Management Reports • Aug 24, 2017
Management Reports
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1ST SEMESTER 2017
| 07 | Governing Bodies |
|---|---|
| 09 | Management Report |
| 21 | Annex to the Management Report |
| 23 | Holders of Qualifed Shareholdings |
| 24 | Consolidated Financial Statements |
| 29 | Notes to the Accounts |
INDEX
Chairman Pedro Canastra de Azevedo Maia
Deputy Chairman Tiago Antunes da Cunha Ferreira de Lemos
Secretary Marta Horta e Costa Leitão Pinto Barbosa
Chairman Rui José da Cunha
Pansy Catilina Chiu King Ho Jorge Armindo de Carvalho Teixeira Calvin Ka Wing Chann
Chairman Stanley Hung Sun Ho
Deputy Chairmen Mário Alberto Neves Assis Ferreira Patrick Wing Ming Huen
Pansy Catilina Chiu King Ho Ambrose Shu Fai So Man Hin Choi António José de Melo Vieira Coelho Vasco Esteves Fraga Jorge Armindo de Carvalho Teixeira Calvin Ka Wing Chann Miguel António Dias Urbano de Magalhães Queiroz
Chairman Pansy Catilina Chiu King Ho
Deputy Chairmen Jorge Armindo de Carvalho Teixeira Vasco Esteves Fraga Calvin Ka Wing Chann
Chairman Manuel Maria Reis Boto
Deputy Chairmen Vitor Pratas Sevilhano Ribeiro Paulo Ferreira Alves
Alternate Lisete Sofa Pinto Cardoso
Secretary Carlos Alberto Francisco Farinha
Alternate Artur Alexandre Conde de Magalhães Mateus
Deloitte & Associados, S.R.O.C., S.A. - represented by Pedro Miguel Argente de Freitas e Matos Gomes
Estoril-Sol, S.A. was incorporated on 25 June 1958 and its company object is "the operation of the gambling concession, on an exclusive basis, in the Estoril permanent area, including other related trade and industries".
On 18 March 2002, ESTORIL-SOL, S.A. modifed its legal status to "Holding Company, S.G.P.S.", Public Corporation, thereby no longer directly conducting any business activities, and such business is now to be conducted by various associated undertakings which have been incorporated for this purpose.
Te Company held indirectly through subsidiaries interests in the tourism sector, in particular, in gaming activities at casinos. Te Company owns the Game Concessions of Estoril (Casino do Estoril and Casino Lisboa) and Póvoa de Varzim. Since July 2016 the Company also began exploring the online gambling activity through one of its subsidiaries.
During the frst semester of the year we monitor regularly and in detail the current management of the subsidiaries, giving particular attention and support to streamline processes and control costs.
At 30th June 2017, the share capital of ESTORIL-SOL, S.G.P.S., S.A. was 59.628.420 Euros, represented by 11.993.684 shares with a nominal unit value of 5 (fve) Euros, of which 6.116.779 were registered shares and 5.876.905 bearer shares.
At the time this report was prepared, ESTORIL-SOL, S.G.P.S., S.A. held 62.565 treasury shares, with no trading taking place during the fnancial year.
During the frst semester of 2017, the Company, did not sold or acquired own shares.
Te Company's shares are listed on the Lisbon Stock Exchange since February 14, 1986 — î2.A.
In June 2017 the Company paid a dividend of € 0,335 per share related to the year 2016. Te price and trading volume of Estoril-Sol, S.G.P.S., S.A. securities, on the dates of reporting to the market during the year 2017 were according table î2.B.
As at June 30th, 2017 the Company had two reference shareholders, which control 90,46% of the share capital, as infographics î2.C.
On June 30th, 2017, ESTORIL-SOL, S.G.P.S., S.A. had the following stakes in the following subsidiaries:
ESTORIL-SOL (III) - TURISMO ANIMAÇÃO E JOGO, S.A. Incorporated on 26 July 2001, headquartered in Estoril, the social object of which is the operation of games of chance in areas where this is permitted by law and, in addition, may also operate in the tourism, hotel, restaurant and entertainment industries, as well as providing consultancy services in those areas of activity. Tis company operates the Estoril and Lisbon Casinos. Its share capital of EUR 34,000,000 is 100% held by ESTORIL-SOL, S.G.P.S., S.A..
With a Share Capital of EUR 500.000 is 50% held by ESTORIL-SOL (III) –TURISMO, ANIMAÇÃO E JOGO, S.A.. Te Company was founded in September 2015 in order to apply for an online gaming license. Te license was issue during July 2016 and the Company immediately started exploring the online gambling activity.
JAN/17 FEV/17 MAR/17 ABR/17 MAI/17 JUN/17 JUL/17 AGO/17 0 1 0,4 1,4 2,4 0,6 1,6 2,6 0,8 1,8 2,8 2 3 4 5 3,4 3,6 3,8 4,2 4,4 4,6 4,8 6 7 5,4 5,6 5,8 6,2 6,4 6,6 6,8 Disclose Annual Results 2016 Disclose Results 1st Quarter 2017 Dividends payment
î 2.B Date for disclosing Estoril-Sol, SGPS, S.A. information
î 2.C Company Shareholders
(Estoril-Sol Security - Price in Euros)
| DISCLOSURE | DATE | QTD | PRICE |
|---|---|---|---|
| 3,30 Open |
|||
| Annual results | 3,30 High |
||
| for 2016 | 28/04/17 | 42 | 3,30 Low |
| 1,35 Close |
|||
| 4,10 Open |
|||
| Dislose Results | 4,10 High |
||
| 1st Quarter 2017 | 29/05/17 | 19 | 4,10 Low |
| 4,10 Close |
|||
| 5,54 Open |
|||
| Dividends | 5,54 High |
||
| payment | 21/06/17 | 210 | 5,54 Low |
| 5,54 Close |
Within the online gaming activities, which is carried out through Estoril-Sol Digital, Online Gaming Products and Services, S.A., a subsidiary company of Estoril-Sol (III) – Turismo, Animação e Jogo, S.A., a company owned by the issuer (Estoril-Sol, S.G.P.S., S.A.), signed with Vision Gaming Holding Limited, a company based in Malta, an association agreement, through which it holds a minority interest, corresponding to 49.9998% of the share capital of Estoril-Sol Digital, keeping the Estoril-Sol (III) S.A. most of the capital and votes in that company (Estoril-Sol Digital, Online Gaming Products and Services, S.A.).
Headquartered in Póvoa de Varzim, has the social object, in particular, of operating the gambling concession of Póvoa de Varzim. Tis company operates the Póvoa de Varzim Casino. It has a share capital of EUR 33.650.000, 100% held by ESTORIL-SOL, S.G.P.S., S.A..
Investimentos Imobiliários, S.A. Its share capital of EUR 50,000 is fully paid up by ESTORIL-SOL, S.G.P.S., S.A.. Te Company is now idle, but owns a site located on maritime land in the parish of Ericeira.
With a share capital of EUR 2,429,146, is 100% held by ESTORIL-SOL, S.G.P.S., S.A.. It owns a plot of land in Monte Estoril, where the former Miramar Hotel stood.
With a share capital of EUR 7,232,570, it is 100% owned by ESTORIL-SOL, S.G.P.S., S.A..
Its social object is the construction, promotion, management and sale of tourist complexes and real estate.
ESTORIL-SOL, S.G.P.S., S.A., with the remaining 10% being held by the company itself.
ESTORIL SOL E MAR Investimentos Imobiliários, S.A. With a share capital of EUR 1.286.000, is fully paid up by ESTORIL-SOL, S.G.P.S., S.A..
Te growth cycle of gaming revenues remained during the frst semester of 2017. Te total gross game revenues of the Estoril Sol Group (territorial and online) amounted to 100,6 million Euros, with an overall growth of 10,8% (2,7% territorial game), to which contributed the online revenues nonexistent in the frst semester of 2016 (game revenues detailed by casino in the graphics î4.A and î4.B).
In the frst semester of 2017 the Group's Consolidated EBITDA increased by 36% and amounted to Euro 20 million Euros.
As at 30th June 2017 the Group reported positive consolidated net results of 9,7 million Euros — î4.C.
All the casinos in the Group improved their performances in the frst semester of 2017 compared to last year.
In the frst semester of 2017, Casino do Estoril and Casino da Póvoa still have net negative results. To be remarked the fact that all casinos, without exception, achieved a positive EBITDA (operational results).
Casino Online started its activity in July 2016, and for this same reason there were no comparable data compared to the previous year — î4.D.
Pursuing a very careful selection of the investments, the Group made investments (CAPEX) during the frst six months of 2017 in the total amount of approximately 4 million Euros.
Te increase in investment in the frst half of 2017 compared to previous years refers to the anticipation for the frst half of the year of investment for the renovation of gaming equipment — î4.E.
In a concerted efort to fnancial stability and less dependence on third parties, the Group has consistently reduced its bank debt, this reduction resulted in a signifcant decrease in fnancial costs incurred by the Group.
By the end of June 2017 the Group bank debt was 30 million Euros — î4.F.
î 4.B Game Revenues - 1st Semester 2016 and 2017
(Million Euros) î 4.C EBITDA/Consolidated Net Income
In Portugal, the gambling activity in land based casinos is developed by fve business groups that exploit, under a public concession, the twelve casinos existing in the national territory.
In March 2017 the Casino of Ponta Delgada in the Azores started its activity. To this date there's no information available related to game revenues due to the youth of this operation.
Te Estoril-Sol Group, through its subsidiaries, operates three of the four biggest casinos in Portugal, accounting for 64% of net income generated by the activity in Portugal.
Revenues from gambling in Portugal during the frst semester of 2017 amounted to approximately 146,4 million Euros, a growth of 2,9% compared last year frst semester.
In the same period the Group territorial game revenues achieved 93,6 million Euros, an increase of 3% — î5.A.
On the 28th June 2015 the online gambling regulation approved by decree-law 66/2015 entered into force.
Te issue of the frst license occurred one year later, in May 2016, it was a sports betting license. Te second license issued by the Turismo de Portugal took place in July 2016 and also for sports betting.
In July 2016 the frst online casino license (slot machines, roulette and blackjack) was issued. Tis license
î 4.F Bank Debt - June (Million Euros)
was granted to the Estoril-Sol Group on July 25th, 2016, and the Group started operations on the same day. Since then two more licenses have been issued, totaling to this date three online casino licenses allotted — î5.B.
During the frst half of 2017, online gambling in Portugal generated gross revenues (amount of bets afer deducting the premiums paid) in the overall amount of 56,6 million Euros. Te sports betting segment accounts for 55% of the market value and generated gross revenues of 31,3 million Euros.
Casino Games, including slot machines, roulette and blackjack, represent 30% of the market and generated gross revenues of 17 million Euros. Poker generated revenues of 8,3 million Euros corresponding to 15% of all online bets — î5.C.
The Estoril-Sol Group, on June 30, 2017, holds a license to operate casino online games, namely, slot machines, roulette and blackjack. To this date there are other operators that hold licenses to operate casino online games, but these licenses do not include
all the games analyzed in this segment (slot machines, roulette and blackjack). During the first half of 2017 Estoril-Sol recorded online gaming revenues of 7,3 million Euros, corresponding to 43% of total gross revenues generated in Portugal with casino online games — î5.D.
During the frst semester of 2017, the Group recorded combined gross game revenues, territorial and online, of 100,6 million
Euros, with an overall growth of 10,8% (3% territorial), which was contributed by the online gaming revenues, nonexistent in the frst semester of 2016. Net from gaming taxes, the Group's total game revenues amounted to 49,8 million Euros, an increase of 15,9% over the 43 million Euros achieved in the frst half of the previous year.
Te efective tax rate borne by the Group in the frst semester of 2017 was 50% compared to 53% in 2016, and this was ofset by the fact that online gaming revenues are taxed at a rate ranging from 15% to 30%
depending on the volume of the revenues achieved.
Te other operating revenues of Estoril-Sol, restaurant and entertainment, increased by 2,6% to 4,3 million Euros. Te Group's 4,8% increase in operating costs refects the Group's investment in streamlining and increasing the entertainment, leisure and restaurant ofer in the casinos, but mainly refects the strong investment in marketing and advertising carried out by the Group in the frst half of 2017 related with the online casino
operation. Tis strong commitment and investment during the frst semester of 2017 and second half of 2016 from the Group, proved to be essential to obtain the good results of this new operation, the online casino — î5.E.
Estoril-Sol Group improve its operating results in almost 36%, and reached for the frst half of 2017 a positive EBITDA of 20,1 million Euros. Casino Lisboa achieved a positive EBITDA of 11,6 million Euros, Estoril and Online an EBITDA of around 3,8 million Euros and the Casino da Póvoa
î 5.C Online games and betting - Gross revenues, 1st Semester 2017 î 5.D Casino games (online)
î 5.E Consolidated income statements
| Jun 2017 | Jun 2016 | Var. % | |
|---|---|---|---|
| Gaming Revenue | 100 688 406 | 90 900 804 | 10,8% |
| Special Gaming Tax | -50 821 114 | -47 870 160 | a) |
| Effective Tax Rate | 50% | 53% | |
| Game Revenue - Net | 49 867 293 | 43 030 643 | 15,9% |
| Other revenue (F&B/Entertainment) | 4 356 801 | 4 247 834 | 2,6% |
| Operating costs | -34 093 318 | -32 520 585 | 4,8% |
| EBITDA | 20 130 776 | 14 757 892 | 36,4% |
| Amortization and Depreciation | -9 495 975 | -10 581 339 | -10,3% |
| Finantial Costs | -776 296 | -1 614 052 | -52% |
| Income tax (IRC) | -58 614 | -7 000 | 737% |
| Consolidated Net Result | 9 799 890 | 2 555 502 | 283% |
| Equity holders of the Parent Company | 7 862 793 | 2 555 502 | |
| Non-controlling interests | 1 937 097 | - | |
| 9 799 890 | 2 555 502 |
a) Includes the amounts recorded in "Gaming Taxes" as "Special Gaming Tax (Current)" and "Annual Gaming Tax (Difference to minimum grant)"
| Casino Estoril |
Casino Lisboa |
Casino Póvoa |
Casino Online |
|
|---|---|---|---|---|
| Gaming Revenue | 30 578 252 | 41 390 919 | 21 364 240 | 7 354 995 |
| Game Taxes | -15 356 456 | -20 755 522 | -13 107 500 | -1 601 635 |
| Effective Tax Rate | 50% | 50% | 61% | 22% |
| Net Revenue | 15 221 797 | 20 635 397 | 8 256 740 | 5 753 360 |
| EBITDA | 3 764 779 | 11 652 554 | 1 602 675 | 3 887 483 |
| EBITDA Margin | 12% | 28% | 8% | 53% |
registered in the frst half of 2017 a positive EBITDA of 1,6 million Euros — î5.F.
In a concerted efort to fnancial stability and less dependence on third parties, the Group has been successively reducing its bank debt. Tis reduction resulted in a signifcant decrease in fnancial costs incurred by the Group Estoril-Sol, a decrease of 52% over the frst six months of 2017 compared to same period last year. Estoril-Sol supported almost 0,7 million Euros with loan interests during the frst half of 2017.
Te Consolidated Net Proft in the frst semester of 2017 was positive by 9,7 million Euros compared with earnings of 2,5 million Euros in the previous year. Of these 9,7 million Euros, 7,8 million Euros belong to the shareholders of Estoril-Sol, S.G.P.S., S.A, and the remainder held by minority and non-controlling interests.
• During the frst quarter of 2013, afer a unanimous vote taken at the headquarters of the Portuguese Association of Casinos as well as within the Board of Estoril-Sol, the operating companies from the Group Estoril-Sol, have fled lawsuits against the State in which they seek to be restored the fnancial balance of Gaming Concessions.
Such a claim is founded, among other reasons, because the State, through its actions and omissions has given rise to changes in circumstances that were the basis for the negotiation of the gaming concessions. Of them highlights the fact that it was assumed for tax basis a continuing and signifcant increase of gaming revenue
throughout the concession period. Despite not having checked this proposition due to the economic climate and as a result of the State attitude in relation to online gambling and illegal gambling, among others, it continued to require them to pay very high taxes, calculated on revenue that the Concessionaires did not obtain.
Tus, remained no alternative to the Concessionaires that was not to challenge with the competent Administrative and Fiscal Courts the settlements of tax to which they were presented, and for that purpose submit the necessary judicial guarantees. However by the time of approval of this report, and despite the fact that all tax settlements were contested by the Group, all taxes are without exception, or paid or its payment was legally postponed under Decree-Law 1/2015, and for this reason the Group Estoril-Sol does not have any overdue debt related with game taxes (note 16 and 18 to the consolidated accounts).
Between the 30th of June 2017 and the date of this report, no relevant facts occurred that could materially afect the fnancial position and the future results of Estoril-Sol, S.G.P.S., S.A. and the other Companies of the Group, in addition to the reported below:
• Te Board of Directors of Turismo de Portugal, IP, at a meeting held on 04th August 2017, decided under the Legal Framework for Games and Online Betting (RJO), approved by Decree-Law No. 66/2015 of 29 April, assign to Estoril-Sol Digital, Online Gaming Products and Services, S.A., a license for online
sports betting, which will operate under the internet domain www.estorilsolcasinos.pt. Tis license shall be valid for an initial period of three years from the date of issue, expiring on August 3rd, 2020, if not renewed, under the terms and conditions set out in RJO.
Within the terms of paragraph c) nº1 of article 246 of Portuguese Securities Code, we hereby inform you that to the best of our knowledge:
• Te information contained in the interim management report is a faithful statement of the evolution of the business, of the performance and of the position of Estoril-Sol, S.G.P.S., S.A., and the companies included within the consolidation perimeter, and contains a description of the main risks and uncertainties which they face;
• Te information contained in the consolidated fnancial statements, as well as their annexes, was produced in compliance with the applicable accounting standards and gives a true and fair view of the assets and liabilities, the fnancial situation and the results of Estoril-Sol, S.G.P.S., S.A. and the companies included in the consolidation perimeter.
Estoril, 26th July 2017
Chairman Stanley Hung Sun Ho
Vice-Chairmen Mário Alberto Neves Assis Ferreira Patrick Wing Ming Huen
Pansy Catilina Chiu King Ho Ambrose Shu Fai So Man Hin Choi António José de Melo Vieira Coelho Vasco Esteves Fraga Jorge Armindo de Carvalho Teixeira Calvin Ka Wing Chann Miguel António Dias Urbano de Magalhães Queiroz
Information regarding the securities issued by ESTORIL-SOL, S.G.P.S., S.A., and by companies with which the Company is in controlling or group relationship, which are owned by the members of the Corporate Ofces of the Company on 30th June 2017.
| No. shares 31 Dec 2016 |
Date | Value (€/share) |
No. shares purchased |
No. shares sold |
No. shares 30 Jun 2017 |
|
|---|---|---|---|---|---|---|
| Board of Directors | ||||||
| Stanley Hung Sun Ho | 135 662 | - | - | - | - | 135 662 |
| Mário Alberto Neves Assis Ferreira | 601 | - | - | - | - | 601 |
| Patrick Wing Ming Huen | 55 000 | - | - | - | - | 55 000 |
| Pansy Catilina Chiu King Ho | 0 | - | - | - | - | 0 |
| Ambrose Shu Fai So | 50 000 | - | - | - | - | 50 000 |
| Man Hin Choi | 527 | - | - | - | - | 527 |
| António José de Melo Vieira Coelho | 0 | - | - | - | - | 0 |
| Vasco Esteves Fraga | 608 | - | - | - | - | 608 |
| Jorge Armindo de Carvalho Teixeira | 0 | - | - | - | - | 0 |
| Calvin Ka Wing Chann | 1 000 | - | - | - | - | 1 000 |
| Miguel António Dias Urbano de Magalhães Queiroz | 0 | - | - | - | - | 0 |
| Advisory Board | ||||||
| Rui José da Cunha | 12 300 | - | - | - | - | 12 300 |
| Audit Board | ||||||
| Manuel Maria Reis Boto | 0 | - | - | - | - | 0 |
| Vitor Prata Sevilhano Ribeiro | 0 | - | - | - | - | 0 |
| Paulo Ferreira Alves | 0 | - | - | - | - | 0 |
| Lisete Sofa Pinto Cardoso | 0 | - | - | - | - | 0 |
| Statutory Auditor | ||||||
| Pedro Miguel Argente de Freitas e Matos Gomes | 0 | - | - | - | - | 0 |
On 30th June 2017, ESTORIL-SOL, S.G.P.S., S.A. held 62.565 treasury shares, and as FINANSOL - SOCIEDADE DE CONTROLO, S.G.P.S., S.A., on 30th June 2017, held 6.930.604 shares of ESTORIL-SOL, S.G.P.S., S.A., it was a direct holder of 57,79% of the share capital and 58,09% of the voting rights.
Te members of the Board of Directors and of the Advisory Board of the Companies which are controlled by or grouped under ESTORIL-SOL, held 255,698 shares of ESTORIL-SOL, S.G.P.S., S.A., corresponding to 2,1% of the share capital and voting rights.
Terefore, in overall terms, the direct and indirect stake of FINANSOL in the capital of ESTORIL-SOL is 57,79%, and 60,23% to the voting rights.
On 30th June 2017, ESTORIL-SOL, S.G.P.S., S.A. held 62.565 treasury shares, and, as AMORIM – ENTERTAINMENT E GAMING INTERNATIONAL, S.G.P.S., S.A. held 3.917.793 shares, this company was a direct holder of 32,67% of the share capital and 32,84% of the voting rights of ESTORIL-SOL, S.G.P.S., S.A..
Mr. José Américo Amorim Coelho, held 34,915 shares of ESTORIL-SOL, S.G.P.S., S.A., corresponding to 0,29% of the share capital and voting rights.
Terefore, in overall terms, the direct and indirect stake of AMORIM - ENTERTAINMENT E GAMING INTERNATIONAL, S.G.P.S., S.A. in the share capital of ESTORIL-SOL, S.G.P.S., S.A. was, on 30th June 2017, 32,67% and 33,13% of the voting rights.
(Amounts in Euros)
| Notes | Jun 2017 | Dec 2016 | |
|---|---|---|---|
| ASSETS | |||
| NON-CURRENT ASSETS | |||
| Tangible fxed assets: | |||
| Reversible to the State | 10 | 41 729 451 | 42 654 547 |
| Not reversible to the State | 10 | 54 958 768 | 55 839 165 |
| Tax deductions on investments | (14 253 292) | (15 399 000) | |
| 82 434 927 | 83 094 712 | ||
| Intangible assets: | 11 | 49 888 957 | 55 639 395 |
| Investment properties | 196 482 | 198 795 | |
| Other non current assets | 45 833 | 41 907 | |
| TOTAL NON-CURRENT ASSETS | 132 566 199 | 138 974 809 | |
| CURRENT ASSETS | |||
| Inventories | 6 793 871 | 6 775 646 | |
| Accounts receivable - trade | 377 613 | 327 017 | |
| Other accounts receivable | 1 904 452 | 1 500 547 | |
| Cash and cash equivalents | 12 | 19 236 546 | 13 573 389 |
| TOTAL CURRENT ASSETS | 28 312 481 | 22 176 599 | |
| TOTAL ASSETS | 160 878 680 | 161 151 407 | |
| EQUITY AND LIABILITIES | |||
| EQUITY | |||
| Capital | 13 | 59 968 420 | 59 968 420 |
| Treasury shares | 13 | (708 306) | (708 306) |
| Share issue premiuns | 13 | 960 009 | 960 009 |
| Legal reserves | 7 154 428 | 6 821 678 | |
| Other reserves and retained earnings | 5 217 044 | 2 987 819 | |
| Consolidated net proft | 7 862 793 | 6 554 939 | |
| Equity attributable to the holders of the Parent Company | 80 454 389 | 76 584 558 | |
| Equity attributable to non-controlling interests | 14 | 3 085 267 | 1 148 165 |
| TOTAL EQUITY | 83 539 656 | 77 732 723 | |
| LIABILITIES | |||
| Non-current liabilities: | |||
| Financial debt | 15 | 1 250 000 | 1 250 000 |
| Other accounts payable | 16 | 4 310 638 | 4 310 638 |
| Provisions | 17 | 8 290 535 | 8 851 972 |
| Total non-current liabilities | 13 851 173 | 14 412 610 | |
| Current liabilities: | |||
| Financial debt | 15 | 28 803 934 | 29 100 739 |
| Other accounts payable | 16 | 34 683 916 | 39 905 336 |
| Total current liabilities | 63 487 851 | 69 006 074 | |
| TOTAL LIABILITIES | 77 339 024 | 83 418 684 | |
| TOTAL EQUITY AND LIABILITIES | 160 878 680 | 161 151 407 |
The notes form an integral part of these fnancial statements
(Amounts in Euros)
| 1st Semester | 2nd Quarter | ||||
|---|---|---|---|---|---|
| Notes | 2017 | 2016 | 2017 | 2016 | |
| REVENUE | |||||
| Gaming revenues | 6 | 100 688 406 | 90 900 804 | 50 792 203 | 44 480 595 |
| Gaming taxes | 6 | (50 821 114) | (47 870 160) | (25 882 164) | (23 584 305) |
| 49 867 292 | 43 030 644 | 24 910 039 | 20 896 290 | ||
| Other operating revenue | 6 | 4 356 801 | 4 247 834 | 2 177 670 | 2 301 984 |
| 54 224 093 | 47 278 478 | 27 087 709 | 23 198 274 | ||
| OPERATING EXPENSES | |||||
| Cost of sales | (1 394 472) | (1 320 837) | (690 426) | (685 537) | |
| Supplies and external services | 7 | (15 568 540) | (14 141 100) | (7 581 017) | (7 057 561) |
| Wages and salaries | 8 | (15 876 411) | (15 484 555) | (8 025 391) | (7 700 284) |
| Depreciation and amortization | (9 938 400) | (10 581 339) | (4 958 592) | (5 220 347) | |
| Impairments - accounts receivable ( (increases) / reversals ) | 150 | 900 | 150 | 450 | |
| Provisons ((increases)/reversals) | 17 | 442 425 | (2 488) | 442 425 | (2 488) |
| Impairment of non-depreciable/amortizable investments | 2 757 | (6 733) | 2 802 | (3 389) | |
| Other operating expenses | (1 256 803) | (1 565 772) | (589 770) | (809 724) | |
| Total operating expenses | (43 589 293) | (43 101 924) | (21 399 817) | (21 478 879) | |
| Income before fnancial results and taxes | 10 634 800 | 4 176 554 | 5 687 892 | 1 719 395 | |
| FINANCIAL (LOSSES) AND GAINS | |||||
| Financial losses | 9 | (798 715) | (1 629 553) | (388 512) | (810 779) |
| Financial gains | 9 | 22 419 | 15 501 | 10 768 | 7 775 |
| (776 296) | (1 614 052) | (377 744) | (803 004) | ||
| Income before taxes | 9 858 504 | 2 562 502 | 5 310 147 | 916 391 | |
| Income taxes | (58 614) | (7 000) | (58 614) | - | |
| Consolidated net income | 5 | 9 799 890 | 2 555 502 | 5 251 533 | 916 391 |
| Attributable to: | |||||
| Equity holders of the parent company | 7 862 793 | 2 555 502 | 4 336 106 | 916 391 | |
| Non-controlling interests | 14 | 1 937 097 | - | 915 428 | - |
| 9 799 890 | 2 555 502 | 5 251 533 | 916 391 | ||
| Net result per share | 19 | 0,66 | 0,21 | 0,36 | 0,08 |
The notes form an integral part of these fnancial statements.
(Amounts in Euros)
| Capital Share |
Treasury Shares | Issue Premiums | Reserve Legal |
Other reserves and retained earnings |
Consolidated of the year net result |
Total | Non-controlling (Note 14) interests |
equity Total |
|
|---|---|---|---|---|---|---|---|---|---|
| Balance at 1st Jan 2016 | 59 968 420 | (708 306) | 7 820 769 | 6 614 782 | (7 271 176) | 4 196 063 | 70 620 552 | - | 70 620 552 |
| Application of the consolidated net proft of the year ended 31st Dec 2015 |
- | - | - | 206 896 | 1 467 887 | (4 196 063) | (2 521 280) | - | (2 521 280) |
| Consolidated Other Comprehensive Income (OCI) of the period ended 30th Jun 2016 |
- | - | - | - | - | 2 555 502 | 2 555 502 | - | 2 555 502 |
| Balance at 30th Jun 2016 | 59 968 420 | (708 306) | 7 820 769 | 6 821 678 | (5 803 291) | 2 555 502 | 70 654 775 | - | 70 654 775 |
| Balance at 1st Jan 2017 | 59 968 420 | (708 306) | 960 009 | 6 821 678 | 2 987 819 | 6 554 939 | 76 584 558 | 1 148 165 | 77 732 723 |
| Application of the consolidated net proft of the year ended 31st Dec 2016 |
- | - | - | 332 750 | 2 229 226 (6 554 939) | (3 992 963) | - | (3 992 963) | |
| Consolidated Other Comprehensive Income (OCI) of the period ended 30th Jun 2017 |
- | - | - | - | - | 7 862 793 | 7 862 793 | 1 937 097 | 9 799 890 |
| Balance at 30th Jun 2017 | 59 968 420 | (708 306) | 960 009 | 7 154 428 | 5 217 044 | 7 862 793 | 80 454 389 | 3 085 267 | 83 539 656 |
The notes form an integral part of these fnancial statements.
(Amounts in Euros)
| 1st Semester | 2nd Quarter | |||||
|---|---|---|---|---|---|---|
| Notes | 2017 | 2016 | 2017 | 2016 | ||
| OPERATING ACTIVITIES | ||||||
| Receipts from clients | 103 513 414 | 93 265 018 | 52 340 634 | 45 850 820 | ||
| Payments to suppliers | (18 544 454) | (17 154 577) | (8 427 494) | (8 674 528) | ||
| Payments to staff | (14 012 022) | (13 821 813) | (7 136 639) | (6 833 917) | ||
| Cash fow generated by operations | 70 956 938 | 62 288 629 | 36 776 501 | 30 342 375 | ||
| Payment of income tax (IRC) | (117 858) | (101 933) | (114 955) | (90 233) | ||
| Payment of Special Gaming Tax | (53 923 570) | (50 601 834) | (20 112 864) | (19 046 988) | ||
| Other payments relating to the operating activity | (2 448 613) | (3 150 541) | (687 214) | (1 408 856) | ||
| Cash fow from operating activities (1) | 14 466 896 | 8 434 321 | 15 861 468 | 9 796 298 | ||
| INVESTING ACTIVITIES | ||||||
| Receipts from: | ||||||
| Interest and similar income | 21 979 | 15 501 | 10 540 | 7 775 | ||
| 21 979 | 15 501 | 10 540 | 7 775 | |||
| Payments in respect of: | ||||||
| Tangible fxed assets | (3 690 771) | (722 512) | (2 377 855) | (372 655) | ||
| Intangible assets | - | (24 000) | - | (24 000) | ||
| (3 690 771) | (746 512) | (2 377 855) | (396 655) | |||
| Cash fow from investment activities (2) | (3 668 792) | (731 011) | (2 367 314) | (388 880) | ||
| FINANCING ACTIVITIES | ||||||
| Receipts from: | ||||||
| Bank loans obtained | 181 802 592 | 193 031 877 | 89 984 808 | 99 218 270 | ||
| 181 802 592 | 193 031 877 | 89 984 808 | 99 218 270 | |||
| Payments in respect of: | ||||||
| Bank loans repaid | (182 190 976) | (199 007 854) | (95 355 902) | (105 448 089) | ||
| Interest and similar costs | (757 751) | (1 937 745) | (316 137) | (862 609) | ||
| Dividends | (3 988 812) | (2 512 356) | (3 988 812) | (2 512 356) | ||
| (186 937 540) | (203 457 956) | (99 660 851) | (108 823 054) | |||
| Cash fow from fnancing activities (3) | (5 134 948) | (10 426 079) | (9 676 043) | (9 604 784) | ||
| Variation in cash and cash equivalents (4)=(1)+(2)+(3) | 5 663 157 | (2 722 769) | 3 818 110 | (197 366) | ||
| Cash and cash equivalents at the start of the period | 12 | 13 573 389 | 10 839 350 | 15 418 436 | 8 313 947 | |
| Cash and cash equivalents at the end of the period | 12 | 19 236 546 | 8 116 580 | 19 236 546 | 8 116 581 |
The notes form an integral part of these fnancial statements.
Te Estoril Sol Group, through its subsidiary and associated companies (Note 4), conducts business in gaming, the restaurant sector, entertainment and also real estate.
Estoril-Sol, S.G.P.S, S.A. is the Holding Company of the Estoril Sol Group ("Group") and the shares representing its share capital are admitted for trading on a regulated market - the Euronext – as such, on 1 January 2005 it was obliged to prepare Consolidated Accounts pursuant to article 3 of Regulation (EC) no. 1606/2002, of the European Parliament and of the Council, of 19 July, following the Portuguese government's publication of Decree Law no. 35/2005, article 11.
Te attached fnancial statements were prepared on the assumption of the continuity of operations, based on the books and accounting records of the companies included in the consolidation (Note 4), adjusted to comply with the provisions of the IAS 34 as adopted in the European Union and should be read together with the consolidated fnancial statements for the year ended 31st December 2016. Te interim fnancial information now disclose was not subjected to an external audit or limited review.
During the period ended on 30th June 2017, there were no changes in accounting policies in relation to those used in the preparation and presentation of the fnancial statements of the year ended on 31st December 2016, nor were any material errors recognised relating to previous periods.
Te companies included in the consolidation, their registered ofces, the method of consolidation adopted and the proportion of the capital efectively held on 30th June 2017 and 31st March 2016 are the following:
| Method of | Effective percentage of the capital held | ||||
|---|---|---|---|---|---|
| Name | Head Offce | consolidation | Jun 2017 | Dec 2016 | |
| Estoril-Sol, S.G.P.S., S.A. | Estoril | Integral | Mãe | Mãe | |
| Estoril-Sol (III) - Turismo, Animação e Jogo, S.A. | Estoril | Integral | 100 | 100 | |
| Varzim Sol - Turismo, Jogo e Animação, S.A. | Póvoa de Varzim | Integral | 100 | 100 | |
| Estoril-Sol V - Investimentos Imobiliários, S.A. | Estoril | Integral | 100 | 100 | |
| DTH - Desenvolvimento Turistico e Hoteleiro, S.A. | Estoril | Integral | 100 | 100 | |
| Estoril-Sol Imobiliária, S.A. | Estoril | Integral | 100 | 100 | |
| Estoril-Sol - Investimentos Hoteleiros, S.A. | Estoril | Integral | 100 | 100 | |
| Estoril-Sol e Mar - Investimentos Imobiliários, S.A. | Estoril | Integral | 100 | 100 | |
| Estoril-Sol Digital, Online Gaming Products and Services, S.A. | Estoril | Integral | 50 | 50 |
Within the online gaming activities, which is carried out through Estoril-Sol Digital, Online Gaming Products and Services, S.A, a subsidiary company of Estoril-Sol (III) – Turismo, Animação e Jogo, S.A., a company owned by the issuer (Estoril-Sol, S.G.P.S., S.A.), signed with Vision Gaming Holding Limited, a company based in Malta, an association agreement, through which it holds a minority interest, corresponding to 49.9998% of the share capital of Estoril-Sol Digital, keeping the Estoril-Sol (III) S.A. most of the capital and votes in that company (Estoril-Sol Digital, Online Gaming Products and Services, S.A.).
Estoril-Sol, S.G.P.S., S.A. indirectly held on the 1st January 2016, 33.33% of the company Parques do Tamariz, S.A., through Estoril-Sol Imobiliária, S.A..
Tese holdings are presented at the value resulting from the equity pick-up method. Using this method, the fnancial statements include the part attributable to the Estoril Sol Group of the results recognised from the date on which the signifcant infuence starts up to the date on which it efectively ends. Associate companies are entities in which the Estoril Sol Group has between 20% and 50% of the voting rights, or in which the Group has signifcant infuence.
During the frst quarter of 2016 the subsidiary company Parques do Tamariz, was dissolved, as it had no longer any assets and did not engage any economic activity. No additional losses resulted from this operation to the Group Estoril-Sol.
Te segments reportable by the Group are based on the identifcation of segments in line with the fnancial information that is reported internally to the Board of Directors and which supports the Board in its evaluation of the performance of the businesses and in taking decisions with regard to the allocation of the resources to be used. Te segments identifed by the Group for reporting by segments, are therefore consistent with the way in which the Board of Directors analyses its business, corresponding to:
On 30th June 2017 and 2016, the information by business segment, is as follows:
| 30th June 2017 | |||||||
|---|---|---|---|---|---|---|---|
| Estoril Game Concession |
Póvoa Game Concession |
License for Online Gambling |
Total | ||||
| Estoril Casino |
Lisboa Casino |
Sub-Total | Póvoa Casino |
Casino Online |
Other | ||
| Net assets | 31 792 214 | 77 783 991 | 109 576 205 | 39 327 117 | 7 876 450 | 4 098 908 | 160 878 680 |
| Net liabilities | 17 061 858 | 24 072 746 | 41 134 605 | 28 820 266 | 1 705 914 | 5 678 239 | 77 339 024 |
| Result of the segment | (156 983) | 8 504 056 | 8 347 072 | (1 808 250) | 3 874 196 | (613 128) | 9 799 890 |
| Investment assets: | |||||||
| Tangible fxed | 1 530 140 | 1 318 838 | 2 848 978 | 1 333 476 | 11 900 | - | 4 194 354 |
| Estoril Game Concession |
Póvoa Game Concession |
License for Online Gambling |
Total | ||||
|---|---|---|---|---|---|---|---|
| Estoril Casino |
Lisboa Casino |
Sub-Total | Póvoa Casino |
Casino Online |
Other | ||
| Net assets | 36 321 368 | 79 131 789 | 115 453 157 | 41 143 522 | - | 6 339 321 | 162 936 000 |
| Net liabilities | 25 087 817 | 32 513 984 | 57 601 801 | 30 168 972 | - | 4 510 450 | 92 281 223 |
| Result of the segment | (860 410) | 6 993 200 | 6 132 790 | (2 606 587) | - | (970 701) | 2 555 503 |
| Investment assets: | |||||||
| Tangible fxed | 495 770 | 120 755 | 616 525 | 451 433 | - | 22 402 | 1 090 360 |
Te consolidated operating income, in the periods ended on 30th June 2017 and 2016, is split in the following manner:
| Nature | Estoril Game Concession |
Póvoa Game Concession |
License for online Gambling |
|||
|---|---|---|---|---|---|---|
| Estoril Casino |
Lisboa Casino |
Sub-Total | Póvoa Casino |
Casino Online |
Total | |
| Gaming revenues: | ||||||
| Slot machines | 23 489 786 | 33 391 418 | 56 881 204 | 17 672 931 | 6 760 148 | 81 314 283 |
| Table based gaming | 7 223 125 | 8 119 626 | 15 342 751 | 3 742 422 | 1 625 245 | 20 710 418 |
| Bonuses and other fair value adjustments | (134 659) | (120 125) | (254 784) | (51 113) | (1 030 398) | (1 336 295) |
| 30 578 252 | 41 390 919 | 71 969 171 | 21 364 240 | 7 354 995 | 100 688 406 | |
| Gaming taxes: | ||||||
| Special gaming tax (current) | (15 356 456) | (20 755 522) | (36 111 979) | (10 707 677) | (1 601 635) | (48 421 290) |
| Annual gaming tax (difference to minimum grant) | - | - | - | (2 399 824) | - | (2 399 824) |
| (15 356 456) | (20 755 522) | (36 111 979) | (13 107 500) | (1 601 635) | (50 821 114) | |
| Other operating revenues: | ||||||
| F&B and Entertainment | 1 983 731 | 330 353 | 2 314 084 | 486 151 | - | 2 800 235 |
| Tax deductions - Entertainment | 562 129 | 415 110 | 977 240 | 400 984 | - | 1 378 224 |
| Supplementary income | 148 445 | 18 512 | 166 957 | 10 296 | - | 177 253 |
| Other | 833 | 0 | 833 | 256 | - | 1 089 |
| 2 695 138 | 763 975 | 3 459 114 | 897 687 | - | 4 356 801 | |
| 17 916 935 | 21 399 372 | 39 316 306 | 9 154 427 | 5 753 360 | 54 224 093 |
| June 2016 | ||||||
|---|---|---|---|---|---|---|
| Estoril Game Concession |
Sub-Total | Póvoa Game Concession |
License for online Gambling |
|||
| Nature | Estoril Casino |
Lisboa Casino |
Póvoa Casino |
Casino Online |
Total | |
| Gaming revenues: | ||||||
| Slot machines | 22 431 003 | 32 902 598 | 55 333 601 | 17 157 275 | - | 72 490 876 |
| Table based gaming | 7 309 064 | 7 517 655 | 14 826 719 | 3 510 753 | - | 18 337 472 |
| Bonuses and other fair value adjustments | 103 335 | (1 343) | 101 992 | (29 536) | - | 72 456 |
| 29 843 402 | 40 418 910 | 70 262 312 | 20 638 492 | - | 90 900 804 | |
| Gaming taxes: | ||||||
| Special gaming tax (current) | (14 870 034) | (20 210 127) | (35 080 161) | (10 334 014) | - | (45 414 174) |
| Annual gaming tax (difference to minimum grant) | - | - | - | (2 455 986) | - | (2 455 986) |
| (14 870 034) | (20 210 127) | (35 080 161) | (12 790 000) | - | (47 870 160) | |
| Other operating revenues: | ||||||
| F&B and Entertainment | 1 904 692 | 307 606 | 2 212 298 | 454 987 | - | 2 667 285 |
| Tax deductions - Entertainment | 552 401 | 404 203 | 956 604 | 467 840 | - | 1 424 444 |
| Supplementary income | 120 566 | 18 530 | 139 096 | 10 899 | - | 149 995 |
| Other | 4 956 | - | 4 956 | 1 155 | - | 6 111 |
| 2 582 615 | 730 339 | 3 312 954 | 934 881 | - | 4 247 834 | |
| 17 555 983 | 20 939 122 | 38 495 106 | 8 783 373 | - | 47 278 478 |
Income from the segments comes from transactions with external customers. Tere are no transactions between segments. Te accounting policies of each segment are the same as those of the Group.
In the periods ended on 30th June 2017 and 2016, external supplies and services were as follows:
| June 2017 | June 2016 | |
|---|---|---|
| Gifts to customers | 2 142 025 | 2 232 978 |
| Marketing and advertising | 1 991 709 | 993 445 |
| Subcontracts | 1 907 803 | 1 744 458 |
| Energy and other fuids | 1 415 031 | 1 415 904 |
| Cleaning and laundry | 1 218 213 | 1 212 756 |
| Conservation and repairs | 1 206 730 | 1 388 034 |
| Specialized work | 1 050 789 | 1 113 662 |
| Royalties | 1 011 119 | 939 520 |
| Surveillance and security | 834 561 | 789 384 |
| Fees | 611 037 | 275 740 |
| Rents | 573 466 | 589 941 |
| Financial services (comissions) | 531 409 | 266 881 |
| Insurance | 376 580 | 375 667 |
| Communication | 268 902 | 235 771 |
| Travel and hotels | 123 574 | 133 313 |
| Other | 305 592 | 433 646 |
| 15 568 540 | 14 141 100 |
In the periods ended on 30th June 2017 and 2016, staf costs were as follows:
| June 2017 | June 2016 | |
|---|---|---|
| Remuneration of governing bodies | 1 453 615 | 1 404 141 |
| Remuneration of staff | 10 757 129 | 10 510 905 |
| Indemnities | 19 815 | 50 713 |
| Charges on remuneration | 2 780 343 | 2 709 016 |
| Insurance | 102 070 | 91 547 |
| Social charges | 580 951 | 545 182 |
| Other | 182 488 | 173 051 |
| 15 876 411 | 15 484 554 |
Financial costs and income for the periods ended on 30th June 2017 and 2016 is broken down as follows:
| June 2017 | June 2016 | |
|---|---|---|
| FINANCIAL COSTS | ||
| Interest borne: | ||
| Financing from banks | (426 715) | (1 045 562) |
| Finance and operating leasing | (84 728) | (34 762) |
| (511 443) | (1 080 324) | |
| Other fnancing costs: | ||
| Comissions and similar charges | (287 272) | (549 229) |
| (798 715) | (1 629 553) | |
| FINANCIAL INCOME | ||
| Exchange gains | 9 699 | 9 660 |
| Other | 5 841 | |
| 22 419 | 15 501 | |
| NET FINANCIAL COSTS | (776 296) | (1 614 052) |
During the periods ended on 30th June 2017 and 2016, the movement in tangible assets, as well as in the respective depreciation and accumulated impairment losses, was as follows:
| January to June 2017 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Land | Buildings and other constructions |
Basic Equipment |
Vehicles | Offce Equipment |
Other tangible fxed assets |
Fixed assets in progress |
Total | |
| Gross amount: | ||||||||
| Opening balance | 197 483 576 120 255 229 | 66 744 | 4 386 179 | 82 292 | 1 780 940 340 568 796 | |||
| Acquisitions | 664 | 1 420 377 | - | 12 725 | - | 2 760 588 | 4 194 354 | |
| Adjustments/Transfers | - | - | 26 225 | - | - | - | - | 26 225 |
| Write-off | - | - | (1 660 829) | (46 000) | (14 659) | - | - | (1 721 488) |
| Closing balance | 16 513 836 197 484 240 120 041 002 | 20 744 | 4 384 245 | 82 292 | 4 541 528 343 067 887 | |||
| Depreciation and accumulated impairment losses: | ||||||||
| Opening balance | - 136 741 249 101 349 388 | 54 615 | 3 874 707 | 81 359 | - 242 101 318 | |||
| Depreciation of the year | - | 3 430 698 | 2 469 721 | 1 473 | 87 037 | - | - | 5 988 929 |
| Write-off | - | (1 660 566) | (35 344) | (14 667) | - | - | (1 710 577) | |
| Closing balance | 140 171 947 102 158 543 | 20 744 | 3 947 077 | 81 359 | - 246 379 670 | |||
| Net amount | 16 513 836 | 57 312 293 | 17 882 459 | - | 437 168 | 933 | 4 541 528 | 96 688 219 |
| Land | Buildings and other constructions |
Basic Equipment |
Vehicles | Offce Equipment |
Other tangible fxed assets |
Fixed assets in progress |
Total | |
|---|---|---|---|---|---|---|---|---|
| Gross amount: | ||||||||
| Opening balance | 16 513 836 197 253 396 119 447 590 | 66 744 | 4 330 748 | 82 292 | 131 617 | 337 826 223 | ||
| Acquisitions | - | 163 152 | 879 139 | - | 48 068 | - | - | 1 090 359 |
| Adjustments/Transfers | - | - | - | - | - | - | (60 938) | (60 938) |
| Write-off | - | - | (224 907) | - | (2 704) | - | - | (227 611) |
| Closing balance | 16 513 836 197 416 548 120 101 822 | 66 744 | 4 376 112 | 82 292 | 70 679 | 338 628 033 | ||
| Depreciation and accumulated impairment losses: | ||||||||
| Opening balance | - 129 470 334 | 97 760 983 | 45 412 | 3 682 050 | 80 995 | - | 231 039 774 | |
| Depreciation of the year | - | 3 821 045 | 2 917 689 | 4 785 | 105 674 | 361 | - | 6 849 554 |
| Write-off | - | - | (211 428) | - | (2 712) | - | - | (214 140) |
| Closing balance | - 133 291 379 100 467 244 | 50 197 | 3 785 012 | 81 356 | - | 237 675 188 | ||
| Net amount | 16 513 836 | 64 125 169 | 19 634 578 | 16 547 | 591 100 | 936 | 70 679 | 100 952 847 |
Te breakdown of intangible assets on 30th June 2017 and 31st December 2016 is as follows:
January to June 2016
| June 2017 | |||||
|---|---|---|---|---|---|
| Gaming Concession | Gross Assets | Accumulated amortization |
Net Assets | ||
| Estoril Gaming Concession | |||||
| Casino Estoril | 153 576 455 | (132 869 269) | 20 707 187 | ||
| Casino Lisboa | 30 000 000 | (22 669 950) | 7 330 051 | ||
| Póvoa Gaming Concession - Casino da Póvoa | 77 034 109 | (55 207 189) | 21 826 920 | ||
| 260 610 564 | (210 746 407) | 49 864 157 | |||
| Intangible assets - Online gaming license (a) | 36 000 | (11 200) | 24 800 | ||
| 260 646 564 | (210 757 607) | 49 888 957 |
| December 2016 | |||||
|---|---|---|---|---|---|
| Gaming Concession | Gross Assets | Accumulated amortization |
Net Assets | ||
| Estoril Gaming Concession | |||||
| Casino Estoril | 153 576 455 | (129 776 774) | 23 799 681 | ||
| Casino Lisboa | 30 000 000 | (21 641 378) | 8 358 622 | ||
| Póvoa Gaming Concession - Casino da Póvoa | 77 034 109 | (53 583 817) | 23 450 292 | ||
| 260 610 564 | (205 001 969) | 55 608 595 | |||
| Intangible assets - Online gaming license (a) | 36 000 | (5 200) | 30 800 | ||
| 260 646 564 | (205 007 169) | 55 639 395 |
(a) Te Board of Directors of Turismo de Portugal, IP, at a meeting held on 25 July 2016, decided under the Legal Framework for Games and Online Betting (RJO), approved by Decree-Law No. 66/2015 of 29 April, assign to Estoril-Sol Digital, Online Gaming Products and Services, S.A., a license for online gambling exploration, which will operate under the internet domain www.estorilsolcasinos.pt/ . Tis license shall be valid for an initial period of three years from the date of issue, expiring on July 24th, 2019, if not renewed, under the terms and conditions set out in RJO. Estoril-Sol Digital, began exploring the online gambling activity in the web site mentioned above on the same day the license was issued, ie 25th July 2016.
On 30th June 2017 and 31st December 2016, this caption was broken down as follows:
| Jun 2017 | Dec 2016 | |
|---|---|---|
| CASH | 8 054 176 | 8 696 631 |
| Bank deposits | ||
| Immediatly avaiable bank deposits | 5 660 587 | 3 657 733 |
| Long term deposits (a) | 5 500 000 | 1 200 000 |
| Other teasury applications | 21 782 | 19 025 |
| Cash and bank deposits | 19 236 546 | 13 573 389 |
| Bank overdrafts | - | - |
| Cash and cash equivalents | 19 236 546 | 13 573 389 |
On 30th June 2017 and 31st December 2016, the share capital of the Company is represented by 11.993.684 shares, of which 6.116.779 are registered shares and 5.876.905 bearer shares, of a nominal unit value of 5 Euros, which confer the right to a dividend.
Te share capital issued by the Company on 30th June 2017 and on 31st December 2016 is broken down as follows:
| Jun 2017 | Dec 2016 | |
|---|---|---|
| Share capital | 59 968 420 | 59 968 420 |
| Treasury shares | (708 306) | (708 306) |
| Issue premiums | 960 009 | 960 009 |
| 60 220 123 | 60 220 123 |
| Date | Nominal value | No. of shares |
|---|---|---|
| 30th June 2017 | ||
| Registered | 5€ | 6 116 779 |
| Bearer | 5€ | 5 876 905 |
| 11 993 684 | ||
| 31st December 2016 | ||
| Registered | 5€ | 6 116 779 |
| Bearer | 5€ | 5 876 905 |
| 11 993 684 |
| Year of acquisition | No. shares | Nominal value | Total nominal | Total premiums | Total |
|---|---|---|---|---|---|
| 2001 | 34 900 | 5 | 174 500 | 280 945 | 455 445 |
| 2002 | 43 | 5 | 215 | 184 | 399 |
| 2007 | 22 | 5 | 110 | 88 | 198 |
| 2008 | 27 600 | 5 | 138 000 | 114 264 | 252 264 |
| Total | 62 565 | 312 825 | 395 481 | 708 306 |
Legal persons with more than a 20% holding in the share capital:
On 30th June 2017 and 31st December 2016, this caption was broken down as follows:
| Jun 2017 | |||||
|---|---|---|---|---|---|
| Company | Equity | Proft/(Loss) of the period |
Book value of non-controlling interests |
Proportion in income attributable to non-controlling interests |
|
| Estoril-Sol Digital, Online Gaming Products and Services, S.A. |
6 170 536 | 3 874 196 | 3 085 267 | 1 937 097 | |
| Dec 2016 | |||||
| Company | Equity | Proft/(Loss) of the period |
Book value of non-controlling interests |
Proportion in income attributable to non-controlling interests |
|
| Estoril-Sol Digital, Online Gaming Products and Services, S.A. |
2 296 340 | 1 813 718 | 1 148 165 | 906 859 |
Within the online gaming activities, which is carried out through Estoril-Sol Digital, Online Gaming Products and Services, S.A., a subsidiary company of Estoril-Sol (III) – Turismo, Animação e Jogo, S.A., a company owned by the issuer (Estoril-Sol, S.G.P.S., S.A.), signed with Vision Gaming Holding Limited, a company based in Malta, an association agreement, through which it holds a minority interest, corresponding to 49.9998% of the share capital of Estoril-Sol Digital, keeping the Estoril-Sol (III) S.A. most of the capital and votes in that company (Estoril-Sol Digital, Online Gaming Products and Services, S.A.).
On 30th June 2017 and 31st December 2016, this caption was broken down as follows:
| Jun 2017 | Dec 2016 | ||||
|---|---|---|---|---|---|
| Nature of the fnancing | Nominal value | Balance sheet value | Nominal value | Balance sheet value | |
| Non-current fnancing: | |||||
| Bank loans | 1 250 000 | 1 250 000 | 1 250 000 | 1 250 000 | |
| 1 250 000 | 1 250 000 | 1 250 000 | 1 250 000 | ||
| Current fnancing: | |||||
| Bank loans | 6 399 865 | 6 267 024 | 7 688 648 | 7 710 499 | |
| Commercial paper | 7 750 000 | 7 956 210 | 2 500 000 | 2 449 228 | |
| Current accounts | 14 580 700 | 14 580 700 | 18 930 300 | 18 930 300 | |
| Financial leasing | - | - | 10 712 | 10 712 | |
| 28 730 565 | 28 803 934 | 29 129 660 | 29 100 739 | ||
| 29 980 565 | 30 053 934 | 30 379 660 | 30 350 739 |
Te average interest rates for fnancing, borne by the Group, including commissions and other charges, come within an interval of between 2% and 4,1%.
Some of the fnancing operations, mainly bank loans, include commitments to maintain certain fnancial ratios based on contractually negotiated limits (fnancial covenants).
Tese ratios are:
On the 30th June 2017 and 31st December 2016, these ratios were according the contractually negotiated limits.
Te amount classifed as non-current bank loans, for a total amount of 1.250.000 Euros, falls due in accordance with the following schedule:
• 1.250.000 Euros in 2018;
Depending on the operating funds that are freed up, we feel the fnancial risk to which the associated undertakings are exposed is minimal, and the same understanding has prevailed in the examination carried out by fnancial institutions, as shown by the fact that assets guarantees are dispensed with for operations under contract.
Te amount included in the column "Nominal value" corresponds to the contracted value that is still owing. Te column "Balance sheet value" is added to the nominal value of fnancial charges already incurred but still not due, less interest and or commissions paid in advance.
On 30th June 2017 and 31st December 2016, this caption was broken down as follows:
| Jun 2017 | Dec 2016 | |
|---|---|---|
| OTHER ACCOUNTS PAYABLE - NON-CURRENT | ||
| Annual payment - Difference to minumum grant | ||
| Installments payment schedule - approved for 2014 | 3 734 424 | 3 734 424 |
| Installments payment schedule - approved for 2015 | 576 214 | 576 214 |
| 4 310 638 | 4 310 638 | |
| OTHER ACCOUNTS PAYABLE - CURRENT | ||
| Current suppliers | 4 480 867 | 5 382 419 |
| Suppliers of investments | 1 410 446 | 1 100 635 |
| State and Public Sector | ||
| Annual gaming payment | 7 443 660 | 11 606 867 |
| Annual payment - Difference to minumum grant | ||
| Decree 1/2015 - 10% over 50% rate of the annual gaming payment | 2 399 823 | 3 241 292 |
| Installments payment schedule - approved for 2015 | 576 215 | 576 215 |
| Special Gaming Tax (to be paid next month) | 5 866 754 | 6 541 148 |
| Social Security contribuitons | 762 205 | 611 667 |
| Other in favour of the State | 1 412 388 | 1 112 534 |
| Clients advance payments | 458 094 | 338 736 |
| Charges with holidays payable | 4 081 303 | 4 540 311 |
| Responsabilities for accumulated gaming premiums | 1 984 055 | 1 872 791 |
| Other | 3 808 106 | 2 980 721 |
| 34 683 916 | 39 905 336 |
Te value of "Clients advance payments" relate entirely to the online casino and refer to the balance of the internet website of the online casino, available for playing or withdraw at 23:59; 30th June and 31st December 2016.
Te Decree Law n º 29/88 of 3 August, down in paragraph 1 of Article 3, the concessionaire is obliged to pay an annual payment amounting to 50% of the gross gaming revenues. Tis payment cannot be, under any circumstances, lower than the values in the table attached to that Decree Law.
Te minimum annual contributions were established (prices of the year 2000) by Decree-Law No. 275/2001 of 14th December 2001, by the time the Concessions Contracts were extended by ffeen years more.
At the beginning of the year 2015 the Regulatory-Decree nº1/2015 of 21st January came to approve the split payment in instalments of the annual minimum contributions calculated based on Decree-Law 275/2001, subject to prior approval from "Turismo de Portugal" of the payments schedule proposed by the Game Concessionaire Companies. Te Regulatory-Decree nº1/2015 was applied for the frst the time to the amounts related to the year ended December 2014, which initially payment deadline was on January 31st, 2015.
Te value 4.310.638 Euros registered in the caption "Other accounts payable – non-current", as "Annual payment – diference to minimum grant" is related to the following instalment payment schedules in accordance with a prior authorization from Turismo de Portugal:
• Instalments payment schedule - approved for 2014, that will be paid in three equal annual instalments of 1.244.808 Euros, on December 31st, 2019, 2020 and 2021.
• Instalments payment schedule - approved for 2015, that will be paid in three equal annual instalments of 576.215 Euros, on December 31st, 2016, 2017 and 2018. Te instalment due in 2017 is recorded as "Other accounts payable – current".
Te movement in the provisions accounts in the periods ended on 30th June 2017 and 2016 is as follows:
| January to June 2017 | |||||
|---|---|---|---|---|---|
| Opening Balance |
Increases | Reversals | Writte-off | Closing Balance |
|
| Provisions for pensions | 2 899 650 | - | - | (26 187) | 2 873 463 |
| Legal proceedings in hand | 5 383 224 | 123 719 | - | (92 825) | 4 847 974 |
| Other risks and charges | 569 098 | - | - | - | 569 098 |
| 5 952 322 | 123 719 | - | (92 825) | 5 417 072 | |
| 8 851 972 | 123 719 | - | (119 012) | 8 290 535 |
Te reversals of provisions that occurred during the frst half of 2017 mostly relate to civil lawsuits related to claims for compensation of players with requests for self-exclusion, and where court judgments have come to co-account the player in a percentage greater than that originally provided by the Group.
| Opening Balance |
Increases | Reversals | Writte-off | Closing Balance |
|
|---|---|---|---|---|---|
| Provisions for pensions | 3 522 023 | - | - | (26 187) | 3 495 836 |
| Legal proceedings in hand | 4 193 142 | 2 488 | - | (260 273) | 3 935 357 |
| Other risks and charges | 569 098 | - | - | - | 569 098 |
| 4 762 240 | 2 488 | - | (260 273) | 4 504 455 | |
| 8 284 263 | 2 488 | - | (286 460) | 8 000 291 |
In the normal course of its activity, the Group is involved in diverse legal proceedings. Given the nature of these and the provisions set up, in accordance with studies and opinions of legal consultants, the current expectation is that the respective outcome will not lead to any material efects in terms of the activity undertaken, the asset position and the result of the operations.
• Diferences in understanding between the Group and the Tax Authorities over Corporation Tax (IRC), relating to the years 2007, 2008, 2009 and 2010, with regard to the taxation of undocumented expenses in-curred in the course of the gaming activity of subsidiaries that form part of the Group and which operate games of fortune as their main activity. During the year 2013 occurred the 1st instance verdict contrary to the allegations and convictions of the Group relating to the process for the years 2007 to 2009. It is the Company's belief, grounded in favourable opinions from legal advisers, that a fnal decision should be favourable, which is why the Group appealed to higher courts. On the date of these fnancial statements there are also previous legal decisions that are in the Group's favour, as well as judicial jurisprudence which is favourable to the Group on this matter. Even so, on this date the Group has bank guarantees provided in favour of the Finance Ofce of Cascais amounting to 7.197.635 Euros.
• One of the subsidiaries of the Group made a collective dismissal in 2010 within the terms established in the Law, which afected 112 employees. Some of these contested this procedure and fled a lawsuit in Court trying to have this overturned and for their reintegration as Company staf. Te Company and the legal consultants responsible for the case consider that there is a high probability of the Company winning and, therefore, it has set up a provision corresponding only to the legal obligations allowed for in labour legislation in cases of collective dismissal which it will have to pay to the former employees by way of indemnity evens if it wins the case. As at 30th June 2017 there are 25 former employees with pending litigation related with this dismissal. Te provision accrued within the accounts amounts to 733.545 Euros.
• One of the subsidiaries of the Group made a collective dismissal in 2013 within the terms established in the Law, which afected 21 employees. Some of these contested this procedure and fled a lawsuit in Court trying to have this overturned and for their reintegration as Company staf. Te Company and the legal consultants responsible for the case consider that there is a high probability of the Company winning and, therefore, it has set up a provision corresponding only to the legal obligations allowed for in labour legislation in cases of collective dismissal which it will have to pay to the former employees by way of indemnity evens if it wins the case. As at 30th June 2017 there are 13 former employees with pending litigation related with this dismissal. Te provision accrued within the accounts amounts to 344.500 Euros.
Te Group also sets up diverse technical provisions related with the normal functioning of its main activity, the operation of games of fortune. Among the more signifcant ones we should highlight:
• Te existence of an account payable for a total amount of 1.984.055 Euros in respect of liabilities for accumulated gaming premiums. Tese liabilities are revised on a monthly basis, according to the accumulated premiums announced in the diverse gaming rooms of the Casinos run by the Group (Note 16).
On 30th June 2017 and 31st December 2016 the guarantees provided by the Group were as follows:
| Jun 2017 | Dec 2016 | |
|---|---|---|
| Obligations related with the Special Gaming Tax | 7 250 000 | 24 494 052 |
| Tax lawsuits in hand / litigation | 7 414 888 | 7 414 888 |
| Current suppliers | 39 250 | 39 250 |
| 14 704 138 | 31 948 190 |
During the frst semester of 2017 the Group saw its responsabilities with bank guarantees reduced by 17,2 million Euros, as they were related with the Special Game Tax from the year ended 31st December 2016 paid during January 2017 (Note 16).
Te consolidated result per basic share of the years ended on 30th June 2017 and 2016 was determined as follows:
| Jun 2017 | Jun 2016 | |
|---|---|---|
| Net proft of the Equity holders of the Parent Company | 7 862 793 | 2 555 502 |
| Average weighted number of shares in circulation | 11 931 119 | 11 931 119 |
| Result per basic share | 0,66 | 0,21 |
Due to the fact that there are no situations that cause dilution, the net result per diluted share is the same as the net result per basic share.
ESTORIL-SOL, S.G.P.S., S.A.
Fully paid up share capital: 59.968.420 Euros Headquarter: Av. Dr. Stanley Ho Edifício do Casino Estoril, 2765-190 Estoril - Cascais
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