KEOLIS S.A. FINANCIAL REPORT 2016 CONTENTS 1. MANAGEMENT REPORT .................................... 3 Management Report of the Board of Directors at the Annual General Meeting on 18 April 2017 ...................................................................4 Appendix 1 ............................................................................9 Appendix 2 ......................................................................... 28 Appendix 3 ......................................................................... 30 Appendix 4 ......................................................................... 30 2. CONSOLIDATED FINANCIAL STATEMENTS ............................... 31 Key figures for the Group ............................................... 32 Consolidated financial statements .............................. 33 Notes to the consolidated financial statements .......................................................................... 38 Statutory auditors’ report on the consolidated financial statements .............................. 91 3. UNAUDITED MANAGEMENT FINANCIAL STATEMENTS ............................... 93 Key figures .......................................................................... 94 Income statement ............................................................ 95 Statement of financial position ..................................... 96 Statement of cash flows ................................................. 97 4. ANNUAL FINANCIAL STATEMENTS ........ 98 Financial statements at 31 December 2016 ............ 99 Notes to the Annual Financial Statements ............103 Information on subsidiaries and non-consolidated investments ..........................115 Statutory auditors’ report on the financial statements .........................................130 1. MANAGEMENT REPort CONTENTS A Management Report of the Board of Directors ............................................ 4 B Appendices ................................................................................. 9 Appendix 1 Non-financial data. 9 Appendix 2 List of terms of office or functions performed in 2016 in other companies by the executive officers of Keolis S.A. ..............................................................28 Appendix 3 Summary of delegations of powers and authorities granted by the General Assembly of the Board with regard to capital increases ...........................................................30 Appendix 4 Table of earnings for the past five financial years .......................................................30 3 1. MANAGEMENT REPORT Management Report of the Board of Directors A at the Annual General Meeting on 18 April 2017 Ladies and Gentlemen, ◗ I n Dijon, the new public transport service concession was awarded to Keolis in December. This new concession will include bus, tram and PRM services, car parks, street parking, We have convened this Ordinary Annual General Meeting, in self-hire bikes and long-term bike rental and car and bike accordance with legal, regulatory and statutory requirements to pounds. report to you on the activities of our Company during the year ◗ Keolis won the Côte Basque-Adour contract in December. The ended 31st December 2016 and submit for your approval the network will be taken over in April 2017 for a duration of 6 years annual and consolidated accounts of that year. and 9 months. In addition, your Auditors will also read their reports to you. Abroad ◗ I n the United Kingdom, the TPE and Southern rail franchises For our part, we are at your disposal to provide any clarification expired in March. and further information that you might find desirable. ◗ I n Germany, the public transport authorities in the Rhein-Ruhr metropolitan region, VRR and NWL, selected Keolis to operate We will review below, successively, the various items of informa- the suburban rail network serving the 11-million population tion as required by applicable regulations. living in the Dortmund area. This contract will commence in December 2019 and will run for 12 years. ◗ I n the Netherlands, Syntus, the Dutch subsidiary, won a ten- • HIghLIghtS OF thE FINANCIAL year contract in September for the operation of buses in YEAR Almere, the country’s seventh largest city. This follows two other wins: another bus contract in the province of Utrecht in Keolis S.A. carried out a share capital increase of 300 million the centre of the country and a railway contract in the Zwolle- euros which was fully subscribed to and paid for by its sharehol- Enschede-Kampen region. Keolis and Syntus also launched der GROUPE KEOLIS S.A.S. by way of set-off against due and Keobike, a new self-hire bike service deployed in 24 towns and payable receivables. cities in the country. ◗ I n Norway, the Bergen PTA Skyss renewed Keolis’s contract Business activity and development for the operation of the city tram network “Bybanen”. This one- year extension will come into effect in July 2018. France ◗ I n Australia in December, Keolis won the operation and main- ◗ T he “Le Bus Direct – Paris Aéroport” shuttle service between tenance of the new integrated public transport network in Paris and its airports was launched in May 2016. This replaces Newcastle. The contract will commence in 2017 and will run the Cars Air France service which had been operated by Aerolis for ten years. This is the first time in Australia that a multi-modal since 2008. transport contract has been awarded to a private operator. ◗ Keolis lost the Lens contract in September (effective as of 1 Keolis Downer will manage the operation and maintenance of January 2017) which it had operated since 2002. The Artois- the entire transport network which comprises buses, ferries Gohelle public transport authority awarded the operation of the and the city’s future tram network scheduled for 2019. Keolis Tadao network to Transdev. Downer was also selected to operate the 7.3 km extension of ◗ T he Lyon contract (TCL) was renewed in October with effect the Gold Coast tram. from 1 January 2017 for a 6-year term. As the Keolis Group’s ◗ I n China in April, the Shanghai metro selected the Shenkai joint leading contract in terms of turnover and ridership, and a show- venture (51%-owned by Shanghai Shentong Consulting and case for the group’s multi-modal expertise, the new contract 49% owned by Keolis) to operate its first automatic driverless started up on 1 January and will generate cumulative turnover metro line, line 8.3. This line is due to come into service at the of 2.2 billion euros. end of 2017. ◗ O ther notable contract losses, effective as of 1 January 2017, include the Alençon urban network in the north west of France, Acquisitions and the Torcy-Créteil Mobilien line in Ile-de-France. ◗ T he Brest urban cable car service was inaugurated in In January 2016, the Keolis Group announced the acquisition of November. This crosses the river Penfeld which splits the city Transports Daniel Meyer, a leading bus and coach service ope- in two, and uses two 13-square-metre cable cars offering rator in Ile-de-France. With this strategic external growth tran- capacity of nearly 1,850 people per day. saction, Keolis reinforces its foothold in Ile-de-France and ◗ I n Laval, Keolis’s contract (Tul) was renewed for 6 years. As part consolidates its position for future projects relating to Grand Paris of the announcement of the renewal of the concession, it was Express. announced that new lines would be opened. In addition, the self-hire bike service will use electrically-assisted bikes. In November 2016, the Keolis Group acquired Skyport, a bus 4 1. MANAGEMENT REPORT operating company based near the Montreal-Trudeau Airport The consolidation scope effect improves recurring EBITDA by and specialising in airport transport. Skyport operates shuttles +€14.7 million, comprising +€9.2 million in France (including for air crews and manages lost and delayed luggage for most +€8.1 million for the acquisition of Transports Daniel Meyer) and airlines principally in the regions of Montreal, Mont-Tremblant, +€5.5 million abroad (notably including +€4.7 million for the full- Quebec City and Ottawa. year impact of ATE in Australia and +€1.0 million for the acqui- sition of Cars Gembloutois in Belgium). Lille ticketing system Excluding foreign exchange and consolidation scope impact, EBITDA amounts to the same as in 2015. Organic growth of In Lille, malfunctions of the ticketing system delivered by Parkeon EBITDA including portfolio growth is +€0.7 million, comprising resulted in its late implementation compared to the initial contrac- -€.3.2 million in France and +€3.9 million for international activi- tual schedule. Lille Métropole (LMCU renamed MEL) decided to ties. introduce it into service in June 2013 against the advice of Keolis who had refused acceptance. This resulted in a shortfall in Keolis Recurrent operating profit stands at €67.5 million, up €11.3 Lille’s revenue. In these circumstances the courts appointed an million or +20.2% compared to 2015. This is notably due to expert in December 2014 to determine the origin of the flaws lower costs in the holding company. and appraise their financial impact. The assessment is currently ongoing and will continue during 2017. Net income (Group share) for 2016 is slightly down and stands at €24.0 million as against €25.2 million for the restated 2015 The Group’s financial results accounts which take into account the impact of the change in accounting rules for UK pensions, amounting to +€13.2 million. The Group’s turnover for 2016 amounted to €4,866 million,