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Isolux has formulated full year 2016 accounts and advances in the sale process of its EPC business

June 2, 2017

  •  The engineering and construction area generated business for 1,205 million euros despite the impact of the lack of liquidity.  The results showed losses of €1,332 million, including strong adjustments and adjustments.
  • The project backlog recognized at the end of the year amounts to 2,057 million.
  • The viability plan underway contemplates the continuity of a majority of the projects
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The Board of Directors of Isolux Corsán has formulated this morning the full year 2016 accounts, after analyzing the impact of the viability plan on the accounts and the balance of the group and subsidiaries.

The financial statements for the year show a loss of €1,332 million, mainly due to the adjustments and asset impairments of 2,853 million applied to engineering and construction (EPC) assets, concessions and other businesses.

 The EPC area had a turnover of 1,205 million euros. After adjustments in the customer account this amount was reduced to 706 million. Already in the consolidated accounts, the group had a turnover of 758 million at December 31, 2016. Gross operating profit (EBITDA) was negative at 1,287 million. This figure reflects the effect of the reorganization carried out in EPC and other activities, including concessions. Earnings before tax result in losses of 326 million, which amount to 1,332 million once incorporated those that come from assets put up for sale and taxes.

EPC's business registered operating losses of €102 million, in addition €955 million were accounted related to adjustments and provisions for impairments of projects and €386 million by the impairment in goodwill due to of the reduction of the perimeter of activity as a result of the lack of funding. In the concession business and other non-strategic activities, asset value adjustments amountd to €1,512 million.

 The effect of these impairments have partially offset by the gains of €1,969 million arising from the debt capitalization process, in execution of the restructuring agreement reached on July 28 and approved by the judicial authority on October 27.

On the balance sheet side, net debt with recourse decreased from €1,413 million at December 31 of 2015 to €511 million at December 31, 2016. The effect of the restructuring plan on the group's indebtedness is noticed here.

Finally, the backlog at the end of the year amounts to €2,057 million, equivalent to almost two years of activity in the EPC area.

 EPC Business Viability

The viability plan developed by the management team and the firm specialized in restructuring processes Alvarez&Marsal was approved by the Board of Directors of Isolux on 26 May. The management of the company, major shareholders and A&M advisors have addressed the restructuring process with the aim of maintaining as many jobs as possible, limiting the risks connected with the guarantees in force and facilitates the continuity of the company through projects that have operational and financial viability.

 The viability plan considers the separation of the group's business into three companies: a first or 'goodco', which would bring projects in progress and in backlog that have or will generate cash; a second one, consisting of works whose additional financing needs for completion are lower than the risk contained in guarantees; and a third one in which the rest of the activities, including all assets that are in the disinvestment plan.

 The process of finding an investor for the EPC business is advancing with the advice of Rothschild and Alantra.

The Board of Directors considers that, with financial support, the Isolux Corsán Group constitutes a viable business project that could recover part of the value it has lost as a result of the impairments reflected in the accounts.

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