EX-99.1 2 hud_ex991.htm HUDSON LTD. INTERIM REPORT (UNAUDITED) FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019 Blueprint
  Exhibit 99.1
 
HUDSON GROUP
 
INTERIM REPORT
SEPTEMBER 2019
 
 
 
 
 
HUDSON GROUP
 
INTERIM REPORT
SEPTEMBER 2019
 
CONTENT
 
 
 
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS  
3
 

UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE THREE AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 2019 AND 2018
 
Interim Consolidated Statements of Comprehensive Income
F-2
Interim Consolidated Statements of Financial Position
F-3
Interim Consolidated Statements of Changes in Equity
F-4
Interim Consolidated Statements of Cash Flows
F-5
Notes to the Interim Consolidated Financial Statements
F-6
 
IMPORTANT REMARKS
 
IFRS 16
Hudson Group adopted the new lease accounting standard as of January 1, 2019 and did not restate the 2018 figures, in accordance with the modified retrospective approach permitted by the standard.
 
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Following the adoption of IFRS 16, the consolidated statements of comprehensive income and the consolidated statements of financial position now include line items more representative of our operating activities and current IFRS expressions. In the third quarter of 2019, Hudson has made corrections to the information reported in the interim consolidated financial statements for the periods ended March 31, 2019 and June 30, 2019 as explained in note 2.2.
 
 
 
 
HUDSON GROUP
 
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
General information and forward-looking statements
The following Management’s Discussion and Analysis should be read in conjunction with the interim consolidated financial statements and notes thereto included as part of this report and the Company’s Annual Report filed on Form 20-F. This interim report contains “forward-looking statements.” Forward-looking statements are based on our beliefs and assumptions and on information currently available to us, and include, without limitation, statements regarding our business, financial condition, strategy, results of operations, certain of our plans, objectives, assumptions, expectations, prospects and beliefs and statements regarding other future events or prospects. Forward-looking statements include all statements that are not historical facts and can be identified by the use of forward-looking terminology such as the words “believe,” “expect,” “plan,” “intend,” “seek,” “anticipate,” “estimate,” “predict,” “potential,” “assume,” “continue,” “may,” “will,” “should,” “could,” “shall,” “risk” or the negative of these terms or similar expressions that are predictions of or indicate future events and future trends. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. We caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, the development of the industry in which we operate and the effect of acquisitions on us may differ materially from those made in or suggested by the forward-looking statements contained in this interim report. In addition, even if our results of operations, financial condition and liquidity, the development of the industry in which we operate and the effect of acquisitions on us are consistent with the forward-looking statements contained in this interim report, those results or developments may not be indicative of results or developments in subsequent periods. Forward-looking statements speak only as of the date they are made, and we do not undertake any obligation to update them in light of new information or future developments or to release publicly any revisions to these statements in order to reflect later events or circumstances or to reflect the occurrence of unanticipated events. Factors that may cause our actual results to differ materially from those expressed or implied by the forward-looking statements in this interim report or that may impact our business and results more generally, include, but are not limited to, the risks described under “Item 3. Key Information – D. Risk factors” of our Annual Report on Form 20-F for the year ended December 31, 2018 which may be accessed through the SEC’s website at https://www.sec.gov/edgar. You should read these risk factors before making an investment in our shares.
 
Overview
Hudson Ltd. (“Hudson”, “Hudson Group” or the “Group”) anchored by our iconic Hudson brand, is committed to enhancing the travel experience for over 300,000 travelers every day in the continental United States and Canada. Our first concession opened in 1987 with five Hudson News stores in a single airport in New York City. Today we operate in airports, commuter terminals, hotels and some of the most visited landmarks and tourist destinations in the world, including the Empire State Building, Space Center Houston, and United Nations Headquarters. The Company is guided by a core purpose: to be “The Traveler’s Best Friend”. We aim to achieve this purpose by serving the needs and catering to the ever-evolving preferences of travelers through our product offerings and store concepts. Through our commitment to this purpose, as part of the global Dufry Group, we have become one of the largest travel concession operators in the continental United States and Canada.
 
Our business is impacted by fluctuations in economic activity primarily in the continental United States and Canada and, to a lesser extent, economic activity outside these areas. Our turnover is generated by travel-related retail and food and beverage sales and income from advertising activities. Apart from the cost of sales, our operating expense structure consists of lease expenses (including our concession fees and rents), personnel expenses and other expenses associated with our retail operations.
 
 
3
 
 
RESULTS OF OPERATIONS
 
Changes in presentation
 
IFRS 16
The Group adopted the new lease accounting standard as of January 1, 2019 and did not restate the 2018 figures, in accordance with the modified retrospective approach permitted by the standard.
 
Interim consolidated financial statements
Following the adoption of IFRS 16, the consolidated statements of comprehensive income and the consolidated statements of financial position now include line items more representative of our operating activities and current IFRS expressions.
 
Comparison of the quarters ended September 30, 2019 and 2018
The following table summarizes changes in financial performance for the quarter ended September 30, 2019, compared to the quarter ended September 30, 2018 (including reclassifications resulting from the new chart of accounts – see Note 2.2 to the interim consolidated financial statements):
 
 
 
FOR THE QUARTER
ENDED SEPTEMBER 30
 
 
PERCENTAGE
CHANGE
 
IN MILLIONS OF USD
 
2019
 
 
2018
 
 
in %
 
 
 
 
 
 
 
 
 
 
 
Turnover
  523.0 
  526.6 
  (0.7)
Cost of sales
  (185.6)
  (191.1)
  (2.9)
Gross profit
  337.4 
  335.5 
  0.6 
Lease expenses
  (40.1)
  (115.5)
  (65.3)
Personnel expenses
  (109.2)
  (105.4)
  3.6 
Other expenses
  (40.3)
  (40.0)
  0.8
Depreciation, amortization and impairment
  (91.1)
  (30.2)
  201.7 
Operating profit
  56.7 
  44.4 
  27.7 
Finance income
  1.9 
  0.6 
  216.7 
Finance costs
  (21.6)
  (7.7)
  180.5 
Foreign exchange gain / (loss)
  0.2 
  0.2 
  - 
Profit / (loss) before tax
  37.2 
  37.5 
  (0.8)
Income tax benefit / (expense)
  (12.5)
  (0.7)
  1,685.7 
Net profit / (loss)
  24.7 
  36.8 
  (32.9)
 
    
    
    
ATTRIBUTABLE TO*
    
    
    
Equity holders of the parent
  14.5 
  26.6 
  (45.5)
Non-controlling interests
  10.2 
  10.2 
  - 
 
* Net profit attributable to equity holders includes charges related to business combinations, such as amortization or impairment of intangible assets, interest and deferred taxes not affecting the non-controlling interests. Additionally, the net profit attributable to non-controlling interests does not include the respective income tax charges.
 
Turnover
Turnover decreased by 0.7% to $523.0 million for the quarter ended September 30, 2019 compared to $526.6 million for the same period last year. Net sales represented 97.8% of turnover for the 2019 period, with advertising income representing the remainder.
 
Organic net sales decreased by 1.0% for the quarter ended September 30, 2019, representing a $5.1 million decline in net sales. Like-for-like net sales decreased by 1.1% and contributed $5.1 million of the decrease in net sales. On a constant currency basis, like-for-like sales decreased 0.9%. The decrease in like-for-like growth was the result of softer sales in our Duty-free stores, primarily driven by a decline in the overall number of transactions. Net new stores and expansions growth was flat for the quarter ended September 30, 2019.
 
 
4
 
 
Gross profit
Gross profit reached $337.4 million for the quarter ended September 30, 2019 from $335.5 million for the prior year period. Our gross profit margin increased to 64.5% for the third quarter of 2019 compared to 63.7% for the prior year period, primarily due to improved vendor terms and sales mix shift from lower margin products to higher margin products.
 
Lease expenses
The lease expenses caption was added in 2019 to comply with the presentation requirements of IFRS 16 (see note 2.2 to the interim consolidated financial statements) and is composed of lease payments that are variable in nature. Lease expenses were $40.1 million for the quarter ended September 30, 2019, compared to $115.5 million for the prior year period. The decrease in lease expense was primarily attributable to the adoption of IFRS 16 requiring the capitalization of fixed concession fees and other rent payments, beginning on January 1, 2019. Selling expenses, which primarily represent credit card fees, have been reclassified to other expenses in both periods.
 
Personnel expenses
Personnel expenses increased to $109.2 million for the quarter ended September 30, 2019 from $105.4 million for the prior year period. As a percentage of turnover, personnel expenses increased to 20.9% for the quarter ended September 30, 2019, compared to 20.0% for the prior year period. The increase in personnel expenses was primarily attributable to wage increases and the opening of new locations.
 
Other expenses
The other expenses caption was added in 2019 to present all remaining operating expenses (see Note 2.2 to the interim consolidated financial statements). Other expenses were $40.3 million for the quarter ended September 30, 2019 compared to $40.0 million in the prior year period. As a percentage of turnover, other expenses increased to 7.7% for the quarter ended September 30, 2019, compared to 7.6% for the prior year period.
 
Depreciation, amortization and impairment
Depreciation, amortization and impairment increased to $91.1 million for the quarter ended September 30, 2019, compared to $30.2 million for same period last year, primarily due to the adoption of IFRS 16. Depreciation was $78.2 million for the quarter ended September 30, 2019, compared to $16.4 million for the same period last year. Amortization decreased to $10.5 million for the quarter ended September 30, 2019 compared to $11.2 million for the prior year period. Impairment was $2.4 million for the quarter ended September 30, 2019, compared to $2.6 million for the same period last year. The higher depreciation expense was due to the right-of-use assets capitalized in 2019 in accordance with IFRS 16.
 
Finance costs
Finance costs increased to $21.6 million for the quarter ended September 30, 2019, compared to $7.7 million for the prior year period. This was primarily attributable to an increase in interest expenses resulting from the implementation of IFRS 16.
 
 
5
 
 
Income tax benefit/(expense)
Income tax expense for the quarter ended September 30, 2019 amounted to $12.5 million compared to $0.7 million for the same period last year. The main components of this increase were (i) additional tax related to U.S. Base Erosion Anti Avoidance Tax (“BEAT”), (ii) nondeductible compensation and (iii) the establishment of previously unrecognized deferred tax assets in the prior year. For the quarter ended September 30, 2019, the current income tax was $2.9 million incurred primarily from our Canadian operations of $1.7 million and the BEAT of $0.9 million. Deferred tax expense of $9.6 million was principally due to utilization of net operating losses in the U.S., partially offset by deferred taxes associated with the amortization of concession rights.
 
Comparison of the nine months ended September 30, 2019 and 2018
The following table summarizes changes in financial performance for the nine months ended September 30, 2019, compared to the nine months ended September 30, 2018 (including reclassifications resulting from the new chart of accounts – see Note 2.2 to the interim consolidated financial statements):
 
 
 
FOR THE NINE MONTHS
ENDED SEPTEMBER 30
 
 
PERCENTAGE
CHANGE
 
IN MILLIONS OF USD
 
2019
 
 
2018
 
 
in %
 
 
 
 
 
 
 
 
 
 
 
Turnover
  1,477.9 
  1,452.8 
  1.7 
Cost of sales
  (529.2)
  (530.0)
  (0.2)
Gross profit
  948.7 
  922.8 
  2.8 
Lease expenses
  (104.7)
  (321.3)
  (67.4)
Personnel expenses
  (332.8)
  (303.8)
  9.5 
Other expenses
  (116.4)
  (119.1)
  (2.3)
Depreciation, amortization and impairment
  (269.1)
  (89.6)
  200.3 
Operating profit
  125.7 
  89.0 
  41.2 
Finance income
  4.3 
  1.7 
  152.9 
Finance costs
  (64.6)
  (23.3)
  177.3 
Foreign exchange gain / (loss)
  0.2 
  (0.3)
  166.7 
Profit / (loss) before tax
  65.6 
  67.1 
  (2.2)
Income tax benefit / (expense)
  (17.0)
  (4.1)
  314.6 
Net profit / (loss)
  48.6 
  63.0 
  (22.9)
 
    
    
    
ATTRIBUTABLE TO*
    
    
    
Equity holders of the parent
  21.5 
  35.2 
  (38.9)
Non-controlling interests
  27.1 
  27.8 
  (2.5)
 
* Net profit attributable to equity holders includes charges related to business combinations, such as amortization or impairment of intangible assets, interest and deferred taxes not affecting the non-controlling interests. Additionally, the net profit attributable to non-controlling interests does not include the respective income tax charges.
 
Turnover
Turnover increased by 1.7% to $1,477.9 million for the nine months ended September 30, 2019 compared to $1,452.8 million for the same period last year. Net sales represented 97.8% of turnover for the 2019 period, with advertising income representing the remainder.
 
Organic net sales growth was 1.6% for the nine months ended September 30, 2019, representing a $23.2 million increase in net sales. Like-for-like net sales growth was 0.5% and contributed $6.2 million of the increase in net sales. On a constant currency basis, like-for-like growth was 1.1%. The increase in like-for-like growth was primarily the result of an increase in the overall number of transactions in Duty-paid stores. Net new stores and expansions growth contributed $17.0 million of the increase in net sales, primarily as a result of opening new stores.
 
 
6
 
 
Gross profit
Gross profit reached $948.7 million for the nine months ended September 30, 2019 from $922.8 million for the prior year period. Gross profit margin increased to 64.2% for the nine months ended 2019 compared to 63.5% for the prior year period, primarily due to improved vendor terms and sales mix shift from lower margin products to higher margin products.
 
Lease expenses
Lease expenses were $104.7 million for the nine months ended September 30, 2019, compared to $321.3 million for the prior year period. The decrease in lease expense was primarily attributable to the adoption of IFRS 16 requiring the capitalization of fixed concession fees and other rent payments beginning on January 1, 2019. Selling expenses, which primarily represent credit card fees, have been reclassified to other expenses in both periods.
 
Personnel expenses
Personnel expenses increased to $332.8 million for the nine months ended September 30, 2019 from $303.8 million for the prior year period. As a percentage of turnover, personnel expenses increased to 22.5% for the nine months ended September 30, 2019, compared to 20.9% for the prior year period. The increase in personnel expenses was primarily attributable to executive separation expenses recorded in the first quarter of 2019, wage increases, the opening of new locations and additional personnel expense upon becoming a public company.
 
Other expenses
Other expenses decreased to $116.4 million for the nine months ended September 30, 2019 compared to $119.1 million in the prior year period. As a percentage of turnover, other expenses decreased to 7.9% for the nine months ended September 30, 2019, compared to 8.2% for the prior year period.
 
Depreciation, amortization and impairment
Depreciation, amortization and impairment increased to $269.1 million for the nine months ended September 30, 2019, compared to $89.6 million for same period last year, primarily due to the adoption of IFRS 16. Depreciation was $233.3 million for the nine months ended September 30, 2019, compared to $51.5 million for the same period last year. Amortization decreased to $32.5 million for the nine months ended September 30, 2019 compared to $34.1 million for the prior year period. Impairment decreased to $3.3 million for the nine months ended September 30, 2019, compared to $4.0 million for the prior year period. The higher depreciation expense was due to the right-of-use assets capitalized in 2019 in accordance with IFRS 16.
 
Finance costs
Finance costs increased to $64.6 million for the nine months ended September 30, 2019, compared to $23.3 million for the prior year period. This was primarily attributable to an increase in interest expenses resulting from the implementation of IFRS 16.
 
Income tax benefit/(expense)
Income tax expense for the nine months ended September 30, 2019 amounted to $17.0 million compared to $4.1 million for the same period last year. The main components of this increase were (i) additional tax related to the BEAT, (ii) nondeductible compensation and (iii) the establishment of previously unrecorded deferred tax assets in the prior year, partially offset by a decrease in pretax income (attributable to shareholders of the parent) of $0.8 million. For the nine months ended September 30, 2019, current income tax expense was $8.3 million incurred primarily from our Canadian operations of $4.5 million and the BEAT of $2.7 million. The deferred tax expense of $8.7 million was principally due to the utilization of net operating losses in the U.S., partially offset by deferred taxes associated with the amortization of concession rights.
 
 
7
 

LIQUIDITY AND CAPITAL RESOURCES
 
Our primary funding sources historically have included cash from operations, and financial debt arrangements with Dufry. The balance outstanding on our long-term debt obligations with Dufry at September 30, 2019 and December 31, 2018 was
$494.1 million and $492.6 million, respectively.
 
We believe existing cash balances, operating cash flows and our long-term financing arrangements with Dufry will provide us with adequate funds to support our current operating plan, make planned capital expenditures and fulfill our debt service requirements for the foreseeable future.
 
If our cash flows and capital resources are insufficient to fund our working capital, we could face substantial liquidity problems and may be forced to reduce or delay investments and capital expenditures. We do not anticipate entering into additional third-party credit facilities for our working capital, and expect any future working capital requirements to be funded by Dufry. As a result, our financing arrangements and relationship with our controlling shareholder are material to our business. Nonetheless, when appropriate, we may borrow cash from third-party sources, and may also raise funds by issuing debt or equity securities, including to fund acquisitions.
 
DUFRY GROUP CASH POOLING
 
For the efficient management of its short-term cash and overdraft positions, Hudson participates in Dufry’s notional cash pool arrangements. At September 30, 2019, we had a deposit of $137.8 million compared to $61.2 million at December 31, 2018 in our cash pool accounts. The cash pool arrangement is structured such that the assets and liabilities remain in the name of the corresponding participant, i. e. no physical cash concentration occurs for the day-to-day operations. We, along with other participants in the cash pool, have pledged the cash we have each placed in the cash pool to the bank managing the cash pool as collateral to support the aggregate obligations of cash pool participants.
 
CAPITAL EXPENDITURES
 
Capital expenditures are our primary investing activity and we divide them into two main categories: tangible and intangible capital expenditures. Tangible capital expenditures consists of spending on the renovation and maintenance of existing stores and the fitting out of new stores. Intangible capital expenditures consists of investments in computer software.
 
When contemplating investments in new concessions, we focus on profitable growth as the key investment criterion. In addition to fitting out new concessions, we expect to invest in renovation and maintenance of our existing stores, including undertaking some major refurbishment projects each year.
 
Our capital expenditures (on the cash basis) are presented for each of the periods below:
 
 
 
FOR THE NINE MONTHS
ENDED SEPTEMBER 30
 
IN MILLIONS OF USD
 
2019
 
 
2018
 
 
 
 
 
 
 
 
Tangible capital expenditures
  46.1 
  52.4 
Intangible capital expenditures
  6.6 
  2.7 
Total
  52.7 
  55.1 
 
 
8
 
 
CASH FLOWS
 
The following table summarizes the cash flows for each of the periods below:
 
 
 
FOR THE NINE MONTHS
ENDED SEPTEMBER 30
 
 
CHANGE
 
IN MILLIONS OF USD
 
2019
 
 
2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net cash flows from operating activities
  409.1 
  197.1 
  212.0 
Net cash flows used in investing activities
  (50.7)
  (54.1)
  3.4 
Net cash flows from / (used in) financing activities
  (262.4)
  (10.2)
  (252.2)
Currency translation
  0.7 
  (0.5)
  1.2 
Increase in cash and cash equivalents
  96.7 
  132.3 
  (35.6)
 
    
    
    
Cash at the beginning of period
  234.2 
  137.4 
  96.8 
Cash at the end of period
  330.9 
  269.7 
  61.2 
 
Cash flows from operating activities
Net cash flows from operating activities were $409.1 million for the nine months ended September 30, 2019, an increase of $212.0 million compared to the prior year period. The increase in net cash flows provided from operating activities mainly resulted from the reclassification of net capitalized lease payments from operating activities to financing activities required by IFRS 16.
 
Cash flows used in investing activities
Net cash used in investing activities decreased to $50.7 million for the nine months ended September 30, 2019, as compared to $54.1 million for the prior period. The decrease was primarily due to a decrease in capital expenditures.
 
Cash flows from/(used in) financing activities
Net cash used in financing activities increased by $252.2 million for the nine months ended September 30, 2019, to $262.4 million compared to $10.2 million in the prior year period. The increase in cash used in financing activities was primarily attributable to the reclassification of capitalized lease payments under IFRS 16 of $225.5 million and the prior year pre-IPO restructuring proceeds of $60.1 million from an affiliated entity within the Dufry Group.

  9
 
 
HUDSON GROUP
 
INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 2019
 
 
 
 
HUDSON GROUP
 
INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
for the three and nine month periods ended September 30, 2019 and 2018
 
IN MILLIONS OF USD (EXCEPT PER SHARE AMOUNTS)1
 
NOTE
 
 
UNAUDITED
Q3 2019
 
 
UNAUDITED
Q3 20182
 
 
UNAUDITED
9M 2019
 
 
UNAUDITED
9M 20182
 
Turnover
  3 
  523.0 
  526.6 
  1,477.9 
  1,452.8 
Cost of sales
    
  (185.6)
  (191.1)
  (529.2)
  (530.0)
Gross profit
    
  337.4 
  335.5 
  948.7 
  922.8 
Lease expenses
  6 
  (40.1)
  (115.5)
  (104.7)
  (321.3)
Personnel expenses
    
  (109.2)
  (105.4)
  (332.8)
  (303.8)
Other expenses
  7 
  (40.3)
  (40.0)
  (116.4)
  (119.1)
Depreciation, amortization and impairment
  8 
  (91.1)
  (30.2)
  (269.1)
  (89.6)
Operating profit
    
  56.7 
  44.4 
  125.7 
  89.0 
Finance income
  9 
  1.9 
  0.6 
  4.3 
  1.7 
Finance costs
  10 
  (21.6)
  (7.7)
  (64.6)
  (23.3)
Foreign exchange gain / (loss)
    
  0.2 
  0.2 
  0.2 
  (0.3)
Profit / (loss) before tax
    
  37.2 
  37.5 
  65.6 
  67.1 
Income tax benefit / (expense)
  11 
  (12.5)
  (0.7)
  (17.0)
  (4.1)
Net profit / (loss)
    
  24.7 
  36.8 
  48.6 
  63.0 
OTHER COMPREHENSIVE INCOME
    
    
    
    
    
Exchange differences on translating foreign operations
    
  (3.3)
  5.2 
  8.8 
  (3.5)
Total other comprehensive income / (loss) that may be reclassified to profit or loss in subsequent periods, net of tax
    
  (3.3)
  5.2 
  8.8 
  (3.5)
Total other comprehensive income / (loss), net of tax
    
  (3.3)
  5.2 
  8.8 
  (3.5)
Total comprehensive income / (loss), net of tax
    
  21.4 
  42.0 
  57.4 
  59.5 
NET PROFIT / (LOSS) ATTRIBUTABLE TO
    
    
    
    
    
Equity holders of the parent
    
  14.5 
  26.6 
  21.5 
  35.2 
Non-controlling interests
    
  10.2 
  10.2 
  27.1 
  27.8 
TOTAL COMPREHENSIVE INCOME / (LOSS) ATTRIBUTABLE TO 
Equity holders of the parent
    
  11.2 
  31.8 
  30.3 
  31.7 
Non-controlling interests
    
  10.2 
  10.2 
  27.1 
  27.8 
EARNINGS PER SHARE ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT
    
    
    
    
    
Basic earnings / (loss) per share in USD
    
  0.16 
  0.29 
  0.23 
  0.38 
Diluted earnings / (loss) per share in USD
    
  0.16 
  0.29 
  0.23 
  0.38 
 
1
In the third quarter of 2019, Hudson has made corrections to the information reported in the interim consolidated financial statements for the periods ended March 31, 2019 and June 30, 2019 as explained in note 2.2.
 
2
In conjunction with the implementation of IFRS 16, Hudson adopted a new structure for the consolidated statements of comprehensive income. The comparative figures were reclassified accordingly (see note 2.3).
 
 
F-2
 
 
HUDSON GROUP
INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
at September 30, 2019 and December 31, 2018
 
IN MILLIONS OF USD1
  
NOTE
 
  
UNAUDITED
30.09.2019
 
  31.12.2018 
ASSETS
 
 
 
 
 
 
    
Property, plant and equipment
 
 
 
  235.0 
  243.0 
Right-of-use assets2
  13 
  1,149.4 
  - 
Intangible assets
    
  275.4 
  301.6 
Goodwill
    
  320.8 
  315.0 
Investments in associates
    
  9.5 
  6.5 
Deferred tax assets
    
  71.5 
  83.9 
Other non-current assets
    
  33.4 
  27.4 
Non-current assets
    
  2,095.0 
  977.4 
Inventories
    
  189.6 
  190.7 
Trade receivables
    
  1.1 
  1.3 
Other accounts receivable
    
  55.5 
  46.8 
Income tax receivables
    
  1.0 
  0.8 
Cash and cash equivalents
    
  330.9 
  234.2 
Current assets
    
  578.1 
  473.8 
Total assets
    
  2,673.1 
  1,451.2 
LIABILITIES AND SHAREHOLDERS’ EQUITY
    
    
    
Equity attributable to equity holders of the parent
    
  577.7 
  552.1 
Non-controlling interests
    
  84.1 
  84.8 
Total equity
    
  661.8 
  636.9 
Borrowings
  12 
  494.2 
  492.6 
Lease obligations2
  12 
  929.0 
  - 
Deferred tax liabilities
    
  38.1 
  40.0 
Post-employment benefit obligations
    
  1.2 
  1.0 
Other non-current liabilities
    
  1.6 
  - 
Non-current liabilities
    
  1,464.1 
  533.6 
Trade payables
    
  133.3 
  105.5 
Borrowings
  12 
  52.9 
  51.4 
Lease obligations2
  12 
  228.1 
  - 
Income tax payables
    
  1.1 
  2.3 
Other liabilities
    
  131.8 
  121.5 
Current liabilities
    
  547.2 
  280.7 
Total liabilities
    
  2,011.3 
  814.3 
Total liabilities and shareholders’ equity
    
  2,673.1 
  1,451.2 
 
1
In the third quarter of 2019, Hudson has made corrections to the information reported in the interim consolidated financial statements for the periods ended March 31, 2019 and June 30, 2019 as explained in note 2.2.
 
2
The Group adopted the new lease standard IFRS 16 as of January 1, 2019. The non-current and current lease obligations represent the present value of Hudson's remaining commitments for concession and other lease agreements. At the same time, Hudson recognized a right-of-use asset, which as of January 1, 2019, equaled the lease obligations less accrued lease expense and which will be depreciated over the remaining lease term. For additional information please refer to notes 2.4 and 14.
 
 
F-3
 
 
HUDSON GROUP
 
INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
for the nine month periods ended September 30, 2019 and 2018
 
 
 
ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT
 
 
 
 
 
 
 
UNAUDITED
2019
IN MILLIONS OF USD1
 
Share
capital
 
 
Treasury
shares
 
 
Translation
reserves
 
 
Retained
earnings
 
 
SHAREHOLDERS'
EQUITY
 
 
NON-CON-
TROLLING
INTERESTS
 
 
TOTAL
EQUITY
 
Balance at January 1, 2019
  0.1 
  (2.0)
  0.4 
  553.6 
  552.1 
  84.8 
  636.9 
Net profit / (loss)
  - 
  - 
  - 
  21.5 
  21.5 
  27.1 
  48.6 
Other comprehensive income / (loss)
  - 
  - 
  8.8 
  - 
  8.8 
  - 
  8.8 
Total comprehensive income / (loss) for the period
  - 
  - 
  8.8 
  21.5 
  30.3 
  27.1 
  57.4 
TRANSACTIONS WITH OR DISTRIBUTIONS TO SHAREHOLDERS
    
    
    
    
    
    
    
Dividends to non-controlling interests
  - 
  - 
  - 
  - 
  - 
  (31.4)
  (31.4)
Purchase of treasury shares
  - 
  (2.7)
  - 
  - 
  (2.7)
  - 
  (2.7)
Assignment of share-based payment plans
  - 
  3.6 
  - 
  (9.0)
  (5.4)
  - 
  (5.4)
Share-based payments
  - 
  - 
  - 
  4.0 
  4.0 
  - 
  4.0 
Tax effect on equity transactions
  - 
  - 
  - 
  (0.6)
  (0.6)
  - 
  (0.6)
Total transactions with or distributions to owners
  - 
  0.9 
  - 
  (5.6)
  (4.7)
  (31.4)
  (36.1)
CHANGES IN OWNERSHIP INTERESTS IN SUBSIDIARIES
    
    
    
    
    
    
    
Changes in participation of non-controlling interests
  - 
  - 
  - 
  - 
  - 
  3.6 
  3.6 
Balance at September 30, 2019
  0.1 
  (1.1)
  9.2 
  569.5 
  577.7 
  84.1 
  661.8 
 
1
In the third quarter of 2019, Hudson has made corrections to the information reported in the interim consolidated financial statements for the periods ended March 31, 2019 and June 30, 2019 as explained in note 2.2.
  
 
  
ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT
 
 
 
 
 
 
 
UNAUDITED
2018
IN MILLIONS OF USD
  
Share
capital
 
  
Treasury
shares
 
  
Translation
reserves
 
  
Retained
earnings
 
  
SHAREHOLDERS'
EQUITY
 
  
NON-CON-
TROLLING
INTERESTS
 
  
TOTAL
EQUITY
 
Balance at January 1, 20181
  0.1 
  - 
  20.5 
  473.1 
  493.7 
  78.7 
  572.4 
Net profit / (loss)
  - 
  - 
  - 
  35.2 
  35.2 
  27.8 
  63.0 
Other comprehensive income / (loss)
  - 
  - 
  (3.5)
  - 
  (3.5)
  - 
  (3.5)
Total comprehensive income / (loss) for the period
  - 
  - 
  (3.5)
  35.2 
  31.7 
  27.8 
  59.5 
TRANSACTIONS WITH OR DISTRIBUTIONS TO SHAREHOLDERS
    
    
    
    
Dividends to non-controlling interests
  - 
  - 
  - 
  - 
  - 
  (33.4)
  (33.4)
Proceeds from restructuring
  - 
  - 
  - 
  60.1 
  60.1 
  - 
  60.1 
Transaction costs for equity instruments
  - 
  - 
  - 
  (15.4)
  (15.4)
  - 
  (15.4)
Share-based payment transactions
  - 
  - 
  - 
  10.6 
  10.6 
  - 
  10.6 
Tax effect on equity transactions
  - 
  - 
  - 
  (7.3)
  (7.3)
  - 
  (7.3)
Total transactions with or distributions to owners
  - 
  - 
  - 
  48.0 
  48.0 
  (33.4)
  14.6 
CHANGES IN OWNERSHIP INTERESTS IN SUBSIDIARIES
    
    
    
    
Changes in participation of non-controlling interests
  - 
  - 
  - 
  - 
  - 
  12.6 
  12.6 
Balance at September 30, 2018
  0.1 
  - 
  17.0 
  556.3 
  573.4 
  85.7 
  659.1 
 
1
Although the restructuring of the Group took place on February 1, 2018, the respective opening balances of the interim consolidated statement of changes in equity are presented as if these transactions took place before January 1, 2018
 
 
F-4
 
  
HUDSON GROUP
 
INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS
for the nine month periods ended September 30, 2019 and 2018
 
IN MILLIONS OF USD1
  
UNAUDITED
9M 2019
 
  
UNAUDITED
9M 2018
 
CASH FLOWS FROM OPERATING ACTIVITIES
 
 
 
 
 
 
Profit / (loss) before tax
  65.6 
  67.1 
ADJUSTMENTS FOR
    
    
Depreciation, amortization and impairment
  269.1 
  89.6 
Loss / (gain) on sale of non-current assets
  0.2 
  0.8 
Increase / (decrease) in allowances and provisions
  7.6 
  12.3 
Loss / (gain) on foreign exchange differences
  (0.1)
  - 
Other non-cash items
  3.9 
  1.4 
Finance income
  (4.3)
  (1.7)
Finance costs
  64.6 
  23.3 
Cash flows before working capital changes
  406.6 
  192.8 
Decrease / (increase) in trade and other accounts receivable
  (14.3)
  11.7 
Decrease / (increase) in inventories
  (4.6)
  (6.6)
Increase / (decrease) in trade and other accounts payable
  31.2 
  4.1 
Cash generated from operations
  418.9 
  202.0 
Income taxes paid
  (9.8)
  (4.9)
Net cash flows from operating activities
  409.1 
  197.1 
 
    
    
CASH FLOWS USED IN INVESTING ACTIVITIES
    
    
Purchase of property, plant and equipment
  (46.1)
  (52.4)
Purchase of intangible assets
  (6.6)
  (2.7)
Contributions to associates
  (2.1)
  (2.6)
Proceeds from sale of property, plant and equipment
  0.4 
  0.3 
Interest received
  1.4 
  2.1 
Repayments of / (granted) loans receivable from non-controlling interest holders2
  0.3 
  1.2 
Proceeds from lease income
  2.0 
  - 
Net cash flows used in investing activities
  (50.7)
  (54.1)
 
    
    
CASH FLOWS FROM / (USED IN) FINANCING ACTIVITIES
    
    
Proceeds from restructuring
  - 
  60.1 
Repayment of borrowings
  - 
  (24.7)
Transaction costs paid for the listing of equity instruments
  - 
  (6.3)
Dividends paid to non-controlling interests
  (26.7)
  (29.0)
Lease payments3
  (225.5)
  - 
Purchase of treasury shares
  (2.7)
  - 
Contributions from / (purchase of) non-controlling interests
  0.8 
  5.9 
Interest paid
  (8.3)
  (16.2)
Net cash flows from / (used in) financing activities
  (262.4)
  (10.2)
Currency translation on cash
  0.7 
  (0.5)
Increase in cash and cash equivalents
  96.7 
  132.3 
 
    
    
CASH AND CASH EQUIVALENTS AT THE
    
    
- beginning of the period
  234.2 
  137.4 
- end of the period
  330.9 
  269.7 
 
1
In the third quarter of 2019, Hudson has made corrections to the information reported in the interim consolidated financial statements for the periods ended March 31, 2019 and June 30, 2019 as explained in note 2.2.
2
The 2018 numbers were reclassified from Cash flows from/(used) in financing activities.
3
Includes interest in the amount of USD 40.2 million.
 
 
F-5
 
 
HUDSON GROUP
 
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
 
1.
CORPORATE INFORMATION
 
Hudson Ltd. and its subsidiaries (“Hudson”, “Hudson Group” or the “Group”) are travel retailers specialized in Duty-paid and Duty-free markets operating 1,011 stores in 89 locations throughout the continental United States and Canada.
 
Hudson Ltd., the parent company which is an exempt company limited by shares, was incorporated on May 30, 2017 in Hamilton, Bermuda with registered office at 2 Church Street, Hamilton HM11, Bermuda. Our Class A common shares began trading on the New York Stock Exchange on February 1, 2018, under the ticker symbol “HUD”. Hudson Ltd. is controlled by a subsidiary of Dufry AG (Dufry), the world’s leading travel retail company headquartered in Basel, Switzerland.
 
2.
BASIS OF PREPARATION AND CHANGES TO THE ACCOUNTING POLICIES
 
2.1
BASIS OF PREPARATION
 
The interim consolidated financial statements for the period ended September 30, 2019 have been prepared in accordance with IAS 34 Interim Financial Reporting.
 
The interim consolidated financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with Hudson’s annual consolidated financial statements as of December 31, 2018.
 
In conjunction with the implementation of IFRS 16, Hudson adopted a new structure for the consolidated statements of comprehensive income to present income and expense line items more representative of the operating activities and to adapt to the IFRS terminology. The comparative figures were reclassified accordingly (see note 2.3).
 
The interim consolidated financial statements include financial assets and liabilities presented at carrying value, which is generally consistent when compared to fair value.
 
The interim consolidated financial statements were authorized for issue on October 29, 2019 by the board of directors of Hudson Ltd.
 
F-6
 
 
2.2
CORRECTION OF THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2019 AND SIX MONTHS ENDED JUNE 30, 2019
 
In the third quarter of 2019, Hudson identified a required correction in the accounting adopted on transition to IFRS 16, related to certain lease contracts for its retail stores. These lease contracts contain complex features and certain payments that were previously considered to be variable lease payments, and as such recognized as lease expenses in the statements of comprehensive income when incurred, contain in-substance fixed commitments, and therefore, should have been included in the initial measurement of the respective lease liabilities and right-of-use assets on January 1, 2019.
 
More specifically, most of our contracts include payments which are variable based on sales, but not lower than a minimum threshold. This minimum threshold can be fixed or variable, with some of the variable thresholds being defined as a percentage of the previous year lease expense. Upon adopting the new lease standard (IFRS 16), the Group considered the future MAG changing every year as variable and consequently these payments fully as variable lease expense. However, as the variability is resolved at a certain point in the future, the minimum portions of the payments for the following years become fixed. These fixed portions of these future lease payments are now recognized as a right-of-use asset and lease obligation.
 
Since Hudson adopted IFRS 16 as of January 1, 2019 under the modified retrospective approach (and did not restate comparative information for 2018), the error has no impact on comparative information presented in interim consolidated financial statements of 2019, i.e. for the three, six and nine month periods.
 
The following corrections have been made to the information reported in the interim consolidated financial statements for the periods ended March 31, 2019 and June 30, 2019:
 
For the adjustments based on the IFRS 16 implementation as of January 1, 2019, see note 14 for the detailed disclosures of the transition to IFRS 16.
 
F-7
 
 
Interim consolidated statements of comprehensive income for the three months ended March 31, 2019 and the three and six months ended June 30, 2019
 
IN MILLIONS OF USD (EXCEPT PER SHARE AMOUNTS)
 
AS PREVIOUSLY
PUBLISHED
Q1 2019
(UNAUDITED)
 
 
CORRECTION
 
 
RESTATED
Q1 2019
(UNAUDITED)
 
 
 
 
 
 
 
 
 
 
 
Turnover
  445.0 
  - 
  445.0 
Cost of sales
  (161.2)
  - 
  (161.2)
Gross profit
  283.8 
  - 
  283.8 
Lease expenses
  (45.4)
  17.7 
  (27.7)
Personnel expenses
  (115.0)
  - 
  (115.0)
Other expenses
  (37.4)
  - 
  (37.4)
Depreciation, amortization and impairment
  (77.5)
  (11.1)
  (88.6)
Operating profit
  8.5 
  6.6 
  15.1 
Finance income
  1.1 
  - 
  1.1 
Finance costs
  (19.9)
  (2.0)
  (21.9)
Foreign exchange gain / (loss)
  0.3 
  - 
  0.3 
Profit / (loss) before tax
  (10.0)
  4.6 
  (5.4)
Income tax benefit / (expense)
  8.1 
  (2.7)
  5.4 
Net profit / (loss)
  (1.9)
  1.9 
  - 
OTHER COMPREHENSIVE INCOME 
    
    
    
Exchange differences on translating foreign operations 
 6.3
 -
 6.3
Total other comprehensive income / (loss) that may be reclassified to profit or loss in subsequent periods, net of tax 
 6.3
 -
 6.3
Total other comprehensive income / (loss), net of tax 
 6.3
 -
 6.3
Total comprehensive income / (loss), net of tax 
 4.4
 1.9
 6.3
NET PROFIT / (LOSS) ATTRIBUTABLE TO
    
    
    
Equity holders of the parent
  (6.7)
  0.9 
  (5.8)
Non-controlling interests
  4.8 
  1.0 
  5.8 
TOTAL COMPREHENSIVE INCOME / (LOSS) ATTRIBUTABLE TO 
    
    
    
Equity holders of the parent 
 (0.4)
 0.9
 0.5
Non-controlling interests 
 4.8
 1.0
 5.8
EARNINGS PER SHARE ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT
    
    
    
Basic earnings / (loss) per share in USD
  (0.07)
  0.01 
  (0.06)
Diluted earnings / (loss) per share in USD
  (0.07)
  0.01 
  (0.06)
 
 
F-8
 
 
IN MILLIONS OF USD (EXCEPT PER SHARE AMOUNTS)
  
AS PREVIOUSLY
PUBLISHED
Q2 2019
(UNAUDITED)
 
  
CORRECTION
 
  
RESTATED
Q2 2019
(UNAUDITED)
 
 
 
 
 
  
 
 
 
 
 
Turnover
  509.9 
  - 
  509.9 
Cost of sales
  (182.4)
  - 
  (182.4)
Gross profit
  327.5 
  - 
  327.5 
Lease expenses
  (54.8)
  17.9 
  (36.9)
Personnel expenses
  (108.6)
  - 
  (108.6)
Other expenses
  (38.7)
  - 
  (38.7)
Depreciation, amortization and impairment
  (78.3)
  (11.1)
  (89.4)
Operating profit
  47.1 
  6.8 
  53.9 
Finance income
  1.3 
  - 
  1.3 
Finance costs
  (19.2)
  (1.9)
  (21.1)
Foreign exchange gain / (loss)
  (0.3)
  - 
  (0.3)
Profit / (loss) before tax
  28.9 
  4.9 
  33.8 
Income tax benefit / (expense)
  (9.8)
  (0.1)
  (9.9)
Net profit / (loss)
  19.1 
  4.8 
  23.9 
OTHER COMPREHENSIVE INCOME 
    
    
    
Exchange differences on translating foreign operations
  5.8
  -
 5.8
Total other comprehensive income / (loss) that may be reclassified to profit or loss in subsequent periods, net of tax 
  5.8
  -
  5.8
Total other comprehensive income / (loss), net of tax
  5.8
  -
  5.8
Total comprehensive income / (loss), net of tax
  24.9
  4.8
  29.7
NET PROFIT / (LOSS) ATTRIBUTABLE TO
    
    
    
Equity holders of the parent
  9.1 
  3.7 
  12.8 
Non-controlling interests
  10.0 
  1.1 
  11.1 
TOTAL COMPREHENSIVE INCOME/ (LOSS) ATTRIBUTABLE TO  
    
    
    
Equity holders of the parent  
  14.9
  3.7
  18.6
Non-controlling interests  
  10.0
  1.1
  11.1
EARNINGS PER SHARE ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT 
    
    
    
Basic earnings / (loss) per share in USD
  0.10 
  0.04 
  0.14 
Diluted earnings / (loss) per share in USD
  0.10 
  0.04 
  0.14 
 
 
F-9
 
 
 
IN MILLIONS OF USD (EXCEPT PER SHARE AMOUNTS)
  
AS PREVIOUSLY
PUBLISHED
6M 2019
(UNAUDITED)
 
  
CORRECTION
 
  
RESTATED
6M 2019
(UNAUDITED)
 
 
 
 
 
 
 
 
 
 
 
Turnover
  954.9 
  - 
  954.9 
Cost of sales
  (343.6)
  - 
  (343.6)
Gross profit
  611.3 
  - 
  611.3 
Lease expenses
  (100.2)
  35.6 
  (64.6)
Personnel expenses
  (223.6)
  - 
  (223.6)
Other expenses
  (76.1)
  - 
  (76.1)
Depreciation, amortization and impairment
  (155.8)
  (22.2)
  (178.0)
Operating profit
  55.6 
  13.4 
  69.0 
Finance income
  2.4 
  - 
  2.4 
Finance costs
  (39.1)
  (3.9)
  (43.0)
Foreign exchange gain / (loss)
  - 
  - 
  - 
Profit / (loss) before tax
  18.9 
  9.5 
  28.4 
Income tax benefit / (expense)
  (1.7)
  (2.8)
  (4.5)
Net profit / (loss)
  17.2 
  6.7 
  23.9 
OTHER COMPREHENSIVE INCOME 
    
    
    
Exchange differences on translating foreign operations 
  12.1
  -
  12.1
Total other comprehensive income / (loss) that may be reclassified to profit or loss in subsequent periods, net of tax 
  12.1
  -
  12.1
Total other comprehensive income / (loss), net of tax
  12.1
  -
  12.1
Total comprehensive income / (loss), net of tax
  29.3
  6.7
  36.0
NET PROFIT / (LOSS) ATTRIBUTABLE TO
    
    
    
Equity holders of the parent
  2.4 
  4.6 
  7.0 
Non-controlling interests
  14.8 
  2.1 
  16.9 
TOTAL COMPREHENSIVE INCOME / (LOSS) ATTRIBUTABLE TO  
    
    
    
Equity holders of the parent  
  14.5
  4.6
  19.1
Non-controlling interests  
  14.8
  2.1
  16.9
EARNINGS PER SHARE ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT 
    
    
    
Basic earnings / (loss) per share in USD
  0.03 
  0.05 
  0.08 
Diluted earnings / (loss) per share in USD
  0.03 
  0.05 
  0.08 
 
 
F-10
 
 
Interim consolidated statements of financial position at
March 31, 2019 and  June 30, 2019
 
IN MILLIONS OF USD
  
AS PREVIOUSLY
PUBLISHED
31.03.2019
(UNAUDITED)
 
  
CORRECTION
 
  
RESTATED
31.03.2019
(UNAUDITED)
 
 
 
 
 
 
 
 
 
 
 
ASSETS
 
 
 
 
 
 
 
 
 
Property, plant and equipment
  235.3 
  - 
  235.3 
Right-of-use assets
  1,048.5 
  184.0
  1,232.5
Intangible assets
  291.9 
  - 
  291.9 
Goodwill
  319.2 
  - 
  319.2 
Investments in associates
  7.6 
  - 
  7.6 
Deferred tax assets
  92.9 
  (2.4)
  90.5 
Other non-current assets
  35.2 
  0.2 
  35.4 
Non-current assets
  2,030.6 
  181.8
  2,212.4
Inventories
  193.6 
  - 
  193.6 
Trade receivables
  1.0 
  - 
  1.0 
Other accounts receivable
  45.9 
  0.1 
  46.0 
Income tax receivables
  0.5 
  - 
  0.5 
Cash and cash equivalents
  241.9 
  - 
  241.9 
Current assets
  482.9 
  0.1 
  483.0 
Total assets
  2,513.5 
  181.9
  2,695.4
LIABILITIES AND SHAREHOLDERS’ EQUITY
    
    
    
Equity attributable to equity holders of the parent
  547.9 
  0.9 
  548.8 
Non-controlling interests
  81.9 
  1.0 
  82.9 
Total equity
  629.8 
  1.9 
  631.7 
Borrowings
  493.7 
  - 
  493.7 
Lease obligations
  887.2 
  119.6
  1,006.8
Deferred tax liabilities
  39.9 
  0.3 
  40.2 
Post-employment benefit obligations
  1.2 
  - 
  1.2 
Other non-current liabilities
  3.5 
  - 
  3.5 
Non-current liabilities
  1,425.5 
  119.9
  1,545.4
Trade payables
  113.3 
  - 
  113.3 
Borrowings
  52.5 
  - 
  52.5 
Lease obligations
  174.3 
  60.1 
  234.4 
Income tax payables
  0.7 
  - 
  0.7 
Other liabilities
  117.4 
  - 
  117.4 
Current liabilities
  458.2 
  60.1 
  518.3 
Total liabilities
  1,883.7 
  180.0
  2,063.7
Total liabilities and shareholders’ equity
  2,513.5 
  181.9
  2,695.4
 
 
F-11
 
 
IN MILLIONS OF USD
  
AS PREVIOUSLY
PUBLISHED
30.06.2019
(UNAUDITED)
 
  
CORRECTION
 
  
RESTATED
30.06.2019
(UNAUDITED)
 
 
 
 
 
 
 
 
 
 
 
ASSETS
 
 
 
 
 
 
 
 
 
Property, plant and equipment
  235.4 
  - 
  235.4 
Right-of-use assets
  1,022.6 
  172.8 
  1,195.4 
Intangible assets
  284.8 
  - 
  284.8 
Goodwill
  323.0 
  - 
  323.0 
Investments in associates
  9.3 
  - 
  9.3 
Deferred tax assets
  84.5 
  (2.3)
  82.2 
Other non-current assets
  35.3 
  0.2 
  35.5 
Non-current assets
  1,994.9 
  170.7 
  2,165.6 
Inventories
  190.8 
  - 
  190.8 
Trade receivables
  1.1 
  - 
  1.1 
Other accounts receivable
  47.7 
  0.1 
  47.8 
Income tax receivables
  2.1 
  - 
  2.1 
Cash and cash equivalents
  302.5 
  - 
  302.5 
Current assets
  544.2 
  0.1 
  544.3 
Total assets
  2,539.1 
  170.8 
  2,709.9 
LIABILITIES AND SHAREHOLDERS’ EQUITY
    
    
    
Equity attributable to equity holders of the parent
  561.2 
  4.6 
  565.8 
Non-controlling interests
  84.6 
  2.1 
  86.7 
Total equity
  645.8 
  6.7 
  652.5 
Borrowings
  494.7 
  - 
  494.7 
Lease obligations
  865.6 
  105.7 
  971.3 
Deferred tax liabilities
  39.0 
  0.5 
  39.5 
Post-employment benefit obligations
  1.4 
  - 
  1.4 
Other non-current liabilities
  2.4 
  - 
  2.4 
Non-current liabilities
  1,403.1 
  106.2 
  1,509.3 
Trade payables
  138.0 
  - 
  138.0 
Borrowings
  53.5 
  - 
  53.5 
Lease obligations
  176.7 
  57.9 
  234.6 
Income tax payables
  0.7 
  - 
  0.7 
Other liabilities
  121.3 
  - 
  121.3 
Current liabilities
  490.2 
  57.9 
  548.1 
Total liabilities
  1,893.3 
  164.1 
  2,057.4 
Total liabilities and shareholders’ equity
  2,539.1 
  170.8 
  2,709.9 
 
 
F-12
 
 
 
Interim consolidated statement of cash flows for the three months ended
March 31, 2019 and the six months ended June 30, 2019
 
IN MILLIONS OF USD
  
AS PREVIOUSLY
PUBLISHED
Q1 2019
(UNAUDITED)
 
  
CORRECTION
 
  
RESTATED
Q1 2019
(UNAUDITED)
 
 
 
 
 
 
 
 
 
 
 
CASH FLOWS FROM OPERATING ACTIVITIES
 
 
 
 
 
 
 
 
 
Profit / (loss) before tax
  (10.0)
  4.6 
  (5.4)
ADJUSTMENTS FOR
    
    
    
Depreciation, amortization and impairment
  77.5 
  11.1 
  88.6 
Loss / (gain) on sale of non-current assets
  0.1 
  - 
  0.1 
Increase / (decrease) in allowances and provisions
  2.4 
  - 
  2.4 
Loss / (gain) on foreign exchange differences
  (0.3)
  - 
  (0.3)
Other non-cash items
  1.8 
  - 
  1.8 
Share of result of associates
  (0.2)
  - 
  (0.2)
Interest income
  (0.9)
  - 
  (0.9)
Finance costs
  19.9 
  2.0 
  21.9 
Cash flows before working capital changes
  90.3 
  17.7 
  108.0 
Decrease / (increase) in trade and other accounts receivable
  (3.5)
  - 
  (3.5)
Decrease / (increase) in inventories
  (3.9)
  - 
  (3.9)
Increase / (decrease) in trade and other accounts payable
  14.5 
  - 
  14.5 
Cash generated from operations
  97.3 
  17.7 
  115.0 
Income taxes paid
  (3.8)
  - 
  (3.8)
Net cash flows from operating activities
  93.5 
  17.7 
  111.2 
 
    
    
    
CASH FLOWS USED IN INVESTING ACTIVITIES
    
    
    
Purchase of property, plant and equipment
  (19.2)
  - 
  (19.2)
Purchase of intangible assets
  (0.9)
  - 
  (0.9)
Contributions to associates
  (0.8)
  - 
  (0.8)
Proceeds from sale of property, plant and equipment
  0.2 
  - 
  0.2 
Interest received
  1.0 
  - 
  1.0 
Repayments of / (granted) loans receivable from non-controlling interest holders
  0.3 
  - 
  0.3 
Proceeds from lease income
  0.6 
  - 
  0.6 
Net cash flows used in investing activities
  (18.8)
  - 
  (18.8)
 
    
    
    
CASH FLOWS FROM / (USED IN) FINANCING ACTIVITIES
    
    
    
Dividends paid to non-controlling interests
  (8.2)
  - 
  (8.2)
Lease payments
  (56.9)
  (17.7)
  (74.6)
Purchase of treasury shares
  (1.9)
  - 
  (1.9)
Interest paid
  (0.5)
  - 
  (0.5)
Net cash flows from / (used in) financing activities
  (67.5)
  (17.7)
  (85.2)
Currency translation on cash
  0.5 
  - 
  0.5 
Increase in cash and cash equivalents
  7.7 
  - 
  7.7 
 
    
    
    
CASH AND CASH EQUIVALENTS AT THE
    
    
    
- beginning of the period
  234.2 
  - 
  234.2 
- end of the period
  241.9 
  - 
  241.9 
 
 
F-13
 
 
IN MILLIONS OF USD
  
AS PREVIOUSLY
PUBLISHED
6M 2019
(UNAUDITED)
 
  
CORRECTION
 
  
RESTATED
6M 2019
(UNAUDITED)
 
 
 
 
 
 
 
 
 
 
 
CASH FLOWS FROM OPERATING ACTIVITIES
 
 
 
 
 
 
 
 
 
Profit / (loss) before tax
  18.9 
  9.5 
  28.4 
 
    
    
    
ADJUSTMENTS FOR
    
    
    
Depreciation, amortization and impairment
  155.8 
  22.2 
  178.0 
Loss / (gain) on sale of non-current assets
  0.2 
  - 
  0.2 
Increase / (decrease) in allowances and provisions
  4.4 
  - 
  4.4 
Other non-cash items
  2.7 
  - 
  2.7 
Share of result of associates
  (0.6)
  - 
  (0.6)
Interest income
  (1.8)
  - 
  (1.8)
Finance costs
  39.1 
  3.9 
  43.0 
Cash flows before working capital changes
  218.7 
  35.6 
  254.3 
 
    
    
    
Decrease / (increase) in trade and other accounts receivable
  (10.0)
  - 
  (10.0)
Decrease / (increase) in inventories
  (2.5)
  - 
  (2.5)
Increase / (decrease) in trade and other accounts payable
  41.1 
  - 
  41.1 
Cash generated from operations
  247.3 
  35.6 
  282.9 
Income taxes paid
  (8.3)
  - 
  (8.3)
Net cash flows from operating activities
  239.0 
  35.6 
  274.6 
 
    
    
    
CASH FLOWS USED IN INVESTING ACTIVITIES
    
    
    
Purchase of property, plant and equipment
  (32.8)
  - 
  (32.8)
Purchase of intangible assets
  (2.4)
  - 
  (2.4)
Contributions to associates
  (2.1)
  - 
  (2.1)
Proceeds from sale of property, plant and equipment
  0.4 
  - 
  0.4 
Interest received
  1.0 
  - 
  1.0 
Repayments of / (granted) loans receivable from non-controlling interest holders
  0.3 
  - 
  0.3 
Proceeds from lease income
  1.3 
  - 
  1.3 
Net cash flows used in investing activities
  (34.3)
  - 
  (34.3)
 
    
    
    
CASH FLOWS FROM / (USED IN) FINANCING ACTIVITIES
    
    
    
Dividends paid to non-controlling interests
  (15.0)
  - 
  (15.0)
Lease payments
  (112.9)
  (35.6)
  (148.5)
Purchase of treasury shares
  (2.7)
  - 
  (2.7)
Contributions from / (purchase of) non-controlling interests
  0.4 
  - 
  0.4 
Interest paid
  (7.6)
  - 
  (7.6)
Net cash flows from / (used in) financing activities
  (137.8)
  (35.6)
  (173.4)
Currency translation on cash
  1.4 
  - 
  1.4 
Increase in cash and cash equivalents
  68.3 
  - 
  68.3 
 
    
    
    
CASH AND CASH EQUIVALENTS AT THE
    
    
    
- beginning of the period
  234.2 
  - 
  234.2 
- end of the period
  302.5 
  - 
  302.5 
 
 
F-14
 
 
2.3
STATEMENT OF COMPREHENSIVE INCOME PRESENTATION LAYOUT, CHANGE IN ACCOUNTING POLICIES
 
Hudson reclassified the statements of comprehensive income and changed its accounting policies in order to better reflect the performance of the Group. The comparative figures for 2018 are presented accordingly to reflect the changes.
 
The following table reflects the reclassification within the new chart of accounts for the three and nine month periods ended September 30, 2018.
 
IN MILLIONS OF USD
 
FOOTNOTE
 
 
PUBLISHED
Q3 2018
 
 
RECLASSIFICATION
 
 
RECLASSIFIED
Q3 2018
 
Turnover
 
 
 
  526.6 
  - 
  526.6 
Cost of sales
 
 
 
  (191.1)
  - 
  (191.1)
Gross profit
 
 
 
  335.5 
  - 
  335.5 
Lease expenses (Selling expenses in 2018)
  1a, 2a 
  (121.7)
  6.2 
  (115.5)
Personnel expenses
    
  (105.4)
  - 
  (105.4)
Other expenses (General expenses in 2018)
  1b, 2b, 3 
  (32.3)
  (7.7)
  (40.0)
Share of result of associates
    
  0.1 
  (0.1)
  - 
Depreciation, amortization and impairment
    
  (30.2)
  - 
  (30.2)
Other operational result (moved to Other expenses)
  3 
  (1.6)
  1.6 
  - 
Operating profit
    
  44.4 
  - 
  44.4 
Finance income (Interest income in 2018)
    
  0.6 
  - 
  0.6 
Finance costs (Interest expenses in 2018)
    
  (7.7)
  - 
  (7.7)
Foreign exchange gain / (loss)
    
  0.2 
  - 
  0.2 
Profit / (loss) before tax
    
  37.5 
  - 
  37.5 
Income tax benefit / (expense)
    
  (0.7)
  - 
  (0.7)
Net profit / (loss)
    
  36.8 
  - 
  36.8 
Net profit attributable to non-controlling interests
    
  10.2 
  - 
  10.2 
Net profit attributable to equity holders of the parent
    
  26.6 
  - 
  26.6 
 
Footnote
 
CONCEPT
 
RECLASSIFICATION FROM
 
RECLASSIFICATION TO
 
IN MILLIONS OF USD
1a Sales related expenses
 
Lease expenses (Selling expenses in 2018)
 
Other expenses
 
10.6
2a Premises expenses
 
Other expenses
 
Lease expenses
 
(4.4)
 
 
 
 
 
 
 
1b Sales related expenses
 
Lease expenses (Selling expenses in 2018)
 
Other expenses
 
(10.6)
2b Premises expenses
 
Other expenses
 
Lease expenses
 
4.4
3 Other operational income / (expenses)
 
Other operational result
 
Other expenses
 
(1.6)
 
 
F-15
 
 
IN MILLIONS OF USD
 
FOOTNOTE
 
 
PUBLISHED
9M 2018
 
 
RECLASSIFICATION
 
 
RECLASSIFIED
9M 2018
 
Turnover
 
 
 
  1,452.8 
  - 
  1,452.8 
Cost of sales
 
 
 
  (530.0)
  - 
  (530.0)
Gross profit
 
 
 
  922.8 
  - 
  922.8 
Lease expenses (Selling expenses in 2018)
  1a, 2a 
  (336.7)
  15.4 
  (321.3)
Personnel expenses
    
  (303.8)
  - 
  (303.8)
Other expenses (General expenses in 2018)
  1b, 2b, 3 
  (97.2)
  (21.9)
  (119.1)
Share of result of associates
    
  0.1 
  (0.1)
  - 
Depreciation, amortization and impairment
    
  (89.6)
  - 
  (89.6)
Other operational result (moved to Other expenses)
  3 
  (6.6)
  6.6 
  - 
Operating profit
    
  89.0 
  - 
  89.0 
Finance income (Interest income in 2018)
    
  1.7 
  - 
  1.7 
Finance costs (Interest expenses in 2018)
    
  (23.3)
  - 
  (23.3)
Foreign exchange gain / (loss)
    
  (0.3)
  - 
  (0.3)
Profit / (loss) before tax
    
  67.1 
  - 
  67.1 
Income tax benefit / (expense)
    
  (4.1)
  - 
  (4.1)
Net profit / (loss)
    
  63.0 
  - 
  63.0 
Net profit attributable to non-controlling interests
    
  27.8 
  - 
  27.8 
Net profit attributable to equity holders of the parent
    
  35.2 
  - 
  35.2 
 
Footnote
 
CONCEPT
 
RECLASSIFICATION FROM
 
RECLASSIFICATION TO
 
IN MILLIONS OF USD
1a Sales related expenses
 
Lease expenses (Selling expenses in 2018)
 
Other expenses
 
28.7
2a Premises expenses
 
Other expenses
 
Lease expenses
 
(13.3)
 
 
 
 
 
 
 
1b Sales related expenses
 
Lease expenses (Selling expenses in 2018)
 
Other expenses
 
(28.7
2b Premises expenses
 
Other expenses
 
Lease expenses
 
13.3
3 Other operational income / (expenses)
 
Other operational result
 
Other expenses
 
(6.6)
 
2.4
NEW STANDARDS, INTERPRETATIONS AND AMENDMENTS ADOPTED
  
The accounting policies adopted in the preparation of the interim consolidated financial statements are consistent with those followed in the preparation of the Hudson’s annual consolidated financial statements for the year ended December 31, 2018, except for the following new or revised Standards and Interpretations adopted in these interim consolidated financial statements (effective January 1, 2019). The impact is disclosed in note 14.
 
IFRS 16 – Leases (effective January 1, 2019)
The Group adopted the standard as of January 1, 2019 under modified retrospective approach.
  
IFRS 16 replaces IAS 17 and sets the principles for recognition, measurement, presentation of leases, specifying the requirements for disclosures of lessees or lessors more extensive than under IAS 17. The main difference in the Group’s consolidated financial statements is the recognition of the right-of-use assets and lease liabilities for lease contracts.
 
To contain a lease, an agreement has to convey the right to control the use of an identified asset throughout the period of use in exchange for consideration. The lessee has the right to obtain substantially all of the economic benefits from the use of the identified asset and direct the use of the identified asset (i. e. direct how and for what purpose the asset is used). The lease term corresponds to the non-cancellable period of each contract, where the Group is reasonably certain of exercising renewal options contractually foreseen. Right-of-use assets are generally capitalized at a value equivalent to the lease obligation at inception and depreciated over the useful life of the asset, except for leases with a lease term (or remaining upon adoption) of less than 12 months or leases of low value assets.
 
F-16
 
 
The lease liability represents the net present value of fixed or in-substance fixed lease payments over the lease term. The implied interest charge is presented as interest expenses on lease obligations. Where a lease agreement does not specify a discount rate and as the subsidiaries are financed internally, Hudson uses a discount rate, which is the aggregation of the risk free rates for the respective currency and lease duration, increased by individual company risk factors. Initial direct costs for contracts signed in the past will not be recognized as part of the right-of-use asset at the date of initial adoption.
 
Usually the lease contracts do not specify interest, so that when the Group pays the variable amount of lease commitment, the minimal in substance fix commitments are presented as lease payments under cash flow from financing, whereas the remaining part is presented as cash outflow from operations.
 
Short-term leases with a duration of less than 12 months and low value leases, as well as those lease elements, not complying with the principles of recognition defined by IFRS 16 are recognized in the income statement when incurred.
 
The standard mainly affects the lease accounting of:
 
a)
Stores
 
Hudson enters into concession agreements with operators of airports, railway stations etc. to operate retail shops which in-substance are considered leases. These concession lease agreements contain complex features, which include variable payments, based on sales, which cannot be lower than a minimum threshold (MAG). The MAG can be fixed or variable depending on certain parameters. The MAG amounts may: a) be fixed by the concession agreement or b) be calculated based on a percentage of fees expensed in the previous year, or c) adjusted based on an index. In these cases, the unavoidable portions of the fees are considered as in-substance fixed payments, despite having a variable component. Such payment features are often determined on the basis of the individual circumstances of the parties to the contract and are unique to the particular contract. Hudson signs and renews a significant number of agreements every year with a typical duration of 5 to 10 years. These agreements do not contain a residual value guarantee. In some cases, the current portion of the lease obligations are secured with bank guarantees in case the Group would not fulfill its contractual commitments. Hudson capitalized all elements of the lease contracts in accordance with IFRS 16 when at the commencement of the agreement such commitments are in-substance fixed. Payment obligations that do not have a fixed or in-substance fixed commitment, will continue to be presented as variable lease expense. Hudson has identified a number of agreements in its portfolio which are not fulfilling the principles of recognition defined by IFRS 16, i.e. they have minimum guaranteed payments based on non-predictable parameters or variables, such as actual number of passengers, which will continue to be presented fully as variable lease expense.
 
Additionally, Hudson has concession subleases in which Hudson acts as lessor for a portion of leased retail space to third party operators. Generally, the term of the sublease is the same duration as the main concession agreement. Therefore, Hudson recognizes a lease receivable related to the fixed minimum payments due from the subtenant as a reduction of the initial right-of-use asset.
 
b)
Other buildings
 
Rental agreements for offices or warehouse buildings usually qualify for capitalization under IFRS 16 capitalization rules.
 
Other amendments and interpretations
Any other amendments and interpretations that apply for the first time in 2019, do not have material impact on the interim consolidated financial statements of the Group.
 
 
F-17
 
 
3.
TURNOVER
 
IN MILLIONS OF USD
  
UNAUDITED
Q3 2019
 
  
UNAUDITED
Q3 2018
 
  
UNAUDITED
9M 2019
 
  
UNAUDITED
9M 2018
 
Net sales
  511.7 
  516.8 
  1,445.4 
  1,422.2 
Advertising income
  11.3 
  9.8 
  32.5 
  30.6 
Turnover
  523.0 
  526.6 
  1,477.9 
  1,452.8 
 
NET SALES BREAKDOWN
 
Net sales by product category
 
IN MILLIONS OF USD
  
UNAUDITED
Q3 2019
 
  
UNAUDITED
Q3 2018
 
  
UNAUDITED
9M 2019
 
  
UNAUDITED
9M 2018
 
Confectionery, Food and Catering
  205.4 
  195.7 
  576.7 
  534.1 
Perfumes and Cosmetics
  70.1 
  75.1 
  203.8 
  210.8 
Fashion, Leather and Baggage
  64.7 
  68.1 
  173.8 
  177.7 
Literature and Publications
  38.2 
  43.8 
  113.8 
  125.8 
Wine and Spirits
  24.6 
  24.5 
  69.2 
  68.8 
Tobacco goods
  13.3 
  14.1 
  40.8 
  42.7 
Watches, Jewelry and Accessories
  27.6 
  29.8 
  80.9 
  84.2 
Electronics
  28.3 
  25.4 
  78.9 
  70.9 
Other product categories
  39.5 
  40.3 
  107.5 
  107.2 
Total
  511.7 
  516.8 
  1,445.4 
  1,422.2 
 
Net sales by market sector
 
IN MILLIONS OF USD
  
UNAUDITED
Q3 2019
 
  
UNAUDITED
Q3 2018
 
  
UNAUDITED
9M 2019
 
  
UNAUDITED
9M 2018
 
Duty-paid
  396.3 
  391.2 
  1,122.7 
  1,078.2 
Duty-free
  115.4 
  125.6 
  322.7 
  344.0 
Total
  511.7 
  516.8 
  1,445.4 
  1,422.2 
 
Net sales by channel
 
IN MILLIONS OF USD
 
UNAUDITED
Q3 2019
 
 
UNAUDITED
Q3 2018
 
 
UNAUDITED
9M 2019
 
 
UNAUDITED
9M 2018
 
Airports
  484.6 
  490.5 
  1,370.6 
  1,348.1 
Downtown and hotel shops
  14.0 
  13.3 
  37.8 
  36.7 
Railway stations and other
  13.1 
  13.0 
  37.0 
  37.4 
Total
  511.7 
  516.8 
  1,445.4 
  1,422.2 
 
 
F-18
 
 
4.
SEGMENT INFORMATION
 
Hudson consists of one operating segment “Travel Retail Operations” for which reports are submitted to the Group Executive Committee, being the Chief Operating Decision Maker (CODM). These reports form the basis for the evaluation of performance and allocation of resources.
 
Hudson generates net sales from selling a wide range of products in its duty-paid and duty-free stores that are mainly located at airports, commuter terminals, hotels, landmarks and other tourist destinations. Refer to note 3 for a split of net sales by product category, market sector and sales channel.
 
Net sales by Country
 
IN MILLIONS OF USD
 
UNAUDITED
Q3 2019
 
 
UNAUDITED
Q3 2018
 
 
UNAUDITED
9M 2019
 
 
UNAUDITED
9M 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S.
  417.4 
  415.7 
  1,186.0 
  1,149.8 
Canada
  94.3 
  101.1 
  259.4 
  272.4 
Total
  511.7 
  516.8 
  1,445.4 
  1,422.2 
 
Non-Current Assets by Country
(excluding investments and deferred taxes)
 
IN MILLIONS OF USD
 
UNAUDITED
30.09.2019
 
 

31.12.2018
 
 
 
 
 
 
 
 
U.S.
  1,464.1 
  511.2 
Canada
  549.9 
  375.9 
Total
  2,014.0 
  887.1 
 
5.
SEASONALITY
 
Hudson has its strongest months of net sales and operating profit between July and September corresponding to the summer season, whereas the first quarter is the weakest. These seasonality effects are more prominent on the operating profit level than in net sales.
 
6.
LEASE EXPENSES
 
IN MILLIONS OF USD
 
UNAUDITED
Q3 2019
 
 
UNAUDITED
Q3 2018
 
 
UNAUDITED
9M 2019
 
 
UNAUDITED
9M 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Lease expenses (in 2019 variable commitments)
  (42.6)
  (118.9)
  (111.8)
  (330.8)
Sublease income
  2.5 
  3.4 
  7.1 
  9.5 
Total1
  (40.1)
  (115.5)
  (104.7)
  (321.3)
 
1 Short-term and low value leases are not material.
 
 
F-19
 
 
7.
OTHER EXPENSES
 
IN MILLIONS OF USD
  
UNAUDITED
Q3 2019
 
  
UNAUDITED
Q3 2018
 
  
UNAUDITED
9M 2019
 
  
UNAUDITED
9M 2018
 
Repairs, maintenance and utilities
  (4.5)
  (4.1)
  (13.5)
  (12.5)
Advertising expenses
  (0.8)
  (0.5)
  (1.6)
  (1.3)
Other operational expenses
  (0.3)
  (1.6)
  (0.7)
  (6.6)
Sales related expenses
  (9.3)
  (10.3)
  (26.7)
  (27.4)
IT expenses
  (1.7)
  (1.6)
  (5.1)
  (4.6)
Office and administration expenses
  (3.9)
  (3.3)
  (11.1)
  (10.6)
Travel, car, entertainment and representation
  (2.9)
  (2.8)
  (9.0)
  (9.2)
Franchise fees and commercial services
  (7.7)
  (8.1)
  (22.1)
  (21.6)
Public relations expenses
  (0.7)
  (0.4)
  (1.5)
  (1.3)
Professional advisors
  (5.3)
  (4.5)
  (14.3)
  (14.5)
Insurances
  (0.8)
  (1.0)
  (3.1)
  (2.9)
Bank expenses
  (0.2)
  (0.1)
  (0.5)
  (0.7)
Taxes, other than income taxes
  (2.2)
  (1.7)
  (7.2)
  (5.9)
Total
  (40.3)
  (40.0)
  (116.4)
  (119.1)
 
8.
DEPRECIATION, AMORTIZATION AND IMPAIRMENT
 
IN MILLIONS OF USD
 
UNAUDITED
Q3 2019
 
 
UNAUDITED
Q3 2018
 
 
UNAUDITED
9M 2019
 
 
UNAUDITED
9M 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Depreciation RoU assets
  (61.8)
  - 
  (183.7)
  - 
Subtotal (Right-of-Use Assets, see note 13)
  (61.8)
  - 
  (183.7)
  - 
Depreciation Property, Plant and Equipment
  (16.4)
  (16.4)
  (49.6)
  (51.5)
Impairment Property, Plant and Equipment
  (2.4)
  (1.8)
  (3.3)
  (3.2)
Subtotal (Property, Plant and Equipment)
  (18.8)
  (18.2)
  (52.9)
  (54.7)
Amortization Intangible Assets
  (10.5)
  (11.2)
  (32.5)
  (34.1)
Impairment Intangible Assets
  - 
  (0.8)
  - 
  (0.8)
Subtotal (Intangible Assets)
  (10.5)
  (12.0)
  (32.5)
  (34.9)
Total
  (91.1)
  (30.2)
  (269.1)
  (89.6)
 
9.
FINANCE INCOME
 
IN MILLIONS OF USD
 
UNAUDITED
Q3 2019
 
 
UNAUDITED
Q3 2018
 
 
UNAUDITED
9M 2019
 
 
UNAUDITED
9M 2018
 
INCOME ON FINANCIAL ASSETS
 
 
 
 
 
 
 
 
 
 
 
 
Interest income on bank deposits
  1.0 
  0.6 
  2.6 
  1.7 
Other financial income
  0.5 
  - 
  0.5 
  - 
Lease interest income
  0.1 
  - 
  0.3 
  - 
Interest income on financial assets
  1.6 
  0.6 
  3.4 
  1.7 
Share of result of associates
  0.3 
  - 
  0.9 
  - 
Total finance income
  1.9 
  0.6 
  4.3 
  1.7 
 
 
F-20
 
 
10.
FINANCE COSTS
 
IN MILLIONS OF USD
 
UNAUDITED
Q3 2019
 
 
UNAUDITED
Q3 2018
 
 
UNAUDITED
9M 2019
 
 
UNAUDITED
9M 2018
 
EXPENSES ON FINANCIAL LIABILITIES
 
 
 
 
 
 
 
 
 
 
 
 
Interest on loans
  (7.3)
  (7.7)
  (21.8)
  (22.6)
Interest on lease obligations
  (12.9)
  - 
  (40.2)
  - 
Other financial expenses
  (1.4)
  0.1 
  (2.5)
  (0.3)
Interest expense on financial liabilities
  (21.6)
  (7.6)
  (64.5)
  (22.9)
EXPENSES ON NON-FINANCIAL LIABILITIES
    
    
    
    
Interest expense
  - 
  (0.1)
  (0.1)
  (0.4)
Interest and other financial expenses
  - 
  (0.1)
  (0.1)
  (0.4)
Total finance costs
  (21.6)
  (7.7)
  (64.6)
  (23.3)
 
11.
INCOME TAX
 
IN MILLIONS OF USD
 
UNAUDITED
Q3 2019
 
 
UNAUDITED
Q3 2018
 
 
UNAUDITED
9M 2019 
 
 
UNAUDITED
9M 2018
 
Current income taxes
  (2.9)
  (3.0)
  (8.3)
  (7.2)
Deferred income taxes
  (9.6)
  2.3 
  (8.7)
  3.1 
Total
  (12.5)
  (0.7)
  (17.0)
  (4.1)
 
 
F-21
 
 
12.
BORROWINGS AND LEASE OBLIGATIONS, NET
 
IN MILLIONS OF USD
 
CASH AND CASH EQUIVALENTS
 
 
LEASE OBLIGATIONS
 
 
BORROWINGS,
CURRENT
 
 
BORROWINGS,
NON-CURRENT
 
 
BORROWINGS, NET
 
Balance at December 31, 2018 (as previously published)
  234.2 
  - 
  51.4 
  492.6 
  309.8 
IFRS 16 Implementation (notes 2.2 and 14)
  - 
  1,268.7 
  - 
  - 
  1,268.7 
Balance at January 1, 2019 (adjusted)
  234.2 
  1,268.7 
  51.4 
  492.6 
  1,578.5 
Cash flows from / (used in) operating, financing and investing activities
  96.0 
  - 
  - 
  - 
  (96.0)
Lease payments
  - 
  (225.5)
  - 
  - 
  (225.5)
Cash flow
  96.0 
  (225.5)
  - 
  - 
  (321.5)
Additions to lease obligations
  - 
  97.2 
  - 
  - 
  97.2 
Decrease in lease obligations
  - 
  (29.5)
  - 
  - 
  (29.5)
Interest accrued on lease obligations
  - 
  40.2 
  - 
  - 
  40.2 
Currency translation adjustments
  0.7 
  6.0 
  1.5 
  1.6 
  8.4 
Other non-cash movements
  0.7 
  113.9 
  1.5 
  1.6 
  116.3 
Balance at September 30, 2019
  330.9 
  1,157.1 
  52.9 
  494.2 
  1,373.3 

IN MILLIONS OF USD
  
CASH AND CASH
EQUIVALENTS
 
  
BORROWINGS,
CURRENT
 
  
BORROWINGS,
NON-CURRENT
 
  
BORROWINGS,
NET
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at January 1, 2018
  137.4 
  80.7 
  520.4 
  463.7 
Cash flows from / (used in) operating, financing and investing activities
  132.8 
  - 
  - 
  (132.8)
Repayment of borrowings
  - 
  (24.7)
  - 
  (24.7)
Cash flow
  132.8 
  (24.7)
  - 
  (157.5)
Currency translation adjustments
  (0.5)
  (1.7)
  (1.4)
  (2.6)
Other non-cash movements
  (0.5)
  (1.7)
  (1.4)
  (2.6)
Balance at September 30, 2018
  269.7 
  54.3 
  519.0 
  303.6 
  
13.
RIGHT-OF-USE ASSETS
 
IN MILLIONS OF USD
 
SHOPS
 
 
OTHER
BUILDINGS
 
 
TOTAL
 
AT COST
 
 
 
 
 
 
 
 
 
Balance at December 31, 2018 (as previously published)
  - 
  - 
  - 
IFRS 16 Implementation (notes 2.2 and 14)
  1,206.0 
  55.3 
  1,261.3 
Balance at January 1, 2019 (adjusted)
  1,206.0 
  55.3 
  1,261.3 
Additions to right-of-use assets
  90.6 
  4.1 
  94.7 
Decrease in right-of-use assets
  (29.0)
  - 
  (29.0)
Currency translation adjustments
  6.1 
  0.1 
  6.2 
Balance at September 30, 2019
 1,273.7
 59.5
 1,333.2
ACCUMULATED DEPRECIATION
    
    
    
Balance at January 1, 2019 (as previously published)
  - 
  - 
  - 
Additions
  (177.5)
  (6.2)
  (183.7)
Currency translation adjustments
  (0.1)
  - 
  (0.1)
Balance at September 30, 2019
  (177.6)
  (6.2)
  (183.8)
CARRYING AMOUNT
    
    
    
Balance at September 30, 2019
  1,096.1 
  53.3 
  1,149.4 
 
 
F-22
 
 
14.
IFRS 16 LEASE
 
The Group adopted IFRS 16 as of January 1, 2019, resulting in changes in our accounting policies. In accordance with the modified retrospective approach, the comparative figures were not restated. The following table presents the effects of the adoption of IFRS 16 on the consolidated statements of financial position:
 
IN MILLIONS OF USD
 
AS PREVIOUSLY
PUBLISHED
31.12.2018
 
UNAUDITED
IFRS 16
IMPLEMEN-TATION
 
AS PREVIOUSLY
PUBLISHED
IN 3M AND
6M 2019
(UNAUDITED)
 
CORRECTION1
 
RESTATED
01.01.2019
(UNAUDITED)
ASSETS
 
 
 
 
 
 
 
 
 
 
Property, plant and equipment
 
  243.0
 
  -
 
  243.0
 
  -
 
  243.0
Right-of-use assets
 
  -
 
  1,068.2
 
  1,068.2
 
  193.1
 
  1,261.3
Intangible assets
 
  301.6
 
  (3.7)
a
  297.9
 
  -
 
  297.9
Goodwill
 
  315.0
 
  -
 
  315.0
 
  -
 
  315.0
Investments in associates
 
  6.5
 
  -
 
  6.5
 
  -
 
  6.5
Deferred tax assets
 
  83.9
 
  -
 
  83.9
 
  -
 
  83.9
Other non-current assets
 
  27.4
 
  5.4
b
  32.8
 
  0.2
b
  33.0
Non-current assets
 
  977.4
 
  1,069.9
 
  2,047.3
 
  193.3
 
  2,240.6
Inventories
 
  190.7
 
  -
 
  190.7
 
  -
 
  190.7
Trade receivables
 
  1.3
 
  -
 
  1.3
 
  -
 
  1.3
Other accounts receivable
 
  46.8
 
  2.3
b
  49.1
 
  0.1
b
  49.2
Income tax receivables
 
  0.8
 
  -
 
  0.8
 
  -
 
  0.8
Cash and cash equivalents
 
  234.2
 
  -
 
  234.2
 
  -
 
  234.2
Current assets
 
  473.8
 
  2.3
 
  476.1
 
  0.1
 
  476.2
Total assets
 
  1,451.2
 
  1,072.2
 
  2,523.4
 
  193.4
 
  2,716.8
LIABILITIES AND SHAREHOLDERS’ EQUITY
 
    
 
    
 
    
 
    
 
    
Equity attributable to equity holders of the parent
 
  552.1
 
  -
 
  552.1
 
  -
 
  552.1
Non-controlling interests
 
  84.8
 
  -
 
  84.8
 
  -
 
  84.8
Total equity
 
  636.9
 
  -
 
  636.9
 
  -
 
  636.9
Borrowings
 
  492.6
 
  - 
 
  492.6
 
  -
 
  492.6
Lease obligations
 
  -
 
  901.0
 
  901.0
 
  130.7
 
  1,031.7
Deferred tax liabilities
 
  40.0
 
  -
 
  40.0
 
  -
 
  40.0
Post-employment benefit obligations
 
  1.0
 
  -
 
  1.0
 
  -
 
  1.0
Non-current liabilities
 
  533.6
 
  901.0
 
  1,434.6
 
  130.7
 
  1,565.3
Trade payables
 
  105.5
 
  -
 
  105.5
 
  -
 
  105.5
Borrowings
 
  51.4
 
  -
 
  51.4
 
  -
 
  51.4
Lease obligations
 
  -
 
  174.3
 
  174.3
 
  62.7
 
  237.0
Income tax payables
 
  2.3
 
  -
 
  2.3
 
  -
 
  2.3
Other liabilities
 
  121.5
 
  (3.1)
c
  118.4
 
  -
 
  118.4
Current liabilities
 
  280.7
 
  171.2
 
  451.9
 
  62.7
 
  514.6
Total liabilities
 
  814.3
 
  1,072.2
 
  1,886.5
 
  193.4
 
  2,079.9
Total liabilities and shareholders’ equity
 
  1,451.2
 
  1,072.2
 
  2,523.4
 
  193.4
 
  2,716.8
 
1
Refer to note 2.2.
a
Prepaid and capitalized concession rights
b
Sublease receivables
c
Concession fee payables
 
 
F-23
 
 
15.  FOREIGN EXCHANGE RATES APPLIED FOR VALUATION AND TRANSLATION
 
 
 
AVERAGE RATE
 
 
CLOSING RATES
 
IN USD
  Q3 2019 
  30.09.2019 
 
 
 
 
    
    
 
 
 
1 CAD
  0.7526 
  0.7553 
 
 
 
 
    
    
 
 
 
IN USD
  Q3 2018 
  30.09.2018 
  31.12.2018 
 
    
    
    
1 CAD
  0.7771 
  0.7750 
  0.7333 
 
 
 
 
 
F-24