Groupe Eurotunnel SE: 2016 Half-Year Results: 13th Consecutive Half-Year of Revenue Growth

20th Jul 2016 07:00

Groupe Eurotunnel SE (Paris:GET):

Jacques Gounon, Chairman and Chief Executive Officer of Groupe Eurotunnel SE stated: “Month after month Eurotunnel has broken traffic records, particularly for the Truck Shuttles. The Tunnel has never been as highly utilised as it is today. Despite the financial market uncertainty generated by the United Kingdom voting to leave the European Union, the Group remains confident in the performance of its economic model and in its outlook.”

1 All comparisons with the figures for the first half of 2015 are made at the average exchange rate for the first half of 2016: £1=€1.273 and after restatement of 2015 for IFRS 5 in the context of the cessation of the maritime segment’s activities in the in the second half of 2015.

2 Excluding the maritime segment MyFerryLink.

Key events

Channel Tunnel Fixed Link Best half-year ever for the Truck Shuttle, with almost 830,000 trucks transported in the first half of the year making it an absolute record. Market share has increased by 2 points to 39.7%. Best first half-year for Le Shuttle car service since 2001 with an estimated 2-point increase in its market share despite a contraction in the cross-Channel car market of 4%. The growth in revenue for Shuttle Services also benefitted from an increase in yield. Despite the terrorist attacks in Brussels in March and the strikes in Belgium and France in March to June, Eurostar traffic only decreased by 3%. Europorte and its subsidiaries EBITDA stable at €10 million, the reduction in operating costs compensating for lower revenues. Slight slow-down in revenue, linked to the reduction in cereal transport activity and to the SNCF strikes in France which paralysed the national rail network in June, blocking signal boxes and leading to disruption to traction services and petrochemical deliveries. The increase in the Carbon Tax in the UK led to a reduction in coal transport for GB Railfreight. New contracts signed, including the 5-year deal signed with Drax to supply biomass and the start-up of new infrastructure and intermodal services. GB Railfreight took delivery of seven new Class 66 locomotives during the first quarter. ElecLink In May, the Eurotunnel Group and Star Capital signed a conditional agreement for the Group to acquire Star’s 51% holding in the ElecLink joint venture. The process continues. Geopolitical context

The referendum on the UK leaving the European Union occurred in an international context already marked by geopolitical risk. As a result, the financial markets were hit in the days following the vote. The effects of the UK leaving the EU will depend closely on the conditions of the exit and the status that the country negotiates in relation to the EU. This uncertainty will continue until negotiations are completed, during which time the UK retains its status as a full member of the Union.

Operating result continues to progress

The Group’s consolidated revenues for the first half of 2016 reached €582 million, an increase of €12 million, or +2%, compared to the first half of 2015.

In spite of the uncertain geopolitical context the consolidated figures for the first half-year show an increase of €9 million in EBITDA to €249 million.

Operating costs for the Group are almost stable (+1%) for the period. For the Fixed Link, operating costs increased by 5% to €204 million, an increase due to the growth in activities and to additional costs generated by the strengthening of security measures.

For the Fixed Link, this is the seventh consecutive first-half-year of EBITDA growth.

Revenues and the operating result are, as always, characterised by a high level of seasonality across the year.

Net financial charges have increased slightly (+€2 million) over the first six months of 2016, the reduction in financial charges following the operation to simplify the structure of the debt and debt repayments being offset by the impact of the increase in the UK inflation rate on the indexed tranche of debt.

In the first half of 2016, the Group recorded a consolidated net profit of €60 million, an increase of €29 million compared to the first half of 2015 (recalculated), after taking account of the €22 million net profit from the discontinued maritime segment, which arises mainly from the accounting for the finance leases with options to sell of the ferries.

Free cash-flow from the continuing activities remains stable at €71 million for the first half of 2016, compared to €73 million (recalculated) for the first half of 2015.

Outlook

As the mechanisms for and the means by which the UK will leave the European Union have yet to be determined, it is difficult to predict the effect on the macro economic and political environment and therefore on cross-Channel transport and the Group’s activities. Nonetheless, the Group does not expect any significant impact on its activities in the short term and currently activity remains buoyant.

In this context, the Group remains confident in its capacity to generate sustainable growth and continues to forecast growth in EBITDA, with the following objectives:

The 2016 objective of €560 million EBITDA at the 2015 average exchange rate of £1=€1.375 and excluding MyFerryLink, is now €535 million at £1=€1.273 (the average exchange rate of the first half-year 2016). Likewise the 2017 objective of €605 million EBITDA at £1=€1.375 and excluding MyFerryLink, is now €579 million at £1=€1.273.

EUROTUNNEL GROUP REVENUES

First half-year (January to June)

€ million		1st half-year2016 *		1st half-year2015 recalculated**		Change		1st half-year2015 restated***
Shuttle Services		288.7		264.1		+9%		275.6
Railway Network		147.0		152.8		-4%		159.9
Other revenues		6.7		7.4		-10%		7.7
Sub-total Fixed Link		442.4		424.3		+4%		443.2
Europorte		139.4		145.9		-4%		153.6
Revenues		581.8		570.2		+2%		596.8

* Average exchange rate for the first half-year 2016: £1=€1.273.

** Recalculated at the average exchange rate of the first half of 2016 and restated in application of IFRS 5 after the ending of MyFerryLink’s activity in the second half of 2015.

*** Average exchange rate for the first half-year 2015 (£1=€1.391) and restated in application of IFRS 5.

Second quarter (April to June)

€ million		2nd quarter2016		2nd quarter2015 recalculated		Change		2nd quarter2015 restated
Shuttle Services		153.2		144.1		+6%		150.8
Railway Network		78.2		81.4		-4%		85.4
Other revenues		3.7		3.9		-7%		4.1
Sub-total Fixed Link		235.1		229.4		+2%		240.3
Europorte		66.8		72.7		-8%		76.6
Revenues		301.9		302.1		0%		316.9

First quarter (January to March)

€ million		1st quarter2016*		1st quarter2015 recalculated**		Change		1st quarter2015 restated***
Shuttle Services		135.5		120.0		+13%		124.8
Railway Network		68.8		71.4		-4%		74.5
Other revenues		3.0		3.5		-13%		3.6
Sub-total Fixed Link		207.3		194.9		+6%		202.9
Europorte		72.6		73.2		-1%		77.0
Revenues		279.9		268.1		+4%		279.9

* Average exchange rate for the first quarter 2016: £1=€1.263.

** Recalculated at the average exchange rate of the first half 2016 and restated in application of IFRS 5 following the ending of MyFerryLink’s activity in the second half of 2015.

** Average exchange rate for the first quarter 2015 (£1=€1.375 €) and restated in application of IFRS 5.

FIXED LINK TRAFFIC

First half-year (January to June)

				1st half 2016		1st half 2015		% change
Truck Shuttles				829,606		752,290		+10%
Passenger Shuttles		Cars*		1,162,740		1,159,863		0%
		Coaches		28,036		31,769		-12%
High-Speed Passenger Trains (Eurostar)**		Passengers		4,971,080		5,120,756		-3%
Rail freight***		Tonnes		512,895		892,023		-43%
		Trains		869		1,536		-43%

Second Quarter (April to June)

				2nd quarter 2016		2nd quarter 2015		% change
Truck Shuttles				418,877		378,655		+11%
Passenger Shuttles		Cars*		660,869		695,558		-5%
		Coaches		17,060		19,807		-14%
High-Speed Passenger Trains (Eurostar)**		Passengers		2,741,862		2,823,356		-3%
Rail freight***		Tonnes		247,854		441,216		-44%
		Trains		427		749		-43%

Reminder: First Quarter (January to March)

				1st quarter 2016		1st quarter 2015		% change
Truck Shuttles				410,729		373,635		+10%
Passenger Shuttles		Cars*		501,871		464,305		+8%
		Coaches		10,976		11,962		-8%
High-Speed Passenger Trains (Eurostar)**		Passengers		2,229,218		2,297,400		-3%
Rail freight***		Tonnes		265,041		450,807		-41%
		Trains		442		787		-44%

* Including motorcycles, vehicles with trailers, caravans and motor homes.

** Only passengers using Eurostar to cross the Channel are included in this table, thus excluding journeys between Paris-Calais and Brussels-Lille.

*** Rail freight services by trains operators (DB Schenker on behalf of BRB, SNCF and its subsidiaries, and Europorte) using the Tunnel.

GROUPE EUROTUNNEL SE

HALF-YEARLY FINANCIAL REPORT*

FOR THE SIX MONTHS TO 30 JUNE 2016

* English translation of GET SE’s 2016 “rapport financier semestriel” for information purposes only.

Contents

HALF-YEARLY ACTIVITY REPORT AT 30 JUNE 2016 1

Summary 1

Analysis of income statement 1

Analysis of statement of financial position 6

Analysis of cash flows 7

Other financial indicators 8

Outlook 9

SUMMARY CONSOLIDATED HALF-YEARLY FINANCIAL STATEMENTS AT 30 JUNE 2016 10

Consolidated income statement 10

Consolidated statement of other comprehensive income 11

Consolidated statement of financial position 12

Consolidated statement of changes in equity 13

Consolidated statement of cash flows 14

Notes to the summary financial statements 15

A. Important events 15

B. Basis of preparation and significant accounting policies 16

C. Assets held for sale and discontinued operations 17

D. Segment reporting 19

E. Finance costs 20

F. Other financial income and (charges) 20

G. Income tax expense 20

H. Earnings per share 21

I. Property, plant and equipment 22

J. Other financial assets 22

K. Share capital 22

L. Changes in equity 23

M. Retirement benefit obligations 24

N. Financial liabilities 24

O. Matrix of class of financial instruments and recognition categories and fair values 25

P. Related party transactions 25

Q. Events after the reporting period 25

DECLARATION BY THE PERSON RESPONSIBLE FOR THE HALF-YEARLY FINANCIAL REPORT AT 30 JUNE 2016 26

STATUTORY AUDITORS’ REVIEW REPORT ON THE 2016 HALF-YEARLY FINANCIAL INFORMATION 27

GROUPE EUROTUNNEL SE: HALF-YEARLY FINANCIAL REPORT FOR THE SIX MONTHS TO 30 JUNE 2016

Half-yearly activity report

HALF-YEARLY ACTIVITY REPORT AT 30 JUNE 2016

To enable a better comparison between the two periods, Groupe Eurotunnel SE’s consolidated income statement for the first half of 2015 presented in this half-yearly activity report has been recalculated at the exchange rate used for the 2016 half-yearly income statement of £1=€1.273.

Since the cessation of MyFerryLink’s operations at the beginning of the second half of 2015, the Eurotunnel Group has applied IFRS 5 “Non-current Assets Held for Sale and Discontinued Operations” to its maritime segment (see note A.1 to the summary consolidated half-year financial statements). Accordingly, the maritime segment’s net result for the current and previous financial half-years are presented as a single line in the income statement called “Net result from discontinued operations”.

SUMMARY

The Group’s consolidated revenues for the first half of 2016 amounted to €582 million, an increase of €12 million or +2% compared to the first half of 2015 and operating costs increased by 1% to €333 million. EBITDA improved by €9 million (+4%) to €249 million, and the operating profit improved by €5 million to €168 million. Net financial costs were relatively stable at €131 million and other net financial income increased by €3 million as a result of a variation in exchange rate gains and losses.

After a net tax charge of €7 million, the Group’s consolidated result from continuing operations was a profit of €38 million compared to a net profit of €36 million restated for the first half of 2015. The net profit generated by the discontinued maritime activity of €22 million was mainly the result of the accounting recognition of the finance leases with put options in respect of the ferries, the Group’s net consolidated profit amounted to €60 million for the first half of 2016 compared to €31 million restated in 2015.

Free cash flow generated by continuing activities amounted to €71 million in the first half of 2016 compared to €73 million restated in the first half of 2015. At 30 June 2016, the Group held cash balances of €298 million compared to €406 million at 31 December 2015 (equivalent to €374 million restated at the rate on 30 June 2016) after payment of the dividend of €118 million, the purchase of treasury shares for €39 million, net capital expenditure of €47 million, and €150 million in debt service costs (interest, repayments and fees).

ANALYSIS OF INCOME STATEMENT

		30 June 2016		30 June 2015		Change				30 June 2015
€ million				restated (*),(**)						restated(**)
Exchange rate €/£		1.273		1.273		€M		%		1.391
Fixed Link		443		424		19		4%		443
Europorte		139		146		(7)		-4%		154
Revenue		582		570		12		2%		597
Fixed Link		(204)		(194)		10		5%		(200)
Europorte		(129)		(136)		(7)		-5%		(143)
Operating costs		(333)		(330)		3		1%		(343)
Operating margin (EBITDA)		249		240		9		4%		254
Depreciation		(77)		(75)		2		3%		(75)
Trading profit		172		165		7		4%		179
Net other operating charges		(4)		(2)		2				(2)
Operating profit (EBIT)		168		163		5		3%		177
Share of result of equity-accounted companies		(1)		–		1				–
Net finance cost		(131)		(129)		2		1%		(136)
Other net financial income		9		6		3				6
Pre-tax profit from continuing operations		45		40		5				47
Income tax for continuing operations		(7)		(4)		3				(3)
Net profit from continuing operations		38		36		2				44
Net profit/(loss) from discontinued operations		22		(5)		27				(5)
Net consolidated profit		60		31		29				39

* Recalculated at the rate of exchange used for the 2016 half-year income statement (£1=€1.273).

** Restated in application of IFRS 5 following the cessation of the maritime segment’s activities.

The evolution of the pre-tax result by segment compared to the first half of 2015 is presented below:

€ millionImprovement/(deterioration) of result		Fixed Link		Europorte		Total
Pre-tax result for the first half of 2015 restated		37		3		40
Improvement/(deterioration) of result:
Revenue		+19		-7		+12
Operating expenses		-10		+7		-3
EBITDA		+9		–		+9
Depreciation		-1		-1		-2
Trading result		+8		-1		+7
Net other operating income/charges		-1		-1		-2
Operating result (EBIT)		+7		-2		+5
Net finance cost and other items		+1		-1		–
Net improvement of result		+8		-3		+5
Pre-tax result from continuing operations for the first half of 2016		45		–		45

1. Fixed Link Concession segment

The Group’s core business is the Channel Tunnel Fixed Link Concession which operates and directly markets its integrated vehicle transport service (Shuttles) and also manages the circulation of the Train Operators’ services through its Railway Network in return for the payment of a toll. This segment also includes the Group’s corporate services.

€ million		30 June 2016		30 June 2015		Change
Exchange rate £1=€1.273				restated(*)		€M		%
Shuttle Services		289		264		25		9%
Railway Network		147		153		(6)		-4%
Other revenue		7		7		–		–
Revenue		443		424		19		4%
External operating costs		(116)		(110)		6		4%
Employee benefits expense		(88)		(84)		4		6%
Operating costs		(204)		(194)		10		5%
Operating margin (EBITDA)		239		230		9		4%
EBITDA / revenue		54%		54%

* Recalculated at the rate of exchange used for the 2016 half-year income statement (£1=€1.273).

1.1. Fixed Link Concession revenues

Revenue generated by this segment, which represents 76% of the Group’s total revenue, increased by 4% compared to the first half of 2015, to €443 million.

The car and coach cross-Channel markets and Eurostar traffic are still impacted by the attacks in Paris and Brussels which occurred at the end of 2015 and the beginning of 2016.

a) Shuttle Services

Traffic			1st quarter (January to March)						2nd quarter (April to June)						1st half (January to June)
(number of vehicles)			2016		2015		% change		2016		2015		% change		2016		2015		% change
Truck Shuttle:
	Trucks		410,729		373,635		+10%		418,877		378,655		+11%		829,606		752,290		+10%
Passenger Shuttle:
	Cars*		501,871		464,305		+8%		660,869		695,558		-5%		1,162,740		1,159,863		+0%
	Coaches		10,976		11,962		-8%		17,060		19,807		-14%		28,036		31,769		-12%

* Including motorcycles, vehicles with trailers, caravans and motor homes.

At €289 million for the first half of 2016, Shuttle Services revenues increased by 9% compared to the first half of 2015.

i) Truck Shuttles

The Short Straits cross-Channel market for trucks grew in the first half of 2016 by an estimated 4% compared to the first half of 2015. During the first half of 2016, the number of trucks transported by Shuttles increased by 10% and the Truck Shuttle market share remained increased by 2 points to 39.7%. The 829,606 trucks transported in the first half of 2016 was a record half-year for the Tunnel.

ii) Passenger Shuttles

Despite a contraction in the Short Straits cross-Channel car market estimated at approximately 4% for the first half of 2016, the number of cars transported by the Passenger Shuttles is at the same level as in 2015 and therefore the car market share increased by 2 points to 57.2% for the period.

The cross-Channel coach market contracted by an estimated 9% in the first half of 2016 and the number of coaches transported by the Fixed Link during this period decreased by 12%. Market share reduced by 1 point to about 38.3%.

b) Railway network

Traffic			1stquarter (January to March)						2ndquarter (April to June)						1sthalf (January to June)
			2016		2015		% change		2016		2015		% change		2016		2015		% change
High-Speed Passenger Trains Eurostar:
	Passengers*		2,229,218		2,297,400		-3%		2,741,862		2,823,356		-3%		4,971,080		5,120,756		-3%
Train Operators’ Rail Freight Services**:
	Tonnes		265,041		450,807		-41%		247,854		441,216		-44%		512,895		892,023		-43%
	Trains		442		787		-44%		427		749		-43%		869		1,536		-43%

* Only passengers using Eurostar to cross the Channel are included in this table, thus excluding journeys between Paris-Calais and Brussels-Lille.

** Rail freight services by trains operators (DB Schenker on behalf of BRB, SNCF and its subsidiaries, and Europorte) using the Tunnel.

For the first half of 2016, revenues arising from the use of the Tunnel’s railway network by Eurostar high-speed trains and by rail freight trains amounted to €147 million, a decrease of 4% compared to 2015.

For the first half of 2016, the number of Eurostar passengers decreased by 3% compared to the first half of 2015, to 4.97 million. The impact of the terror attacks in Paris in November 2015 and then in Brussels in March 2016 as well as the strikes in Belgium and France in the first half of the year has outweighed the positive effect of the added capacity from the new e320 trains and the additional traffic generated by Euro 2016.

Cross-Channel rail freight, which was the traffic most affected by the migrants crisis due to the difficulties in securing the SNCF site at Calais-Fréthun, lost half of its customers and services during the autumn of 2015 which were diverted to other commercial routes. As a result, traffic reduced by 43% in the first half of 2016 compared to the previous year. The Group is working with all parties concerned to re-launch traffic now that the site is once again secure.

1.2. Fixed Link Concession operating costs

At €204 million, the Fixed Link’s operating costs for the first half of 2016 increased by 5% compared to the previous year. This €10 million increase mainly resulted from:

the impact of increased activity on staff costs, maintenance and other operational costs amounting to €6 million, and additional costs of €3 million resulting from increased security measures following the significant influx of migrants at Calais since mid-2015 and the new passport controls for people leaving the UK introduced by the UK government from April 2015.

2. Europorte Segment

The Europorte segment covers the entire rail freight transport logistics chain in France and the UK. It includes GB Railfreight in the UK, and Europorte France and Socorail in France.

€ million		30 June 2016		30 June 2015		Change
Exchange rate £1=€1.273				restated (*)		€M		%
Revenue		139		146		(7)		-4%
External operating costs		(76)		(84)		(8)		-9%
Employee benefits expense		(53)		(52)		1		2%
Operating costs		(129)		(136)		(7)		-5%
Operating margin (EBITDA)		10		10		–		1%

* Recalculated at the rate of exchange used for the 2016 half-year income statement (£1=€1.273).

2.1. Europorte revenues

For the first half of 2016, Europorte’s revenue fell by €7 million (4%) compared to the first half of 2015.

In France, Europorte’s development has slowed as a result of a reduction in the transport of cereals, of the strikes in France which have badly affected its petrochemical traffic, and the fact that company’s cross-Channel service has not yet restarted.

In the United Kingdom, GB Railfreight’s revenue has been affected by the reduction in the transport of coal following the increased carbon tax in 2015 and by the end of several major contracts at the end of 2015 and the beginning of 2016. Revenues have however benefited from the start of new contracts such as the traction of the Caledonian Sleeper, the transport of biomass for Drax and others in the infrastructure, intermodal and bulk transport sectors.

2.2. Europorte operating costs

Operating costs decreased by €7 million mainly reflecting the reduction in activity in the period which has enabled EBITDA to remain at the same level as in 2015.

3. Operating margin (EBITDA)

Compared to the first half of 2015, EBITDA by business segment evolved as follows:

€ million		Fixed Link		Europorte		Total
EBITDA 1st half 2015		230		10		240
Change in revenue		19		(7)		12
Change in operating costs		(10)		7		(3)
Net improvement		9		–		9
EBITDA 1st half 2016		239		10		249

At €249 million, the Group’s consolidated operating margin improved by €9 million compared to the first half of 2015.

4. Operating profit (EBIT)

Depreciation charges increased by €2 million to €77 million for the first half of 2016 following the completion of capital investment projects in 2015.

The operating profit for the first half of 2016 was €168 million, an improvement of €5 million (3%) compared to the first half of 2015.

5. Net result from continuing operations

At €131 million for the first half of 2016, net finance costs increased slightly compared to the first half of 2015 at a constant exchange rate, with the decrease in financial charges arising from the operation to simplify the debt structure completed at the end of 2015 and the contractual debt repayments being offset by the impact of the increase in inflation rates in the UK on the index-linked tranche of the debt.

“Other net financial income” increased by €3 million in the first half of 2016 compared to 2015 as a result of a favourable movement in unrealised exchange differences on intra-group balances.

The Eurotunnel Group’s pre-tax result from continuing operations for the first half of 2016 was a profit of €45 million compared to €40 million for the first half of 2015 restated.

“Income tax” for the first half of 2016 included a net charge of €4 million for dividend tax (2015: €3 million), an income tax charge of €nil (2015: charge of €5 million) and a net deferred tax charge of €3 million (2015: net income of €5 million).

The Eurotunnel Group’s net consolidated result for continuing operations for the first half of 2016 was a profit of €38 million compared to €36 million restated for the first half of 2015.

6. Net result from discontinued operations: MyFerryLink segment

The Eurotunnel Group’s maritime subsidiaries “MyFerryLink” leased their three ferries to SCOP SeaFrance (an operating company outside the Eurotunnel Group) and marketed the cross-Channel crossings for tourist and freight vehicles. Operation of the Group’s three ferries ceased in the second half of 2015.

For the first half of 2016, the maritime segment’s net result was a net profit of €22 million. During the first half of 2016, the lease of the ferries began under agreements with DFDS and Vansea Shipping Company Limited which include a put option, exercisable by the Group, for their subsequent sale. The Group will exercise this option in June 2017, at the end of the period of five years during which it was prohibited from selling the ferries under conditions imposed at the time of their purchase in 2012. In accordance with IAS 17 “Leases”, these leases are treated in the financial statements for the first half of 2016 as finance leases. Consequently, the Group has recognised an income net of tax in the maritime segment’s income statement for the first half of 2016 of €24 million which includes a net income of €40 million (after taking into account €13 million for the cost of putting the ferries back into operation) under “Other net operating income” and a deferred tax charge on this income of €16 million.

The finance lease contracts are accounted for as receivables on the statement of financial position and cash received from the lessees is treated as repayment of the receivable.

€ million		30 June 2016		30 June 2015
Revenue		–		52
Operating costs		(2)		(54)
Operating margin (EBITDA)		(2)		(2)
Depreciation		–		(2)
Trading loss		(2)		(4)
Other net operating income/(charges)		40		(3)
Operating result		38		(7)
Income tax (expense)/income		(16)		2
Net result of discontinued operations: profit/(loss)		22		(5)

7. Consolidated net result

The Eurotunnel Group’s consolidated net result for the first half of 2016, incorporating the net result from discontinued operations, was a profit of €60 million compared to a profit of €31 million in 2015 (restated).

ANALYSIS OF STATEMENT OF FINANCIAL POSITION

€ million		30 June 2016		31 December 2015
Exchange rate €/£		1.210		1.362
Fixed assets		6,322		6,376
Other non-current assets		289		320
Total non-current assets		6,611		6,696
Trade and other receivables		123		129
Other current assets		171		67
Assets held for sale		–		65
Cash and cash equivalents		298		406
Total current assets		592		667
Total assets		7,203		7,363
Total equity		1,335		1,663
Financial liabilities		3,830		4,064
Interest rate derivatives		1,595		1,170
Other liabilities		443		466
Total equity and liabilities		7,203		7,363

The table above summarises the Group’s consolidated statement of financial position as at 30 June 2016 and 31 December 2015. The main elements and changes between the two dates are as follows:

“Fixed assets” includes property, plant and equipment and intangible assets amounting to €6,116 million for the Fixed Link segment and €206 million for the Europorte segment at 30 June 2016. “Other non-current assets” includes a deferred tax asset of €127 million and floating rate notes of €153 million. At 31 December 2015, the maritime segment’s three ferries were treated as “Assets held for sale”. Following the beginning of their finance leases during the first half of 2016, (see note A.1 to the consolidated summary half-yearly financial statements), these assets were accounted for in the discontinued actives’ “Other net operating income” and the contracts were accounted for in “Other current assets”. At 30 June 2016, these contracts represented €113 million (see note J). At 30 June 2016, “Cash and cash equivalents” amounted to €298 million, after payment of the €118 million dividend, share buyback transactions of €39 million, net capital expenditure of €47 million, and €150 million in debt service costs (interest, repayments and fees). “Equity” decreased by €328 million as a result of an increase in the valuation of the “Interest rate derivatives” liability (€425 million), the payment of the dividend (€118 million), share buyback transactions (€34 million), and a change in retirement liabilities (€20 million) partly offset by the impact of the change in the exchange rate on the cumulative translation reserve (€209 million) and the net profit for the period (€60 million). “Financial liabilities” have increased by €234 million compared to 31 December 2015: a decrease of €241 million resulting from the impact of the reduction in the exchange rate on the sterling-denominated debt and of €19 million in debt repayments partly offset by an increase of €8 million arising from the effect of inflation rates on the index-linked debt tranches of the Term Loan and new financing to purchase new locomotives for Europorte in the UK (€18 million). “Other liabilities” include €261 million of trade and other payables, retirement liabilities of €108 million and fees of €74 million to be paid in respect of the operation to simplify the debt structure completed at the end of 2015.

ANALYSIS OF CASH FLOWS

Cash movement

€ million		30 June 2016		30 June 2015recalculated (*)		30 June 2015as reported
Exchange rate €/£		1.210		1.210		1.406
Continuing activities:
Net cash inflow from trading		272		260		277
Other operating cash flows and taxation		(9)		(5)		(5)
Net cash inflow from operating activities		263		255		272
Net cash outflow from investing activities		(47)		(49)		(52)
Net cash outflow from financing activities		(280)		(229)		(239)
Cash movement: decrease		(64)		(23)		(19)
Discontinued activities (maritime segment):
Net cash (out)/inflow from trading		(2)		1		1
Other operating cash flows and taxation		(15)		–		–
Net cash (out)/inflow from operating activities		(17)		1		1
Net cash outflow from investing activities		–		(1)		(1)
Net cash inflow from financing activities		5		–		–
Cash movement: decrease		(12)		–		–
Total cash movement: decrease		(76)		(23)		(19)

* Recalculated at a constant exchange rate, at that used for the statement of financial position at 30 June 2016 (£1=€1.210).

Continuing activities

At €272 million, net cash generated from trading by continuing activities for the first half of 2016 improved by €12 million compared to the first half of 2015 at a constant exchange rate (€260 million restated). “Other operating cash flows” in the first half of 2016 included €7 million of tax paid (€3 million in the first half of 2015).

Net cash outflow from investing activities of €47 million in the first half of 2016 comprised mainly:

€26 million relating to the Fixed Link (first half of 2015: €28 million recalculated). The main expenditure was on Terminal 2015 (€7 million), €8 million on rolling stock, €6 million on the replacement of rails in the Tunnel and €4 million for the GSM-R, and an investment of €21 million for Europorte (€27 million in the first half of 2015) mainly in respect of the acquisition of new locomotives in the United Kingdom to support the development of the activity and which was partially refinanced during the first half of 2016.

Net cash payments from financing activities in the first half of 2016 amounted to €280 million compared to €229 million in the first half of 2015. During the first half of 2016, cash flow from financing comprised:

debt service costs of €150 million: €117 million of interest paid on the Term Loan, associated hedging transactions and on other borrowings (€120 million restated in the first half of 2015), €19 million paid in respect of the scheduled repayments on the Term Loan and other loans (€18 million in the first half of 2015), and €14 million on the second instalment of fees relating to the operation to simplify the debt completed at the end of 2015. €39 million paid in respect of the share buyback programme, €118 million paid in dividends (2015: €97 million), €18 million drawdown for the partial refinancing of locomotives acquired by Europorte, a net receipt of €4 million from the liquidity contract, and €4 million of interest received (at the same level as for the first half of 2015).

Discontinued activities: maritime segment

“Other operating cash flows” in the first half of 2016 included €13 million paid for the cost of putting the maritime segment’s ferries back into operation prior to their new leases starting.

Cash receipts from the finance leases of the ferries amounted to €5 million in the first half of 2016.

Free cash flow

The free cash flow as defined by the Group in paragraph 10.8 of the 2015 Registration Document, is the net cash flow from operating activities less net cash flow from investing activities (excluding the initial investment in new activities and the acquisition of shareholdings in subsidiary undertakings) and net cash flow from financing activities relating to the service of the debt (loans and hedging instruments) plus interest received (on cash and cash equivalents and other financial assets).

For the first six months of 2016, free cash flow from continuing activities amounted to €71 million compared to €73 million restated for the same period in 2015.

€ million		30 June2016		30 June 2015recalculated (*)		30 June 2015as reported
Exchange rate €/£		1.210		1.210		1.406
Continuing activities:
Net cash inflow from operating activities		263		255		272
Net cash outflow from investing activities		(47)		(50)		(53)
Debt service costs (interest, fees and repayments)		(150)		(138)		(149)
Interest received		5		6		6
Free cash flow from continuing activities		71		73		76
Discontinued activities (maritime segment):
Net cash outflow from operating activities		(17)		1		1
Cash received from finance leases		5		–		–
Free cash flow from discontinued activities		(12)		1		1
Total free cash flow		59		74		77

* Recalculated at a constant exchange rate, at that used for the statement of financial position at 30 June 2016 (£1=€1.210).

Debt service cover ratio

Under the terms of the Term Loan, Groupe Eurotunnel SE is required to meet certain financial covenants as described in paragraph 10.6 of the 2015 Registration Document.

At 30 June 2016, the debt service cover ratio (net operating cash flow less capital expenditure for the Fixed Link compared to debt service costs, as defined in the financing agreements, on a rolling 12 month period) and the synthetic debt service cover ratio (calculated on the same basis but taking into account a hypothetical amortisation on the Term Loan and the step-up) were 1.93 and 1.73 respectively. The financial covenants for the period were respected.

OTHER FINANCIAL INDICATORS

Net debt to EBITDA ratio

The net debt to EBITDA ratio as defined by the Group in paragraph 10.7 of the 2015 Registration Document, is the ratio between consolidated EBITDA and financial liabilities less the value of the floating rate notes and cash and cash equivalents held by the Group. The Group does not consider it appropriate to publish this ratio when calculated on the basis of the activity of a six month period. At 31 December 2015, the ratio was 6.5.

OUTLOOK

Since October 2015 and the completion of the security measures at the site in Coquelles, Tunnel operations have no longer been affected by intrusion attempts by migrants and during the first half of 2016, the Group’s Shuttle Services revenues increased by 9%.

In a growing cross-Channel truck market boosted by the continued growth in the UK economy, and to a lesser extent by the beginnings of a recovery in the eurozone, the number of trucks transported by Shuttles increased by 10% in the first half of the 2016. The 829,606 trucks transported in the period represents a record half-year. Despite a contraction in the cross-Channel car market in the first half of the year, the Passenger Shuttle’s car service increased its market share and the current outlook for the peak summer season car traffic indicates that it will be at a similar level as last year. Passenger Shuttle’s car traffic and Eurostar passenger numbers have benefited from the positive effects of the Euro 2016 during June. However, Eurostar passenger numbers were affected by the terror attacks in Paris and Brussels in 2015 and at the beginning of 2016 and have declined by 3% in the first half of 2016. After losing half of its traffic during the autumn of 2015, cross-Channel rail freight remains the only traffic still affected by the migrant crisis. Since the securing of the tracks at Calais-Fréthun, the Group has been working with other parties concerned to re-launch this traffic.

The major capital investment projects to support the increase in Fixed Link revenues continue with the inauguration of Terminal 2015 in Folkestone at the beginning of the year and the delivery of the first wagon of the three new Truck Shuttles in April. The first of the new Truck Shuttles is expected to begin operations at the end of 2016.

For the Europorte segment, the first half of 2016 was marked by a reduction in activity on both sides of the Channel as mentioned in paragraph 2.1 above and impacted by the SNCF strikes in France. 2016 represents a transition year for GB Railfreight’s activities in the United Kingdom: the new contracts that began in 2015 and at the beginning of 2016 (notably the traction of the Caledonian Sleeper and the transport of biomass for Drax) have not yet compensated the negative impact from the ending of some contracts at the end of 2015 and the beginning of 2016 and from the structural change in the coal market brought about by the substantial increase in carbon tax in 2015.

As indicated in note A.2 to the summary consolidated half-yearly financial statements, the Group and Star Capital have signed an agreement relating to the purchase by the Eurotunnel Group of Start Capital’s 51% shareholding in the ElecLink joint venture. Completion of the transaction is subject to conditions which had not been met by the date on which these half-year accounts were prepared. Once these conditions have been met, the Group will hold 100% of ElecLink, which will then be fully consolidated in the Group’s accounts.

In the short term, the Group does not expect there to be a significant impact on its business from the recent decision by the United Kingdom to leave the European Union. It is however difficult to estimate the potential consequences in the medium and long term, both for the UK and Continental Europe. The mechanisms and the means by which the UK will leave have yet to be defined, so it is difficult to predict the precise impact of this result on cross-Channel transport and on the Group's activities. Although market volatility is inevitable whilst the macroeconomic and political environment adapts to the new reality, detailed analyses by the Group have concluded that the potential impact of this decision is not likely to affect the long term sustainable growth of the Channel Tunnel’s activity for the following reasons:

the United Kingdom has never belonged to either the Schengen area or the euro zone: control of the borders does not fall within the remit of the Le Touquet agreement, but rather under articles 1 and 4 of the Treaty of Canterbury and their application in the Sangatte Protocol signed on 25 November 1991. The legal framework is therefore stable and independent of European Union agreements; commercial relations between London and the Continent are strong and durable; during the 22 years that the Tunnel has been in operation, sterling has experienced significant fluctuations against the euro without hindering the general trend of traffic growth; and the Group considers that its business model is based on a seamless, competitive and reliable service making it essential to exchanges between the UK and the Continent and thereby enabling it to withstand any disruptions.

In this context, and in the light of its first-half results, the Group confirms its financial target published in its 2015 annual report of a consolidated EBITDA of €560 million for the 2016 financial year (excluding the MyFerryLink segment). This target is based on an exchange rate of £1=€1.375. Restated at an exchange rate of £1=€1.27, this target comes to €535 million. By way of illustration, and all else being equal, the Group estimates that, as indicated in its 2015 Registration Document, a 10% variation in the sterling/euro exchange rate would change its consolidated EBITDA by approximately €35 million. This target is based on data, assumptions and estimations that are considered reasonable.

The main risks and uncertainties which the Eurotunnel Group may face in the remaining six months of the year, other than those described above, are identified in chapter 4 “Risk Factors” of the 2015 Registration Document filed with the Autorité des marchés financiers (the French financial markets authority) on 10 March 2016.

GROUPE EUROTUNNEL SE: HALF-YEARLY FINANCIAL REPORT FOR THE SIX MONTHS TO 30 JUNE 2016

Summary consolidated half-yearly financial statements

SUMMARY CONSOLIDATED HALF-YEARLY FINANCIAL STATEMENTS AT 30 JUNE 2016

CONSOLIDATED INCOME STATEMENT

€’000		Note		30 June2016		(*) 30 June2015		31 December2015
Revenue		D		581,806		596,814		1,222,012
Operating expenses				(191,640)		(202,425)		(393,140)
Employee benefit expense				(141,447)		(140,588)		(286,807)
Operating margin (EBITDA)		D		248,719		253,801		542,065
Depreciation				(76,773)		(74,872)		(151,815)
Trading profit		D		171,946		178,929		390,250
Other operating income				260		1,026		2,981
Other operating expenses				(4,565)		(2,873)		(6,232)
Operating profit				167,641		177,082		386,999
Share of result of equity-accounted companies				(1,001)		(174)		(1,315)
Operating profit after share of result of equity-accounted companies				166,640		176,908		385,684
Finance income				1,128		1,279		2,604
Finance costs		E		(132,415)		(136,594)		(265,617)
Net finance costs				(131,287)		(135,315)		(263,013)
Other financial income		F		46,284		34,511		30,048
Other financial charges		F		(36,451)		(28,724)		(37,523)
Pre-tax profit from continuing operations				45,186		47,380		115,196
Income tax expense of continuing operations		G		(7,099)		(3,227)		(7,500)
Net profit from continuing operations				38,087		44,153		107,696
Net profit/(loss) from continuing operations		C		21,675		(5,081)		(7,478)
Net profit for the period				59,762		39,072		100,218
Net profit attributable to:
Group share				59,858		39,101		100,451
Minority interest share				(96)		(29)		(233)
Earnings per share (€):		H
Basic earnings per share: Group share				0.11		0.07		0.19
Diluted earnings per share: Group share				0.11		0.07		0.18
Basic earnings per share from continuing operations				0.07		0.08		0.20
Diluted earnings per share from continuing operations				0.07		0.08		0.20

* Restated in application of IFRS 5 following the cessation of the MyFerryLink segment’s activities as explained in note C below.

The accompanying notes form part of these financial statements. The exchange rates used for the preparation of these financial statements are set out in note B.3 below.

CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME

€’000		Note		30 June2016		30 June2015		31 December2015
Items not recyclable to the income statement:
Actuarial gains and losses on employee benefits		M		(20,560)		–		(8,294)
Related tax				725		–		306
Items recyclable to the income statement:
Foreign exchange translation differences				208,629		(176,125)		(115,066)
Movement in fair value of hedging contracts		N		(425,130)		93,638		29,217
Related tax				(3,694)		(3,171)		1 230
Net loss recognised directly in other comprehensive income				(240,030)		(85,658)		(92,607)
Profit for the period - Group share				59,858		39,101		100,451
Total comprehensive (expense)/income - Group share				(180,172)		(46,557)		7,844
Total comprehensive expense - minority interest share				(96)		(29)		(233)
Total comprehensive (expense)/income				(180,286)		(46,586)		7,611

The accompanying notes form part of these financial statements. The exchange rates used for the preparation of these financial statements are set out in note B.3 below.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

€’000		Note		30 June2016		31 December2015
ASSETS
Goodwill				17,145		19,308
Intangible assets				5,630		6,958
Total intangible assets				22,775		26,266
Concession property, plant and equipment		I		6,113,855		6,166,615
Other property, plant and equipment		I		185,547		183,079
Total property, plant and equipment				6,299,402		6,349,694
Investment in subsidiary undertakings				4,109		3,897
Deferred tax asset				127,182		149,497
Other financial assets		J		157,845		167,031
Total non-current assets				6,611,313		6,696,385
Stock				6,098		3,540
Trade receivables				123,090		129,442
Other receivables				51,401		62,882
Other financial assets		J		112,918		192
Cash and cash equivalents				298,088		405,912
Sub-total current assets				591,595		601,968
Assets held for sale		C		–		64,675
Total current assets				591,595		666,643
Total assets				7,202,908		7,363,028
EQUITY AND LIABILITIES
Issued share capital		K		220,000		220,000
Share premium account				1,711,796		1,711,796
Other reserves		L		(834,362)		(337,877)
(Loss)/profit for the period				59,858		100,451
Cumulative translation reserve				177 718		(30,911)
Equity – Group share				1,335,010		1,663,459
Minority interest share				(438)		(342)
Total equity				1,334,572		1,663,117
Retirement benefit obligations		M		108 039		98,301
Financial liabilities		N		3,783,888		4,017,341
Other financial liabilities				67,106		79,177
Interest rate derivatives		N		1,595,372		1,170,242
Total non-current liabilities				5,554,405		5,365,061
Provisions				5,107		8,265
Financial liabilities		N		45,958		46,914
Other financial liabilities				6,550		17,353
Trade payables				192,018		222,727
Other payables				64,298		39,591
Total current liabilities				313,931		334,850
Total equity and liabilities				7,202,908		7,363,028

The accompanying notes form an integral part of these financial statements. The exchange rates used for the preparation of these financial statements are set out in note B.3 below.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

€’000		Issuedsharecapital		Sharepremiumaccount		Consolidatedreserves		Result		Cumulative translation reserve		Group Share		Minority interests		Total
1 January 2015		220,000		1,711,796		(315,094)		57,225		84,155		1,758,082		(109)		1,757,973
Transfer to consolidated reserves						57,225		(57,225)				–				–
Payment of dividend						(97,272)						(97,272)				(97,272)
Share based payments(*)						7,240						7,240				7,240
Acquisition/sale of treasury shares						(12,435)						(12,435)				(12,435)
Result for the period								100,451				100,451		(233)		100,218
Profit / (loss) recorded directly in other comprehensive income:
Actuarial gains and losses on employee benefits						(8,294)						(8,294)				(8,294)
Related tax						306						306				306
Movement in fair value of hedging contracts						29,217						29,217				29,217
Related tax						1,230						1,230				1,230
Foreign exchange translation differences										(115,066)		(115,066)				(115,066)
31 December 2015		220,000		1,711,796		(337,877)		100,451		(30,911)		1,663,459		(342)		1,663,117
Transfer to consolidated reserves						100 451		(100,451)				–				–
Payment of dividend(note L)						(118,154)						(118,154)				(118,154)
Share based payments(*)						3,938						3,938				3,938
Acquisition/sale of treasury shares						(34,061)						(34,061)				(34,061)
Result for the period								59,858				59,858		(96)		59,762
Profit / (loss) recorded directly in other comprehensive income:
Actuarial gains and losses on employee benefits						(20,560)						(20,560)				(20,560)
Related tax						725						725				725
Movement in fair value of hedging contracts						(425,130)						(425,130)				(425,130)
Related tax						(3,694)						(3,694)				(3,694)
Foreign exchange translation differences										208,629		208,629				208,629
30 June 2016		220,000		1,711,796		(834,362)		59,858		177,718		1,335,010		(438)		1,334,572

* Of which €2,622,000 in respect of free shares, €341,000 in respect of share options and €975,000 in respect of preference shares.

The accompanying notes form an integral part of these financial statements. The exchange rates used for the preparation of these financial statements are set out in note B.3 below.

CONSOLIDATED STATEMENT OF CASH FLOWS

€’000		Note		30 June 2016		30 June 2015		31 December 2015
Operating margin (EBITDA) from continuing operations				248,719		253 801		542,065
Operating margin (EBITDA) from discontinued operations		C		(2,338)		(1 655)		(5,069)
Exchange adjustment (*)				(7,456)		1,727		(3,187)
Increase in inventories				(2,597)		(1,802)		18
Decrease/(increase) in trade and other receivables				2,011		(13,946)		6,614
Increase in trade and other payables				31,963		40,287		15,339
Net cash inflow from trading				270,302		278,412		555,780
Other operating cash flows				(17,241)		(2,356)		(4,247)
Taxation paid				(6,810)		(3,163)		(7,235)
Net cash inflow from operating activities				246,251		272,893		544,298
Payments to acquire property, plant and equipment				(46,747)		(59,737)		(135,630)
Sale of property, plant and equipment				32		931		27,154
Change in loans and advances				(860)		6,116		2,240
Net cash outflow from investing activities				(47,575)		(52,690)		(106,236)
Dividend paid				(118,154)		(97,272)		(97,272)
Exercise of stock options				270		1,186		2,878
Purchase of treasury shares				(38,551)		–		(13,965)
Net movement on liquidity contract				4,231		1,249		(1,307)
Cash received from loans				17,544		–		4,087
Fees paid				(14,039)		–		(42,220)
Interest paid on loans				(83,845)		(95,320)		(186,543)
Interest paid on hedging instruments				(33,034)		(33,754)		(67,260)
Scheduled repayment of loans				(19,082)		(19,537)		(39,314)
Cash received under finance leases		J		5,399		–		–
Interest received on cash and cash equivalents				1,149		1,319		2,466
Interest received on other financial assets				3,120		3,291		6,555
Net cash outflow from financing activities				(274,992)		(238,838)		(431,895)
(Decrease)/increase in cash in period				(76,316)		(18,635)		6,167

* The adjustment relates to the restatement of elements of the income statement at the exchange rate ruling at the period end.

Movement during the period €’000		30 June 2016		30 June 2015		31 December 2015
Cash and cash equivalents at 1 January		405,912		384,723		384,723
Effect of movement in exchange rate		(31,448)		23,141		14,930
(Decrease)/increase in cash in the period		(76,316)		(18,635)		6,167
(Decrease)/increase in interest receivable in the period		(60)		(29)		92
Cash and cash equivalents at the end of the period		298,088		389,200		405,912

The accompanying notes form an integral part of these consolidated financial statements. The exchange rates used for the preparation of these financial statements are set out in note B.3 below.

GROUPE EUROTUNNEL SE: HALF-YEARLY FINANCIAL REPORT FOR THE SIX MONTHS TO 30 JUNE 2016

Summary consolidated half-yearly financial statements

NOTES TO THE SUMMARY FINANCIAL STATEMENTS

Groupe Eurotunnel SE is the consolidating entity of the Eurotunnel Group, whose registered office is at 3 rue La Boétie, 75008 Paris, France and whose shares are listed on Euronext Paris and on NYSE Euronext London. The term “Groupe Eurotunnel SE” or “GET SE” refers to the holding company which is governed by French law. The term “Group” or “the Eurotunnel Group” refers to Groupe Eurotunnel SE and all its subsidiaries.

The main activities of the Group are the design, financing, construction and operation of the Fixed Link’s infrastructure and transport system in accordance with the terms of the Concession (which will expire in 2086), as well as the rail freight activity. The maritime activity was discontinued in 2015 (see note A.1 below).

A. Important events

A.1 Cessation of the maritime activity

Since the cessation of its maritime activity in the second half of 2015, the Group has applied IFRS 5 “Non-current assets held for sale and discontinued operations” to its maritime segment. At 31 December 2015, the ferries Berlioz, Rodin and Nord-Pas-de Calais were classed as assets held for sale and presented on a separate line of the statement of financial position, and the net result of the maritime activity was presented on a single line in the income statement entitled “Net result from discontinued operations”.

Since February 2016, two of the ferries, the Berlioz and the Rodin, have been leased to the DFDS group under an agreement which, due to the condition imposed at the time of their purchase in 2012 prohibiting the sale of the ferries for a period of five years, provides for an option, which is exercisable by the Group, for their subsequent sale.

On 4 May 2016, the Group concluded a similar agreement with Vansea Shipping Company Limited for the Nord-Pas-de-Calais which provides initially for its lease with an option, exercisable by the Group, for its subsequent sale.

These contracts, which effectively transfer almost all the risks and rewards of ownership to the lessee, are treated as finance leases in accordance with IAS 17 “Leases”. This treatment is reflected in the financial statements for the first half of 2016 as follows:

the net investment in the finance lease contracts, representing the receivable held by the Group under these leases and the put option, was recorded in the statement of financial position under "current financial assets" (see note J below); and an income net of tax of €24 million was accounted for in the maritime segment’s income statement, including: a net income of €40 million (including €13 million for the cost of putting the ferries back into operation) in “other net operating income” corresponding to the difference between the net book value of the ferries, which at 31 December 2015 were presented under “Assets held for sale”, and the amount of the net investment in the finance leases at the starting date of the contracts (also net of the rehabilitation costs), and a deferred tax charge on this income of €16 million.

Financial information relating to the MyFerryLink segment is presented in note C below.

A.2 ElecLink

On 20 May 2016, the Eurotunnel Group and Star Capital signed an agreement relating to the purchase by the Eurotunnel Group of Start Capital’s 51% shareholding in the ElecLink joint venture. Completion of the transaction is subject to conditions which had not been met by the date on which these half-year accounts were prepared. In this context, the accounting treatment of the Group’s holding in ElecLink remains unchanged compared to 31 December 2015. Once the purchase is completed, the Group will hold 100% of ElecLink.

A.3 United Kingdom’s referendum on 23 June 2016

In the referendum on 23 June 2016, the United Kingdom decided to leave the European Union. The Group has taken into account this new context, the terms and mechanisms of which are yet to be defined, in the main estimates and assumptions made in the preparation of its half-year consolidated financial statements at 30 June 2016, as disclosed in note B.5 below.

B. Basis of preparation and significant accounting policies

B.1 Statement of compliance

The half-year summary consolidated financial statements have been prepared in accordance with IAS 34 and accordingly do not contain all the information necessary for complete annual financial statements and must be read in conjunction with Groupe Eurotunnel SE’s consolidated financial statements for the year ended 31 December 2015.

The half-year summary consolidated financial statements for 2016 were prepared under the responsibility of the Board of Directors at its meeting held on 19 July 2016.

B.2 Scope of consolidation

The half-year summary consolidated financial statements for Groupe Eurotunnel SE and its subsidiaries are prepared as at 30 June. The basis of consolidation at 30 June 2016 is the same as that used for Groupe Eurotunnel SE’s annual financial statements to 31 December 2015.

B.3 Basis of preparation and presentation of the consolidated financial statements

The half-year summary consolidated financial statements have been prepared using the principles of currency conversion as defined in the 2015 annual financial statements.

The average and closing exchange rates used in the preparation of the 2016 and 2015 half-year accounts and the 2015 annual accounts are as follows:

€/£		30 June 2016		30 June 2015		31 December 2015
Closing rate		1.210		1.406		1.362
Average rate		1.273		1.391		1.375

B.4 Principal accounting policies

The half-year summary consolidated financial statements have been prepared in accordance with IFRS. The accounting principles and bases of calculation used for these half-year summary consolidated financial statements are consistent in all significant aspects with those used for GET SE’s 2015.

Amendments to IAS 1 “Presentation of Financial Statements”, IFRS 11 “Joint Arrangements” (amendment relating to the acquisition of an interest in a joint operation), IFRS 10 “Consolidated Financial Statements” and IAS 28 “Investments in Associates and Joint Ventures” (amendment relating to the sale or contribution of assets between the Group and its equity-accounted companies), IAS 16 “Property, Plant and Equipment”, IAS 38 “Intangible Assets” (amendment relating to the clarification of methods of depreciation) and IAS 19 “Employee Benefits” (amendment relating to the contribution by staff to defined contribution plans) became applicable to the Group on 1 January 2016. The application of these amendments did not have a significant impact on the Group's financial statements.

The main texts which may be applicable to the Group that have been published by the IASB but are not yet in force (not adopted by the European Union) are:

IFRS 9 “Financial Instruments: Classification and measurement of financial assets and liabilities” for accounting periods commencing on or after 1 January 2018. IFRS 15 “Revenue from Contracts with Customers” for accounting periods commencing on or after 1 January 2018. IFRS 16 “Leases” for accounting periods commencing on or after 1 January 2019.

The potential effects of these texts are being examined. The other standards, interpretations and amendments to existing standards are not applicable to the Group.

B.5 Use of estimates

The preparation of consolidated financial statements requires the use of estimates and assumptions that affect the amounts of assets and liabilities in the statement of financial position, as well as the amount of revenue and expenses during the period. The Group’s management and the Board of Directors periodically review the valuations and estimates based on experience and other factors considered relevant for the determination of a reasonable and appropriate valuation of assets and liabilities in the statement of financial position. Therefore, the estimates underlying the preparation of half-year consolidated financial statements to 30 June 2016 have been established in the context of the decision by the UK to leave the European Union, as described in the note A.3 above. Depending on the evolution of these assumptions, the actual figures may differ from current estimates.

The use of estimations concerns mainly the valuation of fixed assets (see note I), evaluation of the Group's deferred tax position (see note G), the evaluation of retirement liabilities (see note M) and some elements of valuation of financial assets and liabilities (see note O).

B.6 Seasonal variations

The revenue and the trading result generated in each reporting period are subject to seasonal variations over the year, in particular for the Passenger Shuttle’s car activity during the peak summer season. Therefore the results for the first half of the year cannot be extrapolated to the full year.

B.7 Finance lease contracts

In accordance with IAS 17 “Leases”, the Group recognises the assets held under finance lease contracts as financial receivables in the statement of financial position under “Other financial assets” for an amount equal to the net investment in the finance lease contracts.

The net investment in the lease contract corresponds to the total minimum lease payments to be received under the lease contract, discounted at the interest rate implicit in the lease contract.

Payments of rent paid by the lessee under the lease are recognised as repayment of the principal of the receivable and as financial income for the element relating to interest calculated at the implicit rate of funding.

C. Assets held for sale and discontinued operations

Since the second half of 2015, the Group has applied IFRS 5 “Non-Current Assets Held for Sale and Discontinued Operations” to its maritime segment.

C.1 Income statement for discontinued operations

€’000		30 June 2016		(*) 30 June 2015		31 December 2015
Revenue		–		52,022		52,398
Operating costs		(1,343)		(53,212)		(55,936)
Employee benefits expense		(995)		(467)		(1,531)
Operating margin (EBITDA)		(2,338)		(1,657)		(5,069)
Depreciation		–		(2,473)		(3,621)
Trading loss		(2,338)		(4,130)		(8,690)
Other net operating income		39,805		(3,159)		(1,481)
Operating profit/(loss)		37,467		(7,289)		(10,171)
Other financial income and (charges)		(3)		156		110
Pre-tax result: profit/(loss)		37,464		(7,133)		(10,061)
Income tax expense		(15,789)		2,052		2,583
Net result from discontinued operations: profit/(loss)		21,675		(5,081)		(7,478)
Earnings per share from discontinued operations (€):
Basic earnings per share		0.04		(0.01)		(0.01)
Diluted earnings per share		0.04		(0.01)		(0.01)

* Restated in application of IFRS 5 following the cessation of the MyFerryLink segment’s activities.

An income net of tax of €24 million was accounted for in the first half of 2016 in respect of the ferries’ finance lease contracts (see note A.1 above) as follows:

at the start date of the contracts (in February for the Rodin and Berlioz and in May for the Nord-Pas-de-Calais) a net income of €40 million, after taking into account €13 million for the cost of putting the ferries back into operation, was accounted for under “Other net operating income” being the difference between the net book value of the ferries, which at 31 December 2015 had been classed as “Assets held for sale”, and the net value of the investment recognised in respect of the finance leases for these ferries; and a net deferred tax charge on this income of €16 million.

Transactions between the MyFerryLink segment and other Group entities have been eliminated in accordance with IFRS 5. These transactions, totalling €0.4 million in the first half of 2016 (€0.9 million in the first half of 2015), relate mainly to management charges and interest charges on inter-company loans.

Depreciation on the non-current assets categorised at “Assets held for sale” was stopped on the date of application of IFRS 5, in September 2015 for the Berlioz and the Rodin and in December 2015 for the Nord-Pas-de-Calais.

C.2 Cash flow statement for discontinued operations

€’000		30 June 2016		30 June 2015		31 December 2015
Net cash (out)/inflow from operating activities		(16,647)		1,492		3,300
Net cash outflow from investing activities		–		(1,168)		(1,168)
Net cash inflow from financing activities		5,399		–		–
(Decrease)/increase in cash in period		(11,248)		324		2,132

Net cash flow from operating activities in the first half of 2016 arose mainly from the cost of the refit of the ferries before the start of their finance leases. Net cash flow from financing activities consists mainly of the cash received in respect of the finance leases for the ferries (see note A.1 and J).

C.3 Statement of financial position

At 31 December 2015, the maritime segment’s three ferries were classed as “Assets held for sale”. Following the start of their finance leases during the first half of 2016 (see note A.1 above), their disposal was accounted for under the discontinued activities’ “Other net operating income” and the contracts were then recorded as receivables under “Other financial assets” on the statement of financial position (see note J below).

D. Segment reporting

The Group is structured around the following two activities which correspond to the internal information reviewed and used by the main operational decision-makers (the Executive Committee):

the “Concession for the cross-Channel Fixed Link” segment which includes the Group’s corporate services, and the “Europorte” segment the main activity of which is that of rail freight operator.

€’000		Fixed Link		Europorte		Total continuing operations		Discontinued operations: MyFerryLink		Total
At 30 June 2016
Revenue		442,406		139,400		581,806		–		581,806
EBITDA		238,629		10,090		248,719		–		248,719
Trading profit		168,768		3,178		171,946		–		171,946
Pre-tax result from continuing operations		44,947		239		45,186		–		45,186
Net consolidated result		–		–		38,087		21,675		59,762
Investment in property, plant and equipment		18,575		19,587		38,162		–		38,162
Property, plant and (intangible and tangible)		6,115,779		206,393		6,322,172		5		6,322,177
External financial liabilities		3,769,967		59,879		3,829,846		–		3,829,846
At 30 June 2015 (*)
Revenue		443,215		153,599		596,814		–		596,814
EBITDA		242,890		10,913		253,803		–		253,803
Trading profit		174,343		4,586		178,929		–		178,929
Pre-tax result from continuing operations		44,216		3,164		47,380		–		47,380
Net consolidated result		–		–		44,153		(5,081)		39,072
Investment in property, plant and equipment		25,494		30,703		56,197		711		56,908
Property, plant and (intangible and tangible)		6,187,756		212,030		6,399,786		66,342		6,466,128
External financial liabilities		4,229,457		45,321		4,274,778		–		4,274,778
At 31 December 2015
Revenue		915,421		306,591		1,222,012		–		1,222,012
EBITDA		522,665		19,400		542,065		–		542,065
Trading profit		383,898		6,352		390,250		–		390,250
Pre-tax result from continuing operations		114,124		1,072		115,196		–		115,196
Net consolidated result		–		–		107,696		(7,478)		100,218
Investment in property, plant and equipment		76,615		62,108		138,723		1,265		139,988
Property, plant and (intangible and tangible)		6,168,458		207,497		6,375,955		5		6,375,960
External financial liabilities		4,017,293		46,962		4,064,255		–		4,064,255

* Restated in application of IFRS 5 following the cessation of the MyFerryLink segment’s activities as explained in note C above.

E. Finance costs

€’000		30 June2016		30 June2015		31 December 2015
Interest on loans before hedging		85,902		94,574		187,353
Costs relating to hedging instruments		33,640		33,605		67,638
Effective rate adjustment		3,444		607		1,360
Sub-total		122,986		128,786		256,351
Inflation indexation of the principal		9,429		7,808		9,266
Total finance costs after hedging		132,415		136,594		265,617

The inflation indexation of the loan principal estimated at 30 June 2016 reflects the estimated effect of annual French and British inflation rates on the principal amount of the A tranches of the Term Loan as described in note V of the annual consolidated financial statements at 31 December 2015.

F. Other financial income and (charges)

€’000		30 June2016		(**) 30 June2015		31 December 2015
Unrealised exchange gains*		39,960		28,060		18,475
Other exchange gains		3,011		2,845		4,487
Interest received on floating rate notes		3,246		3,538		6,950
Other		67		68		136
Other financial income		46,284		34,511		30,048
Unrealised exchange losses*		(32,078)		(26,865)		(16,783)
Other exchange losses		(4,361)		(1,854)		(3,231)
Fees relating to financial operations		–		–		(17,500)
Other		(12)		(5)		(9)
Other financial charges		(36,451)		(28,724)		(37,523)
Total		9,833		5,787		(7,475)
Of which net unrealised exchange gains/(losses)		7,882		1,195		1,692

* Mainly arising from the re-evaluation of intra-group debtors and creditors.

** Restated in application of IFRS 5 following the cessation of the MyFerryLink segment’s activities as explained in note C above.

G. Income tax expense

€’000		30 June2016		(*)30 June2015		31 December 2015
Current tax:
Income tax		(109)		(4,832)		(11,732)
Tax on dividends		(3,545)		(2,918)		(2,918)
Total current tax		(3,654)		(7,750)		(14,650)
Deferred tax		(3,445)		4,523		7,150
Total		(7,099)		(3,227)		(7,500)

* Restated in application of IFRS 5 following the cessation of the MyFerryLink segment’s activities as explained in note C above.

The tax charge is determined by applying to the half year’s result the estimated effective tax rate based on internal forecasts for the full year. The effective tax rate at 30 June 2016 was 15.71% (30 June 2015: 6.81%) as a result of the impact of changes in the exchange rate on current tax for the year and on the activation of deferred tax in respect of tax losses.

H. Earnings per share

H.1 Number of shares

				30 June2016		30 June2015		31 December 2015
Weighted average number:
– of issued ordinary shares				550,000,000		550,000,000		550,000,000
– of treasury shares				(12,686,881)		(9,813,618)		(9,921,815)
Number of shares used to calculate the result per share (A)				537,313,119		540,186,382		540,078,185
– effect of share options		i		614,592		950,848		886,921
– effect of free shares		ii		1,068,829		1,403,818		1,340,691
– effect of preference shares		iii		1,983,837		2,500,000		2,498,611
Potential number of ordinary shares (B)				3,667,258		4,854,667		4,726,223
Number of shares used to calculate the diluted result per share (A+B)				540,980,377		545,041,049		544,804,408

The calculations were made on the following bases:

(i) on the assumption of the exercise of all the options issued and still in issue at 30 June 2016. The exercise of these options is conditional on criteria described in note T to the consolidated financial statements at 31 December 2015;

(ii) on the assumption of the acquisition of all the free shares issued to staff. During the first half of 2016, 569,200 of the free shares issued in 2012 and 2014 were acquired by staff and 302,325 new free shares were granted (see note K.3 below). Details of the free shares are described in note T to the consolidated financial statements at 31 December 2015; and

(iii) on the assumption of the acquisition of all the free preference shares issued and still in issue at 30 June 2016. Conversion of these preference shares is subject to achieving certain targets and remaining in the Group’s employment as described in note T to the consolidated financial statements at 31 December 2015.

H.2 Earnings per share

		30 June2016		(*) 30 June2015		31 December 2015
Group share: profit
Net result (€’000) (C)		59,858		39,101		100,451
Basic earnings per share (€) (C/A)		0.11		0.07		0.19
Diluted earnings per share (€) (C/(A+B))		0.11		0.07		0.18
Continuing operations: profit
Net result (€’000) (D)		38,087		44,153		107,696
Basic earnings per share (€) (D/A)		0.07		0.08		0.20
Diluted earnings per share (€) (D/(A+B))		0.07		0.08		0.20
Discontinued operations: profit/(loss)
Net result (€’000) (E)		21,675		(5,081)		(7,478)
Basic earnings per share (€) (E/A)		0.04		(0.01)		(0.01)
Diluted earnings per share (€) (E/(A+B))		0.04		(0.01)		(0.01)

* Restated in application of IFRS 5 following the cessation of the MyFerryLink segment’s activities as explained in note C above.

I. Property, plant and equipment

In the context of the UK’s decision to leave the European Union as described in note A.3 above, the Group has not identified any indication of impairment in either the tangible or intangible assets of its Concession or Europorte activities at 30 June 2016.

In this context, sensitivity analyses on key assumptions (changes in the discount rate and revenue growth rates, the exchange rate between sterling and the euro) were conducted as at 30 June 2016. These analyses show that the recoverable value of the Concession assets remains higher than their carrying value at 30 June 2016.

J. Other financial assets

€’000		30 June2016		31 December 2015
Floating rate notes		153,080		161,279
Other		4,765		5,752
Total non-current		157,845		167,031
Accrued interest on floating rate notes		177		192
Finance leases		112,741		–
Total current		112,918		192

The assets under finance leases relate to contacts for the lease of the ferries Berlioz, Rodin and Nord-Pas-de-Calais concluded by the Euro-TransManche maritime subsidiaries during the first half of 2016. As these contracts transfer virtually all the risks and rewards incidental to ownership of these assets to the lessee, they are presented on the statement of financial position as at 30 June 2016 in “Other financial assets” in accordance with IAS 17.

The amount of the financial asset at 30 June 2016 corresponds to the net investment in the finance lease contracts, being the value of the minimum payments to be received under the lease agreements. These minimum payments include rent payable by the lessees until the expected date of exercise by the Eurotunnel Group of its option to sell the ferries (June 2017, being the date of expiry of the prohibition to sell them imposed at the time of their purchase in 2012), as well as the sale proceeds due on that date. Due to the lease conditions provided for in these contracts, their implicit interest rate is 0%.

The lease contracts began in February 2016 for the Berlioz and Rodin and in May 2016 for the Nord-Pas-de-Calais. The receivable initially recognised under these contracts was €117 million. Payments made by the lessee under the leases, which are recognised as repayment of the principal of the receivable, amounted to €5 million in the first half of 2016.

Given the expected date of disposal of the ferries, receivables under the lease contracts are all considered to have a maturity of less than one year.

K. Share capital

K.1 Changes in share capital

€		30 June2016		31 December 2015
220,000,000 fully paid-up ordinary shares each with a nominal value of €0.40		220,000,000.00		220,000,000.00
267 category B fully paid-up preference shares created on 9 May 2016 each with a nominal value of €0.01		2.67		–
Total		220,000,002.67		220,000,000.00

On 9 May 2016, 267 category B preference shares were issued under the 2014 programme of preference shares convertible into ordinary shares as described in note T.3.i of the notes to the consolidated financial statements as at 31 December 2015.

K.2 Treasury shares

Movements in the number of treasury shares during the period were as follows:

		Share buyback programme		Liquidity contract		Total
At 1 January 2016		10,077,801		770,000		10,847,801
Share buyback programme		4,076,657				4,076,657
Shares transferred to staff (free share plans)		(569,200)				(569,200)
Exercise of share options		(40,000)				(40,000)
Net purchase/(sale) under liquidity contract				(380,316)		(380,316)
30 June 2016		13,545,258		389,684		13,934,942

Treasury shares held as part of the share buyback programme renewed by the general meeting of shareholders and implemented by decision of the board of directors on 27 April 2016 are allocated, in particular, to cover share option plans and the grant of free shares, whose implementation was approved by the general meetings of shareholders in 2010, 2011, 2013, 2014, 2015 and 2016.

K.3 Share-based payments: grant of free shares

Following the approval by the general meeting of shareholders on 27 April 2016 of the plan to issue existing free shares, GET SE’s board of directors decided on 27 April 2016 to grant a total of 302,325 GET SE ordinary shares (75 shares per employee) to all employees of GET SE and its related companies with the exception of executive and corporate officers of GET SE. The definitive acquisition of these shares by the employees is subject to their remaining in employment with the Group and they cannot be sold for a minimum period of three years.

On 27 April 2016, 351,850 free shares issued in 2012 were acquired by employees and on 28 April 2016, 217,100 free shares issued in 2012 were acquired by employees.

Number of shares		2016		2015
In issue at 1 January		1,264,750		930,420
Granted during the period		302,325		583,500
Renounced during the period		(16,600)		(41,770)
Acquired during the period		(569,200)		(207,400)
In issue at the end of the period		981,275		1,264,750

The assumptions used to measure the fair value of the free shares were as follows:

Fair value of free shares and assumptions		2016 grant
Fair value of free shares on grant date (€)		10.45
Share price on grant date (€)		11.17
Number of beneficiaries		4,031
Risk-free interest rate (based on government bonds)		0.0%

A charge of €3,919,000 was made for the first half of 2016 relating to all free shares, stock options and preference shares (first half of 2015: €3,326,000).

L. Changes in equity

Changes in equity during the period, including the movement in the fair value of hedging contracts (see note N below), payment of the dividend, share buyback transactions (note K.2 above) and a change in retirement liabilities (note M) partly offset by the impact of the change in the exchange rate on the cumulative translation reserve and the net profit for the period, are set out in the consolidated statement of changes in equity on page 13.

Dividend

On 27 April 2016, Groupe Eurotunnel SE’s shareholders’ general meeting approved the payment of a dividend relating to the financial year ended 31 December 2015, of €0.22 per share. This dividend was paid on 26 May 2016 for a total of €118 million (before 3% tax on dividends amounting to €3.5 million).

M. Retirement benefit obligations

At 30 June 2016, the Group reviewed the main assumptions used in actuarial calculations and updated the amount of its retirement benefit obligations for its three defined benefit pension plans in the UK. As a result, actuarial differences on employee benefits of €20.5 million were recorded in the consolidated statement of comprehensive income to 30 June 2016.

N. Financial liabilities

The movements in financial liabilities during the period were as follows:

€’000		31 December2015published		31 December2015(*)recalculated		Reclassification		Drawdown /repayment		Interest,indexation and fees		30 June 2016
Term Loan		3,973,025		3,738,612		(18,767)				7,676		3,727,521
Other loans		35,722		33,352		(1,738)		15,730				47,344
Finance leases		8,594		7,632		(423)		1,814				9,023
Total non-current financial liabilities		4,017,341		3,779,596		(20,928)		17,544		7,676		3,783,888
Term Loan		38,864		36,530		18,767		(17,763)				37,534
Other loans		1,924		1,814		1,720		(912)				2,622
Finance leases		722		641		441		(407)		215		890
Accrued interest on Term Loan and other loans		5,404		5,086						(174)		4,912
Total current financial liabilities		46,914		44,071		20,928		(19,082)		41		45,958
Total		4,064,255		3,823,667		–		(1,538)		7,717		3,829,846

* The financial liabilities at 31 December 2015 (calculated at the year-end exchange rate of £1=€1.362) have been recalculated at the exchange rate at 30 June 2016 (£1=€1.210) in order to facilitate comparison.

During the first half of 2016, GB Railfreight took out the following to re-finance the acquisition of locomotives:

A bank loan for £13 million (€15.7 million), which carries a fixed interest rate of 4.010% and is repayable over 7 years. A finance lease of £1.5 million (€1.8 million) which is repayable over 15 years.

Interest rate exposure

The Eurotunnel Group has hedging contracts in place to cover its floating rate loans (tranches C1 and C2) in the form of swaps for the same duration and for the same value (EURIBOR against a fixed rate of 4.90% and LIBOR against a fixed rate of 5.26%). The nominal value of the swaps is €953 million and £350 million.

These derivatives generated a net charge of €33,640,000 for the first half of 2016 which has been accounted for in the income statement (a net charge of €33,605,000 for the first six months of 2015).

These derivatives have been measured at their fair value on the balance sheet as follows:

		Market value of hedging contracts				*Changes in market value
€’000		30 June 2016		31 December 2015
Contracts in euros		Liability of 1,114,505		Liability of 811,799		302,706
Contracts in sterling		Liability of 480,867		Liability of 358,443		122,424
Total		Liability of 1,595,372		Liability of 1,170,242		425,130

* Recorded directly in equity.

O. Matrix of class of financial instruments and recognition categories and fair values

The table below analyses the financial instruments which are accounted for at their fair value, according to their method of valuation. The different levels are defined in note B.4 to the consolidated financial statements at 31 December 2015.

€’000

Carrying amount

Fair value

Class of financial instrument

Assets at fair value through profit and loss

Available-for-salefinancialassets

Loans andreceivables

Hedginginstruments

Liabilities atamortisedcost

Total netcarrying value

Level 1

Level 2

Level 3

Total

Financial assets measured at fair value

Other non-current financial assets

n/a

n/a

n/a

n/a

n/a

n/a

n/a

n/a

n/a

n/a

Financial assets not measured at fair value

Other current and non-current financial assets

270,763

270,763

n/a

n/a

n/a

n/a

Trade receivables

123,090

123,090

n/a

n/a

n/a

n/a

Cash and cash equivalents

298,088

298,088

298,088

298,088

Financial liabilities measured at fair value

Interest rate derivatives

1,595,372

1,595,372

1 595 372

1,595,372

Financial liabilities not measured at fair value

Financial liabilities

3,829,846

3,829,846

5,150,000

5,150,000

Other financial liabilities

73,656

73,656

n/a

n/a

n/a

n/a

Trade payables

192,009

192,009

n/a

n/a

n/a

n/a

Other financial assets which are not measured at fair value consist mainly of floating rate notes and the finance lease contracts for the ferries (see notes A.1 and J).

At 30 June 2016, information relating to the fair value of the financial liabilities remains as described in note W to the annual consolidated financial statements at 31 December 2015 and taking into account the evolution of the yield curve and credit spread estimates at 30 June 2016.

P. Related party transactions

P.1 Eurotunnel Group subsidiaries

All Eurotunnel Group subsidiaries were fully consolidated at 30 June 2016 except for ElecLink as described in note C to the annual consolidated financial statements at 31 December 2015.

P.2 Other related parties

During the financial restructuring in 2007, the Eurotunnel Group concluded interest rate hedging contracts with financial institutions, in the form of swaps (see note N above). Goldman Sachs International was one of the counterparties to these hedging contracts, and at 30 June 2016 held 2.7% of the contracts, representing a charge of €0.9 million in the first half of 2016 and a liability of €43 million at 30 June 2016.

Two of Goldman Sachs’s infrastructure funds (GS Global Infrastructure Partners I, L.P., and GS International Infrastructure Partners I, L.P., together known as GSIP) hold (on the basis of the last declaration of threshold crossing in September 2011) approximately 15.5% of GET SE’s share capital at 30 June 2016.

Q. Events after the reporting period

Nothing to report.

GROUPE EUROTUNNEL SE: HALF-YEARLY FINANCIAL REPORT FOR THE SIX MONTHS TO 30 JUNE 2016

Declaration by the person responsible for the half-yearly financial report

DECLARATION BY THE PERSON RESPONSIBLE FOR THE

HALF-YEARLY FINANCIAL REPORT AT 30 JUNE 2016

I declare that, to the best of my knowledge, these summary half-year consolidated financial statements have been prepared in accordance with applicable accounting standards and present fairly the assets, financial situation and results of Groupe Eurotunnel SE and of all the companies included in the consolidation, and that this half-yearly financial report presents fairly the important events of the first six months of the financial year, their effect on the summary half-year consolidated financial statements, the main transactions between related parties, and a description of the main risks and uncertainties for the remaining six months of the financial year.

Jacques Gounon,

Chairman and Chief Executive Officer of Groupe Eurotunnel SE,

19 July 2016

GROUPE EUROTUNNEL SE: HALF-YEARLY FINANCIAL REPORT FOR THE SIX MONTHS TO 30 JUNE 2016

Statutory auditors’ review report on the half-yearly financial information

STATUTORY AUDITORS’ REVIEW REPORT

ON THE 2016 HALF-YEARLY FINANCIAL INFORMATION

To the Shareholders,

In compliance with the assignment entrusted to us by your general assembly and in accordance with the requirements of article L. 451-1-2 III of the French Monetary and Financial Code ("Code monétaire et financier"), we hereby report to you on:

the review of the accompanying condensed half-yearly consolidated financial statements of Groupe Eurotunnel SE, for the period from 1 January to 30 June 2016, the verification of the information presented in the half-yearly management report.

These condensed half-yearly consolidated financial statements are the responsibility of the Board of Directors. Our role is to express a conclusion on these financial statements based on our review.

I. Conclusion on the financial statements

We conducted our review in accordance with professional standards applicable in France. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with professional standards applicable in France and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Based on our review, nothing has come to our attention that causes us to believe that the accompanying condensed half-yearly consolidated financial statements are not prepared, in all material respects, in accordance with IAS 34 - standard of the IFRSs as adopted by the European Union applicable to interim financial information.

II. Specific verification

We have also verified the information presented in the half-yearly management report on the condensed half-yearly consolidated financial statements subject to our review. We have no matters to report as to its fair presentation and consistency with the condensed half-yearly consolidated financial statements.

The statutory auditors
Paris La Défense, 19 July 2016		Courbevoie, 19 July 2016
KPMG AuditDepartment of KPMG S.A.		Mazars
Fabrice OdentPartner		Francisco SanchezPartner

GROUPE EUROTUNNEL SE

European company with a share capital of €220,000,002.37

483 385 142 R.C.S. Paris

Registered office: 3 rue la Boétie, 75008 Paris, France

Eurotunnel:For UK media enquiries:John Keefe, + 44 (0) 1303 284491[email protected]orFor other media enquiriesAnne-Laure Desclèves, +33(0)1 4098 0467orFor investor enquiries:Jean-Baptiste Roussille, +33 (0)1 40 98 04 81[email protected]orMichael Schuller, +44 (0) 1303 288749[email protected]

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Related Shares:

Groupe Eurotunn