Quarterly Report • May 29, 2017
Quarterly Report
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1ST QUARTER 2017
| 07 | Governing Bodies |
|---|---|
| 09 | Management Report |
| 19 | Holders of Qualified Shareholdings |
| 20 | Consolidated Financial Statements |
| 25 | Notes to the Consolidated Financial Statements |
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 Chairman Mário Alberto Neves Assis Ferreira Patrick Wing Ming Huen
Members
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 Chairman Jorge Armindo de Carvalho Teixeira Vasco Esteves Fraga Calvin Ka Wing Chann
Chairman Mário Pereira Pinto
Members António José Alves da Silva Manuel Martins Lourenço
Alternate Armando do Carmo Gonçalves
Secretary Carlos Alberto Francisco Farinha
Alternate Artur Alexandre Conde de Magalhães Mateus
Lampreia, Viçoso & Associado, SROC, Lda., representada por José Martins Lampreia
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. modified 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.
The Company held indirectly through subsidiaries interests in the tourism sector, in particular, in gaming activities at casinos. The 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 first quarter 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 31st March 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 (five) 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 financial year.
During the first quarter of 2017, the Company, did not sold or acquired own shares.
The Company's shares are listed on the Lisbon Stock Exchange since February 14, 1986 — î2.A.
The 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 March 31st, 201 the Company had two reference shareholders, which control 90,46% of the share capital, as infographics î2.C.
On March 31st, 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. This 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. The Company was founded in September 2015 in order to apply for an online gaming license. The license was issue during July 2016 and the Company immediately started exploring the online gambling activity.
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. This 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..
ESTORIL-SOL (V) - Investimentos Imobiliários, S.A. Its share capital of EUR 50.000 is fully paid up by ESTORIL-SOL, S.G.P.S., S.A.. The 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 - INVESTIMENTOS HOTELEIROS, S.A. With a share capital of EUR
10.835.000 is 90% held by 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..
The growth cycle of gaming revenues remained during the first quarter of 2017. The total gross game revenues of the Estoril Sol Group (territorial and online) amounted to 49,9 million Euros, with an overall growth of 7,5% (0% territorial game), to which contributed the online revenues nonexistent in the first quarter of 2016 (game revenues detailed by casino in graphics î4.A and 4.B).
î 4.A Game Revenues - 1st Quarter î 4.B Game Revenues Detailed by Casino - 1st quarter 2016 and 2017
(Million Euros)
In the first quarter of 2017 the Group's Consolidated EBITDA increased by 26% and amounted to Euro 9,9 million Euros.
As at 31st March 2017 the Group reported positive consolidated net results of 4,5 million Euros — î4.C.
With the exception of Casino do Estoril, all other casinos in the Group improve their performance in the first quarter of 2017 compared to last year.
In the first quarter 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 first three months of 2017 in the total amount of approximately 0,3 million Euros — î4.E.
In a concerted effort to financial stability and less dependence on third parties, the Group has consistently reduced its bank debt, this reduction resulted in a significant decrease in financial costs incurred by the Group.
By the end of March 2017 the Group bank debt was 35,2 million Euros — î4.F.
In Portugal, the gambling activity in land based casinos is developed by four business groups that exploit, under a public concession, the eleven casinos existing in the national territory.
The Estoril-Sol Group, through its subsidiaries, operates three of the four biggest casinos in Portugal, accounting for 64% of net income and taxes paid and generated by the activity in Portugal.
Revenues from gambling in Portugal during the first quarter of 2017 amounted to approximately 71,7 million Euros, almost the same (0% growth rate) as last year first quarter.
In the same period the Group territorial game revenues achieved 46,4 million Euros, an non-relevant increase of 0,1% — î5.A.
Consolidated Net Income
(Million Euros)
î 4.D EBITDA/Consolidated Net Income (Million Euros)
-0,2 -0,6
2014 2015 2016 2017
7,8
1,6
9,9
4,5
7,2
-2
2
4
6
8
6,7
10
12
On the 28th June 2015 the online gambling regulation approved by decree-law 66/2015 entered into force.
The issue of the first license occurred one year later, in May 2016, it was a sports betting license. The second license issued by the Turismo de Portugal took place in July 2016 and also for sports betting.
In July 2016 the first online casino license was issued. This license 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.
Estoril-Sol Group recorded online gaming revenues during the first quarter of 2017 in the amount of 3,6 million Euros.
During the first quarter of 2017, the Group recorded combined gross game revenues, territorial and online, of 49,9 million Euros, with an overall growth of 7,5%, which was contributed by the online gaming revenues, nonexistent in the first quarter of 2016. Net from gaming taxes, the Group's total game revenues amounted to 24,9 million Euros, an increase of 12,2% over the 22,1 million Euros achieved in the first quarter of the previous year.
The effective tax rate borne by the Group in the first quarter of 2017 was 50% compared to 52% in 2016, and this was offset 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.
The other operating revenues of Estoril-Sol, restaurant and entertainment, increased by 12% to 2,1 million Euros. The Group's 5,8% increase in operating costs reflects the Group's investment in streamlining and increasing the entertainment, leisure and restaurant offer in the casinos, but mainly reflects the strong investment in marketing and advertising carried out by the Group in the first quarter of 2017 related with the online casino operation. This strong commitment and investment during the first quarter 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.
Estoril-Sol Group improve its operating results in almost 27%, and reached for the first quarter of 2017 a positive EBITDA of 9,9 million Euros.
In a concerted effort to financial stability and less dependence on third parties, the Group has been successively reducing its bank debt. This reduction resulted in a significant decrease in financial costs incurred by the Group Estoril-Sol, a decrease of 51% over the first three months of 2017 compared to same period last year. Estoril-Sol supported almost 0,4 million Euros with loan interests during the first quarter of 2017.
The Consolidated Net Profit in the first quarter of 2017 was positive by 4,5 million Euros compared
with earnings of 1,6 million Euros in the previous year. Of these 4,5 million Euros, 3,5 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 — î5.C.
During the first quarter of 2013, after 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 filed lawsuits against the State in which they seek to be restored the financial balance of Gaming Concessions. Sucha 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 significant 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. Thus, 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 17 to the consolidated accounts).
Between the 31st of March 2017 and the date of this report, no relevant facts occurred that could materially affect the financial position and the future results of Estoril-Sol, S.G.P.S., S.A. and the other Companies of the Group.
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:
• The 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;
• The information contained in the consolidated financial 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 financial situation and the results of Estoril-Sol, S.G.P.S., S.A. and the companies included in the consolidation perimeter.
Estoril, 26th May, 2017
| March 2017 | March 2016 | Var. % | |
|---|---|---|---|
| Game Revenue | 49.896.203 | 46.420.209 | 7.5% |
| Special Gaming Tax | $-24.938.950$ | $-24.285.854$ | $\alpha$ |
| Effective Tax Rate | 50% | 52% | |
| Game Revenue - Net | 24.957.253 | 22.134.354 | 12,8% |
| Other revenue (F&B/Entertainment) | 2.179.131 | 1.945.849 | 12,0% |
| Operating costs | $-17.209.667$ | $-16.262.052$ | 5,8% |
| EBITDA | 9.926.717 | 7.818.151 | 27,0% |
| Amortization and Depreciation | $-4.979.809$ | $-5.360.992$ | $-7,1$ |
| Financial Costs | $-398.552$ | $-811.048$ | $-51%$ |
| Income Tax (IRC) | $\Omega$ | $-7.000$ | $-100\%$ |
| Consolidated Net Result | 4.548.357 | 1.639.112 | 177% |
| Equity holders of the Parent Company | 3.526.687 | 1.639.112 | |
| Non-controlling interests | 1.021.670 | ||
| 4.548.357 | 1.639.112 |
a) Includes the
amounts recorded in amounts recorded in
"Goming taxes" as
"Special Gaming Tax
(current)" and "Annual
Gaming Tax (difference
to minimum grant)".
Chairman Stanley Hung Sun Ho
Vice-Chairman 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
On 31st March 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 31st March 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.
The 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.
Therefore, 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 31st March 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. Therefore, 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 31st March 2017, 32,67% and 33,13% of the voting rights.
(Amounts in Euros)
| Notes | Mar 2017 | Dec 2016 | |
|---|---|---|---|
| ASSETS | |||
| NON-CURRENT ASSETS | |||
| Tangible fixed assets: | |||
| Reversible to the State | 10 | 40 356 517 | 42 654 547 |
| Not reversible to the State | 10 | 55 361 857 | 55 839 165 |
| Tax deductions on investments | (14 493 888) | (15 399 000) | |
| 81 224 486 | 83 094 712 | ||
| Intangible assets: | 11 | 52 764 176 | 55 639 395 |
| Investment properties | 197 407 | 198 795 | |
| Other non current assets | 44 980 | 41 907 | |
| TOTAL NON-CURRENT ASSETS | 134 231 049 | 138 974 809 | |
| CURRENT ASSETS: | |||
| Inventories | 6 780 178 | 6 775 646 | |
| Accounts receivable - trade | 387 119 | 327 017 | |
| Other accounts receivable | 1 682 288 | 1 500 547 | |
| Cash and cash equivalents | 12 | 15 418 436 | 13 573 389 |
| TOTAL CURRENT ASSETS | 24 268 021 | 22 176 599 | |
| TOTAL ASSETS | 158 499 070 | 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 | 9 210 008 | 2 987 819 | |
| Consolidated net profit | 3 526 687 | 6 554 939 | |
| Equity attributable to the holders of the Parent Company | 80 111 247 | 76 584 558 | |
| Equity attributable to non-controlling interests | 14 | 2 169 831 | 1 148 165 |
| TOTAL EQUITY | 82 281 078 | 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 | 8 840 749 | 8 851 972 | |
| Total non-current liabilities | 14 401 387 | 14 412 610 | |
| Current liabilities | |||
| Financial debt | 15 | 34 047 600 | 29 100 739 |
| Other accounts payable | 16 | 27 769 005 | 39 905 336 |
| Total current liabilities | 61 816 605 | 69 006 074 | |
| TOTAL LIABILITIES | 76 217 992 | 83 418 684 | |
| TOTAL EQUITY AND LIABILITIES | 158 499 070 | 161 151 407 |
(Amounts in Euros)
| Notes | 31st Mar 2017 | 31st Mar 2016 | |
|---|---|---|---|
| REVENUE | |||
| Gaming revenues | 6 | 49 896 203 | 46 420 209 |
| Gaming taxes | 6 | (24 938 950) | (24 285 855) |
| 24 957 253 | 22 134 354 | ||
| Other operating revenue | 6 | 2 179 131 | 1 945 850 |
| 27 136 384 | 24 080 204 | ||
| OPERATING EXPENSES | |||
| Cost of sales | (704 046) | (635 300) | |
| Supplies and external services | 7 | (7 987 523) | (7 083 539) |
| Wages and salaries | 8 | (7 851 020) | (7 784 271) |
| Depreciation and amortization | (4 979 809) | (5 360 992) | |
| Impairments - accounts receivable ((increases)/reversals) | - | 450 | |
| Impairment of non-depreciable/amortizable investments | (45) | (3 344) | |
| Other operating expenses | (667 033) | (756 048) | |
| Total operating expenses | (22 189 476) | (21 623 044) | |
| Income before financial results and taxes | 4 946 908 | 2 457 160 | |
| FINANCIAL (LOSSES) AND GAINS | |||
| Financial losses | 9 | (410 203) | (818 774) |
| Financial gains | 9 | 11 651 | 7 726 |
| (398 552) | (811 048) | ||
| Income before taxes | 4 548 357 | 1 646 112 | |
| Income taxes | - | (7 000) | |
| Consolidated Net Income | 5 | 4 548 357 | 1 639 112 |
| Attributable to: | |||
| Equity holders of the Parent Company | 3 526 687 | 1 639 112 | |
| Non-controlling interests | 14 | 1 021 670 | - |
| 4 548 357 | 1 639 112 | ||
| Net result per share | 18 | 0,30 | 0,14 |
(Amounts in Euros)
| Share Capital |
Treasury Shares |
Issue Premiums |
Legal Reserve |
Other Reserves and Retained Earnings |
Consol. Net Result of the Year |
Total | Non Controlling Interests (Note 14) |
Total Equity |
|
|---|---|---|---|---|---|---|---|---|---|
| Balance at 1st January 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 profit of the year ended 31st December 2015 |
- | - | - | - | 4 196 063 | (4 196 063) | - | - | |
| Consolidated Other Comprehensive Income (OCI) of the period ended 31st March 2016 |
- | - | - | - | - | 1 639 112 | 1 639 112 | - | 1 639 112 |
| Balance at 31st March 2016 | 59 968 420 | (708 306) | 7 820 769 | 6 614 782 | (3 075 115) | 1 639 112 | 72 259 664 | - | 72 259 664 |
| Balance at 1st January 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 profit of the yeat ended 31st December 2016 |
- | - | - | 332 750 | 6 222 189 | (6 554 939) | - | ||
| Consolidated Other Comprehensive Income (OCI) of the period ended 31st March 2017 |
- | - | - | - | - | 3 526 687 | 3 526 687 | 1 021 670 | 4 548 357 |
(Amounts in Euros)
| Notes | 31st Mar 2017 | 31st Mar 2016 | |
|---|---|---|---|
| OPERATING ACTIVITIES | |||
| Receipts from clients | 51 172 781 | 47 414 198 | |
| Payments to suppliers | (10 116 960) | (8 480 049) | |
| Payments to staff | (6 875 384) | (6 987 896) | |
| Cash flow generated by operations | 34 180 437 | 31 946 254 | |
| Payment of income tax | (2 904) | (11 700) | |
| Payment of Special Gaming tax | (33 810 706) | (31 554 846) | |
| Other payments relating to the operating activity | (1 761 399) | (1 741 685) | |
| Cash flow from operating activities (1) | (1 394 572) | (1 361 977) | |
| INVESTING ACTIVITIES | |||
| Receipts from: | |||
| Interest and similar income | 11 439 | 7 726 | |
| 11 439 | 7 726 | ||
| Payments in respect of: | |||
| Tangible fixed assets | (1 312 916) | (349 857) | |
| (1 312 916) | (349 857) | ||
| Cash flow from investment activities (2) | (1 301 477) | (342 131) | |
| FINANCING ACTIVITIES | |||
| Receipts from: | |||
| Bank loans obtained | 91 817 784 | 93 813 607 | |
| 91 817 784 | 93 813 607 | ||
| Payments in respect of: | |||
| Bank loans repaid | (86 835 074) | (93 559 765) | |
| Interest and similar costs | (441 615) | (1 075 136) | |
| (87 276 688) | (94 634 902) | ||
| Cash flow from financing activities (3) | 4 541 096 | (821 295) | |
| Variation in cash and cash equivalents (4) = (1)+(2)+(3) | 1 845 047 | (2 525 403) | |
| Cash and cash equivalents at the start of the period | 12 | 13 573 389 | 10 839 350 |
| Cash and cash equivalents at the end of the period | 15 418 436 | 8 313 947 |
The 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.
The attached financial 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 financial statements for the year ended 31st December 2016. The interim financial information now disclose was not subjected to an external audit or limited review
During the period ended on 31st March 2017, there were no changes in accounting policies in relation to those used in the preparation and presentation of the financial statements of the year ended on 31st December 2016, nor were any material errors recognised relating to previous periods.
The companies included in the consolidation, their registered offices, the method of consolidation adopted and the proportion of the capital effectively held on 31st March 2017 and 31st March 2016 are the following:
| Method of | Effective percentage of the capital held | ||||
|---|---|---|---|---|---|
| Name | Head Office | Consolidation | Mar 2017 | Dec 2016 | |
| Estoril-Sol, S.G.P.S., S.A. | Estoril | Integral | Holding Co. | Holding Co. | |
| 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.
These holdings are presented at the value resulting from the equity pick-up method. Using this method, the financial statements include the part attributable to the Estoril Sol Group of the results recognised from the date on which the significant influence starts up to the date on which it effectively 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 significant influence.
During the first 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.
The segments reportable by the Group are based on the identification of segments in line with the financial 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. The segments identified by the Group for reporting by segments, are therefore consistent with the way in which the Board of Directors analyses its business, corresponding to:
• the Póvoa de Varzim Faming Concession the Póvoa Casino;
• the Online gambling license to Casino Online;
• and "Others", essentially including the effect of the holding companies and of the other operating activities of the Group.
On 31st March 2017 and 2016, the information by business segment, is as follows:
| Estoril Game Concession | Póvoa Game Concession |
License for Online Gambling |
||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Estoril Casino |
Lisboa Casino |
Sub-Total | Póvoa Casino |
Casino Online |
Other | Total | ||||||||
| Net assets | 33 054 865 | 77 251 150 | 110 306 016 | 38 345 863 | 5 505 918 | 4 341 273 | 158 499 070 | |||||||
| Net liabilities | 18 403 309 | 24 724 978 | 43 128 287 | 26 873 284 | 1 166 237 | 5 050 184 | 76 217 992 | |||||||
| Result of the segment | (392 119) | 4 097 082 | 3 704 963 | (842 521) | 2 043 341 | (357 426) | 4 548 357 | |||||||
| Investment assets: | ||||||||||||||
| Tangible fixed | 243 107 | - | 243 107 | 783 | - | - | 243 890 |
| Estoril Game Concession | Sub-Total | Póvoa Game Concession |
License for Online Gambling |
||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Estoril Casino |
Lisboa Casino |
Póvoa Casino |
Casino Online |
Other | Total | ||||||||||||||
| Net assets | 38 635 399 | 80 378 394 | 119 013 793 | 49 271 312 | - | (803 699) | 167 481 406 | ||||||||||||
| Net liabilities | 27 350 310 | 33 660 040 | 61 010 350 | 29 956 268 | - | 4 255 127 | 95 221 745 | ||||||||||||
| Result of the segment | (439 966) | 3 644 084 | 3 204 118 | (1 066 093) | - | (498 914) | 1 639 112 | ||||||||||||
| Investment assets: | |||||||||||||||||||
| Tangible fixed | 176 327 | 70 310 | 246 637 | 5 141 | - | 16 900 | 268 678 |
The consolidated operating income, in the periods ended on 31st March 2017 and 2016, is split in the following manner:
31st March 2017
| 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 | 11 631 293 | 16 396 002 | 28 027 295 | 8 905 693 | 3 052 619 | 39 985 607 |
| Table based gaming | 3 211 546 | 4 303 063 | 7 514 609 | 1 941 371 | 1 036 494 | 10 492 474 |
| Bonuses and other fair value adjustments | (71 335) | (50 632) | (121 967) | (23 497) | (436 414) | (581 878) |
| 14 771 504 | 20 648 433 | 35 419 937 | 10 823 567 | 3 652 699 | 49 896 203 | |
| Gaming taxes: | ||||||
| Special Gaming Tax (current) | (7 421 420) | (10 349 533) | (17 770 953) | (5 423 532) | (614 247) | (23 808 732) |
| Annual Gaming Tax (difference to minimum grant) | - | - | - | (1 130 218) | - | (1 130 218) |
| (7 421 420) | (10 349 533) | (17 770 953) | (6 553 750) | (614 247) | (24 938 950) | |
| Other operating revenues: | ||||||
| F&B and Entertainment | 965 170 | 160 479 | 1 125 649 | 275 360 | - | 1 401 009 |
| Tax deductions - Entertainment | 275 928 | 206 991 | 482 919 | 184 493 | - | 667 412 |
| Supplementary income | 67 007 | 9 215 | 76 222 | 33 874 | - | 110 096 |
| Other | 512 | - | 512 | 102 | - | 614 |
| 1 308 617 | 376 684 | 1 685 302 | 493 829 | - | 2 179 131 | |
| 8 658 702 | 10 675 585 | 19 334 286 | 4 763 646 | 3 038 452 | 27 136 384 |
| 31st March 2016 | ||||||
|---|---|---|---|---|---|---|
| Estoril Game Concession | Póvoa Game Concession |
License for Online Gambling |
||||
| Nature | Estoril Casino |
Lisboa Casino |
Sub-Total | Póvoa Casino |
Casino Online |
Total |
| Gaming revenues: | ||||||
| Slot Machines | 11 370 468 | 16 496 485 | 27 866 953 | 8 737 836 | - | 36 604 789 |
| Table based gaming | 3 900 456 | 4 014 300 | 7 914 756 | 1 805 138 | - | 9 719 894 |
| Bonuses and other fair value adjustments | 107 703 | (7 230) | 100 473 | (4 947) | - | 95 526 |
| 15 378 627 | 20 503 555 | 35 882 182 | 10 538 027 | - | 46 420 209 | |
| Gaming taxes: | ||||||
| Special Gaming Tax (current) | (7 635 462) | (10 255 393) | (17 890 855) | (5 271 487) | - | (23 162 341) |
| Annual Gaming Tax (difference to minimum grant) | - | - | - | (1 123 513) | - | (1 123 513) |
| (7 635 462) | (10 255 393) | (17 890 855) | (6 395 000) | - | (24 285 854) | |
| Other operating revenues: | ||||||
| F&B and Entertainment | 728 272 | 153 676 | 881 948 | 235 349 | - | 1 117 297 |
| Tax deductions - Entertainment | 280 209 | 205 108 | 485 317 | 256 194 | - | 741 511 |
| Supplementary income | 72 836 | 9 238 | 82 074 | 2 932 | - | 85 006 |
| Other | 1 587 | - | 1 587 | 448 | - | 2 035 |
| 1 082 904 | 368 022 | 1 450 926 | 494 923 | - | 1 945 849 | |
| 8 826 069 | 10 616 184 | 19 442 254 | 4 637 950 | - | 24 080 204 |
Income from the segments comes from transactions with external customers. There are no transactions between segments. The accounting policies of each segment are the same as those of the Group.
In the periods ended on 31st March 2017 and 2016, external supplies and services were as follows:
| Mar 2017 | Mar 2016 | |
|---|---|---|
| Advertising | 1 074 080 | 604 212 |
| Gifts to customers | 1 060 528 | 1 058 708 |
| Subcontracts | 1 049 298 | 977 399 |
| Energy and other fluids | 695 640 | 714 582 |
| Conservation and repairs | 624 791 | 618 027 |
| Cleaning and laundry | 612 086 | 597 904 |
| Rents | 530 152 | 438 131 |
| Royalties | 463 204 | 508 761 |
| Surveillance and security | 412 975 | 374 563 |
| Fees | 317 188 | 180 784 |
| Rents | 280 209 | 277 313 |
| Financial services (comissions) | 276 360 | 146 695 |
| Insurance | 269 334 | 271 373 |
| Communication | 130 587 | 114 805 |
| Travel and hotels | 49 840 | 55 538 |
| Other | 141 250 | 144 744 |
| 7 987 523 | 7 083 539 |
In the periods ended on 31st March 2017 and 2016, staff costs were as follows:
| Mar 2017 | Mar 2016 | |
|---|---|---|
| Remuneration of governing bodies | 748 417 | 722 324 |
| Remuneration of staff | 5 336 793 | 5 185 528 |
| Indemnities | 286 | 35 438 |
| Charges on remuneration | 1 387 220 | 1 363 298 |
| Insurance | 50 067 | 44 710 |
| Social charges | 284 008 | 267 864 |
| Other | 44 229 | 165 110 |
| 7 851 020 | 7 784 271 |
Financial costs and income for the periods ended on 31st March 2017 and 2016 is broken down as follows:
| Mar 2017 | Mar 2016 | |
|---|---|---|
| FINANCIAL COSTS | ||
| Interest borne | ||
| Financing from banks | (223 537) | (540 347) |
| Finance and operating leasing | (44 746) | (18 031) |
| (268 282) | (558 378) | |
| Other financing costs | ||
| Comissions and similar charges | (141 921) | (260 396) |
| (410 203) | (818 774) | |
| FINANCIAL INCOME | ||
| Exchange gains | 5 624 | 4 039 |
| Other | 6 027 | 3 687 |
| 11 651 | 7 726 | |
| NET FINANCIAL COSTS | (398 552) | (811 048) |
During the periods ended on 31st March 2017 and 2016, the movement in tangible assets, as well as in the respective depreciation and accumulated impairment losses, was as follows:
January to March 2017
| Land | Buildings and other |
Basic Equipment |
Vehicles | Office equipment |
Other tangible fixed |
Fixed assets |
Total | |
|---|---|---|---|---|---|---|---|---|
| constructions | assets | in progress | ||||||
| Gross amount: | ||||||||
| Opening balance | 16 513 836 197 483 576 | 120 255 229 | 66 744 | 4 386 179 | 82 292 | 1 780 940 340 568 796 | ||
| Acquisitions | - | 319 | 464 | - | - | - | 243 107 | 243 890 |
| Adjustments / Transfers | - | - | 26 225 | - | - | - | - | 26 225 |
| Write-off | - | - | (27 214) | (46 000) | (14 659) | - | - | (87 873) |
| Closing balance | 16 513 836 197 483 895 | 120 254 704 | 20 744 | 4 371 520 | 82 292 | 2 024 047 340 751 038 | ||
| 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 | - | 1 718 282 | 1 245 150 | 1 473 | 43 405 | - | - | 3 008 310 |
| Write-off | - | - | (26 951) | (35 344) | (14 667) | - | - | (76 962) |
| Closing balance | - 138 459 531 | 102 567 587 | 20 744 | 3 903 445 | 81 359 | - 245 032 666 | ||
| Net Amount | 16 513 836 | 59 024 364 | 17 687 117 | - | 468 075 | 933 | 2 024 047 | 95 718 374 |
| January to March 2016 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Land | Buildings and other constructions |
Basic Equipment |
Vehicles | Office equipment |
Other tangible fixed 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 | - | - | 260 616 | - | 8 058 | - | 4 | 268 678 |
| Adjustments / Transfers | - | - | - | - | - | - | (60 938) | (60 938) |
| Write-off | - | - | (182 383) | - | - | - | - | (182 383) |
| Closing balance | 16 513 836 197 253 396 119 525 823 | 66 744 | 4 338 806 | 82 292 | 70 683 | 337 851 580 | ||
| 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 | - | 1 926 659 | 1 464 708 | 2 484 | 52 114 | 180 | - | 3 446 145 |
| Write-off | - | - | (182 383) | - | - | - | - | (182 383) |
| Closing balance | - 131 396 993 | 99 043 308 | 47 896 | 3 734 164 | 81 175 | - | 234 303 536 | |
| Net Amount | 16 513 836 | 65 856 403 | 20 482 515 | 18 848 | 604 642 | 1 117 | 70 683 | 103 548 044 |
The breakdown of intangible assets on 31st March 2017 and 31st December 2016 is as follows:
| March 2017 | ||||
|---|---|---|---|---|
| Gaming Concession | Gross Assets | Accumulated Amortization |
Net Assets | |
| Estoril Gaming Concession | ||||
| Casino Estoril | 153 576 455 | (131 323 021) | 22 253 434 | |
| Casino Lisboa | 30 000 000 | (22 155 664) | 7 844 336 | |
| Póvoa Gaming Concession - Casino da Póvoa | 77 034 109 | (54 395 503) | 22 638 606 | |
| 260 610 564 | (207 874 188) | 52 736 376 | ||
| Intangible assets - Online gaming license (a) | 36 000 | (8 200) | 27 800 | |
| 260 646 564 | (207 882 388) | 52 764 176 |
| December 2016 | |||||
|---|---|---|---|---|---|
| Gaming Concession | Gross Assets | Accumulated Amortization |
Net Assets | ||
| Prémio da Concessão Jogo do Estoril | |||||
| Casino do Estoril | 153 576 455 | (129 776 774) | 23 799 681 | ||
| Casino de 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) The Board of Directors of Turismo de Portugal, IP, at a meeting held on 25th 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. This 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 website mentioned above on the same day the license was issued, i.e. 25th July 2016.
On 31st March 2017 and 31st December 2016, this caption was broken down as follows:
| Mar 2017 | Dec 2016 | |
|---|---|---|
| CASH | 8 184 258 | 8 696 631 |
| Bank Deposits: | ||
| Immediately avaiable bank deposits | 4 314 386 | 3 657 733 |
| Long term deposits (a) | 2 900 811 | 1 200 000 |
| Other teasury applications | 18 980 | 19 025 |
| Cash and cash equivalents | 15 418 436 | 13 573 389 |
On 31st March 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.
The share capital issued by the Company on 31st March 2017 and on 31st December 2016 is broken down as follows:
| Mar 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 |
|---|---|---|
| 31st of March 2017 | ||
| Registered | 5€ | 6 116 779 |
| Bearer | 5€ | 5 876 905 |
| 11 993 684 | ||
| 31st of December 2016 | ||
| Registered | 5€ | 6 116 779 |
| Bearer | 5€ | 5 876 905 |
| 11 993 684 |
| Year of Acquisition | No. of 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 31st March 2017 and 31st December 2016, this caption was broken down as follows:
| Mar 2017 | |||||
|---|---|---|---|---|---|
| Company | Equity | Profit/(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. |
4 339 680 | 2 043 341 | 2 169 831 | 1 021 670 |
| Dec 2016 | |||||
|---|---|---|---|---|---|
| Company | Equity | Profit/(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 31st March 2017 and 31st December 2016, this caption was broken down as follows:
| Mar 2017 | Dec 2016 | ||||
|---|---|---|---|---|---|
| Nature of the Financing | Nominal Value | Balance Sheet Value |
Nominal Value | Balance Sheet Value |
|
| Non-current financing: | |||||
| 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 financing | |||||
| Bank loans | 7 047 259 | 6 908 818 | 7 688 648 | 7 710 499 | |
| Commercial paper | 5 750 000 | 5 834 382 | 2 500 000 | 2 449 228 | |
| Current accounts | 21 304 400 | 21 304 400 | 18 930 300 | 18 930 300 | |
| Financial leasing | - | - | 10 712 | 10 712 | |
| 34 101 659 | 34 047 600 | 29 129 660 | 29 100 739 | ||
| 35 351 659 | 35 297 600 | 30 379 660 | 30 350 739 |
The average interest rates for financing, borne by the Group, including commissions and other charges, come within an interval of between 2% and 4,1%.
Some of the financing operations, mainly bank loans, include commitments to maintain certain financial ratios based on contractually negotiated limits (financial covenants).
These ratios are:
On the 31st March 2017 and 31st December 2016, these ratios were according the contractually negotiated limits.
The amount classified as non-current bank loans, for a total amount of 1.250.000 Euros, falls due in ac5cordance with the following schedule:
• 1.250.000 Euros in 2018.
Depending on the operating funds that are freed up, we feel the financial risk to which the associated undertakings are exposed is minimal, and the same understanding has prevailed in the examination carried out by financial institutions, as shown by the fact that assets guarantees are dispensed with for operations under contract.
The amount included in the column "Nominal value" corresponds to the contracted value that is still owing. The column "Balance sheet value" is added to the nominal value of financial charges already incurred but still not due, less interest and or commissions paid in advance.
On 31st March 2017 and 31st December 2016, this caption was broken down as follows:
| Mar 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 | 3 777 564 | 5 382 419 |
| Suppliers of investments | 29 839 | 1 100 635 |
| State and Public Sector | ||
| Annual gaming payment | 4 183 223 | 11 606 867 |
| Annual payment - Difference to minumum grant | ||
| Decree 1/2015 - 10% over 50% rate of the annual gaming payment | 1 130 217 | 3 241 292 |
| Installments payment schedule - approved for 2015 | 576 215 | 576 215 |
| Special Gaming Tax (to be paid next month) | 6 329 334 | 6 541 148 |
| Social Security contribuitons | 653 988 | 611 667 |
| Other in favour of the State | 600 798 | 1 112 534 |
| Clients advance payments | 338 882 | 338 736 |
| Charges with holidays payable | 4 727 950 | 4 540 311 |
| Responsabilities for accumulated gaming premiums | 1 929 394 | 1 872 791 |
| Other | 3 491 601 | 2 980 721 |
| 27 769 005 | 39 905 336 | |
| 27 769 005 | 39 905 336 |
The 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; 31st March and 31st December 2016.
The 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. This payment cannot be, under any circumstances, lower than the values in the table attached to that Decree Law.
The minimum annual contributions were established (prices of the year 2000) by Decree-Law No. 275/2001 of 14 December 2001, by the time the Concessions Contracts were extended by fifteen years more.
At the beginning of the year 2015 the Regulatory-Decree nº1/2015 of 21st January came to approve the split payment in installments 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. The Regulatory-Decree nº1/2015 was applied for the first the time to the amounts related to the year ended December 2014, which initially payment deadline was on January 31st, 2015.
The value 4.310.638 Euros registered in the caption "Other accounts payable – non-current", as "Annual payment – difference 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. The instalment due in 2017 is recorded as "Other accounts payable – current".
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 effects in terms of the activity undertaken, the asset position and the result of the operations.
The main situations are the following:
• Differences 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 final decision should be favourable, which is why the Group appealed to higher courts. On the date of these financial 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 Office 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 affected 112 employees. Some of these contested this procedure and filed a lawsuit in Court trying to have this overturned and for their reintegration as Company staff. The 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 31st March 2017 there are 25 former employees with pending litigation related with this dismissal. The 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 affected 21 employees. Some of these contested this procedure and filed a lawsuit in Court trying to have this overturned and for their reintegration as Company staff. The 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 31st March 2017 there are 14 former employees with pending litigation related with this dismissal. The provision accrued within the accounts amounts to 360.000 Euros.
The 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 significant ones we should highlight:
• The existence of an account payable for a total amount of 1.929.394 Euros in respect of liabilities for accumulated gaming premiums. These 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 31st March 2017 and 31st December 2016 the guarantees provided by the Group were as follows:
| Mar 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 first quarter 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).
The consolidated result per basic share of the years ended on 31st March 2017 and 2016 was determined as follows:
| Mar 2017 | Mar 2016 | |
|---|---|---|
| Net profit of the Equity holders of the Parent Company | 3 526 687 | 1 639 112 |
| Average weighted number of shares in circulation | 11 931 119 | 11 931 119 |
| Result per basic share | 0,30 | 0,14 |
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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