Dear shareholders:

Although we can already confirm that Codere has executed all required steps and formalities pursuant to the Group’s financial restructuring process, the 2016 accounts continue to include non-recurring expenditure items as a consequence of such process. Additionally, this year, two currency depreciations have had a significant impact on our accounts. Both Argentina and Mexico have seen their currencies depreciate at an annual rate of 59% and 17%, respectively.


If we compare, in nominal terms, the operating data following such depreciations, our total revenue in euros has decreased by 8.6%, to 1,499.1 million euros. Along the same lines, the adjusted EBITDA (without non-recurring items) has also decreased by 14.4%, to 252.2 million euros.


In order to isolate the impact of said depreciations on the progress of our operational activities, we need to either, analyze the results at a 2015 constant exchange rate, or, alternatively, compare it with the 2015 results that record Argentinian figures at the “Blue” exchange rate which already anticipated the discount on the value of the currency which was ultimately confirmed by the depreciation. In the first scenario, 2016 revenues would have reached 1,875 million euros (+14.4%) and an EBITDA of 343.9 (+16.7%) with respect to 2015. In the second scenario, revenues in 2015 would be 1,412 million euros, therefore implying that growth in 2016 would be +6%. In this case, 2015 EBITDA would amount to 243 million euros, which means that EBITDA for 2016 would be 4% higher.


If we focus on the net income attributable to the pa- rent company, it is important to point out the impact of the debt-to-equity swap over such item. At the stock market price of the shares on the date of the swap, it has generated a capital loss of 1,054.2 million euros, included in the 1,125.8 million euro loss figure reflected in our 2016 accounts as opposed to 113.1 million euros in 2015. After deducting such item, net income for 2016 would have reflected losses amounting to 71.6 million euros, implying lower losses than in 2015.


Furthermore, following the refinancing of the corporate debt executed immediately after the culmination of the
restructuring process, the Company has once again reduced its gross debt to 880 million euros, leaving the net debt at 738 million euros and the debt ratio at 2.7 times EBITDA. This allowed for the group’s interest burden to be reduced in over 20 million euros per year, implying a nance cost of all gross borrowings of approximately 7%. With these new financial costs, net income for the last quarter was already positive, reaching 7.6 million euros.


This year, according to plan, investments have increased with the aim of restoring growth and recovering our competitive capacity. Compared with a 65.9 million euros figure in 2015, in 2016 we have reached 120.2 million euros, which represents an 82.4% increase.


The greatest group investment effort has been made in Uruguay, where debts have been capitalized in Carrasco Nobile, therefore now we own 100% of the company’s share capital, and Hípica Rioplatense, where we have acquired the remaining 50% for 31 million euros. In this process, the Hotel Casino Carrasco fee has been renegotiated, which should allow us to over- come the negative results that it has been dragging along until now.


During the month of November we have signed a sponsorship agreement with Real Madrid Club de Fútbol for three whole seasons, which seeks to play a key role in sports betting and online gaming development plans under the Codere brand in the following years.


Finally, we already know that in 2017 we will be, once again, facing the challenge of making our project development plans compatible with the increase in tax burden initiatives in some of our key markets. We are con dent that we will succeed.


Yours faithfully,

José Antonio Martínez Sampedro
Codere Group’s Chairman & CEO