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Annual

Report 2016
Annual Report 2016
This year, according to plan, investments have
increased with the aim of restoring growth and
recovering our competitive capacity
Letter
from the Chairman
that record Argentinian figures at the Blue exchange restructuring process, the Company has once again During the month of November we have signed a spon-
rate which already anticipated the discount on the va- reduced its gross debt to 880 million euros, leaving sorship agreement with Real Madrid Club de Ftbol for
Dear shareholders: lue of the currency which was ultimately confirmed by the net debt at 738 million euros and the debt ratio three whole seasons, which seeks to play a key role in
the depreciation. In the first scenario, 2016 revenues at 2.7 times EBITDA. This allowed for the groups inte- sports betting and online gaming development plans
Although we can already confirm that Codere has exe- would have reached 1,875 million euros (+14.4%) and rest burden to be reduced in over 20 million euros per under the Codere brand in the following years.
cuted all required steps and formalities pursuant to an EBITDA of 343.9 (+16.7%) with respect to 2015. In year, implying a finance cost of all gross borrowings
the Groups financial restructuring process, the 2016 the second scenario, revenues in 2015 would be 1,412 of approximately 7%. With these new financial costs, Finally, we already know that in 2017 we will be, once
accounts continue to include non-recurring expendi- million euros, therefore implying that growth in 2016 net income for the last quarter was already positive, again, facing the challenge of making our project de-
ture items as a consequence of such process. Additio- would be +6%. In this case, 2015 EBITDA would amount reaching 7.6 million euros. velopment plans compatible with the increase in tax
nally, this year, two currency depreciations have had to 243 million euros, which means that EBITDA for 2016 burden initiatives in some of our key markets. We are
a significant impact on our accounts. Both Argentina would be 4% higher. This year, according to plan, investments have increa- confident that we will succeed.
and Mexico have seen their currencies depreciate at sed with the aim of restoring growth and recovering
an annual rate of 59% and 17%, respectively. If we focus on the net income attributable to the pa- our competitive capacity. Compared with a 65.9 million Yours faithfully,
rent company, it is important to point out the impact euros figure in 2015, in 2016 we have reached 120.2
Jos Antonio Martnez Sampedro
If we compare, in nominal terms, the operating data of the debt-to-equity swap over such item. At the stock million euros, which represents an 82.4% increase. Codere Groups Chairman & CEO
following such depreciations, our total revenue in eu- market price of the shares on the date of the swap, it
ros has decreased by 8.6%, to 1,499.1 million euros. has generated a capital loss of 1,054.2 million euros, The greatest group investment effort has been made
Along the same lines, the adjusted EBITDA (without included in the 1,125.8 million euro loss figure reflected in Uruguay, where debts have been capitalized in Ca-
non-recurring items) has also decreased by 14.4%, to in our 2016 accounts as opposed to 113.1 million euros rrasco Nobile, therefore now we own 100% of the com-
252.2 million euros. in 2015. After deducting such item, net income for 2016 panys share capital, and Hpica Rioplatense, where
would have reflected losses amounting to 71.6 million we have acquired the remaining 50% for 31 million
In order to isolate the impact of said depreciations on euros, implying lower losses than in 2015. euros. In this process, the Hotel Casino Carrasco fee
the progress of our operational activities, we need to has been renegotiated, which should allow us to over-
either, analyze the results at a 2015 constant exchange Furthermore, following the refinancing of the corporate come the negative results that it has been dragging
rate, or, alternatively, compare it with the 2015 results debt executed immediately after the culmination of the along until now.

1 2
Contents

5
The Company Corporate Governance
1
1.1 The Codere 5.1 Corporate
Group (p. 07) Governance (p. 75)
Managment Report
1.2 A long track 2
record (p. 08) 2.1 Executive
1.3 Strategy (p. 10) analysis (p. 33)
1.4 Codere in Human Capital
the world (p. 12) 6
6.1 Human Capital
1.5 Principal milestones
in Codere history (p. 19) Group Innovation (p. 87)
3
1.4 Our Organization 2.1 Innovation (p. 39)
(p. 27)

4 7

Areas of activity Auditors Report


4.1 Areas of activity (p. 43) Auditors Report
(p. 97)
4.2 Gaming machines (p. 44)
4.3 Gaming halls (p. 50) Dependent
Societies
4.4 Betting Shops (p. 60) (p. 99)

4.5 Racetracks (p. 66)


4.6 Online gaming (p. 71)
1.
The
Company
Annual Report 2016
1.1 The Codere Group 1.2 A long track record
Codere is a leading Spanish Codere started up its activity in 1980 in the
multinational company within the Autonomous Community of Madrid (Spain),
private gaming industry holding more as a gaming machine operator, and has diversified
than 35 years of business expertise. its activity in the industry, becoming a Company
of reference in the various markets in which
it operates.

The Codere Group has around 14,000 employees and


successfully carries out its regulated activity in several Codere heads gaming hall operations in the province In 2016, in the wake of the Group financial restructu-
business areas, operating gaming machines, gaming of Buenos Aires (Argentina), Mexico and Uruguay, ring, the Company started up an ambitious strategic
halls, betting shops, racetracks and online activity. The is one of the principal AWP machine operators in growth plan, and was able to refinance its corporate
Company -with a global perspective- operates in eight Spain and of bingos in Italy, and is a leading casino debt structure, allowing it to take on new projects.
countries: two in Europe (Spain and Italy) and six in operator in Panama and Colombia. In addition, it is The Group closed the year with sales of over 1,500
Latin America (Argentina, Mexico, Colombia, Panama, present in the on-premise sports betting business in million euros, 67% of which came from its business
Uruguay and Brazil). Spain and Mexico. in Latin America, with an adjusted EBITDA of 262 mi-
llion euros.
Codere is the first and only Spanish gaming company Throughout these years, the Company has known
listed on the Madrid Stock Exchange, going public on how to adapt to the market circumstances at any At the end of 2016, the Company operated 55,060
October 19th , 2007, and carrying out its activity in given time, adapting its activity to the various envi- gaming machines, 144 gaming halls, 3,984 betting
this complex industry with complete Transparency, ronments and reinvesting its profits in new growth shops and 4 racetracks, in addition to carrying out
The Company

Professionalism and Responsibility. opportunities with a customer-oriented vision. online activity in Spain, Mexico and Brazil.

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Annual Report 2016
Transparency

Professionalism Responsibility 1.3 Codere Strategy


In April 2016, Codere definitively completed
its financial restructuring, starting a new stage
with a stronger balance sheet and able to once
Mission again sustain growth projects. After a number of
People want to enjoy themselves playing and betting creating value for shareholders and main stakeholders. years in which the Company was basically focused
on games in which chance and skill play a role. There
is a growing demand for this activity in todays society. Professionalism
on cost efficiency, a period was started to drive
Codere sees it as a mission to be able to attend to this We understand that doing things right requires: growth from the perspective of income.
demand in a professional, transparent, and responsi- Qualified teams having continual training and de-
ble manner in order to be able to generate economic velopment.
growth sustainably. Customer-oriented, creating appreciable competi-
tive advantages.
Innovation which takes advantage of the evolution
Vision of technology.
Respect for and adaptation to the diverse cultures
To be a reference in professional, transparent and respon- and sensibilities of our markets..
sible management in gambling for regulators and custo-
mers alike in the markets in which we have a presence. Transparency
Our activity requires that we handle a large quantity
of outside resources, such as player prizes and special
Values taxes. This characteristic calls for and warrants great
administrative intervention. Transparency is the only The resolution of the uncertainties associated with this This entailed a significant reduction in interest expen-
The Codere Groups vision is based on the values of: way to attain the trust and credibility from regulators process has allowed the Company to focus on a Stra- se, by about 23 million euros annually.
Professionalism, Transparency, and Responsibility, and customers. We have been the leading Spanish ga- tegic Plan (2016-2020) which establishes a long-term
which represent firm commitments of the Company. ming company to trade on the Securities Market. vision of the business project, defining the competitive The strategic plan entails a transformation of the or-
These commitments, far from being a mere declaration positioning of Codere by markets, as well as its mana- ganization to respond to the new challenges of the
of principles, are extended to our daily practice and are Responsibility gement priorities. sector: customer management and business digitiza-
fully integrated into the daily management of the Group Excessive gambling is not harmless, and gives rise to so- tion. Codere has gone from being a logistics operator
in all areas of activity. The Company considers that pro- cially worrisome effects on the most vulnerable groups. Investors showed their confidence in the progress made to becoming a customer-oriented manager. This entails
fessional performance under the values described is To help Regulators and Public Administrations reduce and in the action plans, given that this past November the need to incorporate technological and analytical
The Company

the best guarantee of the Companys commitment to this possible social impact to a minimum is to help us all. the Group successfully refinanced its corporate debt. capacities into the organization, in order to attain so-

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Annual Report 2016
Italy
4.
1.4 Codere Gaming Machines
Gaming Halls
9,032
11
in the world Gaming machines
phisticated customer database management and to be network concessions
able to offer customers better service in highly compe- At year-end, the
titive environments.
Company operates
The Company is aware that the new technologies,
which have arisen together with the gradual regu-
55,060 gaming
lation of online gaming-, has shaped new consumer machines;
habits. This makes it necessary not only to guarantee
a legal gambling online offering for customers that pro- 144 gaming halls,
vides users with the maximum assurances, but also to
introduce digital elements with traditional customers,
3,984 betting shops
and consequently improve their relationship with the and 4 racetracks.
Company.
The Company also
All of these efforts are reflected in the signing, this
past November, of the sponsorship agreement with
operates online
the Real Madrid, a global agreement, which makes gaming in Spain,
the Company the Official Bookmaker of this Madrid
football club until 2020. This alliance makes it possible Mexico and Brazil.
to capitalize the worldwide recognition of this football
club in Codere brand notoriety in Latin America, Spain
and Italy, a decisive factor in promoting both the online
as well as on-premise offering.

Likewise, Codere considers inorganic growth to be key


in the coming years, given that it wants to lead the
consolidation of the markets in which it operates. In this The growth projects in the rest of Latin America Mexi-
regard, this past November the remaining 50% of HRU co, Argentina, Panama and Colombia will be focused
was purchased, with Codere becoming the sole owner on the opening of new gaming halls, selective purcha-
of the Uruguayan business, which in conjunction with ses of operators, and the development of a sports bet- Spain
the fiscal improvements rendering the Hotel Casino Ca- ting channel. In Europe Spain and Italy, the projects
Gaming Machines 9,157 Betting Shops 3,858
rrasco Nobile of Montevideo more viableset the stage will materialize by means of associations, acquisitions
The Company

for the consolidation of the operations in the country. and the promotion of sports betting. Gaming Halls 1 Online

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Annual Report 2016
Argentina
Mexico
Brazil Promotion of actions with customers equipped with the latest generation
Gaming Machines 19,184
Betting Shops 5 Argentina is the principal market of the gaming machines, and food and beve-
Gaming Halls 90 Codere Group. It is the largest bingo rage services. In addition, it promotes
Online
Betting Shops 85 hall operator in the Province of Buenos EL CLUB, with new services such as the
Aires, with 14 halls and nearly 7,000 Call Center and the self-management
Racetracks 1 gaming machines, managing 29.8% of service. In August, Codere Argentina
Online the gaming machines in the Province of implemented the SPACE (Customer
Uruguay Buenos Aires. In 2016, the Company fo- Relationship Management) System in
cused on customers, incorporating the five halls, contributing to the integral
Gaming Machines 2,263
Panama Smokers Club into nine of its gaming management of its members in an aim
Gaming Halls 6 halls, where these exclusive areas are to drive its results.
Gaming Machines 3,069 28
Betting Shops
Gaming Halls 12 Racetracks 2
Startup_ 1991
Betting Shops 8
Figures 2016_
Racetracks 1 Income: 534.5 *
Adjusted EBITDA: 131 *
2016 milestones_
Argentina Promotion of actions with CLUB customers,
and implementation of its SPACE (CRM) platform
Gaming Machines 6,952 in five gaming halls to achieve integral
Colombia customer management.
Gaming Halls 14
Gaming Machines 5,403 * Millions of euros

Gaming Halls 10

Note: Argentina is the principal market of the Codere


PANAMA: Betting shops do not include the 41 horseracing betting associated agencies.
COLOMBIA: Data include only gaming halls holding more than 50 gaming machines. Group. It is the largest bingo hall operator in the
URUGUAY: Data reflect Carrasco Nobile and HRU operating income.
Spain: Betting shops in Spain reflect SSTs number, in other markets betting shops units are reflected. Province of Buenos Aires
The Company

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Annual Report 2016
Mexico Spain
Intense activity in gaming halls and startup of its online activity Leader in sports betting
In 2016, Codere Mexico carried of machines reaching 19,123. One At year-end, Codere maintained its gulated autonomous communities in
out intensive promotional and lei- of the most noteworthy milestones Startup_ 1998 leadership in sports betting, with a Spain. These good results go hand Startup_ 1980
sure activity in its gaming halls, of the year was the start of online 2016 figures_ 30% share of the on-premise market. in hand with the positive performan- 2016 figures_
Income: 329.8 * Income: 170.3 *
carrying out over 1,300 events, activity in October of 2016 under Adjusted EBITDA: 88.5 * Throughout the year, the Company ce of the gaming machine business Adjusted EBITDA: 29.5 *
especially anniversary celebra- the Codere Apuestas brand. In ad- 2016 milestones_ incorporated new regions into its (which increased average daily re- 2016 milestones_
tions, and some 980 promotional dition, among its services Codere Promotion of actions with CLUB customers, expansion plan, such as Santander venues by 10.4%) and of bingo, dri- Codere maintained its leadership in
and implementation of its SPACE (CRM) Spain in on-premise sports betting, with
campaigns. In addition, during the started its customer self-manage- platform in five gaming halls to achieve
(Cantabria), Melilla and Asturias, in ven by an improved product as well
a 30% market share, and developed it
year the Company increased its ment App (adapted for IOS and An- integral customer management. addition to extending its capacity as investment in customer loyalty gaming platform.
average installed gaming machine droid), with numerous advantages * Millions of euros in the regions in which it is already actions. In 2016, the gaming App * Millions of euros
capacity by 7.8%, with the number for players. present, increasing the number of Codere.es was also renovated for
points of sale by 16%. Currently, it mobile phone and PC and incor-
is the only licensed sports betting porates online casino games into
company operating in all of the re- its entertainment offering.

Italy
Responsible growth
Panama
Italy is seen as one of the strategic as the Codere Training program, a Business deployment
countries of the Group in its growth training tool for the recognition and In Panama Codere manages a wide ted the 60th anniversary of the Hip-
project. In 2016, the total number management of critical points rela- Startup_ 2001 range of business: gaming machi- dromo Presidente Remn racetrack,
of AWP gaming machines grew ted to pathological gaming, mana- 2016 figures_ nes, casinos, betting shops and a the only racetrack in Central Ame-
(by 7.4%) and VLTs (6.1%), as did the ged by the legal gaming operators Income: 321.5 * racetrack. The Company, the leader rica, and in May the venue also ce-
Adjusted EBITDA: 26.4 *
number of units connected to the connected to its Network and ope- in casino management of the coun- lebrated the Clsico Presidente de Startup_ 2005
2016 milestones_
Codere Network, and there was li- rating in their own gaming halls or The Company is committed to Responsible try, has incorporated improvements La Repblica, the awards ceremony 2016 figures_
kewise improvement in the average those managed by third parties. In in its installations, and invests in new of which was attended by President Income: 98.1 *
Gaming, and launched the Codere Training
Adjusted EBITDA: 16.6 *
daily revenues in the AWPs (19.2%). Bologna, the Company also started program to train operators to identify products in an aim to improve the Juan Carlos Varela. At year-end, the
pathological gaming behaviors. It also Hitos 2016_
Throughout the year, the Company up the second edition of the event In started the event In the Name of Legality customer experience. In 2016, it re- racetrack also hosted the 7th promo- The Company celebrated the 60th anniver-
was highly focused on its commit- the name of legality 2.0, an initiative 2.0 which promotes a culture of Responsi- novated 19% of its total gaming ma- tion of the Laffit Pincay Jr. Technical sary of the Hipdromo Presidente Remn
ment to Responsible Gaming and supported by regulatory agencies, ble Gaming in the industry. chines, introducing new table games Jockey Academy, the cradle of the racetrack, the only one in Central America.
promoted important initiatives such institutions and local authorities. * Millions of euros in its halls. This last year it celebra- best jockeys in the world. * Millions of euros
The Company

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Annual Report 2016
Colombia Uruguay
Commitment to lead new markets Unification of the business
Codere, one of the most outstan- regulator Coljuegos. In its gaming Codere concentrates its operations In the country, the Company also
ding gaming machines and gaming halls, the Company started im- Startup_ 1984 in Montevideo and its outskirts, ma- manages the Sofitel Montevideo Startup_
2016 figures_ 2002/ 2013 (Carrasco)
hall operators in the country, made provement actions for the Loyalty naging the Hipdromo Nacional de Casino Carrasco & Spa (operated
Income: 24.7 * 2016 figures_
great strides in the context of its CLUB, for the benefit of its custo- Adjusted EBITDA: 4.8 * Maroas and Hipdromo Las Piedras by Accor, under the umbrella of HRU (Hpica Rioplatense de Uruguay)
improvement plan, in renovating mers, and migrated from the CRM 2016 milestones_ racetracks, as well as the ancillary the Sofitel brand), this being one Income: 27.7 *
its total number of machines and system in order to improve hall ma- The Company prepared to develop new activities: horse race betting system, of the most emblematic entertain- Adjusted EBITDA: 8.9 *
equipment, and in migrating to the nagement efficiency. In addition, sports betting gaming modalities and online and entertainment halls with gaming ment buildings. Activity in recent CARRASCO NOBILE
activity in the country. Income: 14.2 *
TITO (ticket in-.ticket out) system in 2016, owing to the forthcoming machines and betting shops, through years has been focused on driving Adjusted EBITDA: (-10.3) *
* Millions of euros
of its machines. Throughout the regulatory changes, the Company simulcasting (a simultaneous betting entertainment, and starting up new 2016 milestones_
year, the focus was also placed on prepared to adopt new gaming mo- system by satellite TV allowing the gaming areas, VIP zones or special Codere integrated its business in the
adapting its equipment to the in- dalities: sports betting and online exchange of races between Europe, rooms for smokers. At year-end the country with the purchase of the remaining
50% of HRU, its subsidiary in Uruguay. In
terconnection requirements of the gaming, to be launched in 2017. North America and Latin America). In Company changed its tax structure the Maroas venue, it made significant
2016, Hipdromo Nacional de Maro- with the regulator (Intendencia de investments in installations and the Villa H-
as made the greatest investment Montevideo) and rethought its VIP pica. In addition, Sofitel Montevideo Casino
Carrasco & Spa refocused its business in
since its reopening, constructing its table business. the local market..
After several years of adjustments, the Company new grass track and Villa Hpica, in
addition to investing in significant
* Millions of euros

was able to regain competitiveness and attain the technological improvements which

bulk of its strategic objectives will enable it to transmit its signal in


HD. Likewise, the venue veterinary
service was certified under the ISO
9000 standard, and the racetrack re-
ceived the principal world turf autho-
rities at the ICRAV (21st International
Brazil Conference of Racing Analysts and
Veterinarians). At year-end, Codere
Promotion of international betting Startup_ 2006 acquired the remaining 50% of HRU
In recent years, Codere Brazil has converting Codere Brazil into the lea- 2016 figures_ (Hpica Rioplatense de Uruguay), in-
taken on numerous initiatives to dri- ding legal online gaming operator in Income: 1.6 * tegrating complete management of
Adjusted EBITDA: (-4.6) *
ve international betting and turf. In the country, and started on a brand its activities.
Hitos 2016_
the first months of 2016 it started up growth and expansion process throu- The Company started up Suaposta.com.br,
online activity alongside the Jockey gh mobile phone terminals in JCRGS which aspires to become the leading meeting
Club do Rio Grande do Sul (JCRGS), betting sites in several cities of the point for turf betters.
The Company

Note: The Uruguay results are presented disaggregated, given that the integration of the
through the page suaposta.com.br, state of Rio Grande do Sul. * Millions of euros businesses did not take effect until December of 2016.

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Annual Report 2016
1.5 Principal milestones in Codere history
The Codere Group has grown and developed
for over more than 35 years, running a
long-distance race marked by a series of milestones:
Expansion in Chile.

2000 Obtains a syndicated loan for 72 million euros.

Purchase of the CANOE Bingo Hall, in Madrid.

Acquires Operibrica and adds 3,500 new gaming


Codere starts up its activities in Madrid.
machines to its business in Spain.

1980 Enters the markets of Catalonia and the Autonomous Community of Valencia.

Codere begins its international expansion in Colombia. Codere starts up its activities in Italy through a
contract in 16 bingo halls.
2001
Monitor Clipper Partners invests 40 million euros in Codere.
Begins managing bingo halls in Argentina.

1990 Starts operations in Mexico with Caliente and CIE group.

Codere takes out a mezzanine loan


Syndicated loan for 45 million euros. for 135 million euros.
2003
1999 Authorized to install gaming machines in the bingo halls of Attains the management of Hipdromo Maroas de
Argentina, driving business profitability. Montevideo (Uruguay) racetrack, and reopens it.
The Company

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Annual Report 2016
Codere goes public.

2007 Acquires 49% of ICELA in Mexico.

Begins managing gaming terminals in Italy. Purchases Maxibingo in Italy.

2004 Begins managing TEB in Mexico.


Renewal of certain bingo licenses in Argentina.

Purchase of the Royal group in Argentina.


Codere and its shareholders obtain a sports
betting license in the Basque Country (Spain).
Bond issue for 335 million euros.

Acquires Operbingo in Italy.


Cashless (TITO) systems start to be introduced
in Argentina.

Begins operating in Brazil.


2008
Codere obtains the license to operate sports betting in the Autonomous

2006 Bond issue for 160 and 165 million euros.


Community of Madrid, and opens the first sports betting shop in Spain.

Opening of a new casino in Panama.


Purchases Bingo Palace and Codere Network in Italy.

Acquires MAE in Mallorca (Spain). Starts its sports betting operations in the
Basque Country (Spain).

Acquisition of Promojuegos in Mexico.

The Martnez Sampedro family purchases the stake of the


Franco brothers and the ICG and MCP funds. Renewal of the license of the La Plata (Argentina) Bingo Hall.

Asset swap between Chile and Panama. 2009 Codere is awarded the tender for the reconstruction and management
of the Hotel Casino Carrasco en Montevideo (Uruguay).

Codere inaugurates the Casino Crown Palatino


in Bogot (Colombia).
The Company

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Annual Report 2016
Codere consolidates its position in Mexico and Codere places a bond issue for 300 million US$.
announces an agreement with the Caliente Group.
2010 2012 Acquires 60% of the operator Dalla Pria Service
Acquires six casinos in Panama. S.R.L. in Italy.

Starts its sports betting operations in Navarra (Spain). The Company obtains the license for the possession, use and exploi-
tation of the Hipdromo de las Piedras racetrack in Uruguay for 30
The first online bingo operation starts in Italy through years, and continues with the Hotel Casino Carrasco renovations.
www.codere.it and VLTs are installed in its gaming halls.
Inaugurates the CrowN Casino Zona T hall in Bogot, Colombia.

Renewal until 2028 and 2029 of five of the licenses which Codere
The Codere Group signs a purchase option for an additional operates in gaming halls in the province of Buenos Aires (Argentina).
35.8% stake in ICELA (Mexico).
2011
Codere Italy closes the purchase of the gaming machine operators
FG Slot Services, Gap Games and Gaming Re throughout 2011.
Re-inauguration of the Casino Carrasco and reopening of
the Hipdromo de las Piedras racetrack, both in Uruguay.
Codere becomes the exclusive distributor of international simulcasting
through its agreement with Jockey Club do Paran (Brazil).
2013
Celebration of the 70th anniversary of the Hipdromo de
las Amricas racetrack in Mexico.
The Codere Group Ethics and Conduct Code is approved.
Renewal of the licenses granted to five gaming halls
Start of the renovation works on the Hotel Casino Carrasco. in Argentina.
The Company

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Annual Report 2016
Codere reaches an agreement with the essential terms for
the restructuring of Group capital and debt.
2014
Agreement for simulcasting between the Maroas and Las Piedras racetracks
in Uruguay and the Hipdromo de Cristal racetrack in Porto Alegre, Brazil.

Codere leads on-premise betting in Spain and launches the


sports betting web App: Codere.es.

Growth of Codere Italy through the purchase of local operators.

2015 Codere Spain begins operating sports betting under


a national license and incorporates casino games into
its online activity.

Codere Brazil launches a pilot drive of its online activity.

Codere completes the Company balance sheet restructuring process.

2016 Definition of the Strategic Plan 2016-2020.

Corporate debt refinancing allows for lower interest expense.

Codere acquires the additional 50% of HRU, its subsidiary in Uruguay.

The Company becomes the Official Bookmaker of Real Madrid Football Club.

Codere starts its online activity in Mexico under


The Company

the Codere Apuestas brand.

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Annual Report 2016
Chairman & CEO
1.6 Our Organization Jos Antonio Martnez Sampedro

Codere Group is structured by geographic


regions and several business units, operating Compliance
its activity in in Europe and Latin America.
Legal Advisory Serafn Gmez

David Jimnez
Human Resources

Codere Europe includes business activities tions, under the same management team Rafael Lpez-Enrquez
in Spain - gaming machines, gaming halls, located in Mexico. The Company head- CIO
sports betting and online gaming - and bu- quarters and central services are located
siness activities in Italy - gaming machines in Madrid, and are responsible for the Felipe Ludea
CFO
and gaming halls-. The control of the ope- global strategy and corporate policies,
rations of each of the business areas in Co- institutional relations, the management of
ngel Corzo
dere America is also organized by country. common activities and the coordination of
the activity of the geographical business Business Development
Since 2016, the Company integrated units. The Codere Foundation is also lo-
Mexico, Panama and Colombias opera- cated in Spain. Fernando Ors Audit & Control

Adolfo Carpena
Note: As per April, 2017

America Europe
President Javier Martnez Sampedro

Argentina Uruguay Brazil Colombia Panama Mexico Spain


Country Manager Country Manager Country manager Country manager Country manager Country manager Italy
The Company

Bernardo Chena Carrasco Nobile - Andr Gelfi Diego F. Navarro Lucas Alemn Rodrigo Gonzlez Country manager
General Manager Alejandro Pascual
Hpica Rioplatense
Gabriel Gurmndez
27 28
6.

Annual Report 2016


6. 6.
Coderes
6. Group principal
magnitudes graphics
Betting shop
Revenues @Blue Rate
Revenues Gaming machines
EbitdaEbitda
@Blue Rate
Revenues Gaming machines
Ebitda Mexico - 85

286 *
* *

283 *
* *
1,533
Spain - 3,858

1,527
Argentina - 6,952

* *
1,533

262 *
1,527
1,439

260 *
Argentina - 6,952 Panama - 8

252 *
* *

286 *
Mexico - 19,184

* *

1,439

283 *
1,346

1,327
Mexico - 19,184 Uruguay - 28

* *
Italy - 9,032
55,060

1,346

229 *
1,327

1,241
55,060

260 *
220 *
Italy - 9,032 Brazil - 5

* *

1,241

252 *
Spain - 9,157

1,127
* *

200 *
Spain - 9,157
1,050

199 *
1,127

199 *
Panama - 3,069

229 *
1,050

* *

220 *
Panama - 3,069
968

176 *
Colombia - 5,403
* *

200 *
880

968

Colombia - 5,403

199 *
199 *
Uruguay - 2,263
880
*

Uruguay - 2,263

176 *
732*

Racetracks
732

Mexico - 1
Gaming halls Panama - 1
Gaming halls
Uruguay - 2

Argentina - 14 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Argentina - 14
Mexico - 90
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Mexico - 90
Italy - 11 144Millions of euros
*
2006 2007 2008 2013-2015
2009 Restructuring
2010 process
2011 2012 2013 2014 2015 2
* Millions of euros
* Millions of euros
2013-2015 Restructuring process
2013-2015 Restructuring process
Italy - 11
Spain - 1
144
Spain - 1 * Millions of euros 2013-2015 Restructuring process
Panama - 12
Panama - 12
Colombia - 10
Online gamin
Colombia - 10 CAGR IFRS
Uruguay - 6 4.1% 2006-2016
Uruguay - 6
CAGR
7.6% CAGR
2006-2016
CAGR: Compound Annual Growth Rate
4.1% CAGR IFRS Mexico -
7.6% 2006-2016
CAGR: Compound Annual Growth Rate 2006-2016 Spain -
The Company

Brazil -
* Betting shops do not include the 41 horseracing betting associated agencies.
*** COL Datashops
Betting include onlyinclude
do not gamingthe
halls
41 holding morebetting
horseracing than 50associated
gaming machines.
agencies.
***
** Data reflect
COL Data Carrasco
include onlyNobile
gamingoperating income
halls holding andthan
more starting December,1st,
50 gaming machines.2016,
the HRU 100% operating income.
*** Data reflect Carrasco Nobile operating income and starting December,1st, 2016,
29 the HRU 100% operating income. 30
2.
Managment

Annual Report 2016


Ebitda
Gaming machines
Betting shops Report
Gaming machines Betting shops
Ebitda
Argentina - 6,952
286 * 286 * Mexico - 85
283 * 283 *

Spain - 3,858
Mexico - 19,184

262 * 262 *
3,984
260 * 260 *

Panama - 8
55,060

252 * 252 *
Italy - 9,032
Argentina 6,952 Mexico - 85
Uruguay - 28
Spain
Mexico - 9,157
- 19,184 Spain - 3,858
220 * 220 *

Brazil - 5
Panama 3,069
Italy - 9,032
55,060
199 * 199 * Panama - 8
3,984
199 * 199 *

Colombia
Spain - 5,403
9,157 Uruguay - 28
Uruguay 2,263
Panama - 3,069 Brazil - 5
Colombia - 5,403
Uruguay - 2,263
Racetracks

Gaming halls Racetracks


Mexico - 1
Panama - 1 4
Gaming halls Uruguay - 2
Argentina - 14 Mexico - 1
2009 2010 2011 2012 - 90 2013
Mexico 2014 2015 2016 Panama - 1 4
Italy - 11
Argentina 14 144 Uruguay - 2
2013-2015 Restructuring process
Spain- -90
Mexico 1
2009 2010 2011 2012 2013 2014 2015 2016
Panama 12
Italy - 11 144
Colombia
Spain- -10
1 2013-2015 Restructuring process
Uruguay- -12
Panama 6 Online gaming
Colombia - 10
Uruguay - 6
Online gaming
Mexico -
Spain - 3
* Betting shops do not include the 41 horseracing betting associated agencies.
** COL Data include only gaming halls holding more than 50 gaming machines. Brazil -
Note: Mexico -
3
*** Data reflect Carrasco Nobile operating income and starting December,1st, 2016,
PANAMA: Betting
the HRU 100% shops
operating do not include the 41 horseracing betting
income. Spain -
* Betting shops do not include the 41 horseracing betting associated agencies.
** COL Data include
associated agencies.
only gaming halls holding more than 50 gaming machines. Brazil -
COLOMBIA:
*** Data reflect Data include
Carrasco Nobileonly gaming
operating halls
income andholding more than 2016,
starting December,1st,
the HRU 100% 50 operating
gaming machines.
income.
The Company

URUGUAY: Data reflect Carrasco Nobile and HRU operating income.


Spain: Betting shops in Spain reflect SSTs number, in other markets
betting shops units are reflected.

31 32
Annual Report 2016
2.1 Executive analysis
The year 2016 has been a turning In addition, certain events taking place at year-end With respect to operational data, it must be pointed
impacted the Codere results, especially in the final out that in 2016 the number of gaming machines rose
point in the evolution of the Codere Group, quarter, for instance, the announcement of new ga- by around 1% compared to the previous year, amoun-
marked by the finalization, on 29 April, ming taxes in Argentina for 2017, which gave rise to
a series of strikes in several Group gaming halls and
ting to 55,060 terminals, reflecting growth in Mexico,
Panama and Italy. The total number of sports betting
of the financial restructuring process. had a negative effect on the accounts; the US elections shops grew by nearly 15.8%, reaching a total of 3,984.
and their impact on the exchange rate of the Mexican In 2016 Codere activity was supplemented by 144 ga-
After several years of adjustments, currency, or the purchase operation -by Codere- of 50% ming halls (of over 50 machines), four horse racetracks
the Company was able to regain of Hpica Rioplatense de Uruguay (HRU), a horse ra-
cetrack and gaming hall operator, with this, moreover,
(consolidating those of HRU) and online activity in three
countries.
competitiveness and attain the bulk of marking a change in the financial consolidation of the
Group. Heavy investments by Codere Spain in marke-
its strategic objectives, focused on ting actions also affected income and EBITDA.
maximizing operational efficiency and In this context, Codere sales at year-end amounted
growth initiatives, especially in Mexico, to 1,527 MM (*), a 6.1% increase with respect to the
previous year, and Adjusted EBITDA was at 262 MM
Italy and Spain. euros, a 3.9% gain over the previous year, reaching
the levels it was at prior to the financial restructuring. Note: The figures of the text for 2015 are adjusted to the unofficial (Blue)
exchange rate in Argentina. In addition, they include our 50% attributable in HRU
In 2016, the Company recorded an Adjusted EBITDA in 2015 and up until November of 2016, as from which time we consolidate 100%.
margin of 17.2%, 0.3 percentage points below the figure Likewise, they eliminate the estimated impact owing to the closing of the halls
reached in 2015. in Argentina for three days in the fourth quarter of 2016, due to the strikes held
to protest the new gambling taxes (and increase in some existing taxes). Said
negative impact is estimated at 4.4 million in income and 2.5 million in EBITDA.
Investments made by the Group in 2016 exceeded Excluding these three adjustments, our income and Adjusted EBITDA in 2016
120 MM, with 62.3% being allocated to maintenance would have been 1,499 and 252 million, respectively.
(renovation of gaming halls and product, or gaming
license renewal, for instance), especially in Mexico, Use of the ARS at the Blue rate: the use of the implicit Blue exchange
rate between the Argentine peso and the euro in 2015 is a more accurate
In 2016, the Codere priorities were focused on defining Argentina and Europe, and 37.7% to growth (product reflection of the contribution of the operations in Argentina to Group
a Business Plan aimed at recovering growth, having purchase to extend the number of gaming machines or EBITDA, prior to the lifting of capital controls imposed by the Central Bank
recourse to the capital markets to refinance the cor- acquire new halls and businesses) in the various coun- of Argentina on 17 December 2015.
porate debt structure (November of 2016), resulting tries, including the aforementioned 31 MM purchase
Managment Report

The Codere Group results at the official exchange rate are included at the end of the
in a reduction of the average interest rate by nearly in Uruguay, and other investments, principally in Spain document in the Audit Report section, and are available both in the Spanish Securities
2 points (an interest saving of over 20 MM per year) and Colombia. At 31 December 2016 the Company tre- Commission (CNMV) as well as on the corporate website: www.codere.com.
and a reduction of 100 MM in principal. asury amounted to 142 MM.

33 34
Annual Report 2016
Performance of Group
Principal Markets Other Operations

At year-end, In 2016, Argentina obtained income


in the amount of 538.9 MM, 18.5%
the constant growth of the daily ave-
rage per machine, to the increased
In Panama, income fell by 5.1%, principally owing to the
decrease in gaming machine daily averages, and as a
me and the finalization of the 50% reduction of the fixed
gambling tax since Q1 2016.
68% of Group more than in 2015. Adjusted EBIT- number of gaming machines and to result of the increase in taxes on players and the falling
income DA for the year rose to 133.5 MM,
29.7% higher than in 2015. These fi-
the increase in the units connected
to Codere Network concessionaire.
profitability of table games. Adjusted EBITDA reached
16.6 MM, 17.7% more than in the previous year. The
HRU, on its part, increased its income in 2016 by 2.6%, up
to 27.7 MM. Adjusted EBITDA fell by 4.3% since 2015,
came from Latin gures include a positive adjustment
of 4.4 million euros in income, and
Adjusted EBITDA was 26.4 MM in
2016, a 1.1% decrease in the figure
EBITDA margin also improved by 3.3 points with respect
to 2015.
down to 8.9 MM. The purchase operation to acquire
50% of HRU allowed Codere to drive synergies for the
American 2.5 million euros in EBITDA, which reached in 2015. The EBITDA margin integration of the local operations, business taxes, and
and 32% from reflect the estimation of the impact
of the three days of strikes in the
decreased by 1.2 percentage points
with respect to 2015.
In Colombia, income fell by 13.9%, down to 24.7 MM, a
result of the depreciation of the Colombian peso against
placement of the gaming halls of both units. The EBITDA
margin decreased by 2.4 percentage points with respect
Europe Argentine gaming halls in the fourth
quarter of the year. In Spain, income grew by 9.2%, rea-
the euro and, to a lesser extent, a consequence of fewer
gaming machines installed. Adjusted EBITDA fell by two
to the previous year.

ching 170.3 MM in 2016, which re- million euros with respect to 2015, owing to the depre- In Brazil, the Company obtained income in the amount
The EBITDA margin for the year was flects a drive forward in all business ciation of the Colombian peso and the gradual appli- of 1.6 MM, a decrease of 0.8 million euros with respect
24.8%, 2.2 percentage points above areas. Average gaming machine cation as from Q3 2015-, of the variable gambling tax, to the previous year, and an Adjusted EBITDA of (-4.6)
the figure for the previous year. revenues likewise increased in this which was partially offset by efficiency measures. The MM with a decrease of 3.2 MM, principally as the re-
period by 10%, as a consequence EBITDA margin fell 4.3 percentage points with respect sult of the closing of two of its horse race betting shops
In Mexico, cumulative sales in 2016 of investment in product as well to the previous year. and the temporary closing of the Sala Niteroi gaming
amounted to 329.8 MM, 7.2% less as the aforementioned customer hall, owing to the renovations carried out at the start
than in 2015 (355.3 MM), owing to loyalty and marketing actions. Ad- In Uruguay, business results in 2016 are divided into the of the year.
the depreciation of the peso against justed EBITDA performed positively, Carrasco Nobile Unit (Casino Carrasco) and the Hpica
the euro (17%). In local currency, increasing by 16.6%, and reaching Rioplatense de Uruguay (HRU) Unit, fully consolidated At year-end, 68% of Group income came from Latin Ame-
income grew by 8.9%, driven by 29.5 MM. The Adjusted EBITDA by the Codere Group since 1 December of said year (up rican and 32% from Europe.
the increase in installed capacity. margin improved by over one per- until then the Codere Group consolidated its 50% stake
Adjusted EBITDA for the year was centage point with respect to the in HRU by the equity method).
88.5 MM, 5.8% less than in the previous year.
same period in 2015, and once again In the case of the Carrasco Unit, income fell by 13.7
was affected by the devaluation of MM with respect to 2015, down to 14.2 MM, affected
the peso which offset a nearly 11% by volatility in the VIP table games in the first half of the
growth in local currency. The Adjus- year, which -subsequently were suspended. The Unit
ted EBITDA margin improved by 0.3 was also affected, to a lesser degree, by the deprecia-
Managment Report

percentage points, reaching 26.8%. tion of the Uruguayan peso against the euro. Likewise,
In Italy, income rose by 13.1% in the Adjusted EBITDA suffered a 7.4 million euro decrease,
year, reaching 321.5 MM, thanks to falling to (-10.3) MM, mainly affected by a fall in inco-

35 36
3.
Group
Innovation
Annual Report 2016
3.1 Innovation
Codere sees innovation as the basis for market
A multi-platform vision Codere Closer to the Customer
growth and differentiation. In 2016,
the Company took on the challenge of Group In recent years, the Company has
oriented the business towards its om-
Recently, the Company has made pro-
gress in projects which analyze CLUB
Last year,
Digital Transformation. A large part of this objective ni-channel offering, favoring a mul- customer prediction models, allowing Codere Mxico
is based on the analytical capacities of its Space ti-platform access to its gaming offering
both on-premise as well as online, and
for customer segmentation and analy-
sis, traceability of customer activity, implemented this
(CRM) platform and on the customer-oriented to rewards for its CLUB customers. The
SPACE application integrates for the
or churn rate, and as a result favoring
greater efficiency in strategic deci-
Self-Management
approach of the business. most part- management of the Loyal- sion-making in regard to gaming hall App as part of its
ty, Marketing and Call Center areas,
consequently obtaining a 360 vision
customer management (in real time)
and personalized promotions. services
of customers in their various interac-
tions, and driving profitability through All of this is reinforced with multiple
managed cross-selling actions. communication channels: SMS, email,
and notifications via App and in the ga-
Other areas, such as product, tech- ming hall, which is a qualitative step
nical service or strategic business forward in the relationship between
analysis also form part of the SPACE Codere and its customers.
application management network.
For instance, in 2016, the platform In the coming months, SPACE will con-
served as support for the manage- tinue to develop, and its functionalities
ment of gaming tables in Panama. will be increased by the integration of
gaming table services (Line A and B),
With the customer Self-Management -in conjunction with EL CLUB rewards-,
In order to start up this process and develop its and Mexico, in the terminal lines, books (bets) and App (adapted for IOS and Android), and with the unification of the Codere
platform, the Information Systems corporate ma- tables. the Company takes the Codere and EL CLUB cards.
nagement has centralized the design and solution experience to another level, going
development activities, and subsequently, the coor- SPACE has evolved from its origin, covering a grea- from the physical kiosk to interaction
dination of the local teams. In the past year, one ter number of functionalities and managing more from outside of the gaming hall. In
of the principal milestones attained has been its services, and has gone from maintaining direct inte- the past year, Codere Mxico imple-
Group Innovation

global implementation in all of the business lines in raction with customers to interaction with the online mented this Self-Management App
the various Codere markets, especially in Argentina systems of the gaming halls. as part of its services.

39 40
4.
Areas
of activity
Annual Report 2016
4.1 Areas of activity 4.2 Gaming machines
Codere carries out its activity in Gaming machines are the origin of Coderes
five areas: gaming machines, gaming activities in the sector, and constitute one of its
halls, sports betting, racetracks, principal business areas. In 2016, the Company
and online games. operated 55,060 machines, an increase of 1.16%
over the previous year, in the Mexico, Spain, Italy,
Argentina, Colombia, Panama and Uruguay,
markets, which are very different from one another
and which are at different stages of maturity.

The Codere gaming machines include AWPs, VLTs, Company or by third parties), bars (bars, restaurants,
electronic bingo terminals, and other types of machi- tobacco shops, and any other establishment except
nes. The annual computation excludes those operated for recreational halls- having fewer than five betting ma-
by third parties. chines or terminals) and racetracks, and offer prizes in
accordance with user bets.
Each year, Group professionals analyze the tastes and
preferences of consumers, as well as the needs of the The different types of gaming terminals adapt to the
In 2016, Codere managed over 55,000 gaming ma- establishment in order to meet consumer demands, characteristics of each market:
chines, 30,000 bingo seats, and nearly 4,000 betting and provide customers and users with an integral qua- AWP (Amusement With Prize) Machines: machines
terminals in Latin America, Spain and Italy through lity service through the analysis, renovation, and rota- which pay out cash prizes as the result of a per-
sales points, which include 144 gaming halls, 633 tion of machine models, commercial attention, collec- centage of total bets on a pre-determined cycle of
recreational halls, 10,000 bars, 156 betting shops and tion management, technical service, or management games. In Spain, Codere operates type B machines,
4 racetracks, in addition to engaging in online activity services, among other activities carried out. and in Italy, Comma 6A machines.
in three companies of the Group. Company activity
adapts itself to the regulations in each country, and The Codere gaming machines are located in gaming Casino Slots: Casino or gaming machines. In exchan-
Areas of activity

manages its operations in line with the peculiarities halls, recreational halls (gaming establishments ha- ge for a given bet, these machines give the user a
of the eight local markets in which it operates. ving between five and fifty machines operated by the game time and eventually- a prize which will always

43 44
Annual Report 2016
Spain Italy Mexico

depend on chance. Codere operates these types of Codere activity in Spain is linked to gaming machines, Codere operates an important gaming machines ne- Codere set up operations in Mexico in 1998 thanks to
terminals in Argentina, Panama, Colombia, Mexico and it currently holds a notable position in the sector. twork (Codere Network) in Italy, Codere Network, as the business alliances with the CIE and Caliente Group.
and Uruguay. well as AWP machines and Video Lottery Terminals Ever since that time, Codere has been pioneer in the
In 2016, Codere Spain made significant investments (VLTs). This modality joined the market thanks to re- gaming sector with bets and lotteries. Currently, Co-
Electronic Bingo Terminals (EBT): machines incorpo- in product improvement, renovating nearly one-third gulatory changes taking place in 2009. dere is the leading gaming hall operator in Mexico,
rating games similar to those played with bingo cards (33%) of all of its machines and improving gradually, with 90 gaming halls at the close of 2016. Likewise,
in the authorized bingo halls. Codere operates EBTs quarter by quarter. Average revenue collection from At the end of 2016, Codere Italy had a total of 9,032 ga- the Company operates 19,184 gaming machines there,
principally in Spain. machines during the year improved by 10.4% with res- ming machines, a 5.5% increase over the previous year located in gaming halls and in the Hipdromo de las
pect to the preceding year. (8,087 AWPs and 945 VLTs). Income from the country Amricas racetrack. In 2016 the number of terminals
VLT (Video Lottery Terminals): machines incorpora- grew by 13.1%, owing to the larger number of machines grew by 2.3%.
ting games similar to those played with bingo cards installed (7.4% and 6.1% more machines on average, res-
in the authorized bingo halls. Codere operates EBTs pectively), and also owing to the significant improve-
principally in Spain. ment in the daily average per machine which grew by Argentina
19.2% (in the case of the AWPs) and, to a lesser extent, to
Electronic Bingo: online game based on bingo which
Quarterly the increase in units connected to the Codere Network. Codere focuses the gaming machine activity in Argen-
allows several persons to play online at the same renewal tina in the province of Buenos Aires, and is one of the
time, through a touch screen. It has a prize structure Renovacin trimestral 2016 Currently, all machines in Italy are connected thanks to leading companies in the sector. In this country, the
which combines traditional shared prizes with indi- the various networks of the concessionaires. Presently, Company operates 6,952 gaming terminals. Inter-an-
vidual prizes, as the main attraction. In Spain, these there are eleven of them in the Italian market. Through nual cumulative revenues have grown by 24.8%.
terminals are found in the CANOE gaming hall. 35% 3% 33% the Codere Network, the Company connects its own
4% machines and offers services to third parties. Within the Codere has equipped the gaming halls with the la-
30%
19% Group growth policy (Strategic Plan 2016-2020), the ob- test generation slot machines, progressive slots, video
25% jective is to continue expanding the number of Codere poker slots, and electronic roulette. The slot machines
20% Network machines and grow in the market through the use the Ticket InTicket Out payment system for grea-
purchase of AWP operators, as the Company already ter player comfort, and in all halls the Company has
15% did in 2015 by signing an agreement with its partner, GAP linked slots, with a common jackpot which grows as
10% Games, for the acquisition of PGO Service S.r.l., which more people play.
7% operated machines in the regions of Veneto, Friuli, Tos-
5% cana and Lazio and, subsequently, with the acquisition Nine of the fourteen Company gaming halls continue
Areas of activity

0% of 51% of the companies GARET S.r.l. and GAME OVER to offer Smokers Clubs, providing an exclusive space
Q1 Q2 Q3 Q4 2016 S.r.l., operating in Toscana and Umbria. with the latest generation machines, a cafeteria, and

45 46
Annual Report 2016
food and beverage service, and excellent personalized thorization could be given for a minimum of 300 Incorporation of machines to online system: in April Among the most noteworthy products installed in 2016
attention. gaming elements; at finalization of the first four 1,633 machines were connected, and in November, were:
months of execution of the concession contract, 1,557 machines were connected, until the operation 88 Fortunes: progressive slot with an Asian theme
at least 400 gaming elements will be required was fully completed. from the manufacturer Bally. Taking advantage
Colombia to be authorized; and at the end of the first eight of its successful performance, 52 machines were
months of execution of the concession contract, Likewise, the Transactional TITO System was imple- installed, adding to the twenty already existing
In compliance with the gaming regulator Coljuegos, Co- at least 500 gaming elements will be required to mented as a pilot in the Crown Casinos Unicentro machines.
dere, which defined the conditions and chronogram for be authorized. gaming hall. In said hall, 78 out of a total of 94
the connectivity of the electronic slot machines, resolved machines would be able to use this system. At year- Lightning Link: multi-level progressive slot from the
that by 2 November 2016 the operator was to guarantee Coljuegos will study the applications for autho- end, the TITO system had already been activated manufacturer Aristocrat. This product, which had
the connectivity of 100% of the asset inventory. By that rization for concession contracts or addition of in 44 of the machines. been incorporated as a trial, is today one of the
date, Codere Colombia already had all of its machines gaming elements, taking into account the total Companys most outstanding products, and a can-
interconnected and paying monthly operating fees. maximum limit of 18,500, that the machines must didate to continue being incorporated in 2017.
not receive or pay out cash, and that in the gaming Panama
Slot machines in non-gaming establishments: on 31 elements no bets may be placed on virtual races Novomatic VIP: a product with successful fruit ga-
March Coljuegos issued a new regulation permitting or sports or gaming modalities other than the lo- Gaming machines are also the main business source in mes and with a new model.
the operation of slot machines in premises the com- calized games. Moreover, the gaming elements Codere Panama. In 2016, the number of terminals grew
mercial activity of which could be other than gaming; must guarantee to the players a theoretical prize by nearly 4%, reaching the number of 3,069 machines. In addition, throughout the year new slot machine
however, it highlighted certain peculiarities for said percentage of 82.5%, placing limitations on prize The unification of its casinos under the CrowN brand cabinets were installed and were well received, such
operation: value, and certain technical specifications for the favors its positioning as an entertainment leader in all as Aristocrat (Helix), Bally (Wave), Ainsworth (SL) and
In municipalities of at least 25,000 inhabitants, as a machines, among other requirements. of the casinos of the country, and at the same time Konami (Selexion and Concerto). In addition, the pro-
general rule three gaming elements could be ope- allows it to improve its profitability and competiveness duct having the greatest performance continued to be
rated per authorized premise. The past year, in the gaming machine business, the in the market. promoted, with additions being made to the number
Company made great efforts to renovate its machines of machines from suppliers such as EGT, Alfastreet
In municipalities having from 25,00050,000 inha- and equipment, investing around (USD) 2,318,429: At year-end 2016, Codere Panama had renovated 19% or Novomatic, which continue providing a key offe-
bitants, there would be a maximum of two gaming Purchase of gaming machines and equipment: of its total gaming machines, some 530 new machines. ring for customers. Likewise, with the commitment to
elements. 190 machines, 157 wallets, 44 TITO kits, 15 game Likewise, and following a strategy of existing product op- increasingly improve integral product offering, the
conversion kits and one bingo equipment. timization, there were more than fifty changes in games. Company has driven a change in the layouts of nearly
It is required that a minimum of 500 gaming ele- all the gaming halls, with Plaza Mirage, Radisson,
Areas of activity

ments be operated for each concession contract, Incorporation of participated machines: 7 suppliers Soloy and Continental being those offering the grea-
indicating the following gradual scale: initial au- and 408 machines. test returns.

47 48
Annual Report 2016
Uruguay 4.3 Gaming halls
In the wake of a long renovation process, in March The Casino del Carrasco is open to both guests as well Codere is an operator of international reference
of 2013 the Sofitel Montevideo Casino Carrasco &
Spa was inaugurated. Carrasco Nobile is a consor-
as the general public. The gaming area has 23 tables
(Roulette, Black Jack, Baccarat, Mini and Midi Bacca- managing 144 gaming halls (with over 50 gaming
tium headed by the Codere Group, and in 2009 was
awarded the tender for this emblematic building, an
rat, Poker, Craps, Big Sixes) and 395 slot machines
of the most highly recognized brands internationally,
machines) in the countries in which it is present.
icon of entertainment and gaming in Latin America, and with progressive slots linked to different groups of In addition, it carries out its activity through
a luxury hotel with a vanguard casino of over 3,000 slots having a number of modalities, and stand-alone
square meters, distributed on two levels. progressive slots. 633 recreational halls (gaming establishments
having between 5 and 50 gaming machines
operated by Codere or third parties) and in bars
(bars, restaurants, tobacco shops, and any other
establishment having fewer than five betting
machines or terminals).

In recent years, the Company made a significant invest- gastronomy, together with the novelties implemented
ment effort in this segment, becoming the leading opera- in the hall over the past year, have made it possible to
tor in Latin America, especially in Mexico and Argentina, close 2016 with 12% more visitors than in 2015.
in the province of Buenos Aires.
In 2016 the Company invested significant resources in
Spain, both in regard to product renovation as well as
Spain in gaming hall improvements and actions to promo-
te its commercial activity. These improvements have
In Spain Codere operates the CANOE Bingo Hall, the been reflected in the re-design of the CANOE betting
Areas of activity

gaming hall of reference in the capital city, with over 35 area, and in the renovation of a number of machines.
years of history. The attractive offering of gaming and Currently, the hall has a multi-product zone which has

49 50
Annual Report 2016
Italy

gaming terminals and multi-gaming terminals, bingo


terminals and electronic roulette.
the access counters, from the kiosks, and from the CA-
NOE webpage itself, www.bingocanoe.com.
Codere is one of the largest gaming
hall operators in Italy, with 11 gaming
and information tool aimed at le-
gal gaming operators connected to
Despite the
halls and 9,032 gaming machines the Codere Network and operating difficulties, the
In addition, improvements were made to the ac-
cessways in the lower and upper floors, including a
In addition to the wide range of entertainment offered
by CANOE (bingo, gaming machines, roulette, sports
including VLTs (Video Lottery Termi-
nals). Three of these gaming halls
in their own gaming halls or halls
managed by third parties. The pre- industry has
direct entrance from the parking area. Moreover, the
reception area was opened up to create a more spa-
betting, lounge bar with a cocktail and tapas menu-
and its renovated food and beverage offering, the at-
are among the five largest in the
country, and one of them, Bingo Re,
sentation took place in Rome, at the
Information Palace, and was atten-
held on, and
cious zone, and the coat and bag check capacity was tractive jackpots and promotional campaigns are a is one of the most important gaming ded by Pier Paolo Baretta, the Un- endeavors have
expanded, with improvements also being made to the
hall lighting and information. In the upper floor, as a
significant enticement for the gaming hall customers.
In fact, last year alone CANOE gave out around forty
halls in continental Europe. The Com-
pany completes its leisure offering
der-Secretary of Economy, among
other authorities. been made to
novelty, there is natural light, and a grass floor simula-
ting the customer entrance to the playing field. Also, a
million euros in prizes from its various games. with restaurant and entertainment
services. This online platform makes it pos-
promote the
large-scale digital screen and a new reception counter Noteworthy among its principal campaigns carried out sible, through a series of modules, survival of legal
were installed. in 2016 is the one launched at Christmas, in addition
to daily mini-drawings, the classic CANOE Rebingos,
The Stability Act (2015) placed the
sector in a difficult situation in Italy,
to train operators to recognize and
manage possible critical points re- gaming
In 2015, CANOE started up the CANOE Grand Terrace, which this year handed out a highly significant volume which, together with the restrictive lated to pathological gambling. The
a space designed to meet customer needs, providing of prizes, and digital Thursdays (month of November), gambling laws in the various regions tool www.coderetraining.it has its
them with comfortable access to the bingo hall and among many other special drawings. and the extremely high taxes (PREU), own qualification procedure, which
with a varied gaming offering. The results of this new made the activity practically unsus- is issued once the learning process
area have continued to improve in 2016. The good results of these initiatives in the gaming hall tainable. Despite the difficulties, the has been successfully completed.
are reflected in the data of the NPS (Net Promoter Sco- industry has held on, and endeavors The training contents include three
One of the milestones of the year in this improvement re), the principal customer experience indicator, which have been made to promote the sur- modules in legal training (History of
plan aimed at customer satisfaction was the launch grew by 30 points in 2016 and is the highest in the vival of legal gaming. Along this Legal Gaming in Italy, the Complexi-
in the third quarter- of the EL CLUB Loyalty Program Group. This indicator reflects the perception that CA- line of action, Codere goes one step ty of the Regulatory System and Pro-
which at year-end 2016 already had 9,000 registered NOE is the gaming hall which gives out the highest further with respect to legal obliga- cedure, and Gaming Operator Ethics
members. The Club was launched with a special event prizes in the market, offers more promotions than other tions (Balduzzi Law), and undertakes and Responsibility) and four modu-
which culminated in the drawing for a Fiat 500 among gaming halls, and has the best installations (entran- from the front line to recognize and les on training to counter pathologi-
the members present in the hall. The Program offers ceway decoration, direct access to parking area, new manage the problems related to pa- cal gambling (definition of patholo-
a wide variety of advantages for members, ranging seats, etc.). thological gambling (GAP) through gical gambling, the various types of
from a unique catalogue of gifts for point redemption, a various initiatives. pathological gambler, prevention in
welcome gift and birthday gift, in addition to exclusive gaming halls and intervention lines).
Areas of activity

offers, promotions, and drawings. Likewise, customers On 13 September, Codere launched The platform contents have been
are able to check their points and promotions through Codere Online Training, a training submitted to the State Monopolies

51 52
Annual Report 2016
Mexico

Codere heads Agency for approval, in accordance


with the Network Concessionaires
improvements and, on the occasion
of the reopening of the Royal gaming
aimed at women, with special focus on a campaign
against gender violence. Moreover, on the occasion
In Mexico Codere operates 90 gaming halls. In 2016,
the Company made a strong investment of some 21.1
gaming hall Development Plan. hall, restructured its gaming ma- of the 73rd edition of the Venice International Film million euros to renovate the gaming machines and

operations in Codere has always maintained the


chine, restaurant and leisure area.
Other improvement initiatives were
Festival, from the Codere Facebook page promotion
was made of the campaign Red Carpet: la star sei tu
halls.

Mexico, the promotion of legal gaming as one


of its business premises, and in No-
promoted through the motivation
competition Squadra Vincente,
(Red Carpet: the Star is You), with incredible film prizes
for the winners, among other initiatives and attractive
Throughout the year, gaming machines were added
to the Cuauhtmoc, Polanco, and Universidad gaming
province of Buenos vember of 2016 continued in Bologna for employees in the Operbingo hall. promotions. halls and to the Royal Yak Hipdromo racetrack, and

Aires (Argentina), with the second stage of its itinerant


workshop In nome della Legalit
This project sought to motivate the
operating team and employees to im-
the Bingo Plus scratcher was also added.

and Uruguay 2.0, which since 2011 has been pro-


moting a culture of responsible ga-
prove the hall ambience, driving their
participation in the Group and in the
Likewise, gaming hall activity throughout the year was
very intense. In total, over 1,300 events took place, ce-
ming with respect for the law. corporate objectives. The program lebrating anniversaries, Yak Day, Mega Bonus, Theme
prizes had a positive repercussion on Celebrations (Valentines Day, Mothers Day, Fathers
This project, sponsored by the State the gaming hall through team trai- Day, National Holidays, All Souls Day, Christmas or
Monopolies and Customs Agency ning, hall modernization, wifi access New Years Day), and around 980 campaigns were
(AAMS) is backed by other institu- points, etc. started to communicate the various promotions in the
tions, and encourages the participa- hall, and the various games (tables, bingo, etc.) and
tion of local representatives, agen- In addition, throughout 2016 there services (F&B).
cies, and professional associations. was a high volume of theme acti-
The initiative, from the outset, has vities, promotions or entertainment
sought a joint agreement with the carried out in the gaming halls, for
various gaming sector actors at the instance, the activity carried out on
national level, to prevent the market Valentines Day (supporting the Tele-
from falling into illegal hands, and to thon Foundation which, since 1990,
work together in order to palliate the has been promoting research into
phenomena associated with gaming, rare genetic diseases) with the cam-
which in recent years has taken on paign A heart for rare people.
worrisome dimensions in the country.
In addition, on Womens Day the
Alongside these initiatives, with res- program Innamrati di te was ca-
Areas of activity

pect to the gaming halls, in 2016 the rried out in Rivoli, Caserta and Rome.
Company implemented a series of This involved a series of encounters

53 54
Annual Report 2016
Argentina

Two branding campaigns were also carried out for the more, support tools were implemented, facilitating the Codere Argentina is the largest bin- Through EL CLUB, members are The Company,
Yak and Royal Yak brand, in various points of the city display and transmission of information to customers. go hall operator in the province of offered rewards through the accu-
and in the gaming halls themselves, and they were Buenos Aires and has 14 gaming mulation of points, called crowns. focused on
very well received, making a very good impression on
the customers.
With respect to the gaming halls, throughout 2016 over
500 events took place, such as drawings, the CrowN
halls currently in operation, mana-
ging 29.8% of the gaming machines.
EL CLUB has a rewards catalogue
allowing swaps for cash and offe-
providing
brand anniversary, theme celebrations such as Mo- During 2016, the Company has ca- rings from the food and beverage excellent service,
All of these events were communicated through specia- thers Day- monthly events, promotions, etc. These rried out intense activity in all of its menu. Through the individual pro-
lized mass media so as to have a greater impact (ad- events were disseminated through specialized mass gaming halls, including a diverse gram card, full and accurate infor- enhances
vertising on radio, and advertising outside and inside
the hall itself). In addition, in 2016 the Company signed
media (BTL, communication in the gaming hall, or SMS
and RRSS) and in the gaming halls themselves. In ad-
number of events, such as anniver-
sary celebrations, special events,
mation on customer behavior is
provided, and on the basis of the
customer care
sponsorship agreements to promote the presence of dition, outside communication was also consolidated, gastronomy events, musicals with analysis made of the data obtained, and continual
the Yak brand in the Box events, which has made it promoting the Group brand and entertainment offering local performers, or loyalty activities, different promotions and rewards
possible to have a greater presence in sporting and in a tourism ad (Hoteles Bogot). which position the Company as the are designed and offered. improvement
theme events, which were promoted both inside and greatest quality offering in amuse-
outside of the gaming halls. Throughout the year, the program Actitud eres t ment and entertainment. At year-end 2016, the program alre-
(You are Attitude) continued to be carried out in the ady had 430,000 registered mem-
various gaming halls. This is a service-oriented pro- Taking as its focal point the promo- bers, and over $1,600,000,000 in net
Colombia gram the principal aim of which is to generate a sensa- tion of customer relations and con- win was generated by members. EL
tion of satisfaction on the job and an excellent attitude, tinual improvement, the Company CLUB has a member base segmen-
During 2016 the EL CLUB Loyalty program was the in an aim to convey to customers that the service which periodically conducts customer sa- ted in direct relation to their playing
principal commercial engine and daily management the Company offers them is unique and personalized. tisfaction analyses (through satis- volume. Based on these segments,
tool in the gaming halls, entailing a change in the in- faction surveys, focus groups and different rewards are offered (birth-
formation provided to customers, placing emphasis on With respect to the Food and Beverage (F&B) area, mystery shopper). day gifts, personalized promotions,
a single rewards points table, and communicating all numerous theme promotions and campaigns were ca- special actions, exclusive drawings,
promotions through points. Moreover, all customers rried out, aimed at the various sporting or group events. Moreover, the gaming halls have se- personalized gifts at the end of the
have unrestricted access by category, given that in this veral communication channels which year, etc.). Likewise, promotions are
model of management by segments, every customer customers can use to send in their personalized, which is an advanta-
receives promotional incentives in accordance with the comments, such as the suggestion ge for both members as well as for
segment which the customer is in month by month. box, complaints book, or the custo- improving profitability.
mer service stand, and outside of the
In accordance with these adjustments, in the customer halls, through email, the telephone In the second quarter of the year,
Areas of activity

management model a change was made from an ex- contact center or the Ethics Line at gaming hall encounters took place,
ternal CRM platform to an own tool (SIEBEL). Further- the corporate level. a series of events carried out in the

55 56
Annual Report 2016
Panam Uruguay

halls with a reduced group of members, inviting them Codere Panama manages two casinos which are inte- In Uruguay Codere operates a single gaming hall in Together with its gaming offering, the hotel has a varied
to enjoy and participate in the various activities (wi- grated under the CrowN brand, a brand consolidation the casino Sofitel Montevideo Casino Carrasco & Spa. food and beverage offering at its different locales: Res-
ne-tasting, spa sessions, etc.), at all times maintaining which has reaffirmed the position of the Company in In 2009 Carrasco Nobile, a consortium headed by the taurant 1921, offering French cuisine; and Thays Gallery
care and dedication in the selection and ambience of the country with respect to betting and entertainment. Codere Group, was awarded the tender for this emble- and El Bar, specialized in cocktails, drinks and informal
every detail. matic building, an icon of entertainment and gaming in dining, located in the Casino zone.
With respect to product, the Sheraton, Panama, and Latin America which, after a restoration process, was
In April, a call center was started up, with two posi- Continental casinos, and subsequently the Casino Rian- re-inaugurated in March of 2013. In 2016, the hall carried out its activity with an approach
tions, for member management and for promoting pro- de Aeropuerto gaming hall, inaugurated the new table which varied throughout the year: in the first half of
fitability (reactivation campaigns, promotions, surveys game of Sic Bo. So far 140 employees have been trai- This historic building dating back to 1912, a Urugua- the year, its commercial focus was on developing and
to know the impact of the actions carried out, etc.). ned to operate this game. This version, very well known yan National Heritage Site, was designed by the ar- consolidating its strategy for attracting the VIP regio-
in Las Vegas, will be one of the main attractions of the chitect Louis Mallet and is located in Carrasco, an nal gaming market, which had been started the year
In August five gaming halls launched the Customer brand. It is planned to be installed later in the halls in the exclusive neighborhood of the city situated opposite before. In the second half of the year, in the context of
SPACE System (Siebel), a CRM software tool which interior of the country, in order to position the Company the Ro de la Plata river, only five minutes away from the negotiations with the Montevideo Municipal Gover-
contributes to the integral management of the mem- as a leader in table variety and innovation in Panama. the Carrasco International Airport, and 25 minutes nment regarding changes in the concession contract, it
ber base. Other tools were also implemented to im- In addition, in 2016 five additional sports machines were from the city center. was decided to temporarily discontinue the commercial
prove gaming hall activity, such as alerts of the ac- installed and the CrowN Club LAIOs in disuse were reu- strategy carried out in 2015 and part of 2016, and focus
cess of highly valued members in order to offer them sed, in order to have greater presence in the Casinos. The Casino del Carrasco has 3,000 m2 distributed on the business on the local market, maintaining contro-
personalized service- or swaps carried out through two levels, and is open to guests as well as to the ge- lled attention on VIP customers. At this stage, special
the self-management terminals (ATM) for members. In addition, the halls were equipped with wifi Wigo neral public. The gaming zone has 23 tables (Roulette, attention was placed on the local market, on customers
to provide customers with greater comfort while ena- Black Jack, Baccarat, Mini and Midi Baccarat, Poker, having a middle/high purchasing power, and the layout
In addition, and in line with quality criteria, the Com- bling them to access the data required to make live bets Craps, Big Sixes) and 395 slot machines of the most was adapted to this new stage. The number of termi-
pany certified its claims management system, compl- thanks to the detailed information of the sports statistics. internationally recognized brands. nals and tables was maintained, adapting minimum and
ying with IRAM Standard 90600:2010, which covers maximum amounts and varying the hold, as well as the
claims and complaints, and IRAM ISO 9001:2008, name of the slots.
covering customer service and the rewards program.
Both standards ratify the pathway to transparency in
all of its processes, ensuring its efficiency and contri-
buting to generating customer trust. Casino Carrasco is a key social meeting point
in Montevideo
Areas of activity

57 58
Annual Report 2016
4.4 Betting Shops
Codere has broad experience as a
Carrasco positions itself as the social meeting point of sports betting operator at the international
Montevideo, promoting weekend entertainment with its
wide offering of attractive games and shows, and with
level, carrying out this activity in Spain,
a quality food and beverage offering. Mexico, Panama, Uruguay and Brazil. In 2016,
The casino entertainment activity in 2016 was very the number of Group sports betting terminals
extensive, offering a number of theme events and en-
counters (carnival, Meet & Greet Ricky Martin with the
rose to 3,984, a 15.7% increase over the
principal casino customers, etc.), parties (White&Gold...) previous year.
and VIP poker tournaments, Big Baccarat, monthly slot
machine tournaments, etc. Likewise, in July the new
Gastronomy Offering of Elena Tejeira, a recognized
gastronomy entrepreneur in Uruguay, took place.

Betting is a gaming activity which can be carried out in Codere began operating in this activity on its arrival in
a variety of establishments, whether in specific shops Mexico in 1998, introduced by its local partners. The
or associated with other gaming modalities, such as majority of these betting shops are connected with
casinos, bingos, sports venues, racetracks, bars, etc. gaming halls, making it possible to offer users a wide
Among the types of bets operated by Codere are those variety of gambling entertainment options.
made in terms of the time they are placed (before or
at the time of the event) or in terms of the number and In the Panama and Uruguay markets, betting halls
Areas of activity

type of bets (simple, accumulator double, triple or are linked to the management of the Presidente Re-
multi- and multiple). mn racetrack (Panama), and Hipdromo Nacional

59 60
Annual Report 2016
Spain

In Spain, Codere de Maroas and Hipdromo Las Pie-


dras racetracks (both in Uruguay).
showed their satisfaction at having
reached this important agreement.
On-premise sports betting continued to grow signifi-
cantly in Spain in 2016, and, in the midst of this growth,
At the Expojoc fair in Valencia (May), the Company
announced its local expansion plan, highlighting the
is the first Since 2006, Codere has also been Codere increased its betting sites by 16% with respect service quality and value added to the offering in bars,
company licensed operating in Brazil, managing bet-
ting shops alongside the principal
In addition to their Madrilenian origin,
both companies have in common the
to the previous year. The bulk of this growth took place
in its betting shops which began to dot the landscape
benefitting both the bar and the operator.

to operate sports equestrian clubs of the country and


offering its customers horse race
fact that they are leaders in their own
playing fields and are known world-
in 2016 developing a new design of the shop expe-
rience with a more innovative and attractive look & feel
In September, Codere took part in the Andalusian ga-
ming congress V Expo Congreso Andaluz sobre el
betting in the betting at the national and interna- wide, and both have an innovative as well as with new locations, in addition to continued juego in Torremolinos (Malaga), a community which
country tional level. vision, which they project onto each
one of their activities. This agree-
growth through third parties. In addition, a process was
started to display the image of Real Madrid in the in-
generates great expectations for development in the
industry. In December, Codere also participated in the
In Spain, Codere is the first company ment, which has become widely terior of the shops. Anesar Gaming Hall Annual Congress (Madrid) where
licensed to operate sports betting in known, is a milestone, which marks it showed its successful SST equipped with intuitive
the country, and inaugurated the first a turning point in betting operations, Major National Projection and manageable software, and its Selfie terminal,with
on-premise betting shop on 16 April and in positioning the Codere brand The Company, present in all of the regulated autono- a lighter and more attractive design, thanks to the eli-
2008 in Madrid, in the CANOE bin- all over the world. mous communities in 2016, began its sports betting mination of peripherals (monetics and mobile wallets).
go hall. At the end of 2016, Codere operation that year in Cantabria. In June, it began its
Spain accounted for over 97% of the Thanks to the sponsorship contrac- activity in the Gran Casino Melilla. In the second half Product innovation at the service of customers
total Group betting terminals. tual assets, and their suitable ex- of the year and in order to comply with its expansion Throughout the year, the Company developed various
ploitation, the brand has attained plan- Codere presented a new corner in Zaragoza. It novelties with respect to its betting product, with its li-
An alliance promoting Codere great visibility through the media likewise initiated its activity in various towns in Astu- censes to offer sports information (tennis) being worthy
betting worldwide and the LED perimeter lighting, and rias, with the support of strategic partners. In October, of mention, as well as certain betting modalities which
On 23 November 2016, Codere be- also thanks to the exploitation of the the Company signed an important alliance to operate are highly attractive to its customers (cash out lottery
came the Official Sports Bookmaker image rights of the club and of the betting sites in the Galician market. In its aim to con- bet or bets). Moreover, Codere has live sports images
for Real Madrid C.F., after making footballers for advertising and pro- tinue growing in 2017, Codere is getting prepared in for its online channel, and for its on-premise channel
public a sponsorship agreement for motional actions and for the rede- those communities soon to be regulated (Andalusia, (Codere TV), as well as NBA images and dog races, in
the following four seasons. sign of the layouts of the Company Balearic Islands and Canary Islands) where a signifi- addition to other novelties.
sports betting ecosystem and other cant campaign is planned.
The presentation took place at the marketing actions (hospitality, brand In September, Codere Apuestas launched its new ga-
Real Madrid headquarters, and was exploitation, etc.). Additionally, Codere is present in a number of impor- ming App available for iOS and Android- and its PC
attended by the president of the Co- tant professional events, such as the franchise exposi- version. The new application improves user experience
dere Group, Jos Antonio Martnez tion Expofranquicia (April), bringing its attractive com- and has an unprecedented architecture making it more
Sampedro, and by Emilio Butrague- mercial offering to possible partners. In the past five fluent and stable, improving net surfing by making it
Areas of activity

o, Real Madrid C.F. Institutional Re- years, Codere has offered the greatest profit margin in easier to move between the different events and mar-
lations Chief Officer, both of whom the market four points above the competition. kets. Its updated look & feel improves customer legi-

61 62
Annual Report 2016
Mexico Panama

bility and experience. Moreover, it makes it possible to engaged in intense promotional activity, marked by its Codere operates 85 betting shops in Mexico (in the Codere operates eight betting sites in Panama (in the
enjoy different events live through streaming, mainly launch on TV, a milestone in promoting the brand throu- gaming halls managed by the Company) offering all gaming halls managed by Codere, without including
football, tennis, dog races, and horse races,minute ghout Spain, which capitalizes important actions on the types of sporting events, facilitating users with a wide the 41 associated agencies, which are only for eques-
by minute, from any location. The recent PC version social networks during major football events, such as variety of gambling entertainment options. Codere trian betting), through the brand Turff Bet & Sport Bar
includes Casino games (blackjack and roulette), and the UEFA Champions League 2016 final on 28 May, operates sports betting from the Hipdromo de las and Codere Apuestas.
likewise provides a wide offering of slot games, toge- which was awarded a Twitter Business Case Study. Amricas racetrack through Sports Book and Codere
ther with its broad market catalogue. Apuestas. These betting sites offer a series of technological and
In April, Codere Apuestas launched its brand notorie- human resources allocated to attracting and opera-
As part of its customer services, the Company has im- ty campaign called Cobrapuestas, which has been By means of Sports Book, customers are able to bet on ting cross bets in equestrian events and sports compe-
proved its prize payment service, reaching an agree- enthusiastically welcomed by customers and has had all types of national and international sporting events titions, as well as games permitted by law, with real-ti-
ment with all of the change machine manufacturers to far-reaching effect. In June, during the Euro Cup, the (dog races, football, American football, baseball, hoc- me audio and video transmission. They are equipped
enable Codere Card users to collect their prizes in real Company launched a new campaign for all of its custo- key) and on horse races in the principal US racetracks with wifi Wigo, offering customers greater comfort
time without having to go to the local operator. mers We reimburse you 50% of your losses on freebets (Santa Anita, Hollywood Park, Lone Star Park, Los Ala- and the ability to access the data required for live
during the Euro Cup. mitos, Sam Houston). betting through their mobile phones, thanks, among
Sophistication in attracting and keeping users other data, to the detailed information provided by
A methodology for attracting users has been develo- In the final quarter of the year, Codere launched the TV The Company also operates sports betting under the sports statistics.
ped through programmed purchases, using look-alike ad campaign Bettors Passion, consisting of various Codere Apuestas brand, offering a great variety of
and retargeting models, segmentations optimized in spots which recreated a soap opera -with a touch of markets and types of bets (including games with live
social networks and the purchase of televisions with humor- telling of the effects of the Codere Apuestas betting, first and second half, full game, hi/lo, etc.). Uruguay
qualitative GRPs, thanks to attribution models, which good practices, using the slogan Bet with Passion, and Parallel to its offline activity, in October of 2016 the
make it possible to optimize the cost and number of producing an unprecedented impact on the business. Company launched its online sports betting operation Codere manages 28 betting sites in Uruguay offering
slots run depending on the volume of registered users. www.codere.mx. simulcasting. In Montevideo, the betting shops are
Other noteworthy actions took place, such as during located in the 18 de Julio and Montevideo Shopping
Once the Codere user is attracted, this methodology the Real Madrid - Barcelona Clsico match (3 Decem- Center gaming halls and the Hipdromo Nacional
is capable of developing predictive sales models by ber) and taking advantage of the recently implemen- de Maroas racetrack (on racing days). In 2016, the
means of complex segmentations, building loyalty and ted sponsorship agreement- a new 360 campaign was Company continued the direct management of the Hi-
reactivating the customer more easily, and obtaining carried out. The El Clsico Codere spot was launched pdromo Nacional de Maroas racetrack and the Las
better retention ratios than the competition analyzed. for TV, with the Company presenting itself for the first Piedras racetrack, in addition to the significant support
time on this communication medium as the Official it provides to three racetracks in the interior of Uruguay
A year of intense promotional activity Sports Bookmaker for Real Madrid where the footba- (Paysand, Colonia and Melo). All of these make up
In addition to the agreement with the Real Madrid C.F., llers can be seen in an image associated with Codere. the National Integrated Turf System, or SINT (Sistema
in 2016 Codere carried out other important sponsorship Integrado Nacional de Turf), a significant commitment
Areas of activity

agreements such as the one with the Valencia C.F. for by the Government to continue revitalizing the coun-
the 2015-2016 season. Along parallel lines, it has been trys equestrian industry.

63 64
Annual Report 2016
4.5 Racetracks
Brazil In 2016 Codere operated four racetracks:
Codere has been operating sports betting in the coun- Parallel to this, Suaposta.com.br has over 600 racetrac- Hipdromo de las Amricas (Mexico), Hipdromo
try since 2006 and, at the end of 2016, had five betting
sites under the brand Turff Bet & Sports Bar and Sua-
ks on its betting calendar: HRU, Hpica Rioplatense de
Uruguay (Maroas and Las Piedras), Presidente Remn Presidente Remn (Panama), as well as
posta, offering customers national and international
horse race bets.
(Panama), GBI (United Kingdom), Sky World (Australia,
New Zealand, South Africa and Argentina - Palermo),
Hipdromo Nacional de Maroas and Hipdromo
Stronach and Churchill Downs (USA), Chile (Santiago, Las Piedras (both in Uruguay).
In 2014, the Company promoted this activity thanks to Valparaso), Peru (Monterrico), among others.
its agreement with the Jockey Club of Rio Grande do
Sul (JCRGS), allowing for the provision of horse race bet
processing and totaling services, and for international
simulcasting. Likewise, through another agreement,
this time with Hpica Rioplatense del Uruguay (HRU),
the Company was able to integrate internationally all
of the bet totalizers of the Hipdromos de Maroas
and Las Piedras racetracks (in Uruguay), with the Hi-
pdromo de Cristal in Porto Alegre (Brazil), allowing
for horse race bets from these racetracks.

At the end of 2015, Codere and the Jockey Club of Rio


Grande do Sul started up the internet and telephone
betting platform Suaposta, www.suaposta.com.br Cu-
rrently, this platform allows customers to bet on a wide
range of turf events, whether by PC, tablet, or smar- The horse racing business has evolved over time. which, at the end of the nineties, was in recession
tphone, -21 hours a day-, starting with the Maroas, Currently, together with horse racing and betting, in Latin America.
Las Piedras and Cristal racetracks, and able to include the Company also operates under the racino model,
the principal horse racetracks of the world, such as the which allows for the installation of gaming terminals The Hipdromo de las Amricas (Mexico), Hipdromo
Royal Ascot, Kentucky Derby, Dubai World Cup, and at racetracks or in facilities associated with the race- Presidente Remn (Panama) and Hipdromo Nacio-
Melbourne Cup, among others. track, in an aim to contribute to financing this activity. nal de Maroas (Uruguay) racetracks form part of
the International Federation of Horse Racing Authori-
On 22 March 2016, the first Suaposta agency was in- Thanks to its experience in the sector, and to exce- ties (IFHA), a prestigious international organization in
Areas of activity

augurated in Niteri (Rio de Janeiro), and is considered llent management procedures, the Company pro- charge of promoting good regulation and best prac-
to be the most modern one of its kind in Brazil. vides successful formulas to revitalize this activity tices internationally in horse racing matters.

65 66
Annual Report 2016
Mxico Panam

The jockeys In March of 1943, President Manuel


vila Camacho inaugurated the Hip-
Club of Hipdromo de las Amricas.
In the same room, on 17 November,
Codere Panama operates the only active racetrack in
Central America, Hipdromo Presidente Remn, with
Laffit Pincay Jr., recognized as the teaching center which
forges the best jockeys in the world. These young men
training academy dromo de las Amricas racetrack, nor- Carlos Pineda presented the book the capacity to accommodate over 20,000 people. The are trained for two years, under a method which com-
- Academia th of Mexico City, in an area of nearly
60 hectares of federal land. In 1997,
Poesa visual mexicana siglo XXI. venue houses around 1,000 horses, and has nearly 300
employees. Alongside the racetrack horse racing agen-
bines academic studies and practical training sessions,
preparing them to be at the front line of professional turf.
Tcnica de the CIE Group was awarded the con-
cession to operate the property, and
At the venue of Granja Las Amricas
the event Watch Out for Diabetes,
cies carry out their activity through simulcasting, which
makes it possible to bet on live races both in Panama
Formacin de after a 3-year renovation, it reopened Your Health Comes First was held, and abroad, in a pleasant atmosphere offering quality
Jinetes Laffit its doors to offer horse racing. a preventive and informative encoun-
ter organized by several diabetes
service. In Panama these agencies operate commercia-
lly under the brand Turff Bet & Sports Bar.
Uruguay

Pincay Jr. - forges In 1943, it was planned to organize a


major race each year, the great Han-
associations and the Codere Foun-
dation. Throughout the year, on the On 29 May, the 88th edition of the Clsico Presidente
The Hipdromo Nacional de Maroas racetrack is one
of the most important turf venues of the region. In 2003
the best jockeys dicap de Las Amricas, the most im- occasion of the principal turf encoun- de La Repblica took place, one of the most important HRU was awarded the tender for its management. HRU
in the world portant horse racing event of the year,
with the participation of horses from
ters, numerous personalities from the
world of communication and culture
racing circuit events, won by Queen Pearl, who took
the race mounted by the jockey Jos ngel Batista.
activity in Uruguay follows the racino model, and cu-
rrently focuses on the metropolitan area of the country,
all over the continent, despite nume- visited Hipdromo de las Amricas, where, in addition to operating the Maroas and Las
rous difficulties such as transportation among them, the journalist Francisco The awards ceremony was hosted by Juan Carlos Piedras racetracks, it offers a horse race betting system
distances, and the time required for Zea, who acted as a sponsor at the Varela, president of the Republic of Panama, who and manages entertainment venues.
the horses to become acclimated to inauguration of the horse racing sea- presented the Clasico Cup to Ricardo Lau (senior)
the altitude of Mexico City (2,240 me- son on 23 January. in representation of the stud Cantn. Other perso- In 2016, the venue was intensely active, this being the
ters above sea level). This event came nalities also took part in this event, such as the Vice year of greatest investment since its reopening, as
to be the great race of Mexico, the On 16 April, the financial journalist President of the Republic, Isabel de Saint Malo; the significant resources were allocated to improving the
race which everyone, owners, joc- Daro Celis participated in the awards Minister of Agricultural Development, Jorge Arango; racetrack infrastructure and technology, and numerous
keys, trainers, wants to win at least ceremony in one of the most impor- the manager of Codere Panama, Lucas Alemn; the first rate turf as well as outside events were held:
once in their life. tant races of the day. Throughout manager of Codere America Horse Racing Opera- On 6 January the Gran Premio Jos Pedro Ramrez
the year, the venue was also visited tions, Ramn Rionda; the manager of Hipdromo Pre- race took place, recognized locally and internationally
In addition to horse racing events, by the actors of the plays Verdad o sidente Remn, Carlos Salazar; and Gerald Castillo, for the participation of the most highly awarded hor-
in 2016 the venue hosted numerous Reto, Marta tiene un Marcapasos and on behalf of Global Brands, sponsor of the race. ses and the presence of leading personalities from the
cultural events: Mentiras. Likewise, on 18 November world of turf, politics and entertainment.
On 19 January the book La bajada al the singer and journalist Adriana Cor- On 2 December the graduation ceremony took pla-
Areas of activity

infierno, by the author David Pastor dero also attended. ce for the fourteen new jockeys of the jockey training In July, and with an investment of 3.4 million dollars,
Vico, was presented at the Jockey academy Academia Tcnica de Formacin de Jinetes construction began on a new grass track to be inau-

67 68
Annual Report 2016
gurated in March of 2018 on the occasion of the Gran
Premio Latinoamericano race.
In November one hundred box stalls were inaugurated
in a new Villa Hpica with an investment of over US$
In 2016, Maroas
2,500,000, increasing the number of horses housed at National Racetrack
In September, the first leg of the Triple Corona race
in Maroas was marked by the inauguration of the
the track and generating new jobs in the sector.
carried out the greatest
Raceway Two-Lane Road, a highly important roadway
and social public work for the neighborhood, allowing
At year-end, the Company donated to the Interior Minis-
try a complex video-surveillance system for the zone.
investment since its
not only for improved connectivity in the city, but also This project is the result of a public-private partnership reopening, with the
for the re-housing of more than two hundred families. agreement making it possible to cover a 40-block area
which includes not only the racetrack accessways but enhancement of the
In October the Hipdromo Nacional de Maroas recei-
ved the world turf authorities and the principal veteri-
also key points in the Ituzaing district. This video sur-
veillance circuit is equipped with a real-time monito-
racetrack infrastructure
narians and chemists of the sector in the framework of ring system and police response. The donation, in the and technology
the International Conference of Racing Analysts and amount of US$ 200,000, was made in the context of
Veterinarians (ICRAV) 2016. This biannual event of the a company community support policy, given the com-
ICRAV is the principal scientific and veterinary forum in panys important role in the neighborhood. In addition
international horse racing, and it chose Uruguay for its to this action, HRU invests in and carries out activities
21st edition, the first time such an event was held in Latin which can improve the quality of life of the people in
America. The encounter was attended by 180 delegates the neighborhood, the social development of the com-
from 32 countries, with the noteworthy presence of Louis munity and the comfort of the racetrack visitors.
Romanet, the maximum international turf authority and
president of IFHA since its creation in 1994.

As from 2016, the HRU Veterinary Service has Quality


Management System certification in accordance with
standard ISO 9001, 2008 version. This makes it pos-
sible to continue its commitment to maximum profes-
sionalism and transparency in the management of the
venue, and allows for compliance with the most strin-
gent international standards and recommendations.
The HRU veterinary service is the first such service in
the region to adopt integral quality certification in all
Areas of activity

of the processes it manages, placing this Uruguayan


racetrack in the vanguard of this matter.

69 70
Annual Report 2016
4.6 Online gaming
The Company has been consolidating its
commitment to online activity, responding to
new customer demands and driving its Brazil
development in the countries in which it operates,
In 2016, Codere carried out its online activity in three In 2016 Codere started up its digital gaming offering in
and where this is legally permissible. markets: Spain, Brazil and Mexico: Brazil with the support of the Jockey Club of Rio Grande
do Sul, under the Suaposta brand, (www.suaposta.com.
br), this being the first legal platform in the country to
Spain operate online horse racing bets.

In the wake of previous experiences which allowed the The platform allows customers to bet on a wide range
Company to consolidate its project, Codere started its of turf events via PC, tablet or smartphone, starting with
activity in Spain under the auspices of Spanish Gaming the Maroas, Las Piedras and Cristal racetracks, and
Regulation Law 13/2011, of 27 May. At the end of 2014, covering the principal horse races of the world, such
the launch of the Codere Bets web App codere.es in as the Royal Ascot, Kentucky Derby, Dubai World Cup,
Madrid was a great success, with mobile device activity or Melbourne Cup, to name a few.
being noteworthy. Subsequent to this, Codere would
go on to develop its activity under national licensing.
Mexico
The Company works in close collaboration with several
gaming solution suppliers, in an aim to develop new The Company started its online operation in Mexico in
products and services in the Spanish market. In 2015, October of 2016, under the brand of Codere Apues-
it incorporated online slots into its entertainment offe- tas (www.codere.mx), with a very complete gaming
The Group digital strategy advocates omni-channel ring, and, at the end of 2016, casino games. offering which covers a large number of sports (from
entertainment, allowing users both an on-premise and American football to motorcycle racing) and has nu-
online experience, which, in the case of Spain, is a great In September of 2016, Codere launched in Spain its new merous attractive markets. Likewise, Codere completes
competitive advantage, given its extensive gaming hall mobile version (iOS and Android) and PC App, with a to- its portfolio with online slots, online casino games and
network. Moreover, the Company works day to day in tally new image, offering greater advantages over the video bingo.
developing new, more accessible formats, and colla- previous version and improving customer experience.
borates with strategic partners, making it possible to Currently, the Company is pending the regulations
Areas of activity

improve customer experience with an attractive ga- in course in the Group countries to promote the legal
ming offering. development of this activity under the Codere brand.

71 72
5.
Corporate
Governance
Moodys B2 B2 Stable 21/10/2016
Standard & Poors B Stable
BBONDS 30/09/2016
(existing issuances as per 31/12/2016)

Annual Report 2016


Issuer ISIN Code Date of Issue Issue Amount Cupon Due Date

Codere Finance 2 XS1513765922 08/11/2016 500 mm 6.75% (six- 01/11/2021


(Luxembourg) S.A. month payment)
5.1 Corporate Governance Codere Finance 2 XS1513776614 08/11/2016 300 mm 7.625% (six- 01/11/2021
(Luxembourg) S.A. Governance month
Bodiespayment)
Codere complies with the Good Governance BONDS (existing issuances as per 31/12/2016)

Standards aimed at protecting the interests Issuer


The breakdown of the significant shareholdings com-
municated atDate
ISIN Code of Issue 2016
31 December Issue
toAmount
the CNMV isCupon
the
The General Meeting of Shareholders and the Board of
Directors, Due
withDate
executive directors and external direc-
of the Company and its shareholders, and Codere Finance 2 18.
following:
XS1513765922 08/11/2016 500 mm
tors, are the maximum governance bodies of the Group.
6.75% (six- 01/11/2021
monitoring the creation of value and the (Luxembourg) S.A.
SHARE CAPITAL DISTRIBUTION (%)
month payment)
The year 2016 was an intensely active business year
in Corporate Governance matters. Accordingly, three
efficient use of its resources. Codere Finance 2
(Luxembourg) S.A.
Share Capital
XS1513776614 08/11/2016Distribution
300 mm (%) 7.625% (six- 01/11/2021
General Meetings of Shareholders were held: in June,
month payment)
November
63.12Major
and December.
Shareholders
With respect to the Ordinary General Meeting, held on
30Free Float
20.18June 2016, in addition to ordinary matters related
Executive to16.68 approval of the annual accounts, the application
the
18. Directors of income and the management of the Board of Direc-
tors, all of the above in reference to the year 2015, a
Treasury 0.012
series of additional matters were dealt with, such as
SHARE CAPITAL DISTRIBUTION (%) shares
the ratification of the Board members appointed by
co-option in the month of April, the appointment, for a
* Communications conveyed to the CNMV as per 31/12/2016
Codere Shareholder Structure term of three years, of ERNST & YOUNG S.L. as the
Major 63.12 auditor of Codere and its consolidated Group, and a
By going public in October of 2007, Codere increa- Directors, Mr. Jos Antonio Martnez Sampedro, held Shareholders consultative vote on the Directors Remunerations An-
sed its shareholder structure, and was able to access 14.17% of the share capital (both through direct share- nual Report, likewise in reference to 2015, which was
greater financing. After a number of years in which the holdings, as well as indirectly through the company Free Float 20.18 approved by 99% of the voting share capital present
Company had been immersed in an arduous process of Masampe S.L.). The deputy chairman of the Board of or represented by proxy. This General Meeting was
negotiation to restructure its debt, the Group reached Directors, Mr. Luis Javier Martnez Sampedro, held 2.5% Executive 16.68 attended by 83.84% of the share capital present or
certain agreements with its creditors. During 2016, the of the share capital (both through his direct holding as Directors represented by proxy.
execution of said agreements finalized, giving way to well as indirectly through Recreativos Metropolitano
a new shareholder structure. S.L. and M Global Solutions-Global Assets Brisa). Other Treasury 0.012 The Extraordinary General Meeting of Shareholders
directors held 0.01% of the share capital, and 0.01% of shares held on 10 November 2016 resolved, among other ma-
At 31 December 2016 the company had a free float of the share capital was held as treasury stock. tters, to amend the Articles of Association, so as to
Corporate Governance

approximately 20.18%. The remaining share capital was * Communications conveyed to the CNMV as per 31/12/2016 adapt them to the new Directors Remuneration Policy
distributed among several significant shareholders, as approved at said Meeting. In addition, certain reso-
declared to the Spanish Securities Market Commission Note: Communications conveyed to the CNMV lutions were adopted which were the consequence
(CNMV). Consequently, the chairman of the Board of as per 31/12/2016 of the agreements reached during the financial res-

75 76
Annual Report 2016
By going public tructuring process of the Company
and its Group (such as the issuance
tnez Sampedro as executive direc-
tors; the remaining seven directors
2016 the decision was made known of Masampe S.L.
to change the natural person representing it on the
other duties, that of supervising the functioning of
the Company Audit Department, establishing the
in October 2007, of Warrants for executive directors were external (two independent and Board, replacing Ms. Cristina Martnez Soria by Mr. Po Codere financial processes and control regulations,
Codere increased and senior management, or the
amendment of the Regulations of
three nominee directors, and a fur-
ther two directors who, after losing
Cabanillas Alonso. and reporting on the annual accounts and other fi-
nancial statements of the Group. In addition, during
its shareholders the General Meeting to include new
competences). This General Meeting
their status of independent directors
with the coming into force of Law
Among its functions, the Board of Directors, notwiths-
tanding its management and representation competen-
2016, it added to its functions that of supervising
the strategy for communication and relations with
structure, being had a higher attendance rate than 31/2014 amending the Capital Com- ce, has taken on, as its focal point, the mission to appro- shareholders and investors, including small and me-
able to access did the Ordinary General Meeting,
with 92.45% of the share capital be-
panies Act, belong to the category of
other external directors), all of the
ve Company strategy and the organization required in
order to implement this, and likewise to supervise and
dium shareholders, and supervising and evaluating
the processes in regard to relations with the various
greater funding ing present or represented by proxy. foregoing having been appointed in
accordance with their high professio-
oversee Management compliance with the objectives
set out and that it respect Company interests.
stakeholders.

In the wake of the debt refinancing nal qualifications. During the first months of 2016, the Audit Commit-
process successfully undertaken by The Board meets with the frequency called for in view tee was made up of five directors (two independent
the Company and its Group in Novem- As from 28 April 2016, and as a result of Company interests, or as mandated by law or the directors, one nominee director and two directors
ber of 2016, it was necessary to call of the restructuring of the Company, Articles of Association. During 2016, the Board of Direc- in the category of other external directors). On 5
one last Extraordinary General Mee- the composition of the Board of Di- tors met thirteen times, and on six additional occasions May 2016, as a result of the new composition of the
ting of Shareholders which was held rectors changed. That day, six Board adopted resolutions in writing and without a physical Board of Directors, new members were appointed to
on 15 December 2016, for the purpo- members resigned (Mr. Encarnacin meeting. the Audit Committee, and since then the Committee
se of furnishing certain secured gua- Martnez Sampedro, Mr. Jos Igna- has been made up of two independent directors (a
rantees in regard to the refinancing. cio Cases Mndez, Mr. Jos Ramn In accordance with the laws in force, and, in particu- chairman and one member) and a nominee director
Attendance at this General Meeting Romero Rodrguez, Mr. Juan Jun- lar, with the recommendations contained in the Lis- (member).
reached 89.48% of the share capital quera Temprano, Mr. Eugenio Vela ted Companies Code of Good Corporate Governance
present or represented by proxy. Sastre and Mr. Juan Jos Zornoza approved by the Spanish National Securities Commis- The Appointments, Remuneration and Corporate
Prez), and five new directors were sion (CNMV), three committees are set up within the Governance Committee, , mandatory for listed com-
The Company Board of Directors was appointed by co-option (Mr. David Board of Directors, each having its specific functions: panies in accordance with the Capital Companies
changed substantially during 2016. Reganato, Mr. Timothy Lavelle, Mr. the Audit Committee, the Appointments, Remuneration Act, has the nature and functions which the Capital
From January until 28 April 2016 the Manuel Martnez-Fidalgo Vzquez, and Corporate Governance Committee, and the Com- Companies Act reserves for it. Among the compe-
Board maintained its composition Mr. Norman Sorensen Valdez and Mr. pliance Committee. tences of the Committee are: to evaluate the com-
Corporate Governance

identical to that of 2015, with ten Matthew Turner. Said appointments, petence, knowledge and experience of the directors
members: Mr. Jos Antonio Martnez by co-option, were ratified at the Or- The Audit Committee has as its essential task that and report on their appointments and resignations,
Sampedro, Mr. Luis Javier Martnez dinary General Meeting held on 30 of serving as support to the Board of Directors in its and do likewise in regard to Company senior execu-
Sampedro and Ms. Encarnacin Mar- June 2016. In addition, on 28 April tasks of financial and risk supervision, and, among tives; to propose and oversee the company remune-

77 78
Annual Report 2016
Board of Directors (at 31 December 2016)
Date of First and
Board Last Directorship
Director Offices Category Curriculum Appointment

Mr. Jos Antonio Codere Group President 7 May 1999


Chairman Executive
ration policy; and to examine compliance with the two being nominee directors (members). Among the Martnez Sampedro and Executive Director. 25 June 2015
Internal Regulations for Conduct with the Securities principal functions of this Committee are control of 7 May 1999
Markets, making proposals for its improvement and Group compliance with Spanish or foreign gaming Mr. Luis Javier Mart-
Deputy Chairman Executive Codere Group Executive Director. 25 June 2015
nez Sampedro
supervising compliance with the Corporate Gover- regulations, and likewise the evaluation of the in-
nance rules applicable in said regard. ternal control systems of the company in relation Masampe S.L. Corporate Image and Marketing 28 July 1998
to gaming and anti-money laundering obligations. (represented by Mr. Member Nominee
General Manager of Acciona S.A. Spanish
25 June 2014
Government Minister Spokesman from
During the first months of 2016, the composition of Po Cabanillas Alonso) 2000 to 2002.
this Committee, which had five members, was that The composition of the Board of Directors and the Co- Managing director of Houlihan Lokey.
Mr. Manuel Martnez-
of one independent director, two nominee directors dere Committees from the dates on which their chan- Member Nominee Formerly worked at Deutsche Bank, Merrill 30 June 2016
Fidalgo Vzquez (1) Lynch and Cajastur.
and two directors classified as other external direc- ges took place, and at year-end 2016, is that shown in
tors. On 5 May 2016, as a result of the new compo- the following tables: Mr. David Reganato (2) Member Nominee
Senior Analyst at Silver Poing Capital L.P.
30 June 2016
Formerly worked at Morgan Stanley.
sition of the Board of Directors, new appointments
Special Situation Investments at
were made to the Appointments, Remuneration and
Mr. Timothy Lavelle (3) Member Nominee Silver Point Capital L.P. Formerly 30 June 2016
Corporate Governance Committee (at that time ca- worked at Credit Suisse.
lled the Corporate Governance Committee). Since US Ambassador in Spain from 1989 to 20 November 2002
then, this Committee has been made up of two in- Mr. Joseph Zappala Member Independent
1992. President of Joseph Zappala Invest-
25 June 2015
ments, a real estate, healthcare, gaming
dependent directors (a chairman and one member) and entertainment holding company.
and two nominee directors (members Board Director of Insperity INC. and Encore
Mr. Norman Sorensen Capital Group Inc. Formerly held key
Member Independent 30 June 2016
The Compliance Committee, set up by the Com- Valdez positions at Principal International, AIG
and Citigroup..
pany in use of the freedom granted to the Board of
Board Director of Arcapita. Formerly held
Directors by the Capital Companies Act to create Mr. Matthew Turner Member Independent key positions at Kaupthing Bank and Bank 30 June 2016
specialized committees within said body, during the of America Merrill Lynch.

first months of 2016 was comprised of five directors


(two independent directors and three nominee direc-
tors). On 5 May 2016, owing to the new composition
Corporate Governance

Nota:
of the Board of Directors, the new members of the
r. Luis Argello lvarez, Non-Director Secretary
M
Compliance Committee were appointed, which, sin-
(1) Represents or has ties with the shareholders Abrams Capital Management, LP. and Contrarian Capital Management L.L.C
ce then, has been made up of three directors, one of (2) Represents the shareholder Silver Point Luxembourg SARL.
which is independent (the chairman) and the other (3) Represents the shareholder Silver Point Luxembourg SARL.

79 80
Annual Report 2016
MEMBERS OF of
Members THEtheBOARDS COMMITTEES
boards committees
(December,
(December, 31st,2016)
31st, 2016 2016)
.
Good Governance Standards
Audit Committee
The Standards of Good Corporate
Governance are essential for the de-
The Critical Operations Committee
was the first tool developed within
The Standards
Position
Name
velopment and growth of the Group. the System to ensure the flow of in- of Good
Chairman Codere centers its Corporate Good formation from the peripheral centers
Mr. Matthew C. Turner
Governance practices around three to senior management, allowing for Corporate
Mr. Norman R. Sorensen Valdez Director basic aspects: the Control and Proce-
dures System, Standards of Complian-
coordinated and cohesive decision
making. The Committee is comprised
Governance are
Mr. Timothy P. Lavelle Director
ce, and monitoring of the listed com- of the executive directors of the cor- essential for
panies Code of Good Governance. poration, who analyze and approve
Governance transactions which are considered the development
Name Position
Codere considers that the establish-
ment of Standards of Good Corporate
critical, consequently establishing
effective financial and legal con-
and growth of
Governance, taken on by company trol over the handling of Company the Group
Mr. Norman R. Sorensen Valdez Chairman governance is essential for Group de- assets. From its creation, the Com-
velopment and growth. Codere focu- mittee has audited and verified over
Mr. Matthew Turner Director ses its Good Corporate Governance 1,600 significant transactions.
practices on three aspects:
Mr. David A. Reganato Director
Control and Procedures System: The Procurement Office is the second
Masampe S.L. Director This aims to provide the Group with tool introduced in an aim to provide a
a fixed organizational structure concrete structure for the purchasing
and corporate culture, applicable and contracting processes, establi-
Committee to all of the entities regardless of shing an action mechanism which
Name Position their area of influence, setting up promotes transparency, ensures the
formal action mechanisms, which, concurrence of suppliers and results
Mr. Joseph Zappala Chairman rather than bureaucratize, aim to in a reduction of acquisition costs for
establish guidelines for controlled the Company, at the same time that
Corporate Governance

Masampe S.L. Director delegation, and to consolidate a it promotes Good Corporate Gover-
culture of effective management, nance. From the time it was created,
Mr. Manuel Martnez-Fidalgo Vzquez Director consequently achieving the stra- in mid-2009, the Procurement Office
tegic cohesion of the Group. has managed over 650 significant

81 82
procurement transactions at the corporate level, reports to the Compliance Committee of Codere S.A.
with a reduction in purchasing costs of over 14% the principal risks detected regarding compliance, in
with respect to the established budgets. In 2011 its each one of the countries, to subsequently forward
implementation was completed in the various geo- said information to the Board of Directors. .
graphical areas in which the Company operates,
and an International Procurement Office is sche- Standards of Good Governance: During the year
duled to be created for 2018. 2016, Codere S.A. engaged in intense in-depth ac-
tivity in the sphere of Corporate Good Governance.
Standards of Compliance: These Standards play In this way, the Board approved a Corporate Social
an essential part in showing the special commit- Responsibility Policy and a Director Selection Policy,
ment the Group has to good business practices, in with these two regulatory texts forming an addition
a sector as regulated and sensitive as is the gaming to the Group collective Corporate Governance Stan-
industry. The Group strategy in this respect is to go dards. Moreover, the Board resolved to amend the Re-
beyond what is called for by regulations and spe- gulation governing its own functioning, and to redraft
cific laws, and make an impact on the true spirit of the Internal Regulations for Conduct in the Securities
fair play and responsible gaming. Specifically, the Markets, so as to bring them in line with Regulation
Group is especially committed to strict compliance (EU) 596/2004. In addition, the Board resolved to
with all anti-money laundering and anti-terrorist propose to the General Meeting of Shareholders the
financing laws, as well as the applicable gaming approval of a Directors Remuneration Policy and the
regulations. To supervise these aspects, the Com- amendment of the Regulations of the General Meeting
pany has a Corporate Security and Compliance of Shareholders, with both texts being approved by
Department which has among its duties, that of the General Meeting.
monitoring and controlling the application of the
Codere Group Code of Ethics and Conduct, as well
as managing and supervising the company and
Group whistleblower channel, a mechanism created
to communicate the commission of irregularities or
any type of acts which violate the law or the perfor-
mance standards of the Ethics Code. During 2016,
Corporate Governance

the whistleblower channel registered 116 denoun-


cements, processing and resolving a total of 108,
with only eight of these still pending. The Corporate
Security and Compliance Department periodically

83 84
6.
Human
Capital
Informe Anual 2016
6.1 Human Capital
Codere drives the development of its human
capital, key to creating sustainable value. Moving towards a Human
The Company aspires to become the Resource Management Global System Evaluation Capacity (SEC)

best place to work, attracting, developing Given that people are strategic for the Group, the In an aim to attract and retain the best professional
Company gives special attention to Human Resource team, and to commit to internal talent, in 2016 selec-
and retaining the best professionals. practices in attracting talent, in addition to promoting tion techniques were implemented, based on Critical
Aware of the importance of a quality human their specialized training, and retaining the most valua-
ble workers through more attractive and more suitable
Success Factors (CSFs) which, together with the Com-
petency Interview, have served as a basis in 2016
team to obtain the best results, the Codere motivation systems. to re-launch the Evaluation Capacity System (SEC).

Group commitment to people is one of its In 2016 Human Resources was established as a stra- In the wake of the assessment conducted in Mexico,
principal assets. tegic area assisting the business, driving important
transformation actions in the Company.
in 2016 the assessment was launched in the corpo-
rate center and business unit in Spain, and for this
purpose preliminary training sessions were organized
In September the first Regional Human Resources Mee- for all employees, structured in accordance with the
ting took place in Mexico City, attended by the Human participant profiles (persons assessed and assessors).
Resources managers of Mexico, Panama, Colombia
and the Corporate Center, and its principal objectives This process principally aims to encourage the pro-
were the following: fessional development of all Company employees,
Review and evaluation of the actions carried out measuring a series of capacities required for the ade-
until said time in the project for regionalization of quate performance of the functions associated with
these countries. their position, so as to maximize their contribution
and generate a quest for continual improvement,
The guidelines defined in the Group 2016-2020 Stra- employees, suppliers, public administrations and Identification of the strong points and areas of oppor- through employee recognition, development and
tegic Plan, call for an adaptation of the Human Re- society, supported by a technological base which tunity in the training processes -carried out until said training.
source area with respect to processes, projects and integrates and supports the information, allowing time in the Vive Codere program-.
structures, defining an Integral People Management the results to be measured. It is based on three The entire assessment process was conducted throu-
Model, adopted to each of the countries. central concepts: talent, efficiency and commit- Maximization of the benefits of employee exchanges gh the Evaluation Capacity (SEC) Online Tool. With
ment, all of which make it possible to standardize, between the countries to export and share know-how said tool, both the assessor as well as the person
As a result, the Human Resources function focu- analyze and measure its impact and application, with respect to the management of employees, re- assessed have been able to access, prepare, carry
Capital humano

ses on the creation of value for the organization and identify new opportunities and relations such sources, and gaming halls, and enrich the operation out, validate and visualize the assessments in a com-
stakeholders: shareholders, investors, clients, as the Big Data model. with the best practices of each of them. fortable and simple manner.

87 88
Informe Anual 2016
19.
19.
Global Continual Training Program Local Training Programs

Currently, both the process as well as the web appli- Workforce distribution by gender The employees are the Group principal asset, and con- Each Codere Group country adapts the training given to
cation have been started up in Mexico, Spain and the sequently the Human Resources area works on their trai- its employees not only to comply with the regulations
Major nationalities
Corporate Center, and will gradually be used in all of ning and constant development through programs which in force (anti-money laundering, health and safety pro-
(more than 20 employees): Female - 41.00% Male - 59.00%
the Group business units. Thanks to these, the process contribute to attaining the Company strategic goals and grams, ISO standards, etc., but also to respond to the
will become more agile and optimal, with homoge- objectives. One of these is the Continual Training Pro- needs of each business, to favor Codere talent, and to
neous Mexico (5,481)
information on employees being generated in gram, the principal objective of which is to foster and drive the Group corporate culture and leadership.
order to be able to draft plans for career and profes-
Argentina (3,159) update employee capacities and know-how, allowing
sional development, inter-country mobility, etc them to carry out their functions efficiently and effec- In this regard, local training schools have been created
Panama (1,254) tively, favoring their professional development, with a to promote specific capacities and know-how related
Spain (1,182) positive impact on the company. In 2016, over 120,000 to the games regulated in each country, in an aim
Human Resources Reports hours of training were given to employees, and over 7,000 to provide the tools required to reach the stipulated
Italy (657) to gaming hall partners. goals and maintain a constant quest for excellence.
Fromcorporate
ColombiaHuman
(589) Resource management, impro- Given the operational integration of Panama, Colombia
vements continue to be made in reporting processes Moreover, from the Corporate Center and in conjunc- and Mexico three Latin American countries of similar
Uruguay
and systems and(301)
in the reports themselves, such as the tion with the local Human Resources managements, a characteristics- during 2016 international training pro-
Human Brazil (82) Report Key Performance Indicators
Resources process has been driven to standardize the control and grams continued to be carried out in an aim to conduct
and the Human Resources Budgets Report, which com- monitoring of the training provided in all of the countries, cross-learning and provide feedback from the Group
piles Group
Romania (31)
information in key items, in order to plan and employee associated travel. training experiences.
,
organization finances,
Albania (25) resources and objectives in the
medium and long term. This process will materialize in the next few years in a One of the most noteworthy initiatives is that of the
Bolivia (24) The Group Human Resources budget in 2016 exceeded common training system for all of the countries, with Mexico Entertainment University, fruit of an alliance
One aspect of the information contained in these reports
Peru (19) 14 million euros Type
(notofincluding
employment contracts
salaries and wages), an periodical systems for measurement and evaluation between Codere and the Commercial Banking School
is the number of Group employees and staff distribution investment of over 1,000 euros per employee. Twenty homogenous both in the manner as well as in the time (EBC) in the year 2011. Thanks to this project, fourteen
Paraguay (18)
by gender. At year-end 2016, Codere had 13,918 em- percent of -this
Permanent amount was allocated toTemporary
92.97% social welfare
- 7.03% they are launched- and likewise through a common ma- employees of the Entertainment University third gene-
ployees, including personnel of Hpica Rioplatense de actions, and nearly 10% to employee training and profes- nagement process (expenses, logistics, travel). ration graduated, obtaining a degree in Entertainment
Uruguay (HRU). sional development. Business Administration, joining the twenty graduates
from previous generations. Through classroom atten-
dance and online classes, they studied in depth sub-
jects concerned with business operation, and obtained
an officially recognized degree.
The employees are the Group principal asset, and In addition, Mexico has a number of specific programs
consequently the Human Resources area works on for training in gaming operation and to promote the
Capital humano

career plans of its employees (Fbrica de momentos


their training and constant development de la verdad, Giras operativas, Trbol de oro, Lderes

89 90
Informe Anual 2016
TAX
TAXOPTIMIZATION
OPTIMIZATION
19.19.
The
The
Flexible
Flexible
Remuneration
Remuneration
Program
Program Flexible
Flexible
Services for Employees

en desarrollo, etc.) as well as leadership promotion In 2016 Codere also carried out programs which were
programs (Avanza, Semillero de talento, etc.). already consolidated, to increase employee satisfac-
tion and contribute to improving the external and in-
Moreover, the Company drives actions related to cor- ternal image of the Company:
porate processes and cultures. One of those most Flexible Remuneration Program, consisting of wage
worthy of note is the Codere Colombia project Dealer personalization in accordance with the tax treatment
Academy, which aims to contribute toward the profes- of certain products in the Personal Income Tax Act
sional and labor growth of external personnel, through 8181 3333 (LIRPF).
training in different table games and their respective EMPLOYEES
EMPLOYEES
JOINED
JOINED
THETHE
PROGRAM
PROGRAM EMPLOYEES
EMPLOYEES
JOINED
JOINED
THETHE
PROGRAM
PROGRAM
procedures for employment in the CrowN Casinos, in Suma + Program, for travel in accordance with Re-
any of its programs, the ultimate aim of which is to gulation 7.p of the LIRPF.
promote quality service.
DSS (Direct Settlement System): in May of 2016 for
An important part of the training programs is linked to the first time social security contributions in Spain
the start of the business season as in the case of Hip- and in the corporate unit were reported with the Di-
dromo de la Amricas and Granja Las Amricas- , in an rect Settlement System (DSS), a new contribution
aim to prepare employees for the startup, fully immer- system which simplifies the current steps and pro-
sing them in the activity, placing special emphasis on cedures through an intensive use of online means. In
customer service (culture of service, rules of conduct this way, Social Security calculates the settlements
with visitors, sales and closing skills, etc.) 156,789.45
156,789.45 618
618 in terms of each worker, providing a receipt for pay-
ment by online means.
ORDERED
ORDERED
PRODUCTS
PRODUCTS TRIPTRIP
DAYSDAYS
Capital humano

MEDICAL
MEDICAL
INSURANCES
RESTAURANT
RESTAURANT
INSURANCES
TICKETS
TICKETS
306,333
306,333
TOTAL
TOTAL
TAX-EXEMPT
TAX-EXEMPT
AMOUNT
AMOUNT
PUBLIC
PUBLIC
TRANSPORT
TRANSPORTCARD
CARD

91 92
Informe Anual 2016
Technology at the Service
of Human Resources A Door Open to Employees Initiatives to Improve the Work Environment:

Within the plan for improvement of the Human Resour- The setting up of communication channels and brid- rency in their communications with their collaborators. Codere has started up at the local level extra-curricu-
ces (People Management Integral Model) we can in- ges from the organization to the human team, and the Hence, CodeRed Informativa (Codere Mexico), in its lar activities for its personnel, encouraging personal
clude a number of projects: encouragement of relations between people are some new video format, provides an opportunity to become relationships outside of the workplace, and favoring
Application to evaluate capacity in the various of the principal tasks of the Human Resources area to informed of the most important news and events of an open, healthy work environment.
business units: improvements in process unifica- favor a positive work environment. the business. Codere Colombia also promotes Colco-
tion and development (payroll, administration and municaciones, which circulates videos reporting the As an example of these activities, a Mixed Paddle Tour-
flexible remuneration) and evolution of the appli- At the corporate level, the Company circulates Codere most significant news and events of the activity of the nament was held at the corporate center in Madrid
cation to register job descriptions. Worthy of note Actualidad. This corporate newsletter was started in Company. (Spain) taking place for the last three years in the fa-
is the new functionality to generate employment 2013, in an aim to establish a sound horizontal line of cilities adjacent to the building.
contracts and the web application allowing for the communication for the Group Presidency to be able to
management of the Personal Income Tax exemption convey to all collaborators the difficulties facing the In the area of sports, Codere Brazil also promotes jog-
for work carried out abroad. Company and the solutions which were being imple- ging by its Porto Alegre employees and those who are
mented. Three years later, it has been consolidated in the city for work purposes, under the supervision of
Cloud Application: from the Human Resources area as a strategic tool to align our teams with Company a sports consultancy specialized in races.
an evaluation has been made of various techno- values, making them participants in the challenges,
logical products making it possible to standardize opportunities and successes attained. Codere Colombia, on its part, annually supports the
and decentralize the processes, optimize costs and solidary race in favor of the United for Colombia Foun-
improve productivity (Cloud, Mobility, Big Data and This publication, sent every other week to all Group em- dation for the rehabilitation of victims of armed con-
Social). ployees having corporate email, and to those wishing to flicts- donating the registration fees of 111 athletes in its
receive it in their personal email accounts, reaches over latest edition of the Bogot Half Marathon. Along this
Application in monitoring and control systems and 5,000 personnel in the eight countries in which Codere same line, Codere Italy supports the initiative Race for
KPIs: drafting and monitoring of global and busi- operates, through its versions in Spanish and in Italian. the Cure, in support of the fight against breast cancer.
ness unit KPIs allowing for the detection of possible Through its more than forty contents of its own produc-
deviations, completing the drafting and monitoring tion, and twenty editorials signed by the Group Presi-
conducted in regard to the budgets of the area as dency, in 2016 the publication kept the entire staff up
well as the labor costs of the organization. to date on the main events and future projection of the
Company. In 2016 these contents have opted for the The Groups Human Resources department
multimedia format more than ever, with a significant
increase in own video production being worthy of note. encourages communication through different channels
and relationships between employees outside of the
Capital humano

At the local level, the various countries of the Group are


also committed to a policy of closeness and transpa- workplace favoring a healthy work environment
93 94
7.
Auditor s
Report
Annual Report 2016
Translation of a report and consolidated financial statements originally
issued in Spanish. In the event of discrepancy, the Spanish-language version
prevails
of accounting estimates made by management, as well as evaluating the overall
presentation of the consolidated financial statements.
INDEPENDENT AUDIT REPORT ON THE CONSOLIDATED FINANCIAL
We believe that the audit evidence we have obtained is sufficient and appropriate
STATEMENTS to provide a basis for our audit opinion.

To the Shareholders of Codere, S.A.:


Opinion

Report on the consolidated financial statements In our opinion, the accompanying consolidated financial statements give a true and
fair view, in all material respects, of the consolidated equity and consolidated
We have audited the accompanying consolidated financial statements of Codere, financial position of Codere, S.A. and its subsidiaries at December 31, 2016, and
S.A. (the parent company) and its subsidiaries (the Group), which comprise its consolidated results and consolidated cash flow for the year then ended, in
consolidated statement of financial position at December 31, 2016, the accordance with International Financial Reporting Standards, as adopted by the
consolidated income statement, the consolidated statement of comprehensive European Union, and other provisions in the regulatory framework for financial
income, the consolidated statement of changes in equity, the consolidated cash information applicable in Spain.
flow statement, and the notes thereto for the year then ended.
Other matters
Directors' responsibility for the consolidated financial statements
On February 26, 2016 other auditors issued their audit report on the 2015
The directors of the parent company are responsible for the preparation of the consolidated financial statements, in which they expressed an unqualified opinion.
accompanying consolidated financial statements so that they give a true and fair
view of the consolidated equity and consolidated financial position and the Report on other legal and regulatory requirements
consolidated results of Codere, S.A. and its subsidiaries, in accordance with
International Financial Reporting Standards, as adopted by the European Union, The accompanying consolidated 2016 management report contains such
and other provisions in the regulatory framework applicable to the Group in Spain, explanations as the directors of the parent company consider appropriate
and for such internal control as they determine is necessary to enable the concerning the situation of the Group, the evolution of its business and other
preparation of consolidated financial statements that are free from material matters; however, it is not an integral part of the consolidated financial
misstatement, whether due to fraud or error. statements. We have checked that the accounting information included in the
aforementioned consolidated management report agrees with the 2016
Auditor's responsibility consolidated financial statements. Our work as auditors is limited to verifying the
consolidated management report in accordance with the scope mentioned in this
Our responsibility is to express an opinion on the accompanying consolidated paragraph, and does not include the review of information other than that obtained
financial statements based on our audit. We conducted our audit in accordance from the accounting records of Codere, S.A. and its subsidiaries.
with prevailing audit regulations in Spain. Those standards require that we comply
with ethical requirements and plan and perform the audit to obtain reasonable
assurance about whether the consolidated financial statements are free from ERNST & YOUNG, S.L.
material misstatement.

An audit requires performing procedures to obtain audit evidence about the


amounts and disclosures in the consolidated financial statements. The procedures
selected depend on the auditors judgment, including the assessment of the risks of _______________________
material misstatement of the consolidated financial statements, whether due to Rafael Pez Martnez
fraud or error. In making those risk assessments, the auditor considers internal
control relevant to the preparation of consolidated financial statements by the
Auditors Report

directors of the parent company in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion
on the effectiveness of the entitys internal control. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness February 27, 2017

97 98
Annual Report 2016
Codere, S.A. and Subsidiaries

Consolidated Balance Sheet at December 31, 2016 and 2015 SHAREHOLDERS EQUITY AND LIABILITIES Note 2016 2015
Equity attributable to equity holders of the parent 17 98,503 (609,658)
* Thousands of euros
Issued capital 505,943 11,007
ASSETS Note 2016 2015 Share Premium 561,950 231,280
Non-current assets 1,051,309 1,069,889 Legal reserve and retained earnings 419,066 (522,446)
Intangible assets 7 376,136 413,045 Revaluation reserves 3,727 3,881
Property, Plant and equipment 8 358,258 318,460 Translation differences (266,297) (220,188)
Investment properties 8 56,102 66,565 Profit/(loss) for the year attributable to equity holders of the parent 1,125.886 (113,192)
Goodwill 10 190,672 193,860 Non- controlling interest 17 (24,822) (6,282)
Investments in equity-accounted investees 9 585 11,607 Total equity 73,681 (615,940)
Non-current financial assets 11 21,474 21,405
Non-current loans 17,020 17,225 Non-current liabilities 997,084 249,658

Held-to-maturity investments 4,454 4,180 Deferred revenues 14 31

Deferred tax assets 12 48,082 44,947 Non-current Provisions 18 30,932 32,341


Non-current financial liabilities 19 870,810 113,657
Current assets 428,141 371,155
Bank borrowings 49,619 76,375
Inventories 14 11,356 11,625
Issued notes 788,335 -
Accounts receivable 15 192,489 188,346
Other borrowings 32,856 37,282
Trade receivables 41,135 40,273
Deferred tax liabilities 12 95,328 103,629
Current tax assets 2,115 3,298
Sundry receivables 40,469 42,125 Current liabilities 408,685 1,807,326
Accrued tax receivable 108,770 102,650 Provisions and others 18 9,252 9,429
Financial Assets 16 63,253 42,750 Bank borrowings 19 23,313 147,496
Short-term securities portfolio - 2 Notes and other marketable securities 19 12,223 1,276,209
Other loans and investments 63,253 42,748 Other non-trade payables 19 213,024 235,326
Prepayments 18,986 18,108 Trade payables 99,229 103,233
Auditors Report

Cash and cash equivalents 24 142,057 110,326 Current tax liabilities 19 51,644 35,633
TOTAL ASSETS 1,479,450 1,441,044 TOTAL EQUITY AND LIABILITIES 1,479,450 1,441,044

99 100
Annual Report 2016
Consolidated Income Statement for the year
ended December 31, 2016 and 2015
* Thousands of euros

Note 2016 2015


Operating revenues 23 1,497,420 1,639,524 PROFIT/(LOSS) FOR THE PERIOD (1,157,075) (139,446)

Revenue 1,486,287 1,630,617 Attributable to non controlling interests (31,189) (26,254)

Other income 11,133 8,907 Attributable to equity holders of the parent (1,125,886) (113,192)

Operating expenses 23 (1,411,782) (1,510,218) Basic and diluted earnings per share (in euro) 23f (0,62) (2,55)

Raw materials and consumables used and other external expenses (47,541) (49,791)
Basic and diluted earnings per share from continuing operations 23f (0,59) (2,07)
Empoloyee benefit expense 23.d (245,506) (276,595) attributable to equity holders of the parent (in euro)
Depreciation and amortization (102,364) (122,115)
Change in provisions for bad debt (5,808) (128)
Other operating expenses 23.c (1,024,045) (1,058,468)
Asset impairment 7,8,10,13 13,482 (3,121)

Gains/(loss) on derecognition/disposal of assets 6 12,583 (4,907)


Consolidate Statement of Comprehensive income for the
years 2016 and 2015 (Income and expensed recognised in Equity)
OPERATING PROFIT/(LOSS) 98,221 124,399 * Thousands of euros

Finance income 5,023 3,557


Nota 2016 2015
Finance costs (1,190,458) (156,429)
Profit/(loss) for the year (1,157,075) (139,446)
Net exchange losses (37,076) (50,469)

Foreign currency translation differences (40,004) (46,797)


NET FINANCE COST 23.g (1,222,511) (203,341)
CONSOLIDATED PROFIT/(LOSS) BEFORE TAX (1,124,290) (78,942) Other comprehensive income (40,004) (46,797)

Income tax 21 (36,738) (63,220)


Total Comprehensive income for the year (1,197,079) (186,244)
Share of profits of equity-accounted investees 3,953 2,716
Attributable to non-controlling interests (25,084) (24,586)
Auditors Report

Attributable to equity holders of the parent (1,171,995) (161,658)

101 102
Annual Report 2016
Consolidated Statement of Changes
in Equity for the year ended December 31, 2015
* Thousands of euros

Share Capital Share Premium Legal reserve and Equity method Revaluation Translation Profit/(loss) Equity attributable Equity attributable Total equity
retained earnings reserve reserve differences attributable to owners of to owners of the parent to non-controlling
(prior-year losses) the parent company company interests

Balance at December 31, 2014 11,007 231,280 (354,053) 3,303 4,060 (171,722) (173,005) (449,130) 17,280 (431,850)

Profit/(loss) for the year - - - - - - (13,192) (113,192) (26,255) (139,447)


Other comprehensive income for the year - - - - - (48,466) - (48,466) 1,669 (46,797)

Total Consolidate Comprehensive income - - - - - (48,466) (113,192) (161,658) (24,586) (186,244)

Reversal of Revaluation Reserve - - 179 - (179) - - - - -


Changes in consolidation scope - - - - - - - - 5,504 5,504
and business combinations
Reserves for treasury shares - 25 - - - - 25 - 25
Provision for options - - 1,116 - - - - 1,116 - 1,116
Gain/(loss) on treasury shares - - (11) - - - - (11) - (11)
Dividends (*) - - 2,269 (2,269) - - - - (4,479) (4,479)
Transfer of results to retained earnings - - (175,972) 2,967 - - 173,005 - - -
(prior-year losses)

Total changes in equity - - (172,393) 698 (179) 173,005 1,130 1,025 2,154

Balance at 31.12.15 11,007 231,280 (526,447) 4,001 3,881 (220,188) (113,192) (609,658) (6,282) (615,940)
Auditors Report

(*) Correspond to dividends distributed to minority interests of spanish subsidiaries.


The accompanying Notes are an integral part of these consolidated financial statements.

103 104
Annual Report 2016
Consolidated Statement of Changes in Equity
for the year ended December 31, 2016
* Thousands of euros

Issued Share Retained Reserves of Revaluation Translation Profit/(loss) attributable Equity attributable Equity attributable Total equity
capital Premium earnings equity-accounted reserves differences to equity holders to equity holders to non-controlling Neto
investees of the parent of the parent interests

Balance at December 31, 2015 11,007 231,280 (526,447) 4,001 3,881 (220,188) (113,192) (609,658) (6,282) (615,940)

Profit/(loss) for the period - - - - - - (1,125,886) (1,125,886) (31,189) (1,157,075)


Other comprehensive income for the period - - - - - (46,109) - (46,109) 6,105 (40,004)

Total comprehensive income - - - - - (46,109) (1,125,886) (1,171,995) (25,084) (1,197,079)

Reversal of revaluation reserves - - 154 - (154) - - - - -


Issuance of shares 494,936 330,670 1,054,296 - - - - 1,879,902 - 1,879,902
Changes in ownership interests - - - - - - - - 11,356 11,356
Business combination - - - - - - - - - -
Reserve for own shares - 15 - - - - 15 - 15
Acquisition of non-controlling interests - - (10,974) - - - - (10,974) - (10,974)
Share-based payments - - 11,213 - - - - 11,213 - 11,213
Gain/(loss) on trading in own shares - - - - - - - - - -
Acquisition of non-controlling interests
Dividends paid (*) - - - - - - - - (4,812) (4,812)
Amounts transferred to retained earnings - - (115,908) 2,716 - - 113,192 - - -

Total changes in equity 494,936 330,670 938,796 2,716 (154) 113,192 1,880,156 6,544 1,886,700

Balance at December 31, 2016 505,943 561,950 412,349 6,717 3,727 (226,297) (1,125,886) 98,503 (24,822) 73,681
Auditors Report

(*) C orresponds to the distribution of dividends to non-controlling in Group subsidiaries.

105 106
Annual Report 2016
Consolidated Cash Flow Statement
* Thousands of euros

2016 2015 2016 2015

Profit/(loss) before tax (1,124,290) (78,942) CASH FLOWS FROM OPERATING ACTIVITIES 151,975 206,857
Net finance (income)/cost 1,222,511 203,341
Operating profit/(loss) 98,221 124,399 Purchase of property, plant and equipment (75,570) (67,071)

Non-cash expenses 106,137 134,115 Proceeds from the sale of property, plant and equipment - 2,126

Depreciation and amortization 102,364 122,115 Loans to establishment owners: cash outflows (22,545) (21,436)

Asset impairment (13,482) 3,121 Loans to establishment owners: cash inflows 21,943 21,069

Other operating expenses 17,255 8,879 Payments for investments (25,792) (5,269)
Payments for other financial assets (15,951) (24,989)
Non-cash income (15,896) (191) Proceeds from disposals 930 -
Dividends received - 2,269
Changes in working capital 12,278 (8,294)
Interest received 2,646 1,667
Inventories 708 (1,183)
Accounts receivable 6,730 (1,042)
Accounts payable (2,394) (10,163)
Otros 7,234 4,094

Income tax paid (48,765) (43,172)


Auditors Report

107 108
Consolidated Cash Flow Statement
* Thousands of euros

2016 2015 2016 2015


CASH FLOWS USED IN INVESTING ACTIVITIES (114,339) (91,634) CASH FLOWS USED IN FINANCING ACTIVITIES (690) (82,693)

Notes issue 1,164,153 - NET INCREASE IN CASH AND CASH EQUIVALENTS 36,946 32,530

Redemption of notes (889,298)


Reconciliation
Drawdown of Coderes senior debt (130,000) -
Cash and cash equivalents, opening balance 110,326 86,672
Repayment of other borrowings (356) -
Net foreign exchange difference (5,215) (8,876)
Change in borrowings (130,356) -
Cash and cash equivalents, closing balance 142,057 110,326
Proceeds from bank loans 1,138 1,514
Net increase/(decrease) in cash and cash equivalents 36,946 32,530
Repayment of bank loans (19,742) (29,436)
Change in other bank loans (18,604) (27,922)
Dividends paid (4,619) (4,627) The accompanying Notes are an integral part of these consolidated financial statements.
Payments in respect of other financial borrowings (12,500) (10,167)
Repayment of other financial borrowings (30,293) -
Change in other financial borrowings (42,793) (10,167)
Other cash flows due to impact of exchange rates on collections and payments 443 (7,406)
Buyback of own equity instruments - (14)
Disposal of own equity instruments - 123
Net investment in own shares - 109
Interest paid (79,616) (32,680)
Auditors Report

109 110
Design: >>>raro
illustrations: Rafa Saudo
Annual Report 2016
M-16888-2017

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