Interim / Quarterly Report • Aug 31, 2017
Interim / Quarterly Report
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| INTRODUCTION3 | |
|---|---|
| STOCK EXCHANGE EVOLUTION4 | |
| COMPANY ACTIVITY 6 | |
| FINANCIAL REVIEW 7 | |
| OUTLOOK 10 | |
| CORPORATE GOVERNANCE 11 | |
| LEGAL MATTERS 12 | |
| CLOSING REMARKS 14 | |
| STATEMENT UNDER ARTICLE 246, 1, C) OF THE SECURITIES CODE 15 | |
| DECLARATION OF RESPONSIBILITY 16 | |
| ARTICLE 447 OF THE COMMERCIAL COMPANIES CODE AND ARTICLE 14, PARAGRAPH 7, OF PORTUGUESE SECURITIES REGULATOR (CMVM) REGULATION NO. 5/2008 17 |
Pursuant to the legal requirements, the Board of Directors of Cofina, SGPS., S.A. (Public Company) hereby presents its Report and Accounts for the first semester of 2017.
The year 2017 has turned out to be a difficult year for circulation and advertising revenues, counteracting the recovery trend that seemed to be a possibility in 2016.
Despite the extremely adverse scenario, the Group continued to maintain leadership of its main products in terms of market share.
(Note: PSI 20 was considered as an index with the same initial market value as the stocks, under analysis, in order to enable a better comparison of the quotations variations.)
In the first half of 2017, the national stock index (PSI-20) appreciated around 10.1% compared to the end of 2016, while Cofina shares appreciated 52.7%.
As of June 30 2017, Cofina's shares closing price was 0.397 Euro per share corresponding to a market capitalization of 40.7 million Euro.
In the first half of 2017, Cofina's shares were traded at the highest price of 0.425 Euro and at the lowest price of 0.243 Euro. In total, 18,552,225 shares were traded.
The most significant events that affected Cofina's shares in the first semester of 2017 can be detailed as follows:
Cofina group develops its activity in the media and contents business area.
The key group company in this sector is Cofina Media, S.A., which owns headings of reference, leaders in their respective segments. In the Group's publishing portfolio it should be highlighted the daily newspaper "Correio da Manhã", the daily sports newspaper "Record", the economic information newspaper "Jornal de Negócios", the free newspapers "Destak" and "Metro", the information magazine "Sábado" as well as other titles, such as "TV Guia".
In addition, since 2013, Cofina Group incorporated the television channel "CMTV" into its operations portfolio.
Cofina Group's complete structure of participations as of 30 June 2017 is as follows:
According to the data provided by APCT ("Associação Portuguesa para o Controlo de Tiragem e Circulação") for the first four months of 2017, "Correio da Manhã" is the most sold newspaper in Portugal, with an average of more than 91 thousand copies sold daily. According to the data provided by this certifying entity, "Correio da Manhã" has a market share of 50% (regarding the daily paid generic newspapers segment). "Correio da Manhã" has been keeping its leadership, year after year, despite the generalized decrease on paid circulation in other titles of the same segment.
The consolidated financial information of Cofina for the 1st half of 2017, prepared in accordance with the recognition and measurement principles of International Financial Reporting Standards (IFRS), can be presented as follows:
| (amounts in thousand of Euro) | 1H 2017 | 1H 2016 | Var (%) | ||||
|---|---|---|---|---|---|---|---|
| 1H17/1H16 | |||||||
| Consolidated operating revenue | 43,991 | 48,471 | -9.2% | ||||
| Circulation | 22,810 | 25,329 | -9.9% | ||||
| Advertising | 14,454 | 15,147 | -4.6% | ||||
| Alternative marketing products and others | 6,727 | 7,995 | -15.9% | ||||
| Operating income by segment | 43,991 | 48,471 | -9.2% | ||||
| Newspapers | 37,117 | 39,905 | -7.0% | ||||
| Magazines | 6,874 | 8,566 | -19.8% | ||||
| Operating Expenses (a) | 38,368 | 42,030 | -8.7% | ||||
| Consolidated EBITDA (b) | 5,623 | 6,441 | -12.7% | ||||
| EBITDA Margin | 12.8% | 13.3% | -0.5 p.p. | ||||
| Newspapers EBITDA | 6,286 | 7,016 | -10.4% | ||||
| Newspapers EBITDA Margin | 16.9% | 17.6% | -0.7 p.p. | ||||
| Magazines EBITDA | -663 | -575 | -15.3% | ||||
| Magazines EBITDA Margin | -9.6% | -6.7% | -2.9 p.p. | ||||
| Restructuring Costs | 2,000 | - | ss | ||||
| Consolidated EBITDA after restructuring costs | 3,623 | 6,441 | -43.8% | ||||
| Amortisation and depreciation (-) | 923 | 1,265 | -27.0% | ||||
| EBIT | 2,700 | 5,176 | -47.8% | ||||
| EBIT Margin | 6.1% | 10.7% | -4.6 pp | ||||
| Net financial income / (loss) | (1,482) | (1,588) | -6.7% | ||||
| Income before taxes and non-controlling interests | 1,218 | 3,588 | -66.1% | ||||
| Income taxes (-) | 500 | 1,248 | -59.9% | ||||
| Net consolidated profit / (loss) | 718 | 2,340 | -69.3% | ||||
| (a) Operating ex penses ex cluding amortisation (b) EBITDA = Earnings before interest, tax es, depreciation and amortisation |
The period in question was characterised by a decrease in total revenues compared to the same period of last year (-9%), with a decrease in all its components: circulation revenues (-10%), advertising revenues (-5%) and alternative marketing products and others (-16%).
In an adverse context, Cofina is implementing a restructuring plan to prepare the Group for current and future reality, ensuring its sustainability as well as acceptable levels of profitability. The plan goes through the optimisation of the structure and product portfolio. Therefore, 2 million Euro of restructuring costs were included in the first semester's financial statements.
EBITDA, before restructuring costs, reached approximately 6.4 million Euro, representing a decrease of 13% compared to the same period of last year.
Consolidated net profit reached approximately 0.7 million Euro.
As of June 30, 2017, the nominal net debt of Cofina amounted to 56 million Euro.
In operational terms, Cofina is developing new business units, especially an online gaming platform, which is currently being approved and should be operational during the second half of 2017.
The main indicators of the core business segments, excluding restructuring costs, are as follows:
| (amounts in thousand of Euro) | 1H 2017 | Var (%) 1H17/1H16 |
|||||
|---|---|---|---|---|---|---|---|
| Operating income | 37,117 | 39,905 | -7.0% | ||||
| Circulation | 19,123 | 20,605 | -7.2% | ||||
| Advertising | 12,381 | 12,567 | -1.5% | ||||
| Alternative marketing products and others | 5,613 | 6,733 | -16.6% | ||||
| Operating expenses (a) | 30,831 | 32,889 | -6.3% | ||||
| EBITDA (b) | 6,286 | 7,016 | -10.4% | ||||
| EBITDA Margin | 16.9% | 17.6% | -0.7 p.p. | ||||
| (a) Operating ex penses ex cluding amortisation (b) EBITDA = Earnings before tax es, financial results and depreciation and amortization |
The newspapers segment of Cofina recorded, in the first semester of 2017, a total income of 37.1 million Euro, which represents a decrease of 7% when compared with the homologous period. The circulation income recorded a decrease of about 7% reaching 19.1 million Euro; the advertising income recorded a decrease of about 1.5% reaching 12.4 million Euro; whilst the revenue from alternative marketing products and others recorded a decrease of 17%, reaching approximately 5.6 million Euro.
Therefore, EBITDA of the newspaper segment reached in the period under analysis amounted to 6.3 million Euro, a decrease of approximately 10%, when compared with the same period. The EBITDA margin amounted to 16.9%.
The newspapers segment includes the results of the "Correio da Manhã TV" channel, which has consistently beaten audience records. Thus, in the first half of 2017, CMTV recorded a 2.5% share, being the channel with the highest audience in the cable and the fourth largest Portuguese channel, behind the Free to Air, being only present in 85% of the market (it is not yet present on the Vodafone and Nowo platforms).
I. Management Report
| 1H 2017 | 1H 2016 | Var (%) | |||||
|---|---|---|---|---|---|---|---|
| (amounts in thousand of Euro) | 1H17/1H16 | ||||||
| Operating income | 6,874 | 8,566 | -19.8% | ||||
| Circulation | 3,687 | 4,724 | -22.0% | ||||
| Advertising | 2,073 | 2,580 | -19.7% | ||||
| Alternative marketing products and others | 1,114 | 1,262 | -11.7% | ||||
| Operating expenses (a) | 7,537 | 9,141 | -17.5% | ||||
| EBITDA | -663 | -575 | -15.3% | ||||
| EBITDA Margin | -9.6% | -6.7% | -2.9 p.p. | ||||
| (a) Operating ex penses ex cluding amortisation |
|||||||
| (b) EBITDA = Earnings before tax es, financial results and depreciation and amortization |
During the first half of 2017, total revenues in this segment reached approximately 6.9 million Euros, reflecting a decrease of around 20% over the same period of last year.
The circulation revenues decreased by 22% to around 3.7 million euro, while advertising decreased by around 20%. Revenues associated with alternative marketing products fell by 12%.
EBITDA of the magazine segment was - 663 thousand Euro.
It should be noted that, as part of the reorganization process, the printed edition of the weekly magazine Flash was closed (maintaining the online edition only), which meant non-recurring costs and less revenue compared to the same period of the previous year. On the other hand, the contract with Condé Naste was not renewed. Therefore, from September onwards, the monthly fashion magazine Vogue will no longer be published by Cofina.
The second semester 2017, in operational terms, should keep the trends from previous years, taking into account the structural change that is getting stronger in the media sector.
In this context, Cofina has been developing a cost reduction and restructuring plan focused in the areas most affected by this transformation and that will continue in the second semester of 2017.
In compliance with the legal requirements in force, the Company is exempted from presenting information regarding Corporate Governance, once this information is only mandatory upon presentation with the Annual Management Report. The Annual Report about Corporate Governance is an integral part of Cofina Annual Financial Statements for year 2016 and it is available on our website (www.cofina.pt).
At this point, however, it should be noted that the Shareholders' General Meeting held on April 26, 2017 elected the corporate bodies for the 2017-2019 triennium.
Thus, they were elected to the Board of Directors for the 2017/2019 mandate:
For the Statutory Audit Board, it were elected the following members:
The Statutory Auditor elected for the 2017-2017 triennium was Ernst & Young Audit & Associados - SROC, S.A., represented by Rui Manuel da Cunha Vieira or Rui Abel Serra Martins.
Pursuant to the requirements of article 66 of the Commercial Companies Code ("Código das Sociedades Comerciais"), the Directors inform that as of 30 June 2017 Cofina had no own shares and did not acquire nor sell own shares during the semester then ended.
Pursuant to the requirements of article 447 of the Commercial Companies Code ("Código das Sociedades Comerciais"), the Directors inform that, as of 30 June 2017, the shares they held were as follows:
| Paulo Jorge dos Santos Fernandes (a) | 13,386,332 |
|---|---|
| João Manuel Matos Borges de Oliveira (b) | 15,400,000 |
| Domingos José Vieira de Matos (c) | 12,395,257 |
| Pedro Miguel Matos Borges de Oliveira | 7,719,360 |
| Ana Rebelo de Carvalho Menéres de Mendonça (d) | 20,488,760 |
(a) – Besides 3,000,000 shares personally held, 10,386,332 shares held by ACTIUM CAPITAL – SGPS, S.A. are also attributable to Paulo Jorge dos Santos Fernandes, its director and dominant shareholder. Thus, under legal terms, a total of 13,386,332 shares, corresponding to 13.05% of the share capital and voting rights of COFINA – SGPS, S.A. are attributable to Paulo Jorge dos Santos Fernandes.
(b) – The 15,400,000 shares are the total number of shares of COFINA – SGPS, S.A. held by INDAZ S.A., in which João Manuel Matos Borges de Oliveira is director.
(c) – The 12,395,257 shares are the total number of shares of COFINA – SGPS, S.A. held by LIVREFLUXO – SGPS, S.A., in which Domingos José Vieira de Matos is director and majority shareholder.
(d) – The 20,488,760 shares are the total number of shares of COFINA – SGPS, S.A. held by PROMENDO – SGPS, S.A., in which Ana Rebelo de Carvalho Menéres de Mendonça is director and majority shareholder.
As of 30 June 2017 the Statutory Auditor and the members of the Shareholders' Meeting and of the Statutory Audit Board held no shares of the Company.
Pursuant to the requirements of articles 16 and 20 of the Securities Code ("Código dos Valores Mobiliários") and article 448 of the Commercial Companies Code, the Company informs that, in accordance with the notifications received, the companies and/or individuals that hold qualified holdings exceeding 2%, 5%, 10%, 20%, 33% and 50% of the voting rights accordingly to the last received notifications until 30 June 2017, are as follows:
| Shares held as of 30 | ||
|---|---|---|
| Santander Asset Management | June 2017 | % of voting rights |
| Through Fundo Santander Acções Portugal | 2,069,459 | 2.02% |
| Through Fundo Santander PPA | 107,964 | 0.11% |
| Total attributable | 2,177,423 | 2.12% |
| Shares held as of 30 | ||
| GNB - Sociedade Gestora de Fundos de Investimentos Mobiliário, S.A. | June 2017 | % of voting rights |
| Through Fundo NB - Portugal Acções | 3,081,677 | 3.00% |
| Total attributable | 3,081,677 | 3.00% |
| Shares held as of 30 | ||
|---|---|---|
| Credit Suisse Group AG | June 2017 | % of voting rights |
| Directly | 5,039,060 | 4.91% |
| Total attributable | 5,039,060 | 4.91% |
| Shares held as of 30 | ||
| Pedro Miguel Matos Borges de Oliveira | June 2017 | % of voting rights |
| Directly | 7,719,360 | 7.53% |
| Total attributable | 7,719,360 | 7.53% |
| Shares held as of 30 | ||
| Domingos José Vieira de Matos | June 2017 | % of voting rights |
| Through Livrefluxo - SGPS, S.A. (of which he is also director and dominant shareholder) | 12,395,257 | 12.09% |
| Total attributable | 12,395,257 | 12.09% |
| Shares held as of 30 | ||
| Paulo Jorge dos Santos Fernandes | June 2017 | % of voting rights |
| Through Actium Capital - SGPS, S.A. (of which he is also director and dominant shareholder) | 10,386,332 | 10.13% |
| Directly | 3,000,000 | 2.92% |
| Total attributable | 13,386,332 | 13.05% |
| Shares held as of 30 | ||
| João Manuel Matos Borges de Oliveira | June 2017 | % of voting rights |
| Through INDAZ, S.A. (of which he is also director) | 15,400,000 | 15.01% |
| Total attributable | 15,400,000 | 15.01% |
| Shares held as of 30 | ||
| Ana Rebelo de Carvalho Menéres de Mendonça | June 2017 | % of voting rights |
| Through PROMENDO - SGPS, S.A. (of which she is also director and dominant shareholder) | 20,488,760 | 19.98% |
Cofina was not notified of any participation exceeding 20% of the voting rights.
The Board of Directors concludes by expressing a vote of gratitude to all of the Group's Stakeholders, for the trust demonstrated in our organization. We would like to thank the Statutory Audit Board for the continued monitoring of our operations.
Oporto, 27 July 2017
The Board of Directors
_____________________________________________ Paulo Jorge dos Santos Fernandes – President
_____________________________________________
_____________________________________________
João Manuel Matos Borges de Oliveira
Domingos José Vieira de Matos
_____________________________________________ Pedro Miguel Matos Borges de Oliveira
Ana Rebelo de Carvalho Menéres de Mendonça
_____________________________________________
The signatories individually declare that, to their knowledge, the Financial Statements prepared meet the standards of the applicable International Financial Accounting ("IFRS") as adopted by the European Union, for Interim Financial Reporting, give a truthful and appropriate image of the assets and liabilities, financial position and the consolidate results of Cofina, SGPS, S.A. and of the companies included in the consolidation, and that the Interim Management Report describes the evolution of business, the performance and the financial position of Cofina, SGPS, S.A. and companies of the companies included in the consolidation, and contains a description of the major risks and uncertainties that they face.
The members of the Board of Directors of Cofina, SGPS, S.A. declare to assume responsibility for the information presented herein and assure that the items included herein are true and that, to the best of their knowledge, there are no omissions.
As required by the article 8, no. 3, of the Securities Code, the Board of Directors of Cofina, SGPS, S.A. declares that the accounts that integrate this report were not subject to a Limited Review.
Under the terms and for the purposes of article 210 of the Code of the Contributory Regimes of the Social Security System (Law no. 110/2009, of September 16), the Board of Directors informs that there are no overdue debts to the State, namely with respect to Social Security.
Disclosure of shares and other securities held by members of the Board of Directors and Officers, as well as people closely related, under the Article 248 B of the Securities Code, and transactions over these shares that took place on the period under analysis.
| Shares held at 30-Jun | ||||
|---|---|---|---|---|
| Members of the Board of Directors | 2016 | Acquisitions | Disposals | 2017 |
| Paulo Jorge dos Santos Fernandes | - | 3,000,000 | - | 3,000,000 |
| Paulo Jorge dos Santos Fernandes (imputation through ACTIUM CAPITAL - SGPS, S.A.) | 13,386,332 | - | (3,000,000) | 10,386,332 |
| João Manuel Matos Borges de Oliveira (imputation through INDAZ, S.A.) | 15,400,000 | - | - | 15,400,000 |
| Domingos José Vieira de Matos (imputation through LIVREFLUXO - SGPS, S.A.) | 12,395,257 | - | - | 12,395,257 |
| Pedro Miguel Matos Borges de Oliveira | 7,719,360 | - | - | 7,719,360 |
| Ana Rebelo Mendonça (imputation through PROMENDO - SGPS, S.A.) | 20,488,760 | - | - | 20,488,760 |
| Date | Nature | Volume | Price (€) | Local | N.º shares |
|---|---|---|---|---|---|
| 31 December 2016 | - | - | - | - | - |
| 11 May 2017 | Acquisition | 3,000,000 | 0.330000 | - | 3,000,000 |
| 30 June 2017 | - | - | - | - | 3,000,000 |
| Date | Nature | Volume | Price (€) | Local | N.º shares |
|---|---|---|---|---|---|
| 31 December 2016 | - | - | - | - | 13,386,332 |
| 11 May 2017 | Sale | (3,000,000) | 0.330000 | - | 10,386,332 |
| 30 June 2017 | - | - | - | - | 10,386,332 |
Consolidated financial statements and notes (Translation of financial statements originally issued in Portuguese – Note 16) (Amounts expressed in Euros)
| ASSETS | Notes | 30.06.2017 | 31.12.2016 |
|---|---|---|---|
| NON CURRENT ASSETS | |||
| Tangible assets | 2,681,540 | 3,169,478 | |
| Goodwill | 5 | 84,777,180 | 84,777,180 |
| Intangible assets | 14,254 | 130,544 | |
| Investments in associated companies | 4 | 3,381,246 | 3,266,782 |
| Investments held for sale | 4 | 9,831 | 9,080 |
| Other non current assets | 36,888 | 32,383 | |
| Deferred tax assets | 547,120 | 547,120 | |
| Total non current assets | 91,448,059 | 91,932,567 | |
| CURRENT ASSETS | |||
| Inventories | 1,446,486 | 1,808,928 | |
| Customers | 9,098,170 | 10,223,150 | |
| State and other public entitites | 892,953 | 894,477 | |
| Other current debtors | 360,201 | 264,777 | |
| Other current assets | 6,378,348 | 7,181,278 | |
| Cash and cash equivalents | 7 | 27,059,517 | 9,403,739 |
| Total current assets | 45,235,675 | 29,776,349 | |
| TOTAL ASSETS | 136,683,734 | 121,708,916 | |
| EQUITY AND LIABILITIES | |||
| SHAREHOLDERS' FUNDS | |||
| Share capital | 8 | 25,641,459 | 25,641,459 |
| Share premium account | 15,874,835 | 15,874,835 | |
| Legal reserve | 5,409,144 | 5,409,144 | |
| Exchange conversion reserve | (697,334) | (594,244) | |
| Other reserves | (20,330,538) | (24,663,549) | |
| Consolidated net profit/(loss) for the period attributable to the parent company | 717,627 | 4,333,011 | |
| Equity attributable to equity holder of the parent company | 26,615,193 | 26,000,656 | |
| Non-controlling interests | - | - | |
| TOTAL EQUITY | 26,615,193 | 26,000,656 | |
| LIABILITIES | |||
| NON CURRENT LIABILITIES | |||
| Other loans | 9 | 33,204,916 | 33,158,397 |
| Other non current creditors | 156,949 | 33,929 | |
| Provisions | 7,565,963 | 7,790,467 | |
| Total non current liabilitiess | 40,927,828 | 40,982,793 | |
| CURRENT LIABILITIES | |||
| Bank loans | 7 and 9 | 6,092,545 | - |
| Other loans | 9 | 43,656,837 | 33,546,302 |
| Suppliers | 7,384,038 | 8,773,388 | |
| State and other public entities | 3,953,639 | 3,107,294 | |
| Other current creditors | 1,261,394 | 1,420,964 | |
| Other current liabilities | 6,792,260 | 7,877,519 | |
| Total current liabilities | 69,140,713 | 54,725,467 | |
| TOTAL LIABILITIES | 110,068,541 | 95,708,260 | |
| TOTAL EQUITY AND LIABILITIES | 136,683,734 | 121,708,916 | |
The accompanying notes form an integral part of the consolidated financial statements.
Consolidated financial statements and notes (Translation of financial statements originally issued in Portuguese – Note 16) (Amounts expressed in Euros)
(Amounts expressed in Euro)
| nd Quarter 2 |
nd Quarter 2 |
||||
|---|---|---|---|---|---|
| Notes | 30.06.2017 | 30.06.2016 | 2017 | 2016 | |
| Sales | 22,809,610 | 25,328,997 | 11,703,245 | 12,684,062 | |
| Services rendered | 14,454,477 | 15,147,150 | 8,070,581 | 8,735,787 | |
| Other operating income | 6,727,235 | 7,994,996 | 3,663,640 | 4,466,899 | |
| Cost of sales | (4,976,056) | (6,264,976) | (2,382,910) | (3,359,468) | |
| External supplies and services | (18,655,729) | (19,383,138) | (10,504,995) | (10,811,727) | |
| Payroll expenses | (16,534,678) | (15,981,597) | (9,120,004) | (7,933,413) | |
| Amortisation and depreciation | (923,026) | (1,265,011) | (461,509) | (632,501) | |
| Provisions and impairment losses | (102,922) | (244,636) | (71,097) | (150,133) | |
| Other operating expenses | (98,514) | (155,496) | (71,573) | (73,791) | |
| Gains/ (losses) related with associated companies | 10 | (180,062) | (311,855) | 195,479 | (344,886) |
| Financial expenses | 10 | (1,326,888) | (1,282,792) | (692,161) | (494,997) |
| Financial income | 10 | 24,933 | 6,353 | 5,917 | (32,225) |
| Profit before income tax | 1,218,380 | 3,587,995 | 334,614 | 2,053,607 | |
| Income tax | 6 | (500,753) | (1,247,842) | (265,226) | (716,115) |
| Net consolidated profit / (loss) for the period | 717,627 | 2,340,153 | 69,388 | 1,337,492 | |
| Attributable to: | |||||
| Shareholders of the parent company | 717,627 | 2,340,153 | 69,388 | 1,337,492 | |
| Non-controlling interests | - | - | - | - | |
| Resultados por ação: Earnings per share: |
|||||
| Basic | 12 | 0.01 | 0.02 | 0.00 | 0.01 |
| Diluted | 12 | 0.01 | 0.02 | 0.00 | 0.01 |
The accompanying notes form an integral part of the consolidated financial statements.
Consolidated financial statements and notes
(Translation of financial statements originally issued in Portuguese – Note 16) (Amounts expressed in Euros)
| Attributable to equity holders of the parent company | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Exchange | |||||||||
| Share | Share premium | Legal | conversion | Other | Net | Non controlling | Total | ||
| capital | account | reserve | reserve | reserves | profit / (loss) | Total | interests | equity | |
| Balance as of 1 January 2016 | 25,641,459 | 15,874,835 | 5,409,144 | (1,234,642) | (28,186,288) | 5,061,226 | 22,565,734 | - | 22,565,734 |
| Appropriation of consolidated net result for 2015: | |||||||||
| Transfer to retained earnings | - | - | - | - | 5,061,226 | (5,061,226) | - | - | - |
| Distributed dividends | - | - | - | - | (1,538,487) | - | (1,538,487) | - | (1,538,487) |
| Total comprehensive income for | |||||||||
| the six months period ended 30 June 2016 | - | - | - | 490,685 | - | 2,340,153 | 2,830,838 | - | 2,830,838 |
| Balance as of 30 June 2016 | 25,641,459 | 15,874,835 | 5,409,144 | (743,957) | (24,663,549) | 2,340,153 | 23,858,085 | - | 23,858,085 |
| Balance as of 1 January 2017 | 25,641,459 | 15,874,835 | 5,409,144 | (594,244) | (24,663,549) | 4,333,011 | 26,000,656 | - | 26,000,656 |
| Appropriation of consolidated net result for 2016 | |||||||||
| Transfer to retained earnings | - | - | - | - | 4,333,011 | (4,333,011) | - | - | - |
| Total comprehensive income for | |||||||||
| the six months period ended 30 June 2017 | - | - | - | (103,090) | - | 717,627 | 614,537 | - | 614,537 |
| Balance as of 30 June 2017 | 25,641,459 | 15,874,835 | 5,409,144 | (697,334) | (20,330,538) | 717,627 | 26,615,193 | - | 26,615,193 |
The accompanying notes form an integral part of the consolidated financial statements.
Consolidated financial statements and notes (Translation of financial statements originally issued in Portuguese – Note 16) (Amounts expressed in Euros)
| 30.06.2017 | 30.06.2016 | nd Quarter 2 2017 |
nd Quarter 2 2016 |
|
|---|---|---|---|---|
| Profit / (loss) for the period | 717,627 | 2,340,153 | 69,388 | 1,337,492 |
| Other comprehensive income: Items that will be reclassified to net income: |
||||
| Exchange differences on translation of foreign operations | (103,090) | 490,685 | (119,526) | 372,237 |
| Total comprehensive income for the period | 614,537 | 2,830,838 | (50,138) | 1,709,729 |
| Attributable to: | ||||
| Shareholders of the parent company | 614,537 | 2,830,838 | (50,138) | 1,709,729 |
| Non-controlling interests | - | - | - | - |
The accompanying notes form an integral part of the consolidated financial statements.
Consolidated financial statements and notes (Translation of financial statements originally issued in Portuguese – Note 16) (Amounts expressed in Euros)
| (Amounts expressed in Euro) | ||
|---|---|---|
| Notes | 30.06.2017 | 30.06.2016 | nd Quarter 2017 2 |
2nd Quarter 2016 | |||||
|---|---|---|---|---|---|---|---|---|---|
| Operating activities | |||||||||
| Cash flow from operating activities (1) | 3,424,481 | 4,771,352 | 2,784,527 | 3,746,780 | |||||
| Atividades de investimento: | |||||||||
| Collections relating to: | |||||||||
| Tangible assets | - | 1,275 | - | 1,275 | |||||
| Interest and similar income | 22,288 | 984 | 17,239 | 163 | |||||
| Dividends | 180,000 | 202,288 | 200,000 | 202,259 | 180,000 | 197,239 | 200,000 | 201,438 | |
| Payments relating to: | |||||||||
| Investments | (200,000) | (252,450) | (100,000) | - | |||||
| Tangible assets | (219,142) | (371,468) | (186,802) | (179,406) | |||||
| Intangible assets | (173,077) | (245,196) | (90,655) | (162,357) | |||||
| Loans granted | (275,000) | (867,219) | (100,000) | (969,114) | - | (377,457) | - | (341,763) | |
| Cash flow from investment activities (2) | (664,932) | (766,855) | (180,218) | (140,326) | |||||
| Financing activities: | |||||||||
| Collections relating to: | |||||||||
| Loans obtained | 27,000,000 | 27,000,000 | 17,322,640 | 17,322,640 | 26,971,278 | 26,971,278 | 7,331,256 | 7,331,256 | |
| Payments relating to: | |||||||||
| Interest and similar costs | (1,159,418) | (1,318,990) | (204,993) | (644,499) | |||||
| Amortisation of leasing contracts | (30,706) | (30,707) | (15,353) | (15,354) | |||||
| Dividends distributed | - | (1,538,487) | - | (1,538,487) | |||||
| Loans obtained | (17,005,888) | (18,196,012) | (23,502,610) | (26,390,794) | (16,002,754) | (16,223,100) | (13,150,000) | (15,348,340) | |
| Cash flow from financing activities (3) | 8,803,988 | (9,068,154) | 10,748,178 | (8,017,084) | |||||
| Cash and its equivalents at the beginning of the period | 7 | 9,403,739 | 8,193,580 | 7,614,842 | 7,540,553 | ||||
| Effect of currency exchange differences | (304) | - | (356) | - | |||||
| Variation of cash and its equivalents: (1)+(2)+(3) | 11,563,537 | (5,063,657) | 13,352,486 | (4,410,630) | |||||
| Cash and its equivalents at the end of the period | 7 | 20,966,972 | 3,129,923 | 20,966,972 | 3,129,923 |
The accompanying notes form an integral part of the consolidated financial statements.
Cofina, SGPS, S.A. ("Cofina" or "Company") is a public company, with headquarters located at Rua General Norton de Matos, 68, r/c in Porto and has its shares listed in the Euronext Lisbon Stock Exchange ("Euronext Lisbon"). Cofina is the Parent company of a group of companies detailed in Note 4, commonly designated as Cofina Group, and its main activity is the management of investments in the Media sector (written press).
The Cofina Group owns headings of reference in their respective segments, editing titles like newspapers "Correio da Manhã", "Record", "Jornal de Negócios" and "Destak", as well as the magazines "Sábado" and "TV Guia", among others. Additionally, since the year of 2013, the Cofina Group incorporated in its portfolio of activities the television channel "CMTV".
During the semester ended as of 30 June 2017, the Cofina Group developed its activity mainly in Portugal, having also some interests in Brazil, through the investment in the associated company Destak Brasil and in the subsidiary Adcom Media (Note 4).
Cofina's consolidated financial statements are expressed in Euro (rounded to the nearest unit). This is the currency used by the Group in its operations and as such, considered the functional currency. Operations of the foreign group companies whose functional currency is not the Euro are translated to Euro using the exchange rates in force at the balance sheet date. Income and expenses and cash flows are converted to Euro using the average exchange rate for the period. The exchange rate differences originated are recorded in equity captions.
The accompanying consolidated financial statements have been prepared on a going concern basis.
Annual financial statements were prepared in accordance with the International Financial Reporting Standards ("IFRS") as adopted by the European Union. The financial statements as of 30 June 2017 were prepared in accordance with the International Accounting Standard 34 – Interim Financial Reporting.
The accounting policies adopted in Cofina's consolidated financial statements are consistent with those used in the preparation of the consolidated financial statements for the year ended as of 31 December 2016.
During this period, there were no changes in accounting policies nor were detected any material errors relating to previous periods.
(Translation of financial statements originally issued in Portuguese – Note 16) (Amounts expressed in Euros)
The companies included in the consolidated financial statements by the full consolidation method, their headquarters, percentage of participation held and activity developed as of 30 June 2017 are as follows:
| Designation | Headquarters | Percentage participation held |
Activity |
|---|---|---|---|
| Parent company: Cofina, SGPS, S.A. |
Porto | Investment management | |
| Cofina Media Group: | |||
| Cofina Media, S.A. ("Cofina Media") | Lisbon | 100.00% | Newspapers and magazine publication, television broadcast, production and creation of websites for online business development, events promotion and organization. |
| Grafedisport – Impressão e Artes Gráficas, S.A. ("Grafedisport") |
Queluz | 100.00% | Newspaper print |
| Adcom Media – Anúncios e Publicidade S.A. ("Adcom Media") |
São Paulo, Brasil |
100.00% | Communication and advertising services |
All the above companies were included in the consolidated financial statements in accordance with the full consolidation method.
The associated companies, their headquarters, percentage of participation held and activity developed as of 30 June 2017 are as follows:
| Designation | Headquarters | Percentage participation held |
Activity | ||
|---|---|---|---|---|---|
| Direct | Indirect | ||||
| VASP – Sociedade de Transportes e Distribuições, Lda. |
Lisbon | 33.33% | - | Publications distribution | |
| Destak Brasil – Empreendimentos e Participações, S.A. |
São Paulo, Brasil |
29.90% | - | Investment management | |
| A Nossa Aposta – Jogos e Apostas On-line, S.A. ("A Nossa Aposta"). |
Lisboa | 40% | - | Online gambling and betting activity |
|
| Mercados Globais – Publicação de Conteúdos, Lda. |
V.N. Gaia | 50% | - | Management of services and promotion of a financial forum on the internet |
Associated companies VASP, Destak Brasil and A Nossa Aposta were included in the consolidated financial statements in accordance with the equity method. The company Mercados Globais is recorded at acquisition cost, less impairment losses.
(Translation of financial statements originally issued in Portuguese – Note 16) (Amounts expressed in Euros)
The acquisition cost of the associated companies and their book value as of 30 June 2017 are as follows:
| Designation | Acquisition Cost | Book value |
|---|---|---|
| VASP – Sociedade de Transportes e Distribuições, Lda. | € 6,234 | € 2,893,803 |
| Destak Brasil – Empreendimentos e Participações, S.A. | € 299,065 | € (2,968,151) |
| A Nossa Aposta – Jogos e Apostas On-line, S.A. | € 550,000 | € 212,443 |
| Mercados Globais – Publicação de Conteúdos, Lda. | € 72,000 | - |
As of 30 June 2017 and 31 December 2016 the caption "Investments in associated companies" can be detailed as follows:
| 30.06.2017 | 31.12.2016 | |
|---|---|---|
| Financial Investment | ||
| VASP – Sociedade de Transportes e Distribuições, Lda. | 2,893,803 | 3,073,803 |
| Mercados Globais - Publicação de Conteúdos, Lda. | 72,000 | 72,000 |
| A Nossa Aposta - Jogos e Apostas Online, S.A. | 212,443 | 192,979 |
| 3,178,246 | 3,338,782 | |
| Accumulated impairment losses on investmetns in associated companies | (72,000) | (72,000) |
| 3,106,246 | 3,266,782 | |
| Loans granted | ||
| Destak Brasil Empreendimentos | 275,000 | - |
| 3,381,246 | 3,266,782 |
As of 30 June 2017 and 31 December 2016 the Group has investments available for sale corresponding to non-controlling investments in unlisted companies. The Group has recorded impairment losses to face differences to the net realizable amount, presenting this caption, as of those dates, a net book value of 9,831 Euro and 9,080 Euro, respectively. As of 30 June 2017 and as of 31 December 2016 the total investments for which adjustments were made in the same value amount to 244,439 Euro, respectively.
During the semester ended 30 June 2017 there were no changes in the caption "Goodwill".
During the six months' period ended as of 30 June 2016, the movement in the caption "Goodwill" fully refers to the changes in exchange rates in the period then ended of the Goodwill attributable to the subsidiary Adcom Media.
(Amounts expressed in Euros)
The income taxes recognized in the income statement at 30 June 2017 and 2016 refer mainly to the tax estimate for the period.
As of 30 June 2017, disputes with the Portuguese tax authorities ("Autoridade Tributária e Aduaneira") were still in progress following a Corporate Income Tax inspection with an amount of, approximately, 17,900,000 Euro being challenged by the tax authorities. This amount results from two corrections performed by the tax authorities: one related with the non-acceptance of a capital loss generated by a disposal of a subsidiary; and another related with the nonacceptance of deductibility of part of the dividends distributed by a subsidiary.
Under the Tax and Social Security Debts' Regularization Exceptional Regime, approved by the Decree-Law 151-A/2013, of October 31 ("RERD"), the Group paid voluntarily, during the year ended as of 31 December 2013, an amount of 2,000,000 Euro, with the corresponding exemption of default and penalty interests and other costs of the tax process. Under that same regime, the Group requested to the Tax Authorities the offset of part of the amounts challenged related with that inspection, with credits that the Group had over the Tax Authorities (regarding Income Tax administrative and judicial appeals), having obtained, in the year ended as of 31 December 2014, the approval of the requirement in the amount of, approximately, 5,700,000 Euro.
Under the State Indebtedness Reduction Special Plan, approved by the Decree-Law 67/2016, of November 3 ("PERES"), the Group paid voluntarily, during the year ended as of 31 December 2016, an amount of 3,614,561 Euro, with the corresponding exemption of default and penalty interests and other costs of the tax process.
Consequently, the amount of the unresolved contingency/tax assessment, as of 30 June 2017, amounts to, approximately, 13,500,000 Euro, from which 3 million Euro refers to the correction of the capital loss above referred and the remaining amount (10.5 million Euro) is related to the dividends correction.
The Board of Directors, supported by its legal and tax advisors, and under the process of its tax contingencies revaluation, evaluated as probable a: (i) favorable decision in the case of the dividends and (ii) an unfavorable decision in the case of the capital loss, reason why a provision in the amount of, approximately, 3,000,000 Euro was allocated to that component of the process.
Nevertheless, the Group is still in litigation with the Portuguese tax authorities regarding these two situations.
In order to cope with these disputes, the Group recorded provisions, which correspond to the best estimate made by the Board of Directors, supported by their legal and tax advisors, of the impact that might result from the ongoing tax claims.
As of 30 June 2017, 31 December 2016 and 30 June 2016, the caption "Cash and cash equivalents" can be detailed as follows:
| 30.06.2017 | 31.12.2016 | 30.06.2016 | |
|---|---|---|---|
| Cash | 67,614 | 65,349 | 66,428 |
| Bank deposits repayable on demand | 26,991,903 | 9,338,390 | 3,063,495 |
| Cash and cash equivalents | 27,059,517 | 9,403,739 | 3,129,923 |
| Bank overdraft (Note 9) | (6,092,545) | - | - |
| Cash and cash equivalents | 20,966,972 | 9,403,739 | 3,129,923 |
(Amounts expressed in Euros)
As of 30 June 2017, the Company's fully subscribed and paid up capital consisted of 102,565,836 shares without nominal value. As of that date, Cofina and the Group companies did not hold own shares.
The caption "Bank loans" at 30 June 2017 refers to bank overdrafts (Note 7).
As of 30 June 2017 and 31 December 2016, the caption "Other loans" was made up as follows:
| 30.06.2017 | ||||||
|---|---|---|---|---|---|---|
| Book value | Nominal value | |||||
| Current | Non current | Current | Non current | |||
| Bond loans | 16,666,667 | 33,204,916 | 16,666,667 | 33,333,333 | ||
| Commercial paper | 26,990,170 | - | 27,000,000 | - | ||
| 43,656,837 | 33,204,916 | 43,666,667 | 33,333,333 | |||
| 31.12.2016 | ||||||
| Book value | Nominal value | |||||
| Current | Non current | Current | Non current | |||
| Bond loans | 16,579,199 | 33,158,397 | 16,666,667 | 33,333,333 | ||
| Commercial paper | 16,967,103 | - | 17,000,000 | - | ||
| 33,546,302 | 33,158,397 | 33,666,667 | 33,333,333 |
As of 30 June 2017, the liability caption "Bond Loans" refers to a bond loan denominated "Obrigações Cofina SGPS – 2013/2019", amounting to 50,000,000 Euro, issued by Cofina SGPS, S.A. recorded in accordance with the effective interest rate method, with a book value of 49,871,583 Euro. This loan, according to its terms, matures on September 28, 2019.
The main features of this bond loan are as follows:
The liability caption "Commercial Paper" relates to three commercial paper programs, in the maximum amounts of 15,000,000 Euro, 5,000,000 Euro and 7,000,000 Euro, with guaranteed subscription by the banks, which bear interest at market rates. These commercial paper programs mature in September 2021, November 2018 and April 2020, respectively.
The financial income and expenses for the six months' periods ended as of 30 June 2017 and 2016 are made up as follows:
| 30.06.2017 | 30.06.2016 | ||
|---|---|---|---|
| Financial expenses | |||
| Interest paid | 1,046,175 | 972,507 | |
| Commissions | 269,117 | 297,844 | |
| Other financial expenses | 11,596 | 12,441 | |
| Gains and Losses in associated companies | |||
| Application of the Equity Method | 180,062 | 311,855 | |
| 1,506,950 | 1,594,647 | ||
| Financial income | |||
| Interest received | 24,933 | 6,353 | |
| Gains and Losses in associated companies | - | - | |
| Application of the Equity Method | 24,933 | 6,353 | |
As of 30 June 2017, Cofina had provided guarantees as follows:
a) Pledge of 112,268,150 shares of Cofina Media, S.A., in favour of the Portuguese Tax Authority ("Autoridade Tributária") as a guarantee of the ongoing income tax claims.
As of 30 June 2017, Cofina Media group companies had assumed responsibilities for guarantees granted amounting to 337,525 Euro related to its advertising activities and ongoing tax and civil proceedings.
Additionally, as of 30 June 2017, the Group had also given promissory notes to guarantee credit facilities amounting to 61,500,000 Euro.
Consolidated financial statements and notes (Translation of financial statements originally issued in Portuguese – Note 16) (Amounts expressed in Euros)
Earnings per share for the six months' periods ended as of 30 June 2017 and 2016 were determined taking into consideration the following amounts:
| 30.06.2017 | 30.06.2016 | |
|---|---|---|
| Net profit / (loss) considered for the computation of basic and diluted earnings |
717,627 | 2,340,153 |
| Weighted average number for shares used to compute the basic earnings per share |
102,565,836 | 102,565,836 |
| Earnings per share: Basic Diluted |
0.01 0.01 |
0.02 0.02 |
According to the source and nature of the income generated by the Group, the following segments were considered:
Since the Group mainly operates in the domestic market, geographic segments are not reported.
The information for the six months' periods ended as of 30 June 2017 and 2016 is detailed as follows:
| Consolidation | ||||
|---|---|---|---|---|
| adjustments and | ||||
| 30.06.2017 | Newspapers | Magazines | elimination | Total |
| Net operating income | 37,117,474 | 6,873,848 | - | 43,991,322 |
| Operating cash-flow - EBITDA (a) | 4,286,627 | (663,205) | - | 3,623,422 |
| Operating profit (EBIT) | 3,363,602 | (663,205) | - | 2,700,397 |
| Consolidation | ||||
|---|---|---|---|---|
| adjustments and | ||||
| 30.06.2016 | Newspapers | Magazines | elimination | Total |
| Net operating income | 39,904,786 | 8,566,357 | - | 48,471,143 |
| Operating cash-flow - EBITDA (a) | 7,016,050 | (574,750) | - | 6,441,300 |
| Operating profit (EBIT) | 5,751,039 | (574,750) | - | 5,176,289 |
(a) - Earnings before interests, taxes, depreciation and amortisation
Regarding the 2016 financial year, the Board of Directors proposed in its annual report the individual net profit of Cofina, SGPS, SA in the amount of 1,320,920.73 Euro to be transferred to Free Reserves, and that proposal was approved in the General Meeting held on April 26, 2017.
The interim financial statements as of 30 June 2017 were approved by the Board of Directors for issuance on 27 July 2017.
These consolidated financial statements are a translation of financial statements originally issued in Portuguese in accordance with International Financial Reporting Standards (IFRS/IAS) as adopted by the European Union, some of which may not conform or be required by generally accepted accounting principles in other countries. In the event of discrepancies, the Portuguese language version prevails.
COFINA, SGPS, S.A. Rua do General Norton de Matos, 68 - R/C 4050 – 424 Porto PORTUGAL Tel: + 351 22 834 65 00
www.cofina.pt
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