Interim / Quarterly Report • Nov 29, 2019
Interim / Quarterly Report
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| 9M19 Highlights |
4 |
|---|---|
| Governing | |
| Bodies | 5 |
| Management Report Business Review Consolidated Financial Review |
6 6 10 |
| Consolidated Financial Statements |
17 |
| 9M19 Highlights | 9M18 | 9M19 | 9M19 / 9M18 |
|---|---|---|---|
| Financial Highlights | |||
| Operating Revenues | 1,167.3 | 1,185.2 | 1.5% |
| Telco Revenues | 1,116.1 | 1,128.0 | 1.1% |
| EBITDA | 491.7 | 505.3 | 2.8% |
| EBITDA Margin | 42.1% | 42.6% | 0.5pp |
| Telco | 450.9 | 463.3 | 2.8% |
| EBITDA Margin | 40.4% | 41.1% | 0.7pp |
| Net Income Before Associates & Non-Controlling Interests | 129.0 | 135.6 | 5.1% |
| EBITDA - Total CAPEX Excluding Leasings | 212.2 | 230.7 | 8.7% |
| Total Free Cash-Flow Before Dividends, Financial Investments and Own Shares Acquisition |
180.1 | 144.4 | (19.9%) |
As at the date of this report, 6 November 2019 Governing Bodies had the following composition:
| Chairman of the Board of Directors | Jorge de Brito Pereira |
|---|---|
| Chairman of the Executive Committee | Miguel Almeida |
| Members of the Executive Committee | José Pedro Pereira da Costa, Vice-Presidente, CFO Ana Paula Marques, Vice-Presidente Jorge Graça Luis Nascimento Manuel Ramalho Eanes |
| Members | Angelo Paupério António Domingues António Lobo Xavier António Correia Teles Catarina Tavira Van-Dúnem Cláudia Azevedo João Torres Dolores Joaquim de Oliveira Mário Leite da Silva Paula Neves Oliveira |
| Fiscal Board | |
| Chairman of the Fiscal Board Members |
José Pereira Alves Patrícia Couto Viana |
| Alternate | Paulo Mota Pinto Ana Luisa Aniceto da Fonte |
| Officials of the General Meeting of Shareholders | |
| Chairman | Pedro Canastra de Azevedo Maia |
| Secretary | Tiago Antunes da Cunha Ferreira de Lemos |
| Statutory Auditor | |
| In Office | ERNST & YOUNG AUDIT & ASSOCIADOS, SROC, S.A., (ROC number 178 and registered at CMVM with the number 9011, represented by Sandra e Sousa Amorim (ROC number 1213); |
| Alternate | Pedro Jorge Pinto Monteiro da Silva e Paiva (ROC n.º 1258) |
Core service growth continued to pick up in 3Q19 led by a seasonal recovery in mobile with 39.7 thousand net adds (41.1 thousand in 9M19) and by stronger take up in Pay TV with net growth of 14.2 thousand Pay TV subscribers (8.0 thousand in 9M19), with Fixed access growth more than offsetting the continued decline in DTH subscribers. Fixed broadband services grew in line with the Pay TV base consistent with the fact that they tend to be sold on top of Pay TV offers.
In late May, NOS launched a new residential value proposition focusing on more flexible offers for fixed and mobile services. The commercial focus is progressively detracting from that enable customers to subscribe to bundles whilst retaining flexibility to add or subtract services as a function of specific usage profiles and without having to disrupt the base tariff plan. To reflect this change in operating momentum, we have adapted our KPI reporting invoiced for fixed and mobile services on the same monthly bill. At the end of 9M19, 914.8 thousand customers were subscribing to converged and integrated offers, representing 59.1% of the fixed customer base with the revised commercial positioning having given a boost to fixed and mobile service take-up. Campaigns for the consumer segment have also placed strong emphasis on the advantages of increasing the number of mobile cards within an account as a means of driving a more than proportionate increase in mobile data allowances. These marketing shifts are designed to encourage customers to upgrade services, receiving more value for money on a like for like basis whilst driving progressive growth in monthly revenues.
In comparison with 9M18, total premium channel subscriptions remained flat however they posted growth of 6% in comparison to the previous quarter driven by a boost in sports channel subscriptions with the start of the football season. Premium sport subscriptions are starting to show tenuous signs of recovery versus previous quarters however yoy revenue from premium channels still posted negative growth due to the less favourable mix with increased weight of lower priced channels.
Fixed residential ARPU was broadly flat yoy at 44.1 euros per customer, in comparison with 9M18 (44.2 euros). However, this reflects a combination of more positive underlying trends in basic services which were mitigated by regulatory effects and the still negative yoy performance of premium revenues. Basic customer revenue ARPU grew by 1.1% yoy, reflecting upselling and index-based price events which helped to offset the yoy decline in premium channel revenues per sub as well as the negative impact to discretionary traffic revenues resulting from the regulatory imposition of internatonal call caps within Europe as from May 2019 and the MTR cuts of July 2018.
Important customer service and transactional APPs were launched during 3Q19, designed to fundamentally improve customer experience, service take-up and general operating r favourite theatres, send tickets to friends or buy popcorn and other bar products in advance of the session. The two service APPs, for NOS and WTF customers (our stand-alone mobile brand for the teenage/young adult segment), represent key milestones in our digitalization programme and provide
insights to better understanding and leveraging customer preferences and usage profiles and a platform to develop more targeted and effective digital marketing initiatives. Over the NOS APP, customers can actively manage their tariff plans, data allowances and consumption and general account settings, make payments at any time and always have their NOS Cinema card at hand. In addition to tariff and data allowance management and consumption, the WTF APP also includes several additional features that are appealing to the target segment such as management of UBER and UBER Eats vouchers and NOS Cinema Vouchers, amongst others. All the APPs are proving a big success, with ratings on digital stores ranging from 4.5 to 4.7 and consistently listing amongst the top 20 downloads since respective launches.
Within the B2B segment, operating performance was positive with yoy growth in the number of client accounts managed across the main segments and importantly posting some growth in average revenue per account, reflecting the effort being made to compensate the generalized decline in traditional telco revenues with new data and IT driven services. Wholesale activity was very positive primarily due to a seasonal pick-up in voice and data traffic in 1Q19 and 3Q19 and to structural growth in revenues from network sharing arrangements in place.
Our FttH deployment programme is going according to plan and as a result, total fixed NGN coverage increased by 181 thousand households in 9M19 to 4.6 million households, of which 31% were FttH, up from 29% last quarter and 22% in 9M18. NGN coverage is delivered over our legacy Docsis 3.1 and FttH networks, new FttH build and wholesaled FttH network within the context of the sharing agreement with Vodafone and finally through wholesale access from dst, a regional FttH provider.
Modernization of our mobile infrastructure with the upgrade to a 5G ready single RAN architecture is now complete and network performance and customer satisfaction levels are already reflecting this important investment. We continuously evaluate opportunities for further improvement in the quality and reach of our networks, whilst approaching investments in a technologically rational and cost-effective manner, as is the case of our FttH sharing deal that is currently being deployed.
| Operating Indicators ('000) | 9M18 | 9M19 | 9M19 / 9M18 |
|---|---|---|---|
| Telco (1) | |||
| Homes Passed | 4,277.4 | 4,608.9 | 7.8% |
| Total RGUs | 9,548.9 | 9,652.9 | 1.1% |
| o.w. Consumer RGUs | 8,055.6 | 8,138.0 | 1.0% |
| o.w. Business RGUs | 1,493.3 | 1,514.9 | 1.4% |
| Mobile | 4,761.3 | 4,808.8 | 1.0% |
| Pre-Paid | 2,051.1 | 2,013.1 | (1.9%) |
| Post-Paid | 2,710.2 | 2,795.6 | 3.2% |
| Pay TV Fixed Access (2) | 1,312.5 | 1,347.2 | 2.6% |
| Pay TV DTH | 309.2 | 284.1 | (8.1%) |
| Fixed Voice | 1,765.6 | 1,773.4 | 0.4% |
| Broadband | 1,369.4 | 1,406.3 | 2.7% |
| Others and Data | 31.0 | 33.0 | 6.5% |
| 3,4&5P Subscribers (Fixed Access) | 1,147.3 | 1,195.7 | 4.2% |
| % 3,4&5P (Fixed Access) | 87.4% | 88.7% | 1.3pp |
| Convergent + Integrated RGUs | 4,432.8 | 4,622.1 | 4.3% |
| Convergent + Integrated Customers | 880.4 | 914.8 | 3.9% |
| Fixed Convergent + Integrated Customers as % of Fixed Access Customers | 57.4% | 59.1% | 1.7pp |
| % Convergent + Integrated Customers | 54.3% | 56.1% | 1.8pp |
| Residential ARPU / Unique Subscriber With Fixed Access (Euros) | 44.2 | 44.1 | (0.2%) |
| Net Adds | |||
| Homes Passed | 183.4 | 181.4 | (1.1%) |
| Total RGUs | 149.0 | 72.4 | (51.4%) |
| o.w. Consumer RGUs | 109.1 | 59.7 | (45.3%) |
| o.w. Business RGUs | 39.9 | 12.7 | (68.0%) |
| Mobile | 91.2 | 41.1 | (54.9%) |
| Pre-Paid | (28.6) | (16.1) | (43.6%) |
| Post-Paid | 119.8 | 57.2 | (52.2%) |
| Pay TV Fixed Access | 20.3 | 22.7 | 12.2% |
| Pay TV DTH | (15.2) | (14.7) | (3.1%) |
| Fixed Voice | 12.8 | (0.9) | (106.7%) |
| Broadband | 39.7 | 22.9 | (42.4%) |
| Others and Data | 0.1 | 1.3 | 992.5% |
| 3,4&5P Subscribers (Fixed Access) | 35.2 | 32.4 | (7.9%) |
| Convergent + Integrated RGUs | 782.3 | 139.3 | (82.2%) |
| Convergent + Integrated Customers | 158.9 | 25.0 | (84.3%) |
(1) Portuguese Operations. (2) Fixed Access Subscribers include customers served by the HFC, FTTH and ULL networks and indirect access customers.
| Operating Indicators ('000) | 9M18 | 9M19 | 9M19 / 9M18 |
|---|---|---|---|
| Cinema (1) | |||
| Revenue per Ticket (Euros) | 4.9 | 5.2 | 6.1% |
| Tickets Sold - NOS | 6,346.9 | 6,860.9 | 8.1% |
| Tickets Sold - Total Portuguese Market (2) | 10,538.5 | 11,471.4 | 8.9% |
| Screens (units) | 212 | 218 | 2.8% |
(1) Portuguese Operations (2) Source: ICA - Portuguese Institute For Cinema and Audiovisuals
st quarter ever in terms of ticket sales with a yoy improvement of 16.2% to 2.764 million in 3Q19, also reflecting the positive performance of the market as a whole. This record performance was due to an improved line-up of box office hits in comparison with 3Q18 and also with previous quarters. Although trends in Portugal tend to follow those of other western European and anglo-saxon markets, 3Q19 was significantly stronger in Portugal with the exhibition of very popular and more family centric animated films and super-hero franchises. In 9M19, the number of NOS cinema ticket sales increased by 8.1% to 6.861 million tickets.
The top films exhibited in 9M , Spider- Average revenue per ticket improved by 6.1% yoy to 5.2 euros in 9M -office revenues increased by 7.0% in 9M19 as NOS continues to lead the market with a 61.3% share of gross revenues.
In the Audiovisuals arena, NOS distributed 8 of the top 10 cinema box-office hits in 9M19, and Fast & Furious Presents: Hobbs & Shaw maintaining its clear leadership status in this market.
The following Consolidated Financial Statements have been subject to limited review.
accounting of operating lease contracts. Restated values for the corresponding periods in 2018 are presented in this report and are the basis for all comparisons made.
| Profit and Loss Statement (Millions of Euros) |
9M18 | 9M19 | 9M19 / 9M18 |
|---|---|---|---|
| Operating Revenues | 1,167.3 | 1,185.2 | 1.5% |
| Telco | 1,116.1 | 1,128.0 | 1.1% |
| Consumer Revenues | 727.5 | 729.5 | 0.3% |
| Business and Wholesale Revenues | 332.0 | 340.5 | 2.6% |
| Others and Eliminations | 56.7 | 58.0 | 2.3% |
| Audiovisuals & Cinema (1) | 81.7 | 88.4 | 8.3% |
| Others and Eliminations | (30.5) | (31.2) | 2.4% |
| Operating Costs Excluding D&A | (675.6) | (679.8) | 0.6% |
| Direct Costs | (393.4) | (399.0) | 1.4% |
| Non-Direct Costs (2) | (282.2) | (280.8) | (0.5%) |
| EBITDA (3) | 491.7 | 505.3 | 2.8% |
| EBITDA Margin | 42.1% | 42.6% | 0.5pp |
| Telco | 450.9 | 463.3 | 2.8% |
| EBITDA Margin | 40.4% | 41.1% | 0.7pp |
| Cinema Exhibition and Audiovisuals | 40.8 | 42.0 | 2.9% |
| EBITDA Margin | 50.0% | 47.5% | (2.5pp) |
| Depreciation and Amortization | (319.8) | (298.0) | (6.8%) |
| (Other Expenses) / Income | 4.1 | (14.0) | n.a. |
| Operating Profit (EBIT) (4) | 176.0 | 193.4 | 9.9% |
| Share of results of associates and joint ventures | (4.5) | 2.3 | n.a. |
| (Financial Expenses) / Income | (24.1) | (19.2) | (20.3%) |
| Income Before Income Taxes | 147.5 | 176.5 | 19.7% |
| Income Taxes | (22.9) | (38.6) | 68.4% |
| Net Income Before Associates & Non-Controlling Interests | 129.0 | 135.6 | 5.1% |
| Income From Continued Operations | 124.5 | 137.9 | 10.7% |
| o.w. Attributable to Non-Controlling Interests | 0.6 | 0.2 | (60.9%) |
| Net Income | 125.1 | 138.1 | 10.4% |
(1) Includes cinema operations in M ozambique.
(2) Non-Direct Costs Include Commercial & Customer Related Costs and Operating & Structure Costs (3) EBITDA = Operating Profit + Depreciation and Amortization + Integration Costs + Net Losses/Gains on Disposal of Assets + Other Non-Recurrent Losses/Gains
(4) EBIT = Income Before Financials and Income Taxes.
In 9M19, Consolidated Revenue growth amounted to 1.5% yoy to 1,185.2 million euros, with growth in core telco revenues of 1.1% to 1,128.0 million euros and continued strong recovery in the audiovisuals and cinema businesses with growth of 8.3% to 88.4 million euros, driven by a record quarter in revenues in 3Q19, posting 15.6% yoy growth to 33.6 million euros.
Within the telco division, Consumer revenues grew by 0.3% yoy to 729.5 million euros, with Customer Revenues growing 1.0%, reflecting a combination of 2.3% growth in fixed residential Customer revenues, continued decline in DTH Customer revenues of more than 10% yoy, and strong growth in Personal (stand-alone mobile) Customer revenues of 5.0%.
Business and Wholesale Revenues posted yoy growth of 2.6% to 340.5 million euros with growth of 2.8% in Business Customer Revenues and 7.0% in Wholesale revenues, which was partially offset by lower Equipment sales. As mentioned above in the operating discussion, the very good performance in Wholesale was due to a strong pick-up in voice and data traffic and, to a lesser degree, to structural growth in revenues from network sharing.
Total Customer Revenues were negatively impacted by the lower yoy level of premium sports channel revenues as discussed above, (down yoy by 10.5%) and by the the regulatory imposition of tariff caps on international calls within Europe, which came into force in May 2019. Operator revenues yoy comparisons in 3Q19 were no longer impacted by the MTR cuts of July 2018 and posted a marginal decline of just 1.3% (-13.5% in 9M19).
The strong performance in 2Q19 and 3Q19 in Audiovisuals and Cinemas led to growth of revenues of 8.3%, with Cinema exhibition revenues growing by 12.8% yoy to 50.8 million euros and Audiovisuals revenues by 6.3% to 50.0 million euros, the latter influenced by the underlying trends in cinema going.
Total OPEX grew by 0.6% to 679.8 million euros reflecting growth of 1.4% in direct costs to 399.0 million euros and a slight decline of 0.5% in non-direct costs to 280.8 million euros. Consolidated EBITDA grew by 2.8%, above the pace of revenues, to 505.3 million euros and representing an increase in Group EBITDA margin of 0.5 pp to 42.6%. Telco EBITDA grew by 2.8% to 463.3 million euros representing a 41.1% EBITDA margin (up 0.7pp yoy) and Audiovisuals and Cinema by 2.9% to 42.0 million euros, representing a margin of 47.5% (down 2.5pp yoy).
Direct Costs yoy performance was impacted by increased Corporate IT project costs and higher movie royalties with the strong box office sales, offset by lower traffic related costs due to the regulated cuts in MTRs in July 2018. Non-direct costs posted a decline of 0.5% to 280.8 million euros resulting from a number of opposite trends in the main costs aggregates, namely a decline in Commercial and Customer related costs, with particular focus on areas such as customer billing and finishing, and an increase in Operating and Structure Costs with the main impact related to an adjustment in provisions for bad debt in 2018.
Depreciation and Amortization declined by 6.8% yoy in 9M19 to 298.0 million euros mainly due to a significantly lower level of network imparities when compared with those recorded in 9M18 as a result of the single RAN modernization project underway. This reduction was partially mitigated by a downward revision of average economic life of network assets to 8 years.
Net Results increased by 10.4% to 138.1 million euros. Net financial expenses posted a positive yoy performance with the various refinanciang deals closed in previous quarters driving a significantly lower average cost of debt, as explained ahead in the capital structure section. The average provision for taxes amounted to 38.6 million euros, primarily due to the higher level of pre-tax results and and a higher effective tax rate due to a timing differential when recognizing deferred taxes related to fiscal benefits.
| CAPEX (Millions of Euros) (1) | 9M18 | 9M19 | 9M19 / 9M18 |
|---|---|---|---|
| Total CAPEX Excluding Leasing Contracts | 279.6 | 274.7 | (1.7%) |
| Telco | 258.7 | 254.8 | (1.5%) |
| % of Telco Revenues | 23.2% | 22.6% | (0.6pp) |
| o.w. Technical CAPEX | 150.8 | 150.5 | (0.2%) |
| % of Telco Revenues | 13.5% | 13.3% | (0.2pp) |
| Baseline Telco | 92.6 | 101.8 | 10.0% |
| Network Expansion / Substitution and Integration Projects and Others |
58.2 | 48.6 | (16.5%) |
| o.w. Customer Related CAPEX | 107.8 | 104.4 | (3.2%) |
| % of Telco Revenues | 9.7% | 9.3% | (0.4pp) |
| Audiovisuals and Cinema Exhibition | 20.9 | 19.8 | (5.0%) |
| Leasing Contracts | 33.2 | 36.3 | 9.5% |
| Total Group CAPEX | 312.7 | 311.0 | (0.6%) |
(1) CAPEX = Increase in Tangible and Intangible Fixed Assets, Contract Costs and Rights of Use
Total CAPEX of 274.7 million euros (excluding leasing contracts) was 1.7% lower yoy in 9M19, representing 23.2% as a proportion of Consolidated Revenues, compared with 23.9% in 9M18. With the implementation of IFRS16 as from 2019, the level of operational leasing contracts is now isolated in the chart above to provide a better proxy of cash CAPEX for the period and to reduce quarterly volatility resulting from operating lease capitalization under the new accounting rules.
Total Telco CAPEX posted a 1.5% decrease to 254.8 million euros (22.6% of Telco Revenues). Technical Telco investments were 0.2% lower in 9M19. As a percentage of Telco Sales, Technical Telco CAPEX amounted to 13.3% in 9M19. Customer Related CAPEX posted a decline of 3.2% to 104.4 million euros in 9M19, representing 9.3% of Telco Revenues.
Audiovisuals and Cinema CAPEX declined by 5.0% yoy to 19.8 million euros.
| Cash Flow (Millions of Euros) | 9M18 | 9M19 | 9M19 / 9M18 |
|---|---|---|---|
| EBITDA | 491.7 | 505.3 | 2.8% |
| Total CAPEX Excluding Leasings | (279.6) | (274.7) | (1.7%) |
| EBITDA - Total CAPEX Excluding Leasings | 212.2 | 230.7 | 8.7% |
| % of Revenues | 18.2% | 19.5% | 1.3pp |
| Non-Cash Items Included in EBITDA - CAPEX and Change in Working Capital |
2.6 | (10.0) | n.a. |
| Leasings (Capital & Interest) (1) | (45.0) | (48.5) | 7.7% |
| Operating Cash Flow | 169.8 | 172.2 | 1.4% |
| Interest Paid | (12.3) | (11.8) | (3.9%) |
| Income Taxes Paid | 3.9 | (8.8) | n.a. |
| Disposals | 0.8 | 1.4 | 65.1% |
| Other Cash Movements (2) | 18.0 | (8.6) | n.a. |
| Total Free Cash-Flow Before Dividends, Financial Investments and Own Shares Acquisition |
180.1 | 144.4 | (19.9%) |
| Acquisition of Own Shares | (3.1) | (3.5) | 14.5% |
| Dividends | (153.9) | (179.6) | 16.7% |
| Free Cash Flow | 23.1 | (38.8) | n.a. |
| Debt Variation Through Financial Leasing, Accruals & Deferrals & Others |
(9.6) | (7.6) | (21.0%) |
| Change in Net Financial Debt | (13.5) | 46.4 | n.a. |
(1) Includes Long Term Contracts. (2) Includes Cash Restructuring Payments and Other Cash M ovements.
Presentation of some aggregates has changed since FY18 to accommodate introduction of the IFRS16 accounting standard and to facilitate yoy comparisons and understanding of cash flow trends.
Free Cash Flow Before Dividends decreased by 19.9% to 144.4 million euros in 9M19 due to the positive impact in 3Q18, of a non-recurrent inflow related with the receival of a legal settlement in favour of NOS, regarding a pending regulatory dispute over operator terminator rate charges.
EBITDA-CAPEX excluding the impact of leases, increased by 8.7% to 230.7 million euros, while the level of investment in working capital and non-cash adjustments in EBITDA-CAPEX amounted to 10.0 million euros, which compares with a positive amount of 2.6 million euros in 9M18, explained primarily by the contribution of trade balance payments with ZAP and outstanding operator balances related with the aforementioned pending legal dispute in the previous year. The cash impact of leasing contracts, relating to both components of capital amortization and interest charges, was 48.5 million euros in 9M19, up from 45.0 million euros in 9M18. Combining these effects, Operating Cash Flow increased by 1.4% to 172.2 million euros in 9M19. Cash Taxes amounted to 8.8 million euros in 9M19, which compares with a positive value of 3.9 million euros in 9M18 due to a one-off recovery of withholding tax payments in 1Q18 which generated a positive cash tax and to a corporate tax refund last year related to excess advance payments made in 3Q18.
| Balance Sheet (Millions of Euros) | 9M18 | 2018 | 9M19 | 9M19 / 9M18 |
|---|---|---|---|---|
| Non-current Assets | 2,534.5 | 2,528.7 | 2,521.6 | (0.5%) |
| Current Assets | 532.3 | 530.1 | 569.3 | 6.9% |
| Total Assets | 3,066.8 | 3,058.8 | 3,090.8 | 0.8% |
| Total Shareholders' Equity | 1,039.4 | 1,053.6 | 1,011.7 | (2.7)% |
| Non-current Liabilities | 1,230.6 | 1,164.2 | 1,265.9 | 2.9% |
| Current Liabilities | 796.8 | 841.0 | 813.3 | 2.1% |
| Total Liabilities | 2,027.4 | 2,005.2 | 2,079.1 | 2.6% |
| Total Liabilities and Shareholders' Equity | 3,066.8 | 3,058.8 | 3,090.8 | 0.8% |
At the end of 9M19, Total Net Debt, including Leasings and Long-Term Contracts (according to IFRS16) amounted to 1,329.1 million euros. Total Debt stood at 1,120.4 million euros and was offset with a cash and short-term investment position on the balance sheet of 31.2 million euros. At the end of 9M19, NOS also had 275 million euros in unissued commercial paper programmes.
The all-in average cost of debt stood at 1.5% for 9M19 which compares with 1.9% in 9M18. Net Financial Debt / EBITDA After Lease Payments (last 4 quarters) now stands at 1.9x, below the 2.0x of 1H19, which reflected the 35 euro cents per share dividend payment in 2Q19. NOS targets a leverage ratio in the range of 2x Net Financial Debt / EBITDA after lease payments, which represents a solid and conservative capital structure that NOS is committed to maintain.
The average maturity of debt at the end of 9M19 was 3.1 years. Taking into account loans issued at a fixed rate, interest rate hedging operations in place and the negative interest rate environment, as at 30 September 2019, the proportio interest at a fixed rate was approximately 96%.
In 2Q19, NOS executed seven financing operations:
A Commercial Paper Programme of up to 50 million euros with maturity in 2024, with Caixa Geral de Depósitos and Caixa Banco de Investimento;
A Bond Issue, by private subscription, in the amount of 25 million euros with maturity in 2024, which was organized, launched, placed and guaranteed subscription by Mediobanca;
The purpose of these financing operations was to refinance all the lines maturing in 2019, as well as to implement a liability management exercise by extending maturities and reducing the cost of financing lines which matured in 2020 and 2023. These operations have therefore positively contributed to the strategic objectives of the financing activity, namely in what regards the diversification of financing sources, extension and management of the average maturity of debt and the reduction of the average financing cost.
Stable Outlook. Maintaining its investment grade long term issuer credit rating with Fitch enables NOS to reinforce the conditions to further diversify its sources of funding, extend average debt maturity and continue to reduce the already low average cost of debt.
| Net Financial Debt (Millions of Euros) | 9M18 | 2018 | 9M19 | 9M19 / 9M18 |
|---|---|---|---|---|
| Short Term | 164.2 | 219.7 | 171.6 | 4.5% |
| Medium and Long Term | 875.7 | 825.4 | 948.8 | 8.3% |
| Total Debt | 1,040.0 | 1,045.1 | 1,120.4 | 7.7% |
| Cash and Short Term Investments | 2.5 | 2.2 | 31.2 | 1154.8% |
| Net Financial Debt (1) | 1,037.5 | 1,042.9 | 1,089.3 | 5.0% |
| Net Financial Debt / EBITDA after lease payments (last 4 quarters) (2) | 1.8x | 1.9x | 1.9x | n.a. |
| Leasings and Long Term Contracts | 253.9 | 252.4 | 239.8 | (5.5%) |
| Net Debt | 1,291.4 | 1,295.2 | 1,329.1 | 2.9% |
| Net Debt / EBITDA | 2.1x | 2.1x | 2.1x | n.a. |
| Net Financial Gearing (3) | 55.6% | 55.3% | 59.0% | 3.4pp |
| (1) Net Financial Debt = Borrowings – Leasings + Cash |
(2) EBITDA After Lease Payments = EBITDA - Lease Cash Payments (Capital & Interest) (3) Net Financial Gearing = Net Debt / (Net Debt + Total Shareholders' Equity).
By the end of 9M19, NOS held, within the scope of its Employee Share Plan and the Regulation on Short and Medium Term Variable Remuneration, aimed at NOS employees, 1,990,718 own shares.
September 2019:
| Description | Number of Shares |
|---|---|
| Initial Balance | 2,069,356 |
| Acquisition | 610,500 |
| Share Incentive Scheme and Other Remuneration - Distribution | 689,138 |
| Final Balance | 1,990,718 |
During October 2019, a gradual and significant currency devaluation, of approximately 26% versus the Euro occurred, which led to currency exchange losses being booked in October 2019, by the companies in which NOS has a minority stake in Angola, which it consolidates esults of Associates the month of October 2019.
(Amounts stated in thousands of euros)
| NOTES | 30-09-2018 | 31-12-2018 | 30-09-2018 | 31-12-2018 | 30-09-2019 | |
|---|---|---|---|---|---|---|
| REPORTED | REPORTED | RESTATED | RESTATED | |||
| ASSETS | ||||||
| NON - CURRENT ASSETS | 7 | |||||
| Tangible assets | 1,053,840 659 |
1,053,663 659 |
1,021,818 659 |
1,026,355 659 |
1,044,520 657 |
|
| Investment property Intangible assets |
8 | 1,062,521 | 1,064,878 | 1,015,721 | 1,019,256 | 1,017,895 |
| Contract costs | 9 | 162,910 | 162,948 | 162,910 | 162,948 | 161,670 |
| Rights of use | 1 0 | - | - | 199,367 | 200,483 | 196,909 |
| Investments in jointly controlled companies and associated companies 1 1 | 21,111 | 19,585 | 21,111 | 19,585 | 21,786 | |
| Accounts receivable - other | 1 2 | 5,239 | 7,334 | 5,239 | 4,529 | 4,416 |
| Tax receivable | 1 3 | 149 | 149 | 149 | 149 | 149 |
| Available-for-sale financial assets | 236 | 204 | 236 | 204 | 226 | |
| Deferred income tax assets | 1 4 | 99,858 | 85,641 | 107,184 | 94,404 | 73,330 |
| Derivative financial instruments | 1 9 | 65 | 112 | 65 | 112 | - |
| TOTAL NON - CURRENT ASSETS | 2,406,588 | 2,395,174 | 2,534,457 | 2,528,684 | 2,521,558 | |
| CURRENT ASSETS: | ||||||
| Inventories | 1 5 | 33,663 | 38,885 | 33,663 | 38,885 | 40,924 |
| Accounts receivable - trade | 1 6 | 384,706 | 382,100 | 384,706 | 382,100 | 350,054 |
| Contract assets | 1 7 | 56,457 | 57,022 | 56,457 | 57,022 | 68,643 |
| Accounts receivable - other | 1 2 | 4,498 | 9,418 | 4,498 | 9,164 | 24,557 |
| Tax receivable | 1 3 | 1,230 | 1,246 | 1,230 | 1,246 | 3,140 |
| Prepaid expenses | 1 8 | 49,205 | 38,844 | 49,205 | 38,844 | 50,057 |
| Non-current assets held-for-sale | - | 600 | - | 600 | 600 | |
| Derivative financial instruments | 1 9 | 61 | 73 | 61 | 73 | 106 |
| Cash and cash equivalents | 20 | 2,484 | 2,182 | 2,484 | 2,182 | 31,173 |
| TOTAL CURRENT ASSETS | 532,303 | 530,370 | 532,304 | 530,116 | 569,254 | |
| TOTAL ASSETS | 2,938,891 | 2,925,543 | 3,066,761 | 3,058,800 | 3,090,811 | |
| SHAREHOLDER'S EQUITY | 21.1 | |||||
| Share capital | 21.2 | 5,152 854,219 |
5,152 854,219 |
5,152 854,219 |
5,152 854,219 |
5,152 854,219 |
| Capital issued premium Own shares |
21.3 | (12,159) | (12,132) | (12,159) | (12,132) | (11,639) |
| Legal reserve | 21.4 | 1,030 | 1,030 | 1,030 | 1,030 | 1,030 |
| Other reserves and accumulated earnings | 21.4 | 85,458 | 86,909 | 58,826 | 60,276 | 17,749 |
| Net Income | 123,001 | 141,405 | 125,107 | 137,770 | 138,093 | |
| EQUITY BEFORE NON - CONTROLLING INTERESTS | 1,056,701 | 1,076,582 | 1,032,175 | 1,046,315 | 1,004,604 | |
| Non-controlling interests | 22 | 7,204 | 7,301 | 7,199 | 7,296 | 7,059 |
| TOTAL EQUITY | 1,063,905 | 1,083,883 | 1,039,374 | 1,053,611 | 1,011,663 | |
| LIABILITIES | ||||||
| NON - CURRENT LIABILITIES | ||||||
| Borrowings | 23 | 944,518 | 888,918 | 1,068,374 | 1,014,364 | 1,111,541 |
| Provisions | 24 | 137,743 | 128,815 | 137,743 | 128,815 | 132,295 |
| Accounts payable | 28 | 11,583 | 9,723 | 11,583 | 9,723 | 4,916 |
| Accrued expenses | 25 | 6,372 | 688 | 519 | 688 | 545 |
| Deferred income | 26 | 5,662 | 5,521 | 5,662 | 5,521 | 5,226 |
| Derivative financial instruments | 1 9 | 1,585 | - | 1,585 | - | 216 |
| Deferred income tax liabilities | 1 4 | 5,166 | 5,968 | 5,166 | 5,123 | 11,148 |
| TOTAL NON - CURRENT LIABILITIES | 1,112,628 | 1,039,632 | 1,230,631 | 1,164,233 | 1,265,888 | |
| CURRENT LIABILITIES: | ||||||
| Borrowings | 23 | 190,636 | 244,134 | 225,499 | 283,061 | 248,752 |
| Accounts payable - trade | 27 | 253,106 | 254,950 | 253,106 | 254,950 | 262,291 |
| Accounts payable - other | 28 | 41,898 | 38,226 | 41,898 | 38,226 | 32,788 |
| Tax payable | 1 3 | 53,289 | 33,783 | 53,289 | 33,783 | 35,616 |
| Accrued expenses | 25 | 192,315 | 197,052 | 191,849 | 197,052 | 201,977 |
| Deferred income | 26 | 31,114 | 32,671 | 31,114 | 32,671 | 31,682 |
| Derivative financial instruments | 1 9 | - | 1,211 | - | 1,211 | 155 |
| TOTAL CURRENT LIABILITIES TOTAL LIABILITIES |
762,358 | 802,028 | 796,755 | 840,955 | 813,260 | |
| TOTAL LIABILITIES AND SHAREHOLDER´S EQUITY | 1,874,986 2,938,891 |
1,841,661 2,925,543 |
2,027,387 3,066,761 |
2,005,189 3,058,800 |
2,079,148 3,090,811 |
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 financial position as at 30 September 2019.
(Amounts stated in thousands of euros)
| NOTES | 3º QUARTER 18 REPORTED |
9M 18 REPORTED |
3º QUARTER 18 RESTATED |
9M 18 RESTATED |
3º QUARTER 19 | 9M 19 | |
|---|---|---|---|---|---|---|---|
| REVENUES: | |||||||
| Services rendered | 367,829 | 1,086,922 | 367,829 | 1,086,922 | 375,307 | 1,105,708 | |
| Sales | 21,789 | 61,300 | 21,789 | 61,300 | 22,263 | 61,078 | |
| Other operating revenues | 5,378 | 19,061 | 5,378 | 19,061 | 5,876 | 18,397 | |
| 29 | 394,996 | 1,167,283 | 394,996 | 1,167,283 | 403,445 | 1,185,182 | |
| COSTS, LOSSES AND GAINS: | |||||||
| Wages and salaries | 30 | 21,187 | 60,206 | 21,187 | 60,206 | 21,989 | 62,383 |
| Direct costs | 31 | 120,569 | 371,646 | 118,802 | 367,231 | 126,161 | 376,787 |
| Costs of products sold | 32 | 17,018 | 44,615 | 17,018 | 44,615 | 14,293 | 42,246 |
| Marketing and advertising | 7,426 | 21,629 | 7,426 | 21,629 | 8,965 | 21,561 | |
| Support services | 33 | 20,935 | 62,662 | 20,893 | 62,548 | 19,343 | 59,816 |
| Supplies and external services | 33 | 40,368 | 115,481 | 30,659 | 90,025 | 28,862 | 84,889 |
| Other operating losses / (gains) | 158 | 584 | 158 | 584 | 139 | 393 | |
| Taxes | 8,656 | 25,359 | 8,656 | 25,359 | 7,149 | 24,490 | |
| Provisions and adjustments | 34 | 2,464 | 3,380 | 2,464 | 3,380 | 3,143 | 7,280 |
| Depreciation, amortisation and impairment losses | 7, 8 and 36 | 95,189 | 297,111 | 103,217 | 319,837 | 97,513 | 297,974 |
| Reestructuring costs | 3,423 | 8,574 | 3,423 | 8,574 | 2,755 | 7,019 | |
| Losses / (gains) on sale of assets, net | (192) | (286) | (192) | (286) | (207) | (645) | |
| Other losses / (gains) non recurrent net | 37 | 282 | (12,393) | 282 | (12,393) | 4,345 | 7,634 |
| 337,484 | 998,568 | 333,994 | 991,309 | 334,450 | 991,827 | ||
| INCOME BEFORE FINANCIAL RESULTS AND TAXES | 57,513 | 168,715 | 61,004 | 175,974 | 68,994 | 193,355 | |
| Net losses / (gains) of affiliated companies | 11 and 35 | (1,276) | 4,451 | (1,276) | 4,451 | (1,007) | (2,296) |
| Financial costs | 38 | 4,103 | 12,663 | 6,174 | 19,080 | 5,812 | 16,450 |
| Net foreign exchange losses / (gains) | (79) | 38 | (79) | 38 | 1 2 | (36) | |
| Net losses / (gains) on financial assets | (2) | (1) | (2) | (1) | (4) | (9) | |
| Net other financial expenses / (income) | 38 | 1,194 | 6,709 | 1,061 | 4,954 | 997 | 2,766 |
| 3,942 | 23,861 | 5,880 | 28,523 | 5,811 | 16,875 | ||
| INCOME BEFORE TAXES | 53,572 | 144,854 | 55,124 | 147,451 | 63,183 | 176,480 | |
| Income taxes | 1 4 | 9,590 | 22,451 | 9,943 | 22,936 | 15,267 | 38,618 |
| NET CONSOLIDATED INCOME | 43,983 | 122,403 | 45,182 | 124,515 | 47,916 | 137,862 | |
| ATTRIBUTABLE TO: | |||||||
| NOS Group Shareholders | 44,111 | 123,001 | 45,309 | 125,107 | 47,897 | 138,093 | |
| Non-controlling interests | 22 | (128) | (598) | (127) | (592) | 1 9 | (231) |
| EARNINGS PER SHARES | |||||||
| Basic - euros | 39 | 0.09 | 0.24 | 0.09 | 0.24 | 0.09 | 0.27 |
| Diluted - euros | 39 | 0.09 | 0.24 | 0.09 | 0.24 | 0.09 | 0.27 |
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 2019.
(Amounts stated in thousands of euros)
| NOTES | 3º QUARTER 18 REPORTED |
9M 18 REPORTED |
3º QUARTER 18 RESTATED |
9M 18 RESTATED |
3º QUARTER 19 | 9M 19 | |
|---|---|---|---|---|---|---|---|
| NET CONSOLIDATED INCOME | 43,983 | 122,403 | 45,182 | 124,515 | 47,916 | 137,862 | |
| OTHER INCOME | |||||||
| ITENS THAT MAY BE RECLASSIFIED SUBSEQUENTLY TO THE INCOME STATEMENT: | |||||||
| Accounting for equity method | 1 1 | (3,009) | (10,971) | (3,009) | (10,971) | 86 | (72) |
| Fair value of interest rate swap | 1 9 | 387 | 868 | 387 | 868 | 270 | 1,081 |
| Deferred income tax - interest rate swap | 1 9 | (87) | (195) | (87) | (195) | (61) | (243) |
| Fair value of equity swaps | 1 9 | 190 | (26) | 190 | (26) | (299) | (481) |
| Deferred income tax - equity swap | 1 9 | (42) | 6 | (42) | 6 | 67 | 108 |
| Currency translation differences and others | (260) | (1,214) | (260) | (1,214) | - | (143) | |
| INCOME RECOGNISED DIRECTLY IN EQUITY | (2,821) | (11,532) | (2,821) | (11,532) | 63 | 250 | |
| TOTAL COMPREHENSIVE INCOME | 41,162 | 110,871 | 42,361 | 112,983 | 47,979 | 138,112 | |
| ATTRIBUTABLE TO: | |||||||
| NOS Group Shareholders | 41,290 | 111,469 | 42,503 | 113,590 | 48,120 | 138,343 | |
| Non-controlling interests | (128) | (598) | (142) | (607) | (141) | (231) | |
| 41,162 | 110,871 | 42,361 | 112,983 | 47,979 | 138,112 |
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 2019.
(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 AND ACCUMULATE D EARNINGS |
NET INCOME |
NON - CONTROLLING INTERESTS |
TOTAL | |
| BALANCE AS AT 1 JANUARY 2018 (RESTATED AT 31 DECEMBER 2018) |
5,152 | 854,219 | (12,681) | 1,030 | 129,504 | 122,083 | 7,807 | 1,107,113 | |
| Effect of adoption of IFRS 16 (Note 2.1) | - | - | - | - | (30,969) | 4,337 | (11) | (26,643) | |
| BALANCE AS AT 1 JANUARY 2018 (RESTATED AT 31 MARCH 2019) | 5,152 | 854,219 | (12,681) | 1,030 | 98,534 | 126,420 | 7,796 1,080,470 | ||
| Result appropriation | |||||||||
| Transfers to reserves | - | - | - | - | 126,420 | (126,420) | - | - | |
| Dividends paid | - | - | - | - | (153,923) | - | - | (153,923) | |
| Aquisition of own shares | - | - | (3,096) | - | - | - | - | (3,096) | |
| Distribution of own shares - share incentive scheme | - | - | 3,515 | - | (3,515) | - | - | - | |
| Distribuition of own shares - other remunerations | - | - | 103 | - | (20) | - | - | 83 | |
| Share Plan - costs incurred in the period and others | - | - | - | - | 2,862 | - | (5) | 2,857 | |
| Comprehensive Income | - | - | - | - | (11,532) | 125,107 | (592) | 112,983 | |
| BALANCE AS AT 30 SEPTEMBER 2018 (RESTATED IFRS 16) | 5,152 | 854,219 | (12,159) | 1,030 | 58,826 | 125,107 | 7,199 | 1,039,374 | |
| BALANCE AS AT 1 JANUARY 2019 (REPORTED) | 5,152 | 854,219 | (12,132) | 1,030 | 86,909 | 141,405 | 7,301 | 1,083,883 | |
| Effect of adoption of IFRS 16 (Note 2.1) | - | - | - | - | (26,633) | (3,635) | (5) | (30,273) | |
| BALANCE AS AT 1 JANUARY 2019 (RESTATED) | 5,152 | 854,219 | (12,132) | 1,030 | 60,276 | 137,770 | 7,296 | 1,053,611 | |
| Result appropriation | |||||||||
| Transfers to reserves | - | - | - | - | 137,770 | (137,770) | - | - | |
| Dividends paid | - | - | - | - | (179,607) | - | - | (179,607) | |
| Aquisition of own shares | 21.3 | - | - | (3,547) | - | - | - | - | (3,547) |
| Distribution of own shares - share incentive scheme | 21.3 | - | - | 3,702 | - | (3,702) | - | - | - |
| Distribuition of own shares - other remunerations | 21.3 | - | - | 338 | - | (60) | - | - | 277 |
| Share Plan - costs incurred in the period and others | 43 | - | - | - | - | 2,823 | - | (6) | 2,817 |
| Comprehensive Income | - | - | - | - | 250 | 138,093 | (231) | 138,112 | |
| BALANCE AS AT 30 SEPTEMBER 2019 | 5,152 | 854,219 | (11,639) | 1,030 | 17,749 | 138,093 | 7,059 | 1,011,663 |
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 2019.
(Amounts stated in thousands of euros)
| NOTES | 9M 18 | 9M 18 | 9M 19 | |
|---|---|---|---|---|
| REPORTED | RESTATED | |||
| OPERATING ACTIVITIES | ||||
| Collections from clients | 1,390,804 | 1,390,804 | 1,388,677 | |
| Payments to suppliers | (739,150) | (704,849) | (702,684) | |
| Payments to employees | (80,657) | (80,657) | (81,322) | |
| Receipts / (Payments) relating to income taxes | 3,856 | 3,856 | (8,762) | |
| Other cash receipts / (payments) related with operating activities | (33,235) | (33,235) | (32,505) | |
| CASH FLOW FROM OPERATING ACTIVITIES (1) | 541,618 | 575,919 | 563,404 | |
| INVESTING ACTIVITIES | ||||
| CASH RECEIPTS RESULTING FROM | ||||
| Financial investments | - | - | 9 1 | |
| Tangible assets | 1,134 | 1,134 | 1,620 | |
| Intangible assets | 1 1 | 1 1 | - | |
| Interest and related income | 3,239 | 3,239 | 3,700 | |
| 4,384 | 4,384 | 5,411 | ||
| PAYMENTS RESULTING FROM | ||||
| Financial investments | 1 1 | (25) | (25) | - |
| Tangible assets | (203,054) | (203,054) | (216,946) | |
| Intangible assets | (138,328) | (138,328) | (143,840) | |
| (341,407) | (341,407) | (360,786) | ||
| CASH FLOW FROM INVESTING ACTIVITIES (2) | (337,023) | (337,023) | (355,375) | |
| FINANCING ACTIVITIES | ||||
| CASH RECEIPTS RESULTING FROM | ||||
| Borrowings | 377,099 | 377,099 | 299,000 | |
| 377,099 | 377,099 | 299,000 | ||
| PAYMENTS RESULTING FROM | ||||
| Borrowings | (378,333) | (378,333) | (206,833) | |
| Lease rentals (principal) | (16,028) | (43,912) | (48,520) | |
| Interest and related expenses | (19,215) | (25,632) | (22,086) | |
| Dividends | 21.4 | (153,924) | (153,924) | (179,607) |
| Aquisition of own shares | 21.3 | (3,096) | (3,096) | (3,547) |
| (570,596) | (604,897) | (460,593) | ||
| CASH FLOW FROM FINANCING ACTIVITIES (3) | (193,497) | (227,798) | (161,593) | |
| Change in cash and cash equivalents (4)=(1)+(2)+(3) | 11,098 | 11,098 | 46,436 | |
| Effect of exchange differences | 6 | 6 | 30 | |
| Cash and cash equivalents at the beginning of the year | (38,775) | (38,775) | (17,754) | |
| CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD | (27,671) | (27,671) | 28,712 | |
| Cash and cash equivalents | 20 | 2,484 | 2,484 | 31,173 |
| Bank overdrafts | 23 | (30,155) | (30,155) | (2,461) |
| (27,671) | (27,671) | 28,712 |
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 2019.
(Amounts stated in thousands of euros, unless otherwise stated)
Serviços de Telecomunicações e 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..
Meeting of Shareholders approved the ch
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 datacentres and consulting services in IT.
Group as at 30 September 2019 is shown in Note 21.
its subsidiaries, NOS Açores and NOS Madeira. These companies carry out: a) cable and satellite television distribution; b) the operation of the latest generation mobile communication network, GSM/UMTS/LTE; 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 indirectly related to the above mentioned activities and services. The business of NOS SA, NOS Açores and NOS Madeira is regulated by Law no. 5/2004 (Electronic Communications Law), which establishes the legal regime governing electronic communications networks and services.
NOSPUB and NOS Lusomundo TV operate in the television and content production business, and currently produce films and series channels, which are distributed, among other operators, by NOS SA and its subsidiaries. NOSPUB 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 period ended on 30 September 2019 were approved by the Board of Directors and their issue authorised on 6 November 2019.
The Board of Directors believes that these financial statements give a true and fair view operations, financial 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 of NOS were prepared in accordance with the International January 2019.
These consolidated financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting ("IAS 34"). Consequently, these financial statements do not include all the information required by IFRS and should therefore be read in conjunction with the consolidated financial statements for the year ended on 31 December 2018.
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 2.3.19.
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 2.3.22).
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 group presents a statement of financial position at the beginning of the previous comparative period when there is a retrospective application of an accounting policy, a retrospective restatement or a material reclassification of items in the financial statements. A statement of financial position is presented as 1 January 2018 due to retrospective application of accounting policies because of the adoption of the new accounting standard (IFRS 16).
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.
The standards and interpretations that became effective as of 1 January 2019 are as follows:
Material impacts on the consolidated financial statements of the group of the application of these standards and amendments are not estimated, except for IFRS 16.
IFRS 16 was issued in October 2017 and should be applied for periods beginning on or after 1 January 2019, being the early adoption permitted. This standard establishes the form of recognition, presentation and disclosure of leases, defining a single model of recognition.
The new standard will replace all current requirements, principles of recognition, measurement, presentation and disclosure of leases prescribed in IFRS, particularly in IAS 17 - Leases and should be applied retrospectively, adopting one of the following methods:
i) complete retrospective application: it implies the restatement of all comparative periods; or
ii) modified retrospective application: recognition of the cumulative effect, during the first period of application of the standard, as an adjustment to equity, and during the opening balance of the period when the standard is adopted.
NOS Group adopted the new standard on the effective date requested (1 January 2019), using the full retrospective method.
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, an entity shall evaluate and identify whether it is or contains a lease. This evaluation involves an exercise of judgment on whether each contract depends on a specific asset, if the entity obtains substantially all the economic benefits from the use of that asset and if the entity has the right to control the use of the asset.
In the case of contracts that constitute or contain a lease, entities shall account for each component of the lease contained in the contract as a lease, separately from the other components of the contract that are not leases, unless the entity applies the practical expedient foreseen in the scope of the standard. NOS Group adopted this practical expedient.
IFRS 16 establishes that lessees account for all leases based on a single on-balance model recognition, similarly to the treatment that IAS 17 establishes for financial leases.
The standard allows two exceptions to this model: (1) low value leases and (2) short term leases (with a lease term lower than 12 months). NOS Group did not adopt these exceptions.
At the start date of the lease, the lessee recognises the responsibility related to the lease payments (the lease liability) and the asset that represents the right to use the underlying asset during the lease
Lessees will have to separately recognise the cost of interest on the lease liability and the depreciation of the ROU.
Tenants should also remeasure the lease liability according to 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 the rate used to determine such payments). The lessee will recognise the amount of the remeasurement of the lease liability as an adjustment in the ROU.
The lessor's accounting remains substantially unchanged from the current treatment of IAS 17. The lessor continues to classify all leases using the same principles of IAS 17 and distinguishing between two types of leases: operational and financial.
There were no additional provisions made to dismantling of assets now considered in the Rights of Use, once it is already considered in the financial statements of the previous year.
The business segments in which NOS Group operates are essentially telecommunications, advertising,
cinema distribution and exhibition, and audiovisuals.
The impact of the application of IFRS 16 were in all the segments, with particular impact on leasing contracts for telecommunications towers, movie theaters, equipments, stores and vehicles.
Additionally, the application of IFRS 16, implicated a corresponding adjustment on taxes.
The impacts of the application of IFRS 16 in the consolidated financial position statements are presented in the tables below:
| 31-12-2017 REPORTED |
IFRS 16 | 31-12-2017 RESTATED |
|
|---|---|---|---|
| ASSETS | |||
| NON - CURRENT ASSETS | |||
| Tangible assets | 1,043,939 | (39,917) | 1,004,022 |
| Intangible assets | 1,253,398 | (54,073) | 1,199,325 |
| Rights of use | - | 204,920 | 204,920 |
| Deferred income tax assets | 107,700 | 7,811 | 115,511 |
| Other assets | 44,306 | - | 44,306 |
| TOTAL NON - CURRENT ASSETS | 2,449,343 | 118,741 | 2,568,084 |
| CURRENT ASSETS | |||
| TOTAL CURRENT ASSETS | 561,206 | - | 561,206 |
| TOTAL ASSETS | 3,010,549 | 118,741 | 3,129,290 |
| SHAREHOLDER'S EQUITY | |||
| Share capital issued, premium and own shares | 846,690 | - | 846,690 |
| Other reserves and accumulated earnings | 134,873 | (30,969) | 103,904 |
| Net Income | 122,083 | 4,337 | 126,420 |
| EQUITY BEFORE NON - CONTROLLING INTERESTS | 1,103,644 | (26,632) | 1,077,014 |
| Non-controlling interests | 7,822 | (11) | 7,811 |
| TOTAL EQUITY | 1,111,466 | (26,643) | 1,084,825 |
| LIABILITIES | |||
| NON - CURRENT LIABILITIES | |||
| Borrowings | 954,658 | 121,828 | 1,076,486 |
| Accrued expenses | 8,767 | (8,139) | 628 |
| Other liabilities | 182,635 | - | 182,635 |
| TOTAL NON - CURRENT LIABILITIES | 1,146,060 | 113,689 | 1,259,749 |
| Borrowings | 210,136 | 32,435 | 242,571 |
| Accrued expenses | 213,564 | (740) | 212,824 |
| Other liabilities | 329,321 | - | 329,321 |
| TOTAL CURRENT LIABILITIES | 753,021 | 31,695 | 784,716 |
| TOTAL LIABILITIES | 1,899,082 | 145,384 | 2,044,465 |
| TOTAL LIABILITIES AND SHAREHOLDER´S EQUITY | 3,010,549 | 118,741 | 3,129,290 |
| 30-09-2018 REPORTED |
IFRS 16 | 30-09-2018 RESTATED |
||
|---|---|---|---|---|
| ASSETS | ||||
| NON - CURRENT ASSETS | ||||
| Tangible assets | 1,053,840 | (32,022) | 1,021,818 | |
| Intangible assets | 1,062,521 | (46,800) | 1,015,721 | |
| Rights of use | - | 199,367 | 199,367 | |
| Deferred income tax assets | 99,858 | 7,326 | 107,184 | |
| Other assets | 190,369 | - | 190,369 | |
| TOTAL NON - CURRENT ASSETS | 2,406,588 | 127,869 | 2,534,457 | |
| CURRENT ASSETS: | ||||
| TOTAL CURRENT ASSETS | 532,303 | - | 532,303 | |
| TOTAL ASSETS | 2,938,891 | 127,869 | 3,066,761 | |
| SHAREHOLDER'S EQUITY | ||||
| Share capital issued, premium and own shares | 847,212 | - | 847,212 | |
| Other reserves and accumulated earnings | 86,488 | (26,632) | 59,856 | |
| Net Income | 123,001 | 2,106 | 125,107 | |
| EQUITY BEFORE NON - CONTROLLING INTERESTS | 1,056,701 | (24,526) | 1,032,175 | |
| Non-controlling interests | 7,204 | (5) | 7,199 | |
| TOTAL EQUITY | 1,063,905 | (24,531) | 1,039,374 | |
| LIABILITIES | ||||
| NON - CURRENT LIABILITIES | ||||
| Borrowings | 944,518 | 123,856 | 1,068,374 | |
| Accrued expenses | 6,372 | (5,853) | 519 | |
| Other liabilities | 161,738 | - | 161,738 | |
| TOTAL NON - CURRENT LIABILITIES | 1,112,628 | 118,003 | 1,230,631 | |
| Borrowings | 190,636 | 34,863 | 225,499 | |
| Accrued expenses | 192,314 | (466) | 191,849 | |
| Other liabilities | 379,408 | - | 379,408 | |
| TOTAL CURRENT LIABILITIES | 762,358 | 34,397 | 796,755 | |
| TOTAL LIABILITIES | 1,874,986 | 152,400 | 2,027,387 | |
| TOTAL LIABILITIES AND SHAREHOLDER´S EQUITY | 2,938,891 | 127,869 | 3,066,761 |
| 31-12-2018 REPORTED |
IFRS 16 | ||
|---|---|---|---|
| ASSETS | |||
| NON - CURRENT ASSETS | |||
| Tangible assets | 1,053,663 | (27,308) | 1,026,355 |
| Intangible assets | 1,064,878 | (45,622) | 1,019,256 |
| Rights of use | - | 200,483 | 200,483 |
| Deferred income tax assets | 85,641 | 8,763 | 94,404 |
| Other assets | 183,658 | - | 183,658 |
| TOTAL NON - CURRENT ASSETS | 2,395,174 | 133,510 | 2,528,684 |
| CURRENT ASSETS | |||
| TOTAL CURRENT ASSETS | 530,370 | (254) | 530,116 |
| TOTAL ASSETS | 2,925,543 | 133,257 | 3,058,800 |
| SHAREHOLDER'S EQUITY | |||
| Share capital issued, premium and own shares | 847,239 | - | 847,239 |
| Other reserves and accumulated earnings | 87,939 | (26,633) | 61,306 |
| Net Income | 141,405 | (3,635) | 137,770 |
| EQUITY BEFORE NON - CONTROLLING INTERESTS | 1,076,582 | (30,267) | 1,046,315 |
| Non-controlling interests | 7,301 | (4) | 7,296 |
| TOTAL EQUITY | 1,083,883 | (30,272) | 1,053,611 |
| LIABILITIES | |||
| NON - CURRENT LIABILITIES | |||
| Borrowings | 888,918 | 125,446 | 1,014,364 |
| Deferred income tax liabilities | 5,968 | (845) | 5,123 |
| Other liabilities | 144,746 | - | 144,746 |
| TOTAL NON - CURRENT LIABILITIES | 1,039,632 | 124,601 | 1,164,233 |
| Borrowings | 244,134 | 38,927 | 283,061 |
| Other liabilities | 557,894 | - | 557,894 |
| TOTAL CURRENT LIABILITIES | 802,028 | 38,927 | 840,955 |
| TOTAL LIABILITIES | 1,841,660 | 163,529 | 2,005,189 |
| TOTAL LIABILITIES AND SHAREHOLDER´S EQUITY | 2,925,543 | 133,257 | 3,058,800 |
The impacts of the application of IFRS 16 in the Consolidated Statement of Income by nature are presented in the table below:
| 9M 18 REPORTED |
IFRS 16 | 9M 18 RESTATED |
|
|---|---|---|---|
| REVENUES: | 1,167,283 | - | 1,167,283 |
| COSTS, LOSSES AND GAINS: | |||
| Direct costs | 371,646 | (4,415) | 367,231 |
| Support services | 62,662 | (114) | 62,548 |
| Supplies and external services | 115,481 | (25,456) | 90,025 |
| Depreciation, amortisation and impairment losses | 297,112 | 22,725 | 319,837 |
| Other costs, losses and gains | 151,667 | - | 151,667 |
| 998,568 | (7,259) | 991,309 | |
| INCOME BEFORE FINANCIAL RESULTS AND TAXES | 168,715 | 7,259 | 175,974 |
| Financial costs | 12,663 | 6,417 | 19,080 |
| Net other financial expenses / (income) | 6,709 | (1,756) | 4,954 |
| Other financial results | 4,489 | - | 4,489 |
| 23,861 | 4,662 | 28,523 | |
| INCOME BEFORE TAXES | 144,854 | 2,597 | 147,451 |
| Income taxes | 22,451 | 485 | 22,936 |
| NET CONSOLIDATED INCOME | 122,403 | 2,112 | 124,515 |
| ATTRIBUTABLE TO: | |||
| NOS Group Shareholders | 123,001 | 2,106 | 125,107 |
| Non-controlling interests | (598) | 6 | (592) |
| EARNINGS PER SHARES | |||
| Basic - euros | 0.24 | - | 0.24 |
| Diluted - euros | 0.24 | - | 0.24 |
The impacts of the adoption of IFRS 16 in the Consolidated statement of cash flows are equivalent to
There were no impacts with the adoption of IFRS 16 in the Consolidated statement of comprehensive income.
At the date of approval of these financial statements, there are no standards and interpretations endorsed by the European Union, with mandatory application in future financial years.
The following standards, interpretations, amendments, and revisions, with mandatory application in future financial years have not yet been endorsed by the European Union, at the date of approval of these financial statements:
IFRS 3 (amendment), "Business Combinations" (effective for periods beginning on or after 1 January 2020). The intent of the amendment to the standard is to overcome the difficulties that arise when an entity determines whether it has acquired a business or a set of assets.
The general objective of IFRS 17 is to provide a more serviceable and consistent accounting model for insurance contracts between entities that issue them globally.
The Group has been evaluating the impact of these amendments. It will apply this standard once it becomes effective or when earlier application is permitted.
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).
separately in the consolidated statement of financial position and in the consolidated statement, -
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 nonidentifiable acquired assets and liabilities is stated in Goodwill. 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 interests of minority shareholders are initially recognised 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 recognised 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 recognised 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, unrealised gains on transactions and dividends distributed between Group companies are eliminated. Unrealised 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 corresponding to the share in the net profits of jointly controlled companies, as a cont income statement before financial results and taxes. Direct changes in the post-acquisition equity of jointly controlled companies are recognised 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 recognised, except when the Group has entered into undertakings with that company.
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 the majority of associated companies (Annex B)) are stated by the equity method. Under this method, financial investments are adjusted periodically by an amount corresp -acquisition equity of associated companies are recognised 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 recognised, except when the Group has entered into undertakings with that associated company.
Dividends received from these companies are recorded as a reduction in the value of the financial investments.
Balances and transactions as well as unrealised gains between Group companies, and between them and the parent company, are eliminated in the consolidation.
The part of unrealised gains arising from transactions with associated companies or jointly controlled companies attributable to the Group is eliminated in the consolidation. Unrealised 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.
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.
Realisable 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 nonrecurring costs / (gains)"reflect unusual costs, should be disclosed separately from the usual cost lines, in order to avoid distortion of the financial information from regular operations.
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 (Notes 2.3.12 and 7).
Estimated losses resulting from the replacement of equipment before the end of its useful life due to technological obsolescence are recognised by a deduction, from the corresponding asset as a contra entry in profit and loss. The costs of current maintenance and repairs are recognised as a cost when they are incurred. Significant costs incurred on renovations or improvements to the asset are capitalised 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.
Non-current assets (or discontinued operations), are classified as held for sale if their value is realisable through a sale transaction rather than through their continued use.
This situation is deemed to arise only when: (i) the sale is highly probable and the asset is available for immediate sale in its present condition; (ii) the Group has given an undertaking to sell; and (iii) it is expected that the sale will be realised within 12 months. In this case, non-current assets are valued at the lesser of their book value or their fair value less the sale costs.
assets ceases and they are classified as non-current assets held for sale. Gains and losses on disposals of tangible assets, corresponding to the difference between the sale price and the net book value, are
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:
| 2018 (YEARS) |
2019 (YEARS) |
|
|---|---|---|
| 2 - 50 | 2 - 50 | |
| Buildings and other constructions | ||
| Technical equipment: | ||
| Network Installations and equipment | 7 - 40 | 7 - 40 |
| Terminal equipment | 2 - 8 | 2 - 8 |
| 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 |
In the nine months ended on 30 September 2019, the useful lives practiced in mobile network equipment were revised and changed, prospectively, from 16 to 8 years.
Intangible assets and Charges of contracts with costumers are stated at acquisition cost, less accumulated amortisation and impairment losses, when applicable. Recognised 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 utilisation rights and other contractual rights.
Contract costs consist mainly of commissions paid to third parties and charges incurred with the customer loyalty contracts acquisition.
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.
company or in the case in which the excess of cost has been originated by a mer company.
Goodwill is not amortised and is subject to impairment tests at least once a year, on a specified date, and whenever the financial position which may result in a possible loss of value. Any impairment loss is recorded e to subsequent reversal. For the purposes of impairment tests, goodwill is attributed to the cash-generating units to which it is related (Note 8), 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 recognised 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 realising 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 recognised as assets when the necessary conditions to organise 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 recognised by 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.
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.
These assets are amortised by the straight-line method, in twelfths, from the beginning of the month in which they become available for use.
The amortisation rates used correspond to the following estimated useful lives:
| 2018 | 2019 | |
|---|---|---|
| (YEARS) | (YEARS) | |
| Telecom licences | 30 - 33 | 30 - 33 |
| Software licences | 1 - 8 | 1 - 8 |
| Period of the | Period of the | |
| Content utilization rights | contract | contract |
| Other | 1 - 8 | 1 - 8 |
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 -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 amortisation 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.
flows expire; (ii) the Group has substantially transferred all the risks and benefits associated with their ownership; or (iii) although it retains part but not substantially all of the risks and benefits associated with their ownership, the Group has transferred control of the assets.
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.
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.
Gains and losses resulting from changes in the fair value of assets measured at fair value through profit
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 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.
deposits, term deposits and other investments with maturities of less than three months which may be immediately realisable and with a negligible risk of change of value.
Financial liabilities and equity instruments are classified according to their contractual substance irrespective of their legal form. Equity instruments are contracts that show a residual interest in the the liabilities. The 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:
e) The recognised contingent consideration by a buyer in a concentration of business activities to which IFRS 3 applies. Such contingent consideration shall be subsequently measured at fair value, with changes recognised in profit or loss.
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 recognises 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 recognise 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, taking into account 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, recognising instead impairment losses based on the expected credit loss on each reporting date. The Group 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.
Until the 1 January 2018, the documentation included the identification of the hedging instrument, the hedged item or transaction, the nature of the hedged risk and the manner in which the Group assessed the effectiveness of changes in the fair value of the hedging instrument according with the Group's exposure to changes in the fair value of the hedge item or cash flows arising from the hedged risk. Such hedges should be highly effective to compensate changes in fair values or cash flows and would be assessed on a continuing basis in order to demonstrate their highly effectiveness over the reporting period.
Beginning 1 January 2018, 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:
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: i) currency contracts for its exposure to foreign currency risk in forecast transactions and firm commitments; ii) interest rates to cover the risk of volatility of the interest rates; iii) own shares contracts for its exposure to volatility in own shares to be distributed within the scope of share incentive scheme. The ineffective portion relating to foreign currency
In the nine months ended on 30 September 2019, the Group did not make any changes in 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 realisable 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 realisable value, whichever is the lower, and this reduction is recognised directly in the income statement.
The net realisable value corresponds to the normal sale price less restocking costs and selling costs.
The differences between the cost and the corresponding net realisable value of inventories, when this
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 realisable 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 systematic basis given the pattern of economic benefits obtained through their commercial exploration.
Due to the agreement between the three national operators of reciprocal availability, for several sports content (national and international) owned by them, (Note 40), 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: (i) there is a present obligation arising from past events and it is likely that in settling that obligation, the expenditure of internal resources will be necessary; and (ii) the amount or value of such obligation can be reasonably estimated. 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 programme, 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 the provisions of an agreement contract, which entail costs that cannot be avoided and exceed the economic benefits derived from the agreement.
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 judgment as to whether each contract depends on a specific asset if the NOS obtains substantially all the economic benefits from the use of that asset and whether the NOS has the right to control the use of the asset.
All contracts that constitute a lease are accounted for on the basis of 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 liabilities are 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 Group recognises 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.
At the start date of the lease, the Group recognises 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.
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 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.
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.
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.
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.
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.
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".
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 main types of revenue of NOS subsidiaries are as follows:
i) Revenues of Telecommunications Services:
Cable television, fixed broadband and fixed voice: The revenues from services provided using the fibre optic cable network result from: (a) basic channel subscription packages that can be sold in a bundle with fixed broadband/fixed voice services; (b) premium channel subscription packages and S-VOD; (c) terminal equipment rental; (d) consumption of content (VOD); (e) traffic and voice termination; (f) service activation; (g) sale of equipment; and (h) other additional services (ex: firewall, antivirus).
Satellite television: Revenues from the satellite television service mainly result from: (a) basic and premium channel subscription packages; (b) equipment rental; (c) consumption of content (VOD); (d) service activation; and (e) sale of equipment.
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 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 standalone 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 are 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 that might be exchanged, over a limited period, for discounts in equipment purchase. These points represent a deferred income, until the date when the points are definitely converted into benefits, as its utilization implies an additional retention. The fair value of the liability is calculated based on an estimated utilisation point rate and an average cost per point, taking into consideration the available points at the date of each report.
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.
Until 31 December 2014, revenue from penalties, due to the inherent uncertainties, was recorded only at the moment it was received, and the amount was disclosed as a contingent asset (Note 42). From 1 January 2015, Revenue from penalties is recognised based on an estimated collectability rate, considering the Group's collection history. Revenue from penalties is recognised under "Other revenues".
Interest revenue is recognised using the effective interest method, only when they generate future economic benefits for the Group and when they can be measured reliably.
ch 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 ivable that have already occurred 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 that future periods are as well as the timing o aspects, the value is classified as Provisions (Note 2.3.12).
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-monetary items
The financial statements of subsidiaries denominated in foreign currencies are converted at the following exchange rates:
at the date of the operations is used), apart from cases of affiliated companies that are in a hyperinflationary economy, such as Angola;
• The historical exchange rate for the conversion of equity accounts.
Exchange differences arising from the conversion into euros of the financial statements of subsidiaries
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:
The monetary assets and liabilities are not amended because they are already updated to the current unit at the financial statements date;
The non-monetary assets and liabilities (that are still not expressed in terms of the current unit at the financial statements) are restated by the application of an index;
The effect of the inflation on the net monetary position of the subsidiaries companies is reflected in the income statement as a loss in the net monetary position.
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.
| Converted CPI | |||
|---|---|---|---|
| Basis 100 | CPI | (Basis 100 Year 2010) | |
| dec/10 | Year 2010 | 100.0 | 100.0 |
| dec/11 | Year 2010 | 111.4 | 111.4 |
| dec/12 | Year 2011 | 109.0 | 121.4 |
| dec/13 | Year 2014 | 93.0 | 130.8 |
| dec/14 | Year 2014 | 100.0 | 140.5 |
| dec/15 | Year 2014 | 114.3 | 160.6 |
| dec/16 | Year 2014 | 162.2 | 227.9 |
| dec/17 | Year 2014 | 204.8 | 287.8 |
| mar/18 | Year 2014 | 212.9 | 299.1 |
| jun/18 | Year 2014 | 220.4 | 309.8 |
| sep/18 | Year 2014 | 232.0 | 326.1 |
| dec/18 | Year 2014 | 241.1 | 338.8 |
| mar/19 | Year 2014 | 250.2 | 351.2 |
| jun/19 | Year 2014 | 258.6 | 363.3 |
| set/19 | Year 2014 | 270.2 | 379.7 |
At 31 December 2018 and 30 September 2019, 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:
| 31-12-2018 | 30-09-2019 | |
|---|---|---|
| US Dollar | 1.1450 | 1.0889 |
| Angolan Kwanza | 353.0155 | 401.5286 |
| British Pound | 0.8945 | 0.8857 |
| Mozambican Metical | 70.2400 | 66.8600 |
| Canadian Dollar | 1.5605 | 1.4426 |
| Swiss Franc | 1.1269 | 1.0847 |
| Real | 4.4440 | 4.5288 |
In the nine months ended at 30 September 2018 and 2019, 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, with the exception of cases of affiliated companies that are in a hyperinflationary economy, such as Angola, which exchange rate used is at the end of the period. The average exchange rates used are as follows:
| 9M 18 | 9M 19 | |
|---|---|---|
| US Dollar | 1.1942 | 1.1236 |
| Angolan Kwanza | 287.6098 | 373.4811 |
| Mozambican Metical | 71.9100 | 69.5678 |
Financial charges related to borrowings are recognised as costs in accordance with the accruals 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 capitalised in the acquisition cost of that asset.
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, such as investment properties, 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:
On the main market of the assets and liabilities, or
In the absence of a primary market, it is assumed that the transaction occurs in the most advantageous market. This is what maximises the amount that would be received for selling asset or minimises the amount that would be paid to transfer the liability, after considering transaction costs and transport costs.
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.
The fair value measurement uses assumptions that ma asset or liability, assuming that market participants would use the asset to maximise 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:
Level 1 Listed and unadjusted market prices, in active markets for identical assets or liabilities that the entity can access at the measurement date;
Level 2 - valuation techni observable;
Level 3 - valuation techniques using inputs not based on observable market data, based on unobservable inputs.
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:
preceding payment. These liabilities of the Group are recorded when incurred, independently of the moment of payment, and are reflected under the item "Accounts payable and other".
c) Labour Compensation Fund (FCT) and the Labour 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 Labour Compensation Fund schemes (FCT) and the Guarantee Fund Compensation of Labour (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.
The monthly deliveries to FCT, made by the employer are recognised as a financial asset, in the caption "Other non- of the entity, measured at fair value with changes recognised in the respective results.
The statement of cash flows is prepared in accordance with the direct method. The Group classifies 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 for the year.
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 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.
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
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 subjected to impairment tests or whenever there are indications of a possible loss of value in accordance with the criteria described in Note 8. The recoverable values of the cashgenerating 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 amortisation/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 amortisation/depreciation to be recognised in the consolidated income statement each period.
concerned and taking account of the practices adopted by companies in the sectors in which the Group operates.
The capitalised costs with the audiovisual content distribution rights acquired for commercialisation 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 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 uncollectability 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 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 valorisation 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 2018 and 2019, errors, estimates and changes in material accounting policies relating to prior years were not recognised, in addition to the application of IFRS 16 (Note 2.1).
The changes in the consolidation perimeter, during the quarterly ended on 30 September 2018, were:
1) generate any impact on the consolidated financial statements.
During the period ended on 30 September 2019, the spin-off project of NOS Comunicações, SA was materialised, resulting in the creation of three new entities, NOS International Carrier Services, SA, NOS Wholesale, SA and NOS Corporate Center, SA. The businesses transferred were related to the Voice and SMS, Data and Roaming and Shared Services, respectively. The spin-off did not have any impact on the consolidated financial statements.
The business segments are as follows:
| TELCO AUDIOVISUALS ELIMINATIONS GROUP ASSETS NON - CURRENT ASSETS: Tangible assets 1,015,150 11,205 - Intangible assets 925,339 93,917 - Contract costs 162,948 - - Rights of use 182,213 18,270 - Investments in jointly controlled companies and associated companies (64,811) 45,706 38,690 Accounts receivable - other 22,732 (19,950) 1,747 Deferred income tax assets 79,493 14,911 - Other non-current assets 434 690 - (84,761) TOTAL NON - CURRENT ASSETS 2,413,030 200,415 CURRENT ASSETS: Inventories 37,815 1,070 - (177,711) Account receivables 570,533 55,464 (281) Prepaid expenses 36,898 2,227 Other current assets (82) 1,476 525 Cash and cash equivalents 1,172 1,010 - TOTAL CURRENT ASSETS 647,894 (178,074) 60,296 TOTAL ASSETS (262,835) 3,058,800 3,060,924 260,711 SHAREHOLDER'S EQUITY Share capital 5,152 29,799 (29,799) 5,152 Capital issued premium 854,219 854,219 - - (12,132) (12,132) Own shares - - (87) Legal reserve 1,030 87 1,030 (30,036) (24,954) Other reserves and accumulated earnings 115,266 60,276 (9,516) Net income 110,570 36,716 (64,356) EQUITY BEFORE NON - CONTROLLING INTERESTS 1,074,105 36,566 1,046,315 Non-controlling interests 7,296 7,296 - - (64,356) TOTAL EQUITY 1,081,401 36,566 1,053,611 LIABILITIES NON - CURRENT LIABILITIES: Borrowings (19,951) 1,011,341 22,974 1,014,364 Provisions 121,600 7,215 128,815 - Accrued expenses 688 - - Other non-current liabilities 15,244 15,244 - - Deferred income tax liabilities 4,668 455 5,123 - (19,951) TOTAL NON - CURRENT LIABILITIES 1,153,540 30,644 1,164,233 CURRENT LIABILITIES: (151,894) Borrowings 293,847 141,108 283,061 (22,018) Accounts payable 289,534 25,660 293,176 (83) Tax payable 31,124 2,742 33,783 Accrued expenses (4,255) 181,933 19,374 197,052 Other current liabilities (279) 33,882 29,545 4,616 TOTAL CURRENT LIABILITIES 825,983 193,500 (178,529) 840,955 (198,479) TOTAL LIABILITIES 1,979,523 224,145 2,005,189 (262,835) TOTAL LIABILITIES AND SHAREHOLDER´S EQUITY 3,060,924 260,711 3,058,800 |
|||
|---|---|---|---|
| 1,026,355 | |||
| 1,019,256 | |||
| 162,948 | |||
| 200,483 | |||
| 19,585 | |||
| 4,529 | |||
| 94,404 | |||
| 1,124 | |||
| 2,528,684 | |||
| 38,885 | |||
| 448,286 | |||
| 38,844 | |||
| 1,919 | |||
| 2,182 | |||
| 530,116 | |||
| 137,770 | |||
| 688 | |||
| TELCO | AUDIOVISUALS | ELIMINATIONS | GROUP | |
|---|---|---|---|---|
| ASSETS | ||||
| NON - CURRENT ASSETS: | ||||
| Tangible assets | 1,033,574 | 10,946 | - | 1,044,520 |
| Intangible assets | 924,511 | 93,384 | - | 1,017,895 |
| Contract costs | 161,670 | - | - | 161,670 |
| Rights of use | 178,855 | 18,054 | - | 196,909 |
| Investments in jointly controlled companies and associated companies | 76,808 | 40,971 | (95,993) | 21,786 |
| Accounts receivable - other | 76,634 | 2,782 | (75,000) | 4,416 |
| Deferred income tax assets | 62,368 | 10,962 | - | 73,330 |
| Other non-current assets | 354 | 678 | - | 1,032 |
| TOTAL NON - CURRENT ASSETS | 2,514,774 | 177,777 | (170,993) | 2,521,558 |
| CURRENT ASSETS: | ||||
| Inventories | 40,162 | 762 | - | 40,924 |
| Account receivables | 354,106 | 71,924 | (51,419) | 374,611 |
| Contract assets | 68,643 | - | - | 68,643 |
| Prepaid expenses | 48,510 | 1,910 | (363) | 50,057 |
| Other current assets | 2,106 | 2,173 | (433) | 3,846 |
| Cash and cash equivalents | 29,250 | 1,923 | - | 31,173 |
| TOTAL CURRENT ASSETS | 542,777 | 78,692 | (52,215) | 569,254 |
| TOTAL ASSETS | 3,057,550 | 256,469 | (223,208) | 3,090,811 |
| SHAREHOLDER'S EQUITY | ||||
| Share capital | 5,152 | 36,756 | (36,756) | 5,152 |
| Capital issued premium | 854,219 | - | - | 854,219 |
| Own shares | (11,639) | - | - | (11,639) |
| Legal reserve | 1,030 | 88 | (88) | 1,030 |
| Other reserves and accumulated earnings | 45,902 | 22,118 | (50,271) | 17,749 |
| Net income | 131,744 | 14,773 | (8,424) | 138,093 |
| EQUITY BEFORE NON - CONTROLLING INTERESTS | 1,026,408 | 73,735 | (95,539) | 1,004,604 |
| Non-controlling interests | 7,059 | - | - | 7,059 |
| TOTAL EQUITY | 1,033,467 | 73,735 | (95,539) | 1,011,663 |
| LIABILITIES | ||||
| NON - CURRENT LIABILITIES: | ||||
| Borrowings | 1,089,983 | 96,558 | (75,000) | 1,111,541 |
| Provisions | 125,016 | 7,279 | - | 132,295 |
| Accrued expenses | 545 | - | - | 545 |
| Other non-current liabilities | 10,358 | - | - | 10,358 |
| Deferred income tax liabilities | 10,680 | 468 | - | 11,148 |
| TOTAL NON - CURRENT LIABILITIES | 1,236,583 | 104,305 | (75,000) | 1,265,888 |
| CURRENT LIABILITIES: | ||||
| Borrowings | 255,509 | 34,232 | (40,989) | 248,752 |
| Accounts payable | 290,300 | 12,572 | (7,794) | 295,078 |
| Tax payable | 33,704 | 2,345 | (433) | 35,616 |
| Accrued expenses | 183,013 | 22,054 | (3,090) | 201,977 |
| Other current liabilities | 24,974 | 7,227 | (364) | 31,837 |
| TOTAL CURRENT LIABILITIES | 787,500 | 78,429 | (52,669) | 813,260 |
| TOTAL LIABILITIES | 2,024,083 | 182,734 | (127,669) | 2,079,148 |
| TOTAL LIABILITIES AND SHAREHOLDER´S EQUITY | 3,057,550 | 256,469 | (223,208) | 3,090,811 |
The results by segment and investments in tangible and intangible assets for the three and nine months ended on 30 September 2018 and 2019 are shown below:
| 9M 18 RESTATED | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| TELCO | AUDIOVISUALS | ELIMINATIONS | GROUP | ||||||
| 3ºQUARTER 18 | 9M 18 | 3º QUARTER 18 | 9M 18 | 3º QUARTER 18 | 9M 18 | 3º QUARTER 18 | 9M 18 | ||
| RESTATED | RESTATED | RESTATED | RESTATED | RESTATED | RESTATED | RESTATED | RESTATED | ||
| REVENUES: | |||||||||
| Services rendered | 353,842 | 1,048,878 | 24,869 | 70,833 | 352,600 | (32,789) | 731,311 | 1,086,922 | |
| Sales | 17,294 | 49,053 | 4,546 | 12,373 | 19,356 | (126) | 41,196 | 61,300 | |
| Other operating revenues | 5,503 | 19,370 | 321 | 954 | 5,949 | (1,263) | 11,773 | 19,061 | |
| 376,639 | 1,117,301 | 29,736 | 84,160 | 377,905 | (34,178) | 784,280 | 1,167,283 | ||
| COSTS, LOSSES AND GAINS: | |||||||||
| Wages and salaries | 18,510 | 52,481 | 2,677 | 7,725 | 19,041 | - | 40,228 | 60,206 | |
| Direct costs | 120,333 | 374,315 | 7,095 | 19,015 | 118,741 | (26,099) | 246,169 | 367,231 | |
| Costs of products sold | 16,998 | 44,468 | 30 | 178 | 14,091 | (31) | 31,119 | 44,615 | |
| Marketing and advertising | 7,591 | 21,894 | 1,702 | 5,367 | 6,061 | (5,632) | 15,354 | 21,629 | |
| Support services | 20,797 | 62,171 | 575 | 1,726 | 18,756 | (1,349) | 40,128 | 62,548 | |
| Supplies and external services | 28,202 | 83,237 | 2,853 | 7,855 | 29,226 | (1,067) | 60,281 | 90,025 | |
| Other operating losses / (gains) | 147 | 511 | 1 1 | 73 | 270 | - | 428 | 584 | |
| Taxes | 8,615 | 25,255 | 41 | 104 | 8,329 | - | 16,985 | 25,359 | |
| Provisions and adjustments | 2,285 | 3,363 | 179 | 1 7 | (3,226) | - | (762) | 3,380 | |
| 223,478 | 667,695 | 15,163 | 42,060 | 211,290 | (34,178) | 449,931 | 675,577 | ||
| EBITDA | 153,160 | 449,606 | 14,573 | 42,100 | 166,616 | - | 334,349 | 491,706 | |
| Depreciation, amortisation and impairment losses | 94,025 | 291,221 | 9,192 | 28,616 | 102,404 | - | 205,621 | 319,837 | |
| Other losses / (gains), net | 3504 | (4,469) | 9 | 364 | 4,502 | - | 8,015 | (4,105) | |
| INCOME BEFORE FINANCIAL RESULTS AND TAXES | 55,631 | 162,854 | 5,372 | 13,120 | 59,710 | - | 120,713 | 175,974 | |
| Net losses / (gains) of affiliated companies | (1,280) | 4,642 | 4 | (191) | (587) | - | (1,863) | 4,451 | |
| Financial costs | 5,493 | 16,653 | 681 | 2,427 | 6,053 | - | 12,227 | 19,080 | |
| Net foreign exchange losses / (gains) | (64) | (10) | (15) | 48 | (70) | - | (149) | 38 | |
| Net losses / (gains) on financial assets | (1) | (17,136) | - | (3,351) | - | 20,486 | (1) | (1) | |
| Net other financial expenses / (income) | 1,111 | 5,014 | (50) | (60) | 2,694 | - | 3,755 | 4,954 | |
| 5,259 | 9,164 | 620 | (1,127) | 8,090 | 20,486 | 13,969 | 28,523 | ||
| INCOME BEFORE TAXES | 50,373 | 153,690 | 4,752 | 14,247 | 51,620 | (20,486) | 106,745 | 147,451 | |
| Income taxes | 8,754 | 20,765 | 1,189 | 2,171 | 6,971 | - | 16,914 | 22,936 | |
| NET INCOME | 41,619 | 132,925 | 3,563 | 12,076 | 44,649 | (20,486) | 89,831 | 124,515 | |
| CAPEX | 102,123 | 291,808 | 7,735 | 20,899 | - | - | 109,858 | 312,707 | |
| EBITDA - CAPEX | 51,038 | 157,798 | 6,838 | 21,201 | 166,616 | - | 224,492 | 178,999 |
EBITDA = Operational Result + Depreciation, amortisation 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
| 9M 19 | ||||||||
|---|---|---|---|---|---|---|---|---|
| TELCO | AUDIOVISUALS | ELIMINATIONS | GROUP | |||||
| 2 ºQUARTER 19 | 9M 19 | 2 ºQUARTER 19 | 9M 19 | 3ºQUARTER 19 | 9M 19 | 3ºQUARTER 19 | 9M 19 | |
| REVENUES: | ||||||||
| Services rendered | 357,581 | 1,062,101 | 28,865 | 76,688 | (11,139) | (33,081) | 375,307 | 1,105,708 |
| Sales | 17,258 | 48,163 | 5,063 | 13,059 | (58) | (144) | 22,263 | 61,078 |
| Other operating revenues | 6,063 | 18,985 | 319 | 940 | (506) | (1,528) | 5,876 | 18,397 |
| 380,901 | 1,129,248 | 34,247 | 90,687 | (11,703) | (34,753) | 403,445 | 1,185,182 | |
| COSTS, LOSSES AND GAINS: | ||||||||
| Wages and salaries | 19,202 | 54,476 | 2,787 | 7,907 | - | - | 21,989 | 62,383 |
| Direct costs | 124,338 | 377,744 | 10,263 | 25,015 | (8,440) | (25,972) | 126,161 | 376,787 |
| Costs of products sold | 14,255 | 42,037 | 45 | 229 | (7) | (20) | 14,293 | 42,246 |
| Marketing and advertising | 9,168 | 22,221 | 2,062 | 5,373 | (2,265) | (6,033) | 8,965 | 21,561 |
| Support services | 19,402 | 60,025 | 442 | 1,294 | (501) | (1,503) | 19,343 | 59,816 |
| Supplies and external services | 26,566 | 78,274 | 2,786 | 7,840 | (490) | (1,225) | 28,862 | 84,889 |
| Other operating losses / (gains) | 127 | 359 | 1 2 | 34 | - | - | 139 | 393 |
| Taxes | 7,130 | 24,401 | 1 9 | 89 | - | - | 7,149 | 24,490 |
| Provisions and adjustments | 3,169 | 7,371 | (26) | (91) | - | - | 3,143 | 7,280 |
| 223,357 | 666,907 | 18,389 | 47,690 | (11,703) | (34,753) | 230,043 | 679,844 | |
| EBITDA | 157,544 | 462,341 | 15,858 | 42,997 | - | - | 173,402 | 505,338 |
| Depreciation, amortisation and impairment losses | 88,576 | 272,392 | 8,937 | 25,582 | - | - | 97,513 | 297,974 |
| Other losses / (gains), net | 6,886 | 13,937 | 7 | 71 | - | - | 6,893 | 14,008 |
| INCOME BEFORE FINANCIAL RESULTS AND TAXES | 62,081 | 176,011 | 6,914 | 17,344 | - | - | 68,995 | 193,355 |
| Net losses / (gains) of affiliated companies | (966) | (2,066) | (41) | (230) | - | - | (1,007) | (2,296) |
| Financial costs | 5,201 | 15,074 | 611 | 1,376 | - | - | 5,812 | 16,450 |
| Net foreign exchange losses / (gains) | 157 | 100 | (145) | (136) | - | - | 1 2 | (36) |
| Net losses / (gains) on financial assets | (3) | (6,709) | (1) | (1,724) | - | 8,424 | (4) | (9) |
| Net other financial expenses / (income) | 984 | 2,730 | 1 3 | 36 | - | - | 997 | 2,766 |
| 5,373 | 9,129 | 437 | (678) | - | 8,424 | 5,810 | 16,875 | |
| INCOME BEFORE TAXES | 56,707 | 166,881 | 6,477 | 18,023 | - | (8,424) | 63,183 | 176,480 |
| Income taxes | 14,003 | 35,367 | 1,264 | 3,251 | - | - | 15,267 | 38,618 |
| NET INCOME | 42,704 | 131,514 | 5,212 | 14,772 | - | (8,424) | 47,916 | 137,862 |
| CAPEX | 93,784 | 286,416 | 9,658 | 24,536 | - | - | 103,442 | 310,952 |
| EBITDA - CAPEX | 63,761 | 175,925 | 6,200 | 18,461 | - | - | 69,960 | 194,386 |
EBITDA = Operational Result + Depreciation, amortisation 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.
The accounting policies set out in IFRS 9 for financial instruments were applied to the following items:
| 31-12-2018 RESTATED | |||||||
|---|---|---|---|---|---|---|---|
| FINANCIAL ASSETS |
DERIVATIVES | FINANCIAL LIABILITIES |
TOTAL FINANCIAL ASSETS AND LIABILITIES |
NON FINANCIAL ASSETS AND LIABILITIES |
TOTAL | ||
| ASSETS | |||||||
| Available-for-sale financial assets | 204 | - | - | 204 | - | 204 | |
| Derivative financial instruments (Note 19) | - | 185 | - | 185 | - | 185 | |
| Accounts receivable - trade (Note 16) | 382,100 | - | - | 382,100 | - | 382,100 | |
| Accounts receivable - other (Note 12) | 7,993 | - | - | 7,993 | 5,700 | 13,693 | |
| Cash and cash equivalents (Note 20) | 2,182 | - | - | 2,182 | - | 2,182 | |
| TOTAL FINANCIAL ASSETS | 392,479 | 185 | - | 392,664 | 5,700 | 398,364 | |
| LIABILITIES | |||||||
| Borrowings (Note 23) | - | - | 1,297,425 | 1,297,425 | - | 1,297,425 | |
| Derivative financial instruments (Note 19) | - | 1,211 | - | 1,211 | - | 1,211 | |
| Accounts payable - trade (Note 27) | - | - | 254,950 | 254,950 | - | 254,950 | |
| Accounts payable - other (Note 28) | - | - | 47,822 | 47,822 | 127 | 47,949 | |
| Accrued expenses (Note 25) | - | - | 197,740 | 197,740 | - | 197,740 | |
| TOTAL FINANCIAL LIABILITIES | - | 1,211 | 1,797,937 | 1,799,148 | 127 | 1,799,275 |
| 30-09-2019 | ||||||
|---|---|---|---|---|---|---|
| FINANCIAL ASSETS |
DERIVATIVES | FINANCIAL LIABILITIES |
TOTAL FINANCIAL ASSETS AND LIABILITIES |
NON FINANCIAL ASSETS AND LIABILITIES |
TOTAL | |
| ASSETS | ||||||
| Available-for-sale financial assets | 226 | - | - | 226 | - | 226 |
| Derivative financial instruments (Note 19) | - | 106 | - | 106 | - | 106 |
| Accounts receivable - trade (Note 16) | 350,054 | - | - | 350,054 | - | 350,054 |
| Accounts receivable - other (Note 12) | 7,806 | - | - | 7,806 | 21,167 | 28,973 |
| Cash and cash equivalents (Note 20) | 31,173 | - | - | 31,173 | - | 31,173 |
| TOTAL FINANCIAL ASSETS | 389,259 | 106 | - | 389,365 | 21,167 | 410,532 |
| LIABILITIES | ||||||
| Borrowings (Note 23) | - | - | 1,360,293 | 1,360,293 | - | 1,360,293 |
| Derivative financial instruments (Note 19) | - | 371 | - | 371 | - | 371 |
| Accounts payable - trade (Note 27) | - | - | 262,291 | 262,291 | - | 262,291 |
| Accounts payable - other (Note 28) | - | - | 37,453 | 37,453 | 251 | 37,704 |
| Accrued expenses (Note 25) | - | - | 202,522 | 202,522 | - | 202,522 |
| TOTAL FINANCIAL LIABILITIES | - | 371 | 1,862,559 | 1,862,930 | 251 | 1,863,181 |
Considering its nature, the balances of the amounts to be paid and received to/from state and other 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.
market risk, liquidity risk and economical and judicial risks, which are described in the Management Report.
In the nine months ended on 30 September 2018 and 2019, the movements in this item were as follows:
| 31-12-2017 | INCREASES | DISPOSALS AND | TRANSFERS AND | 30-09-2018 | |
|---|---|---|---|---|---|
| RESTATED | WRITE-OFFS | OTHERS | RESTATED | ||
| ACQUISITION COST | |||||
| Lands | 955 | - | (117) | - | 838 |
| Buildings and other constructions | 378,899 | 2,078 | (2,323) | (72) | 378,582 |
| Basic equipment | 2,218,817 | 28,207 | (28,814) | 106,187 | 2,324,397 |
| Transportation equipment | 567 | 365 | (32) | - | 900 |
| Tools and dies | 1,347 | - | (3) | 33 | 1,377 |
| Administrative equipment | 186,850 | 2,014 | (1,588) | 1,259 | 188,535 |
| Other tangible assets | 41,928 | 190 | (65) | 340 | 42,393 |
| Tangible assets in-progress | 60,072 | 119,135 | - | (116,194) | 63,013 |
| 2,889,436 | 151,989 | (32,942) | (8,448) | 3,000,035 | |
| ACCUMULATED DEPRECIATION AND IMPAIRMENT LOSSES | |||||
| Lands | 37 | - | - | (37) | - |
| Buildings and other constructions | 208,016 | 8,336 | (2,088) | (3,714) | 210,550 |
| Basic equipment | 1,459,884 | 115,371 | (28,686) | (956) | 1,545,613 |
| Transportation equipment | 329 | 413 | (32) | - | 710 |
| Tools and dies | 1,282 | 27 | (4) | - | 1,305 |
| Administrative equipment | 174,763 | 4,112 | (1,488) | 957 | 178,344 |
| Other tangible assets | 41,104 | 9 3 | (63) | 561 | 41,695 |
| 1,885,415 | 128,352 | (32,361) | (3,189) | 1,978,217 | |
| 1,004,022 | 23,636 | (581) | (5,259) | 1,021,818 | |
| 31-12-2018 | DISPOSALS AND | TRANSFERS AND | |||
| RESTATED | INCREASES | WRITE-OFFS | OTHERS | 30-09-2019 | |
| ACQUISITION COST | |||||
| Land | 838 | - | - | - | 838 |
| Buildings and other constructions | 388,170 | 2,948 | (217) | 9,519 | 400,420 |
| Basic equipment | 2,278,623 | 32,198 | (84,049) | 102,255 | 2,329,027 |
| Transportation equipment | 567 | - | - | - | 567 |
| Tools and dies | 1,406 | - | 4 | 77 | 1,487 |
| Administrative equipment | 189,070 | 1,663 | (1,571) | 816 | 189,978 |
| Other tangible assets | 42,553 | 181 | - | 285 | 43,019 |
| Tangible assets in-progress | 55,220 | 116,236 | - | (122,690) | 48,766 |
| 2,956,447 | 153,226 | (85,833) | (9,738) | 3,014,102 | |
| ACCUMULATED DEPRECIATION AND IMPAIRMENT LOSSES | |||||
| Buildings and other constructions | 213,822 | 7,134 | (715) | (649) | 219,592 |
| Basic equipment | 1,493,105 | 111,872 | (83,346) | 2,647 | 1,524,278 |
| Transportation equipment | 516 | 2 | - | 45 | 563 |
| Tools and dies | 1,316 | 42 | (4) | - | 1,354 |
| Administrative equipment | 179,428 | 3,237 | (1,545) | 219 | 181,339 |
| Other tangible assets | 41,905 | 550 | (1) | 2 | 42,456 |
| 1,930,092 | 122,837 | (85,611) | 2,264 | 1,969,582 | |
| 1,026,355 | 30,389 | (222) | (12,002) | 1,044,520 | |
At 30 September 2019, the tangible assets net value is composed mainly by basic equipment, namely:
Tangible and intangible assets include interests and other financial expenses incurred directly related to the construction of certain tangible or intangible assets in progress. At 30 September 2019, total net value of these costs amounted to 13.8 million euros (31 December 2018: 14.5 million euros). The
amount of interest capitalised in the nine months ended on 30 September 2019 amounted to 0.8 million euros (31 December 2018: 1.3 million euros).
In the nine months ended on 30 September 2018 and 2019, the movements in this item were as follows:
| 31-12-2017 RESTATED |
INCREASES | DISPOSALS AND WRITE-OFFS |
TRANSFERS AND OTHERS |
30-09-2018 RESTATED |
||
|---|---|---|---|---|---|---|
| ACQUISITION COST | ||||||
| Industrial property and other rights | 1,450,947 | 2,847 | (14) | 44,932 | 1,498,712 | |
| Goodwill | 641,400 | - | - | - | 641,400 | |
| Intangible assets in-progress | 43,533 2,135,880 |
47,713 50,560 |
- (14) |
(41,239) 3,693 |
50,007 2,190,119 |
|
| ACCUMULATED AMORTISATION AND IMPAIRMENT LOSSES | ||||||
| Industrial property and other rights | 1,102,786 | 67,866 | (2) | 782 | 1,171,432 | |
| Other intangible assets | 4,566 | - | - | (1,600) | 2,966 | |
| 1,107,352 | 67,866 | (2) | (818) | 1,174,398 | ||
| 1,028,528 | (17,306) | (12) | 4,511 | 1,015,721 | ||
| 31-12-2018 RESTATED |
INCREASES | DISPOSALS AND WRITE-OFFS |
TRANSFERS AND OTHERS |
30-09-2019 | ||
| ACQUISITION COST | ||||||
| Industrial property and other rights | 1,521,380 | 7,151 | - | 67,793 | 1,596,324 | |
| Goodwill Intangible assets in-progress |
641,400 | - | - | - | 641,400 33,210 |
|
| 50,211 2,212,991 |
52,124 59,275 |
- - |
(69,125) (1,332) |
2,270,934 | ||
| ACCUMULATED AMORTISATION AND IMPAIRMENT LOSSES | ||||||
| Industrial property and other rights | 1,191,312 | 59,254 | (104) | 154 | 1,250,616 | |
| Intangible assets in-progress | 2,423 | - | - | - | 2,423 | |
| 1,193,735 | 59,254 | (104) | 154 | 1,253,039 | ||
| 1,019,256 | 2 1 | 104 | (1,486) | 1,017,895 | ||
| (1) | A net amount of 112.5 million euros (31 December 2018: 118.7 million euros) mainly related to the | |||||
| investment, net of amortisation, made in the development of the UMTS network by NOS SA, | ||||||
| including: (i) 35.6 million euros (31 December 2018: 37.6 million euros) related to the license, (ii) 11.9 million euros (31 December 2018: 12.6 million euros) related to the agreement signed in 2002 |
||||||
| between Oni Way and the other three mobile telecommunication operators with activity in | ||||||
| Portugal, (iii) 3.7 million euros (31 December 2018: 3.9 million euros) related to the Share Capital of | ||||||
| telecommunication operators in Portugal; (iv) 52.1 million euros (31 December 2018: 55 million | ||||||
| December 2018: 6.5 million euros) corresponding to the valuation of the license in the fair value | ||||||
| allocation process resulting from the merger; | ||||||
| (2) | A net amount of 83.7 million euros (31 December 2018: 86.5 million euros) corresponding to the | |||||
| current value of future payments related with the acquisition of rights of use for frequencies | ||||||
| (spectrum) bands of 800 MHz, 1800 MHz, 2600 MHz, which will be used to develop 4th generation | ||||||
| services (LTE - Long Term Evolution) and a net amount of 2.9 million euros (31 December 2018: 3.0 | ||||||
| million euros) corresponding to the valuation of the license in the fair value allocation process resulting from the merger; |
(3) A net amount of 13.2 million euros (31 December 2018: 17.1 million euros) corresponding to the future rights to use movies and series.
Increases in the nine months ended on 30 September 2019 correspond mainly to movies and series rights of use, for an amount of 20.2 million euros, and software acquisition and development, for an amount of 29.7 million euros.
Goodwill was allocated to the cash-generating units of each reportable segment, as follows:
| 31-12-2018 | ||
|---|---|---|
| RESTATED | 30-09-2019 | |
| Telco | 564,799 | 564,799 |
| Audiovisuals | 76,601 | 76,601 |
| 641,400 | 641,400 |
In 2018, impairment tests were performed based on assessments in accordance with the discounted cash flow method, which corroborate the recoverability of the book value of the Goodwill. The amounts in these assessments are based on the historical performances and growth forecast of the businesses and their markets, incorporated in medium to long-term plans approved by the Board.
These estimates are based on the following assumptions:
| TELCO | AUDIOVISUALS SEGMENT | ||
|---|---|---|---|
| SEGMENT | NOS | NOS | |
| AUDIOVISUALS | CINEMAS | ||
| Discount rate (before taxes) | 7.2% | 6.2% | 7.2% |
| Assessment period | 5 years | 5 years | 5 years |
| EBITDA* Growth | 4.0% | -4.2% | 2.4% |
| Perpetuity growth rate | 1.3% | 1.3% | 1.3% |
* EBITDA = Operational result + Depreciation and amortisation (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.
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 on variations in discount rates of approximately 10%, from which no impairments resulted.
Sensitivity analyses were also performed for a perpetuity growth rate of 0%, from which no impairments also resulted.
At 30 September 2019, it was understood that the assumptions made in the impairment tests carried out in 2018 did not have material variations, and therefore there are no indications of any impairment.
In the nine months ended on 30 September 2018 and 2019, the movements in this item were as follows:
| 31-12-2017 RESTATED |
INCREASES | DISPOSALS AND WRITE-OFFS |
30-09-2018 RESTATED |
|
|---|---|---|---|---|
| Acquisition Cost | 528,439 | 70,384 | (109,001) | 489,822 |
| Accumulated amortisation and impairment losses | 357,642 | 78,271 | (109,001) | 326,912 |
| 170,797 | (7,887) | - | 162,910 | |
| 31-12-2018 RESTATED |
INCREASES | DISPOSALS AND WRITE-OFFS |
30-09-2019 | |
| Acquisition Cost | 514,694 | 74,369 | - | 589,063 |
| Accumulated amortisation and impairment losses | 351,746 | 75,647 | - | 427,393 |
| 162,948 | (1,278) | - | 161,670 |
loyalty contracts. These costs are amortized, 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 2018 and 2019, the movements in this item were as follows:
| 31-12-2017 | DISPOSALS AND | 30-09-2018 | ||
|---|---|---|---|---|
| RESTATED | INCREASES | WRITE-OFFS | RESTATED | |
| ACQUISITION COST | ||||
| Telecommunications towers and rooftops | 143,058 | 13,715 | - | 156,773 |
| Movie theatres | 103,575 | - | - | 103,575 |
| Transponders | 91,541 | - | - | 91,541 |
| Equipments | 79,221 | 16,450 | (333) | 95,338 |
| Buildings | 71,868 | 1,429 | - | 73,297 |
| Fiber optic rental | 34,582 | 7,751 | (425) | 41,908 |
| Stores | 21,579 | 331 | - | 21,910 |
| Others | 33,980 | 1,244 | (382) | 34,842 |
| 579,404 | 40,920 | (1,140) | 619,184 | |
| ACCUMULATED DEPRECIATION AND IMPAIRMENT LOSSES | ||||
| Telecommunications towers and rooftops | 111,096 | 6,470 | - | 117,566 |
| Movie theatres | 84,392 | 3,864 | - | 88,256 |
| Transponders | 43,459 | 5,836 | - | 49,295 |
| Equipments | 37,421 | 12,551 | (312) | 49,660 |
| Buildings | 45,496 | 4,162 | - | 49,658 |
| Fiber optic rental | 21,941 | 7,818 | - | 29,759 |
| Stores | 14,910 | 1,591 | - | 16,501 |
| Others | 15,769 | 3,728 | (377) | 19,120 |
| 374,484 | 46,021 | (689) | 419,816 | |
| 204,920 | (5,101) | (451) | 199,367 |
| 31-12-2018 RESTATED |
INCREASES | DISPOSALS AND WRITE-OFFS |
30-09-2019 | |
|---|---|---|---|---|
| ACQUISITION COST | ||||
| Telecommunications towers and rooftops | 122,014 | 12,167 | 1,346 | 135,527 |
| Movie theatres | 84,816 | 4,620 | - | 89,436 |
| Transponders | 92,395 | (488) | - | 91,907 |
| Equipments | 99,145 | 13,608 | (1,477) | 111,276 |
| Buildings | 65,282 | 2,815 | (3,675) | 64,422 |
| Fiber optic rental | 34,157 | - | - | 34,157 |
| Stores | 14,768 | 1,691 | 149 | 16,608 |
| Others | 22,290 | 1,461 | 10,652 | 34,403 |
| 534,867 | 35,874 | 6,995 | 577,736 | |
| ACCUMULATED DEPRECIATION AND IMPAIRMENT LOSSES | ||||
| Telecommunications towers and rooftops | 81,614 | 7,698 | 1,366 | 90,678 |
| Movie theatres | 67,326 | 4,767 | - | 72,093 |
| Transponders | 50,859 | 4,405 | (61) | 55,203 |
| Equipments | 53,365 | 10,686 | (192) | 63,859 |
| Buildings | 33,803 | 4,658 | 3,246 | 41,707 |
| Fiber optic rental | 24,696 | 2,288 | (1,073) | 25,911 |
| Stores | 9,659 | 1,626 | 147 | 11,432 |
| Others | 13,061 | 4,106 | 2,776 | 19,943 |
| 334,384 | 40,234 | 6,209 | 380,827 | |
| 200,483 | (4,360) | 786 | 196,909 |
The caption "Rights of Use" refers to assets associated with lease contracts, resulting from the application of IFRS 16 on January 1, 2019. These assets are amortized according to the duration of the respective agreement.
At 31 December 2018 and 30 September 2019, this item was composed as follows:
| 31-12-2018 | 30-09-2019 | |
|---|---|---|
| RESTATED | ||
| INVESTMENTS - EQUITY METHOD | ||
| Sport TV | 5,436 | 4,592 |
| Dreamia | 3,634 | 3,850 |
| Finstar | 9,465 | 11,365 |
| Mstar | 564 | 1,451 |
| Upstar | 361 | 389 |
| Big Picture 2 Films | 125 | 139 |
| ASSETS | 19,585 | 21,786 |
months ended on 30 September 2018 and 2019 were as follows:
| 9M 18 | ||
|---|---|---|
| RESTATED | 9M 19 | |
| AS AT JANUARY 1 | 36,706 | 19,585 |
| Gains / (losses) of exercise (Note 35) | (4,623) | 2,272 |
| Changes in equity i) | (10,971) | (71) |
| AS AT SEPTEMBER 30 | 21,112 | 21,786 |
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 The Group's interest in the results and assets and liabilities of the jointly controlled companies and associated companies in the periods ended on 31 December 2018 and 30 September 2019, is as follows:
| 31-12-2018 | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| ENTITY | ASSETS | LIABILITIES | EQUITY | REVENUE | NET INCOME | % HELD | GAIN/(LOSS) ATTRIBUTED TO THE GROUP |
||
| Sport TV* | 161,779 | 140,034 | 21,745 | 188,100 | 2,973 | 25.00% | 743 | ||
| Dreamia | 15,553 | 8,286 | 7,267 | 2,118 | (48) | 50.00% | (24) | ||
| Finstar | 196,896 | 165,345 | 31,551 | 254,280 | (28,029) | 30.00% | (8,409) | ||
| Mstar | 8,008 | 6,128 | 1,880 | 22,082 | 3,253 | 30.00% | 976 | ||
| Upstar | 139,979 | 138,777 | 1,202 | 73,911 | 274 | 30.00% | 82 | ||
| Canal 20 TV, S.A. ** | - | - | - | - | - | 50.00% | (12) | ||
| Big Picture 2 Films | 3,552 | 2,926 | 626 | 9,393 | 126 | 20.00% | 25 | ||
| 525,767 | 461,496 | 64,271 | 549,884 | (21,451) | (6,618) |
* The equity is adjusted, against liabilities, totalling 10.2 million euros resulting from supplementary payments rendered by other two shareholders which are above the held percentage.
** Company dissolved on December 2017.
| 30-09-2019 | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| ENTITY | ASSETS | LIABILITIES | EQUITY | REVENUE | NET INCOME | % HELD | GAIN/(LOSS) ATTRIBUTED TO THE GROUP |
||
| Sport TV* | 209,416 | 191,046 | 18,369 | 139,386 | (3,375) | 25.00% | (844) | ||
| Dreamia | 15,230 | 7,530 | 7,700 | 2,214 | 432 | 50.00% | 216 | ||
| Finstar | 243,639 | 205,757 | 37,882 | 145,746 | 6,777 | 30.00% | 2,033 | ||
| Mstar | 9,306 | 4,470 | 4,836 | 17,678 | 2,749 | 30.00% | 825 | ||
| Upstar | 115,873 | 114,578 | 1,295 | 24,095 | 9 3 | 30.00% | 28 | ||
| Big Picture 2 Films | 2,952 | 2,255 | 697 | 4,832 | 71 | 20.00% | 1 4 | ||
| 596,415 | 525,636 | 70,779 | 333,952 | 6,746 | 2,272 | ||||
* The equity is adjusted, against liabilities, totalling 10.2 million euros resulting from supplementary payments rendered by other two shareholders which are above the held percentage.
Consolidated adjustments are reflected in the indicators presented in the tables above.
At 31 December 2018 and 30 September 2019, this item was composed as follows:
| 31-12-2018 RESTATED |
30-09-2019 | |||
|---|---|---|---|---|
| CURRENT | NON CURRENT | CURRENT | NON CURRENT | |
| Accounts receivables i) | 3,708 | 5,252 | 5,139 | |
| Advances of suppliers | 5,700 | - | - | |
| 9,408 | 5,252 | 25,007 | 5,139 | |
| Impairment of other receivable | (244) | (723) | (450) | (723) |
| 9,164 | 4,529 | 24,557 | 4,416 |
i) At 30 September 2019, the amount of accounts receivable corresponds mainly to short-term loans, medium and longcompanies.
The summary of movements in impairment of other receivable in other accounts receivable is as follows:
| 9M 18 | |
|---|---|
| RESTATED | 9M 19 |
| AS AT JANUARY 1 1,500 |
967 |
| Increases (Note 34) 162 |
299 |
| Utilizations / Others (518) |
(93) |
| AS AT SEPTEMBER 30 1,144 |
1,173 |
At 31 December 2018 and 30 September 2019, these items were composed as follows:
| 31-12-2018 | 30-09-2019 | |||
|---|---|---|---|---|
| RESTATED | ||||
| RECEIVABLE | PAYABLE | RECEIVABLE | PAYABLE | |
| NON CURRENT | ||||
| Debt regularization | 149 | - | 149 | - |
| 149 | - | 149 | - | |
| CURRENT | ||||
| Value-added tax | 826 | 18,606 | 2,720 | 19,494 |
| Income taxes | - | 11,295 | - | 12,414 |
| Personnel income tax witholdings | - | 1,787 | - | 1,782 |
| Social Security contributions | - | 1,831 | - | 1,862 |
| Others | 420 | 264 | 420 | 64 |
| 1,246 | 33,783 | 3,140 | 35,616 | |
| 1,395 | 33,783 | 3,289 | 35,616 |
At 31 December 2018 and 30 September 2019, the amounts of IRC (Corporate Income Tax) receivable and payable were composed as follows:
| 31-12-2018 | ||
|---|---|---|
| RESTATED | 30-09-2019 | |
| Estimated current tax on income | (31,733) | (28,214) |
| Payments on account | 18,967 | 14,189 |
| Withholding income taxes | 785 | 452 |
| Others | 686 | 1,159 |
| (11,295) | (12,414) |
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 2/2014 of 16 January, this rate was raised by 3% and will be above 35 million euros.
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 2019 are:
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 2019.
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 periods ended on 30 September 2018 and 2019 were as follows:
| DEFERRED TAXES OF THE PERIOD |
|||
|---|---|---|---|
| RESTATED | INCOME (NOTE B) |
EQUITY | 30-09-2018 RESTATED |
| 6,635 | (1,692) | - | 4,943 |
| 2,340 | (295) | - | 2,045 |
| 71,500 | (8,684) | - | 62,816 |
| 20,926 | 2,101 | - | 23,027 |
| 7,396 | (707) | - | 6,689 |
| 7,811 | (485) | 7,326 | |
| 557 | (30) | (189) | 338 |
| 117,165 | (9,792) | (189) | 107,184 |
| 4,851 | (1,951) | - | 2,900 |
| - | - | 9 | |
| - 2,257 |
|||
| 5,166 | |||
| 102,018 | |||
| RESTATED | INCOME (NOTE B) |
EQUITY | 30-09-2019 |
| 4,796 | (3,655) | - | 1,141 |
| 1,610 | 158 | - | 1,768 |
| 51.956 | (5,767) | - | 46,189 |
| 22,098 | (2,709) | - | 19,389 |
| 4,760 | |||
| 8,763 | (8,763) | - | - |
| 83 | |||
| 73,330 | |||
| - | 2,663 | ||
| 26 | |||
| - | - | - | - |
| - | - | 6,090 | |
| - | 2,369 | ||
| 11,148 62,182 |
|||
| 31-12-2017 18,383 2,289 25,523 91,642 31-12-2018 4,943 238 94,404 2,846 7 2,270 5,123 89,281 |
9 (18,383) (32) (20,357) 10,565 (183) 88 (20,831) (183) 127 6,090 9 9 6,133 (26,964) |
- - - (189) DEFERRED TAXES OF THE PERIOD - (243) (243) (108) (108) (135) At 30 September 2019, the deferred tax assets related to the other provisions and adjustments are mainly due: i) Impairments and acceleration of amortisations beyond the acceptable fiscally and other adjustments in fixed tangible assets and intangible assets, amounted to 36.1 million euros (31 December 2018: 40.9 million euros; and ii) Other provisions amounted to 9.2 million euros (31 At 30 September 2019, the deferred tax liability is related to the revaluation of assets relates mainly to lease agreements between Group companies and the appreciation of telecommunications licenses, |
At 30 September 2019, deferred tax assets were not recognised for an amount of 1.8 million euros, corresponding mainly to tax incentives.
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
At 30 September 2019, the tax rate used to calculate the deferred tax assets relating to tax losses carried forward was 21% (2018: 21%). In the case of temporary differences, the rate used was 22.5% (2018: 22.5%) increased to a maximum of 5.13% (2018: 5.13%) 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 the nine months ended on 30 September 2018 and 2019, the reconciliation between the nominal and effective rates of tax was as follows:
| 3º QUARTER 18 RESTATED |
9M 18 RESTATED |
3º QUARTER 19 | 9M 19 | |
|---|---|---|---|---|
| Income before taxes | 55,124 | 147,451 | 63,183 | 176,480 |
| Statutory tax rate | 22.5% | 22.5% | 22.5% | 22.5% |
| ESTIMATED TAX | 12,402 | 33,176 | 14,216 | 39,708 |
| Permanent differences i) | (584) | 163 | 107 | (93) |
| Differences in tax rate of group companies | (440) | (1,227) | (45) | (1,113) |
| Record of deferred taxes | (63) | (3,862) | (499) | (1,848) |
| Tax benefits ii) | - | (11,398) | (2,097) | (8,263) |
| State surcharge | 2,920 | 9,388 | 2,979 | 8,421 |
| Autonomous taxation | 172 | 574 | 183 | 548 |
| Others | (4,464) | (3,878) | 423 | 1,258 |
| INCOME TAXES | 9,943 | 22,936 | 15,267 | 38,618 |
| Effective Income tax rate | 18.0% | 15.6% | 24.2% | 21.9% |
| Income tax | 9,395 | 33,501 | 10,951 | 11,654 |
| Deferred tax | 548 | (10,565) | 4,316 | 26,964 |
| 9,943 | 22,936 | 15,267 | 38,618 |
i) At 30 September 2018 and 2019, the permanent differences were composed as follows:
| 3º QUARTER 18 RESTATED |
9M 18 RESTATED |
3º QUARTER 19 | 9M 19 | |
|---|---|---|---|---|
| Equity method (Note 35) | (1,276) | 4,451 | (1,007) | (2,296) |
| Others | (1,322) | (3,727) | 1,485 | 1,884 |
| (2,598) | 724 | 478 | (412) | |
| 22.5% | 22.5% | 22.5% | 22.5% | |
| (584) | 163 | 107 | (93) |
ii) This item corresponds to the amount 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. During the nine months ended on 30 September 2018 and following different dates for the submission and approval of the applications, tax incentives for the RFAI and SIFIDE of 2016 and 2017 were recognised, while in the nine months ended on 30 September 2019, only the RFAI and SIFIDE of 2018 were recognised. Under the terms of the IRC (Corporate Income Tax) Code, the tax paid may not be less than 90% of the amount, which would result if the Company did not benefit from tax benefits. Therefore, this amount corresponds to that difference, given that the amount is recorded in the controlling company under the Special Taxation Regime for Groups of Companies, and the tax benefits are recorded in the controlled companies.
At 31 December 2018 and 30 September 2019, this item was composed as follows:
| 31-12-2018 | 30-09-2019 | |
|---|---|---|
| RESTATED | ||
| INVENTORIES | ||
| Telco | 43,485 | 46,372 |
| Audiovisuals | 1,568 | 1,334 |
| 45,053 | 47,706 | |
| IMPAIRMENT OF INVENTORIES | ||
| Telco | (5,670) | (6,210) |
| Audiovisuals | (498) | (572) |
| (6,168) | (6,782) | |
| 38,885 | 40,924 |
The movements occurred in impairment adjustments were as follows:
| 9M 18 | ||
|---|---|---|
| RESTATED | 9M 19 | |
| AS AT JANUARY 1 | 8,961 | 6,167 |
| Increase and decrease - Cost of products sold (Note 32) | (59) | 1,888 |
| Utilizations / Others | (1,135) | (1,273) |
| AS AT SEPTEMBER 30 | 7,767 | 6,782 |
At 31 December 2018 and 30 September 2019, this item was as follows:
| 31-12-2018 | ||
|---|---|---|
| RESTATED | 30-09-2019 | |
| Trade receivables | 460,499 | 429,811 |
| Unbilled revenues i) | 61,423 | 64,183 |
| 521,922 | 493,994 | |
| Impairment of trade receivable | (139,822) | (143,940) |
| 382,100 | 350,054 |
i) 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 18 | ||
|---|---|---|
| RESTATED | 9M 19 | |
| AS AT JANUARY 1 | 139,484 | 139,822 |
| Increases and decreases (Note 34) | 4,467 | 11,433 |
| Penalties - i) | 10,995 | 13,899 |
| Impact of application of IFRS 9 | 6,008 | - |
| Utilizations / Others | (37,764) | (21,214) |
| AS AT SEPTEMBER 30 | 123,190 | 143,940 |
i) Penalties correspond to the estimated amount of uncollectible invoiced penalties recognised in the period, deducted from revenue, as described in Note 42.6.
At 31 December 2018 and 30 September 2019, this item was as follows:
| 31-12-2018 | ||
|---|---|---|
| RESTATED | 30-09-2019 | |
| Contract assets 57,022 |
68,643 | |
| 57,022 | 68,643 |
The amount of assets related to contracts with customers result from the early recognition of revenue, resulting from the allocation of discounts granted in packages, to different performance obligations.
At 31 December 2018 and 30 September 2019, this item was composed as follows:
| 31-12-2018 | ||
|---|---|---|
| RESTATED | 30-09-2019 | |
| Programming costs | 16,364 | 16,513 |
| Costs of litigation procedure activity | 8,465 | 9,087 |
| Insurance | 1,276 | 1,336 |
| Taxes | - | 4,923 |
| Advertising | 708 | 1,420 |
| Others | 12,031 | 16,778 |
| 38,844 | 50,057 |
At the date of the statement of the financial position there were foreign currency forwards open for 6,922 thousand euros (31 December 2018: 2,525 thousand euros), whose fair value amounts to a positive net amount of 106 thousand euros (2018: gain of about 32 thousand euros).
At 30 September 2019, NOS had contracted two interest rate swaps totalling 250 million euros (31 December 2018: 250 million euros) whose swap maturities expire in 2019 e 2022. The fair value of
interest rate swaps, in the negative amount of 0.1 million euros (31 December 2018: negative amount
At 30 September 2019, NOS had contracted three own shares derivatives, in the amount of 2,640 thousand euros (31 December 2018: 2,641 thousand euros), maturing in March 2020, 2021 and 2022, in order to cover the delivery of share plans liquidated in cash.
| 31-12-2018 | |||||
|---|---|---|---|---|---|
| RESTATED | |||||
| ASSETS | LIABILITIES | ||||
| NOTIONAL | CURRENT | NON CURRENT | CURRENT | NON CURRENT | |
| Interest rate swaps | 250,000 | - - |
1,211 | - | |
| Equity Swaps | 2,641 | 41 | 112 | - | - |
| Exchange rate forward | 2,525 | 32 | - | - | - |
| 255,166 | 73 | 112 | 1,211 | - |
| 30-09-2019 | |||||
|---|---|---|---|---|---|
| ASSETS | LIABILITIES | ||||
| NOTIONAL | CURRENT | NON CURRENT | CURRENT | NON CURRENT | |
| Interest rate swaps | 250,000 | - - |
76 | 54 | |
| Equity swaps | 2,640 | - - |
79 | 162 | |
| Exchange rate forward | 6,922 | 106 | - | - | - |
| 259,562 | 106 | - | 155 | 216 |
Movements during the nine months ended on 30 September 2018 and 2019 were as follows:
| 31-12-2017 RESTATED |
RESULT | EQUITY | 30-09-2018 RESTATED |
|
|---|---|---|---|---|
| Fair value interest rate swaps | (2,453) | - | 868 | (1,585) |
| Fair value exchange rate forward | (33) | 73 | - | 40 |
| Fair value equity swaps | 1 0 | 102 | (26) | 86 |
| DERIVATIVES | (2,476) | 175 | 842 | (1,459) |
| Deferred income tax liabilities | - | (9) | - | (9) |
| Deferred income tax assets | 557 | (30) | (189) | 338 |
| DEFERRED INCOME TAX | 557 | (39) | (189) | 329 |
| (1,919) | 136 | 653 | (1,130) |
| 31-12-2018 RESTATED |
RESULT | EQUITY | 30-09-2019 | |
|---|---|---|---|---|
| Fair value interest rate swaps | (1,211) | - | 1,081 | (130) |
| Fair value exchange rate forward | 32 | 74 | - | 106 |
| Fair value equity swaps | 153 | 87 | (481) | (241) |
| DERIVATIVES | (1,026) | 161 | 600 | (265) |
| Deferred income tax liabilities | (7) | (127) | 108 | (26) |
| Deferred income tax assets | 238 | 88 | (243) | 83 |
| DEFERRED INCOME TAX | 231 | (39) | (135) | 57 |
| (795) | 122 | 465 | (208) |
At 31 December 2018 and 30 September 2019, this item was composed as follows:
| 31-12-2018 | ||
|---|---|---|
| RESTATED | 30-09-2019 | |
| Cash | 744 | 1,533 |
| Other deposits i) | 1 3 | - |
| Deposits | 1,425 | 29,640 |
| 2,182 | 31,173 |
i) At 31 December 2018 and 30 September 2019, term deposits have short-term maturities and bear interest at normal market rates.
At 31 December 2018 and 30 September 2019, the share capital of NOS was 5,151,613.80 euros, represented by 515,161,380 shares registered book-entry shares, with a nominal value of 1 euro cent per share.
| 31-12-2018 RESTATED |
30-09-2019 | |||
|---|---|---|---|---|
| NUMBER OF | % SHARE NUMBER OF SHARES CAPITAL |
% SHARE | ||
| CAPITAL | ||||
| ZOPT, SGPS, SA (1) | 268,644,537 | 52.15% | 268,644,537 | 52.15% |
| Blackrock, Inc | 11,562,497 | 2.24% | - | - |
| MFS Investment Management | 11,049,477 | 2.14% | 11,049,477 | 2.14% |
| Norges Bank | 10,891,068 | 2.11% | 10,891,068 | 2.11% |
| TOTAL | 302,147,579 | 58.65% | 290,585,082 | 56.41% |
The main shareholders as of 31 December 2018 and 30 September 2019 are:
Efanor Investimentos, SGPS, S.A, with effects after 29 November 2017, has no longer a control shareholder, in accordance and for the effects of Articles 20 and 21 of the Securities Code.
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:
Additionally, the premium for issue of shares was deducted for an amount of 125 thousand euros related to costs with the respective capital increase.
The capital issued premium is subject to the same rules as for legal reserves and can only be used:
a) To cover part of the losses on the balance of the year that cannot be covered by other reserves;
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 2019 there were 1,990,718 own shares, representing 0.3864% of share capital (31 December 2018: 2,069,356 own shares, representing 0.4017% of the share capital).
Movements in the three and nine months ended on 30 September 2018 and 2019 were as follows:
| QUANTITY | VALUE | |
|---|---|---|
| BALANCE AS AT 1 JANUARY 2018 | 2,040,234 | 12,681 |
| Acquisition of own shares | 650,000 | 3,096 |
| Distribution of own shares - share incentive scheme | (598,725) | (3,515) |
| Distribution of own shares - other remunerations | (17,650) | (103) |
| BALANCE AS AT 30 SEPTEMBER 2018 | 2,073,859 | 12,159 |
| BALANCE AS AT 1 JANUARY 2019 | 2,069,356 | 12,132 |
| Acquisition of own shares | 610,500 | 3,547 |
| Distribution of own shares - share incentive scheme | (631,447) | (3,702) |
| Distribution of own shares - other remunerations | (57,691) | (338) |
| BALANCE AS AT 30 SEPTEMBER 2019 | 1,990,718 | 11,639 |
Company law and NOS Articles of Association establish that a profit must be used 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 2019, NOS had reserves, which by their nature are considered distributable for an amount of approximately 122.6 million euros, not including the net income.
The General Meeting of Shareholders held on 10 May 2018 approved a proposal by the Board of Directors for payment of an ordinary dividend per share of 0.30 euros, totalling 154,548 thousand euros. The dividend attributable to own shares amounted to 625 thousand euros.
| DIVIDENDS | |
|---|---|
| Dividends | 154,548 |
| Dividends of own shares | (625) |
| 153,923 |
The General Meeting of Shareholders held on 8 May 2019 approved a proposal by the Board of Directors for payment of an ordinary dividend per share of 0.35 euros, totalling 180,306 thousand euros. The dividend attributable to own shares amounted to 699 thousand euros.
| DIVIDENDS | |
|---|---|
| Dividends | 180,306 |
| Dividends of own shares | (699) |
| 179,607 |
The movements of the non-controlling interests occurred during the nine months ended on 30 September 2018 and 2019 and the results attributable to non-controlling interests for the year are as follows:
| 31-12-2017 RESTATED |
ATTRIBUTABLE PROFITS |
OTHERS | 30-09-2018 RESTATED |
|
|---|---|---|---|---|
| NOS Madeira | 5,882 | (326) | (3) | |
| NOS Açores | 1,914 | (266) | (2) | 1,646 |
| 7,796 | (592) | (5) | 7,199 | |
| 31-12-2018 | ATTRIBUTABLE | OTHERS | 30-09-2019 | |
| RESTATED | PROFITS | |||
| NOS Madeira | 5,660 | (46) | (4) | 5,611 |
| NOS Açores | 1,636 | (186) | (2) | 1,448 |
| 7,296 | (231) | (6) | 7,059 |
At 31 December 2018 and 30 September 2019, the composition of borrowings was as follows:
| 31-12-2018 RESTATED |
30-09-2019 | |||
|---|---|---|---|---|
| CURRENT | NON-CURRENT | NON-CURRENT | ||
| LOANS - NOMINAL VALUE | 217,769 | 830,000 | 170,794 | 951,667 |
| Debenture loan | 150,000 | 510,000 | 575,000 | |
| Commercial paper | 29,500 | 265,000 | 50,000 | 340,000 |
| Foreign loans | 18,333 | 55,000 | 18,333 | 36,667 |
| Bank overdrafts | 19,936 | - | 2,461 | - |
| LOANS - ACCRUALS AND DEFERRALS | 1,890 | (4,602) | 811 | (2,828) |
| LOANS - AMORTISED COST | 219,659 | 825,398 | 171,605 | 948,839 |
| LEASES | 63,402 | 188,966 | 77,147 | 162,702 |
| 283,061 | 1,014,364 | 248,752 | 1,111,541 |
During the nine months ended on 30 September 2019, the average cost of debt of the used lines was approximately 1.4% (2018: 1.7%).
At 31 December 2018 and 30 September 2019, NOS has a total amount of 660 million euros and 675 million euros of bonds issued, respectively, including at 30 September 2019, 575 million euros with maturity after one year:
At 30 September 2019, an amount of 318 thousand euros, corresponding to interest and commissions, was added from this amount and recorde -
At 30 September 2019, the Company has borrowings of 390 million euros in the form of commercial paper. The total amount contracted, under underwriting securities, is of 665 million euros, corresponding to thirteen programmes, with six banks, 590 million euros of which bear interest at market rates and 75 million euros are issued in fixed rate. Commercial paper programmes with maturities over one-year totalling 340 million euros are classified as non-current, since the Company can renew unilaterally current are underwritten by the organiser. As such, this amount, although having a current maturity, it was classified as non-current for presentation purposes in the financial position statement.
At 30 September 2019 an amount of 669 thousand euros, corresponding to interest and commissions, -
In November 2013, NOS signed a Finance Contract with the European Investment Bank for an amount of 110 million euros to support the development of the mobile broadband network in Portugal. In September 2014, the total amount of funds was used. This contract matures in a maximum period of 8 years from the use of the funds, with partial amortisations of 18.3 million euros per year as of September 2017. At 30 September 2019, the amount in borrowings totalizes 55 million euros.
At 30 September 2019, an amount of 2,368 thousand euros was deducted from this amount, corresponding to the benefit associated with the fact that the loan with BEI is at a subsidised rate. All bank borrowings contracted (apart from BEI loan of 55 million euros, from public issuance of bonds of 300 million euros from a commercial paper program of 75 million euros issued in fixed rate, besides finance leases) are negotiated at variable short-term interest rates and their book value is therefore broadly similar to their fair value.
At 31 December 2018 and 30 September 2019, 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.
| 31-12-2018 | ||
|---|---|---|
| RESTATED | 30-09-2019 | |
| Until 1 year | 63,402 | 77,147 |
| Between 1 and 5 years | 131,849 | 113,616 |
| Over 5 years | 57,118 | 49,087 |
| 252,368 | 239,849 |
| 31-12-2018 | 30-09-2019 | |
|---|---|---|
| RESTATED | ||
| Until 1 year | 73,908 | 84,255 |
| Between 1 and 5 years | 153,032 | 128,792 |
| Over 5 years | 62,443 | 52,882 |
| 289,383 | 265,929 | |
| Future financial costs (lease) | (37,015) | (26,080) |
| PRESENT VALUE OF LEASE LIABILITIES | 252,368 | 239,849 |
The maturities of the loans obtained are as follows:
| 31-12-2018 RESTATED |
30-09-2019 | |||||
|---|---|---|---|---|---|---|
| UNTIL 1 YEAR | BETWEEN 1 AND 5 YEARS |
OVER 5 YEARS | UNTIL 1 YEAR | BETWEEN 1 AND 5 YEARS |
OVER 5 YEARS | |
| Debenture loan | 152,487 | 447,718 | 59,970 | 101,563 | 573,119 | - |
| Commercial paper | 29,732 | 227,500 | 37,500 | 50,725 | 289,946 | 49,998 |
| Foreign loans | 17,504 | 52,710 | - | 16,856 | 35,776 | - |
| Bank overdrafts | 19,936 | - | - | 2,461 | - | - |
| Leases | 63,402 | 131,849 | 57,118 | 77,147 | 113,616 | 49,087 |
| 283,061 | 859,777 | 154,587 | 248,752 | 1,012,457 | 99,085 |
At 31 December 2018 and 30 September 2019, the provisions were as follows:
| 31-12-2018 RESTATED |
30-09-2019 |
|---|---|
| Litigation and other - i) 58,369 |
60,946 |
| Dismantling and removal of assets - iii) 34,626 |
37,710 |
| 32,055 Contingent liabilities - iv) |
31,391 |
| Contingencies - other - v) 3,765 |
2,248 |
| 128,815 | 132,295 |
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:
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 40) 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, totalling 13.6 million euros that 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 September 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 totalling close to 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 net cost of universal service related to the pre-competitive period, and the liquidation of each extraordinary contribution, once the Board of Directors is convinced it will be successful in challenges already undertaken;
During the nine months ended on 30 September 2018, movements in provisions were as follows:
| 31-12-2017 RESTATED |
INCREASES | DECREASES | OTHERS | 30-09-2018 RESTATED |
|
|---|---|---|---|---|---|
| Litigation and other | 52,261 | 9,013 | (7,514) | - | 53,760 |
| Financial investments | 425 | - | (425) | - | - |
| Dismantling and removal of assets | 31,651 | 340 | (37) | 2,179 | 34,133 |
| Contingent liabilities | 32,490 | - | - | - | 32,490 |
| Contingencies - other | 16,435 | 1,710 | (464) | (321) | 17,360 |
| 133,262 | 11,063 | (8,440) | 1,858 | 137,743 |
During the nine months ended on 30 September 2018, increases mainly refer from provisions for legal claims plus interest and charges.
The movement recorded in "Others" in the amount of 2.0 million euros, under "Contingencies - other" refers mainly to the reclassification of cost estimates in respect of which it was not possible to
estimate with great reliability the timing of the expenditure, in the meantime settled, in the amount of 3.1 million euros, less the use of provisions created for compensations to employees, in the amount of 1.1 million euros.
During the nine months ended on 30 September 2019, movements in provisions, were as follows:
| 31-12-2018 | INCREASES | DECREASES | |||
|---|---|---|---|---|---|
| RESTATED | OTHERS | 30-09-2019 | |||
| Litigation and other | 58,369 | 8,961 | (6,384) | - | 60,946 |
| Dismantling and removal of assets | 34,626 | 89 | (89) | 3,084 | 37,710 |
| Contingent liabilities | 32,055 | - | (663) | - | 31,391 |
| Contingencies - other | 3,765 | 4,455 | (1,481) | (4,491) | 2,248 |
| 128,815 | 13,505 | (8,617) | (1,407) | 132,295 |
During the nine months ended on 30 September 2019, the increases refer mainly to provisions for legal claims plus interests and charges and the reductions refer, predominantly, to the reassessment of several legal contingencies.
The net movements for the nine months ended on 30 September 2018 and 2019 reflected in the income statement under Provisions were as follows:
| 9M 18 RESTATED |
9M 19 |
|---|---|
| Provisions and adjustments (Note 34) (1,288) |
(4,462) |
| Financial investments (Note 11) (425) |
- |
| Other losses / (gains) non-recurrent (Note 37) 8,429 |
7,023 |
| Interests - dismantling 303 |
- |
| (4,396) Other interests |
2,327 |
| INCREASES AND DECREASES IN PROVISIONS 2,623 |
4,888 |
At 31 December 2018 and 30 September 2019, this item was composed as follows:
| 31-12-2018 | 30-09-2019 | |
|---|---|---|
| RESTATED | ||
| NON-CURRENT | ||
| Others | 688 | 545 |
| 688 | 545 | |
| CURRENT | ||
| Invoices to be issued by operators i) | 62,041 | 65,219 |
| Vacation pay and bonuses | 24,460 | 24,630 |
| Investments in tangible and intangible assets | 26,541 | 21,727 |
| Content and film rights | 11,370 | 15,650 |
| Professional services | 12,113 | 13,334 |
| Advertising | 15,144 | 12,652 |
| Programming services | 12,293 | 8,849 |
| Costs of litigation procedure activity | 7,852 | 8,000 |
| Taxes (ANACOM and Cinema Law) | 1 7 | 7,676 |
| Comissions | 5,376 | 6,051 |
| Energy and water | 5,807 | 5,175 |
| Maintenance and repair | 2,409 | 1,781 |
| Other accrued expenses | 11,628 | 11,233 |
| 197,052 | 201,977 |
i) Amounts related to invoices to be billed by operators, mainly international operators, regarding interconnection costs related with international traffic and roaming services.
| 31-12-2018 RESTATED |
30-09-2019 | ||||
|---|---|---|---|---|---|
| CURRENT | NON-CURRENT | CURRENT | NON-CURRENT | ||
| Advanced billing i) | 32,261 | - | 31,285 | - | |
| Investment subsidy ii) | 410 | 5,521 | 397 | 5,226 | |
| 32,671 | 5,521 | 31,682 | 5,226 |
At 31 December 2018 and 30 September 2019, this item was composed as follows:
i) This item relates mainly to the billing of Pay TV services regarding the following month to the omers, 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 23).
At 31 December 2018 and 30 September 2019, this item was composed as follows:
| 31-12-2018 | ||
|---|---|---|
| RESTATED | 30-09-2019 | |
| Suppliers current account | 252,644 | 258,856 |
| Invoices in reception and conference | 2,306 | 3,435 |
| 254,950 | 262,291 |
At 31 December 2018 and 30 September 2019, this item was composed as follows:
| 31-12-2018 RESTATED |
30-09-2019 | |
|---|---|---|
| NON-CURRENT | ||
| Assignment of receivables without recourse i) | 9,723 | 4,916 |
| 9,723 | 4,916 | |
| CURRENT | ||
| Fixed assets suppliers | 27,006 | 24,782 |
| Assignment of receivables without recourse i) | 10,093 | 5,953 |
| Advances from customers | 127 | 251 |
| Others | 1,000 | 1,802 |
| 38,226 | 32,788 | |
| 47,949 | 37,704 |
i) NOS Comunicações, SA materialised a credit assignment transaction, that was coordinated by Banco Comercial Português and Caixa Geral de Depósitos, which it ceded future credits to be generated by a portfolio of Corporate customers. In the nine months ended on 30 September 2019, the balance amounts to 10.9 million euros. This does not imply any change in the accounting treatment of the receivables or in the relationship with their customers.
Consolidated operating revenues, for the three and nine months ended on 30 September 2018 and 2019, were as follows:
| 3º QUARTER 18 RESTATED |
9M 18 RESTATED |
3º QUARTER 19 | 9M 19 | |
|---|---|---|---|---|
| SERVICES RENDERED: | ||||
| Telco i) | 350,314 | 1,038,259 | 353,637 | 1,050,544 |
| Audiovisuals and cinema exhibition ii) | 17,516 | 48,663 | 21,670 | 55,164 |
| 367,829 | 1,086,922 | 375,307 | 1,105,708 | |
| SALES: | ||||
| Telco iii) | 17,284 | 49,022 | 17,251 | 48,142 |
| Audiovisuals and cinema exhibition iv) | 4,505 | 12,278 | 5,013 | 12,936 |
| 21,789 | 61,300 | 22,263 | 61,078 | |
| OTHER OPERATING REVENUES: | ||||
| Telco | 5,105 | 18,175 | 5,734 | 17,990 |
| Audiovisuals and cinema exhibition | 273 | 886 | 142 | 407 |
| 5,378 | 19,061 | 5,876 | 18,397 | |
| 394,996 | 1,167,283 | 403,445 | 1,185,182 |
These operating revenues are shown net of inter-company eliminations.
In the three and nine months ended on 30 September 2018 and 2019, this item was composed as follows:
| 3º QUARTER 18 | 9M 18 | 9M 19 | ||
|---|---|---|---|---|
| RESTATED | RESTATED | 3º QUARTER 19 | ||
| Remuneration | 16,327 | 46,422 | 16,952 | 47,072 |
| Social taxes | 4,233 | 12,520 | 4,324 | 12,605 |
| Social benefits | 480 | 1,435 | 487 | 1,452 |
| Other | 146 | (172) | 226 | 1,254 |
| 21,187 | 60,206 | 21,989 | 62,383 |
In the three and nine months ended on 30 September 2018 and 2019, the average number of employees of the companies included in the consolidation was 2,493 and 2,466, respectively. At 30 September 2019, the number of employees of the companies included in the consolidation was 2,463 employees.
The costs of compensations paid to employees, since they are non-recurring costs, are recorded in the
In the nine months ended on 30 September 2018 and 2019, this item was composed as follows:
| 3º QUARTER 18 | 9M 18 | ||||
|---|---|---|---|---|---|
| RESTATED | RESTATED | 3º QUARTER 19 | 9M 19 | ||
| Exhibition costs | 52,579 | 153,936 | 54,935 | 159,218 | |
| Traffic costs | 49,553 | 160,894 | 50,735 | 155,269 | |
| Capacity costs | 9,766 | 32,725 | 12,103 | 35,887 | |
| Costs related to corporate customers services | 2,869 | 6,601 | 5,148 | 16,308 | |
| Shared advertising revenues | 3,197 | 10,361 | 3,240 | 10,105 | |
| Others | 838 | 2,714 | - | - | |
| 118,802 | 367,231 | 126,161 | 376,787 |
In the third quarter of 2018, the Group changed the presentation caption of costs related to services of large corporate customers, fr costs directly related to the operational activity of this business segment. This change had no impact in equity and of cash flows. The consolidated statements were restated, ascending the amount reclassified as at 30 September 2018 to 6,601 thousand euros.
In the three and nine months ended on 30 September 2018 and 2019, this item was composed as follows:
| 3º QUARTER 18 RESTATED |
9M 18 RESTATED |
3º QUARTER 19 | 9M 19 | |
|---|---|---|---|---|
| Costs of products sold | 16,840 | 44,674 | 13,860 | 40,358 |
| Increases / (decreases) in inventories impairments (Note 15) | 178 | (59) | 433 | 1,888 |
| 17,018 | 44,615 | 14,293 | 42,246 |
In the three and nine months ended on 30 September 2018 and 2019, this item was composed as follows:
| 3º QUARTER 18 RESTATED |
9M 18 RESTATED |
3º QUARTER 19 | 9M 19 | |
|---|---|---|---|---|
| SUPPORT SERVICES: | ||||
| Administrative support and others | 9,922 | 28,618 | 8,624 | 26,812 |
| Call centers and customer support | 7,256 | 22,876 | 7,711 | 23,062 |
| Information systems | 3,714 | 11,053 | 3,008 | 9,942 |
| 20,893 | 62,548 | 19,343 | 59,816 | |
| SUPPLIES AND EXTERNAL SERVICES: | ||||
| Maintenance and repair | 11,531 | 33,485 | 10,488 | 30,289 |
| Electricity | 5,721 | 16,711 | 5,168 | 16,794 |
| Professional services | 3,039 | 8,958 | 3,013 | 8,663 |
| Installation and removal of terminal equipment | 1,288 | 3,269 | 1,175 | 4,589 |
| Communications | 1,740 | 5,427 | 1,434 | 4,417 |
| Travel and accommodation | 913 | 3,082 | 985 | 3,334 |
| Fees | 1,127 | 2,922 | 1,522 | 2,107 |
| Other supplies and external services | 5,300 | 16,171 | 5,077 | 14,696 |
| 30,659 | 90,025 | 28,862 | 84,889 |
In the three and nine months ended on 30 September 2018 and 2019, these items were composed as follows:
| 3º QUARTER 18 | 9M 18 | |||
|---|---|---|---|---|
| RESTATED | RESTATED | 3º QUARTER 19 | 9M 19 | |
| Provisions (Note 24) | (66) | (1,288) | 118 | (4,462) |
| Impairment of account receivables - trade (Note 16) | 2,509 | 4,467 | 2,981 | 11,433 |
| Impairment of account receivables - others (Note 12) | 1 6 | 162 | 34 | 299 |
| Others | 5 | 39 | 1 0 | 1 0 |
| 2,464 | 3,380 | 3,143 | 7,280 |
In the three and nine months ended on 30 September 2018 and 2019, this item was composed as follows:
| 3º QUARTER 18 RESTATED |
9M 18 RESTATED |
3º QUARTER 19 | 9M 19 | |
|---|---|---|---|---|
| EQUITY METHOD (NOTE 11) | ||||
| Sport TV | (481) | (1,461) | 421 | 844 |
| Dreamia | 1 | (183) | (19) | (216) |
| Finstar | (404) | 6,965 | (1,155) | (2,033) |
| Mstar | (316) | (610) | (218) | (825) |
| Upstar | (41) | (92) | (6) | (28) |
| Others | 3 | 4 | (23) | (14) |
| (1,238) | 4,623 | (999) | (2,272) | |
| OTHERS | (38) | (172) | (8) | (24) |
| (1,276) | 4,451 | (1,007) | (2,296) |
During the nine months ended on 30 September 2018, the Kwanza recorded an exceptional devaluation against the Euro of approximately 36%, which generated the recognition of exchange losses in Finstar, losses that impact this item in approximately, 10 million euros.
In the nine months ended on 30 September 2018 and 2019, this item was composed as follows:
| 3º QUARTER 18 RESTATED |
9M 18 RESTATED |
3º QUARTER 19 | 9M 19 | |
|---|---|---|---|---|
| TANGIBLE ASSETS | ||||
| Buildings and other constructions | 2,753 | 8,336 | 2,557 | 7,134 |
| Basic equipment | 32,431 | 115,371 | 35,042 | 111,872 |
| Transportation equipment | 383 | 413 | 1 | 2 |
| Tools and dies | 1 0 | 27 | 1 6 | 42 |
| Administrative equipment | 1,260 | 4,112 | 1,207 | 3,237 |
| Other tangible assets | 4 | 9 3 | 166 | 550 |
| 36,841 | 128,352 | 38,989 | 122,837 | |
| INTANGIBLE ASSETS | ||||
| Industrial property and other rights | 21,271 | 67,866 | 19,514 | 59,254 |
| 21,271 | 67,866 | 19,514 | 59,254 | |
| CONTRACT COSTS | ||||
| Contract costs | 25,952 | 78,271 | 25,558 | 75,647 |
| 25,952 | 78,271 | 25,558 | 75,647 | |
| LEASES | ||||
| Leases | 19,152 | 45,346 | 13,451 | 40,234 |
| 19,152 | 45,346 | 13,451 | 40,234 | |
| INVESTIMENT PROPERTY | ||||
| Investment property | 1 | 2 | 1 | 2 |
| 1 | 2 | 1 | 2 | |
| 103,217 | 319,837 | 97,513 | 297,974 |
During the nine months of 2018, following the modernisation project of the NOS mobile network, impairment losses were recognised for an approximate amount of 30 million euros.
In the three and nine months ended on 30 September 2018 and 2019, the other non-recurring costs / (gains) was composed as follows:
| 3º QUARTER 18 RESTATED |
9M 18 RESTATED |
3º QUARTER 19 | 9M 19 | |
|---|---|---|---|---|
| GAINS: | ||||
| Default interests - offsetting of credits i) | - | (27,318) | - | - |
| - | (27,318) | - | - | |
| COSTS: | ||||
| Provisions and costs with lawsuits | - | 12,529 | 4,164 | 4,164 |
| Others | 282 | 2,396 | 181 | 3,470 |
| 282 | 14,925 | 4,345 | 7,634 | |
| TOTAL | 282 | (12,393) | 4,345 | 7,634 |
i) Following the dispute between the subsidiary NOS SA and MEO - Serviços de Comunicações e Multimédia, SA (formerly TMN - Telecomunicações Móveis Nacionais, SA), relating to the lack of definition ofinterconnection prices for 2001, and subsequent assignment from TMN to MEO and unilateral compensation by MEO of interconnection related credits, NOS filed an action against it, in which it required that (i) the compensation be declared ineffective and (ii) the payment of the debt, plus interest. After all appeals and claims in court, promoted by MEO, were dismissed, including by the Constitutional Court, NOS received and recognised an income of interests on these loans amounting to 27.3 million euros. This amount was received at 3 July 2018.
In the three and nine months ended on 30 September 2018 and 2019, financing costs and other financial expenses / (income) were composed as follows:
| 3º QUARTER 18 RESTATED |
9M 18 RESTATED |
3º QUARTER 19 | 9M 19 | |
|---|---|---|---|---|
| FINANCING COSTS: | ||||
| INTEREST EXPENSE: | ||||
| Borrowings | 3,248 | 9,985 | 3,127 | 10,051 |
| Finance leases | 3,228 | 9,823 | 2,058 | 6,843 |
| Derivatives | 410 | 1,217 | 371 | 1,151 |
| Others | 267 | 1,159 | 1,154 | 1,902 |
| 7,153 | 22,184 | 6,710 | 19,947 | |
| INTEREST EARNED | (979) | (3,104) | (898) | (3,497) |
| 6,174 | 19,080 | 5,812 | 16,450 | |
| NET OTHER FINANCIAL EXPENSES / (INCOME): | ||||
| Comissions and guarantees | 971 | 4,212 | 811 | 2,203 |
| Others | 9 0 | 742 | 186 | 563 |
| 1,061 | 4,954 | 997 | 2,766 |
Interest earned mainly corresponds to default interests charged to customers.
Earnings per share for the three and nine months ended on 30 September 2018 and 2019 were calculated as follow:
| 3º QUARTER 18 RESTATED |
9M 18 RESTATED |
3º QUARTER 19 | 9M 19 | |
|---|---|---|---|---|
| Consolidated net income attributable to shareholders Number of ordinary shares outstanding during the period (weighted |
45,309 | 125,107 | 47,897 | 138,093 |
| average) | 513,081,276 | 513,090,643 | 513,166,298 | 513,226,521 |
| Basic earnings per share - euros | 0.09 | 0.24 | 0.09 | 0.27 |
| Diluted earnings per share - euros | 0.09 | 0.24 | 0.09 | 0.27 |
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 2018 and 30 September 2019, the Group had furnished sureties, guarantees, and comfort letters in favour of third parties corresponding to the following situations:
| 31-12-2018 | ||
|---|---|---|
| RESTATED | 30-09-2019 | |
| Tax authorities i) | 13,382 | 26,740 |
| Others ii) | 9,878 | 10,211 |
| 23,260 | 36,951 |
i) At 31 December 2018 and 30 September 2019, this amount relates to guarantees demanded by the tax authorities in connection with tax proceedings contested by the Company and its subsidiaries (Note 42).
ii) At 31 December 2018 and 30 September 2019, this amount mainly relates to guarantees provided in connection with Municipal Wayleave Tax proceedings and guarantees provided to cinema owners, and bank guarantees given to providers of satellite capacity renting services.
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.
NOS provided a guarantee to Warner Brothers, under the contract renewal of cinema distribution for national territory and African Portuguese speaking countries.
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 14.1 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 14% of the total loans obtained require that the consolidated net financial debt does not exceed 3 times consolidated EBITDA, approximately 7% of the total loans obtained require that the consolidated net financial debt does not exceed 3.5 times consolidated EBITDA, approximately 5% of the total loans obtained require that the consolidated net financial debt does not exceed 4 times consolidated EBITDA and approximately 11% require that the consolidated net financial debt does not exceed 5 times consolidated EBITDA.
EBITDA = Operational Result + Depreciation, amortisation and impairment losses + Integration costs + Losses / (gains) on sale of assets + Other losses / (gains) non-recurrent
In December 2015, NOS signed a contract with Sport Lisboa e Benfica - Futebol SAD and Benfica TV, SA Benfica TV Channel. The contract began 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 will begin 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.
During the year of 2016, NOS SA has signed contracts regarding the television rights of home senior team football games with the following sports clubs:
The contracts will begin in the 2019/2020 sports season and last up to 3 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 andp sports clubs channels, whose rights are owned by each of the companies in each moment. The agreement came into force from the here these football games are broadcast.
Considering that the contract signed allowed for the possibility of extending the agreement to the other operators, in July 2016 MEO and Cabovisão joined the agreement, ending the lack of availability of Porto Cana relevant sports content, regardless of which operator they use.
Following the agreement signed with the remaining operators, as a counterpart of the reciprocal provision of rights, the global costs are shared according with retailer telecommunications revenues and Pay TV market shares.
| Seasons | 2019/20 | following |
|---|---|---|
| Estimated cash-flows with the contract signed by NOS with the sports entities* | ||
| 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 |
The estimated cash flows are estimated as follows:
* Includes games and channels broadcasting rights, advertising and others.
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 database and the choice of technological solutions they might decide to implement, that did not originate any impact on the consolidated financial statements (according to IAS 16, this exchange of similar non-monetary 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.
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 2018 and 30 September 2019 and transactions in the quarterlys ended on 30 September 2018 and 2019 between NOS Group and its associated companies, joint ventures and other related parties are as follows:
| ACCOUNTS | ACCOUNTS | ACCRUED | DEFERRED | PREPAID | |
|---|---|---|---|---|---|
| RECEIVABLES | PAYABLE | EXPENSES | INCOME | EXPENSES | |
| ASSOCIATED COMPANIES | |||||
| Big Picture 2 Films | 26 | 278 | 172 | - | - |
| Sport TV | 3,222 | 4,018 | 2,968 | 11,764 | 15,146 |
| JOINTLY CONTROLLED COMPANIES | |||||
| Dreamia Holding BV | 2,840 | - | - | - | - |
| Dreamia SA | 2,727 | 1,787 | 340 | - | - |
| Finstar | 7,850 | - | - | 1 9 | - |
| Mstar | 1 | - | - | - | - |
| Upstar | 7,015 | 59 | - | 1,049 | - |
| ZAP Cinemas | 24 | - | - | 1 5 | - |
| ZAP Media | 407 | - | - | 125 | - |
| OTHER RELATED PARTIES | |||||
| Centro Colombo | 5 | 7 | 4 | - | 129 |
| Digitmarket | 124 | 325 | (24) | - | 149 |
| Itrust - Cyber Security and Intellig. , S.A. | 7 | 383 | - | - | 202 |
| MDS Corretor de Seguros, SA | 103 | - | (0) | - | 71 |
| Modelo Continente Hipermercados | 1,025 | 49 | 9 | - | 2 |
| Norteshopping | 4 | 7 | - | - | 114 |
| SC-Consultadoria,SA | 255 | - | - | - | - |
| Sierra Portugal | 740 | (10) | 30 | - | 1 2 |
| Sonae Arauco Portugal, S.A. | 184 | - | - | - | - |
| Sonae Center II | 928 | - | - | - | - |
| UNITEL | 3,116 | 2,143 | 1,357 | - | - |
| We Do Consulting-Sist. de Informação | 230 | 1,761 | - | - | 77 |
| Worten - Equipamento para o Lar | 1,028 | 169 | 29 | - | - |
| Others | 1,052 | 149 | 74 | - | 297 |
| 32,913 | 11,125 | 4,959 | 12,972 | 16,199 |
| REVENUES | OTHER OPERATING LOSSES / (GAINS) |
FINANCIAL INCOME AND (EXPENSES) |
CAPEX | |
|---|---|---|---|---|
| SHAREHOLDERS | ||||
| Banco BPI | - | - | - | - |
| ASSOCIATED COMPANIES | ||||
| Big Picture 2 Films | 24 | 3,463 | - | - |
| Sport TV | 1,542 | 55,760 | - | - |
| JOINTLY CONTROLLED COMPANIES | ||||
| Dreamia Holding BV | 1 3 | - | 100 | - |
| Dreamia SA | 2,635 | 5 | - | - |
| Finstar | 652 | - | - | - |
| Mstar | 25 | - | - | - |
| ZAP Cinemas | 1 0 | - | - | - |
| ZAP Media | 199 | - | - | - |
| OTHER RELATED PARTIES | ||||
| Cascaishopping | 1 2 | 617 | - | - |
| Centro Colombo | 1 8 | 1,355 | - | - |
| Centro Vasco da Gama | 1 4 | 709 | - | - |
| Continente Hipermercados, S.A. | 219 | 6 7 | - | - |
| CYBER SECURI AND INTELLIGEN,SA | - | - | - | 434 |
| Digitmarket | 233 | 487 | - | 5,040 |
| EFACEC Engenharia e Sistemas | 94 | 34 | - | 371 |
| Gaiashopping | 27 | 311 | - | - |
| Itrust - Cyber Security and Intellig | 22 | 370 | - | - |
| Maiashopping | 1 3 | 238 | - | - |
| Modalfa-Comércio e Serviços,SA | 115 | - | - | - |
| Modelo Continente Hipermercados | 2,935 | (4) | - | - |
| MDS Corretor de Seguros, SA | 395 | - | - | - |
| Norteshopping | 1 6 | 1,085 | - | - |
| PHARMACONTINENTE - Saúde e Higiene, S.A. | 119 | - | - | - |
| Público-Comunicação Social,SA | 110 | 1 3 | - | - |
| RACE-Refrig. & Air Condit.Engineering,SA | 110 | 1 | - | - |
| Rio Sul - Centro Comercial, SA | 7 | 98 | - | - |
| Saphety Level - Trusted Services | 75 | 247 | - | - |
| SC-Consultadoria,SA | 956 | - | - | - |
| SDSR - Sports Division SR, S.A. | 197 | - | - | - |
| SFS - Serviços de Gestão e Marketing | - | 264 | - | - |
| Sonae Arauco Portugal, S.A. | 823 | - | - | - |
| Sierra Portugal | 2,468 | 172 | - | - |
| Solinca HF | 275 | - | - | - |
| Sonae Center II | 2,609 | 46 | - | - |
| Spinveste - Promoção Imobiliária, SA | - | 174 | - | - |
| Troiaverde-Expl.Hoteleira Imob.,SA | 102 | - | - | - |
| UNITEL S.a.r.l. | 1,820 | 1,286 | - | - |
| We Do Consulting-Sist. de Informação | 341 | 1,995 | - | 2,563 |
| Worten - Equipamento para o Lar | 2,629 | 1,182 | - | - |
| Others | 1,508 | 508 | - | 44 |
| 31,296 | 70,331 | 100 | 8,452 |
| ACCOUNTS RECEIVABLES |
ACCOUNTS PAYABLE |
ACCRUED EXPENSES |
DEFERRED INCOME |
PREPAID EXPENSES |
|
|---|---|---|---|---|---|
| ASSOCIATED COMPANIES | |||||
| Big Picture 2 Films | 22 | 852 | 208 | - | - |
| Sport TV | 7,745 | 3,727 | 3,368 | 18,491 | 10,020 |
| JOINTLY CONTROLLED COMPANIES | |||||
| Dreamia Holding BV | 2,855 | 1 | - | - | - |
| Dreamia SA | 1,814 | 2,393 | 251 | - | - |
| Finstar | 13,401 | - | - | 121 | - |
| Mstar | 1 1 | - | - | - | - |
| Upstar | 6,754 | 62 | (28) | 295 | - |
| ZAP Cinemas | 24 | - | - | 1 5 | - |
| ZAP Media | 606 | - | - | 142 | - |
| OTHER RELATED PARTIES | |||||
| Centro Colombo- Centro Comercial, S.A. | 3 | 6 | 1 2 | - | 133 |
| Digitmarket-Sistemas de Informação,SA | 314 | 346 | - | 25 | 203 |
| Gaiashopping I- Centro Comercial, S.A. | 3 | 88 | - | - | 36 |
| ITRUST - Cyber Security and Intellig.,SA | 9 | 360 | - | - | 53 |
| Modelo Continente Hipermercados,SA | 726 | 86 | 7 | - | 0 |
| Norteshopping-Centro Comercial, S.A. | 7 | 1 7 | - | - | 114 |
| Olivedesportos - Publicidade, Televisão e Media | - | - | 30 | - | - |
| SC-Consultadoria,SA | 214 | - | - | - | - |
| Sonae Arauco Portugal, S.A. | 101 | - | - | - | - |
| RACE-Refrig. & Air Condit.Engineering,SA | 57 | 9 0 | - | - | - |
| Sierra Portugal, SA | 606 | (4) | (1) | - | 5 |
| 610 | 1 | - | - | - | |
| Worten-Equipamento para o Lar,SA | 1,240 | 75 | 269 | - | - |
| Others | 1,196 | 216 | 34 | - | 244 |
| 40,869 | 9,802 | 4,319 | 19,089 | 10,808 |
| REVENUES | OTHER OPERATING LOSSES / (GAINS) |
FINANCIAL INCOME AND (EXPENSES) |
CAPEX | |
|---|---|---|---|---|
| ASSOCIATED COMPANIES | ||||
| Big Picture 2 Films | 75 | 2,891 | - | - |
| Sport TV | 1,322 | 57,372 | - | - |
| JOINTLY CONTROLLED COMPANIES | ||||
| Dreamia Holding BV | - | - | 105 | - |
| Dreamia SA | 2,794 | (161) | - | - |
| Finstar | 7,499 | - | - | - |
| MSTAR | 26 | - | - | - |
| Upstar | 1,423 | (31) | - | (793) |
| ZAP Media | 199 | - | - | - |
| OTHER RELATED PARTIES | ||||
| Cascaishopping- Centro Comercial, S.A. | 1 1 | 611 | - | - |
| Centro Colombo- Centro Comercial, S.A. | 1 3 | 1,537 | - | - |
| Centro Vasco da Gama-Centro Comercial,SA | 1 1 | 816 | - | - |
| Continente Hipermercados, S.A. | 234 | 30 | 0 | - |
| Digitmarket-Sistemas de Informação,SA | 175 | 769 | 0 | 4,622 |
| EFACEC Energia | 155 | 36 | - | - |
| Gaiashopping I- Centro Comercial, S.A. | 1 9 | 301 | - | - |
| ITRUST - Cyber Security and Intellig.,SA | 32 | 1,187 | - | 404 |
| Maiashopping- Centro Comercial, S.A. | 1 1 | 366 | 0 | - |
| MDS Corretor de Seguros, SA | 391 | 71 | - | - |
| Modalfa-Comércio e Serviços,SA | 117 | - | - | - |
| Modelo - Dist.de Mat. de Construção,S.A. | 102 | - | - | - |
| Modelo Continente Hipermercados,SA | 2,593 | 130 | - | - |
| Norteshopping-Centro Comercial, S.A. | 1 2 | 1,052 | - | - |
| Olivedesportos - Publicidade, Televisão e Media | 20 | 2,034 | - | |
| PHARMACONTINENTE - Saúde e Higiene, S.A. | 144 | - | - | - |
| Público-Comunicação Social,SA | 97 | 39 | - | - |
| RACE-Refrig. & Air Condit.Engineering,SA | 162 | 1 | - | 94 |
| Rio Sul - Centro Comercial, SA | 7 | 95 | - | - |
| SC-Consultadoria,SA | 870 | - | - | - |
| SDSR - Sports Division SR, S.A. | 199 | - | - | - |
| SFS, Gestão e Consultoria, S.A. | 4 | 253 | - | - |
| Sierra Portugal, SA | 2,067 | 109 | - | - |
| Solinca - Health & Fitness, SA | 314 | - | - | - |
| Sonae Arauco Portugal, S.A. | 336 | - | - | - |
| 2,475 | 1 | - | - | |
| Spinveste - Promoção Imobiliária, SA | - | 156 | - | - |
| UNITEL S.a.r.l. | 1,908 | 388 | - | - |
| We Do Consulting-Sist. de Informação (*) | 306 | 1,430 | - | 2,061 |
| Worten-Equipamento para o Lar,SA | 1,990 | 997 | 0 | 0 |
| Outras partes relacionadas | 1,576 | 557 | (52) | - |
| 29,690 | 73,037 | 53 | 6,388 |
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.
The Company also regularly performs transactions and enters into financial contracts with various credit institutions, which hold qualifying shareholdings in the Company. However, these are performed on normal market terms for similar transactions, as part of the contracting companies' current activity.
Due to the large number of low value related pa heading "Other related parties" the balances and transactions with entities whose amounts are less than 100 thousand euros.
• in respect of the payment of the Annual Fee of Activity (for 2009, 2010, 2011, 2012, 2013, 2014, 2015, 2016, 2017 and 2018) 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. The settlements for the year 2018 were impugned in the first semester of 2019.
The settlement amounts are, respectively, as follows:
electronic communications revenues. NOS SA, NOS Açores and NOS Madeira 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.
Four sentences on the matter were given, i.e. in December 2012, in September 2017, in April 2018 and in May 2018, respectively, within the scope of the contestation of the annual rate of 2009, 2010 (NOS Comunicações) and 2012 (Ex-ZON and also Ex-Optimus). The first judgment ruled in favour of the respective contestation, only based on lack of prior hearing, but ordered ANACOM to pay interest. ANACOM submitted an appeal concerning that decision, but the Court of Appeal declined it by decision in July 2013. The three remain decisions judge also, in turn, ruled in favour of the respective contestations, but, this time for fundamental reasons, annulled the contested act by unlawfulness with the legal consequences, namely imposing the refund of the tax that was paid but still not refunded to NOS and ordering ANACOM to pay compensatory interest. These decisions were the subject of an appeal from ANACOM to the Tribunal Central Administrativo Sul (Central Administrative Court South), where it is pending.
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. On this date, it is impossible to determine what the scope of the infraction proceedings is to be.
During the course of the 2003 to 2019 financial years, some companies of the NOS Group were the subject of tax inspections for the 2001 to 2017 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 28.5 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 favourable outcome, which is why these proceedings are maintained in court. However, in accordance with the prudence principle, periodically, it is performed an assessment of the group's level of exposure to these proceedings taking into consideration the evolution of case law. As a result, the provisions recorded are adjusted. The Group provided the bank guarantees demanded by the tax authorities, in connection with these proceedings, as stated in Note 40.
from claims of undue portability, absence of response time to requests submitted to them by MEO and alleged illegal refusal of electronic portability requests.
to be financially compensated, realizing only part of these, in the case of NOS SA, in the amount of 26 million euros (from August 2011 to May 2014), in the case of NOS Açores, in the amount of 195 thousand euros and NOS Madeira, amounting to 817 thousand euros.
At the beginning of July 2018, NOS, SA was notified of the filing by MEO of a lawsuit concerning portability compensations in which MEO claims from NOS the right, in this respect, to approximately 26.8 million euros intending to proceed with the special judicial notification sent to the NOS in July 2015, as mentioned above. NOS challenged the lawsuit during the month of October 2018 and, in September 2019, a judgement was handed down by the Court of First Instance, which upheld the prescription exception invoked by NOS SA, absolving it from the request made by MEO. MEO appealed against this decision to the Court of Appeal, so the deadline for NOS to lodge its administrative infractions is ongoing.
In March 2018, the 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 2018, the operators, including NOS, lodged a defence and are awaiting further developments in the process. The 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. Further terms of the proceedings are awaited.
At 30 September 2019, 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.
The general conditions that affect the agreement and termination of this contract between NOS and its clients, establish that if the products and services provided by the client can no longer be used prior to the end of the binding period, the client is obliged to pay damages immediately.
Until December 31st, 2014, the revenue from penalties, in the face of the inherent uncertainties, was only recognised at the time of receipt, and on 30 September 2019, the amounts receivable by NOS SA, NOS Madeira and NOS Açores from these invoiced compensations amounted to 50,834 thousand euros. During the nine months ended on 30 September 2019, receipts in the amount of 762 thousand euros of the amounts outstanding as of 31 December 2014 were recognised as revenues.
From 1 January 2015, revenue from penalties is recognised considering an estimated collectability rate considering the Group's collection history. The penalties invoiced are recorded as accounts receivable and the uncollectible calculated values of these amounts are recorded as impairment by deducting the revenue recognised at the time of invoicing (Note 16).
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 2019, the unvested plans are:
| SHARES | |
|---|---|
| NOS PLAN | |
| Plan 2017 | 866,028 |
| Plan 2018 | 875,571 |
| Plan 2019 | 739,922 |
| NUMBER OF | |||||
|---|---|---|---|---|---|
| SHARES | |||||
| NOS PLAN | |||||
| Plan 2017 | 866,028 | ||||
| Plan 2018 | 875,571 | ||||
| Plan 2019 | 739,922 | ||||
| During the quarterly ended on 30 September 2019, the movements that occurred in the plans are detailed as follows: |
|||||
| NOS PLAN | NOS PLAN | NOS PLAN | NOS PLAN | ||
| 2016 | 2017 | 2018 | 2019 | TOTAL | |
| BALANCE AS AT 31 DECEMBER 2018: | 729,519 | 836,519 | 844,391 | - | 2,410,429 |
| MOVEMENTS IN THE PERIOD: | |||||
| Awarded | - | - | - | 702,577 | 702,577 |
| Vested | (599,677) | (17,187) | (14,583) | - | (631,447) |
| Cancelled / elapsed / corrected (1) | (129,842) | 46,696 | 45,763 | 37,345 | (38) |
| BALANCE AS AT 30 SEPTEMBER 2019 | - | 866,028 | 875,571 | 739,922 | 2,481,521 |
| (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. As at 30 September 2019, the outstanding responsibility related to these plans is 5,510 thousand euros and is recorded in Reserves, for an amount of 4,251 thousand euros, for plans liquidated in shares and in Accrued expenses, for an amount of 1,259 thousand euros, for plans liquidated in cash. |
The costs recognised in previous years and in the period, and its liabilities are as follows:
| ACCRUED EXPENSES |
RESERVES | TOTAL | |
|---|---|---|---|
| Costs recognised in previous years related to plans as at 31 December 2018 | 1,270 | 5,225 | 6,495 |
| Costs of plans vested in the period | (642) | (3,791) | (4,433) |
| Costs incured in the period and others | 631 | 2,817 | 3,448 |
| TOTAL COST OF THE PLANS | 1,259 | 4,251 | 5,510 |
During the month of October 2019, there was a significant gradual devaluation of Kwanza against the Euro of approximately 26%, which led to the recognition of foreign exchange losses in October 2019 by the minority subsidiaries of NOS in Angola, consolidated by the method equity method. These losses approximately 5 million euros in October 2019.
As of the date of approval of this document, there have been no other relevant subsequent events that merit disclosure in the present 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.
| SHARE | PERCENTAGE OF OWNERSHIP | |||||
|---|---|---|---|---|---|---|
| COMPANY | HEADQUARTERS | ACTIVITY | HOLDER | EFFECTIVE 31-12-2018 |
DIRECT 30-09-2019 |
EFFECTIVE 30-09-2019 |
| NOS, SGPS, S.A. (Holding) Empracine - Empresa Promotora de |
Lisbon | Management of investments | - Lusomundo |
- | - | - |
| Atividades Cinematográficas, Lda. | Lisbon | Movies exhibition | 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. | Maputo | Movies exhibition and commercialization of other public events NOS Cinemas | 100% | 100% | 100% | |
| NOS Sistemas, S.A. ('NOS Sistemas') | Lisbon | Rendering of consulting services in the area of information | NOS SA | 100% | 100% | 100% |
| NOS Sistemas España, S.L. | Madrid | systems Rendering of consulting services in the area of information |
NOS SA | 100% | 100% | 100% |
| NOS Açores Comunicações, S.A. | Ponta Delgada | systems Distribution of television by cable and satellite and operation of telecommunications services in the Azores area |
NOS SA | 84% | 84% | 84% |
| NOS Audiovisuais, SGPS, S.A. | Lisbon | Management of social participations in other companies as an | NOS | 100% | 100% | 100% |
| NOS Communications S.à r.l (b) | Luxembourg | indirect form of economic activity Management of investments |
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. (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. The company may also perform any other services. activities that are complementary, subsidiary or ancillary to those referred to in the preceding paragraph, directly or through participation in any other form of association, temporary or permanent, with other companies and / or other entities governed by public or private law. |
NOS SA | 0% | 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 International Carrier Services, S.A. (a) | Lisbon | Service rendered and exploitation of electronic communications, namely, service rendered of national and international voice and SMS traffic transport services, as well as associated support signaling. The company may also perform any other activities that are complementary, subsidiary or ancillary. referred to in the preceding paragraph, directly or through participation in any other forms of association, temporary or permanent, with other companies and / or other entities governed by public or private law. |
NOS SA | 0% | 100% | 100% |
| NOS Internacional, SGPS, S.A. | Lisbon | Management of social 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 Lusomundo TV, Lda. | Lisbon | Movies distribution, editing, distribution, commercialization and production of audiovisual products |
NOS Audiovisuais |
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 SA | 78% | 78% | 78% |
| NOSPUB, Publicidade e Conteúdos, S.A. | Lisbon | Comercialization of cable tv contents | NOS | 100% | 100% | 100% |
| 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 SA | 100% | 100% | 100% |
| Lisbon | Implementation, installation and exploitation of towers and other sites for the instalment of telecommunications equipment |
NOS SA | 100% | 100% | 100% | |
| NOS Wholesale, S.A. (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 Rendering of consulting services and support to contract management in roaming business. The organization of the material and human resources necessary for the commercialization, promotion and operation of electronic communications networks and circuits. The company may also perform any other activities that are complementary, subsidiary or ancillary to those referred to in the preceding paragraphs, directly or through participation in any other form of association, temporary or permanent, with other companies and / or other entities governed by public or private law. |
NOS SA | 0% | 100% | 100% |
| ('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 |
NOS SA | 100% | 100% | 100% |
| Teliz Holding B.V. | Amsterdam | purchased for that purpose Management of group financing activities |
NOS | 100% | 100% | 100% |
(a) Constitution on 1st August 2019, by split of NOS Comunicações, S.A
(b) On 1st October 2019, the company NOS Communications S.à r.l. changed its headquarters to Lisbon and changed its name to Nos Property, S.A..
| COMPANY | HEADQUARTERS | ACTIVITY | SHARE HOLDER |
PERCENTAGE OF OWNERSHIP | ||
|---|---|---|---|---|---|---|
| EFFECTIVE | DIRECT | EFFECTIVE | ||||
| 31-12-2018 | 30-09-2019 | 30-09-2019 | ||||
| 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% |
| COMPANY | HEADQUARTERS | ACTIVITY | SHARE HOLDER |
PERCENTAGE OF OWNERSHIP | ||
|---|---|---|---|---|---|---|
| EFFECTIVE | DIRECT | EFFECTIVE | ||||
| 31-12-2018 | 30-09-2019 | 30-09-2019 | ||||
| Dreamia Holding B.V. | Amsterdam | Management of investments | NOS Audiovisuais |
50.00% | 50.00% | 50.00% |
| Dreamia - Serviços de Televisão, S.A. | Lisbon | Conception, production, realization and commercialization of audiovisual contents and provision of publicity services |
Dreamia Holding BV |
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 B.V. |
30.00% | 30.00% | 30.00% |
| MSTAR, SA | Maputo | Distribution of television by satellite, operation of telecommunications services |
NOS | 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% |
| ZAP Cinemas, 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% |
| ZAP Publishing, 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 |
ZAP Media | 30.00% | 100.00% | 30.00% |
Financial investments whose participation is less than 50% were considered as joint arrangements due to shareholder agreements that confer joint control.
| COMPANY | HEADQUARTERS | ACTIVITY | PERCENTAGE OF OWNERSHIP | |||
|---|---|---|---|---|---|---|
| SHARE HOLDER |
EFFECTIVE | DIRECT | EFFECTIVE | |||
| 31-12-2018 | 30-09-2019 | 30-09-2019 | ||||
| Turismo da Samba (Tusal), SARL (a) | Luanda | n.a. | NOS | 30.00% | 30.00% | 30.00% |
| Filmes Mundáfrica, SARL (a) | Luanda | Movies exhibition | NOS | 23.91% | 23.91% | 23.91% |
| Companhia de Pesca e Comércio de Angola (Cosal), SARL (a) |
Luanda | n.a. | NOS | 15.76% | 15.76% | 15.76% |
| 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 financial investments in these companies are fully provisioned.
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