CAPÍTULO II Régimen de contribuciones y prestaciones del sistema
Artículo 11. Incompatibilidades entre aportaciones y prestaciones 12
Accrued expenses:
Cost of transactions of players' registrations, not yet due 6,166,478 1,852,280
Deferred income:
Broadcasting rights advances/anticipated invoicing
(Note 30) 4,000,000 6,000,000
Deferred revenue sponsorship - BMG Museum 5,957,167 5,046,639
Effect of discounting trade payables (159,909) (136,297)
15,963,736 12,762,622
Other current liabilities
State and public sector 2,638,865 3,127,033
Advances to clients - 5,000,000
Other creditors 8,557,715 9,902,184
11,196,580 18,029,217 Accrued expenses:
Accrued payroll 780,856 767,371
Cost of transactions of players' registrations, not yet due 10,967,739 7,839,508 Competition bonuses pending processing 3,338,422 2,071,921
Other accrued expenses 3,658,014 519,099
18,745,031 11,197,899
Deferred income:
Broadcasting rights advances/anticipated invoicing (Note 30) 2,000,000 2,000,000
Sale of season tickets 98,688 328,613
Advertising - 1,825,000
Deferred revenue sponsorship - BMG Museum 695,576 651,679
Other deferred income 645,920 221,509
3,440,184 5,026,801
Effect of discounting trade payables (597,370) (434,242)
Consolidated Accounting Report 2014/2015
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(a) The costs of intermediation services of players totaling 14,683,295 Euros relating, among others, the sale of Jackson Martinez and Iturbe player’s registration and the exercise price of the call options to purchase a percentage of the economic rights of Brahimi (Note 19).
(b) Celebration and/or renewal of the labour contracts, namely signing-on fees in the amount of 1,670,893 Euro related, among others, to the players Andrés Fernandez and Walter.
As of 30 June 2014, includes, namely, amounts related to:
(a) intermediation costs of players in the amount of 5,583,452 Euro related, to among others, with the sale of registration rights of the players Iturbe, Fernando and Otamendi;
(b) celebration and/or renewal of the labour contracts, namely signing-on fees and image rights in the amount of 3,417,565 Euro related, among others, to the players Reyes and Diego Herrera.
In the classification as non-current balance, which regards the signing-on fees, were considered the agreed payment dates.
The item "Other payables" as of June 30, 2015, includes remunerations, bonuses and termination compensations payable to players who have terms of payment in the short term (approximately 6,115,000 Euro as of June 30, 2015 and 7,567,000 Euro as of June 30, 2014).
On June 30, 2015 and 2014, the caption "Competition bonuses pending processing" includes amounts relating to matches participation premiums and amounts and bonuses attributed to certain athletes in order to guarantee the minimum annual wage contracted in their respective labour contract.
The caption "Deferred Revenue Sponsorship - BMG Museum" refers to the deferral of revenue related to the agreement signed between the subsidiary PortoComercial and Banco de Minas Gerais (“BMG”) as an advance under the signature of a partnership agreement concerning advertising and support of the construction of the FC Porto Museum. This contract establishes the sponsorship and naming of the Museum in the amount of 8,000,000 Euro until 2025. As mentioned in Note 13, PortoComercial acquired, in October 2013, to Futebol Clube do Porto the right to explore the Museum, having paid in advance 12,000,000 Euro, corresponding to the rents of 8 years of the Museum exploration.
The maturity of the captions ‘Other non-current liabilities’ and ‘Other current liabilities’ as of 30 June 2015 and 2014 can be detailed as follows:
30.06.2015 > 1 YEAR > 2 YEARS > 3 YEARS > 4 YEARS > 5 YEARS
Other non-current liabilities Accrued expenses:
Cost of transactions of players' registrations, not yet due 6,166,478 5,746,478 420,000 - - -
Deferred income:
Broadcasting rights advances/anticipated invoicing
(Note 30) 4,000,000 2,000,000 2,000,000 - - -
Deferred revenue sponsorship - BMG Museum 5,957,167 695,576 695,576 695,576 695,576 3,174,863
Effect of discounting trade payables (159,909) (149,017) (10,892) - - -
Consolidated Accounting Report 2014/2015 ___________________________________________________________________________________________ 30.06.2015 < 90 DAYS 90-180 DAYS 180-360 DAYS Other current liabilities
State and public sector 2,638,865 2,638,865 - -
Other creditors 8,557,715 8,557,715 - -
11,196,580 11,196,580 - - Accrued expenses:
Accrued payroll 780,856 - 260,285 520,571
Cost of transactions of players' registrations, not yet due 10,967,739 8,857,017 1,201,611 909,111 Competition bonuses pending processing 3,338,422 3,338,422 - -
Other accrued expenses 3,658,014 3,658,014 - -
18,745,031 15,853,453 1,461,896 1,429,682 Deferred income:
Broadcasting rights advances/anticipated invoicing (Note 30) 2,000,000 500,000 500,000 1,000,000
Sale of season tickets 98,688 98,688 - -
Deferred revenue sponsorship - BMG Museum 695,576 173,894 173,894 347,788
Other deferred income 645,920 645,920 - -
3,440,184 1,418,502 673,894 1,347,788
Effect of discounting trade payables (597,370) (420,901) (22,875) (153,594)
32,784,425 28,047,634 2,112,915 2,623,876
30.06.2014 > 1 Year > 2 years > 3 years > 4 years > 5 years
Other non-current liabilities Accrued expenses:
Cost of transactions of players' registrations, not yet due 1,852,280 1,120,352 453,464 278,464 - -
Deferred income:
Broadcasting rights advances/
antecipated invoicing (Note 30) 6,000,000 2,000,000 2,000,000 2,000,000 - -
Deferred revenue sponsorship - BMG Museum 5,046,639 651,679 651,679 651,679 651,679 2,439,923
Effect of discounting trade payables (136,297) (82,439) (33,367) (20,490) - -
12,762,622 3,689,592 3,071,776 2,909,653 651,679 2,439,923
30.06.2014 < 90 days 90-180
days
180-360 days
Other current liabilities
State and public sector 3,127,033 3,127,033 - -
Advances to clients 5,000,000 - - 5,000,000
Other creditors 9,902,184 9,902,184 - -
18,029,217 13,029,217 - 5,000,000 Accrued expenses:
Accrued payroll 767,371 - 255,790 511,581
Cost of transactions of players' registrations, not yet due 7,839,508 6,887,175 612,333 340,000 Competition bonuses pending processing 2,071,921 2,071,921 - -
Other accrued expenses 519,099 519,099 - -
11,197,899 9,478,195 868,123 851,581 Deferred income:
Broadcasting rights advances/
antecipated invoicing (Note 30) 2,000,000 500,000 500,000 1,000,000
Sale of season tickets 328,613 82,153 82,153 164,307
Advertising 1,825,000 912,500 912,500 -
Deferred revenue sponsorship - BMG Museum 651,679 162,919 162,290 326,470
Other deferred income 221,509 221,509 - -
5,026,801 1,879,081 1,656,943 1,490,777 Effect of discounting trade payables (434,242) (452,817) (2,725) (23,960) 33,819,675 23,933,677 2,522,341 7,318,397
Consolidated Accounting Report 2014/2015
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22. PROVISIONS AND ACCUMULATED IMPAIRMENT LOSSES
The movement in provisions and accumulated impairment losses in the years ended 30 June 2015 and 2014 is as follows:
Provisions Tax litigations
As of June 30, 2013 the Group presented provisions in the amount of 1,514,094 Euro to cover any contingencies that might arise from an unfavourable outcome of tax litigations, which had been challenged through complaints/administrative appeals or judicial challenges by the Group, by the fact that the Board of Directors and theirs legal and tax advisors consider that the reasons given by the Tax Administration on the matters referred, were not in accordance with Portuguese law.
However, under the Extraordinary Regime for the Settlement of Debts to Social Security and to Tax Authority ("RERD") granted by the Ministry of Finance to the voluntary payments made by taxpayers until December 31, 2013, regarding taxes due, the FC Porto SAD paid the amount of 4,227,685 Euro related to tax processes, using the provision recorded for this purpose in the amount of 1,514,094 Euro, recognizing the remaining difference as an expense for the year Note 15). Notwithstanding the settlement of this amount, the Company maintains the complaints and judicial claims, having the Company contingent assets related with them as detailed in Note 34.
Currently, the Company does not have any tax assessments settlements’ pending from regularization, by which no additional provisions were not registered in order to face tax contingencies.
Other litigations
During the year ended 30 June 2008 a judicial process was brought by a third party against the subsidiary PortoEstádio; in May 2009 a sentence was issued by the the Judicial Court’s (7ª Vara Cível do Tribunal Judicial do Porto) condemning PortoEstádio to pay a compensation of 404,241 Euro, plus default interests, having the Group presented an appeal against this verdict. In July 2015 the outcome of this process was known, a favorable decision for PortoEstádio by which the previously recorded provision was reversed.
Opening Closing
Balance Changes of balance
Captions 30.06.2014 the perimeter Increase Utilization Decrease 30.06.2015
Accumulated impairment loss on investments (Note 9) 1,202,037 - 432,114 (1,610,892) - 23,259
Accumulated impairment loss on account receivables (Note 11) 4,878,255 60,963 1,429,549 (943,189) (386,559) 5,039,019
Accumulated impairment loss on inventories (Note 12) 377,293 - 232,158 - - 609,451
Provisions 410,555 - - - (410,555) -
6,868,140 60,963 2,093,821 (2,554,081) (797,114) 5,671,729
Opening Closing
balance Changes of balance
Captions 30.06.2013 the perimeter Increase Utilization Decrease 30.06.2014
Accumulated impairment loss on investments (Note 9) 1,705,267 - 1,532,169 - (2,035,399) 1,202,037
Accumulated impairment loss on account receivables (Note 11) 5,042,712 - 322,016 (78,184) (408,289) 4,878,255
Accumulated impairment loss on inventories (Note 12) 302,696 - 74,597 - 377,293
Provisions 1,924,649 - - (1,514,094) - 410,555
Consolidated Accounting Report 2014/2015
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Bank guarantees
As of June 30, 2015, the Group had the following bank guarantees:
a) FC Porto SAD: active bank guarantee in the amount of 2,250,000 Euro in Banco Montepio Geral regarding the acquisition of Quintero’s player’s registration to Pescara. The amount covered by the guarantee was fully paid in July 2015, and the bank guarantee has been withdrew.
b) Porto Estádio: bank guarantee of 410,555 Euro regarding the judicial process described above, having this warranty however been withdrew in the beginning of the season 2015/16 due to the favourable decision to the Group;
c) PortoComercial: bank guarantees in the amount of 137,511 Euro in favour of malls store’s leaseholders;;
d) PortoSeguro: bank guarantees of 15,000 Euro in favour of the “Instituto de Seguros de Portugal” – “ISP”, the Portuguese Insurance Institute;
e) Dragon Tour: bank guarantee of 75,000 Euro in favour of IATA - International Air Transport Association.
Other responsibilities
FC Porto, SAD endorsed a guarantee towards FCP Serviços Partilhados, S.A. in the amount of 503,574 Euro, under the financial leasing of computer equipment purchased by this entity of the Futebol Clube do Porto Group.
23. PENSION LIABILITIES
The Group has committed to grant to certain employees cash contributions as retirement complement plans. These benefits are set out in the Collective Agreement between FC Porto and CESP – “Sindicato dos Trabalhadores do Comércio, Escritórios e Serviços de Portugal e Outros” (Trade Union for workers of Commerce, Offices and Services of Portugal).
The most recent actuarial valuation of the plan and the present value of defined benefits obligation was made in July 25, 2015 by Mercer (Portugal) Lda.. The present value of the defined benefit obligation and the cost of the current services and past services were measured using Projected Unit Credit method.
The main assumptions followed in the actuarial valuation referred above are as follows:
Movements in the present value of the defined benefit obligation for the years ended June 30, 2015 and 2014 are described as follows:
30.06.2015 30.06.2014
Retirement normal age 66 years 66 years
Mortality table TV 88/90 TV 88/90
Disability table EVK 80 at 50% EVK 80 at 50%
Discount rate 2.25% 2.75%
Inflation rate 2.00% 2.00%
Salaries increase rate 3.00% 3.00%
Consolidated Accounting Report 2014/2015
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The major risks for which the pension plan may be exposed are as follow: • Behaviour of demographic variables;
• Changes to occur in the Social Security system; • Pension indexation.
A sensitivity analysis was performed in order to measure the impact on pension liabilities caused by changes in the discount rate (increase of 50 basis points) and a negative impact of approximately 26,000 Euro was calculated.
24. SERVICE RENDERED
Services rendered for the years ended 30 June 2013 and 2012 are made up as follow:
The increase in revenues from "European competitions participating bonus" is justified by the fact that: (i) the revenue for the UEFA Champions League 2014/15 Group’s stage, on the amount of 8.6 million Euro has been recorded in the year ended as of June 30, 2015 and not in season 2013/2014 by the fact that the Company only won the right to participate in this stage this season, while the revenues of the same nature relating to the homologous period have been recorded in the 2012/13 season, due to the fact that the main team have won the access, in that same season, to the UEFA Champions League 2013/14 Group’s stage, (ii) best sporting performance of when compared with the homologous period in the UEFA Champions League, which already includes the revenue for the participation on the quarter finals of that competition and (iii) revenue from the Champions’ League group stage of the 2015/16 season, amounting to 12 million Euro, since it has been assured with the second place in the 2014/15 National Championship.
30.06.2015 30.06.2014
Opening Balance 448,818 -
Constitution - 448,818
Interest Cost 24,932 -
(Gains) /actuarial losses (138,526) -
Closing Balance 335,224 448,818
30.06.2015 30.06.2014
Sporting income
European competitions participating bonus 36,169,711 9,551,956
Ticketing income 4,269,628 2,493,309
Season tickets 2,690,530 2,835,578
Membership contributions 918,144 899,123
Other sporting income 1,176,611 2,400,405
45,224,624 18,180,371 Advertising 13,564,684 13,594,159 Broadcasting rights 17,251,214 15,928,072 Corporate Hospitality 8,200,550 14,352,830 Others 4,269,462 4,922,761 88,510,534 66,978,193
Consolidated Accounting Report 2014/2015
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The increase in the caption "Ticket income" is related to a higher number of matches in the European competitions. The decrease in the caption "Season tickets" is related to a lower level of commercialization of season tickets for the season 2014/15. The caption "Membership contributions” correspond to the transfer of 25% of the total contributions charged by FC Porto.
Corporate Hospitality
Under the loan and cooperation agreement signed in July 2003 between PortoEstádio – Gestão e Exploração de Equipamentos Desportivos, S.A. (“PortoEstádio”), FCPorto e Futebol Clube do Porto – Futebol, S.A.D. (“FCP, SAD”), Euroantas holds the exclusive right to commercialize Boxes and Business Seats ("Lugares Euroantas"). The reduction in this caption when compared with 2013/14 sporting season is related to the inclusion, for the first time, of Euroantas in the Group's consolidation perimeter, remaining under this caption, the net value, at Group level, of income related to the commercialization of "Lugares Euroantas".
25. EXTERNAL SUPPLIES AND SERVICES
As of 30 June 2015 and 2014, the main balances included in this caption were as follows:
The caption ‘Specialised services’ includes several types of costs associated with the Group’s activity, namely: (i) expenses with market research services, (ii) costs with legal advisory services, (iii) costs with advisory services, namely the ones provided by FC Porto – Serviços Partilhados S.A. (Note 31); (iv) costs relating to the cession of the exploitation and management rights of the TV channel "Porto Canal" and to the alterations of the referred TV Channel grid, as agreed with the company “Avenida dos Aliados de Comunicações, SA.”.
In the caption ‘Subcontracts’ are included costs incurred in connection with the protocol signed between the Group and Futebol Clube do Porto, mainly related with the use of several facilities,
30.06.2015 30.06.2014 Specialised services 11,813,892 10,865,542 Subcontracts 5,336,446 4,902,667 Rentals 3,956,461 3,817,848 Advertising 2,168,258 1,672,386 Security 1,592,689 1,370,372 Organization costs 1,382,672 1,295,064
Repair and maintenance 1,359,541 536,159
Insurance 1,146,193 1,016,266 Sports equipment 835,074 617,127 Fees 736,189 787,335 Cleaning up services 544,618 515,000 Representation expenses 500,442 488,439 Communication 470,155 392,237 Electricity 327,418 370,819 Fuels 212,528 427,793 Corporate Hospitality - 12,261,707 Other costs 854,031 711,255 33,236,607 42,048,016
Consolidated Accounting Report 2014/2015
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as well as the utilization of the training centre by the senior team and the junior teams, as well the costs of travel and accommodation incurred by the subsidiary Dragon Tour.
The caption "Organization costs" considers various costs associated with matches’ organization and the balance of the caption “Travel expenses” includes, essentially, travel expenses performed by the main football team in the national championship, in the European competitions and in pre- season tournaments.
The absence of the caption "Corporate Hospitality" towards the season 2013/14 is related to the inclusion for the first time, of Euroantas in the Group's consolidation perimeter.
The increase in the captions "Subcontracts", "Security" and "Organization costs” is related to the increase in the number of matches, neamely in what refers to the European competitions. The increase in the caption "Maintenance and repair" caption is related to extraordinary expenses of the substitution of the “Estádio do Dragão’s”’ lawn.
26. PAYROLL EXPENSES
The balances related to payroll expenses for the years ended 30 June 2015 and 2014 of the Company and subsidiaries are detailed as follows:
The increase in the captions "Players/Coaches", "Charges on salaries" and "Insurance" in the year ended June 30, 2015 is justified mainly by the strong investment made in the squad, which led to a significant increase in labour costs.
For the year ended June 30, 2015, compensation costs with players loaned out to other clubs amounted to approximately 600,000 Euro (3,5 million Euro on June 30 2014) and the salaries costs for players borrowed from other clubs amounted to approximately 6,1 million Euro.
The remuneration of the members of the Board of Directors of FC Porto, SAD and its subsidiaries for the years ended June 30, 2015 and 2014 is as follows:
The detail of the remunerations for each Board of Directors’ member and remaining governing bodies is disclosed in the Corporate Governance Report.
30.06.2015 30.06.2014
Governing bodies 1,827,494 2,853,989
Players/Coaches 54,120,242 34,362,160
Technical and administrative staff 4,891,902 5,303,599
Post-Employment Benefits 24,035 448,818 Indemnities 473,169 545,718 Charges on salaries 4,627,194 3,252,683 Insurance 2,316,993 1,571,613 Other costs 1,717,537 546,714 69,998,566 48,885,294 30.06.2015 30.06.2014 Fixed Remuneration 1,827,494 2,853,989 1,827,494 2,853,989
Consolidated Accounting Report 2014/2015
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As of 30 June 2015 and 2014, the number of people working for the Group is as follows:
27. RESULTS OF TRANSACTIONS WITH PLAYERS’ REGISTRATIONS
The results of transactions with players’ registrations in the years ended 30 June 2015 and 2014 can be detailed follows:
Impairment losses of players’ registrations rights consider the carrying amount of players’ registrations as of 30 June 2015 whose employment contracts were terminated by the Company until the approval date of these financial statements, as well as the estimated impairment loss of the players’ registrations considering the players’ sport situation as of the approval date of the financial statements. The balance of this caption as of 30 June 2015 corresponds essentially to the players Djalma, Opare and Quiñones. On June 30, 2014 the balance of this caption corresponds mainly to the players Izmailov and Stefanovic.
On June 30, 2015, the caption "Costs relating to players on loan" refers to expenses incurred under the loan of the players Malthe Johansen, Roniel, Oliver, Pavlovski, Tello, Casimir, Ruiz, Campaña and Gudiño. 30.06.2015 30.06.2014 Governing bodies 7 8 Administrative staff 133 159 Technical staff 37 31 Museum 32 7 Vendors (stores) 43 33 Football players 77 58 329 296 30.06.2015 30.06.2014
Amortisation and impairment losses of players' registrations
Amortisation of players' sporting registration rights (Note 8) 30,227,292 26,379,179 Impairment losses of players' sporting registration rights (Note 8) 1,146,645 563,333
Elimination of player's passes - 188,192
31,373,937 27,130,704 Income/(expenses) related with transactions of players' registrations
Costs relating to players on loan (3,511,210) (145,000)
Other costs relating to players (3,975,181) (1,660,800)
(7,486,391) (1,805,800) Gains from the sales of players' registrations (Note 8) 86,470,297 22,397,504
Income relating to players on loan 1,017,500 1,483,937
Other income relating to players 2,499,025 1,831,215
89,986,822 25,712,656 82,500,431 23,906,857 51,126,494 (3,223,847)
Consolidated Accounting Report 2014/2015
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For the year ended June 30, 2015, the caption "Other income relating to players" includes the solidarity mechanism for the transfer of player James Rodriguez from AS Monaco to Real Madrid (1,069,000 Euro). The caption "Other costs relating to players", in the same period, includes (i) compensation payable to the Clube Corinthians Alagoano arising from a dispute with this entity on the transfer of the player Pepe, for which the two companies reached an agreement, that foresees a payment of compensation in the amount of 1,650,000 Euro and (ii) adjustments to capital gains arising from negotiation process completed during the year ended 30 June 2015 amounting to 1,300,000 Euro.
For the year ended June 30, 2014, the value of "Other income relating to players" includes the amount of 913,655 Euro received from SL Benfica, SAD following the execution of the arbitration decision made by the Arbitration Commission of the Portuguese Professional Football League. This outcome resulted from a lawsuit brought by FC Porto, SAD in 2002, as part of the transfer by SL Benfica, SAD of the player Miklos Feher.
The amounts included in the captions "Gains from the sales of players’ registrations” and "Losses from the sales of players’ registrations " are presented net of the carrying amount of the players’ registrations, intermediation service costs incurred with that sales, and liabilities under the “solidarity mechanism” (if and when applicable), the discount effect of accounts receivable and payable related with those transactions and the cost of eventual compensation payments. On 30 June 2015 the caption "Gains from the sales of players’ registrations" mainly refers to sale of players’ registration rights of:
Mangala (22,806,942 Euro), Danilo (23,101,403 Euro), Jackson Martinez (26,633,515 Euro) and Defour (2,683,593 Euro), among others. On June 30, 2014, the most significant figures refer to the sale of sports and economic rights of Otamendi (7,974,000 Euro), Fernando (5,298,000 Euro), Iturbe (4,736,000 Euro), Christian Atsu (1,991,000 Euro) and André Castro (1,654,000 Euro), among others.
28. FINANCIAL RESULTS
Financial expenses and income for the years ended 30 June 2015 and 2014 are made up as follows:
The balance of the captions ‘Discount effect of accounts receivable’ and ‘Discount effect of accounts payable’ relate to interest resulting from the temporal difference between the transaction date of sale / purchase of the registration rights of several sports players and the dates of receipt / payment contractually agreed.
In the years ended 30 June 2015 and 2014 the income interest relate, mainly, to interest payable by FC Porto in accordance with the signed debt settlement agreement and in the meanwhile settled in the year ended as of 30 June 2015 (Note 11).
30.06.2015 30.06.2014
Financial expenses:
Interest 12,844,769 9,824,932
Discount effect of accounts payable 2,239,002 1,457,890
Other financial expenses 1,925,614 1,451,644
17,009,385 12,734,466 Financial income:
Interest 641,150 1,045,448
Discount effect of accounts receivable 1,449,355 1,519,494 2,090,505 2,564,942
Consolidated Accounting Report 2014/2015
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29. INVESTMENT INCOME
The detail of caption “Gains and losses in investments” for the years ended 30 June 2015 and 2014 is as follows:
In the year ended June 30, 2015 Santos FC sold the sporting registration rights of the player Sousa to Fenerbahce for 8 million Euro; having FCP, SAD entitled to a value of 2,000,000 Euro, regarding 25% of the economic rights of this player, generating a capital gain of 1,528,226 Euro.
30. RELATED PARTIES
Balances and transactions between the Company and its subsidiaries, which are related parties of this