ES

 

(Consolidated financial statements 2017) (In millions of euros – emls)

 

Key Data at November 30

(Consolidated figures in millions of euros)

 

 

Stock Market Data at December 31 (Euros)

 

 

Presentation of the Annual Financial Statements

The consolidated annual financial statements of the Zardoya Otis Group at November 30, 2017 have been prepared in accordance with the International Financial Reporting Standards (IFRS) and interpretations (IFRIC) adopted in the European Union and in force at said date.


Business evolution

Profit and loss

The EBITDA (operating profit + depreciation + amortization) obtained in 2017 was 220,8 million euros, 3.1% lower than the 227.8 million euros obtained in 2016.

The profit after tax at the end of the 2017 reporting period was 152.7 million euros, 0.1% higher than the 152.6 million euros in 2016.

The tax rate in Spain dropped from 28% to 25% in 2017.

The consolidated cash flow (net profit + depreciation + amortization) at the end of 2017 was 163.9 million euros (2016: 163.3 million of euros).


Sales

Total consolidated sales in 2017 were 778.3 million euros, in comparison with the 746.0 million euros of 2016, representing a 4.3% increase.


New Sales

Work completed: the value of work completed in 2017 was 48.8 million euros, 16.8% higher than the 2016 figure.

In 2017, New Installation sales accounted for 6.3% of total sales (5.6% in 2016).

Orders received and backlog of unfilled orders

Orders received for Installations in 2017, for both new and existing buildings, totalled 197.2 million euros, representing an increase of 17.3% on 2016.

 

 

The backlog of unfilled orders was 139.3 million euros in 2017, which was an increase of 26.8% on the preceding annual period.


Service

Sales: consolidated Service sales totalled 545.4 million euros, showing an increase of 2.0% on the 2016 figure.

The Service activity accounted for 70.1% of the Group’s total billing in 2017.


Units under maintenance

The number of units rose by 0.1% in 2017, totalling 285,840 units. Our service excellence has allowed us to keep the confidence our customers place in us.


Exports 

Net consolidated Export sales were 184.2 million euros, 8.4% up on the 2016 figure.

Exports represented 23.7% of consolidated Group sales in 2017 (22.8% in 2016).


Employees

At the end of the 2017 reporting period, the Group employed 5,233 people, 1.7% more than at the end of the previous reporting period.


Dividends

The dividends and partial cash distribution of the share premium paid out in the 2017 calendar year were as follows:

At November 30, 2017, interim dividends charged to the period ended at said date had been declared for an amount of EThs 75 274 (EThs 73,819 in 2016). These interim dividends were paid for shares 1 to 470,464,311.

Additionally, a partial cash distribution of the share premium took place on July 10, 2017 for shares 1 to 452,369,530, for a gross amount of EThs 37 166. Treasury shares held at said dates were excluded.


 

 

The total amount of the dividends (including the third interim dividend for the year, declared in December 2017 as an event after the end of the reporting period) and the partial cash distribution of the share issue premium in 2017 amounts to 150.1 Million Euros, which represents an increase of 1.6% compared to those paid in 2016 and together represents a pay-out of 98.25% of the consolidated result attributed to the parent company, Zardoya Otis, SA; thus continuing the policy followed by the Company to distribute a figure close to 100% pay-out.

 

Evolution of capital

Treasury stock

At November 30, 2017, Zardoya Otis, S.A. did not hold any of its own shares (0 at the end of 2016).

 

 


Evolution of Zardoya Otis on the Securities Markets

The quoted price at the end of 2017 was 9.12 euros per share, representing an increase of 13.6% on the adjusted value at the end of 2016, while the IBEX rose by 7.4%.

 

 

 

Historical Stock Market Data

(In euros)

 

 


Forecast evolution

In 2017, we increased our sales in 4.3% as a result of the slight recovery in both the general economy and the construction sector. The backlog of unfilled orders for New Installations increased by 17.3% while, in the Service area, sales rose by 2.0%.

At the end of 2017, New Installations sales accounted for 6.3% of total sales. We expect this relative weight to continue to grow in 2018. As in the preceding reporting period, the recovery continued in the construction sector in the Iberian and Moroccan markets.

 

General Description of the Group’s Risk Policy

The Group’ activities are exposed to a variety of financial risks: market risk (including foreign exchange risk, fair value interest risk and price risk), credit risk, liquidity risk and cash flow interest rate risk. The Group’s global risk management program is focused on the uncertainty of the financial markets and tries to minimize any potential adverse effects on the Group’s financial profitability.

Risk management is controlled by Group Management in accordance with policies approved by the parent company’s Board of Directors. Management assesses and hedges financial risks in close collaboration with the operating units of the rest of the Group, in order to:

- Ensure that the most important risks are identified, assessed and managed.

- Ensure an appropriate operating segregation of risk management functions.

- Ensure that the risk exposure level accepted by the Group in its operations is in line with its risk profile.

In the 2017 Annual Financial Statements of Zardoya Otis, S.A. and Subsidiaries, the information concerning the following risks is presented:

a) Market risk:

  1.   i) Exchange rate risk
  2.  ii) Price risk
  3. iii) Cash flow interest rate risk and fair value risk

b) Credit risk

c) Liquidity risk

d) Capital risk

The Audit Committee is responsible for periodically reviewing the internal control and risk management systems, so that the main risks are properly identified, managed and disclosed, through control devices that allow the main potential risks of the Company and the Group to be assessed and the evaluation of the risk control systems, adapted to the risk profile of the Company and its Group.

Zardoya Otis, S.A. has an Internal Audit Department, with systems and processes that are intended to evaluate, monitor, mitigate or reduce the Company’s main risks by preventive measures and alerts of possible situations of risk. The Company has the risks that affect assets and liabilities covered by the appropriate insurance policies. Likewise, it has processes that ensure control of any risk that may stem from trading operations.

Conservative liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities. Group Treasury aims to maintain flexibility in funding by keeping committed credit lines available.

The Group has no significant concentrations of risk with customers and there are no significant old credit balances. Nevertheless given the deterioration in the national economic situation, the Group has policies in place to ensure that installation sales are made to customers with appropriate credit histories and, in addition, regular debt-monitoring procedures are conducted by the departments involved in debt collection.


Average Payment Period to Suppliers

In relation with the provider of Law 3/2004 and Law 15/2010 on measures to combat late payment in commercial operations, the Law 31/2014, of December 3, amended Law 15/2010 in relation to the information to be included in the report to request the average period of payment to suppliers. In this way, the average payment period in 2017 to suppliers is below 60 days. The Company has planned measures that are aimed at maintaining compliance with the law, among which are maintaining the adequacy of the average payment period for its operations with group companies and associated with the provisions of the regulations and compliance with the agreements and commercial relationships with external suppliers.


Research and development expenses

The Group parent follows the policy of recognizing research costs in profit and loss in the period in which they are incurred, in accordance with its accounting policies and criteria. At November 30, 2017, the income statement included expenses of EThs 1,957 for this item (2016: EThs 2,160).


Significant events at November 30, 2017

On March 7, 2017, Zardoya Otis, S.A. acquired 7.23% of shares in the subsidiary Electromecánica Hemen Elevadores, S.L. from non-controlling interests. This transaction meant that the percentage held by Zardoya Otis, S.A. in Hemen Elevadores, S.L. changed, rising from 92.77% to 100%.

On May 17, 2017, Zardoya Otis, S.A. acquired 2.19% of the shares in the subsidiary Acresa Cardellach, S.L. from non-controlling interests. This transaction meant a change in Zardoya Otis, S.A.’s holding in Acresa Cardellach, S.L., which rose from 94.57% to 96.76%.

In 2017, companies belonging to the CGU Zardoya Group (Spain) acquired 100% of the shares in the companies Servicios Automáticos de Elevación S.L (April 21, 2017) and Liftsur Elevadores, S.L. (July 27, 2017). Additionally, la company Otis Elevadores Lda., belonging to the CGU Zardoya Otis Group (Portugal) acquired 100% of the shares in Liftime – Elevadores Unipessoal and Joaquim Férias e Filhos – Elevadores Unipessoal, Lda. (January 1, 2017). All the aforementioned companies are engaged in elevator repair and maintenance.


Events after the reporting date

On December 12, 2017 Zardoya Otis, S.A. declared the third interim dividend charged to the profit for the period for an amount of 0.080 euros gross per share, resulting in a total gross dividend of EThs 37,637. This dividend was paid out on January 10, 2018.


Annual Corporate Governance Report

The Annual Corporate Governance Report for 2017 forms part of this Management Report.

Said Report is published on the website of both the National Securities Market Commission (CNMV) and Zardoya Otis.

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