1

ECOVERITAS S.A.1 1. INTRODUCTION

Ecoveritas SA was founded in 2002 by four families and it is managed by Silvio Elías (one of the

founders). It is the biggest organic supermarket chain in Spain whose main objective is to make

accessible to everybody the best possible food. They offer the greatest variety of products with the

organic certification at the best possible price to guarantee a healthy and tasty food. They have been

expanding since their beginnings in Catalunya, where they started making business, and later on, since

2015, at a national level, having nowadays more than 50 establishments distributed in more than 15

municipalities (see on Figure 1).

2. HISTORY OF ECOVERITAS S.A.

In 1997, Silvio Elías de Gispert, co-founder and CEO of Veritas was working temporary in Holland

and there he met the person in charge of the organic department. It was in that moment when he realized

what the real food was and one of the ingredients to make the future choice to start the new business

model.

The second ingredient was when he went back to Spain where he met one of his best friends back, who

was studying the organic food from an academic point of view. From that moment, they thought that

the new tendency of healthy lifestyle could be influential in Spain and they decided to travel around

Europe to check if that “healthy” moment had started in other countries.

The third and last ingredient was more about family traditions (Mr. Elías comes from one of the

families that founded Caprabo). It was the habit of checking the nutritional information and choosing

the healthiest products that lead Mr. Elías to run his idea jointly with his friend Carles Torrecilla and

two other businessmen who joined them later, Josep Pont and Joan Martí. Those last ones decided to

risk and invest in this new model the same way Silvio Elías and Carles Torrecilla engage themselves

body and soul for bringing the organic European tendency to Spain.

When they were setting up the business project, they found three main difficulties along the journey:

1) Back in 2002, the ecological market was not widely known and the supply of this type of products

was pretty scattered and hard to find. 2) There was a huge difference between the price of conventional

products and the price of ecological ones. It was far above the cost of production (which was also very

1 Case written by Clàudia Muratet, Mònica Segura, Joana Carrillo and Aina Vesa. With the supervision of Professor Oriol Amat. Universitat Pompeu Fabra, 2019.

2

high), thus not everyone could afford these goods. In contrast, nowadays, prices have become more

competitive even if there is still a small difference with standard goods’ price. 3) Spanish society was

not used to this type of sectors (there was a lack of education and information), so it was really difficult

to success and gain market power. At that time, the ecological sector was growing in Europe where

the market share was about 2.5%, whereas in Spain was only around 0.2%-0.5% (now it is around 3%-

4%).

Figure 1: Location of the different stores of Ecoveritas around the country

Source: Google Maps

3

3. INDUSTRY ANALYSIS AND COMPETITORS

3.1 SWOT INDUSTRY

STRENGTHS WEAKNESSES

- Specialization in ecological

products allows to offer a higher

product variety

- Exclusive management of

ecological product, unlike other

establishments with both

conventional and ecological

products

- Specialized channels with diverse structures

and atomized (reduce efficiency since different

management models)

- High complexity and length of supply chain

and difficulty to access to production at source

- Difficulty of fresh range products

- Lack of strong and clear image

communication of what ecological product is

that makes the consumer be confused

- Lack of knowledge, trust, and assessment of

ecological products by final consumers.

OPPORTUNITIES THREATS

- Increasing tendency in ecological

products relating a well-being and

health with an equilibrate and

healthy diet.

- Predisposition of clients to

proximity purchases (products)

- Increasing awareness of

environmental problems and

increasing interest of consumers in

local and high-quality products

- Expansion of online commerce

- Approximation of ecological

products and their market to the

catering industry

- Increasing decision power of large distribution

channels that zoom out the consumer from the

producer

- Competence of “borderline products”

(“naturals”, dietary, etc) and alternative from

ecological products

- Incorporation of ecological products with own

brand in big commercial and conventional

supermarkets

- Disinformation practices that do not allow

consumers to trust in ecological products

- Excessive bureaucratization of production and

commercial process

Table 1: SWOT of the industry (of ecological products) Source: Own elaboration

4

As we can see, there is less strengths than weaknesses, but on the other side, there is a large list of

opportunities that verify the increasing trend in consumer’s interest in ecological products and how the

companies of this industry can find a place to growth. The increasing purchasing power linked to the

decrease in the economic crisis intensity can also determine a helpful factor to help grow the industry.

To sum up, even that it has not a strong presence in comparison to the conventional products

commerce, the industry of ecological products is likely to increase during the forthcoming years.

3.2 SALES RANKING

Corroborating the expansion of the ecological sector, the spending per capita in ecological products in

a national has increased a 14,05%, reaching an expenditure of 36,33€/p in 2016 according to “El sector

ecológico en España 2018”, Ecological, page 5.

Nonetheless, this fact is far from other countries, locating Spain in the 18th position of a worldwide

ranking led by Switzerland (274€/p), Denmark (227€/p) and Sweden (197€/p).

3.3 MAIN COMPETITORS

The principal competitors focused on the specialized

stores in ecological products, as we can see in Figure 2,

in the national level are: Casa Ametller, Navarro

Herbolario, Super Sano, Tribu Woki, Ecorganic

ecomarket and GranBio. Considering also the increasing

trend in huge supermarkets that apart from selling

conventional products have include an ecological

products sector, it should be considered these ones as a

competence: Aldi, Lidl, El Corte Inglés (with a

specialized sector called La Biosfera), Día, Consum and

Carrefour.

Veritas was one of the pioneers in starting to run this new

concept of ecological supermarkets and this explains why

Figure 2: Sales evolution of ecological products depending on channels. "El sector ecológico en España 2018”, Ecological

their sales and profits differ a lot from their main competitors, except from Casa Ametller, as we can

see below in Figure 4, which is the main competitor and with which results and business decisions can

be compared.

However, to consider the big supermarkets of conventional products, since they have incorporated

some ecological products, as competitors could not be an optimal analysis, as it is shown in Figure 3.

This is because profits do not differentiate among conventional and ecological products, so they would

be rather high in comparison with specialized stores.

5

Figure 3: Ecoveritas and Casa Ametller net profits compared with big supermarkets

with an ecological sector 2

Figure 4: Ecoveritas and Casa Ametller net profits compared with specialized stores

in ecological products

2 This bar charts have been built from information recorded on the tables included in the Annexes (page 15)

6

4. PRESENT SITUATION OF THE COMPANY

4.1 MISSION

The slogan of Veritas has become “the real food”. Since 2002, they have been working on their main

objective which is to make accessible to everyone the true food: “to offer the greater variety of products

with organic certification at the best price to guarantee a healthy and tasty food”. Thus, their mission

is to bring ecologic and healthier products closer to families in order to improve quality of life and to

increase the knowledge of this sector. In addition, they decided to reach this goal while concerning

about the sustainability of the planet (as an additional objective): by reducing their CO2 emission,

substituting plastic packaging by more sustainable ones, try to minimize food waste and achieve a

100% self-management of their residues.

Veritas’ customers are people from medium-high cultural class that live in the city. The majority of

them buy ecological goods but they also go to conventional supermarkets, so that only around a 5% of

their customers fill the whole basket of goods with 100% ecologic products.

4.1.1 Strategy

In order to achieve their main objectives, we have just mentioned, the founders of the company decided

to apply a specific strategy based on offering a large variety of products such as 71 types of breakfast

cereals; 61 vegetable drinks; 29 flours, 19 tomatoes or 81 different breads. Moreover, within these

categories, Veritas also offer options for celiac, vegans and vegetarians, lactose-free options and

macrobiotics.

Therefore, it was clear to them the fact that it was crucial to reduce the difference between the price of

conventional products and the ecological ones. Thus, one of the first measures was to start producing

own brand products: “we could offer products in the market at a reasonable price, producing at a

certain level, reducing the production chain and taking advantage of scale economies”- Silvio Elías

stated. Currently, Veritas is offering around 6460 products, from which 543 are from their own brand,

which is named Veritas.

Moreover, the proximity of their suppliers is another of their main characteristics. The firm has the

goal to reduce the distance between suppliers and shops, which allows to save cost, and also benefit

the environment. Around 850 out of 927 suppliers are national producers and 80% are close suppliers.

7

4.2 CORPORATE GOVERNANCE

The shareholders are Elias, Martí, Pont and Torrecilla families. Pluvisilva SL and Sandrigham SL are

companies owned by Elias family which means that even though they are not owning 51% of

Ecoveritas, they own 40% of it, having the majority among the four families.

The fact that the capital structure is based on 4 families owning the company provides agility in the

decision making and the objectives can be easily put in common.

Silvio Elías de Gispert knew already how to manage a supermarket chain since he is the son of one the

three creators of Caprabo and he worked, after studying in ESADE, in Ahold located in Holland and

he set in motion the online shop “caprabocasa”. So, experience play an important role.

Moreover, Elías family is between the 100th richer families in Spain, owning a net equity of €804

millions. Silvio Elías i Marimón, father of Silvio Elías de Gispert is the owner of Duet Fit gym network

and of the Veritas supermarkets which is managed by his son. In total, he holds 41 active positions in

34 companies which is an outstanding factor since this remarkable equity plus the reputation helped

them to boost the growth and success of Veritas supermarkets.

4.3 BUSINESS EVOLUTION

As it has been explained before, Veritas was created in 2002, but it was recording losses for eight

consecutive years. One of the main problems they faced was the society lack of knowledge, therefore

they looked for some kind of strategy to educate consumers and spread the understanding about the

benefits and advantages of eating ecologic products. Thus, they opened several restaurants in order to

allow people tasting food, but it ended being a strategic mistake.

In addition, in 2005 their introduced a change in their communicative strategy in order to reach a wider

range of customers by divulging the idea that an ecological diet was linked to healthy and real food

instead of being a specific diet for vegetarians, vegans and so on. At the end, founders’ confidence on

the project and their perseverance helped Veritas to achieve success, and in 2010 the company

accounted the first profits. And since then the company has been registering a constant and balanced

growth. (see in figure x, the evolution of Veritas’ net profits since 2002 that we have just explained,

together with the evolution of net profits of its main competitor: Casa Ametller).

8

Figure 5: Evolution of Veritas and Casa Ametller net profits (2002-2016)

Soure: Own elaboration based on information of figure 7 and 10

4.4 AUDITOR'S OPINION

We checked the notes of the company in order to know the auditor’s opinion about the financial

statements of Ecoveritas. The report states an unqualified opinion each year which means that the

accounts of the company give a true reflection of the real situation of the company. And they do also

verify that the information that is shown in the management report is consistent with the one provided

in the annual accounts.

9

5. ANNEXES

ECOVERITAS SA

non-consolidated accounts

Assets 2012 31/12/2012

2013 31/12/2013

2014 31/12/2014

2015 31/12/2015

2016 31/12/2016

A) NON-CURRENT ASSETS 14013,454 79,46% 14.963,42 74,06% 14.619,82 69,15% 17.169,70 65,91% 17.264,60 58,77%

I. Intangible assets 78,384 0,44% 376,74 1,86% 386,77 1,83% 422,07 1,62% 933,58 3,18%

1. Computer software 78,384 0,44% 376,74 1,86% 386,77 1,83% 422,07 1,62% 627,12 2,13%

2. Other intangible assets 0 0,00% 0,00 0,00% 0,00 0,00% 0,00 0,00% 306,46 1,04%

II. property, plant and equipment 11214,676 63,59% 11.914,96 58,97% 11.642,68 55,07% 14.550,23 55,86% 14.646,33 49,86%

1. Land and buildings 8234,59 46,69% 9.082,40 44,95% 8.811,85 41,68% 10.423,86 40,02% 8.493,08 28,91%

2. Technical installations and other items 2980,086 16,90% 2.832,56 14,02% 2.830,83 13,39% 4.126,38 15,84% 6.153,25 20,95%

III. Non-current investment 162,726 0,92% 165,25 0,82% 194,52 0,92% 285,50 1,10% 407,77 1,39%

1. Other financial assets 162,726 0,92% 165,25 0,82% 194,52 0,92% 285,50 1,10% 407,77 1,39%

IV. Deferred tax assets 2557,668 14,50% 2.506,48 12,41% 2.395,85 11,33% 1.911,90 7,34% 1.276,92 4,35%

B) CURRENT ASSETS 3622,946 20,54% 5.240,30 25,94% 6.523,44 30,85% 8.878,55 34,09% 12.110,41 41,23%

I. Inventories 1813,488 10,28% 1.771,14 8,77% 2.088,25 9,88% 2.486,13 9,54% 3.234,61 11,01%

II. Trade and other receivables 664,574 3,77% 648,96 3,21% 895,86 4,24% 2.100,03 8,06% 5.888,32 20,05%

1. Long term clients 268,691 1,52% 424,03 2,10% 886,93 4,19% 1.927,06 7,40% 5.576,00 18,98%

3. Other receivables 256,369 1,45% 207,04 1,02% 0,00 0,00% 0,00 0,00% 0,00 0,00%

4. Personnel 0 0,00% 0,57 0,00% 0,00 0,00% 0,00 0,00% 0,00 0,00%

5. Current tax assets 0 0,00% 17,33 0,09% 8,93 0,04% 0,00 0,00% 230,60 0,79%

6. Public entities, other 139,514 0,79% 0,00 0,00% 0,00 0,00% 172,97 0,66% 81,73 0,28%

III.Current investments 0 0,00% 0,00 0,00% 0,00 0,00% 0,00 0,00% 15,00 0,05%

IV. Prepayments for current assets 138,287 0,78% 138,29 0,68% 152,99 0,72% 207,45 0,80% 275,72 0,94%

V. Cash and cash equivalents 1006,597 5,71% 2.681,91 13,27% 3.386,34 16,02% 4.084,94 15,68% 2.696,76 9,18%

TOTAL ASSETS (A + B) 17636,401 100,00% 20.203,72 100,00% 21.143,26 100,00% 26.048,25 100,00% 29.375,01 100,00%

Equity and liabilities

A) EQUITY 7250,859 41,11% 7.502,75 37,14% 7.650,68 36,18% 9.328,40 35,81% 10.435,53 35,53%

A-1) Capital and reserves without valuation adjustments

7250,859

41,11%

7.502,75

37,14%

7.650,68

36,18%

9.328,40

35,81%

10.435,53

35,53%

I. Capital 6668,724 37,81% 6.668,72 33,01% 6.668,72 31,54% 6.668,72 25,60% 6.668,72 22,70%

1. Registered Capital 6668,724 37,81% 6.668,72 33,01% 6.668,72 31,54% 6.668,72 25,60% 6.668,72 22,70%

II. Share premium 1282,5 7,27% 1.282,50 6,35% 1.282,50 6,07% 1.282,50 4,92% 1.282,50 4,37%

III. Reserves 2580,291 14,63% 2.609,83 12,92% 2.641,69 12,49% 2.714,41 10,42% 2.955,29 10,06%

1. Legal and statutory reserves 28,601 0,16% 58,14 0,29% 90,00 0,43% 162,72 0,62% 403,60 1,37%

2. Other reserves 2551,689 14,47% 2.551,69 12,63% 2.551,69 12,07% 2.551,69 9,80% 2.551,69 8,69%

IV. Prior period's profit and loss -3576,025 -20,28% -3.376,92 -16,71% -3.369,46 -15,94% -3.306,05 -12,69% -3.142,95 -10,70%

V. Profit/(loss) for the period. 295,369 1,67% 318,61 1,58% 727,23 3,44% 2.408,81 9,25% 3.171,96 10,80%

VI. (Interim dividend). 0 0,00% 0,00 0,00% -300,00 -1,42% -440,00 -1,69% -500,00 -1,70%

B) NON-CURRENT LIABILITIES 4951,921 28,08% 5.960,75 29,50% 4.761,60 22,52% 4.115,12 15,80% 2.532,85 8,62%

I Non-current payables 4951,921 28,08% 5.960,75 29,50% 4.761,60 22,52% 4.115,12 15,80% 2.532,85 8,62%

1. Debt with financial institutions 2694,879 15,28% 3.752,66 18,57% 3.109,53 14,71% 3.173,05 12,18% 2.447,35 8,33%

2. Other financial liabilities 2257,042 12,80% 2.208,09 10,93% 1.652,07 7,81% 942,07 3,62% 85,50 0,29%

C) CURRENT LIABILITIES 5433,621 30,81% 6.740,22 33,36% 8.730,97 41,29% 12.604,74 48,39% 16.406,62 55,85%

I. Current payables 446,072 2,53% 955,87 4,73% 730,74 3,46% 805,93 3,09% 942,91 3,21%

1. Debt with financial institutions. 414,163 2,35% 635,51 3,15% 640,73 3,03% 800,88 3,07% 957,58 3,26%

31,909 0,18% 320,36 1,59% 90,01 0,43% 5,05 0,02% -14,67 -0,05%

II. Trade and other payables 4987,549 28,28% 5.784,35 28,63% 7.760,23 36,70% 11.508,81 44,18% 15.234,21 51,86%

1. Suppliers 1844,993 10,46% 2.318,98 11,48% 3.033,37 14,35% 4.446,72 17,07% 5.807,10 19,77%

2. Other payables. 2935,002 16,64% 3.215,89 15,92% 4.424,18 20,92% 5.919,37 22,72% 8.455,65 28,79%

3. Personnel (salaries payable). 2,011 0,01% 0,00 0,00% 0,00 0,00% 692,26 2,66% 414,77 1,41%

4. Current tax liabilities. 0 0,00% 41,77 0,21% 0,00 0,00% 24,92 0,10% 3,95 0,01%

5. Public entities, other. 205,544 1,17% 207,70 1,03% 302,67 1,43% 425,54 1,63% 552,76 1,88%

III. Current accruals. 0 0,00% 0,00 0,00% 240,00 1,14% 290,00 1,11% 229,50 0,78%

TOTAL EQUITY AND LIABILITIES (A + B + C) 17636,401 100,00% 20.203,72 100,00% 21.143,26 100,00% 26.048,25 100,00% 29.375,01 100,00%

Figure 6: Veritas balance sheet 2012-2016 (in thousands of euros) Source: Commercial Register

10

Figure 7: Veritas income statement 2012-2016 (in thousands of euros) Source: Commercial Register

Profit and loss 2012 2013 2014 2015 2016

1. REVENUES 21.005,61 100,00% 24.941,97 100,00% 32.187,81 100,00% 44.320,64 100,00% 58.082,89 100,00%

a) Sales 21.005,61 100,00% 24.941,97 100,00% 32.187,81 100,00% 44.320,64 100,00% 58.082,89 100,00%

2. Changes in invenotries of finished goods and work in progress

0,00

0,00%

0,00

0,00%

0,00

0,00%

0,00

0,00%

0,00

0,00%

3. Work carried out by the company for assets

0,00

0,00%

0,00

0,00%

0,00

0,00%

0,00

0,00%

0,00

0,00%

4. Supplies -11.381,92 -54,19% -13.730,06 -55,05% -18.332,03 -56,95% -25.547,75 -57,64% -34.565,07 -59,51%

a) Merchandise used -11.378,52 -54,17% -13.730,06 -55,05% -18.332,03 -56,95% -25.519,22 -57,58% -34.111,69 -58,73%

b) Raw materials ans other consumables used

-3,40

-0,02%

0,00

0,00%

0,00

0,00%

0,00

0,00%

-448,88

-0,77%

c) Subcontracted work 0,00 0,00% 0,00 0,00% 0,00 0,00% -28,53 -0,06% -4,50 -0,01%

d) Impairment of merchandise, raw materials and other supplies

0,00

0,00%

0,00

0,00%

0,00

0,00%

0,00

0,00%

0,00

0,00%

5. Other operating income 195,25 0,93% 133,20 0,53% 175,33 0,54% 158,49 0,36% 103,58 0,18%

a) Non-trading and other operating income 157,58 0,75% 133,20 0,53% 141,26 0,44% 158,49 0,36% 103,58 0,18%

b) Operating grants taken to income 37,67 0,18% 0,00 0,00% 34,07 0,11% 0,00 0,00% 0,00 0,00%

6. Personnel expenses -4.485,39 -21,35% -4.737,21 -18,99% -5.325,56 -16,55% -7.185,62 -16,21% -8.300,01 -14,29%

a) Salaries and wages -3.462,70 -16,48% -3.614,32 -14,49% -4.112,66 -12,78% -5.720,29 -12,91% -6.538,00 -11,26%

b) Employees benefits expenses -1.022,68 -4,87% -1.122,89 -4,50% -1.212,90 -3,77% -1.465,32 -3,31% -1.762,01 -3,03%

c) Provisions 0,00 0,00% 0,00 0,00% 0,00 0,00% 0,00 0,00% 0,00 0,00%

7. Other operating expenses -4.533,56 -21,58% -4.770,23 -19,13% -5.666,51 -17,60% -6.630,58 -14,96% -9.222,88 -15,88%

a) External services -4.432,94 -21,10% -4.615,35 -18,50% -5.105,22 -15,86% -6.357,67 -14,34% -8.775,45 -15,11%

b) Taxes -133,65 -0,64% -146,16 -0,59% -170,11 -0,53% -245,69 -0,55% -364,79 -0,63%

c) Losses, impairments and changes in trade provisions

43,06

0,21%

0,00

0,00%

-360,57

-1,12%

0,00

0,00%

0,00

0,00%

d) Other operating expenses -10,04 -0,05% -8,72 -0,03% -30,62 -0,10% -27,22 -0,06% -82,64 -0,14%

e) Gastos por emisión de gases de efecto invernadero

0,00

0,00%

0,00

0,00%

0,00

0,00%

0,00

0,00%

0,00

0,00%

8. Amortization and depreciation -345,06 -1,64% -379,66 -1,52% -1.004,52 -3,12% -1.104,25 -2,49% -1.556,72 -2,68%

9. Non-financial and other capital grants 0,00 0,00% 0,00 0,00% 0,00 0,00% 0,00 0,00% 0,00 0,00%

10. Provision surpluses 0,00 0,00% 0,00 0,00% 0,00 0,00% 0,00 0,00% 0,00 0,00%

11. Impairment and gain (losses) on disposal of fixed assets

2,32

0,01%

-941,31

-3,77%

-932,64

-2,90%

-505,27

-1,14%

-413,43

-0,71%

a) Impairment and losses 0,00 0,00% 0,00 0,00% 0,00 0,00% 0,00 0,00% 0,00 0,00%

b) Gains /(losses) on disposable and other 2,32 0,01% -941,31 -3,77% -932,64 -2,90% -505,27 -1,14% -413,43 -0,71%

c) Deterioro y resultados por enajenaciones del inmovilizado de las sociedades holding

0,00

0,00%

0,00

0,00%

0,00

0,00%

0,00

0,00%

0,00

0,00%

12. Other 66,54 0,32% 30,23 0,12% 20,40 0,06% -64,66 -0,15% 277,12 0,48% A.1) RESULT FROM OPERATING ACTIVITIES (1 + 2 + 3 + 4 + 5 + 6 + 7 + 8 + 9 + 10 + 11 + 12 +

523,78

2,49%

546,94

2,19%

1.122,27

3,49%

3.441,01

7,76%

4.405,48

7,58%

14. Finance income 7,37 0,04% 11,74 0,05% 31,75 0,10% 8,24 0,02% 9,71 0,02%

a) Dividends 0,00 0,00% 0,00 0,00% 0,00 0,00% 0,00 0,00% 0,00 0,00%

b) Marketable securities and other financial instruments

7,37

0,04%

11,74

0,05%

31,75

0,10%

8,24

0,02%

9,71

0,02%

15. Finance expenses -109,20 -0,52% -103,52 -0,42% -115,13 -0,36% -93,29 -0,21% -72,70 -0,13%

a) Group companies and associates 0,00 0,00% 0,00 0,00% 0,00 0,00% 0,00 0,00% 0,00 0,00%

b) Other -109,20 -0,52% -103,52 -0,42% -115,13 -0,36% -93,29 -0,21% -72,70 -0,13%

16. Change in fair value of financial instruments

0,00

0,00%

0,00

0,00%

0,00

0,00%

0,00

0,00%

0,00

0,00%

17. Exchange gains/(losses) 0,00 0,00% 0,00 0,00% 0,00 0,00% 0,00 0,00% 0,00 0,00%

18. Impairment and gains/(losses) on disposal of financial instruments

0,00

0,00%

0,00

0,00%

0,00

0,00%

0,00

0,00%

0,00

0,00%

19. Other financial income and expenses 0,00 0,00% 0,00 0,00% 0,00 0,00% 0,00 0,00% 0,00 0,00%

A.2) NET FINANCE INCOME/(EXPENSE) (14+15+16+17+18+19)

-101,82

-0,48%

-91,77

-0,37%

-83,37

-0,26%

-85,05

-0,19%

-62,99

-0,11%

A.3) PROFIT/(LOSS) BEFORE INCOME TAX (A.1+A.2)

421,96

2,01%

455,16

1,82%

1.038,90

3,23%

3.355,95

7,57%

4.342,48

7,48%

20. Income tax expense -126,59 -0,60% -136,55 -0,55% -311,67 -0,97% -947,14 -2,14% -1.170,52 -2,02%

A.4) PROFIT/(LOSS) FROM CONTINUING OPERATIONS(A.3+20)

295,37

1,41%

318,61

1,28%

727,23

2,26%

2.408,81

5,43%

3.171,96

5,46%

21. Profit/ (loss) from discontinued operations, net of income tax

0,00

0,00%

0,00

0,00%

0,00

0,00%

0,00

0,00%

0,00

0,00%

A.5) PROFIT/(LOSS) FOR THE PERIOD (A.4+21)

295,37

1,41%

318,61

1,28%

727,23

2,26%

2.408,81

5,43%

3.171,96

5,46%

11

2012 2013 2014 2015 2016

A) CASH FLOWS FROM OPERATING ACTIVITIES

1) EBT 421.956 455.161 1.038.900 3.355.951 4.342.484

2) Adjustments 401.500 1.391.031 2.020.536 1.519.588 2.033.145

(+) Amortization and depreciation 345.064 357.952 1.004.519 1.104.250 1.556.723

(+/-) Valuation allowances for impairment losses -43.064 0 0 0 0

(+/-) Proceeds from disposals of fixed assets -2.323 941.305 932.643 509.770 413.429

(-) Financial income -7.373 -11.742 -31.751 -8.238 -9.712

(+) Financial expenses 109.195 103.515 115.125 -86.194 72.704

3) Cange in current capital 301.487 769.402 1.436.129 1.587.891 2.864.436

(+/-) Inventory -261.121 42.347 -317.107 -397.886 -748.475

(+/-) Debtors and other accounts receivable -220.999 15.616 -246.901 -1.642.436 551.813

(+/-)Other current assets -7.799 0 -14.706 -54.461 -68.267

(+/-) Creditors and other accounts payable 791.406 796.798 1.975.881 3.723.659 3.725.408

(+/-) Other current liabilities 0 0 240.000 50.000 -60.500

(+/-) Other non-current assets and liabilities 0 -85.359 -201.038 -90.985 -535.544

4) Other cash flows from operating activities -101.822 -91.774 -83.374 94.432 -62.992

(-) Interest Payment -109.195 -103.515 -115.125 86.194 -72.704

(+) Interest revenue 7.373 11.742 31.751 8.238 9.712

5) Cash flows from operating activities (1+2+3+4) 1.023.120 2.523.819 4.412.191 6.557.862 9.177.073

B) CASH FLOW FROM INVESTING ACTIVITIES

6) Payment for investments (-) -931.307 -2.300.412 -1.704.191 -4.556.869 -7.055.136

7) Divestments costs (+) 4.800 0 0 0 0

8) Cash flows from investing activities (6+7) -926.507 -2.300.412 -1.704.191 -4.556.869 -7.055.136

C) CASH FLOW FROM FINANCING ACTIVITIES

9) Proceeds from and payments for equity instruments 0 0 0 0 0

10) Proceeds from and payments for financial liability instruments 213.631 1.518.631 -1.424.278 -571.296 -1.445.288

11) Dividends and interest on other equity instruments paid -81.718 -66.726 -579.293 -731.096 -2.064.826

12) Cash flows from financing activities (9+10+11) 131.912 1.451.905 -2.003.571 -1.302.392 -3.510.113

E) INCREASE / DECREASE IN CASH AND CASH EQUIVALENTS

(5+8+12)

228.525 1.675.312 704.429 698.601 -1.388.176

Cash and cash equivalents at the beginning of the year 778.072 1.006.597 2.681.909 3.386.338 4.084.939

Cash and cash equivalents at the end of the year 1.006.597 2.681.909 3.386.338 4.084.939 2.696.762

Figure 8: Veritas cash flow statement 2012-2016 (in thousands of euros) Source: Commercial Register

Figure 9: Financial ratios of Veritas compared with average sector, average sector with profits and Casa Ametller Source: Own elaboration

12

13

Unconsolidated accounts

Average sector

Average sector

with profits casa ametller

Balance Sheet mil Eur % mil Eur % %

Fixed assets 776.960 78,56% 199.245 68,99% 33.371.915 78%

Intangible fixed assets 309.827 31,33% 47.228 16,35% 1.815.352 4%

Tangible fixed assets 216.930 21,93% 87.150 30,18% 16.432.475 38%

Other fixed assets 250.202 25,30% 64.866 22,46% 15.124.087 35%

Current assets 212.029 21,44% 89.545 31,01% 9.498.486 22%

Stocks 123.523 12,49% 45.798 15,86% 3.700.062 9%

Debtors 51.553 5,21% 14.890 5,16% 2.134.883 5%

Other current assets 36.953 3,74% 28.857 9,99% 3.663.541 9%

Cash and cash equivalents 13.488 1,36% 7.368 2,55% 3.504.682 8%

Total assets 988.989 100,00% 288.790 100,00% 42.870.401 100%

Shareholders funds 389.353 39,37% 126.548 43,82% 8.210.714 19%

Capital 98.298 9,94% 85.820 29,72% 1.298.600 3%

Other shareholders funds 291.055 29,43% 40.728 14,10% 6.912.114 16%

Non-current Liabilities 197.586 19,98% 16.888 5,85% 5.875.423 14%

Long-term debt 187.813 18,99% 16.188 5,61% 4.442.873 10%

Other non-current liabilities 9.773 0,99% 699 0,24% 1.432.550 3%

Current Liabilities 402.050 40,65% 145.355 50,33% 28.784.264 67%

Loans 20.493 2,07% 17.891 6,20%

Creditors 155.975 15,77% 28.970 10,03%

Other current liabilities 225.582 22,81% 98.494 34,11%

Total shareh. funds & liab. 988.989 100,00% 288.790 100,00% 42.870.428 100%

Income Statement mil eu % mil eur % %

Operating revenue/turnover 1.846.327 100,00% 677.677 100,00% 139.110.384 100%

Sales 1.744.478 94,48% 638.293 94,19% 138.617.035 100%

Operating expenses 0,00% 0,00% 0%

Material costs 1.291.056 69,93% 483.660 71,37% 100.808.299 72%

Cost of employees 230.785 12,50% 69.457 10,25% 19.892.486 14%

Other operating items -261.030 -14,14% -97.749 -14,42% -10.542.018 -8%

EBITDA 63.455 3,44% 26.811 3,96% 7.867.580 6%

Depreciation 57.681 3,12% 10.985 1,62% 2.956.818 2%

Operating result (EBIT) 5.775 0,31% 15.826 2,34% 4.910.762 4%

Financial revenue 9.028 0,49% 4.245 0,63% 403.838 0%

Financial expenses 9.380 0,51% 954 0,14% 240.636 0%

Financial result -351 -0,02% 3.291 0,49% 163.203 0%

EBT 5.424 0,29% 19.118 2,82% 5.073.965 4%

Taxation 16.406 0,89% 3.689 0,54% 3.851.427 3%

Net profit -10.983 -0,59% 15.429 2,28% 3.851.427 3%

Figure 10: 2016 Shortened balance sheet & income statement of Veritas compared with average sector,

average sector with profits and Casa Ametller Source: SABI

14

Figure 11: Cause-effect diagram of Veritas qualitative aspects

Source: Own elaboration

15

Figure 12: Veritas net profits compared with specialized channels of ecological products, 2016

Source: SABI

Figure 13: Veritas net profits compared with huge supermarkets with an ecological sector, 2016

Source: SABI

16

6. QUESTIONS TO SOLVE3

1) Prepare the qualitative analysis of Ecoveritas S.A.

2) Prepare an analysis of the Balance sheet.

3) Prepare an analysis of the Income statement. Analyse the profitability and the self-

financing capacity and the dividends policy.

4) Analyse the Cash flow statement.

5) Prepare a SWOT with the strength and weakness found in the previous points.

6) Prepare the Cause & Effect Diagram.

7) Which measures would you recommend to Veritas in order to improve its performance?

Demonstrate them and show their effect.

3 When searching for the industry average we selected the top 10 companies with the largest revenues in order to find the average sector, and the top 5 companies with the highest ROI in order to find the average sector with profits out of the total number of companies that were inside the activities 4729 and 4711 (other specialized retail commerce of foodstuff, beverages and tobacco, and non-specialized retail commerce of foodstuff, beverages and tobacco). In the first case our sample was composed by Caprabo SA, Twins alimentacio SA, Supermercados ERCORECA S.A., DIA S.A., Centros Comerciales Carrefour S.A., LIDL Supermercados S.A., Consum S. Coop. V., Mercadona S.A., Eroski S. Coop. and Alcampo S.A. And for the second case we got Centros Comerciales Carrefour S.A., Mercadona S.A., DIA S.A.., LIDL Supermercados S.A. and Alcampo S.A. However, in the case of Ecoveritas, we could not compare it with these companies, since they have a larger size and the amount of revenues and profits is much higher. Thus, since this sample did not allow an accurate comparison, we decided to study the market of ecological products and we find out that compared to Veritas, the rest of the companies were smaller, with less amounts of profits and revenues and were not as expanded as Ecoveritas, except for one company: Casa Ametller. This one, is of a similar size, started more or less in the same period and offered to us a better comparison. Therefore, since we could call Casa Ametller the main competitor of Ecoveritas, we based our analysis in the comparison between these two companies.