23) SEGMENT INFORMATION
The CEO is the Chief Operating Decision Maker (“CODM”). Management has determined the operating segments on the basis of the information reviewed by the CEO for the purposes of allocating resources and assessing performance. The results measurement used by the CEO to assess the performance of the Atento Group’s segments is the EBITDA and Adjusted EBITDA (as defined below).
The CEO considers the business from the geographical perspective in the following areas:
• EMEA, which combines the activities carried out regionally in Spain and Morocco1.
• The Americas, which includes the activities carried out by the various Spanish-speaking companies in Mexico, Central and South America. It also includes transactions in the United States.
• Brazil, which is managed separately in view of its different language and major importance.
Inter-segment transactions are carried out at market prices.
The Atento Group uses EBITDA and Adjusted EBITDA to track the performance of its segments and to establish operating and strategic targets. Management believes that EBITDA and Adjusted EBITDA provides an important measure of the segment’s operating performance because it allows management to evaluate and compare the segments’ operating results, including their return on capital and operating efficiencies, from period to period by removing the impact of their capital structure (interest expenses), asset bases (depreciation and amortization), and tax consequences. EBITDA is defined as profit/(loss) for the period from continuing operations before net finance expense (which includes finance income, finance costs, change in fair value of financial instruments and net foreign exchange losses), income taxes and depreciation and amortization. Adjusted EBITDA is defined as EBITDA adjusted to exclude acquisition and integration related costs, restructuring costs, site relocation costs, financing fees, asset impairments and other items which are not related to our core operating results.
EBITDA and Adjusted EBITDA are a commonly reported measure and are widely used among analysts, investors and other interested parties in the Atento Group’s industry, although not a measure explicitly defined in IFRS, and therefore, may not be comparable to similar indicators used by other companies. EBITDA and Adjusted EBITDA should not be considered as an alternative to the profit for the year as a measurement of our consolidated earnings or as an alternative to consolidated cash flow from operating activities as a measurement of our liquidity.
| For the year ended December 31, 2015 | ||||||||||
| Thousands of U.S. dollars | ||||||||||
| EMEA (*) | Americas | Brazil | Other and eliminations | Total Group | ||||||
| Sales to other companies | 71,524 | 411,651 | 577,519 | - | 1,060,694 | |||||
| Sales to Telefónica Group | 160,148 | 376,347 | 352,675 | - | 889,170 | |||||
| Sales to other group companies | 32 | 1,775 | - | (1,788) | 19 | |||||
| Other operating income and expense | (219,713) | (685,565) | (813,701) | (7,623) | (1,726,602) | |||||
| EBITDA | 11,991 | 104,208 | 116,493 | (9,411) | 223,281 | |||||
| Depreciation and amortization | (12,360) | (38,371) | (49,979) | (797) | (101,507) | |||||
| Operating profit/(loss) | (369) | 65,837 | 66,514 | (10,208) | 121,774 | |||||
| Net finance expense | (12,343) | (8,678) | (25,257) | (116) | (46,394) | |||||
| Income tax | 3,233 | (20,157) | (14,010) | 7,784 | (23,150) | |||||
| Profit/(loss) from continuing operations | (9,479) | 37,002 | 27,247 | (2,540) | 52,230 | |||||
| Profit/(loss) from discontinued operations | (3,082) | - | - | - | (3,082) | |||||
| Profit/(loss) for the year | (12,561) | 37,002 | 27,247 | (2,540) | 49,148 | |||||
| EBITDA | 11,991 | 104,208 | 116,493 | (9,411) | 223,281 | |||||
| Acquisition and integration related costs | - | 108 | - | - | 108 | |||||
| Restructuring costs | 6,299 | 3,107 | 5,613 | 780 | 15,799 | |||||
| Site relocation costs | - | 27 | 3,383 | - | 3,410 | |||||
| Financing and IPO fees | - | - | - | 313 | 313 | |||||
| Asset impairments and Other | 175 | 1,610 | 3,892 | 1,098 | 6,775 | |||||
| Adjusted EBITDA (unaudited) | 18,465 | 109,060 | 129,381 | (7,220) | 249,686 | |||||
| Capital expenditure | 7,332 | 39,207 | 74,248 | 427 | 121,214 | |||||
| Intangible, Goodwill and PP&E | 62,014 | 211,105 | 266,454 | 2,372 | 541,945 | |||||
| Allocated assets | 417,828 | 590,884 | 618,925 | (249,221) | 1,378,416 | |||||
| Allocated liabilities | 278,871 | 327,042 | 456,823 | (82,111) | 980,625 | |||||
| (*) Exclude discontinued operations - Morocco. | ||||||||||
| For the year ended December 31, 2016 | |||||||||
| Thousands of U.S. dollars | |||||||||
| EMEA | Americas | Brazil | Other and eliminations | Total Group | |||||
| Sales to other companies | 72,750 | 394,961 | 542,953 | 1 | 1,010,665 | ||||
| Sales to Telefónica Group | 151,176 | 322,237 | 273,420 | - | 746,833 | ||||
| Sales to other group companies | 4 | 1,718 | - | (1,722) | - | ||||
| Other operating income and expense | (220,645) | (596,963) | (717,683) | (8,497) | (1,543,788) | ||||
| EBITDA | 3,285 | 121,953 | 98,690 | (10,218) | 213,710 | ||||
| Depreciation and amortization | (10,712) | (33,757) | (52,356) | (539) | (97,364) | ||||
| Operating profit/(loss) | (7,427) | 88,196 | 46,334 | (10,757) | 116,346 | ||||
| Net finance expense | (12,319) | (31,092) | (40,074) | (24,297) | (107,782) | ||||
| Income tax | 4,933 | (15,823) | (3,070) | 8,753 | (5,207) | ||||
| Profit/(loss) from continuing operations | (14,813) | 41,281 | 3,190 | (26,301) | 3,357 | ||||
| Profit/(loss) from discontinued operations | (3,206) | - | - | - | (3,206) | ||||
| Profit/(loss) for the year | (18,019) | 41,281 | 3,190 | (26,301) | 151 | ||||
| EBITDA | 3,285 | 121,953 | 98,690 | (10,218) | 213,710 | ||||
| Restructuring costs | 10,390 | 10,562 | 10,994 | 1,700 | 33,646 | ||||
| Site relocation costs | 18 | 168 | 9,137 | - | 9,323 | ||||
| Asset impairments and Other | 2,709 | (40,668) | 2,131 | 1,011 | (34,817) | ||||
| Adjusted EBITDA (unaudited) | 16,402 | 92,015 | 120,952 | (7,507) | 221,862 | ||||
| Capital expenditure | 2,124 | 23,042 | 23,000 | - | 48,166 | ||||
| Intangible, Goodwill and PP&E | 48,342 | 189,036 | 298,920 | 1,540 | 537,838 | ||||
| Allocated assets | 396,298 | 558,657 | 677,794 | (255,131) | 1,377,618 | ||||
| Allocated liabilities | 272,082 | 259,352 | 490,172 | (74,191) | 947,415 | ||||
| For the year ended December 31, 2017 | |||||||||
| Thousands of U.S. dollars | |||||||||
| EMEA | Americas | Brazil | Other and eliminations | Total Group | |||||
| Sales to other companies | 80,020 | 435,195 | 652,696 | - | 1,167,911 | ||||
| Sales to Telefónica Group | 143,424 | 317,849 | 292,110 | (1) | 753,382 | ||||
| Sales to other group companies | 1 | 4,997 | - | (4,980) | 18 | ||||
| Other operating income and expense | (215,860) | (688,949) | (832,377) | 12,745 | (1,724,441) | ||||
| EBITDA | 7,585 | 69,092 | 112,429 | 7,764 | 196,870 | ||||
| Depreciation and amortization | (9,340) | (37,640) | (56,908) | (533) | (104,421) | ||||
| Operating profit/(loss) | (1,755) | 31,452 | 55,521 | 7,231 | 92,449 | ||||
| Net finance expense | (16,834) | (13,206) | (33,038) | (30,406) | (93,484) | ||||
| Income tax | 5,031 | (9,667) | (8,822) | 925 | (12,533) | ||||
| Profit/(loss) for the year | (13,558) | 8,579 | 13,661 | (22,250) | (13,568) | ||||
| EBITDA | 7,585 | 69,092 | 112,429 | 7,764 | 196,870 | ||||
| Restructuring costs | 3,831 | 8,473 | 4,011 | 464 | 16,779 | ||||
| Other | 115 | 4,208 | 119 | 2,875 | 7,317 | ||||
| Shared services expenses | 3,259 | 1,734 | 8,155 | (13,148) | - | ||||
| Adjusted EBITDA (unaudited) | 14,790 | 83,507 | 124,714 | (2,045) | 220,966 | ||||
| Capital expenditure | 3,948 | 24,503 | 38,825 | 259 | 67,535 | ||||
| Intangible, Goodwill and PP&E | 49,101 | 178,485 | 306,672 | 1,185 | 535,443 | ||||
| Allocated assets | 401,332 | 603,770 | 677,149 | (351,946) | 1,330,305 | ||||
| Allocated liabilities | 126,575 | 280,575 | 499,670 | 45,646 | 952,466 | ||||
"Other and eliminations" includes activities of the intermediate holdings in Spain (Atento Spain Holdco, S.L.U.), Luxembourg holdings, as well as inter-group transactions between segments.
The breakdown of sales to customers by the main countries where the Atento Group operates is as follow:
| For the years ended December 31, | |||||
| 2015 (*) | 2016 | 2017 | |||
| Country | |||||
| Spain | 233,041 | 223,956 | 223,445 | ||
| Other and eliminations (*) | (1,336) | (25) | (1) | ||
| EMEA | 231,705 | 223,931 | 223,444 | ||
| Argentina | 162,143 | 119,589 | 142,473 | ||
| Chile | 79,626 | 80,106 | 97,196 | ||
| Colombia | 59,546 | 61,042 | 75,373 | ||
| El Salvador | 19,238 | 16,741 | 12,527 | ||
| United States | 28,865 | 36,968 | 48,341 | ||
| Guatemala | 17,091 | 15,771 | 16,732 | ||
| Mexico | 242,426 | 199,634 | 178,537 | ||
| Peru | 145,413 | 151,755 | 151,681 | ||
| Puerto Rico | 13,982 | 14,629 | 10,156 | ||
| Uruguay | 3,652 | 3,475 | 3,184 | ||
| Panama | 4,617 | 4,990 | 4,466 | ||
| Other and eliminations (*) | 13,174 | 14,217 | 17,375 | ||
| Americas | 789,773 | 718,917 | 758,041 | ||
| Brazil | 930,194 | 816,373 | 944,806 | ||
| Other and eliminations (*) | (1,789) | (1,723) | (4,980) | ||
| Total revenue | 1,949,883 | 1,757,498 | 1,921,311 | ||
| (*) Includes holding company level revenues and consolidation adjustments. | |||||
The Atento Group signed a framework contract with Telefónica that expires on December 31, 2021. In 2017, 39.2% of service revenue were generated from business with Telefónica Group companies (42,5% in 2016 and 45,2% in 2015).