31
2016 ANNUAL REPORT
$12 million pending, which could be
fulfilled in Q1 2017 and, therefore, meet
the $200 million goal.
It is worth noting that RECOPE was
awarded top rating (AAA cri) by FITCH
RATINGS and Pacific Credit Rating;
this means that RECOPE is considered
a “low risk company”. Each of the two
rating agencies consider RECOPE to
be a stable and reliable company in
Costa Rican and Salvadoran markets,
especially in light of the fact that
RECOPE is a state-owned company
engaged in monopoly behavior, with
considerable ongoing investments that
guarantee nationwide coverage and fuel
distribution services.
The severance pay provision grew to
$1 million (+2.7%) in comparison to
2015. This includes the liquidation of
the legal benefits of the employees who
resigned, or that accepted the pension in
accordance with regulations; therefore,
this liability must contain the necessary
resources to meet short-term and long-
term obligations.
Total Equity
Total equity reached $1,043 million as
at December 2016, down by $52 million
(-4.73%) in relation to the previous year.
The decline in total equity is attributable
to the asset revaluation surplus and the
drop in operating earnings.
The company’s capital stock remained
unchanged in comparison to 2015,
when retained earnings were capitalized
to the tune of $360 million; a
requirement established by the General
Superintendence of Securities so that
total liabilities do not exceed the sum
of the capital stock, the capital reserves,
the asset revaluation surplus and the
donation surplus, by more than 4.
In regard to the company’s indebtedness,
RECOPE’s debt-to-equity ratio, as at
December 2016, rose to 0.50 (up from
0.48 in relation to the previous year). It
is important to note that, including the
placement of bonds, RECOPE’s debt-to-
equity ratio dropped from 33% in 2015
to 22% in September 2016.
Asset Revaluation Surplus
This bookkeeping account showed a
net decline of $16 million (-2.37%) and
includes the following:
Asset Revaluation Surplus. This
account’s balance is $672 million; it
reflects the asset revaluation surplus
observed upon changing the price index
used prior to 2011, and contains all
the assets that were not included in the
evaluation, to wit: furniture, equipment
and vehicles.
Technical Evaluation Surplus. This
bookkeeping account showed a
balance of $414 million; it reflects the
surplus observed after the technical
evaluation of fixed assets carried out by
Pricewaterhouse & Cooper (PwC). It is
worth noting that approximately 30%
of the total amount under evaluation
was reclassified as deferred income tax.
This was done for all the asset classes
that are depreciable, excluding land (as
explained above).
Retained earnings as at December
2016 grew by $1 million (0.32%) in
comparison to 2015. The two most
significant changes of this account
were: a loss of $15 million due to
projects initiated in prior periods; and
the liquidation of the investment reserve
(Act 7722 and Act 7593); both of these
changes occurred in late 2015.
$1,043
millions
Total Equity 2016
