Earnings Release • May 31, 2017
Earnings Release
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Publicly Listed Company
Registered office: Praça do Bom Sucesso, 105/159, 9th floor, Porto Share Capital Euros 24.000.000 Commercial Registry: Oporto under number 501669477 Fiscal number: 501669477
The positive evolution of the demand, coupled with the effects of Eat Out Group acquisition at the end of October and the openings of larger restaurants at the end of 2016, allowed to achieve an increase restaurant sales of 76.8%.
Eliminating the effect of the Eat Out Group acquisition, the sales growth in the first quarter was 16.1%, despite the negative calendar effect of -4.8%, which fully absorbed the impact of the VAT rate change on food products in Portugal that occurred in July of the previous year.
| SALES IN RESTAURANTS | 1st Q17 w/EOG | EOG | TOTAL 1st Q17 | |||
|---|---|---|---|---|---|---|
| euro million % Ch. 17/16 | euro million | euro million % Ch. 17/16 | ||||
| Restaurants | 17.82 | 6.4% | 4.52 | 22.34 | 33.4% | |
| Counters | 37,06 | 19.3% | 7.83 | 44.90 | 44.5% | |
| Concessions & Catering | 5.93 | 30.5% | 19.43 | 25.36 | 458.5% | |
| Total Sales | 60.81 | 16.1% | 31.78 | 92.59 | 76.8% |
About half of this negative calendar effect is associated with the change in Easter holidays from March to April. Until April, the restaurant sales without Eat Out Group grew 18%.
All segments show a positive trend with an increase in the same universe and market share gains.
In the counters segment, the brands which we operate maintained the trend observed last year with market share gains and growth rates influenced by a higher number of units operating.
The "Catering and Concessions" business reached the better performance, benefited from a larger number of great catering events and the traffic increase in the concession areas.
The contribution of the Eat Out Group equity restaurants sales amounts to 31.8 million, with special emphasis on the approximately 20 million sales in concessions.
The consolidated turnover amounted to EUR 94.3 million (EUR 61.3 million without Eat Out Group), compares with EUR 53.0 million euros in the first quarter 2016 as follows:
| Turnover | 1st Q17 w/EOG EOG |
TOTAL 1st Q17 | ||||
|---|---|---|---|---|---|---|
| euro million % Ch. 17/16 | euro million | euro million % Ch. 17/16 | ||||
| Sales of Restaurants | 60.81 | 16.1% | 31.78 | 92.59 | 76.8% | |
| Sales of Merchandise | 0.40 | $-18.4%$ | 0.00 | 0.40 | $-18.4%$ | |
| Services Rendered | 0.16 | 5.5% | 1.18 | 1.33 | 794.4% | |
| Net Sales & Services | 61.36 | 15.8% | 32.96 | 94.32 | 78.0% |
With the Eat Out Group acquisition, royalty's revenues from franchisees gain another dimension. Also in this item of income there was a strong impact of the calendar in the quarter.
During the quarter, we closed 20 restaurants, 9 equities and 11 franchises. The closures of the equity restaurants resulted from the end of the concession period of 6 units at Fuerteventura Airport and 3 due to non-renewal option of the respective contracts (Pans Plaza Norte, Òkilo and Pasta Caffé Vila Real). Continuing the process of evaluation of the franchisees network, 7 units of Santamaria and 4 Pans in Spain were closed.
Following the strategy of expansion in new concessions, we opened at Santa Maria airport in Azores and at the train station in Lérida.
At the end of the quarter, the total number of restaurants was 649 (497 equity and 152 franchises), as shown below:
| Nº of Restaurants | 2016 | 2017 | |||
|---|---|---|---|---|---|
| 31-Dec | Openings | Transfer | Closings | 31-Mar | |
| PORTUGAL | 307 | $\mathbf{1}$ | $\overline{2}$ | 306 | |
| Own Stores | 306 | 1 | $\overline{2}$ | 305 | |
| Pizza Hut | 93 | 93 | |||
| Okilo+MIIT | 5 | 1 | $\overline{4}$ | ||
| Pans+Roulotte | 46 | 46 | |||
| Burger King | 66 | 66 | |||
| KFC | 18 | 18 | |||
| Pasta Caffé | 10 | 1 | 9 | ||
| Quiosques | 8 | 8 | |||
| Coffee Shops | 30 | 30 | |||
| Catering | $\overline{7}$ | $\overline{7}$ | |||
| Concessions & Other | 23 | 1 | 24 | ||
| Franchise Stores | $\mathbf{1}$ | $\mathbf{1}$ | |||
| SPAIN | 340 | 1 | 18 | 323 | |
| Own Stores | 188 | 1 | 0 | 7 | 182 |
| Pizza Móvil | 34 | $-3$ | 31 | ||
| Pizza Hut | $\mathbf{0}$ | 3 | 3 | ||
| Burger King | 33 | 33 | |||
| Pans | 38 | 1 | 37 | ||
| Ribs | 9 | 9 | |||
| FrescCo | 3 | 3 | |||
| Concessions | 71 | 1 | 6 | 66 | |
| Franchise Stores | 152 | 11 | 141 | ||
| Pizza Móvil | 16 | 16 | |||
| Pans | 67 | 4 | 63 | ||
| Ribs | 25 | 25 | |||
| Fresco | 8 | 8 | |||
| SantaMaria | 36 | 7 | 29 | ||
| ANGOLA | 10 | 10 | |||
| KFC | 9 | 9 | |||
| Pizza Hut | 1 | 1 | |||
| Other Locations - Franchise Stores | 10 | 10 | |||
| FrescCo India | $\overline{2}$ | $\overline{2}$ | |||
| Pans Italy | $\overline{8}$ | 8 | |||
| Total Own stores | 504 | 2 | 0 | 9 | 497 |
| Total Franchise stores | 163 | 0 | $\bf{0}$ | 11 | 152 |
| TOTAL | 667 | 2 | $\bf{0}$ | 20 | 649 |
The consolidated net income of 1Q amounted to Eur 2.1 million euros, 3.8 million euros lower than what had been registered in 1Q 2016. According to the report for the first quarter of 2016, the result for that period included 3.1 million euros of non-recurring income.
For comparative purposes with the first quarter of last year we will take as reference the adjusted accounts for the first quarter of 2016, in which we segregated the effect of financial compensation for the traffic losses, caused by the implementation of tolls on the ex-Scuts.
In the first quarter of 2017 the result is strongly influenced by the consolidation of Eat Out Group, by the unfavorable calendar with sales impact at the whole Group and for the reduction of the VAT rate in the Portuguese market.
In order to better understanding the 1Q 2017 indicators, we consider the two perimeters, with and without consolidation of the Eat Out Group:
| 2017 | 2016 | |||
|---|---|---|---|---|
| 1st Q17 | 1st Q17 (without EOG) |
1st Q16 | 1st Q17 (adusted) |
|
| Operating Income | ||||
| Sales | 93 004 437 | 61.220.352 | 52 807 354 | 52.807.354 |
| Rendered services | 1.318.623 | 143.061 | 149.970 | 149.970 |
| Other operating income | 2.041.341 | 650.679 | 3.969.565 | 1.571.807 |
| Total operating income | 96.364.401 | 62.014.092 | 56.926.889 | 54.529.131 |
| Total operating costs | 92.578.327 | 57.361.388 | 50.364.752 | 50.364.752 |
| Operating Income | 3.786.074 | 4.652.704 | 6.562.137 | 4.164.379 |
| EBITDA | 10.465.920 | 8.626.398 | 9.279.812 | 6.882.054 |
| Net financing cost | $-1.293.929$ | $-978.649$ | 1.051.026 | $-519.297$ |
| Gaisn (losses) in joint controlled subsidiaries - Equity method | 5.365 | 5.365 | $-8.309$ | $-8.309$ |
| Profit before tax | 2.497.510 | 3.679.420 | 7.604.854 | 3.636.773 |
| Income tax expense | 446.246 | 724.650 | 1.741.233 | 907.936 |
| Net profit | 2.051.264 | 2.954.770 | 5.863.621 | 2.728.837 |
Net income for the 1Q17 was 25% lower than the same adjusted period in 2016. Not considering the Eat Out Group in the consolidation perimeter, net income grew 8.3%.
Gross margin corresponds to 77.0% of turnover (1Q16: 75.6%), reflecting an improvement by consolidation of EOG's business, which by its typology have a higher gross margin, namely the contribution of the franchise business.
Without considering Eat Out Group contribution, the gross margin was 75.4%, as the level registered in the first quarter of 2016. The effect of the VAT rate reduction in the gross margin was absorbed by the increase in the wheight of counters in total sales and promotional aggressiveness,
namely the campaign to join the main loyalty card in Portugal "Cartão Continente", in February and March.
Staff costs: increased 87.6%, above sales evolution, representing 33.4% of turnover.
Without EOG, this increase was 14.2%, slightly lower than the 15.8% activity increase, representing 31.3% of the turnover (1Q16: 31.7%). The increase in the minimum wage and the training costs resulting from the planned expansion of new units concentrated in the second quarter, did not allow to achieve the expected gains from the VAT reduction.
External Supplies and services: increase of 91.1%, representing 33.9% of turnover. For this increase, it should be noted the increase in activity in concessions, characterized by higher rents. Without EOG, increase of 11.7%, representing 30.4% of turnover,1.2 pp less than in 1Q 2016.
Other operating income decreased by about 1 million euros corresponding almost entirely to income from consulting services on the first quarter of previous year, as well as other operating costs with a reduction of 0.8 million, mainly due to the reduction in exchange differences recorded in the Angolan subsidiary at the 1Q16, as result of the AKZ depreciation against foreign currencies which affected some liabilities and assets denominated in external currency.
Therefore EBITDA amounted to 10.5 million euros, an increase of 52% over 1Q16 Ebitda without Eat Out Group, increased 1.7 million euros and amounted to 8.6 million euros, ie 25.3% over 1Q16.
Consolidated EBITDA margin stood at 11.1% of turnover and 14.1% without Eat Out Group, compared with 13.0% at 1Q16.
Consolidated EBIT margin was 3.8 million euros, representing 4.0% of turnover, reflecting the weight of depreciation in a quarter of lower activity.
At Eat Out Group, in the first quarter, depreciation amounted to 2.7 million euros, representing 8.2% of turnover.
Without Eat Out Group, EBIT margin decreased from 7.9% of turnover to 7.6%, corresponding to an operating profit of EUR 4.7 million euros. Should be noted the increase of the depreciations value, which represented 6.5% of turnover (5.1% in 1Q16).
Consolidated Financial Results were negative by 1.3 million euros, around 0.8 million euros higher than 1Q16.
Average cost of loans, which stood at 2.6%, substantially lower than 1Q16, due to the dilution of the weight of the debt in Angola, due to the financing agreement for the acquisition of Eat Out Group.
Total Assets amounted to 415 million euros and equity stood at 154 million euros, representing 37% of assets.
CAPEX reached 5 million euros. About half (2.6 million euros), for the investment in the new central unit production and the remaining for the refurbishment and reconversion of some restaurants.
Net debt at 31th March 2017 amounted to 114 million euros, 4.2 milion euros higher than at the end of 2016.
Treasury Stock
During the first quarter of 2017 there has not been registered transactions of own shares. On the 31st March the company held 2.399.905 treasury stock, representing 9.9996% of the share capital, acquired by 11.179.347 euros, corresponding to an average price per share of 4.65€.
In May a simple swap contract was concluded to cover the interest rate in the amount of 24 million euros.
31st March 2017
| Non-current Tangible fixed assets 7 178.173.143 179.388.621 Goodwill 8 111.156.658 Intangible assets 8 14.313.276 Deferred tax assets 8.435.770 Financial investments - joint controlled subsidiaries 2.422.996 Available-for-sale financial assets 456.586 Other financial assets 14 11.025.900 Other non-current assets 6.500.428 Total non-current assets 332.484.757 Current Stocks 11.281.728 Cash and bank deposits 30.936.405 Income tax receivable 2.751.654 Other financial assets 14 7.006.502 Other current assets 15 30.213.593 Total current assets 82.189.882 Total Assets 414.674.639 EQUITY AND LIABILITIES EQUITY Capital and reserves attributable to shareholders Share capital 24.000.000 Own shares -11.179.348 Conversion Reserves -2.047.882 Other Reserves & Retained Results 140.909.956 Net profit in the year 1.997.246 23.387.471 153.679.972 151.728.429 Non-controlling interest 387.417 333.399 Total Equity 154.067.389 152.061.828 LIABILITIES Non-current Loans 117.368.104 130.457.713 Deferred tax liabilities 10.115.216 10.187.932 Provisions 3.232.128 3.412.128 Derivative financial instrument 114.935 114.935 Other non-current liabilities 200.828 131.031.211 144.380.748 Total non-current liabilities Current Loans 45.521.357 Accounts payable to suppliers and accrued costs 62.692.281 69.304.753 Income tax payable 3.307.108 Other current liabilities 15 18.055.293 18.626.423 Total current liabilities 129.576.039 126.614.779 Total Liabilities 260.607.250 270.995.527 Total Equity and Liabilities 414.674.639 423.057.355 |
ASSETS | Notes | 31-03-2017 | 31-12-2016 |
|---|---|---|---|---|
| 111.156.658 | ||||
| 14.990.885 | ||||
| 8.555.186 | ||||
| 2.417.631 | ||||
| 440.541 | ||||
| 10.438.768 | ||||
| 6.574.793 | ||||
| 333.963.083 | ||||
| 11.547.211 | ||||
| 39.588.532 | ||||
| 2.332.391 | ||||
| 7.041.574 | ||||
| 28.584.565 | ||||
| 89.094.273 | ||||
| 423.057.355 | ||||
| 24.000.000 | ||||
| -11.179.348 | ||||
| -2.002.180 | ||||
| 117.522.486 | ||||
| 208.040 | ||||
| 36.333.949 | ||||
| 2.349.654 | ||||
| Notes | 31-03-2017 | 31-03-2016 | |
|---|---|---|---|
| Operating Income | |||
| Sales | 5 | 93.004.437 | 52.807.354 |
| Rendered services | 5 | 1.318.623 | 149.970 |
| Other operating income | 6 | 2.041.341 | 3.969.565 |
| Total operating income | 96.364.401 | 56.926.889 | |
| Operating Costs | |||
| Cost of sales | 21.688.285 | 12.930.687 | |
| External supplies and services | 31.958.224 | 16.721.037 | |
| Personnel costs | 31.531.510 | 16.810.068 | |
| Amortisation, depreciation and impairment losses of TFA and IA | 7 and 8 | 6.679.846 | 2.717.675 |
| Other operating costs | 720.462 | 1.185.285 | |
| Total operating costs | 92.578.327 | 50.364.752 | |
| Operating Income | 3.786.074 | 6.562.137 | |
| Net financing cost | 16 | 1.293.929 | -1.051.026 |
| Gains (losses) in joint controlled subsidiaries - Equity method | 5.365 | -8.309 | |
| Profit before tax | 2.497.510 | 7.604.854 | |
| Income tax expense | 446.246 | 1.741.233 | |
| Net profit | 2.051.264 | 5.863.621 | |
| Other comprehensive income: | |||
| Change in currency conversion reserve (net of tax and that can be | |||
| recycled for results) | -45.702 | -959.050 | |
| TOTAL COMPREHENSIVE INCOME | 2.005.562 | 4.904.571 | |
| Net profit attributable to: | |||
| Owners of the parent | 1.997.246 | 5.913.159 | |
| Non-controlling interest | 54.018 | -49.538 | |
| 2.051.264 | 5.863.621 | ||
| Total comprehensive income attributable to: | |||
| Owners of the parent | 1.951.544 | 4.954.109 | |
| Non-controlling interest | 54.018 | -49.538 | |
| 2.005.562 | 4.904.571 | ||
| Earnings per share: | 9 | ||
| Basic | 0,09 | 0,33 | |
| Diluted | 0,09 | 0,33 |
(value in euros)
| Ass ign ed har eho lde to s rs |
||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Not e |
Sha re C ital ap |
Ow n Sha res |
Co rsio nve n Res erv es |
Leg al Res erv es |
Oth er Res & erv es Ret ain ed Res ults |
Net Pro fit |
Tot al p nt are ity equ |
Inte hat ts t res do ol not ntr co |
Tot al Equ ity |
|
| Bal Ja 201 6 n 1 anc e o nua ry Ch in t he iod |
20. 000 .00 0 |
11. 179 .64 4 - |
850 .43 9 - |
4.0 00. 001 |
107 .37 2.1 32 |
10. 582 .26 6 |
129 .92 4.3 16 |
5.1 21. 687 |
135 .04 6.0 03 |
|
| ang es per : App lica tion of the lida ted fit f 20 15: co nso pro rom |
||||||||||
| sfe T r to and ret ain ed ults ran res erv es res |
10. 582 .26 6 |
10. 582 .26 6 - |
- | - | ||||||
| Cha int hat do l st t t co ntro nge on ere no |
250 .52 2 |
250 .52 2 |
250 .52 2 - |
- | ||||||
| Con sio - A la ver n re ser ves ngo Net lida ted inc e in the thr nth riod co nso om ee mo pe end ed 31 Ma rch 20 16 on |
-95 9.0 50 |
5.9 13. 159 |
-95 9.0 50 5.9 13. 159 |
49. 538 |
959 .05 0 - 5.8 63. 621 |
|||||
| Tot al c han in the riod ges pe |
- | - | -95 9.0 50 |
- | 10. 832 .78 8 |
4.6 69. 107 |
5.2 04. 631 |
- 300 .06 0 |
4.9 04. 571 |
|
| Net ofit pr |
- 5.9 13. 159 |
5.9 13. 159 |
- 49. 538 - |
5.8 63. 621 |
||||||
| Tot al c hen sive inc om pre om e |
4.9 54. 109 |
49. 538 - |
4.9 04. 571 |
|||||||
| Tra ctio wit h c ital s in the riod nsa ns ap ow ner pe App lica tion of the lida ted fit f 20 15: co nso pro rom |
||||||||||
| P aid div ide nds |
- | -3.7 98. 270 |
3.7 98. 270 - |
|||||||
| - | - | - | - | - | - | - | -3.7 98. 270 |
3.7 98. 270 - |
||
| Bal n 3 1 M h 2 016 anc e o arc |
20. 000 .00 0 |
11. 179 .64 4 - |
1.8 09. 489 - |
4.0 00. 001 |
118 .20 4.9 20 |
5.9 13. 159 |
135 .12 8.9 47 |
1.0 23. 357 |
136 .15 2.3 04 |
|
| Bal n 1 Ja 201 7 anc e o nua ry |
24. 000 .00 0 |
11. 179 .34 8 - |
2.0 02. 180 - |
- | 117 .52 2.4 86 |
23. 387 .47 1 |
151 .72 8.4 29 |
333 .39 9 |
152 .06 1.8 28 |
|
| Ch in t he iod ang es per : |
||||||||||
| App lica tion of the lida ted fit f 20 16: co nso pro rom |
||||||||||
| T sfe and ain ed ults r to ret ran res erv es res |
23. 387 .47 1 |
23. 387 .47 1 - |
- | - | ||||||
| Con sio - A la ver n re ser ves ngo Net lida ted inc e in the thr nth riod |
-45 .70 2 |
-45 .70 2 |
45. 702 - |
|||||||
| co nso om ee mo pe end ed 31 Ma rch 20 17 on |
1.9 97. 246 |
1.9 97. 246 |
54. 018 |
2.0 51. 264 |
||||||
| Tot al c han in the riod ges pe |
- | - | -45 .70 2 |
- | 23. 387 .47 1 |
21. 390 .22 5 - |
1.9 51. 544 |
54. 018 |
2.0 05. 562 |
|
| Net ofit pr |
1.9 97. 246 |
1.9 97. 246 |
018 54. |
2.0 264 51. |
||||||
| Tot al c hen sive inc om pre om e |
1.9 51. 544 |
54. 018 |
2.0 05. 562 |
|||||||
| Tra ctio wit h c ital s in the riod nsa ns ap ow ner pe |
||||||||||
| App lica tion of the lida ted fit f 20 16: co nso pro rom |
||||||||||
| P aid div ide nds |
- | - | ||||||||
| - | - | - | - | - | - | - | - | - | ||
| Bal n 3 1 M h 2 017 anc e o arc |
24. 000 .00 0 |
179 .34 8 11. - |
2.0 882 47. - |
- | 140 .90 9.9 56 |
1.9 97. 246 |
153 .67 9.9 72 |
387 .41 7 |
.06 7.3 89 154 |
(value in euros)
| Three months period ending on March 31 |
||||
|---|---|---|---|---|
| Note | 2017 | 2016 | ||
| Cash Flows from Operating Activities | ||||
| Receipts from clients | 95.113.198 | 53.333.327 | ||
| Payments to supliers | -58.178.876 | -37.535.197 | ||
| Staff payments | -23.762.185 | -12.243.159 | ||
| Payments/receipt of income tax | -35.910 | -570.529 | ||
| Other paym./receipts related with operating activities | -5.709.535 | 4.275.201 | ||
| Flows from operating activities (1) | 7.426.692 | 7.259.643 | ||
| Cash Flows from Investment Activities | ||||
| Receipts from: | ||||
| Financial investments | 4.180 | |||
| Tangible fixed assets | 2.778 | 1.967 | ||
| Intangible assets | ||||
| Investment benefits | ||||
| Interest received | 227.493 | 1.599.771 | ||
| Payments for: | ||||
| Financial Investments | 20.225 | 5.604 | ||
| Other financial assets | 552.061 | 3.474.665 | ||
| Tangible fixed assets | 10.727.617 | 5.332.608 | ||
| Intangible assests | 432.763 | 278.138 | ||
| Other | 500.000 | |||
| Flows from investment activities (2) | -11.498.215 | -7.989.277 | ||
| Cash flows from financing activities | ||||
| Receipts from: | ||||
| Loans obtained | 2.000.000 | 7.205.210 | ||
| Sale of own shares | ||||
| Payments for: | ||||
| Loans obtained | 6.796.069 | 662.666 | ||
| Amortisation of financial leasing contracts | 38.527 | 37.807 | ||
| Interest and similar costs | 1.129.228 | 480.798 | ||
| Dividends paid | 3.647.565 | |||
| Flows from financing activities (3) | -5.963.824 | 2.376.374 | ||
| Change in cash & cash equivalents (4)=(1)+(2)+(3) | -10.035.347 | 1.646.740 | ||
| Perimeter changes effect | ||||
| Exchange rate differences effect | -38.448 | 463.256 | ||
| Cash & cash equivalents at the start of the period | 37.782.889 | 14.425.207 | ||
| Cash & cash equivalents at end of the period | 27.709.094 | 16.535.203 |
(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 649 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, Sol, Sugestões e Opções, Silva Carvalho Catering e Palace Catering, coffe counters and other concessions. The group has 497 units which it operates and 152 units under a franchise contract. Of this universe, 323 are headquartered in Spain, of which 182 are own establishments and 141 are franchised establishments, and 10 in Angola.
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.
These consolidated financial statements were prepared according to the International Financial Reporting Standards (IFRS), as applied in the European Union and in force on 01 January 2017, mainly with the international standard nº. 34 – Interim Financial Report.
The consolidated 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 31 March 2017 are identical to those applied for preparing the financial statements of 31 March and 31 December 2016, except for the exchange currency differences included in other income / other operating costs and excluded from net financing cost.
There where no substantial differences between accounting estimates and judgments applied on 31 December 2016 and the accounting values considered in the three months period ended on the 31 March 2017.
4.1. The following group companies were included in the consolidation on 31st March 2017 and 2016 and 31 December 2016:
| % Shareholding | ||||
|---|---|---|---|---|
| Company | Head Office | Mar-17 | Mar-16 | Dec-16 |
| 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% | 80% | 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 - Spain | 100% | 100% | 100% |
| Inverpeninsular, S.L. | Vigo - Spain | 100% | 100% | 100% |
| Ibergourmet Produtos Alimentares, S.A. | Porto | 100% | 100% | 100% |
| Ferro & Ferro, Lda. | Porto | 100% | 100% | 100% |
| Asurebi SGPS, S.A. | Porto | 100% | 100% | 100% |
| Charlotte Develops, SL | Madrid - Spain | 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 - Spain | 100% | 100% | 100% |
| (c) Q.R.M.- Projectos Turísticos, S.A | Porto | - | 100% | - |
| Sugestões e Opções-Actividades Turísticas, S.A | Porto | 100% | 100% | 100% |
| Resboavista- Restauração Internacional, Lda | 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 - Spain | 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% |
| (c) Gravos 2012, S.A. | Porto | 100% | 100% | 100% |
| Lusinver Restauracion, S.A. | Vigo - Espanha | 100% | - | 100% |
| The Eat Out Group S.L.U. | Barcelona - Spain | 100% | - | 100% |
| Pansfood, S.A.U. | Barcelona - Spain | 100% | - | 100% |
| Foodstation, S.L.U | Barcelona - Spain | 100% | - | 100% |
| Dehesa de Santa Maria Franquicias, S.L. | Barcelona - Spain | 50% | - | 50% |
| Pansfood Italia, S.R.L. | Barcelona - Spain | 100% | - | 100% |
| 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) Company merged into subsidiary José Silva Carvalho Catering, S.A. in July 2016, with effect from January 1, 2016.
The subsidiary companies were included in the consolidation by the full consolidation method. UQ Consult, the Jointly controlled entity, was 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.
The group did not buy any subsidiary in the three months period ended on 31 March 2017.
In the year ended 31 December 2016, the Ibersol group acquired the following subsidiaries:
| % Shareholding | ||||
|---|---|---|---|---|
| Company | Entry date | Head Office | 2016 | 2015 |
| The Eat Out Group S.L.U. | 31-Out-16 | Barcelona - Spain | 100,00% | - |
| Pansfood, S.A.U. | 31-Out-16 | Barcelona - Spain | 100,00% | - |
| Foodstation, S.L.U | 31-Out-16 | Barcelona - Spain | 100,00% | - |
| Dehesa de Santa Maria Franquicias, S.L. | 31-Out-16 | Barcelona - Spain | 50,00% | - |
| Pansfood Italia, S.R.L. | 31-Out-16 | Barcelona - Spain | 100,00% | - |
The above acquisitions had the following impact on the consolidated statement of financial position on December 31, 2016:
| Date of acquisition | Dec-16 | |
|---|---|---|
| Acquired net assets | ||
| Tangible and intangible assets (Notes 8 and 9) | 32.360.743 | 32.654.939 |
| Stocks | 2.706.371 | 2.646.062 |
| Deferred tax assets | 5.941.376 | 5.601.456 |
| Other assets | 18.937.159 | 19.012.245 |
| Cash & bank deposits | 3.640.340 | 5.523.047 |
| Provisions (Nota 19) | -1.000.000 | -1.000.000 |
| Loans | -16.982.720 | -25.794.395 |
| Deferred tax liabilities | -679.372 | -863.895 |
| Other liabilities | -37.602.707 | -31.153.618 |
| 7.321.190 | 6.625.841 | |
| Goodwill (Note 9) | 70.647.649 | |
| Interests that do not control | -868.839 | |
| Acquisition price | 77.100.000 | |
| Payments | 77.100.000 | |
| Amounts payable in the future | - | |
| 77.100.000 | ||
| Net cash-flows from acquisition | ||
| Payments made | 77.100.000 | |
| Cash & cash equivalents acquired | 3.640.340 | |
| 73.459.660 |
The goodwill of the Eat Out Group in the amount of 70.647.649 euro was determined based on provisional amounts of the net assets acquired.
These acquisition results in significant changes in the consolidated statement of comprehensive income as of March 31, 2017, compared to the same period in 2016.
In the three months period ended on 31 March 2017 and in the year ended December 31, 2016 there were no disposals of subsidiaries.
Ibersol Administration monitors the business based on the following segmentation:
| SEGMENT | BRANDS | ||||||
|---|---|---|---|---|---|---|---|
| Restaurants | Pizza Hut | Pasta Caffe | Pizza Movil | ||||
| Counters | KFC | O'Kilo | Miit | Burguer King | Pans | Coffee Counter | |
| Other business | Sol (SA) | Concessions | Catering | Convenience stores | |||
| Grupo Eat Out | Pans &C.ª FresCo | Ribs | Concessions |
The results per segment in the three months period ended 31 March 2017 and 2016 were as follows:
| Concessions | Other, write off and |
||||
|---|---|---|---|---|---|
| 31 March 2017 | Restaurants | Counters | and Catering | adjustments | Total Group |
| Inter-segment client | - | - | - | - | - |
| External client | 23.496.197 | 45.331.768 | 25.384.398 | 110.698 | 94.323.060 |
| Total sales and services | 23.496.197 | 45.331.768 | 25.384.398 | 110.698 | 94.323.060 |
| Royalties | 820.604 | 1.783.300 | 318.928 | - | 2.922.832 |
| Rents and Condominium | 2.704.070 | 4.725.506 | 7.266.872 | - | 14.696.448 |
| Coste of sales | 4.773.849 | 11.967.357 | 4.947.078 | - | 21.688.285 |
| Operating cash-flow (EBITDA) | 2.787.414 | 6.347.953 | 1.330.552 | - | 10.465.920 |
| Amortisation, depreciation and impairment losses | 1.543.439 | 3.027.044 | 2.102.989 | 6.373 | 6.679.846 |
| Operating income (EBIT) | 1.243.975 | 3.320.909 | -772.437 | -6.373 | 3.786.074 |
| Concessions | Other, write off and |
||||
|---|---|---|---|---|---|
| 31 March 2016 | Restaurants | Counters | and Catering | adjustments | Total Group |
| Inter-segment client | - | - | - | - | - |
| External client | 17.230.042 | 31.079.802 | 4.569.124 | 78.356 | 52.957.324 |
| Total sales and services | 80.649.482 | 150.079.074 | 38.751.162 | 352.677 | 52.957.324 |
| Royalties | 767.340 | 1.449.128 | 52.015 | - | 2.268.483 |
| Rents and Condominium | 2.018.100 | 2.778.608 | 790.273 | - | 5.586.981 |
| Coste of sales | 3.464.254 | 8.289.352 | 1.177.081 | - | 12.930.687 |
| Operating cash-flow (EBITDA) | 1.905.901 | 4.294.974 | 3.078.937 | - | 9.279.812 |
| Amortisation, depreciation and impairment losses | 642.000 | 1.585.255 | 430.997 | 59.424 | 2.717.675 |
| Operating income (EBIT) | 1.263.901 | 2.709.719 | 2.647.941 | -59.424 | 6.562.137 |
On March 31, 2017 and 2016 income and non-current assets by geography is presented as follows:
| 31 MARCH 2017 | Portugal (1) | Spain | Grupo |
|---|---|---|---|
| Restaurants | 48.332.237 | 44.229.145 | 92.561.382 |
| Merchandise | 113.760 | 329.295 | 443.055 |
| Rendered services | 56.557 | 1.262.066 | 1.318.623 |
| Total sales and services | 48.502.554 | 45.820.506 | 94.323.060 |
| Tangible fixed and intangible assets | 144.652.967 | 47.833.452 | 192.486.419 |
| Goodwill | 7.605.482 | 103.551.176 | 111.156.658 |
| Deferred tax assets | 2.574.551 | 5.861.219 | 8.435.770 |
| Financial investments - joint controlled subsidiaries | 2.422.996 | - | 2.422.996 |
| Available-for-sale financial assets | 456.586 | - | 456.586 |
| Other financial assets | 11.025.900 | - | 11.025.900 |
| Other non-current assets | - | 6.500.428 | 6.500.428 |
| Total non-current assets | 168.738.482 | 163.746.275 | 332.484.757 |
| 31 MARCH 2016 | Portugal (1) | Spain | Grupo |
|---|---|---|---|
| Restaurants | 39.994.416 | 12.307.746 | 52.302.162 |
| Merchandise | 109.151 | 396.041 | 505.192 |
| Rendered services | 58.320 | 91.650 | 149.970 |
| Total sales and services | 40.161.887 | 12.795.437 | 52.957.324 |
| Tangible fixed and intangible assets | 130.725.599 | 18.459.198 | 149.184.797 |
| Goodwill | 7.605.482 | 32.903.527 | 40.509.009 |
| Deferred tax assets | 2.877.297 | 391.564 | 3.268.861 |
| Financial investments - joint controlled subsidiaries | 2.409.582 | - | 2.409.582 |
| Available-for-sale financial assets | 408.194 | - | 408.194 |
| Other financial assets | 10.573.511 | - | 10.573.511 |
| Other non-current assets | - | 1.384.562 | 1.384.562 |
| Total non-current assets | 154.599.665 | 53.138.851 | 207.738.516 |
(1) Due to the small size of its operations Angola is included in Portugal segment.
On the three months period ended on 31 March 2016, in operating income, from the agreement with Ascendi, is a non-current income of 2.397.758 eur corresponding to compensation for loss of traffic by charging tolls on former Scuts. It was also agreed not to install the Guimarães Service Areas, Fafe and Paredes have been returned to their respective concession rights that led to the receipt of contractual interest in the amount of 1.570.323 eur (Note 16). Furthermore, non-current consulting services in the amount of 951 thousand euros were provided to third parties.
In the restaurant segment season activity is characterized by a decrease of sales in the first two quarters of the year. In addition sales for the first three months of the year are influenced by the Easter calendar as well as the pace of openings or closures of the group restaurants. The previous years have evidenced that, in comparable perimeter and with an equal distribution of openings and closings, in the period that understands the first three months of the year, sales are about 21% to 23% of annual volume.
In the three months period ended 31 March 2017 and in the year ending on 31 December 2016, entries in the value of tangible fixed assets, depreciation and accumulated impairment losses were as follows:
| Other tangible | Tangible Assets | |||||
|---|---|---|---|---|---|---|
| Land | Buildings | Equipment | fixed Assets | in progress (1) | Total | |
| 1 January 2016 | ||||||
| Cost | 11.963.649 | 150.435.664 | 76.028.676 | 19.707.381 | 411.815 | 258.547.187 |
| Accumulated depreciation | - | 36.522.989 | 56.954.512 | 13.802.872 | - | 107.280.372 |
| Accumulated impairment | - | 9.169.591 | 416.747 | 47.333 | - | 9.633.671 |
| Net amount | 11.963.649 | 104.743.084 | 18.657.418 | 5.857.177 | 411.815 | 141.633.142 |
| 31 December 2016 | ||||||
| Initial net amount | 11.963.649 | 104.743.084 | 18.657.418 | 5.857.177 | 411.815 | 141.633.142 |
| Changes in consolidat perimeter | - | 61.509.602 | 37.914.100 | 956.299 | 239.525 | 100.619.526 |
| Currency conversion | -756.850 | -1.723.366 | -756.531 | -224.851 | -19.440 | -3.481.038 |
| Additions | 135.242 | 16.405.428 | 8.187.617 | 2.615.018 | 1.215.586 | 28.558.891 |
| Decreases | - | 863.164 | 236.294 | 47.292 | 105.686 | 1.252.436 |
| Transfers | - | 100.636 | 5.806 | 11.681 | -234.617 | -116.494 |
| Depreciation in the year | 74.637 | 8.041.000 | 5.062.093 | 1.082.763 | - | 14.260.493 |
| Deprec. by changes in the perim. | - | 38.817.273 | 28.953.945 | 1.042.245 | - | 68.813.463 |
| Impairment in the year | - | 751.562 | 41.432 | 24.750 | - | 817.744 |
| Impairment by changes in the perim. | - | 2.080.269 | 687.570 | 4.407 | - | 2.772.246 |
| Impairment reversion | - | -90.976 | - | - | - | -90.976 |
| Final net amount | 11.267.404 | 130.573.092 | 29.027.075 | 7.013.867 | 1.507.183 | 179.388.621 |
| 31 December 2016 | ||||||
| Cost | 11.342.041 | 222.786.283 | 118.519.498 | 22.193.978 | 1.507.183 | 376.348.985 |
| Accumulated depreciation | 74.637 | 81.893.238 | 88.409.796 | 15.115.597 | - | 185.493.267 |
| Accumulated impairment | - | 10.319.953 | 1.082.628 | 64.515 | - | 11.467.096 |
| Net amount | 11.267.404 | 130.573.092 | 29.027.075 | 7.013.867 | 1.507.183 | 179.388.621 |
| Land | Buildings | Equipment | Other tangible fixed Assets |
Tangible Assets in progress (1) |
Total |
| 31 March 2017 | ||||||
|---|---|---|---|---|---|---|
| Initial net amount | 11.267.404 | 130.573.092 | 29.027.075 | 7.013.867 | 1.507.183 | 179.388.621 |
| Changes in consolidat perimeter | - | - | - | - | - | - |
| Currency conversion | -15.473 | -39.843 | -21.568 | -4.851 | -184 | -81.919 |
| Additions | - | 3.176.466 | 1.432.540 | 151.446 | 180.501 | 4.940.9 53 |
| Decreases | - | 3.432 | 6.542 | 139 | 92.506 | 102.619 |
| Transfers | - | 1.070.062 | 4.669 | 6.798 | -1.082.169 | -640 |
| Depreciation in the year | 8.404 | 3.753.310 | 1.885.691 | 323.846 | - | 5.971.251 |
| Deprec. by changes in the perim. | - | - | - | - | - | - |
| Impairment in the year | - | - | - | - | - | - |
| Impairment by changes in the perim. | - | - | - | - | - | - |
| Impairment reversion | - | - | - | - | - | - |
| Final net amount | 11.243.527 | 131.023.035 | 28.550.483 | 6.843.275 | 512.825 | 178.173.143 |
| 31 March 2017 | ||||||
| Cost | 11.326.196 | 226.385.708 | 119.885.371 | 22.345.420 | 512.825 | 380.455.522 |
| Accumulated depreciation | 82.669 | 85.483.218 | 90.252.261 | 15.437.632 | - | 191.255.779 |
| Accumulated impairment | - | 9.879.455 | 1.082.628 | 64.514 | - | 11.026.597 |
| Net amount | 11.243.527 | 131.023.035 | 28.550.483 | 6.843.275 | 512.825 | 178.173.143 |
(1) changes essentially relate to the central kitchen in Portugal, whose (re) opening took place in the three months period ended on 31 March 2017.
The 2016 investments of approximately 28.6 million in tangible fixed assets, relate to the opening of new units and remodelling of existing ones in Portugal and Spain.
In the three-month period ended March 31, 2017, an investment of approximately 2.6 million euros was made in the central kitchen in Portugal. The remaining investment mainly concerns the opening of the concession at Santa Maria Airport (Azores) and a unit in the group Eat Out.
Goodwill and intangible assets are broken down as follows:
| Mar-17 | Dec-16 | |
|---|---|---|
| Goodwill | 111.156.658 | 111.156.658 |
| Intangible assets | 14.313.276 | 14.990.885 |
| 125.469.934 | 126.147.543 |
In the three months period ended 31 March 2016 and in the year ending on 31 December 2015, entries in the value of intangible assets, amortization and accumulated impairment losses were as follows:
| Goodwill | Industrial property |
Other intangible Assets |
Intangible Assets in progress |
Total | |
|---|---|---|---|---|---|
| 1 January 2016 | |||||
| Cost | 42.370.687 | 23.375.701 | 5.918.825 | 759.034 | 72.424.247 |
| Accumulated amortization | - | 9.386.529 | 5.534.246 | - | 14.920.775 |
| Accumulated impairment | 1.861.678 | 3.661.102 | 39.815 | - | 5.562.594 |
| Net amount | 40.509.009 | 10.328.070 | 344.764 | 759.034 | 51.940.880 |
| 31 December 2016 | |||||
| Initial net amount | 40.509.009 | 10.328.070 | 344.764 | 759.034 | 51.940.880 |
| Changes in consolidat. perimeter | - | 12.915.831 | 9.314.758 | - | 22.230.589 |
| Currency conversion | - | -94.715 | - | -127.949 | -222.664 |
| Additions | 70.647.649 | 1.914.708 | 54.868 | 132.476 | 72.749.701 |
| Decreases | - | -49.444 | 50.066 | 66.883 | 67.505 |
| Transfers | - | 3.150 | - | -3.150 | - |
| Amortization in the year | - | 1.291.011 | 288.783 | - | 1.579.794 |
| Amortiz. by changes in the perimeter | - | 12.108.385 | 6.754.442 | - | 18.862.827 |
| Impairment in the year | - | - | - | - | - |
| Impairment by changes in the perim. | - | 7.562 | 33.274 | - | 40.836 |
| Impairment reversion | - | - | - | - | - |
| Final net amount | 111.156.658 | 11.709.530 | 2.587.825 | 693.528 | 126.147.543 |
| 31 December 2016 | |||||
| Cost | 113.018.336 | 37.987.818 | 14.894.091 | 693.528 | 166.593.773 |
| Accumulated amortization | - | 22.609.624 | 12.264.391 | - | 34.874.015 |
| Accumulated impairment | 1.861.678 | 3.668.664 | 41.875 | - | 5.572.216 |
| Net amount | 111.156.658 | 11.709.530 | 2.587.825 | 693.528 | 126.147.543 |
| Goodwill | Industrial property |
Other intangible Assets |
Assets in progress |
Total | |
|---|---|---|---|---|---|
| 31 March 2017 | |||||
| Initial net amount | 111.156.658 | 11.709.530 | 2.587.825 | 693.528 | 126.147.543 |
| Changes in consolidat. perimeter | - | - | - | - | - |
| Currency conversion | - | -2.792 | - | -2.808 | -5.600 |
| Additions | - | 34.127 | - | - | 34.127 |
| Decreases | - | - | 1.448 | - | 1.448 |
| Transfers | - | - | - | - | - |
| Amortization in the year | - | 469.605 | 235.083 | - | 704.688 |
| Amortiz. by changes in the perimeter | - | - | - | - | - |
| Impairment in the year | - | - | - | - | - |
| Impairment by changes in the perim. | - | - | - | - | |
| Impairment reversion | - | - | - | - | - |
| Final net amount | 111.156.658 | 11.271.260 | 2.351.294 | 690.720 | 125.469.934 |
| 31 March 2017 | |||||
| Cost | 113.018.336 | 38.019.153 | 14.890.575 | 690.720 | 166.618.784 |
| Accumulated amortization | - | 23.079.229 | 12.497.406 | - | 35.576.635 |
| Accumulated impairment | 1.861.678 | 3.668.664 | 41.875 | - | 5.572.216 |
| Net amount | 111.156.658 | 11.271.260 | 2.351.294 | 690.720 | 125.469.934 |
The distribution of goodwill allocated to segments is presented as follows:
| Mar-17 | Dec-16 | |
|---|---|---|
| Eat Out | 70.647.649 | 70.647.649 |
| Restaurants | 11.104.988 | 11.104.988 |
| Counters | 25.349.831 | 25.349.831 |
| Concessions and Catering | 3.874.469 | 3.874.469 |
| Other, write off and adjustments | 179.721 | 179.721 |
| 111.156.658 | 111.156.658 |
Income per share in the three months period ended 31 March 2017 and 2016 was calculated as follows:
| Mar-17 | Mar-16 | |
|---|---|---|
| Profit payable to shareholders | 1.997.246 | 5.913.159 |
| Mean weighted number of ordinary shares issued | 24.000.000 | 20.000.000 |
| Mean weighted number of own shares | -2.399.905 | -2.000.000 |
| 21.600.095 | 18.000.000 | |
| Basic earnings per share (€ per share) | 0,09 | 0,33 |
| Earnings diluted per share (€ per share) | 0,09 | 0,33 |
| Number of own shares at the end of the year | 2.399.905 | 2.000.000 |
Since there are no potential voting rights, the basic earnings per share is equal to earnings diluted per share.
At the General Meeting of 26th May 2017, the company decided to pay a gross dividend of 0,10 euro per share (0,10 euro in 2016), representing a total value of 2.160.000 euro for outstanding shares (1.800.000 euro in 2016), It is expected that the payment will be made on June 23, 2017.
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 31st March 2017 and 31st December 2016, responsibilities not recorded by the companies and included in the consolidation consist mainly of bank guarantees given on their behalf, as shown below:
| Mar-17 | Dec-16 | ||
|---|---|---|---|
| Bank guarantees | 23.626.593 | 18.424.430 |
The relevant amount comes from the guarantees required by the owners of spaces concession (Airports) or leased (Shopping centers).
In addition, Ibersol SGPS provided guarantees to the subsidiaries in the amount of 2.750.000 USD.
No investments had been signed on the Balance Sheet date which had not taken place yet.
Changes during the three months period ended on 31 March 2017 and in the year 2016, under the heading of asset impairment losses were as follows:
| Mar-17 | |||||||
|---|---|---|---|---|---|---|---|
| Starting balance |
Perimeter variation |
Cancellation | Impairment assets disposals |
Impairment in the year |
Impairment reversion |
Closing balance |
|
| Tangible fixed assets | 11.467.097 | - | - | -440.500 | - | - | 11.026.597 |
| Goodwill | 1.861.678 | - | - | - | - | - | 1.861.678 |
| Intangible assets | 3.710.538 | - | - | - | - | - | 3.710.538 |
| Stocks | 74.981 | - | - | - | - | - | 74.981 |
| Other current assets | 2.753.877 | -305 | -86.423 | - | 131.100 | -40.395 | 2.757.854 |
| 19.868.171 | -305 | -86.423 | -440.500 | 131.100 | -40.395 | 19.431.648 |
| Dec-16 | |||||||
|---|---|---|---|---|---|---|---|
| Starting balance |
Perimeter variation |
Cancellation | Impairment assets disposals |
Impairment in the year |
Impairment reversion |
Closing balance |
|
| Tangible fixed assets | 9.633.672 | 2.772.246 | - | -1.665.589 | 817.744 | -90.976 | 11.467.097 |
| Goodwill | 1.861.678 | - | - | - | - | - | 1.861.678 |
| Intangible assets | 3.700.917 | 40.836 | - | -31.215 | - | - | 3.710.538 |
| Stocks | 74.981 | - | - | - | - | - | 74.981 |
| Other current assets | 1.442.527 | 2.022.906 | -588.973 | - | 33.885 | -156.467 | 2.753.877 |
| Other non current assets | 134.342 | - | -134.342 | - | - | - | - |
| 16.848.116 | 4.835.988 | -723.315 | -1.696.804 | 851.629 | -247.443 | 19.868.171 |
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 in a growing phase. 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. The financing of the Angolan subsidiary in foreign currency in the amount of \$ 1.375.000, does not have large exposure due to the reduced amount. The remaining financing concerning Angolan subsidiaries are denominated in the local currency, the same in which the income is generated. In light 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:
| Mar-17 | |||
|---|---|---|---|
| Euro exchange rates | (x | Rate on March, 31 | Average interest rate |
| foreign currency per 1 Euro) | 2017 | March 2017 | |
| Kwanza de Angola (AOA) | 185,391 | 183,655 | |
| Dec-16 | |||
| Euro exchange rates | (x | Rate on December, | Average interest rate |
| foreign currency per 1 Euro) | 31 2016 | year 2016 | |
| Kwanza de Angola (AOA) | 184,468 | 181,554 |
ii) Price risk
The group is not greatly exposed to the merchandise price risk.
With the exception of the Angola Treasury Bonds, the group has no significant interest bearing assets. Therefore, profit and cash flows from investment activities are substantially independent of changes in market interest rate. Regarding the Angolan State treasury bonds, interest is fixed, so there is also no risk.
The group's interest rate risk follows its liabilities, in particular long-term loans. Loans issued with variable rates expose the group to the cash flow risk associated to interest rates. Loans with fixed rates expose the group to the risk of the fair value associated to interest rates. At the current interest rates, in financing of longer maturity periods the group has a policy of fixing interest rates of at least 50% of the outstanding amount.
The unpaid debt bears variable interest rate, part of which has been the object of an interest rate swap. The interest rate swap to hedge the risk of a 6,25 million euros (commercial paper programmes) loan has the maturity of the underlying interest and the repayment plan identical to the terms of the loan. Financing contracted at the end of the period will be subject to settlement operations during the year 2017. Additionally in the month of May was contracted a swap in the amount of 24 million euros.
Based on simulations performed on 31 March 2017, an increase of 100 basis points in the interest rate, maintaining other factors constant, would have a negative impact in the net profit of 284.000 euros.
The main activity of the Group is carried out with sales paid in cash, or debit or credit card, so the Group has no significant credit risk concentrations. Regarding the customers, the risk is limited to the Catering business and sales of services and merchandise to franchised, representing less than 4% of the consolidated sales. The Group has policies to 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.
The Group's cash and cash equivalents include mainly deposits resulting from cash provided by sales and its deposits in current accounts. These amounts excluded, the value of financial investments at March 31, 2017, is not significant, with the exception of the above mentioned Treasury Bonds of the Republic of Angola in the amount of 18 million euro, subject to country risk.
Deposits and other financial investments are spread over several credit institutions; therefore there is not a 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.
The Group considers that the short-term bank loans are due on the renewal date and that the commercial paper programmes matured on the dates of denunciation.
On the three months period ended on 31 March 2017, current liabilities reached 130 million euros, compared with 82 million euros in current assets. This disequilibrium is, on one hand, a financial characteristic of this business and, on the other hand, due to the use of commercial paper programmes in witch the Group considers the maturity date as the renewal date, regardless of its initial stated periods. In order to ensure liquidity of the short term debt it is expected in the year 2017 the renewal of the commercial paper programmes (18.250.000 euros). However, the expected operating cash flows and, if necessary, contracted credit lines, on the amounts of which have not yet been used, are sufficient to settle current liabilities.
Even with reduced use of the group has contracted a significant amount of short-term lines. On March 31, 2017, the use of short term liquidity cash flow support was less than 3%. Investments in term deposits and other application of 28 million euros, match 17% of liabilities paid.
The following table shows the Group financial liabilities (relevant items), considering contractual cash-flows:
| to March 2018 | from March 2018 to 2028 | |
|---|---|---|
| Bank loans and overdrafts | 45.521.357 | 117.368.104 |
| Other non-current liabilities | - | 200.828 |
| Accounts payable to suppliers and accrued | ||
| costs | 56.397.458 | - |
| Accrued costs | 10.058.964 | - |
| Total | 111.977.779 | 117.568.932 |
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.
On 31st March 2017 and 31st December 2016 the gearing ratio was of 43% and 42%, respectively, as follows:
| Mar-17 | Dec-16 | ||
|---|---|---|---|
| Bank loans | 162.889.461 | 166.791.662 | |
| Other financial assets | -18.032.402 | -17.480.341 | |
| Cash and bank deposits | -30.936.405 | -39.588.532 | |
| Net indebtedness | 113.920.653 | 109.722.788 | |
| Equity | 154.067.389 | 152.061.828 | |
| Total capital | 267.988.042 | 261.784.616 | |
| Gearing ratio | 43% | 42% |
The fair value of financial instruments commercialised in active markets (such as publicly negotiated derivatives, securities for negotiation and available for sale) 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 31 March 2017 and 31st December 2016 are broken down as follows:
| Mar-17 | Dec-16 | |
|---|---|---|
| Clients | 11.341.306 | 11.933.322 |
| State and other public entities | 2.033.317 | 1.542.489 |
| Other debtors | 7.226.730 | 5.206.424 |
| Advances to suplliers | 502.345 | 236.513 |
| Advances to financial investments debt | 2.900.000 | 2.900.000 |
| Accruals and income | 6.137.185 | 6.677.919 |
| Deferred costs | 2.830.563 | 2.841.775 |
| Other current assets | 32.971.446 | 31.338.442 |
| Accumulated impairment losses | 2.757.853 | 2.753.877 |
| 30.213.593 | 28.584.565 | |
| Mar-17 | Dec-16 | |
| Other creditors | 10.058.964 | 10.933.132 |
| State and other public entities | 6.294.823 | 7.035.937 |
| Deferred income | 1.701.506 | 657.354 |
| 18.055.293 | 18.626.423 |
Net financing cost on 31st March 2017 and 2016 are broken down as follows:
| 2017 | 2016 | |
|---|---|---|
| Interest paid | 1.120.613 | 470.001 |
| Interest earned (1) | -240.936 | -1.717.878 |
| Currency exchange differences | -10.534 | - |
| Payment discounts obtained | -2.947 | -2.417 |
| Other financial costs and income | 427.734 | 199.268 |
| 1.293.930 | -1.051.026 |
(1) 2016 balance is essentially Aenor's compensation interest. It was agreed not to install the Service Areas of Guimarães, Fafe and Paredes and the respective concession rights that gave rise to the receipt of contractual interest in the amount of 1.570.323 (Note 6).
The related parties of Ibersol group are:
(*) ATPS voting rights are also attributable to Antonio Carlos Vaz Pinto de Sousa and António Alberto Guerra Leal Teixeira under subparagraph b) of paragraph 1 of article 20 and paragraph 1 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, CALUM - SERVIÇOS E GESTÃO, S.A. with the NIPC 513799486 and DUNBAR - SERVIÇOS E GESTÃO, S.A with the NIPC 513799257, which together hold the majority of the capital of ATPS.
With respect to the balances and transactions with related entities, the overall value of the balances and transactions of the Group with the joint controlled UQ Consult relates mainly to support services and management information systems, and was, respectively, 744.544 and 632.445 euros.
The company shareholder ATPS-S.G.P.S., S.A., which signed a service-rendering contract with the subsidiary Ibersol Restauração, S.A.. ATPS-S.G.P.S., S.A. under contract with Ibersol Restauração, S.A. has the obligation to ensure that its administrators, António Carlos Vaz Pinto de Sousa and António Alberto Guerra Leal Teixeira, manage the group without incur in any additional charge. The company does not pay directly to its administrators any remuneration.
a) IFRS 9 (new), 'Financial instruments' (effective for annual periods beginning on or after 1 January 2018). IFRS 9 replaces the guidance in IAS 39, regarding: (i) the classification and measurement of financial assets and liabilities; (ii) the recognition of credit impairment (through the expected credit losses model); and (iii) the hedge accounting requirements and recognition. The impact of this standard is being assessed by Ibersol's management.
b) IFRS 15 (new), 'Revenue from contracts with customers' (effective for annual periods beginning on or after 1 January 2018). This new standard, applies only to contracts with customers to provide goods or services, and requires an entity to recognise revenue when the contractual obligation to deliver the goods or services is satisfied and by the amount that reflects the consideration the entity is expected to be entitled to, following a five step approach." The impact of this standard is being assessed by Ibersol's management.
a) IAS 7 (amendment), 'Cashflow statement – Disclosure initiative' (effective for annual periods beginning on or after 1 January 2017). This amendment is still subject to endorsement by the European Union. This amendment introduces an additional disclosure about the changes in liabilities arising from financing activities, disaggregated between cash changes and non-cash changes and how it reconciles with the reported cash flows from financing activities, in the Cash Flow Statement. Its application is not expected to have significant impacts.
b) IAS 12 (amendment),'Income taxes – Recognition of deferred tax assets for unrealised losses' (effective for annual periods beginning on or after 1 January 2017). This amendment is still subject to endorsement by the European Union. This amendment clarifies how to account for deferred tax assets related to assets measured at fair value, how to estimate future taxable profits when temporary deductible differences exist and how to assess recoverability of deferred tax assets when restrictions exist in the tax law. Its application is not expected to have significant impacts.
c) IAS 40 (amendment), 'Transfers of Investment property' (effective for annual periods beginning on or after 1 January 2018). This amendment is still subject to endorsement by the European Union. This amendment clarifies when assets are transferred to, or from investment properties, the evidence of the change in use is required. A change of management intention in isolation is not enough to support a transfer. Its application is not expected to have significant impacts.
d) IFRS 2 (amendment), 'Classification and measurement of share-based payment transactions' (effective for annual periods beginning on or after 1 January 2018). This amendment is still subject to endorsement by the European Union. This amendment clarifies the measurement basis for cash-settled, share-based payments and the accounting for modifications to a share-based payment plan that change the classification an award from cashsettled to equity-settled. It also introduces an exception to the principles in IFRS 2 that will require an award to be treated as if it was wholly equity-settled, where an employer is obliged to withhold an amount for the employee's tax obligation associated with a share-based payment and pay that amount to the tax authority. Its application is not expected to have significant impacts.
e) IFRS 4 (amendment), 'Insurance contracts (Applying IFRS 4 with IFRS 9)' transactions' (effective for annual periods beginning on or after 1 January 2018). This amendment is still subject to endorsement by the European Union. This amendment allows companies that issue insurance contracts the option to recognise in Other Comprehensive Income, rather than Profit or Loss the volatility that could rise when IFRS 9 is applied before the new insurance contract standard is issued. Additionally, it is given an optional temporary exemption from applying IFRS 9 until 2021, to the companies whose activities are predominantly connected with insurance, not being applicable at consolidated level. Its application is not expected to have significant impacts.
f) Amendments to IFRS 15, f) 'Revenue from contracts with customers' (effective for annual periods beginning on or after 1 January 2018). These amendments are still subject to endorsement by European Union. These amendments refer to additional guidance for determining the performance obligations in a contract, the timing of revenue recognition from a license of intellectual property, the review of the indicators for principal versus agent classification, and to new practical expedients to simplify transition. Its application is not expected to have significant impacts.
g) IFRS 16 (new), 'Leases' (effective for annual periods beginning on or after 1 January 2019). This standard is still subject to endorsement by European Union. This new standard replaces the IAS 17 with a significant impact on the accounting by lessees that are now required to recognise a lease liability reflecting future lease payments and a "right-of-use asset" for all lease contracts, except for certain short-term leases and for low-value assets. The definition of a lease contract also changed, being based on the "right to control the use of an identified asset". The impact of this standard is being assessed by Ibersol's management.
Annual Improvement 2014 – 2016 (generally effective for annual periods beginning on or after 1 January 2017). These improvements are still subject to endorsement by European Union. The 2014-2016 annual improvements impacts: IFRS 1, IFRS 12 and IAS 28. Its application is not expected to have significant impacts.
There are no subsequent events to 31st March 2017 that may have a material impact on the financial statements presented, in addition to the aforementioned swap to hedge interest rate risk in the amount of 24 million eur contracted in May.
The financial statements were approved by the Board of Directors and authorised for emission on 29th May 2017.
With the positive signs of evolution of the economic indicators, it is expected that the sales growth trend will continue, maintaining margins, without considering the effect of changing the VAT rate in Portugal, which occurred at the beginning of the second half of the last year.
In the second quarter, in addition to the positive evolution of consumption, we also expect positive calendar impacts, namely the Easter holidays in April and the increase in the shopping malls traffic, highly affected by the television broadcast of the European Football Championship in 2016.
The expansion plan will result in the opening at least of 17 new restaurants in Portugal until the end of the year and in the continuity of the remodeling plan, including Pans and Pizza Hut restaurants. In the second quarter, 7 of the planned openings for the year are expected to materialize.
As far as Eat Out Group is concerned, the integration process will be continued and special attention will be given to the Barcelona competition, whose deadline for submission of proposals was 10 April last. At the same time, new contests will be opened in different airports, Madrid, Malaga and the Canary Islands.
In Angola, the development of the business is closely linked to oil price trends. The pressure facing the Angolan currency indicates that there may be a devaluation scenario at the end of this year, which may result in a reduction of the difficulties to currencies access.
Porto, 29th May 2017
______________________________ 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 quarter of 2017 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, and
(ii) the interim management report includes a fair review of the important events that have occurred in the first nine months of the year and the evolution of business performance and the position of all the companies included in consolidation.
Porto, 29th May 2017
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
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