Interim / Quarterly Report • Sep 29, 2020
Interim / Quarterly Report
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Publicly Listed Company
Registered office: Praça do Bom Sucesso, 105/159, 9th floor, Porto Commercial Registry: Oporto under number 501669477 Share Capital Euros 36.000.000 Fiscal number: 501669477
The first half of 2020, was marked by the pandemic outbreak of Covid-19 that spread worldwide, putting a brake on the global economic activity, with profound impacts on consumer behaviors and habits.
The World Health Organization on 11 March declared a pandemic associated with the spread of Covid-19, and the state of emergency was declared in all geographical locations in which Ibersol operates, which determined measures to contain the population and the closure of most shops and restaurants.
This situation forced the restaurants to close, leaving only those that had the possibility of continuing through take-away and delivery, even though they were operating below their normal potential.
At the end of March, Ibersol Group closed about 73% of its restaurants. During the second quarter, it gradually reopened restaurants, initially to provide delivery, take-away and drive thru services, culminating in the reopening of restaurants located in shopping centers in June.
In restaurants located in concessions, namely airports, specific openings were carried out, in evaluation with the concessionaires, in order to adjust the offer with the passenger traffic as the restrictions on air spaces were lifted.
Ibersol Group, following the instructions of the World Health Organization and General Health Directorates, activated the contingency plans that allowed to guarantee, as a priority, the safety of all customers and employees and ensure the protection of the entire supply chain.
To reconcile the abrupt reduction in activity and the protection of employment, the Group's companies activated el ERTE (Expediente de Regulación Temporal de Empleo) in Spain and the simplified and normal lay-off in Portugal, which covered about 75% of the total group employees in April.
In Portugal, in August, the group joined the Extraordinary Incentive to Standardization of Business Activity, while in Spain it remained with around 35% on ERTE.
At the same time, cost reduction initiatives were taken through the renegotiation of contracts, in order to rediscover their financial rebalancing and adjust payment terms. During the first semester, some negotiations have already been concluded, resulting in a positive impact of around 2.5 million euros.
At the end of the second quarter, negotiations were still underway with the shopping centers and also with the concessionaires in Portugal and Spain.
At the date of publication of this report, there has been an increase in the spread of the Covid-19 outbreak, so there is still uncertainty about the evolution of the epidemiological situation and the measures to be implemented in different countries in the coming months. However, it is estimated that a second wave will not have such limiting effects on mobility as to compromise the continuity of the Group's operations.
Due to the great uncertainty regarding the evolution of the pandemic and its real effects on the national and international economy, as well as on the Group's future cash flows, we continue to monitor and update the business plans for 2020 and beyond.
In the context of the pandemic, we carried out the following additional analyzes, which effects were recognized in the second quarter consolidated financial statements:
-analysis of the verification of additional evidence of adjustments resulting from the impacts of COVID-19 on the results of the various businesses of the Group, according to the current forecasts, which could indicate impairments of goodwill and other non-current, tangible and intangible assets;
revision of the different agreements under the current situation, with no contracts identified that should be considered onerous;
we are monitoring, together with the financial institutions, the evolution of compliance with the financial covenants, taking into account the evaluation to be carried out on them at the end of the financial current year;
In order to strengthen its financial position and manage liquidity risk, in the second quarter the Group concluded the negotiation processes for additional lines of credit with the contracting of approximately 45 million euros. In July, the refinancing of 15 million euros was completed.
As of 30 June 2020, the Group had cash and other applications surplus that amounted to 60 million euros and had contracted and unused lines that amounted to 34 million euros.
Consolidated turnover in the first half of 2020 amounted to EUR 133.6 million, compared to EUR 221.3 million in the same period of the previous year, which represents a 39.6% reduction:
| Turnover | 1st Half 2020 | ||||
|---|---|---|---|---|---|
| euro million % Ch. 20/19 | |||||
| Sales of Restaurants | 130,5 | $-38.8%$ | |||
| Sales of Merchandise | 2.5 | $-61.0%$ | |||
| Services Rendered | 0,6 | $-65.5%$ | |||
| Net Sales & Services | 133,6 | $-39.6%$ |
The beginning of the year 2020 showed promising signs of restaurant sales, with growths above 15% until mid of March.
The development of the outbreak of COVID-19 at the beginning of March immediately caused a brutal reduction in demand for restaurants in all regions, which culminated in the closure of 73% of restaurants and losses of 50% in restaurant sales, following the decision to decree the state of emergency from the second week of March.
During the confinement period, the restaurants operated to provide delivery, take-away and drivethru services and from June onwards they extended to the remaining segments with special relevance for the units located in Shopping Centers.
The restaurants located in concessions, namely airports, were strongly affected by the restrictions on airspace during this period, which led to the closure of all of our restaurants, with the exception of one at Barcelona airport and three at Portuguese airports that provided minimum services. We also kept two restaurants open at service stations.
In this context, sales in the second quarter decreased to 1/3 of sales in the same period last year.
| SALES IN RESTAURANTS | 1st Half 2020 | 2nd Quarter 2020 | |||
|---|---|---|---|---|---|
| euro million | % Ch. 20/19 | Milhões de euros | Var 20/19 | ||
| Restaurants | 31.1 | $-37.0%$ | 9.6 | $-62.4%$ | |
| Counters | 77.1 | $-27.0%$ | 27.8 | $-48.7%$ | |
| Concessions&Catering | 22.3 | $-61.6%$ | 1.0 | $-97.0%$ | |
| Total Sales | 130.5 | $-38.8%$ | 38.4 | $-66.4%$ |
It is worth noting the good performance in restaurants with Drive services (operated by the brands Burger King and KFC), which overcame the closure of the service inside the restaurant and the growth in the Delivery segment that contributed to minimize the impacts and limitations of other more penalized segments.
In Spain, due to a smaller number of restaurants with drive service and locations that are more dependent on tourism, the drop in sales was more abrupt and the recovery will be slower.
Sales of restaurants located in Angola reflect losses in local currency and the effects of converting them to euros.
Due to the weight of the "travel" segment in the group's operations in Spain, only 53% of all restaurants in this country had reopened, and in August, around 30% of our restaurants are still closed.
Concerning the segments, the impact of greater magnitude was felt in concessions and catering, which saw a reduction in activity in the quarter to 3% of restaurant sales compared to the same period in 2019, due to the restrictions imposed on the people's circulation and agglomeration which additionally led to the cancelation of all catering events in the quarter.
In the restaurant and counter segments, the impacts of closures and traffic restrictions has been partly minimized by keeping restaurants with delivery and take-away services in operations since the state of emergency was decreed.
The increase in delivery sales made it possible to minimize the impacts of confinement. The reinforcement of the internal response capacity and of the partnerships with home delivery operators allowed to reach a volume of sales that represented in the months of April and May more than 40% of the total restaurant sales.
Restaurants, with dinne-in service, were more penalized given the weight that this service represents in the segment.
In the counters segment, losses in the second quarter compared to same period in 2019, were minimized by 2 relevant facts:
The combination of these factors, even allowed Burger King to achieve sales growth compared to the same period in August, which allows a faster return to pre-covid growth.
During the semester, 22 restaurants were closed, ten of which were franchised and six new restaurants were opened.
The closure of the twelve equity restaurants in Spain resulted from the decision to concentrate Pizza Móvil operation in urban centers, the option of not renewing the lease contracts of Pans Callao and Ribs Faro Guadiana, and from the end of the Pans concession contract at the FCB stadium.
Following the KFC strategy of expansion four new restaurants were opened, one of which in Spain, a Burger King in Portugal and the last restaurant that remained to be opened at Barcelona airport, under the contract that started in May 2018, to complete the commitments that resulted from tenders.
At the end of the semester, the total number of restaurants was 643 (541 equity and 102 franchises), as shown below:
| Nº of Restaurants | 2019 | 2020 | |||
|---|---|---|---|---|---|
| 31-Dec | Openings | Transfer | Closures | 30/Jun | |
| PORTUGAL | 355 | $\overline{4}$ | $\bf{0}$ | $\bf{0}$ | 359 |
| Equity Restaurants | 354 | 4 | $\bf{0}$ | $\bf{0}$ | 358 |
| Pizza Hut | 98 | 98 | |||
| Okilo+MIIT+Ribs | $\overline{4}$ | 4 | |||
| Pans+Roulotte | 45 | 45 | |||
| Burger King | 101 | 1 | 102 | ||
| KFC | 30 | 3 | 33 | ||
| Pasta Caffé | 6 | 6 | |||
| Quiosques | 8 | 8 | |||
| Taco Bell | $\overline{2}$ | $\overline{2}$ | |||
| Coffee Shops | 27 | 27 | |||
| Catering | 10 | 10 | |||
| Concessions & Other | 23 | 23 | |||
| Franchise Restaurants | $\blacksquare$ | $\mathbf{1}$ | |||
| SPAIN | 287 | $\overline{a}$ | 21 | 268 | |
| Equity Restaurants | 183 | 2 | 12 | 173 | |
| Pizza Móvil | 23 | 9 | 14 | ||
| Pizza Hut | 5 | 5 | |||
| Burger King | 37 | 37 | |||
| Pans | 35 | 1 | 34 | ||
| Ribs | 15 | 1 | 14 | ||
| FrescCo | 3 | 3 | |||
| KFC | 1 | 1 | $\overline{2}$ | ||
| Concessions | 64 | 1 | 1 | 64 | |
| Franchise Restaurants | 104 | $\bf{0}$ | 9 | 95 | |
| Pizza Móvil | 12 | $\overline{2}$ | 10 | ||
| Pans | 52 | $\overline{2}$ | 50 | ||
| Ribs | 22 | 3 | 19 | ||
| FrescCo | 5 | 5 | |||
| SantaMaria | 13 | $\overline{2}$ | 11 | ||
| ANGOLA | 10 | 10 10 | |||
| KFC | 9 | 9 | |||
| Pizza Hut | 1 | 1 | |||
| Other Locations - Franchise | $\overline{I}$ | $\bf{0}$ | 1 | $6\overline{6}$ | |
| Pans | $\overline{7}$ | 1 | $6\phantom{a}$ | ||
| Total Equity Restaurants | 547 | 6 | 0 | 12 | 541 |
| Total Franchise Restaurants | 112 | $\bf{0}$ | 0 | 10 | 102 |
| TOTAL | 659 | 6 | 0 | 22 | 643 |
The consolidated net income of 1H amounted to Eur -33.4 million euros compared to 0.6 million euros, in the same period of 2019.
The abrupt closure in March and the confinement period that continued until mid-May, during which 73% of the restaurants operated by the Group remained closed, strongly penalized the semester, and it was not possible in this period to adjust the cost items to the reduction sales, which inevitability led to increases in the weight of the items costs and inherent loss of profitability.
| (Million euros) | 1H 20 | $\frac{9}{6}$ | 1H 19 | % | yoy |
|---|---|---|---|---|---|
| Operating income | |||||
| Sales | 133.0 | 100.0% | 219,6 | 100.0% | $-39.4%$ |
| Rendered services | 0.6 | 0.4% | 1.7 | 0.8% | $-65.5%$ |
| Other operating income | 6.1 | 4.6% | 3,9 | 1.8% | 55.3% |
| Total operating income | 139.7 | 104.6% | 225.3 | 101.8% | $-38.0%$ |
| Operating costs | |||||
| Cost of sales | 33.7 | 25.2% | 54.2 | 24.5% | $-37.8%$ |
| External supplies and services | 36.7 | 27.5% | 48,7 | 22.0% | $-24.6%$ |
| Personnel costs | 52.8 | 39.5% | 71,5 | 32.3% | $-26.2%$ |
| Amortisation, depreciation and impairment | 47.0 | 35.1% | 39.6 | 17.9% | 18.5% |
| Other operating costs | 1.4 | 1.0% | 2.0 | 0.9% | $-30.5%$ |
| Total operating costs | 171,5 | 128,4% | 216,0 | 97,6% | $-20,6%$ |
| Operating Income | $-31.8$ | $-23.8%$ | 9.2 | 4.2% | -444.9% |
| EBITDA | 15,2 | 11,3% | 48.9 | 22.1% | $-69.0%$ |
| Net financing cost | 10.3 | 7.7% | 10.9 | 4.9% | $-5.6%$ |
| Gains (losses) in joint controlled subsidiaries - Equity | $-0.1$ | $-0.1%$ | 0,1 | 0.1% | $-162.1%$ |
| Gain (loss) on the net monetary position | 0.0 | 0,0% | 0.6 | 0.3% | $-100.0%$ |
| Profit before tax | $-42,1$ | $-31,5%$ | $-0,9$ | $-0,4%$ | -4635,9% |
| Income tax expense | $-8.8$ | $-6.6%$ | $-1.5$ | $-0.7%$ | 486.6% |
| Net profit | $-33.4$ | $-25.0%$ | 0,6 | 0.3% | -5973.8% |
Turnover amounted to 134 million euros, a decrease of 88 million euros compared to the first half of 2019.
Gross margin was 74.8% of turnover, 0.7p.p lower than the previous year (1H19: 75.5%). This reduction was due to the loss of perishable raw materials in March, following the abrupt interruption of restaurant activity and the limited operation to segments of greater promotional aggressiveness and consequently with lower margins.
Staff costs decreased 26.2%, representing 39.5% of the turnover (1H19: 32.3%). The group joined ERTE in Spain from the 18th of March, while in Portugal the measures to protect and support employment through the simplified lay off only took place at the beginning of April.
Despite the gradual reopening of restaurants in the post-confinement period, constraints due to legal requirements and limitations on the number of customers with a relevant impact on turnover, led to the extension of these protection measures to 43% of employees at the end of the semester.
External Supplies and services decreased by 24.6%, representing 27.5% of turnover, which represents an increase of 5.5p.p. than in the first half of 2019 (1H19:22.0%).
In the second quarter, several contracts were cancelled and renegotiated, which made possible to mitigate part of the losses in result from the closure of restaurants. However, the increase in the weight of sales through delivery, did not allow for a greater reduction in the weight of this cost.
Other operating income and costs increased by 2.8 million euros, as a result from definitive rental fees granted by landlords until 30 june, which contributed with a total amount of 2.5 million euros. These situations mainly affected restaurant lease agreements located outside of shopping centers and concessions and represent only 30% of the leased units.
As of June 30, the other negotiations which have a very significant impact, were not yet concluded, namely those related to units located in shopping centers and airports. In the second quarter, leasing contracts with non negotiated shopping centers represent a cost of 2.1 million euros and with airports, a cost of 8.9 million euros.
Therefore EBITDA amounted to15.2 million euros, a decrease of 69.0% over 1H19. Consolidated EBITDA margin stood at 11.3% of turnover which compares with 22.1% in the same period of the previous year.
Depreciation for the period of 42.8 million euros, which represents an increase of 3.1 million euros.
Impairment losses in the first half of 4.2 million euros, due to the relevant impact on the activity, impairment tests were carried out that led to the recognition of impairment losses on the following assets:
EBIT margin was -23.8% of turnover, which compares with 4.2% in the first half of 2019.
Consolidated Financial Results were 10.3 million euros, around 0.6 million euros lower than in the first half of 2019.
The cost of net debt decreased by 0.4 million euros compared to the same period of the previous year, to 1.7 million euros.
Average cost of loans was 1.9%, lower than 1H19(2.6%), due to the effect of loans in Angola and the lower cost contracted in this year.
Total Assets amounted to 766.3 million euros and Equity stood at 180 million euros, representing 23.5% of assets. Eliminating the impact of IFRS16, Equity would represent 38% of total Assets.
CAPEX reached 6.7 million euros. About 5.6 million corresponds to the investment incurred in to complete the expansion plan and the remaining for the refurbishment and modernization of some restaurants.
Current assets amounted to 115 million euros, of which 7 million correspond to cash and cash equivalents.
Current liabilities amount to 170 million euros, of which 57.4 million correspond to Liabilities with Leases and 43.7 million euros to current loans. With regard to current loans, it should be noted that the Group has 21 million euros of contracted lines and not used with maturities over 1 year, 15 million euros were refinanced in July and 8 million are in the restructuring.
Without IFRS16, Net debt at 30th June 2020 increased by 40 million euros, to 118 million euros, to finance the needs generated by the pandemic crisis.
| Balance Sheet (million euros) | 30/06/2020 | 31/12/2019 | Δ |
|---|---|---|---|
| Total non-current assets | 651,6 | 676,7 | $-25,1$ |
| Total current assets | 114,7 | 96,5 | 18,2 |
| Total Assets | 766,3 | 773,3 | $-7,0$ |
| EQUITY AND LIABILITIES | |||
| Total Equity | 179,6 | 214,2 | $-34.6$ |
| Total non-current liabilities | 416,6 | 369,8 | 46,8 |
| Total current liabilities | 170,1 | 193,2 | $-23,2$ |
| Total Liabilities | 586,7 | 563,1 | 23,6 |
| Total Equity and Liabilities | 766,3 | 777,3 | $-11,0$ |
ECB forecasts point to a recession of 10% of GDP for Portugal and Spain, with a partial and slow recovery over the following years, namely in the business areas that depend on flow and circulation of people, as well as airports and shopping centres;
As of the date of publication of this report, there has been an increase in the spread of the Covid-19 outbreak in European countries, which could affect circulation and consumer behaviour in the coming months.
Ibersol Group permanently assesses developments, adjusting operations according to the behaviour of demand, in order to minimize the impacts resulting from this crisis, in order to guarantee the interest of all stakeholders.
Despite the most recent positive signs of recovery, it is not possible to exclude that the spread of the Covid-19 pandemic, may cause a slowdown in the pace of recovery, in a non-homogeneous way depending on the locations and business segments.
We continue to make efforts to conclude rental negotiations with shopping centers and concessionaires, namely ANA and AENA, which are expected to have a significant impact on the annual accounts.
Despite the uncertainty regarding the development of the pandemic and taking into account the current situation, it is expected that this pandemic crisis will cause losses in turnover of around 35%
Seven new restaurants were opened in 2020, and we expect to open 2 Taco Bell's and 4 Drive Thru restaurants due to the good performance of these segment in the current pandemic context.
Porto, 28th September 2020
______________________________ António Carlos Vaz Pinto de Sousa
______________________________ António Alberto Guerra Leal Teixeira
______________________________
Juan Carlos Vázquez-Dodero
(i) the consolidated financial statements of Ibersol SGPS SA, referring to the first semester of 2020 were drawn up in compliance with applicable accounting rules and provide a true and suitable picture of the assets and liabilities, financial situation and results of Ibersol SGPS, SA and the companies included in consolidation perimeter;
(ii) the interim management report includes a fair review of the important events that have occurred in the period, the evolution of business performance and the position of all the companies included in consolidation.
António Carlos Vaz Pinto Sousa Chairman of the Boards of Director António Alberto Guerra Leal Teixeira Member of the Board of Directors Juan Carlos Vázquez-Dodero Member of the Board of Directors
Under the terms defined in caption d) of no. 5 of article 66º of the Commercial Companies Code, we hereby declare that, during the first half of 2020, the company did not proceed with any transaction over own shares. Therefore, as at June 30, 2020, Ibersol SGPS, SA hold 3,599,981 own shares representing 9.9999% of its share capital, detailed as follows:
| 2019 | Quantity | Amount (€) | Average price (€) |
|---|---|---|---|
| 1 January | 3,599,981 | 11,180,516 | 3.11 |
| 30 June | 3,599,981 | 11,180,516 | 3.11 |
| Shareholders | $no$ shares | % share capital |
|---|---|---|
| ATPS - SGPS, S.A. (*) | ||
| Directly | 19 767 058 | 54,91% |
| António Alberto Guerra Leal Teixeira | 2.520 | 0.01% |
| António Carlos Vaz Pinto Sousa | 2 5 2 0 | 0.01% |
| Total attributable | 19 772 098 | 54,92% |
| Magallanes Iberian Equity FI | ||
| Total attributable | 1 182 535 | 3,28% |
| Bestinver Gestion GGIIC | ||
| Total attributable | 3 845 161 | 10,68% |
| Total attributable | 870 648 | 2,42% |
| Directly | 631 638 | 1,75% |
| River and Mercantile Asset Management LLP Norges Bank Others |
99 407 | 0.28% |
| Total attributable | 731 045 | 2,03% |
| FMR LLC | ||
| Fidelity Managemment & Research Company | 1 105 146 | 3,07% |
| GOSHA HOLDINGS SARL |
(*)The voting rights attributable to the ATPS are also attributable to António Pinto Sousa and Alberto Teixeira under subparagraph b) of paragraph 1 of Article 20 and Article 21 paragraph 1, both of the Securities Code, by virtue of the latter are holding the domain of that company, in which participate indirectly in equal parts by, respectively, of CALUM – SERVIÇOS E GESTÃO, SA. with the NIPC 513799486 and DUNBAR – SERVIÇOS E GESTÃO, SA with the NIPC 513799257, which together hold the majority of the capital of ATPS.
| Board of Directors | Acquisictions/Increases (a) | Sales | Balance at | ||
|---|---|---|---|---|---|
| shares | av pr | shares | av pr | 30.06.2020 | |
| António Alberto Guerra Leal Teixeira | |||||
| DUNBAR- SERVIÇOS E GESTÃO SA (1) | 9 9 9 6 | ||||
| Ibersol SGPS, SA | 2 5 2 0 | ||||
| António Carlos Vaz Pinto Sousa | |||||
| CALUM-SERVIÇOS E GESTÃO SA (2) | 9 9 9 6 | ||||
| Ibersol SGPS, SA | 2 5 2 0 | ||||
| DUNBAR- SERVIÇOS E GESTÃO SA (1) |
|||||
| ATPS-S.G.P.S., SA (3) |
2 8 4 0 | ||||
| (2) CALUM-SERVIÇOS E GESTÃO SA | |||||
| ATPS-S.G.P.S., SA (3) |
2 840 | ||||
| ATPS-S.G.P.S., SA (3) |
|||||
| Ibersol SGPS, SA | 19 767 058 |
No transactions were reported by persons discharging managerial connected with them during the first half of 2020 responsabilities and people closely em 2020.
30th June 2020
| ASSETS | Notes | 30/06/2020 | 31/12/2019 |
|---|---|---|---|
| Non-current | |||
| Tangible fixed assets | 8 | 210 047 550 | 216 563 700 |
| Rights of use | 7 | 297 408 317 | 321 812 178 |
| Goodwill | 9 | 84 851 938 | 87 968 225 |
| Intangible assets | 9 | 35 940 302 | 36 440 964 |
| Financial investments - joint controlled subsidiaries | 2 484 135 | 2 566 336 | |
| Non-current financial assets | 508 056 | 435 226 | |
| Other financial assets | 19 | 910 312 | 2 710 150 |
| Other non-current assets | 16 | 7 777 250 | 8 238 111 |
| Deferred tax | 11 658 678 | 4 010 940 | |
| Total non-current assets | 651 586 538 | 680 745 830 | |
| Current | |||
| Inventories | 12 193 288 | 12 014 986 | |
| Cash and bank deposits | 20 | 60 829 369 | 38 424 757 |
| Income tax receivable | 1 462 510 | 1 502 658 | |
| Other financial assets | 19 | 13 230 516 | 12 916 621 |
| Other current assets | 16 | 26 978 535 | 31 681 067 |
| Total current assets | 114 694 218 | 96 540 090 | |
| Total Assets | 766 280 756 | 777 285 920 | |
| EQUITY AND LIABILITIES | |||
| EQUITY | |||
| Capital and reserves attributable to shareholders | |||
| Share capital | 10 | 36 000 000 | 36 000 000 |
| Own shares | -11 180 516 | -11 180 516 | |
| Share prize | 469 937 | 469 937 | |
| Legal reserves | 1 075 511 | 1 075 511 | |
| Conversion Reserves | -11 583 229 | -10 355 553 | |
| Other Reserves & Retained Results | 197 926 090 | 180 376 862 | |
| Net profit in the year | -33 331 342 | 17 549 228 | |
| 179 376 451 | 213 935 469 | ||
| Interests that do not control | 212 455 | 293 007 | |
| Total Equity | 179 588 906 | 214 228 476 | |
| LIABILITIES | |||
| Non-current Loans |
11 | 138 130 122 | 74 763 367 |
| Liability for leases | 11 | 270 833 880 | 286 206 086 |
| Deferred tax | 7 171 692 | 8 671 083 | |
| Provisions | 33 257 | 33 257 | |
| Derivative financial instrument | 92 945 | 128 699 | |
| Other non-current liabilities | 6 026 | 6 146 | |
| Total non-current liabilities | 416 267 922 | 369 808 638 | |
| Current | |||
| Loans | 11 | 44 049 004 | 46 399 315 |
| Liability for leases | 11 | 57 398 112 | 53 777 115 |
| Accounts payable to suppliers and accrued costs | 21 | 55 542 698 | 77 816 608 |
| Income tax payable | 807 095 | 689 748 | |
| Other current liabilities | 16 | 12 627 019 | 14 566 020 |
| Total current liabilities | 170 423 928 | 193 248 806 | |
| Total Liabilities | 586 691 850 | 563 057 444 | |
| Total Equity and Liabilities | 766 280 756 | 777 285 920 |
(values in euros)
| Notes | 30/06/2020 | 30/06/2019 | |
|---|---|---|---|
| Sales | 6 | 133 041 159 | 219 598 464 |
| Rendered services | 6 | 600 615 | 1 738 397 |
| Cost of sales | -33 707 405 | -54 179 091 | |
| External supplies and services | -36 726 602 | -48 727 214 | |
| Personnel costs | -52 756 667 | -71 487 268 | |
| Amortisation, depreciation and impairment losses of TFA, Rights of | |||
| Use, Goodwill and IA | 8 e 9 | -46 954 410 | -39 639 681 |
| Other operating costs | 4 700 665 | 1 917 535 | |
| Operating Income | -31 802 645 | 9 221 143 | |
| Financial expenses and losses | 17 | -10 968 404 | -11 729 006 |
| Financial income and gains | 17 | 709 689 | 862 788 |
| Gains (losses) in joint controlled subsidiaries - Equity method | -82 201 | 132 343 | |
| Gains (losses) on Net monetary position | - | 583 621 | |
| Profit before tax | -42 143 561 | -929 111 | |
| Income tax expense | 18 | 8 781 473 | 1 497 093 |
| Net profit | -33 362 088 | 567 982 | |
| Other comprehensive income: | |||
| Change in currency conversion reserve (net of tax and that can be | |||
| recycled for results) | -1 227 676 | -627 951 | |
| TOTAL COMPREHENSIVE INCOME | -34 589 764 | -59 969 | |
| Net profit attributable to: | |||
| Owners of the parent | -33 331 342 | 565 142 | |
| Non-controlling interest | -30 746 | 2 840 | |
| -33 362 088 | 567 982 | ||
| Total comprehensive income attributable to: | |||
| Owners of the parent | -34 559 018 | -62 809 | |
| Non-controlling interest | -30 746 | 2 840 | |
| -34 589 764 | -59 969 | ||
| Earnings per share: | 10 | ||
| Basic | -1,03 | 0,02 | |
| Diluted | -1,03 | 0,02 |
(values in euros)
| 2nd TRIMESTER (unaudited) | |||
|---|---|---|---|
| Notes | 2020 | 2019 | |
| Sales | 38 607 000 | 117 659 359 | |
| Rendered services | 8 480 | 896 946 | |
| Cost of sales | -9 792 816 | -29 280 154 | |
| External supplies and services | -15 495 368 | -25 101 762 | |
| Personnel costs Amortisation, depreciation and impairment losses of TFA, Rights of |
-15 946 693 | -37 155 466 | |
| Use, Goodwill and IA | -25 617 701 | -20 960 082 | |
| Other operating costs | 2 875 096 | 1 323 463 | |
| Operating Income | -25 362 002 | 7 382 305 | |
| Financial expenses and losses | -5 533 855 | -6 402 960 | |
| Financial income and gains | 363 060 | 464 351 | |
| Gains (losses) in joint controlled subsidiaries - Equity method | -67 753 | 49 830 | |
| Gains (losses) on Net monetary position | - | 222 742 | |
| Profit before tax | -30 600 550 | 1 716 268 | |
| Income tax expense | 6 243 291 | 842 699 | |
| Net profit | -24 357 259 | 2 558 967 | |
| Other comprehensive income: | |||
| Change in currency conversion reserve (net of tax and that can be | |||
| recycled for results) | -876 856 | -576 841 | |
| TOTAL COMPREHENSIVE INCOME | -25 234 115 | 1 982 126 | |
| Net profit attributable to: | |||
| Owners of the parent | -24 345 639 | 2 535 896 | |
| Non-controlling interest | -11 620 | 23 071 | |
| -24 357 259 | 2 558 967 | ||
| Total comprehensive income attributable to: | |||
| Owners of the parent | -25 222 495 | 1 959 055 | |
| Non-controlling interest | -11 620 | 23 071 | |
| -25 234 115 | 1 982 126 | ||
| Earnings per share: | |||
| Basic | -0,75 | 0,08 | |
| Diluted | -0,75 | 0,08 | |
(value in euros)
| Oth er Res es & Inte rest s th at erv Ow Leg al Con sio Ret aine d Tot al p do nt not n ver n are Sha re C apit al Sha Sh Priz Res Res Res ults Ne Pro fit ity trol Tot Not t res are e erv es erv es equ con e Bal Jan y 20 19 n 1 36 0 00 0 00 -11 180 516 469 937 755 58 1 -7 1 40 9 07 158 974 733 24 962 06 1 202 840 889 329 204 anc e o uar Cha s in the riod nge pe : App lica tion of t he c olid ated fit fr 201 8: ons pro om T fer t nd r etai ned ults 319 930 24 642 13 1 -24 962 06 1 rans o re serv es a res - Con ion - A la -627 95 1 -627 95 1 vers rese rves ngo Net soli date d in e fo r the six nths riod con com mo pe end ed o n 30 Jun e, 2 019 565 142 565 142 2 8 40 Tot al c han in the riod 319 930 -62 7 95 1 24 642 13 1 -24 396 919 -62 809 2 8 40 ges pe - - - Net fit 565 142 565 142 2 8 40 pro Tot al c rehe nsiv e in -62 809 2 8 40 omp com e Tra ctio ith ital in the riod nsa ns w cap own ers pe App lica tion of t he c olid ated fit fr 201 8: ons pro om P aid divi den ds -3 2 40 0 00 -3 2 40 0 00 -12 6 77 9 -3 2 40 0 00 -3 2 40 0 00 -12 6 77 9 - - - - - Bal n 30 Ju ne 2 019 36 0 00 0 00 -11 180 516 469 937 1 0 75 5 11 -7 7 68 8 58 180 376 863 565 142 199 538 079 205 265 anc e o Bal n 1 Jan y 20 20 36 0 00 0 00 -11 180 516 469 937 1 0 75 5 11 -10 355 553 180 376 862 17 549 228 213 935 469 293 007 anc e o uar Cha s in the riod nge pe : App lica tion of t he c olid ated fit fr 201 9: ons pro om T fer t nd r etai ned ults 17 5 49 2 28 -17 549 228 rans o re serv es a res - Con ion - A la -1 2 27 6 76 -1 2 27 6 76 vers rese rves ngo Net soli date d in e fo r the six nths riod con com mo pe end ed o n 30 Jun e, 2 020 -33 331 342 -33 33 1 34 2 -30 746 Tot al c han in the riod -1 2 27 6 76 17 549 228 -50 880 570 -34 559 018 -30 746 ges pe - - - - Net fit -33 331 342 -33 33 1 34 2 -30 746 pro Tot al c rehe nsiv e in -34 559 018 -30 746 omp com e Tra ctio ith ital in the riod nsa ns w cap own ers pe App lica tion of t he c olid ated fit fr 201 9: ons pro om P aid divi den ds -49 806 - |
Ass ign ed t o s |
har eho lder s |
|||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| al Equ ity |
|||||||||||
| 203 170 093 |
|||||||||||
| - | |||||||||||
| -62 7 95 1 982 |
|||||||||||
| 567 -59 969 |
|||||||||||
| 567 982 |
|||||||||||
| -59 | |||||||||||
| 969 | |||||||||||
| -3 3 66 7 79 |
|||||||||||
| -3 3 66 7 79 |
|||||||||||
| 199 743 344 |
|||||||||||
| 214 228 476 |
|||||||||||
| - | |||||||||||
| -1 2 27 6 76 |
|||||||||||
| -33 362 088 589 764 |
|||||||||||
| -34 -33 362 088 |
|||||||||||
| -34 589 |
|||||||||||
| 764 | |||||||||||
| -49 806 |
|||||||||||
| - | - | - | - | - | - | - | - | -49 806 |
-49 806 |
||
| Bal n 30 Ju ne 2 020 36 0 00 0 00 -11 180 516 469 937 1 0 75 5 11 -11 583 229 197 926 090 -33 33 1 34 2 179 376 451 212 455 anc e o |
179 588 906 |
Porto, 28th September 2020
The Board of Directors,
(value in euros)
| Six months period ended on June | |||
|---|---|---|---|
| Note | 30 2020 |
2019 | |
| Cash Flows from Operating Activities | |||
| Receipts from clients | 136 239 130 | 221 243 140 | |
| Payments to supliers | -77 453 851 | -92 892 884 | |
| Staff payments | -44 365 345 | -67 445 769 | |
| Flows generated by operations | 14 419 934 | 60 904 487 | |
| Payments/receipt of income tax | -114 058 | -150 797 | |
| Other paym./receipts related with operating activities | -11 349 859 | -7 401 772 | |
| Flows from operating activities (1) | 2 956 017 | 53 351 918 | |
| Cash Flows from Investment Activities | |||
| Receipts from: | |||
| Financial investments | 55 195 | 61 139 | |
| Tangible fixed assets | 1 412 | 21 348 | |
| Interest received | 601 044 | 799 476 | |
| Other financial assets | 1 509 173 | 3 471 601 | |
| Payments for: | |||
| Financial Investments | 128 025 | 101 899 | |
| Tangible fixed assets | 17 248 416 | 22 170 371 | |
| Intangible assests | 1 706 480 | 1 747 863 | |
| Flows from investment activities (2) | -16 916 097 | -19 666 569 | |
| Cash flows from financing activities | |||
| Receipts from: | |||
| Loans obtained | 62 286 425 | 7 740 349 | |
| Payments for: | |||
| Loans obtained | 1 633 794 | 7 082 498 | |
| Amortisation and interest of liability for leases | 23 310 881 | 26 480 558 | |
| Interest and similar costs | 2 271 161 | 2 620 891 | |
| Dividends paid | 3 241 321 | ||
| Flows from financing activities (3) | 35 070 589 | -31 684 919 | |
| Change in cash & cash equivalents (4)=(1)+(2)+(3) | 21 110 509 | 2 000 430 | |
| Cash & cash equivalents at the start of the period | 34 684 804 | 32 048 560 | |
| Cash & cash equivalents at end of the period | 20 | 55 795 313 | 34 048 990 |
(Values in euros)
IBERSOL, SGPS, SA ("Company" or "Ibersol") has its head office at Praça do Bom Sucesso, Edifício Península n.º 105 a 159 – 9º, 4150-146 Porto, Portugal. Ibersol's subsidiaries (jointly called the Group), operate a network of 643 units in the restaurant segment through the brands Pizza Hut, Pasta Caffé, Pans & Company, Ribs, FresCo, SantaMaria, Kentucky Fried Chicken, Burger King, O' Kilo, Roulotte, Quiosques, Pizza Móvil, Miit, Taco Bell, Sol, Sugestões e Opções, Silva Carvalho Catering e Palace Catering, coffee counters and other concessions. The group has 541 units which it operates and 102 units under a franchise contract. Of this universe, 359 are headquartered in Portugal, of which 358 are owned and 1 franchised, and 268 are based in Spain, spread over 173 own establishments and 95 franchisees. Finally, 10 units are located in Angola and 6 in other locations.
Ibersol is a public limited company listed on the Euronext of Lisbon.
Ibersol SGPS parent company is ATPS - SGPS, S.A ..
The main accounting policies applied in preparing these consolidated financial statements are described below.
2.1 Basis of presentation, consolidation and main accounting policies
These consolidated interim financial statements were prepared according to the international standard nº. 34 – Interim Financial Report, and therefore do not include all the information required by the annual financial statements, and should be read together with the company's financial statements for the period ended 31 December 2019.
The consolidated interim financial statements have been prepared in accordance with the historical cost principle, changed to fair value in the case of derivative financial instruments.
The accounting policies applied on 30 June 2020 are identical to those applied for preparing the financial statements of 30 June and 31 December 2019, except for the exchange currency differences included in other income / other operating costs and excluded from net financing cost.
These financial statements were approved by the Board of Directors and authorised for emission on 28th September 2020.
The rules and interpretations that became effective on January 1, 2020 are as follows:
a) IFRS 3 (amendment), "Concentration of business activities" (effective for annual periods beginning on or after 1 January 2020). The intention of changing the standard is to overcome the difficulties that arise when an entity determines whether it has acquired a business or a set of assets.
b) IAS1 and IAS 8 (amendment), "Definition of material" (to be applied in annual periods beginning on or after 1 January 2020). The intention of changing the standard is to clarify the definition of material and align the definition used in international financial reporting standards.
c) Reform of the interest rate reference (issued on September 26, 2019, to be applied in years beginning on or after January 1, 2020). This reform aims to change the standards of financial instruments, provided for in IFRS 9 Financial Instruments, IAS 39 Financial Instruments: Recognition and Measurement and IFRS 7 Financial Instruments: Disclosures.
d) Improvements to international financial reporting standards (issued on March 29, 2018, to be applied to annual periods beginning on or after January 1, 2020). These improvements involve the revision of several standards.
These standards and amendments had no material impact on the Group's consolidated financial statements.
At the date of approval of these financial statements, there are no standards and interpretations endorsed by the European Union, whose mandatory application occurs in future financial years.
The following standards, interpretations, amendments and revisions, with mandatory application in the year and in future economic years, were not, until the date of approval of these financial statements, endorsed by the European Union:
IFRS 3 (amendment), "Concentration of business activities" (effective for annual periods beginning on or after 1 January 2020). The intention of changing the standard is to overcome the difficulties that arise when an entity determines whether it has acquired a business or a set of assets.
IFRS 17 (new), "Insurance contracts" (effective for annual periods beginning on or after 1 January 2021). The general objective of IFRS17 is to provide a more useful and consistent accounting model for insurance contracts between entities that issue them globally.
IAS 1 (Amendment), "Presentation of the financial statements". The intent of the standard is to clarify the classification of liabilities as current or non-current.
Improvements to international financial reporting standards 2018-2020 (issued on May 14, 2020, to be applied to annual periods beginning on or after January 1, 2022). These improvements involve the revision of several standards.
IFRS 16 (amendment), "Leases" (issued on May 28, 2020, to be applied in annual periods beginning on or after June 1, 2020). The general purpose of this change is to allow tenants, as a practical expedient, to treat the changes / concessions related to COVID-19 as not being a modification to the lease. The change does not affect owners.
IFRS 4 (amendment), "Insurance Contracts" (issued on 25 June 2020, to be applied in annual periods beginning on or after 1 January 2021). This amendment seeks to address concerns arising from the application of IFRS 9 before the new IFRS17.
IAS 16 (amendment). Income obtained before commissioning.
IAS 37 (amendment), "Onerous Contracts". Costs of fulfilling a contract.
The Group is assessing the impact resulting from these changes and will apply these standards in the year in which they become effective, or in advance when permitted.
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.
Estimates, assumptions and circumstances will rarely, by definition, match actual reported results. Estimates and assumptions 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 group performs annual tests to determine whether the goodwill is subject to impairment, according to the accounting policy. Recoverable amounts from the units generating cash flows are determined based on the calculation of utilisation values. Those calculations require the use of estimates (Note 9).
The assumptions used are sensitive to changes in macroeconomic indicators and to the business assumptions used by management. Considering the uncertainties regarding the goodwill recovery value due to the fact that they are based on the best information available at the date, changes in the assumptions could result in impacts in determining the level of impairment and, consequently, in the results.
b) Provisions
The group on a periodic basis examines possible obligations arising from past events that should be recognized or disclosed.
The subjectivity inherent in determining the probability and amount of internal resources required to settle these obligations may result in significant adjustments due to changes in the assumptions used or the future recognition of provisions previously disclosed as contingent liabilities.
c) Estimated lifetime and impairment of tangible and intangible assets
Tangible and intangible fixed assets are subject to systematic depreciation for the period determined to be their economic useful life. The determination of lifetime period of the assets and the depreciation method to be applied, is essential to determine the amount of depreciation to be recognized in the income statement for each year.
According to the best judgment of the Board of Directors and considering the practices adopted by companies in the sector internationally these two parameters are set for the assets and business in question.
The recoverability of tangible and intangible fixed assets requires the definition of estimates and assumptions by the Management, namely, when applicable, with regard to the determination of the value in use in the scope of the impairment tests of the Group's cash generating units.
In applying the expected impairment loss models, the Group assesses the probability of default and estimated losses in the event of default. This evaluation involves relevant estimates by the Group, which are based on a set of historical information and assumptions, which may not be representative of the future uncollectibility of the Group's debtors.
e) Lease term and Incremental financing rates
To determine the estimated impacts of adopting IFRS 16, the Group makes estimates on the lease terms and their incremental financing rates, which incorporate specific market and entity risks that require the Group to make relevant judgments and estimates.
The World Health Organization on 11 March declared a pandemic associated with the spread of Covid-19, having been declared the "Estado Alarma" in Spain and soon afterwards the State of Emergency in Portugal. Later, at the end of the month, the same happened in Angola. The state of emergency determined measures to contain the population and the closure of most shops and restaurants.
With the gradual opening of the economy and, despite being open, restaurants have been operating below their normal potential.
In order to reconcile the abrupt reduction in activity and the protection of jobs, the Group's companies joined the ERTE (Expediente de Regulación Temporal de Empleo) in Spain and the simplified and normal Lay-off in Portugal.
At the same time, and as detailed in Note 23, initiatives were taken to reduce costs, renegotiate contracts, including the financial rebalancing of lease contracts and the negotiation of payment terms.
| % Shareholding | |||||
|---|---|---|---|---|---|
| Company | Head Office | Jun/20 | Dec/19 | Jun/19 | |
| Parent company | |||||
| Ibersol SGPS, S.A. | Porto | parent | parent | parent | |
| Subsidiary companies | |||||
| Iberusa Hotelaria e Restauração, S.A. | Porto | 100% | 100% | 100% | |
| Ibersol Restauração, S.A. | Porto | 100% | 100% | 100% | |
| Ibersande Restauração, S.A. | Porto | 100% | 100% | 100% | |
| Ibersol Madeira e Açores Restauração, S.A. | Funchal | 100% | 100% | 100% | |
| Ibersol - Hotelaria e Turismo, S.A. | Porto | 100% | 100% | 100% | |
| Iberking Restauração, S.A. | Porto | 100% | 100% | 100% | |
| Iberaki Restauração, S.A. | Porto | 100% | 100% | 100% | |
| Restmon Portugal, Lda | Porto | 61% | 61% | 61% | |
| Vidisco, S.L. | Vigo - Espanha | 100% | 100% | 100% | |
| Inverpeninsular, S.L. | Vigo - Espanha | 100% | 100% | 100% | |
| Asurebi SGPS, S.A. | Porto | 100% | 100% | 100% | |
| Charlotte Develops, SL | Vigo - Espanha | 100% | 100% | 100% | |
| Firmoven Restauração, S.A. | Porto | 100% | 100% | 100% | |
| IBR - Sociedade Imobiliária, S.A. | Porto | 100% | 100% | 100% | |
| Eggon SGPS, S.A. | Porto | 100% | 100% | 100% | |
| Anatir SGPS, S.A. | Porto | 100% | 100% | 100% | |
| Lurca, SA | Madrid-Espanha | 100% | 100% | 100% | |
| Sugestões e Opções-Actividades Turísticas, S.A | Porto | 100% | 100% | 100% | |
| José Silva Carvalho Catering, S.A | Porto | 100% | 100% | 100% | |
| (a) Iberusa Central de Compras para Restauração ACE | Porto | 100% | 100% | 100% | |
| (b) Vidisco, Pasta Café Union Temporal de Empresas | Vigo - Espanha | 100% | 100% | 100% | |
| Maestro - Serviços de Gestão Hoteleira, S.A. | Porto | 100% | 100% | 100% | |
| SEC - Eventos e Catering, S.A. | Porto | 100% | 100% | 100% | |
| IBERSOL - Angola, S.A. | Luanda - Angola | 100% | 100% | 100% | |
| HCI - Imobiliária, S.A. | Luanda - Angola | 100% | 100% | 100% | |
| Ibergourmet Produtos Alimentares (ex-Gravos 2012, S.A.) Porto | 100% | 100% | 100% | ||
| Lusinver Restauracion, S.A. | Vigo - Espanha | 100% | 100% | 100% | |
| The Eat Out Group S.L.U. | Barcelona - Espanha | 100% | 100% | 100% | |
| Pansfood, S.A.U. | Barcelona - Espanha | 100% | 100% | 100% | |
| Foodstation, S.L.U | Barcelona - Espanha | 100% | 100% | 100% | |
| Dehesa de Santa Maria Franquicias, S.L. | Barcelona - Espanha | 100% | 100% | 100% | |
| Cortsfood, S.L. | Barcelona - Espanha | 100% | 100% | 50% | |
| (d) Volrest Aldaia, S.L | Vigo - Espanha | 100% | - | - | |
| (d) Volrest Alcala, S.L | Vigo - Espanha | 100% | - | - | |
| (d) Volrest Alfafar, S.L. | Vigo - Espanha | 100% | - | - | |
| (d) Volrest Rivas, S.L. | Vigo - Espanha | 100% | - | - | |
| Associated companies | |||||
| (c) Ziaicos - Serviços e gestão, Lda | Porto | 40% | 40% | - | |
| Companies controlled jointly | |||||
| UQ Consult - Serviços de Apoio à Gestão, S.A. | Porto | 50% | 50% | 50% |
(a) Company consortium agreement that acts as the Purchasing and Logistics Centre and provides the respective restaurants with raw materials and maintenance services. (b) Union Temporal de Empresas which was founded in 2005 and that during the year functioned as the Purchasing Centre in Spain by providing raw materials to the respective restaurants.
( c) Associated constituted in 2019. (d) Acquired subsidiaries related to the 4 units that the group started to control in 2019..
The subsidiary companies were included in the consolidation by the full consolidation method. UQ Consult, the jointly controlled entity, and associated Ziaicos, were subject to the equity method according to the group's shareholding in this company.
The shareholding percentages in the indicated companies imply an identical percentage in voting rights.
In the six months period ended on 30 June 2020 there was no acquisition of subsidiaries.
In the six months period ended on 30 June 2020 there was no disposals of subsidiaries.
Ibersol Administration monitors the business based on the following segmentation:
| SEGMENT | BRANDS | ||||||
|---|---|---|---|---|---|---|---|
| Restaurants | Pizza Hut | Pasta Caffe | Pizza Movil | FresCo | Ribs | StaMaria | |
| Counters | KFC | O'Kilo | Miit | Burger King | Pans & C.ª | Coffee Counters Taco Bell | |
| Concessions | |||||||
| and catering | Sol (SA) | Concessions | Catering | Convenience stores | Travel |
The results by segment for the six-month periods ended June 30, 2020 and 2019, with and without impact of the application of IFRS 16, are presented as follows:
| w/ IFRS 16 | Restaurants | Counters | Concessions and Catering |
Other, write off and adjustments |
Total Group | |||||
|---|---|---|---|---|---|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | |
| Turnover | 32 879 799 | 53 817 103 | 78 241 170 108 806 329 | 22 433 123 | 58 532 707 | 87 683 | 180 723 | 133 641 774 221 336 861 | ||
| Operating income net of Amortization, deprec. and impairment losses Amortization, depreciation and impairment |
1 089 237 | 9 246 802 | 12 711 768 | 20 235 812 | 1 144 651 | 19 378 209 | 206 108 | - | 15 151 765 | 48 860 823 |
| losses Operating income |
10 413 553 -9 324 316 |
5 806 716 3 440 086 |
15 762 827 -3 051 059 |
13 588 772 6 647 040 |
20 245 198 -19 100 547 |
19 659 126 -280 917 |
532 832 -326 724 |
585 066 -585 066 |
46 954 410 -31 802 645 |
39 639 681 9 221 142 |
| Net financing cost | 10 258 715 | 10 866 218 | ||||||||
| Other non-operating gains and losses | -82 201 | 715 964 | ||||||||
| Income tax expense | -8 781 473 | -1 497 093 | ||||||||
| Net profit | -33 362 088 | 567 981 | ||||||||
| Total assets allocated* | 104 975 223 107 316 064 316 908 350 323 975 084 302 755 548 309 506 689 11 387 428 11 641 356 | 736 026 549 418 394 747 |
11
| n/a IFRS 16 | Restaurants | Counters | Catering | Concessions and | Other, write off and adjustments |
Total Group | ||||
|---|---|---|---|---|---|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | |
| Turnover | 32 879 799 | 53 817 103 | 78 241 170 108 806 329 | 22 433 123 | 58 532 707 | 87 683 | 180 723 | 133 641 774 221 336 861 | ||
| Operating income net of Amortization, deprec. and impairment losses Amortization, depreciation and impairment |
-2 967 564 | 5 722 441 | 3 426 106 | 12 890 151 | -7 609 158 | 4 422 326 | - - | -7 150 616 | 23 034 918 | |
| losses Operating income |
6 877 824 -9 845 388 |
2 616 159 3 106 282 |
9 012 521 -5 586 415 |
7 232 370 5 657 781 |
2 703 307 -10 312 465 |
2 561 560 1 860 766 |
454 909 -454 909 |
585 066 -585 066 |
19 048 562 -26 199 177 |
12 995 156 10 039 762 |
| Net financing cost | 1 796 053 | 2 050 248 | ||||||||
| Other non-operating gains and losses | -82 201 | 715 964 | ||||||||
| Income tax expense | -5 270 093 | 913 871 | ||||||||
| Net profit | -22 807 338 | 7 791 607 | ||||||||
| Total assets allocated* | 64 280 474 | 81 809 532 194 055 496 236 159 047 185 389 176 101 180 187 | 6 972 972 11 478 249 | 450 698 118 418 394 747 |
* non allocated amounts on 30 June 2020 and 31 December 2019 refer essentially to other financial assets, loans and deferred taxes.
Total liabilities allocated* 8 014 024 18 232 074 24 984 244 47 499 872 45 569 267 25 783 042 230 726 43 348 78 798 261 91 558 335
On June 30, 2020 and 2019 income and non-current assets by geography is presented as follows:
| 30 JUNE 2020 | Portugal | Angola | Spain | Grupo |
|---|---|---|---|---|
| Total sales and services | 84 846 789 | 3 979 488 | 44 815 497 | 133 641 774 |
| Tangible fixed and intangible assets | 152 763 445 | 20 874 913 | 72 349 494 | 245 987 852 |
| Rights of use | 85 131 791 | 883 517 | 211 393 009 | 297 408 317 |
| Goodwill | 7 605 482 | - | 77 246 456 | 84 851 938 |
| Deferred tax asset | - | - | 11 658 678 | 11 658 678 |
| Financial investments - joint controlled subsidiaries | 2 484 135 | - | - | 2 484 135 |
| Non-current financial assets | 508 056 | - | - | 508 056 |
| Other financial assets | - | 910 312 | - | 910 312 |
| Other non-current assets | - | - | 7 777 250 | 7 777 250 |
| Total non-current assets | 248 492 909 | 22 668 742 | 380 424 887 | 651 586 538 |
| 30 JUNE 2019 | Portugal | Angola | Spain | Grupo |
| Total sales and services | 119 080 631 | 6 577 864 | 95 678 366 | 221 336 861 |
| Tangible fixed and intangible assets | 150 936 909 | 25 493 046 | 58 497 345 | 234 927 300 |
| Rights of use | 67 900 618 | 2 770 396 | 257 674 951 | 328 345 965 |
| Goodwill | 7 605 482 | - | 83 240 845 | 90 846 327 |
| Financial investments - joint controlled subsidiaries | 2 592 185 | - | - | 2 592 185 |
| Non-current financial assets | 252 189 | - | - | 252 189 |
| Other financial assets | - | 15 098 929 | - | 15 098 929 |
| Other non-current assets | - | - | 12 125 349 | 12 125 349 |
| Total non-current assets | 229 287 383 | 43 362 371 | 411 538 490 | 684 188 244 |
In the six months period ended 30 June 2020 and in the year ending on 31 December 2019, entries in the value of rights of use, depreciation and accumulated impairment losses were as follows:
| Rights of use | |
|---|---|
| 1 January 2019 | |
| Initial net amount | 291 085 260 |
| Additions | 88 072 137 |
| Decreases | -1 467 059 |
| Depreciation in the year | 55 878 164 |
| Final net amount | 321 812 178 |
| 31 December 2019 | |
| Cost | 384 554 772 |
| Accumulated depreciation | 62 742 598 |
| Net amount | 321 812 178 |
| Rights of use | |
| 1 January 2020 | |
| Initial net amount | 321 812 178 |
| Currency conversion | -199 688 |
| Additions | 5 979 041 |
| Decreases | -532 492 |
| Transfers | -750 909 |
| Depreciation in the year | 28 899 813 |
| Final net amount | 297 408 317 |
| 30 June 2020 |
| Net amount | 297 408 317 |
|---|---|
| Accumulated depreciation | 89 692 797 |
| Cost | 387 101 114 |
In the six months period ended 30 June 2020 and in the year ending on 31 December 2019, entries in the value of tangible fixed assets, depreciation and accumulated impairment losses were as follows:
| 1 January 2019 | ||||||
|---|---|---|---|---|---|---|
| Cost | 14 163 037 | 267 021 639 | 138 067 977 | 30 839 024 | 3 574 147 | 453 665 824 |
| Accumulated depreciation | 243 567 | 105 564 602 | 100 649 863 | 19 662 947 | - | 226 120 979 |
| Accumulated impairment | - | 10 207 629 | 730 304 | 43 212 | - | 10 981 144 |
| Net amount | 13 919 470 | 151 249 408 | 36 687 810 | 11 132 865 | 3 574 147 | 216 563 700 |
| 1 January 2019 | ||||||
| Initial net amount | 14 490 886 | 142 801 429 | 33 468 569 | 9 552 595 | 996 812 | 201 310 291 |
| Change in accounting policy (IFRS 16) | - | -3 335 985 | -899 062 | -47 363 | - | -4 282 410 |
| Changes in the perimeter | - | 1 600 000 | 845 363 | 119 304 | - | 2 564 667 |
| Currency conversion | -542 668 | -1 209 078 | -540 488 | -117 382 | -19 445 | -2 429 061 |
| Additions | - | 25 420 469 | 11 712 366 | 3 596 959 | 3 144 834 | 4 3 874 629 |
| Decreases | - | -1 298 973 | -119 844 | -25 680 | -43 908 | -1 488 404 |
| Transfers | - | 39 603 | 280 569 | 34 644 | -504 148 | -149 332 |
| Depreciation in the year | 28 749 | 12 999 373 | 8 257 847 | 1 995 447 | - | 23 281 415 |
| Impairment in the year | - | 492 746 | - | - | - | 492 746 |
| Impairment reversion | - | -724 062 | -198 182 | -15 236 | - | -937 480 |
| Final net amount | 13 919 470 | 151 249 409 | 36 687 809 | 11 132 867 | 3 574 146 | 216 563 700 |
| 31 December 2019 | ||||||
| Cost | 14 163 037 | 267 021 639 | 138 067 977 | 30 839 024 | 3 574 147 | 453 665 824 |
| Accumulated depreciation | 243 567 | 105 564 602 | 100 649 863 | 19 662 947 | - | 226 120 979 |
| Accumulated impairment | - | 10 207 629 | 730 304 | 43 212 | - | 10 981 144 |
| Net amount | 13 919 470 | 151 249 408 | 36 687 810 | 11 132 865 | 3 574 147 | 216 563 700 |
| Other tangible | Tangible Assets | |||||
|---|---|---|---|---|---|---|
| Land | Buildings | Equipment | fixed Assets | in progress | Total | |
| 1 January 2020 | ||||||
| Initial net amount | 13 919 470 | 151 249 408 | 36 687 810 | 11 132 865 | 3 574 147 | 216 563 700 |
| Currency conversion | -167 374 | -284 086 | -102 136 | -19 016 | -41 256 | -613 868 |
| Additions | - | 3 609 084 | 1 184 519 | 194 403 | 1 697 980 | 6 685 986 |
| Decreases | - | -7 200 | -44 486 | -7 556 | -18 704 | -77 946 |
| Transfers | - | 1 522 029 | 961 531 | 102 123 | -1 967 708 | 617 97 5 |
| Depreciation in the year | 12 008 | 6 793 425 | 4 134 487 | 1 093 147 | - | 12 033 067 |
| Impairment in the year | - | 1 016 998 | 99 875 | 17 702 | - | 1 134 575 |
| Impairment reversion | - | -20 610 | -18 735 | - | - | -39 345 |
| Final net amount | 13 740 088 | 148 299 422 | 34 471 611 | 10 291 970 | 3 244 459 | 210 047 550 |
| 30 June 2020 | ||||||
| Cost | 13 982 878 | 270 604 652 | 139 363 429 | 31 008 324 | 3 244 459 | 458 203 742 |
| Accumulated depreciation | 242 790 | 111 612 916 | 104 099 183 | 20 655 650 | - | 236 610 539 |
| Accumulated impairment | - | 10 692 314 | 792 635 | 60 704 | - | 11 545 653 |
| Net amount | 13 740 088 | 148 299 422 | 34 471 611 | 10 291 970 | 3 244 459 | 210 047 550 |
The investment of 6.7 million euros in the first six months of 2020 mainly refers to the opening of concessions in the travel Spain segment (1.5 million euros), and the remaining investment in four KFCs, one Burger King and two Taco Bell.
In 2019, an investment of around 54 million was made in the opening of 40 new units, mainly 14 Burger King, 3 KFC and 3 Pizza Hut in Portugal, and 5 concessions at the airports of Alicante, Barcelona and Las Palmas, 2 Burger King and 2 Pans in Spain. On part of the investment in Spain, leasing contracts were made in the amount of around 10 million (rights of use, note 7).
On June 30, 2020 and December 31, 2019, impairment tests were carried out on the Group's main tangible assets that showed signs of impairment. The methods and main assumptions used in the preparation of the impairment tests were as follows:
| 2020 | 2019 | ||||
|---|---|---|---|---|---|
| Portugal | Spain | Portugal | Spain | ||
| Method used | Use Value | Use Value | |||
| Base used* | Projections with perpetuity |
Projections with perpetuity |
Projections with perpetuity |
Projections with perpetuity |
|
| Periodo Utiizado (anos) | 5 | 5 | 5 | 5 | |
| Discount rate for the period (WACC)** |
7,4%/7,8%/8,2% | 6,5%/6,8%/7,2% | 5.6% | 5.2% |
* The discount rate presented was calculated based on the WACC (Weighted Average Cost of Capital) methodology.
** According to the business segment, Fast Food (Burguer King and KFC), Restaurants and Travel, respectively.
The perpetuity growth rate used in the cash flow projections is 2.5%.
The tests carried out on the Ibersol group restaurants with signs of impairment resulted in the need to record impairment in the amount of 1,134,575 euros and 492,745 euros as at 30 June 2020 and 31 December 2019, respectively, and impairment reversals in the amounts 39,345 euros and 937,480 euros, in the same period, related to tangible fixed assets, as follows:
| June 2020 | |||||||
|---|---|---|---|---|---|---|---|
| Unit | Recoverable amount (use value) |
Assets account value |
Impairment losses |
||||
| Pizza Hut (1 unit) | - | 180 164 | 180 164 | ||||
| FresCo (1 unit) | - | 24 743 | 24 743 | ||||
| Pizza Móvil (2 units) | - | 374 488 | 374 488 | ||||
| Ribs (1 unit) | - | 58 123 | 58 123 | ||||
| Pans & C.ª (2 units) | 211 779 | 708 836 | 497 057 | ||||
| TOTAL | 211 779 | 1 346 354 | 1 134 575 |
| Year 2019 | ||||
|---|---|---|---|---|
| Unit | Recoverable amount (use value) |
Assets account value |
Impairment losses |
|
| Ribs (1 unit) | 539 050 | 864 530 | 325 480 | |
| Pizza Movil (2 units) | - | 167 265 | 167 265 | |
| TOTAL | 539 050 | 1 031 795 | 492 745 |
The reversals of impairment as at 30 June 2020 and 31 December 2019 are presented as follows:
| Units | jun/20 | Ano 2019 |
|---|---|---|
| Pizza Hut (2 units) | - | 403 720 |
| Burger King (1 unit) | - | 262 209 |
| Pasta caffe (1 unit) | - | 211 714 |
| Roulotte (1 unit) | - | 59 837 |
| Pans & C.ª (1 unit) | 23 247 | - |
| Ribs (1 unit) | 16 098 | - |
| TOTAL | 39 345 | 937 480 |
From the sensitivity analysis carried out, with an increase of 1% in the discount rate used for each of the segments, it did not lead to signs of additional impairments.
Goodwill and intangible assets are broken down as follows:
| Jun/20 | Dec/19 | |
|---|---|---|
| Goodwill | 84 851 938 | 87 968 225 |
| Intangible assets | 35 940 302 | 36 440 964 |
| 120 792 240 | 124 409 189 |
The distribution of Goodwill allocated to the segments is presented as follows:
| Jun/20 | Dec/19 | |
|---|---|---|
| Restaurants | 8 624 542 | 11 740 829 |
| Counters | 37 199 991 | 37 199 991 |
| Concessions and Catering | 38 847 684 | 38 847 684 |
| Other, write off and adjustments | 179 721 | 179 721 |
| 84 851 938 | 87 968 225 |
In the six months period ended 30 June 2020 and in the year ending on 31 December 2019, entries in the value of intangible assets and goodwill, amortization and accumulated impairment losses were as follows:
| Goodwill | Brands | Industrial property |
Other intangible Assets |
Intangible Assets in progress |
Total | |
|---|---|---|---|---|---|---|
| 1 January 2019 | ||||||
| Cost | 90 846 327 | 22 000 000 | 42 232 722 | 12 960 943 | 2 370 483 | 170 410 475 |
| Accumulated amortization | - | 2 383 333 | 26 100 687 | 11 211 040 | - | 39 695 061 |
| Accumulated impairment | - | - | 3 681 055 | 41 875 | - | 3 722 930 |
| Net amount | 90 846 327 | 19 616 667 | 12 450 980 | 1 708 028 | 2 370 483 | 126 992 484 |
| 1 January 2019 | ||||||
| Initial net amount | 90 846 327 | 19 616 667 | 12 450 980 | 1 708 028 | 2 370 483 | 126 992 484 |
| Changes in the perimeter | 1 121 898 | - | - | - | - | 1 121 898 |
| Change in accounting policy (IFRS 16) | - | - | - | - | - | - |
| Currency conversion | - | - | -74 408 | - | -100 681 | -175 089 |
| Additions | - | - | 3 372 763 | 317 030 | 244 781 | 3 934 574 |
| Decreases | - | - | -37 273 | - | -57 258 | -94 530 |
| Transfers | - | - | 442 100 | 600 000 | -1 042 100 | - |
| Amortization in the year | - | 1 100 000 | 1 737 240 | 532 903 | - | 3 370 143 |
| Impairment in the year | 4 000 000 | - | 0 | - | - | 4 000 000 |
| Final net amount | 87 968 225 | 18 516 667 | 14 416 923 | 2 092 155 | 1 415 225 | 124 409 189 |
| 31 December 2019 | ||||||
| Cost | 87 968 225 | 22 000 000 | 45 735 432 | 13 793 294 | 1 415 225 | 170 912 176 |
| Accumulated amortization | - | 3 483 333 | 27 637 453 | 11 659 270 | - | 42 780 056 |
| Accumulated impairment | - | - | 3 681 055 | 41 875 | - | 3 722 930 |
| Net amount | 87 968 225 | 18 516 667 | 14 416 923 | 2 092 155 | 1 415 225 | 124 409 189 |
| Industrial | Other intangible | Assets in | ||||
|---|---|---|---|---|---|---|
| Goodwill | Brands | property | Assets | progress | Total | |
| 1 January 2020 | ||||||
| Initial net amount | 87 968 225 | 18 516 667 | 14 416 923 | 2 092 155 | 1 415 225 | 124 409 189 |
| Currency conversion | - | - | -16 668 | - | -25 460 | -42 128 |
| Additions | - | - | 913 864 | - | 266 500 | 1 180 364 |
| Decreases | - | - | -4 275 | - | - | -4 275 |
| Transfers | - | - | 362 207 | 22 500 | -258 209 | 126 498 |
| Amortization in the year | - | 550 000 | 933 720 | 258 613 | - | 1 742 333 |
| Impairment in the year | 3 116 287 | - | - | 18 788 | - | 3 135 075 |
| Final net amount | 84 851 938 | 17 966 667 | 14 738 331 | 1 837 248 | 1 398 056 | 120 792 240 |
| 30 June 2020 | ||||||
| Cost | 84 851 938 | 22 000 000 | 46 935 259 | 13 626 965 | 1 398 056 | 168 812 218 |
| Accumulated amortization | - | 4 033 333 | 28 515 873 | 11 729 056 | - | 44 278 261 |
| Accumulated impairment | - | - | 3 681 055 | 60 662 | - | 3 741 718 |
| Net amount | 84 851 938 | 17 966 667 | 14 738 331 | 1 837 248 | 1 398 056 | 120 792 240 |
On June 30, 2020 and December 31, 2019, impairment tests were carried out on the Group's main assets that showed signs of impairment, and an impairment of 18,788 euros was recognized in intangible assets and of 3,116,287 in Goodwill.
Goodwill is not amortized. The Group performs impairment tests on goodwill annually, or whenever there are signs of impairment.
As of June 30, 2020 and December 31, 2019, the methods and main assumptions used in the preparation of impairment tests for goodwill and Group brands were as follows:
| 2020 | 2019 | |||||||
|---|---|---|---|---|---|---|---|---|
| Portugal | Spain | Spain (Vidisco) |
Portugal | Spain | Spain (Vidisco) |
|||
| Method used | Use Value | Use Value | ||||||
| Base used* | Projections with perpetuity |
Projections with perpetuity |
Projections with perpetuity |
Projections with perpetuity |
Projections with perpetuity |
Projections with perpetuity |
||
| Used Period (years) | 5 | 5 | 5 | 5 | 5 | 5 | ||
| Growth rate in perpetuity |
2.5% | 2.5% | 2.5% | 2.5% | 2.5% | 2.5% | ||
| Discount rate for the period (WACC)** |
7,4%/7,8%/8,2% | 6,5%/6,8%/7,5% | 7,50% | 5.6% | 5.2% | 8% |
* The discount rate presented was calculated based on the WACC (Weighted Average Cost of Capital) methodology.
** According to the business segment, Fast Food (Burguer King and KFC), Restaurants and Travel, respectively.
In the interim accounts for the semester, given the impacts of Covid-19 in the catering sectors, impairment tests were carried out on Goodwill, with the assumptions for the evolution of the different segments, the most recent market inputs and the evolution of the operation, in the gradual reopening restaurants, as well as local and international entities that operate in the air transport market, with decisive relevance for the Travel segment.
The discount rates adopted correspond to the weighted average cost of capital (WACC) estimated for each of the segments operated in Portugal and Spain with the highest risk in the segments that show a trend of greater resistance to the recovery from the pandemic crisis.
As of June 30, 2020, the tests performed resulted in the need to record an impairment in the amount of 3,116,287 euros in goodwill (restaurants), as follows:
| June 2020 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Unit | Recoverable amount (use value) |
Assets account value |
Impairment losses |
|||||
| Vidisco (CFU) | - | 3 116 287 | 3 116 287 | |||||
| TOTAL | - | 3 116 287 | 3 116 287 |
Following the decision not to reopen nine Pizza Móvil restaurants in Spain, the need arose to constitute impairment for the total amount of 3.1 million euros. It should also be noted that, during the second quarter of the year, the remaining 17 restaurants resumed their activity.
Additional analyzes of signs of impairment and revision of projections did not result in the determination of losses.
In the current climate of uncertainty, the assumptions used are sensitive to changes in macroeconomic indicators and to the business assumptions used by management. Considering the uncertainties regarding the goodwill recovery value due to the fact that they are based on the best information available at the date, changes in the assumptions could result in impacts in determining the level of impairment and, consequently, in the results.
The sensitivity analysis carried out, with an increase of 1% in the discount rate used for each of the segments, did not lead to signs of additional impairments.
Income per share in the six months period ended 30 June 2020 and 2019 was calculated as follows:
| Jun/20 | Jun/19 | |
|---|---|---|
| Profit payable to shareholders | -33 331 342 | 565 142 |
| Mean weighted number of ordinary shares issued | 36 000 000 | 36 000 000 |
| Mean weighted number of own shares | -3 599 981 | -3 599 926 |
| 32 400 019 | 32 400 074 | |
| Basic earnings per share (€ per share) | -1,03 | 0,02 |
| Earnings diluted per share (€ per share) | -1,03 | 0,02 |
| Number of own shares at the end of the year | 3 599 981 | 3 599 981 |
Since there are no potential voting rights, the basic earnings per share is equal to earnings diluted per share.
On 30 June 2020 and 31 December 2019, current and non-current loans were broken down as follows:
| Non-current | Jun/20 | Dec/19 |
|---|---|---|
| Bank loans | 58 930 122 | 16 763 367 |
| Commercial paper programmes | 79 200 000 | 58 000 000 |
| 138 130 122 | 74 763 367 | |
| Current | Jun/20 | Dec/19 |
| Bank overdrafts | 5 034 056 | 3 739 953 |
| Bank loans | 30 014 948 | 23 659 362 |
| Commercial paper programmes | 9 000 000 | 19 000 000 |
| 44 049 004 | 46 399 315 | |
| Total loans | 182 179 126 | 121 162 682 |
There are no significant differences between the balance sheet amounts and fair value of current and non-current loans.
Long-term loans contracted under the acquisition of Eat Out Group include clauses with the following financial covenants:
| Financial Covenants | SPAIN (EOG Consolidated) (Consolidated) |
PORTUGAL |
|---|---|---|
| Debt/EBITDA | 2,5x to 1,5x from 2017 to 2021 with reductions of 0.25 per year |
3,5x or 4,5x |
| EBITDA/Financial Cost | 5x | - |
| Equity/Assets | - | 30% |
Loans whose associated covenants are not being paid are presented as current liabilities. The Group is monitoring, together with the financial institutions, the evolution of compliance with the financing covenants, taking into account the assessment to be carried out on them at the end of the year 2020.
.
On 30 June 2020 and December 31, 2019, the company has commitments made to third parties, arising from lease contracts, namely real estate contracts, as follows:
| jun/20 | Dec/19 | |||||||
|---|---|---|---|---|---|---|---|---|
| Corrente | Não corrente | Total | Corrente | Não corrente | Total | |||
| Leases | TOTAL | 57 398 112 57 398 112 |
270 833 880 270 833 880 |
328 231 992 328 231 992 |
53 777 115 53 777 115 |
286 206 086 286 206 086 |
339 983 201 339 983 201 |
The group has contingent liabilities regarding bank and other guarantees and other contingencies related with its business operations (as licensing, advertising fees, food hygiene and safety and employees, and the rate of success of these processes is historically high in Ibersol). No significant liabilities are expected to arise from the said contingent liabilities.
On 30th June 2020 and 31st December 2019, responsibilities not recorded by the companies and included in the consolidation consist mainly of bank guarantees given on their behalf, as shown below:
| Jun/20 | Dec/19 | |
|---|---|---|
| Bank guarantees | 25 562 601 | 26 329 519 |
On June 30th, 2020 there are no significant commitments for contracted investments not included in these financial statements.
Changes during the six months period ended on 30 June 2020 and in the year 2019, under the heading of asset impairment losses were as follows:
| Jun/20 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Starting balance |
Currency conversion |
Cancellation and reclassif. |
Impairment assets disposals |
Impairment in the year |
Impairment reversion |
Closing balance |
||
| Tangible fixed assets | 10 981 144 | - | - | -530 721 | 1 134 575 | -39 345 | 11 545 654 | |
| Intangible assets | 3 722 929 | - | - | - | 18 788 | - | 3 741 717 | |
| Stocks | 74 981 | - | - | - | - | - | 74 981 | |
| Other current assets Other financial assets |
2 585 661 | -3 464 | -72 913 | - | 657 900 | - | 3 167 184 | |
| (current and non-current) | 707 366 | - | - | - | 130 927 | - | 838 293 | |
| 18 072 081 | -3 464 | -72 913 | 530 721 - | 1 942 190 | 39 345 - | 19 367 829 |
| Dec/19 | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Starting balance |
Currency conversion |
Cancellation and reclassif. |
Impairment assets disposals |
Impairment in the year |
Impairment reversion |
Closing balance |
|||
| Tangible fixed assets | 11 632 624 | - | - | -206 746 | 492 746 | -937 480 | 10 981 144 | ||
| Intangible assets | 3 722 929 | - | - | - | - | - | 3 722 929 | ||
| Stocks | 74 981 | - | - | - | - | - | 74 981 | ||
| Other current assets Other financial assets |
2 931 120 | -10 923 | -931 803 | - | 1 002 267 | -405 000 | 2 585 661 | ||
| (current and non-current) | 940 762 | - | - | - | - | -233 396 | 707 366 | ||
| 19 302 416 | -10 923 | -931 803 | -206 746 | 1 495 013 | -1 575 876 | 18 072 081 |
The group's activities are exposed to a number of financial risk factors: market risk (including currency exchange risk, fair value risk associated to the interest rate and price risk), credit risk, liquidity risk and cash flow risks associated to the interest rate. The group maintains a risk management program that focuses its analysis on financial markets to minimise the potential adverse effects of those risks on the group's financial performance.
Financial risk management is headed by the Financial Department based on the 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.
With regard to exchange rate risk, the Group follows a natural hedge policy using financing in local currency. Since the Group is mainly present in the Iberian market, bank loans are mainly denominated in euros and the volume of purchases outside the Euro zone are of irrelevant proportions.
The main source of the Group's exposure arises from the investment outside the euro area of operation that develops in Angola, although it is still small is growing and consequently to gain weight in the group activity. The reduction of oil prices is to lead to a shortage of foreign currency in Angola by the devaluation of the kwanza is a risk to consider. Financing concerning Angolan subsidiaries are denominated in the local currency, the same in which the income is generated. In view of the current limitations on payments abroad, the group adopted a policy of monthly monitoring of credit balances in foreign currency and its full coverage with the acquisition of Treasury Bonds of the Republic of Angola, indexed to the USD.
Currency exchange rate used for conversion of the transactions and balances denominated in Kwanzas, were respectively:
| Jun/20 | |||
|---|---|---|---|
| Euro exchange rates | (x | Rate on June, 30 | Average interest 1st |
| foreign currency per 1 Euro) | 2020 | Semester 2020 | |
| Kwanza de Angola (AOA) | 641,849 | 600,601 | |
| Dec/19 | |||
| Euro exchange rates | (x | Rate on December, | Average interest rate |
| foreign currency per 1 Euro) | 31 2019 | year 2019 | |
| Kwanza de Angola (AOA) | 536,193 | 408,497 | |
ii) Price risk
The group is not greatly exposed to the merchandise price risk.
With the exception of the Angolan State Treasury Bonds (TB's), the group has no interest-bearing assets with significant interest. Therefore, the profit and cash flows from the investment activity are substantially independent of changes in the market interest rate. As regards the Angolan State Treasury Bonds, interest is fixed, so there is also no risk.
The Group's main interest rate risk arises from liabilities, namely long-term loans. Loans issued at variable rates expose the Group to cash flow risk associated with interest rates. Loans issued at fixed rates expose the Group to the fair value risk associated with the interest rate. With the current level of interest rates, the policy of the group is, in financing of greater maturity, to proceed with the fixing of interest rates of around 50% of the amount owed.
Interest-bearing debt bears interest at a variable rate, having been part of an interest rate setting through an interest rate swap derivative. The interest rate swap contracts to cover the interest rate risk of part of the loans (commercial paper) of 16 million euros are based on interest maturities and repayment plans identical to the loan conditions. In 2019, 20 million euros of fixed-rate debt were contracted.
Based on simulations carried out on June 30, 2020, an increase of another 100 basis points in the interest rate, keeping everything else constant, would have a negative impact on the net profit for the period of 315 thousand euros (513 thousand euros in December 2019).
The Group's main activity is carried out with sales paid in cash, debit or credit card (meal cards, etc.) or other electronic payment, so the Group has no relevant credit risk concentrations. In relation to customers, the risk is limited to the Catering business and sales of goods and services to franchisees, which represent 6.4% of the consolidated turnover. The Group has policies that ensure that credit sales are made to customers with an appropriate credit history. The Group has policies that limit the amount of credit that customers have access to, with no information on the rating assigned to these entities.
The Group's cash and cash equivalents essentially include deposits arising from cash generated by operations and respective deposits in current accounts. Excluding these amounts, the value of financial investments is reduced on June 30, 2020, with the exception of the aforementioned TB's from the Republic of Angola in the amount of 13.9 million euros, subject to country risk.
Deposits and other financial investments are spread over several credit institutions, therefore, there is no concentration of these financial assets.
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 30 June 2020, current liabilities amounted to 170 million euros, compared to 115 million euros in current assets. This disequilibrium is, in part, a financial characteristic of this business and to which it adds a large component of leases, in other part it is due to some Commercial Paper programs, with termination clauses, in which reimbursement on the termination date is considered regardless of the deadlines for which they are hired and still circumstantially, the option for issuing under contracts of lesser maturity to the detriment of other programs of greater maturity that remain unused and consequently with amounts available for coverage. During the year 2020, the issue of Commercial Paper is considered to be considered as short-term debt (9,000,000 euros). Loans in the form of commercial paper issues are classified as non-current liabilities when they are guaranteed to be placed for a period of more than one year and it is the intention of the Group's Board of Directors to use this funding source for a period of more than one year. . With the restructuring of the financing due in 2020 and the financing contracted in the second quarter, the Group will have sufficient available means to settle the total current liabilities.
As of June 30, 2020, surplus availability and other investments amounted to 60 million euros, corresponding to 31% of interest-bearing liabilities. On the other hand, it has contracted and unused lines that amount to 34 million euros.
After June 30, 2020, the payment of € 15M financing has already been renegotiated, moving from short to medium to long term.
The following table shows the Group financial liabilities (relevant items), considering contractual cash-flows:
| to June 2021 | from June 2021 to 2039 | ||
|---|---|---|---|
| Bank loans and overdrafts | 44 049 004 | 138 130 122 | |
| Liability for leases | 57 398 112 | 270 833 880 | |
| Other non-current liabilities | - | 6 026 | |
| Accounts payable to suppliers and | |||
| accrued costs | 44 174 563 | - | |
| Other current liabilities | 5 476 881 | - | |
| Total | 151 098 560 | 408 970 028 |
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 within a 35%-70% interval.
The financial gearing ratio without the application of IFRS16, on June 30, 2020 and December 31, 2019, was 38% and 26%, respectively, as shown in the table below:
| jun/20 | 30/06/2020 (n/a IFRS16) |
31/12/2019 (n/a IFRS16) |
Dec/19 | ||
|---|---|---|---|---|---|
| Liability for leases | 328 231 992 | - | - | 339 983 201 | |
| Bank loans | 182 179 126 | 192 768 388 | 132 095 130 | 121 162 682 | |
| Other financial assets | -14 140 828 | -14 140 828 | -15 626 772 | -15 626 772 | |
| Cash and bank deposits | -60 829 369 | -60 829 369 | -38 424 757 | -38 424 757 | |
| Net indebtedness | 435 440 921 | 117 798 191 | 78 043 601 | 407 094 354 | |
| Equity | 179 588 906 | 190 143 656 | 223 729 770 | 214 228 476 | |
| Total capital | 615 029 827 | 307 941 847 | 301 773 371 | 621 322 830 | |
| Gearing ratio | 71% | 38% | 26% | 66% |
In restaurants where it operates with international brands, the group enters into long-term franchise agreements: 20 years in the case of Burger King and 10 years in the case of Pizza Hut and KFC, which are renewable for another 10 years at the franchise's option, provided certain obligations have been fulfilled.
It has become practical for these contracts to be renewed. However, nothing obliges the franchisees to do so, so the risk of non-renewal may be verified.
In these contracts it is normal to contract the payment of an "Initial Fee" at the beginning of each contract and a "Renewall Fee" at the end of the initial period, in addition to a royalty and marketing operations fee on the sales amount.
Periodically, development contracts are negotiated which guarantee the right to open new restaurants.
At the moment a contract has been signed for the implementation of 80 KFC restaurants in the period between May 2017 and May 2022.
The fair value of financial instruments commercialised in active markets (such as publicly negotiated derivatives and securities for negotiation) is determined based on the listed market prices on the consolidated statement of financial position date. The market price used for the group's financial assets is the price received by the shareholders in the current market. The market price for financial liabilities is the price to be paid in the current market.
The nominal value of accounts receivable (minus impairment adjustments) and accounts payable is assumed to be as approximate to its fair value. The fair value of financial liabilities is estimated by updating future cash flows contracted at the current market interest rate that is available for similar financial instruments.
Other current assets and liabilities on 30th June 2020 and 31st December 2019 are broken down as follows:
| Jun/20 | Dec/19 | |
|---|---|---|
| Clients | 7 802 891 | 9 398 831 |
| State and other public entities | 5 792 304 | 6 264 376 |
| Other debtors | 11 475 595 | 8 659 243 |
| Advances to suplliers | 149 863 | 226 991 |
| Advances to fixed suppliers | 522 675 | 539 636 |
| Accruals and income | 2 673 703 | 7 600 004 |
| Deferred costs | 1 728 688 | 1 577 647 |
| Other current assets | 30 145 719 | 34 266 728 |
| Accumulated impairment losses | 3 167 184 | 2 585 661 |
| 26 978 535 | 31 681 067 | |
| Other current liabilities | ||
| Jun/20 | Dec/19 | |
| Other creditors | 5 476 881 | 4 576 409 |
| State and other public entities | 6 484 737 | 9 143 072 |
| Deferred income | 665 401 | 846 539 |
| 12 627 019 | 14 566 020 |
16.2 Other non-current assets and liabilities
The breakdown of other non-current assets as at 30 June 2020 and 31 December 2019 is presented as follows:
| Jun/20 | Dec/19 | ||
|---|---|---|---|
| Other non-current assets (1) | 7 777 250 | 8 164 336 | |
| Credits granted to third parties | 344 013 | 464 334 | |
| Impairment balances | -344 013 | -390 559 | |
| 7 777 250 | 8 238 111 |
(1) balance of other non-current debtors is mainly comprised of deposits and securities in Spain resulting from lease agreements. Trade accounts receivable from other debtors are initially recognized at fair value and, in the case of medium and long-term debt, are subsequently measured at amortized cost using the effective interest method, less impairment.
Impairment refers to a balance receivable from a Vidisco franchise of 344.013 euros (390.559 euros in 2019).
Net financing cost on 30th June 2020 and 2019 are broken down as follows:
| 2020 | 2019 | |
|---|---|---|
| Interest on rentals liabilities (IFRS16) | 8 462 662 | 8 815 970 |
| Interest paid | 1 619 855 | 2 100 294 |
| Interest earned | -582 803 | -698 590 |
| Currency exchange differences | 113 781 | - |
| Other financial costs and income | 645 220 | 648 544 |
| 10 258 715 | 10 866 218 |
The detail of other financial expenses and losses / (income and gains) is presented as follows:
| 2020 | 2019 | |
|---|---|---|
| Financial instruments - cash flow hedge | -35 754 | 20 |
| Commercial paper programmes charges | 221 757 | 271 497 |
| Discounted value | - | 326 |
| TB's Impairment (IFRS9) | 130 927 | -71 128 |
| Other commissions | 46 600 | 79 454 |
| Other financial cost and gains | 281 690 | 368 375 |
| 645 220 | 648 544 |
Income taxes recognized as of June 30, 2020 and 2019 are detailed as follows:
| Jun/20 | Jun/19 | |
|---|---|---|
| Current taxes | 400 534 | 456 835 |
| Insufficiency (excess) of income tax | 12 000 | 300 811 |
| Deferred taxes | -9 194 007 | -2 254 739 |
| -8 781 473 | -1 497 093 |
The effective tax rate on profits was 21% on June 30, 2020 and 10% in the same period of 2019, as follows:
| jun/20 | Jun/19 (n/a IFRS16) |
jun/19 (w/ IFRS 16) |
||
|---|---|---|---|---|
| Profit before tax | -42 143 561 | 8 705 478 | -929 111 | |
| Income tax expense | -8 781 473 | 913 871 | -1 497 093 | |
| Effective tax rate | 21% | 10% | n/a |
On June 2019 the estimated effective tax rate in the period was lower than the nominal rate, mainly due to the tax benefits obtained under the terms of the Investment Tax Code (CFI).
The amount of financial assets refers to the acquisition of Angola treasury bonds, resettable in accordance with the variation of the National Bank of Angola (BNA) exchange rate for the purchase of United States dollars, with rates interest coupon of default by maturity, as follows:
| Jun/20 | |||||||
|---|---|---|---|---|---|---|---|
| Non | Non | ||||||
| Current | current | Total | Current | current | Total | ||
| Treasury bonds | 13 933 451 | 1 045 670 | 14 979 121 | 13 501 309 | 2 832 828 | 16 334 138 | |
| Sub-total | 13 933 451 | 1 045 670 | 14 979 121 | 13 501 309 | 2 832 828 | 16 334 138 | |
| Accumulated impairment losses | 702 935 | 135 358 | 838 293 | 584 688 | 122 678 | 707 366 | |
| TOTAL | 13 230 516 | 910 312 | 14 140 828 | 12 916 621 | 2 710 150 | 15 626 772 |
The Probability of Default and Loss Given Default indices are in line with the publication of Moody's and S & P.
On 30th June 2020 and 31st December 2019, cash and cash equivalents are broken as follows:
| Jun/20 | Dec/19 | |
|---|---|---|
| Cash | 764 778 | 1 065 534 |
| Bank deposits | 60 064 091 | 37 358 723 |
| Treasury applications | 500 | 500 |
| Cash and bank deposits in the balance sheet | 60 829 369 | 38 424 757 |
| Bank overdrafts | -5 034 056 | -3 739 953 |
| Cash and cash equivalents in the cash flow statement | 55 795 313 | 34 684 804 |
On 30th June 2020 and 31st December 2019, accounts payable to suppliers and accrued costs were broken down as follows:
| Jun/20 | Dec/19 | |
|---|---|---|
| Suppliers c/ a | 25 643 992 | 32 908 102 |
| Suppliers - invoices pending approval | 129 281 | 5 548 999 |
| Suppliers of fixed assets c/ a | 6 141 125 | 19 231 301 |
| Total accounts payable to suppliers | 31 914 398 | 57 688 402 |
| Jun/20 | Dec/19 | |
| Accrued costs - Payable insurance | 173 425 | 109 426 |
| Accrued costs - Payable remunerations | 8 708 369 | 8 201 758 |
| Accrued costs - Performance bonus | 2 659 766 | 1 910 792 |
| Accrued costs - Rent and lease (1) | 831 272 | 1 842 319 |
| Accrued costs - External services | 9 045 190 | 6 219 141 |
| Accrued costs - Other | 2 210 278 | 1 844 770 |
| Total acrrued costs | 23 628 300 | 20 128 206 |
| Total accounts payable to suppl.and accrued costs | 55 542 698 | 77 816 608 |
(1) With the adoption of IFRS 16, accrued costs- rents and lease include only the amount related to variable rents and additions to contracts that are not relevant for the adoption of this standard.
Balances and transactions with related parties in the six months period ended in June 2020 and in the year 2019 can be presented as follows:
| Parent entitie | Jointly controlled entitie | Associated entitie | |||||
|---|---|---|---|---|---|---|---|
| Semester 2020 |
Year 2019 | Semester 2020 |
Year 2019 | Semester 2020 |
Year 2019 | ||
| Supplies and services |
241 185 | 1 000 000 | 1 747 402 | 3 767 298 | - | - | |
| Rental lease | - | - | - | - | - | - | |
| Accounts Payable | - | - | 1 096 319 | 1 069 114 | - | - | |
| Other current assets |
25 000 | 25 000 | - | - | - | - | |
| Other non-current assets |
- | - | - | - | 300 000 | 300 000 |
The parent company of Ibersol SGPS S.A. is ATPS - SGPS, SA, holder of 19.767.058 shares. The shareholder company provides administration and management services for the group, under a service provision agreement with the subsidiary Ibersol, Restauração, SA. company directors, Dr. António Carlos Vaz Pinto de Sousa and Dr. António Alberto Guerra Leal Teixeira, exercise their positions without the same company having to incur any additional charges. The company does not pay any remuneration directly to any of its directors.
Dr. António Carlos Vaz Pinto de Sousa and Dr. António Alberto Guerra Leal Teixeira each hold 2.520 shares of Ibersol SGPS, SA The voting rights attributable to ATPS are also attributable to António Carlos Vaz Pinto de Sousa and António Alberto Guerra Leal Teixeira under the terms of paragraph b) of no. 1 of article 20 and no. 1 of article 21, both of the Portuguese Market Code, by holding the domain of ATPS, in which they participate indirectly in equal parts by their companies, respectively, the companies CALUM - SERVIÇOS E GESTÃO, SA with NIPC 513799486 and DUNBAR - SERVIÇOS E GESTÃO, SA with NIPC 513799257, which, jointly, hold the majority of the share capital of ATPS.
Transactions with related parties were carried out under normal market conditions, thus corresponding to the values that would be charged between unrelated companies..
The semester of 2020, contrary to what the global outlook for this year was, is marked by the pandemic outbreak of Covid-19 that spread worldwide, putting a brake on global economic activity, with profound impacts on consumer behaviors and habits.
The World Health Organization on 11 March declared a pandemic associated with the spread of Covid-19, and a state of emergency was declared in all geographical locations in which the Group operates, which determined measures to contain the population and to close the generality of commerce and restaurants in order to block transmission chains.
This situation forced the restaurants to close, leaving only those that had the possibility of continuing to operate through take-away and delivery, even though they were operating below their normal potential.
At the end of March, the Ibersol Group closed about 73% of its restaurants, having gradually reopened restaurants during the 2nd quarter, initially to provide delivery, take-away and drive-thru services, culminating in the beginning of the reopening. of restaurants located in shopping centers in June.
It is worth noting the good performance in restaurants with Drive services, which overcame the closing of the rooms and the growth in the Delivery segment, which contributed to minimize the impacts and limitations of other more penalized segments.
In restaurants located in concessions, namely airports, specific openings were carried out, in conjunction with the concessionaires, in order to have the offer compatible with passenger traffic as restrictions on air spaces were lifted.
The Ibersol Group, following the indications of the World Health Organization and General Health Directorates, activated the contingency plans that allowed the priority to guarantee the safety of all customers and employees and ensuring the protection of the entire supply chain.
In order to reconcile the abrupt reduction in activity and the protection of jobs, the Group companies adhered to ERTE (Expediente de Regulación Temporal de Empleo) in Spain and the simplified and normal Lay-off in Portugal, covering approximately 75% of the total group employees in April.
In Portugal, in August, the group joined the Extraordinary Incentive to Standardization of Business Activity, while in Spain, it remained with around 35% of ERTE employees.
At the same time, initiatives were taken to reduce the cost of renegotiating contracts, including the financial rebalancing of lease contracts and payment terms. During the first semester, some negotiations have already been concluded, resulting in a positive impact of around 2.5 million euros, resulting from rental concessions already approved on 30 June 2020.
At the end of the semester, negotiations were still underway with shopping centers due to the impacts of the recent legislation as well as with the concessions in Portugal and Spain.
At the date of publication of this report, there has been an increase in the spread of the Covid-19 outbreak, so there is still uncertainty about the evolution of the epidemiological situation and the measures to be implemented in different countries in the coming months. However, it is estimated that a second wave will not have such limiting effects on mobility as to compromise the continuity of the group's operations. However, at this stage it is not possible to quantify the magnitude of the impacts.
In the context of the pandemic, the Group carried out the following additional analyzes, the effects of which were duly recognized in the half-yearly consolidated financial statements:
Due to the great uncertainty regarding the evolution of the pandemic and its real effects on the national and international economy, as well as on the Group's future cash flows, we continue to monitor and update the business plans for 2020 and years following;
The Group analyzed whether there were additional signs of impairment resulting from the impacts of COVID-19 on the results of the various businesses of the Group, according to current forecasts, which could indicate the existence of impairment of goodwill and other non-current assets, namely assets tangible and intangible assets, with no additional impairments to be recognized, in addition to those referred to in notes 8 and 9;
Revised the existence of onerous contracts due to the current situation, having not identified any contracts that should be considered as onerous contracts;
It is monitoring, together with the financial institutions, the evolution of compliance with the financing covenants, taking into account the evaluation to be carried out on them at the end of the financial year 2020;
In order to strengthen its financial position and manage liquidity risk, in the second quarter the Group concluded the negotiation processes for additional credit lines with the contracting of approximately 45 million euros. In July, the refinancing of 15 million euros was completed, witch will change from short to medium to long term.
In addition, as mentioned above, on June 30, 2020, the Group has surplus availability and other investments amounting to 60 million euros, which correspond to 31% of interest-bearing liabilities. In addition, it has contracted and unused lines that amount to 34 million euros.
After June 30, 2020 and to the present date, no relevant subsequent event has occurred that could have a material impact on the interim consolidated condensed financial statements, which has not been disclosed in the notes to the financial statements.
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