Interim / Quarterly Report • Nov 21, 2016
Interim / Quarterly Report
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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 consolidated turnover for the nine months of the year amounted to 177.5 million euros which compares to 155.5 million euros of the same period in 2015.
With the continued market recovery evidenced in the second quarter 2016, Ibersol recorded a growth of 14.1% in turnover, with a remarkable performance in Portugal. This evolution was impaired by the effect of exchange rate conversion of the sales in Angola, as a consequence of the local currency devaluation. But on the other hand Ibersol benefited from the reduction of TVA on food products in Portugal, in force since the 1st July 2016,
| Turnover | euro million | % Ch. 16/15 |
|---|---|---|
| Sales of Restaurants | 175,50 | 14.4% |
| Sales of Merchandise | 1.53 | $-6.2\%$ |
| Services Rendered | 0.45 | -10,6% |
| Net Sales & Services | 177.48 | 14.1% |
With a more favorable context, the segment of restaurants grew around 5% in Portugal and 2% in Spain. The combination of this fact with the opening of larger units and closing of the smaller and less profitable ones led Ibersol an increase of sales volume of 14,4%. The decrease of the VAT is estimated to have contributed to 5.1% improvement on the third quarter sales and to 2% on the cumulative sales.
The counters segment grew by 20% giving the highest contribution to sales leverage in the period.
| SALES IN RESTAURANTS | Million $\epsilon$ | Ch. 16/15 |
|---|---|---|
| Restaurants | 54.47 | 10,1% |
| Counters | 102,68 | 20,6% |
| Concessions & Catering | 18.35 | $-2.5%$ |
| Total Sales | 175,50 | 14.4% |
Benefiting from a more favorable context for the restaurants sector Ibersol grew above the market, with special emphasis on the performance of Pizza Hut, and Pasta Caffé on the 3Q16.
In the counters segment, the brands we operate maintained the trend registered last year with market share gains and growth rates resulting from an increase of the number of operating units.
The segment "Catering and Concessions" did not reach the sales YoY due to the closure of five units located on motorways, at the beginning of the year, and specially due to the decrease of catering events.
In the first nine months of the year we closed five units located in highways whose concession periods came to an end, namely five cafetarias and two Pan's. Proceeding with the adjustment of the offer in the restaurants located in the motorways with less traffic we also closed two Pan's units, maintaining only the cafetaria service. The Group has also decided to discontinue Pizza Hut contract in CoimbraShopping, Miit contract in CascaisShopping as well as a Cafetaria concession contract.
Following the selective strategy expansion in malls we opened a Pizza Hut and a Burger King in the Arcade Shopping in Braga. In line with Burger King Capex we launched 3 new restaurants: in Lisbon, Portalegre and Ermesinde. At the Centro Universitário do Porto we opened a restaurant where we now have a reference space for catering events.
In Spain we converted a franchised unit into an equity one. In Angola we opened two KFC restaurants.
At the end of the period the Group operated 376 equity restaurants, as shown below:
| Nº of Restaurants | 2015 | 2016 | 2016 | ||
|---|---|---|---|---|---|
| 31-Dec | Openings | Transfer | Closings | 30-Sep | |
| PORTUGAL | 304 | 8 | 12 | 300 | |
| Own Stores | 303 | 8 | 12 | 299 | |
| Pizza Hut | 92 | $\overline{2}$ | 1 | 93 | |
| Okilo+MIIT | 6 | 1 | 5 | ||
| Pans+Roulotte | 51 | 4 | 47 | ||
| Burger King | 54 | 4 | 58 | ||
| KFC | 18 | 18 | |||
| Pasta Caffé | 10 10 | 10 | |||
| Quiosques | 9 | 9 | |||
| Flor d'Oliveira | 0 | $\Omega$ | |||
| Cafetarias | 35 | 5 | 30 | ||
| Catering | 6 | 1 | $\overline{7}$ | ||
| Concessions & Other | 22 | 1 | 1 | 22 | |
| Franchise Stores | 1 | 1 | |||
| SPAIN | 83 | $\bf{0}$ | $\bf{0}$ | 83 | |
| Own Stores | 66 | $\bf{0}$ | $\bf{0}$ | 67 | |
| Pizza Móvil | 33 | 1 | 34 | ||
| Burger King | 33 | 33 | |||
| Franchise Stores | 17 | $-1$ | 16 | ||
| ANGOLA | 8 | $\overline{2}$ | 10 | ||
| KFC | $\overline{1}$ | $\overline{2}$ | 9 | ||
| Pizza Hut | 1 | 1 | |||
| Total Own stores | 377 | 10 | 12 | 376 | |
| Total Franchise stores | 18 | $\bf{0}$ | $\bf{0}$ | 17 | |
| TOTAL | 395 | 10 | 12 | 393 |
The consolidated net income of 9M16 amounted to Eur 18.1 million euros, 8.8 million euros above 9M15.
By the end of the first quarter Ibersol received a financial compensation for the impact of the traffic loss due to toll implementation on the so called ex-Scuts and also a concession rights refund - plus the inherent interests - that have been paid with the signing of three contracts that were not implemented.
Therefore, in an attempt to clarify the result of the operation over the period, we segregated the impact of this exceptional and non-recurring income, according to the adjusted statement presented below which compares to the same period of last year.
| Non - recurring | Adjusted | |||
|---|---|---|---|---|
| 30-09-2016 | income | 30-09-2016 | 30-09-2015 | |
| Operating Income | ||||
| Sales | 177.028.181 | 177.028.181 | 155.040.312 | |
| Rendered services | 449.328 | 449.328 | 502.358 | |
| Other operating income | 5.252.225 | $-2.397.758$ | 2.854.467 | 1.644.135 |
| Total operating income | 182.729.734 | $-2.397.758$ | 180.331.976 | 157.186.805 |
| Operating Costs | ||||
| Cost of sales | 42.925.591 | 42.925.591 | 37.084.999 | |
| External supplies and services | 53.317.217 | 53.317.217 | 48.288.923 | |
| Personnel costs | 52.331.750 | 52.331.750 | 47.341.376 | |
| Amortisation, depreciation and impairment losses | 8.355.461 | 8.355.461 | 7.703.793 | |
| Other operating costs | 2.096.525 | 2.096.525 | 823.774 | |
| Total operating costs | 159.026.544 | $\bf{0}$ | 159.026.544 | 141.242.865 |
| Operating Income | 23.703.190 | $-2.397.758$ | 21.305.432 | 15.943.940 |
| EBITDA | 32.058.651 | $-2.397.758$ | 29.660.893 | 23.647.733 |
| $-77.503$ | $-1.570.323$ | $-1.647.826$ | $-3.854.092$ | |
| Net financing cost | 4.405 | 19.618 | ||
| Gaisn (losses) in joint controlled subsidiaries - Equity method Profit before tax |
4.405 | |||
| 23.630.092 | $-3.968.081$ | 19.662.011 | 12.109.466 | |
| 5.605.163 | $-833.297$ | 4 771 866 | 2.843.756 | |
| Income tax expense | 18.024.929 | $-3.134.784$ | 14.890.145 | 9.265.710 |
| Net profit |
Adjusted net income for the 9M16 reached Eur 14.9 million euros that compares to Eur 9.3 million euros YoY.
The alteration on VAT on food products on the 3Q16 may have contributed with around 2 million euros to Net Result.
Gross margin in the period decreased to 75.8% of turnover (9M15: 76.2%). In 3Q16 the adjustment of the sales price, a more agressive promotional activity and the significant increase of logistics costs in Angola limited the impact of TVA decrease. Gross margin just increased 0.5 pp versus 1H16.
Cost structure continues to reflect the dynamics of recent years which ensures a leverage of the profitability whenever we record a turnover growth. In fact, a dilution of the weight of fixed costs was verified as follows:
Staff costs: increase of 10.5%, below sales evolution, representing 29.5% of turnover (9M15: 30.4%). Sales increase and the dilution of structure costs compensated the effect of the 5% increase of minimum wage in Portugal. The change on VAT policy on the 3Q16 contributed positively to reduction of its weight in sales.
External Supplies and services: increase of 10.4%, slightly below sales evolution, representing 30.0% of turnover, 1 pp less than 9M15.
Other operating income increased by about 1.2 million euros corresponding almost entirely to income from consulting services on the first quarter.
Furthermore other operating costs also increased by about 1.3 million, due to costs associated to closures (0.7 million euros) together with exchange rate differences amounting to 500 thousand euros recorded in the Angolan subsidiary, as result of the AKZ depreciation against foreign currencies which affected some liabilities and assets denominated in external currency.
Therefore adjusted EBITDA increased by 6 million euros and amounted to 29.6 milllion euros, ie 25.4% over 9M15.
Adjusted consolidated EBITDA margin stood at 16.7%, compared with 15.2% at 9M15.
Consolidated EBIT margin went from increased from 10.3% of turnover to 12.0%, corresponding to an operating profit of 21.3 million euros.
Adjusted consolidated Financial Results were negative by 1.6 million euros, around 2.2 million euros less than 9M15. It must be stressed that over 9M15 currency exchange in Angola of 2.5 million euros were recorded under net financing costs.
Average cost of loans, which stood at 5.9%, was considerably higher than 9M15, Despite the reduction loans rates in Europe, increased weight of financing contracted in Angola (32% of total Group loans) at much higher interest rates than the Group average, originated a 4% increase of average cost of borrowings.
Financial Situation
Total Assets amounted to 267 million euros and equity stood at 146 million euros, representing 55% of assets.
As usual in this business, current assets are lower than current liabilities. Financial allowance stood at 33 million euros, in line with the end of 2015.
CAPEX reached 13.5 million euros, 10 million euros for the expansion programme and the remaining for the refurbishing of some units.
In July a promissory contract for the acquisition of Eat Out Group was held with the subsequent payment of 10 million euros.
Net debt at 30th September 2016 amounted to 20 million euros, 2 milion euros less than at the end of 2015.
Considering that the company holds 10% of treasury stock, 100 of those shares were sold in August at an average price of 12,005 euros to grant the assignment of all rights corresponding to the leftover fractions of the operation of share capital increase by incorporation of reserves.
At 30th September 2016 the company held 1.999.900 treasury stock, representing 9.9995% of the share capital, acquired by Euro 11.178.443 euros, corresponding to an average price per share of 5.59 euros.
Until the end of the year we expect to maintain the sales trend that occurred in the third quarter.
CAPEX for the third quarter includes the opening of 8 new units. We will also carry on our plan of upgrading and refurbishment of the existing ones.
In Angola we expect to continue facing the same difficulties to get currency for foreign payments. Therefore special attention will be given to the foreign exchange risk coverage.
At the end of October we concluded the operation of acquisition of the total shareholding in Eat-Out, for an amount of around 77 million euros. This operation has been financed through bank borrowings at long term. This operation amounts to 105 million euros and the debt of the company will be refinanced to increase maturity.
The process of issuing and admission to quotation of the shares corresponding to share capital increase by incorporation of reserves also occurred in October.
Porto, 17th November 2016
______________________________ António Alberto Guerra Leal Teixeira
______________________________ António Carlos Vaz Pinto de Sousa
______________________________
Juan Carlos Vázquez-Dodero
(i) the consolidated financial statements of Ibersol SGPS SA, referring to the third quarter of 2016 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, 17th November 2016
António Carlos Vaz Pinto Sousa Member of the Board of Directors Juan Carlos Vázquez-Dodero Member of the Board of Directors
António Alberto Guerra Leal Teixeira Chairman of the Boards of Director
30 September 2016
| ASSETS | Notes | 30-09-2016 | 31-12-2015 |
|---|---|---|---|
| Non-current | |||
| Tangible fixed assets | 7 | 141.645.775 | 141.633.142 |
| Goodwill | 8 | 40.509.009 | 40.509.009 |
| Intangible assets | 8 | 11.645.074 | 11.431.871 |
| Deferred tax assets | 3.262.573 | 3.294.546 | |
| Financial investments - joint controlled subsidiaries | 2.422.297 | 2.417.891 | |
| Other financial investments | 496.655 | 402.591 | |
| Advances on account of financial investments | 4 | 10.000.000 | - |
| Other financial assets | 14 | 17.327.331 | 7.098.836 |
| Other non-current assets | 1.344.183 | 1.408.996 | |
| Total non-current assets | 228.652.897 | 208.196.882 | |
| Current | |||
| Stocks | 8.529.672 | 7.711.071 | |
| Cash and bank deposits | 16.957.171 | 14.471.082 | |
| Income tax receivable | 560.628 | 144.108 | |
| Other current assets | 15 | 12.632.004 | 10.793.400 |
| Total current assets | 38.679.475 | 33.119.661 | |
| Total Assets | 267.332.372 | 241.316.543 | |
| EQUITY AND LIABILITIES | |||
| EQUITY | |||
| Capital and reserves attributable to shareholders | |||
| Share capital | 9 | 24.000.000 | 20.000.000 |
| Own shares | 9 | -11.178.443 | -11.179.644 |
| Conversion Reserves | -2.017.907 | -850.439 | |
| Legal Reserves | - | 4.000.001 | |
| Other Reserves & Retained Results | 116.414.920 | 107.372.132 | |
| Net profit in the year | 18.086.698 | 10.582.266 | |
| 145.305.268 | 129.924.316 | ||
| Non-controlling interest | 10 | 1.001.126 | 5.121.687 |
| Total Equity | 146.306.394 | 135.046.003 | |
| LIABILITIES | |||
| Non-current | |||
| Loans | 14 | 25.913.308 | 25.309.774 |
| Deferred tax liabilities | 10.178.460 | 10.046.125 | |
| Provisions Derivative financial instrument |
2.062.128 176.437 |
861.962 181.602 |
|
| Other non-current liabilities | 218.077 | 239.713 | |
| Total non-current liabilities | 38.548.410 | 36.639.176 | |
| Current Loans |
14 | 27.741.656 | 18.125.529 |
| Accounts payable to suppl. and accrued costs | 43.567.317 | 41.398.168 | |
| Income tax payable | 3.320.293 | 1.390.543 | |
| Other current liabilities | 15 | 7.848.302 | 8.717.124 |
| Total current liabilities | 82.477.568 | 69.631.364 | |
| Total Liabilities | 121.025.978 | 106.270.540 | |
| Total Equity and Liabilities | 267.332.372 | 241.316.543 |
| Notes | 30-09-2016 | 30-09-2015 | |
|---|---|---|---|
| Operating Income | |||
| Sales | 5 | 177.028.181 | 155.040.312 |
| Rendered services | 5 | 449.328 | 502.358 |
| Other operating income | 6 | 5.252.225 | 1.644.135 |
| Total operating income | 182.729.734 | 157.186.805 | |
| Operating Costs | |||
| Cost of sales | 42.925.591 | 37.084.999 | |
| External supplies and services | 53.317.217 | 48.288.923 | |
| Personnel costs | 52.331.750 | 47.341.376 | |
| Amortisation, depreciation and impairment losses | 7 e 8 | 8.355.461 | 7.703.793 |
| Other operating costs | 2.096.525 | 823.774 | |
| Total operating costs | 159.026.544 | 141.242.865 | |
| Operating Income | 23.703.190 | 15.943.940 | |
| Net financing cost | 16 | -77.503 | -3.854.092 |
| Gaisn (losses) in joint controlled subsidiaries - Equity method | 4.405 | 19.618 | |
| Profit before tax | 23.630.092 | 12.109.466 | |
| Income tax expense | 5.605.163 | 2.843.756 | |
| Net profit | 18.024.929 | 9.265.710 | |
| Other comprehensive income: | |||
| Change in currency conversion reserve (net of tax and that can be | |||
| recycled for results) | -1.167.468 | -982.862 | |
| TOTAL COMPREHENSIVE INCOME | 16.857.461 | 8.282.848 | |
| Net profit attributable to: | |||
| Owners of the parent | 18.086.698 | 9.307.049 | |
| Non-controlling interest | -61.769 | -41.340 | |
| 18.024.929 | 9.265.709 | ||
| Total comprehensive income attributable to: | |||
| Owners of the parent | 16.919.230 | 8.324.187 | |
| Non-controlling interest | -61.769 | -41.340 | |
| 16.857.461 | 8.282.847 | ||
| Earnings per share: | 9 | ||
| Basic | 0,90 | 0,52 | |
| Diluted | 0,90 | 0,52 |
| 3rd TRIMESTER (unaudited) | ||||
|---|---|---|---|---|
| Notes | 2016 | 2015 | ||
| Operating Income Sales |
5 | 69.277.871 | 57.790.437 | |
| Rendered services | 5 | 59.333 | 164.783 | |
| Other operating income | 6 | 624.165 | 510.440 | |
| Total operating income | 69.961.369 | 58.465.660 | ||
| Operating Costs | ||||
| Cost of sales | 16.542.188 | 13.783.464 | ||
| External supplies and services | 19.055.525 | 17.194.643 | ||
| Personnel costs | 18.156.767 | 16.291.908 | ||
| Amortisation, depreciation and impairment losses | 7 e 8 | 2.913.111 | 2.602.447 | |
| Other operating costs | 503.684 | 300.087 | ||
| Total operating costs | 57.171.275 | 50.172.549 | ||
| Operating Income | 12.790.094 | 8.293.111 | ||
| Net financing cost | 16 | -657.259 | -1.492.847 | |
| Gaisn (losses) in joint controlled subsidiaries - Equity method | 2.525 | 11.963 | ||
| Profit before tax | 12.135.360 | 6.812.227 | ||
| Income tax expense | 2.897.618 | 1.665.235 | ||
| Net profit | 9.237.742 | 5.146.992 | ||
| Other comprehensive income: | ||||
| Change in currency conversion reserve (net of tax and that can be | ||||
| recycled for results) | -40.843 | -459.385 | ||
| TOTAL COMPREHENSIVE INCOME | 9.196.899 | 4.687.607 | ||
| Net profit attributable to: Owners of the parent |
9.214.333 | 5.121.788 | ||
| Non-controlling interest | 23.408 | 25.203 | ||
| 9.237.742 | 5.146.991 | |||
| Total comprehensive income attributable to: | ||||
| Owners of the parent | 9.173.490 | 4.662.403 | ||
| Non-controlling interest | 23.408 | 25.203 | ||
| 9.196.899 | 4.687.606 | |||
| Earnings per share: | 9 | |||
| Basic | 0,43 | 0,28 | ||
| Diluted | 0,43 | 0,28 | ||
(value in euros)
| Ass ign ed to s har eho lde 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 |
No n llin tro con g inte t res |
Tot al Equ ity |
|
| Bal n 1 Ja 201 5 anc e o nua ry |
20. 000 .00 0 |
11. 179 .64 4 - |
68. 631 |
4.0 00. 001 |
100 .69 1.6 23 |
7.7 56. 088 |
121 .33 6.6 99 |
4.9 76. 886 |
126 .31 3.5 85 |
|
| Cha s in the riod nge pe : App lica tion of the lida ted fit f 20 14: co nso pro rom |
||||||||||
| T sfe and ain ed ults r to ret ran res erv es res |
6.7 66. 088 |
6.7 66. 088 - |
- | - | ||||||
| Con sio - A la ver n re ser ves ngo Net lida ted inc e in the nin h p erio d ont co nso om e m end ed ber |
-98 2.8 62 |
-98 2.8 62 |
982 .86 2 - |
|||||||
| 30 Sep 20 15 tem on |
9.3 07. 049 |
9.3 07. 049 |
41. 340 - |
9.2 65. 709 |
||||||
| Tot al c han in the riod ges pe Net ofit |
- | - | -98 2.8 62 |
- | 6.7 66. 088 |
2.5 40. 961 9.3 07. 049 |
8.3 24. 187 9.3 07. 049 |
41. 340 - 41. 340 |
8.2 82. 847 9.2 65. 709 |
|
| pr Tot al c hen sive inc |
8.3 24. 187 |
- 41. 340 |
8.2 82. |
|||||||
| om pre om e Tra ctio wit h c ital s in the riod nsa ns ap ow ner pe |
- | 847 | ||||||||
| App lica tion of the lida ted fit f 20 14: co nso pro rom |
||||||||||
| P aid divi den ds |
-99 0.0 00 |
990 .00 0 - |
990 .00 0 - |
|||||||
| - | - | - | - | - | -99 0.0 00 |
990 .00 0 - |
- | -99 0.0 00 |
||
| 0 S Bal n 3 ept ber 20 15 anc e o em |
20. 000 .00 0 |
11. 179 .64 4 - |
914 .23 1 - |
4.0 00. 001 |
107 .45 7.7 11 |
9.3 07. 049 |
128 .67 0.8 86 |
4.9 35. 546 |
133 .60 6.4 32 |
|
| Bal Ja n 1 201 6 anc e o nua ry |
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 |
|
| Cha s in the riod nge pe : |
||||||||||
| App lica tion of the lida ted fit f 20 15: co nso pro rom |
||||||||||
| T sfe and ain ed ults r to ret ran res erv es res |
10. 582 .26 6 |
10. 582 .26 6 - |
- | - | ||||||
| Sha ital incr re c ap eas e |
4.0 00. 000 |
-4.0 00. 001 |
- | - | ||||||
| Non lling int han ntro st c -co ere ge |
4 | 260 .52 2 |
260 .52 2 |
260 .52 2 - |
- | |||||
| Con sio - A la ver n re ser ves ngo |
-1.1 67. 468 |
-1.1 67. 468 |
1.1 67. 468 - |
|||||||
| ( Acq uisi tion ) / di sal of o sha spo wn res |
1.2 01 |
1.2 01 |
1.2 01 |
|||||||
| Net lida ted inc e in the nin ont h p erio d co nso om e m end ed 30 Sep ber 20 16 tem on |
18. 086 .69 8 |
18. 086 .69 8 |
61. 769 |
18. 024 .92 9 |
||||||
| Tot al c han in the riod ges pe |
4.0 00. 000 |
1.2 01 |
1.1 67. 468 |
4.0 00. 001 |
10. 842 .78 8 |
7.5 04. 432 |
17. 180 .95 3 |
- 322 .29 1 |
16. 858 .66 2 |
|
| Net ofit pr |
- | - | 18. 086 .69 8 |
18. 086 .69 8 |
- 61. 769 - |
18. 024 .92 9 |
||||
| Tot al c hen sive inc om pre om e |
16. 919 .23 0 |
61. 769 - |
16. 857 .46 1 |
|||||||
| 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 divi den ds |
10 | -1.8 00. 000 |
1.8 00. 000 - |
3.7 98. 270 - |
5.5 98. 270 - |
|||||
| - | - | - | - | -1.8 00. 000 |
- | -1.8 00. 000 |
3.7 98. 270 - |
5.5 98. 270 - |
||
| Bal n 3 0 S ber 20 16 ept anc e o em |
24. 000 .00 0 |
11. 178 .44 3 - |
2.0 17. 907 - |
- | 116 .41 4.9 20 |
18. 086 .69 8 |
145 .30 5.2 68 |
1.0 01. 126 |
146 .30 6.3 94 |
(value in euros)
| Nine months period ending on | |||||
|---|---|---|---|---|---|
| September 30 | |||||
| Note | 2016 | 2015 | |||
| Cash Flows from Operating Activities | |||||
| Receipts from clients | 177.101.390 | 155.522.766 | |||
| Payments to supliers | -102.050.640 | -90.693.043 | |||
| Staff payments | -38.833.311 | -33.741.499 | |||
| Payments/receipt of income tax | -2.645.864 | -1.563.249 | |||
| Other paym./receipts related with operating activities | -1.774.715 | -6.567.745 | |||
| Flows from operating activities (1) | 31.796.860 | 22.957.230 | |||
| Cash Flows from Investment Activities | |||||
| Receipts from: | |||||
| Financial investments | 590.332 | 42 | |||
| Tangible fixed assets | 4.964 | 19.287 | |||
| Intangible assets | |||||
| Investment benefits | 4.608 | 84.525 | |||
| Interest received | 16 | 2.111.585 | 108.161 | ||
| Payments for: | |||||
| Financial Investments | 10.094.296 | 27.147 | |||
| Other financial assets | 14 | 8.700.525 | |||
| Tangible fixed assets | 16.805.224 | 12.493.611 | |||
| Intangible assests | 1.341.376 | 1.104.996 | |||
| Other | |||||
| Flows from investment activities (2) | -34.229.932 | -13.413.739 | |||
| Cash flows from financing activities | |||||
| Receipts from: | |||||
| Loans obtained | 14 | 13.348.261 | 2.193.687 | ||
| Sale of own shares | 1.201 | ||||
| Payments for: | |||||
| Loans obtained | 3.780.748 | 3.959.399 | |||
| Amortisation of financial leasing contracts | 75.773 | ||||
| Interest and similar costs | 1.977.395 | 1.311.923 | |||
| Dividends paid | 10 | 5.598.270 | 990.000 | ||
| Flows from financing activities (3) | 1.917.276 | -4.067.635 | |||
| Change in cash & cash equivalents (4)=(1)+(2)+(3) | -515.796 | 5.475.856 | |||
| Perimeter changes effect | |||||
| Exchange rate differences effect | -551.779 | 185.111 | |||
| Cash & cash equivalents at the start of the period | 14.425.207 | 13.471.613 | |||
| Cash & cash equivalents at end of the period | 13.357.632 | 19.132.580 |
(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 393 units in the restaurant segment through the brands Pizza Hut, Pasta Caffé, Pans & Company, Kentucky Fried Chicken, Burger King, O' Kilo, Roulotte, Café Sô, Quiosques, Pizza Móvil, Miit, Sol, Sugestões e Opções, Silva Carvalho Catering e Palace Catering, coffee counters and other concessions. The group has 376 units which it operates and 17 units under a franchise contract. Of this universe, 83 are headquartered in Spain, of which 67 are own establishments and 16 are franchised establishments, and 10 in Angola.
Ibersol is a public limited company listed on the Euronext of Lisbon.
The main accounting policies applied in preparing these consolidated financial statements are identical to those used in preparing information for the periods ended September 30 and December 31, 2015, as described in the complete financial statements for the prior year presented, except for the exchange currency differences included in other income / other operating costs and excluded from net financing cost.
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 2016, mainly with the international standard nº. 34 – Interim Financial Report.
There where no substantial differences between accounting estimates and judgments applied on 31 December 2015 and the accounting values considered in the nine months period ended on the 30 September 2016.
4.1. The following group companies were included in the consolidation on 30th September 2016 and 30th September and 31st December 2015:
| Head Office Sep-16 parent 100% 100% 80% 100% |
Sep-15 parent 100% 100% |
Dec-15 parent 100% |
|---|---|---|
| 100% 100% 100% 61% Vigo - Espanha 100% Vigo - Espanha 100% 100% 100% 100% Madrid-Espanha 100% 100% 100% 100% 100% Madrid-Espanha 100% - 100% 100% 100% 100% Vigo - Espanha 100% 100% 100% Luanda - Angola 100% Luanda - Angola 100% 100% |
80% 100% 100% 100% 100% 61% 100% 100% 100% 100% 100% 100% 100% 98% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 98% |
100% 80% 100% 100% 100% 100% 61% 100% 100% 100% 100% 100% 100% 100% 98% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 98% |
| 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) Changes resulting from intra-group sale of 10% of the subsidiary IBR by Ibersande subsidiary to subsidiary Asurebi.
(d) 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.
4.2. Alterations to the consolidation perimeter
4.2.1. Acquisition of new companies
The group did not buy any subsidiary in the nine months period ended on 30 September 2016.
In accordance with the agreement signed on 29 July 2016, in which Ibersol promised to acquire from the AGROLIMEN food group headquartered in Barcelona the entire capital of the Eat-Out Group, an advance of 10.000.000 eur was made on August 5th .
4.2.3. Disposals
The group did not sell any of its subsidiaries in the nine months period ended on 30 September 2016.
4.2.4. Change in % shareholding
On January 2, 2016, the Ibersande subsidiary sells its 10% share in the subsidiary IBR Imobiliária, to Asurebi SGPS.
As the Group has a shareholding of 80% in subsidiary Ibersande and IBR of 100% in subsidiary Gravos, with that sale the change in the percentage of group share changes from 98% to 100% for the two subsidiaries IBR and Gravos.
Ibersol monitors the business based on 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) | Concessões Catering | Convenience stores |
The results per segment for the nine month period ended on 30 September 2016 and 2015 were as follows:
| Concessions | Other, write off and |
||||
|---|---|---|---|---|---|
| 30 September 2016 | Restaurants | Counters | and Catering | adjustments | Total Group |
| Inter-segment client | - | - | - | - | - |
| External client | 56.086.272 102.700.197 | 18.430.573 | 260.467 | 177.477.509 | |
| Total sales and services | 56.086.272 102.700.197 | 18.430.573 | 260.467 | 177.477.509 | |
| Royalties | 2.564.709 | 4.794.896 | 230.931 | - | 7.590.536 |
| Rent and condominiums | 6.004.869 | 8.430.530 | 3.128.822 | 17.564.221 | |
| Cost of sales | 10.917.134 | 27.567.027 | 4.441.429 | - | 42.925.591 |
| Operating cash-flow (EBITDA) | 8.519.084 | 17.719.928 | 5.819.639 | - | 32.058.651 |
| Amortisation, depreciation and impairment losses | 2.000.675 | 4.871.733 | 1.301.237 | 181.815 | 8.355.461 |
| Operating income (EBIT) | 6.518.409 | 12.848.195 | 4.518.402 | -181.815 | 23.703.191 |
| Other, write off | |||||
|---|---|---|---|---|---|
| Concessions | and | ||||
| 30 September 2015 | Restaurants | Counters | and Catering | adjustments | Total Group |
| Inter-segment client | - | - | - | - | - |
| External client | 50.817.834 | 85.523.575 | 18.954.361 | 246.901 | 155.542.670 |
| Total sales and services | 50.817.834 | 85.523.575 | 18.954.361 | 246.901 | 155.542.670 |
| Royalties | 2.215.714 | 3.858.531 | 178.486 | - | 6.252.730 |
| Rent and condominiums | 5.477.350 | 7.114.000 | 3.541.382 | - | 16.132.731 |
| Cost of sales | 10.426.214 | 21.886.528 | 4.772.258 | - | 37.084.999 |
| Operating cash-flow (EBITDA) | 5.823.082 | 14.916.432 | 2.908.462 | -244 | 23.647.733 |
| Amortisation, depreciation and impairment losses | 2.169.933 | 4.027.688 | 1.322.108 | 184.064 | 7.703.793 |
| Operating income (EBIT) | 3.653.149 | 10.888.744 | 1.586.354 | -184.308 | 15.943.940 |
On September 30, 2016 and 2015 income and non-current assets by geography is presented as follows:
| 30 SEPTEMBER 2016 | Portugal (1) | Espanha | Grupo |
|---|---|---|---|
| Restaurants | 139.369.712 | 36.132.420 | 175.502.132 |
| Merchandise | 400.469 | 1.125.580 | 1.526.049 |
| Rendered services | 175.730 | 273.598 | 449.328 |
| Total sales and services | 139.945.911 | 37.531.598 | 177.477.509 |
| Tangible fixed and intangible assets | 135.514.649 | 17.776.200 | 153.290.849 |
| Goodwill | 7.605.482 | 32.903.527 | 40.509.009 |
| Deferred tax assets | 2.869.377 | 393.196 | 3.262.573 |
| Financial investments - joint controlled subsidiaries | 2.422.297 | - | 2.422.297 |
| Other financial investments | 436.655 | 60.000 | 496.655 |
| Advances on account of financial investments | - | 10.000.000 | 10.000.000 |
| Other financial assets | 17.327.331 | - | 17.327.331 |
| Other non-current assets | - | 1.344.183 | 1.344.183 |
| Total non-current assets | 166.175.791 | 62.477.106 | 228.652.897 |
| 30 SEPTEMBER 2015 | Portugal (1) | Espanha | Grupo |
| Restaurants | 119.372.038 | 34.041.843 | 153.413.881 |
| Merchandise | 437.316 | 1.189.115 | 1.626.431 |
| Rendered services | 237.262 | 265.096 | 502.358 |
| Total sales and services | 120.046.616 | 35.496.054 | 155.542.670 |
| Tangible fixed and intangible assets | 128.923.022 | 19.034.099 | 147.957.121 |
| Goodwill | 7.691.061 | 32.903.527 | 40.594.588 |
| Deferred tax assets | 166.261 | 377.389 | 543.650 |
| Financial investments - joint controlled subsidiaries | 2.468.471 | - | 2.468.471 |
| Other financial investments | 397.204 | - | 397.204 |
| Other financial assets | - | - | - |
| Other non-current assets | - | 1.416.929 | 1.416.929 |
| Total non-current assets | 139.646.019 | 53.731.944 | 193.377.963 |
(1) Due to the small size of its operations Angola is included in Portugal segment.
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 Guimarães, Fafe and Paredes Service Areas witch led to the refund of their concession rights and 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 an increase of sales in the months of July, August and December, witch leads to a greater activity on the third trimester of the year compared with the first semester. The previous years have evidenced that, in comparable perimeter and with an equal distribution of openings and closings, in the period that understands the nine first months of the year, sales are about 75% of annual volume and, with the dilution effect of the fixed costs with the increase of the activity, the operating income represents about 85%.
In the nine months period ended 30 September 2016 and in the year ending on 31 December 2015, 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 | Total | |
| 1 January 2015 | ||||||
| Cost | 7.444.433 138.429.980 | 70.718.503 | 17.057.427 | 9.564.864 243.215.209 | ||
| Accumulated depreciation | - | 34.496.057 | 54.791.463 | 13.348.258 | - | 102.635.777 |
| Accumulated impairment | - | 7.844.284 | 562.633 | 62.515 | - | 8.469.432 |
| Net amount | 7.444.433 | 96.089.640 | 15.364.408 | 3.646.655 | 9.564.864 132.110.000 | |
| 31 December 2015 | ||||||
| Initial net amount | 7.444.433 | 96.089.640 | 15.364.408 | 3.646.655 | 9.564.864 132.110.000 | |
| Changes in consolidat perimeter | - | - | - | - | - | - |
| Currency conversion | -455.293 | -993.314 | -319.677 | -73.998 | -779.806 | -2.622.088 |
| Additions | 833.571 | 14.095.614 | 6.587.413 | 2.520.021 | 131.654 | 24.168.273 |
| Decreases | - | 275.933 | 169.302 | 13.776 | - | 459.012 |
| Transfers | 4.140.938 | 2.453.987 | 1.375.694 | 635.587 | -8.504.897 | 101.310 |
| Depreciation in the year | - | 3.845.385 | 4.181.118 | 857.312 | - | 8.883.815 |
| Deprec. by changes in the perim. | - | - | - | - | - | - |
| Impairment in the year | - | 2.929.579 | - | - | - | 2.929.579 |
| Impairment reversion | - | -148.054 | - | - | - | -148.054 |
| Final net amount | 11.963.649 104.743.084 | 18.657.418 | 5.857.177 | 411.815 141.633.142 | ||
| 31 December 2015 | ||||||
| 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 |
| Other tangible | Tangible Assets | |||||
|---|---|---|---|---|---|---|
| Land | Buildings | Equipment | fixed Assets | in progress | Total | |
| 30 September 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 | - | - | - | - | - | - |
| Currency conversion | -783.337 | -1.783.678 | -783.007 | -232.721 | -20.120 | -3.602.863 |
| Additions | 105.842 | 6.538.440 | 3.978.252 | 1.128.494 | 201.452 | 11.952.480 |
| Decreases | - | 683.756 | 163.459 | 29.120 | 58.273 | 934.608 |
| Transfers | - | 99.152 | 6.509 | 10.978 | -163.260 | -46.621 |
| Depreciation in the year | - | 3.248.673 | 3.327.604 | 779.481 | - | 7.355.758 |
| Deprec. by changes in the perim. | - | - | - | - | - | - |
| Impairment in the year | - | - | - | - | - | - |
| Impairment reversion | - | - | - | - | - | - |
| Final net amount | 11.286.154 | 105.664.569 | 18.368.109 | 5.955.327 | 371.614 | 141.645.775 |
| 30 September 2016 | ||||||
| Cost | 11.286.154 | 151.625.964 | 76.884.020 | 19.824.714 | 371.614 | 259.992.468 |
| Accumulated depreciation | - | 38.382.297 | 58.162.285 | 13.834.029 | - | 110.378.611 |
| Accumulated impairment | - | 7.579.098 | 353.627 | 35.359 | - | 7.968.084 |
| Net amount | 11.286.154 | 105.664.569 | 18.368.109 | 5.955.327 | 371.614 | 141.645.775 |
Investments in 2015 and 2016, with the amount of about 24 and 12 million euros, respectively, refer mainly to KFC restaurants openings in Angola, and Burger King and Pizza Hut in Portugal.
Goodwill and intangible assets are broken down as follows:
| Sep-16 | Dec-15 | |
|---|---|---|
| Goodwill | 40.509.009 | 40.509.009 |
| Intangible assets | 11.645.074 | 11.431.871 |
| 52.154.083 | 51.940.880 |
In the nine months period ended 30 September 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:
| Industrial | Other intangible | Intangible Assets in | |||
|---|---|---|---|---|---|
| Goodwill | property | Assets | progress | Total | |
| 1 January 2015 | |||||
| Cost | 42.456.266 | 21.231.044 | 5.969.250 | 2.487.970 | 72.144.530 |
| Accumulated amortization | - | 8.322.510 | 5.290.418 | - | 13.612.928 |
| Accumulated impairment | 1.861.678 | 2.511.522 | 70.110 | - | 4.443.310 |
| Net amount | 40.594.588 | 10.397.012 | 608.722 | 2.487.970 | 54.088.293 |
| 31 December 2015 | |||||
| Initial net amount | 40.594.588 | 10.397.012 | 608.722 | 2.487.970 | 54.088.293 |
| Changes in consolidat. perimeter | - | - | - | - | - |
| Currency conversion | - | -77.506 | - | -37.454 | -114.960 |
| Additions | - | 2.242.182 | 109.736 | 442.757 | 2.794.675 |
| Decreases | - | 7.075 | 71.086 | - | 78.161 |
| Transfers | -85.579 | 66.401 | - | -2.134.239 | -2.153.417 |
| Amortization in the year | - | 1.141.796 | 302.608 | - | 1.444.404 |
| Amortiz. by changes in the perimeter | - | - | - | - | - |
| Impairment in the year | - | 1.151.148 | - | - | 1.151.148 |
| Impairment reversion | - | - | - | - | - |
| Final net amount | 40.509.009 | 10.328.070 | 344.764 | 759.034 | 51.940.880 |
| 31 December 2015 | |||||
| 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 |
| Industrial | Other intangible | Intangible Assets in | |||
| Goodwill | property | Assets | progress (1) | Total | |
| 30 September 2016 | |||||
| Initial net amount | 40.509.009 | 10.328.070 | 344.764 | 759.034 | 51.940.880 |
| Changes in consolidat. Perimeter | - | - | - | - | - |
| Currency conversion | - | -98.029 | - | -132.426 | -230.455 |
| Additions | - | 1.363.708 | - | 131.485 | 1.495.193 |
| Decreases | - | 620 | - | 66.303 | 66.923 |
| Transfers | - | 3.150 | - | -3.150 | - |
| Amortization in the year | - | 870.905 | 113.706 | - | 984.611 |
| Amortiz. by changes in the perimeter | - | - | - | - | - |
| Impairment in the year | - | - | - | - | - |
| Impairment reversion | - | - | - | - | - |
| Final net amount | 40.509.009 | 10.725.374 | 231.058 | 688.640 | 52.154.083 |
| 30 September 2016 | |||||
|---|---|---|---|---|---|
| Cost | 42.370.687 | 24.456.712 | 5.647.330 | 688.638 | 73.163.367 |
| Accumulated amortization | - | 10.070.234 | 5.407.671 | - | 15.477.905 |
| Accumulated impairment | 1.861.678 | 3.661.102 | 8.601 | - | 5.531.380 |
| Net amount | 40.509.009 | 10.725.376 | 231.058 | 688.638 | 52.154.083 |
(1) balance on 30 September 2016 concerns, mainly, to restaurants in Angola due to open.
Industrial property includes group's concessions and territorial rights.
Goodwill is broken down as shown bellow:
| Sep-16 | Dec-15 | |
|---|---|---|
| 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 |
| 40.509.009 | 40.509.009 |
Income per share in the nine months period ended 30 September 2016 and 2015 was calculated as follows:
| Sep-16 | Sep-15 | |
|---|---|---|
| Profit payable to shareholders | 18.086.698 | 9.307.049 |
| Mean weighted number of ordinary shares issued | 22.250.000 | 20.000.000 |
| Mean weighted number of own shares | -2.224.986 | -2.000.000 |
| 20.025.014 | 18.000.000 | |
| Basic earnings per share (€ per share) | 0,90 | 0,52 |
| Earnings diluted per share (€ per share) | 0,90 | 0,52 |
| Number of own shares at the end of the year | 2.399.900 | 2.000.000 |
At the General Meeting of 29th April 2016, it was decided to increase the share capital to 24 million, by incorporation of legal reserves. The capital increase implies an increase of 400.000 own shares.
At the General Meeting of 29th April 2016, the company decided to pay a gross dividend of 0,10 euros per share (0,055 euros in 2015), representing a total value of 1.800.000 euros for outstanding shares (990.000 euros in 2015), settled on May 27th, 2016.
Also, in the year 2016, 3.798.270 euros of dividends were paid to a minority shareholder of the subsidiary Ibersande.
The group has contingent liabilities regarding bank and other guarantees and other contingencies related with its business operations (as licensing, advertising fees, food hygiene and safety and employees, and the rate of success of these processes is historically high in Ibersol). No significant liabilities are expected to arise from the said contingent liabilities.
On 30th September 2016 and 31st December 2015, subsidiaries non-accounted responsibilities included in the consolidation consist mainly of bank guarantees given on their behalf, as shown below:
| Sep-16 | Dec-15 | ||
|---|---|---|---|
| Bank guarantees | 2.091.494 | 1.875.027 |
Bank guarantees are related mainly to concessions and rents.
There are no commitments relating to investments contracted at the date of approval of these financial statements.
Changes in the nine months period ended 30 September 2016 and in the year ending on 31 December 2015, under the heading of asset impairment losses were as follows:
| Sep-16 | ||||||
|---|---|---|---|---|---|---|
| Impairment | ||||||
| Starting | assets | Losses in | Impairment | Closing | ||
| balance | Transfer | disposals | the Year | reversion | balance | |
| Tangible fixed assets | 9.633.672 | - | -1.665.588 | - | - | 7.968.084 |
| Goodwill | 1.861.678 | - | - | - | - | 1.861.678 |
| Intangible assets | 3.700.917 | - | -31.215 | - | - | 3.669.702 |
| Stocks | 74.981 | - | - | - | - | 74.981 |
| Other current assets | 1.442.527 | 6.228 | - | -15.320 | -49.111 | 1.384.324 |
| Other non current assets | 134.342 | -6.228 | - | - | - | 128.114 |
| 16.848.116 | - | -1.696.803 | -15.320 | -49.111 | 15.086.882 |
| Dec-15 | ||||||
|---|---|---|---|---|---|---|
| Impairment | ||||||
| Starting | assets | Losses in | Impairment | Closing | ||
| balance | Transfer | disposals | the Year | reversion | balance | |
| Tangible fixed assets | 8.469.432 | - | -1.617.285 | 2.929.579 | -148.054 | 9.633.672 |
| Goodwill | 1.861.678 | - | - | - | - | 1.861.678 |
| Intangible assets | 2.581.631 | - | -31.862 | 1.151.148 | - | 3.700.917 |
| Stocks | 74.981 | - | - | - | - | 74.981 |
| Other current assets | 1.386.567 | 24.170 | - | 102.321 | -70.532 | 1.442.527 |
| Other non current assets | 158.512 | -24.170 | - | - | - | 134.342 |
| 14.532.802 | - | -1.649.147 | 4.183.048 | -218.586 | 16.848.116 |
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, there bank loans are denominated in euros and in kwanzas in Angola. The volume of purchases outside the Euro zone are of irrelevant proportions.
The main source of the Group's exposure arises from the investment outside the euro area of operation that develops in Angola, although it is still small is growing and consequently is gaining weight in the group's activity. The shortage of foreign currency in Angola and the devaluation of the kwanza is a risk to consider. The financing of the Angolan subsidiary in foreign currency in the amount of \$ 1.625.000 does not have large exposure due to it's reduced amount. The remaining financing concerning Angolan subsidiaries are denominated in the local currency, the same in which the income is generated. The difficulty in paying the imports have been increasing and the liabilities of the Angolan subsidiary in foreign currency has increased. The adopted policy is liability coverage in foreign currency assets indexed to USD (Angolan State Treasury Bonds, presented under Other financial assets of the Consolidated Statement of Financial Position). In the nine months period ended 30 September 2016 has been invested 8.700.525 euros in this type of obligations, and to this end was the same amount financing contracted (which largely justifies the increased loans face line by December 31, 2015).
Currency exchange rate used for conversion of the transactions and balances denominated in Kwanzas, were respectively:
| Sep-16 | |||
|---|---|---|---|
| Euro exchange rates | (x | Rate on September, | Average interest rate |
| foreign currency per 1 Euro) | 30 2016 | September 2016 | |
| Kwanza de Angola (AOA) | 186,081 | 183,117 | |
| Dec-15 | |||
| Euro exchange rates | (x | Rate on December, | Average interest rate |
| foreign currency per 1 Euro) | 31 2015 | year 2015 | |
| Kwanza de Angola (AOA) | 147,842 | 134,409 |
Based on simulations performed on September 30, 2016, a decrease from 5% to 10% in AOA, concerning EUR and USD currency, keeping everything else constant, would have no impact on the consolidated financial statements of the Group because there is full coverage of liabilities in foreign currency. That is assets and liabilities in foreign currency have identical values.
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 totally or partially fixing the interest rates.
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 7,5 million euros (commercial paper programmes) loan has the maturity of the underlying interest and the repayment plan identical to the terms of the loan.
Based on simulations performed on 30 September 2016, an increase of 100 basis points in the interest rate, maintaining other factors constant, would have a negative impact in the net profit of 186 thousand 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 merchandise to franchisees representing less than 3% 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 September 30, 2016, is not significant.
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.
At the end of September 2016 current liabilities reached 82 million euros, compared with 39 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 2016 the renewal of the commercial paper programmes (18.000.000 euros). However, in case of need, cash and cash equivalents and cash flows from operations are sufficient to settle current loans.
On September 30, 2016, the use of short term liquidity cash flow support was less than 37%. Investments in term deposits and other application of 16.9 million euros, match 32% of liabilities paid.
The following table shows the Group financial liabilities (relevant items), considering contractual cash-flows:
| to September 2017 | from September 2017 to 2028 | |
|---|---|---|
| Bank loans and overdrafts | 9.584.938 | 18.780.277 |
| Commercial paper | 18.000.000 | 6.750.000 |
| Suppliers of fixed assets c/ a | 7.464.007 | - |
| Suppliers c/ a | 23.785.178 | - |
| Leasing suppliers | 156.718 | 383.031 |
| Other creditors | 10.155.062 | 218.077 |
| Accrued costs | 12.318.132 | - |
| Total 81.464.035 |
26.131.385 |
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 30th September 2016 the gearing ratio was of 12% and on 31st December 2015 of 14%, as follows:
| Set-16 | Dec-15 | ||
|---|---|---|---|
| Bank loans | 53.654.964 | 43.435.303 | |
| Other financial assets | -17.327.331 | -7.098.836 | |
| Cash and bank deposits | -16.957.171 | -14.471.082 | |
| Net indebtedness | 19.370.462 | 21.865.385 | |
| Equity | 146.306.394 | 135.046.003 | |
| Total capital | 165.676.856 | 156.911.388 | |
| Gearing ratio | 12% | 14% |
Given the current constraints of the financial markets and despite the goal of placing the gearing ratio in the range 35% -70%, prudently, in September 2016 we have a 12% ratio and in December 2015, 14%.
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 30 September 2016 and 31st December 2015 are broken down as follows:
| Sep-16 | Dec-15 | |
|---|---|---|
| Clients | 4.150.149 | 3.688.266 |
| State and other public entities | 419.843 | 203.710 |
| Other debtors | 2.887.765 | 4.876.466 |
| Advances to suplliers | 152.259 | - |
| Advances to asset suplliers | 2.251.000 | 94.089 |
| Accruals and income | 2.244.291 | 1.591.708 |
| Deferred costs | 1.911.021 | 1.781.688 |
| Other current assets | 14.016.328 | 12.235.927 |
| Accumulated impairment losses | 1.384.324 | 1.442.527 |
| 12.632.004 | 10.793.400 | |
| Other current liabilities | ||
| Sep-16 | Dec-15 | |
| Other creditors | 2.234.604 | 1.986.777 |
| State and other public entities | 4.600.165 | 6.020.854 |
| Deferred income | 1.013.533 | 709.493 |
| 7.848.302 | 8.717.124 |
Other Debtors change concerns repayment of the amount invested in Guimarães, Fafe e Paredes platforms (EUR 2.1 million).
Net financing cost on 30th September 2016 and 31st December 2015 are broken down as follows:
| 2016 | 2015 | ||
|---|---|---|---|
| Interest paid | 1.823.166 | 842.264 | |
| Interest earned (1) | -2.183.239 | -27.302 | |
| Currency exchange differences (2) | -24.022 | 2.508.943 | |
| Payment discounts obtained | -7.947 | -6.249 | |
| Other financial costs and income | 469.545 | 536.436 | |
| 77.503 | 3.854.092 |
(1) 2016 balance is essentially the compensatory interest of Aenor (Note 6).
(2) in 2015, the devaluation of Kwanza (AOA) against major currencies, with particular emphasis to the USD, gave potential unfavorable exchange differences in Angola for updating assets and liabilities in foreign currency. In 2016, this exchange rate adjustment was recognized in other operating costs (about EUR 0.5 million).
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 20º and paragraph 1 Article 21º, both of the Portuguese Market Code, with the control 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, 830.440 and 1.805.821 euros.
The company shareholder ATPS-S.G.P.S., S.A., under a service-rendering contract with the subsidiary Ibersol Restauração, S.A., has the obligation to ensure that its administrators, António Carlos Vaz Pinto de Sousa and Antonio Alberto Guerra Leal Teixeira, manage the group without incur in any additional charge. The company does not pay directly to its administrators any remuneration.
There were no subsequent events as of 30 September 2016 that may have a material impact on these financial statements, besides the following:
a) by contract signed on October 27, 2016 with the Restaurant Group AGROLIMEN, based in Barcelona, Ibersol acquire the entire share capital of Eat-Out Group, that holds a major position in the Spanish food market through different brands: Pans & Co, Ribs, FresCo and Dehesa Santa Maria, and a significant presence in the Travel segment, operating in several Airports in Spain.
b) still in October, the process of issuing and listing the shares corresponding to the capital increase by incorporation of reserves occurred.
The financial statements were approved by the Board of Directors and authorised for emission on 17th November 2016.
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