Professional Documents
Culture Documents
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
Professionalism and Responsibility. opportunities with a customer-oriented vision. online activity in Spain, Mexico and Brazil.
7 8
Annual Report 2016
Transparency
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-
9 10
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.
for the consolidation of the operations in the country. and the promotion of sports betting. Gaming Halls 1 Online
11 12
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
13 14
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
15 16
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
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.
17 18
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.
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.
19 20
Annual Report 2016
Codere goes public.
Acquires MAE in Mallorca (Spain). Starts its sports betting operations in the
Basque Country (Spain).
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).
21 22
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
23 24
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.
The Company becomes the Official Bookmaker of Real Madrid Football Club.
25 26
Annual Report 2016
Chairman & CEO
1.6 Our Organization Jos Antonio Martnez Sampedro
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
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.
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
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
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
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
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
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
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.
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
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.
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)
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
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
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
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
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.
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
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
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)
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)
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
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)
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
105 106
Annual Report 2016
Consolidated Cash Flow Statement
* Thousands of euros
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
107 108
Consolidated Cash Flow Statement
* Thousands of euros
Notes issue 1,164,153 - NET INCREASE IN CASH AND CASH EQUIVALENTS 36,946 32,530
109 110
Design: >>>raro
illustrations: Rafa Saudo
Annual Report 2016
M-16888-2017