Altice International S.à r.l.
[Pages:85]Altice International S.? r.l.
CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED
DECEMBER 31, 2021
Table of Contents
Consolidated Statement of Income
1
Consolidated Statement of Comprehensive Income
1
Consolidated Statement of Financial Position
2
Consolidated Statement of Changes in Equity
3
Consolidated Statement of Cash Flows
4
Notes to the Consolidated Financial Statements
5
1 About Altice International S.? r.l. and the Altice Group
5
2 Significant accounting policies
7
3 Scope of consolidation
26
4 Segment reporting
30
5 Goodwill and impairment of goodwill
35
6 Intangible assets and right-of-use assets
38
7 Property, plant and equipment
40
8 Contract balances
41
9 Investment in associates and joint ventures
42
10 Financial assets and other non-current assets
43
11 Inventories
45
12 Trade and other receivables
45
13 Cash and cash equivalents and restricted cash
47
14 Shareholders' equity
47
15 Provisions
48
16 Employee benefit provisions
48
17 Borrowings and other financial liabilities
51
18 Financial risk factors
59
19 Fair value of financial assets and liabilities
62
20 Leases
64
21 Trade and other payables
65
22 Other liabilities
65
23 Taxation
65
24 Other operating expenses
68
25 Depreciation, amortization and impairment losses
68
26 Finance costs, net
69
27 Average workforce
69
28 Related party transactions
69
29 Contractual obligations and commercial commitments
72
30 Litigation
74
31 Going concern
79
32 Events after the reporting period
79
33 List of entities included in the scope of consolidation
80
Report of the r?viseur d'entreprises agr??
82
Altice International S.? r.l. Consolidated Financial Statements
Consolidated Statement of Income
Notes
Year ended
Year ended
(m)
December 31, 2021
December 31, 2020
Revenues
4
4,375.1
4,064.5
Purchasing and subcontracting costs
4
(1,107.4)
(1,009.0)
Other operating expenses
4
(912.6)
(868.5)
Staff costs and employee benefits
4
(570.4)
(477.1)
Depreciation, amortization and impairment
25
Other (expenses) and income1
4
(1,201.6) (289.8)
(1,206.1) 58.5
Operating profit
4
293.3
562.3
Interest relative to gross financial debt
26
(396.4)
(468.7)
Realized and unrealized (losses)/gains on derivative instruments linked to financial debt
26
217.7
(229.5)
Other financial expenses
26
(280.4)
(109.8)
Finance income
26
275.7
337.7
Net result on extinguishment and remeasurement of financial liabilities
26
(89.5)
370.6
Finance costs, net
26
(272.9)
(99.7)
Share of earnings/(loss) of associates and joint ventures
9
(6.9)
3.2
Profit/(loss) before income tax
13.5
465.8
Income tax expense
23
(50.8)
(48.0)
Profit/(loss) for the period
(37.3)
417.8
Attributable to equity holders of the parent
(72.1)
403.5
Attributable to noncontrolling interests
34.8
14.3
1. Other (expenses) and income for the year ended December 31, 2021 include mainly the provision for a voluntary employee reduction program
for 327.6 million and a provision related to termination payments payable to employees of 24.6 million in Portugal.
Consolidated Statement of Comprehensive Income (m)
Profit/(loss) for the period
Other comprehensive income/(loss) Items that may be reclassified subsequently to profit or loss Exchange differences on translating foreign operations Cash flow hedges - effective portion of changes in fair value Cash flow hedges - reclassified to profit or loss Related taxes
Item that will not be reclassified subsequently to profit or loss Change of fair value of equity instruments at fair value through OCI Actuarial gain/(loss) Related taxes Total other comprehensive income/(loss) Total comprehensive income/(loss) for the period Attributable to equity holders of the parent Attributable to noncontrolling interests
Year ended December 31, 2021
(37.3)
Year ended December 31, 2020
417.8
(98.3) 14.8 7.8 (5.6)
2.0 4.5 (1.0) (75.8) (113.1) (149.4) 36.3
4.0 16.4 101.0 (39.7)
1.6 15.1 (3.1) 95.3 513.1 500.2 12.9
The accompanying notes from pages 5 to 80 form an integral part of these consolidated financial statements.
1
Altice International S.? r.l. Consolidated Financial Statements
Consolidated Statement of Financial Position (m) Noncurrent assets Goodwill Intangible assets Property, plant & equipment Right-of-use assets Contract costs Investment in associates and joint ventures Financial assets Deferred tax assets Other non-current assets
Total noncurrent assets Current assets Inventories Contract assets Trade and other receivables Current tax assets Financial assets Cash and cash equivalents Restricted cash Assets classified as held for sale Total current assets Total assets
Notes
5 6.1 7 6.2 8.1 9 10.1 23 10.2
11 8.2 12 23 10.1 13 13 3.1
Equity
Issued capital
14.1
Other reserves
14.2
Accumulated gains/(losses)
Equity attributable to equity holders of the parent
Noncontrolling interests
3.4
Total equity
Noncurrent liabilities
Long-term borrowings, financial liabilities and related hedging instruments 17
Other financial liabilities
17.8
Non-current lease liabilities
20
Provisions
15
Deferred tax liabilities
23
Non-current contract liabilities
8.3
Other non-current liabilities
22
Total noncurrent liabilities
Current liabilities
Short-term borrowings, financial liabilities and related hedging instruments 17
Other financial liabilities
17.8
Current lease liabilities
20
Trade and other payables
21
Contract liabilities
8.3
Current tax liabilities
23
Provisions
15
Other current liabilities
22
Liabilities directly associated with assets classified as held for sale
3.1
Total current liabilities
Total liabilities
Total equity and liabilities
As of December 31, 2021
3,345.8 1,182.0 3,576.4
850.4 118.9 53.3 3,127.1 285.2 190.9 12,730.0
164.7 43.4 1,168.2
6.0 342.0 285.2 41.7 12.2 2,063.4 14,793.4
309.3 (236.4) 555.0 627.9 (35.8) 592.1
7,969.2 971.2 949.2 938.8 95.3 48.9 139.2
11,111.8
292.6 552.8 94.3 1,567.6 125.7 250.1 180.3 21.8
4.3 3,089.5 14,201.3 14,793.4
As of December 31, 2020
3,139.1 1,159.9 3,438.6
802.4 107.8 15.2 2,562.2 153.9 182.4 11,561.5
119.1 36.9 1,415.8 22.8 207.5 354.0 39.3
2,195.4 13,756.9
309.3 (159.1)
605.9 756.1 (20.1) 736.0
7,395.9 1,033.6
805.5 861.4 88.0 54.4 25.9 10,264.7
92.3 808.4 83.7 1,371.6 106.4 189.4 87.7 16.7
2,756.2 13,020.9 13,756.9
The accompanying notes from pages 5 to 80 form an integral part of these consolidated financial statements.
2
Altice International S.? r.l. Consolidated Financial Statements
Consolidated Statement of Changes in Equity
Number of shares on issue
Share capital
(Accumulated losses)/retained
earnings
Currency translation
reserve
Cash flow hedge Fair value through Employee benefits
reserve
OCI
(m)
Common Shares
Equity at January 1, 2021
30,925,700,000
309.3
605.9
(33.1)
(16.8)
3.5
(112.7)
Profit / (loss) for the period
-
(72.1)
-
-
-
-
Other comprehensive profit/(loss)
-
-
(99.7)
16.8
2.0
3.6
Comprehensive profit/(loss)
-
(72.1)
(99.7)
16.8
2.0
3.6
Transactions with non-controlling interests1
-
(0.7)
-
-
-
-
Dividends2
-
-
-
-
-
-
Other
-
21.9
-
-
-
-
Equity at December 31, 2021
30,925,700,000
309.3
555.0
(132.8)
-
5.5
(109.1)
1. Transactions with non-controlling interests mainly related to the change in the fair value of minority put options of Teads and Intelcia Portugal Inshore S.A. ("Intelcia Portugal Inshore").
2. Dividends related mainly to the dividend payments by FastFiber, reducing NCI by 52.5 million (please refer to note 3.4).
Total equity attributable to equity holders of
the parent
756.1 (72.1) (77.3) (149.4)
(0.7) -
21.9 627.9
Non-controlling interests
(20.1) 34.8
1.5 36.3
0.3 (52.5)
0.2 (35.8)
Total equity
736.0 (37.3) (75.8) (113.1)
(0.4) (52.5) 22.1 592.1
Consolidated Statement of Changes in Equity Number of shares
Share capital
(Accumulated
Currency Cash flow hedge Fair value through Employee benefits
Total equity
on issue
losses)/retained
translation
reserve
OCI
earnings
reserve
attributable to equity holders of
the parent
(m)
Common Shares
Equity at January 1, 2020
30,925,700,000
309.3
(583.0)
(38.4)
(94.6)
1.9
(124.7)
(529.5)
Profit for the period
-
403.5
-
-
-
-
403.5
Other comprehensive profit/(loss)
-
-
5.3
77.8
1.6
12.0
96.7
Comprehensive profit/(loss)
-
403.5
5.3
77.8
1.6
12.0
500.2
Transactions with non-controlling interests1
-
1,066.9
-
-
-
-
1,066.9
Dividends2
-
-
-
-
-
-
-
Initial recognition of amended debt3
-
(267.1)
-
-
-
-
(267.1)
Other
-
(14.4)
-
-
-
-
(14.4)
Equity at December 31, 2020
30,925,700,000
309.3
605.9
(33.1)
(16.8)
3.5
(112.7)
756.1
1. Transactions with non-controlling interests mainly related to the sale of 49.99% of the Portuguese fibre business (please refer to note 3.2.2) and the acquisition of the minority interests of Teads.
2. Dividends related mainly to the dividend payments by subsidiaries of Altice Technical Services, reducing NCI by 9.5 million (please refer to note 3.4).
3. This relates to amended debt value of the MCN (please refer to note 17.8.6).
Non-controlling interests
(12.2) 14.3 (1.4) 12.9 (12.4) (9.5)
1.1 (20.1)
Total equity
(541.7) 417.8
95.3 513.1 1,054.5
(9.5) (267.1) (13.3) 736.0
The accompanying notes from pages 5 to 80 form an integral part of these consolidated financial statements.
3
Consolidated Statement of Cash Flows
(m) Profit/(loss) for the period adjustments for: Share of (earnings)/loss of associates and joint ventures Depreciation, amortization and impairment Other noncash operating items, net1 Finance costs/(income), net recognised in the statement of income Income tax expense/(benefit) recognised in the statement of income Pension plan liability payments Income tax paid Changes in working capital2 Net cash provided by operating activities Payments to acquire tangible and intangible assets and contract costs Proceeds from sale of tangible and intangible assets Payments related to acquisition of interests in associates Proceeds related to sale of interests in associates Payments for acquisition of consolidated entities, net of cash3 Advances paid to group companies Proceeds from repayment of advances to group companies Transfers from restricted cash Dividend received Other cash used in investing activities Net cash used in investing activities Proceeds from issuance of debt instruments Payments to redeem debt instruments Proceeds from the sale of minority stake Proceeds related to payments made to suppliers through factoring arrangements Payments made to factoring companies Lease payment (principal) related to ROU Lease payment (interest) related to ROU Interest paid4 Proceeds from the monetization of swaps Repayment of advances received from group companies Transaction with non-controlling interests Dividends paid to non-controlling interests Other cash used by financing activities5 Net cash from financing activities Effects of exchange rate changes on the balance of cash held in foreign currencies Net change in cash and cash equivalents Cash and cash equivalents at beginning of the period Cash and cash equivalents at end of the period
Year ended
Year ended
Note December 31, 2021 December 31, 2020
(37.3)
417.8
9 25
26 23.1
4.3.5 3.1.2 3.1.1 3.2.1
10.1.2 10.1.2
17.9 17.9 3.2.2
20 20 26 26
3.3.2 3.4
6.9 1,201.6
153.6 272.9 50.8 (112.8) (129.9) (12.4) 1,393.4 (932.5) 215.9 (45.4)
8.5 (130.0) (819.3)
1.6 2.5 (9.5)
(1,708.2) 3,218.1 (2,543.0)
376.2 423.5 (417.0) (84.4) (69.1) (320.0) 32.4 (16.8) (210.3) (52.5) (101.7) 235.4
10.6
(68.8) 354.0 285.2
(3.2) 1,206.1
(41.3) 99.7 48.0
(113.6) (55.9) (81.1) 1,476.5 (830.3) 11.5 (9.5) 211.0 (4.0) (1,579.9) 647.2
2.0 2.7
-
(1,549.3) 3,530.9 (4,353.4) 1,576.0
422.8 (430.5) (78.6) (69.5) (423.1)
50.2 (72.2)
(9.5) (96.1) 47.0 (15.8)
(41.5) 395.5 354.0
1 Other non-cash items include allowances and writebacks for provisions and capital gains and losses recorded on the disposal of assets. For the year ended December 31, 2021, other non-cash items include mainly the provision for a voluntary employee reduction program for 327.6 million, a provision related to termination payments payable to employees of 24.6 million in Portugal (please refer to note 3.3.1.) and the capital gain of 88.5 million related to the Portuguese tower transaction (please refer to note 3.1.2).
2 Changes in working capital relate to payments and receipts related to inventories, trade and other receivables and trade and other payables. 3 Mainly payment related to the acquisition of Unisono Solution Group S.L ("Unisono Group") for an amount of 123.1 million, which was
closed on August 6, 2021 (please refer to note 3.1.3) and payment of the earnout related to the acquisition of Teads MENA SA (previously Buzzeff Holding S.A.) for an amount of 6.1 million. 4 Interest paid on debt includes interest received from / paid on interest rate derivatives. 5 For the year December 31, 2021, other cash used in financing activities mainly includes 78.9 million of call premium related to the redemption of the Altice Financing 2026 notes (please refer to note 17.2.1.2.), 13.1 million interest on factoring arrangements, and 11.1 million of bank fees. For the year ended December 31, 2020, other cash used for financing activities mainly consisted of 100.3 million of call premium related to the repayment of bonds resulting from the refinancing transactions which occurred during the year 2020 and 18.0 million interest on factoring arrangements.
The accompanying notes from pages 5 to 80 form an integral part of these consolidated financial statements. 4
About Altice International S.? r.l. and the Altice Group
Altice International S.? r.l. (the "Company") is a private limited liability company ("soci?t? ? responsabilit limite") incorporated in Luxembourg, headquartered at 5, rue Eug?ne Ruppert, L-2453 Luxembourg, Grand Duchy of Luxembourg. The Company is the parent company of a consolidated group (the "Group").
The Company is a wholly-owned subsidiary of Altice Luxembourg S.A. ("Altice Luxembourg"). The controlling shareholder of Altice Luxembourg is Next Alt S.? r.l., which is itself controlled by Mr. Patrick Drahi. As of December 31, 2021, Next Alt S.? r.l. indirectly held 92.76% of the share capital of the Company.
The Group is a convergent leader in telecoms, content, media, entertainment and advertising, and operates in Portugal, Israel and the Dominican Republic. The Group also has a global presence through its online advertising business Teads.
1.1. Basis of presentation of the consolidated financial statements
The consolidated financial statements of the Group as of December 31, 2021 and for the year then ended (the "consolidated financial statements") were approved by the Board of Managers and authorized for issue on April 26, 2022.
The consolidated financial statements as of December 31, 2021 and for the year then ended are presented in millions of Euros, except as otherwise stated, and have been prepared in accordance with International Financial Reporting Standards as adopted in the European Union ("IFRS-EU").
The consolidated financial statements have been prepared on the historical cost basis except for certain financial instruments that are measured at fair values at the end of each reporting period, as explained in the accounting policies.
Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company considers the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these consolidated financial statements is determined on such a basis, except for share-based payment transactions that are within the scope of IFRS 2 Share-based Payment, leasing transactions that are within the scope of IFRS 16 Leases, and measurements that have some similarities to fair value but are not fair value, such as net realisable value in IAS 2 Inventories or value in use in IAS 36 Impairment of Assets.
For financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:
Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
Level 3 inputs are unobservable inputs for the asset or liability (please refer to note 19).
Where the accounting treatment of a specific transaction is not addressed by any accounting standard and interpretation, the Board of Managers applies its judgment to define and apply accounting policies that provide information consistent with the general IFRS concepts: faithful representation and relevance.
1.2. Significant accounting judgments and estimates
In the application of the Group's accounting policies, the Board of Managers is required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not clear from other sources. The estimates and associated assumptions are based on historical experience and other factors that are relevant. Actual results may differ from these estimates.
5
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
These judgments and estimates relate principally to revenue recognition, litigations, post-employments benefits, fair value of financial instruments, deferred taxes assets, useful lives of intangible assets and property, plant and equipment, impairment of goodwill and intangible assets, impairment of contract assets and trade receivables, determination of right-of-use assets and lease liabilities and assessment of control. These estimates and assumptions are described in note 2.27.
1.3. Application of new and revised International Financial Reporting Standards (IFRSs)
Standards applicable for the reporting period
The following standards have mandatory application for periods beginning on or after January 1, 2021 as described in note 2 to the consolidated financial statements:
Interest Rate Benchmark Reform - Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16), effective for annual periods beginning on or after January 1, 2021;
COVID-19 Related Rent Concession ? Amendment 2 IFRS 16, effective for annual periods beginning on or after April 1, 2021.
The application of the Interest Rate Benchmark Reform ? Phase 2 and the COVID-19 Related Rent Concession had no material impact on the amounts recognised and on the disclosures in these consolidated financial statements.
Standards and interpretations not applicable as of reporting date
The Group has not early adopted the following standards and interpretations, for which application is not mandatory for periods starting from January 1, 2021 and that may impact the amounts reported:
Amendments to IFRS 10 and IAS 28 Sale or Contribution of Assets between an Investor and its Associate or Joint Venture, effective date of the amendments has not yet been determined by the IASB;
Amendments in Classification of Liabilities as Current or Non-Current (Amendments to IAS 1), effective on or after January 1, 2023;
Amendments to IAS 1 and IFRS Practice Statement 2 titled Disclosure of Accounting Policies, effective on or after 1 January 2023;
Amendments to IAS 8 Definition of Accounting Estimates, effective on or after January 1, 2023; Annual Improvements to IFRS Standards 2018-2020, effective on or after January 1, 2022; Reference to the Conceptual Framework (Amendments to IFRS 3), effective on or after January 1, 2022; and Amendments to IAS 12 Deferred Tax related to Assets and Liabilities arising from a Single Transaction,
effective for annual periods beginning on or after January 1, 2023.
The Board of Managers anticipates that the application of those amendments will not have a material impact on amounts reported in respect of the Group's financial assets and financial liabilities.
1.4. COVID-19 pandemic
On March 11, 2020, the COVID-19 outbreak was declared by the World Health Organization (WHO) as a global pandemic, highlighting the health risks of the disease. In this context and following regulatory requirements published by governments over the last months in the countries in which the Group operates, the Group activated a response program in order to minimize the impact of the COVID-19 pandemic.
The COVID-19 pandemic had a limited impact on the consolidated financial statements of the Group as of December 31, 2021 and for the twelve-month periods then ended. The impact has remained limited since the beginning of the crisis demonstrating the resilience of the Group's telecom business in the countries where the Group operates. Although the situation continues to evolve, the Company expects that the COVID-19 pandemic will have limited effects on the Group's operations and financial performance for future periods.
The Group has taken this situation into account in its estimates, notably those related to the non-current and current assets valuation (including goodwill) (please refer to note 5.2).
Based on the above and information in note 31, the Group determined that the going concern assumption is still appropriate.
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