groupe keolis sas 2015 financial report

F INANCIAL REPORT 2015

GROUPE kEOlis s.a.s.

CONTENTS1. ManageMent RepoRt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3

Management report from the President of the Board of Directors on the consolidated and statutory accounts for the year ended 31st December 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

2. Consolidated finanCial stateMents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9Key figures for the Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Consolidated financial statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Notes to the consolidated financial statements . . . . . 16

Statutory auditors’ report on the consolidated financial statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65

3. UnaUdited ManageMent finanCial stateMents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67Key figures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68

Income statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69

Statement of financial position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70

Statement of cash flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71

4. annUal finanCial stateMents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73Financial statements at 31 December 2015 . . . . . . . . . . . . 74

Notes to the annual financial statements . . . . . . . . . . . . . . . . 78

Statutory auditors’ report on the Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86

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1. MaNaGEMENT REPORT

A Management report from the President of the Board of Directors . . . . . . . . . . . . . . . . 4

1 • aCTiViTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41.1 Highlights of the financial year . . . . . . . . . . . . . . . . . . . 4

2 • NOTEs ON FiNaNCial sTaTEMENTs aND REsUlTs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

2.1 Consolidated financial statements . . . . . . . . . . . . . . . 52.2 annual financial statements . . . . . . . . . . . . . . . . . . . . . 62.3 subsidiaries and investments . . . . . . . . . . . . . . . . . . . 62.4 Notification of major holdings and takeovers . . . . . 62.5 Research and development activity . . . . . . . . . . . . . . 62.6 information on supplier payment settlement . . . . . . 7

3 • FOREsEEaBlE TRENDs aND FUTURE OUTlOOk . . . . . . . . . . . . . . . . . . . . . . 7

4 • siGNiFiCaNT EVENTs siNCE THE END OF THE YEaR . . . . . . . . . . . . . . . . . . . . . . . . 7

5 • CORPORaTE GOVERNaNCE . . . . . . . . . . . . . . . . . . . 75.1 Members of the supervisory Board . . . . . . . . . . . . . . 85.2 internal committees within

the supervisory Board . . . . . . . . . . . . . . . . . . . . . . . . . . 8 5.3 Group Executive Committee . . . . . . . . . . . . . . . . . . . . 85.4 Capital and shareholdings . . . . . . . . . . . . . . . . . . . . . . 8

6 • PREsENTaTiON OF REsOlUTiONs PROPOsED FOR aDOPTiON BY sHaREHOlDERs . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

6.1 allocation of income . . . . . . . . . . . . . . . . . . . . . . . . . . . 86.2 agreements covered by the article

l227-10 of the Commercial Code . . . . . . . . . . . . . . . . 8

CONTENTS

Management report from the President of the Board of Directors on the consolidated and statutory accounts for the year ended 31st December 2015 Ordinary Annual General Meeting of 11 May 2016A

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1. ManageMent RepoRt

Ladies and Gentlemen,

In accordance with legal, regulatory and statutory requirements, we submit for your approval the consolidated and annual finan-cial statements for the financial year ended 31st December 2015 and report to you on the activities of our Company and its sub-sidiaries during the year.

Your auditors will also read their reports to you.

This report reviews the various items of information as required by applicable regulations and information on corporate gover-nance.

1 • aCTiViTY

1.1 Highlights of the financial year

Business activity and development

Notable 2015 events in Keolis in France were the renewal of its contracts in Le Mans, Châteauroux, Vesoul, on the Blanc Argent line (railway operating licence), and contract extensions in Lorient and Arras.

EFFIA notably won the parking operations of the Marseille beaches and successfully launched P+R activities in Bordeaux (5,500 spaces).

In Continental Europe, Keolis renewed the Hellweg-Netz contract in Germany, won the Odense bus contract and Aarhus tram contract in Denmark, won the Zwenzwoka railway tender and Utrecht bus tender in the Netherlands and won the Dalarna bus contract in Sweden. In the United Kingdom, Keolis opened two new tram lines in Nottingham, almost doubling the size of the network. In North America, Keolis renewed the urban contract for MRC Les Moulins in Canada and the railway operating contract VRE in the USA.

In the field of new connected mobility solutions, Keolis created the subsidiary Kisio, bringing together the Group’s skills in Solutions and Services around five expertise hubs (analytics with Kisio Analysis, forecasting with Kisio Consulting, operations with Kisio Services, scientific and industrial with Kisio Solutions and digital with Kisio Digital) and continues to develop new services projects for all public transport authorities.

amendment to syndicated loan agreementOn 11 June 2015, GROUPE KEOLIS S.A.S. signed an amend-ment to the syndicated loan agreement dated 12 July 2013. The

main characteristics of this amendment are:◗ an increase in the maximum amount from €800 million to €900

million,◗ an adjustment of the financial conditions to correspond to the

current market, which are more favourable,◗ an extension of the maturity until 11 June 2020,◗ a provision under which Keolis may extend the maturity by an

additional year, in 2016 and 2017, subject to the approval of the entire financing syndicate. Maturity could thereby be extended until 11 June 2022.

By virtue of the principle of debt continuity, the implementation of the amendment did not give rise to any reimbursement of the nominal amount.

At 31 December 2015 the drawn amount of the loan was €600 million, with the remaining undrawn amount of €300 million.

acquisition of aTE in australia On 1 May 2015, Keolis Downer (51%-owned by Keolis and 49% by Downer EDI), Australia’s largest light rail operator, acquired australian Transit Enterprises (ATE), one of the country’s biggest bus operators.As a result of this acquisition, Keolis Downer has become the leading privately-owned multi-modal public transport operator in Australia.Established in 1974 as a family business, ATE has since conti-nued to grow, generating revenue of approximately AUD 190 million (€136 million) in 2014. Headquartered in Brisbane, ATE operates a fleet of nearly 1,000 buses and runs urban, inter-city and school services in three states: South Australia (Adelaide), Western Australia (Perth) and Queensland (Brisbane). The com-pany currently employs 1,600 people.As the 5th largest private bus operator in Australia, ATE consists of 4 business divisions:◗ Path Transit, providing timetabled route and school bus ser-

vices in the suburbs of Perth (Western Australia);◗ southlink, providing timetabled route and school bus services

in metropolitan Adelaide (South Australia);◗ linksa, providing timetabled route, school, special bus and

dial-a-ride services within 100 km of Adelaide (South Australia);◗ Hornibrook, providing timetabled route and school bus ser-

vices in the suburbs of Brisbane (Queensland). lille ticketing systemIn Lille, malfunctions of the ticketing system delivered by Parkeon resulted in its late implementation compared to the initial contrac-tual schedule. Lille Métropole (LMCU renamed MEL) decided to introduce it into service in June 2013 against the advice of Keolis who had refused acceptance. This resulted in a shortfall in Keolis Lille’s revenue. In these circumstances the courts appointed an expert in December 2014 to determine the origin of the flaws

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and appraise their financial impact. The expertise is currently ongoing and will continue during 2016.

The Group’s financial results

The Group’s turnover for 2015 amounted to €5,002.5 million, an increase of €543.4 million, or 12.2%, on 2014.

The currency impact is positive at +€73.8 million in particular due to the depreciation of the euro against sterling and the US dollar. The consolidation scope effect is +€153.0 million, due to the acquisition of Striebig and the disposal of Transévry in France, the acquisition of ATE in Australia and various acquisitions by EBH in Belgium (Doppagen/Sanglier, Schloemer, Dislaire/Ourthe, Van Rompaye) and the tie-up with Nettbuss in Denmark.

The portfolio impact of contracts won and lost stands at +€172.1 million, comprising -€13.0 million in France and +€185.1 million abroad. In France we can note the loss of the public service dele-gation contracts in Aix-les-Bains, CDG-Val and Concarneau. Outside France, it is worth noting the effect of a full year of opera-tions on the Boston contract (+€118 million), the DLR contract in London (+€95 million) and the loss of E23 in Sweden (-€27 million).

Excluding foreign exchange impact and change in reporting scope, revenue is up +€319.3 million / 7.2%.

Organic growth within existing contracts stands at +€147.2 million or +3.3%, comprising +€19.9 million for France (large networks +€11.9 million, major urban +€5.5 million, Territories -€2.6 million, Ile-de-France +€5.0 million), +€1.4 million for EFFIA (+€4.7 million for Parking and Others and -€3.4 million for Kisio) and +€126.6 million for international activities (+€4.8 million in the UK, +€33.7 million in Continental Europe, +€15.7 million in North America and +€72.6 million in Australia).

Recurrent EBITDA stands at €296.2 million, up €18.3 million, or +6.6%, on the previous year. The currency impact accounts for -€5.2 million. The consolidation scope effect improves recurring EBITDA by +€19.0 million, comprising +€3.7 million in France (including +€3.4 million for the acquisition of Striebig) and +€15.3 million outside France (+€4.2 million for the Belgian acquisitions, +€2.8 million for the Nettbuss tie-up in Denmark and +€8.3 million for ATE in Australia). Excluding foreign exchange and consolidation scope impact, EBITDA amounts to the same as in 2014.

Organic growth of EBITDA including portfolio growth is flat, com-prising +€10,9 million in France, +€4.4 million for EFFIA and -€6.8 million from international activities (the growth of the UK and

Continental Europe zones have not fully counterbalanced the poor results of North America, Australia and New Territories). An action plan has been established and is currently being deployed to boost North America and in particular re-establish profitability on the Boston contract. Operational costs of the holding company are €8.7 million higher than in 2014, of which 4.3 million relates to the unwinding of diesel hedges.

Recurrent operating profit stands at €91.0 million, down 13.1% in relation to 2014. One of the reasons for this is the entry into force of a new agreement relating to payments due on retirement.

Net income (Group share) for 2015 amounts to €33.3 million compared with €26.0 million in 2014.

Cash flow generation is -€126.0 million in 2015 (including -€125.5 million due to acquisitions) versus +€7.4 million in 2014.

The consolidated net debt of GROUPE KEOLIS S.A.S. amounts to €791.3 million at the end of 2015 compared to €607.7 million at the end of 2014. The increase is essentially a consequence of the Group’s active external growth policy.

2 • NOTEs ON FiNaNCial sTaTEMENTs aND REsUlTs

2.1 Consolidated financial statements

The consolidated financial statements are prepared in accor-dance with IFRS as adopted by the European Union.

Revenues from ordinary activities amount to €5,022 million.

After taking into account all operating costs, operating profit after income from investments under the equity method amounts to €73.8 million.

Net profit (group share) amounts to €33.3 million for the financial year ended 31st December 2015.

2.2 annual financial statements

The operating loss amounts to -€4,177 thousand.

Financial income amounts to €18,025 thousand.

After posting of an exceptional loss of -€14 thousand and a corporate income tax credit of €17,279 related to tax consolida-tion gains, the financial statements of GROUPE KEOLIS S.A.S. show a profit of €31,113 thousand.

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2.3 subsidiaries and investments

The table attached to the balance sheet provides all the neces-sary information concerning the company’s subsidiaries and investments.

2.4 Notification of major holdings and takeovers

During the financial year 2015, Keolis S.A., a subsidiary of GROUPE KEOLIS S.A.S., acquired or took control of the fol-lowing companies:

At the same time, EFFIA S.A., a subsidiary of GROUPE KEOLIS S.A.S., acquired or took control of the following companies:

2.5 Research and development activity

The company has no research and development activity.

aCqUisiTiON OF COMPaNiY iN FRaNCE BY EFFia

Name Date Percentage

EFFIA STATIONNEMENT BGD (formerly Ramery Stationnement)

30/11/2015 100% EFFIA STATIONNEMENT

EsTaBlisHMENT OF COMPaNiEs iN FRaNCE BY EFFia


EFFIA Stationnement Marseille 13/10/2015 100% EFFIA

STATIONNEMENT

KLP01 28/12/2015 100% EFFIA STATIONNEMENT

aCqUisiTiON OF COMPaNiEs iN FRaNCE – kEOlis BRaNCH


VOYAGES A. FOUACHE 15/10/2015 100% Keolis

FOUACHE EVASION 15/10/2015 100% Keolis

PRIORIS 30/10/2015 34% of shares held by SIA

FORCITY 18/03/2015 Acquisition of a 5% share

ONEPARK 14/10/2015 Acquisition of a 20.25% share

EsTaBlisHMENT OF COMPaNiEs aBROaD – kEOlis BRaNCH

Name Date PercentageKEOLIS DOWNER BUS AND COACHLINES PTY LTD

10/03/2015 Keolis Downer Pty Ltd: 100%

KEOLIS DOWNER BUS AND COACHLINES PROPERTY PTY LTD

10/03/2015Keolis Downer Bus and Coachlines Pty

Ltd: 100%

KEOLIS AMEY METROLINK LIMITED 13/11/2015

Keolis (UK) Limited: 60%

Amey Rail Limited: 40%

aCqUisiTiON OF COMPaNiEs aBROaD – kEOlis BRaNCH


HORNIBROOK TRANSIT MANAGEMENT PTY LTD

27/05/2015Keolis Downer Bus

And Coachlines Pty Ltd: 100%

SOUTH WEST TRANSIT PTY LTD 27/05/2015

Hornibrook Transit Management Pty

Ltd: 100%

AUSTRALIAN TRANSIT ENTERPRISES PTY LTD 27/05/2015


Ltd: 100%

HORNIBROOK BUS LINES PTY LTD 27/05/2015

Keolis Downer Bus And Coachlines Pty Ltd: 83.33%


Ltd: 16.67%

PATH TRANSIT PTY LTD 27/05/2015 Australian Transit Enterprises: 100%

SOUTHLINK PTY LTD 27/05/2015 Australian Transit Enterprises: 100%

LINKSA PTY LTD 27/05/2015 Australian Transit Enterprises: 100%

MASABI 23/10/2015 Acquisition of a 5.13% share

EsTaBlisHMENT OF COMPaNiEs iN FRaNCE – kEOlis BRaNCH


KEOLIS BASSIN D’ARCACHON 26/02/2015 100% Keolis S.A.

KEOLIS ORLY RUNGIS 03/03/2015 100% Keolis Seine Val de Marne

KEOLIS ALES 11/08/2015 100% Keolis S.A.

TRANSKEO 07/10/201551% Keolis S.A.

49% SNCF Participations

KEOLIS BEAUNE 23/11/2015 100% Keolis S.A.

KEOLIS ROISSY SERVICES AEROPORTUAIRES

01/12/2015 100% Keolis S.A.

KEOLIS PORTE DE L’ISERE 02/12/2015 100% Keolis S.A.

KLP02 14/12/2015 100% Keolis S.A.

KLP03 14/12/2015 100% Keolis S.A.

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Express. Keolis Ile-de-France, which generated 400 million euros of turnover in 2014, operates a fleet of 1,900 vehicles across 25 depots. Established in all of the departments comprising the Paris region, its 19 subsidiaries employ 4,000 people and carry 70 million passengers each year. The group Transports Daniel Meyer has 440 employees and a fleet of 260 vehicles. It gene-rated a turnover of 40.4 million euros in 2014. Its main line of business is in the operation of approximately 50 timetabled bus lines, supplemented by school buses and school outings and charter activity.

EFFia becomes shareholder of saEMEs

At the beginning of January 2016, EFFIA became the main industrial shareholder of Société anonyme d’economie mixte d’exploitation du stationnement de la ville de Paris (SAEMES) by acquiring a 33.27% share in the company.

EFFIA, which already manages more than 30,000 parking spaces in the Ile-de-France region, thus initiates closer ties with the second largest car park operator in the region, SAEMES (€45 million turnover, 25,000 spaces). SAEMES operates a number of major facilities, among which Paris’ number 1 car park for revenue, Lyon-Méditerrannée, loca-ted under Gare de Lyon.

The two companies which will remain commercially independent but may join together on certain invitations to tender, already jointly operate the Lyon-Diderot car park.After this transaction, EFFIA becomes the second largest sha-reholder of SAEMES, behind Paris City Hall, which sold 26.50% of the capital of SAEMES but remains majority shareholder with a 50.06% share.

5 • CORPORaTE GOVERNaNCE

The Company is a société par actions simplifiée whose President is Mr. Jean-Pierre Farandou, President of the Company and sole member of the Executive Board, confirmed in this position on 29 July 2015.

The company also has a Supervisory Board whose role, in accordance with legal and statutory requirements, is to supervise the management of the Executive Board, made up of one mem-ber in the person of Mr. Farandou, and to decide on the Important Resolutions under the meaning of the Articles of Association.

2.6 information on supplier payment settlement

In accordance with articles L 441-6-1 and D 441-4 of the Commercial Code, we analyse the year- end balance of amounts due to our suppliers and customers by due date:

3 • FOREsEEaBlE TRENDs aND FUTURE OUTlOOk

Keolis has entered into exclusive negotiations with the Lyon public transport authority for the renewal of its operating contract. The Group is also responding to invitations to tender to renew its operating contracts for networks in Dijon, Artois-Gohelle and Laval.

In France and at EFFIA the Group intends to consolidate its current positions and will remain attentive to any opportunities.

Keolis wishes to develop its international footprint and will exa-mine all the opportunities related to the mobility chain in the territories where it is already established, but also in new countries.

4 • siGNiFiCaNT EVENTs siNCE THE END OF THE YEaR

acquisition of Transports Daniel Meyer

In January 2016, the Keolis Group announced the acquisition of a leading bus and coach service operator in Ile-de-France, Transports Daniel Meyer. With this strategic external growth transaction, Keolis reinforces its foothold in Ile-de-France and consolidates its position for future projects relating to Grand Paris

€ thousandFinancial

year 2015Financial

year 2014

Breakdown by invoice due date

- Invoices due:

◗ from 0 to 30 days

◗ from 31 to 60 days

◗ over 60 days 281

- Invoices not yet due 1,022

TRaDE PaYaBlEs 281 1,022

Amount owning by suppliers 89

Amount of invoices not yet received 4,530 1,761Total trade payables and related accounts 4,720 2,783

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5.1 Members of the supervisory Board

At 31 December 2015, the Supervisory Board was composed of 7 members:

◗ Mr. Joël Lebreton, member and President of the Supervisory Board

◗ Mr. Mathias Emmerich, member of the Board ◗ Mr. Eric Lachance, member of the Board◗ Mr. Jean-Yves Leblanc, member of the Board◗ Mr. Philippe Maystadt, member of the Board◗ Mr. Normand Provost, member of the Board◗ Mr. Laurent Trévisani, member of the Board

Mr. Patrick Coté is a member of the Board without voting rights.

5.2 internal committees within the supervisory Board

The Supervisory Board is supported by four internal committees which prepare the Board’s work:

◗ the Audit and Ethics Committee◗ the Investment and Strategy Committee◗ The Risks and Safety Committee◗ The Remuneration and Human Resources Committee.

5.3 Group Executive Committee

Jean-Pierre Farandou, President of the Company, set up an Executive Committee whose members on the date of the Assembly comprise :

◗ Mr. Michel Lamboley, Group CEO◗ Mr. Thomas Barbelet, Brand and Communications Executive

Director◗ Mr. Frédéric Baverez, CEO France◗ Mr. Jacques Damas, Executive Director, Rail and Operations◗ Mr. Bruno Danet, Group Human Resources Director ◗ Mr. Laurent Kocher, Executive Director, Marketing, Innovation

& Services◗ Mr. Bernard Tabary, CEO International◗ Mr. Arnaud van Troeyen, Executive Vice President, Group

Strategy and Development

5.4 Capital and shareholdings

On 31st December 2015, the share capital was €237,888,901.80, allocated as follows:

•SNCFParticipations:69.70%•CDP-IE:30%•FCPE“GROUPEKEOLISACTIONNARIAT”:0.16%•Treasurystock:0.14%

EmployeeshareholdingsintheformoftheFCPE“GROUPEKEOLISACTIONNARIAT”thereforerepresent0.16%ofthecapital.

6 • PREsENTaTiON OF REsOlUTiONs PROPOsED FOR aDOPTiON BY sHaREHOlDERs

6.1 allocation of profit

We propose to allocate the profit for the year in the following manner:

Profit for the year 31,113,593.16 €Allocation to legal reserve (1,555,679.66 €)Retained earnings for year N-1 142,613,581.34 € ________________Distributable profit 172,171,494.84 €Allocation to Retained earnings 172,171,494.84 €

In accordance with legal requirements, you are requested to note that the amount of the dividend distributed and that of the cor-responding dividend tax credit for the previous fiscal years were as follows:

Non tax deductible expenses We advise you that there were no non tax deductible expenses within the meaning of Articles 223 quater and 223 quinquies of the General Tax Code during the past year.

6.2 agreements covered by the article l227-10 of the Commercial Code

You will be read the Statutory Auditors’ report on agreements made during the financial year and authorised by the Supervisory Board pursuant to Article L227-10 of the Commercial Code.

We hope that you will approve the above proposals and consequently vote in favour of the resolutions to be submitted to you.

President of the Board of Directors

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2012 Nil - -

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2. Consolidated finanCial statements

2. CONSOlIDaTED FINaNCIal STaTEMENTS

A Key figures for the Group . . . . . . . . . . . . . . . 10

B Consolidated financial statements . . . . . 11

1 • iNCOME sTaTEMENT . . . . . . . . . . . . . . . . . . . . . . . . 11

2 • sTaTEMENT OF COMPREHENsiVE iNCOME . . . . 12

3 • sTaTEMENT OF FiNaNCial POsiTiON . . . . . . . . 13

4 • sTaTEMENT OF CHaNGEs iN EqUiTY . . . . . . . . . 14

5 • sTaTEMENT OF CasH FlOws . . . . . . . . . . . . . . . . 15

C Notes to the consolidated financial statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

1 • GENERal iNFORMaTiON . . . . . . . . . . . . . . . . . . . . 16

2 • sUMMaRY OF siGNiFiCaNT aCCOUNTiNG POliCiEs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

2.1 Basis of preparation . . . . . . . . . . . . . . . . . . . . . . . . . . 162.2 Changes in accounting principles . . . . . . . . . . . . . . . 162.3 Use of Management estimates in the application

of the Group’s accounting standards . . . . . . . . . . . 182.4 accounting principles . . . . . . . . . . . . . . . . . . . . . . . . 18

3 • HiGHliGHTs OF THE FiNaNCial YEaR . . . . . . . . 29

4 • NOTEs TO THE CONsOliDaTED iNCOME sTaTEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

4.1 staff costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 304.2 Other operating income . . . . . . . . . . . . . . . . . . . . . . 304.3 Operating profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 304.4 EBiTDa calculation . . . . . . . . . . . . . . . . . . . . . . . . . . 314.5 Financial income / (expense) . . . . . . . . . . . . . . . . . . 314.6 share in net profit for the year from investments

under the equity method . . . . . . . . . . . . . . . . . . . . . . 314.7 Taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

5 • NOTEs TO THE CONsOliDaTED sTaTEMENT OF FiNaNCial POsiTiON . . . . . . . . . . . . . . . . . . . . . 34

5.1 Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 345.2 Other intangible assets . . . . . . . . . . . . . . . . . . . . . . . 355.3 Property, plant and equipment . . . . . . . . . . . . . . . . 365.4 investments under the equity method . . . . . . . . . . 375.5 Current and non-current financial assets . . . . . . . 385.6 inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 385.7 Trade and other receivables . . . . . . . . . . . . . . . . . . . 395.8 Cash and cash equivalents. . . . . . . . . . . . . . . . . . . . 395.9 Equity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 405.10 Financial debt and long term borrowings . . . . . . 405.11 Financial assets and liabilities by category . . . . 435.12 Risk management and financial derivatives . . . . 445.13 Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 505.14 Operating liabilities and other debt . . . . . . . . . . . 54

6 • OTHER COMMiTMENTs NOT RECOGNisED iN THE sTaTEMENT OF FiNaNCial POsiTiON aND CONTRaCTUal COMMiTMENTs . . . . . . . . . 55

7 • DisPUTEs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56

8 • RElaTED PaRTY TRaNsaCTiONs . . . . . . . . . . . . 568.1 Transactions with the sNCF . . . . . . . . . . . . . . . . . . . 568.2 Transactions with joint ventures

and associates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 568.3 Remuneration of the Group’s key managers . . . . . . 56

9 • POsT BalaNCE sHEET EVENTs . . . . . . . . . . . . . . 56

10 • CONsOliDaTiON sCOPE . . . . . . . . . . . . . . . . . . . 5710.1 subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5710.2 Joint Ventures and associates . . . . . . . . . . . . . . . . 64

Statutory auditors’ report on the consolidated financial statements . . . . . . . . . . . 65

CONTENTS

10


(1) Surplus cash positions are presented in brackets.

Key figures for the GroupA(€ million) 31/12/2015 31/12/2014

Revenue 5,002.5 4,459.1

◗ Revenue France 2,810.3 2,785.7

◗ Revenue International 2,192.1 1,673.4

Revenue net of sub-contracting 4,818.2 4,272.6

Recurring EBiTDa 4.4 296.2 277.8

EBiTDa 4.4 274.6 250.9

Recurring operating profit 4.3 91.0 104.7

Operating profit before investments under equity method 51.4 52.7

Operating profit after investments under equity method 73.8 68.7

Profit after tax from continuing operations 26.0 27.8

Profit attributable to equity shareholders 33.3 26.0

Total equity 1,024.7 994.4

of which attributable to equity shareholders 972.9 973.4

Net cash flows from operating activities 201.8 247.3

industrial investments 237.2 209.9

Net financial debt (cash surplus)(1) 791.3 607.7

11


1 • iNCOME sTaTEMENT

Consolidated financial statements B(€ million) Note 31/12/2015 31/12/2014

Revenue 5,002.5 4,459.1

Other income from operations 19.3 26.1

iNCOME FROM CONTiNUiNG OPERaTiONs 5,021.7 4,485.2

Sub-contracting (184.2) (186.5)

Purchases consumed and external expenses (1,641.8) (1,489.6)

Taxes (17.4) (15.2)

Staff costs, incentive schemes, profit-sharing 4.1 (2,891.0) (2,529.1)

Other operating income 4.2 50.2 50.3

Other operating expense (31.9) (22.2)

Net provisions on current assets (0.1) (4.6)

Net depreciation and other provisions charged (221.7) (190.2)

Profit/(loss) on recurring fixed asset disposals 0.9 1.1

Amortisation of grants received 6.3 5.5

RECURRiNG OPERaTiNG PROFiT 91.0 104.7

Other non-recurring income 4.3 7.4 6.6

Other non-recurring expense 4.3 (26.0) (30.5)

Depreciation and provisions on contractual rights 4.3 (21.0) (28.1)

Of which depreciation of other intangible assets and negative Goodwill 5.7 (5.3)

OPERaTiNG PROFiT/lOss BEFORE iNVEsTMENTs UNDER EqUiTY METHOD 51.4 52.7

Profit/(loss) from associates 22.4 16.0

OPERaTiNG PROFiT/(lOss) aFTER iNVEsTMENTs UNDER EqUiTY METHOD 73.8 68.7

Net cost of financial borrowing 4.5 (18.1) (18.6)

Other financial income 4.5 7.3 7.5

Other financial expense 4.5 (19.0) (18.2)

FiNaNCial iNCOME (ExPENsE) (29.8) (29.3)

PROFiT BEFORE Tax 44.0 39.4

Taxation 4.7 (18.0) (11.6)

PROFiT aFTER Tax FROM CONTiNUiNG OPERaTiONs 26.0 27.8

PROFiT FOR THE YEaR 26.0 27.8

Profit attributable to non-controlling interests 7.3 (1.8)

PROFiT aTTRiBUTaBlE TO GROUP 33.3 26.0

12


(€ million) 31/12/2015 31/12/2014


Actuarial gains and losses on defined benefit pension schemes (0.8) (14.2)

Tax on actuarial gains and losses on defined benefit pension schemes 0.2 4.9

Share of other items in comprehensive income of investments under equity method 13.0 8.4

iTEMs THaT will NOT BE REClassiFiED TO PROFiT OR lOss 12.4 (1.0)

Translation differences and others 1.2 5.3

Unrealised gains and losses on financial hedging instruments 0.3 (10.6)

Tax on items that may be reclassified to profit or loss (0.1) 3.7

iTEMs THaT MaY BE REClassiFiED TO PROFiT OR lOss 1.4 (1.7)

TOTal GaiNs aND lOssEs RECOGNisED DiRECTlY iN EqUiTY 13.7 (2.7)

TOTal COMPREHENsiVE iNCOME FOR THE YEaR 39.7 25.1

of which attributable to :

- Equity shareholders 47.0 22.6- Non-controlling interests (7.3) 2.4

2 • sTaTEMENT OF COMPREHENsiVE iNCOME

13


assETs(€ million)

Note 31/12/2015 31/12/2014

Goodwill 5.1 1,139.6 1,105.1

Other intangible assets 5.2 533.9 489.9

Property, plant and equipment 5.3 891.8 806.3

Investments under the equity method 5.4 35.1 32.5

Non-current financial assets 5.5 171.1 147.7

Deferred tax asset 4.7 84.6 79.9

NON-CURRENT assETs 2,856.2 2,661.3

Inventories and work in progress 5.6 82.0 78.0

Trade receivables 5.7 426.4 391.5

Other receivables 5.7 348.8 310.5

Current financial assets 5.5 19.4 19.7

Cash and cash equivalents 5.8 312.7 294.6CURRENT assETs 1,189.2 1,094.3TOTal assETs 4,045.4 3,755.7

liaBiliTiEs(€ million)

Note 31/12/2015 31/12/2014

Share capital 5.9 237.9 237.9

Reserves and premiums 5.9 701.6 709.5

Net profit/(loss) attributable to Group 5.9 33.3 26.0

EqUiTY aTTRiBUTaBlE TO GROUP 972.9 973.4

Reserves attributable to non-controlling interests 59.1 19.2

Profit for the year attributable to non-controlling interests (7.3) 1.8

EqUiTY 1,024.7 994.4Non-current provisions 5.13 196.4 182.1

Non-current financial debt 5.10 881.1 653.1

Deferred tax liability 4.7 177.5 153.8

NON-CURRENT liaBiliTiEs 1,255.1 989.0

Current provisions 5.13 55.6 52.4

Current financial debt 5.10 78.8 181.0

Bank borrowings 5.8 189.9 117.7

Trade payables and other liabilities 5.14 1,441.3 1,421.1

CURRENT liaBiliTiEs 1,765.6 1,772.2

TOTal liaBiliTiEs 4,045.4 3,755.7

3 • sTaTEMENT OF FiNaNCial POsiTiON

14


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aT 31 DECEMBER 2013 237.9 753.3 (14.8) 2.1 (12.2) 728.4 966.3Attributable to GROUPE KEOLIS S.A.S. shareholders 237.9 740.4 (15.5) 2.1 (12.1) 714.9 952.8Attributable to minority shareholders in subsidiaries - 12.8 0.7 - - 13.5 13.5Dividends paid to GROUPE KEOLIS S.A.S. shareholders - - - - - - -Change in GROUPE KEOLIS SAS shareholdings in its subsidiaries without losing control - (2.0) - - - (2.0) (2.0)

OPERaTiONs aTTRiBUTaBlE TO GROUPE kEOlis s.a.s. sHaREHOlDERs (a) - (2.0) - - - (2.0) (2.0)

Dividends paid to minority shareholders in subsidiaries - (0.6) - - - (0.6) (0.6)Change in shareholdings in subsidiaries related to gaining / losing control - - - - - - -

Change in shareholdings in subsidiaries without gaining/losing control - 5.7 - - - 5.7 5.7

OPERaTiONs aTTRiBUTaBlE TO MiNORiTY sHaREHOlDERs iN sUBsiDiaRiEs (B) - 5.1 - - - 5.1 5.1

Profit for the year - 27.8 - - - 27.8 27.8Requalification of non-classifiable reserves related to mergers - (2.8) - - 2.8 - -Gains / (losses) recognised directly in equity - - 5.3 (7.0) (1.0) (2.7) (2.7)COMPREHENsiVE iNCOME (C) - 25.0 5.3 (7.0) 1.8 25.1 25.1CHaNGE iN THE YEaR (a+B+C) - 28.1 5.3 (7.0) 1.8 28.1 28.1Attributable to GROUPE KEOLIS S.A.S. shareholders - 23.9 4.6 (7.0) 1.8 23.4 23.4Attributable to minority shareholders in subsidiaries - 6.9 0.7 - - 7.6 7.6aT 31 DECEMBER 2014 237.9 781.3 (9.6) (4.9) (10.4) 756.5 994.4Attributable to GROUPE KEOLIS S.A.S. shareholders 237.9 761.6 (10.9) (4.9) (10.3) 735.5 973.4Attributable to minority shareholders in subsidiaries - 19.8 1.3 - (0.1) 21.0 21.0Dividends paid to GROUPE KEOLIS S.A.S. shareholders - (50.0) - - - (50.0) (50.0)Other changes (including effects of application of IFRIC 21) - 2.5 - - - 2.5 2.5OPERaTiONs aTTRiBUTaBlE TO GROUPE kEOlis s.a.s. sHaREHOlDERs (a) - (47.5) - - - (47.5) (47.5)

Dividends paid to minority shareholders in subsidiaries - (0.8) - - - (0.8) (0.8)Change in shareholdings in subsidiaries related to gaining / losing control - - - - - - -

Change in shareholdings in subsidiaries without gaining/losing control - 38.9 - - - 38.9 38.9

OPERaTiONs aTTRiBUTaBlE TO MiNORiTY sHaREHOlDERs iN sUBsiDiaRiEs (B) - 38.1 - - - 38.1 38.1

Profit for the year - 26.0 - - - 26.0 26.0Gains / (losses) recognised directly in equity - - 1.2 0.2 12.4 13.7 13.7COMPREHENsiVE iNCOME (C) - 26.0 1.2 0.2 12.4 39.7 39.7CHaNGE iN THE YEaR (a+B+C) - 16.6 1.2 0.2 12.4 30.3 30.3Attributable to GROUPE KEOLIS S.A.S. shareholders - (14.2) 1.2 0.2 12.4 (0.5) (0.5)Attributable to minority shareholders in subsidiaries - 30.8 - - - 30.8 30.8aT 31 DECEMBER 2014 237.9 797.9 (8.4) (4.7) 2.0 786.8 1,024.7Attributable to GROUPE KEOLIS S.A.S. shareholders 237.9 747.3 (9.7) (4.7) 2.1 735.0 972.9Attributable to minority shareholders in subsidiaries - 50.6 1.3 - - 51.9 51.9

4 • sTaTEMENT OF CHaNGEs iN EqUiTY RESERVES aND OTHER

Items that may be reclassified to profit

or loss

15


(€ million) Note 31/12/2015 31/12/2014

opeRating pRofit befoRe investMents UndeR eqUity Method 4.3 51.4 52.7

Non-cash items 4.4 223.2 198.3

ebitda 4.4 274.6 250.9

Elimination of provisions on current assets 0.1 4.6

Changes in working capital (25.5) 13.5

Tax paid (47.3) (21.8)

a) NET CasH FROM OPERaTiNG aCTiViTiEs 201.8 247.3

Capital expenditure (237.2) (209.9)

Proceeds from the sale of tangible and intangible assets 37.3 34.4

Investment grants received 8.1 2.5

Change in financial assets for concessions (IFRIC 12) (14.2) (19.1)

Financial investments (133.1) (86.0)

Proceeds from disposal of financial assets 6.4 11.0

Cash flows on changes in reporting scope 4.9 27.2

B) NET CasH FROM iNVEsTiNG aCTiViTiEs (327.8) (239.9)

FREE CasH FlOw (126.0) 7.4

Net dividends paid (51.0) (1.0)

Net dividends received 32.2 13.4

Change in equity (other transactions with shareholders) 38.7 13.0

New borrowings 243.8 104.3

Borrowings repaid (167.2) (130.2)

Interest received 0.7 1.2

Interest paid (19.1) (19.6)

Change in other financial debts 0.2 0.4

Other (7.9) (10.2)

C) NET CasH FROM FiNaNCiNG aCTiViTiEs 70.4 (28.8)

D) FOREiGN ExCHaNGE TRaNslaTiON DiFFERENCEs 1.5 3.0

CHaNGE iN CasH aND CasH EqUiValENTs (a+B+C+D) (54.2) (18.4)

Cash and cash equivalents at beginning of period 5.8 176.9 195.3

Cash and cash equivalents at end of period 5.8 122.8 176.9

CHaNGE iN CasH aND CasH EqUiValENTs (54.2) (18.4)

5 • sTaTEMENT OF CasH FlOws

16


1 • GENERal iNFORMaTiON

TheactivityofGROUPEKEOLISS.A.S.anditssubsidiaries(“theGroup”)ismultimodalpassengertransportthroughKeolisandcarparking through the EFFIA Group. The Group operates in 9 European countries, in Canada, Australia, the United States and India as a licensed public service operator within public-private contracts.

GROUPE KEOLIS S.A.S., the Group’s holding company, is a simplified joint stock company (société par actions simplifiée) registered and domiciled in France, with its registered office loca-ted at 20/22, rue le Peletier, 75320 Paris Cedex 09.

The consolidated financial statements of GROUPE KEOLIS S.A.S. as at 31 December 2015 were approved by the Executive Board on 9 February 2016 and presented to the Supervisory Board on 18 February 2016.

The financial statements of GROUPE KEOLIS S.A.S. are fully consolidated into those of SNCF.

2 • sUMMaRY OF siGNiFiCaNT aCCOUNTiNG POliCiEs

2.1 Basis of preparationThe Group’s consolidated financial statements for the reporting period ending 31 December 2015 have been prepared in accor-dance with IFRS (standards and interpretations) published by IASB as adopted by the European Union and rendered manda-tory from 1st January 2015. They are available at this site: http://ec.europa.eu/internal_market/accounting/ias/index_fr.htm

The consolidated financial statements are presented in millions of euros unless otherwise indicated.In the absence of borrowing or equity instruments traded on a regulated market, the Group chose not to publish information on earnings per share (IAS 33), or information about operating seg-ments (IFRS 8).

The assets and liabilities in the Group’s consolidated financial statements are measured and recognised according to various measurement bases authorised by IFRS, primarily the historical cost basis of accounting, with the exception of derivative finan-cial instruments and financial assets held for trading purposes or classified as AFS (available for sale), which are measured at fair value.

2.2 Changes in accounting principles

application of standards, amended standards and interpretations that are mandatory as of 1st January 2015

•IFRIC21“Levies”IFRICInterpretation21“Levies”identifiesthe“obligatingevent”,on the liability side of the balance sheet, which triggers taxes that fallwithinthescopeofapplicationofIAS37“Provisions,ContingentLiabilitiesandContingentAssets”.Taxesareoutflowsofresourcesthat represent economic benefits imposed by public authorities by virtue of the laws or regulations.

However, the scope of application of this interpretation excludes outflowsofresourcesreferredtoinIAS12“IncomeTaxes”,finesand penalties imposed for non-compliance with the laws and regulations in effect, and payments made by the entity in the fra-mework of a contractual agreement with a public authority on the acquisition of an asset or the performance of a service.

IFRIC Interpretation 21 requires the recognition of the liability according to the due dates of the taxes and not their related commitments. The application of this interpretation within the Group has led solely to changes in the timing of recognition and totheannualperiodusedtocalculatethetaxrelatedtothe“cor-poratesocialsolidaritycontribution”(C3S)ineffectinFrance,which had in the past been recognized on a proportional basis in each interim period in accordance with turnover for the current period. Henceforth, it is posted on the date of the event that trig-gers the tax payment obligation, i.e. 1 January, in accordance with the turnover of the prior calendar year.

The impact of the application of the interpretation results in impro-ved shareholders’ equity as at 1 January 2014 in the amount of €2.3 million. But, the impact on the 2014 profit and loss statement is not significant. As the impact is not material, this improvement in shareholders’ equity was recognized at the start of the 2015 financial year.

The application of IFRIC 21 at the end of December 2015 led to a restatement of the CS3 expense posted at the end of 2014 in the amount of €3.5 million, with a tax due date on 1 January 2015. The expense related to this tax without applying IFRIC 21 would have been €1.8 million taking account of the tax authorities’ changes to the valuation methods for the 2016 fiscal year.

•AnnualImprovementstoIFRSs2011-2013CycleThe annual Improvements to the IFRSs 2011-2013 Cycle apply to financial years beginning on or after 1 July 2014 and mainly relatetoIFRS3“BusinessCombinations”andIFRS13“FairValueMeasurement”.IFRS3hasbeenamendedsoastoexcludethecreation of all types of joint arrangements, as defined in IFRS 11

Notes to the consolidated financial statementsC

17


“JointArrangements”,i.e.jointventuresandjointoperations,fromits scope of application. With regard to IFRS 13, it now exceptio-nally allows for fair value to be measured not only for a series of financial assets and liabilities on a net basis, but also for the mea-surement of the fair value of all contracts that fall under IAS 39 “FinancialInstruments:RecognitionandMeasurement”,evenifthey do not comply with the definition of financial assets and lia-bilitiesunderIAS32“FinancialInstruments:Presentation”.

These improvements have no impact on the presentation of the last financial year.

standards, amendments to standards and interpretations not subject to early applicationIn general, the Group does not apply in advance the standards and interpretations adopted by the European Union that apply to annual periods that start before 1 January 2015. The Group has not applied the standards, annual improvements, amendments to standards and interpretations that have not been adopted by the European Union.

•AnnualImprovementstoIFRSs2010-2012CycleThe amendments applicable to the annual periods starting on or after1February2015relatetoIFRS2“Share-BasedPayment”,which defines a performance condition and a service condition; IFRS3“BusinessCombinations”,whichprovidesdetailsontherecognitionofpotentialconsideration;IFRS8“OperatingSegments”(notpublishedbytheGroup);IFRS13“FairValueMeasurement”,whichexplainsthereasonsfortheeliminationofthe paragraphs related to the valuation of short-term receivables and payables, with no stated interest rate on the invoice amounts; IAS16“Property,PlantandEquipment”andIAS38“IntangibleAssets”,whichindicatethataccumulateddepreciationiscalcula-ted on the difference between the gross amount and the net amountaccountedfor;andIAS24“RelatedPartyDisclosures”,which stipulates that the reporting entity is exempted from the obligation to report the amount of the remuneration paid to top executives, but it must indicate the amount of fees paid to service provider entities.

•AnnualImprovementstoIFRSs2012-2014CycleAmendments that apply to the annual periods starting on or after 1January2016relatetoIFRS5“Non-CurrentAssetsHeldforSaleandDiscontinuedOperations”withaviewtoincludethereintheassetsheldfordistributiontotheowners;IFRS7“FinancialInstruments:Disclosures”,withregardtothecontinuinginvolve-ment in a transferred asset via a service agreement and the lack of information on the offsetting of financial assets and financial liabilities in condensed interim financial statements; IAS 19 “EmployeeBenefits”clarifyingthatthediscountrateshouldbeapplied no longer at country level but according to the currency; andIAS34“InterimFinancialReporting”,whichprovidesanexpla-

nationfortheexpression“elsewhereintheinterimfinancialreport”.

•AmendmentstoIAS1:“PresentationofFinancialStatements”The amendments applicable to the annual periods starting on or after 1 January 2016 stipulate that the application of the materia-lity concept applies to financial statements, including the appended notes to improve their understandability, and that pro-fessional judgement is to be used more broadly in the information on accounting methods included in the notes.

•AmendmentstoIAS16:“Property,PlantandEquipment”andIAS38“IntangibleAssets”The amendments applicable to the annual periods starting on or after 1 January 2016 indicate that the use of the revenue based depreciation methods are not appropriate.

•LimitedamendmentstoIAS19“EmployeeBenefits”The amendments applicable to the annual periods starting on or after 1 February 2015 clarify and simplify the recognition of contri-butions, which do not depend on the employee’s number of years of service to the employer, as a reduction in the service cost in the period in which the service is rendered instead of being allocated across the period of service.

•AmendmentstoIAS27“EquityMethodinSeparateFinancialStatements”The amendments applicable to the annual periods starting on or after 1 January 2016 allow for the use of the equity method as describedinIAS28“InvestmentsinAssociatesandJointVentures”andnolongeraccordingtoIFRS9“FinancialInstruments”tomeasureinvestmentsinsubsidiaries,associatesand joint ventures in the separate financial statements.

•AmendmentstoIFRS11“JointArrangements”The amendments applicable to the annual periods starting on or after 1 January 2016 describe the method to recognize acquisi-tions of interests in a joint operation whose operations constitute abusinesswithinthemeaningofIFRS3“BusinessCombinations”.

standards applicable after 2015 and not yet approved by the EU The Group does not apply the following texts that did not apply in 2015 but should become mandatory in the future:- IFRS 15 – Revenues from Contracts with Customers (published inMay2014).ThisstandardwillreplaceIAS18“Revenue”andIAS11“ConstructionContracts”.Theapplicationofthisstandardshould become mandatory for the 2018 and ensuing annual periods, subject to being adopted by the European Union.

- IFRS 9 – Financial Instruments (published in July 2014). This text relates to the classification and valuation of financial instruments, the deprecation of financial assets and hedge accounting. This standardwillreplaceIAS39“FinancialInstruments”;itshould

18


become mandatory for the 2018 and ensuing annual periods, subject to being adopted by the European Union.

The Group is examining these standards in order to determine their impact on the consolidated financial statements, as well as their practical consequences.

2.3 Use of Management estimates in the application of the Group’s accounting standards In order to draw up the Group’s accounts in accordance with IAS 8 - Accounting Policies, Changes in Accounting Estimates and Errors, management must make estimates and assump-tions affecting the amounts stated in the financial statements. Management has to revise such estimates in the light of changes in the circumstances on which they are based or further to new information. Management also has to exercise judgement in how accounting methods are applied. As a result, future estimates may be different from those adopted as of 31 December 2015.

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

Finally, in the absence of standards or interpretations applicable to a specific transaction, Group management must use its best judgement to define and implement accounting methods that provide the most relevant and reliable information, to ensure that the financial statements:◗ present a true and fair view of the Group’s financial position and

cash flows;◗ reflect the economic reality of the accounts.

2.4 accounting principles2.4.1 Methods of consolidationSubsidiaries are recognised in the consolidated statements from the date on which control thereof reverted to the Group. They are derecognised from the date on which the Group ceased to control them. The income and expenses of the companies are included in the Group’s income statement from the date that control was taken, up to the date on which the Group lost control.

Fully-consolidated subsidiariesAll the Group’s subsidiaries are companies it exclusively controls directly or indirectly. The Group’s consolidated financial statements include the assets, liabilities, income and expenses of these com-panies.

Exclusive control exists when GROUPE KEOLIS S.A.S. has power over the entity, is exposed or has rights to variable returns, and has the ability to affect those returns. In ascertaining whether there is

control, account is taken of the established rules of governance and the rights held by the other shareholders in order to ensure that they are merely protective in nature. Potential voting rights, whether immediately exercisable or convertible, including those held by another entity, are also analysed to determine those conferring substantive rights in the assessment of power, in accordance with IFRS10“ConsolidatedFinancialStatements”.

Structured entities substantially controlled by the Group are fully consolidated.

associates and joint ventures consolidated under the equity methodEntities in which the Group exerts significant influence without exercising control are associates. Significant influence is presu-med when the Group holds upwards of 20% of the voting rights.

Under the equity method, investments in associates or joint ventures are capitalised in the consolidated balance sheet at their cost of acquisition. The Group’s share of income (loss) of associates or joint ventures is recognised in profit or loss, whereas its share of post-acquisition movements in reserves is recognised in reserves. Post-acquisition movements are posted in adjustment to the value of the investment. The Group’s share of an associate’s or a joint venture’s losses is recognised up to the limit of the carrying amount of the investment as well as any possible long-term share. Additional losses are not booked as provisions, unless the Group is legally or implicitly required to support the said associate or joint venture.

Non-controlling investmentsA non-controlling investment is the share of interest in a subsi-diary which is not directly attributable to the parent company. Non-controlling investments are recognised at fair value on the takeover date.

Year-end closing timing differencesFor companies whose financial year does not end on 31st December, interim financial statements as at 31st December are established.

Transactions eliminated in the consolidated financial statementsTransactions between consolidated companies which have an impact on their balance sheet or income statement are elimina-ted. Losses on transactions between consolidated companies that are indicative of value impairment are not eliminated. IAS 12 “IncomeTaxes”appliestotemporarydifferencesresultingfromthe elimination of profits and losses on intra-group transactions.

2.4.2 translation of transactions and financial statements of foreign companies The Group’s consolidated financial statements are prepared in euros, which is the functional and reporting currency of the parent.

19


Translation of the financial statements of foreign companiesThe financial statements of consolidated foreign subsidiaries, whose functional currency is different from the euro, are transla-ted on the following bases:◗ assets and liabilities are translated at the official exchange rates

prevailing at the year-end date;◗ income and expenses are translated at the average rate for the

period, unless exchange rates fluctuate significantly;◗ goodwill and fair value adjustments recognised on the acqui-

sition of companies whose functional currency is not the euro are considered to be the assets and liabilities of such compa-nies: they are thus stated in the functional currency of the said companies and converted at the closing rate of each period;

◗ the resulting foreign exchange translation differences are reco-gnisedinconsolidatedequityundertheitem“foreignexchangetranslationreserves”.

Translation of foreign currency transactionsThe functional currency of Group companies is their local cur-rency. Transactions denominated in foreign currency are trans-lated by the subsidiaries into their functional currency at the rate of exchange prevailing at the transaction date.

Monetary assets and liabilities denominated in foreign currency are translated into euros at the last official year-end exchange rate. The corresponding exchange differences are recorded in financial income (expense).

2.4.3 business combinationsThe Group has applied IFRS 3 (Revised) since 1st January 2010.A business combination is understood to involve the obtaining or losing of control. Upon acquisition of a controlling interest, the acquirer recognises the fair value of the acquired assets and liabilities of the acquired entity and also assesses the goodwill or profit from them.

Non-controlling interests are recognised according to the fol-lowing options for each combination:◗ either based on their share in the fair value of the assets and

liabilities acquired (the so-called partial goodwill method);◗ or at fair value of the shareholding (the so-called complete

goodwill method).

Acquisition costs are expensed in the year.

For a takeover in several stages, the investment held prior to the establishment of control is revalued at its fair value on the date of takeover and any profit or loss arising therefrom is recognised under operational profit or loss after gains or losses from disposals.

Commitments linked to earn-out clauses are measured at their fair value on the acquisition date.

Adjustments to the cash consideration during the twelve months after the date of acquisition must be analysed in order to deter-mine:◗ if the adjustment is linked to new factors occurring since the

acquisition of control: counterpart in profit for the year;◗ if the adjustment is the result of new information collected

enabling fine-tuning of the valuation on the takeover date: counterparty in goodwill.

The subsequent change of debt corresponding to additional consideration beyond the twelve month period is booked in profit for the year.

After the acquisition of control, purchases/disposals without loss of control are treated as transactions between shareholders and therefore directly through equity.

2.4.4 goodwillGoodwill on acquisition represents the excess of the cost of an acquisition over the share acquired by the Group of the fair value of the acquired assets and liabilities of the acquired entity on the date of acquisition.

The goodwill recognised for an associate is included in the value ofthecapitalholdinginitunder“Investmentsundertheequitymethod”,inthestatementoffinancialposition.

Corrections or adjustments may be made to the fair value of assets, liabilities and contingent liabilities acquired in the twelve months following the acquisition, when new information arises affecting facts and circumstances which were in evidence at this date of acquisition. Goodwill is then corrected with retroactive effect. Beyond that date, any change in assets acquired and liabilities assumed is recognised in the income statement. If the information is a result of events occurring after the date of acqui-sition, they are recognised in profit for the year.

As goodwill cannot be amortized, it undergoes impairment tests every year or at more frequent intervals when events or changes in circumstances indicate possible loss in value (see 2.4.9). Goodwill is allocated to cash generating units or groups thereof which are likely to benefit from synergies resulting from aggre-gation as described in note 2.4.9.

Negative goodwill is recognised in the income statement on the date of acquisition.

2.4.5 Commitments to repurchase the non-controlling interests in a subsidiary The Group has given promises to non-controlling shareholders of certain fully consolidated subsidiaries to repurchase their shares.

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These purchase commitments (firm or conditional) of non-controlling interests do not transfer risks and benefits. They are recognised in financial debts against a reduction of these ear-nings attributable to non-controlling interests.

Where the value of the commitment exceeds the amount of earnings attributable to non-controlling interests the balance is recognised in equity attributable to Group shareholders.

The fair value of non-controlling interest buyout commitments is reviewed at each financial accounting period end. The change in the corresponding financial liability is booked against equity. This provision applies to commitments to purchase non-control-ling interests issued after the application date of revised IFRS 3, i.e. 1st January 2010.

For those issued before that date, the change in valuation will be booked against the associated goodwill.

2.4.6 service concession arrangements

presentation of the ifRiC 12 interpretationAn arrangement is included in the scope of interpretation of IFRIC 12, where the assets used to carry out the public service are controlled by the grantor. Control is presumed when the two conditions below are met:◗ the grantor controls or regulates the public service, i.e. it

controls or regulates the services that must be rendered, through the infrastructure covered by the concession and determines to whom and at what price the service shall be rendered; and

◗ the grantor controls the infrastructure on termination of the contract, i.e. it has the right to regain possession of the infras-tructure at the end of the contract.

In its public transport activities, the Group is in particular the holder of outsourced public service contracts.

In France, the Group operates outsourced public service contracts, mainly in the form of operate and maintain (O&M) contracts whereby the operator is responsible for operating and maintaining facilities owned and funded by local and regio-nal authorities – public transport authorities (PTAs).

Pursuant to the interpretation of IFRIC 12, in this case, the operator cannot include the infrastructure controlled by the grantor in its balance sheet as tangible assets, but either as an intangibleasset(“intangibleassetmodel”)and/orasafinancialasset(“financialassetmodel”):◗the“intangibleassetmodel”applieswheretheoperator

receives a right to charge users for the public service and thus bears a financial risk;

◗the“financialassetmodel”applieswheretheoperatorobtains

an unconditional right to receive cash or other financial asset, either directly or indirectly through guarantees given by the grantor on the amount of cash payments from the public service. The remuneration is independent of the extent to which the public uses the infrastructure.

Where the service is provided using infrastructure rented from a third party and controlled by the grantor, the Group has reco-gnised payments of fixed and variable fees in the IFRIC 12 asset valuation.

Financial asset modelIn service concessions, the operator receives an unconditional right if the grantor gives it a contractual guarantee to pay:◗ amounts specified or determined in the contract; or◗ the shortfall, if any – between the amount received from users

of the public service and specified or determinable amounts in the contract.

Financial assets stemming from the application of the IFRIC 12 interpretation are recorded in the statement of financial position under“Non-currentfinancialassets”detailedinNote5.5.Theyare recognised at amortised cost and repaid according to the rents collected.

The financial income, calculated on the basis of the effective rate of interest, the equivalent of the project’s internal rate of return, is recognised as revenue.

intangible asset modelThe intangible asset model applies where the operator is paid by users or does not receive any contractual guarantee from the grantor on the amount to be collected. The intangible asset corresponds to the right granted by the grantor to the operator to charge users for the public service.

Intangible assets resulting from the application of the IFRIC 12 interpretation are booked in the statement of financial position undertheheading“Otherintangiblefixedassets”detailedinNote 5.2. These assets are amortised straight-line over the term of the contract.

Within the framework of the intangible asset model, revenues include: ◗ Turnover as and when assets or infrastructures under construc-

tion are completed;◗ Remuneration relating to the provision of services.

Mixed or bifurcation model Application of the financial asset model or the intangible asset model is based on the existence of guarantees of payment given by the grantor.

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However, certain contracts may include a payment commitment from the grantor which partially covers the investment, with the balance covered through fees charged to users.

In this case, the amount guaranteed by the grantor is recognised as a financial asset and the balance as an intangible asset.

2.4.7 intangible assets excluding goodwillIntangible assets are shown in the statement of financial position at their acquisition cost less the accumulated amortisation and impairments.

Intangible assets mainly consist of patents, licences, trademarks, rights under contracts, pension plan assets, software and service concession intangible assets as defined by IFRIC 12.

When contracts are awarded, the Group capitalises the costs that match the identification criteria, and that are incurred between the date when the contract is awarded and the date when the ope-ration actually starts up.

When the Group completes an acquisition, the contractual rela-tionship between the acquired company and its client (the public transport authority) is assessed at fair value and recognised sepa-rately from the goodwill as a contractual right satisfying the qua-lifying criteria of IAS 38 and IFRS 3.

Where their useful life is defined, intangible assets are amortised on a straight-line basis over periods corresponding to their expec-ted useful life. The amortisation method and useful lives are revised at least each financial year or when necessary. The estimated useful lives are as follows:◗ trademarks: between five and fifteen years;◗ contractual rights: two to twenty years, corresponding to their

estimated useful life, allowing for a contract renewal rate when the Group has a high renewal rate in the Cash Generating Unit (CGU) concerned;

◗ software: one to five years;◗ service concession assets amortised over the term of the

contract (see 2.4.6).

2.4.8 property, plant and equipmentExpenditure on property, plant and equipment by the Group is recognised as an asset at its acquisition cost where it satisfies the following criteria:◗ it is likely that the future economic benefits relating to the asset

will fall to the Group;◗ the cost of the asset can be reliably measured.

Property, plant and equipment are shown in the statement of financial position at their acquisition cost less the accumulated depreciation and impairments. The cost includes the asset’s

purchase or production cost and all the costs directly incurred in making it usable.

Items of property, plant and equipment cease to be recognised as assets when they are derecognised (through disposal or retirement), or when no future economic benefit is expected from their use or disposal. Any gain or loss arising from the dereco-gnition of an asset from the statement of financial position (the difference between the net income from disposal and the asset’s carrying amount) is recognised in the income statement in the period of its retirement.

Given the nature of the Group’s business, the activities of the different subsidiaries or joint ventures do not include holding investment property assets.

subsequent expenditureSubsequent expenditure incurred in replacing property, plant or equipment is recognised under PPE only if it satisfies the fore-going general criteria and qualifies as components.

Otherwise, this expenditure is recognised in the income state-ment as incurred. Through its public passenger transport activity, the Group incurs multiyear expenditure on heavy maintenance and major servicing operations on its light rail (underground railway, tramway) and passenger rail rolling stock. These are capitalised as assets as a component overhaul, which is subsequently depreciated. Furthermore, expenditure which relates to refurbishments or leads to an increase in productive capacity and modifications bringing new functionality or that extend lifespans are contribu-tions that can be qualified as operator assets.

DepreciationThe residual values and useful lives of the assets are reviewed and, where applicable, adjusted, annually or whenever lasting changes arise in operating conditions. To date, the residual values at the end of the useful life are regarded as immaterial.Land is not depreciated. Other property, plant and equipment items are depreciated using the straight line method. The esti-mated useful lives are as follows:

Buildings 15 - 20 years

Equipment and tooling 5 - 10 years

Office equipment and furniture 5 - 10 years

Vehicles:

Cars 5 years

Coaches and buses 10 - 15 years

Rolling stock 15 - 30 years

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lease agreementsAs part of its various operations, the Group uses assets made available through lease agreements. These lease agreements are the subject of an analysis based on the situations described and indicators provided in IAS 17 in order to determine whether they are operating lease agreements or finance leases.Finance leases are agreements that transfer almost all of the risks and benefits of the relevant asset to the lessee. All the lease agreements that do not comply with the definition of a finance lease are classified as operating lease agreements.The main indicators examined by the Group to assess whether a lease agreement transfers almost all of the risks and benefits are as follows: the existence of an automatic ownership transfer clause or a transfer option; the conditions under which this clause may be exercised; a comparison between the length of the lease and the estimated life of the asset; the uniqueness of the asset used, and a comparison of the present value of the minimum payments under the agreement with the fair value of the asset.

Recognition of finance leasesAt the point of initial recognition the assets treated as finance leases are posted as tangible assets, with a corresponding finan-cial debt. The asset is recognized at the fair value of the asset at the start of the lease or, if it is lower, the present value of the minimum payments under the lease.

Recognition of operating leases Payments made under operating lease agreements are reco-gnised as expenses in the income statement.

Government investment grantsGovernment grants wholly or partly covering the cost of inves-tinginanassetarerecognisedas“Tradepayablesandotherliabilities”andsystematicallywrittendownintheincomestate-ment over the useful lives of the assets concerned.

2.4.9 impairment of capitalised assets and non-financial assetsThe Group performs systematic impairment tests annually (or more frequently where value impairment is indicated) of good-will and other intangible assets that have indefinite useful lives, and therefore cannot be depreciated.

For property, plant and equipment, and intangible assets with finite useful lives, which are therefore depreciated or amortised, an impairment test is only conducted where impairment is indi-cated.

Cash Generating Units (CGUs) are the smallest group of assets generating cash flows largely independently of other asset

groups. Such units or groups of units correspond to activities in France and, internationally are mainly classed by country.

For testing purposes, the assets are aggregated within CGUs inaccordancewithIAS36“ImpairmentofAssets”.

These tests compare the net carrying amount of assets with their recoverable amount, which is the higher of the fair value less the potential sales costs or the value in use of the asset. In the absence of any fair value observable on an organised market, the recoverable value of the CGUs is determined on the basis of their value in use.

The carrying amount of each asset group tested was compared with its value in use defined as the sum of the net cash flows arising from the latest forecasts for each of the CGUs, drawn up using the main assumptions and procedures set out below:◗ medium-term plan and budgets over a 5-year timeframe,

drawn up by Management on the basis of growth and profi-tability assumptions taking account of past performance, foreseeable developments in the economic environment and the expected development of markets;

◗ extrapolation of the net cash flow of the last year or the ave-rage of cash flows over the five previous years by applying the growth assumptions stated in note 5.1;

◗ discounted future value of the cash flows arising from these plans at a rate determined using the weighted average cost of capital (WACC) of the Group.

Value impairment is recognised in the income statement, under other non-recurring expense, if the carrying amount of a cash-generating unit or group of such units is greater than its reco-verable amount. The value impairment is allocated first to the goodwill apportioned to the CGU or CGU group tested, then to the other assets of the CGU or CGU group in proportion to their carrying amount.

This allocation must not result in the carrying amount of an individual asset being lower than its fair value, value in use or zero.

Impairment losses allocated to acquisition goodwill cannot be reversed, unlike the impairment losses of other property, plant and equipment and intangible assets.

In the event of an impairment loss being reversed, the asset’s carrying amount is capped at the carrying amount, net of any depreciation or amortisation without taking into account any value impairment recognised in prior periods. When an impair-ment loss or a reversal of an impairment loss has been reco-gnised, the depreciation charge is adjusted for future periods so that the adjusted carrying amount of the asset, less its resi-

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dual value, if any, is spread systematically over the remaining useful life.

2.4.10 financial assetsPurchases and sales of financial assets are accounted for at their transaction date, the date on which the Group is committed to the purchase or sale of the asset. On initial recognition, financial assets are recognised in the statement of financial position at fair value plus the transaction costs directly attributable to the acquisition or issue of the asset (except for the category of financial assets mea-sured at fair value, for which transaction costs are recognised directly in the income statement).Financial assets are derecognised from the statement of financial position to the extent that entitlements to future cash flows have expired or have been transferred to a third party, and the Group has transferred virtually all the risks and benefits or the control of such assets. Financial assets, the maturity (or intended holding period)ofwhichexceedsoneyear,arerecognisedunder“Non-currentfinancialassets”.On the date of initial recognition, according to the purpose for which the asset is acquired, the Group classifies the financial asset inoneoftheaccountingcategoriesspecifiedbyIAS39,“FinancialInstruments:RecognitionandMeasurement”.TheGroupdoesnotusethe“Held-tomaturityinvestments”category.

Financial assets at fair value, recognised in profit or lossThese are financial assets acquired by the Group with the intention of selling them in the short term.

Derivative financial instruments are also classified as held for tra-ding unless they are designated, effective hedging instruments. They are measured at fair value and their subsequent fair value changes are recognised in the income statement.

loans and receivablesLoans and receivables are non-derivative financial assets, the payment of which is fixed or determinable and that are not listed on a regulated market. These assets are recognised at their fair value plus the directly attributable costs of transaction and are then measured at depreciated cost by the effective interest rate method. An impairment loss is recognised whenever the esti-mated recoverable amount is below the carrying amount.

This category includes operating receivables, deposits and gua-rantees, loans and concession financial assets.

available for sale (aFs) financial assetsThese are non-derivative financial assets designated as being available for sale, or not belonging to the other categories. They are measured at their fair value in the statement of financial posi-tion; changes in value are recognised in equity. When available-for-sale financial assets are sold, or if there is an objective

indication of impairment of these assets, any changes in fair value that have been recognised directly in equity are transferred to the income statement.

For listed securities, fair value is equal to market price; for unlisted securities, reference is made to recent arm’s-length transactions made between informed and willing parties, or to a technical measurement based on reliable, objective information consistent with the other estimates used by other market operators or using discounted cash flow analysis. However, when the fair value of a security cannot reasonably be estimated, in the last resort it is carried at historical cost.

This category consists mainly of non-consolidated shareholdings.

impairment of financial assetsImpairment is recognised on a financial asset or group of financial assets where there is an objective indication of impairment arising from one or more events that have occurred since the initial reco-gnition of the asset, and such impairing event has an impact on the estimated future cash flows from the financial asset or group of financial assets, and if its carrying value is higher than its esti-mated recoverable value.

2.4.11 inventoriesInventories consist mainly of consumables and miscellaneous goods or supplies used for the maintenance and upkeep of vehicles or intended for resale.

These inventories are valued at purchase cost. Impairment is recognised to reduce the purchase cost (determined using the weighted average cost (WAC) method or the First-in, First-out (FIFO) method) to the net realisable value if lower. Pursuant to IAS 2, the net realisable value is the estimated sale price in the normal course of business, less the estimated cost for comple-tion and realisation of the sale.

2.4.12 trade receivables and other debtorsTrade receivables and receivables from other debtors are initially recognised at their fair value which, in most cases is their nomi-nal value, given the generally short payment times. The carrying amount is subsequently measured where required at an amor-tised cost using the effective interest rate method, less any impairment losses.

If there is an objective indication of impairment or a risk that the Group may be unable to collect all the contractual amounts (principal plus interest) on the date set in the contractual payment schedule, an impairment loss is recognised in the income state-ment. This allowance is equal to the difference between the carrying amount and the estimated recoverable future cash flows, discounted at the original effective rate of interest.

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2.4.13 Cash and cash equivalentsThis item includes cash, sight deposits and other short-term deposits as well as other easily convertible liquid instruments with negligible risk of a change in value, maturing less than three months from the date of acquisition.

2.4.14 Corporate income tax The company GROUPE KEOLIS S.A.S., parent of the tax group, has opted for the tax consolidation system in France.Other tax consolidation regimes also exist in Europe and in the USA. The effect of these regimes is recognised in the income statement. Most of the French companies subject to corporate income tax and in which the company GROUPE KEOLIS S.A.S. holds an equity interest of at least 95% are included in the tax consolidation group.

The income tax expense or income includes the current tax expense or income and the deferred tax expense or income. Tax is recognised in profit for the year unless it relates to items that are directly recognised under equity, in which case, the tax is reco-gnised under equity.

Current tax is the estimated amount of tax due on the taxable profit for the period. It also includes adjustments to the amount of tax payable in respect of previous periods.

Deferred tax is calculated for each individual entity according to the balance sheet approach, on the temporary differences between the carrying amount of the assets and liabilities and their taxation base, including assets of which the Group has posses-sion under finance lease agreements.

Measurement of deferred tax assets and liabilities depends on whether the Group expects to recover or to pay the carrying amount of the assets and liabilities, under the variable-carry-forward method, using the rates of taxation that were adopted or virtually adopted at the reporting date. A deferred tax asset is only recognised or maintained as an asset to the extent that the Group is likely to benefit from future taxable profits to which the related deductible temporary difference may be imputed.

The deferred tax assets and liabilities are not discounted.

Deferred tax assets and liabilities are offset in each taxable entity when it recovers the asset and settles the liability on the same due date, subject to the following conditions being met: ◗ legally enforceable right to offset,◗ intention to settle, ◗ schedule of payments.

Deferred tax liabilities are recognised for all taxable temporary differences, with the exception of certain differences between the values of the Group’s proportionate interests in the net assets of

subsidiaries, joint ventures and associates and their tax values. This exception applies in particular to the income of subsidiaries yet to be distributed, should distribution thereof to shareholders generate taxation; if the Group has decided not to distribute pro-fits retained by the subsidiary in the foreseeable future, no deferred tax liabilities are recognised.

2.4.15 financial debt and long term borrowingsAll borrowings are initially recognised at fair value, less the related borrowing costs. Thereafter, they are recognised at amortised cost, using the effective interest rate method, with the difference between the cost and the redemption value recognised in the income statement over the term of the borrowings.

The effective interest rate is the rate used to obtain the original carrying amount of a loan by discounting the future cash inflows or outflows over the loan’s term. The original carrying amount of the loan includes the transaction costs of the operation and any issuance premiums.

When a debt is reimbursed early, any non-amortised costs are recognised as expenses.

2.4.16 derivative financial instrumentsThe Group uses derivative financial instruments to manage exposure to financial market risks resulting from its operational, financial and investment activities:◗ Interest rate risk;◗ Foreign exchange risk;◗ Commodities risk.

The derivative financial instruments are measured and reco-gnised at fair value in the statement of financial position on the date they are established, then on each financial year end date.Fair value is measured by using standard valuation methods and is based on the mid-market conditions commonly used in the markets. The market data used is Level 2 data, as described in IFRS 13.

The treatment of the gains and losses under the fair value revalua-tion depends on whether or not the derivative instrument is consi-dered a hedging instrument and the nature of the hedged item.

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

Certain derivative financial instruments are eligible for one of the three hedge accounting categories defined in IAS 39:◗ Fair value hedge;◗ Cash flow hedge;◗ Net investment hedge.They are recognised in accordance with hedge accounting rules.

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The criteria to apply hedge accounting are mainly:◗ general hedging documentation that describes the Group’s

exposure to the various financial risks and its hedging strategy,◗ a hedging relationship clearly established on the date on which

each derivative financial instrument is established,◗ the use of effectiveness testing to demonstrate the effective-

ness of the hedging relationship prospective to the date of establishment, and retrospective to each financial close. This effectiveness must be reliably measured and fall within 80% and 125%.

Interest rate, foreign exchange and commodity derivative finan-cial instruments are entered into with first-class bank counter-parties in accordance with the Group’s counterparty risk management policy. Consequently, the counterparty risk can be regarded as negligible.

interest rate risks relating to the variable rate portion of its financial debtThe Group’s interest rate risk exposure results from its financial debt. The Group covers this risk by using derivative financial instruments.

The objective of the risk management is to protect the Group’s financial income/(expense) from an increase in interest rates, while taking advantage of a decrease in rates to the greatest extent possible.

The interest rate hedging policy implemented consists in favou-ring fixed rate derivative financial instruments. The management horizon adopted is usually a rolling five years, but this can be greater dependent upon the hedging requirement.

The derivative financial instruments which the Group uses, are standard, liquid and available on the market, namely:◗ swaps;◗ cap calls;◗ sales of caps to unwind an existing cap or to realise a cap

spread;◗ floor puts if tied with cap calls to create a symmetrical or asym-

metrical collar;◗ floor calls, in particular to buy back floors that constitute asym-

metrical collars;◗ swaption calls;◗ swaption puts if tied with calls to constitute swaption collars.

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

Changes in the intrinsic value of derivative financial instruments recognised under cash flow hedges are entirely recognised

within equity (OCI - other comprehensive income). The other items are recognised as financial income/(expense):◗ changes in fair value of derivative financial instruments not eli-

gible for hedge accounting (for example, the asymmetrical portion of collars);

◗ changes in the time value of all derivative financial instruments;◗ option premiums.

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

The Group also makes net investments in the capital of its foreign subsidiaries in local currency. To cover the foreign exchange risks engendered by these investments, the Group uses derivative financial instruments in controlled amounts. Management’s objec-tive is to protect the balance sheet values of these investments in local currency. The foreign exchange hedging policy implemented to achieve this objective consists of maintaining a reference exchange rate defined for the year.

The derivative financial instruments used by the Group are stan-dard, liquid and market-available:◗ forward and futures sales and purchases;◗ foreign exchange swaps;◗ call options;◗ put options in combination with call options to provide symme-

tric or asymmetric collars.

Most of the derivative financial instruments held by the Group are eligible for net investment hedge accounting as described in IAS 39. The derivative financial instruments that are not eligible are recognised under trading.

Changes in the intrinsic value of derivative financial instruments recognised under net investment hedges are entirely recognised within equity (OCI). The other items are recognised as financial income/(expense):◗ Changes in fair value of derivative financial instruments not eli-

gible for hedge accounting (for example, the asymmetrical por-tion of collars);

◗ changes in the time value of all derivative financial instruments;◗ option premiums.

Commodities price risksWithin the scope of its activities, the Group is exposed to a risk in the fluctuation of the price of certain commodities, in particu-lar diesel. The diesel price fluctuation risk is generally hedged using price

26


indexation included in the contracts signed by GROUPE KEOLIS S.A.S. and its subsidiaries with their clients. For its diesel pur-chases, the Group nonetheless bears the price risk until it is passed on to its customers. This time lag, when it exists, usually lasts only a few months, and up to a maximum of twenty-four months. A hedging policy has been set up to cover this partial exposure.

Management’s objective for commodity risk management is to defend the prices indexed under the contracts.

The Group covers this commodities risk using standard, liquid and market-available derivative financial instruments, namely:◗ swaps;◗ cap calls;◗ cap puts to unwind an existing cap or to realise a cap spread;◗ floor puts if tied with cap calls to create symmetrical or asym-

metrical collars;◗ floor calls, in particular to buy back floors that constitute asym-

metrical collars.

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

Changes in the intrinsic value of derivative financial instruments recognised under cash flow hedges are entirely recognised within equity (OCI). The other items are recognised as financial income/(expense):◗ Changes in fair value of derivative financial instruments not

eligible for hedge accounting (for example, the asymmetrical portion of collars);

◗ changes in the time value of all derivative financial instruments;◗ the contango/backwardation component, corresponding to

the price difference between the forward price for swaps (or exercise price for options) and the spot price;

◗ option premiums.

2.4.17 provisions

provisions for pension and post-employment commit-ments (ias 19 revised)The Group offers its employees various fringe benefits while they are in employment or after employment. These benefits arise under the legislation applicable in certain countries and under contractual arrangements concluded by the Group with its employees, and are either defined contribution plans or defined benefit plans.

(a) Defined contribution plansDefined contribution plans are characterised by payments to organisations that discharge the employer from any subsequent obligation, with the organisations taking responsibility for paying

employees their entitlements. Hence, once the contributions are paid, no liability is reported in the Group’s financial statements.

(b) Defined benefit plansDefined benefit plans refer to plans providing post-employment benefits other than defined contribution plans. The Group has a duty to accrue provisions for the benefits to be paid to serving members of its staff, and to pay the benefits of former members of its staff. In substance, the actuarial and investment risks lie with the Group.

These plans mainly concern the following:◗ pension commitments: pension annuity plans, retirement gra-

tuities, other retirement commitments and additional pension benefits;

◗ other long term benefits: long service awards.

Description of commitments under defined benefit plans

Apart from ordinary, statutory schemes, the Group provides, according to country and local legislation, retirement gratuity schemes (France), defined benefit pension schemes (United Kingdom and Canada) and pensioners’ health benefit schemes (Canada and USA).

In France, retirement gratuities paid to the employee on leaving employment are determined according to the national collective labour agreement or the company agreement applying in the business. The following are the two main collective labour agree-ments applied within the Group:◗ “Conventioncollectivedestransportspublicsurbains”

(CCN_3099) – the national collective labour agreement for urban public transport;

◗ “Conventioncollectivedestransportsroutiers”(CCN_3085)–the national road-haulage collective labour agreement.

These schemes are partly financed by insurance policies. Their value is measured over the average term of the policies (20 years) except in the case of GROUPE KEOLIS S.A.S., Keolis S.A. and subsidiaries of the EFFIA group, which are measured on a per-petuity basis.

Annual actuarial evaluations of the commitments of the defined benefit schemes are carried out each year end primarily by inde-pendent actuaries.

Commitments for pensions, additional pension benefits and retirement gratuities are measured using a method that takes account of the projected final end-of-career salaries (termed the Projected Unit Credit Method) on an individual basis, which is based on assumptions of discount rates and expected long-term yields from the funds invested for each country, and on assumptions regarding life expectancy, staff turnover, trends in

27


pay, annuity revaluations and the discounted value of payable sums. The specific assumptions for each plan take local econo-mic and demographic factors into account.

The value entered in the statement of financial position under provisions“pensionsandotheremploymentbenefits”isthedifference between the discounted value of the future obligations and the fair value of the pension plan assets intended to cover them. Where the result of this calculation is a net commitment, an obligation is recognised as a liability in the statement of finan-cial position.

When bids are won in France or abroad, the asset representing pension rights and all other employee benefits recognised at the start of the franchise is determined on the basis of the amount of pension liabilities and other employee benefits over the esti-mated life of the contract.

Actuarial gains/losses relating to post-employment benefits resul-ting from experience and changes in actuarial assumptions are recognised directly in equity in the year in which they are incurred and are off set against the increase or decrease of the obligation. They are set out in the statement of comprehensive income.

In the income statement, the cost of service earned during the financial year is included in the operating profit.

The interest cost in respect of the discounting of pensions and similar obligations, and the income relating to the expected yields from the pension plan assets, are recognised under financial income and expense.

The actuarial calculations for pension and similar commitments are mainly performed by independent actuaries.

Long service medals are valued on the same basis as pension commitments, with the exception of the recognition of actuarial gains and losses. Actuarial gains and losses are recognised in the income statement.

Furthermore, the Group has implemented a long-term employee retention scheme.

Other types of provisions Provisions are accrued where at the end of the reporting period there is a present legal or implicit obligation towards third parties arising from a past event and there is a probability that an outflow of resources embodying economic benefits will be required to settle this obligation and a reliable estimate can be made of the amount.In the context of its activity, the Group is generally subject to a contractual obligation to carry out multiyear heavy maintenance

and major servicing operations on facilities managed under a public service agreement. The resulting maintenance and repair costs are analysed in accordance with IAS 37 on provisions and, where applicable, provisions are accrued for heavy maintenance and major servicing and also for lossmaking contracts in the event that the unavoidable costs incurred to meet the contractual obli-gation are greater than the economic benefits of the contract.

In cases of restructuring, an obligation is accrued in so far as the restructuring has been announced and is the object of a detailed formalised plan or has been started prior to the reporting date.

Provisions due in more than one year are discounted whenever the impact is material.

2.4.18 payments in shares and similar paymentsThe Group has no share option plans or share purchase war-rants for the benefit of its members of staff.

2.4.19 trade payables and other accounts payable Trade payables and other accounts payable are measured at their fair value at initial recognition, which in most cases is their nominal value, and otherwise at the amortised cost. Short-term payables are recognised at their nominal amount unless dis-counting at the market rate would have a material impact.

In the event of long payment delays, the suppliers’ debt is discounted.

Other payables include deferred revenues, corresponding to income received for services not yet provided, and investment grants not yet credited in the income statement.

2.4.20 Revenue and other business income Revenue and other business-related income are measured at the fair value of the consideration received or accrued.

They are measured net of discounts and commercial benefits given, where the service has been provided. No income is reco-gnised where there exists significant uncertainty as to the recove-rability of the consideration receivable or the costs incurred or to be incurred in relation to the service, and where the Group remains involved in managing the income.

The revenue from urban passenger transport companies is reco-gnised according to the terms of the contract signed with the public transport authority, taking account of all additional clauses and any vested rights (indexation clauses, etc).

The same applies for revenue from intercity passenger transport companies, and other activities not under contract, recognised according to the services provided. Revenues include fees from value added services arising from the

28


Group’s knowhow. These activities (excluding transportation) mainly relate to the management of car parks, airports and bike rental.

Other business-related income covers fees for services consisting mainly of revenues classified by the Group as incidental, as well as the remuneration of concession financial assets.

2.4.21 other operating expensesSince they are a recurrent feature of the activity, losses or gains on sales of transport equipment are recognised on a separate line, and included in profit from continuing operations.

2.4.22 other operating incomeOther operating income mainly comprises the CICE (tax credit for competitiveness and employment) which was created to help companies finance their competitiveness, in particular through investment, research, innovation, recruitment, prospection of new markets, environmental transition and replenishment of their working capital. It applies to remuneration not exceeding two and a half times the minimum wage that the companies pay their employees in the course of the calendar year. In 2015, the tax credit rate remained unchanged at 6%.

The CICE is deducted from corporate income tax due for the year during which the remuneration used for the calculation of the tax credit was paid. Any non-deducted credit is treated as a receivable from the State and can be used to pay tax due in the three years following that in which the credit was earned. At the end of this period, any remaining non-deducted amount is reim-bursed to the company.

The Group holds the view that the CICE is a type of public sub-sidy within the application of IAS 20, insofar as it is used for financing working capital related expenditure. The CICE is reco-gnisedunderoperatingsubsidiesintheline“Otheroperatingincome”oftheconsolidatedincomestatement.

2.4.23 Recurring operating profitRecurring operating profit corresponds to the whole of the expenses and income arising from the Group’s recurring operating activity before financing activities, the earnings of associates, activities discontinued or being sold and taxation.

2.4.24 operating profit or loss Operating profit includes recurring operating profit and all tran-sactions not directly related to the normal conduct of business, but that cannot be directly attached to any other item in the income statement.

Income and expenses, charges to depreciation and provisions on non-recurring items include all non-recurring operations where costs are significant: this applies in particular to offensive bids, res-tructuring costs, disposal gains or losses on assets other than transport equipment, the amortisation of contractual rights and

startup costs in a new country or zone, and to other items that are by their nature non-recurring.

Effects of changes in scope recognised directly in income include:◗ direct acquisition costs in the case of a takeover;◗ effects of revaluations, at fair value on the acquisition date, of non-

controlling interests previously acquired in the case of an acquisi-tion in stages;

◗ subsequent earn-outs;◗ profit or loss from divestments of holdings which lead to a change

in the method of consolidation as well as, where applicable, the revaluation effects of retained non-controlling interests.

2.4.25 ebitda calculationEBITDA is calculated based on operating profit/(loss), plus or minus the profit or loss on asset disposals, the amounts repre-senting depreciation and amortisation, increases and reversals of provisions and the share of grant income released.

Recurring EBITDA corresponds to EBITDA less material non-recurring items.

2.4.26 financial income (expense)Financial expenses include interest on borrowings and financial debt calculated using the effective interest rate method, the cost of early loan repayments or of cancelling credit lines, the financial interest not directly attributable to the operating margin and the financial cost of discounting non-current liabilities.

Financial income includes income from deposits of cash or cash equivalents and dividends received from non-consolidated com-panies.

Other financial income and expense include net foreign exchange gains and losses, bank commissions on credit transactions booked as an expense and their rebilling as income, changes in the fair value of derivative financial instruments when they are to be recognised in the income statement and are recognised respectively as financial income or expenses on transactions, with the exception of changes in the fair value of hedging deri-vatives which are recorded on the same line as the transaction hedged within operating profit. Therefore, any change in the fair value of derivatives, when they are not eligible for hedge accoun-ting, and the change in value of the ineffective portion for cash flow hedging are recognised in the financial result.

All interest on borrowings is recognised as a financial expense as and when incurred.

2.4.27 Changes made to comparative periods The only change in accounting principles to be noted is that presented under paragraph 2.2 relating to the application of the IFRIC21Interpretation“Levies”asof1January2015.

29


3 • HiGHliGHTs OF THE FiNaNCial YEaR

amendment to syndicated loan agreement

On 11 June 2015, GROUPE KEOLIS S.A.S. signed an amend-ment to the syndicated loan agreement dated 12 July 2013. The main characteristics of this amendment are:◗ an increase in the maximum amount from €800 million to €900

million,◗ an adjustment of the financial conditions to correspond to the

current market, which are more favourable,◗ an extension of the maturity until 11 June 2020,◗ a provision under which Keolis may extend the maturity by an

additional year, in 2016 and 2017, subject to the approval of the entire financing syndicate. Maturity could thereby be extended until 11 June 2022.

By virtue of the principle of debt continuity, the implementation of the amendment did not give rise to any reimbursement of the nominal amount.

At 31 December 2015 the drawn amount of the loan was €600 million, with the remaining undrawn amount €300 million.

acquisition of aTE in australia

On 1 May 2015, Keolis Downer (51%-owned by Keolis and 49% by Downer EDI), Australia’s largest light rail operator, acquired Australian Transit Enterprises (ATE), one of the country’s biggest bus operators.

Through this acquisition, Keolis Downer has become the leading privately-owned multi-modal public transport operator in Australia.

Established in 1974 as a family business, ATE has since conti-nued to grow, generating revenue of approximately AUD 190 million (€136 million) in 2014. Headquartered in Brisbane, ATE operates a fleet of nearly 1,000 buses and runs urban, inter-city and school services in three states: South Australia (Adelaide), Western Australia (Perth) and Queensland (Brisbane). The com-pany currently employs 1,600 people.

As the 5th largest private bus operator in Australia, ATE consists of 4 business divisions:Path Transit, providing timetabled route and school bus services in the suburbs of Perth (Western Australia);Southlink, providing timetabled route and school bus services in metropolitan Adelaide (South Australia);LinkSA, providing timetabled route, school, special bus and dial-a-ride services within 100km of Adelaide (South Australia);Hornibrook, providing timetabled route and school bus services in the suburbs of Brisbane (Queensland).

30


4 • NOTEs TO THE CONsOliDaTED iNCOME sTaTEMENT

4.1 staff costs

staff costs

4.3 Operating profit

average number of employees

(€ million) 31/12/2015 31/12/2014

Wages and social charges (2,437.4) (2,240.4)

Taxes on remuneration (63.0) (62.7)

Other staff expenses (1) (390.6) (226.0)

TOTal (2,891.0) (2,529.1)

31/12/2015 31/12/2014

Managers 2,425 2,171

Supervisory and technical staff 6,461 6,210

Clerical and manual employees, drivers 45,938 42,907

TOTal 54,824 51,288

The number of staff in the companies acquired during the period is averaged over the period.

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

(1) This item includes negative goodwill in Belgium amounting to €5.7 million in 2015 and €5.3 million of depreciation of goodwill in the USa in 2014.

(€ million) 31/12/2015 31/12/2014


Non-recurring costs of offensive bids (12.4) (15.6)

Profit/(loss) on non-recurring fixed asset disposals 0.5 1.0

Amortisation of contractual rights and others (1) (21.0) (28.1)

Other non-recurring items (6.7) (9.3)

◗ Net reorganisation expenses (8.5) (6.0)

◗ Change in provisions for contract losses 1.4 3.3

◗ Other 0.2 (6.6)

TOTal NON-RECURRiNG iTEMs (39.6) (52.0)

OPERaTiNG PROFiT BEFORE iNVEsTMENTs UNDER EqUiTY METHOD 51.4 52.7

4.2 Other operating incomeUnder the CICE, the Group received €49.5 million in 2015, compared to €50.2 million in 2014.

31


4.4 EBiTDa calculation

4.5 Financial income / (expense)

(€ million) 31/12/2015 31/12/2014

OPERaTiNG PROFiT 51.4 52.7

Net depreciation and other provisions charged 221.7 190.2

Depreciation and provisions on non-recurring items 20.8 30.6

Including amortisation of contractual rights and brands 26.7 22.8

Including Belgium negative goodwill and KTA goodwill depreciation (5.7) 5.3

Amortisation of grants received (6.3) (5.5)

Reversals of operating provisions utilised on recurring items (9.4) (10.4)

Reversals of provisions utilised on non-recurring items (2.3) (4.6)

Profit/(loss) on non-recurring fixed asset disposals (0.5) (1.0)

Profit/(loss) on fixed asset disposals (0.9) (1.1)

EBiTDa 274.6 250.9

Non-recurring income and expense(1) 21.6 26.9

RECURRiNG EBiTDa 296.2 277.8

(1) Non-recurring income and expense include significant offensive bid costs, major restructuring expenses and other significant exceptional items.

(€ million) 31/12/2015 31/12/2014

Net cost of financial debt (18.1) (18.6)

◗ of which Cost of gross financial debt (19.0) (19.7)

◗ of which Income from cash and cash equivalents 0.9 1.0

Other financial income and charges 7.3 7.5

Other financial charges (19.0) (18.2)

◗ of which foreign exchange impact (5.2) (1.0)

FiNaNCial iNCOME / (ExPENsE) (29.8) (29.3)

(€ million) 31/12/2015 31/12/2014

Govia (UK) 12.4 5.7

First / Keolis Transpennine (UK) 9.4 10.1

Other associates (France) 0.7 0.1

Other associates (international, excluding UK) (0.1) -

TOTal JOiNT VENTUREs aND assOCiaTEs 22.4 16.0

4.6 share in net profit for the year from investments under the equity method

32


4.7 Taxation

The 2015 tax charge amounts to €18 million.

The Group has opted to present a reconciliation of its effective rate at 34.43%, rather than 38%, which is the 2015 rate including the additional contribution of 10.7% (2013 Finance Act).This rate of 38% will not in fact apply to the Group because the impact of the reversal of deferred income taxes is insignificant in the period and currently this measure is only temporary.

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

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

(€ million) 31/12/2015 31/12/2014

CURRENT Tax ExPENsE (24.8) (32.9)

Tax payable for the period (25.3) (33.6)

Adjustments in respect of prior years 0.5 0.7

DEFERRED Tax iNCOME 6.8 21.3

Deferred tax for the period 6.8 24.4

Impairment loss on deferred tax asset - (3.1)

Tax ExPENsE FOR THE YEaR (18.0) (11.6)

(€ million) 31/12/2015 31/12/2014

DEFERRED Tax assETs 84.6 79.9

Less than one year 16.7 8.4

More than one year 67.9 71.5

DEFERRED Tax liaBiliTiEs (177.5) (153.8)

Less than one year (17.3) (6.3)

More than one year (160.2) (147.5)

31/12/2015 31/12/2014

In % In € million In % In € million


Profit/(loss) from associates (22.4) (16.0)

Taxation 18.0 11.6

PROFiT BEFORE Tax aND BEFORE PROFiT/lOss FROM assOCiaTEs 21.6 23.3

Legal rate of taxation in France 34.43% (7.4) 34.43% (8.0)

French / foreign taxation rate differentials -9.22% 2.0 2.99% (0.7)

Effect of reduced rates and changes in tax rates 12.07% (2.6) 2.45% (0.6)

Adjustment in respect of tax for prior years -2.18% 0.5 -3.13% 0.7

Other permanent differences 22.02% (4.8) 15.33% (3.6)

Crédit d’Impôt Compétitivité Emploi -79.37% 17.1 -73.71% 17.3

Effect of direct taxation (CVAE) 43.17% (9.3) 37.06% (8.7)

Unrecognised deferred tax assets 62.46% (13.5) 34.31% (8.0)

EFFECTiVE RaTE OF TaxaTiON 83.38% (18.0) 49.73% (11.6)

Unrecognised deferred tax assets mainly relate to North America and Germany.

33


Unused losses amounted to €238 million at 31 December 2015 of which €112 million were not recognised, taking into account assumptions on the usability of these losses within available time limits, which would represent a deferred tax asset of €26.2 mil-lion.

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

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

(€ million) Net position

OPENiNG BalaNCE ON 1 JaNUaRY 2015 (73.9)Recognised in equity 0.1

Recognised in profit for the year 6.8

Effect of consolidation scope changes (27.2)

Foreign exchange translation difference and other movements 1.3

ClOsiNG BalaNCE ON 31 DECEMBER 2015 (92.9)

(€ million) Net position

OPENiNG BalaNCE ON 1 JaNUaRY 2014 (100.3)Recognised in equity 8.6

Recognised in profit for the year 21.3

Effect of consolidation scope changes (5.2)

Foreign exchange translation difference and other movements 1.5

ClOsiNG BalaNCE ON 31 DECEMBER 2014 (73.9)

Net deferred taxes by type are as follows:

(€ million) 31/12/2015 31/12/2014

Purchase accounting asset revaluations (152.8) (140.8)

Staff benefits 45.9 40.7

Tax losses 29.2 29.9

Other timing differences (15.2) (3.7)

ClOsiNG BalaNCE ON 31 DECEMBER (92.9) (73.9)

34


5 • NOTEs TO THE CONsOliDaTED sTaTEMENT OF FiNaNCial POsiTiON

5.1 Goodwill

Changes in carrying amount

(€ million) France Continental Europe australia UK North

america total

at 1 January 2015 740.5 103.6 - 222.8 38.2 1,105.1

Acquisitions (1) 0.4 0.1 38.8 - - 39.3

Disposals - - - - - -

Impairment loss for the period - - - - - -Foreign exchange translation differences and others (3.0) (2.4) (1.9) - 2.6 (4.7)

at 31 December 2015 737.8 101.2 36.9 222.8 40.9 1,139.6

Of which gross value 737.8 103.2 37.2 222.8 51.3 1,152.3Of which accumulated amortisation and impairment charges - (2.0) (0.2) - (10.4) (12.7)

(€ million) France Continental Europe australia UK North

america total

at 1 January 2014 729.5 100.0 - 222.8 41.1 1,093.5

Acquisitions 12.1 5.2 - - 17.3

Disposals - - - - - -

Impairment loss for the period - - - - (5.3) (5.3)Foreign exchange translation differences and others (1.2) (1.6) - - 2.4 (0.4)

at 31 December 2014 740.5 103.6 - 222.8 38.2 1,105.1

Of which gross value 740.5 105.6 - 222.8 48.3 1,117.1Of which accumulated amortisation and impairment charges - (2.0) - - (10.0) (12.1)

impairment testingThe main assumptions made for impairment tests are as follows:

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

The average weighted cost of capital has been determined by a combinationoftwomethods:the“CapitalAssetPricingModel”(CAPM) method and the average weighted cost of capital method for comparable listed companies. Taking into account these fac-tors, the cost of capital used to discount future cash flows was set at 4.8% in 2015 versus 5.6% in 2014.

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

Long-term growth ratesThe growth rate applied to the main cash-generating units or groups thereof was 2%.

Sensitivity of recoverable amountsSensitivity tests on groups of cash-generating units were carried out by varying the long-term growth rates or the WACC (weighted average cost of capital).

A 0.5 point decrease in the indefinite growth rate leaves a positive margin between the value in use and the carrying amount of cash-generating units.

A 0.5 point increase in the discount rate leaves a positive margin between the value in use and the carrying amount of cash-gene-rating units.

(1) The additional goodwill recorded in 2015 arises principally from the acquisition of ATE on 1 May 2015. The assessment of assets and liabilities at the date of acquisition is currently underway and will be completed within one year.

35


5.2 Other intangible assets

(€ million) Software Trademarks Contractual rights Other (1) total

at 1 January 2015 40.0 63.6 268.3 118.0 489.9

Acquisitions 20.7 - - 41.0 61.6

Assets disposed of and scrapped (1.3) - - (1.4) (2.7)

Amortisation (21.1) (2.0) (25.4) (26.1) (74.6)

Changes in reporting scope - - 68.8 - 68.8Foreign exchange translation differences and other movements (2) 16.4 0.6 (1.6) (24.6) (9.3)

at 31 December 2015 54.6 62.3 310.1 106.9 533.9

Of which gross value 144.7 70.4 552.4 230.9 998.4Of which cumulative depreciation and impairment losses (90.1) (8.1) (242.3) (124.0) (464.5)

(€ million) Software Trademarks Contractual rights Other (1) total

at 1 January 2014 33.8 65.6 281.6 94.7 475.6

Acquisitions 17.6 - 0.2 28.5 46.3

Assets disposed of and scrapped - - - (0.5) (0.5)

Amortisation (18.5) (2.0) (20.7) (22.7) (64.0)

Changes in reporting scope - - 6.1 - 6.2Foreign exchange translation differences and other movements (2) 7.1 0.1 1.2 17.9 26.2

at 31 December 2014 40.0 63.6 268.3 118.0 489.9

Of which gross value 120.2 69.7 481.2 224.4 895.5Of which cumulative depreciation and impairment losses (80.2) (6.1) (212.8) (106.4) (405.5)

(1) Of which net value of intangible concession assets of €48.4 million in 2015 versus €56.7 million in 2014.(2) Mainly relates to contractual rights acquired in Australia (ATE).

36


5.3 Property, plant and equipment

(€ million)

land

&

Dev

elop

men

ts

Bui

ldin

gs

Equi

pmen

t and

to

olin

g

Tran

spor

t eq

uipm

ent

PP

E un

der

cons

truc

tion

Oth

er

tota

l

at 1 January 2015 25.4 183.4 42.8 427.1 52.7 75.0 806.3

Acquisitions 2.4 13.3 12.4 123.5 19.6 19.2 190.3

Assets disposed of and scrapped (1.8) (3.3) (1.6) (20.8) (1.0) (6.3) (34.8)

Depreciation (1.8) (22.2) (13.5) (92.9) 0.1 (18.0) (148.3)

Changes in reporting scope (1) 4.9 0.1 - 62.4 - 2.0 69.3Foreign exchange translation differences and other movements 8.6 46.8 7.2 (9.4) (36.3) (7.9) 9.0

at 31 December 2015 37.8 218.0 47.2 489.8 35.1 64.0 891.8

Of which gross value 45.9 391.2 140.6 1,135.4 35.1 172.4 1 920.6Of which cumulative depreciation and impairment losses (8.2) (173.2) (93.5) (645.6) - (108.4) (1,028.8)

(1) Relates mainly to acquisition in Australia (ATE).

(€ million)

land

&

Dev

elop

men

ts

Bui

ldin

gs

Equi

pmen

t and

to

olin

g

Tran

spor

t eq

uipm

ent

PP

E un

der

cons

truc

tion

Oth

er

tota

l

at 1 January 2014 25.6 174.2 44.2 379.9 37.2 67.8 729.0

Acquisitions 3.8 11.4 8.3 116.6 39.9 25.2 205.2

Assets disposed of and scrapped (3.0) (1.1) (0.3) (26.5) (0.4) (1.1) (32.3)

Depreciation (1.1) (16.9) (12.4) (84.9) - (17.7) (133.0)

Changes in reporting scope - 0.7 - 35.3 - 1.0 37.0Foreign exchange translation differences and other movements 0.1 15.1 2.9 6.6 (24.0) (0.2) 0.5

at 31 December 2014 25.4 183.4 42.8 427.1 52.7 75.0 806.3

Of which gross value 31.4 338.8 128.0 1,050.1 52.8 170.2 1,771.3Of which cumulative depreciation and impairment losses (6.0) (155.4) (85.2) (623.0) (0.1) (95.2) (965.0)

Finance leases At 31 December 2015, finance leased assets included within assets in the statement of financial position comprised:

Schedule of minimum finance lease payments

(€ million)Transport

equipmentland and Buildings total

Gross value 276.1 7.0 283.1

Depreciation (143.3) (3.9) (147.2)

TOTal FiNaNCE lEasED FixED assETs 132.9 3.1 136.0

(€ million) 1 year 1 to 5 years > 5 years total

Principal 26.1 77.9 19.6 123.6

Interest 5.3 7.7 4.5 17.5

FiNaNCE lEasE PaYMENTs 31.4 85.6 24.1 141.1

37


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

The financial elements relating to significant joint ventures are presented below at 100% of their values:

(€ million) 31/12/2015 31/12/2014

aT 1 JaNUaRY 32.5 20.1

Net profit attributable to Group 22.4 16.0

Depreciation - -

PROFiT/(lOss) FROM iNVEsTMENTs UNDER EqUiTY METHOD 22.4 16.0

Change in fair value affecting equity (1) 13.1 8.4

Foreign exchange translation differences (1.5) 0.7

Dividends paid (31.9) (12.9)

Changes in consolidation scope & other 0.6 0.2

aT 31 DECEMBER 35.1 32.5

(1) Changes in fair value affecting equity relate to actuarial gains and losses within the defined benefit pension schemes of the Railways Pension Scheme which are a function of franchise length.

(€ million)

Gov

ia &

sub

sidi

arie

s

Firs

t / K

eolis

Tr

ansp

enni

ne

Oth

ers

Tota

l as

soci

ates

Gov

ia &

sub

sidi

arie

s

Firs

t / K

eolis

Tr

ansp

enni

ne

Oth

ers

Tota

l as

soci

ates

Non-current assets 27.0 1.8 NA NA 37.6 2.8 NA NA

Net WCR 31.8 25.4 NA NA 7.5 29.2 NA NA

Equity 56.8 27.3 NA NA 45.1 32.0 NA NA

Incl. net profit 35.5 20.8 NA NA 16.4 22.5 NA NA

Non-current liabilities 2.0 (0.1) NA NA - - NA NA

Net assets 56.8 27.3 Na Na 45.1 32.0 Na Na

Percentage owned 35% 45% 35% 45% Reconciliation of financial data with value of investments under equity method:

Group share of net assets 19.9 12.3 3.0 35.1 15.8 14.4 2.3 32.5

Goodwill - - - - - - - -

Other - - - - - - - -

Net book value of investments 19.9 12.3 3.0 35.1 15.8 14.4 2.3 32.5

at 31 December 2014at 31 December 2015

38


5.5 Current and non-current financial assets

The securities available for sale relate to investments in companies which are not consolidated.

The changes in concession financial assets in the period include new acquisitions for €22.3 million and reimbursements for €8.1 million.

(€ million)

loan

s an

d

rece

ivab

les

Sec

uriti

es

avai

labl

e fo

r sal

e

Dep

osits

and

gu

aran

tees

Der

ivat

ive

asse

ts

Con

cess

ion

fin

anci

al a

sset

s

tota

l

at 31 December 2015

Gross value 1.4 29.6 33.6 0.7 125.4 190.8

Impairment - (0.3) - - - (0.3)

Net value 1.4 29.4 33.6 0.7 125.4 190.5

◗ Less than one year 0.1 - 18.5 0.7 - 19.4

◗ More than one year 1.3 29.4 15.0 - 125.4 171.1

5.6 inventories

(€ million) at 31 December 2015 at 31 December 2014

Gross inventories 86.4 82.5

Provisions (4.4) (4.4)

NET iNVENTORiEs 82.0 78.0

(€ million)

loan

s an

d

rece

ivab

les

Sec

uriti

es

avai

labl

e fo

r sal

e

Dep

osits

and

gu

aran

tees

Der

ivat

ive

asse

ts

Con

cess

ion

fin

anci

al a

sset

s

tota

l

at 31 December 2014

Gross value 1.5 23.3 36.7 0.1 106.1 167.7

Impairment - (0.3) - - - (0.3)

Net value 1.5 23.0 36.7 0.1 106.1 167.4

◗ Less than one year (0.1) - 19.7 0.1 - 19.7

◗ More than one year 1.6 23.0 17.0 - 106.1 147.7

39


5.7 Trade and other receivables


Trade receivables 429.6 394.2

Advances and down payments on orders 8.1 8.2

Amortisation of accounts receivable (11.3) (10.9)

TRaDE RECEiVaBlEs 426.4 391.5

Receivables from staff and welfare agencies 4.4 7.2

Central government and local authorities 151.4 119.6

Prepayments 24.8 21.8

Other(1) 169.5 163.0

Depreciation of other debtors (1.3) (1.1)

OTHER RECEiVaBlEs 348.8 310.5

(1) Other receivables for 2015 include €65 million representing the Australian Department for Transport’s guarantee on extra holiday rights; these rights appear under liabilities as payables to staff.

5.8 Cash and cash equivalents

analysis by type


Cash 287.3 228.0

Short term investments 25.4 66.6

TOTal RECOGNisED as assETs 312.7 294.6

BaNk OVERDRaFTs (189.9) (117.7)

NET CasH aND CasH EqUiValENTs 122.8 176.9

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

The Group takes the view that its UCITS classified by the AMF (Frenchfinancialmarketsauthority)as“euromoney-market”meetthe criteria necessary to classify them as cash equivalents.

In 2015, the Group carried out several transactions to monetise trade receivables. The amount of receivables thus monetised was

€27.4 million at 31 December 2015 versus €23.6 million at 31 December 2014.

The receivable arising in 2013, 2014 and 2015 from the CICE implemented by the French government and recognised by Frenchconsolidatedtaxgroupswassubjecttoa“Dailly”sale.

40


5.9 Equity

share capital and share premium At 31 December 2015, the share capital was €237.9 million, comprising 180,218,865 ordinary shares with a nominal value of one euro and thirty-two cents each, fully paid up. The share premium amounted to €303.2 million.

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

Treasury shares On 31 December 2015 all of GROUPE KEOLIS S.A.S.’ treasury shares, totalling €1.9 million, were cancelled.

Distributable reserves and earningsAt 31 December 2015, the company GROUPE KEOLIS S.A.S. had distributable reserves and earnings of €143.0 million and €29.2 million respectively.

Non-controlling interestsAt 31 December 2015, non-controlling interests amounted to €51.9 million as against €21.0 million at 31 December 2014.The main non-controlling interests are Keolis Commuter Services LLC, Keolis Downer and KDR Victoria Pty Ltd.

Foreign exchange translation reserve During 2015, foreign exchange translation reserves increased by €1.2 million. The following were the main exchange rates against the euro used for the 2015 and 2014 financial years:

5.10 Financial debt and long term borrowings

Financial debt breakdown by type

(for 1 euro) 2015 2014

average rate Closing rate average rate Closing rate

Pound sterling 0.725978 0.733950 0.806100 0.778900

Australian dollar 1.476802 1.489700 1.471900 1.482900

Danish crown 7.458912 7.462600 7.454800 7.445300

Swedish crown 9.352400 9.189500 9.098500 9.393000

Norvegian crown 8.944238 9.603000 8.354400 9.042000

US dollar 1.109067 1.088700 1.328500 1.214100

Canadian dollar 1.417910 1.511600 1.466100 1.406300

Indian rupee 71.141807 72.021500 81.040600 76.719000

at 31 December 2015

(€ million)amounts in the

statement of financial position

term Rates

Finance leasing 2.8 2016 Variable rates

Finance leasing 23.4 2016 Fixed rates

Derivatives 6.1 2016 -

Loans 4.3 2016 Fixed rates

Loans 42.2 2016 Variable rates

sUBTOTal lEss THaN 1 YEaR 78.8 -

Owed to non-controlling shareholders (put option) 9.5 2017 -

Finance leasing 4.5 2017-2021 Variable rates

Finance leasing 93.0 2017-2021 Fixed rates

Employee profit-sharing 0.6 2017-2020 Fixed rates

Derivatives - -

Loans 37.8 2017-2021 Fixed rates

Loans 735.7 2017-2021 Variable rates

sUBTOTal MORE THaN 1 YEaR 881.1 -

TOTal 959.9 -

41


Financial debt breakdown by maturity

At 31 December 2015, the amount drawn under the syndicated loan put in place on 12 July 2013 and amended on 11 June 2015 stood at €600 million and the amount undrawn was €300 million.

Financial debt breakdown by currency

Maturity

(€ million) 2016 2017 2018 2019 2020 after 2020 total

Finance leasing 26.2 26.7 24.8 16.6 9.6 19.6 123.7

Other liabilities 52.6 46.4 30.8 7.4 676.0 23.1 836.3

TOTal 78.8 73.2 55.6 24.1 685.6 42.7 959.9


Euro 655.0 624.6

Canadian dollar 51.3 53.9

Pound sterling 17.8 0.7

Swedish crown 33.1 34.1

US dollar 76.3 73.5

Australian dollar 78.9 9.9

Danish crown 47.5 37.4

Norwegian crown - -

TOTal FiNaNCial DEBTs 959.9 834.1

at 31 December 2014

(€ million)amounts in the

statement of financial position

term Rates

Finance leasing 10.1 2015 Variable rates

Finance leasing 15.8 2015 Fixed rates

Derivatives 6.8 - -

Loans 4.3 2015 Fixed rates

Loans 144.0 2015 Variable rates

sUBTOTal. lEss THaN 1 YEaR 181.0 - -

Owed to non-controlling shareholders (put option) 10.4 2016 -

Finance leasing 7.9 2015-2018 Variable rates

Finance leasing 82.1 2015-2018 Fixed rates

Employee profit-sharing 0.9 2015-2018 Fixed rates

Derivatives - - -

Loans 17.5 2015-2018 Fixed rates

Loans 534.4 2015-2018 Variable rates

sUBTOTal. MORE THaN 1 YEaR 653.1 - -

TOTal 834.1 - -

42


Mandatory financial ratiosInthedocumentationforthesyndicatedloan,the“Leverage”financialratioistobecompliedwithonasix-monthlybasis.At31December2015 this ratio under the syndicated loan was met.

The Leverage ratio corresponds to the ratio between the adjusted net debt and the adjusted recurring EBITDA.

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

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

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

The aggregations used to calculate the financial ratio strictly comply with the definitions set out in the syndicated loan documentation.

(€ million)

at 3

1 D

ecem

ber

2014

incr

ease

dec

reas

e

Cha

nges

in

repo

rtin

g sc

ope

impa

ct o

f ex

chan

ge ra

te

oth

er

at 3

1 D

ecem

ber

2015

Finance leasing 25.9 5.4 (16.8) 4.2 (0.4) 7.8 26.2Owed to non-controlling shareholders (put option) - - - - - - -

Derivatives 6.8 - - - - (0.7) 6.1

Loans 148.3 6.1 (130.6) 0.8 1.8 20.2 46.5

sUBTOTal lEss THaN 1 YEaR 181.0 11.5 (147.4) 5.0 1.4 27.3 78.8Owed to non-controlling shareholders (put option) 10.4 - - - - (0.8) 9.5

Finance leasing 90.0 27.2 (19.0) 6.5 (1.8) (5.5) 97.5

Employee profit-sharing 0.9 - - - - (0.4) 0.6

Derivatives - - - - - - -

Loans 551.8 237.9 (1.0) 3.9 - (19.0) 773.6

sUBTOTal MORE THaN 1 YEaR 653.2 265.1 (20.0) 10.4 (1.8) (25.7) 881.1

TOTal 834.1 276.6 (167.5) 15.4 (0.4) 1.6 959.9

statement of changes in financial debts

43


5.11 Financial assets and liabilities by category

at 31 december 2015book value by category of instruments

€ million

Fair

valu

e th

roug

h pr

ofit a

nd lo

ss

Fair

valu

e th

roug

h eq

uity

Fair

valu

e th

roug

h P

&l

and

equi

ty (d

eriv

ativ

e in

stru

men

ts)

Deb

ts a

t am

ortis

ed

cost

Tota

l

Investments available for resale - 29.4 - - 29.4

Other non-current financial assets - - - 141.7 141.7

Trade receivables - - - 426.4 426.4

Other receivables - - - 348.8 348.8

Current financial assets - - 0.7 18.6 19.4

Cash and cash equivalents 25.4 - - 287.3 312.7

assETs 25.4 29.4 0.7 1,222.8 1,278.3

Non-current financial debt - - - 881.1 881.1

Current financial debt - - 6.1 72.7 78.8

Bank borrowings - - - 189.9 189.9

Customer deposits and advances received - - - 34.5 34.5

Trade and other payables - - - 542.8 542.8

Other current operating liabilities - - 6.4 857.6 864.0

liaBiliTiEs - - 12.5 2,578.6 2,591.1

at 31 december 2015fair value by level

€ million

leve

l 1:

list

ed p

rice

leve

l 2:

Mod

el b

ased

on

obs

erva

ble

para

met

ers

leve

l 3:

Mod

el b

ased

on

non-

obse

rvab

le

para

met

ers

Tota

l

Investments available for resale - - 29.4 29.4

Other receivables - - - -

Current financial assets - 0.7 - 0.7

Cash and cash equivalents 25.4 - - 25.4

assETs 25.4 0.7 29.4 55.5

Current financial debt - 6.1 - 6.1

Other current operating liabilities - 6.4 - 6.4

liaBiliTiEs - 12.5 - 12.5

44


(€ million)other comprehensive income

account (oCi) (reclassifiable as income)

latent financial income/

(expense)

Underlying asset hedge accountingfair value at 31/12/2014 Change (1) Reclassified (2) Change (3)

fair value at 31/12/2015

Interest rates CFH (5.3) (2.2) 2.4 (0.1) (5.2)

Interest rates Trading - - - - -TOTal iNTEREsT RaTEs (5.3) (2.2) 2.4 (0.2) (5.2)

Currency NIH - (0.1) 0.1 - -

Currency Trading (1.3) - - 1.1 (0.2)

TOTal CURRENCY (1.3) (0.1) 0.1 1.1 (0.2)

Commodities CFH (6.5) (4.2) 4.9 (0.5) (6.3)

Commodities Trading (0.2) - - - (0.2)TOTal COMMODiTiEs (6.8) (4.2) 4.9 (0.4) (6.5)

TOTal (13.3) (6.5) 7.4 0.5 (11.9)

(1) Changes in market values, which have impacted the other comprehensive income account (reclassifiable reserves) for the financial year.(2) Reclassifications from equity have had a negative impact of €4.9 million on EBITDA and a negative impact of €2.5 million on financial income / (expense).(3) Changes in market values that impacted financial income (expense) for the financial year.

The impact on 2015 profit for the year is presented in the table below:

(€ million) ebitda financial result obtained

Underlying asset hedge accounting Change Change

Interest rates CFH - (2.4)

Interest rates Trading - (1.1)

TOTal iNTEREsT RaTEs - (3.5)

Currency NIH - (0.3)

Currency Trading - (9.6)

TOTal CURRENCY - (9.9)

Commodities CFH (6.6) (0.3)

Commodities Trading - (0.3)

TOTal COMMODiTiEs (6.6) (0.6)

TOTal (6.6) (14.0)

This table excludes accrued interest.

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

As at 31 December 2015, the Group held derivative instruments:◗ eligible for hedge accounting and recognised as cash flow hedges (CFH), or as net investment hedges (NIH); ◗ or non-eligible for hedge accounting and recognised in trading.

Fair values are calculated by using standard valuation methods and on a basis of mid-market conditions commonly used in the finan-cial markets. The market data used is level 2 under the terms of IFRS 13. The impacts on performance and the financial position of derivatives are presented in the table below:

45


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

(€ million)at 31 December 2015 at 31 December 2014

assets liabilities assets liabilities

Interest rate instruments 0.8 6.0 0.1 5.4

Currency instruments - 0.3 - 1.4

Commodities instruments - 6.5 - 6.8

TOTal 0.8 12.8 0.1 13.6

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

ThehedginginstrumentslinkedtothedebtagreementputinplacebyKeolisS.A.in2010(“privateplacementwithCaissesRégionalesdeCréditAgricole”orCRPP)maturedatthesametimeasthedebton30September2015.

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

The breakdown between the Group’s fixed and variable rate debt is as follows:

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

At 31 December 2015, on the basis of a constant net financial debt, an increase of 50 basis points in market interest rates would have increased the annual borrowing cost by €4.0 million (excluding accrued interest, derivatives and amounts owed to non-control-ling shareholders) and in parallel would have increased the financial income from cash and cash equivalents by €0.6 million.

On the basis of the interest rate hedging portfolio, an instantaneous increase of 50 basis points in market interest rates would cut the cost of annual debt by €2.0 million.

Hence, on the basis of constant net financial debt adjusted to reflect the impact of interest rate hedging derivative financial instru-ments, an immediate increase of 50 basis points in market interest rates would increase the annual cost of debt by €1.3 million.

Equally, on the basis of constant net financial debt adjusted to reflect the impact of interest rate hedging derivative financial instru-ments, an immediate decrease of 50 basis points in market interest rates would reduce the annual cost of debt by €1.4 million.


Variable rate 791.3 703.2

Fixed rate 159.1 120.6FiNaNCial DEBT aND lONG TERM BORROwiNGs aDJUsTED FOR aCCRUED iNTEREsT 950.4 823.8

Variable rate cash and cash equivalents (122.7) (176.9)

Fixed rate cash and cash equivalents - -

CasH aND CasH EqUiValENTs (122.7) (176.9)

Accrued interest receivable (0.1) 0.1

Loans and receivables (1.4) (1.5)

Deposits and guarantees (33.6) (36.6)

Derivative assets (0.7) (0.1)

Profit-sharing (0.6) (0.9)

NET FiNaNCial DEBT 791.3 607.7

46


(€ million)

at 31 December 2015 at 31 December 2014


Interest rate instruments:

◗ Cash flow hedges 0.8 6.0 0.1 5.4

◗ Trading - - - -

TOTal 0.8 6.0 0.1 5.4

(€ million)

at 31 December 2015

Nominal Fair Value

Rate swaps 385.0 (4.2)

Purchases of options 95.0 0.1

Collars 65.0 (1.1)

Sales of options - -

TOTal 545.0 (5.2)

(€ million)

at 31 December 2015

Market rate -0.5% Market rate +0.5%

Impact OCI (reserve reclassifiable as income) (12.9) 2.6

Impact financial income (expense) (0.8) (0.3)

ValUaTiON (13.7) 2.4

The sensitivity of the portfolio of derivative financial instruments to an impact of 0.50% on interest rate levels is presented below:

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

The nominal amounts and fair values of derivative financial instruments are detailed below:

All of the interest rate hedging instruments held at 31 December 2015 mature between 2016 and 2023.

47


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

The Group also makes investments in foreign entities. To cover the foreign exchange risk engendered by these investments, the Group uses derivative financial instruments for controlled amounts, with the management objective being to maintain the reference exchange rate defined for the year.

Some of the derivative financial instruments held by the Group are eligible for net investment hedge accounting as described by IAS 39, the rest are recognised under trading.

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

(€ million)



Currency instruments:

◗ Net investment hedges - - - -

◗ Trading - 0.3 - 1.4

TOTal - 0.3 - 1.4

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

All of the foreign exchange hedging derivatives held at 31 December 2015 mature in 2016.

The sensitivity of foreign exchange hedging contracts to a variation of plus or minus 10% in foreign exchange rates is detailed below:

(€ million)

at 31 December 2015

90% of the exchange rate

110% of the exchange rate

Impact OCI (reserves reclassifiable as income) - -

Impact financial income (expense) 16.2 (16.6)

FaiR ValUE 16.2 (16.6)

48


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

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

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

The sensitivity of commodity hedging contracts to a variation of plus or minus 10% in commodities’ prices is detailed below:

(€ million)

at 31 December 2015

90% of diesel price

110% of diesel price

Impact OCI (reserves reclassifiable as income) (7.8) (5.0)

Impact financial income (expense) (0.2) -

iMPaCT FaiR ValUE (8.0) (4.9)

(€ million)



Derivative financial instruments on commodities

◗ Cash flow hedges - 6.3 - 6.5

◗ Trading - 0.2 - 0.2

TOTal - 6.5 - 6.8

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

In 2013, the Group established and implemented a counterparty risk procedure for bank counterparties relating to its investments and derivative financial instruments. This procedure is based on the principles set out below:◗ Definition of three categories within which the Group’s bank counterparties are divided:•AuthorisedBanks;•Banksundersupervision;•Non-authorisedBanks.

All commodities’ hedging instruments held at 31 December 2015 mature between January 2016 and August 2017.

Nominal amounts for positions open at 31 December 2015 are as follows:

Type of hedge instrumentVolume in tonnes

yet to mature Maturing in 2016 Maturing in 2017

Swaps 32,632 28,932 3,700

Tunnels◗ Cap purchase and floor sale 11,500 9,900 1,600

◗ Floor sales 1,950 1,950 -

TOTal 46,082 40,782 5,300

49


These categories are defined based on criteria specific to banks (rating) or GROUPE KEOLIS S.A.S. (Group financing):◗ Cashinvestmentsandderivativefinancialinstrumentsareonlyundertakenwithcounterpartiesthatbelongtothe“AuthorisedBanks”

category;◗ The portfolio of cash investments complies with weighting restrictions;◗ The“fairvalueatrisk”(fairvalueinfavouroftheGroup)oftheportfolioofderivativefinancialinstrumentsismonitoredregularlysoasto

spread the risk over various counterparties;◗ The banks and categories are monitored regularly.

IfabankthatisaGroupcounterpartyisremovedfromthe“AuthorisedBanks”category,theportfolioofderivativefinancialinstrumentsis restructured so as to comply once again with the category criteria.

At 31 December 2015:◗ All the investments made and all the derivative financial instruments held by the Group were established with bank counterparties in the“AuthorisedBanks”category;

◗ The analysis of fair values at risk indicates that there is no major counterparty risk to report.

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

liquidity riskThe available, confirmed and undrawn syndicated credit facility at 31 December 2015 is €300 million. This credit line is available to GROUPE KEOLIS S.A.S.

On 11 June 2015, an amendment to the syndicated loan was signed to renegotiate its terms, raise its nominal amount to €900 million and extend its maturity to 11 June 2020 and possibly to 11 June 2022 if the two options to extend for one year are exercised.

In 2015, two credit facilities were set up by Keolis S.A.:◗ A loan of €15 million taken out at Société Générale, set up and drawn on 15 October 2015 repayable in instalments over 8 years,

to finance rolling stock. This loan is fully hedged by a derivative financial instrument;◗ A loan of €5 million taken out at the Banque Publique d’Investissement (BPI), set up in December 2014 and drawn in February

2015. This credit facility was amended on 7 December 2015 to increase its amount to €7 million repayable over 3 years.

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

Financial debt (1.9) (21.9) (612.6) (5.5)

Debt expense (6.4) (5.6) (12.9) (0.1)

◗ of which interest rate hedges (2.8) (2.1) (0.7) 0.1

The forecasted interest charges on the debt are calculated on the gross debt on the basis of the forward Euribor 1 month/3 months rate on the date of closing, to which is added the Group’s interest margin.It takes into account the impact of the interest rate derivative financial instruments.

At 31 December 2015 2016 2017 2018 2019 2020

Forward Interest rates -0.27% -0.23% 0.01% 0.31% 0.64%

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

50


5.13 Provisions

analysis by type

(€ million)


More than a

year

less than a

yearTotal

More than a

year

less than a

yearTotal

Pensions 129.2 6.3 135.5 117.9 2.4 120.3

Other employee benefits 31.1 0.9 32.0 30.1 0.9 31.0

Employment and tax risks 12.3 16.3 28.6 13.8 16.8 30.6Losses on contract termination and loss-making contracts 2.6 2.4 5.0 4.1 2.6 6.7

Contract fines - 2.9 2.9 - 1.9 1.9

Major repairs and maintenance 12.4 24.9 37.3 9.2 26.2 35.4

Other 8.8 1.9 10.7 7.0 1.6 8.6

TOTal 196.4 55.6 252.0 182.1 52.4 234.5

Movements during the financial year

(€ million)at 1 January

2015 Charges ReversalsChanges in reporting

scopeother

movementsat 31

December 2015

Pensions 120.3 23.2 (9.2) 0.4 0.7 135.5

Other employee benefits 31.0 2.4 (1.3) - (0.1) 32.0Employment and tax risks 30.6 6.8 (9.0) 0.1 0.2 28.6

Losses on contract termination and loss-making contracts

6.7 5.0 (6.7) - - 5.0

Contract fines 1.9 2.9 (1.9) - - 2.9Major repairs and maintenance 35.4 6.3 (4.3) - (0.2) 37.2

Other 8.6 7.1 (4.9) 0.1 (0.1) 10.8

TOTal 234.5 53.7 (37.3) 0.6 0.5 252.0

(€ million)at 1 January

2014 Charges ReversalsChanges in reporting

scopeother

movementsat 31

December 2014

Pensions 104.1 8.9 (7.3) - 14.6 120.3

Other employee benefits 14.2 2.5 (0.7) - 15.0 31.0Employment and tax risks 23.2 15.1 (7.4) - (0.3) 30.6

Losses on contract termination and loss-making contracts

11.0 0.6 (5.7) 0.8 - 6.7

Contract fines 2.6 1.9 (2.6) - - 1.9Major repairs and maintenance 32.3 5.8 (2.9) - 0.2 35.4

Other 9.6 4.3 (5.2) - (0.1) 8.6

TOTal 196.9 39.1 (31.8) 0.8 29.4 234.5

51


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


Commitments recorded in the statement of financial position:

Pensions and other post-employment benefits 135.5 120.3

Other employee benefits 32.0 31.0

TOTal 167.5 151.3

◗ Of which: Non-current 160.3 148.0

◗ Of which: Current 7.2 3.3

Pensions and other post-employment benefits

Actuarial assumptions

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


(per cent) France Canada France Canada

Discount rate 1.49 3.30 1.35 3.75

Rate of increase in salaries 2.00-6.20 N/a 2.00-5.80 N/A

Expected rate of return on assets 1.49 3.75 1.35 4.25

The plan assets break down as follows:

(€ million)at 31 December 2015 at 31 December 2014

France Canada France Canada

Equities - 5.3 - 5.9

Bonds 0.1 1.4 0.2 1.6

Real estate - 0.3 - 0.3

Other 0.1 - - -

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

(€ million)Commitment at

31/12/2015 service cost 2016 financial cost 2016

discount rate less 0.25% 138.8 8.5 2.0

discount rate (basic assumption) 135.5 8.3 2.2

discount rate plus 0.25% 131.9 8.1 2.4

52


Commitments recorded in the statement of financial position

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

Analysis of changes in liabilities and assets

The net present value of the liabilities comprises:


Present value of non-financed liabilities 133.0 121.1

Present value of financed liabilities 9.7 7.3

PREsENT ValUE OF TOTal liaBiliTiEs 142.7 128.4

Fair value of pension scheme assets (7.2) (8.1)PREsENT ValUE OF NET liaBiliTiEs RECOGNisED 135.5 120.3

(€ million) 31/12/2015 31/12/2014

NET PREsENT ValUE OF liaBiliTiEs aT 1 JaNUaRY 128.3 111.4

Service cost 7.1 6.0

Financial cost 1.9 2.9

Benefits paid (9.4) (7.6)

Employee contributions - -

Changes in pension schemes 14.1 0.1

Actuarial gains/(losses) 1.0 14.9

Foreign exchange translation difference (0.2) 0.3

Effect of changes in consolidation scope (0.1) 0.3

Effect of reductions and pension scheme settlements - -

NET PREsENT ValUE OF liaBiliTiEs aT 31 DECEMBER 142.7 128.3

The fair value of the assets comprises:

(€ million) 31/12/2015 31/12/2014

FaiR ValUE OF PENsiON PlaN assETs aT 1 JaNUaRY 8.1 7.5Expected return on assets 0.3 0.3

Actuarial gains/(losses) on pension fund returns 0.1 0.7

Employer contributions 0.2 0.3

Employee contributions - -

Benefits paid (0.9) (0.9)

Foreign exchange translation differences (0.6) 0.3

Effect of changes in consolidation scope - -

Effect of reductions and pension scheme settlements - -

FaiR ValUE OF PENsiON PlaN assETs aT 31 DECEMBER 7.2 8.1

53


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

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

(€ million) 31/12/2015 31/12/2014

Impact of changes in assumptions (1.5) 11.9

Losses/(gains) in the light of experience 2.5 2.3

aCTUaRial lOssEs/(GaiNs) FOR THE YEaR 1.0 14.2

(€ million)at 31 December 2015

France Canada Total

Present value of the liabilities 135.1 7.6 142.7

Fair value of pension scheme assets (0.2) (7.0) (7.2)

NET PREsENT ValUE OF NET OBliGaTiONs 134.9 0.6 135.5

Benefit cost for the financial year

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

(€ million) 31/12/2015 31/12/2014

Service cost 7.1 6.0Interest cost 1.9 2.9

Expected return on assets (0.3) (0.3)

Depreciation of past service costs 14.1 0.1

Changes in pension schemes - -

TOTal ExPENsE RECOGNisED iN THE iNCOME sTaTEMENT 22.8 8.8

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

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

(€ million) 31/12/2015 31/12/2014

OPENiNG PROVisiON aT 1 JaNUaRY 120.3 104.1Newly consolidated companies 0.1 0.3

Benefit cost for the financial year 22.9 8.7

Used (Benefits / Contributions paid) (8.7) (6.9)

Provision charged to/(reversed from) equity 1.0 14.2

Foreign exchange translation differences and other changes (0.1) -

ClOsiNG PROVisiON aT 31 DECEMBER 135.5 120.3

54


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

(€ million) 31/12/2015 31/12/2014

CUMUlaTiVE OPENiNG BalaNCE OF CHaRGEs/(REVERsals) 38.5 24.3Actuarial (gains) / losses for the year 1.0 14.2

Foreign exchange translation differences (0.2) -

CUMUlaTiVE ClOsiNG BalaNCE OF CHaRGEs/(REVERsals) 39.3 38.5

(€ million) 31/12/2015 31/12/2014 31/12/2013 31/12/2012

Present value of liabilities 142.7 128.4 111.6 113.9

Fair value of pension scheme assets (7.2) (8.1) (7.5) (8.7)

Surplus (deficit) of the pension scheme 135.5 120.3 104.1 105.2

Adjustments related to experience 2.5 2.3 (3.8) 1.1

(€ million) 01/01/2015 Charge Reversals Change in scope

Foreign exch transl. diff &

other31/12/2015

France – long service awards 15.7 1.8 (0.9) - 0.1 16.7USA – healthcare expenses of retired employees 15.4 0.6 (0.5) - (0.2) 15.3

TOTal 31.1 2.4 (1.4) - (0.1) 32.0

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

Other employee benefits

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

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

Analysis of changes in obligations

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

(1) including €37.1 million as IFRIC 12 financial liabilities in 2015 compared to €44.3 million in 2014.

5.14 Operating liabilities and other debt


Trade receivables: advances and deposits received 34.5 58.6Trade payables 543.2 521.7

Payables to PPE suppliers 41.0 62.4

Payables to staff 479.5 460.1

Central government and local authorities 101.4 83.0

Deferred income (1) 137.0 141.6

Other 104.6 93.7

TOTal 1,441.3 1,421.1

55


6 • OTHER COMMiTMENTs NOT RECOGNisED iN THE sTaTEMENT OF FiNaNCial POsiTiON aND CONTRaCTUal COMMiTMENTs

Theamountofrailwaypathaccessentitlementswithinthe“Guaranteesgivenforoperatingcommitments”is€72.0millionat31December 2015 compared to €73.8 million at 31 December 2014.

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

Future commitments linked to leases primarily relate to the rental of transport equipment and buildings. They comprise €435 million internationally and €478.8 million in France. IT equipment rental contracts are in place for immaterial values.

France

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

The manufacturer’s buyback undertaking corresponds to the estimated market value of the vehicle at the end of the rental period.

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

Outside FranceWe distinguish between railway contracts and bus contracts.

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

Rentals under leases due in less than one year amount to €17.8 million.

Rentals under leases due in more than one year depend on the end date of each of the railway or similar franchises. They amount to €98.9 million.

Bus and coach contractsRental instalments outstanding on these contracts amount to €202.5 million.

As in France, Keolis S.A. is required to provide guarantees of rental payments on behalf of its foreign subsidiaries.


UNUTilisED CREDiT liNEs 508.6 318.1Guarantees given to secure debt 43.8 41.2

Guarantees given for operating commitments 677.8 651.8

Securities provided - - TOTal COMMiTMENTs MaDE aND GUaRaNTEEs GiVEN, ExClUDiNG OPERaTiNG lEasEs 721.6 693.1


Less than one year 171.6 174.8One to five years 456.1 496.0

More than five years 286.1 333.8

TOTal 913.8 1,004.5

56


7 • DisPUTEs

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

The impact of changes in accounting estimates is recognised during the period of the change where they only affect that period, or during the period of the change and subsequent periods where the latter are also affected by the change.

Risks are measured at fair value and where appropriate a provi-sion is made in the accounts (see note 5.13).

On 27 June 2014, the Group decided to terminate a subcontrac-tor agreement. On 4 August 2014, the subcontractor filed a claim against a subsidiary of the Group without producing any evidence to support this action, which is thus entirely refuted by the subsidiary concerned. At this stage in the procedure, no provision has been made in the financial statements.

8 • RElaTED PaRTY TRaNsaCTiONs

The revised IAS 24 norm, applicable from 1 January 2011, has modified disclosure obligations for public entities regarding tran-sactions with related parties.

GROUPE KEOLIS S.A.S. is majority-owned by SNCF, a public entity with an industrial and commercial activity whose capital is wholly owned by the French State.

8.1 Transactions with the sNCF69.69% of GROUPE KEOLIS S.A.S. is owned by SNCF Participations and 30.00% by Caisse de Dépôt et Placement du Québec. Transactions mainly correspond to general manage-ment services.Transactions with the SNCF and its subsidiaries mainly concern car park rentals, and either permanent or occasional passenger transport services.

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

8.3 Remuneration of the Group’s key managers The key managers in the Group are defined as being the com-pany officers of GROUPE KEOLIS S.A.S. and the members of the executive committee. Remuneration and other short-term benefits paid to these directors amounted to €5.1 million for 9 people in 2015, compared to €3.1 million for 8 people in 2014.

The following director’s fees were paid to outside directors: €337,000 in 2015 and €325,000 in 2014.

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

9 • POsT BalaNCE sHEET EVENTs

EFFia becomes shareholder of saEMEsAt the beginning of January 2016, EFFIA became the main industrial shareholder of Société anonyme d’economie mixte d’exploitation du stationnement de la ville de Paris (SAEMES) by acquiring a 33.27% share in the company.EFFIA, which already manages more than 30,000 parking spaces in the Ile-de-France region, thus initiates closer ties with the second largest car park operator in the region SAEMES (€45 million turnover, 25,000 spaces). SAEMES operates a number of major facilities, among which Paris’ number 1 car park for revenue, Lyon-Méditerrannée, located under Gare de Lyon.The two companies which will remain commercially independent but may join together on certain invitations to tender, already jointly operate the Lyon-Diderot car park.After this transaction, EFFIA becomes the second largest sha-reholder of SAEMES, behind Paris City Hall, which sold 26.50% of the capital of SAEMES but remains majority shareholder with a 50.06% share.

keolis acquires Transports Daniel Meyer in ile-de-FranceIn January 2016, the Keolis Group announced the acquisition of a leading bus and coach service operator in Ile-de-France, Transports Daniel Meyer. With this strategic external growth transaction, Keolis reinforces its foothold in Ile-de-France and consolidates its position for future projects relating to Grand Paris Express. Keolis Ile-de-France, which generated 400 million euros of turnover in 2014, operates a fleet of 1,900 vehicles across 25 depots. Established in all of the departments compri-sing the Paris region, its 19 subsidiaries employ 4,000 people and carry 70 million passengers each year. The group Transports Daniel Meyer has 440 employees and a fleet of 260 vehicles. It generated a turnover of 40.4 million euros in 2014. Its main line of business is in the operation of approximately 50 timetabled bus lines, supplemented by school buses and school outings and charter activity.

57


10 • CONsOliDaTiON sCOPE

10.1 subsidiaries

Name Country Method of consolidation

% of shareholding

aérobag France FC 100.00%

aérolis France FC 50.10%

aéroport de Troyes Barberey France FC 100.00%

aérosat France FC 85.00%

airelle France FC 100.00%

athis Cars France FC 100.00%

autocars Delion France FC 100.00%

autocars Eschenlauer France FC 100.00%

autocars Garrel et Navarre France FC 100.00%

autocars Planche France FC 100.00%

autocars striebig France FC 100.00%

Caennaise de services France FC 100.00%

Canal TP France FC 100.00%

Cariane littoral France FC 100.00%

Caron Voyages France FC 100.00%

Cars de Bordeaux France FC 100.00%

Cars et autobus de Cassis - sCaC France FC 100.00%

Cars Planche France FC 100.00%

Compagnie des Transports Méditerranéens France FC 100.00%

Compagnie du Blanc argent France FC 99.43%

Devillairs France FC 100.00%

DROP&GO France FC 100.00%

EFFia (Holding) France FC 100.00%

EFFia Concessions France FC 100.00%

EFFia stationnement France FC 100.00%

EFFia stationnement Cassis France FC 100.00%

EFFia stationnement Grenoble France FC 100.00%

EFFia stationnement lille France FC 100.00%

EFFia stationnement lyon France FC 100.00%

EFFia stationnement Marseille France FC 100.00%

EFFia stationnement saint-Etienne France FC 100.00%

EFFia synergies France FC 100.00%

EFFia Transport France FC 100.00%

Enlèvement et Gardiennage services France FC 100.00%

Fouache Evasion France FC 100.00%

GROUPE kEOlis s.a.s. France FC 100.00%

Holding striebig France FC 100.00%

institut keolis France FC 100.00%

interhône-alpes France FC 100.00%

intrabus Orly France FC 100.00%

keolis abbeville France FC 99.02%

58



% of shareholding

keolis agen France FC 100.00%

keolis aix-les-Bains France FC 100.00%

keolis alençon France FC 100.00%

keolis alès France FC 100.00%

keolis amiens France FC 100.00%

keolis angers France FC 100.00%

keolis arles France FC 100.00%

keolis armor France FC 100.00%

keolis artois Gohelle France FC 100.00%

keolis atlantique France FC 100.00%

keolis auch France FC 100.00%

keolis aude France FC 100.00%

keolis Baie des anges France FC 100.00%

keolis Bassin D’arcachon France FC 100.00%

keolis Bassin de Pompey France FC 100.00%

keolis Beaune France FC 100.00%

keolis Besançon France FC 99.96%

keolis Blois France FC 100.00%

keolis Bordeaux France FC 99.99%

keolis Bordeaux Métropole France FC 100.00%

keolis Boulogne sur Mer France FC 100.00%

keolis Bourgogne France FC 99.50%

keolis Brest France FC 100.00%

keolis Bus Verts France FC 100.00%

keolis Caen France FC 100.00%

keolis Calvados France FC 100.00%

keolis Camargue France FC 100.00%

keolis Centre France FC 100.00%

keolis Châlons-en-Champagne France FC 99.24%

keolis Charente Maritime France FC 99.96%

keolis Château Thierry France FC 100.00%

keolis Châteauroux France FC 100.00%

keolis Châtellerault France FC 100.00%

keolis Chaumont France FC 100.00%

keolis Chauny-Tergnier France FC 100.00%

keolis Cherbourg France FC 100.00%

keolis Concarneau* France FC 100.00%

keolis Conseil et Projets France FC 100.00%

keolis Dijon France FC 100.00%

keolis Drôme France FC 100.00%

keolis Drouais France FC 100.00%

keolis Emeraude France FC 100.00%

keolis en Cévennes France FC 99.19%

keolis Epinal France FC 100.00%

59



% of shareholding

keolis Eure et loir France FC 100.00%

keolis Garonne France FC 100.00%

keolis Gascogne France FC 100.00%

keolis Gironde ( ex sNCOa ) France FC 100.00%

keolis Grand Tarbes France FC 100.00%

keolis ille et Vilaine France FC 100.00%

keolis languedoc France FC 100.00%

keolis laval France FC 100.00%

keolis lille (ex Transports en Commun de la Métropole lilloise (Transpole)) France FC 100.00%

keolis littoral France FC 100.00%

keolis lorient France FC 100.00%

keolis lyon France FC 99.99%

keolis Manche France FC 100.00%

keolis Maritime Brest France FC 100.00%

keolis Maritime lorient France FC 99.00%

keolis Marmande France FC 100.00%

keolis Mobilité Hauts de seine France FC 100.00%

keolis Mobilité Roissy France FC 100.00%

keolis Montargis France FC 100.00%

keolis Montélimar France FC 100.00%

keolis Montluçon France FC 100.00%

keolis Morlaix France FC 100.00%

keolis Narbonne France FC 100.00%

keolis Nevers France FC 100.00%

keolis Nord allier France FC 100.00%

keolis Normandie seine France FC 100.00%

keolis Obernai France FC 100.00%

keolis Oise France FC 100.00%

keolis Orléans France FC 100.00%

keolis Orly Rungis France FC 100.00%

keolis Oyonnax France FC 100.00%

keolis Pays d'aix France FC 100.00%

keolis Pays de Montbéliard France FC 100.00%

keolis Pays des Volcans France FC 100.00%

keolis Pays Nancéien France FC 100.00%

keolis Pays Normands France FC 100.00%

keolis PMR Rhône France FC 100.00%

keolis Porte de l’isère France FC 100.00%

keolis Provence France FC 100.00%

keolis Pyrénées France FC 95.16%

keolis quimper France FC 100.00%

keolis Rennes France FC 100.00%

keolis Réseau Départemental sud Oise France FC 100.00%

60



% of shareholding

keolis Roissy services aéroportuaires France FC 100.00%

keolis Rouen Vallée de seine France FC 100.00%

keolis s.a. France FC 100.00%

keolis saint Malo France FC 100.00%

keolis saintes France FC 100.00%

keolis seine Maritime France FC 100.00%

keolis somme France FC 100.00%

keolis sud allier France FC 100.00%

keolis sud lorraine France FC 100.00%

keolis Touraine France FC 100.00%

keolis Tours France FC 100.00%

keolis Travel services France FC 100.00%

keolis Trois Frontières France FC 100.00%

keolis Urbest France FC 100.00%

keolis Val d’Oise France FC 100.00%

keolis Val de Maine France FC 100.00%

keolis Val de saône France FC 100.00%

keolis Val Hainaut France FC 96.32%

keolis Vesoul France FC 100.00%

keolis Vichy France FC 100.00%

keolis Voyages France FC 100.00%

keolis Yvelines France FC 100.00%

kTa France FC 100.00%

les autobus d'arcachon France FC 100.00%

les Cars du Bassin de Thau France FC 100.00%

les Cars Roannais France FC 100.00%

les Courriers Catalans France FC 99.99%

les Courriers de l'ile-de-France France FC 99.99%

les Courriers du Midi France FC 100.00%

les Transports Dunois France FC 100.00%

loisirs et Voyages France FC 100.00%

Millau Cars France FC 100.00%

Monnet Tourisme France FC 100.00%

Monts Jura autocars France FC 99.99%

Motion lines France FC 100.00%

MTi Conseil France FC 100.00%

Pacific Cars France FC 100.00%

Prioris France FC 100.00%

Réseau en Vosges France FC 70.00%

s.T.E.F.i.M. France FC 100.00%

sa saP Drogoul France FC 100.00%

saP Cariane Provence France FC 100.00%

sCaC Bagnis France FC 100.00%

setver France FC 100.00%

61



% of shareholding

sFD France FC 100.00%

sNC du Parc lyon Diderot France FC 50.00%

société Bordelaise d’exploitation de services France FC 100.00%

société d’Exploitation des Transports Urbains d’Oyonnax France FC 100.00%

société d'exploitation de l'aéroport de Dole Jura France FC 51.00%

société d'exploitation de l'aéroport albert Picardie France FC 51.00%

société de Gestion de l'aéroport d'angers-Marcé France FC 100.00%

société de Transports et de services aéroportuaires France FC 100.00%

société Départementale des Transports du Var France FC 95.08%

société des Transports Côte d’azur Riviéra France FC 100.00%

société des Transports de la Communauté Urbaine d'arras France FC 100.00%

société des Transports en Commun Nîmois France FC 100.00%

société des Transports Robert France FC 100.00%

société Nantaise de Fourrière automobile France FC 100.00%

société Rennaise de Transport et de services (Handistar) France FC 100.00%

société pour la Mobilité à Paris (sOMaP) France FC 100.00%

sTa France FC 100.00%

sTaC France FC 100.00%

strasbourgeoise d'Enlèvement et de Gardiennage France FC 100.00%

sVTU France FC 100.00%

TPR France FC 100.00%

Train Bleu st Marcellin France FC 100.00%

Trans Val de lys France FC 99.99%

Transétude* France FC 100.00%

Transkeo France FC 51.00%

Transports de la Brière France FC 60.10%

Transports et services aérolignes France FC 100.00%

Transports Evrard France FC 100.00%

Transports Gep Vidal France FC 100.00%

Transroissy France FC 100.00%

Var Tours France FC 99.45%

Voyages autocars services France FC 100.00%

Voyages Chargelègue France FC 100.00%

Voyages Dourlens France FC 100.00%

Voyages Fouache France FC 100.00%

Voyages Monnet France FC 100.00%

Voyages striebig France FC 100.00%

VTs Roissy France FC 100.00%

westeel Voyages France FC 100.00%

keolis Deutschland GmbH & Co. kG Germany FC 100.00%

keolis Deutschland Holding GmbH Germany FC 100.00%

keolis Deutschland Verwaltung GmbH Germany FC 100.00%

schloemer Verkehrsbetrieb GmbH Germany FC 100.00%

62



% of shareholding

striebig Deutschland Germany FC 100.00%

striebig GmbH Germany FC 100.00%

australian Transit Enterprises Pty ltd Australia FC 51.00%

kDR Gold Coast Pty ltd Australia FC 51.00%

kDR Victoria Pty ltd Australia FC 51.00%

keolis australie Australia FC 100.00%

keolis Downer Pty ltd Australia FC 51.00%

keolis Downer Bus and Coachlines Property Pty ltd Australia FC 51.00%

keolis Downer Bus and Coachlines Pty ltd Australia FC 51.00%

Hornibrook Bus lines Pty ltd Australia FC 51.00%

Hornibrook Transit Management Pty ltd Australia FC 51.00%

link sa Pty ltd Australia FC 51.00%

Path Transit Pty ltd Australia FC 51.00%

south west Transit Pty ltd Australia FC 51.00%

southlink Pty ltd Australia FC 51.00%

autobus De Genval Belgium FC 100.00%

autobus Dony Belgium FC 100.00%

autobus Dujardin Belgium FC 100.00%

autobus lienard Belgium FC 100.00%

Cardona-Deltenre Belgium FC 100.00%

Cintra Belgium FC 100.00%

Cintral Belgium FC 100.00%

De Turck Belgium FC 100.00%

Eltebe Belgium FC 100.00%

Etablissements Picavet & Co Belgium FC 100.00%

Eurobus Holding Belgium FC 100.00%

Eurobussing airport Belgium FC 100.00%

Eurobussing Brussels Belgium FC 100.00%

Eurobussing wallonie Belgium FC 100.00%

Flanders Bus Belgium FC 100.00%

Garage Du Perron Belgium FC 100.00%

Gino Tours Belgium FC 100.00%

Heyerick Belgium FC 100.00%

Joye Belgium FC 100.00%

keolis Vlaanderen Belgium FC 100.00%

kibel (ex Belbus) Belgium FC 100.00%

kortenbergse Busonderneming Belgium FC 100.00%

l.i.M. Collard-lambert Belgium FC 100.00%

le Cinacien Belgium FC 100.00%

N.V. autobusbedrijf Bronckaers Hamont Belgium FC 100.00%

N.V. autobussen De Reys Belgium FC 100.00%

N.V. autocars Henri De Boeck En Reizen andre leloup Belgium FC 100.00%

Pirnay Belgium FC 100.00%

Ramoudt Tours Belgium FC 100.00%

63



% of shareholding

Reniers & Co Belgium FC 50.02%

s.a.D.a.R Belgium FC 100.00%

sa a.B.C. Cars Belgium FC 100.00%

satracom Belgium FC 100.00%

société de Transport automobiles Cars autobus sa* Belgium FC 100.00%

sophibus Belgium FC 100.00%

sprl Bertrand Belgium FC 100.00%

sprl Taxis Melkior Belgium FC 100.00%

sprl Voyages F. lenoir Belgium FC 100.00%

sprl Truck Bus Repair (Tbr) Belgium FC 100.00%

T.C.M. Cars Belgium FC 100.00%

Transport Penning Belgium FC 100.00%

Trimi Belgium FC 100.00%

Van Rompaye NV Belgium FC 100.00%

Voyages Doppagne Belgium FC 100.00%

Voyages Nicolay Belgium FC 100.00%

west Belgium Coach Company Belgium FC 100.00%

keolis Canada inc. Canada FC 100.00%

keolis Grand River sec Canada FC 100.00%

keolis Bus Danmark (ex City-Trafik) Denmark FC 75.00%

keolis Espagne Spain FC 100.00%

keolis america inc. United States FC 100.00%

keolis Commuter services llC United States FC 60.00%

keolis Rail services america United States FC 100.00%

keolis Rail services Virginia United States FC 100.00%

keolis Transit america United States FC 100.00%

keolis Hyderabad Mass Rapid Transit system Private limited India FC 100.00%

kilux Luxembourg FC 100.00%

luxbus* Luxembourg FC 100.00%

keolis Nederland Netherlands FC 100.00%

keolis Norge (ex Fjord1 Partner as) Norway FC 100.00%

syntus BV Netherlands FC 100.00%

keolis amey Docklands ltd United Kingdom FC 70.00%

keolis Uk United Kingdom FC 100.00%

Nottingham Trams ltd United Kingdom FC 80.00%

Citypendeln Sweden FC 100.00%

CsG Commuter security Sweden FC 100.00%

keolis Nordic Sweden FC 100.00%

keolis sverige aB Sweden FC 100.00%

*companies removed from the consolidation scope on 31 December 2015.

64



% of shareholding

Compagnie des Transports Collectifs de l’Ouest Parisien France EM 50.00%

EFFia sEM Roubaix France EM 50.00%

Orgebus France EM 50.00%

Passerelle CDG* France EM 34.00%

RDk France EM 50.00%

sCODEC France EM 35.00%

société de Promotion et d'Exploitation de Parkings* France EM 49.97%

société de Transport de l’agglomération de Chauny France EM 50.00%

Trans Pistes France EM 40.00%

Transévry France EM 39.42%

Transports de l’agglomération de Metz France EM 25.00%

Transports intercommunaux Centre Essonne (TiCE) France EM 19.00%

NETlOG Germany EM 33.00%

shanghai keolis Public Transport Operation Management Co. China EM 49.00%

wuhan Tianhe airport Transport Center Operation and Management Co. ltd. China EM 40.00%

PROMETRO Portugal EM 20.00%

First keolis Holding limited United Kingdom EM 45.00%

First keolis Transpennine Holding limited United Kingdom EM 45.00%

First keolis Transpennine limited United Kingdom EM 45.00%

Govia United Kingdom EM 35.00%

Govia Thameslink Railway limited United Kingdom EM 35.00%

london & Birmingham Railway limited United Kingdom EM 35.00%

london & south Eastern Railway limited United Kingdom EM 35.00%

New southern Railway limited United Kingdom EM 35.00%

southern Railway limited United Kingdom EM 35.00%

Thameslink Rail limited United Kingdom EM 35.00%

10.2 Joint Ventures and associates

* companies removed from the consolidation scope on 31 December 2015.

65


To the Shareholders,

In compliance with the assignment entrusted to us by your Annual General Meeting, we hereby report to you, for the year ended December 31, 2015, on:◗ the audit of the accompanying consolidated financial statements

of GROUPE KEOLIS S.A.S.;◗ the justification of our assessments;◗ the specific verifications required by law.These consolidated financial statements have been approved by the Executive Board. Our role is to express an opinion on these consolidated financial statements based on our audit.

I - OpInIOn On the COnsOlIdAted fInAnCIAl stAtements

We conducted our audit in accordance with professional stand-ards applicable in France; those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit involves performing procedures, using sampling techniques or other methods of selection, to obtain audit evidence about the amounts and disclosures in the con-solidated financial statements. An audit also includes evaluating the appropriateness of accounting policies used and the rea-sonableness of accounting estimates made, as well as the over-all presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

In our opinion, the consolidated financial statements give a true and fair view of the assets and liabilities and of the financial posi-tion of the Group at December 31, 2015 and of the results of its operations for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union.

II - JustIfICAtIOn Of Our AssessmentsIn accordance with the requirements of article L.823-9 of the French Commercial Code (Code de commerce) relating to the justification of our assessments, we bring to your attention the following matters:◗ Keolis carries out impairment tests on goodwill and indefinite life

assets and also assesses whether there is any indication of impairment on non-current assets, as described in note 2.4.9 to the consolidated financial statements. We have examined the methods used to carry out this impairment test as well as the corresponding cash flow forecasts and assumptions, and have verified that the notes to the consolidated financial statements provide appropriate disclosures.

◗ Note 2.4.17 specifies the valuation methods for provisions for pensions and other employee benefits. An evaluation of these provisions was carried out by independent actuaries. Our work consisted in examining the data and assumptions used and verifying that note 5.13 to the consolidated financial statements provides appropriate disclosures.

statutory auditors’ report on the consolidatedfinancial statements (For the year ended December 31, 2015)

this is a free translation into english of the statutory auditors’ report on the consolidated financial statements issued in the french language and is provided solely for the convenience of english speaking users. the statutory auditors’ report includes information specifically required by french law in such reports, whether modified or not. this information is presented below the opinion on the consolidated financial statements and includes explanatory paragraphs discussing the auditors’ assessments of certain significant accounting and auditing matters. these assessments were made for the purpose of issuing an audit opinion on the consolidated financial statements taken as a whole and not to provide separate assurance on individual account captions or on information taken outside of the consolidated financial statements.

this report also includes information relating to the specific verification of information given in the group’s management report.

this report should be read in conjunction with, and is construed in accordance with, french law and professional auditing standards applicable in france.

66


neuilly-sur-seine, March 7, 2016

the statutory auditors

pricewaterhouseCoopers audit french original signed byfrançoise garnier-bel

deloitte & associés french original signed by

bertrand boisselier

◗ Note 2.4.17 specifies the methods used to take into account the risks relating to ongoing litigation and contracts. Our work con-sisted in examining the procedures used by the Company to identify and assess these risks and the accounting treatment applied and in assessing the resulting estimates.

These assessments were made as part of our audit of the con-solidated financial statements taken as a whole, and therefore contributed to the opinion we formed which is expressed in the first part of this report.

III - speCIfIC VerIfICAtIOnAs required by law, we have also verified in accordance with professional standards applicable in France the information pre-sented in the Group’s management report.We have no matters to report as to its fair presentation and its consistency with the consolidated financial statements.

67

3. UnaUdited financial statements

3. UNaUDITED MaNaGEMENT FINaNCIal STaTEMENTS

1 • kEY FiGUREs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68

2 • iNCOME sTaTEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69

3 • sTaTEMENT OF FiNaNCial POsiTiON . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70

4 • sTaTEMENT OF CasH FlOws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71

CONTENTS

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

The management accounts as at 31 December 2015 have not been audited.

68


1 • kEY FiGUREs

(€ million) 31/12/2015 31/12/2014

Revenue 6,425.4 5,564.5

◗ Revenue France 2,819.1 2,797.5

◗ Revenue International 3,606.3 2,766.9

Revenue net of sub-contracting 6,238.6 5,375.3

Recurring EBiTDa 355.5 323.1

EBiTDa 327.4 291.9

Recurring operating profit 128.5 131.3

Operating profit before investments under equity method 82.4 74.9

Operating profit after investments under equity method 82.1 75.2

Profit after tax from continuing operations 25.7 27.2

Profit attributable to equity shareholders 33.3 26.0

Total equity 1,024.4 994.1

of which attributable to equity shareholders 972.9 973.4

Net cash flows from operating activities 301.7 344.5

industrial investments 242.2 220.6

Net financial debt (cash surplus) (1) 467.3 360.2

(1) Surplus cash positions are presented in brackets

69


2 • iNCOME sTaTEMENT

(€ million) 31/12/2015 31/12/2014

Revenue 6,425.4 5,564.5

Other income from operations 20.8 26.1

iNCOME FROM CONTiNUiNG OPERaTiONs 6,446.2 5,590.6

Sub-contracting (186.8) (189.2)

Purchases consumed and external expenses (2,555.5) (2,195.6)

Taxes (18.0) (15.6)

Staff costs, incentive schemes, profit-sharing (3,253.9) (2,799.3)

Other operating income 50.5 50.5

Other operating expense (116.6) (103.0)

Net provisions on current assets (1.0) (4.6)

Net depreciation and other provisions charged (247.6) (212.3)

Profit/(loss) on recurring fixed asset disposals 1.4 1.2

Amortisation of grants received 9.8 8.6


Other non-recurring income 7.4 4.4

Other non-recurring expense (32.5) (32.6)

Depreciation and provisions on contractual rights (21.0) (28.1)

Of which depreciation of other intangible assets and negative goodwill 5.7 (5.3)

PROFiT BEFORE iNVEsTMENTs UNDER THE EqUiTY METHOD 82.4 74.9

Profit/(loss) from associates (0.3) 0.2

PROFiT aFTER iNVEsTMENTs UNDER THE EqUiTY METHOD 82.1 75.2

Net cost of financial borrowing (18.0) (18.5)

Other financial income 12.4 6.7

Other financial expense (24.2) (17.4)

FiNaNCial iNCOME (ExPENsE) (29.8) (29.2)

NET PROFiT BEFORE TaxaTiON 52.3 46.0

Taxation (26.6) (18.7)

NET PROFiT FROM CONTiNUiNG OPERaTiONs 25.7 27.2


Profit attributable to non-controlling interests 7.6 (1.3)PROFiT aTTRiBUTaBlE TO GROUP 33.3 26.0

70


assETs(€ million)

31/12/2015 31/12/2014

Goodwill 1,139.6 1,105.1

Other intangible assets 534.5 490.9

Property, plant and equipment 900.6 821.2

Investments under equity method 2.1 2.0

Other non-current financial assets 171.1 147.7

Deferred tax asset 84.7 80.1

NON-CURRENT assETs 2,832.6 2,646.9

Inventories and work in progress 89.0 85.1

Trade receivables 466.6 437.3

Other receivables 456.8 387.3

Other current financial assets 14.0 13.7

Cash and cash equivalents 655.3 563.5

CURRENT assETs 1,681.7 1,486.9

TOTal assETs 4,514.4 4,133.8

liaBiliTiEs(€ million)

31/12/2015 31/12/2014

Share capital 237.9 237.9

Reserves and premiums 701.6 709.5

Net profit/(loss) attributable to Group 33.3 26.0

EqUiTY aTTRiBUTaBlE TO GROUP 972.9 973.4

Reserves attributable to non-controlling interests 59.1 19.5

Profit for the year attributable to non-controlling interests (7.6) 1.3

EqUiTY 1,024.4 994.1Non-current provisions 194.9 180.8

Non-current financial debt 881.2 653.7

Deferred tax liability 178.2 153.2

NON-CURRENT liaBiliTiEs 1,254.3 987.7

Current provisions 55.6 52.4

Current financial debt 91.3 195.1

Bank borrowings 190.7 118.5

Trade payables and other liabilities 1,898.0 1,785.9

CURRENT liaBiliTiEs 2,235.6 2,151.9

TOTal liaBiliTiEs 4,514.4 4,133.8

3 • sTaTEMENT OF FiNaNCial POsiTiON

71


(€ million) 31/12/2015 31/12/2014

operating profit before investments under equity method 82.4 74.9

Non-cash items 245.1 216.9

ebitda 327.4 291.9

Elimination of provisions in current assets 1.0 4.6

Changes in working capital 30.5 77.9

Tax paid (57.2) (29.8)

a) NET CasH FROM OPERaTiNG aCTiViTiEs 301.7 344.5

Capital expenditure (242.2) (220.6)

Proceeds from sale of tangible and intangible assets 39.4 35.0

Investment grants received 7.7 7.3

Change in financial assets for concessions (IFRIC 12) (14.2) (19.1)

Financial investments (133.3) (82.0)

Gains/ (losses) from disposal of financial assets 5.6 35.1

Cash flows on changes in reporting scope 4.9 27.2

B) NET CasH FROM iNVEsTiNG aCTiViTiEs (332.1) (217.2)

FREE CasH FlOw (30.4) 127.3

Net dividends paid (50.6) (0.7)

Net dividends received 0.5 0.5

Change in equity (other transactions with shareholders) 38.7 13.0

New borrowings 243.8 108.3

Borrowings repaid (170.1) (117.8)

Interest received 2.2 2.4

Interest paid (20.5) (20.6)

Change in other financial debts 0.2 0.4

Other (7.9) (10.2)

C) NET CasH FROM FiNaNCiNG aCTiViTiEs 36.3 (24.8)

D) FOREiGN ExCHaNGE TRaNslaTiON DiFFERENCEs 13.7 15.8

CHaNGE iN CasH aND CasH EqUiValENTs (a+B+C+D) 19.6 118.3

Cash and cash equivalents at beginning of period 445.0 326.7

Cash and cash equivalents at end of period 464.6 445.0

CHaNGE iN CasH aND CasH EqUiValENTs 19.6 118.3

4 • sTaTEMENT OF CasH FlOws

4. aNNUalFINaNCIalSTaTEMENTS

73

4. AnnuAl FinAnciAl StAtementS

4. aNNUal FINaNCIal STaTEMENTS

CONTENTSA Financial statements

at 31 December 2015 . . . . . . . . . . . . . . . . . . . . . 74

1 • BalaNCE sHEET aT 31 DECEMBER 2015 . . . . . . . . . . . . . . . . . . . . . 74

2 • iNCOME sTaTEMENT aT 31 DECEMBER 2015 . . . . . . . . . . . . . . . . . . . . .76

B Notes to the annual financial statements . . . . . . . . . . . . . . . . . . . . . 78

1 • siGNiFiCaNT EVENTs OF THE FiNaNCial YEaR . . . . . . . . . . . . . . . . . . . . . . . . . . 78

2 • aCCOUNTiNG PRiNCiPlEs, RUlEs aND METHODs . . . . . . . . . . . . . . . . . . . . 78

2.1 Contract managed . . . . . . . . . . . . . . . . . . . . . . . . . . . . 782.2 Fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 782.3 inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 782.4 Receivables and payables . . . . . . . . . . . . . . . . . . . . . 782.5 Marketable securities . . . . . . . . . . . . . . . . . . . . . . . . . 782.6 Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 782.7 Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 782.8 Employee benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . 792.9 Public investment subsidies. . . . . . . . . . . . . . . . . . . . 792.10 Tax status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79

3 • NOTEs ON THE BalaNCE sHEET . . . . . . . . . . .793.1 Fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79

3.2 Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 793.3 Details of prepayments and deferred income . . . . 803.4 Equity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 803.5 Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 813.6 liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81 3.7 Exchange differences on receivables

and payables in foreign currencies . . . . . . . . . . . . . . 81

4 • NOTEs ON THE iNCOME sTaTEMENT . . . . . . . . . 814.1 analysis of turnover . . . . . . . . . . . . . . . . . . . . . . . . . . . 814.2 Details of other operating income

and expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 814.3 share of profit of joint ventures . . . . . . . . . . . . . . . . . 814.4 Transfers of expenses . . . . . . . . . . . . . . . . . . . . . . . . . 824.5 Gains and losses relating to prior years . . . . . . . . . 824.6 Financial income and expenses . . . . . . . . . . . . . . . . 824.7 Taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 824.8 Exceptional income and expense . . . . . . . . . . . . . . . 82

5 • OTHER iNFORMaTiON . . . . . . . . . . . . . . . . . . . . . . . .835.1 Related party transactions . . . . . . . . . . . . . . . . . . . . . 835.2 Financial instruments . . . . . . . . . . . . . . . . . . . . . . . . . 835.3 Pension and long service award commitments . . . 855.4 information on leasing . . . . . . . . . . . . . . . . . . . . . . . . . 855.5 Personal training account . . . . . . . . . . . . . . . . . . . . . . 855.6 identity of the consolidating company. . . . . . . . . . . 855.7 information on subsidiaries and investments . . . . 855.8 Post balance sheet events . . . . . . . . . . . . . . . . . . . . . 85

Statutory auditors’ report on the financial statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86

aNNUalFINaNCIalSTaTEMENTS

74


1 • BalaNCE sHEET aT 31 DECEMBER 2015

31/12/2015 31/12/2014

Gross accumulated Depreciation Net Net

in euros

Uncalled subscribed capitaliNTaNGiBlE assETs

Preliminary expenses - - - -Development costs - - - -Concessions, patents and related rights - - - -Goodwill 343,750,090 - 343,750,090 343,750,090Other intangible assets - - - -Advances, down payments for intangible assets - - - -PROPERTY, PlaNT aND EqUiPMENT

Land - - - -Buildings - - - -Technical facilities, equipment, machinery - - - -Other property, plant and equipment - - - -PPE under construction - - - -Advances and down payments - - - -NON-CURRENT FiNaNCial assETs

Shareholdings under the equity method - - - -Other shareholdings 758,667,888 - 758,667,888 757,955,588Receivables from shareholdings 310,584,600 - 310,584,600 -Other long-term investments - - - -Loans 2,755,580 - 2,755,580 2,403,268Other non-current financial assets 538 - 538 538TOTal FixED assETs (i) 1,415,758,697 - 1,415,758,697 1,104,109,484iNVENTORiEs aND wORk iN PROGREssRaw materials, supplies - - - -Production in progress (goods) - - - -Production in progress (services) - - - -Semi-finished and finished goods - - - -Goods - - - -Advances and down payments on orders 40,178 - 40,178 -TRaDE RECEiVaBlEs

Trade receivables and related accounts 3,697,559 - 3,697,559 6,351,755Other receivables 68,311,138 - 68,311,138 232,371,814Subscribed called non paid-up capital - - - -MisCEllaNEOUs

Marketable securities held for trading 5 - 5 5Cash 598,707 - 598,707 389,902aCCRUals

Prepayments - - - 20,077TOTal CURRENT assETs (ii) 72,647,587 72,647,587 239,133,554Unrealised losses on foreign exchange transactions (iii) - - - -

TOTal assETs (i TO iii) 1,488,406,284 1,488,406,284 1,343,243,038

Financial statements at 31 December 2015A

75


31/12/2015 31/12/2014

in euros

LIABILITIESEqUiTY

Share capital or individual capital 237,888,902 237,888,902Additional paid-in capital 303,246,055 353,238,942Revaluation reserves - -Legal Reserve 7,717,008 6,213,321Statutory or contractual reserves - -Regulated reserves - -Other reserves 2,386,768 2,386,768Retained earnings brought forward 142,613,581 114,043,532NET PROFiT/(lOss) FOR THE YEaR 31,113,593 30,073,736Investment grants - -Regulated provisions - -TOTal EqUiTY (i) 724,965,907 743,845,201CONTiNGENCY aND lOss PROVisiONs

Provisions for contingencies - -Provisions for charges 6,297,021 3,215,309TOTal PROVisiONs (ii) 6,297,021 3,215,309DEBTs (1)

Convertible bond issues - -Other bond issues - -Bank borrowings (2) 620,669,969 510,390,057Loans and other financial debts - -Customer advances and down payments - -Trade payables and related accounts 4,720,473 2,783,475Tax and social security liabilities 3,516,234 6,281,409Liabilities on assets and related accounts - -Other liabilities 127,884,369 76,727,586 aCCRUals

Deferred income - -liaBiliTiEs aND aCCRUals (iii) 756,791,045 596,182,528Unrealised gains on foreign exchange transactions (iV) 352,312 -TOTal liaBiliTiEs (i TO iV) 1,488,406,284 1,343,243,038(1) Liabilities and deferred income less than 1 year 136,791,045 86,182,527

(2) Overdrafts (short-term borrowings for cash requirements) and bank credit balances of which

- Amounts payable after one year 620,000,000 510,000,000

- Amounts due within one year 669,969 390,057

76


2 • iNCOME sTaTEMENT aT 31 DECEMBER 2015

In euros 31/12/2015 31/12/2014

OPERaTiNG REVENUE

Sales of goods - -Services 14,412,921 10,047,085NET REVENUE 14,412,921 10,047,085

Production held as inventory - -

Capitalised production - -

Operating grants - -

Reversal of depreciation, provision and expense transfers - 3,725,904

Other income 12 4,052

TOTal OPERaTiNG iNCOME (i) 14,412,933 13,777,041

Stock purchases (including customs duties) - -

Change in inventory of goods - -

Purchase raw materials, other supplies (including customs duties) - -

Change in inventory purchases (raw materials and supplies) - -

Other purchases and operating expenses 8,973,657 5,130,618

Taxes and similar payments 1,095,258 702,487

Wages and salaries 3,932,432 5,381,625

Welfare contributions 1,162,947 2,286,613

OPERaTiNG allOwaNCEs

On capital/ fixed assets: - -

On current assets: charge to provisions - -

For contingency and loss provisions: charge to provisions 3,081,711 159,913

Other charges 344,122 325,814

TOTal OPERaTiNG ExPENsEs (ii) 18,590,127 13,987,070

OPERaTiNG PROFiT / (lOss) (i - ii) (4,177,194) (210,029)

FiNaNCial iNCOME

Financial income from shareholdings 26,565,823 19,145,039

Other marketable and receivables from capitalized assets - -

Other interest and similar income - -

Reversal of provisions charged and expense transfers - -

Foreign exchange gains - -

Net gains on sales of marketable securities - -

TOTal FiNaNCial iNCOME (iii) 26,565,823 19,145,039

Changes to depreciation and provisions - -

Interest and similar expenses 8,540,090 9,518,513

Foreign exchange losses - 75

Net expenses on sales of marketable securities -

TOTal FiNaNCial ExPENsEs (iV) 8,540,090 9,518,588

FiNaNCial iNCOME / (ExPENsE) (iii - iV) 18,025,733 9,626,452

RECURRiNG PROFiT BEFORE Tax (i - ii + iii - iV) 13,848,539 9,416,422

77


In euros 31/12/2015 31/12/2014

ExCEPTiONal GaiNs

Exceptional gains on operations - -

Exceptional gains on equity transactions - -

Reversal of provisions charged and expense transfers - -

TOTal ExCEPTiONal GaiNs (V) - -

Exceptional losses on operations 14,179 -

Exceptional losses on equity transactions - -

Exceptional charges to depreciation and provisions - -

TOTal ExCEPTiONal lOssEs (Vi) 14,179 -

ExCEPTiONal iNCOME/ (lOss) (V - Vi) (14,179) -

Employee profit-sharing (Vii) - -

Corporate income tax (Viii) (17,279,233) (20,657,314)

TOTal iNCOME (i + iii + V) 40,978,756 32,922,080

TOTal CHaRGEs (ii + iV + Vi + Vii + Viii) 9,865,163 2,848,344

NET PROFiT/ (lOss) 31,113,593 30,073,737

78


1 • siGNiFiCaNT EVENTs OF THE FiNaNCial YEaR

syndicated loan amendmentOn 11 June 2015, GROUPE KEOLIS S.A.S. signed an amend-ment to the syndicated loan agreement dated 12 July 2013 arranged with a syndicate of 13 banks for a nominal amount of €800 million maturing on 12 July 2018. This amendment pro-vides for the renegotiation of borrowing conditions of the credit line, the increase of its nominal amount to €900 million, the extension of its maturity until 11 June 2020 and a provision under which Keolis may extend maturity by an additional year, in 2016 and 2017, subject to the approval of the entire lending syndicate. Maturity could thereby be extended until 11 June 2022.

Monetisation of CiCE (Crédit d’Impôt pour la Compétitivité et l’Emploi) receivableThe receivable arising in 2015 from the CICE, implemented by theFrenchgovernment,wassubjecttoa“Dailly”sale.Thissaleresulted in net proceeds of €47.4 million for the Company on behalf of the tax group. As the parent company of the tax group, GROUPE KEOLIS S.A.S. recognised a debt owing to the com-panies that are part of the tax group for the amount of €49.5 million (gross amount). The impact of the CICE receivable sale on GROUPE KEOLIS S.A.S’s income statement is €1.1 million included as a financial expense.

2 • aCCOUNTiNG PRiNCiPlEs, RUlEs aND METHODs

These financial statements are prepared in accordance with the rules laid down by the general chart of accounts in accordance with regulation ANC N°2014-03 dated 5 June 2014 of the French Accounting Standards Authority (Autorité des Normes Comptables) and principles generally accepted in the profession.General conventions were applied in compliance with the pru-dence principle, in accordance with the basic assumptions of:◗ continuity of operations,◗ consistency of accounting methods from one year to another,◗ independence of financial years.

The underlying method used to value the items in the accounts is the historical cost method.There were no exceptions from standards nor changes in method that affected the annual financial statements.

The main accounting policies used are described below.

2.1 Contract managedNil.

2.2 Fixed assets

2.2.1 intangible assetsThe goodwill recorded in the balance sheet as an intangible asset is exclusively composed of technical losses from mergers.

Technical losses from mergers carried in goodwill are not amor-tised, but are tested for loss of value at each annual close by reference to a separate review of the related underlying asset values. Any losses in value would be recognised by the esta-blishment of an impairment charge.Technical losses from mergers within assets relate directly to the investment in Keolis S.A.

2.2.2 Tangible assetsNil.

2.2.3 Financial assets Equity investments are recorded at acquisition cost, including direct expenses. Under a specific tax provision, these expenses are amortised pro rata over 5 years.

If this value is greater than the inventory value an impairment is recognised for the difference. For each of the holdings, the inven-tory value is determined based on future cash flows which their business activity could generate.

2.3 inventoriesNil.

2.4 Receivables and payablesReceivables are recorded at their nominal value.Where applicable, a depreciation is recognised whenever there is a risk of non-recovery.

2.5 Marketable securitiesNil.

2.6 CashCash balances in foreign currencies are converted at the closing exchange rate of the financial period. The difference that results from this adjustment is recognised in the year’s income state-ment in foreign exchange gains and losses.

2.7 ProvisionsA provision for contingencies and charges is recorded when the company has a legal or implicit obligation to a third party arising from a past event, whose amount can be reliably esti-mated and where it is probable that its settlement will cause an outflow of resources without compensation of at least an equi-valent amount.

Notes to the annual financial statementsB

79


2.8 Employee benefits Employee benefits relate to payments due on retirement.Evaluations of these obligations are carried out annually using the projected unit credit method.The main actuarial assumptions used for the assessment of employee benefits are: ◗ Discount rate 1.49%◗ Long-term expected inflation rate 1.75%◗ Rate of increase of payrolls used to calculate

payments due on retirement 3.70%◗ Average turnover rate 2.20%◗ Type of retirement At the initiative of the employee◗ Mortality table INSEE TD/TV 2011-2013

These commitments appear under off-balance sheet commit-ments.

2.9 Public investment subsidiesNil.

2.10 Tax statusThe Company opted for the tax group regime from the year commencing 1st January 2008.

Procedures for allocating corporate tax are:◗ tax is calculated as if the Company were taxed separately,◗ the savings achieved by the parent company from the tax

losses and long-term capital losses of the subsidiary are taken by the latter in its income statement.

However, in accordance with current corporate tax legislation governing the carrying forward of losses, these are reallocated to the subsidiary as and when it generates future profits.

3 • NOTEs ON THE BalaNCE sHEET

3.1 Fixed assets

(in euros)Gross value at

beginning of financial year

Increase Decrease Gross value at end of financial year

iNTaNGiBlE assETs

Goodwill 343,750,090 - - 343,750,090

FiNaNCial assETs

Shares 757,955,588 712,300 - 758,667,888

Receivables from shareholdings* - 310,584,600 - 310,584,600

Deposits & guarantees 538 - - 538

Loans 2,403,269 352,312 - 2,755,580

TOTal 1,104,109,484 311,649,212 - 1,415,758,697

3.2 Receivables

(in euros) amount gross Due in less than one year

Due in more than one year

Trade receivables and related accounts 3,697,559 3,697,559 -

Other receivables* 68,311,138 68,311,138 -

TOTal 72,008,697 72,008,697 - * Other receivables comprise €36,064 thousand in trade receivables from the Group, €23,247 thousand of tax group receivables, €7,968 thousand of tax receivables

and €49 thousand represented by a supplier credit note.

*On 7 July 2015, GROUPE KEOLIS S.A.S. entered into a loan agreement with Keolis S.A.

80


Receivables represented by commercial billsNil.

3.3 Details of prepayments and deferred incomeNil.

3.4 Equity

statement of changes in equity (in euros)

situation at the beginning of year Balance

Equity before distribution of prior year retained profits 743,845,201

Distributions of prior year retained profits -

Equity after distributions of prior year retained profits 743,845,201

Movements during the year Decreases increases

Changes in capital - -

Changes in share premium 49,992,887 -

Changes in reserves - 1,503,687

Changes in capital grants - -

Changes in untaxed reserves - -

Other changes - 28,570,050

Profit for the year 30,073,736 31,113,593

BalaNCE 80,066,624 61,187,330

situation at the end of the year Balance

Equity before appropriation 724,965,907

share capitalThe capital of the company amounts to €237,888,901.80, made up of 180,218,865 shares of €1.32 each.

GROUPE KEOLIS S.A.S. holds 0.14% of its own capital, or 257,000 shares (nominal value €1.32 each), following the acquisition in 2015 of 85,000 shares from FCPE GROUPE KEOLIS ACTIONNARIAT for a total of €712,300.00. These shares do not carry voting rights.

allocation of net income for the previous yearThe General Meeting of 30 June 2015 allocated the result of financial year 2014 amounting to €30,073,736.55 as follows:(in euros)◗ Legal Reserve of: 1,503,686.83 euros◗ Retained profits: 28,570,049.72 euros

Changes in paid-in capitalThe company distributed reserves amounting to €49,992,887.05 from additional paid-in capital, in accordance with the written resolution of the shareholders of 2 October 2015.

Regulated provisions and investment subsidies Nil.

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(in euros)

Gross value at beginning of

financial yearCharge Release

Gross value at end of financial

year

Tax provisions 2,550,197 2,707,058 - 5,257,256

Other provisions 665,112 374,653 - 1,039,765

TOTal 3,215,309 3,081,711 - 6,297,021

3.5 ProvisionsA provision is recorded when the company has a legal or implicit obligation to a third party arising from a past event, whose amount can be reliably estimated and where it is probable that its settlement will cause an outflow of resources.

The tax consolidation agreement obligates the parent company to return to its subsidiaries the tax savings resulting from the use of their tax losses, which it has recorded in its income statement, as soon as they become profitable.

Pursuant to Article 322-1 of Regulation No. 2014.03 of the French Accounting Standards Authority (ANC), a provision has been stated arising from this obligation where restitution in cash of the tax savings is likely.

3.6 liabilitiesAt 31 December 2015, the amount of bank borrowings drawn down is €620 million and the undrawn balance is €300 million.

Details of accrued liabilities at 31/12/2015(in euros)

Bank borrowingsAccrued interest 153,181Trade payables and related accountsSuppliers, invoices not yet received 4,350,494Tax and social security debtsStaff, accrued charges 1,694,426Social institutions, accrued charges 777,754State, accrued charges 45,044TOTal aCCRUED liaBiliTiEs 7,020,900

3.7 Exchange differences on receivables and payables in foreign currencies GROUPE KEOLIS S.A.S. took out a loan (convertible bond) for 3 million dollars. It was booked on 31 December 2015 at the closing exchange rate of €1 = USD 1.08870 equating to an unreal ised foreign exchange transaction gain of €352,311.55.

4 • NOTEs ON THE iNCOME sTaTEMENT

4.1 analysis of turnoverThe company generates all of its turnover in France.

4.2 Details of other operating income and expense

income(in euros)

Settlement differences 12 TOTal 12

Expenses(in euros)

Attendance fees 344,000Settlement differences 122TOTal 344,122

4.3 share of profit of joint venturesNil.

(in euros) amount gross Due in less than one year

Due in more than one year

Bank borrowings 620,669,969 669,969 620,000,000

Trade payables and related accounts 4,720,473 4,720,473 -

Tax and social security debts 3,516,234 3,516,234 -

Other liabilities 127,884,369 127,884,369 -

TOTal 756,791,045 136,791,045 620,000,000

Other liabilities comprise €127,531 thousand of tax group payables and €353 thousand of miscellaneous creditors.

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4.4 Transfers of expenses Nil.

4.5 Gains and losses relating to prior yearsNil.

4.6 Financial income and expenses

4.7 TaxationThe corporate income tax for the year consists of:

(in euros) Income Expense Balance

Income from shareholdings 24,226,938 - 24,226,938

Interest on loans - (6,608,906) (6,608,906)

Losses/receivables related to shareholdings 2,338,885 - 2,338,885

Other financial income and expense - (1,931,184) (1,931,184)

TOTal 26,565,823 (8,540,090) 18,025,733

(in euros) Profit before tax Tax due Net profit

Current 13,848,539 13,848,539

Exceptional (14,179) (14,179)

Tax integration (18,779,233) 18,779,233

Exceptional contribution 1,500,000 (1,500,000)

TOTal 13,834,360 (17,279,233) 31 113 593

4.8 Exceptional income and expense(in euros)Exceptional expenses Tax penalties 14,179TOTal 14,179

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5 • OTHER iNFORMaTiON

5.1 Related party transactions

(in euros) 31/12/2015 31/12/2014

assetsInvestments 758,667,888 757,955,588Receivables from shareholdings 310,584,600 -Trade receivables and related accounts 3,697,559 6,351,755Current accounts 36,068,193 225,018,193Other operating receivables - -liabilitiesTax provision 5,257,256 2,550,198Trade accounts payable and related accounts 684,978 89,800Other operating payables - - Current accounts - - iNCOME sTaTEMENTFinancial income 26,565,823 19,145,039Financial expense - -

5.2 Financial instrumentsGROUPE KEOLIS S.A.S. uses derivative financial instruments to manage its exposure to financial risks resulting from its financial and investing activities:◗ interest rate risk;◗ foreign exchange risk.

At the end of the financial year, unrealised gains are not recognised in the accounts. Unrealised losses are accounted for except when they relate to instruments qualified as hedging and falling within one of the following two cases:◗ to hedge underlying items in the balance sheet which have not been revalued;◗ to hedge future cash flows expected in a future year, under the principle of matching the accounting impact in the same financial

year.

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

Interest rate and foreign exchange derivative financial instruments are traded with first-class bank counterparties in accordance with the Group’s counterparty risk management policy. Consequently, the counterparty risk can be regarded as negligible.

5.2.1 interest rate risks relating to the variable rate portion of its financial debt

The Group’s interest rate risk exposure results from its financial debt. This financial debt mainly relates to its syndicated loan.

To cover this risk, the Group uses standard, liquid and market-available derivative financial instruments:◗ swaps,◗ cap calls,◗ floor puts if tied with cap calls to create a symmetrical or asymmetrical collar,◗ sales of caps to unwind an existing cap or to realise a cap spread,◗ floor calls, in particular to buy back floors that constitute asymmetrical collars.

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GROUPE KEOLIS S.A.S. is subject to variations in interest rates on the part of its net debt at variable rates. At 31 December 2015, an immediate increase of 50 basis points of market interest rates, based on unchanged net debt, would increase the annual cost of debt by €3.1 million and in parallel would increase financial income in cash and cash equivalents by €0.2 million, and also would increase the financial income of variable rate receivables by €1.5 million.

An immediate increase of 50 basis points in market interest rates on the hedge portfolio would reduce the annual cost of debt by €1.7 million.

Hence, an immediate increase of 50 basis points in market interest rates on an unchanged amount of net debt, taking into account the impact of hedges, would reduce the net annual debt cost by 0.3 million.

Equally, an immediate decrease of 50 basis points in market interest rates on an unchanged amount of net debt, taking into account the impact of hedges, would increase the net annual debt cost by 0.3 million.

5.2.2 Foreign exchange risk

The Company GROUPE KEOLIS S.A.S., given its status as the parent company of the Group, carries out net investments in foreign currencies in the capital of its foreign subsidiaries. To cover the foreign exchange risk engendered by these investments, GROUPE KEOLIS S.A.S. uses derivative financial instruments for limited amounts. Management’s objective is to protect the reference exchange rate defined for the year.

The instruments used by the Group are standard, liquid and market-available:◗ forward and futures sales and purchases;◗ foreign exchange swaps;◗ call options;◗ put options in combination with call options to provide symmetric or asymmetric collars.

At 31 December 2015, GROUPE KEOLIS S.A.S. had no open foreign exchange positions.

The distribution of GROUPE KEOLIS S.A.S.’ debt between fixed and variable rates, without taking into account the derivatives portfolio, is as follows:

(€ million) 31/12/2015 31/12/2014

Variable rates 620.0 510.0

Fixed rates

lOaNs aND FiNaNCial DEBTs NET OF aCCRUED iNTEREsT 620.0 510.0

Cash and cash equivalents at variable rates (35.8) (224.9)

Cash and cash equivalents at fixed rates - -

TOTal CasH aND CasH EqUiValENTs (35.8) (224.9)

Accrued interest receivable (0.6) -

Variable rate financial receivables (310.0) -

Premiums (0.3) (0.4)

Loans and guarantees (3.7) (3.9)

Accrued interest payable - -

NET FiNaNCial DEBT 269.5 280.8

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5.3 Pension and long service award commitmentsThe amount of pension liabilities at 31 December 2015 stood at 356,131 euros.This sum is not provided for in the annual financial statements and appears under financial commitments.

5.4 information on leasingNil.

5.5 Personal Training accountThe compte personnel de formation (CPF) replaced the droit individuel de formation (DIF) on 1 January 2015, taking over the training entitlements accrued at 31 December 2014. It is funded by the single contribution to the state-approved collecting bodies which have replaced the companies as responsible for its management.

5.6 identity of the consolidating companyThe Company belongs a group whose consolidating company is SNCF PARTICIPATIONS, incorporated and domiciled in France, under SIRET number 572 150 977 01821, whose headquarters is located at 2 place aux Étoiles - CS 70001 - 93633 LA PLAINE ST DENIS CEDEX. The Company’s accounts are fully consolidated within the consolidated accounts of SNCF PARTICIPATIONS.

5.7 information on subsidiaries and investments (in euros)

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

NAME & REGISTERED OFFICE

Capital Shares held % Gross value of shares

loans, advances Revenue

kEOlis s.a. 46,851,276.00 100.00% 480,342,045 - 196,787,773EFFia20 - 22 RUE LE PELETIER75009 PARIS

3,136,000.00 100.00% 276,430,523 - 15,738,901

NAME & REGISTERED OFFICE

Equity Dividends received Net value of shares Guarantees Profit for the

year

kEOlis s.a. 186,905,847 19,130,938 480,342,045 - 37,599,518EFFia20 - 22 RUE LE PELETIER75009 PARIS

25,255,942 5,096,000 276,430,523 - 6,924,520

Other financial commitmentsCommitted credit lines available but not drawn down as at 31 December 2015 amount to €300 million, available to GROUPE KEOLIS S.A.S. In addition, on 22 January 2014 a €20 million bilateral bank loan agreement was set up, maturing on 22 January 2017. The nomi-nal amount drawn down at 31 December 2015 is €20 million.

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To the Shareholders,

In compliance with the assignment entrusted to us by your Annual General Meeting, we hereby report to you, for the year ended December 31, 2015, on: ◗ the audit of the accompanying financial statements of GROUPE

KEOLIS S.A.S. ; ◗ the justification of our assessments; ◗ the specific verifications and information required by law.

These financial statements have been approved by the Executive Board. Our role is to express an opinion on these financial statements based on our audit.

I. OPINION ON the FINANCIAl StAteMeNtSWe conducted our audit in accordance with professional standards applicable in France; those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit involves performing procedures, using sampling techniques or other methods of selection, to obtain audit evidence about the amounts and disclosures in the financial statements. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made, as well as the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.In our opinion, the financial statements give a true and fair view of the assets and liabilities and of the financial position of the company at December 31, 2015 and of the results of its operations for the year then ended in accordance with French accounting principles.

neuilly-sur-seine, March 7, 2016

the statutory auditors

II - JuStIFICAtION OF Our ASSeSSMeNtSIn accordance with the requirements of article L.823-9 of the French Commercial Code (Code du commerce) relating to the justification of our assessments, we inform you that the assessments made by us focused on the appropriateness of the accounting principles used and the reasonableness of the significant estimates made by the management relating particularly to the following matters:◗ measure the recoverable amount of goodwill resulting from

technical losses on mergers (§2.2.1 of the notes);◗ measure the value in use of financial investments (§2.2.3 of the

notes);◗ measure the current tax provision made in application of the

tax consolidation regime (§3.5 of the notes).

These assessments were made as part of our audit of the financial statements taken as a whole, and therefore contributed to the opinion we formed which is expressed in the first part of this report.

III. SPeCIFIC verIFICAtIONS AND INFOrMAtIONWe have also performed, in accordance with professional standards applicable in France, the specific verifications required by French law.

We have no matters to report as to the fair presentation and the consistency with the financial statements of the information given in the management report of the Executive Board and in the documents addressed to shareholders with respect to the financial position and the financial statements.

statutory auditors’ report on the financialstatements (For the year ended December 31, 2015)

pricewaterhouseCoopers audit deloitte & associés

French original signed by Bertrand Boisselier

French original signed byFrançoise Garnier-Bel

This is a free translation into English of the statutory auditors’ report issued in French and is provided solely for the convenience of English speaking users. The statutory auditors’ report includes information specifically required by French law in such reports, whether modified or not. This information is presented below the opinion on the financial statements and includes explanatory paragraphs discussing the audi-tors’ assessments of certain significant accounting and auditing matters. These assessments were considered for the purpose of issuing an audit opinion on the financial statements taken as a whole and not to provide separate assurance on individual account captions or on information taken outside of the financial statements.This report also includes information relating to the specific verification of information given in the management report and in the document addressed to shareholders.This report should be read in conjunction with, and is construed in accordance with, French law and professional auditing standards appli-cable in France.

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