -165 10,326 -87 135 l'Ouest Parisien 18, rue de la Senette - 78755 Carrières sous Poissy Keolis Versailles 680 11,679 99.90 2,960 2,960 -6,335 31,303 1,667 0 12 avenue du Général de Gaulle - Les Manèges - 78000 Versailles Keolis Yvelines 358 244 99.68 959 959 1,392 6,222 165 0 12 avenue du Général de Gaulle - Les Manèges - 78000 Versailles Keolis Somme 219 76 99.99 219 219 -71 2,014 -5 0 ZI du Frier - 80290 Poix de Picardie

Société d'Exploitation de 50 -163 50.96 26 0 207 10 0 l'Aéroport Albert Picardie Rue Henri Potez - 80300 Meaulte Keolis Abbeville 162 172 99.02 186 186 -552 93 75 0 Place de la Gare - 80100 Abbeville Keolis Littoral 2,822 -2,443 100.00 2,824 2,824 -125 4,266 -84 0 Place de la Gare - 59820 Gravelines

Société Départementale des 1,344 2,478 95.08 5,303 5,303 -31 15,567 65 0 Transports du Var 175 Chemin du Palyvestre - 83400 Hyères Keolis Châtellerault 113 78 100.00 111 111 -767 3,639 24 0 6 rue Le Prince Ringuet - 86100 Châtellerault Keolis Epinal 141 822 100.00 141 141 -1,052 5,004 301 0 ZAC de la Magdeleine - 88000 Epinal Keolis Seine Senart 47 8,120 100.00 5,783 5,783 -3,884 12,028 818 0 19, rue Charles Mory - 91210 Draveil Transports Daniel Meyer 240 25,498 100.00 39,039 39,039 -3,750 32,845 2,053 123 rue Paul Fort - 91310 Montlhery Keolis Seine Val de Marne 230 7,382 100.00 5,594 5,594 4,078 32,110 884 0 172 avenue François Mitterrand - 91200 Athis Mons Keolis Seine Essonne 3,004 -1,868 100.00 5,705 0 4,294 9,301 -201 0 110, route Nationale 191 - La belle Etoile - 91540 Mennecy Keolis Orly Airport 282 944 100.00 759 759 -329 12,688 -152 0 1 à 3 avenue François. Mitterand - 93200 Saint Denis

127 4. ANNUAL FINANCIAL STATEMENTS | KEOLIS S.A. 2017

Equity at

31 December 2016 (€ thousand)

in credit at 31/12/2016 31/12/2016 Percentage Percentage Gross value of and not refunded not and of capital held at securities held at held securities Net carryingNet value Other 31 December31 2017 December31 2017 Share 31 December31 2017 Companies or groups equity by the Company at capital 31 December31 2017 December31 2017 Net profit or loss(-) of securities held at Loans and advances and Loans Dividends collectedDividends financial year year ended financial Revenue for excl. VAT guararantees suppliedguararantees the 2017 financialthe 2017 year Amount of deposits and deposits of Amount for financial year ended granted by the Company of companies during Company the by

Société & Exp. Francilienne Inter 40 -861 100.00 40 0 1,860 960 -248 0 Modalité (STEFIM) 1 à 3 avenue Francois Mitterand - Immeuble Le Jade - 93200 Saint Denis Autocars Delion 482 759 100.00 2,557 2,557 147 6,921 278 0 12 rue Jean Perrin - 92000 Nanterre Keolis Mobilité Hauts de Seine 10 -1,409 100.00 10 0 1,396 -13 0 1-3 av Francois Mitterrand - Batiment le Jade - 93200 La Plaine St Denis S.F.D 40 526 100.00 1,184 566 -571 0 0 20-22 rue Le Peletier - 75009 Paris Keolis Travel Services 1,057 -869 100.00 1,057 0 1,849 6,156 179 0 12 rue Jean Perrin - 92000 Nanterre Voyages Autocars Services 2,064 -1,824 100.00 4,370 0 4,616 9,545 -410 0 52 rue Jean Lemoine - 93230 Romainville Pacific Cars 1,300 -3,010 100.00 4,581 0 2,111 21 -6 0 20 rue du Bailly - 93210 La Plaine Saint-Denis Prioris 38 -24 100.00 38 38 -32 -10 0 1 à 3 avenue François Mitterand - 93200 La Plaine Saint Denis

Société des Transports et de 150 -102 100.00 98 98 -3 -80 0 Serv. Aéroportuaires 1 à 3 avenue Francois Mitterand - Bâtiment Le Jade - 93200 Saint Denis Keolis Val d'Oise 128 2,284 99.99 130 130 2,240 5,462 255 0 1,chemin Pavé - 95340 Bernes sur Oise Aérobag 8 -2,847 100.00 8 0 3,823 5,405 39 0 Rue de Paris - lieu-dit La Maladrerie - Mesnil Amelot 77990 Aerolis 3,759 -6,041 100.00 9,777 0 2,809 25,563 -4,863 0 Lieu-dit La Maladrerie – Rue de Paris au Mesnil Amelot (77990) Keolis Conseil & Projets 8 280 100.00 8 8 -2,067 2,637 80 0 20 rue de la Villette - Immeuble le Bonnel - 69003 Lyon Kisio Solution 7,235 -4,175 100.00 7,235 7,235 2,807 -3,832 0 20-22 rue Le Peletier - 75009 Paris SCI Héron Verdier 100.00 228 228 0 55/57 Le Nid de Verdier - 76400 Fécamp REV (Réseau en Vosges) 10 14 70.00 7 0 -500 2,423 4 0 3 place Gambetta - 88300 Neufchâteau

128 4. ANNUAL FINANCIAL STATEMENTS | KEOLIS S.A. 2017

Equity at

31 December 2016 (€ thousand)

in credit at 31/12/2016 31/12/2016 Percentage Percentage Gross value of and not refunded not and of capital held at securities held at held securities Net carryingNet value Other 31 December31 2017 December31 2017 Share 31 December31 2017 Companies or groups equity by the Company at capital 31 December31 2017 December31 2017 Net profit or loss(-) of securities held at Loans and advances and Loans Dividends collectedDividends financial year year ended financial Revenue for excl. VAT guararantees suppliedguararantees the 2017 financialthe 2017 year Amount of deposits and deposits of Amount for financial year ended granted by the Company of companies during Company the by

Keolis Amiens 654 693 100.00 654 654 -7,556 31,403 220 0 45 rue Dejean - 80000 Amiens Les Transports Dunois 629 -458 100.00 651 171 -162 6 0 Route de la souterraine - Dun le Palestel 23800 Keolis Creil 250 747 83.97 210 210 -1,511 7,200 246 0 ZI du Marais sec - rue du pont de la brèche sud - Villers Saint-Paul 60780 Voyages Chargélègue 1,291 -1,725 100.00 1,772 0 162 90 0 0 20 rue Grand rue Vasles - 79340 Menigoute TRANSKEO 1,500 49 51.00 765 765 -7,189 3,618 49 0 266 avenue du Président Wilson - Immeuble Le Stadium - 93200 Saint Denis Les Coccinelles 100.00 3,942 3,942 0 33 rue Ernest Renan - 94200 Ivry sur Seine Keolis Val de Marne 10 100.00 50 0 1,061 41 rue Le Corbusier - 94000 Créteil Keolis Côte Basque Adour 10 100.00 600 600 -2,042 Chemin de Marouette - 64100 Bayonne

Keolis Chauny-Tergnier - La Fère 10 100.00 10 10 90 Scolaire 150 avenue Jean Jaurès - 02300 Chauny Transpole 10 100.00 37 37 0 276 avenue de la Marne - 59700 Marcq en Baroeul Keolis Caen Mobilité 10 100.00 1,100 1,100 -1,100 15 rue de Geôle - 14000 Caen Keolis Besançon Mobilités 10 100.00 800 800 -800 5 rue Edouard Branly - 25000 Besançon KLP19 10 100.00 10 10 0 20-22 rue Le Peletier - 75009 Paris KLP20 10 100.00 10 10 0 20-22 rue Le Peletier - 75009 Paris KLP21 10 100.00 10 10 0 20-22 rue Le Peletier - 75009 Paris KLP22 10 100.00 10 10 0 20-22 rue Le Peletier - 75009 Paris KLP23 10 100.00 10 10 0 20-22 rue Le Peletier - 75009 Paris KLP24 10 100.00 10 10 0 20-22 rue Le Peletier - 75009 Paris

129 4. ANNUAL FINANCIAL STATEMENTS | KEOLIS S.A. 2017

Equity at

31 December 2016 (€ thousand)

in credit at 31/12/2016 31/12/2016 Percentage Percentage Gross value of and not refunded not and of capital held at securities held at held securities Net carryingNet value Other 31 December31 2017 December31 2017 Share 31 December31 2017 Companies or groups equity by the Company at capital 31 December31 2017 December31 2017 Net profit or loss(-) of securities held at Loans and advances and Loans Dividends collectedDividends financial year year ended financial Revenue for excl. VAT guararantees suppliedguararantees the 2017 financialthe 2017 year Amount of deposits and deposits of Amount for financial year ended granted by the Company of companies during Company the by

2) Foreign subsidiaries Keolis Nordic * 100 448,494 100.00 46,034 46,034 0 0 160,750 0 c/o Advokatfirman Vinge KB - Box SEK SEK SEK SEK 1703 - 111 87 Stockholm - Sweden Keolis Espagne 4,508 -510 100.00 20,445 3,997 -3,925 Via Augusta, 291 - 08017 Barcelona - Spain Keolis Canada inc * 29,569 -32,243 100.00 20,892 20,892 26,629 84,848 -4,481

1 place Ville Marie - CAD CAD CAD CAD H3B 4M7 Montréal - Canada Keolis UK * 2,000 25,841 100.00 3,059 3,059 -6,218 0 5,852 0 Evergreen Buiding North - 160 Euston Road - NW1 2DX Londres - GBP GBP GBP GBP United Kiingdom Keolis Bus Danmark 1,800 169,336 100.00 21,680 21,680 46,288 878,870 13,546 0

2/4, Thorvald Borgs Gade - DKK DKK DKK DKK 2300 Copenhagen - Denmark Keolis Deutschalnd Gmbh & Co. KG 51 -50,127 100.00 736 0 -25,000 132,975 -10,049 Rheinstrasse 4E - 55116 Mainz - Germany

Keolis Deutschland 26 -17 100.00 26 0 0 0 -1 0 Verwaltungsgesellschaft Gmbh KG Postfach-103255 - 40023 Düsseldorf - Germany Keolis Vlaanderen 7,349 13,431 100.00 22,708 22,708 0 0 2,958 0 Oosterring 17 - 3600 Genk - Belgium Keolis America * 78,605 -32,817 100.00 84,155 84,155 95,390 0 -8,595 0 c/o National Corporate Research, USD USD USD USD 615 South Dupont Highway Dover, Kent County 19901 Delaware - USA Keolis Australie * 32,020 22,201 100.00 22,616 22,616 0 0 6,070 0

140 William Street - AUD AUD AUD VIC 3000 Melbourne - Australia Keolis Tramway d'Alger * 100.00 198 0 0 2 impasse Bossuet - Alger - Algeria DZD DZD Eurobus Holding SA 25,000 36,741 100.00 131,453 131,453 0 0 152 0 62 av. de Navagne - 4600 Visé - Belgium

Keolis Hyderabad Mass Rapid 3,500 11,964 100.00 50 50 0 427,353 -5,800 0 Transit System Private Limited

Cyber Tower - Q3 L4 - INR INR INR INR 500081 Hyderabad - India Kilux 13 95 100.00 20 20 827 45 0 Weiswampach - Grand Duché - Luxembourg Striebig Deutschland GmbH 52 583 100.00 1,000 1,000 0 2,732 60 0 Lundelbrunnstrasse 6 - 76887 Bad Bergzabern - Germany KIBEL 37,671 32,535 100.00 81,708 81,708 -171,618 298 682 0 62 av. de Navagne - 4600 Visé - Belgium SYNTUS 272 2,835 100.00 22,248 22,248 -29 126,931 -7,652 0 5 Visbystraat - 7418 Be Deventer - Netherlands Keolis Nederland 18 -320 100.00 588 520 7,215 0 2 0 5 Visbystraat - 7418 Be Deventer - Netherlands RDK 50.00 30 30 396 54 quai de la rapée - 75012 Paris

130 4. ANNUAL FINANCIAL STATEMENTS | KEOLIS S.A. 2017

B - NON CONSOLIDATED INVESTMENTS (BETWEEN 10% AND 50% HELD BY COMPANY)

Equity at

31 December 2016 (€ thousand)

in credit at 31/12/2016 31/12/2016 Percentage Percentage Gross value of and not refunded not and of capital held at securities held at held securities Net carryingNet value Other 31 December31 2017 December31 2017 Share 31 December31 2017 Companies or groups equity by the Company at capital 31 December31 2017 December31 2017 Net profit or loss(-) of securities held at Loans and advances and Loans Dividends collectedDividends financial year year ended financial Revenue for excl. VAT guararantees suppliedguararantees the 2017 financialthe 2017 year Amount of deposits and deposits of Amount for financial year ended granted by the Company of companies during Company the by

1) French subsidiaries

T.I.C.E 182 1,153 19.00 35 35 0 0 0 0

352 rue des Champs Elysées - 0 91026 Evry Scodec Voyages SCOP 338 617 35.00 111 111 92 0 0 0 La Tuilerie du Vignault - 79140 Cerisay Kisio Digital 867 2,401 34.02 1,687 1,687 11,509 10,601 -1,413 0

20 bd Poniatowski - 75012 Paris

Trans Pistes 80 -79 40.00 32 0 0 1,017 -13 0

37-39 rue d'Athènes - 13127 Vitrolles

Transports de l'Agglomération de 2,000 -64 25.00 500 500 0 44,838 19 0 Metz Metropole 10 rue des intendants Joseph et Ernest Joba - 57000 Metz

Keolis Velizy 359 6,570 40.36 310 310 739 16,971 983 0

12 avenue du Général De Gaulle - 78000 Versailles

Keolis Pays des Volcans 904 581 45.97 416 416 -407 5,371 295 0

14, avenue de la Gare - 63260 Aigueperse Transbusevry 415 1,398 31.08 138 0 0 1 445 0 266 avenue du Président Wilson - 93200 Saint Denis

131 4. ANNUAL FINANCIAL STATEMENTS | KEOLIS S.A. 2017

Equity at

31 December 2016 (€ thousand)

in credit at 31/12/2016 31/12/2016 Percentage Percentage Gross value of and not refunded not and of capital held at securities held at held securities Net carryingNet value Other 31 December31 2017 December31 2017 Share 31 December31 2017 Companies or groups equity by the Company at capital 31 December31 2017 December31 2017 Net profit or loss(-) of securities held at Loans and advances and Loans Dividends collectedDividends financial year year ended financial Revenue for excl. VAT guararantees suppliedguararantees the 2017 financialthe 2017 year Amount of deposits and deposits of Amount for financial year ended granted by the Company of companies during Company the by

2) Foreign subsidiaries Prometro 500 1,906 20.00 100 100 0 31,299 1,140 0 Rua de Campo Alegre 17, 2 - 4150- 177 Porto - Portugal Goldlinq Holdings Pty Ltd (création 5,749 5,749 0 2013) Level 2,7 Bay Street -Southport Qld 4215 - Australia Wuhan Tianhe Airport 1,739 0 40.00 85 85 0 0 0 0 Transport Center Operation and Management Co., Ltd *

47 Huang Xia He Road - District of CNY CNY Jaang An - Wuhan - China

Shanghai KEOLIS Public 10,000 -7,366 49.00 724 724 0 6,779 -4,545 0 Transport Operation Management Co.*

5F Building No.1 - 909 Gullin Road - CNY CNY CNY CNY 201 103 Shangai - China

STAR* 1,000 25.00 1,000 1,000 0

Abidjan plateau - Avenue Nogue CFA CFA CFA Immeuble Brodway - 011450 Abidjan BEAC BEAC BEAC - Ivory Coast

*Subsidiaries presented in local currency for Equity, Revenue and Net profit.

132 4. ANNUAL FINANCIAL STATEMENTS | KEOLIS S.A. 2017

This is a translation into English of the statutory auditors’ report on the financial statements of the Company issued in French and it is provided solely for the convenience of English speaking users . This statutory auditors’ report includes information required by European regulation and French law, such as information about the appointment of the statutory auditors or verification of the management report and other documents provided to shareholders . This report should be read in conjunction with, and construed in accordance with, French law and professional auditing standards applicable in France .

PricewaterhouseCoopers Audit Ernst & Young Audit 63 rue de Villiers Tour First - TSA 14444 92208 Neuilly-sur-Seine Cedex 92037 Paris-La Défense Cedex 672 006 483 R.C.S. Nanterre S.A.S. à capital variable 344 366 315 R.C.S. Nanterre Commissaire aux Comptes Membre de la compagnie régionale de Versailles Commissaire aux Comptes Membre de la compagnie régionale de Versailles

STATUTORY AUDITORS’ REPORT ON THE FINANCIAL STATEMENTS (FOR THE YEAR ENDED 31 DECEMBER 2017)

To the Shareholders, Independence Keolis We conducted our audit engagement in compliance with inde- 20-22 rue le Peletier pendence rules applicable to us, for the period from January 1st, 75009 Paris 2017 to the date of our report and specifically we did not provide any prohibited non-audit services referred to in the French Code Opinion of ethics (code de déontologie) for statutory auditors.

In compliance with the engagement entrusted to us by your Emphasis of Matter Annual General Meeting, we have audited the accompanying financial statements of Keolis SA (“the Company”) for the year We draw attention to the following matter described in Note 4 ended December 31, 2017. to the financial statements relating to change in the accounting method due to the first application of the settlement ANC 2015- In our opinion, the financial statements give a true and fair view 05 of July 2, 2015 related to the hedging instruments. Our opi- of the assets and liabilities and of the financial position of the nion is not modified in respect of this matter. Company as at December 31, 2017 and of the results of its operations for the year then ended in accordance with French Justification of Assessments accounting principles. In accordance with the requirements of Articles L.823-9 and Basis for Opinion R.823-7 of the French Commercial Code (code de commerce) relating to the justification of our assessments, we inform you of Audit Framework the following assessments that, in our professional judgement, We conducted our audit in accordance with professional stan- were of most significance in our audit of the financial statements dards applicable in France. We believe that the audit evidence of the current period. we have obtained is sufficient and appropriate to provide a basis for our opinion. These assessments were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion Our responsibilities under those standards are further described thereon, and we do not provide a separate opinion on specific in the Statutory Auditors’Responsibilities for the Audit of the items of the financial statements. Financial Statements section of our report.

133 4. ANNUAL FINANCIAL STATEMENTS | KEOLIS S.A. 2017

Accounting estimates accounting principles and for such internal control as manage- As part of our assessment, we inform you that our assessments ment determines is necessary to enable the preparation of finan- made by us focused on the appropriateness of the accounting cial statements that are free from material misstatement, whether principles used and the reasonableness of the significant esti- due to fraud or error. mates made by the management relating particularly to the fol- lowing matters: In preparing the financial statements, management is res- ■■ Measure the recoverable amount of goodwill resulting from ponsible for assessing the Company’s ability to continue as a technical losses on mergers (note 2.3), going concern, disclosing, as applicable, matters related to ■■ Measure the value is use of the financial investments and going concern and using the going concern basis of accounting the recoverable value of current accounts and receivables unless it is expected to liquidate the Company or to cease ope- from investments (note 2.3), rations. ■■ Risks related to current litigations (note 2.7). The financial statements were approved by the Board of Verification of the management report and of the other Directors. documents provided to Shareholders Statutory Auditors’ Responsibilities for the Audit of the We have also performed, in accordance with professional stan- Financial Statements dards applicable in France, the specific verifications required by French law. Our role is to issue a report on the financial statements. Our objective is to obtain reasonable assurance about whether the Information given in the management report and in the financial statements as a whole are free from material misstate- other documents provided to Shareholders with respect to ment. Reasonable assurance is a high level of assurance, but is the financial position and the financial statements not a guarantee that an audit conducted in accordance with We have no matters to report as to the fair presentation and the professional standards will always detect a material misstatement consistency with the financial statements of the information given when it exists. Misstatements can arise from fraud or error and in the management report of the Board of Directors and in the are considered material if, individually or in the aggregate, they other documents provided to Shareholders with respect to the could reasonably be expected to influence the economic deci- financial position and the financial statements. sions of users taken on the basis of these financial statements.

Information related to the Corporate Governance As specified in Article L.823-10-1 of the French Commercial We attest the existence, in the report of the Board of Directors, Code (code de commerce), our statutory audit does not include on the Corporate Governance, of the information required by assurance on the viability of the Company or the quality of mana- Articles L.225-37-3 and L.225-37-4 of the French Commercial gement of the affairs of the Company. Code (code de commerce). As part of an audit conducted in accordance with professional Concerning the information given in accordance with the requi- standards applicable in France, the statutory auditor exercises rements of Article L. 225-37-03 of the French Commercial Code professional judgment throughout the audit and furthermore: (code de commerce) relating to remunerations and benefits received by the directors and any other commitments made in ■■ Identifies and assesses the risks of material misstatement their favour, we have verified its consistency with the financial of the financial statements, whether due to fraud or error, statements, or with the underlying information used to prepare designs and performs audit procedures responsive to those these financial statements and, where applicable, with the infor- risks, and obtains audit evidence considered to be sufficient mation obtained by your company from controlling and control- and appropriate to provide a basis for his opinion. The risk led companies. Based on this work, we attest the accuracy and of not detecting a material misstatement resulting from fraud fair presentation of this information. is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepre- Other information sentations, or the override of internal control. In accordance with French law, we have verified that the required information concerning the purchase of investments and control- ■■ Obtains an understanding of internal control relevant to the ling interests and the identity of the shareholders and holders of audit in order to design audit procedures that are appro- the voting rights has been properly disclosed in the management priate in the circumstances, but not for the purpose of report. expressing an opinion on the effectiveness of the internal control. Responsibilities of Management and Those Charged with Governance for the Financial Statements ■■ Evaluates the appropriateness of accounting policies used and the reasonableness of accounting estimates and rela- Management is responsible for the preparation and fair presen- ted disclosures made by management in the financial sta- tation of the financial statements in accordance with French tements.

134 4. ANNUAL FINANCIAL STATEMENTS | KEOLIS S.A. 2017

■■ Assesses the appropriateness of management’s use of exists, there is a requirement to draw attention in the audit the going concern basis of accounting and, based on the report to the related disclosures in the financial statements audit evidence obtained, whether a material uncertainty or, if such disclosures are not provided or inadequate, to exists related to events or conditions that may cast signi- modify the opinion expressed therein. ficant doubt on the Company’s ability to continue as a going concern. This assessment is based on the audit ■■ Evaluates the overall presentation of the financial state- evidence obtained up to the date of his audit report. ments and assesses whether these statements represent However, future events or conditions may cause the the underlying transactions and events in a manner that Company to cease to continue as a going concern. If the achieves fair presentation. statutory auditor concludes that a material uncertainty

Neuilly-sur-Seine and Paris-La-Défense, March 12, 2018

PricewaterhouseCoopers Audit Ernst & Young Audit

Françoise Garnier-Bel Jérôme Guirauden

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