Annual Report • Nov 11, 2022
Annual Report
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MANAGEMENT REPORT
(Page. 03)
(Page 11)
Technological leadership and service quality recognized in customer preference and satisfaction levels, driving healthy operational growth and efficiency, with lowest ever levels of churn.
Financial performance supported by strength of operational success in core telco business and continued improvement in cinema activity
| 9M22 Highlights ('000) | 9M21 | 9M22 | 9M22 / 9M21 |
|---|---|---|---|
| Operating Highlights | |||
| Homes Passed | 5,052.8 | 5,216.6 | 3.2% |
| % FttH | 49.8% | 59.0% | 9.2pp |
| Total RGUs | 10,146.1 10,665.2 | 5.1% | |
| Fixed Pay TV RGUs | 1,381.6 | 1,424.1 | 3.1% |
| Convergent + Integrated Customers | 1,005.8 | 1,071.2 | 6.5% |
| Fixed Convergent + Integrated Customers as % of Fixed Access Customers |
63.9% | 66.5% | 2.7pp |
| Mobile RGUs | 5,209.9 | 5,642.3 | 8.3% |
| Residential ARPU / Unique Subscriber With Fixed Access (Euros)(1) | 47.1 | 47.8 | 1.6% |
| Financial Highlights (Millions of Euros) | |||
| Consolidated Revenues | 1,044.9 | 1,123.5 | 7.5% |
| Consolidated EBITDA | 477.7 | 500.1 | 4.7% |
| Consolidated EBITDA Margin | 45.7% | 44.5% | (1.2pp) |
| 135.9 | (19.0%) | ||
| Consolidated EBITDA - Consolidated CAPEX Excluding Leasings, Spectrum License & Other Contractual Rights |
167.7 | ||
| Telco Revenues | 1,029.2 | 1,089.0 | 5.8% |
| Telco EBITDA | 447.6 | 468.2 | 4.6% |
| Telco EBITDA Margin | 43.5% | 43.0% | (0.5pp) |
limitless live and on-demand content, a seamless experience over a multiple device user interface integrating all relevant OTT platforms.
Telco operating strength driving quality financial performance, together with ongoing recovery in cinema activity
The Consolidated Financial Statements of the 9M22 were subject to a limited review.
| Table 2. | |||
|---|---|---|---|
| Profit and Loss Statement | 9M21 | 9M22 | 9M22 / 9M21 |
| (Millions of Euros) | |||
| Operating Revenues | 1,044.9 | 1,123.5 | 7.5% |
| Telco | 1,029.2 | 1,089.0 | 5.8% |
| Consumer Revenues | 743.5 | 763.6 | 2.7% |
| Business Revenues | 225.9 | 254.3 | 12.6% |
| Wholesale and Others | 59.8 | 71.0 | 18.9% |
| Audiovisuals & Cinema (1) | 42.2 | 62.5 | 48.3% |
| Others and Eliminations | (26.4) | (28.0) | 6.1% |
| Operating Costs Excluding D&A | (567.2) | (623.4) | 9.9% |
| Telco | (581.6) | (620.8) | 6.7% |
| Audiovisuals & Cinema (1) | (12.0) | (30.6) | 154.1% |
| Others and Eliminations | 26.4 | 28.0 | 6.1% |
| EBITDA (2) | 477.7 | 500.1 | 4.7% |
| EBITDA Margin | 45.7% | 44.5% | (1.2pp) |
| Telco | 447.6 | 468.2 | 4.6% |
| EBITDA Margin | 43.5% | 43.0% | (0.5pp) |
| Cinema Exhibition and Audiovisuals | 30.1 | 31.9 | 6.0% |
| EBITDA Margin | 71.4% | 51.1% | (20.4pp) |
| Depreciation and Amortization | (312.8) | (345.6) | 10.5% |
| (Other Expenses) / Income | (7.4) | 76.4 | 1133.9% |
| Operating Profit (EBIT) (3) | 157.5 | 230.9 | 46.6% |
| Share of profits (losses) of associates and joint ventures | 4.7 | 17.0 | 258.1% |
| (Financial Expenses) / Income | (26.7) | (25.8) | (3.6%) |
| Leases Financial Expenses | (19.3) | (18.7) | (3.4%) |
| Funding & Other Financial Expenses | (7.4) | (7.1) | (4.2%) |
| Income Before Income Taxes | 135.5 | 222.2 | 63.9% |
| Income Taxes | (15.7) | (31.0) | 97.3% |
| Net Income Before Associates & Non-Controlling Interests | 115.1 | 174.2 | 51.3% |
| Net income | 119.8 | 191.2 | 59.5% |
| Net income attributable to Non-controlling interests | 0.2 | 0.1 | (41.2%) |
| Net Income attributable to NOS shareholders | 120.0 | 191.3 | 59.4% |
| Net Income attributable to NOS shareholders excluding gain from tower sale |
120.0 | 128.4 | 7.0% |
(1) Includes cinema operations in Mozambique. (2) EBITDA = Operating Profit + Depreciation and Amortization + Integration Costs + Net Losses/Gains on Disposal of Assets + Other Non-Recurrent Losses/Gains (3) EBIT = Income Before Financials and Income Taxes.
Consolidated revenues grew by 7.5% yoy to 1,123.5 million euros, with growth in Telco revenues of 5.8% to 1,089.0 million euros and in Audiovisuals and Cinema revenues of 48.3% to 62.5 million euros.
B2C telco revenues maintained previous positive trends with growth of 2.7% to 763.6 million euros driven by very positive RGU performance, both in fixed residential services and mobile standalone segments, more than compensating declining legacy satellite services. In B2B, Revenues increased by 12.6% yoy to 254.3 million euros. Underlying growth in B2B revenues was positive accompanied by higher levels of average profitability. Wholesale and other business revenues increased by 18.9% yoy to 71.0 million euros explained namely by yoy recovery in roaming in revenue as a result of a return of holiday makers to Portugal.
Audiovisual distribution and Cinema exhibition revenues grew by 48.3% to 62.5 million euros compared with 9M21. The number of tickets sold increased by 140.2% yoy due to the return of spectators to cinemas in safety after the lifting of pandemic restrictions.
| Table 3. | |||
|---|---|---|---|
| Operating Indicators ('000) | 9M21 | 9M22 | 9M22 / 9M21 |
| Cinema (1) | |||
| Revenue per Ticket (Euros) | 5.3 | 5.6 | 4.9% |
| Tickets Sold - NOS | 1,819.6 | 4,370.2 | 140.2% |
| Tickets Sold - Total Portuguese Market (2) | 2,884.6 | 6,730.6 | 133.3% |
| Screens (units) | 208 | 214 | 2.9% |
| (1) Portuguese Operations (2) Source: ICA - Portuguese Institute For Cinema and Audiovisuals |
Consolidated EBITDA grew by 4.7% to 500.1 million euros representing a 44.5% margin as a proportion of consolidated revenues. Telco EBITDA increased 4.6% to 468.2 million euros reflected a decrease in margin to 43.0%, compared with 43.5% in 9M21.
Although Telco OPEX was 9.9% higher yoy at 623.4 million euros, efforts to contain costs where possible have enabled us to maintain a positive margin trajectory despite global inflationary pressures. In particular as regards electricity costs, NOS successfully locked in the price of approximately 35% of its requirements through a long term power purchasing agreement (PPA) agreed in 2021, entailing the construction of a wind farm in Iberia injecting new renewable electricity into the grid. Out of the remaining 65%, around 35% is sourced in the regulated market with regulator controlled prices and only the remaining 30% is sourced in the spot market
Audiovisuals and Cinema EBITDA increased by 6.0% to 31.9 million euros.
Total CAPEX excluding leasing contracts, spectrum license & other contractual rights increased 17.5% to 364.2 million euros impacted by our accelerated 5G deployment programme, which is getting close to completion having achieved population coverage of over 80% by the end of the quarter.
5G rollout programme and continued FttH expansion are visible in yoy technical CAPEX growth of 29.0% to 238.1 million euros and of which 119.4 million euros related to network expansion and modernization projects. The fixed Gigabit network coverage already reaches 5.217 million households, of which 59% with FttH, having grown by an additional 142.2 thousand in 9M22. On the commercial front, investment in telco customer acquisition and retention was lower by 5.3% yoy at 109.3 million euros, reflecting stronger commercial momentum. Due to the continued recovery in operational performance, CAPEX in the Audiovisuals and Cinema was higher at 16.9 million euros.
| CAPEX (Millions of Euros) (1) | 9M21 | 9M22 | 9M22 / 9M21 |
|---|---|---|---|
| Total CAPEX Excluding Leasing Contracts, Spectrum license & Other Contractual Rights |
310.1 | 364.2 | 17.5% |
| Telco | 300.1 | 347.4 | 15.8% |
| % of Telco Revenues | 29.2% | 31.9% | 2.7pp |
| o.w. Technical CAPEX | 184.6 | 238.1 | 29.0% |
| % of Telco Revenues | 17.9% | 21.9% | 3.9pp |
| Baseline Telco | 103.2 | 118.7 | 15.0% |
| Network Expansion / Substitution and Integration Projects and Others |
81.4 | 119.4 | 46.7% |
| o.w. Customer Related CAPEX | 115.4 | 109.3 | (5.3%) |
| % of Telco Revenues | 11.2% | 10.0% | (1.2pp) |
| Audiovisuals and Cinema Exhibition | 10.0 | 16.9 | 68.6% |
| Leasing Contracts & Other Contractual Rights | 25.2 | 49.4 | 95.7% |
| Total Group CAPEX | 335.3 | 413.6 | 23.4% |
| Table 5. | |||
|---|---|---|---|
| Cash Flow (Millions of Euros) | 9M21 | 9M22 | 9M22 / 9M21 |
| EBITDA | 477.7 | 500.1 | 4.7% |
| Total CAPEX Excluding Leasings, Spectrum License & Other Contractual Rights |
(310.1) | (364.2) | 17.5% |
| EBITDA - Total CAPEX Excluding Leasings, Spectrum License & Other Contractual Rights |
167.7 | 135.9 | (19.0%) |
| % of Revenues | 16.0% | 12.1% | (4.0pp) |
| Non-Cash Items Included in EBITDA - CAPEX and Change in Working Capital |
(4.4) | 2.4 | (155.5%) |
| Leasings (Capital & Interest) (1) | (70.6) | (72.1) | 2.2% |
| Operating Cash Flow | 92.7 | 66.2 | (28.6%) |
| Interest Paid | (10.2) | (8.7) | (14.5%) |
| Income Taxes Paid | (15.2) | (19.3) | 26.7% |
| Disposals | 1.5 | 121.8 | 7821.2% |
| Other Cash Movements (2) | (8.3) | 23.6 | 383.8% |
| Total Free Cash-Flow Before Dividends, Financial Investments and Own Shares Acquisition |
60.5 | 183.5 | 203.2% |
| Financial Investments | 0.2 | (1.9) | (878.5%) |
| Acquisition of Own Shares | (2.1) | (7.1) | 242.6% |
| Dividends | (142.4) | (142.3) | (0.0%) |
| Free Cash Flow | (83.7) | 32.2 | (138.5%) |
| Debt Variation Through Financial Leasing, Accruals & Deferrals & Others |
(0.1) | (0.1) | (28.7%) |
| Change in Net Financial Debt | 83.8 | (32.2) | (138.4%) |
(1) Includes Long Term Contracts. (2) Includes Cash Restructuring Payments and Other Cash Movements.
In 9M22, EBITDA total CAPEX excluding leases, spectrum license & other contractual rights amounted to 135.9 million euros, with higher EBITDA being offset by increased yoy CAPEX.
As announced in previous quarters, NOS agreed to monetize its mobile tower portfolio through a global agreement originally announced in 2020. In 2020, approximately 2 thousand towers (sites and rooftops) were transferred to Cellnex through the equity sale of NOS Towering, generating proceeds of 375 million euros and in 2Q22, NOS announced a transaction, within the scope of this agreement, to sell up to an additional 350 towers for which the first tranche of cash proceeds was received in 3Q22. The cash proceeds relating to the asset sale amounted to 118.3 million euros. In other cash movements NOS recorded 27.2 million euros relating to VAT charged on the tower sale, which will generate a reverse movement when returned to the Tax Authorities in 4Q22. Upon determination of the final number of towers to be sold until the end of 2022, an additional cash in of around 40 million euros (excluding VAT) should be received generating an additional capital gain of around 24 million which will be recorded.
Total FCF before dividends, Financial Investments and Own Shares Acquisitions was 183.5 million euros in 9M22, representing 16.3% of Consolidated Revenues.
| Table 6. | ||||
|---|---|---|---|---|
| Balance Sheet (Millions of Euros) | 9M21 | 2021 | 9M22 | 9M22 / 9M21 |
| Non-current Assets | 2,584.1 | 2,752.9 | 2,845.5 | 10.1% |
| Current Assets | 518.7 | 506.5 | 687.3 | 32.5% |
| Total Assets | 3,102.8 | 3,259.4 | 3,532.8 | 13.9% |
| Total Shareholders' Equity | 937.4 | 963.0 | 1,028.8 | 9.8% |
| Non-current Liabilities | 1,367.9 | 1,406.4 | 1,280.4 | (6.4%) |
| Current Liabilities | 797.5 | 890.0 | 1,223.6 | 53.4% |
| Total Liabilities | 2,165.4 | 2,296.4 | 2,503.9 | 15.6% |
| Total Liabilities and Shareholders' Equity | 3,102.8 | 3,259.4 | 3,532.8 | 13.9% |
| Table 7. | ||||
|---|---|---|---|---|
| Net Financial Debt (Millions of Euros) | 9M21 | 2021 | 9M22 | 9M22 / 9M21 |
| Short Term | 169.3 | 235.7 | 500.8 | 195.8% |
| Medium and Long Term | 762.0 | 806.9 | 649.4 | (14.8%) |
| Total Debt | 931.2 | 1,042.6 | 1,150.2 | 23.5% |
| Cash and Short Term Investments | 43.4 | 10.9 | 150.6 | 247.2% |
| Net Financial Debt (1) | 887.8 | 1,031.7 | 999.5 | 12.6% |
| Net Financial Debt / EBITDA after lease payments (last 4 quarters) (2) | 1.73x | 1.99x | 1.85x | 0.07pp |
| Leasings and Long Term Contracts | 543.5 | 534.0 | 562.3 | 3.5% |
| Net Debt | 1,431.3 | 1,565.7 | 1,561.8 | 9.1% |
| Net Debt / EBITDA | 2.35x | 2.53x | 2.44x | 0.04pp |
| Net Financial Gearing (3) | 60.4% | 61.9% | 60.3% | -0.2% |
(2) EBITDA After Lease Payments = EBITDA - Lease Cash Payments (Capital & Interest) (3) Net Financial Gearing = Net Debt / (Net Debt + Total Shareholders' Equity).
At the end of 9M22, total net debt, including leasings and long-term contracts (according to IFRS16) amounted to 1,561.8 million euros. Net financial debt stood at 999.5 million euros with a cash and short-term investment position on the balance sheet of 150.6 million euros. At the end of 9M22, NOS also had 312.5 million euros in unissued commercial paper programmes. The decrease in net financial debt in 9M22 is linked to the completion of the sale of an additional tower portfolio to Cellnex, and to the recurrent free cash flow in the quarter.
Net financial debt leverage ratio in the range of 2x net financial debt / EBITDA after lease payments, following the cash-in received from Cellnex at September 30.
The all-in average cost of debt, adjusted for interest rate hedging recently contracted, stood at 1.2% for 9M22, which compares with 1.5% in 9M21.
Taking into account loans issued at a fixed rate and interest rate hedging operations in place, as at 30 September 2022, the
At the end of 9M22, the average maturity of NOS debt was 2.5 years.
As at the date of this report, 24th of October 2022, the Governing Bodies were made up as follows:
| Board of Directors | |
|---|---|
| Chairman of the Board of Directors | Angelo Paupério |
| Chairman of the Executive Committee | Miguel Almeida |
| Members of the Executive Committee | José Pedro Pereira da Costa, CFO |
| Daniel Beato | |
| Filipa Santos Carvalho | |
| Jorge Graça | |
| Luis Nascimento | |
| Manuel Ramalho Eanes | |
| Members | António Lobo Xavier |
| Catarina Tavira Van-Dünem | |
| Cláudia de Azevedo | |
| Cristina Marques | |
| Eduardo Verde Pinho | |
| João Torres Dolores | |
| Rita Rodrigues | |
| Fiscal Board | |
| Chairman of the Fiscal Board | José Pereira Alves |
| Members | Patrícia Teixeira Lopes |
| Paulo Mota Pinto | |
| Alternate | Ana Luisa Aniceto da Fonte |
| Officials of the General Menting of Shareholders | |
| Chairman | Agostinho Guedes |
| Secretary | Daniela Baptista |
| Statutory Auditor | |
| In Office | ERNST & YOUNG AUDIT & ASSOCIADOS, SR S.A., (ROC number 178 and registered at CMV with the number 20161480, represented by Sa e Sousa Amorim (ROC number 1213); |
| Alternate | Pedro Jorge Pinto Monteiro da Silva e Paiva (ROC n.º 1258) |
(Amounts stated in thousands of euros)
| NOTES | 30-09-2021 | 31-12-2021 | 30-09-2022 | |
|---|---|---|---|---|
| ASSETS | ||||
| NON - CURRENT ASSETS: | ||||
| Tangible assets | 7 | 1,031,337 | 1,041,100 | 1,088,464 |
| Investment property | 625 | 621 | 608 | |
| Intangible assets | 8 | 1,043,648 | 1,205,031 | 1,207,162 |
| Contract costs | 9 | 162,797 | 162,118 | 160,872 |
| Rights of use | 10 | 239,329 | 236,063 | 238,942 |
| Investments in jointly controlled companies and associated companies |
11 | 18,378 | 18,091 | 44,205 |
| Accounts receivable - other | 12 | 6,186 | 5,914 | 5,173 |
| Tax receivable | 13 | 149 | 149 | 48 |
| Other financial assets non-current | 14 | 1,156 | 2,074 | 4,964 |
| Deferred income tax assets | 15 | 80,185 | 81,390 | 84,506 |
| Derivative financial instruments | 20 | 336 | 361 | 10,517 |
| TOTAL NON - CURRENT ASSETS | 2,584,126 | 2,752,912 | 2,845,461 | |
| CURRENT ASSETS: | ||||
| Inventories | 16 | 43,060 | 44,014 | 66,398 |
| Accounts receivable - trade | 17 | 302,068 | 323,934 | 318,974 |
| Contract assets | 18 | 62,921 | 61,764 | 59,137 |
| Accounts receivable - other | 12 | 20,919 | 18,392 | 17,978 |
| Tax receivable | 13 | 3,315 | 2,538 | 5,827 |
| Prepaid expenses | 19 | 42,963 | 44,878 | 60,524 |
| Derivative financial instruments | 20 | 40 | 61 | 3,135 |
| Cash and cash equivalents | 21 | 43,380 | 10,902 | 150,622 |
| Assets held for sale | 46 | - | - | 4,701 |
| TOTAL CURRENT ASSETS | 518,666 | 506,483 | 687,296 | |
| TOTAL ASSETS | 3,102,792 | 3,259,395 | 3,532,757 |
(Amounts stated in thousands of euros)
| NOTES | 30-09-2021 | 31-12-2021 | 30-09-2022 | |
|---|---|---|---|---|
| SHAREHOLDER'S EQUITY | ||||
| Share capital | 22.1 | 5,152 | 5,152 | 855,168 |
| Capital issued premium | 22.2 | 854,219 | 854,219 | 4,202 |
| Own shares | 22.3 | (12,353) | (12,353) | (15,968) |
| Legal reserve | 22.4 | 1,030 | 1,030 | 1,030 |
| Other reserves and accumulated earnings | 22.4 | (37,200) | (35,586) | (13,155) |
| Net Income | 120,021 | 144,159 | 191,281 | |
| EQUITY BEFORE NON - CONTROLLING INTERESTS | 930,869 | 956,621 | 1,022,558 | |
| Non-controlling interests | 23 | 6,502 | 6,379 | 6,272 |
| TOTAL EQUITY | 937,371 | 963,000 | 1,028,830 | |
| LIABILITIES | ||||
| NON - CURRENT LIABILITIES: | ||||
| Borrowings | 24 | 1,239,706 | 1,275,541 | 1,150,340 |
| Provisions | 25 | 78,973 | 82,516 | 79,702 |
| Accounts payable - other | 29 | 39,266 | 38,502 | 38,512 |
| Accrued expenses | 26 | 454 | 497 | - |
| Deferred income | 27 | 4,349 | 4,230 | 3,517 |
| Deferred income tax liabilities | 15 | 5,149 | 5,159 | 8,290 |
| TOTAL NON - CURRENT LIABILITIES | 1,367,897 | 1,406,445 | 1,280,361 | |
| CURRENT LIABILITIES: | ||||
| Borrowings | 24 | 234,992 | 301,068 | 560,944 |
| Accounts payable - trade | 28 | 258,594 | 279,993 | 273,708 |
| Accounts payable - other | 29 | 26,470 | 35,639 | 24,717 |
| Tax payable | 13 | 50,498 | 61,526 | 103,640 |
| Accrued expenses | 26 | 192,303 | 175,784 | 223,168 |
| Deferred income | 27 | 34,329 | 35,603 | 35,797 |
| Derivative financial instruments | 20 | 338 | 337 | - |
| Liabilities directly associated with the assets held for sale | 46 | - | - | 1,592 |
| TOTAL CURRENT LIABILITIES | 797,524 | 889,950 | 1,223,566 | |
| TOTAL LIABILITIES | 2,165,421 | 2,296,395 | 2,503,927 | |
| TOTAL LIABILITIES AND SHAREHOLDER´S EQUITY | 3,102,792 | 3,259,395 | 3,532,757 |
As standard practice, only the annual accounts are audited, therefore the quarterly amounts were not audited autonomously.
The Notes to the Financial Statements form an integral part of the consolidated statement of financial position as at 30 September 2022.
(Amounts stated in thousands of euros)
| NOTES | 3º QUARTER 21 | 9M 21 | 3º QUARTER 22 | 9M 22 | |
|---|---|---|---|---|---|
| REVENUES: | |||||
| Services rendered | 332,251 | 959,151 | 346,016 | 1,012,443 | |
| Sales | 27,892 | 66,891 | 28,437 | 89,725 | |
| Other operating revenues | 6,322 | 18,875 | 7,079 | 21,330 | |
| 30 | 366,465 | 1,044,917 | 381,532 | 1,123,498 | |
| COSTS, LOSSES AND GAINS: | |||||
| Wages and salaries | 31 | 20,793 | 61,080 | 22,175 | 63,037 |
| Direct costs | 32 | 82,332 | 247,918 | 77,765 | 245,947 |
| Costs of products sold | 33 | 24,538 | 59,224 | 23,889 | 79,852 |
| Marketing and advertising | 3,576 | 11,818 | 6,646 | 17,842 | |
| Support services | 34 | 19,428 | 61,120 | 18,361 | 58,499 |
| Supplies and external services | 34 | 33,746 | 97,759 | 40,716 | 117,516 |
| Other operating losses / (gains) | 142 | 366 | 86 | 635 | |
| Taxes | 7,210 | 23,490 | 9,201 | 26,807 | |
| Provisions and adjustments | 35 | 3,570 | 4,417 | 4,848 | 13,242 |
| Depreciation, amortisation and impairment | 7,8,9,10 | ||||
| losses | and 37 | 107,978 | 312,804 | 124,239 | 345,556 |
| Reestructuring costs | 38 | 958 | 6,740 | 315 | 1,563 |
| Losses / (gains) on sale of assets, net | 46 | (29) | (242) | (74,565) | (74,547) |
| Other losses / (gains) non recurrent net | 39 | 460 | 891 | 92 | (3,398) |
| 304,702 | 887,385 | 253,768 | 892,551 | ||
| INCOME BEFORE LOSSES / (GAINS) | |||||
| PARTICIPATED COMPANIES, FINANCIAL | 61,763 | 157,532 | 127,764 | 230,947 | |
| RESULTS AND TAXES | |||||
| 11 and | |||||
| Net losses / (gains) of affiliated companies | 36 | (2,415) | (4,741) | (6,586) | (16,975) |
| Financial costs | 40 | 8,184 | 24,946 | 7,332 | 23,534 |
| Net foreign exchange losses / (gains) | (51) | (605) | (355) | (400) | |
| Net losses / (gains) on financial assets | (21) | 9 | 41 | 97 | |
| Net other financial expenses / (income) | 40 | 764 | 2,385 | 847 | 2,541 |
| 6,461 | 21,994 | 1,279 | 8,797 | ||
| INCOME BEFORE TAXES | 55,302 | 135,538 | 126,485 | 222,150 | |
| Income taxes | 15 | 9,171 | 15,698 | 20,615 | 30,976 |
| NET CONSOLIDATED INCOME | 46,131 | 119,840 | 105,870 | 191,174 | |
| ATTRIBUTABLE TO: | |||||
| NOS Group Shareholders | 46,147 | 120,021 | 105,962 | 191,281 | |
| Non-controlling interests | 23 | (17) | (182) | (92) | (107) |
| EARNINGS PER SHARES | |||||
| Basic - euros | 41 | 0.09 | 0.23 | 0.21 | 0.37 |
| Diluted - euros | 41 | 0.09 | 0.23 | 0.21 | 0.37 |
As a standard practice, only the annual accounts are audited, therefore the quarterly amounts were not audited autonomously.
The Notes to the Financial Statements form an integral part of the consolidated statement of income by nature for the nine months ended on 30 September 2022.
(Amounts stated in thousands of euros)
| NOTES | 3º QUARTER 21 | 9M 21 | 3º QUARTER 22 | 9M 22 | |
|---|---|---|---|---|---|
| NET CONSOLIDATED INCOME | 46,131 | 119,840 | 105,870 | 191,174 | |
| OTHER INCOME | |||||
| ITEMS THAT MAY BE RECLASSIFIED SUBSEQUENTLY TO THE INCOME STATEMENT: | |||||
| Accounting for equity method | 11 | 1,111 | 1,550 | 2,105 | 9,139 |
| Fair value of interest rate swap | 20 | 11 | 30 | 7,622 | 9,647 |
| Deferred income tax - interest rate swap | 20 | (2) | (6) | (1,715) | (2,171) |
| Fair value of equity swaps | 20 | 136 | 434 | 225 | 186 |
| Deferred income tax - equity swap | 20 | (31) | (98) | (51) | (42) |
| Fair value of exchange rate forward | 20 | 101 | 228 | 2,422 | 3,308 |
| Deferred income tax - exchange rate forward | 20 | (29) | (66) | (700) | (956) |
| Currency translation differences and others | 80 | (34) | (45) | (107) | |
| INCOME RECOGNISED DIRECTLY IN EQUITY | 1,377 | 2,038 | 9,863 | 19,004 | |
| TOTAL COMPREHENSIVE INCOME | 47,508 | 121,878 | 115,733 | 210,178 | |
| ATTRIBUTABLE TO: | |||||
| NOS Group Shareholders | 47,525 | 122,060 | 115,825 | 210,285 | |
| Non-controlling interests | (17) | (182) | (92) | (107) | |
| 47,508 | 121,878 | 115,733 | 210,178 | ||
As a standard practice, only the annual accounts are audited, therefore the quarterly amounts were not audited autonomously.
The Notes to the Financial Statements form an integral part of the consolidated statement of comprehensive income for the nine months ended on 30 September 2022.
(Amounts stated in thousands of euros)
| ATTRIBUTABLE TO NOS GROUP SHAREHOLDERS | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| NOTES | SHARE CAPITAL |
CAPITAL ISSUED PREMIUM |
OWN SHARES DISCOUNTS AND PREMIUMS |
LEGAL RESERVE |
OTHER RESERVES |
NET INCOME | NON - CONTROLLING INTERESTS |
TOTAL | |
| BALANCE AS AT 1 JANUARY 2021 | 5,152 | 854,219 | (14,859) | 1,030 | 12,007 | 92,000 | 6,685 | 956,234 | |
| Result appropriation | |||||||||
| Transfers to reserves | - | - | - | - | 92,000 | (92,000) | - | - | |
| Dividends paid | 22.4 | - | - | - | - | (142,376) | - | - | (142,376) |
| Aquisition of own shares | 22.3 | - | - | (2,069) | - | - | - | - | (2,069) |
| Distribution of own shares: | |||||||||
| Distribution of own shares - share incentive scheme | 22.3 | - | - | 3,976 | - | (3,976) | - | - | - |
| Distribuition of own shares - other remunerations | 22.3 | - | - | 599 | - | (139) | - | - | 460 |
| Share Plan - costs incurred in the period and others | - | - | - | - | 3,246 | - | - | 3,246 | |
| Comprehensive Income | - | - | - | - | 2,038 | 120,021 | (182) | 121,878 | |
| BALANCE AS AT 30 SEPTEMBER 2021 | 5,152 | 854,219 | (12,353) | 1,030 | (37,200) | 120,021 | 6,502 | 937,371 | |
| BALANCE AS AT 1 JANUARY 2022 | 5,152 | 854,219 | (12,353) | 1,030 | (35,586) | 144,159 | 6,379 | 963,000 | |
| Result appropriation | |||||||||
| Transfers to reserves | - | - | - | - | 144,159 | (144,159) | - | - | |
| Dividends paid | 22.4 | - | - | - | - | (142,357) | - | - | (142,357) |
| Share capital increase by incorporation of share premium | 22.2 | 850,016 | (850,016) | - | - | - | - | - | - |
| Aquisition of own shares | 22.3 | - | - | (7,087) | - | - | - | - | (7,087) |
| Distribution of own shares: | |||||||||
| Distribution of own shares - share incentive scheme | 22.3 | - | - | 3,186 | - | (3,186) | - | - | - |
| Distribuition of own shares - other remunerations | 22.3 | - | - | 286 | - | (14) | - | - | 272 |
| Share Plan - costs incurred in the period and others | 45 | - | - | - | - | 4,825 | - | - | 4,825 |
| Comprehensive Income | - | - | - | - | 19,004 | 191,281 | (107) | 210,178 | |
| Others | - | (1) | - | - | - | - | - | (1) | |
| BALANCE AS AT 30 SEPTEMBER 2022 | 855,168 | 4,202 | (15,968) | 1,030 | (13,155) | 191,281 | 6,272 | 1,028,830 |
As a standard practice, only the annual accounts are audited, therefore the quarterly amounts were not audited autonomously.
The Notes to the Financial Statements form an integral part of the consolidated statement of changes in shareholders' equity for the nine months ended on 30 September 2022. The Chief Accountant The Board of Directors
FOR THE NINE MONTHS ENDED ON 30 SEPTEMBER 2021 AND 2022
(Amounts stated in thousands of euros)
| NOTES | 9M 21 | 9M 22 | |
|---|---|---|---|
| OPERATING ACTIVITIES | |||
| Collections from clients | 1,210,811 | 1,332,754 | |
| Payments to suppliers | (578,333) | (665,804) | |
| Payments to employees | (84,837) | (78,924) | |
| Receipts / (Payments) relating to income taxes | (15,248) | (19,317) | |
| Other cash receipts / (payments) related with operating activities | (26,098) | (43,835) | |
| CASH FLOW FROM OPERATING ACTIVITIES (1) | 506,295 | 524,874 | |
| INVESTING ACTIVITIES | |||
| CASH RECEIPTS RESULTING FROM | |||
| Financial investments | 797 | 832 | |
| Tangible assets | 1,197 | 149,024 | |
| Interest and related income | 2,865 | 3,385 | |
| 4,859 | 153,241 | ||
| PAYMENTS RESULTING FROM | |||
| Financial investments | (557) | (2,909) | |
| Tangible assets | (201,037) | (226,976) | |
| Intangible assets and contract costs | (165,041) | (168,364) | |
| (366,635) | (398,249) | ||
| CASH FLOW FROM INVESTING ACTIVITIES (2) | (361,776) | (245,008) | |
| FINANCING ACTIVITIES | |||
| CASH RECEIPTS RESULTING FROM | |||
| Borrowings | 127,000 | 456,693 | |
| 127,000 | 456,693 | ||
| PAYMENTS RESULTING FROM | |||
| Borrowings | (147,833) | (416,733) | |
| Lease rentals (principal) | (55,617) | (68,284) | |
| Interest and related expenses | (31,752) | (31,825) | |
| Dividends | 22.4 | (142,376) | (142,357) |
| Aquisition of own shares | 22.3 | (2,069) | (7,087) |
| (379,647) | (666,286) | ||
| CASH FLOW FROM FINANCING ACTIVITIES (3) | (252,647) | (209,593) | |
| Change in cash and cash equivalents (4)=(1)+(2)+(3) | (108,128) | 70,273 | |
| Effect of exchange differences | 79 | 20 | |
| Cash and cash equivalents at the beginning of the year | 151,014 | 10,170 | |
| CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD | 22 | 42,965 | 80,463 |
| Cash and cash equivalents | 21 | 43,380 | 150,622 |
| Bank overdrafts | 24 | (415) | (70,159) |
As a standard practice, only the annual accounts are audited, therefore the quarterly amounts were not audited autonomously.
The Notes to the Financial Statements form an integral part of the consolidated statement of cash flows for the nine months ended on 30 September 2022.
(Amounts stated in thousands of euros, unless otherwise stated)
until 27 August 2013, named ZON Multimédia Company headquarters registered at Rua Actor António Silva, nº9, Campo Grande, was established by Portugal Telecom, SGPS, S.A. ("Portugal Telecom") on 15 July 1999 for the purpose of implementing its multimedia business strategy.
During the 2007 financial year, Portugal Telecom proceeded with the spin-off of ZON through the attribution of its participation in the company to their shareholders, which become fully independent from Portugal Telecom.
During the 2013 financial year, ZON and Optimus, SGPS, S.A. ("Optimus SGPS") have merged through the incorporation of Optimus SGPS into ZON. Thereafter, the Company adopted the designation of ZON OPTIMUS, SGPS, S.A..
On 20 June 2014, be
The businesses operated by NOS and its associated companies, form the "NOS Group" or "Group", which includes cable and satellite television services, voice and Internet access services, video production and sale, advertising on Pay TV channels, cinema exhibition and distribution, the production of channels for Pay TV, management of datacenters and consulting services in IT, mainly in the Portuguese market.
NOS shares are listed on the Euronext Lisbon market. 30 September 2022 is shown in Note 22.
subsidiaries, NOS Açores, NOS Madeira and NOS wholesale comprehends: a) cable and satellite television distribution; b) the operation of the latest generation mobile communication network, GSM/UMTS/LTE/5G; c) the operation of electronic communications services, including data and multimedia communication services in general; d) IP voice services ("VOIP" - Voice over IP); e) Mobile Virtual Network Operator e above mentioned activities and services. The business of these companies is regulated by Law no. 5/2004 (Electronic Communications Law), which establishes the legal regime governing electronic communications networks and services.
The main activity of NOS Audio Sales and Distribution, S.A., previously designated NOS Lusomundo TV, S.A. and the result of the merger of NOSPUB with NOS Lusomundo TV on December 2020, is the negotiation, acquisition and distribution of content rights and other multimedia products to television and other platforms of distribution, currently producing films and series channels through the compilation of the acquired contents, which are distributed, among other operators, by NOS SA and its subsidiaries. This company also manages the advertising space on Pay TV channels and in the cinemas of NOS Cinemas.
NOS Audiovisuais and NOS Cinemas, together with their associated companies, operate in the audiovisual sector, which includes video production and sale, cinema exhibition and distribution, and the acquisition/negotiation of Pay TV and VOD (video-on-demand) rights.
NOS Sistemas is a company dedicated to datacentre management and consulting services in IT.
NOS Inovação main activities are conducting and stimulating scientific activities of R&D (it owns all the intellectual property developed within the NOS Group, intending to guarantee the return of the initial investment through the commercialization of patents and concessions regarding commercial operation, as a result of the creation of new products and services), the demonstration, disclosure, technology and training transfers in the services and information management domains as well as fixed and mobile solutions of the latest generation of TV, internet, voice and data solutions.
These notes to the Financial Statements follow the order in which the items are shown in the consolidated financial statements.
The consolidated financial statements for the nine months ended on 30 September 2022 were approved by the Board of Directors and their issue authorised on 24 October 2022.
l performance, and consolidated cash flows.
The principal accounting policies adopted in the preparation of the financial statements are described below. These policies were consistently applied to all the financial years presented, unless otherwise stated.
The consolidated financial statements were prepared in accordance with IAS 34 Therefore, these financial statements do not include all the information required by IFRS, so they must be read in conjunction with the consolidated financial statements for the year ended on 31 December 2021.
The consolidated financial statements are presented in euros as this is the main currency of the Group's operations and all amounts are presented in thousands of euros, except when referred to the financial statements of subsidiaries located abroad were converted into euros in accordance with the accounting policies described in Note 2.3.21.
The consolidated financial statements were prepared on a going concern basis from the ledgers and accounting records of the companies included in the consolidation (Annex A)), using the historical cost convention, adjusted when necessary for the valuation of financial assets and liabilities (including derivatives) at their fair value (Note 2.3.24).
In preparing the consolidated financial statements in accordance with IFRS, the Board used estimates, assumptions, and critical judgments with impact on the value of assets and liabilities and the recognition of income and costs in each reporting period. Although these estimates were based on the best information available at the date of preparation of the consolidated financial statements, current and future results may differ from these estimates. The areas involving a higher element of judgment and estimates are described in Note 3.
The Board of Directors is convinced that there are no material uncertainties that might question this assumption. An analysis was made that the Group has the necessary resources to continue its operations into the future, for a period of no less than 12 months from the reporting date.
In the preparation and presentation of the consolidated financial statements, the NOS Group declares that it complies explicitly and without reservation with IAS/IFRS reporting standards and related SIC/IFRIC interpretations as approved by the European Union.
Changes in accounting policies and disclosures
were mandatory for the first time on the financial year beginning 1 January 2022:
or not a contract is onerous, only expenses directly related to the performance of the contract can be considered, such as incremental costs related to direct labor and materials and the allocation of other expenses directly related, such as the allocation of depreciation expenses of the tangible assets used to carry out the contract. General and administrative costs do not relate directly to a contract and are excluded unless they are explicitly chargeable to the counterparty under the contract. This amendment shall apply to contracts which, at the beginning of the first annual reporting period to which the amendment is applied, still include unfulfilled contractual obligations, without the need to re-express the comparative.
Union, but only are mandatory in future financial years:
covering all relevant accounting aspects.
• Amendments to IFRS 17 Insurance contracts Initial application of IFRS 17 and IFRS 9 Comparative information. This amendment to IFRS 17 refers to the presentation of comparative information on financial assets, in the initial classification of a financial asset in the comparative period(s) presented in the initial application of IFRS 17. The the scope of IFRS 17, to be classified, instrument by instrument, in the comparative period(s) in line with how the entity expects these assets to be classified on initial application of IFRS 9.
The Group did not apply any of these standards in advance in the financial statements in the nine months ended on 30 September 2022. No significant impacts on the financial statements resulting from their adoption are estimated.
The following standards, interpretations, amendments and revisions, with mandatory application in future financial years, have not been endorsed by the European Union, until the date of approval of these financial statements:
The Group did not apply any of these standards in advance in the financial statements in the nine months ended on 30 September 2022. No significant impacts on the financial statements resulting from their adoption are estimated.
In the nine months ended on 30 September 2022, the Group changed the presentation of costs related to the rental of ducts and poles and network circuits, in the amount of 26.9 million euros, from Direct costs to Supplies and external services, in line with how the group's financial performance is analyzed internally. The amounts for the nine months ended on 30 September 2021 were restated, ensuring comparability.
Controlled companies were consolidated by the full consolidation method. Control is deemed to exist when the Group is exposed or has rights, because of their involvement, to a variable return of the entity's activities, and has capacity to affect this return through the power over the entity. Namely, when the Company directly or indirectly holds a majority of the voting rights at a General Meeting of Shareholders or has the power to determine the financial and operating policies. In situations where the Company has, in substance, control of other entities created for a specific purpose, although it does not directly hold equity in them, such entities are consolidated by the full consolidation method. The entities in these situations are listed in Annex A).
statement of financial position and in the consolidated statement, respectively, under the item - (Note 23).
The identifiable acquired assets and the liabilities and contingent liabilities assumed in a business combination are measured initially at fair value at the acquisition date, irrespective of the existence of non-controlled interests. The excess of ll. When the acquisition cost is less than the fair value of the identified net assets, the difference is recorded as a gain in the income statement in the period in which the acquisition occurs.
The non-controlling interests are initially recognized as their proportion of the fair value of the identifiable assets and liabilities.
On the acquisition of additional equity shares in companies already controlled by the Group, the difference between the
share of capital acquired and the corresponding acquisition value is recognized directly in equity.
When an increase in position in the capital of an associated company results in the acquisition of control, with the latter being included in the consolidated financial statements by the full consolidation method, the share of the fair values assigned to the assets and liabilities, corresponding to the percentages previously held, is stated in the income statement.
The directly attributable transaction costs are recognized immediately in profit or loss.
The results of companies acquired or sold during the year are included in the income statements as from the date of obtaining control or until the date of their disposal, respectively.
Intercompany transactions, balances, unrealized gains on transactions and dividends distributed between Group companies are eliminated. Unrealized losses are also eliminated unless the transaction shows evidence of impairment of the transferred asset.
When necessary, adjustments are made to the financial statements of controlled companies in order to align their accounting policies with those of the Group.
The classification of investments as jointly controlled companies is determined based on the existence of shareholder agreements, which show and regulate the joint control. Financial investments of jointly controlled companies (Annex C)) are stated by the equity method. Under this method, financial investments are adjusted periodically by an amount he income statement before financial results and taxes. Direct changes in the post-acquisition equity of jointly controlled companies are recognized as the value of the shareholding as a contra entry in reserves, in equity.
Additionally, financial investments may also be adjusted for recognition of impairment losses.
Any excess of acquisition cost over the fair value of identifiable net assets and liabilities (goodwill) is recorded as part of the financial investment of jointly controlled companies and subject to impairment testing when there are indicators of loss of value. When the acquisition cost is less than the fair value of the identified net assets, the difference is recorded as a gain in the income statement in the period in which the acquisition occurs.
Losses in jointly controlled companies, which exceed the investment made in them, are not recognized, except when the Group has entered into undertakings with that entity.
Dividends received from these companies are recorded as a reduction in the value of the financial investments.
An associated company is a company in which the Group exercises significant influence through participation in decisions about its financial and operating policies, but in which does not have control or joint control.
Any excess of the acquisition cost of a financial investment over the fair value of the identifiable net assets is recorded as goodwill and is added to the value of the financial investment and its recovery is reviewed annually or whenever there are indications of possible loss of value. When the acquisition cost is less than the fair value of the identified net assets, the difference is recorded as a gain in the statement of comprehensive income in the period in which the acquisition occurs.
Financial investments in associated companies (Annex B)) are stated by the equity method. Under this method, financial investments are adjusted periodically by an amount corresponding to the share in the net profits of associated companies, as a contra -acquisition equity of associated companies are recognized as the value of the shareholding as a contra entry in reserves, in equity. Additionally, financial investments may also be adjusted for recognition of impairment losses.
Losses in associated companies, which exceed the investment made in them, are not recognized, except when the Group has entered undertakings with that associated company.
Dividends received from these companies are recorded as a reduction in the value of the financial investments.
Holdings in entities without significant influence
Investments made by the Group in entities where it does not have significant influence are initially recorded at cost and subsequently measured at fair value through profit or loss.
These investments are presented under "Other financial assets non-current" in the statement of financial position and changes in fair value are recorded against "Net losses / (gains) of affiliated companies" in the income statement.
Balances and transactions as well as unrealized gains between Group companies, and between them and the parent company, are eliminated in the consolidation.
The part of unrealized gains arising from transactions with associated companies or jointly controlled companies attributable to the Group is eliminated in the consolidation. Unrealized losses are similarly eliminated except when they show evidence of impairment of the transferred asset.
As stipulated in IFRS 8, the Group presents operating segments based on internally produced management information (Note 5).
Operating segments are reported consistently with the internal management information model provided to the chief operating decision maker of the Group, who is responsible for allocating resources to the segment and for assessing its performance, and for taking strategic decisions.
The Group presents assets and liabilities in the financial statements based in the current and non-current classification. An asset is classified as current when:
A liability is classified as current when:
The remaining assets and liabilities of the Group are classified as non-current.
Realizable assets and liabilities due in less than one year from the date of the statement of financial position are classified as current in assets and liabilities, respectively.
In accordance with IAS 1, "Integration costs", "Losses / (gains) on disposal of assets" and "Other non-recurring costs / (gains)"reflect unusual costs and revenues, that should be disclosed separately from the usual cost and revenues lines, in order to avoid distortion of the financial information from regular operations, and be consistent with the way the group's financial performance is analyzed and monitored by management. These unusual costs and revenues may not be comparable to similarly titled measures used by other companies. When determining whether an event or transaction is unusual, management considers both quantitative and qualitative factors. Examples of unusual costs and revenues are: business restructuring programs and respective compensation; regulatory affairs and lawsuits; extraordinary impairment of assets due to the reduction of their recoverable amount, sale of non current assets, among others. If costs and revenues meet these criteria, which are applied consistently from year to year, they are treated as unusual and presented in the specific lines above.
Tangible assets are stated at acquisition cost, less accumulated depreciation and impairment losses, when applicable. Acquisition cost includes, in addition to the purchase price of the asset: (i) costs directly attributable to the purchase; and (ii) the estimated costs of decommissioning and removal of the assets and restoration of the site, which in Group applies to the cinema operation business, telecommunication towers and offices (Note 7).
Estimated losses resulting from the replacement of equipment before the end of its useful life due to technological obsolescence are recognized by a deduction, from the corresponding asset as a contra entry in profit and loss. The costs of current maintenance and repairs are recognized as a cost when they are incurred. Significant costs incurred on renovations or improvements to the asset are capitalized and depreciated over the corresponding estimated payback period when it is probable that there will be future economic benefits associated with the asset and when these can be measured reliably.
The gains and losses from the disposal of tangible assets, determined by the difference between the sale value and the net book value, are recognized
Tangible assets are depreciated from the time they are completed or ready to be used. These assets, less their residual value, are depreciated by the straight-line method, in twelfths, from the month in which they become available for use, according to the useful life of the assets defined as their estimated utility.
The depreciation rates used correspond to the following estimated useful lives:
| 2021 | 2022 | |
|---|---|---|
| (YEARS) | (YEARS) | |
| Buildings and other constructions | 2 - 50 | 2 - 50 |
| Technical equipment: | ||
| Network Installations and equipment | 7 - 40 | 7 - 40 |
| Terminal equipment | 2 - 8 | 1 - 5 |
| Other technical equipment | 1 - 16 | 1 - 16 |
| Transportation equipment | 3 - 4 | 3 - 4 |
| Administrative equipment | 2 - 10 | 2 - 10 |
| Other tangible assets | 4 - 8 | 4 - 8 |
During the nine months ended on 30 September 2022, NOS reviewed the depreciations rates (reduced the estimated useful lives) of terminal equipment installed impairment losses amounting to 11.5 million euros (Note 37).
The non-current assets (or discontinued operations) are classified as held for sale if the respective value is realizable through a sale transaction instead of its continued use.
This situation is considered to happen only when: i) the sale is very likely to happen and the asset is immediately available to be sold in its current conditions, ii) the Company made the commitment to sell, and iii) the sale is expected to take place in a period of 12 months. In this case, the non-current assets are measured by the lower amount between accounting value or the respective fair value deducted from the costs of the sale.
The non-current assets held for sale and discontinued operations are measured at the lower of two: i) the accounting value and, ii) the fair value deducted from the costs of the sale. The costs of the sale are the incremental costs directly assigned to the disposal of the asset (or group to be disposed), excluding financial costs and income tax expenses.
From the moment that tangible assets are con and the assets are determined as non-current asset held for sale.
A discontinued operation unit is a component of and entity that was disposed or is classified as held for sale and:
separated from the operational units or;
• It is a subsidiary acquired exclusively for resale.
Discontinued operations are excluded from the continued operations results and are presented in separate as an amount of net income after taxes from discontinued operations on the financial statement of income by nature.
Intangible assets are stated at acquisition cost, less accumulated amortization and impairment losses, when applicable. Recognized only when they generate future economic benefits for the Group and when they can be measured reliably.
Intangible assets consist mainly of goodwill, telecom and software licenses, content utilization rights and other contractual rights.
Group companies periodically carry out an impairment assessment of intangible assets in-progress. This impairment assessment is also carried out whenever events or changes in circumstances indicate that the amount at which the asset is recorded may not be recoverable. When such indications exist, the Group calculates the recoverable value of the asset in order to determine the existence and extent of the impairment loss.
Goodwill represents the excess of acquisition cost over the net fair value of the assets, liabilities, and contingent liabilities of a subsidiary, jointly controlled company or associated company at the acquisition date, in accordance with IFRS 3.
8) in the case of a controlled company or in the case in which the excess of cost has been originated by a mer 11) in the case of a jointly controlled company or an associated company.
Goodwill is not amortised and is subject to impairment tests at least once a year, on a specified date, and whenever there not liable to subsequent reversal.
For the purposes of impairment tests, goodwill is attributed to the cash-generating units to which it is related (Note 7), which may correspond to the business segments in which the Group operates, or a lower level.
Internally generated intangible assets, including expenditure on research, are expensed when they are incurred. Research and development costs are only recognized as assets when the technical capability to complete the intangible asset is demonstrated and when it is available for use or sale.
Assets classified under this item relate to the rights and licenses acquired under contract by the Group to third parties and used in realizing the Group's activities, and include:
The content exploration rights are recorded in the consolidated statement of financial position, as intangible assets, when the following conditions are fulfilled: (i) there is control over the content, (ii) the Company has the right to choose the way to explore the content, and (iii) it is available for exhibition.
The conclusion of contracts relating to sports contents, which are not immediately available, originates rights that are initially classified as contractual commitments.
In the specific case of broadcasting rights of sports competitions, these are recognized as assets when the necessary conditions to organize each sports competition are present, which occurs in the homologation date of the participating
teams in the competition that is being held in the sports season to be initiated, by the organizing entity, taking into consideration that it is from that date that the conditions for the recognition of an asset are present, namely, the unequivocal attainment of the exploration rights of the games of the stated season. In this situation, the stated rights are recogniz z twelfths, starting from the beginning of the month in which they are available for use.
Resulting from agreements concluded for the cession of the exclusive rights to exploit sports content, and as it is permitted by IAS 1, since 2017, NOS presents the net assets and liabilities of the values ceded to other operators, considering that this compensation best reflects the substance of the transactions.
When the recognized intangible assets involve payments in periods above 1 year, the intangible asset corresponds to the present value of those payments.
The useful lives of the intangible assets are classified as finite or indefinite.
Intangible assets with finite useful lives are amortised over their useful lives, with an impairment analysis carried out whenever there are indications that the amount at which the intangible asset is mentioned in the financial statements may not be recovered. The amortization period and the amortization method of an intangible asset with a finite useful life are reviewed periodically. Any changes in the expected useful life or in the expected pattern of future consumption of the economic benefits incorporated in the asset, are considered in the modification over the period or method of amortization and, if verified, are treated as changes in accounting estimates. The amortization costs of intangible assets with finite lives are recognized in the income statement.
The assets with finite useful life are amortised by the straight-line method, in twelfths, from the beginning of the month in which they become available for use.
The amortization rates used correspond to the following estimated useful lives:
| 2021 | 2022 | |
|---|---|---|
| (YEARS) | (YEARS) | |
| Telecom licences | 20 - 33 | 20 - 33 |
| Software licences | 1 - 8 | 1 - 8 |
| Period of the | Period of the | |
| Content utilization rights | contract | contract |
| Other | 1 to 20 | 1 to 20 |
The intangible assets with indefinite useful lives are not amortised, and impairment assessments are performed annually.
Accordingly, the useful life of an intangible asset that is not being amortised is periodically reviewed to determine whether events and circumstances continue to support an indefinite useful life assessment for that asset. If not, the change in the assessment of the useful life from indefinite to finite is accounted for as a change in an accounting estimate.
An intangible asset is unrecognized in its disposal moment, or when no future economic benefits from its use or disposal are expected. The gain or loss related with an unrecognized intangible asset (determined as the difference between the net income of its disposal, if there is any, and the carrying amount of that same asset) is recognised in the financial statement of income by nature.
This item corresponds to costs incurred in attracting customers and costs associated with fulfilling a contract that are capitalized whenever they meet all of the following criteria:
These costs are recognized for the period expected to fulfill the contract (2 to 4 years).
The costs of attracting customers are essentially:
The costs associated with fulfilling the contracts are essentially:
Group companies periodically carry out an impairment assessment of non-current assets. This impairment assessment is also carried out whenever events or changes in circumstances indicate that the amount at which the asset is recorded may not be recoverable. When such indications exist, the Group calculates the recoverable value of the asset to determine the existence and extent of the impairment loss.
The recoverable value is estimated for each asset individually or, if that is not possible, assets are grouped at the lowest levels for which there are identifiable cash flows to the cash-generating unit to whi businesses is a cash-generating unit, except for the assets allocated to the cinema exhibition business, which are grouped into regional cash-generating units.
The recoverable amount is calculated as the higher of the net sale price and the current use value. The net sale price is the amount that would be obtained from the sale of the asset in a transaction between independent and knowledgeable entities, less the costs directly attributable to the sale. The current use value is the current value of the estimated future cash flows resulting from continued use of the asset or of the cash-generating unit. When the amount at which the asset is recorded exceeds its recoverable value, it is recognised as an impairment loss.
The reversal of impairment losses recognised in previous years is recorded when there are indications that these losses no longer exist or have decreased. The reversal of impairment losses is recognised in the statement of comprehensive income in the year in which it occurs. However, an impairment loss can only be reversed up to the amount that would be recognised (net of amortization or depreciation) if no impairment loss had been recorded in previous years.
Financial assets are recognised in the statement of financial position of the Group on the trade or contract date, which is the date on which the Group undertakes to purchase or sell the asset.
Initially, apart from commercial accounts receivable, financial assets are recognised at fair value plus directly attributable transaction costs, except for assets at fair value through income in which transaction costs are immediately recognised in income. Trade accounts receivable, at the initial time, are recognised at their transaction price, as defined in IFRS 15.
The financial assets are derecognised when:
The financial assets and liabilities are offset and shown as a net value when, and only when, the Group has the right to offset the recognised amounts and intends to settle for the net value.
The Group classifies its financial assets into the following categories: financial assets at fair value through profit or loss,
financial assets measured at amortised cost, financial assets at fair value through other comprehensive income. Its classification depends on the entity's business model to manage the financial assets and the contractual characteristics in terms of the cash flows of the financial asset.
Financial assets at fair value through profit and loss
This category includes financial derivatives and equity instruments that the Group has not classified as financial assets through other comprehensive income at the time of initial recognition. This category also includes all financial instruments whose contractual cash flows are not exclusively capital and interest.
Financial assets at fair value through results are presented in the financial statements at fair value, the net changes being known in the income statement. This category of assets includes derivative instruments and investments in listed companies for which the Company has not classified them as financial assets at fair value through other comprehensive income. Dividends from investments in listed companies are recognised as income in the income statement when the respective right of receipt is formalized.
Gains and losses resulting from changes in the fair value of assets measured at fair value through profit or loss are recognised in results in the year in which they occ interest and dividends.
Financial assets at fair value through other comprehensive income
Financial assets measured at fair value through other comprehensive income are those that are part of a business model whose objective is achieved through the collection of contractual cash flows and the sale of financial assets, being that these contractual cash flows are only capital and interest reimbursement on the capital in debt.
Financial assets measured at amortised cost
Financial assets measured at amortised cost are those that are included in a business model whose purpose is to hold financial assets in order to receive the contractual cashflows, being that these contractual cash flows are only capital reimbursement and interest payments on the capital in debt.
Financial assets measured at amortised cost are subsequently measured using the effective tax rate method and subject to impairment. Income and costs are recognised in the income statement when the asset is derecognised, updated or an impairment is recognised over it. Financial assets measured at the Company's amortised cost include accounts receivable and loans granted to related parties.
The amounts incl other investments with maturities of less than three months which may be immediately realizable and with a negligible risk of change of value.
For the p
Financial liabilities and equity instruments are classified according to their contractual substance irrespective of their legal he equity instruments issued by Group companies are recorded at the amount received, net of the costs incurred in their issue. Financial liabilities are recognised only when extinguished, i.e. when the obligation is settled, cancelled, or extinguished.
In accordance with IFRS 9, financial liabilities are classified as subsequently measured at amortised cost, except for:
Financial guarantee contracts;
The commitments to grant a loan at a lower interest rate than the market;
Financial liabilities of the Group include borrowings, accounts payable and derivative financial instruments.
At the date of each financial position statement, the Group analyses and recognizes expected losses on its debt securities, loans and accounts receivable. The expected loss results from the difference between all contractual cash flows that are due to an entity in accordance with the contract and all the cash flows that the entity expects to receive, discounted at the original effective interest rate.
The objective of this impairment policy is to recognize expected credit losses over the respective duration of financial instruments that have undergone significant increases in credit risk since initial recognition, assessed on an individual or collective basis, considering all reasonable and sustainable information, including prospects. If, at the reporting date, the credit risk associated with a financial instrument has not increased significantly since the initial recognition, the Group measures the provision for losses relating to that financial instrument by an amount equivalent to the expected credit losses within a period of 12 months.
For receivables and assets resulting from contracts under IFRS 15, the Group adopts the simplified approach when calculating expected credit losses. As a result, the Group does not monitor changes in credit risk, recognizing instead impairment losses based on the expected credit loss on each reporting date. The Group estab where it presents an impairment loss criterion based on the history of credit losses, adjusted by specific prospective factors for the clients and the economic environment.
The Group uses derivative financial instruments, such as exchange rate forward contracts, interest rate swaps, to cover its exchange rate risks, interest, respectively. Such derivative financial instruments are initially recorded at fair value on the date the derivative is contracted and are subsequently measured at fair value. Derivatives are presented in assets when their fair value is positive and in liabilities when their fair value is negative.
In terms of hedge accounting, hedges are classified as:
NOS Group uses derivative financial instruments with fair value and cash flow hedges.
At the beginning of the hedge relationship, the Group formally designates and documents the hedging relationship for which hedge accounting is intended to apply as well as the management and strategy purpose of such hedge.
The documentation includes the identification of the hedging instrument, the hedged item or transaction, the nature of the risk being hedged and how the Group will assess whether the hedging relationship meets the hedge effectiveness requirements (including the analysis of sources of hedge ineffectiveness and how the hedge ratio is determined). A hedging relationship qualifies for hedge accounting if it meets all the following effectiveness requirements:
• The hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the Group hedges and the quantity of the hedging instrument that the Group actually uses to hedges that quantity of hedged item.
Hedges that meet all the quantifying criteria for hedge accounting are accounted for, as described below:
The change in the fair value of a hedging instrument is recognised in the statement of profit or loss. The change in the fair value of the hedged item attributable to the risk hedged is recorded as part of the carrying value of the hedged item and is also recognised in the statement of profit or loss.
For fair value hedges relating to items carried at amortised cost, any adjustment to carrying value is amortised through profit or loss over the remaining term of the hedge using the EIR method. The EIR amortisation may begin as soon as an adjustment exists and no later than when the hedged item ceases to be adjusted for changes in its fair value attributable to the risk being hedged.
If the hedged item is derecognised, the unamortised fair value is recognised immediately in profit or loss.
When an unrecognised firm commitment is designated as a hedged item, the subsequent cumulative change in the fair value of the firm commitment attributable to the hedged risk is recognised as an asset or liability with a corresponding gain or loss recognised in profit or loss.
The effective portion of the gain or loss on the hedging instrument is recognised in OCI in the cash flow hedge reserve, while any ineffective portion is recognised immediately in the statement of profit or loss. The cash flow hedge reserve is adjusted to the lower of the cumulative gain or loss on the hedging instrument and the cumulative change in fair value of the hedged item.
The Group uses forward contracts of:
The ineffective portion relating to foreign currency contracts is recognised ineffective portion relating to interest rates is recognised shares contracts is recognised
On the nine months ended on 30 September 2022, the Group did not change the recognition method.
The amounts accumulated in OCI are accounted for, depending on the nature of the underlying hedged transaction. If the hedged transaction subsequently results in the recognition of a non-financial item, the amount accumulated in equity is removed from the separate component of equity and included in the initial cost or other carrying amount of the hedged asset or liability. This is not a reclassification adjustment and will not be recognised in OCI for the period. This also applies where the hedged forecast transaction of a non-financial asset or noncommitment for which fair value hedge accounting is applied.
For any other cash flow hedges, the amount accumulated in OCI is reclassified to profit or loss as a reclassification adjustment in the same period or periods during which the hedged cash flows affect profit or loss.
If cash flow hedge accounting is discontinued, the amount that has been accumulated in OCI must remain in accumulated OCI if the hedged future cash flows are still expected to occur. Otherwise, the amount will be immediately reclassified to profit or loss as a reclassification adjustment. After discontinuation, once the hedged cash flow occurs, any amount remaining in accumulated OCI must be accounted for depending on the nature of the underlying transaction as described above.
Inventories, which mainly include mobile phones, customer terminal equipment, DVDs, and content broadcasting rights, are valued at the lower of their cost or net realizable value.
The acquisition cost includes the invoice price, freight, and insurance costs, using the Weighted Average Cost as the method of costing goods sold.
Inventories are adjusted for technological obsolescence, as well as for the difference between the purchase cost and the net realizable value, whichever is the lower, and this reduction is recognised directly in the income statement.
The net realizable value corresponds to the normal sale price less restocking costs and selling costs.
The differences between the cost and the corresponding net realizable value of inventories, when this is less than the cost,
Inventories in transit, since they are not available for consumption or sale, are separated out from other inventories and are valued at their specific acquisition cost.
The signing of contracts related with sports content originates rights that are initially classified as contractual commitments.
The content broadcasting rights are recorded in the consolidated statement of financial position, as Inventories, in the event of the nonexistence of full right over the way of exploration of the asset, by the respective value of cost or net realizable value, whenever it is lower, when programmatic content has been received and is available for exhibition or use, according to contractual conditions, without any production or change, given that the necessary conditions for the organization of each sports competition are present, which occurs in the homologation date of the participating teams in the competition that is being held in the sports season to be initiated, by the organizing entity. The stated rights are recognised in the income their commercial exploration. No balances of content rights are registered in the Inventories caption.
Due to the agreement between the three national operators of reciprocal availability, for several sports seasons (collaborative arrangement), of sports content (national and international) owned by them, (Note 42.2), NOS considered the recognition of the costs, excluding those divided by the remaining operators, on a systematic basis, given the pattern of economic benefits obtained through their commercial exploration.
Subsidies are recognised at their fair value when there is a reasonable assurance that they will be received and Group companies will meet the requirements for their award.
Operating subsidies, mainly for employee training, are recognised in the statement of comprehensive income by deduction from the corresponding costs incurred.
Investment subsidies are recognised in the statement of financial position as deferred income.
If the subsidy is considered as deferred income, it is recognised as income on a systematic and rational basis during the useful life of the asset.
Provisions are recognised when:
When one of the above conditions is not met, the Group discloses the events as a contingent liability unless the likelihood of an outflow of funds resulting from this contingency is remote, in which case they are not disclosed.
Provisions for legal procedures taking place against the Group are made in accordance with the risk assessments carried out by the Group and by their legal advisers, based on success rates.
Provisions for restructuring are only recognised when the Group has a detailed, formal plan, which identify the main features of the restructuring program, and after these facts have been reported to the entities involved.
Provisions for dismantling costs, removal of assets and restoration of the site are recognised when the assets are installed, in line with the best estimates available at that date. The amount of the provisioned liability reflects the effects of the passage of time and the corresponding financial indexing is recognised in results as a financial cost.
Obligations that result from onerous contracts are registered and measured as provisions. There is an onerous contract when the Company is an integral part of a contract, which entail costs exceed the economic future economic benefits.
Provisions for potential future operating losses are not covered.
Contingent liabilities are not recognised in the financial statements, unless the exception provided under IFRS 3 business combination, and are disclosed whenever there is a good chance to shed resources including economic benefits. Contingent assets are not recognised in the financial statements, being disclosed when there is a likelihood of a future influx of financial resources.
Provisions are reviewed and brought up to date at the date of the statement of financial position to reflect the best estimate at that time of the obligation concerned.
A lease is defined as a contract, or part of a contract, that transfers the right to use a good (the underlying asset) for a period in exchange for a value.
At the beginning of each contract, it is evaluated and identified if it is or contains a lease. This assessment involves an exercise of judgement as to whether each contract depends on a specific asset if NOS obtains substantially all the economic benefits from the use of that asset and whether NOS has the right to control the use of the asset.
All contracts that constitute a lease are accounted for based on the on-balance model in a similar way with the treatment that IAS 17 establishes for financial leases.
At the commencement date of the lease, NOS recognises the liability related to lease payments (lease liability) and the asset representing the right to use the underlying asset during the lease period (the right of use or "ROU").
The cost of interest on the lease liability and the depreciation of the ROU are recognised separately.
Lease liability is remeasured at the occurrence of certain events (such as a change in the lease period, a change in future payments that result from a change in the reference rate or rate used to determine such payments). This remeasurement of the lease liability is recognised as an adjustment in the ROU.
The estimated costs of dismantling, removal of assets and restoration of the site related with leases are recognised in tangible assets with works carried out (Note 2.3.3).
The Group recognizes the right to use the assets at the start date of the lease (that is, the date on which the underlying asset is available for use).
The right to use the assets is recorded at acquisition cost, deducted from accumulated depreciation and impairment losses and adjusted for any new measurement of lease liabilities. The cost of the ROU of the assets includes the recognised amount of the lease liability, any direct costs incurred initially, and payments already made prior to the initial rental date, less any incentives received.
Unless it is reasonably certain that the Group obtains ownership of the leased asset at the end of the lease term, the recognised right of use of the assets is depreciated on a straight-line basis over the shorter of its estimated useful life and the term of the lease.
Rights of use are subject to impairment.
The rights of used of assets are depreciated using the straight-line method by the shortest period between length of the contract and its expected useful life.
If at the end of the leasing contract the asset is transferred to the company, or if the cost reflects the possibility of exercising the call option, the depreciation is calculated according to the estimated useful life of the asset.
At the start date of the lease, the Group recognizes the liabilities measured at the present value of the future payments to be made until the end of the lease.
Lease payments include fixed payments (including fixed payments on the substance), deducted of any incentives to be received, variable payments, dependent on an index or rate, and expected amounts to be paid under residual value guarantees. The lease payments also include the exercise price of a call option if it is reasonably certain that the Group will exercise the option, and penalties for termination of the lease if it is reasonably certain that the Group will terminate the lease.
Variable payments that do not depend on an index or a rate are recognised as an expense in the period in which the event giving rise to them occurs.
To calculate the present value of the lease payments, the Group uses the incremental loan rate at the start date of the lease if the implied interest rate is not readily determinable.
After the start date of the lease, the value of the lease liability is increased to reflect the increase in interest and reduces by the payments made. In addition, the book value of the lease liability is remeasured if there is a change, such as a change in the lease term, fixed payments or the purchase decision of the underlying asset.
NOS is covered by the special tax regime for groups of companies, which covers all the companies in which it directly or indirectly owns at least 75% of the share capital and which simultaneously are resident in Portugal and subject to Corporate Income Tax (IRC).
The remaining subsidiaries not covered by the special tax regime for groups of companies are taxed individually based on their respective taxable incomes and the applicable tax rates.
Income tax is stated in accordance with the IAS 12 criteria. In calculating the cost relating to income tax for the period, in addition to current tax, allowance is also made for the effect of deferred tax calculated in accordance with the liability method, taking into account the temporary differences resulting from the difference between the tax basis of assets and liabilities and their values as stated in the consolidated financial statements, and the tax losses carried forward at the date of the statement of financial position. The deferred income tax assets and liabilities were calculated based on the tax legislation currently in force or of legislation already published for future application.
Deferred income tax assets are recognised for all the deductible temporary differences until it is likely that a taxable profit is obtained to which the deductible temporary difference may be used, unless the deferred income tax asset results from the initial recognition of an asset or liability in a transaction which:
As stipulated in the above standard, deferred income tax assets are recognised only when there is reasonable assurance
that these may be used to reduce future taxable profit, or when there are deferred income tax liabilities whose reversal is expected to occur in the same period in which the deferred income tax assets are reversed. At the end of each period an assessment is made of deferred income tax assets, and these are adjusted in line with the likelihood of their future use.
The amount of tax to be included, either in current tax or in deferred tax resulting from transactions or events recognised in equity accounts, is recorded directly under those items and does not affect the results for the period.
In a business combination, the deferred tax benefits acquired are recognised as follows:
The benefits granted to employees under share purchase or share option incentive plans are recorded in accordance with the requirements of IFRS 2 Share-based payments.
In accordance with IFRS 2, since it is not possible to reliably estimate the fair value of the services received from employees, their value is measured by reference to the fair value of equity instruments in accordance with their share price at the grant date.
The cost is recognised, linearly over the period in which the service is provided by employees, under the cap
The accumulated cost recognised at the date of each statement of financial position up to the vesting reflects the best estimate of the number of own shares that will be vested, weighted by the tire elapse between the grant and the vesting. The impact on the income statement each year corresponds to the accumulated cost valuation between the beginning and the end of the year.
In turn, benefits granted based on shares but paid in cash lead to the recognition of a liability valued at fair value at the date of the statement of financial position.
Issue of shares corresponds to premiums from the issuance or capital increases. According to Portuguese law, share premiums follow the treatment given to the "Legal reserve", that is, the values are not distributable, except in case of liquidation, but can be used to absorb losses after having exhausted all other reserves and to increase share capital.
The own shares are recorded at acquisition cost as a deduction from equity. Gains or losses on the sale of own shares are recorded under "Other reserves".
Portuguese commercial legislation requires that at least 5% of annual net profit must be appropriated to a legal reserve until it represents at least 20% of the share capital. This reserve is not distributable, except in case of liquidation, but can be used to absorb losses, after having exhausted all other reserves and to increase share capital.
Other reserves and accumulated earnings
Reserves for plans of medium term incentive
According to IFRS 2 - "Share-based payments", the responsibility with the medium-term incentive plans settled by delivery of own shares is recorded as credit under "Reservations for mid-term incentive plans" and such reserve is not likely to be
distributed or used to absorb losses.
Hedging reserve reflects the changes in fair value of derivative financial instruments as cash flow hedges that are considered effective, and they are not likely to be distributed or be used to absorb losses.
ame legal regime as the legal reserve. Under Portuguese law, the amount of distributable reserves is determined according to the individual financial statements of the company prepared in accordance with IFRS. In addition, the increases resulting from the application of fair value through equity components, including its application through the net profit can only be distributed when the elements that originated them are sold, exercised liquidated or when the end their use, in the case of tangible assets or intangible assets.
This item includes the results available for distribution to shareholders and earnings per fair value in financial instruments increases, financial investments and investment properties, which, in accordance with paragraph 2 of article 32 of the CSC, will only be available for distribution when the elements or rights that originated them are sold, exercised, terminated, or settled.
The company recognizes the liability, as well as its impact over the equity, associated with the responsibility to distribute dividends when it is approved by the shareholders.
The main types of revenue of NOS subsidiaries are as follows:
Satellite television: Revenues from the satellite television service mainly result from:
Mobile broadband and voice services: Revenues from mobile broadband Internet access services and mobile voice services result mainly from monthly subscriptions and/or usage of the Internet and voice service, as well
as the traffic associated with the type chosen by the client.
The Group's revenue is based on the five-step model established by IFRS 15:
Thus, at the beginning of each contract, the NOS Group evaluates the promised goods or services and identifies, as a performance obligation, every promise of transfer to the customer of any distinct good or service (or package of goods or services). These promises in customer contracts may be express or implied, provided such promises create a valid expectation in the client that the entity will transfer a good or service to the customer, based on the entity's published policies, specific statements or usual business practices.
The NOS Group has internally defined that a performance obligation corresponds to the promise of delivery of a good or service that can be used in an isolated/separated way by the customer and on which there is a clear perception of this good or service by the customer among the available in each contract.
The main performance obligations are summarized as Sales of Mobile Phones, Telephones, Hotspots, DVD's, Movie Tickets, Licensing and Other Equipment and the Services Rendered of Mobile Internet Services, Fixed Internet, Mobile Phone, Landline Phone, Television, Consulting, Cloud/ IT Services, distribution of audio-visual rights among others.
The provision of Set-top-boxes, routers, modems and other terminal equipment at the customers' home and respective installation and activation services were considered by the group as not corresponding to a performance obligation, since they are necessary actions to fulfil the promised performance obligation.
In determining and allocating the transaction price of each performance obligation, NOS used stand-alone prices of the promised products and services at the time of entering into the agreement with the customer to distribute the amount expected to be received under the contract.
The recognition of revenue occurs at the time of performance of each performance obligation.
Revenue from selling equipment is included when the buyer takes on the risks and advantages of taking possession of
goods and the value of the benefits are reasonably quantified.
Revenue from telecom services subscriptions (TV, internet, mobile and fixed voice services bundle subscription, individually or as a bundle) is recognised linearly over the subscription period.
Revenue from equipment rental is recognised linearly over the rental agreement, except in the case of instalment sales, which are accounted as credit sales.
The Group attributes to its customers loyalty points in each call or recharge, that might be exchanged, over a limited period, for discounts in equipment purchase.
In each reporting period, NOS recognizes the current liability with discounts to be awarded in the future. This responsibility is calculated based on the amount of points awarded and not yet used, discounted from the estimate of points that will not be used (based on the history of use) and valued based on the offer available at each time for the use of points (specific catalog).
The recognition of liability configures a deferred income (until the date on which the points are definitively converted into benefits), which is recognised at the time of the use of the discount, as a revenue accrual.
Revenue related with traffic, roaming, data usage, audiovisual content, and others is recognised when the service is rendered. The Group also offers various personalised solutions, particularly to its corporate customers in telecom management, access, voice, and data transmission services. These personalised solutions are also recognised when the service is rendered.
Unless demanded or allowed by IFRS, the compensation of revenues and costs is not performed, namely, when it reflects the nature of the transaction or other event.
The compensation of revenues and costs is performed in the following situations:
Discounts granted to customers related with loyalty programmes are allocated to the entire retention contract to which the customer is committed to. Therefore, the discount is recognised as the goods and services made available to the customer.
Amounts that have not been invoiced for are included based on estimates. The differences between the estimated amounts and the actual amounts, which are normally immaterial, are recorded in the next financial year.
Interest revenue is recognised using the effective interest method, only when they generate future economic benefits.
Group s principle, under which they are recognised as they are generated or incurred, regardless of when they are received or paid.
The costs and revenues related to the current period and whose expenses and income will only occur in future periods are urred that relate to future periods, which will be recognised in each of those periods, for the corresponding amount.
The costs related to the current period and whose expenses will only occur in future periods
materialization. If uncertainty exists related to any of these aspects, the value is classified as Provisions (Note 2.3.14).
Transactions in foreign currencies are converted into the functional currency at the exchange rate on the transactions dates. On each accounting date, outstanding balances (monetary items) are updated by applying the exchange rate prevailing on that date. The exchange rate differences in this update are recognised in the income statement for the year in which they were calculated in the item "Losses / (gains) on exchange variations". Exchange rate variations generated on monetary items, which constitute enlargement of the investment denominated in the functional currency of the Group or of the subsidiary in question, are recognised in equity. Exchange rate differences on non-
The financial statements of subsidiaries denominated in foreign currencies are converted at the following exchange rates:
Exchange differences arising from the conversion into euros of the financial statements of subsidiaries denominated in
In the last quarter of 2017, the Angolan economy was considered a hyperinflationary economy according to IAS 29 - Financial Reporting in Hyperinflationary Economies.
This standard requires that the financial statements prepared in the currency of a hyperinflationary must be expressed in terms of the current measurement unit at the financial statements preparation date.
In summary, the general aspects that must be considered for the restatement of the individual financial statements are the following ones:
Additionally, according to IAS 21, the restatement of the consolidated financial statements is prohibited when the parent company does not operate in a hyperinflationary economy.
The conversion coefficient that was used for the restatement of the individual financial statements of the subsidiaries in Angola was the Consumer Price Index (CPI), issued by the National Bank of Angola.
In the last quarter of 2019, the Angolan economy was no longer considered a hyperinflationary economy.
IAS 29 the company should treat the amounts expressed in the current unit of measurement at the end of the previous reporting adjustments / revaluations, carried out until the end of the classification as a hyperinflationary economy, are treated as a deemed cost and recognised in the same proportion as the assets that gave rise to it.
At 31 December 2021 and 30 September 2022, assets and liabilities expressed in foreign currencies were converted into euros using the following exchange rates of such currencies against the euro, as published by the Bank of Portugal:
| 31-12-2021 | 30-09-2022 | |
|---|---|---|
| US Dollar | 1.1326 | 0.9748 |
| Angolan Kwanza | 635.7510 | 410.3908 |
| British Pound | 0.8403 | 0.8830 |
| Mozambican Metical | 71.5800 | 61.6500 |
| Canadian Dollar | 1.4393 | 1.3401 |
| Swiss Franc | 1.0331 | 0.9561 |
| Real | 6.3101 | 5.2584 |
In the nine months ended on 30 September 2021 and 2022, the income statements of subsidiaries expressed in foreign currencies were converted to euros at the average exchange rates of the currencies of their countries of origin against the euro. The average exchange rates used are as follows:
| 9M 21 | 9M 22 | |
|---|---|---|
| Angolan Kwanza | 758.4909 | 464.9699 |
| Mozambican Metical | 77.6960 | 66.7544 |
Financial charges related to borrowings are recognised as costs in accordance with the accrual s principle, except in the case of loans incurred (whether these are generic or specific) for the acquisition, construction or production of an asset that takes a substantial period (over one year) to be ready for use, which are capitalized in the acquisition cost of that asset. Costs from capitalized borrowings are determined having in consideration the amount of borrowing costs obtained that can be capitalized, according to the application of a capitalization rate over the expenses associated with that asset. The capitalization rate (aligned with NOS average financing rate) as well as with the costs to be capitalized are determined monthly, taking into consideration the monthly balance of eligible borrowings and the monthly amount of the asset in progress that qualifies.
Investment property mainly includes buildings held to generate rents rather than for use in the production or supply of goods or services, or for administrative purposes, or for sale in the ordinary course of business. These are measured initially at cost.
Subsequently, the Group uses the cost model for the valuation of investment property since use of the fair value model would not result in material differences.
An investment property is eliminated from the statement of financial position on disposal or when the investment property is taken permanently out of use and no financial benefit is expected from its disposal.
The Group measures part of the financial assets, such as financial assets available for sale, and some of its non-financial assets, at fair value on the date of the financial statements.
The fair value measurement assumes that the asset or liability is exchanged in an orderly transaction among market participants to sell the asset or transfer the liability at the measurement date under current market conditions. The fair value measurement is based on the assumption that the transaction to sell the asset or transfer the liability may occur:
Since different entities and businesses within a single entity can have access to different markets, the main or most advantageous market for the same asset or liability can vary from one entity to another, or even between businesses within the same entity, but it is assumed that they are accessible to the Group.
T assuming that market participants would use the asset to maximize its value.
The Group uses valuation techniques appropriate to the circumstances whenever there is information to measure the fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.
All assets and liabilities measured at fair value or of which disclosure is mandatory, are rated on a fair value hierarchy, which ranks data in three levels to be used in the measurement at fair value, and detailed below:
The fair value measurement is classified in the same fair value hierarchy level at the lowest level of input, which is significant to the measurement as a whole.
Financial assets and liabilities are offset and presented at the net amount when, and only when, the Group has the right to offset the recognised amounts and intends to settle for the net amount.
Personnel expenses are recognised when the service is rendered by employees independently of their date of payment. Here are some specificities:
Labor Compensation Fund (FCT) and the Labor Compensation Guarantee Fund (FGCT). Based on the publication of Law No. 70/2013 and subsequent regulation by Order No. 294-A / 2013, entered into force on 1 October the Labor Compensation Fund schemes (FCT) and the Guarantee Fund Compensation of Labor (FGCT). In this context, companies that hire a new employee are required to deduct a percentage of the respective salary for these two new funds (0.925% to 0.075% and the FCT for FGCT), in order to ensure, in the future, the partial payment the compensation for dismissal. Considering the characteristics of each Fund, the following is considered:
The monthly deliveries to FGCT, made by the employer are recognised as expense in the period to which they relate.
maturities of less than three months and for which the risk of change in value is negligible. For purposes of the statement of cash flows, the balance of cash and cash equivalents also include bank overdrafts included in the statement of financial position under "Borrowings".
The statement of cash flows is divided into operating, investing, and financing activities.
Operating activities include cash received from customers and payments to suppliers, staff and others related to operating activities. Under "Other cash receipts / (payments) related with operating activity" includes the amount received and subsequent payments related to assignments without recourse, coordinated by the Banco Comercial Português and Caixa Geral de Depósitos, and these operations do not involve any change in the accounting treatment of the underlying receivables or in the relationship with their clients.
The cash flows included in investing activities include acquisitions and disposals of investments in subsidiaries and cash received and payments arising from the purchase and sale of tangible and intangible assets, amongst others.
Financing activities include cash received and payments relating to borrowings, the payment of interest and similar costs, finance leases, the purchase and sale of own shares and the payment of dividends.
Events occurring after the date of the statement of financial position, which provide additional information about conditions that existed at that date, are considered in the preparation of financial statements of the quarter.
Events occurring after the date of the statement of financial position, which provide information on conditions that occur after that date, are disclosed in the notes to the financial statements, when they are materially relevant.
The preparation of consolidated financial statements requires the Group's management to make judgments and estimates that affect the statement of financial position and the reported results. These estimates are based on the best information and knowledge about past and/or present events and on the operations that the Company considers it may implement in the future. However, at the date of completion of such operations, their results may differ from these estimates.
Changes to these estimates that occur after the date of approval of the consolidated financial statements will be corrected in the income statement in a prospective manner, in accordance with IAS 8 - "Accounting Policies, Changes in Accounting Estimates and Errors".
The estimates and assumptions that imply a greater risk of giving rise to a material adjustment in assets and liabilities are described below:
To determine the entities to be included in the consolidation perimeter, the Group assesses the extent to which it is exposed, or has rights, to variability in return from its involvement with that entity and can take possession of them through the power it holds over this entity.
The decision that an entity must be consolidated by the Group requires the use of judgment, estimates, and assumptions to determine the extent to which the Group is exposed to return variability and the ability to take possession of them through its power.
Other assumptions and estimates could lead to the Group's consolidation perimeter being different, with direct impact on the consolidated financial statements.
Impairment of non-current assets, excluding goodwill
The determination of a possible impairment loss can be triggered by the occurrence of various events, such as the availability of future financing, the cost of capital or other market, economic and legal changes or changes with an adverse effect on the technological environment, many of which are beyond the Group's control.
The identification and assessment of impairment indicators, the estimation of future cash flows, and the calculation of the recoverable value of assets involve a high degree of judgment by the Board.
Goodwill is annually subject to impairment tests or whenever there are indications of a possible loss of value, according to the criteria referred on Note 8. The recoverable values of the cash-generating units to which goodwill is allocated are determined based on the calculation of current use values. These calculations require the use of estimates by management.
The life of an asset is the period during which the Company expects that an asset will be available for use and this should be reviewed at least at the end of each financial year.
The determination of the useful lives of assets, the amortization/depreciation method to be applied, and the estimated losses resulting from the replacement of equipment before the end of its useful life due to technological obsolescence is crucial in determining the amount of amortization/depreciation to be recognised in the consolidated income statement each period.
These three parameters are defined using management's best estimates for the assets and businesses concerned and taking account of the practices adopted by companies in the sectors in which the Group operates.
The capitalized costs with the audiovisual content distribution rights acquired for commercialization in the various windows of exhibition are amortised over the period of exploration of the respective contracts. Additionally, these assets are subject to impairment tests whenever there are indications of changes in the pattern generation of future revenue underlying each contract.
The residual value, the useful life and the depreciation methods are periodically revised by the various companies of the Group and prospectively adjusted, if appropriated.
The Group determines the end of the lease as the non-cancelable part of the lease term, together with any periods covered by an option to extend the lease if it is reasonably certain that it will be exercised, or any periods covered by an option to terminate the lease agreement, if it is reasonably certain that it will not be exercised.
The Group has the option, under some of its lease agreements, to lease its assets for additional periods. NOS assesses the reasonableness of exercising the option to renew the contract. That is, NOS considers all the relevant factors that create an economic incentive for exercising the renewal. After the start date, the Group re-evaluates the termination of the contract if there is a significant event or changes in circumstances that are under control and affect its ability to exercise (or not exercise) the renewal option (a change in strategy of business).
The Group periodically reviews any obligations arising from past events, which should be recognised or disclosed. The subjectivity involved in determining the probability and amount of internal resources required to meet obligations may give rise to significant adjustments, either due to changes in the assumptions made, or due to the future recognition of provisions previously disclosed as contingent liabilities.
Deferred income tax assets are recognised only when there is strong assurance that there will be future taxable income
available to use the temporary differences or when there are deferred tax liabilities whose reversal is expected in the same period in which the deferred tax assets are reversed. The assessment of deferred income tax assets is undertaken by management at the end of each period taking account of the expected future performance of the Group.
The credit risk on the balances of accounts receivable is assessed at each reporting date, using a collection matrix based on the historical past collections adjusted from the future expectation of collections evolution, to determine the uncollectibility rate. The expected credit losses of the accounts receivable are thus adjusted for the assessment made, which may differ from the effective risk that will incurred in the future.
When the fair value of an asset or liabilities is calculated, on an active market, the respective market price is used. When there is no active market, which is the case with some of the Group's financial assets and liabilities, valuation techniques generally accepted in the market, based on market assumptions, are used.
The Group applies evaluation techniques for unlisted financial instruments, such as derivatives, financial instruments at fair value and instruments measured at amortised cost. The most frequently used valorization models are models of discounted cash flows and option models, which incorporate, for example, interest rate and market volatility curves.
For certain types of more complex derivatives, more advanced valuation models are used containing assumptions and data that are not directly observable in the market, for which the Group uses internal estimates and assumptions.
During the nine months ended on 30 September 2021 and 2022, errors, estimates and changes in material accounting policies relating to prior years were not recognised.
The changes in the consolidation perimeter, during the nine months ended on 30 September 2021, were:
• Constitution, in July 2021, of NOS Mediação de is to distribute insurance and related activities.
During the nine months ended on 30 September 2022, there were no changes.
The business segments are as follows:
Assets and liabilities by segment at 31 December 2021 and 30 September 2022 are shown below:
| 31-12-2021 | ||||
|---|---|---|---|---|
| TELCO | AUDIOVISUALS | ELIMINATIONS | GROUP | |
| ASSETS | ||||
| NON - CURRENT ASSETS: | ||||
| Tangible assets | 1,031,185 | 9,915 | - | 1,041,100 |
| Intangible assets | 1,115,586 | 89,445 | - | 1,205,031 |
| Contract costs | 162,118 | - | - | 162,118 |
| Rights of use | 206,880 | 29,183 | - | 236,063 |
| Investments in jointly controlled companies | ||||
| and associated companies | 127,114 | 47,227 | (156,250) | 18,091 |
| Accounts receivable - other | 48,856 | 3,004 | (45,946) | 5,914 |
| Deferred income tax assets | 71,385 | 10,005 | - | 81,390 |
| Other non-current assets | 2,562 | 643 | - | 3,205 |
| TOTAL NON - CURRENT ASSETS | 2,765,686 | 189,422 | (202,196) | 2,752,912 |
| CURRENT ASSETS: | ||||
| Inventories | 43,532 | 482 | - | 44,014 |
| Account receivables | 396,514 | 68,996 | (61,420) | 404,090 |
| Prepaid expenses | 43,965 | 1,285 | (372) | 44,878 |
| Other current assets | 1,226 | 1,373 | - | 2,599 |
| Cash and cash equivalents | 10,204 | 698 | - | 10,902 |
| TOTAL CURRENT ASSETS | 495,441 | 72,834 | (61,792) | 506,483 |
| TOTAL ASSETS | 3,261,127 | 262,256 | (263,988) | 3,259,395 |
| SHAREHOLDER'S EQUITY | ||||
| Share capital | 5,152 | 44,863 | (44,863) | 5,152 |
| Capital issued premium | 854,219 | - | - | 854,219 |
| Own shares | (12,353) | - | - | (12,353) |
| Legal reserve | 1,030 | 1,796 | (1,796) | 1,030 |
| Other reserves and accumulated earnings | 9,540 | 53,760 | (98,886) | (35,586) |
| Net income | 132,689 | 21,719 | (10,249) | 144,159 |
| EQUITY BEFORE NON - CONTROLLING | 990,277 | 122,138 | (155,794) | 956,621 |
| INTERESTS | ||||
| Non-controlling interests | 6,379 | - | - | 6,379 |
| TOTAL EQUITY | 996,656 | 122,138 | (155,794) | 963,000 |
| LIABILITIES | ||||
| NON - CURRENT LIABILITIES: | ||||
| Borrowings | 1,251,644 | 69,844 | (45,947) | 1,275,541 |
| Provisions | 73,986 | 8,530 | - | 82,516 |
| Accrued expenses | 497 | - | - | 497 |
| Other non-current liabilities | 42,732 | - | - | 42,732 |
| Deferred income tax liabilities | 4,784 | 375 | - | 5,159 |
| TOTAL NON - CURRENT LIABILITIES | 1,373,643 | 78,749 | (45,947) | 1,406,445 |
| CURRENT LIABILITIES: | ||||
| Borrowings | 331,535 | 12,283 | (42,750) | 301,068 |
| Accounts payable | 311,008 | 19,035 | (14,411) | 315,632 |
| Tax payable | 60,362 | 1,164 | - | 61,526 |
| Accrued expenses | 159,459 | 21,040 | (4,715) | 175,784 |
| Other current liabilities | 28,464 | 7,847 | (371) | 35,940 |
| TOTAL CURRENT LIABILITIES | 890,828 | 61,369 | (62,247) | 889,950 |
| TOTAL LIABILITIES | 2,264,471 | 140,118 | (108,194) | 2,296,395 |
| TOTAL LIABILITIES AND SHAREHOLDER´S | 3,261,127 | 262,256 | (263,988) | 3,259,395 |
| EQUITY |
| 30-09-2022 | |||||
|---|---|---|---|---|---|
| TELCO | AUDIOVISUALS | ELIMINATIONS | GROUP | ||
| ASSETS | |||||
| NON - CURRENT ASSETS: | |||||
| Tangible assets | 1,079,391 | 9,073 | - | 1,088,464 | |
| Intangible assets | 1,115,631 | 91,531 | - | 1,207,162 | |
| Contract costs | 160,872 | - | - | 160,872 | |
| Rights of use | 217,464 | 21,478 | - | 238,942 | |
| Investments in jointly controlled companies | |||||
| and associated companies | 157,214 | 47,294 | (160,303) | 44,205 | |
| Accounts receivable - other | 43,984 | 3,080 | (41,891) | 5,173 | |
| Deferred income tax assets | 75,969 | 8,537 | - | 84,506 | |
| Other non-current assets | 15,592 | 545 | - | 16,137 | |
| TOTAL NON - CURRENT ASSETS | 2,866,117 | 181,538 | (202,194) | 2,845,461 | |
| CURRENT ASSETS: | |||||
| Inventories | 65,889 | 509 | - | 66,398 | |
| Account receivables | 383,572 | 69,817 | (57,300) | 396,089 | |
| Prepaid expenses | 59,140 | 1,765 | (381) | 60,524 | |
| Other current assets | (52,395) | 2,117 | 59,240 | 8,962 | |
| Cash and cash equivalents | 149,838 | 784 | - | 150,622 | |
| Assets for sale | 4,701 | - | - | 4,701 | |
| TOTAL CURRENT ASSETS | 610,745 | 74,992 | 1,559 | 687,296 | |
| TOTAL ASSETS | 3,476,862 | 256,530 | (200,635) | 3,532,757 | |
| SHAREHOLDER'S EQUITY | |||||
| Share capital | 855,168 | 48,917 | (48,917) | 855,168 | |
| Capital issued premium | 4,202 | - | - | 4,202 | |
| Own shares | (15,968) | - | - | (15,968) | |
| Legal reserve | 1,030 | 1,989 | (1,989) | 1,030 | |
| Other reserves and accumulated earnings | 17,862 | 67,791 | (98,808) | (13,155) | |
| Net income | 188,452 | 12,962 | (10,133) | 191,281 | |
| EQUITY BEFORE NON - CONTROLLING | |||||
| INTERESTS | 1,050,746 | 131,659 | (159,847) | 1,022,558 | |
| Non-controlling interests | 6,272 | - | - | 6,272 | |
| TOTAL EQUITY | 1,057,018 | 131,659 | (159,847) | 1,028,830 | |
| LIABILITIES | |||||
| NON - CURRENT LIABILITIES: | |||||
| Borrowings | 1,128,264 | 63,969 | (41,893) | 1,150,340 | |
| Provisions | 71,078 | 8,624 | - | 79,702 | |
| Other non-current liabilities | 42,029 | - | - | 42,029 | |
| Deferred income tax liabilities | 7,866 | 424 | - | 8,290 | |
| TOTAL NON - CURRENT LIABILITIES | 1,249,237 | 73,017 | (41,893) | 1,280,361 | |
| CURRENT LIABILITIES: | |||||
| Borrowings | 596,959 | 2,428 | (38,443) | 560,944 | |
| Accounts payable | 290,155 | 23,097 | (14,827) | 298,425 | |
| Tax payable | 43,975 | 426 | 59,239 | 103,640 | |
| Accrued expenses | 209,109 | 18,542 | (4,483) | 223,168 | |
| Other current liabilities | 28,817 | 7,361 | (381) | 35,797 | |
| Liabilities directly associated with assets held | |||||
| for sale | 1,592 | - | - | 1,592 | |
| TOTAL CURRENT LIABILITIES | 1,170,607 | 51,854 | 1,105 | 1,223,566 | |
| TOTAL LIABILITIES | 2,419,844 | 124,871 | (40,788) | 2,503,927 | |
| TOTAL LIABILITIES AND SHAREHOLDER´S | |||||
| EQUITY | 3,476,862 | 256,530 | (200,635) | 3,532,757 |
The results by segment and investments in tangible and intangible assets, contract costs and rights of use for the nine months ended on 30 September 2021 and 30 September 2022 are shown below:
| TELCO | AUDIOVISUALS | ELIMINATIONS | GROUP | |||||
|---|---|---|---|---|---|---|---|---|
| 3 QUARTER 21 | 9M 21 | 3 QUARTER 21 | 9M 21 | 3 QUARTER 21 | 9M 21 | 3 QUARTER 21 | 9M 21 | |
| REVENUES: | ||||||||
| Services rendered | 324,656 | 946,766 | 16,706 38,296 | (9,111) | (25,911) | 332,251 | 959,151 | |
| Sales | 25,784 | 64,256 | 2,147 | 2,699 | (39) | (64) | 27,892 | 66,891 |
| Other operating revenues | 6,237 | 18,157 | 234 | 1,168 | (149) | (450) | 6,322 | 18,875 |
| 356,677 | 1,029,179 | 19,087 42,163 | (9,299) | (26,425) | 366,465 1,044,917 | |||
| COSTS, LOSSES AND GAINS: | ||||||||
| Wages and salaries | 18,533 | 55,057 | 2,260 | 6,023 | - | - | 20,793 | 61,080 |
| Direct costs | 95,936 | 292,774 | 3,407 | 5,357 | (7,871) | (23,358) | 91,472 | 274,773 |
| Costs of products sold | 24,504 | 59,263 | 44 | (9) | (10) | (30) | 24,538 | 59,224 |
| Marketing and advertising | 5,577 | 19,319 | 1,022 | 1,479 | (3,023) | (8,980) | 3,576 | 11,818 |
| Support services | 19,500 | 61,298 | 539 | 1,710 | (611) | (1,888) | 19,428 | 61,120 |
| Supplies and external services | 24,182 | 71,863 | (1,792) | (8,790) | 2,216 | 7,831 | 24,606 | 70,904 |
| Other operating losses / (gains) | 132 | 329 | 10 | 37 | - | - | 142 | 366 |
| Taxes | 7,198 | 23,449 | 12 | 41 | - | - | 7,210 | 23,490 |
| Provisions and adjustments | 3,571 | 4,750 | (1) | (333) | - | - | 3,570 | 4,417 |
| 199,133 | 588,102 | 5,501 | 5,515 | (9,299) | (26,425) | 195,335 | 567,192 | |
| EBITDA | 157,544 | 441,077 | 13,586 36,648 | - | - | 171,130 | 477,725 | |
| Depreciation, amortisation and impairment losses | 101,333 | 293,874 | 6,645 18,930 | - | - | 107,978 | 312,804 | |
| Other losses / (gains), net | 1,371 | 6,980 | 18 | 409 | - | - | 1,389 | 7,389 |
| INCOME BEFORE LOSSES / (GAINS) PARTICIPATED COMPANIES, FINANCIAL RESULTS AND TAXES |
54,840 | 140,223 | 6,923 17,309 | - | - | 61,763 | 157,532 | |
| Net losses / (gains) of affiliated companies | (2,330) | (4,589) | (85) | (152) | - | - | (2,415) | (4,741) |
| Financial costs | 7,760 | 23,779 | 424 | 1,167 | - | - | 8,184 | 24,946 |
| Net foreign exchange losses / (gains) | (30) | (265) | (21) | (340) | - | - | (51) | (605) |
| Net losses / (gains) on financial assets | (18) | (8,008) | (3) | (2,232) | - | 10,249 | (21) | 9 |
| Net other financial expenses / (income) | 762 | 2,373 | 2 | 12 | - | - | 764 | 2,385 |
| 6,144 | 13,290 | 317 (1,545) | - | 10,249 | 6,461 | 21,994 | ||
| INCOME BEFORE TAXES | 48,696 | 126,933 | 6,606 18,854 | - | (10,249) | 55,302 | 135,538 | |
| Income taxes | 7,711 | 13,556 | 1,460 | 2,142 | - | - | 9,171 | 15,698 |
| NET INCOME | 40,985 | 113,377 | 5,146 16,712 | - | (10,249) | 46,131 | 119,840 | |
| CAPEX | 116,805 | 322,860 | 5,656 12,414 | - | - | 122,461 | 335,274 | |
| EBITDA - CAPEX |
7,930 24,234 | - | - | 48,669 | 142,451 |
| TELCO | AUDIOVISUALS | ELIMINATIONS | GROUP | |||||
|---|---|---|---|---|---|---|---|---|
| 3 QUARTER 21 | 9M 21 | 3 QUARTER 21 |
9M 21 | 3 QUARTER 21 | 9M 21 | 3 QUARTER 21 | 9M 21 | |
| REVENUES: | ||||||||
| Services rendered | 335,668 | 986,768 | 25,068 58,534 | (14,720) | (32,859) | 346,016 1,012,443 | ||
| Sales | 25,044 | 81,383 | 3,432 | 8,452 | (39) | (110) | 28,437 | 89,725 |
| Other operating revenues | 6,893 | 20,845 | 337 | 937 | (151) | (452) | 7,079 | 21,330 |
| 367,605 | 1,088,996 | 28,837 67,923 | (14,910) | (33,421) | 381,532 1,123,498 | |||
| COSTS, LOSSES AND GAINS: | ||||||||
| Wages and salaries | 19,494 | 55,641 | 2,681 | 7,396 | - | - | 22,175 | 63,037 |
| Direct costs | 80,048 | 255,802 | 5,282 | 12,717 | (7,565) | (22,572) | 77,765 | 245,947 |
| Costs of products sold | 23,139 | 78,066 | 758 | 1,809 | (8) | (23) | 23,889 | 79,852 |
| Marketing and advertising | 8,865 | 24,638 | 682 | 2,069 | (2,901) | (8,865) | 6,646 | 17,842 |
| Support services | 18,438 | 58,723 | 708 | 2,143 | (785) | (2,367) | 18,361 | 58,499 |
| Supplies and external services | 37,421 | 110,833 | 6,946 | 6,277 | (3,651) | 406 | 40,716 | 117,516 |
| Other operating losses / (gains) | 59 | 497 | 27 | 138 | - | - | 86 | 635 |
| Taxes | 9,158 | 26,711 | 43 | 96 | - | - | 9,201 | 26,807 |
| Provisions and adjustments | 4,835 | 13,957 | 13 | (715) | - | - | 4,848 | 13,242 |
| 201,457 | 624,868 | 17,140 31,930 | (14,910) | (33,421) | 203,687 | 623,377 | ||
| EBITDA | 166,148 | 464,128 | 11,697 35,993 | - | - | 177,845 | 500,121 | |
| Depreciation, amortisation and impairment losses | 117,490 | 323,563 | 6,749 21,993 | - | - | 124,239 | 345,556 | |
| Other losses / (gains), net | (74,290) | (76,740) | 132 | 358 | - | - | (74,158) | (76,382) |
| INCOME BEFORE LOSSES / (GAINS) PARTICIPATED | ||||||||
| COMPANIES, FINANCIAL RESULTS AND TAXES | 122,948 | 217,305 | 4,816 13,642 | - | - | 127,764 | 230,947 | |
| Net losses / (gains) of affiliated companies | (6,720) | (16,908) | 134 | (67) | - | - | (6,586) | (16,975) |
| Financial costs | 7,070 | 22,590 | 262 | 944 | - | - | 7,332 | 23,534 |
| Net foreign exchange losses / (gains) | (295) | (377) | (60) | (23) | - | - | (355) | (400) |
| Net losses / (gains) on financial assets | 41 | (7,282) | - | (2,754) | - | 10,133 | 41 | 97 |
| Net other financial expenses / (income) | 842 | 2,523 | 5 | 18 | - | - | 847 | 2,541 |
| 938 | 546 | 341 (1,882) | - | 10,133 | 1,279 | 8,797 | ||
| INCOME BEFORE TAXES | 122,010 | 216,759 | 4,475 15,524 | - | (10,133) | 126,485 | 222,150 | |
| Income taxes | 19,517 | 28,414 | 1,098 | 2,562 | - | - | 20,615 | 30,976 |
| NET INCOME | 102,493 | 188,345 | 3,377 12,962 | - | (10,133) | 105,870 | 191,174 | |
| CAPEX | 136,829 | 398,168 | (37) | 15,425 | - | - | 136,792 | 413,593 |
| EBITDA - CAPEX |
29,319 | 65,960 | 11,734 20,568 | - | - | 41,053 | 86,528 | |
EBITDA = Operational Result + Depreciation, amortization and impairment losses + Restructuring costs + Losses / (gains) on sale of assets + Other losses / (gains) non-recurrent
CAPEX = Increases in tangible and intangible assets, contract costs and rights of use
Transactions between segments are performed on market terms and conditions in a comparable way to transactions performed with third parties.
At 30 September 2022, fully consolidated foreign companies represent less than 1% of assets (at 30 September 2021: less than 1%) and their turnover is less than 0.1% of consolidated turnover.
The accounting policies set out in IFRS 9 for financial instruments were applied to the following items:
Considering its nature, the balances of the amounts to be paid and received to/from state and other public entities were in this note, as the nature of such balances are not included in the scope of IFRS 7.
The Board of Directors believes that the fair value of the breakdown of financial instruments recorded at amortised cost or registered at the present value of the payments does not differ significantly from their book value. This decision is based in the contractual terms of each financial instrument.
| 31-12-2021 | |||||||
|---|---|---|---|---|---|---|---|
| FINANCIAL ASSETS |
DERIVATIVES | FINANCIAL LIABILITIES |
TOTAL FINANCIAL ASSETS AND LIABILITIES |
NON FINANCIAL ASSETS AND LIABILITIES |
TOTAL | ||
| ASSETS | |||||||
| Other financial assets non-current (Note 14) | 2,074 | - | - | 2,074 | - | 2,074 | |
| Derivative financial instruments (Note 20) | - | 422 | - | 422 | - | 422 | |
| Accounts receivable - trade (Note 17) | 323,934 | - | - | 323,934 | - | 323,934 | |
| Accounts receivable - other (Note 12) | 10,066 | - | - | 10,066 | 14,240 | 24,306 | |
| Cash and cash equivalents (Note 21) | 10,902 | - | - | 10,902 | - | 10,902 | |
| TOTAL FINANCIAL ASSETS | 346,976 | 422 | - | 347,398 | 14,240 | 361,638 | |
| LIABILITIES | |||||||
| Borrowings (Note 24) | - | - | 1,576,609 | 1,576,609 | - | 1,576,609 | |
| Derivative financial instruments (Note 20) | - | 337 | - | 337 | - | 337 | |
| Accounts payable - trade (Note 28) | - | - | 279,993 | 279,993 | - | 279,993 | |
| Accounts payable - other (Note 29) | - | - | 73,921 | 73,921 | 220 | 74,141 | |
| Accrued expenses (Note 26) | - | - | 176,281 | 176,281 | - | 176,281 | |
| TOTAL FINANCIAL LIABILITIES | - | 337 | 2,106,804 | 2,107,141 | 220 | 2,107,361 | |
| 30-09-2022 | |||||||
|---|---|---|---|---|---|---|---|
| FINANCIAL ASSETS |
DERIVATIVES | FINANCIAL LIABILITIES |
TOTAL FINANCIAL ASSETS AND LIABILITIES |
NON FINANCIAL ASSETS AND LIABILITIES |
TOTAL | ||
| ASSETS | |||||||
| Other financial assets non-current (Note 14) | 4,964 | - | - | 4,964 | - | 4,964 | |
| Derivative financial instruments (Note 20) | - | 13,652 | - | 13,652 | - | 13,652 | |
| Accounts receivable - trade (Note 17) | 318,974 | - | - | 318,974 | - | 318,974 | |
| Accounts receivable - other (Note 12) | 9,314 | - | - | 9,314 | 13,837 | 23,151 | |
| Cash and cash equivalents (Note 21) | 150,622 | - | - | 150,622 | - | 150,622 | |
| TOTAL FINANCIAL ASSETS | 483,874 | 13,652 | - | 497,526 | 13,837 | 511,363 | |
| LIABILITIES | |||||||
| Borrowings (Note 24) | - | - | 1,711,284 | 1,711,284 | - | 1,711,284 | |
| Derivative financial instruments (Note 20) | - | - | - | - | - | - | |
| Accounts payable - trade (Note 28) | - | - | 273,708 | 273,708 | - | 273,708 | |
| Accounts payable - other (Note 29) | - | - | 63,076 | 63,076 | 153 | 63,229 | |
| Accrued expenses (Note 26) | - | - | 223,168 | 223,168 | - | 223,168 | |
| TOTAL FINANCIAL LIABILITIES | - | - | 2,271,236 | 2,271,236 | 153 | 2,271,389 | |
In the nine months ended on 30 September 2021 and 2022, the movements in this item were as follows:
| 31-12-2020 | INCREASES | DISPOSALS AND WRITE OFFS |
TRANSFERS AND OTHERS |
30-09-2021 | |
|---|---|---|---|---|---|
| ACQUISITION COST | |||||
| Lands | 838 | - | (34) | (1) | 803 |
| Buildings and other constructions | 263,952 | - | (568) | 2,925 | 266,309 |
| Basic equipment | 2,599,495 | 41,787 | (32,214) | 85,502 | 2,694,570 |
| Transportation equipment | 512 | - | - | 2 | 514 |
| Tools and dies | 1,554 | - | (1) | 34 | 1,587 |
| Administrative equipment | 193,109 | 1,344 | (1,167) | 1,361 | 194,647 |
| Other tangible assets | 43,471 | 105 | (18) | 160 | 43,718 |
| Tangible assets in-progress | 39,349 | 114,824 | - | (76,604) | 77,569 |
| 3,142,280 | 158,060 | (34,002) | 13,379 | 3,279,717 | |
| ACCUMULATED DEPRECIATION AND IMPAIRMENT | |||||
| LOSSES | |||||
| Buildings and other constructions | 165,127 | 417 | (430) | 4,698 | 169,812 |
| Basic equipment | 1,758,042 | 127,043 | (31,345) | (5,103) | 1,848,637 |
| Transportation equipment | 510 | 1 | - | 1 | 512 |
| Tools and dies | 1,420 | 44 | (1) | (1) | 1,462 |
| Administrative equipment | 182,562 | 3,245 | (1,157) | 22 | 184,672 |
| Other tangible assets | 43,006 | 297 | (18) | - | 43,285 |
| 2,150,667 | 131,047 | (32,951) | (383) | 2,248,380 | |
| 991,613 | 27,013 | (1,051) | 13,762 | 1,031,337 | |
| 31-12-2021 | INCREASES | DISPOSALS AND WRITE OFFS |
TRANSFERS AND OTHERS |
30-09-2022 | |
|---|---|---|---|---|---|
| ACQUISITION COST | |||||
| Land | 796 | - | (4) | - | 792 |
| Buildings and other constructions | 276,320 | (888) | (32,485) | 16,869 | 259,816 |
| Basic equipment | 2,765,157 | 37,337 | (69,853) | 146,696 | 2,879,337 |
| Transportation equipment | 514 | - | - | 1 | 515 |
| Tools and dies | 1,596 | - | - | 14 | 1,610 |
| Administrative equipment | 195,035 | 1,097 | (883) | 1,257 | 196,506 |
| Other tangible assets | 43,864 | 81 | - | 196 | 44,141 |
| Tangible assets in-progress | 41,226 | 165,058 | - | (159,736) | 46,548 |
| 3,324,508 | 202,685 | (103,225) | 5,297 | 3,429,265 | |
| ACCUMULATED DEPRECIATION AND | |||||
| IMPAIRMENT LOSSES | |||||
| Buildings and other constructions | 180,308 | 9,157 | (22,993) | (1,097) | 165,375 |
| Basic equipment | 1,872,564 | 136,590 | (66,730) | (71) | 1,942,353 |
| Transportation equipment | 513 | 1 | - | 1 | 515 |
| Tools and dies | 1,479 | 46 | - | - | 1,525 |
| Administrative equipment | 185,182 | 2,903 | (883) | 189 | 187,391 |
| Other tangible assets | 43,362 | 280 | (15) | 15 | 43,642 |
| 2,283,408 | 148,977 | (90,621) | (963) | 2,340,801 | |
| 1,041,100 | 53,708 | (12,604) | 6,260 | 1,088,464 | |
| 31-12-2020 | INCREASES | TRANSFERS AND OTHERS |
31-09-2021 | |
|---|---|---|---|---|
| ACQUISITION COST | ||||
| Industrial property and other rights | 1,739,434 | 3,414 | 62,401 | 1,805,232 |
| Goodwill | 641,400 | 641,400 | ||
| Intangible assets in-progress | 33,310 | 73,973 | (75, 503) | 31,780 |
| 2,414,144 | 77,387 | (13, 102) | 2,478,412 | |
| ACCUMULATED AMORTISATION AND IMPAIRMENT | ||||
| LOSSES | ||||
| Industrial property and other rights | 1,370,986 | 61,723 | 264 | 1,432,956 |
| Other intangible assets | 2,071 | (264) | 1,807 | |
| 1,373,057 | 61,723 | 1,434,763 | ||
| 1,041,087 | 15,664 | (13, 102) | 1,043,648 | |
| 31-12-2021 | INCREASES | TRANSFERS AND OTHERS |
30-09-2022 | |
|---|---|---|---|---|
| ACQUISITION COST | ||||
| Industrial property and other rights Goodwill Intangible assets in-progress |
1,981,959 641,400 39,861 |
7,706 81,549 |
82,681 (92, 410) |
2,072,345 641,400 29,000 |
| ACCUMULATED AMORTISATION AND IMPAIRMENT LOSSES |
2,663,220 | 89,255 | (9, 729) | 2,742,745 |
| Industrial property and other rights Intangible assets in-progress |
1,456,166 2,023 |
77,495 | (4) 74 |
1,533,486 2,097 |
| 1,458,189 1,205,031 |
77,495 11,760 |
70 (9, 799) |
1,535,583 1,207,162 |
|
| 31-12-2021 | 30-09-2022 | |
|---|---|---|
| Telco | 564,799 | |
| Audiovisuals | 76,601 | 564,799 76,601 |
| 641,400 | 641,400 | |
These estimates are based on the following assumptions:
| AUDIOVISUALS SEGMENT | |||
|---|---|---|---|
| TELCO | NOS | NOS | |
| SEGMENT | AUDIOVISUALS | CINEMAS | |
| Discount rate (before taxes) | 5,3% | 6,3% | 8,0% |
| Assessment period | 5 years | 5 years | 5 years |
| EBITDA Growth (2021-26)* | 2,7% | 1,6% | 10,4% |
| Perpetuity growth rate | 1,4% | 1,4% | 1,4% |
* EBITDA = Operating Income + Depreciation, Amortization and Impairment Losses + Restructuring Costs + Losses / (Gains) on disposal of assets + Other Costs / (Gains) Non-Recurring (CAGR - average 5 years)
In the Telco segment, the assumptions used are based on past performance, evolution of the number of customers, expected development of regulated tariffs, current market conditions, and expectations of future development.
In the cinema segment, the most affected segment by COVID-19, the strong increase in EBITDA is justified by a year of 2021 still impacted by the pandemic, with an estimated activity recovery to pre-pandemic levels by 2023.
The number of years specified in the impairment tests depends on the degree of maturity of the several businesses and markets, and were determined based on the most appropriate criterion for the valuation of each cash-generating unit.
Sensitivity analyses were performed to variations in the discount rate and growth rate in the perpetuity of the various reported segments, of 1 percentage point and 0.4 percentage points, respectively.
In the telecommunications segment, sensitivity analysis were also performed to variations in the operational indicators RGU (Revenue Generating Unit), ARPU (Average Revenue per User), EBITDA and CAPEX, in perpetuity, of approximately 5%.
In the cinema segment, sensitivity analysis were conducted on variations in the projected number of tickets sold, average revenue per ticket, EBITDA and CAPEX, in perpetuity, of approximately 5%.
These simulations did not result in the need to reinforce impairment.
In the nine months ended on 30 September 2022, it was understood that the assumptions made in the impairment tests carried out in 2021 were conservative due the more recent developments, so there are no indications of the existence of any impairment.
In the nine months ended on 30 September 2021 and 2022, the movements in this item were as follows:
| 31-12-2020 | INCREASES | 30-09-2021 | |
|---|---|---|---|
| ACQUISITION COST | |||
| Cost of attracting customers | 491,490 | 49,371 | 540,861 |
| Costs of fulfilling customer contracts | 223,961 | 25,236 | 249,197 |
| 715,451 | 74,607 | 790,058 | |
| ACCUMULATED AMORTIZATIONS AND IMPAIRMENT LOSSES | |||
| Cost of attracting customers | 393,153 | 48,435 | 441,588 |
| Costs of fulfilling customer contracts | 160,175 | 25,498 | 185,673 |
| 553,328 | 73,933 | 627,261 | |
| 162,123 | 674 | 162,797 | |
| 31-12-2021 | INCREASES | 30-09-2022 | |
|---|---|---|---|
| ACQUISITION COST | |||
| Cost of attracting customers | 556,967 | 49,965 | 606,932 |
| Costs of fulfilling customer contracts | 256,884 | 22,327 | 279,211 |
| 813,851 | 72,292 | 886,143 | |
| ACCUMULATED AMORTIZATIONS AND IMPAIRMENT LOSSES | |||
| Cost of attracting customers | 457,570 | 48,410 | 505,980 |
| Costs of fulfilling customer contracts | 194,163 | 25,128 | 219,291 |
| 651,733 | 73,538 | 725,271 | |
| 162,118 | (1,246) | 160,872 | |
, including portability costs. These costs are amortised, systematically and consistently, with the transfer to customers of goods or services to which the asset is related (between 2 and 4 years).
In the nine months ended on 30 September 2021 and 2022, the movements in this item were as follows:
| 31-12-2020 | INCREASES | DISPOSALS AND WRITE OFFS |
TRANSFERS AND OTHERS |
30-09-2021 | |
|---|---|---|---|---|---|
| ACQUISITION COST | |||||
| Telecommunications towers and rooftops |
138,590 | 3,070 | - | 105 | 141,765 |
| Movie theatres | 114,332 | 2,176 | - | 222 | 116,730 |
| Transponders | 91,709 | 78 | - | - | 91,787 |
| Equipments | 132,737 | 13,024 | - | - | 145,761 |
| Buildings | 72,979 | 882 | - | (222) | 73,639 |
| Fiber optic rental | 40,337 | (191) | - | - | 40,146 |
| Stores | 19,596 | 764 | - | - | 20,360 |
| Others | 34,052 | 5,414 | - | - | 39,466 |
| 644,332 | 25,217 | - | 105 | 669,654 | |
| ACCUMULATED DEPRECIATION AND | |||||
| IMPAIRMENT LOSSES | |||||
| Telecommunications towers and | |||||
| rooftops | 45,575 | 7,974 | - | - | 53,549 |
| Movie theatres | 79,595 | 6,135 | - | - | 85,730 |
| Transponders | 62,540 | 4,377 | - | - | 66,917 |
| Equipments | 84,777 | 13,665 | - | - | 98,442 |
| Buildings | 52,119 | 5,548 | - | 1 | 57,668 |
| Fiber optic rental | 28,449 | 2,807 | - | - | 31,256 |
| Stores | 14,184 | 1,796 | - | - | 15,980 |
| Others | 16,996 | 3,787 | - | - | 20,783 |
| 384,235 | 46,089 | - | 1 | 430,325 | |
| 260,097 | (20,872) | - | 104 | 239,329 | |
| 31-12-2021 | INCREASES | DISPOSALS AND WRITE OFFS |
TRANSFERS AND OTHERS |
30-09-2022 | |
|---|---|---|---|---|---|
| ACQUISITION COST | |||||
| Telecommunications towers and rooftops |
142,921 | 21,813 | - | (1,968) | 162,766 |
| Movie theatres | 118,322 | (1,468) | - | - | 116,854 |
| Transponders | 91,787 | 1,965 | - | - | 93,752 |
| Equipments | 149,061 | 13,736 | - | - | 162,797 |
| Buildings | 77,480 | 9,807 | (3) | - | 87,284 |
| Fiber optic rental | 40,146 | - | - | - | 40,146 |
| Stores | 21,445 | 831 | - | - | 22,276 |
| Others | 41,321 | 2,677 | (4) | - | 43,994 |
| 682,483 | 49,361 | (7) | (1,968) | 729,869 | |
| ACCUMULATED DEPRECIATION AND | |||||
| IMPAIRMENT LOSSES | |||||
| Telecommunications towers and rooftops |
56,137 | 8,980 | (212) | (806) | 64,099 |
| Movie theatres | 89,550 | 6,079 | - | - | 95,629 |
| Transponders | 68,380 | 4,572 | - | - | 72,952 |
| Equipments | 102,784 | 12,064 | - | - | 114,848 |
| Buildings | 58,411 | 5,675 | (3) | - | 64,083 |
| Fiber optic rental | 32,019 | 2,290 | - | - | 34,309 |
| Stores | 16,585 | 1,877 | - | - | 18,462 |
| Others | 22,554 | 3,996 | (4) | (1) | 26,545 |
| 446,420 | 45,533 | (219) | (807) | 490,927 | |
| 236,063 | 3,828 | 212 | (1,161) | 238,942 | |
The caption "Rights of Use" refers to assets associated with lease contracts. These assets are amortised according to the duration of the respective agreement, except for the lease of equipment with a purchase option that is amortised over the estimated period of use.
The net amount of refers to the reclassification of mobile sites leases to non-current assets held for sale (Note 46).
At 31 December 2021 and 30 September 2022, this item was composed as follows:
| 31-12-2021 | 30-09-2022 | |
|---|---|---|
| INVESTMENTS - EQUITY METHOD | ||
| Finstar* | 12,550 | 37,645 |
| Dreamia | 2,989 | 3,086 |
| Mstar | 2,029 | 2,964 |
| Other companies | (552) | (565) |
| 17,016 | 43,130 | |
| ASSETS | 18,091 | 44,205 |
| LIABILITIES (NOTE 25) | (1,075) | (1,075) |
* Consolidated from Finstar and ZAP Media
nine months ended on 30 September 2021 and 2022 were as follows:
| 9M 21 | 9M 22 | |
|---|---|---|
| AS AT JANUARY 1 | 10,897 | 17,016 |
| Gains / (losses) of exercise (Note 36) | 4,856 | 16,975 |
| Changes in equity i) | 1,550 | 9,139 |
| AS AT SEPTEMBER 30 | 17,303 | 43,130 |
i) Amounts related to changes in equity of the companies registered by the equity method of consolidation are mainly related to foreign exchange impacts of the investment in currencies other than euro.
The assets, liabilities and results of the jointly controlled companies and associated companies in the periods ended on 31 December 2021 and 30 September 2022, are as follows:
| 31-12-2021 | ||||||||
|---|---|---|---|---|---|---|---|---|
| ENTITY | NON CURRENT ASSETS |
CURRENT ASSETS |
NON CURRENT LIABILITIES |
CURRENT LIABILITIES |
EQUITY | REVENUE | NET INCOME |
% HELD |
| Sport TV | 81,857 | 67,376 | 5,920 | 131,009 | 12,304 | 236,924 | 1,140 | 25.00% |
| Dreamia | 14,752 | 744 | 6,180 | 1,878 | 7,438 | 1,232 | (609) | 50.00% |
| Finstar | 62,579 | 111,165 | - | 131,912 | 41,832 | 150,791 | 16,248 | 30.00% |
| Mstar | 549 | 11,757 | - | 7,125 | 5,181 | 3,795 | 1,203 | 30.00% |
| Upstar | 1,184 | 36,392 | 17,096 | 19,208 | 1,272 | 21,280 | 35 | 30.00% |
| Big Picture 2 Films | 744 | 2,791 | 546 | 2,456 | 533 | 2,708 | (16) | 20.00% |
| Dualgrid | 7 | 229 | - | 166 | 70 | 388 | 30 | 50.00% |
| Dreamia S.L. | - | 3 | - | - | 3 | - | - | 50.00% |
| 161,672 | 230,457 | 29,742 | 293,754 | 68,633 | 417,118 | 18,031 |
| ENTITY | NON CURRENT ASSETS |
CURRENT ASSETS |
NON CURRENT LIABILITIES |
CURRENT LIABILITIES |
EQUITY | REVENUE | NET INCOME |
% HELD |
|---|---|---|---|---|---|---|---|---|
| Sport TV* | 130,533 | 89,126 | 5,686 | 191,228 | 22,745 | 149,072 | 10,440 | 25.00% |
| Dreamia | 536 | 16,399 | 6,870 | 3,650 | 6,415 | 12,370 | 272 | 50.00% |
| Finstar | 101,417 | 225,647 | - | 200,666 | 126,398 | 256,262 | 55,656 | 30.00% |
| Mstar | 1,119 | 14,868 | - | 8,172 | 7,815 | 20,322 | 1,648 | 30.00% |
| Upstar | 945 | 19,302 | 4,915 | 14,039 | 1,293 | 18,586 | 20 | 30.00% |
| Big Picture 2 Films | 790 | 1,254 | 593 | 1,076 | 375 | 2,669 | (158) | 20.00% |
| Dualgrid | 6 | 353 | - | 268 | 91 | 425 | 32 | 50.00% |
| Dreamia S.L. | 14,913 | 1,124 | 6,317 | 2,296 | 7,424 | 1,657 | (13) | 50.00% |
| 250,259 | 368,073 | 24,381 | 421,395 | 172,556 | 461,363 | 67,897 |
* During the period of 2021, Sport TV changed the annual reporting period from 31 December to 30 June, hence, in the accounts presented in the tables above, the earnings and net income corresponds to the income from the 12 months of 2021, and the income from January to September of 2022.
Indicators presented in the tables above do not include consolidated adjustments which were considered when determining the Group's interest in the results, assets and liabilities of jointly controlled and associated companies.
In the nine months ended on 30 September 2022, the assets, liabilities and results of jointly controlled company ZAP Media (100% held by Finstar) are:
| 30-09-2022 | |||||||
|---|---|---|---|---|---|---|---|
| ENTITY | NON CURRENT ASSETS |
CURRENT ASSETS |
NON CURRENT LIABILITIES |
CURRENT LIABILITIES |
EQUITY | REVENUE | \NET INCOME |
| ZAP Media | 37,065 | 26,784 | - | 47,794 | 16,055 | 37,618 | 9,658 |
The differences between the individual accounts (prepared in accordance with Angolan regulations) and the Finstar Group (Finstar + ZAP Media) correspond, predominantly, to the annulment of balances and transactions between the companies and the adjustment because the companies were in a hyperinflationary economy from 2017 to September 2019 (IAS 29).
The Group has several controls regarding the reporting process of its jointly controlled and associated companies. The amounts included in the reported financial statements are subject to audit in cases where it is legally required. In the remaining cases and in those where the audit has not been completed, specific review procedures are carried out by the Group.
The Board of Directors believes that the seizure of assets to Mrs. Isabel dos Santos, in the specific case of the shares held by her in Finstar and ZAP Media (where she holds 70% of the capital), does not change the control profile, in this case joint control as defined in IFRS 11.
At 31 December 2021 and 30 September 2022, this item was composed as follows:
| 31-12-2021 | 30-09-2022 | |||
|---|---|---|---|---|
| CURRENT | NON CURRENT | NON CURRENT | ||
| Accounts receivables | 4,916 | 6,674 | 5,015 | 6,300 |
| Advances to suppliers | 14,240 | - | 13,837 | - |
| 19,156 | 6,674 | 18,852 | 6,300 | |
| Impairment of other receivable | (764) | (760) | (874) | (1,127) |
| 18,392 | 5,914 | 17,978 | 5,173 | |
At 30 September 2022, this item corresponds predominantly to:
Additionally, at 30 September 2022, the advances to suppliers correspond, essentially, to payments related with football
The summary of movements in impairment of other receivable in other accounts receivable is as follows:
| 9M 21 | 9M 22 | |
|---|---|---|
| AS AT JANUARY 1 | 1,501 | 1,524 |
| Increases (Note 35) | 175 | 165 |
| Utilizations / Others | (120) | 312 |
| AS AT SEPTEMBER 30 | 1,556 | 2,001 |
At 31 December 2021 and 30 September 2022, these items were composed as follows:
| 31-12-2021 | 30-09-2022 | |||
|---|---|---|---|---|
| RECEIVABLE | PAYABLE | RECEIVABLE | PAYABLE | |
| NON CURRENT | ||||
| Debt regularization | 149 | - | 48 | - |
| 149 | - | 48 | - | |
| CURRENT | ||||
| Value-added tax | 2,117 | 12,682 | 5,405 | 40,838 |
| Income taxes | - | 44,947 | - | 59,240 |
| Personnel income tax witholdings | - | 1,887 | - | 1,659 |
| Social Security contributions | - | 1,887 | - | 1,841 |
| Others | 421 | 123 | 422 | 62 |
| 2,538 | 61,526 | 5,827 | 103,640 | |
| 2,687 | 61,526 | 5,875 | 103,640 | |
At 31 December 2021 and 30 September 2022, the amounts of CIT (Corporate Income Tax) receivable and payable were composed as follows:
| 31-12-2021 | 30-09-2022 | |
|---|---|---|
| Estimated current tax on income | (25,829) | (39,138) |
| Tax processes | (42,167) | (42,533) |
| Payments on account | 21,493 | 20,735 |
| Withholding income taxes | 911 | 628 |
| Others | 645 | 1,068 |
| (44,947) | (59,240) | |
In the nine months ended on 30 September 2022 ongoing tax processes, of which highlights:
• Future credits transferred: for the financial year ended at 31 December 2010, NOS SA was notified of the Report of Tax Inspection, when it is considered that the increase, when calculating the taxable profit for the year 2008, of the amount of 100 million euros, with respect to initial price of future credits transferred to securitization, is inappropriate. Given the principle of periodization of taxable income, NOS SA was subsequently notified of the improper deduction of the amount of 20 million euros in the calculation of taxable income between 2009 and 2013. Given that the increase made in 2008 was not accepted due to not complying with Article 18 of the CIRC, also in the years following, the deduction corresponding to credits generated in that year, will eliminate the calculation of taxable income, to meet the annual amortization hired as part of the operation (20 million per year for 5 years). NOS SA challenged the decisions regarding the 2009 to 2013 fiscal year and will appeal for the judicial review in due time the decision regarding the 2008 to 2013 fiscal year. Regarding the year 2008, the Administrative and Fiscal Court of Porto has already decided unfavorably, in March 2014. The company has appealed.
In March 2021, NOS SA was notified of the dismissal issued by the Court of Appeal. Not accepting the decision, NOS filed a Review Appeal with the Supreme Administrative Court, pending, in this regard, the issuance of the respective admissibility order.
In May 2022, NOS was notified of the decision which did not admit the review appeal. An appeal has been filed against the Constitutional Court with suspensive effects on the transit of that non-admission decision. In addition to that appeal, an application was lodged in the file for recognition of the invalidity of the decision, for lack of
reasoning. Both expedients are pending consideration and decision.
• Supplementary Capital: the fiscal authorities believe that NOS SA has broken the principle of full competition under the terms of (1) of Article 58 of the Corporate Tax Code (CIRC) currently Article 63 , by granting supplementary capital to its subsidiary NOS, without having been remunerated at a market interest rate. In consequence, it has been notified, with regard to the years 2004, 2005, 2006 and 2007 of corrections to the determination of its taxable income in the total amount of 20.5 million euros. NOS SA contested the decision with regard to all the above-mentioned years. As for the year 2004, the Court has decided favorably. This decision is concluded (favorably), originating a reversal of provisions, in 2016, in the amount of 1.3 million euros plus interest. As for the years 2006 and 2007, the Porto Fiscal and Administrative Court has already decided unfavorably. As for the year 2005, the Court decided favorably, having been concretized by the Tax Authorities, which meant the provision reversal of one million euros, in 2018.
On 31 December 2021 and 30 September 2022, this caption is composed as follows:
| 31-12-2021 | 30-09-2022 | |
|---|---|---|
| Fundo TechTransfer | 637 | 995 |
| Didimo* | - | 1,415 |
| Seems Possible* | 800 | 800 |
| Reckon.ai* | 250 | 500 |
| MindProber* | - | 500 |
| SkillAugment* | - | 300 |
| Others | 387 | 454 |
| 2,074 | 4,964 | |
During the nine months ended on September 30, 2022, NOS reinforced its investment in start-up Reckon.ai and invested in the start-up Didimo, which develops photo-based 3D digital avatars, in the start-up MindProber, which has developed a pioneering platform capable of measuring the emotional impact that multimedia content has on consumers, and in the start-up SkillAugment (KIT-AR), which develops solutions using emerging technologies such as augmented reality and artificial intelligence.
NOS and its subsidiaries are subject to IRC - Corporate Income Tax - at the rate of 21% on taxable amount (taxable profit less eventual tax losses subject to deduction), plus IRC surcharge at the maximum rate of 1.5% on taxable profit, giving an aggregate rate of approximately 22.5%. Additionally, following the introduction of austerity measures approved by Law 66- B/2012 of 31 December, and respective addendum published by Law 114/2017 of 29 December, this rate was raised by 3% and will be applied to the co
In the calculation of taxable income, amounts, which are not fiscally allowable, are added to or subtracted from the book results. These differences between accounting income and taxable income may be of a temporary or permanent nature.
NOS is taxed in accordance with the Special Regime for Taxation of Corporate Groups, which covers the companies in which it directly or indirectly holds at least 75% of their share capital and which fulfil the requirements of Article 69 of the IRC Code.
The companies covered by the Special Regime for Taxation of Corporate Groups in 2022 are:
Empracine
Lusomundo Imobiliária
Under current legislation, tax declarations are subject to review and correction by tax authorities for a period of four years, except when tax losses have occurred or tax benefits have been obtained, whose term, in these cases, matches the deadline to use them. It should be noted that in the event of inspections, appeals, or disputes in progress, these periods might be extended or suspended.
The Board of Directors of NOS, based on information from its tax advisers, believes that these and any other revisions and corrections to these tax declarations, as well as other contingencies of a fiscal nature, will not have a significant effect on the consolidated financial statements as at 30 September 2022.
NOS and its associated companies have reported deferred tax relating to temporary differences between the taxable basis and the book amounts of assets and liabilities, and tax losses carried forward at the date of the statement of financial position. The movements in deferred tax assets and liabilities for the nine months ended on 30 September 2021 and 2022 were as follows:
| 6,632 |
|---|
| 2,071 |
| 44,826 |
| 17,285 |
| 4,944 |
| 4,351 |
| 76 |
| 80,185 |
| 2,461 |
| 99 |
| 35 |
| 2,554 |
| 5,149 |
| 75,036 |
| 31-12-2021 | INCOME (NOTE B) |
EQUITY | 30-09-2022 | |
|---|---|---|---|---|
| DEFERRED INCOME TAX ASSETS | ||||
| Impairment of other receivable | 6,531 | 1,327 | - | 7,858 |
| Inventories | 2,539 | 73 | - | 2,612 |
| Other provision and adjustments | 41.645 | (3,907) | - | 37,738 |
| Intragroup gains | 20,892 | 4,373 | - | 25,265 |
| Liabilities recorded as part of the allocation of | 4,968 | - | - | 4,968 |
| fair value to the liabilities acquired in the merger | ||||
| Assets recognised under application of IFRS 16 | 4,739 | 1,326 | - | 6,065 |
| Derivatives | 76 | (34) | (42) | - |
| 81,390 | 3,158 | (42) | 84,506 | |
| DEFERRED INCOME TAX LIABILITIES | ||||
| Revaluations of assets as part of the allocation of fair value to the assets acquired in the merger |
2,429 | (131) | - | 2,298 |
| Derivatives | 116 | 84 | 3,127 | 3,327 |
| Assets recognised under application of IFRS 16 | 23 | (2) | - | 21 |
| Others | 2,591 | 53 | - | 2,644 |
| 5,159 | 4 | 3,127 | 8,290 | |
| NET DEFERRED TAX | 76,231 | 3,154 | (3,169) | 76,216 |
At 30 September 2022, the deferred tax assets related to the other provisions and adjustments are mainly due:
The revaluations of assets refer to the appreciation of telecommunications licenses and other assets at the merger of Group companies.
At 30 September 2022, deferred tax assets were not recognised for an amount of 0.4 million euros, corresponding mainly to tax incentives and losses.
Deferred tax assets were recognised when it is probable that taxable profits will occur in future that may be used to absorb tax losses or deductible tax differences. This assessment was based on the busi are regularly revised and updated.
At 30 September 2022, the tax rate used to calculate the deferred tax assets relating to tax losses carried forward was 21% (2021: 21%). In the case of temporary differences, the rate used was 22.5% (2021: 22.5%) increased to a maximum of 6.5% (2021: 6.5%) of state surcharge when the taxation of temporary differences in the estimated period of application of the state surcharge was perceived as likely. Tax benefits, related to deductions from taxable income, are considered 100%, and in some cases, their full acceptance is conditional upon the approval of the authorities that grants such tax benefits.
Under the terms of Article 88 of the IRC Code, the Company is subject to autonomous taxation on a series of charges at the rates set out in that Article.
Additionally, under the terms of current legislation in Portugal, tax losses generated from 2012 to 2013 and from 2014 to 2016 may be carried forward for a period of five years and twelve years, respectively, after their occurrence and may be deducted from taxable profits generated during that period, up to a limit of 75% of the taxable profit, in 2012 and 2013, and 70% of taxable profit from 2014 to 2016. For tax losses generated in taxation periods that begin on or after 1 January 2017, the carryover is over a five-year period up to the limit of 70% of the taxable profit.
In view of the Supplementary Budget for 2020, tax losses generated in the taxable periods of 2020 and 2021 are reportable over a period of twelve years with a limit of 80% of taxable profit, the period for counting of tax losses in force, calculated before 2020, being suspended during these two periods.
In the nine months ended on 30 September 2021 and 2022, the reconciliation between the nominal and effective rates of tax was as follows:
| 3º QUARTER 21 | 9M 21 | 3º QUARTER 22 | 9M 22 | |
|---|---|---|---|---|
| Income before taxes | 55,302 | 135,538 | 126,485 | 222,150 |
| Statutory tax rate | 22.5% | 22.5% | 22.5% | 22.5% |
| ESTIMATED TAX | 12,443 | 30,496 | 28,459 | 49,984 |
| Permanent differences | (634) | (1,485) | (9,661) | (11,986) |
| Tax benefits | (3,158) | (13,404) | (1,657) | (9,884) |
| State surcharge | 2,231 | 5,126 | 4,978 | 7,939 |
| Autonomous taxation | 168 | 449 | 166 | 476 |
| Others | (1,879) | (5,484) | (1,670) | (5,553) |
| INCOME TAXES | 9,171 | 15,698 | 20,615 | 30,976 |
| Effective Income tax rate | 16.6% | 11.6% | 16.3% | 13.9% |
| Income tax | 10,162 | 13,147 | 22,783 | 34,130 |
| Deferred tax | (991) | 2,551 | (2,168) | (3,154) |
| 9,171 | 15,698 | 20,615 | 30,976 | |
At 30 September 2021 and 2022, the permanent differences were composed as follows:
| 3º QUARTER 21 | 9M 21 | 3º QUARTER 22 | 9M 22 | |
|---|---|---|---|---|
| Equity method (Note 36) | (2,415) | (4,741) | (6,586) | (16,975) |
| Others | (405) | (1,860) | (36,352) | (36,295) |
| (2,820) | (6,601) | (42,938) | (53,270) | |
| 22.5% | 22.5% | 22.5% | 22.5% | |
| (634) | (1,485) | (9,661) | (11,986) | |
i) During the nine months ended on 30 September 2022, the item Others refers predominantly to capital gains generated with the sale of mobile sites (Note 46), taxed at 50%, resulting from the reinvestment of the realization value of the assets held for more than one year.
Additionally, the amount registered as fiscal benefits relates to the register of deferred taxes and the use of tax benefits for which there was no record of deferred taxes: SIFIDE (Business Research and Development Tax Incentives System), a tax benefit introduced by Law 40/2005 of 3 August and RFAI (Investment Tax Incentive Regime) introduced by Law 10/2009 of 10 March; and provisions for used tax incentives.
At 31 December 2021 and 30 September 2022, this item was composed as follows:
| 31-12-2021 | 30-09-2022 | |
|---|---|---|
| INVENTORIES | ||
| Telco | 52,467 | 75,075 |
| Audiovisuals | 482 | 525 |
| 52,949 | 75,600 | |
| IMPAIRMENT OF INVENTORIES | ||
| Telco | (8,935) | (9,186) |
| Audiovisuals | - | (16) |
| (8,935) | (9,202) | |
| 44,014 | 66,398 | |
The movements occurred in impairment adjustments were as follows:
| 9M 21 | 9M 22 | |
|---|---|---|
| AS AT JANUARY 1 | 7,292 | 8,935 |
| Increase and decrease - Cost of products sold (Note 33) | 1,493 | 1,200 |
| Utilizations / Others | (1,521) | (933) |
| AS AT SEPTEMBER 30 | 7,264 | 9,202 |
At 31 December 2021 and 30 September 2022, this item was as follows:
| 31-12-2021 | 30-09-2022 | |
|---|---|---|
| Trade receivables | 454,610 | 441,251 |
| Unbilled revenues | 66,952 | 85,508 |
| 521,562 | 526,759 | |
| Impairment of trade receivable | (197,628) | (207,785) |
| 323,934 | 318,974 | |
The amounts to be invoiced correspond mainly to the value of contractual obligations already met or partially met and whose invoicing will occur subsequently.
The movements occurred in impairment adjustments were as follows:
| 9M 21 | 9M 22 | |
|---|---|---|
| AS AT JANUARY 1 | 195,165 | 197,628 |
| Increases and decreases (Note 35) | 5,579 | 13,167 |
| Penalties | 20,810 | 14,422 |
| Utilizations / Others | (25,859) | (17,432) |
| AS AT SEPTEMBER 30 | 195,695 | 207,785 |
Penalties correspond to the invoiced penalties, in the period, for which the full expected credit losses are registered, and the register was made by deduction from the respective revenue.
At 30 September 2022, the contract assets, in the amount of 59.1 million euros (31 December 2021: 61.8 million euros), correspond to discounts, attributed to customers at the time of the sale of equipment (included in the telecommunications packages) and which are allocated to monthly fees / services rendered, within the scope of the allocation of credits to different types of performance obligations, according to IFRS 15. These assets are deferred, at the time of sale of the equipment, and recognised over the contract period (service rendered).
At 31 December 2021 and 30 September 2022, this item was composed as follow:
| 31-12-2021 | 30-09-2022 | |
|---|---|---|
| Programming costs i) | 18,473 | 16,690 |
| Costs related to specific corportate projects | 9,010 | 15,243 |
| Taxes | - | 5,620 |
| Costs of litigation procedure activity ii) | 4,750 | 5,385 |
| Repair and maintenance | 927 | 2,687 |
| Insurance | 1,038 | 1,883 |
| Advertising | 872 | 417 |
| Others iii) | 9,808 | 12,599 |
| 44,878 | 60,524 | |
At 30 September 2022, NOS have 3 interest rate swaps in a total amount of 180 million euros (31 December 2021: 150 million euros), with forward start on September 2022.
During the nine months ended on 30 September 2022, NOS early terminated its derivatives on own shares that hedged the delivery of share plans to be settled in cash, following a change in the estimate on how to deliver these plans (Note 45).
At the date of the statement of the financial position there are foreign currency forwards open worth 46,051 thousand euros (31 December 2021: 6,268 thousand euros).
| 31-12-2021 | |||||
|---|---|---|---|---|---|
| ASSETS | LIABILITIES | ||||
| NOTIONAL | CURRENT | NON CURRENT | CURRENT | NON CURRENT | |
| Interest rate swaps | 150,000 | - | - | 10 | - |
| Equity Swaps | 3,004 | - | 105 | 323 | - |
| Exchange rate forward | 6,268 | 61 | 256 | 4 | - |
| 159,272 | 61 | 361 | 337 | - | |
| 30-09-2022 | |||||
|---|---|---|---|---|---|
| ASSETS | LIABILITIES | ||||
| NOTIONAL | CURRENT | NON CURRENT | CURRENT | NON CURRENT | |
| Interest rate swaps | 180,000 | - | 9,637 | - | - |
| Equity swaps | - | - | - | - | - |
| Exchange rate forward | 46,051 | 3,135 | 880 | - | - |
| 226,051 | 3,135 | 10,517 | - | - | |
Movements during the nine months ended on 30 September 2021 and 2022 were as follows:
| 31-12-2020 | INCOME | EQUITY | 30-09-2021 | |
|---|---|---|---|---|
| Fair value interest rate swaps | (51) | - | 30 | (21) |
| Fair value exchange rate forward | - | (2) | 228 | 226 |
| Fair value equity swaps | (950) | 349 | 434 | (167) |
| DERIVATIVES | (1,001) | 347 | 692 | 38 |
| Deferred income tax liabilities | - | (33) | (66) | (99) |
| Deferred income tax assets | 225 | (45) | (104) | 76 |
| DEFERRED INCOME TAX | 225 | (78) | (170) | (23) |
| (776) | 269 | 522 | 15 | |
| 31-12-2021 | INCOME | EQUITY | 30-09-2022 | |
|---|---|---|---|---|
| Fair value interest rate swaps | (10) | - | 9,647 | 9,637 |
| Fair value exchange rate forward | 313 | 394 | 3,308 | 4,015 |
| Fair value equity swaps | (218) | 32 | 186 | - |
| DERIVATIVES | 85 | 426 | 13,141 | 13,652 |
| Deferred income tax liabilities | (116) | (84) | (3,127) | (3,327) |
| Deferred income tax assets | 76 | (34) | (42) | - |
| DEFERRED INCOME TAX | (40) | (118) | (3,169) | (3,327) |
| 45 | 308 | 9,972 | 10,325 | |
At 31 December 2021 and 30 September 2022, this item was composed as follows:
| 31-12-2021 | 30-09-2022 | |
|---|---|---|
| Cash | 523 | 500 |
| Other deposits | 125 | - |
| Terms deposits i) | 10,254 | 150,122 |
| Cash and cash equivalents | 10,902 | 150,622 |
| Bank overdrafts (Note 24) | 731 | 70,159 |
| Cash and cash equivalents for the purposes of the Cash Flow Statement |
10,171 | 80,463 |
i) At 31 December 2021 and 30 September 2022, there are 8.4 million euros and 5.7 million euros, respectively, recorded in the item "Current deposits" whose use is restricted, because they are held by the Capital Fund NOS 5G, subscribed by NOS.
At 31 December 2021 and 30 September 2022, the share capital of NOS was 5,151,613.80 euros and 855,167,890.80 euros, respectively. At 30 September 2022, the share capital is represented by 515,161,380 shares registered book-entry shares, with a nominal value of 1.66 euro each (2021: 1 euro cent each).
The main shareholders as of 31 December 2021 and 30 September 2022 are:
| 31-12-2021 | 30-09-2022 | ||||
|---|---|---|---|---|---|
| NUMBER OF SHARES |
% SHARE CAPITAL |
NUMBER OF SHARES |
% SHARE CAPITAL |
||
| ZOPT, SGPS, SA | 268,644,537 | 52.15% | 268,644,537 | 52.15% | |
| Sonae, SGPS, S.A. | 38,000,000 | 7.38% | 55,524,516 | 10.78% | |
| Mubadala Investment Company | 25,758,569 | 5.00% | 25,758,569 | 5.00% | |
| TOTAL | 332,403,106 | 64.52% | 349,927,622 | 67.93% | |
At the General Meeting of ZOPT SGPS, S.A., held on 28 September 2022, it was decided to proceed with the amortization of Sonaecom's stake in that company, and the refund of additional payments made by it, for a consideration that includes the delivery of shares representing 26.075% of the share capital of NOS. As a result of this amortization, Sonaecom is no longer a shareholder of ZOPT, which is now wholly owned by Unitel International Holdings, BV and Kento Holding Limited, companies controlled by Isabel dos Santos. Therefore, a shareholding in NOS of 36.855% of the share capital and voting rights is now attributable to Sonae, as a result of the direct holding of 10.78% and an indirect holding of 26.075%. The update of the shareholder structure is subject to the completion of legal procedures.
On 27 August 2013, following the completion of the merger between ZON and Optimus SGPS, the Company's share capital was increased by 856,404,278 euros, corresponding to the total number of issued shares (206,064,552 shares), based on the closing market price of 27 August 2013. The capital increase is detailed as follows:
• share capital in the amount of 2,060,646 euros;
• premium for issue of shares in the amount of 854,343,632 euros.
Additionally, the premium for issue of shares was deducted for an amount of 125 thousand euros related to costs with the respective capital increase.
On 21 April 2022, was approved in the Annual General Meeting of shareholders of NOS SGPS, an increase of share capital, by incorporation of share premium, in the amount of 850,016,277.00, through the increase of the nominal value of the total shares representing the share capital in the amount of . The nominal value of each share is now
As of September
Company law regarding own shares requires the establishment of a non-distributable reserve of an amount equal to the purchase price of such shares, which becomes frozen until the shares are disposed of or distributed. In addition, the applicable accounting rules determine that gains or losses on the disposal of own shares are stated in reserves.
At 30 September 2022 there were 4,008,391 own shares, representing 0.7781% of share capital (31 December 2021: 3,002,427 own shares, representing 0.5828% of the share capital).
The movements occurred in the nine months ended on 30 September 2021 and 2022 were as follows:
| QUANTITY | VALUE | |
|---|---|---|
| BALANCE AS AT 1 JANUARY 2021 | 3,424,754 | 14,859 |
| Acquisition of own shares | 687,000 | 2,069 |
| Distribution of own shares - share incentive scheme | (963,026) | (3,976) |
| Distribution of own shares - other remunerations | (146,301) | (599) |
| BALANCE AS AT 30 SEPTEMBER 2021 | 3,002,427 | 12,353 |
| BALANCE AS AT 1 JANUARY 2022 | 3,002,427 | 12,353 |
| Acquisition of own shares | 1,868,129 | 7,087 |
| Distribution of own shares - share incentive scheme | (791,257) | (3,186) |
| Distribution of own shares - other remunerations | (70,908) | (286) |
| BALANCE AS AT 30 SEPTEMBER 2022 | 4,008,391 | 15,968 |
Company law and NOS to build up the legal reserve until it corresponds to 20% of the share capital. This reserve cannot be distributed except in the event of liquidation of the company, but it may be used to absorb losses after all other reserves have been exhausted, or for incorporation in the share capital.
Under Portuguese law, the amount of distributable reserves is determined according to the individual financial statements of the company prepared in accordance with IAS / IFRS. Thus, on 30 September 2022 NOS had reserves, which by their nature are considered distributable for an amount of approximately 343.1 million euros, not including the net income.
The General Meeting held on April 21, 2021 approved the Board of Directors' proposal to pay an ordinary dividend per share of 0.278 euros, in the amount of 143,215 thousand euros. The dividend attributable to own shares amounted to approximately 838 thousand euros. The dividends were paid on May 6, 2021.
The General Meeting of Shareholders held on April 21, 2022 approved the Board of Directors' proposal to pay an ordinary amounted to approximately 858 thousand euros. The dividend was paid on May 9, 2022.
The movements of the non-controlling interests occurred during the nine months ended on 30 September 2021 and 2022 and the results attributable to non-controlling interests for the year are as follows:
| 31-12-2020 | ATTRIBUTABLE PROFITS |
OTHERS | 30-09-2021 | |
|---|---|---|---|---|
| NOS Madeira | 5,320 | 16 | - 5,336 |
|
| NOS Açores | 1,365 | (199) | - 1,166 |
|
| 6,685 | (182) | - 6,502 |
||
| 31-12-2021 | ATTRIBUTABLE PROFITS |
OTHERS | 30-09-2022 | |
| NOS Madeira | 5,289 | 76 | - 5,365 |
|
| NOS Açores | 1,090 | (183) | - 907 |
|
| 6,379 | (107) | - 6,272 |
||
At 31 December 2021 and 30 September 2022, the composition of borrowings was as follows:
| 31-12-2021 | 30-09-2022 | |||
|---|---|---|---|---|
| CURRENT | NON-CURRENT | CURRENT | NON-CURRENT | |
| LOANS - NOMINAL VALUE | 233,064 | 807,500 | 499,959 | 650,000 |
| Debenture loan | 150,000 | 440,000 | 300,000 | 290,000 |
| Commercial paper | 64,000 | 367,500 | 129,800 | 360,000 |
| Foreign loans | 18,333 | - | - | - |
| Bank overdrafts | 731 | - | 70,159 | - |
| LOANS - ACCRUALS AND DEFERRALS | 2,678 | (638) | 808 | (601) |
| LOANS - AMORTISED COST | 235,742 | 806,862 | 500,767 | 649,399 |
| LEASES | 65,326 | 468,679 | 60,176 | 500,941 |
| 301,068 | 1,275,541 | 560,944 | 1,150,340 | |
During the nine months ended on 30 September 2022, the average cost of debt of the used lines was approximately 1.0% (2021: 1.2%).
The average global financing cost (used and unused lines) during the nine months ended on 30 September 2022 was approximately 1.1% (2021: 1.4%).
At 30 September 2022 there is no default in terms of capital, interest, conditions for redemption on loans payable or other commitments.
At 30 September 2022, NOS has a total amount of 590 million euros of bonds issued:
In March 2022, NOS contracted a bond loan, in the amount of 75 million euros, placed by BPI. It will be issued in July 2022 and maturing in March 2027. The loan bears interest at a variable rate, indexed to Euribor and paid quarterly.
At 30 September 2022, an amount of 705 thousand euros, corresponding to interest and commissions, was added to this s -
At 30 September 2022, the Company has borrowings of 489.8 million euros in the form of commercial paper, of which 92 million euros were issued under securities without underwriting. The total amount contracted, under underwriting securities, is of 710 million euros, corresponding to 13 programmes, with 6 banks, 572.5 million euros of which bear interest at market rates and 137.5 million euros are issued in fixed rate. Commercial paper programmes with maturities over oneyear totaling 660 million euros (of which 360 million euros have been used as of 30 September 2022) are classified as nonthey are underwritten by the organizer. As such, this amount, although having a current maturity, it was classified as noncurrent for presentation purposes in the financial position statement.
At 30 September 2022 an amount of 498 thousand euros, corresponding to interest and commissions, was deducted to - accruals and d
At 31 December 2021 and 30 September 2022, the leases refer mainly to rental agreements for telecommunications towers, movie theaters, equipment, shops and vehicles, exclusive acquisition of satellite capacity and rights to use distribution network capacity.
Leases payments
| 31-12-2021 | 30-09-2022 | |
|---|---|---|
| Until 1 year | 89,711 | 84,226 |
| Between 1 and 5 years | 256,137 | 267,274 |
| Over 5 years | 369,302 | 379,819 |
| 715,150 | 731,319 | |
| Future financial costs (lease) | (181,145) | (170,202) |
| PRESENT VALUE OF LEASE LIABILITIES | 534,005 | 561,117 |
Leases present value
| 31-12-2021 | 30-09-2022 | |
|---|---|---|
| Until 1 year | 65,326 | 60,176 |
| Between 1 and 5 years | 113,002 | 190,875 |
| Over 5 years | 355,677 | 310,066 |
| 534,005 | 561,117 | |
The maturities of the loans obtained are as follows:
| 31-12-2021 | 30-09-2022 | |||||
|---|---|---|---|---|---|---|
| UNTIL 1 | BETWEEN 1 AND 5 | OVER 5 | UNTIL 1 | BETWEEN 1 AND 5 | OVER 5 | |
| YEAR | YEARS | YEARS | YEAR | YEARS | YEARS | |
| Debenture loan | 152,511 | 439,385 | - | 301,295 | 289,410 | - |
| Commercial paper | 64,410 | 367,477 | - | 129,313 | 359,989 | - |
| Foreign loans | 18,090 | - | - | - | - | - |
| Bank overdrafts | 731 | - | - | 70,159 | - | - |
| Leases | 65,326 | 113,002 | 355,677 | 60,176 | 190,875 | 310,066 |
| 301,068 | 919,864 | 355,677 | 560,944 | 840,274 | 310,066 | |
At 31 December 2021 and 30 September 2022, the provisions were as follows:
| 31-12-2021 | 30-09-2022 | |
|---|---|---|
| Litigation and other - i) | 32,468 | 32,282 |
| Financial investments - ii) | 1,075 | 1,075 |
| Dismantling and removal of assets - iii) | 22,326 | 20,836 |
| Contingent liabilities - iv) | 23,707 | 23,707 |
| Contingencies - other - v) | 2,940 | 1,802 |
| 82,516 | 79,702 | |
i) At 30 September 2022, the amount under the item "Litigation and other" corresponds to provisions to cover the legal and others claims in-progress.
ii) The amount presented in the "Financial Investments" caption corresponds to the responsibilities assumed by the Group towards the associated companies and jointly controlled entities, other than the investment made (Note 11);
iii) The amount under the item "Dismantling and removal of assets "refers to the estimated future costs discounted to the present value, related with the termination of the use of the space where there are telecommunication towers and cinemas;
iv) The amount in the item "Contingent liabilities" refers to several provisions recorded for present but not likely obligations, related to the merger by incorporation of Optimus SGPS, namely:
a. Extraordinary contribution toward the fund for the compensation of the net costs of the universal service of electronic communications (CLSU): The Extraordinary contribution toward the fund for the compensation of the net costs of the universal service of electronic communications (CLSU) is legislated in Articles 17 to 22 of Law no 35/2012, of 23 August. From 1995 until June 2014, MEO, SA (former PTC) was the sole provider for the universal service of electronic communications, having been designated administratively by the government, i.e. without a formal contest procedure led by the government for that effect, which constitutes an illegality, by the way acknowledged by the European Court of Justice who, through its decision taken in June 2014, condemned the Portuguese State to pay a fine of 3 million euros for illegally designating MEO. In accordance with Article 18 of the abovementioned Law 35/2012, of 23 August, the net costs incurred by the operator responsible for providing the universal service, approved by ANACOM, must be shared between other companies who provide, in national territory public communication networks and publicly accessible electronic communications services. NOS is therefore within the scope of this extraordinary contribution given that MEO has being requesting the payment of CLSU to the compensation fund of the several periods during which it was responsible for providing the services. In accordance with law, the compensation fund can be activated to compensate the net costs of the electronic communications universal service, relative to the period before the designation of the provider by tender, whenever, cumulatively (i) there are net costs, considered excessive, the amount of which is approved by ANACOM, following an audit to their preliminary calculation and support documents, which are provided by the universal service provider, and (ii) the universal service provider requester the Government compensation for the net costs approved under the terms previously mentioned.
In 2013, ANACOM deliberated to approve the final results of the CLSU audit presented by MEO, relative to the period from 2007 to 2009, in a total amount of 66.8 million euros, a decision that was contested by the Company. In January 2015, ANACOM issued the settlement notes in the amount of 18.6 million euros related to NOS, SA, NOS Madeira and NOS Açores which were contested by NOS and for which a bail was presented by NOS SGPS (Note 44) to avoid Tax Execution Proceedings. The guarantees have been accepted by ANACOM.
In 2014, ANACOM deliberated to approve the final results of the CLSU audit by MEO, relative to the period from 2010 to 2011, in a total amount of 47.1 million euros, a decision also contested by NOS. In February 2016, ANACOM issued the settlement notes in the amount of 13 million euros, related to NOS, SA, NOS Madeira and NOS Açores which were also contested and for which it was before also presented bail by NOS SGPS in order to avoid the promotion of respective tax enforcement processes. The guarantees that have been accepted by ANACOM.
In 2015, ANACOM deliberated to approve the final results of the audit to CLSU presented by MEO relative to the period from 2012 to 2013, in the amount of 26 million euros and 20 million euros, respectively, and as the others, it was contested by NOS. In December 2016, the notices of settlement were issued relating to NOS, SA, NOS Madeira and NOS Açores, corresponding to that period, in the amount of 13.6 million euros which were contested by NOS and for which guarantees have been already presented by NOS SGPS in order to avoid the promotion of the respective proceedings of tax execution. The guarantees were also accepted by ANACOM.
In 2016, ANACOM approved the results of the audit to the CLSU presented by MEO related with the period between January and June 2014, for an amount of 7.7 million euros that was contested by NOS, in standard terms.
In 2017, NOS, SA, NOS Madeira and NOS Açores were notified of the decision of ANACOM concerning the entities that are obliged to contribute toward the compensation fund and the setting of the values of contributions corresponding to CLSU that must be compensated and relating to the months of 2014 in which MEO still remained as provider of the Universal Service, which establishes for all these companies a contribution around 2.4 million euros. In December 2017, the settlement notes relating to NOS, SA, NOS Madeira and NOS Açores, concerning that period, were issued in the amount of approximately 2.4 million euros, which were challenged by NOS and for which guarantees have also been presented by NOS SGPS, in order to avoid the promotion of their tax enforcement procedures. The guarantees were also accepted by ANACOM.
It is the opinion of the Board of Directors of NOS that these extraordinary contributions to Universal Service (not designated through a tender procedure) flagrantly violate the Directive of Universal Service. Moreover, considering the existing legal framework since NOS began its activity, the request of payment of the extraordinary contribution violates the principle of the protection of confidence, recognised on a legal and constitutional level in Portuguese domestic law. For these reasons, NOS has judicially challenged either the approval of audit results of the universal service net cost related with the pre-contest period as well as the liquidation of each and every extraordinary contributions that may be required. In September 2021, the Lisbon Administrative Circle Court ruled as unfounded the action regarding the administrative challenge of the results of the CLSU 2007-2009 audit, which NOS appealed in October 2021. The Board of Directors is convinced it will be successful in both challenges and appeals undertaken;
v) The amount under the caption "Contingencies - other" refers to provisions for risks related to miscellaneous events/disputes of various kinds, the settlement of which may result in outflows of cash, and other likely liabilities related to several transactions from previous periods, and whose outflow of cash is probable, namely, costs charged to the current period or previous years, for which it is not possible to estimate reliably the time of occurrence of the expense.
| 31-12-2020 | INCREASES | DECREASES | OTHERS | 30-09-2021 | |
|---|---|---|---|---|---|
| Litigation and other | 24,756 | 3,271 | (3,604) | 5,497 | 29,920 |
| Financial investments | - | 1,075 | - | - | 1,075 |
| Dismantling and removal of assets | 21,604 | 318 | - | - | 21,922 |
| Contingent liabilities | 23,720 | - | (13) | - | 23,707 |
| Contingencies - other | 3,265 | 6,822 | (352) | (7,386) | 2,349 |
| 73,345 | 11,486 | (3,969) | (1,889) | 78,973 | |
During the nine months ended on 30 September 2022, movements in provisions were as follows:
During the nine months ended on 30 September 2021, increases refer mainly to provisions for legal claims and others plus respective interests and charges, and the decreases refer mainly to the reassessment of several contingencies.
During the nine months ended on 30 September 2022, movements in provisions, were as follows:
| 31-12-2021 | INCREASES | DECREASES | OTHERS | 30-09-2022 | |
|---|---|---|---|---|---|
| Litigation and other | 32,468 | 2,697 | (2,883) | - | 32,282 |
| Financial investments | 1,075 | - | - | - | 1,075 |
| Dismantling and removal of assets | 22,326 | 354 | - | (1,844) | 20,836 |
| Contingent liabilities | 23,707 | - | - | - | 23,707 |
| Contingencies - other | 2,940 | 1,397 | (49) | (2,486) | 1,802 |
| 82,516 | 4,448 | (2,932) | (4,330) | 79,702 | |
During the nine months ended on 30 September 2022, the increases refer mainly to compensation to employees, provisions for legal and other claims plus interests and charges, and the decreases refer mainly to the reassessment and prescription of several legal contingencies.
The movement recorded in "Others", under the item "Dismantling and removal of assets", corresponds to the reclassification to assets held for sale of the provision for dismantling mobile sites (Note 46).
The net movements for the nine months ended on 30 September 2021 and 2022 reflected in the income statement under Provisions were as follows:
| 9M 21 | 9M 22 | |
|---|---|---|
| Provisions and adjustments (Note 35) | (1,326) | (90) |
| Losses / (gains) of affiliated companies, net (Note 36) | 1,075 | - |
| Other losses / (gains) non-recurrent (Note 38) | 6,501 | 1,388 |
| Interests - dismantling | 318 | 354 |
| Other | 949 | (136) |
| INCREASES AND DECREASES IN PROVISIONS | 7,517 | 1,516 |
At 31 December 2021 and 30 September 2022, this item was composed as follows:
| 31-12-2021 | 30-09-2022 | |
|---|---|---|
| NON-CURRENT | ||
| Others | 497 | - |
| 497 | - | |
| CURRENT | ||
| Investments in tangible and intangible assets | 18,689 | 41,628 |
| Invoices to be issued by operators i) | 31,365 | 38,855 |
| Costs related to specific projects of business customers | 20,775 | 26,891 |
| Vacation pay and bonuses | 23,020 | 23,623 |
| Programming services | 12,370 | 21,859 |
| Content and film rights | 16,810 | 13,948 |
| Professional services | 11,087 | 12,517 |
| Advertising | 16,567 | 8,654 |
| Taxes (ANACOM and Cinema Law) ii) | 298 | 8,386 |
| Energy and water | 3,427 | 7,054 |
| Comissions | 5,761 | 5,942 |
| Costs of litigation procedure activity | 4,705 | 4,014 |
| Maintenance and repair | 1,963 | 1,830 |
| Other accrued expenses | 8,947 | 7,967 |
| 175,784 | 223,168 | |
i) Amounts related to invoices to be billed by operators, mainly international operators, regarding interconnection costs related with international traffic and roaming services.
ii) Amounts related to ANACOM licenses and other ICA fees, whose invoicing is processed annually on a subsequent basis.
At 31 December 2021 and 30 September 2022, this item was composed as follows:
| 31-12-2021 | 30-09-2022 | |||
|---|---|---|---|---|
| CURRENT | NON-CURRENT | CURRENT | NON-CURRENT | |
| Advanced billing i) | 35,206 | - | 35,348 | - |
| Investment subsidy ii) | 397 | 4,230 | 449 | 3,517 |
| 35,603 | 4,230 | 35,797 | 3,517 | |
i) This item relates mainly to the billing of Pay TV services regarding the following month to the report period and amounts received from NOS Comunicações, SA customers, related with the recharges of mobile phones and purchase of telecommunications minutes yet unused.
ii) Deferred income related to the implicit subsidy when the BEI loans were obtained at interest rates below market value (Note 24).
At 31 December 2021 and 30 September 2022, this item was composed as follows:
| 31-12-2021 | 30-09-2022 | |
|---|---|---|
| Suppliers current account | 279,138 | 266,899 |
| Invoices in reception and conference | 855 | 6,809 |
| 279,993 | 273,708 | |
At 31 December 2021 and 30 September 2022, thids item was composed as follows:
| 31-12-2021 | 30-09-2022 | |
|---|---|---|
| NON-CURRENT | ||
| Contractual rights | 38,502 | 38,512 |
| 38,502 | 38,512 | |
| CURRENT | ||
| Fixed assets suppliers | 32,422 | 21,248 |
| Contractual rights | 264 | 1,041 |
| Advances from customers | 220 | 153 |
| Others | 2,733 | 2,276 |
| 35,639 | 24,718 | |
| 74,141 | 63,229 | |
The caption Contractual Rights refers to the liability to settle over the next 20 years, related with the contractual right acquired with the agreement celebrated between NOS Comunicações, S.A., NOS Technology S.A., and Vodafone Portugal, Comunicações Pessoais, S.A with the aim of sharing mobile support network infrastructures (passive infrastructure such as towers and masts) and active mobile network (active radio equipment such as antennas, amplifiers and other equipment), as disclosed to the market on 22 October 2020.
Consolidated operating revenues, for the nine months ended on 30 September 2021 and 2022, were as follows:
| 3º QUARTER 21 | 9M 21 | 3º QUARTER 22 | 9M 22 | |
|---|---|---|---|---|
| SERVICES RENDERED: | ||||
| Communications service revenues (i) | 314,078 | 914,474 | 324,244 | 953,969 |
| Revenue distribution and cinematographic exhibition (ii) | 6,668 | 9,917 | 9,632 | 24,162 |
| Advertising revenue (iii) | 4,555 | 13,571 | 4,391 | 13,305 |
| Production and distribution of content and channels (iv) | 6,217 | 19,177 | 6,378 | 17,952 |
| Others | 733 | 2,012 | 1,372 | 3,055 |
| 332,251 | 959,151 | 346,016 | 1,012,443 | |
| SALES: | ||||
| Telco v) | 25,770 | 64,215 | 24,955 | 81,271 |
| Audiovisuals and cinema exhibition vi) | 2,122 | 2,676 | 3,482 | 8,454 |
| 27,892 | 66,891 | 28,437 | 89,725 | |
| OTHER OPERATING REVENUES: | ||||
| Telco | 6,238 | 18,158 | 6,444 | 20,394 |
| Audiovisuals and cinema exhibition | 84 | 717 | 635 | 936 |
| 6,322 | 18,875 | 7,079 | 21,330 | |
| 366,465 | 1,044,917 | 381,532 | 1,123,498 | |
These operating revenues are shown net of inter-company eliminations.
This item includes earned income related with non-compliances and contractual penalties, as well as other supplementary income of diverse natures.
In the nine months ended on 30 September 2021 and 2022, this item was composed as follows:
| 3º QUARTER 21 | 9M 21 | 3º QUARTER 22 | 9M 22 | |
|---|---|---|---|---|
| Remuneration | 16,313 | 46,821 | 16,737 | 47,308 |
| Social taxes | 4,215 | 12,516 | 4,437 | 12,880 |
| Social benefits | 503 | 1,540 | 489 | 1,525 |
| Other | (238) | 203 | 512 | 1,324 |
| 20,793 | 61,080 | 22,175 | 63,037 | |
In the nine months ended on 30 September 2021 and 2022, the average number of employees of the companies included in the consolidation was 2,364 and 2,373, respectively. At 30 September 2022, the number of employees of the companies included in the consolidation was 2,373 employees.
The costs of compensations paid to employees, since they are noncosts 38).
In the nine months ended on 30 September 2021 and 2022, this item was composed as follows:
| 3º QUARTER 21 | 9M 21 | 3º QUARTER 22 | 9M 22 | |
|---|---|---|---|---|
| Exhibition costs | 46,460 | 144,903 | 44,846 | 138,279 |
| Traffic costs | 17,332 | 51,479 | 18,349 | 52,309 |
| Costs related to corporate customers services | 11,251 | 31,358 | 7,967 | 34,104 |
| Capacity costs | 4,228 | 10,777 | 3,862 | 12,392 |
| Shared advertising revenues | 3,061 | 9,401 | 2,742 | 8,863 |
| 82,332 | 247,918 | 77,765 | 245,947 | |
In the nine months ended on 30 September 2021 and 2022, this item was composed as follows:
| 3º QUARTER 21 | 9M 21 | 3º QUARTER 22 | 9M 22 | |
|---|---|---|---|---|
| Costs of products sold | 23,889 | 57,731 | 23,724 | 78,652 |
| Increases / (decreases) in inventories impairments (Note 16) |
649 | 1,493 | 165 | 1,200 |
| 24,538 | 59,224 | 23,889 | 79,852 | |
In the nine months ended on 30 September 2021 and 2022, this item was composed as follows:
| 3º QUARTER 21 | 9M 21 | 3º QUARTER 22 | 9M 22 | |
|---|---|---|---|---|
| SUPPORT SERVICES: | ||||
| Call centers and customer support | 8,048 | 27,274 | 7,594 | 24,150 |
| Administrative support and others | 7,446 | 23,101 | 7,199 | 23,166 |
| Information systems | 3,934 | 10,745 | 3,567 | 11,182 |
| 19,428 | 61,120 | 18,361 | 58,499 | |
| SUPPLIES AND EXTERNAL SERVICES: | ||||
| Maintenance and repair | 10,604 | 31,679 | 11,597 | 34,865 |
| Leasing of ducts and poles | 7,403 | 21,552 | 6,727 | 20,825 |
| Electricity | 5,023 | 13,939 | 7,483 | 21,898 |
| Professional services | 2,896 | 8,439 | 2,692 | 8,097 |
| Installation and removal of terminal equipment | 1,195 | 3,583 | 1,212 | 3,904 |
| Communications | 887 | 3,203 | 1,017 | 3,022 |
| Travel and accommodation | 271 | 739 | 747 | 1,871 |
| Other supplies and external services | 5,467 | 14,625 | 9,242 | 23,034 |
| 33,746 | 97,759 | 40,716 | 117,516 |
During the nine months ended on 30 September 2021 and 2022, given the application of IFRS 16, (practical expedient to consider the changes / concessions related to COVID-19 as not being a modification to the lease) discounts from rents were recognised 6.3 million euros and 2.5 million euros, respectively.
In the nine months ended on 30 September 2021 and 2022, these items were composed as follows:
| 3º QUARTER 21 | 9M 21 | 3º QUARTER 22 | 9M 22 | |
|---|---|---|---|---|
| Provisions (Note 25) | 529 | (1,326) | 77 | (90) |
| Impairment of account receivables - trade (note 17) | 3,017 | 5,579 | 4,731 | 13,167 |
| Impairment of account receivables - others (note 12) | 24 | 175 | 38 | 165 |
| Others | - | (11) | - | (1) |
| 3,570 | 4,417 | 4,848 | 13,242 | |
In the nine months ended on 30 September 2021 and 2022, this item was composed as follows:
| 3º QUARTER 21 | 9M 21 | 3º QUARTER 22 | 9M 22 | |
|---|---|---|---|---|
| EQUITY METHOD (NOTE 11) | ||||
| Dreamia | (102) | (170) | 122 | (99) |
| Finstar | (2,307) | (5,444) | (6,611) | (16,697) |
| Mstar | (122) | (316) | (165) | (555) |
| Upstar | 3 | (18) | 3 | (6) |
| Others | (2) | 1,092 | 65 | 382 |
| (2,530) | (4,856) | (6,586) | (16,975) | |
| OTHERS | 115 | 115 | - | - |
| (2,415) | (4,741) | (6,586) | (16,975) | |
In the nine months ended on 30 September 2021 and 2022, this item was composed as follows:
| 3º QUARTER 21 | 9M 21 | 3º QUARTER 22 | 9M 22 | |
|---|---|---|---|---|
| TANGIBLE ASSETS | ||||
| Buildings and other constructions | 137 | 417 | 3,618 | 9,157 |
| Basic equipment | 45,888 | 127,043 | 52,688 | 136,590 |
| Transportation equipment | - | 1 | 1 | 1 |
| Tools and dies | 16 | 44 | 14 | 46 |
| Administrative equipment | 1,071 | 3,245 | 972 | 2,903 |
| Other tangible assets | 82 | 298 | 92 | 280 |
| 47,194 | 131,048 | 57,385 | 148,977 | |
| INTANGIBLE ASSETS | ||||
| Industrial property and other rights | 20,506 | 61,723 | 26,724 | 77,495 |
| 20,506 | 61,723 | 26,724 | 77,495 | |
| CONTRACT COSTS | ||||
| Contract costs | 24,663 | 73,933 | 24,503 | 73,538 |
| 24,663 | 73,933 | 24,503 | 73,538 | |
| RIGHTS OF USE | ||||
| Rights of use | 15,612 | 46,089 | 15,622 | 45,533 |
| 15,612 | 46,089 | 15,622 | 45,533 | |
| INVESTIMENT PROPERTY | ||||
| Investment property | 4 | 12 | 4 | 12 |
| 4 | 12 | 4 | 12 | |
| 107,978 | 312,804 | 124,239 | 345,556 | |
During the nine months ended on 30 September 2022, NOS revised the depreciation rates (reduced the estimated useful lives) of terminal equipment placed in customers' homes, leading to an increase in Depreciation, amortization and impairment losses amountin
In the nine months ended on 30 September 2021 and 2022, this item was composed as follows:
| 3º QUARTER 21 | 9M 21 | 3º QUARTER 22 | 9M 22 | |
|---|---|---|---|---|
| Personnel compensation (Note 25) | 876 | 6,501 | 267 | 1,388 |
| Personnel costs related to non-recurrent projects | 82 | 239 | 48 | 175 |
| 958 | 6,740 | 315 | 1,563 | |
In the nine months ended on 30 September 2021 and 2022, the other non-recurring costs / (gains) was composed as follows:
| 3º QUARTER 21 | 9M 21 | 3º QUARTER 22 | 9M 22 | |
|---|---|---|---|---|
| GAINS: | ||||
| Legal Processes | - | - | 120 | 6,338 |
| - | - | 120 | 6,338 | |
| COSTS: | ||||
| Others | 460 | 891 | 212 | 2,940 |
| 460 | 891 | 212 | 2,940 | |
| TOTAL | 460 | 891 | 92 | (3,398) |
In the nine months ended on 30 September 2022, an income/receivable of 6.3 million euros was estimated resulting from favorable decisions in proceedings initiated by the company. The amount was received in October 7, 2022.
In the nine months ended on 30 September 2021 and 2022, financing costs and other financial expenses / (income) were composed as follows:
| 3º QUARTER 21 | 9M 21 | 3º QUARTER 22 | 9M 22 | |
|---|---|---|---|---|
| FINANCING COSTS: | ||||
| INTEREST EXPENSE: | ||||
| Borrowings | 2,364 | 7,631 | 2,346 | 6,762 |
| Finance leases | 6,350 | 19,306 | 6,188 | 18,653 |
| Derivatives | 16 | 48 | 4 | 24 |
| Others | 463 | 732 | 129 | 1,162 |
| 9,193 | 27,717 | 8,667 | 26,601 | |
| INTEREST EARNED | (1,009) | (2,771) | (1,335) | (3,067) |
| 8,184 | 24,946 | 7,332 | 23,534 | |
| NET OTHER FINANCIAL EXPENSES /(INCOME): | ||||
| Comissions and guarantees | 635 | 2,000 | 673 | 2,261 |
| Others | 129 | 385 | 174 | 280 |
| 764 | 2,385 | 847 | 2,541 | |
Interest earned mainly corresponds to default interests charged to customers.
Earnings per share for nine months ended on 30 September 2021 and 2022 were calculated as follow:
| 3º QUARTER 21 | 9M 21 | 3º QUARTER 22 | 9M 22 | |
|---|---|---|---|---|
| Consolidated net income attributable to shareholders |
46,147 | 120,021 | 105,962 | 191,281 |
| Number of ordinary shares outstanding during the period (weighted average) |
512,152,122 | 512,033,379 | 516,769,820 | 511,668,571 |
| Basic earnings per share - euros | 0.09 | 0.23 | 0.21 | 0.37 |
| Diluted earnings per share - euros | 0.09 | 0.23 | 0.21 | 0.37 |
In the above periods, there were no diluting effects on net earnings per share, so the diluted earnings per share are equal to the basic earnings per share.
At 31 December 2021 and 30 September 2022, the Group had furnished sureties, guarantees, and comfort letters in favour of third parties corresponding to the following situations:
| 31-12-2021 | 30-09-2022 | |
|---|---|---|
| Tax authorities | 33,034 | 33,155 |
| Others | 11,695 | 13,250 |
| 44,729 | 46,405 | |
In connection with the finance obtained by Upstar from Banco Comercial Português, totalling 10 million euros, NOS signed a promissory note, proportional to the participation held, of 30% of the loan.
During the first quarterly of 2015, 2016, 2017 and 2018, and following the settlement notes to CLSU 2007-2009, 2010-2011, 2012-2013 and 2014, respectively, NOS constituted guarantees in favour of the Universal Service Compensation Fund in the amount of 23.6 million euros, 16.7 million euros, 17.5 million euros and 3.0 million euros, respectively, in order to prevent the introduction of tax enforcement proceedings in order to enforce recovery of the amounts paid.
In addition to the guarantees required by the tax authorities, sureties were set up for the current fiscal processes, which NOS was a surety for NOS SA for an amount of 14.6 million euros.
Of the loans obtained, in addition to being subject to the Group complying with its operating, legal and fiscal obligations, 100% are subject to cross-default, Pari Passu and Negative Pledge clauses and 82% to ownership clauses.
In addition, approximately 19% of the total loans obtained require that the consolidated net financial debt does not exceed
CONSOLIDATED FINANCIAL STATEMENTS 80
3 times consolidated EBITDA after leasing payment, approximately 4% of the total loans obtained require that the consolidated net financial debt does not exceed 3.5 times consolidated EBITDA after leasing payment, approximately 2% of the total loans obtained require that the consolidated net financial debt does not exceed 4 times consolidated EBITDA after leasing payment and approximately 11% require that the consolidated net financial debt does not exceed 5 times consolidated EBITDA.
Net Financial Debt = Loans - Leasings - Cash and Cash Equivalents
EBITDA = Operational Result + Depreciation, amortization and impairment losses + restructuring costs + Losses / (gains) on sale of assets + Other losses / (gains) non-recurrent
EBITDA after leasing payments = EBITDA - Leasing payments (Capital and Interest)
In December 2015, NOS signed a contract with Sport Lisboa e Benfica - Futebol SAD and Benfica TV, SA of television rights in 2016/2017 sports season, had an initial duration of three years, and might be renewed by decision of either party up to a total of 10 sports seasons, with the overall financial consideration reaching the amount of 400 million euros, divided into progressive annual amounts.
Also in December 2015, NOS signed a contract with Sporting Clube de Portugal - Futebol SAD and Sporting and Communication Platforms, S.A. for the assignment of the following rights:
The contract will last 10 seasons, concerning the rights indicated in 1) and 2) above, starting in July 2018, 12 seasons in the case of the rights stated in 3) starting in July 2017 and 12 and a half seasons in the case of the rights mentioned in 4) beginning in January 2016, with the overall financial consideration amounting to 446 million euros, divided into progressive annual amounts.
Also in December 2015, NOS SA has signed contracts regarding the television rights of home senior team football games with the following sports clubs:
The contracts began in the 2019/2020 sports season and last up to 7 seasons, apart from the contract with Sporting Clube de Braga - Futebol, SAD which lasts 9 seasons.
In May 2016, NOS and Vodafone have agreed on reciprocal availability, for several sports seasons, of sports content (national and international) owned by the companies, in order to assure to both companies, directly by the assigning party or indirectly through the transfer to third party content distribution channels or models, the availability of broadcasting rights of the sports clubs home football games, as well as the broadcasting and distribution rights of sports and sports clubs channels, whose rights are owned by each of the companies in each moment. The agreement came into force from the
Considering that the contract signed allowed for the possibility of extending the agreement to the other operators, in July assuring that every Pay TV client can have access to every relevant sports content, regardless of which operator they use.
Following the agreement signed with the remaining operators, which is being made directly in some cases and through channel yield to third parties in others, as a counterpart of the reciprocal provision of rights, the global costs are shared according with retailer telecommunications revenues and Pay TV market shares.
The estimated cash flows are estimated as follows:
| Seasons | 2022/23 | Following |
|---|---|---|
| Estimated cash-flows with the contract signed by NOS with the sports entities* | 113.6 | 498 |
| NOS estimated cash-flows for the contracts signed by NOS (net amounts charged to the operators) and for the contracts signed by the remaining operators |
58.9 | 264.4 |
* Includes direct broadcasts of games and channels, advertising and others.
Considering that, following the celebrated agreements with the remaining operators, the risks and benefits associated to contracts with teams are shared amongst the operators, the agreement was considered a collaborative agreement. For this reason, the revenue (with operators) is compensated with the expenses with teams.
Network sharing contract with Vodafone
NOS and Vodafone Portugal celebrated on 29 September 2017 an agreement of infrastructure development and sharing with a nationwide scope. This partnership allows the two Operators providing their commercial offers under a shared network at the beginning of 2018.
The agreement covers the reciprocal sharing of dark fibre in approximately 2.6 million of homes in which each of the entities shares with the other one an equivalent investment value, in other words, they share similar goods. It is assumed that both companies retain full autonomy, independence, and confidentiality concerning the design of the commercial offers, the did not originate any impact on the consolidated financial statements (according to IAS 16, this exchange of similar nonmonetary assets will be presented on a net basis).
The partnership has also been extended to mobile infrastructure sharing where it is agreed a minimum sharing of 200 mobile towers.
Celebrated agreements regarding the sharing of mobile network support infrastructure
On 22 October 2020, NOS Comunicações S.A. and NOS Technology, on the one hand, and Vodafone Portugal, Comunicações Pessoais, S.A., on the other hand, celebrated a set of agreements regarding the sharing of mobile network support infrastructure (passive infrastructures such as towers and poles) and activemobile network elements (active radio equipment such as antennas, amplifiers and remaining equipment).These agreements have the following characteristics:
a) the agreements have a nationwide scope with diverse geographical application according to the higher or lower level of population density. In higher density geographies, typically larger urban areas, the parties will pursue synergies by sharing support infrastructure. In lower density areas, typically rural and interior locations, in addition to shared use of support infrastructure, the parties will also share active mobile network.
b) the agreements focus on assets currently held, or that may be held by each party in the future, and on existing 2G, 3G and 4G technology. Incorporation of 5G technology in these agreements will depend on each to deploy this technology.
c) the agreements do not encompass spectrum sharing between the operators and each party will maintain exclusive strategic control of its networks, thus ensuring full competitive, strategic and commercial independence and the ability to differentiate in terms of customer service and provision.
Each party retains the ability to develop its mobile communications network independently.
These agreements will enable NOS to invest more efficiently by capturing value through synergies. NOS will also be able to
deploy its mobile network faster and in a more environmentally responsible way, thus benefitting customers and remaining stakeholders.
Sharing of mobile infrastructure represents an important contribution towards greater geographical cohesion and digital inclusion, both of which are essential to the sustainable development of the country.
Transactions and balances between NOS and companies of the NOS Group were eliminated in the consolidation process and are not subject to disclosure in this note.
The balances at 31 December 2021 and 30 September 2022 and transactions in the nine months ended on 30 September 2021 and 2022 between NOS Group and its associated companies, joint ventures and other related parties are as follows:
Balances at 31 December 2021
| Balances at 31 December 2021 | |||||
|---|---|---|---|---|---|
| ACCOUNTS RECEIVABLES AND PREPAID EXPENSES |
ACCOUNTS PAYABLE AND DEFERRED INCOME |
BORROWINGS | |||
| ASSOCIATED COMPANIES | 24,273 | 13,574 | - | ||
| Big Picture 2 Films | 8 | 1,287 | - | ||
| Sport TV | 24,265 | 12,287 | - | ||
| JOINTLY CONTROLLED COMPANIES | 11,261 | 1,149 | 3,004 | ||
| Dreamia Holding BV | 88 | - | 2,993 | ||
| Dreamia SA | 1,335 | 500 | 10 | ||
| Finstar | 9,214 | 66 | - | ||
| Upstar | 449 | 383 | - | ||
| ZAP Media | 142 | 142 | - | ||
| DUALGRID | 32 | 58 | - | ||
| OTHER RELATED PARTIES | 8,037 | 4,209 | - | ||
| Banco BIC Português, S.A. | 209 | 0 | - | ||
| Cascaishopping- Centro Comercial, S.A. | 217 | 271 | - | ||
| Centro Colombo Centro Comercial, SA | 487 | 682 | - | ||
| Centro Vasco da Gama-Centro Comercial,SA | 367 | 723 | - | ||
| Continente Hipermercados, SA | 102 | 1 | - | ||
| Fashion Division, S.A. | 135 | - | - | ||
| MDS Corretor de Seguros, SA | 109 | - | - | ||
| Modelo Continente Hipermercados,SA | 1,180 | 35 | - | ||
| Norteshopping-Centro Comercial, S.A. | 186 | 623 | - | ||
| S21SEC Portug-Cyber Security Services,SA | 119 | 1,136 | - | ||
| SC-Consultadoria,SA | 174 | - | - | ||
| Sierra Portugal, SA | 425 | (4) | - | ||
| Sonae MC Serviços Partilhados, SA |
1,080 | - | - | ||
| UNITEL S.a.r.l. | 112 | 255 | - | ||
| Worten-Equipamento para o Lar,SA | 1,842 | 370 | - | ||
| Other related parties | 1,294 | 117 | - | ||
| 43,571 | 18,932 | 3,004 |
Transactions in the nine months ended on 30 September 2021
| SERVICES RENDERED |
SUPPLIES AND EXTERNAL SERVICES |
INTEREST GAINS |
INTEREST LOSSES |
|
|---|---|---|---|---|
| ASSOCIATED COMPANIES | 1,707 | 14,786 | - | - |
| Big Picture 2 Films | 6 | 245 | - | - |
| Sport TV | 1,701 | 14,541 | - | - |
| JOINTLY CONTROLLED COMPANIES | 8,633 | (24) | 67 | - |
| Dreamia Holding BV | - | - | 67 | - |
| Dreamia SA | 2,973 | (168) | - | - |
| Finstar | 5,436 | (1) | - | - |
| Mstar | (2) | - | - | - |
| Upstar | 226 | 54 | - | - |
| DUALGRID | - | 91 | - | - |
| OTHER RELATED PARTIES | 15,852 | 8,789 | - | (4) |
| Banco Bic Português, S.A. | 1,293 | - | - | - |
| Capwatt Services, SA | 102 | - | - | - |
| Cascaishopping- Centro Comercial, S.A. | 10 | 371 | - | - |
| Centro Colombo- Centro Comercial, S.A. | 13 | 910 | - | - |
| Centro Vasco da Gama-Centro Comercial,SA | 10 | 636 | - | - |
| Continente Hipermercados, S.A. | 364 | 26 | - | - |
| Digitmarket-Sistemas de Informação,SA | (114) | 1,397 | - | - |
| Gaiashopping I- Centro Comercial, S.A. | 8 | 114 | - | - |
| Insco Insular de Hipermercados, S.A. | 142 | 31 | - | - |
| Maiashopping- Centro Comercial, S.A. | 7 | 371 | - | - |
| MDS Corretor de Seguros, SA | 829 | - | - | - |
| Modalfa-Comércio e Serviços,SA | 269 | - | - | - |
| Modelo Continente Hipermercados,SA | 4,142 | 105 | - | - |
| Modelo - Dist.de Mat. de Construção,S.A. | 104 | - | - | - |
| Norteshopping-Centro Comercial, S.A. | 19 | 697 | - | - |
| Olivedesportos- Publicidade Televisão e Media SA | 11 | 2,181 | - | - |
| PHARMACONTINENTE - Saúde e Higiene, S.A. | 266 | - | - | - |
| S21SEC Portug-Cyber Security Services,SA | 40 | 1,801 | - | - |
| SC-Consultadoria,SA | 674 | - | - | - |
| SDSR - Sports Division SR, S.A. | 155 | - | - | - |
| SFS - Financial Services, IME, S.A. | 178 | - | - | - |
| SFS, Gestão e Consultoria, S.A. | 8 | 295 | - | - |
| Sierra Portugal, SA | 1,666 | 57 | - | - |
| Solinca Classic, S.A. | 204 | - | - | - |
| Sonae Arauco Portugal, S.A. | 224 | - | - | - |
| Sonaecom - Serviços Partilhados, S.A | 137 | - | - | - |
| Sonae MC Serviços Partilhados, SA |
2,110 | - | - | - |
| UNITEL S.a.r.l. | (1,313) | (1,417) | - | - |
| Worten-Equipamento para o Lar,SA | 2,815 | 631 | - | - |
| ZIPPY - Comércio e Distribuição, SA | 125 | - | - | - |
| Other related parties | 1,353 | 582 | - | (4) |
| 26,192 | 23,551 | 67 | (4) |
30/09/2021
Balances at 30 September 2022
| Balances at 30 September 2022 | |||||
|---|---|---|---|---|---|
| ACCOUNTS RECEIVABLES AND PREPAID EXPENSES |
ACCOUNTS PAYABLE AND DEFERRED INCOME |
BORROWINGS | |||
| ASSOCIATED COMPANIES | 27,367 | 18,016 | - | ||
| Big Picture 2 Films | 6 | 373 | - | ||
| Sport TV | 27,361 | 17,642 | - | ||
| JOINTLY CONTROLLED COMPANIES | 14,525 | 3,009 | 3,082 | ||
| Dreamia SA | 1,689 | 1,351 | - | ||
| Dreamia Servicios de Televisión, S.L. | 97 | - | 3,082 | ||
| Finstar | 12,244 | 1,065 | - | ||
| Upstar | 341 | 142 | - | ||
| ZAP Media | 142 | - | - | ||
| MSTAR | 12 | - | - | ||
| DUALGRID | - | - | - | ||
| OTHER RELATED PARTIES | 7,785 | 2,982 | - | ||
| Banco BIC Português, S.A. | 201 | - | - | ||
| Centro Vasco da Gama-Centro Comercial,SA | 603 | 695 | - | ||
| Fashion Division, S.A. | 116 | - | - | ||
| Maiashopping- Centro Comercial, S.A. | 18 | 122 | - | ||
| MDS Corretor de Seguros, SA | 186 | - | - | ||
| Modelo Continente Hipermercados,SA | 1,042 | 52 | - | ||
| S21SEC Portug-Cyber Security Services,SA | 140 | 342 | - | ||
| SC-Consultadoria,SA | 159 | - | - | ||
| Sierra Portugal, SA | 560 | 1 | - | ||
| MC Shared Services, S.A. | 654 | - | - | ||
| UNITEL S.a.r.l. | 77 | 432 | - | ||
| Universo, IME, S.A. | 118 | - | - | ||
| Worten-Equipamento para o Lar,SA | 2,415 | 1,274 | - | ||
| Other related parties | 1,496 | 63 | - | ||
| 49,677 | 24,007 | 3,082 |
Transactions in the nine months ended on 30 September 2022
| 30/09/2022 | ||||
|---|---|---|---|---|
| SUPPLIES | ||||
| SERVICES | AND | INTEREST | INTEREST | |
| RENDERED | EXTERNAL | GAINS | LOSSES | |
| SERVICES | ||||
| ASSOCIATED COMPANIES | 1,651 | 12,538 | - | - |
| Big Picture 2 Films | 75 | 1,708 | - | - |
| Sport TV | 1,576 | 10,830 | - | - |
| JOINTLY CONTROLLED COMPANIES | 10,468 | 151 | 87 | - |
| Finstar | 7,067 | - | - | - |
| Upstar | 60 | 95 | - | - |
| Dreamia Servicios de Televisión, S.L. | - | - | 97 | - |
| Dreamia SA | 3,341 | (145) | (10) | - |
| DUALGRID | - | 201 | - | - |
| OTHER RELATED PARTIES | 19,840 | 8,846 | - | - |
| Banco Bic Português, S.A. | 1,346 | - | - | - |
| Capwatt Services, SA | 139 | - | - | - |
| Cascaishopping- Centro Comercial, S.A. | 10 | 573 | - | - |
| Centro Colombo- Centro Comercial, S.A. | 14 | 1,256 | - | - |
| Centro Vasco da Gama-Centro Comercial,SA | 10 | 559 | - | - |
| Continente Hipermercados, S.A. | 360 | 26 | - | - |
| Cosmos - Viagens e Turismo, SA | - | 206 | - | - |
| Fashion Division, S.A. | 211 | - | - | - |
| Gaiashopping I- Centro Comercial, S.A. | 8 | 217 | - | - |
| Insco Insular de Hipermercados, S.A. | 134 | 31 | - | - |
| Irmãos Vila Nova III - Imobiliária, S.A. | 118 | - | - | - |
| Maiashopping- Centro Comercial, S.A. | 7 | 241 | - | - |
| MDS Corretor de Seguros, SA | 1,061 | - | - | - |
| Modalfa-Comércio e Serviços,SA | 453 | - | - | - |
| Modelo Continente Hipermercados,SA | 4,177 | 137 | - | - |
| Modelo - Dist.de Mat. de Construção,S.A. | 109 | - | - | - |
| Norteshopping-Centro Comercial, S.A. | 10 | 1,021 | - | - |
| Olivedesportos- Publicidade Televisão e Media SA | 12 | 1,110 | - | - |
| PHARMACONTINENTE - Saúde e Higiene, S.A. | 280 | - | - | - |
| S21SEC Portug-Cyber Security Services,SA | 42 | 1,822 | - | - |
| SC-Consultadoria,SA | 638 | - | - | - |
| SDSR - Sports Division SR, S.A | 159 | - | - | - |
| SFS, Gestão e Consultoria, S.A. | 11 | 232 | - | - |
| Sierra Portugal, SA | 1,661 | 81 | - | - |
| Solinca Classic, S.A. | 266 | - | - | - |
| Sonae Arauco Portugal, S.A. | 234 | 41 | - | - |
| Sonaecom - Serviços Partilhados, S.A | 123 | - | - | - |
| MC Shared Services, S.A. | 1,860 | - | - | - |
| UNITEL S.a.r.l. | 135 | 152 | - | - |
| Universo, IME, S.A. | 219 | - | - | - |
| Worten-Equipamento para o Lar,SA | 4,388 | 521 | - | - |
| ZIPPY - Comércio e Distribuição, SA | 160 | - | - | - |
| Other related parties | 1,485 | 620 | - | - |
| 31,959 | 21,535 | 87 | - |
The Company regularly performs transactions and signs contracts with several parties within the NOS Group. Such transactions were performed on normal market terms for similar transactions, as part of the contracting companies' current activity.
ing "Other related parties" the balances and transactions with entities whose amounts are less than 100 thousand euros.
• NOS SA, NOS payment of the Annual Fee of Activity (for 2009, 2010, 2011, 2012, 2013, 2014, 2015, 2016, 2017, 2018, 2019, 2020 and 2021) as Electronic Communications Services Networks Supplier, and furthermore the refund of the amounts that meanwhile were paid within the scope of the mentioned acts of settlement was requested. Also NOS of the Annual Fee of Activity for 2020 and 2021.
The settlement amounts are, respectively, as follows:
This fee is a percentag communications revenues. NOS SA, NOS Açores, NOS Madeira and NOS Wholsale claim, namely: i) addition to defects of unconstitutionality and illegality, related to the inclusion in the cost accounting of ANACOM of the provisions made by the latter, due to judicial proceedings against the latter (including these appeals of the activity rate) and ii) that only revenues from the electronic communications business per se, subject to regulation by ANACOM, should be considered for the purposes of the application of the percentage and the calculation of the fee payable, and that revenues from television content should be excluded. Nine sentences were handed down on the matter, of which ANACOM appealed to the Central Administrative Court. To date, no judgment has been issued by the TCA in any of these cases.
The remaining proceedings are awaiting trial and/or decision.
During the first quarter of 2017, NOS was notified by ANACOM of the initiation of an infraction process related to communications of prices update at the end of 2016, beginning of 2017. In the end of the last trimester of 2020, ANACOM notified NOS of the accusation, with the practice of 4 very severe offences and 1 severe offence related, respectively, with i) the non-communication to customers of the right to rescind the contract with no charges, with (ii and iii) the supposed non-communication of pricing update and with (iv) the adequate advance and, yet, (v) the lack of information to be communicated to ANACOM. However, ANACOM did not present any value for a fine, except in relation to the with severe offence. In this case, NOS is given the possibility to settle the fine by the minimum, in the amount of 13 thousand euros, which NOS did. NOS presented its written defense on 29 January 2021. The Group is waiting for ANACOM to deliver a final decision.
During the course of the 2003 to 2022 financial years, some companies of the NOS Group were the subject of tax inspections for the 2001 to 2020 financial years. Following these inspections, NOS SGPS, as the controlling company of the Tax Group, and companies not covered by Tax Group, were notified of the corrections made to the Group's tax losses, to VAT and stamp tax and to make the payments related to the corrections made to the above exercises. The total amount of the notifications unpaid is about 36 million euros, added interest, and charges. These settlement notes, which totally were contested, are the respective lawsuits in progress.
Based on the advice obtained from the process representatives and tax consultants, the Board of Directors maintains the belief in a favorable outcome, which is why these proceedings are maintained in court. However, in accordance with the principle of prudence, an assessment of the group's level of exposure to these proceedings is made periodically, in the light of the evolution of case law, and consequently the provisions recorded for this purpose are adjusted. The Group provided the guarantees demanded by the Tax Authorities, related to these processes, according reference in Note 42.
In 2011, MEO brought against NOS SA, in the Judicial Court of Lisbon, a claim for the compensation of 10.3 million of Euros, as compensation for alleged unauthorized portability of NOS SA in the period between March 2009 and July 2011. NOS SA contested, and the Court ordered an expert opinion, meanwhile, deemed without effect. The discussion and trial hearing took place at the end of April and beginning of May 2016, and a judgment was rendered in September of the same year, which considered the action to be partially justified, based not on the occurrence of improper portability, which the Court has determined to restrict itself to those which do not correspond to the will of the proprietor. In that regard, it sentenced NOS to the payment of approximately 5.3 million euros to MEO, a decision of which NOS appealed to the Lisbon Court of Appeal. MEO, on the other hand, was satisfied with the decision and did not appeal against the part of the sentence that acquitted NOS. This Court, in the first quarter of 2018, upheld the decision of the Court of First Instance, except for interests, in which it gave reason to the claims of NOS, in the sense that interests should be counted from the citation to the action and not from the due date of the invoices. NOS filed an extraordinary appeal with the Supreme Court of Justice (SCJ), that appeal which found that the facts established by the Lower Courts were insufficient to resolve on the substance of the case. Consequently, the SCJ ordered that the court under appeal should amplify the facts. The case was transferred to the Court of First Instance for the extension of the facts. In November 2019, the Court of First Instance granted the parties the possibility of requesting the production of supplementary evidence on the subject of the extension, with NOS requesting an expert examination and the repetition of testimonial evidence. In February 2020, the Court considered that the expansion of the matter of fact leads to the need to obtain new evidence, which requires the analysis of the information relating to all portabilities that serve as the basis for the process, determining the carrying out of expert evidence for that purpose. The appointment of the expert occurred on October 2021, and the expected date for completion of the diligence is unknown.
In 2011, NOS SA brought an action in Lisbon Judicial Court against MEO, claiming payment of 22.4 million euros, for damages suffered by NOS SA, arising from violations of the Portability Regulation by MEO, in particular, the large number of unjustified refusals of portability requests by MEO in the period between February 2008 and February 2011. The court declared the performance of expert evidence of technical nature and an economic-financial survey, which were completed in February 2016 and June 2018, respectively. MEO argued for the nullity of the expert economic-financial report, which was dismissed. After the trial, in May 2022, the court partially agreed with NOS, condemning MEO to pay 7.9 million euros, a decision challenged by MEO and NOS by filing appeals in October 2022. It is the understanding of the Board of Directors, corroborated by the attorneys accompanying the process, that it is, in formal and substantive terms, likely that NOS SA will be able to win the lawsuit, due to MEO already having been convicted for the same offences by ANACOM.
In March 2018, NOS was notified of a lawsuit brought by DECO against NOS, MEO and NOWO, in which a declaration of nullity of the obligation to pay the price increases imposed on customers at the end of 2016 is requested. In April and May After the discussion and trial sessions were held in 2022, the parties are now awaiting the Court's decision. Board of Directors is convinced that the arguments used by the author are not justified, which is why it is believed that the outcome of the proceeding should not result in significant impacts for the Group's financial statements.
At 30 September 2022, accounts receivable and accounts payable include 37,139,253 euros and 43,475,093 euros, respectively, resulting from a dispute between the subsidiary NOS SA and, essentially, the operator MEO Serviços de Comunicação e Multimédia, S.A. (previously named TMN Telecomunicações Móveis Nacionais, S.A.), in relation to the non-definition of interconnection tariffs of 2001. In what concerns to that dispute with MEO, the result was totally favourable to NOS S.A., having already become final. In March 2021, MEO filed a new lawsuit against NOS, in which it claimed After NOS had lodged an objection challenging MEO's request, a prior hearing was held and, by court decision, NOS was acquitted of the case, with MEO having appealed against this decision. Further developments in the process are awaited, it being the understanding of the Board of Directors, supported by the lawyers who monitor the process, that there are, in substantive terms, good probabilities that NOS SA can win the action.
On 23 April 2014, the General Meeting approved the Regulation on Short and Medium-Term Variable Remuneration, which establishes the terms of the Share Incentive Scheme ("NOS Plan"). This plan aimed at more senior employees with the vesting taking place three years being awarded, assuming that the employee is still with the company during that period.
At 30 September 2022, the unvested plans are:
| NUMBER OF SHARES |
|
|---|---|
| NOS PLAN | |
| Plan 2020 | 1,462,485 |
| Plan 2021 | 1,323,572 |
| Plan 2022 | 1,081,903 |
During the nine months ended on 30 September 2022, the movements that occurred in the plans are detailed as follows:
| NOS PLAN 2019 |
NOS PLAN 2020 |
NOS PLAN 2021 |
NOS PLAN 2022 |
TOTAL | |
|---|---|---|---|---|---|
| BALANCE AS AT 31 DECEMBER 2021: | 761,557 | 1,411,601 | 1,276,908 | - | 3,450,066 |
| MOVEMENTS IN THE PERIOD: | |||||
| Awarded | - | - | - | 1,032,100 | 1,032,100 |
| Vested | (761,064) | (16,081) | (13,236) | (876) | (791,257) |
| Cancelled / elapsed / corrected (1) | (493) | 66,965 | 59,900 | 50,679 | 177,051 |
| BALANCE AS AT 30 SEPTEMBER 2022 | - | 1,462,485 | 1,323,572 | 1,081,903 | 3,867,960 |
(1) Refers mainly to correction made for dividends paid, exit of employees not entitled to the vesting of shares and other adjustments resulting from the way the shares are vested.
The share plans costs are recognised over the year between the awarding and vesting date of those shares. The responsibility is calculated taking into consideration the share price at award date of each plan, for plans settled in shares, or at the closing date, for plans settled in cash. The responsibility is recorded in Reserves and Accrued Expenses, respectively.
As at 30 September 2022, the outstanding responsibility related to these plans is 5.680 thousand euros and is recorded in Reserves.
The costs recognised in previous years and in the financial year, and its liabilities are as follows:
| ACCRUED EXPENSES |
RESERVES | TOTAL | |
|---|---|---|---|
| Costs recognised in previous years related to plans as at 31 December 2021 |
1,262 | 4,861 | 6,123 |
| Costs of plans vested in the period | - | (4,006) | (4,006) |
| Reclassification of plans to settle in cash to reserves | (923) | 923 | - |
| Costs incured in the period and others | (339) | 3,902 | 3,563 |
| TOTAL COST OF THE PLANS | - | 5,680 | 5,680 |
In the nine months ended 30 September 2022, plans to be settled in cash were paid for in shares. Additionally, as it is projected that these plans will be paid through the delivery of shares in the following years, the responsibility, valued at fair value, was reclassified to reserves based on the share price at the date of this change in estimate.
On 21 April 2022, NOS reached an agreement with Cellnex for the sale of an additional portfolio up to 350 mobile sites (towers and rooftops), as part of the long partnership established in 2020 and which translates into a long term agreement concerning the provision, by Cellnex, of hosting services for NOS active network on the passive infrastructure acquired by Cellnex.
During the nine months period ended September 30, 2022, NOS sold a portfolio of 193 mobile sites and received 118.3 million euros, resulting in a gain of 74.7 million euros, recognized under Losses / (gains) on disposal of assets.
As of September 30, 2022, the assets and liabilities related to unsold mobile sites were classified as held for sale.
At 31 December 2021 and 30 September 2022, the assets and liabilities held for sale are as follows:
| 30-09-2022 | |
|---|---|
| ASSETS | |
| NON - CURRENT ASSETS | |
| Tangible assets | 3,539 |
| Rights of use | 1,162 |
| TOTAL NON - CURRENT ASSETS | 4,701 |
| TOTAL ASSETS HELD FOR SALE | 4,701 |
| LIABILITIES | |
| NON - CURRENT LIABILITIES | |
| Borrowings | (861) |
| Provisions | (420) |
| TOTAL NON - CURRENT LIABILITIES | (1,281) |
| CURRENT LIABILITIES: | |
| Borrowings | (311) |
| TOTAL CURRENT LIABILITIES | (311) |
| TOTAL LIABILITIES RELATED WITH ASSETS HELD FOR SALE | (1,592) |
| TOTAL ASSETS AND LIABILITIES | 3,109 |
47.1. Preventive seizure of 26.075% of the share capital of NOS SGPS, S.A.
by this company of the communication received from the Central Criminal Investigation Court of Lisbon (hereinafter Tribunal) to proceed to the preventive seizure of 26.075% of the share capital of NOS, SGPS, SA, corresponding to half of the shareholding in NOS held by ZOPT and, indirectly, by the companies Unitel International Holdings, BV and Kento Holding by Eng.ª Isabel dos Santos.
Under the terms of the aforementioned decision, the foreclosed shares are deprived of the exercise of voting rights and the right to receive dividends, the latter of which must be deposited with Caixa Geral de Depósitos, S.A. at the court's discretion.
The other half of ZOPT's participation in NOS share capital, corresponding to an identical percentage of 26.075% - and which, at least in line with the criterion used by the Court, embodies the 50% held in ZOPT by SONAECOM - was not subject to seizure, nor the rights attached to it were subject to any limitation.
On 12 June 2020, ZOPT was authorized by the Lisbon Central Criminal Investigation Court to exercise the voting right corresponding to the 26.075% of NOS share capital preventively seized under the aforementioned Court order.
Following the communication of April 4, 2020, ZOPT filed third-party claims, which, in June 2020, were rejected by the investigating judge on the grounds that the Portuguese courts had no jurisdiction to hear and decide them, a decision that, having been appealed by ZOPT, was revoked by the Lisbon Court of Appeal, in February 2021.
In November 2021, the Investigating Judge, , dismissed the third-party embargoes presented by ZOPT, a decision that, according to ZOPT, was appealed to the Court of Appeal. After being admitted in February 2022, in June 2022, ZOPT was notified of the decision dismissing the appeal. Further developments are awaited.
On February 24, 2022, Russian troops invaded Ukraine. The military attack led to significant human casualties, population displacement, damage in infrastructures and disruption in the economic activity in Ukraine.
In response, multiple jurisdictions, including the European Union, imposed various economic sanctions on Russia (and, in some cases, Belarus).
This conflict comes at a time of significant uncertainty and global economic volatility, when many sectors/jurisdictions were already facing the impacts of transports disruptions and the rising of commodity and raw material prices as a result of increased demand from consumers as the COVID-19 pandemic eased. These conditions are likely to be significantly exacerbated by the wider effects of the war in Ukraine, increasing inflationary pressures and weakening the post-pandemic recovery.
NOS, not having significant transactions with the Russian and Ukrainian markets, is exposed to general inflationary pressures. It is the conviction of the Board of Directors that, despite these uncertainties, the continuity of its operations is not jeopardized.
Until the date of approval of the present document, no subsequent relevant events have occurred being eligible to disclose in this report.
These financial statements are a translation of financial statements originally issued in Portuguese in accordance with International Financial Reporting Standards (IAS / IFRS) as adopted by the European Union and the format and disclosures required by those Standards, some of which may not conform to or be required by generally accepted accounting principles in other countries. In the event of discrepancies, the Portuguese language version prevails.
| PERCENTAGE OF OWNERSHIP | ||||||
|---|---|---|---|---|---|---|
| COMPANY | HEADQUARTERS | PRINCIPAL ACTIVITY | SHARE HOLDER |
EFFECTIVE 30-09-2021 |
DIRECT 30-09-2022 |
EFFECTIVE 30-09-2022 |
| NOS, SGPS, S.A. (Holding) | Lisbon | Management of investments | ||||
| Fundo de Capital de Risco N5G (a) | Lisbon | Invest and support the development of companies that aim to commercialize technologies and products that result from scientific and technological research |
NOS | 100% | 100% | 100% |
| Empracine - Empresa Promotora de Atividades Cinematográficas, Lda. |
Lisbon | Movies exhibition | Lusomundo SII | 100% | 100% | 100% |
| Lusomundo - Sociedade de investimentos imobiliários SGPS, SA |
Lisbon | Management of Real Estate | NOS | 100% | 100% | 100% |
| Lusomundo Imobiliária 2, S.A. | Lisbon | Management of Real Estate | Lusomundo SII | 100% | 100% | 100% |
| Lusomundo Moçambique, Lda. (b) | Maputo | Movies exhibition and commercialization of other public events | $NOS + NOS$ Cinemas |
100% | 100% | 100% |
| NOS Sistemas, S.A. | Lisbon | Rendering of consulting services in the area of information systems | NOS Comunicações |
100% | 100% | 100% |
| NOS Sistemas España, S.L. | Madrid | Rendering of consulting services in the area of information systems | NOS Comunicações |
100% | 100% | 100% |
| NOS Açores Comunicações, S.A. | Ponta Delgada | Distribution of television by cable and satellite and operation of telecommunications services in the Azores area |
NOS Comunicações |
84% | 84% | 84% |
| NOS Audiovisuais, SGPS, S.A. | Lisbon | Management of investments participations in other companies as an indirect form of economic activity |
NOS | 100% | 100% | 100% |
| NOS Property, S.A. | Lisbon | Management of investments participations in other companies as an indirect form of economic activity |
NOS | 100% | 100% | 100% |
| NOS Comunicações, S.A. | Lisbon | Implementation, operation, exploitation and offer of networks and rendering services of electronic comunications and related resources; offer and commercialisation of products and equipments of electronic communications |
NOS | 100% | 100% | 100% |
| NOS Corporate Center, S.A. | Lisbon | Service rendered of business support and management and administration consultancy services, including accounting, logistics, administrative, financial, tax, human resources services and any other services that are subsequent or related to previous activities |
NOS | 100% | 100% | 100% |
| NOS Inovação, S.A. | Matosinhos | Achievement and promotion of scientific activities and research and development as well as the demonstration, dissemination, technology transfer and formation in the fields of services and information systems and fixed solutions and last generation mobile, television, internet, voice and data, and licensing and engineering services and consultancy |
NOS | 100% | 100% | 100% |
| NOS Internacional, SGPS, S.A. | Lisbon | Management of investments participations in other companies as an indirect form of economic activity |
NOS | 100% | 100% | 100% |
| NOS Lusomundo Audiovisuais, S.A. | Lisbon | Import, distribution, commercialization and production of audiovisual products |
NOS Audiovisuais SGPS |
100% | 100% | 100% |
| NOS Lusomundo Cinemas, S.A. | Lisbon | Movies exhibition and commercialization of other public events | NOS | 100% | 100% | 100% |
| NOS Audio - Sales and Distribution, S.A. (c) | Lisbon | Movies distribution, editing, distribution, commercialization and production of audiovisual products |
NOS | 100% | 100% | 100% |
| NOS Madeira Comunicações, S.A. | Funchal | Distribution of television by cable and satellite and operation of telecommunications services in the Madeira area |
NOS Comunicações |
78% | 78% | 78% |
| NOS Mediação de Seguros, S.A. (c) | Lisbon | Insurance distribution and related activities | NOS | 100% | 100% | 100% |
| NOS TECHNOLOGY - Concepção, Construção e Gestão de Redes de Comunicações, S.A. ('Artis') |
Matosinhos | Design, construction, management and exploitation of electronic communications networks and their equipment and infrastructure, management of technologic assets and rendering of related services |
NOS Comunicações |
100% | 100% | 100% |
| NOS Wholesale, S.A. | Lisbon | Trade, service rendered and exploitation of wholesale offerings of national and international electronic communications services and related services, namely information and communication technology services |
NOS SA | 0% | 100% | 100% |
| Per-Mar - Sociedade de Construções, S.A. ('Per- Mar') |
Lisbon | Purchase, sale, renting and operation of property and commercial establishments |
NOS SA | 100% | 100% | 100% |
| Sontária - Empreendimentos Imobiliários, S.A. ('Sontária') |
Lisbon | Realisation of urbanisation and building construction, planning, urban management, studies, construction and property management, buy and sale of properties and resale of purchased for that purpose |
NOS Comunicações |
100% | 100% | 100% |
| Teliz Holding, S.A. (d) | Lisbon | Management of investments financing activities | NOS | 100% | 100% | 100% |
(a) NOS SGPS: 27,50%; NOS Sistemas: 20,00%; NOS Internacional SGPS: 20,00%; NOS Audiovisuais SGPS: 22,50%; NOS Cinemas: 10,00%
(b) NOS SGPS: 90%; NOS Lusomundo Cinemas: 10%
(c) Company disposed of on 29 June 2020
(d) Previously designated Teliz Holding B.V.
| SHARE | PERCENTAGE OF OWNERSHIP | |||||
|---|---|---|---|---|---|---|
| COMPANY | HEADOUARTERS | PRINCIPAL ACTIVITY | HOLDER | EFFECTIVE | DIRECT | EFFECTIVE |
| 30-09-2021 | 30-09-2022 | 30-09-2022 | ||||
| Big Picture 2 Films, S.A. | Oeiras | Import, distribution, commercialization and production of audiovisual products |
NOS Audiovisuais |
20.00% | 20.00% | 20.00% |
| Big Picture Films, S.L. | Madrid | Distribution and commercialization of movies | Big Picture 2 Films, S.A. |
20.00% | 100.00% | 20.00% |
| Sport TV Portugal, S.A. | Lisbon | Conception, production, realization and commercialization of sports programs for telebroadcasting, purchase and resale of the rights to broadcast sports programs for television and provision of publicity services |
NOS | 25.00% | 25.00% | 25.00% |
| SHARE | PERCENTAGE OF OWNERSHIP | |||||
|---|---|---|---|---|---|---|
| COMPANY | HEADQUARTERS | PRINCIPAL ACTIVITY | HOLDER | EFFECTIVE | DIRECT | EFFECTIVE |
| 30-09-2021 | 30-09-2022 | 30-09-2022 | ||||
| Dreamia Holding B.V. (a) | Amsterdam | Conception, production, realization and commercialization of audiovisual contents and provision of publicity services |
NOS Audiovisuais |
0.00% | ||
| Dreamia Servicios de Televisión, S.L. (b) | Madrid | Management of investments | NOS Audiovisuais |
50.00% | 50.00% | 50.00% |
| Dreamia - Servicos de Televisão, S.A. | Lisbon | Conception, production, realization and commercialization of audiovisual contents and provision of publicity services |
Dreamia SL | 50.00% | 100.00% | 50.00% |
| FINSTAR - Sociedade de Investimentos e Participações, S.A. |
Luanda | Distribution of television by satellite, operation of telecommunications services |
Teliz Holding S.A. |
30.00% | 30.00% | 30.00% |
| Upstar Comunicações S.A. | Vendas Novas | Electronic communications services provider, production, commercialization, broadcasting and distribution of audiovisual contents |
NOS | 30.00% | 30.00% | 30.00% |
| ZAP Media S.A. | Luanda | Projects development and activities in the areas of entertainment, telecommunications and related technologies, the production and distribution of the contents and the design, implementation and operation of infrastructure and related facilities |
FINSTAR | 30.00% | 100.00% | 30.00% |
| MSTAR, SA (c) | Maputo | Satellite television signal distribution, operation and provision of telecommunications services |
$NOS + NOS$ Comunicações |
30.00% | 30.00% | 30.00% |
| Dualgrid - Gestão de Redes Partilhas, S.A. | Lisbon | Rendering of technical, administrative and financial consultancy services to telecommunications companies, planning and management of telecommunications networks and any other activities that are complementary, subsidiary or accessory to those referred to in the previous numbers |
NOS Comunicações |
50% | 50.00% | 50.00% |
(a) Merged company in Dreamia Servicios de Televisión, S.L.
(b) At 3 October 2020, NOS Lusomundo Audiovisuais acquired 1,500 shares of Dreamia Servicios de Televisión, S.L.
(c) NOS SGPS: 29,40%; NOS Comunicações: 0,60%.
Financial investments whose participation is less than 50% were considered as joint arrangements due to shareholder agreements that confer joint control.
| COMPANY | HEADQUARTERS | PRINCIPAL ACTIVITY | SHARE HOLDER |
PERCENTAGE OF OWNERSHIP | ||
|---|---|---|---|---|---|---|
| EFFECTIVE 30-09-2021 |
DIRECT 30-09-2022 |
EFFECTIVE 30-09-2022 |
||||
| Associação Laboratório Colaborativo em Transformação Digital - DTX |
Guimarães | Research applied to different areas associated with digital transformation to encourage cooperation between R&D units, educational institutions and the productive sector |
NOS Inovação | 4.92% | 4.92% | 4.92% |
| Fundo TechTransfer | Lisbon | Invest and support the development of companies that aim to commercialize technologies and products that result from scientific and technological research |
NOS Inovação | 3.90% | 3.90% | 3.90% |
| RK. Al - Servicos de Processamento de Imagens e Análise de Dados, S.A. (Reckon.ai) |
Porto | Activities related to information and computer technologies, images and data processing and analysis, hosting and related activities and IT consulting |
Fundo NOS 5G | 0.00% | 11.76% | 11.76% |
| SkillAugment, Lda (KIT-AR) (a) | Aveiro | Conception, design, methodology development, programming, editing, testing, support and maintenance of software, online web platforms and virtual and augmented reality systems, with machine learning and artificial intelligence capabilities, in industrial and business environments. |
Fundo NOS 5G + Fundo TechTransfer |
0.00% | 0.00% | |
| Seems Possible, Lda. (Knock Healthcare) (a) | Porto | Data processing activities, information domiciliation and related activities, namely in the health area. |
Fundo NOS 5G | 0.00% | 0.00% | |
| Mindprober | Braga | The company aims to measure the emotional impact that multimedia content has on consumers, through wearables that monitor biometric data such as sweat or heartbeat acceleration. |
Fundo NOS 5G | 2.09% | 2.09% | |
| Didimo Inc. (b) | Dover | DIDIMO has developed a platform that allows the generation, in about 60 seconds, of 3D digital avatars based on photographs. |
Fundo NOS 5G | 0.00% | 0.00% | |
| Didimo SA (b) | Porto | DIDIMO has developed a platform that allows the generation, in about 60 seconds, of 3D digital avatars based on photographs. |
Fundo NOS 5G | 0.00% | 0.00% | |
| Lusitânia Vida - Companhia de Seguros, S.A ("Lusitânia Vida") |
Lisbon | Insurance services | NOS | 0.03% | 0.03% | 0.03% |
| Lusitânia - Companhia de Seguros, S.A ("Lusitânia Seguros") |
Lisbon | Insurance services | NOS | 0.02% | 0.02% | 0.02% |
(a) The investment in the entity was in convertible debt, so the interest is 0%.
(b) The NOS 5G Fund only holds 1 share in each entity, representing 0.0% of the capital.
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