Codere Q and Full Year 2015 Results

Transcription

1 Codere Q and Full Year 2015 Results February 26, 2016

2 Highlights Herein, adjusted EBITDA refers to EBITDA excluding non-recurring items incurred in the financial restructuring process during 2014 and 2015 and the expense associated with the Corte dei Conti Agreement in Q ( See Other Highlights ). Q revenue increased by 0.9% compared to Q Versus Q4 2014, revenue grew 11.1%, primarily due to strong business performance in Argentina, Italy, Spain and Uruguay which more than offset the negative impact from a weaker Argentine and Mexican Peso. In constant currency terms, revenue for the quarter would have grown by 14.9% versus the same period in Q adjusted EBITDA reached 69.9mm, exceeding the guidance range of 60-63mm. Adjusted EBITDA, which excludes 11.6mm in costs associated with the financial restructuring process, grew by 9.9% compared to the 63.6mm in Q The increase is due to strong topline performance in Argentina and Spain, the positive impact of the cost efficiency measures that have been deployed and the reversal of insolvency provisions in Italy, despite 10.5mm of nonrecurring operating costs (2) incurred in Q (versus 1.4mm in Q4 2014). Excluding these nonrecurring operating items and the reversal of provisions in Italy, Q4 EBITDA would have reached 76.9mm. Q adjusted EBITDA margin (excluding all non-recurring items) reached 18.4%, which represents an improvement of 1.2 p.p. compared to the margin for Q (17.2%). The total number of machine seats has increased 2.7% to 53,596 at year end 2015, compared to 52,172 at year end 2014, mainly explained by the growth of the portfolio in Italy (9.3%), Mexico (7.7%) and Argentina (5.9%), partially offset by the rationalization of machines in Spain (5.4%) and in other operations (5.3%). The total number of gaming halls and sports betting locations increased to 183 and 1,805, respectively, at year end 2015 from 176 and 1,709 at year end Capex in Q was 17.8mm, of which 12.7mm was related to maintenance and 5.1mm to growth projects. As of December 31, 2015, we had 110.3mm in cash and no available amounts under the Senior Credit Facility. Coverage and leverage ratios with respect to the adjusted EBITDA were 2.1x and 5.0x, respectively, compared to 1.7x and 6.1x as of December 31, Includes financial restructuring advisor fees, extraordinary banking commissions and extra costs related to such process. (2) Non-recurring items associated with the operation of our business such as costs associated with efficiency efforts. 2

3 Other Highlights Debt restructuring transaction. Codere and its creditors are working to finalise the debt restructuring within the timetable as established in the Scheme of Arrangement; (i) before April 1, 2016, or (ii) before July 1, 2016 with the consent of Codere, 75% of the Consenting Noteholders and each Backstop Party. Scheme registration. As announced in the Significant Event published on December 23, 2015, the High Court of Justice of England and Wales issued an order dated December 17, 2015 which sanctioned a Scheme of Arrangement pursuant to the United Kingdom Companies Act 2006 between Codere's English subsidiary, Codere Finance (UK) Limited, and the holders of the notes issued by Codere Finance (Luxembourg) S.A.. Codere Finance (UK) is a co-issuer of these notes with primary, joint and several liability. On December 22, 2015 a similar court order was also granted in the United States. Senior credit facility. The facility matured on February 6, 2014 and is now due, although it remains under the Standstill Agreement linked to the Lock-Up signed in September 2014 and amended in August The Company continues paying default interest rates on this facility. 760mm bonds maturity. The bonds matured on June 15, 2015 and are now due. Under the Scheme of Arrangement provisions these bonds will remain unpaid until the completion of the restructuring process. Debt restructuring costs. As a result of the restructuring process, the Company has incurred extraordinary expenses during Q4 2015, which include: 3.9mm of interest derived from the unpaid coupons ( 18.9mm since the beginning of the process) and 1.4mm of default interest related to the Senior Facility Agreement ( 10.7mm since the beginning of the process), both included as financial expenses in the reported income statement; and 11.6mm of extraordinary costs related to the financial restructuring process and recorded as operating expenses. Adjusted EBITDA excludes these financial restructuring expenses ( 6.8mm in Q and 11.6mm in Q and 25.2mm in 2014 and 25.5mm in 2015). Results of Hípica Rioplatense of Uruguay. Pursuant to the revised IFRS 11 standard, Codere s 50% share of HRU results are no longer consolidated, and the business is now accounted for using the equity method. In order to compare the full evolution of our business, please note that Q revenue and EBITDA for this business unit were 6.7mm and 2.3mm, respectively, compared to 6.1mm and 1.9mm in Q Spanish online sports betting platform. On September 17, 2015 the Company launched an online sports betting platform for Spain, which previously only operated in one region (Madrid). Revenue for this business through year end was 0.5mm. 3

4 Other Highlights Gaming tax in Italy. On December 29, 2014 the Italian government published the Legge Stabilità 2015 (Stability Law 2015), which outlines an additional contribution to the public treasury from the Italian gaming machine industry in the amount of 500mm per annum to be distributed among all the companies participating in this sector. The yearly payment, effective from the 2015 Italian government budget, is proportionately distributed between all 13 network concessionaires based on the number of machines (both AWPs and VLTs) connected to each operator as of December 31, Codere Network has been allocated 22.4mm of the total 500mm yearly payment, based on AAMS s (the regulatory body of gaming and sports betting activities in Italy) announcement on January 15, Codere Network is responsible for collecting this sum amongst all participants in the slot business value chain. The first 40% of the 22.4mm total ( 9.0mm) was due in April and the other 60% in October. In total, Codere has paid to the Italian government 14.3mm, including 1.4mm in payments corresponding to Codere operations on other networks. In this amount paid are included both Codere s share of the Stability Law tax due related to its network, bingo and AWP operator business (approximately 6.8mm) and all amounts collected from third parties (approximately 7.5mm). As a result, there remains about 9.5mm to be collected from third parties of the total of 22.4mm assigned to Codere Network. Codere Network is not responsible for collecting these pending amounts, which correspond to payment obligations of other participants in the slot business value chain, and which are not entities controlled by the Company. The total impact recorded in our accounts due to the Stability Law in the year is 7.0mm, including payments corresponding to Codere operations on both our network and other networks. In 2016 the Italian government has passed a new stability law (Legge Stabilità 2016) which, effective January 1, 2016, has increased the gaming tax (PREU) for amusement with prizes machines (AWPs) by 4.5 percentage points to 17.5% and for video lottery terminals (VLTs) by 0.5 percentage points to 5.5%, but eliminates the 500mm tax on gaming machines introduced in 2015 (as outlined above). It has also lowered the permitted minimum payout ratios for AWPs to 70% from 74%. Finally, additional considerations have been introduced by this law on the market, including a 30% reduction in the size of the AWP market by December 31, 2019 and a replacement of the remaining units with junior VLTs. Impairment charges. In Q the Company booked a 7.9mm provision against goodwill in the Italian operation. In Colombia, meanwhile, we have made a partial reversal ( -4,8mm) of impairment provisions related to prior periods. The impairment loss or gain is a non-cash charge to operating earnings, and does not affect the company s liquidity, operating cash flow, or debt service capacity. Gaming taxes in Panama. On May 4, 2015 the Panamanian government passed Ley 27 de 2015 which established a 5.5% Selective Excise Tax on amounts cashed out in gaming activities (which formally took effect on June 23, 2015), a tax which does not apply to bets placed at Presidente Remón Racetrack. This tax replaces the existing 7% Selective Excise Tax over prizes higher than 300USD. Gaming taxes in Colombia. Pursuant to a Resolution issued by the Colombian Gaming Supervisory Body (Coljuegos) in July 2014, effective October 2015, slots machines are obliged to be connected online and the gaming tax is amended to reflect the higher of (i) a flat tax based on the number of gaming machines and (ii) 12% of gross win. The Resolution establishes a timeline divided in three stages to execute the online connection. This calendar has changed recently and the new calendar applicable is October 1, 2015 for the first 30%, March 31, 2016 for the second 30% and 100% connection on September 30,

5 Key figures Income Statement ( in millions) 2014 FY 2015 FY Var % Q Q Var % Operating revenue 1, , % % Operating expenses 1, , % % Consumption and other external expenses % % Personnel expenses % % Depreciation of fixed assets (9.4%) (5.5%) Amortization of intangible assets % % Variation in provisions for trade transactions (95.0%) 0.3 (0.1) n.a. Impairment charge 4.9 (4) 3.1 (36.3%) (36.7%) Other operating expenses: % % Gaming and other taxes % % Machine rentals % % Other rentals % % Other % % Gains or losses on asset disposals (10.3) (4.9) 52.4% (7.8) (4.4) 43.6% Operating profit n.a % Financial items Financial expenses % (9.0%) Financial revenue % (28.6%) Gains or losses on financial assets (15.5) (21.2) (36.8%) (5.2) (5.7) (9.6%) Exchange rate gains (losses), net (45.9) (50.5) (10.0%) (17.1) (10.7) 37.4% Profit before tax (170.0) (78.9) 53.6% (46.1) (29.6) 35.8% Corporate income tax % % Results companies accounted by equity method (10.0%) (88.9%) Minority interests (34.9) (26.3) 24.6% (15.9) (4.1) 74.2% Net income (173.0) (113.1) 34.6% (37.3) (39.4) (5.6%) EBITDA % % (2) Adjusted EBITDA % % Adjusted EBITDA margin 15.4% 17.1% 16.9% 16.7% # of shares (in millions) EPS (3.14) (2.06) (0.68) (0.72) Gaming machine seats (at Dec. 31) Average daily net win per machine/seat Operating data Q Var % Q Q Q Q Q Q4 14 Argentina 6,562 6, % % Local currency 2, , , , , % (3) Mexico 17,414 18, % (13.9%) Local currency (8.8%) Italy 8,271 9, % AWPs 6,999 7, % % VLTs 1,272 1, % (0.1%) Spain 10,411 9,845 (5.4%) % Others 9,514 9,009 (5.3%) Total 52,172 53, % We define EBITDA as the earnings before interest expense, corporate income tax, depreciation and amortization, change in provisions for trade transactions, gains or losses on asset disposals, and asset impairments. (2) Excludes financial restructuring costs (See Other Highlights ) and the expense associated with the Corte dei Conti Agreement in Q (3) The average daily net win per machine in Mexico includes fee for service. (4) (See Other Highlights ). 5

6 Income statement comments for 2015 Revenue increased in 2015 by 253.9mm or 18.3% to 1,639.5mm, mainly due to (i) the increase in revenue in Argentina ( 192.8mm), partially due to the appreciation of the Argentine Peso and to local currency inflation, (ii) the increase in revenue in Italy ( 20.4mm), mainly explained by the higher average daily net win per machine and the higher number of machine seats, and (iii) Panama ( 14.8mm) due to the appreciation of the Dollar. Operating expenses increased by 155.6mm or 11.5% to 1,510.1mm. The main drivers of this growth were Argentina ( 142.3mm) and Panama ( 18.9mm), mainly due to inflation in Argentina and the appreciation of the Argentine Peso and the Dollar, partially offset by a significant reduction in operating expenses in Mexico ( 10.7mm). Adjusted EBITDA increased 66.9mm (or 31.4%) to 280.1mm, mainly due to the growth in Argentina ( 52.7mm), Mexico ( 16.4mm) and Spain ( 7.0mm), partially offset by a decrease in Panama ( 3.1mm) and in Italy ( 2.7mm). Adjusted EBITDA margin for 2015 was 17.1%, 1.7 percentage points above Gains or losses on asset disposals or acquisitions resulted in a loss of 4.9mm compared to a loss of 10.3mm in the same period in Operating profit increased by 103.7mm to 124.5mm. The operating margin increased to 7.6% from 1.5% in Excluding financial restructuring costs and the expense associated with the Corte dei Conti Agreement, 2015 operating profit was 150.0mm and the operating margin reached 9.1%, representing an increase of 79.5mm and 4.0 percentage points, respectively, compared to Financial expenses increased by 2.6mm (2.0%) to 135.3mm. The increase was primarily attributable to the higher funding costs under the Senior Credit Facility, including default interest costs, additional interest resulting from the unpaid bond coupons and the appreciation of the Dollar against the Euro. Financial revenue increased by 0.3mm to 3.6mm. Gains or losses on financial assets represented a loss of 21.2mm in the period as a result of losses from transactions in sovereign bonds. Corporate income tax increased by 22.3mm to 63.2mm, primarily due to the increase in profit before taxes in Argentina and the impact of the Corte dei Conti fine payment on taxable income in Italy which reduced 2014 corporate income tax by 10.4mm. Minority interest represents a gain of 26.3mm in 2015 compared to a gain of 34.9mm in 2014 due to lower losses in Legacy Caliente and the increase of our interest in Carrasco Nobile from 51% to 73.7%. As a result of the aforementioned results, the net loss for the twelve months of 2015 was 113.1mm, compared to a net loss of 173.0mm for the same period in

7 Per country Revenue Adjusted EBITDA Revenue Adjusted EBITDA ( in millions) 2014 FY 2015 FY Var % 2014 FY 2015 FY Var % Q Q Var % Q Q Var % Argentina % % % % Mexico % % (5.9%) (11.0%) Italy % (9.2%) % % Spain % % % n.a. Other operations: Panama % (20.8%) % (45.7%) Colombia (8.6%) (18.3%) (39.1%) Uruguay % (2.5) (3.1) (24.0%) n.a. (0.5) (0.3) 40.0% Brazil (14.3%) (0.4) (1.4) n.a (14.3%) (0.1) (0.4) n.a. HQ - - n.a. (21.2) (23.0) (8.5%) - - n.a. (6.0) (4.4) 26.7% TOTAL 1, , % % % % Constant Currency (2) Revenue Adjusted EBITDA Revenue Adjusted EBITDA ( in millions) 2014 FY 2015 FY Var % 2014 FY 2015 FY Var % Q Q Var % Q Q Var % Argentina % % % % Mexico % % (0.1%) (5.5%) Italy % (9.2%) % % Spain % % % n.a. Other operations: Panama (2.4%) (34.2%) (10.5%) (51.4%) Colombia % % (21.7%) Uruguay % (2.5) (3.2) (28.0%) n.a. (0.5) (0.3) 40.0% Brazil (0.4) (1.7) n.a % (0.1) (0.5) n.a. HQ - - n.a. (21.2) (23.0) (8.5%) - - n.a. (6.0) (4.4) 26.7% TOTAL 1, , % % % % Q Revenue (3) (3) 10% 9% 10% Q EBITDA 4% 41% 13% 46% 18% Argentina 21% 28% Mexico Italy Spain Others Excludes both financial restructuring costs (See Other Highlights ) and the expense associated with the Corte dei Conti Agreement in Q (2) The table shows what revenue and adjusted EBITDA would have been for 2015 at 2014 (prior year period) exchange rates. (3) Q data excluding headquarters. 7

8 Argentina Income Statement ( in millions) 2014 FY 2015 FY Var % Q Q Var % Operating revenue % % Operating expenses % % Consumption and other external expenses % % Personnel expenses % % D&A % (10.5%) Other operating expenses % % Gaming and other taxes % % Machine rentals % % Other rentals % % Others % % Operating profit % % EBITDA % % EBITDA margin 19.1% 21.4% 21.7% 19.7% Gaming machine seats (at Dec. 31) Average daily net win per machine/seat Var % 2014 FY 2015 FY Var % Q Q Var % Argentina 6,562 6, % % % Local currency 2, , % 2, , % Non recurring items Restructuring costs ( in millions) 2014 FY 2015 FY Q Q (9.6) (8.9) 0.5 (6.6) Revenues increased by 39.4% in 2015 compared to 2014 primarily due to the increase in average daily win per machine (27.4%) and the appreciation of the Argentine Peso against the Euro (4.3%). This increase in win per machine was boosted by a number of commercial initiatives that were taken during the year as well as by the high inflation rate in Argentina. In constant currency terms, revenue increased by 33.4% to 652.4mm. Operating Expenses increased by 34.8% during 2015 compared to 2014 as a result of inflation, Argentine Peso appreciation against the Euro and an increase in gaming taxes derived from the growth in revenues, partially offset by the cost saving initiatives implemented in EBITDA increased by 56.4% to 146.1mm resulting in a EBITDA margin for 2015 of 21.4%, 2.3 p.p. higher than in 2014 (19.1%). Excluding the non-recurring charges, EBITDA margins for 2015 and 2014 would have been 22.7% and 21.1% respectively. EBITDA calculated in constant currency terms would have been of 139.4mm, compared to the 93.4mm of 2014, which represents an increase of 49.3%. 8

9 Mexico Income Statement ( in millions) 2014 FY 2015 FY Var % Q Q Var % Operating revenue % (5.9%) Operating expenses (3.3%) (6.3%) Consumption and other external expenses (8.0%) (11.1%) Personnel expenses (11.0%) (15.6%) D&A (13.2%) (16.9%) Other operating expenses % % Gaming and other taxes (7.7%) (13.5%) Machine rentals % (1.2%) Other rentals % % Others % % Gains or losses on asset disposals (6.9) (4.4) 36.2% (6.9) (4.4) 36.2% Operating profit n.a % EBITDA % (11.0%) EBITDA margin 22.0% 25.8% 25.7% 24.3% Gaming machine seats (at Dec. 31) Average daily net win per seat Var % 2014 FY 2015 FY Var % Q Q Var % (2) Mexico 17,414 18, % (13.9%) Local currency (0.4%) (8.8%) Non recurring items Restructuring costs Expenses related to racetrack concession ( in millions) 2014 FY 2015 FY Q Q (4.2) (1.3) (2.1) (0.4) - (1.2) - (1.2) Revenue increased in 2015 by 13.4mm (3.9%) compared to 2014 due to an increase in the number of slot machines, both in existing and the 6 new halls opened in the last 12 months, and as a result of the deployment of commercial measures to enhance traffic. Despite a favorable exchange rate during the first half of 2015, full year results did not benefit materially from a stronger Mexican Peso, due to its devaluation in the second half of the year. Operating expenses in 2015 decreased by 3.3% ( 10.7mm) compared to 2014 as a result of the savings measures implemented despite a growing revenue environment and the reduction in nonrecurring charges in 2015 ( 2.5mm) compared to 2014 ( 4.2mm). EBITDA increased by 21.8% to 91.5mm driven by the cost saving actions and, to a lesser extent, by the increase in revenue. EBITDA margin increased 3.8 p.p. to 25.8%, versus 22% in Excluding non-recurring charges, EBITDA margin would have reached 26.5% (23.2% in 2014). If we look at these figures in constant currency terms, 2015 EBITDA would have been 90.9mm, an increase of 21% over Includes personnel costs related to outsourced employees. (2) The average daily net win per machine in Mexico includes fee for service. 9

10 Italy Income Statement ( in millions) 2014 FY 2015 FY Var % Q Q Var % Operating revenue % % Operating expenses % % Consumption and other external expenses % Personnel expenses (2.2%) (10.0%) D&A % % Variation in provisions for trade transactions (57.1%) (50.0%) Asset impairment test n.a n.a. Other operating expenses (0.5%) % Gaming and other taxes % % Machine rentals n.a n.a. Other rentals % (4.0%) Others (27.5%) % Gains or losses on asset disposal 0.4 (0.1) n.a n.a. Operating profit (11.6) 1.9 n.a. 3.0 (3.0) n.a. EBITDA n.a %, (2) Adjusted EBITDA (9.2%) % EBITDA margin 11.1% 9.4% 10.3% 12.8% Gaming machine seats (at Dec. 31) Average daily net win per seat Var % 2014 FY 2015 FY Var % Q Q Var % Italy AWPs 6,999 7, % % % Italy VLTs 1,272 1, % % (0.1%) Non recurring items Restructuring costs Write-offs ( in millions) 2014 FY 2015 FY Q Q Revenue in 2015 increased by 7.7% or 20.4mm compared to 2014, due to the increase in the average daily win per machine, the increase in number of VLT and AWP machines installed and, to a lesser extent, the increase in revenues in the bingo business reported figures are also influenced by the impact of the Legge de Stabilitá passed by the Italian government in December 2014 (see Other Highlights ) (3). Operating expenses in 2015 were 12.3% higher than in 2014 (excluding the 24.5mm impact from the Corte dei Conti agreement included in 3Q 2014 figures) due to a 7.9mm impairment provision against goodwill in Q4 2015, the impact of the canon for slot machines derived from the Legge de Stabilitá, the AWP PREU tax increase in January 2015 from 12.7% to 13% and the increase in other gaming tax expenses as a result of higher recorded revenue, which more than offset the cost saving initiatives accomplished in Adjusted EBITDA in 2015 was of 26.7mm, 9.2% lower than in 2014 (excluding the impact of the Corte dei Conti settlement), due to the impact of the 2015 Stability Law. Excluding the impact of this Stability Law, 2015 EBITDA would have been 33.7mm, 14.6% higher than in 2014, and a continuation of the strong year-on-year revenue growth witnessed in Excludes the expense associated with the Corte dei Conti Settlement in Q (2) Figure for Q includes the impact of the 3.5mm reversal of insolvency provisions booked in the first nine months of (3) The increase in tax derived from the Stability Law produces an increase in our reported revenue as we register as revenue the amounts collected by AWPs net of the participation of the bar owner which decreases proportionally with tax increases. 10

11 Spain Income Statement ( in millions) 2014 FY 2015 FY Var % Q Q Var % Operating revenue % % Operating expenses (0.7%) % Consumption and other external expenses % % Personnel expenses (3.0%) (1.1%) D&A % % Variation in provisions for trade transactions 1.3 (0.3) n.a. - (0.4) n.a. Other operating expenses (1.0%) % Gaming and other taxes (2.1%) (0.7%) Machines rental (33.3%) Other rentals (4.2%) Others % % Gains or losses on asset disposal (2.7) (0.4) 85.2% n.a. Operating profit (3.8) 5.5 n.a n.a. EBITDA % n.a. EBITDA margin 11.7% 15.8% 9.0% 16.3% Gaming machine seats (at Dec. 31) Average daily net win per seat Var % 2014 FY 2015 FY Var % Q Q Var % Spain 10,411 9,845 (5.4%) % % Non recurring items Restructuring costs ( millions) 2014 FY 2015 FY Q Q (1.4) (0.7) (0.4) - Revenue in 2015 was 6.0mm higher than in 2014 (a 4.0% full year increase despite a 0.9% decrease for 1H 2015) due to a strong performance in the sport betting and slot machine business (in the second half of 2015), which more than offset the revenue decrease in the bingo business. The positive results of the slot machine business in the second half of the year is due to an increase in the average daily win per machine explained by the improving economic situation in Spain and the management enhancement initiatives implemented in our route business. Sport betting revenue has also increased as a result of an increase in points of sale (1,651 at the end of 2015 compared to 1,563 in 2014) and the higher revenue per point of sale. Operating Expenses diminished by 0.7% in 2015 because of the efficiency measures deployed during the year, which more than compensated the costs associated with new sports betting points of sale and the new online betting platform. Non-recurring restructuring costs amounted to 0.7mm in 2015 (compared to 1.4mm in 2014). EBITDA in 2015 increased 39.8% to 24.6mm, 7.0mm higher than in EBITDA margin has risen to 15.8%, 4.1 p.p. higher than in Excluding non-recurring costs, EBITDA margin for 2015 was 16.3% compared to 12.7% in

12 Other operations ( in millions) 2014 FY 2015 FY Var % Q Q Var % Operating revenue % % Panama % % Colombia (8.6%) (18.3%) Uruguay % n.a. Brazil (14.3%) (14.3%) Operating expenses % (8.8%) Panama % % Colombia (27.8%) (82.1%) Uruguay % (6.5%) Brazil % % Gains or losses on asset disposal (1.2) 0.2 n.a. (1.3) 0.2 n.a. Operating profit (5.9) 0.2 n.a. (5.3) 3.2 n.a. EBITDA (24.9%) (50.0%) EBITDA margin 13.4% 8.7% 13.6% 6.3% Gaming machine seats (at Dec. 31) Var % Panama 3,144 2,951 (6.1%) Colombia 5,975 5,663 (5.2%) Uruguay Non recurring items ( in millions) 2014 FY 2015 FY Q Q Colombia Restructuring costs (0.2) (0.2) - (0.2) Tax provisional adjustment Panama Legal contingencies provision (0.2) Reversal of personnel cost provisions Restructuring costs (0.1) (2.3) - (1.9) Other provisions (0.4) (0.4) - Uruguay Restructuring costs - (0.2) - (0.2) Other operations include results from our operations in Panama, Colombia, Uruguay and Brazil, but excludes Corporate Overhead. Revenue in 2015 increased by 21.3mm (15.1% compared to 2014), to 162.3mm as follows: 14.8mm in Panama as a result of the appreciation of the Dollar against the Euro, partially offset by the lower revenue as a consequence of the tax increase on players since Q mm in Uruguay as a result of the revenue increase in table game volume and the appreciation of the Uruguayan Peso against the Euro. Decrease of 2.7mm in Colombia primarily of the depreciation of the Colombian Peso against the Euro (14.8%). Operating expenses increased by 16.6mm (11.4% compared to 2014) to 162.3mm as follows: 18.9mm in Panama due to the appreciation of the Dollar against the Euro and the evolution of non-recurring expenses, 2.3mm in 2015 versus a positive 0.4mm in 2014 (reversal of provisions). 5.0mm in Uruguay because of the increase in gaming taxes as well as other operational expenses related to the revenue increase and the Uruguayan Peso appreciation. Decrease of 7.9mm in Colombia because of the partial reversal ( 4.8mm) of impairment provisions related to prior periods, cost reduction initiatives and tax reductions in the bingo business as well as the Colombian Peso depreciation against the Euro. Operating Profit is a 0.2mm gain, which is 6.1mm better than the 5.9mm loss for EBITDA in 2015 decreased 4.7mm to 14.2mm because of the players tax in Panama and operating cost and tax increases related to revenue increases in the Casino Hotel Carrasco. EBITDA margin was 8.7%, 4.7 p.p. less than in Excluding non-recurring expenses, 2015 EBITDA margin would have been 10.2% compared to 13.3% in Figures do not include 1,868 machines at both year end 2014 and 2015 of the HRU business unit. 12

13 Cash flow ( in millions) 2014 FY 2015 FY Q Q Operating profit Expenses that do not represent cash movements Depreciation and amortization Impairment charge Other operating expenses Income that does not represent cash movements (2.4) (0.2) (1.3) 0.1 Changes in working capital (39.7) (8.3) (31.4) 3.4 Corporate income tax (32.3) (43.2) (9.1) (10.8) Net cash from operating activities , (2) Capital expenditures (48.6) (60.4) (15.3) (15.9), (3) Long-term loans and receivables (0.1) (0.6) (0.4) 0.2, (4) Investments (5.5) (4.9) (5.5) (2.1) Net cash used in investing activities (54.2) (65.9) (21.2) (17.8) (5) Net change in other financial debt Net change in bank loans (10.9) (27.9) (1.2) (12.0) Net dividends (2.6) (2.4) Net change in other debt and contingent payments (32.4) (39.8) (3.6) (16.8) Net investment in treasury shares Interest income Interest expenses (31.2) (32.6) (9.4) (7.8) Net cash effect of exchange rate changes (10.6) (7.4) (7.0) (2.5) Net cash from financing activities (51.3) (108.4) 15.4 (37.7) (7) (6) Effects of exchange rate fluctuations (3.6) (8.9) (0.5) (6.5) Net change in cash position (15.7) (10.4) Net cash from operating activities for year 2015 was 206.8mm, an increase of 121% versus 93.4mm in This increase is mainly attributable to stronger operating performance during 2015 ( 103.6mm) and a lower decrease in working capital variations (2014 is affected by the Corte dei Conti fine payment in Q while in 2015 there are higher gaming tax deferrals awaiting resolution in Spain), partially offset by higher corporate income tax paid. Regarding the net cash used in investing activities, capital expenditures were a total of 60.4mm, a set amount of 0.6mm was used in long-term loans to the owners of bars and restaurants in Spain and Italy, and 4.9mm was recorded for the acquisition of three operators of AWP in Italy. Net cash used in financing activities was 108.4mm. The principal drivers were the following: Decrease in other debt and contingent payments of 39.8mm, consisting of a decrease in debt related to capex financing suppliers of 6.0mm, a negative variation of 24.9mm of financial assets mainly due to the losses associated with the sale of sovereign bonds; and a decrease in deferred taxes in Spain of 10.2mm compensated by 1.3mm from initial cash of companies acquired. The 6.0mm decrease in debt with capex suppliers is mainly explained by an increase in payments of 13.3mm mainly in Mexico, Argentine and Spain (Sport Betting), partially compensated by an increase in capex financing of 7.3mm, primarily in Spain (AWP), Panama and Italy. A decrease in bank loans of 27.9mm, primarily due to the repayment of loans in Mexico, Panama, Italy (Operators and Network) and Uruguay compensated by loans in Colombia and Italy (Bingo). Dividends net paid of 2.4mm that includes dividend paid to minorities of 4.7mm net of 2.3mm dividends received from HRU, 32.6mm of financial expenses, 1.6mm of financial income and a negative net change in funds from exchange differences of 7.4mm ( 26.1mm negative differences and 18.7mm positive differences). The fluctuation in foreign exchange rates on conversion of cash balances has resulted in a negative impact of 8.9mm. During the year of 2015, there has been an increase in cash and cash equivalents of 23.6mm. Reflects accrued amounts, including any related contingency payment. Financing or deferment of these investments is recorded under Net change in other debtor and contingent payments. (2) Capital expenditures primarily consist of investments to maintain or improve the quality of the facilities, to build out and equip our premises, to purchase new gaming machines and to make exclusivity payments to site owners in connection with contracts to install our machines in their establishments. (3) Includes loans to site owners and other loans. (4) Includes the amounts committed to business acquisitions. (5) Includes our Senior Credit Facility. (6) Reflects movements in temporary financial investments such as vendor financing for investments, contingent payments, and the payment of deferred gaming taxes. (7) Includes the effect of exchange rate fluctuation in the conversion of balances to Euros. 13

14 Balance sheet ( in millions) Dec Dec ( in millions) Dec Dec Fixed and other non-current assets 1, ,069.8 Shareholders equity (449.1) (609.6) Fixed assets, net Share capital Intangible assets, net Additional paid-in capital Tangible fixed assets Other (518.4) (738.8) Long-term financial assets Net income (loss) for the period (173.0) (113.1) Goodwill on consolidation Minority interests 17.3 (6.3) Other deferred assets (0.1) - Non-current liabilities Deferred tax assets Deferred income - - Current assets Provisions Inventories Long-term debt and other long-term liabilities Accounts receivable net Payable to credit entities Short-term financial investments Deferred tax liabilities Cash Bonds LT - - Other assets Other payables Total assets 1, ,441.0 Current liabilities 1, ,807.3 Trade accounts payable Bonds ST 1, ,276.2 Payable to credit entities Other non trade payables Accrual accounts and others Total shareholders equity and liabilities 1, ,441.0 Total assets decreased by 98.4mm in This decrease is principally attributable to the depreciation of the Argentine and the Mexican Peso against the Euro (36.5% and 5.5% respectively), partially offset by an increase in the cash position. Book value of tangible and intangible assets decreased 112.2mm due to the depreciation and amortization of assets along with the depreciation of the Mexican and Argentine Peso against the Euro. The consolidated goodwill decreased by 13.7mm, mainly as a consequence of the impairment provision booked in the Italian operation ( 7.9mm), the depreciation of the Mexican and Argentina Peso against the Euro, partially offset by the appreciation of the Dollar (9.9%). The increase in current assets is primarily due to the increase in the cash position. Financial debt, which includes the long and short term portion of payables to credit entities and bonds, increased by 107.9mm, due to an increase in accrued, unpaid bond interest ( 105.8mm), the Euro devaluation impact in the USD Notes ( 28.5mm) and in local debt in Uruguay ( 2.1mm), partially offset by the amortization of debt in Mexico ( 23.9mm) and in Panama ( 4.3mm). 14

15 Other financial data Capitalization ( in millions ) 31/03/ /06/ /09/ /12/2015 Cash Principal and interest of HY bonds ST 1, , , ,276.2 Payable to credit entities ST Bank loans Senior Credit Facility Short term debt 1, , , ,423.7 Payable to credit entities LT Long term debt Total debt 1, , , ,500.1 Shareholders equity (439.4) (487.9) (550.9) (609.6) Total capitalization 1, Other financial ratios Twelve months ended ( in millions) 31/03/ /06/ /09/ /12/2015 Adjusted EBITDA Net interest expense Total net debt 1, , , ,389.8 Total net debt/ebitda 5.8x 5.2x 4.9x 5.0x EBITDA/Net interest expense 1.8x 2.0x 2.1x 2.1x Capex ( in millions) 2014 FY 2015 FY Q Q Argentina Mexico (2) Italy Spain HQ Others Total Maintenance Growth (3) 17.8 (4) Total Excludes financial restructuring costs (See Other Highlights ). (2) Includes 8.4mm related to the purchase in Mexico of 1,940 machines that were formerly under operating leases. (3) Mainly attributable to the purchase of additional equity interests in Mexico ( 4.0mm), the enlargement of some gaming halls in Argentina ( 3.4mm) and the development of Sport Betting in Spain ( 1.3mm). (4) Mainly attributable to the purchase of equity interests in Italy ( 4.9mm), the enlargement of some gaming halls in Argentina ( 6.5mm) and the development of Sport Betting in Spain ( 3.0mm). 15

16 Other data Operating Data (at Dec. 31) Gaming halls Sport Betting locations Racetracks Argentina Mexico Italy Spain 1 1 1,563 1, Panama Colombia Uruguay Brazil Total ,709 1, Restricted group members 2015 FY (at Dec. 31) ( in millions) Revenue Adj. EBITDA Net profit Equity Assets Restricted group members 1, (116.2) (614.6) 1,428.3 (2) Gaming tax deferral in Spain (at Dec. 31) ( in millions) Deferred Awaiting resolution TOTAL Exchange rates Average Q Q Var % 2014 FY 2015 FY Var % Dec Dec Var % EUR/ARS % (4.3%) % EUR/MXN % (0.3%) % EUR/USD (12.8%) (16.5%) (9.9%) EoP Due to the equity method consolidation in Uruguay we have not included HRU operating data which (at Dec-31 of 2014 and 2015) were: 5 gaming halls, 21 and 24 betting locations, respectively, and 2 racetracks. (2) Excludes financial restructuring costs (see Other Highlights ). 16

17 Disclaimer About Codere: Codere is a leading gaming company engaged in the management of slot machines, gaming halls, casinos, racetracks and sport betting locations in Latin America, Spain and Italy. Codere, S.A. Avda. de Bruselas, Alcobendas (Madrid), Spain Investor Relations inversor@codere.com This document contains statements that constitute forward looking statements in its general meaning and within the meaning of the Private Securities Litigation Reform Act of These statements appear in a number of places in this document and include statements regarding the intent, belief or current expectations regarding potential acquisitions, estimates regarding future growth of our business, market share, financial results and other aspects of the Company s activities and situation. The forward-looking statements in this document can be identified, in some instances, by the use of words such as expects, anticipates, intends, believes, plans, and similar language or the negative thereof or by the forward-looking nature of discussions of strategy, plans or intentions. Such forward-looking statements are not guarantees of future performance and involve risks and uncertainties and actual results may differ materially from those in the forward looking statements as a result of various factors. Analysts and investors are cautioned not to place undue reliance on those forward looking statements which speak only as of the date of this presentation. Codere undertakes no obligation to release publicly the results of any revisions to these forward looking statements which may be made to reflect events and circumstances after the date of this presentation, including, without limitation, changes in Codere s business or acquisition strategy or to reflect the occurrence of unanticipated events. 17