Annual / Quarterly Financial Statement • Apr 19, 2018
Annual / Quarterly Financial Statement
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Publicly Listed Company
Registered office: Praça do Bom Sucesso 105/159, 9º andar, Porto
Share Capital: Euro 30.000.000
Fiscal Number: 501 669 477
(Proposal point 1 of Gerneral Annual Meeting)
In compliance with legal and statutory obligations, we present to the Shareholders the Management Report and Accounts of IBERSOL - SGPS, SA for the financial year 2017.
Recent data from the INE and the Bank of Portugal indicate that the portuguese economy grew by 2.7% in 2017, higher than in the Euro Zone and surpassing in 1 pp the initial estimate of the Government, contributing to the reduction of the per capita wealth differential between Portugal and UE.
This growth was induced by the evolution of investment and the good performance of exports, namely tourism. It is estimated that in 2020 exports will reach 68% higher than in 2008.
The economy has benefited from very favorable monetary and financial conditions. According to the projections of the Bank of Portugal, the expansion will continue in the next three years, but at a progressively lower pace, close to the evolution of the Euro Zone average.
The unemployment rate is expected to remain on a downward trend, from 8.9% in 2017 to 6.1% in 2020, with a reduction in youth unemployment, which is still high (above 20%).
The average inflation rate increased significantly in 2017 (from 0.6% to 1.6%), against a backdrop of a slight increase in unit labor costs, with developments in the following years expected to be in line with that projected by EUROSISTEMA for the Euro Zone
The CAPEX showed a strong growth in its main components (construction, machinery and equipment and transport material), a tendency that should be maintained in the following year, although in a less pronounced way.
The economic recovery strengthened in 2017 due to the structural reforms carried out in the recent past and the increase in external demand.
Private investment has been expanding rapidly and job creation has intensified. The challenge is the sustainability of growth and its growth to levels that allow, in the medium term, a consistent approach to the standards of living of the most advanced countries of the European Union.
The evolution of the activity of Ibersol SGPS is associated with the strategic development of its subsidiaries, whose turnover increased 66 %.
The integration of the Eat Out Group during a full year allowed an increase in the size of the businesses in Spain, and the Group's turnover amounted to EUR 448 million.
Ibersol SGPS focused its activities in providing services of administration and management to the Group, mainly the management of the funds to financing the group.
Financial planning, the adequacy of financial resources of the subsidiaries, the management of the financial costs of the group and a strict management of the treasury were a major vector of our activity.
The most important events occurred during the period, regarding the results and changes in financial structure of the company are as follows:
Operating income was negative at 225 thousand euros, with:
a) turnover relating to the services rendered to the subsidiary Ibersol Restauração, SA, which manages the services shared by the different brands, were equal to the last years;
b) the operating costs (without impairment) increased and amounted to 648 thousand euros, higher 178 thousand euros than the previous year. This increase corresponds entirely to the loss in the fair value of the swaps contracted to cover the interest rate risk of part of the debt.
In addition, for prudence, an impairment loss of EUR 264 thousand was recorded in respect of the valuation of Change Partners.
The net financing cost was negative by 871 thousand euros, reflecting the financial gains of the loans to subsidiaries, which are higher than the amount of financing contracted. Ibersol also received dividends amounting to 7 million euros. The company has progressively centralized the Group financing and consequently the costs of commissions associated with medium and long-term "grouped" commercial paper program contracts and the guarantees provided to its subsidiaries. The bank commissions and fees increased around 130 thousand euros.
The current Taxes is estimated at EUR 145 thousand and the company recorded tax savings of 1.39 million (under the tax consolidation for 2016 and 2017) and recognized € 1.2 million deferred tax benefits for use in the coming years . As a result, IRC for the year is negative at 2.5 million euros.
The Net Profit amounted to € 9.85 million.
On 31 December 2017, Assets amounted to EUR 267 million, a decrease of EUR 13 million in the year, reflecting the reduction of the financing to the subsidiaries.
In order to finance the subsidiaries, on 2016, Ibersol SGPS borrowed 78 million euros through commercial paper program contracts with long repayment maturities (up to 6 years) and maintaining the same level of debt during the 2017.
Total Liabilities reduced by approximately EUR 20 million as the company paid the liability, at the same amount, it had to Ibersol Restauração as a result of the purchase of Asurebi's share capital at the end of 2016.
On 31 of December 2016, Equity stood at 185 million euros and the company maintain a strong financial health.
In addition, the company received dividends from its subsidiaries in the amount of 7 million euros and distributed to its shareholders approximately 2.2 million euros.
Risk management is a part of the Group's culture and cuts across the whole organization. It is present in every process and is the responsibility of all managers and employees at the different organizational levels.
Risk management is undertaken with the goal of creating value through management and control of uncertainties and threats that may affect the Group's companies, from a standpoint of operational continuity with a view to taking advantage of business opportunities.
In the strategic planning context, risks affecting the portfolio of existing businesses as well as the development of new businesses and more significant projects are identified and assessed. Strategies to manage those risks are then determined.
At operational level the management risks associated to each business's objectives are identified and evaluated and actions planned to manage those risks, which are included and monitored in the scope of the business plans and functional units.
The group's main internal control systems are regularly evaluated to ensure conformity of the established procedures.
Internal control and monitoring of internal control systems are conducted by the Executive Committee. Certain risk areas are due to the specific nature of the business, of which the following stand out:
Because operations are in the food service sector eventual epidemics or distortions in raw material markets along with consumption pattern changes can significantly impact the financial statements.
Operating the company as the Group's financial center, liquidity risk is associated with the risk of its subsidiaries. The management of cash requirements is based on annual planning that is reviewed quarterly and adjusted on a daily basis. Related to the dynamics of the underlying business, the Group's Treasury intends to maintain the flexibility of floating debt by keeping credit lines available. At the end of 2017, current liabilities amounted to 10 million euros, compared to 7.8 million current assets. Non-current assets include 153 million loans granted to subsidiaries, whose repayment may be requested in the short term, if necessary.
Ibersol's main interest rate risk arises from the liability of long-term borrowings in commercial paper. At the current level of interest rates, the Group's policy is, in longer maturities, to fix interest rates in full or in part. At the company level, the risk is reduced since the company has loans granted at a variable rate higher than those obtained.
Practices on Corporate Governance prepared in compliance with the provisions of article 245 - A of the Securities Code and pursuant to CMVM Regulation No. 1/2010, are included in the Report on Corporate Governance annexed consolidated report.
During the year the company had the following movements of own shares:
-In September, assignment of 599,976 new shares resulting from rights in capital increase by incorporation of reserves;
-In September, acquisition of 57 new shares corresponding to the rights remaining from the capital increase at the average price of € 10.90.
At the end of 2017, the company held 2,999,938 shares (9.9998% of capital), with nominal value of € 1 each, for a total acquisition value of 11,179,969 euros, corresponding to an average price of 3.73€.
On March 1, 2018, draft investment tax contracts between the Portuguese State and Iber King and Iberusa subsidiaries were approved by the Council of Ministers, which attribute tax credits to IRC. Impacts at IRC level have already been considered in the 2017 accounts.
In a context that shows signs of a recovery in consumption, we will continue to support the very selective growth strategy of our subsidiaries in the three markets where we operate.
In the financial year of 2017 the net profit in the individual accounts is of 9,851,530.49 €.
In accordance with legal and statutory the Board of Directors proposes the following application:
| Legal Reserve | 492,580.00 € |
|---|---|
| Free Reserves | 6,358,950.49 € |
| Dividends | 3,000,000.00 € |
The dividends of 3,000,000 € corresponds to attribute a gross dividend per share of 0.10€. In the case the company holds own shares, the mentioned attribution of 0.10€ per share in circulation will stand, being the global amount of the attributed dividends reduced.
The first vote of this Board is directed to all employees of the group, for the dedication and enthusiasm revealed that was fundamental in achieving the objectives we have identified.
We thank also our Suppliers of goods and services for the support demonstrated and we stress, with appreciation, the cooperation given by the banks and other financial institutions with whom the Group has worked throughout the year.
We also recognise the Fiscal Council and Auditors for the permanent collaboration and dialogue expressed in the monitoring and examination of the management of the company.
By virtue of the Law, PricewaterhouseCoopers will cease to be the Statutory Auditor of the company, after a long period. The Board of Directors refers the high professionalism and quality that has always been demonstrated.
____________________________
____________________________
Porto, 5 April 2018
António Carlos Vaz Pinto Sousa
____________________________
António Alberto Guerra Leal Teixeira
Juan Carlos Vázquez-Dodero
Within the terms of paragraph c) of article 245 of the Portuguese Securities Code, the members of the Board of Directors, identified below, declare that to the best of their knowledge:
i) the information contained in the management report, the annual accounts and all other accounting documentation required by law or regulation, was produced in compliance with the applicable accounting standards and gives a true and fair view of the assets and liabilities, the financial position and the results of Ibersol , SGPS, S.A. .
ii) the Management report is a faithful statement of the evolution of the businesses, of the performance and of the position of Ibersol , SGPS, S.A. and contains a description of the main risks and uncertainties which they face.
| António Carlos Vaz Pinto Sousa | Chairman |
|---|---|
| António Alberto Guerra Leal Teixeira | Vice-Chairman |
| Juan Carlos Vázquez-Dodero | Member |
Individual Financial Statements
31 December 2017
| Ibersol – SGPS, SA 1 | |||||||
|---|---|---|---|---|---|---|---|
| Statement of financial position 3 | |||||||
| Statement of comprehensive income 5 | |||||||
| Changes in equity statement 6 | |||||||
| Cash flows statement 7 | |||||||
| Financial statements report 8 | |||||||
| 1 | INTRODUCTION 8 | ||||||
| 2 | FINANCIAL STATEMENTS ACCOUNTING STANDARDS 8 | ||||||
| 3 | MAIN ACCOUNTING POLICIES 11 | ||||||
| 4 | CASH FLOWS 17 | ||||||
| 5 | TANGIBLE FIXED ASSETS 18 | ||||||
| 6 | FINANCIAL INVESTMENTS IN SUBSIDIARIES 18 | ||||||
| 7 | OTHER FINANCIAL ASSETS 21 | ||||||
| 8 | INCOME TAX RECOVERABLE AND PAYABLE 21 | ||||||
| 9 | OTHER DEBTORS 21 | ||||||
| 10 | DEFERRALS 22 | ||||||
| 11 | CAPITAL 22 | ||||||
| 12 | OWN SHARES 22 | ||||||
| 13 | RESERVES 22 | ||||||
| 14 | SUBSIDIARIES LOANS 23 | ||||||
| 15 | LOANS 24 | ||||||
| 16 | OTHER CURRENT LIABILITIES 25 | ||||||
| 17 | PROVISIONS 26 | ||||||
| 18 | SALES AND RENDERED SERVICES 26 | ||||||
| 19 | EXTERNAL SUPPLIES AND SERVICES 26 | ||||||
| 20 | PERSONNEL COSTS 27 | ||||||
| 21 | OTHER INCOME AND GAINS 27 | ||||||
| 22 | OTHER EXPENSES AND LOSSES 27 | ||||||
| 23 | FINANCIAL COSTS AND INCOME 27 | ||||||
| 24 | INCOME TAX 28 | ||||||
| 25 | CONTINGENCIES 29 | ||||||
| 26 | REMUNERATION ASSIGNED TO SOCIAL BOARD 29 | ||||||
| 27 | RELATED PARTIES 29 | ||||||
| 28 | INCOME PER SHARE 32 | ||||||
| 29 | SUBSEQUENT EVENTS 32 |
| Notes | 2017 | 2016 | |
|---|---|---|---|
| ASSETS | |||
| Non-current Asset | |||
| Tangible fixed assets | 3.2 and 5 | - | - |
| Financial investments in subsidiaries Other financial assets |
3.1 and 6 3.1 and 7 |
103 727 847 - |
103 727 847 264 000 |
| Loans granted to subsidiaries | 14 | 152 977 496 | 166 679 496 |
| Deferred tax assets | 24 | 1 225 064 | - |
| Total non-current assets | 257 930 407 | 270 671 343 | |
| Current Asset | |||
| State and other public entities | 8 | 1 384 754 | - |
| Group subsidiaries | 14 | 6 853 084 | 7 285 243 |
| Other debtors | 9 | 18 652 | 22 141 |
| Deferrals | 10 | 364 713 | 400 418 |
| Cash and bank deposits | 3.5 and 4 | 168 507 | 1 496 660 |
| Total current assets | 8 789 710 | 9 204 462 | |
| Total Assets | 266 720 116 | 279 875 805 | |
| EQUITY AND LIABILITIES | |||
| Share capital | 3.6 and 11 | 30 000 000 | 24 000 000 |
| Own shares | 12 | -11 179 968 | -11 179 347 |
| Share prize | 469 937 | 469 937 | |
| Legal reserves | 13 | 263 001 | 1 |
| Other reserves | 13 | 120 470 050 | 127 582 600 |
| Revaluation surplus | 12 110 | 12 110 | |
| Retained earnings Net profit in the year |
35 305 424 9 851 530 |
35 305 424 1 310 460 |
|
| Total Equity | 185 192 085 | 177 501 185 | |
| LIABILITIES | |||
| Non-current | |||
| Provisions | 3.10 and 17 | 2 677 564 | 1 494 968 |
| Loans obtained | 3.7 and 15.1 | 68 500 000 | 78 000 000 |
| Derivative financial instruments | 15.2 | 188 745 | - |
| Total non-current liabilities | 71 366 309 | 79 494 968 | |
| Current | |||
| Suppliers | 6 987 | 12 160 | |
| Income tax payable | 8 | - | 2 196 187 |
| Group subsidiaries | 14 | 230 986 | 179 272 |
| Loans obtained Other current liabilities |
3.7 and 15.1 16 |
9 500 000 423 750 |
- 20 492 033 |
| Total current liabilities | 10 161 723 | 22 879 653 | |
| Total Liabilities | 81 528 032 | 102 374 620 | |
| Total Equity and Liabilities | 266 720 116 | 279 875 805 |
| Notes | 2017 | 2016 | |
|---|---|---|---|
| Operating Income | |||
| Rendered services | 3.12 and 18 | 600 000 | 600 000 |
| Other operating income | 3.11 and 21 | 438 | 209 |
| Total operating income | 600 438 | 600 209 | |
| Operating Costs | |||
| External supplies and services | 19 | 142 510 | 144 913 |
| Personnel costs | 20 | 335 423 | 337 544 |
| Impairment of financial assets (losses / reversals) | 7 | 264 000 | - |
| Other operating costs | 3.11 and 22 | 347 459 | 165 520 |
| Total operating costs | 1 089 391 | 647 977 | |
| Operating Income | -488 954 | -47 768 | |
| Net financing cost | 23 | -870 727 | -930 779 |
| Dividends | 23 | 7 000 000 | 600 000 |
| Pre-tax income | 7 381 773 | 1 483 012 | |
| Income tax | 3.8 and 24 | -2 469 758 | 172 552 |
| Net profit in the year | 9 851 530 | 1 310 460 | |
| Other comprehensive income: | - | - | |
| TOTAL COMPREHENSIVE INCOME | 9 851 530 | 1 310 460 | |
| Earnings per share | 28 | 0,36 | 0,05 |
| Income per share | 0,36 | 0,05 | |
| Sh Ca ital are p |
Ow har n s es |
Sh ize are pr |
al Re Leg ser ves |
Oth er res erv es |
Re val ion uat sur lus p |
Re tai ned ear nin gs |
Ne Pro fit t |
al Eq Tot uity |
||
|---|---|---|---|---|---|---|---|---|---|---|
| Ba lan 1 J 20 16 ce on anu ary |
20 000 00 0 |
11 179 64 3 - |
469 93 7 |
4 0 00 001 |
128 23 8 5 02 |
12 110 |
36 672 55 4 |
-22 3 6 58 |
177 98 9 8 03 |
|
| Ch in p eri od ang es Ch in a ing licie unt ang es cco po s Ap lica tion of fit net p pro Re cla ssi fica tio fit a lica tio et n o s n pro pp n Sh ital inc are ca p rea se Ac isit ion / ( dis al) of ha qu pos ow n s res Re aliz atio f re val ion lus of t ible d in ible uat tan n o su rp es ang an g fixe d a ts sse and the ir v aria tion s Oth han in ity er c ges equ |
11 12 |
4 0 00 000 |
296 | -4 0 00 000 |
1 1 43 472 626 |
9 4 39 257 -10 80 6 3 87 |
10 582 72 9 - 10 806 38 7 |
0 0 0 0 922 0 0 |
||
| Ne rof it in th t p e y ear To tal inc om e |
4 0 00 000 |
296 | 0 | 4 0 00 000 - |
1 1 44 098 |
0 | 1 3 67 130 - |
223 65 8 1 3 10 460 1 3 10 460 |
922 1 3 10 460 1 3 10 460 |
|
| Tra ctio wit h c ital s in th eri od nsa ns ap ow ner e p Ca ital inc p res eas es Sh ize s in are pr cre ase s Div ide nds id pa Los ses co ver age Oth tion er t ran sac s |
28 | 0 | 0 | 0 | 0 | -1 8 00 000 -1 8 00 000 |
0 | 0 | 0 | 0 0 -1 8 00 000 0 0 -1 8 00 000 |
| Ba lan 31 De ber 20 16 ce on cem |
24 000 00 0 |
-11 17 9 3 47 |
469 93 7 |
1 | 127 58 2 6 00 |
12 110 |
35 305 42 4 |
1 3 10 459 |
177 50 1 1 85 |
| Sh Ca ital are p |
Ow har n s es |
Sh ize are pr |
al Re Leg ser ves |
Oth er res erv es |
Rev alu atio n sur lus p es |
Re tai ned ear nin gs |
Ne t |
Pro fit |
tal Eq To uity |
||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Ba lan 1 J 20 17 ce on anu ary |
24 000 00 0 |
11 179 34 7 - |
469 93 7 |
1 | 127 58 2 6 00 |
12 110 |
35 305 42 4 |
1 3 10 459 |
177 50 1 1 85 |
||
| Ch in p eri od ang es Ch in a ing licie unt ang es cco po s Ap lica tion of fit net p pro Sh ital inc are ca p rea se Ac isit ion / ( dis al) of ha qu pos ow n s res Re aliz atio f re val ion lus of t ible d in ible uat tan n o su rp es ang an g fixe d a ts sse Rev alu atio lus of t ible d in ible fix ed tan ets n s urp es ang an g ass and the ir v aria tion s Oth han in ity er c ges equ |
11 12 |
6 0 00 000 |
-62 1 |
263 00 0 |
1 0 47 459 -6 0 00 000 |
-1 3 10 459 |
0 0 0 -62 1 0 0 0 |
||||
| 6 0 00 000 |
-62 1 |
0 | 263 00 0 |
-4 9 52 541 |
0 | 0 | -1 3 10 459 |
-62 1 |
|||
| Ne t p rof it in th e y ear To tal inc om e |
9 8 51 530 9 8 51 530 |
9 8 51 530 9 8 51 530 |
|||||||||
| Tra ctio wit h c ital s in th eri od nsa ns ap ow ner e p Ca ital inc p res eas es Sh ize s in are pr cre ase s Div ide nds id pa Los ses co ver age Oth tion er t ran sac s |
28 | 0 | 0 | 0 | 0 | -2 160 01 0 -2 160 01 0 |
0 | 0 | 0 | 0 0 -2 160 01 0 0 0 -2 160 01 0 |
|
| Ba lan 31 De ber 20 17 ce on cem |
30 000 00 0 |
-11 17 9 9 68 |
469 93 7 |
263 00 1 |
120 47 0 0 50 |
12 110 |
35 305 42 4 |
9 8 51 531 |
185 19 2 0 84 |
| 31st December | |||
|---|---|---|---|
| Notes | 2017 | 2016 | |
| Cash Flows from Operating Activities | |||
| Receipts from clients | 600 000 | 600 000 | |
| Payments to supliers | 37 576 | 32 858 | |
| Staff payments Operational cash flows |
266 037 296 387 |
224 314 342 828 |
|
| Payments/receipt of income tax | -411 338 | 301 216 | |
| Other paym./receipts related with operating activities | -175 482 | -1 535 314 | |
| Flows from Operating Activities (1) | 532 243 | -1 493 702 | |
| Cash Flows from Investment Activities | |||
| Payments for: | |||
| Tangible assets | |||
| Intangible assests | |||
| Financial Investments: | |||
| Investments | 16 | 20 181 420 | |
| Capital contributions to subsidiaries Loans granted to subsidiaries |
14 | 50 795 000 | 80 200 000 |
| Other assets | |||
| Receipts from: | |||
| Tangible assets | |||
| Intangible assets | |||
| Financial investments: Investments |
|||
| Capital contributions to subsidiaries | 6 | 3 470 000 | |
| Loans granted to subsidiaries | 14 | 64 497 000 | 2 020 000 |
| Other assets | |||
| Investment benefits | |||
| Interest received | 23 | 1 339 625 | 1 367 010 |
| Dividends received | 23 | 7 000 000 | 600 000 |
| Flows from Investment Activities (2) | 1 860 205 | -72 742 990 | |
| Cash flows from financing activities | |||
| Receipts from: Loans obtained |
15 | 78 000 000 | |
| Capital and other equity instruments increases | 1 675 | ||
| Losses coverage | |||
| Other financing activities | |||
| Payments for: | |||
| Loans obtained | |||
| Interest and similar costs Dividends paid |
23 28 |
1 559 971 2 160 010 |
471 910 1 800 000 |
| Capital and other equity instruments reductions | 621 | 752 | |
| Other financing activities | |||
| Flows from financing activities (3) | -3 720 602 | 75 729 013 | |
| Change in cash & cash equivalents (1)+(2)+(3) Cash & cash equivalents at the start of the period |
-1 328 154 1 496 660 |
1 492 321 4 338 |
|
| Cash & cash equivalents at end of the period | 3.5 and 4 | 168 507 | 1 496 660 |
Ibersol – SGPS, SA ("Company" or "Ibersol") has its head Office at Edifício Península – Praça do Bom Sucesso, 105/159 – 9º - 4150-146 Porto, Portugal. Ibersol was set up on 30 December 1985 with management of shareholdings main activity.
Ibersol is owned by 54,91% by ATPS - SGPS, S.A., with its head office at Edifício Península – Praça do Bom Sucesso, 105/159 – 9º - 4150-146 Porto.
These financial statements were approved by the Board of Directors on 05th April 2018. The Board of directors believes that these financial statements reflect the true and proper Ibersol operations, as well as its position and financial performance and cash flows.
These financial statements have been prepared according to the International Financial Reporting Standards (IFRS), as applied in the European Union and in force on 01 January 2016. They have been prepared in accordance with the historical cost standard.
The preparation of financial statements in accordance with IFRS requires the use of estimates, assumptions and critical judgments in the process of determining the accounting policies to be adopted by Ibersol SGPS, with a significant impact on the value of assets and liabilities, as well as income and expenses in the period
Although these estimates are based on best experience of the Board of Directors and their best expectations in relation to current and future events and actions, present and future profit may differ from these estimates. In Note 3 of these financial statements we have the areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant.
The financial statements are expressed in Euros (rounded to the unit).
In these financial statements, there hasn't been any exception involving directly the derogation of any SNC standard.
The elements contained in these financial statements are all comparable with the previous year.
taxable profits when temporary deductible differences exist and how to assess recoverability of deferred tax assets when restrictions exist in the tax law. This amendement had no impact on the entity.
settled, share-based payments and the accounting for modifications to a share-based payment plan that change the classification an award from cash-settled to equity-settled. It also introduces an exception to the principles in IFRS 2 that will require an award to be treated as if it was wholly equitysettled, where an employer is obliged to withhold an amount for the employee's tax obligation associated with a share-based payment and pay that amount to the tax authority. It is not expected that its application has significant impacts.
The main accounting policies applied in preparing these financial statements are described below. Unless stated these policies have been consistently applied to all years presented.
Subsidiaries are all entities in which Ibersol directly or indirectly has the power to control their financial and operational activities, which is usually associated with holding more than half of the voting rights. The existence and the effect of potential voting rights are considered in the evaluation of the control over a subsidiary.
Associates are entities over which the company has between 20% and 50% of the voting rights or on which the company has significant influence, but which cannot exercise its control.
Investments in subsidiaries and associates are presented at cost. Dividends attributed by subsidiaries and associates are considered in financial results.
Investments in subsidiaries and associates are subject to impairment tests whenever there are indications of impairment. An impairment loss is recognized in the income statement of the amount of the excess of the initial amount of the asset over its recoverable amount. The recoverable amount is the higher of the fair value of an asset less the costs incurred to sell and its value in use. To perform impairment tests, each investment is analyzed separately.
The entities that qualify as subsidiaries and associates are listed in note 27.
Ibersol, SGPS, S.A. prepares consolidated accounts.
Tangible fixed assets are shown at the acquisition cost, net of the respective amortisation and accumulated impairment losses. This includes estimated cost at the date of transition to NCRF, and acquisition costs to assets acquired after that date
The historic cost includes all expenses attributable directly to the acquisition of goods.
Subsequent costs are added to the amounts for which the good is recorded or recognised as separate assets, as appropriate, only when it is probable that the company will obtain the underlying economic benefits and the cost may be reliably measured.
Other expenses on repairs and maintenance are recognised as an expense in the period in which they are incurred.
The estimated lifetime for the most significant tangible fixed assets are as follows:
| Years | |
|---|---|
| Land and buildings | Between 10 and 20 years |
| Equipment | Between 4 and 20 years |
| Other tangible assets | Between 5 and 10 years |
Depreciation of assets is calculated by the equal annual amounts method, accordingly with accounting policies in force (DR nº 25/2009 14 September). Depreciation of tangible fixed assets begins when they are available for use.
The estimated lifetime of assets are reviewed each year, in which the depreciation is evaluated with the standards of use of assets. Changes to the estimated lifetime are treated as a change in accounting estimate and are applied prospectively.
Impairment tests are carried out whenever there is evidence of loss of value to estimate the recoverable amount of the asset, and when necessary to record an impairment loss. The recoverable amount is determined as the higher of net selling price and value in use of the asset, the latter being calculated based on the present value of estimated future cash flows from continuing use and disposal of the asset at the end of its useful life
Gains and losses consequent to a reduction or sale are determined by the difference between receipts from the sale and the asset's accounted value, and are recognised in the profit and loss account.
Assets with a specific lifetime are not subject to amortisation and are, instead, subject to annual impairment tests. Ibersol performs impairment test in reference to 31st December of each year and whenever there are events or alterations in the circumstances causing their accounting value not to be recoverable.
Ibersol identifies an impairment loss and determines whether the loss is permanent or not whenever the recoverable amount is less than the carrying value of assets. In cases where the loss is not considered permanent and definitive, Ibersol makes the disclosure of the reasons for this conclusion.
The recoverable amount is the highest amount between an asset's fair value minus the costs necessary for its sale and its utilisation value. Assets are grouped at the lowest level at which it may be able to separately identify cash flows (units generating cash flows), to perform impairment tests.
At each reporting date, non-financial assets with impairment, other than goodwill, are assessed on the possible reversal of impairment losses.
Amortisation and depreciation of assets are recalculated prospectively in accordance with the recoverable value when there is an impairment reversal.
The group classifies its financial assets under the following categories: financial assets at the fair value through results, loans granted and accounts receivable, investments held until maturity and financial assets available for sale. The investment is classified according to its purpose. The Board of Directors decides on the classification when the investments are initially recorded and re-assesses that classification at each report date.
This category is subdivided into two parts: financial assets held for negotiation and those that are designated at the fair value through results from the start. A financial asset is classified in this category if it is acquired for the main purpose of being sold on the short term or if designated as such by the Board of Directors. Derivatives are also classified as held for negotiation, except if they are classified for hedging. Assets in this category are classified as current if they are held for negotiation or are realisable within 12 months after the consolidated statement of financial position date.
Loans granted and other credits are non-derivative financial assets with fixed or determinable payments and that are not listed on an active market. These assets originate when the group supplies cash, goods or services directly to a debtor, without intending to negotiate the time at which it will receive payment for the said cash goods or services. They are included in current assets, except when they mature in more than 12 months after the consolidated statement of financial position date, in which case they are classified as non-current assets.
Investments held until maturity is non-derivative financial assets with fixed or determinable payments and fixed maturities, which the group's Board of Directors has the intention and capacity to maintain until maturity. These investments are included in non-current assets, except those falling due within 12 months as of the consolidated statement of financial position date, which are classified as current assets.
Financial assets available for sale are non-derivative assets which are designated in this category or are not classified in any of the other categories. They are included in non-current assets, except when the Board of Directors wishes to sell the investment within 12 months as of the consolidated statement of financial position date.
Purchases and sales of investments are recognised on the transaction date – the date on which the group promises to purchase or sell the asset. Investments are initially recognised at the fair value, including transaction costs, when the financial assets are not shown at the fair value through results (in this case, they are also recognised at the fair value, but the transaction costs are recorded in costs in the year at the time they are incurred). Financial investments are derecognised when the rights to receive cash from them expire or have been transferred and the group has substantially transferred all the risks and benefits from its possession. Financial assets available for sale and financial assets at the fair value through results are subsequently valuated at the fair value. Loans granted and accounts receivable and investments held until maturity are valuated at the amortised cost, using the effective rate method. Gains and losses - either realised or not realised and arising from alterations to the fair value of the category of the financial assets at their fair value through results - are included in the consolidated statement of comprehensive income in the year in which they arise. Unrealised gains and losses, resulting from alterations to the fair value of non-monetary securities, classified as available for sale, are recognised in the equity. When the securities classified as available for sale are sold or are under impairment, the accumulated adjustments to the fair value are included in the consolidated statement of comprehensive income as gains or losses in securities investments.
The fair value of listed investments is based on current market prices.
If there is no active market for a financial asset (and for non-listed securities), the group determines the fair value using evaluation techniques, which include using recent transactions between independent parties, reference to other instruments that are substantially identical, an analysis of the discounted cash flow and refined options price models that reflect the specific emission circumstances.
On each consolidated statement of financial position, the group checks for objective evidence showing whether any group of financial assets is subject to impairment. In the event of equity securities classified as available for sale, a significant or lasting decrease in the fair value falling below the cost value is determinant for knowing if there is impairment. If there is evidence of impairment applicable to financial assets available for sale, the accumulated loss – calculated by the difference between the acquisition cost and the current fair value, minus any impairment loss of that financial asset previously recognised in results – is removed from equity and recognised in the consolidated statement of comprehensive income. Impairment losses from capital instruments recognised in results are not reversible.
The group complies with the guidelines of IAS 39 (reviewed in 2004) to determine the permanent impairment of investments. This measure requires that the group valuate, among other factors, the duration and the extent to which the fair value of an investment is less than its cost, the financial health and business outlook for the subsidiary, including factors such as the industry's and sector's performance, technological alterations and flows of operating cash and financing.
Cash and cash equivalents include cash amounts, bank deposits, other short term investments with high liquidity and initial maturities of up to 3 months and bank overdrafts. Bank overdrafts are presented in the balance sheet, in current liabilities, in the Obtained Loans item, and are considered in the the cash flow statement as cash and cash equivalents.
When effected ordinary shares are classified in equity. Incremental costs directly attributable to the emission of new shares or options are presented in equity as a deduction, net of taxes, of entries.
Loans obtained are initially recognised at the fair value, including incurred transaction costs. Medium and long term loans are subsequently presented at cost minus any amortisation; any difference between receipts (net of transaction costs) and the amortised value is recognised in the profit and loss account during the loan period, using the effective rate method.
Loans obtained are classified in current liabilities, except when Ibersol is entitled to an unconditional right to defer the liquidation of the liability for at least 12 months after the balance sheet date.
Income tax for the period comprises current and deferred taxes. Income taxes are recorded in the income statement, except when they relate to items recognised directly in equity. The value of current tax payable is determined based on the result before taxes, adjusted in accordance with the tax rules in force.
Deferred taxes are recognised overall, using the liability method and calculated based on the temporary differences arising from the difference between the taxable base of assets and liabilities and their values in the financial statements.
Deferred taxes are determined by the tax (and legal) rates decreed or substantially decreed on the date of the balance sheet and that can be expected to be applicable in the period of the deferred tax asset or in the liquidation of the deferred tax liability.
Deferred tax assets are recognised insofar as it will be probable that future taxable income will be available for using the respective temporary difference. Deferred tax liabilities are recognised for all temporary differences, except those related to: i) the initial recognition of goodwill; or ii) the initial recognition of an asset or liability in a transaction that is not a corporate concentration or that, on the transaction date, does not affect the accounting result or the tax result. However, in respect of taxable temporary differences related to investments in subsidiaries, these are not recognised because: i) the parent company has the ability to control the amount of the reversal of the temporary difference; and ii) it is probable that the temporary difference will not be reverse in the near future.
The estimated income tax (IRC) was calculated under the special taxation regime (RETGS), and the Group decided that the expense / income recognized in the subsidiaries will be reflected in other liabilities / current assets with the parent company (Note 14.2), and the tax savings being reflected in the accounts of the parent company.
The employee performance premiums are recorded in the year to which they relate, regardless of the year in which the payment occurs.
Provisions for costs of restructuring activities, paid contracts and legal claims are recognised when: i) Ibersol has a legal or constructive obligation due to past events; ii) it is probable that a outflow of resources will be necessary to liquidate the obligation; e iii) the obligation amount may be reliably estimated. Whenever one of the criteria is not met or the existence of the obligation is subject to the occurrence (or not) of a certain future event, Ibersol discloses a contingent liability, unless the enforceability for payment is considered remote.
Provisions are measured at the present value of estimated expenditures to settle the obligation using a pre-tax rate that reflects market assessment for the period of discount and to the risk of that provision.
In accordance with the principle of accrual accounting expenses and income are recorded in the period to which they relate, regardless of their payment or receipt. The differences between the amounts received and paid and the corresponding revenues and expenses are recognised as assets or liabilities
Revenue comprises the fair value of the sale of rendering of services from Ibersol's activities, net of taxes and discounts and after eliminating internal sales.
Rendering of services is recognised in the accounting period in which the services are rendered, in accordance with the percentage of completion or based on the period of the contract when the service is not associated with the implementation of specific activities, but to provide continuous service.
Ibersol uses derivatives financial instruments, such as exchange forwards and interest rate swaps, only to cover the financial risk witch the Group is exposed to. Ibersol doesn't use derivatives financial instruments for speculation. For the carrying amount of derivatives financial instruments, Ibersol uses hedge accounting policies under the terms of the legislation in force. Derivatives financial instruments negotiation is carried out by Ibersol's financial department under the policies approved by the Board of directors. Derivative financial instruments are initially measured at the transaction date fair value, being subsequently measured at each reporting date fair value. Gains or losses of fair value changes are recognised as follows.
In an operation to hedge the exposure to fair value of an asset or liability ("fair value hedge") determined as effective hedges, the fair value changes are recognised in the income statement jointly with the fair value changes of the risk component of the hedged item.
In an operation to hedge the exposure to future cash-flows of an asset or liability ("cash-flow hedge"), the effective part of the fair value changes in the hedging derivative are recognizes in equity; the ineffective part of the hedging is recognized in the income statement when it occurs.
Currently there are no foreign operational units (subsidiaries) in currencies other than the euro, therefore Ibersol is not exposed to foreign currency exchange-rate risks.
Ibersol has well identified the nature of the involved risks, guarantees through its software that each hedge instrument is followed under Ibersol's risk policy, recording thorough and formally the hedges relationships; the hedges goal and strategy; classification of the hedges relationship; description of the nature of the risk that's being cover; identification of the hedge instrument and covered item; description of initial measure and future effectiveness of the hedge; identification of the excluded, if any, part of the hedge instrument.
Ibersol will consider discontinued an hedge instrument when it is sold, expires or is realised; the hedge ceases to fulfil the hedge accounting criteria; for the cash flow hedge the expected transaction in unlikely or unexpected; the Group cancels the hedge instruments for managing reasons.
Estimates and judgements are continuously evaluated and are based on past experience and on other factors, including expectations regarding future events that are believed to be reasonably probable within the respective circumstances.
Due to its nature accounting based on estimates rarely corresponds to the real reported results. Estimates and premises that present a significant risk of leading to a material adjustment in the accounting value of the assets and liabilities in the following year are described below:
The company determines periodically if any obligations arising from past events should be merit recognition or disclosure.
The determination if an amount of internal resources is required for the payment of obligations is very subjective and could lead to significant adjustments, either by variation of the assumptions used, either by the future recognition of provisions previously disclosed as contingent liabilities.
The determination of a potential impairment loss can be triggered by the occurrence of various events, which are outside the sphere of Ibersol influence, such as: the future availability of funding, the cost of capital, as well as for any other changes, either internal or external.
It is expected from the Board of Directors a high degree of judgement as regards the identification of indicators of impairment, the estimate of future cash flows and the determination of fair value of assets entail and evaluation of different indicators of impairment, expected cash flows, discount rates applicable, useful lives and residual values.
The company recognizes liabilities for additional settlements of taxes which may result from inspections made by the tax authorities. When the final result of tax inspections is different from the values initially recorded, differences will impact the income tax and deferred taxes, in the period in which such differences are identified.
The group's activities are exposed to a number of financial risk factors: market risk (including interest rate risk), credit risk, liquidity risk and capital risk.
Ibersol maintains a risk management program that focuses its analysis on financial markets to minimise the potential adverse effects of those risks on the Ibersol's financial performance.
Risk management is headed by the Financial Department based on policies approved by the Board of Directors. The treasury identifies, evaluates and employs financial risk hedging measures in close cooperation with the group's operating units. The Board provides principles for managing the risk as a whole and policies that cover specific areas, such as the currency exchange risk, the interest rate risk, the credit risk and the investment of surplus liquidity.
Ibersol main interest rate risk follows its liabilities, in particular long-term loans. Loans issued with variable rates expose the group to the cash flow risk associated to interest rates. Loans with fixed rates expose the group to the risk of the fair value associated to interest rates. At the current interest rates, in financing of longer maturity periods the group has a policy of totally or partially fixing the interest rates.
Ibersol's credit risk stems from its liabilities, in particular from loans to subsidiaries. The credit risk is assured by the company's financial Direction, taking into account the historic trading relationship, its financial situation, as well as other information that may be obtained through the network business of Ibersol. If necessary, the credit limits established are regularly reviewed and revised. Credit risk is reduced.
Liquidity risk management implies maintaining a sufficient amount of cash and bank deposits, the feasibility of consolidating the floating debt through a suitable amount of credit facilities and the capacity to liquidate market positions. Treasury needs are managed based on the annual plan that is reviewed every quarter and adjusted daily. Related with the dynamics of the underlying business operations, the group's treasury strives to maintain the floating debt flexible by maintaining credit lines available.
At 31 December 2017, current liabilities amounted to Euro 10 million, compared to Euro 8,8 million in current assets. The non-current assets include 153 million of loans to subsidiaries. If necessary, repayment could be required in the short term, thus supplying the imbalance.
The company aims to maintain an equity level suitable to the characteristics of its main business (cash sales and credit from suppliers) and to ensure continuity and expansion. The capital structure balance is monitored based on the gearing ratio (defined as: net remunerated debt / net remunerated debt + equity) in order to place the ratio above 35%.
On 31st December 2017 and 2016 the gearing ratio was as follows:
| Dec/17 | Dec/16 | |
|---|---|---|
| Loans granted Loans obtained |
-152 977 496 | -166 679 496 |
| Cash and bank deposits | 78 000 000 -168 507 |
78 000 000 -1 496 660 |
| Net indebtedness Equity |
-75 146 003 185 192 085 |
-90 176 156 177 501 185 |
| Total capital | 110 046 082 | 87 325 029 |
On 31 December 2017 and 2016, cash and bank deposits are broken as follows:
| 2017 | 2016 | |
|---|---|---|
| Bank deposits | 168 507 | 1 496 660 |
| Cash and bank deposits | 168 507 | 1 496 660 |
"Cash and cash equivalents" for the preparation of the statement of cash flows for the years ended December 31, 2017 and 2016 is as follows:
| 2017 | 2016 | |
|---|---|---|
| Bank deposits | 168 507 | 1 496 660 |
| Term deposits | - | - |
| Other deposits | - | - |
| 168 507 | 1 496 660 | |
| Cash and cash equivalents (asset) | 168 507 | 1 496 660 |
| Cash equivalents (liabilities) Cash and cash equivalents |
- | - |
| on the cash flows statement | 168 507 | 1 496 660 |
As the assets are fully reinstated, in the years ending on 31 December 2017 and 2016, there has been no movement in tangible fixed assets and no depreciations.
| Land and buildings |
Basic equipment |
Transport equipment |
Office equipment |
Other tang. Assets |
Total | |
|---|---|---|---|---|---|---|
| 31 December 2017 | ||||||
| Cost | 29 828 | 3 736 | - | 215 338 | 18 289 | 267 191 |
| Accumulated depreciation | 29 828 | 3 736 | - | 215 338 | 18 289 | 267 191 |
| Accumulated impairment | - | - | - | - | - | - |
| Net amount | - | - | - | - | - | - |
Financial investments in subsidiaries are as follows:
| 2017 | 2016 | |
|---|---|---|
| Financial investments (6.1) | 22 133 064 | 22 133 064 |
| Supplementary capital contributions (6.2) | 81 594 783 | 81 594 783 |
| 103 727 847 | 103 727 847 |
Ibersol's financial investments are stated in the balance sheet by the cost method, as follows:
| 2017 | 2016 | ||
|---|---|---|---|
| % | Acquisition value |
Acquisition value |
|
| Subsidiaries | |||
| Asurebi SGPS, S.A. | 10% | 20 181 420 | 20 181 420 |
| Ibersol Restauração, S.A. | 100% | 847 986 | 847 986 |
| Iberusa-Hotelaria e Restauração, S.A. | 5% | 158 119 | 158 119 |
| Ibersol Madeira Restauração, S.A. | 100% | 242 800 | 242 800 |
| Restmon Portugal, Lda | 61% | 499 448 | 499 448 |
| Eggon - SGPS, S.A. | 2% | 645 000 | 645 000 |
| Ibergourmet-Prod.Alimentares, S.A. | 100% | 57 020 | 57 020 |
| Ibersol Angola, S.A. | 0% | 720 | 720 |
| 22 632 512 | 22 632 512 | ||
| Accumulated impairment losses | -499 448 | -499 448 | |
| 22 133 064 | 22 133 064 |
In the year ending on 31 December 2017 and 2016, changes under investments in subsidiaries are presented as follows:
| Ibersol Rest., S.A. |
Ibersol Madeira Rest., S.A. |
Iberusa Hotelaria e Rest., S.A. |
Asurebi SGPS, S.A. |
Eggon - SGPS, S.A. |
Restmon Portugal, Lda |
Ibergourmet Prod.Alimen., S.A. |
Ibersol Angola, S.A |
Total | |
|---|---|---|---|---|---|---|---|---|---|
| 1st January 2016 | 847.986 | 242.800 | 158.119 | - | 645.000 | 499.448 | 57.020 | 720 | 2.451.092 |
| Acquisition/sale | - | - | - | 20.181.420 (1) | - | - | - | - | 20.181.420 |
| Gains/losses | - | - | - | - | - | - | - | - | - |
| Fair value adjustments | - | - | - | - | - | - | - | - | - |
| Other movement in Equity | - | - | - | - | - | - | - | - | - |
| Dividends received | - | - | - | - | - | - | - | - | - |
| 31st December 2016 | 847.986 | 242.800 | 158.119 | 20.181.420 | 645.000 | 499.448 | 57.020 | 720 | 22.632.512 |
(1) acquisition on October 3, 2016 of 421.500 shares (10% capital) of the subsidiary Asurebi to Ibersol Restauração, amount witch was outstanding on December 31, 2016 (Note 16).
| Ibersol Rest., S.A. |
Ibersol Madeira Rest., S.A. |
Iberusa Hotelaria e Rest., S.A. |
Asurebi SGPS, S.A. |
Eggon - SGPS, S.A. |
Restmon Portugal, Lda |
Ibergourmet Prod.Alimen., S.A. |
Ibersol Angola, S.A |
Total | |
|---|---|---|---|---|---|---|---|---|---|
| 1st January 2017 | 847 986 | 242 800 | 158 119 | 20 181 420 | 645 000 | 499 448 | 57 020 | 720 | 22 632 512 |
| Acquisition/sale | - | - | - | - | - | - | - | - | - |
| Gains/losses | - | - | - | - | - | - | - | - | - |
| Fair value adjustments | - | - | - | - | - | - | - | - | - |
| Other movement in Equity | - | - | - | - | - | - | - | - | - |
| Dividends received | - | - | - | - | - | - | - | - | - |
| 31st December 2017 | 847 986 | 242 800 | 158 119 | 20 181 420 | 645 000 | 499 448 | 57 020 | 720 | 22 632 512 |
Assets and liabilities on 31 December 2017 and 2016, and gain and losses earned in 2017 and 2016, as recognised in the separate financial statements of subsidiaries are as follows:
| 2017 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Asurebi SGPS, S.A. |
Ibersol Rest., S.A. |
Ibersol Madeira Rest., S.A. |
Iberusa Hotelaria e Rest., S.A. |
Eggon SGPS, S.A. |
Restmon Portugal, Lda |
Ibergourmet Prod.Alimen., S.A. |
Ibersol Angola, S.A. |
|
| Equity | 141 880 426 | 122 425 341 | 3 085 602 | 82 290 492 | 35 591 259 | -2 239 034 | 4 299 192 | 8 709 380 |
| Equity without supplementary capital contributions |
141 880 426 | 52 425 341 | 3 085 602 | -18 474 508 | 31 461 259 | -2 239 034 | 2 314 192 | 6 283 476 |
| Total income | 860 259 | 29 813 965 | 1 627 184 | 7 975 172 | -23 | -18 382 | -228 956 | 2 274 920 |
| 2016 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Asurebi SGPS, S.A. |
Ibersol Rest., S.A. |
Ibersol Madeira Rest., S.A. |
Iberusa Hotelaria e Rest., S.A. |
Eggon SGPS, S.A. |
Restmon Portugal, Lda |
Ibergourmet Prod.Alimen., S.A. |
Ibersol Angola, S.A. |
|
| Equity | 171 020 167 | 96 111 377 | 1 958 418 | 74 315 320 | 35 841 282 | -2 220 652 | 2 944 926 | 6 466 668 |
| Equity without supplementary capital contributions |
171 020 167 | 26 111 377 | 1 958 418 | -26 449 680 | 31 461 282 | -2 220 652 | 1 759 926 | 4 028 621 |
| Total income | 31 948 899 | 23 943 613 | 863 369 | 9 707 679 | 6 003 | -17 546 | 424 926 | 2 724 624 |
The impairment tests carried out on the investments of the subsidiaries Asurebi and Iberusa did not result in impairment adjustments. The assumptions used were as follows:
| Growth rate | |
|---|---|
| Portugal | 2,00% (1% real + 1% inflation) |
| Discount rate | |
| Portugal | 7,40% |
| Spain | 6,80% |
On 31 December 2017 and 2016, balances recognised under this heading relate to subsidiaries supplementary capital contributions. Subsidiaries supplementary capital contributions are not remunerated, or have no fixed maturity.
| 2017 | ||||||
|---|---|---|---|---|---|---|
| Iberusa | Ibersol Restauração |
Eggon | Ibergourmet | Ibersol Angola |
TOTAL | |
| Subsidiaries Supplementary capital contributions |
9 765 000 | 70 000 000 | 640 000 | 1 185 000 | 4 783 | 81 594 783 |
| Accumulated impairment losses Total |
- 9 765 000 |
- 70 000 000 |
- 640 000 |
- 1 185 000 |
- 4 783 |
- 81 594 783 |
| 2016 | ||||||
| Iberusa | Ibersol Restauração |
Eggon | Ibergourmet | Ibersol Angola |
TOTAL | |
| Subsidiaries Supplementary capital contributions |
9 765 000 | 70 000 000 | 640 000 | 1 185 000 | 4 783 | 81 594 783 |
Changes in this heading, are presented as follows:
| 2017 | 2016 | |
|---|---|---|
| Initial amount | 81 594 783 | 85 064 783 |
| Additions | - | - |
| Decreases | - | 3 470 000 |
| Final amount | 81 594 783 | 81 594 783 |
On 31 December 2017 and 2016, the assets recognized under this heading relate to capital shares, as follows:
| % own | 2017 | 2016 | |
|---|---|---|---|
| Change Partners I, SGPS, S.A. | 3,08% | 264 000 | 264 000 |
| Sub-total | 264 000 | 264 000 | |
| Accumulated impairment losses | -264 000 | - | |
| Total | - | 264 000 |
The primary business of Change Partners I, SGPS, S.A., is management of shareholdings. With prudence, Ibersol recorded an impairment loss equal to the acquisition value, because it is not possible to reliably determine their fair value.
On 31 December 2017 and 2016, Income tax is presented as follows:
| 2017 | 2016 | |||
|---|---|---|---|---|
| Debit balance | Credit balance | Debit balance | Credit balance | |
| Income tax - IRC (1) | 1 384 754 | - | - | 2 196 187 |
| 1 384 754 | - | - | 2 196 187 |
(1) by applying the special taxation for corporate groups (RETGS), the shareholder Ibersol - SGPS, SA will carry out payments of its subsidiaries income tax (Note 14.2).
For the periods presented the credit balance of income tax has the following breakdown:
| 2017 | 2016 | |
|---|---|---|
| Special payment on account | -11 808 | -29 896 |
| Payments on account | -3 452 637 | -2 498 358 |
| Withholding taxes | -896 | -425 |
| Income tax - company (Note 23) | 145 299 | 198 720 |
| Income tax - subsidiaries (RETGS) | 2 961 158 | 4 526 147 |
| Tax saving (RETGS) | -1 025 870 | - |
| Total | -1 384 754 | 2 196 187 |
On 31 December 2017 and 2016, the detail of other current debtors is as follows:
| 2017 | 2016 | ||||
|---|---|---|---|---|---|
| Current | Total | Current | Total | ||
| Other debtors: | |||||
| - Other debtors | 17 242 | 17 242 | 20 731 | 20 731 | |
| Sub-total | 17 242 | 17 242 | 20 731 | 20 731 | |
| Personnel | 1 410 | 1 410 | 1 410 | 1 410 | |
| Sub-total | 1 410 | 1 410 | 1 410 | 1 410 | |
| Accumulated impairment losses | - | - | - | - | |
| Other debtors | 18 652 | 18 652 | 22 141 | 22 141 |
On 31 December 2017 and 2016 the Ibersol has recorded under the heading of deferrals, the following balances:
| 2017 | 2016 | |
|---|---|---|
| Insurance | 2 877 | 2 755 |
| Rents | 3 353 | 3 353 |
| Financial fees (1) | 358 483 | 394 311 |
| Deferred costs | 364 713 | 400 418 |
(1) Concerning commercial paper contracted (note 15).
On May 26, 2017, share capital increased with free reserve incorporation in the amount of 6.000.000 euros, with the creation of 6.000.000 new shares, distributed free of charge to shareholders in proportion to a new share for each group of 4 shares already held.
On 31 December 2017, fully subscribed and paid up share capital was represented by 30.000.000 shares to the bearer with a par value of 1 euro each.
With the share capital increase, Ibersol increased its own shares by 599.976. In addition it acquired 57 in 2017. In the year 2016, with the share capital increase, Ibersol increased its own shares by 399.980. In addition it sold 100 shares and acquired 25 in 2016. In the year 2015 the company did not carry out any transactions with own shares.
Shares are subject to the regime established for own shares which determines that their voting rights and assets are suspended for as long as they remain in the ownership of the group, without prejudice of being sold.
At the end of the year the company held 2.999.938 own shares acquired for 11.179.968 euros. According to the legislation in force, Ibersol shall maintain a non-available reserve by the same amount of the purchase of own shares. This reserve is included in Other reserves.
On December 2017 and 2016, reserves were broken down as follows:
| Legal reserves | ||||
|---|---|---|---|---|
| 2017 | 2016 | |||
| 1st January | 1 | 4 000 001 | ||
| Increase | 263 001 | - | ||
| Use | - | 4 000 000 | ||
| 31st December | 263 002 | 1 |
On April 29, 2016, share capital increased with legal reserve incorporation in the amount of 4.000.000 euros.
| Own shares reserves | Other reserves | |||
|---|---|---|---|---|
| 2017 | 2016 | 2017 | 2016 | |
| 1st January | 11 179 347 | 11 179 643 | 116 403 253 | 117 058 858 |
| Increase (1) | - | 278 | 1 047 460 | 1 344 394 |
| Use (2) | - | 574 | 8 160 010 | 2 000 000 |
| Transfer | 621 | - | -621 | - |
| 31st December | 11 179 968 | 11 179 347 | 109 290 081 | 116 403 253 |
(1) changes in the years 2017 and 2016 result from the increase in free reserves in the distribution of the result of the previous year.
(2) amount for dividends paid in the years 2016 and 2017 of, respectively, 1.800.000 eur and 2.160.010 eur. In addition, due to the capital increase of the year (Note 11), there was a decrease of 6.000.000 euros in free reserves
Ibersol available reserves and retained earnings amounts to 144.595.505 euros. Own shares reserves held by Ibersol (11.179.968 euros) are unavailable for distribution.
On 31 December 2017 and 2016, balances recognised under this heading relate to loans granted to subsidiaries of Ibersol. These loans with repayment periods exceeding 1 year accrues interest at a fixed rate based on Euribor 12 m + 1,25% and changed as variation of ECB reference rate.
| 2017 | |||||
|---|---|---|---|---|---|
| Iberusa | Ibersol Restauração |
Asurebi SGPS |
Restmon | TOTAL | |
| Non-current | |||||
| Loans granted Subsidiaries |
1 842 500 | 92 108 996 | 57 750 000 | 1 276 000 | 152 977 496 |
| Accumulated impairment losses | - | - | - | - | - |
| Non-current total | 1 842 500 | 92 108 996 | 57 750 000 | 1 276 000 | 152 977 496 |
| 2016 | |||||
| Ibersol | Asurebi | ||||
| Iberusa | Restauração | SGPS | Restmon | TOTAL | |
| Non-current | |||||
| Loans granted Subsidiaries |
4 357 500 | 91 515 996 | 69 530 000 | 1 276 000 | 166 679 496 |
| Accumulated impairment losses | - | - | - | - | - |
Changes in this heading, are presented as follows:
| 2017 | 2016 | |
|---|---|---|
| Initial amount | 166 679 496 | 88 499 496 |
| Additions | 50 795 000 | 80 200 000 |
| Decreases | 64 497 000 | 2 020 000 |
| Final amount | 152 977 496 | 166 679 496 |
On 31 December 2017 and 2016, balances recognised under this heading relate to interest concerning loans granted to subsidiaries of Ibersol and subsidiaries current year income tax, as follows:
| 2017 | 2016 | |||
|---|---|---|---|---|
| Current asset | Current liabilities | Current asset | Current liabilities | |
| 3 192 144 | 230 986 | 4 705 419 | 179 272 | |
| 3 660 940 | - | 2 579 824 | - | |
| 6 853 084 | 230 986 | 7 285 243 | 179 272 | |
By applying the special taxation for corporate groups (RETGS), the shareholder Ibersol - SGPS, SA will carry out income tax payments of its subsidiaries.
These balances are presented as follows (Note 27):
| 2017 | 2016 | |||
|---|---|---|---|---|
| Debit | Credit | Debit | Credit | |
| Ibersol Restauração | - | 72 049 | - | 82 461 |
| Iberusa | 1 356 186 | - | 1 267 731 | - |
| Asurebi | - | 100 329 | - | 74 723 |
| IBR Imobiliária | 155 928 | - | 154 948 | - |
| Ibersol Hotelaria e Turismo | 29 371 | - | 178 920 | - |
| Eggon | - | 16 | 1 718 | - |
| Iber King | 416 834 | - | 1 813 504 | - |
| Ibersol Madeira & Açores | 346 687 | - | 353 403 | - |
| Sugestões & Opções | 193 157 | - | 190 598 | - |
| Anatir | - | 283 | - | 631 |
| Ibergourmet | - | - | 127 233 | - |
| Iberaki | 131 682 | - | 101 326 | - |
| Ferro & Ferro | 55 134 | - | 41 318 | - |
| Firmoven | 6 814 | - | 11 604 | - |
| Resboavista | 119 198 | - | 30 762 | - |
| JSCC | 218 062 | - | 90 805 | - |
| SEC | 55 317 | - | 26 992 | - |
| Ibersande | 96 624 | - | 314 556 | - |
| Gravos | - | 58 308 | - | 989 |
| Maestro | 11 151 | - | - | 20 469 |
| 3 192 144 | 230 986 | 4 705 419 | 179 272 |
Concerning interest loans, short term balances of the subsidiaries are presented as follows:
| 2017 | 2016 | |
|---|---|---|
| Ibersol Restauração | 1 658 950 | 2 039 708 |
| Iberusa | 47 389 | 37 335 |
| Restmon | 288 579 | 272 629 |
| Asurebi | 1 666 022 | 230 152 |
| 3 660 940 | 2 579 824 |
On 31 December 2017 and 2016, the detail of loans for the period (current and non-current) and by type of loan, is as follows:
| 2017 Non |
2016 Non |
|||||
|---|---|---|---|---|---|---|
| Current | Current | Total | Current | Current | Total | |
| Commercial paper | 9 500 000 | 68 500 000 | 78 000 000 | - | 78 000 000 | 78 000 000 |
| 9 500 000 | 68 500 000 | 78 000 000 | - | 78 000 000 | 78 000 000 |
For Commercial Paper Programs we consider reimbursement on the date of filing regardless of the terms for which they are contracted. Ibersol is a subscriber of a commercial paper program with denunciation in January 2018 in the amount of 5.000.000 €, being fully used on 31 December 2016 and 2017, meanwhile renewed. The rest have long maturities up to five years.
During 2017 there were no increases or amortization of loans.
The (undiscounted) future cash flows associated with the loans (commercial paper) at 31 December 2017 are detailed as follows:
| 2018 | 2019 | 2020 | 2021 | 2022 | |
|---|---|---|---|---|---|
| Commercial paper | 9 500 000 | 20 500 000 | 15 000 000 | 15 000 000 | 18 000 000 |
| Interest | 1 355 125 | 1 106 750 | 789 750 | 510 000 | 180 000 |
In 2017, the average cost of the loans 1,9%.
The financial instruments relate to interest rate SWAP, as follows:
| 2017 | 2016 | ||||||
|---|---|---|---|---|---|---|---|
| Non | Non | ||||||
| Current | Current | Total | Current | Current | Total | ||
| Swap | - | 188 745 | 188 745 | - | - | - | |
| Total | - | 188 745 | 188 745 | - | - | - |
The swap contracts for interest rate risk coverage are associated with two commercial paper programs amounting to 24 million euros and 8 million euros and have underlying the interest maturities and reduction plans of these maximum amounts of issue. The last emission period will occurs in 2022, and detailed as follows:
| Ibersol SGPS | Ibersol SGPS | |
|---|---|---|
| Initial date | 19/05/2017 | 08/06/2017 |
| Due date | 20/10/2022 | 14/11/2022 |
| Fixed interest rate | 0,39% | 0,395% |
| Variable interest rate | Euribor 6M * | Euribor 3M * |
| Amount on 31st December 2017 | 24 000 000 | 8 000 000 |
(*) with floor zero
On 31 December 2017 and 2016, the detail of other current liabilities is as follows:
| 2017 | 2016 | |||
|---|---|---|---|---|
| Current | Total | Current | Total | |
| Investment suppliers | ||||
| Financial investments (1) | - | - | 20 181 420 | 20 181 420 |
| Other creditors | ||||
| Creditors | 16 446 | 16 446 | 12 546 | 12 546 |
| State and other public entities | ||||
| Income tax withholding | 6 716 | 6 716 | 6 625 | 6 625 |
| VAT payable | 135 621 | 135 621 | 126 674 | 126 674 |
| Social Security | 7 654 | 7 654 | 7 133 | 7 133 |
| Accrued costs | ||||
| Payable remunerations | 29 121 | 29 121 | 28 524 | 28 524 |
| Premiums | 78 352 | 78 352 | 74 876 | 74 876 |
| Payable interest | 141 926 | 141 926 | 49 222 | 49 222 |
| Fee | 384 | 384 | 99 | 99 |
| Other | 7 529 | 7 529 | 4 914 | 4 914 |
| Total accounts payable to | ||||
| creditors and accrued costs | 423 750 | 423 750 | 20 492 033 | 20 492 033 |
(1) Debt for the acquisition of 10% of the subsidiary Asurebi (note 6.1), settled in 2017.
Changes in provisions for the year 2017 and 2016 are as follows:
| Legal proceedings | Income tax | |||
|---|---|---|---|---|
| 2017 | 2016 | 2017 | 2016 | |
| Initial amount | 5 257 | 5 257 | 1 489 711 | 289 545 |
| Additions (1) | - | - | 1 182 596 | 1 200 166 |
| Decreases | - | - | - | - |
| Final amount | 5 257 | 5 257 | 2 672 307 | 1 489 711 |
(1) accrued provisions related to tax benefits arising from the IRC calculation for the years 2015 and 2014, in the confirmation phase of its implementation.
The amount of sales and services recognized in the income statement, is detailed as follows:
| 2017 | 2016 | |
|---|---|---|
| Rendered services - internal market | 600 000 | 600 000 |
| Rendered services - external market | - | - |
| Sub-total | 600 000 | 600 000 |
| Sales and rendered services | 600 000 | 600 000 |
External services and supplies in the years ending on 31 December 2017 and 2016 are broken down as follows:
| 2017 | 2016 | ||
|---|---|---|---|
| Services fees | 121 543 | 125 408 | |
| Fees | 330 | 1 433 | |
| Other | 20 637 | 18 072 | |
| External supplies and services | 142 510 | 144 913 | |
Personnel cost in the years ending on 31 December 2017 and 2016 are broken down as follows:
| 2017 | 2016 | |
|---|---|---|
| Salaries and wages | ||
| Board od directors | 34 409 | 33 475 |
| Employees | 232 971 | 224 740 |
| 267 380 | 258 215 | |
| Social costs | ||
| Social security contributions | 61 511 | 73 102 |
| Other personnel costs | 6 531 | 6 227 |
| Sub-total | 68 042 | 79 329 |
| Personnel costs | 335 423 | 337 544 |
The average number of employees in 2017 was 3 (2016:3)
Heading other operating income may be presented as follows:
| 2017 | 2016 | |
|---|---|---|
| Other operating income | 438 | 209 |
| 438 | 209 |
The detail of other operating costs is presented in the following table:
| 2017 | 2016 | |
|---|---|---|
| Taxes | 31 844 | 53 932 |
| Gains from fair value increase (swap) | 188 745 | - |
| Banking services | 126 870 | 111 400 |
| Others | - | 188 |
| 347 459 | 165 520 |
Net Financing cost in the years ending on 31 December 2017 and 2016 are broken down as follows:
| 2017 | 2016 | ||
|---|---|---|---|
| Financial costs | |||
| Interest on bank loans | 870 641 | 170 194 | |
| Commercial paper commissions | 655 164 | 239 539 | |
| Others | 24 210 | 26 498 | |
| Sub-total | 1 550 015 | 436 231 | |
| Financial income | |||
| Interest subsidiaries debt | 2 420 741 | 1 367 010 | |
| Sub-total | 2 420 741 | 1 367 010 | |
| Total | -870 727 | -930 779 |
| 2017 | 2016 | |
|---|---|---|
| Other financial income | ||
| Dividends | 7 000 000 | 600 000 |
| 7 000 000 | 600 000 |
Tax amount recognised in the financial statements of the years 2017 and 2016 is as follows:
| 2017 | 2016 | |
|---|---|---|
| Current income tax | 145 299 | 198 720 |
| Income tax insufficiency (1) | -1 546 719 | -1 226 333 |
| Provisions | 1 182 596 | 1 200 166 |
| Tax saving - RETGS (Note 8) | -1 025 870 | - |
| Deferred taxes (2) | -1 225 064 | - |
| Income tax | -2 469 758 | 172 552 |
| 2017 | 2016 | |
| Current tax for the year | ||
| Tax base | 135 612 | 185 472 |
| Pours | 9 687 | 13 248 |
| 145 299 | 198 720 |
(1) excess resulting from the use of the income tax benefit (RFAI).
(2) Income tax benefit (RFAI) to be used in subsequent years.
Tax amount for the year reconciliation is as follows:
| 2017 | 2016 | |
|---|---|---|
| Pre-tax profit | 7 381 773 | 1 483 012 |
| Tax calculated at the applicable tax rate in Portugal (22,5%) |
1 660 899 | 333 678 |
| Non-deductible costs Non-deductible income (dividends) |
59 400 -1 575 000 |
42 -135 000 |
| Special tax (independent) Income tax expenses |
- 145 299 |
- 198 720 |
| Imposto s/ rendimento corrente | 145 299 | 198 720 |
| Imposto s/ rendimento diferido | -1 225 064 | - |
| Imposto s/ rendimento | -1 079 765 | 198 720 |
To determine the amount of tax in the financial statements the tax rate is chosen as follows:
| 2017 | 2016 | |
|---|---|---|
| Tax base rate | 21,00% | 21,00% |
| Tax pours | 1,50% | 1,50% |
| 22,50% | 22,50% |
In accordance with the legislation in force, tax declarations of Ibersol are subject to review and can be corrected by the tax authorities for a period of four years in general terms, so that the declarations of 2014 to 2017 are still open.
Ibersol board of directors understands that the corrections resulting from reviews or inspections by the tax authorities will not have a significant effect on the financial statements presented on 31 December 2017.
Bail of 28.342 euros for the rental of a commercial shop of 231m2 took by the subsidiary Ibersol Restauração, S.A..
In addition, Ibersol SGPS provided guarantees to the subsidiaries in the amount of 4.375.000 USD.
The compensation granted to social board is related to fees for the annual review of the company's accounts, as follows:
| 2017 | 2016 | |
|---|---|---|
| Auditors | 44 500 | 35 500 |
| Fiscal board | 27 141 | 26 358 |
| General Assembly | 2 346 | 2 335 |
| Board of Directors (1) | 6 000 | 6 000 |
| 79 986 | 70 193 |
(1) earnings of non-Executive Director.
The company shareholder ATPS-S.G.P.S., S.A., which signed a service-rendering contract with the subsidiary Ibersol Restauração, SA for 2016, in the amount of 900.000 euros (800.000 euros in 2016), provided services of administration and management to the group. ATPS-S.G.P.S., S.A. under contract with Ibersol Restauração, S.A. has the obligation to ensure that its administrators, António Carlos Vaz Pinto de Sousa and Antonio Alberto Guerra Leal Teixeira, exercise their positions without incur in any additional charge.
On 31 December 2017, Ibersol is controlled by ATPS, SGPS, S.A. that holds a direct participation of 54,91%.
Shareholders:
ATPS – SGPS, S.A.
Ibersande Restauração, S.A. Iberusa – Hotelaria e Restauração, S.A. Ibersol Madeira e Açores Restauração, S.A. Ibersol Restauração, S.A. Iberking Restauração, S.A. Iberaki Restauração, S.A. Restmon Portugal, Lda. Ibersol – Hotelaria e Turismo, S.A.
Vidisco, S.L. Inverpeninsular, S.L. Ibergourmet Produtos Alimentares, S.A. Ferro & Ferro, Lda. Asurebi SGPS, S.A. Charlotte Develops, S.L. Firmoven Restauração, S.A. I.B.R. - Sociedade Imobiliária, S.A. Eggon SGPS, S.A. Anatir SGPS, S.A. Lurca, S.A. Sugestões e Opções – Actividades Turísticas, S.A. Resboavista – Restauração Internacional, Lda. José Silva Carvalho Catering, S.A. Iberusa Central de Compras para Restauração, ACE Vidisco e Pasta Caffe, Union Temporal de Empresas Maestro – Serviços de Gestão Hoteleira, S.A. Solinca – Eventos e Catering, S.A. Ibersol – Angola, S.A. HCI – Imobiliária, S.A. Lusinver Restauración, S.A. The Eat Out Group S.L.U. Pansfood, S.A.U. Foodstation, S.L.U. Dehesa de Santa Maria Franquicias, S.L. Pansfood Itália, S.R.L.
UQ Consult, S.A.
In the year endied on 31 December 2017 Ibersol carried out transactions with shareholders as follows:
| 2017 | 2016 | |
|---|---|---|
| ATPS SGPS, S.A. | 582 | 1 701 |
| 582 | 1 701 |
In the years ending on 31 December 2017 and 2016 Ibersol carried out transactions with subsidiaries as follows:
| 2017 | 2016 | |
|---|---|---|
| Sales and rendered services | ||
| Ibersol Restauração | 600 000 | 600 000 |
| 600 000 | 600 000 |
11 187 10 803
| 2017 | 2016 | |
|---|---|---|
| Financial income | ||
| Asurebi | 1 435 870 | 230 152 |
| Ibersol Restauração | 920 950 | 1 081 708 |
| Iberusa | 47 389 | 37 335 |
| Restmon | 15 950 | 16 114 |
| 2 420 159 | 1 365 309 | |
| Dividends received | ||
| Ibersol Madeira e Açores | 500 000 | 600 000 |
| Asurebi | 3 000 000 | - |
| Ibersol Restauração | 3 500 000 | - |
| 7 000 000 | 600 000 | |
| Products and services | ||
| 2017 | 2016 | |
| Products and services acquisition | ||
| Ibersol Restauração | 11 187 | 10 803 |
In the years ending on 31 December 2017 and 2016, the balances resulting from transactions with related parties are as follows:
| 2017 | 2016 | |
|---|---|---|
| Debit balances | ||
| Asurebi | 1 666 022 | 230 152 |
| Eggon | - | 1 718 |
| Ferro | 55 134 | 41 318 |
| Firmoven | 6 814 | 11 604 |
| Iber King | 416 834 | 1 813 504 |
| Iberaki | 131 682 | 101 326 |
| Ibergourmet | 3 935 | 127 233 |
| Ibersande | 96 624 | 314 556 |
| Ibersol Madeira e Açores | 346 687 | 353 403 |
| Ibersol Restauração | 1 687 506 | 2 039 708 |
| Iberusa | 1 403 575 | 1 305 066 |
| IBR | 155 928 | 154 948 |
| IHT | 29 371 | 178 920 |
| José Silva Carvalho | 218 062 | 90 805 |
| Resboavista | 119 198 | 30 762 |
| Restmon | 288 579 | 272 629 |
| SEC | 55 317 | 26 992 |
| Sugestões | 193 157 | 190 598 |
| Maestro | 11 151 | - |
| 6 885 576 | 7 285 242 | |
| Loans | ||
| Supplementary capital contributions (Note 6) | 81 594 783 | 81 594 783 |
| Subsidiaries (Note 14) | 152 977 496 | 166 679 496 |
| 234 572 279 | 248 274 279 | |
| 2017 | 2016 | |
|---|---|---|
| Credit balances | ||
| Anatir | 283 | 631 |
| Asurebi | 100 329 | 74 723 |
| Eggon | 16 | - |
| Gravos | - | 989 |
| Ibergourmet | 62 243 | - |
| Ibersol Restauração | 107 632 | 20 267 271 |
| Maestro | - | 20 469 |
| 270 503 | 20 364 083 |
Income per share in the years ending on 31 December 2017 and 2016 was calculated as follows:
| Dec/17 | Dec/16 | |
|---|---|---|
| Profit payable to shareholders | 9 851 530 | 1 310 460 |
| Mean weighted number of ordinary shares issued | 30 000 000 | 30 000 000 |
| Mean weighted number of own shares | -2 999 938 | -2 999 938 |
| 27 000 062 | 27 000 062 | |
| Basic earnings per share (€ per share) | 0,36 | 0,05 |
| Number of own shares at the end of the year | 2 999 938 | 2 999 938 |
At the Annual General Meeting of 26 May 2017, gross dividends of EUR 0.10 per share (EUR 0.10 in 2016) were attributed, corresponding to a total value of EUR 2.160.010 for shares in circulation (EUR 1.800.000 in 2016), which was paid on June 23, 2017.
On March 1, 2018, draft investment tax contracts between the Portuguese State and Iber King and Iberusa subsidiaries were approved by the Council of Ministers, which attribute tax credits to IRC. Impacts at IRC level have already been considered in the 2017 accounts.
The Board of Directors,
______________________________ António Carlos Vaz Pinto de Sousa
______________________________ António Alberto Guerra Leal Teixeira
______________________________
Juan Carlos Vázquez-Dodero
We have audited the financial statements of Ibersol, S.G.P.S., S.A. (the Entity), which comprise the statement of financial position as at 31 December 2017 (which shows total assets of Euro 266,720,116 and total shareholders' equity of Euro 185,192,085 including a net profit of Euro 9,851,530), the statement of comprehensive income, the statement of changes in equity and the statement of cash flows for the year then ended, and the notes to the financial statements, including a summary of significant accounting policies.
In our opinion, the accompanying financial statements present fairly in all material respects, the financial position of Ibersol, S.G.P.S., S.A. as at 31 December 2017, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRS), as adopted by the European Union.
We conducted our audit in accordance with International Standards on Auditing (ISAs) and other technical and ethical standards and recommendations issued by the Institute of Statutory Auditors. Our responsibilities under those standards are described in the "Auditor's responsibilities for the audit of the financial statements" section below. In accordance with the law we are independent of the Entity and we have fulfilled our other ethical responsibilities in accordance with the ethics code of the Institute of Statutory Auditors.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current year. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matters described below to be the key audit matters to be communicated in our report.
PricewaterhouseCoopers & Associados - Sociedade de Revisores Oficiais de Contas, Lda. o′Porto Bessa Leite Complex, Rua António Bessa Leite, 1430 - 5º, 4150-074 Porto, Portugal Tel +351 225 433 000 Fax +351 225 433 499, www.pwc.pt Matriculada na CRC sob o NUPC 506 628 752, Capital Social Euros 314.000 Inscrita na lista das Sociedades de Revisores Oficiais de Contas sob o nº 183 e na CMVM sob o nº 20161485
PricewaterhouseCoopers & Associados - Sociedade de Revisores Oficiais de Contas, Lda. pertence à rede de entidades que são membros da PricewaterhouseCoopers International Limited, cada uma das quais é uma entidade legal autónoma e independente. Sede: Palácio Sottomayor, Rua Sousa Martins, 1 - 3º, 1069-316 Lisboa, Portugal
Responsibilities of management and supervisory board for the financial statements
standards applicable.
Management is responsible for:
separate financial statements.
Disclosures related with investment in subsidiaries are presented in Note 6 of the
a) the preparation of the financial statements, which present fairly the financial position, the financial performance and the cash flows of the Entity in accordance with International Financial Reporting Standards (IFRS), as adopted by the European Union;
b) the preparation of the Directors' Report , including the Corporate governance Report, in accordance with the applicable law and regulations;
c) the creation and maintenance of an appropriate system of internal control to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error;
d) the adoption of appropriate accounting policies and criteria;
e) the assessment of the Entity's ability to continue as a going concern, disclosing, as applicable, events or conditions that may cast significant doubt on the Entity's ability to continue its activities.
The supervisory board is responsible for overseeing the process of preparation and disclosure of the Entity's financial information.
Our responsibility is to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:
a) identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control;
b) obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Entity's internal control;
c) evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management;
d) conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Entity's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Entity to cease to continue as a going concern;
e) evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation;
f) communicate with those charged with governance, including the supervisory board, regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit;
g) of the matters we have communicated to those charged with governance, including the supervisory board, we determine which one's were the most important in the audit of the financial statements of the current year, these being the key audit matters. We describe these matters in our report, except when the law or regulation prohibits their public disclosure;
h) confirm to the supervisory board that we comply with the relevant ethical requirements regarding independence and communicate all relationships and other matters that may be perceived as threats to our independence and, where applicable, the respective safeguards.
Our responsibility also includes verifying that the information included in the Directors' report is consistent with the financial statements and the verification set forth in paragraphs 4 and 5 of article No. 451 of the Portuguese Company Law.
In compliance with paragraph 3 e) of article No. 451 of the Portuguese Company Law, it is our understanding that the Director's report has been prepared in accordance with applicable requirements of the law and regulation, that the information included in the Directors' report is consistent with the audited financial statements and, taking into account the knowledge and assessment about the Entity, no material misstatements were identified.
In compliance with paragraph 4 of article No. 451 of the Portuguese Company Law, it is our understanding that the Corporate governance report includes the information required under article No. 245-A of the Portuguese Securities Market Code, that no material misstatements were identified in the information disclosed in this report and that it complies with paragraphs c), d), f), h), i) and m) of that article.
In accordance with article No. 10 of Regulation (EU) 537/2014 of the European Parliament and of the Council, of April 16, 2014, and in addition to the key audit matters referred to above, we also provide the following information:
a) We were first appointed auditors of the Entity in the Shareholders' General Meeting of 13 April 2004 till the end of the period 2001 to 2004, having remained in functions until the current period. Our last appointment was in the Shareholders' General Meeting of 26 May 2017 for the year of 2017.
b) The management has confirmed to us it has no knowledge of any allegation of fraud or suspicions of fraud with material effect in the financial statements. We have maintained professional scepticism throughout the audit and determined overall responses to address the risk of material misstatement due to fraud in the financial statements. Based on the work performed, we have not identified any material misstatement in the financial statements due to fraud.
c) We confirm that our audit opinion is consistent with the additional report that was prepared by us and issued to the Entity's supervisory board as of 9 April 2018.
d) We declare that we did not provide any prohibited non-audit services referred to in paragraph 8 of article No. 77 of the by-laws of the Institute of Statutory Auditors ("Estatutos da Ordem dos Revisores Oficiais de Contas") and that we remain independent of the Entity in conducting our audit.
9 April 2018
PricewaterhouseCoopers & Associados - Sociedade de Revisores Oficiais de Contas, Lda. represented by:
Hermínio António Paulos Afonso, R.O.C.
In accordance with paragraph c) number 1 of article 245 of the Portuguese Securities Market Code the Fiscal Board informs as far as its members know and regarding the elements we assessed, the information contained in the individual and consolidated financial statements of 2017 was prepared in accordance with applicable accounting standards, giving a true and appropriate view of the assets and liabilities, financial position and the results of IBERSOL-SGPS, SA, and the companies included in the consolidation perimeter, and that the management reports faithfully describes the business evolution, performance and financial position of the company and of the companies included in the consolidation perimeter, and contains a description of the major risks and uncertainties they face.
Porto, 11th April 2018
The Fiscal Board
Dr. Carlos Alberto Alves Lourenço (President)
Doutora Maria José Martins Lourenço da Fonseca (Vice-President)
Dr. Eduardo Moutinho Ferreira Santos (Vogal)
In compliance with the applicable legislation and its mandate, the Fiscal Board issues its report on the supervisory action carried out as well as its opinion on the Management Report and remaining consolidated and individual financial statements for the year ended 31 December 2017.
The Fiscal Board accompanied, within the scope of its competencies and mandate, during the 2017 financial year, the management of the company and its subsidiaries, having received for that purpose the information of the Company's Board of Directors, the Statutory Auditor and the External Auditor.
Over the course of the year the Fiscal Council held quarterly meetings with all members present, which examined and considered the matters subject to the powers of this body. In the ordinary meetings was always present the External Auditor, Pricewaterhouse Coopers & Associados-SROC, who is also the Statutory Auditor of the company, who proposed to the Fiscal Board, in the first meeting relating to the annual activity, and obtained agreement from the Fiscal Board regarding its fiscal activity plan, including that meant to ascertain: - i) the effectiveness of the risk management system, internal control and internal auditing; - ii) the quality of the process of preparing and disclosing financial information and respective accounting policies; as well as – iii) value-measuring criteria, the regularity of the accounting registers and books and respective support documents, and also - iv) the verification of goods and values pertaining to the company. Along the exercise, the External Auditor/Statutory Auditor provided detailed information about the actions performed and the resulting conclusions.
The Fiscal Board met quarterly with the Board of Directors and this last organ was forthcoming in providing the Fiscal Board information over the society's activity and explanations needed to understand the activity and financial
1
information drawn up by same Board of Directors in a previous moment to its disclosure. The Fiscal Board did not come across any constraint during their supervision action and not received any occurrence or denouncement of irregularities by shareholders, collaborators of the Company, External Auditor or others.
The Fiscal Board exercised its powers to supervise the activities and independence of the External Auditor and the Auditor, having the perception that the recommended practices were observed; and the Fiscal Board has rendered its approval to additional services to the auditory services that were hired to the External Auditor, having considered that its independence was safeguarded, its remuneration was in market conditions, and, therefore, it was in the society's interest to benefit of the knowledge and punctuality assured in those services. The provision of additional services performed by the external auditor did not reach the threshold of 30% of the total value of provided Services.
There were no reports to the Fiscal Board of any kind of transactions between the society and its shareholders or related parties, in the sense of the CMVM Recommendation V.2 that should be submitted to its prior opinion if they reached the level of significance established by this body.
The Fiscal Board examined the individual and consolidated management report and the individual and consolidated financial statements, its respective attachments, including the 2017 Corporate Governance Report presented by the Board of Directors. As well having examined the Legal Certification of Accounts and its Opinion issued by the Chartered Accountant and has also considered the Audit Report submitted by Pricewaterhouse Coopers & Associados, SROC., attached to the "Additional Report of the External Auditor to the Supervisory Body", produced by it and referring to the 2017 financial year, in accordance with Article 24 of the Portuguese RJSA (Legal Regime of Audit Supervision), approved by Law 148 / 2015, of 7 September. It contains the scope of the audit, the partners and employees of the External Auditor who participated in it, the evaluation methods used with reference to impairment tests and corporate concentrations, the consolidation perimeter with mention of entities not audited by PwC, materiality, Independence and the additional services provided, as well as, among others, the results of the analysis of Internal Control that answers the questions raised, the answers obtained and the recommendations made.
The Fiscal Board also examined the compliance of the Corporate Governance Report included in the Management Report in compliance to the nº 5 art. 420 of the Commercial Societies Code, focusing it's analysis in the inclusion, in that Governance Report, of the required elements of the 245º-A article of the Portuguese Securities Market Code.
Considering the above, the opinion of the Fiscal Board is that are fulfilled the conditions of the approval, by the General Meeting, of:
Porto, 11th April 2018
The Fiscal Board
Dr. Carlos Alberto Alves Lourenço (President)
Doutora Maria José Martins Lourenço da Fonseca (Vice-President)
Dr. Eduardo Moutinho Ferreira Santos (Effective Member)
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