Interim / Quarterly Report • Jul 27, 2018
Interim / Quarterly Report
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Registered Office: Lugar do Espido, Via Norte, Maia, Portugal Registered at the Commercial Registry of Maia Registry and Tax Identification No. 506 035 034 Share Capital: € 253 319 797.26 Publicly Traded Company
CONTENTS
MANAGEMENT REPORT
APPENDICES IN ACCORD WITH ART 9 OF CMVM REGULATION 5/2008
STATEMENT IN ACCORD WITH ART 246 CMVM CODE
CONSOLIDATED FINANCIAL STATEMENTS
I am pleased to be able to inform our stakeholders that our plants in Mangualde and Oliveira do Hospital, affected by the forest fires in 4Q17, are now operating close to their desired capacity levels and that the sales ramp up has gradually been accelerating enabling us once again to fully serve our customers.
It is also encouraging that during the first half of 2018, Sonae Indústria generated a net profit of 18.9 million Euros, significantly above last year, driven mainly by the strong contribution from Sonae Arauco but also benefiting from the positive contribution of our North American business with an improvement in performance during the second quarter compared to the first quarter of the year.
Recurrent EBITDA of our fully owned businessesimproved in the second quarter as anticipated, with our North American business increasing Turnover while benefiting from lower input costs when compared with the previous quarter. However, North America's Recurrent EBITDA in 1H18 was lower than last year mainly as a result of higher transportation costs both for inbound wood supply and for outbound supply of finished products, higher thermal energy costs due to the severe winter in 1Q18, and some production issues in one of our lines which will be addressed during the 2019 maintenance stoppage. Results in our Laminates business in 1H18 were impacted by a lower top line when compared to last year due primarily to the loss of volumes from a customer in Northern Europe that have only been progressively and partially recovered.
I would like to highlight that as from 3Q18 our North America business will bring to the market a unique HPL matching of the complete decorative MFC collection using HPL supplied by our Laminates business in Portugal under the new brand Surforma. This is a strategic project that should bring substantial benefits for both businesses.
Sonae Arauco delivered sound results during the first half of the year with higher Recurrent and Total EBITDA when compared to the same period of last year, benefiting from improved profitability of its underlying business. Notwithstanding higher variable costs versus 1H17, namely chemicals and wood, Sonae Arauco generated a Recurrent EBITDA that is 2.4 million Euros above last year. Sonae Arauco results also reflect the recognition of insurance income related with the fires that affected its two plants in Portugal, in respect of business interruption and property damage.
Considering our 50% share of Sonae Arauco's figures, LTM Proportional Recurrent EBITDA was at 83.1 million Euros and Proportional Net Debt at 313 million euros leading to a stable leverage ratio of circa 3.8x. The increase in Proportional Net Debt when compared to 1H17 is due to the higher Net Debt at Sonae Arauco which reflects the investment effort we are making in respect of our existing asset base and the fact that we had not yet received the full expected amount of insurance compensation during the 1H18.
As part of our plan at Sonae Arauco to improve the competitiveness of our plants and our focus on customer needs, we have approved an investment to replace the two multi daylight particleboard presses at our Beeskow plant in Germany, by a new continuous press with state of the art technology.
Finally, it should be noted that Sonae Indústria's capital structure continues to strengthen, a process that began more than two years ago, and continued in the quarter as a result of the strengthening of Shareholders' Funds and with Net Debt marginally below the previous quarter.
Paulo Azevedo Chairman, Sonae Indústria
Due to the fact that one of Sonae Indústria's main assets (its 50% shareholding in Sonae Arauco) is accounted by the Equity method since June 2016, this section 1.1. provides unaudited Proportional Indicators, to help improve the understanding of size of the business, valuation and financial leverage of Sonae Indústria. These Proportional Indicators consider the full results of our wholly owned businesses and the proportional consolidation of the 50% contribution from Sonae Arauco.
| FINANCIAL INDICATORS (unaudited) | 1H17 | 1H18 |
|---|---|---|
| Proportional Turnover | 331 | 317 |
| Proportional Rec. EBITDA | 48 | 42 |
| Proportional Rec. EBITDA margin | 14.4% | 13.3% |
| Proportional LTM Turnover | 644 | 617 |
| Proportional LTM Rec. EBITDA | 90 | 83 |
| Proportional LTM Rec. EBITDA margin | 14.0% | 13.5% |
| LEVERAGE | ||
| Proportional Net Debt | 308 | 313 |
| Proportional Leverage (Net Debt / LTM Rec. EBITDA) | 3.4 x | 3.8 x |
| LOAN TO VALUE | ||
| Net Debt of Sonae Indústria | 213 | 208 |
| Asset Value2 | 497 | 447 |
| LTV (Net Debt of Sonae Indústria / Asset Value) | 43% | 47% |
2 Calculated as described in the Glossary of Terms. This compares with a Consensus 'Asset Value' of EUR 522M based on the average of the sum of the parts valuation (as at year-end 2018) of Sonae Indústria assets carried out by two independent equity research houses.
Proportional Turnover in 1H18 was circa 13.2 million euros lower than in the same period of last year. This evolution was driven by a lower contribution from the fully owned businesses primarily due to the depreciation of the Canadian dollar, and by a 3.2 million euros lower contribution by Sonae Arauco explained by fact that the two Sonae Arauco plantsin Portugal that had been hit by the forest fires in October 2017, only gradually resumed production in the first four months of the current year (and the insurance income related with business interruption is not included under Turnover items).
Proportional Recurrent EBITDA in 1H18 was circa 5.5 million euros lower than in the same period of last year. This evolution was driven by a lower contribution from fully owned businesses as Sonae Arauco recurrent EBITDA contribution increased by circa 1.2 million euros when compared to 1H17.
For the first half of the year, Net Debt to Recurrent EBITDA (proportional) stood at circa 3.8x, which represents an increase of circa 0.4x vs. 1H17. Loan to Value also increased when compared to 1H17, reaching circa 47% at the end of 1H18.
Consolidated Turnover for the first half of the year reached 111.8 million euros, a reduction of circa 10.0 million euros vs. same period of last year, essentially driven by a 7.3 million euros unfavourable exchange rate effect resulting from the depreciation of the Canadian dollar vs. the EUR. For the quarter, Consolidated Turnover reached 57.5 million euros, down by circa 4.8 million euros vs. 2Q17, explained mainly by the unfavourable exchange rate evolution of the Canadian dollar and lower sales to the Nordic markets by our Laminates & Components business. However,when compared to the previous quarter, consolidated turnover increased by 3.2 million euros, driven by our North American business with higher sales volumes to the Canadian market and an increase in average selling prices.
Variable costs per cubic meter in local currency increased, when compared with the first half of 2017, mainly driven by higher input costs of wood (affected by higher transportation costs) and higherthermal energy costs (due to the extreme cold weather in Canada in 1Q18). For the quarter, variable costs per cubic meter increased
when compared to 2Q17 mainly driven by higher input costs of wood, but decreased materially when compared to the previous quarter, with a reduction in most input costs and particularly thermal energy.
Recurrent EBITDA for the first half of the year reached circa 14.1 million euros, a reduction of circa 6.7 million euros vs. 1H17. The lower Recurrent EBITDA when compared to 1H17 is mainly explained by the already mentioned reduction in Turnover, which was only partially offset by the 2.6 million euros reduction on variable costs (which benefited from the Canadian dollar depreciation since local currency costs increased as previously explained). It should also be taken to account that 1Q17 included a positive one off effect on fixed costs of circa 1.5 million euros. The 1H18 Recurrent EBITDA margin reached 12.6%, down by 4.4 p.p. vs. 1H17. On a quarterly basis, Recurrent EBITDA for the 2Q18 stood at circa 8.3 million euros, a decrease of circa 2.8 million euros vs. 2Q17, but an increase of circa 2.5 million euros vs. 1Q18, driven by our North American business. The 2Q18 Recurrent EBITDA margin reached circa 14.4%, down by 3.3. p.p. vs. 2Q17, but up by 3.7 p.p. vs. 1Q18.
Consolidated EBITDA reached circa 13.9 million euros in the first semester of the year and 8.1 million euros in 2Q18, a reduction of circa 6.8 million euros and 2.8 million euros vs. 1H17 and 2Q17, respectively. However, when compared to the previous quarter, consolidated EBITDA increased circa 2.4 million euros. The evolution in Consolidated EBITDA is explained by the aforementioned performance of Recurrent EBITDA.
| CONSOLIDATED INCOME STATEMENT | ||||||||
|---|---|---|---|---|---|---|---|---|
| Million euros | 1H17 Unaudited |
1H18 Unaudited |
1H18 / 1H17 |
2Q17 Unaudited |
1Q18 Unaudited |
2Q18 Unaudited |
2Q18 / 2Q17 |
2Q18 / 1Q18 |
| Turnover | 121.8 | 111.8 | (8.2%) | 62.3 | 54.3 | 57.5 | (7.6%) | 5.9% |
| Other operational income | 2.8 | 2.0 | (29.0%) | 1.7 | 0.9 | 1.1 | (36.3%) | 25.4% |
| EBITDA | 20.6 | 13.9 | (32.9%) | 10.9 | 5.7 | 8.1 | (25.9%) | 41.1% |
| Non recurrent items | (0.1) | (0.2) | (104.8%) | (0.1) | (0.1) | (0.2) | (55.3%) | - |
| Recurrent EBITDA | 20.8 | 14.1 | (32.1%) | 11.0 | 5.8 | 8.3 | (25.0%) | 42.5% |
| Recurrent EBITDA Margin % | 17.0% | 12.6% | -4.4 pp | 17.7% | 10.7% | 14.4% | -3.3 pp | 3.7 pp |
| Depreciation and amortisation | (6.2) | (6.3) | (1.3%) | (3.1) | (3.1) | (3.2) | (4.1%) | (1.6%) |
| Provisions and impairment Losses | 0.0 | (0.1) | - | 0.0 | 0.0 | (0.1) | - | - |
| Operational profit (EBIT) | 14.4 | 7.5 | (48.1%) | 7.9 | 2.6 | 4.9 | (38.2%) | 86.2% |
| Net financial charges | (6.1) | (5.7) | 7.0% | (3.4) | (2.8) | (2.9) | 14.6% | (1.8%) |
| o.w. Net interest charges | (4.2) | (4.0) | 3.8% | (2.0) | (2.0) | (2.0) | 1.5% | (0.6%) |
| o.w. Net exchange differences | (0.7) | (0.0) | 97.9% | (0.6) | (0.0) | (0.0) | 98.6% | (47.6%) |
| o.w. Net financial discounts | (0.9) | (0.8) | 9.7% | (0.5) | (0.4) | (0.4) | 9.9% | (11.5%) |
| Gains and losses in Joint-Ventures - Net Results | 9.3 | 18.8 | 102.6% | 5.1 | 4.7 | 14.1 | - | - |
| Gains and losses in Joint-Ventures - Other | 0.0 | 0.0 | - | 0.0 | 0.0 | 0.0 | - | - |
| Profit before taxes (EBT) | 17.6 | 20.6 | 17.1% | 9.6 | 4.5 | 16.1 | 67.6% | - |
| Taxes | (3.5) | (1.6) | 53.1% | (1.9) | (0.7) | (0.9) | 51.8% | (32.5%) |
| o.w. Current tax | (3.9) | (3.0) | 25.0% | (2.3) | (1.1) | (1.9) | 17.3% | (78.8%) |
| o.w. Deferred tax | 0.4 | 1.3 | - | 0.3 | 0.4 | 1.0 | - | - |
| Consolidated net profit/(loss) for the period | 14.1 | 18.9 | 34.6% | 7.6 | 3.8 | 15.1 | 98.1% | - |
Total fixed costs represented 16.9% of turnover for 1H18 and 17.0% for 2Q18, an increase of circa 1.4 p.p. vs. 1H17 (which benefited from a positive one off effect on fixed costs of circa 1.5 million euros) and 0.6 p.p. vs. 2Q17, respectively, due to the reduction of Turnover as Fixed Costs are in both cases lower than in the same period of last year. When compared to the previous quarter, total fixed costs as a percentage of turnover increased circa 0.2 p.p..
Total headcount of Sonae Indústria, at the end of June 2018, was 493 FTE's excluding Sonae Arauco, which compares with 484 FTE's at the end of June 2017.
Depreciation and amortization charges were 6.3 million euros during 1H18 in line with the values booked for 1H17. For the quarter, the depreciation charges reached circa 3.2 million euros, also in line with the values booked for 2Q17 and 1Q18.
Net financial charges during 1H18 were circa 5.7 million Euros, which represents a reduction of 0.4 million euros vs. 1H17, mainly explained by an improvement of 0.7 million euros in net exchange differences (it should be noted that 2Q17 included a one off negative effect for foreign exchange differences and derivatives). In the quarter net financial charges reached circa 2.9 million euros, in line with the values booked for 1Q18 and a reduction of circa 0.5 million euros vs. 2Q17, due to already mentioned improvement in net exchange differences.
Gains and losses in Joint-Ventures – Net Resultsrefers to 50% of the net results of Sonae Arauco in the period (equity method accounting). For the first semester of the year, this amounted to circa 18.8 million euros, an increase of 9.5 million euros when compared to 1H17, benefiting from the recognition of the insurance income related to business interruption and property damage due to the fires that affected two Sonae Arauco plants in Portugal in October 2017. On a quarterly basis, Gains and Losses in Joint-Ventures reached circa 14.1 million euros, up by 9.3 million euros and by 9.0 million euros when compared to 1Q18 and 2Q17, respectively.
Current tax charges were circa 3.0 million euros for the first half of the year, a decrease of circa 1.0 million euros when compared to 1H17, mainly driven by lower tax charges in Canada. On a quarterly basis, current tax charges improved circa 0.4 million euros vs. 2Q17, but increased by 0.8 million euros when compared to the previous quarter, mainly driven by our North American business.
Net results were positive of 18.9 million euros for 1H18 and reached 15.1 million euros in 2Q18, an improvement of circa 4.9 million euros and 7.5 million euros when compared to 1H17 and 2Q17, respectively. The increase in Net results, when compared to 1H17 and 2Q17, is explained by the improvement in the net results of Sonae Arauco Joint-Venture. When compared to the previous quarter, net results increased 11.3 million euros, explained by the increase in Recurrent EBITDA of fully owned businesses and again by the improvement in the net results of our Joint Venture.
| CONSOLIDATED STATEMENT OF FINANCIAL POSITION Million euros |
|||
|---|---|---|---|
| 1H17 | 1Q18 | 1H18 | |
| Unaudited | Unaudited | Unaudited | |
| Non current assets | 347.7 | 357.1 | 363.5 |
| Tangible assets | 140.3 | 138.5 | 139.1 |
| Investments in joint ventures | 198.6 | 210.7 | 215.8 |
| Deferred tax asset | 1.4 | 1.5 | 2.1 |
| Other non current assets | 7.4 | 6.5 | 6.4 |
| Current assets | 51.2 | 40.2 | 50.0 |
| Inventories | 16.1 | 16.7 | 17.2 |
| Trade debtors | 18.9 | 16.2 | 16.8 |
| Cash and cash equivalents | 3.1 | 1.8 | 2.9 |
| Other current assets | 13.1 | 5.5 | 13.1 |
| Non-current assets classified as available for sale | 1.5 | 0.0 | 0.0 |
| Total assets | 400.5 | 397.4 | 413.5 |
| Shareholders' Funds | 120.3 | 126.4 | 140.6 |
| Equity Holders | 120.3 | 126.4 | 140.6 |
| Non-controlling interests | 0.0 | 0.0 | 0.0 |
| Liabilities | 280.2 | 271.0 | 272.9 |
| Interest bearing debt | 215.9 | 210.4 | 210.6 |
| Non current | 204.6 | 195.8 | 197.8 |
| Current | 11.3 | 14.6 | 12.8 |
| Trade creditors | 25.0 | 22.5 | 24.9 |
| Other liabilities | 39.3 | 38.1 | 37.4 |
| Liabilities directly associated with non-current assets | |||
| classified as available for sale | 0.0 | 0.0 | 0.0 |
| Total Shareholders'Funds and liabilities | 400.5 | 397.4 | 413.5 |
| Net debt | 212.8 | 208.6 | 207.7 |
| Working Capital | 10.0 | 10.4 | 9.1 |
Investments in Joint-Ventures (50% shareholding in Sonae Arauco) reached 215.8 million euros, which is 5.1 million euros higher than the book value of this investment at the end of 1Q18, mostly due to our share of Sonae Arauco's results of circa 14.1 million euros, despite the impacts of (i) the amount of dividends to be paid by Sonae Arauco to Sonae Indústria booked in 1H18 and to be settled in 3Q18 in an amount of circa 6.4 million euros (which justify the increase in Current assets) and (ii) the unfavourable exchange rate evolution of the South African Rand of circa 2.5 million euros in the quarter.
Consolidated Working Capital reached 9.1 million euros, a decrease of 1.3 million euros when compared to March 2018, due to an increase in trade creditors balances in our North American operation.
Net Debt stood at circa 207.7 million euros at the end of June 2018, a decrease of 0.9 million euros vs. March 2018 and circa 5.1 million euros vs. June 2017.
Total Shareholders' Funds, at the end of June 2018, totaled circa 140.6 million euros, which represents an increase of 14.2 million euros when compared to March 2018, mainly explained by the positive impact from net results in the quarter.
Additions to Gross Tangible Fixed Assets reached 3.6 million euros in the first half of the year, in line with the values booked for 1H17, essentially related with recurrent maintenance and environmental investments.
27 July 2018
The Board of Directors
Paulo Azevedo Carlos Moreira da Silva
Albrecht Ehlers José Romão de Sousa
Javier Vega Christopher Lawrie
Louis Brassard Berta Cunha
Isabel Barros
| Asset Value | Asset Value is calculated as follows: [6.5 x LTM Recurrent EBITDA of fully consolidated business (100%)] + [market value of inactive sites real estate properties owned 100% by Sonae Indústria] + [50% x (6.5 x LTM Recurrent EBITDA of Sonae Arauco – Sonae Arauco Net Debt)] |
|---|---|
| CAPEX | Investment in Tangible Fixed Assets |
| EBITDA | Earnings Before Interests and Taxes + Depreciations and Amortizations + (Provisions and impairment losses - Impairment losses in trade receivables + Reversion of impairment losses in trade receivables) |
| FTEs | Full Time Equivalent; the equivalent of one person working full time, according to the working schedule of each country where Sonae Indústria has operations |
| Fixed Costs | Overheads + Personnel costs (internal and external); management accounts concept |
| Gross Debt | Bank loans + Debentures + Obligations under finance leases + other loans + Loans from related parties |
| Headcount | Total number of internal FTEs, excluding trainees |
| Loan to Value | Net Debt of Sonae Indústria / Asset value |
| LTM | Last Twelve Months |
| Net Debt | Gross Debt - Cash and cash equivalents |
| Proportional: Turnover, Recurrent EBITDA (unaudited) |
Proportional Turnover and Proportional Recurrent EBITDA consider, in what regards to Turnover and Recurrent EBITDA, the full contribution of the wholly owned businesses and the proportional consolidation of the 50% contribution from Sonae Arauco. |
| Proportional Leverage (unaudited) |
Proportional Net Debt / Proportional LTM Recurrent EBITDA |
| Proportional Net Debt (unaudited) |
Proportional Net Debt considers the full contribution of the Net Debt of the wholly owned businesses and the proportional consolidation of the 50% contribution from Sonae Arauco. |
| Recurrent EBITDA | EBITDA excluding non-recurrent operational income / costs |
| Recurrent EBITDA margin | Recurrent EBITDA / Turnover |
| Working Capital | Inventories + Trade Debtors – Trade Creditors |
| Acquisitions | Sales | Position at 30.06.2018 |
Balance at 30.06.2018 |
||||
|---|---|---|---|---|---|---|---|
| Date | amount | € average value | amount | € average value | amount | ||
| Duarte Paulo Teixeira de Azevedo Efanor Investimentos, SGPS, SA (1) Migracom, SA (2) |
Minoritary Dominant |
||||||
| Acquisitions | Sales | Position at 30.06.2018 |
Balance at 30.06.2018 |
||||
| Date | amount | € average value | amount | € average value | amount | ||
| (1) Efanor Investimentos, SGPS, SA Sonae Indústria, SGPS, SA Pareuro, BV (3) |
Dominant | 19 370 549 | |||||
| (2) Migracom, SA Sonae Indústria, SGPS, SA Imparfim, Investimentos e Participações Financeiras, SA (4) |
Minoritary | 38 931 | |||||
| (3) Pareuro, BV Sonae Indústria, SGPS, SA |
11 730 752 | ||||||
| (4) Imparfin, Invest. e Participações Financeiras, SA Sonae Indústria, SGPS, SA |
120 396 |
Complying with Article 9 No.1 c) of the the CMVM Regulation no. 05/2008
| Shareholder | No. of shares | % Share Capital | % Voting rights | |
|---|---|---|---|---|
| Efanor Investimentos, SGPS, SA (1) | ||||
| Directly | 19,370,549 | 42.6636% | 42.6636% | |
| By Pareuro, BV (Company controlled by Efanor Investimentos, SGPS, SA) | 11,730,752 | 25.8369% | 25.8369% | |
| By Maria Margarida CarvalhaisTeixeira de Azevedo (Director of Efanor Investimentos, SGPS, SA) | 4 | 0.000009% | 0.000009% | |
| By Migracom, SA (Company controlled by Efanor Investimentos, SGPS, SA´s Director, Duarte Paulo Teixeira de Azevedo) | 38,931 | 0.0857% | 0.0857% | |
| By Linhacom, SA (Company controlled by Efanor Investimentos, SGPS, SA´s Director, Maria Cláudia Teixeira de Azevedo) | 10,030 | 0.0221% | 0.0221% | |
| Total allocation | 31,150,266 | 68.6083% | 68.6083% |
On 30 April 2018, TEAK Capital, SA informed Sonae Indústria having signed a services agreement with the company Pareuro, BV, through which it was granted, by way of consideration, a call option over 2,000,000 shares representative of 4,40% of the share capital and voting rights of Sonae Indústria, SGPS, S.A., exercisable on 30 April 2018. This agreement replaces and revokes the previous agreement signed on 22 February 2016.
Futher informed the referred to company that 40% of its share capital is held by Carlos Moreira da Silva, 45% by his wife (under the regime of separation of people and property), Fernanda Arrepia and 15% by TPR BV, the latter being jointly held by Carlos Moreira da Silva's three descendants Tiago Moreira da Silva, Pedro Moreira da Silva and Raquel Moreira da Silva. Fernanda Arrepia and Tiago Moreira da Silva are also Directors of TEAK.
(1) Efanor Investimentos, SGPS, SA ceased, with effect from 29 November 2017, to have a controlling shareholder, according with the terms and for the purpose of articles 20º and 21º of the Portuguese Securities Code.
In terms of the order in sub-paragraph c), no. 1, Article 246 of the Portuguese Securities Code, the Board members of Sonae Indústria, SGPS, SA hereby declare, to the best of our knowledge, that the:
Duarte Paulo Teixeira de Azevedo
Carlos António Rocha Moreira da Silva
Albrecht Olof Lothar Ehlers
Berta Maria Nogueira Dias da Cunha
Isabel Sofia Bragança Simões de Barros
Javier Vega de Seoane Azpilicueta
José Joaquim Romão de Sousa
George Christopher Lawrie
Louis Brassard
(Amounts expressed in Euros)
| NON-CURRENT ASSETS Tangible fixed assets 6 139 101 697 146 469 904 Goodwill 347 081 347 082 Intangible assets 84 316 142 979 Investment properties 5 875 592 6 001 043 Investment in joint ventures 4, 5 215 829 686 205 616 464 Other investments 5 132 296 130 487 2 145 543 1 462 160 Deferred tax asset Total non-current assets 363 516 211 360 170 119 CURRENT ASSETS 17 172 774 16 998 114 Inventories Trade debtors 16 842 655 13 591 178 Other current debtors 7 6 809 656 285 410 Current tax asset 1 854 853 1 677 850 Other taxes and contributions 1 351 597 2 096 256 Other current assets 3 076 240 2 128 573 Cash and cash equivalents 8 2 875 210 4 084 771 49 982 985 40 862 152 Total current assets TOTAL ASSETS 413 499 196 401 032 271 SHAREHOLDERS FUNDS AND LIABILITIES<br>SHAREHOLDERSFUNDSShare capital 253 319 797 253 319 797 Legal reserve 1 807 489 Other reserves and accumulated earnings (165 671 544) (182 494 467) Accumulated other comprehensive income 9 51 128 902 55 287 278 Total shareholders' funds attributabble to equity holders of Sonae Indústria 140 584 644 126 112 608 TOTAL SHAREHOLDERS`FUNDS 140 584 644 126 112 608 LIABILITIES NON-CURRENT LIABILITIES Bank loans - net of current portion 10 197 103 383 197 650 071 Finance lease creditors - net of current portion 10 655 947 898 793 Post-retirement liabilities 872 699 962 252 Other non-current liabilities 1 326 338 2 122 999 Deferred tax liability 19 428 937 20 568 786 Provisions 1 983 940 1 983 940 Total non-current liabilities 221 371 244 224 186 841 CURRENT LIABILITIES Current portion of non-current bank loans 10 11 063 327 11 949 858 Current bank loans 10 1 297 349 1 750 000 Current portion of non-current finance lease creditors 10 487 474 500 227 Trade creditors 24 908 015 19 626 920 Current tax liability 66 886 53 391 Other taxes and contributions 406 099 734 383 Other current liabilities 11 10 038 440 12 842 324 Provisions 3 275 718 3 275 719 Total current liabilities 51 543 308 50 732 822 TOTAL SHAREHOLDERS' FUNDS AND LIABILITIES 413 499 196 401 032 271 |
ASSETS | Notes | 30.06.2018 Unaudited |
31.12.2017 |
|---|---|---|---|---|
The notes are an integral part of the consolidated financial statements
(Amounts expressed in Euros)
| Notes | 30.06.2018 | 2nd. Quarter 2018 | 30.06.2017 | 2nd. Quarter 2017 | |
|---|---|---|---|---|---|
| Unaudited | Unaudited | Unaudited | Unaudited | ||
| Sales | 14 | 111 126 048 | 57 176 673 | 121 186 517 | 61 983 892 |
| Services rendered | 14 | 706 137 | 348 744 | 610 932 | 297 981 |
| Other income and gains | 12, 14 | 1 987 551 | 1 105 833 | 2 801 194 | 1 736 233 |
| Cost of sales | 14 | (60 520 563) | (30 126 430) | (63 342 959) | (31 616 244) |
| Increase / (decrease) in production | 14 | ( 895 900) | ( 480 364) | (1 713 827) | (1 248 751) |
| External supplies and services | 14 | (23 999 237) | (12 343 971) | (24 860 563) | (12 386 638) |
| Staff expenses | 14 | (12 835 619) | (6 636 931) | (12 018 500) | (6 744 844) |
| Depreciation and amortisation | (6 310 122) | (3 180 197) | (6 227 662) | (3 054 605) | |
| Provisions and impairment losses (increase / reduction) | 14 | ( 73 055) | ( 71 377) | ( 86 882) | 840 |
| Other expenses and losses | 13, 14 | (1 696 567) | ( 919 446) | (1 932 898) | (1 087 816) |
| Operating profit / (loss) | 14 | 7 488 673 | 4 872 534 | 14 415 352 | 7 880 048 |
| Financial income | 15 | 365 713 | 151 509 | 653 456 | 316 919 |
| Financial expenses | 15 | (6 044 923) | (3 015 891) | (6 761 873) | (3 670 188) |
| Gains and losses in joint ventures | 4 | 18 757 240 | 14 053 446 | 9 256 226 | 5 054 254 |
| Net profit/(loss) before taxation | 20 566 703 | 16 061 598 | 17 563 161 | 9 581 033 | |
| Taxation | 16 | (1 645 177) | ( 937 560) | (3 509 188) | (1 947 128) |
| Consolidated net profit / (loss) for the period | 18 921 526 | 15 124 038 | 14 053 973 | 7 633 905 | |
| Attributable to: | |||||
| Equity holders of Sonae Industria | 18 921 526 | 15 124 038 | 14 053 973 | 7 633 905 | |
| Consolidated net profit/(loss) per share | |||||
| Basic | 0.4167 | 0.3331 | 0.0012 | 0.0007 | |
| Diluted | 0.4167 | 0.3331 | 0.0012 | 0.0007 | |
The notes are an integral part of the consolidated financial statements
FOR THE PERIODS ENDED 30 JUNE 2018 AND 30 JUNE 2017
(Amounts expressed in Euros)
| Notes | 30.06.2018 Unaudited |
2nd Quarter 2018 Unaudited |
30.06.2017 Unaudited |
2nd Quarter 2017 Unaudited |
|
|---|---|---|---|---|---|
| Consolidated net profit / (loss) for the period (a) | 18 921 526 | 15 124 038 | 14 053 973 | 7 633 905 | |
| Consolidated other comprehensive income | |||||
| Items that may be subsequently transferred to profit or loss | |||||
| Change in currency translation reserve | 9 | (1 965 327) | 1 935 683 | (2 669 405) | (2 190 805) |
| Group share of other comprehensive income of joint ventures | 9 | (2 142 194) | (2 504 363) | ( 865 294) | (1 347 797) |
| Consolidated other comprehensive income for the period, net of tax (b) | (4 107 521) | ( 568 680) | (3 534 699) | (3 538 602) | |
| Total consolidated comprehensive income for the period (a) + (b) | 14 814 005 | 14 555 358 | 10 519 274 | 4 095 303 | |
| Total consolidated comprehensive income attributable to: | |||||
| Equity holders of Sonae Industria | 14 814 005 | 14 555 358 | 10 519 274 | 4 095 303 |
The notes are an integral part of the consolidated financial statements
| Share capital | Legal reserve |
Other Reserves and accumulated earnings |
Accumulated other comprehensive income |
Total shareholders` funds attributable to the equity holders of Sonae Indústria |
Total shareholders' funds |
|
|---|---|---|---|---|---|---|
| Notes | 9 | |||||
| Balance as at 1 January 2018 | 253 319 797 | (182 494 467) | 55 287 278 | 126 112 608 | 126 112 608 | |
| Total consolidated comprehensive income for the period Consolidated net profit/(loss) for the period Consolidated other comprehensive income for the period |
18 921 526 | (4 107 521) | 18 921 526 (4 107 521) |
18 921 526 (4 107 521) |
||
| Total | 18 921 526 | (4 107 521) | 14 814 005 | 14 814 005 | ||
| Transferred to Legal reserve Others |
1 807 489 | (1 807 489) ( 291 114) |
( 50 855) | ( 341 969) | ( 341 969) | |
| Balance as at 30 June 2018 - Unaudited | 253 319 797 | 1 807 489 | (165 671 544) | 51 128 902 | 140 584 644 | 140 584 644 |
| Share capital | Legal reserve |
Other Reserves and accumulated earnings |
Accumulated other comprehensive income |
Total shareholders` funds attributable to the equity holders of Sonae Indústria |
Total shareholders' funds |
|
|---|---|---|---|---|---|---|
| Notes | 9 | |||||
| Balance as at 1 January 2017 | 812 107 574 | 3 131 757 | (759 319 894) | 54 418 718 | 110 338 155 | 110 338 155 |
| Total consolidated comprehensive income for the period Consolidated net profit/(loss) for the period Consolidated other comprehensive income for the period |
14 053 973 | (3 534 699) | 14 053 973 (3 534 699) |
14 053 973 (3 534 699) |
||
| Total | 14 053 973 | (3 534 699) | 10 519 274 | 10 519 274 | ||
| Share capital reduction Others |
(558 787 777) | (3 131 757) | 561 919 534 ( 517 979) |
( 517 979) | ( 517 979) | |
| Balance as at 30 June 2017 - Unaudited | 253 319 797 | (183 864 366) | 50 884 019 | 120 339 450 | 120 339 450 |
The notes are an integral part of the consolidated financial statements
CONSOLIDATED STATEMENT OF CASH FLOWS
(Amounts expressed in Euros)
| Notes | 30.06.2018 | 30.06.2017 | |
|---|---|---|---|
| Unaudited | Unaudited | ||
| OPERATING ACTIVITIES | |||
| Receipts from trade debtors | 106 271 912 | 114 462 665 | |
| Payments to trade creditors | 81 298 428 | 86 039 974 | |
| Payments to staff | 13 108 799 | 13 611 007 | |
| Net cash flow from operations | 11 864 685 | 14 811 684 | |
| Payment / (receipt) of corporate income tax | 3 846 568 | 7 476 686 | |
| Other receipts / (payments) relating to operating activities | 1 266 472 | 1 052 493 | |
| Net cash flow from operating activities (1) | |||
| 9 284 589 | 8 387 491 | ||
| INVESTMENT ACTIVITIES | |||
| Cash receipts arising from: | |||
| Tangible fixed assets and intangible assets | 1 433 715 | 85 228 | |
| Investment subventions | 31 953 | ||
| 1 465 668 | 85 228 | ||
| Cash Payments arising from: | |||
| Investments | 1 809 | 1 896 | |
| Tangible fixed assets and intangible assets | 4 823 807 | 5 161 421 | |
| Net cash used in investment activities (2) | 4 825 616 | 5 163 317 | |
| (3 359 948) | (5 078 089) | ||
| FINANCING ACTIVITIES | |||
| Cash receipts arising from: | |||
| Interest and similar income | 10 295 | 306 127 | |
| Loans obtained | 855 320 162 | 378 937 399 | |
| 855 330 457 | 379 243 526 | ||
| Cash Payments arising from: | |||
| Interest and similar charges | 5 536 854 | 3 988 452 | |
| Loans obtained | 857 854 666 | 379 807 666 | |
| Finance leases - repayment of principal | 247 480 | 205 618 | |
| Net cash used in financing activities (3) | 863 639 000 | 384 001 736 | |
| (8 308 543) | (4 758 210) | ||
| Net increase/(decrease) in cash and cash equivalents resulting from cash flows (4) = (1) + (2) + (3) | (2 383 902) | (1 448 808) | |
| Cash and cash equivalents at the beginning of the period (a) | 8 | 4 084 771 | 4 795 077 |
| Cash and cash equivalents at the end of the period (b) | 8 | 1 577 861 | 3 057 994 |
| Net increase/(decrease) in cash and cash equivalents (b) - (a) | |||
| Effect of foreign exchange rate in cash and cash equivalents (c) | (2 506 910) | (1 737 083) | |
| Net increase/(decrease) in cash and cash equivalents resulting from cash flows (b) - (a) - (c) | ( 123 008) | ( 288 275) | |
| (2 383 902) | (1 448 808) |
The notes are an integral part of the consolidated financial statements
(Amounts expressed in euros)
SONAE INDÚSTRIA, SGPS, SA has its head-office at Lugar do Espido, Via Norte, 4470-177 Maia, Portugal.
The shares of the company are listed on Euronext Lisbon.
Consolidated financial statements for the period ended 30 June 2018 and 30 June 2017 were not subject to a limited revision carried out by the company's statutory external auditor.
This set of consolidated financial statement has been prepared on the basis of the accounting policies that were disclosed on the notes to the consolidated financial statements for fiscal year 2017.
These consolidated financial statements were prepared in accordance with the International Accounting Standard 34 – Interim Financial Reporting. As such, they do not include all the information which should be included in annual consolidated financial statements and should therefore be read in connection with the financial statements for fiscal year 2017.
These consolidated financial statements were prepared on the basis of International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) and with Interpretations issued by the IFRS Interpretations Committee (IFRS IC), effective from 1 January 2018 and endorsed by the European Union.
2.2.1. In the period ended 30 June 2018, the following standards and interpretations, which had been endorsed by the European Union, became effective:
IFRS 2 (amendment), Classification and measurement of share-based payment transactions. This amendment clarifies the measurement basis for cash-settled, share-based payments and the accounting for modifications to a share-based payment plan that change the classification an award from cash-settled to equity-settled. It also introduces an exception to the principles in IFRS 2 that will require an award to be treated as if it was wholly equity-settled, where an employer is obliged to withhold an amount for the employee's tax obligation associated with a share-based payment and pay that amount to the tax authority;
IFRS 4 (amendment), Insurance contracts (Applying IFRS 4 with IFRS 9). This amendment allows companies that issue insurance contracts the option to recognise in Other Comprehensive Income, rather than Profit or Loss the volatility that could rise when IFRS 9 is applied before the new insurance contract standard is issued. Additionally, it is given an optional temporary exemption from applying IFRS 9 until 2021, to the companies
whose activities are predominantly connected with insurance, not being applicable at consolidated level;
IFRS 9 (new), Financial instruments. IFRS 9 replaces the guidance in IAS 39, regarding: (i) the classification and measurement of financial assets and liabilities; (ii) the recognition of credit impairment (through the expected credit losses model); and (iii) the hedge accounting requirements and recognition;
IFRS 15 (new), Revenue from contracts with customers. This new standard applies only to contracts with customers to provide goods or services and requires an entity to recognise revenue when the contractual obligation to deliver the goods or services is satisfied and by the amount that reflects the consideration the entity is expected to be entitled to, following a five step approach.
IFRS 15 (amendment) Revenue from contracts with customers. This amendment refers to additional guidance for determining the performance obligations in a contract, the timing of revenue recognition from a license of intellectual property, the review of the indicators for principal versus agent classification, and to new practical expedients to simplify transition;
IAS 40 (amendment), Transfers of Investment property. This amendment clarifies when assets are transferred to or from investment properties, the evidence of the change in use is required. A change of management intention in isolation is not enough to support a transfer;
Annual Improvement 2014 - 2016. The 2014-2016 annual improvements impacts: IFRS 1, IFRS 12 and IAS 28;
IFRIC 22 (new), Foreign currency transactions and advance consideration. An Interpretation to IAS 21 'The effects of changes in foreign exchange rates' it refers to the determination of the "date of transaction" when an entity either pays or receives consideration in advance for foreign currency denominated contracts. The date of transaction determines the exchange rate used to translate the foreign currency transactions.
2.2.2. At 30 June 2018, the following standards and interpretations had been issued by IASB and had been endorsed by the European Union, but had not been applied as they only become effective in later periods:
IFRS 9 (amendment), Prepayment Features with Negative Compensation (effective for annual periods beginning on or after 1 January 2019). The amendment introduces the possibility to classify certain financial assets with negative compensation features at amortized cost, provided that specific conditions are fulfilled, instead of being classified at fair value through profit or loss;
IFRS 16 (new), Leases (effective for annual periods beginning on or after 1 January 2019). This new standard replaces the IAS 17 with a significant impact on the accounting by lessees that are now required to recognise a lease liability reflecting future lease payments and a "right-of-use asset" for all lease contracts, except for certain short-term leases and for lowvalue assets. The definition of a lease contract also changed, being based on the "right to control the use of an identified asset".
The Company still did not complete the analysis of the effects which may arise from the future application of these standards.
2.2.3. At 30 June 2018, the following standards, effective 1 January 2018 or later, had been issued by IASB but still had not been endorsed by the European Union:
IFRS 17 (new), Insurance contracts (effective for annual periods beginning 1 January 2021). This standard is still subject to endorsement by the European Union. This standard will revoke IFRS 4 – Insurance contracts and applies to all entities issuing insurance contracts, reinsurance contracts and investment contracts with discretionary participation characteristics. IFRS 17 is based on the current measurement of technical liabilities at each reporting date. The current measurement can be based on a complete "building block approach" or "premium allocation approach". The recognition of the technical margin is different depending on whether it is positive or negative. IFRS 17 is of retrospective application;
IAS 28 (amendment), Long-term Interests in Associates and Joint Ventures (effective for annual periods beginning on or after 1 January 2019). This amendment is still subject to endorsement by the European Union. The amendment clarifies that long-term investments in associates and joint ventures (components of an entity's investments in associates and joint ventures), that are not being measured through the equity method, are to be measured in accordance with IFRS 9, being subject to impairment expected credit loss model prior to any impairment test of the investment as a whole;
Annual Improvement 2015 – 2017, (effective for annual periods beginning on or after 1 January 2019). These improvements are still subject to endorsement by the European Union. The 2015-2017 annual improvements affects: IAS 23, IAS 12, IFRS 3 and IFRS 11;
IFRIC 23 (new), Uncertainty over Income Tax Treatments (effective for annual periods beginning 1 January 2019). This interpretation is still subject to endorsement by the European Union. This is an interpretation of IAS 12 - Income tax referring to the measurement and recognition requirements to be applied when there is uncertainty as to the acceptance of an income tax treatment by the tax authorities. In the event of uncertainty as to the position of the tax authority on a specific transaction, the entity shall make its best estimate and record the income tax assets or liabilities under IAS 12 rather than IAS 37 - Provisions, contingent liabilities and contingent assets, based on the expected value or the most probable value. The application of IFRIC 23 may be retrospective or retrospective modified.
The Company does not estimate any significant effect to arise from the application of these standards.
Exchange rates used for translating into euros the financial statements of subsidiaries whose functional currency is not the euro are listed below:
| 30.06.2018 | 31.12.2017 | 30.06.2017 | |||||
|---|---|---|---|---|---|---|---|
| Closing | Average | Closing | Average | Closing | Average | ||
| rate | rate | rate | rate | rate | rate | ||
| Great Britain Pound | 0.8861 | 0.8796 | 0.8872 | 0.8761 | 0.8793 | 0.8602 | |
| South African Rand | 16.0488 | 14.8787 | 14.8060 | 14.9993 | 14.9209 | 14.2959 | |
| Canadian Dollar | 1.5442 | 1.5459 | 1.5039 | 1.4631 | 1.4785 | 1.4427 | |
| American Dollar | 1.1658 | 1.2100 | 1.1993 | 1.1272 | 1.1412 | 1.0818 | |
Source: Bloomberg
Group companies included in the consolidated financial statements, their head offices and percentage of capital held by the Group as at 30 June 2018, 31 December 2017 and 30 June 2017 are as follows:
| PERCENTAGE OF CAPITAL HELD | ||||||||
|---|---|---|---|---|---|---|---|---|
| COM PANY | HEAD OFFICE | 30.06.2018 | 31.12.2017 | 30.06.2017 | TERM S FOR INCLUSION |
|||
| Direct | Total | Direct | Total | Direct | Total | |||
| Frases e Frações - Imobiliária e Serviços, SA | M aia (Portugal) | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | a) |
| Glunz UK Holdings, Ltd. | Liverpool (United Kingdom) |
100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | a) |
| Glunz UkA GmbH | M eppen (Germany) | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | a) |
| Isoroy, SAS | La Garenne Colombes (France) |
100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | a) |
| M aiequipa - Gestão Florestal, SA | M aia (Portugal) | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | a) |
| M egantic B.V. | Amsterdam (The Netherlands) |
100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | a) |
| M ovelpartes - Comp. para a Indústria do M obiliário, SA |
Paredes (Portugal) | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | a) |
| Novodecor (Pty) Ltd | Woodmead (South Africa) |
100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | a) |
| Parcelas e Narrativas - Imobiliária, SA | M aia (Portugal) | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | a) |
| Poliface North America | Lac-M égantic (Canada) |
100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | a) |
| Sonae Indústria - M anagement Services, S. A. | M aia (Portugal) | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | a) |
| Sonae Indústria - Soc. Gestora de Participações Sociais, SA |
M aia (Portugal) | Parent | Parent | Parent | Parent | Parent | Parent | Parent |
| Sonae Indústria de Revestimentos, SA | M aia (Portugal) | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | a) |
| Spanboard Products Ltd | Belfast (United Kingdom) |
100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | a) |
| Tafisa Canada Inc | Lac-M égantic (Canada) |
100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | a) |
| Tafisa France S.A.S. | La Garenne Colombes (France) |
100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | a) |
a) Majority of voting rights;
Joint ventures, their head offices, percentage of share capital held on 30 June 2018, 31 December 2017 and 30 June 2017 are as follows:
| PERCENTAGE OF CAPITAL HELD | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| COM PANY | HEAD OFFICE | 30.06.2018 | 31.12.2017 | 30.06.2017 | TERM S FOR INCLUSION |
||||
| Direct | Total | Direct | Total | Direct | Total | ||||
| Sonae Arauco, SA | M adrid (Spain) | 50.00% | 50.00% | 50.00% | 50.00% | 50.00% | 50.00% | ||
| Agepan Eiweiler M anagement, GmbH | Eiweiler (Germany) | 100.00% | 50.00% | 100.00% | 50.00% | 100.00% | 50.00% | a) | |
| Agloma Imobiliaria y Servicios, S. L. | M adrid (Spain) | 100.00% | 50.00% | 100.00% | 50.00% | 100.00% | 50.00% | a) | |
| Agloma Investimentos, SGPS, S. A. | M aia (Portugal) | 100.00% | 50.00% | 100.00% | 50.00% | 100.00% | 50.00% | a) | |
| Aserraderos de Cuellar, S.A. | M adrid (Spain) | 100.00% | 50.00% | 100.00% | 50.00% | 100.00% | 50.00% | a) | |
| Sonae Arauco Beeskow GmbH | M eppen (Germany) | 100.00% | 50.00% | 100.00% | 50.00% | 100.00% | 50.00% | a) | |
| Ecociclo, Energia e Ambiente, S. A. | M aia (Portugal) | 100.00% | 50.00% | 100.00% | 50.00% | 100.00% | 50.00% | a) | |
| Euroresinas - Indústrias Quimicas, S.A. | M aia (Portugal) | 100.00% | 50.00% | 100.00% | 50.00% | 100.00% | 50.00% | a) | |
| GHP Glunz Holzwerkstoffproduktions GmbH | M eppen (Germany) | 100.00% | 50.00% | 100.00% | 50.00% | 100.00% | 50.00% | a) | |
| Sonae Arauco Deutschland GmbH | M eppen (Germany) | 100.00% | 50.00% | 100.00% | 50.00% | 100.00% | 50.00% | a) | |
| 1) | Glunz Service GmbH | M eppen (Germany) | - | - | - | - | 100.00% | 50.00% | a) |
| Impaper Europe GmbH | M eppen (Germany) | 100.00% | 50.00% | 100.00% | 50.00% | 100.00% | 50.00% | a) | |
| Imoplamac – Gestão de Imóveis, S. A. | M aia (Portugal) | 100.00% | 50.00% | 100.00% | 50.00% | 100.00% | 50.00% | a) | |
| Laminate Park GmbH & Co. KG | Eiweiler (Germany) | 50.00% | 25.00% | 50.00% | 25.00% | 50.00% | 25.00% | b) | |
| 1) | OSB Deustchland | M eppen (Germany) | - | - | - | - | 100.00% | 50.00% | a) |
| Racionalización y M anufacturas Florestales, S.A. Sociedade de Iniciativa e Aproveit. Florestais – |
M adrid (Spain) | 100.00% | 50.00% | 100.00% | 50.00% | 100.00% | 50.00% | a) | |
| 2) | Energia, S.A. | M angualde (Portugal) | - | - | - | - | 100.00% | 50.00% | a) |
| Somit – Imobiliária, S.A. | M angualde (Portugal) | 100.00% | 50.00% | 100.00% | 50.00% | 100.00% | 50.00% | a) | |
| Sonae Arauco France | La Garenne-Colombes (France) |
100.00% | 50.00% | 100.00% | 50.00% | 100.00% | 50.00% | a) | |
| 3) | Sonae Arauco Maroc SARL | Casablanca (M orocco) | 100.00% | 50.00% | - | - | - | - | a) |
| Sonae Arauco Portugal, SA | M angualde (Portugal) | 100.00% | 50.00% | 100.00% | 50.00% | 100.00% | 50.00% | a) | |
| Sonae Arauco South Africa (Pty) Ltd | Woodmead (South Africa) |
100.00% | 50.00% | 100.00% | 50.00% | 100.00% | 50.00% | a) | |
| Sonae Arauco Netherlands B. V. | Woerden (The Netherlands) |
100.00% | 50.00% | 100.00% | 50.00% | 100.00% | 50.00% | a) | |
| Sonae Arauco (UK), Ltd. | Liverpool (United Kingdom) |
100.00% | 50.00% | 100.00% | 50.00% | 100.00% | 50.00% | a) | |
| Sonae Arauco Espana - Soluciones de M adera, S. L. | M adrid (Spain) | 100.00% | 50.00% | 100.00% | 50.00% | 100.00% | 50.00% | a) | |
| Tafiber. Tableros de Fibras Ibéricas, S.L. | M adrid (Spain) | 100.00% | 50.00% | 100.00% | 50.00% | 100.00% | 50.00% | a) | |
| Taiber, Tableros Aglomerados Ibéricos, S.L. | M adrid (Spain) | 100.00% | 50.00% | 100.00% | 50.00% | 100.00% | 50.00% | a) | |
| Sonae Arauco Suisse SA | Tavannes (Switzerland) | 100.00% | 50.00% | 100.00% | 50.00% | 100.00% | 50.00% | a) | |
| Tecnologias del M edio Ambiente, S.A. | Barcelona (Spain) | 100.00% | 50.00% | 100.00% | 50.00% | 100.00% | 50.00% | a) | |
| Tecmasa. Reciclados de Andalucia, S. L. | M adrid (Spain) | 50.00% | 25.00% | 50.00% | 25.00% | 50.00% | 25.00% | b) | |
| Tool, GmbH | M eppen (Germany) | 100.00% | 50.00% | 100.00% | 50.00% | 100.00% | 50.00% | a) |
Net assets and net profit/loss for these jointly-controlled companies, whose 50%-share was recognized on these consolidated financial statements using equity method, are detailed as follows:
| Sonae Arauco - Consolidated | ||
|---|---|---|
| 30.06.2018 | 31.12.2017 | |
| Non-current assets | 520 391 124 | 486 460 459 |
| C urrent assets (without cash and cash equivalents) | 238 652 664 | 203 319 661 |
| C ash and cash equivalents | 15 701 215 | 26 708 564 |
| Non-current financial liabilities | 180 391 021 | 181 836 027 |
| Other non-current liabilities | 77 559 672 | 82 277 751 |
| C urrent financial liabilities | 46 690 587 | 29 796 341 |
| Other current liabilities | 200 395 603 | 173 296 890 |
| Sonae Arauco - Consolidated | ||
|---|---|---|
| 30.06.2018 | 30.06.2017 | |
| Unaudited | ||
| Operating revenues | 464 534 130 | 436 840 594 |
| Operating expenses (without Depreciation and amortization) | (390 979 245) | (383 793 733) |
| Depreciation and amortization | (21 140 059) | (21 316 025) |
| Interest income | 471 442 | 405 603 |
| Interest expense | (3 378 797) | (4 416 938) |
| Taxation | (6 533 398) | (4 199 998) |
| Net profit/(loss) from continuing operations | 37 514 481 | 18 512 453 |
| Adjustments to the Group's accounting policies | ||
| Group's share on net profit/(loss) | 18 757 240 | 9 256 226 |
| Other comprehensive income | (4 284 388) | (1 730 588) |
| Group's share on other comprehensive Income | (2 142 194) | ( 865 294) |
In October 2017, industrial plants of Mangualde and Oliveira do Hospital, which are controlled by Sonae Arauco, S. A., a company 50%-owned by Sonae Indústria, SGPS, S. A., were hit by wild fires that affected central Portugal. As a consequence, the wood yards, the exposed equipment within the wood yards and the electrical and cabling systems were significantly damaged, forcing these plants to stop operating.
In the first half of 2018, both industrial plants resumed normal activity.
These plants are subject to an insurance policy that will indemnify them for property damage and business interruption losses.
In the period ended 30 June 2018, the results of Sonae Arauco Group included the following effects related to the aforementioned fires:
Insurance compensation gain relating to business interruption losses, which were estimated to amount to EUR 15 million;
Insurance compensation for property damages resulting from new equipment which replaced damaged ones, amounting to EUR 19.7 million;
Insurance compensation gain relating to losses in inventories and other losses, amounting to EUR 1 million.
The consolidated net profit of Sonae Arauco Group is recognized using the equity method in the Consolidated Income Statement for 50% of its amount, under Gains and losses in joint ventures, which therefore include 50% of the abovementioned effects.
At 30 June 2018 and 31 December 2017, details of Investments, on the Consolidated Statement of Financial position, are as follows:
| 30.06.2018 | 31.12.2017 | |
|---|---|---|
| Investment in joint ventures | ||
| Opening balance | 205 616 464 | 195 908 535 |
| Effect of equity method | 16 619 569 | 15 369 886 |
| Dividends | (6 406 347) | (5 661 957) |
| Closing balance | 215 829 686 | 205 616 464 |
| 30.06.2018 | 31.12.2017 | |
| Other investments | ||
| Opening balance | 134 476 | 134 810 |
| Acquisition | 1 809 | 2 076 |
| Disposal | ( 2 410) | |
| Closing balance | 136 285 | 134 476 |
| Accumulated impairment losses | 3 989 | 3 989 |
| Net other investments | 132 296 | 130 487 |
At 30 June 2018 and 31 December 2017, movements in tangible assets, accumulated depreciation and impairment losses were as follows:
| 30.06.2018 | 31.12.2017 | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Land and Buildings |
Plant and Machinery |
Vehicles | Tools | Fixtures and Fittings |
Other Tangible Fixed Assets |
Tangible Fixed Assets under construction |
Total tangible fixed assets |
Total tangible fixed assets |
|
| Gross cost | |||||||||
| Opening balance | 97 133 999 | 262 567 210 | 2 581 162 | 96 237 | 3 478 555 | 214 703 | 7 907 292 | 373 979 158 | 374 111 199 |
| C apital expenditure | 3 727 | 3 609 008 | 3 612 735 | 11 235 343 | |||||
| Disposals | (2 211 765) | (2 217 236) | ( 78 261) | ( 7 681) | (4 514 943) | (3 658 476) | |||
| Revaluation | 9 532 969 | ||||||||
| Transfers and reclassifications | ( 10 941) | 4 360 868 | 429 045 | 55 914 | 72 866 | (4 918 693) | ( 10 941) | 1 574 040 | |
| Exchange rate effect C losing balance |
(1 886 338) 93 024 955 |
(6 281 261) 258 429 581 |
( 58 137) 2 873 809 |
96 237 | ( 50 022) 3 480 493 |
( 141) 287 428 |
( 130 509) 6 467 098 |
(8 406 408) 364 659 601 |
(18 815 917) 373 979 158 |
| Accumulated depreciation and impairment losses | |||||||||
| Opening balance | 38 343 362 | 183 688 922 | 1 893 568 | 94 601 | 3 282 682 | 206 119 | 227 509 254 | 226 045 505 | |
| Depreciations for the period | 1 196 299 | 4 781 379 | 111 380 | 326 | 36 958 | 2 922 | 6 129 264 | 12 086 686 | |
| Impairment losses for the period - through P/L | 55 225 | 55 225 | 1 509 634 | ||||||
| Disposals | (1 758 133) | (1 160 598) | ( 78 261) | ( 7 681) | (3 004 673) | (3 524 854) | |||
| Reversion of impairment losses for the period | (1 019 430) | ||||||||
| Revaluation | 3 736 123 | ||||||||
| Transfers and reclassifications | 68 267 | ||||||||
| Exchange rate effect | ( 738 162) | (4 307 389) | ( 40 752) | ( 44 788) | ( 75) | (5 131 166) | (11 392 677) | ||
| C losing balance | 37 043 366 | 183 057 539 | 1 885 935 | 94 927 | 3 267 171 | 208 966 | 225 557 904 | 227 509 254 | |
| Carrying amount | 55 981 589 | 75 372 042 | 987 874 | 1 310 | 213 322 | 78 462 | 6 467 098 | 139 101 697 | 146 469 904 |
At the closing date of these consolidated financial statements, mortgaged net tangible fixed assets amounted to EUR 122 317 598 (EUR 128 604 501 at 31 December 2017), as collateral for loans amounting to EUR 40 200 621 (EUR 37 380 912 at 31 December 2017).
At 30 June 2018 and 31 December 2017, detail of Other current debtors, on the Consolidated Statement of Financial Position, was as follows:
| 30.06.2018 | 31.12.2017 | |||
|---|---|---|---|---|
| Gross Value | Net Value | Gross Value | Net Value | |
| Other debtors | 75 919 | 75 919 | 59 076 | 59 076 |
| Related parties | 6 437 097 | 6 437 097 | 18 349 | 18 349 |
| Financial Instruments | 6 513 016 | 6 513 016 | 77 425 | 77 425 |
| Other debtors | 296 640 | 296 640 | 207 985 | 207 985 |
| Assets out of scope of IFRS 9 | 296 640 | 296 640 | 207 985 | 207 985 |
| Total | 6 809 656 | 6 809 656 | 285 410 | 285 410 |
The amount stated under Related parties includes EUR 6 406 347 of dividends attributes but not paid by the joint venture Sonae Arauco, S. A., in the period ended 30 June 2018.
At 30 June 2018 and 31 December 2017, detail of Cash and Cash Equivalents, on the Consolidated Statement of Financial Position, was as follows:
| 30.06.2018 | 31.12.2017 | |
|---|---|---|
| Cash at Hand | 7 077 | 6 556 |
| Bank Deposits and Other Treasury Applications | 2 868 133 | 4 078 215 |
| Cash and Cash Equivalents on the C onsolidated Statement of Financial Position |
2 875 210 | 4 084 771 |
| Bank Overdrafts | 1 297 349 | |
| Cash and Cash Equivalents on the C onsolidated Statement of Cash Flows |
1 577 861 | 4 084 771 |
Accumulated other comprehensive income on the Consolidated Statement of Financial Position, is detailed as follows:
| Accumulated other comprehensive income Atributable to the parent's shareholders |
||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Remeasurements | Share of Other C omprehensive Income of Joint Ventures |
Income tax related to |
||||||||
| Currency translation |
Revaluation Reserve |
on defined benefit plans |
Which may be subsequently transferred to profit or loss |
Which may not be subsequently transferred to profit or loss |
components of other comprehensive income |
Total | ||||
| Ba lance as at 1 January 2018 | 6 873 920 | 12 164 031 | ( 86 071) | 3 850 335 | 35 054 610 | (2 569 547) | 55 287 278 | |||
| C onsolidated other comprehensive income for the period | (1 965 327) | (2 142 194) | (4 107 521) | |||||||
| Others | ( 50 855) | ( 50 855) | ||||||||
| Ba lance as at 30 June 2018 | 4 908 593 | 12 164 031 | ( 86 071) | 1 657 286 | 35 054 610 | (2 569 547) | 51 128 902 |
| Accumulated other comprehensive income Atributable to the parent's shareholders |
|||||||||
|---|---|---|---|---|---|---|---|---|---|
| Share of Other C omprehensive Income tax Income of Joint Ventures related to Remeasurements |
|||||||||
| Currency translation |
Revaluation Reserve |
on defined benefit plans |
Which may Which may be not be subsequently subsequently transferred to transferred to profit or loss profit or loss |
components of other comprehensive income |
Total | ||||
| Ba lance as at 1 January 2017 | 11 114 057 | 6 367 184 | ( 192 092) | 4 468 623 | 33 694 328 | (1 033 382) | 54 418 718 | ||
| C onsolidated other comprehensive income for the period | (2 669 405) | ( 865 294) | (3 534 699) | ||||||
| Ba lance as at 30 June 2017 | 8 444 652 | 6 367 184 | ( 192 092) | 3 603 329 | 33 694 328 | (1 033 382) | 50 884 019 |
As at 30 June 2018 and 31 December 2017, Sonae Indústria had the following outstanding loans:
| 30.06.2018 | 31.12.2017 | |||||||
|---|---|---|---|---|---|---|---|---|
| Amortized cost | Nominal value | Amortized cost | Nominal value | |||||
| Current | Non current |
Current | Non current |
Current | Non current |
Current | Non current |
|
| Current portion of non-current bank loans | 11 063 327 | 11 063 327 | 11 949 858 | 11 949 858 | ||||
| Bank loans | 1 297 349 | 197 103 383 | 1 297 349 | 198 220 402 | 1 750 000 | 197 650 071 | 1 750 000 | 199 012 843 |
| Obligations under finance leases | 487 474 | 655 947 | 487 474 | 655 947 | 500 227 | 898 793 | 500 227 | 898 793 |
| Gross debt | 12 848 150 | 197 759 330 | 12 848 150 | 198 876 349 | 14 200 085 | 198 548 864 | 14 200 085 | 199 911 636 |
At 30 June 2018, loans can be detailed as follows:
| Company(ies) | Loan | Contract date | Maturity (with reference to 30.06.2018) |
Currency | Outstanding principal at 30.06.2018 (EUR) |
Outstanding principal at 31.12.2017 (EUR) |
|---|---|---|---|---|---|---|
| Tafisa Canada Inc. | Bank loan (Revolving ) |
July 2011 | to be repaid from March 2017 to May 2021 |
CAD | 36 200 621 | 33 380 912 |
| Sonae Indústria, SGPS, S.A. | Commercial paper programme |
June 2013 | June 2018 Note: programme without subscription guarantee |
EUR | 1 750 000 | |
| Sonae Indústria, SGPS, S.A. | Commercial paper programme |
July 2014 | to be repaid from July 2018 to January 2020 |
EUR | 7 500 000 | 7 500 000 |
| Sonae Indústria, SGPS, S.A. | Commercial paper programme |
May 2016 | to be repaid from May 2019 to May 2021 |
EUR | 139 500 000 | 143 500 000 |
| Sonae Indústria, SGPS, S.A. | Commercial paper programme |
July 2016 | July 2019 | EUR | 4 000 000 | 4 000 000 |
| Sonae Indústria, SGPS, S.A. | Commercial paper programme |
July 2016 | to be repaid from July 2017 to July 2018 |
EUR | 500 000 | 1 000 000 |
| Sonae Indústria, SGPS, S.A. | Commercial paper programme |
December 2016 | to be repaid from June 2018 to December 2019 |
EUR | 10 200 000 | 16 000 000 |
| Sonae - Indústria de Revestimentos, S. A. |
Bank loan | September 2017 | to be repaid from March 2019 to September 2022 |
EUR | 4 000 000 | 4 000 000 |
| Sonae Indústria, SGPS, S. A. | Commercial paper programme |
June 2018 | to be repaid from December 2019 to June 2021 |
EUR | 6 000 000 | N/A |
| Others | EUR | 2 680 457 | 1 581 789 | |||
| Total | EUR | 210 581 078 | 212 712 701 |
All these loans are subject to variable interest rates.
Figures detailed on the previous table correspond to the nominal value of bank loans disclosed on this note.
At 30 June 2018, in addition to mortgaged tangible fixed assets referred to on note 6, there were other assets amounting to EUR 29 167 815 (EUR 26 613
983 at 31 December 2017) which were pledged as collateral for the Group's liabilities. These assets consisted mostly of inventories and accounts receivable.
At 30 June 2018 and 31 December 2017, Other current liabilities on the Consolidated Statement of Financial Position were composed of:
| 30.06.2018 | 31.12.2017 |
|---|---|
| 26 923 | 71 838 |
| 883 371 | 2 155 951 |
| 604 475 | 496 357 |
| 1 514 769 | 2 724 146 |
| 316 192 | 488 389 |
| 14 105 | |
| 4 867 167 | 4 318 109 |
| 212 492 | 1 049 512 |
| 1 798 677 | 3 305 322 |
| 298 997 | 346 339 |
| 711 398 | 268 090 |
| 163 812 | 173 377 |
| 154 936 | 154 935 |
| 8 523 671 | 10 118 178 |
| 12 842 324 | |
| 10 038 440 |
Details of Other income and gains on the Consolidated Income Statement for the periods ended 30 June 2018 and 30 June 2017 are as follows:
| 30.06.2018 | 30.06.2017 | |
|---|---|---|
| Gains on disp. and write off of invest. prop., tang. and intang. assets | 171 879 | 83 765 |
| Supplementary revenue | 757 940 | 1 091 809 |
| Investment subventions | 79 787 | 78 704 |
| Positive exchange gains | 670 027 | 1 322 834 |
| Adjustment to fair value of financial instruments at fair value through profit or loss | 168 210 | 171 809 |
| Others | 139 708 | 52 273 |
| 1 987 551 | 2 801 194 |
Details of Other expenses and losses on the Consolidated Income Statement for the periods ended 30 June 2018 and 30 June 2017 are as follows:
| 30.06.2018 | 30.06.2017 | |
|---|---|---|
| Taxes | 671 782 | 661 803 |
| Losses on disp. and write off of invest. prop., tang. and intang. assets | 158 215 | 28 653 |
| Negative exchange gains | 690 019 | 889 669 |
| Adjustment to fair value of financial instruments at fair value through profit or loss | 69 985 | 227 345 |
| Others | 106 566 | 125 428 |
| 1 696 567 | 1 932 898 |
Recurring operating items on the Consolidated Income Statement are detailed as follows:
| 30.06.2018 | 30.06.2017 | |
|---|---|---|
| Recurring | Recurring | |
| Sales | 111 126 048 | 121 185 047 |
| Services rendered | 706 137 | 610 932 |
| Other income and gains | 1 809 803 | 2 651 840 |
| Cost of sales | (60 520 563) | (63 342 959) |
| Increase / (decrease) in production | (895 900) | (1 713 827) |
| External supplies and services | (23 755 255) | (24 625 613) |
| Staff expenses | (12 835 546) | (12 017 836) |
| Impairment losses in trade debtors - (increase)/reduction | ( 17 830) | (86 882) |
| Other expenses and losses | (1 527 011) | (1 902 508) |
| Recurring operating profit/(loss) before amortization, depreciation, provisions and impairment losses (except trade debtors) |
14 089 883 | 20 758 194 |
| Non-Recurring operating profit/(loss) before amortization, depreciation, provisions and impairment losses (except trade debtors) |
(235 865) | (115 180) |
| Total operating profit/(loss) before amortization, depreciation, provisions and impairment losses (except trade debtors) |
13 854 018 | 20 643 014 |
Financial results for the periods ended 30 June 2018 and 30 June 2017 were as follows:
| 30.06.2018 | 30.06.2017 | |
|---|---|---|
| Financial income: | ||
| Interest income | ||
| related to bank loans | 6 819 | 7 996 |
| related to loans to related parties | 2 128 | |
| Others | 651 | |
| 7 470 | 10 124 | |
| Gains in currency translation | ||
| related to loans | 7 956 | 71 566 |
| related to cash and cash equivalents | 295 534 | 211 354 |
| 303 490 | 282 920 | |
| Cash discounts obtained | 51 921 | 32 737 |
| Other finance gains | 2 832 | 327 675 |
| 365 713 | 653 456 | |
| Financial expenses: | ||
| Interest expenses | ||
| related to bank loans and overdrafts | (3 967 205) | (4 108 810) |
| related to finance leases | (32 525) | (39 943) |
| others | (1 672) | (12 616) |
| (4 001 402) | (4 161 529) | |
| Losses in currency translation related to loans |
(18 574) | (634 118) |
| related to cash and cash equivalents | ( 300 148) | ( 372 890) |
| ( 318 722) | (1 007 008) | |
| Cash discounts granted | ( 856 336) | ( 923 858) |
| Other finance losses | ( 868 463) | ( 669 478) |
| (6 044 923) | (6 761 873) | |
| Finance profit / (loss) | (5 679 210) | (6 108 417) |
Corporate income tax accounted for in the periods ended 30 June 2018 and 30 June 2017 is detailed as follows:
| 30.06.2018 | 30.06.2017 | |
|---|---|---|
| C urrent tax | 2 957 536 | 3 941 515 |
| Deferred tax | (1 312 359) | (432 327) |
| 1 645 177 | 3 509 188 |
In the financial statements for the year ended 31 December 2017, the Company disclosed several contingencies for which there was no significant evolution during the six-month period ended 30 June 2018.
Furthermore, Sonae Arauco South Africa (Pty) Ltd, a company classified as a joint venture of Sonae Indústria, as indicated in note 4, has been under investigation since the beginning of 2016 by the South African Competition Commission. This ongoing investigation includes Sonae Arauco South Africa (PTY) Ltd and a competitor and is based on alleged infraction of local competition law. If this South-African authority is able to prove the allegations to the Competition Court of South Africa, Sonae Arauco South Africa may incur a fine of up to 10% of its turnover stated in the preceding financial year. The ongoing investigation has consisted, among other things, in the inquiries of several directors and employees of the company. In the context of these inquiries, in June 2018 Sonae Arauco and Sonae Indústria have taken note of previously unknown facts that could negatively influence the outcome of the ongoing investigation, although, at the date of approval of these consolidated financial statements, it is not possible to predict whether this investigation will give rise to any responsibility in the consolidated liabilities of Sonae Indústria Group nor the amount of such a responsibility, if any.
Under the terms of the agreement for the subscription of Sonae Arauco, S. A. shares, entered into by Sonae Arauco, S. A., Sonae Indústria, SGPS, S. A. and the companies of the Arauco Group, Inversiones Arauco Internacional Limitada and Celulosa Arauco y Constituición S. A., Sonae Indústria, SGPS, S. A. assumed the obligation to compensate Sonae Arauco, S. A. for any losses that may result from this investigation.
These consolidated financial statements were approved by the Board of Directors and authorized for issuance 27 July 2018.
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