Interim / Quarterly Report • Aug 28, 2015
Interim / Quarterly Report
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CORTICEIRA AMORIM; S.G.P.S., S.A. Sociedade Aberta
Capital Social: EUR 133 000 000,00 C.R.C. Sta. Maria da Feira NIPC e Matrícula n.º: PT 500 077 797 Edifício Amorim I Rua de Meladas, n.º 380 Apartado 20 4536-902 MOZELOS VFR PORTUGAL
Tel.: + 351 22 747 54 00 Fax: + 351 22 747 54 07
Internet: www.amorim.com/cortica.html E-mail: [email protected]
In accordance with the law, the Directors of CORTICEIRA AMORIM, SGPS, SA, a Public Company, present their:
During the first half of 2015 (1H15) the world economy maintained a reasonable pace of growth. The approach of growth rates between different geographic areas is one of the most important events of the last few quarters.
The perspective presented in the first quarter of a slowdown or stoppage, at least temporarily, of the strengthening of the USD was confirmed. Neither the worsening crisis in Greece, not even the erratic developments of the Chinese stock market seemed to give additional impetus to the US dollar.
| Average exchange rate 1Q15 |
Average Exchange rate 2Q15 |
Average exchange rate 1H15 |
Average exchange rate 1H14 |
Variation 1H15 vs 1H14 |
|
|---|---|---|---|---|---|
| USD | 1.126 | 1.105 | 1.116 | 1.370 | -18.5% |
| CLP (Chile) | 703 | 683 | 693 | 758 | -8.6% |
| ZAR (S. Africa) | 13.23 | 13.38 | 13.30 | 14.68 | -9.4% |
| AUD (Australia) | 1.431 | 1.421 | 1.426 | 1.499 | -4.9% |
| GBP | 0.7434 | 0.7211 | 0.7323 | 0.8213 | -10.8% |
During the second quarter (2Q15) sales growth maintained the pattern observed in the first three months of the year, i.e., favourable currency effect coupled with organic growth. On the whole, that growth was offset by the resulting negative effect of a sales drop recorded in Floor & Wall Coverings Business Unit (BU).
The half-yearly sales exceeded for the first time 300 M€, reaching 309.2 M€. The variation of +20 M€, corresponding to a growth of 7% was justified largely, about three-quarters, by the exchange rate. Of that growth, about 90% was due to the appreciation of the USD.
The Cork Stoppers BU has continued to demonstrate a dynamic to be pointed, managing to keep in the 2Q15 about the same rate growth achieved during the first quarter, closing the first half with an increase of 10.1%.
Likewise, the Composite Cork BU recorded a significant sales growth rate. Indeed, after an increase of 12.5% in 1Q15, the UN managed to overcome this record, reaching an accumulated variation at the end of the semester of +15.7%.
To point out that these BU are the most exposed to exchange rate fluctuations, especially the net effect of changes for the USD.
In addition to the positive effect induced by the exchange, these two BU registered volume growth between 5% and 7%.
Taken together, these two effects justify practically all sales growth of the respective BUs.
As for the Insulation BU, although their total sales are down 4.2%, the effect on consolidated basis remained positive, about 2.6%, since the fall recorded was due to the non-recurrence in 2015 of a significant amount of semi-finished product sales to other BU.
With an adverse effect on the consolidated sales, the Floor & Wall Coverings BU, though marginally recovering in 2Q15, continued to show a decline of activity. The reasons are the same as presented in the first quarter and relate to sales to Russia, affected by the political situation, which economic sanctions are its visible face, and the situation in the United States. The growth in the Nordic markets was not enough to change the general trend of this indicator.
In terms of sales it remains to point out the importance of new products, especially the HELIX ® stopper and Hydrocork® flooring. Not so much by its weight in the semester consolidated sales, which is not material, but for what they represent in terms of capacity of CORTICEIRA AMORIM in bringing to market on a regular basis, truly innovative products. And finally, its potential as revealed in the sales growth recorded in both quarters.
Operating costs were affected by increased activity. The value of production grew significantly (+ 12%), the result of a variation of inventories of finished goods and work in progress of approximately 20 M€. Even taking into account the effect of currency appreciation in end inventories of finished goods and work in progress, the growth of the activity is significant. Suspended margins in inventories should be materialized during the coming quarters.
Operating costs grew by 7.6%, also affected by the exchange rate (4.4%), especially in United States subsidiaries, the exchange differences themselves, and also by the said increase in activity.
The value of the EBITDA achieved in the first six months of 2015 reached 54.3 M€, up 24.7% over the same period 2014.
Not considering the various foreign exchange effects on the EBITDA that rise would be 6.1%.
The ratio EBITDA / Sales amounted to 17.6%, reaching 18.9% in the second quarter, values ever achieved by CORTICEIRA AMORIM.
During the first quarter it was recorded a non-recurring expense of 2.9 M € for the Goodwill.
The financial function keeps the successive improvements as a result of the drop in interest rates and a decreasing amount of interest bearing debt.
Also point out the contribution of the results of associated companies.
After the estimation of income tax, and the non-controlling interests, net profit attributable to CORTICEIRA AMORIM shareholders amounted to 26.222 in M€, up 42.4% over the first six months of 2014, keeping practically the pace of growth registered in the first three months of the year.
Raw-materials BU kept the pace of activity in the first quarter, with sales totalling 72.8 M€ (+ 5.1%). Traditionally in this BU, there are no major variations in terms of production, so it must be concluded that the activity of this BU followed the activity of its almost unique client (Cork Stoppers).
During the first quarter, the last batch of 2013 cork campaign was laboured. With the start of operation of 2014 cork, margins were affected, since the price / quality of this campaign, as expected, is less favourable.
This fact dictated a slower pace of earnings growth during the second quarter.
The EBITDA reached 11.1 M€, an increase of 12.3% compared to the first half of 2014 (1Q15: 14.9%).
At the time of closing this report is almost completed the 2015 cork campaign. Objectives were achieved, which passed for ensuring the cork needed during 2016 with an acceptable quality / price ratio.
The BU maintains a broad set of actions and investments regarding operational improvements, which are expected to bring important returns starting in 4Q15.
Sales of Cork Stoppers BU reached 201.7 M€, up 10.1% compared to 1H14. The second quarter followed thus the rate presented in the first three months of the year. Growth in the first half continued to be benefited by a significant exchange rate effect, which justifies about 5% of that increase. The remaining is virtually totally explained by the quantity effect. Sales amounted to 2.100 million units, about 100 million more than the half of 2014.
All cork stoppers families grew in value and quantity, except for Twin Top® stopper, which recorded a slight decrease in volume.
The highlight continues to go to the major markets (France, United States and Italy).
At the end of the semester, the Income Statement line Change in manufactured inventories, has an abnormally high value (+14.7 M€ vs. +4 M€ in June 2014).
Even taking into account the exchange rate effect in the inventory of finished goods and work in progress at June 30, 2015, which is estimated to have an impact of 2.5 million euros in that line, the corrected value of around 12M€, is, nevertheless, an increase of 8 M€. This increase resulted from the decision to increase the finished goods stocks before the stoppage in August of the Portuguese operations. This will avoid disruptions in inventories as it had happened in the past and, consequently, the need for air freight.
With regard to operating costs, the registration of an expense for Research and Development of 1.1 M€ and the increase in the number of workers in the area of capsulated stoppers justify much of their increase.
EBITDA reached 32.2 M€, a rise of over 30% compared to the same period of 2014. The foreign exchange effect justifies a large extent this variation. As already mentioned, during the six months was recorded a one-off expenditure in the amount of 1.1 M€. This expense is related to a major quality project. Only at the end of the semester was possible to determine the value. It is expected that the project will be integrated in production during the fourth quarter. The expected success of the project and the extended use of this technology will bring significant commercial advantage to a large proportion of finished products of this Business Unit.
Half year sales registered a value of 57.5 M€, a decrease of 7.7% over the same period of 2014. This decrease, slightly lower than the one recorded in the first quarter, comes in the wake of the difficulties faced since summer 2014 in two key markets: Russia and the United States. The political situation in Russia and its immediate consequence of economic sanctions made business conditions harder in that important market. US sales decline required a review of all guidance in this market. An action plan designed to restore the growth momentum in this important sales target is starting.
The good performance of the Nordic market was not enough to offset this drop. The remaining markets showed stabilization in sales.
To highlight the good performance of the new and innovative product of this BU. Sales growth and its order book already puts Hydrocork® as a key product in the future of this Unit. Hydrocork® is a product which presents an innovative solution that reconciles for the first time water resistance and reduced thickness in a floating cork floor.
EBITDA of 5.4 M€ registered a drop (31%), having been affected by the significant reduction in activity and the exchange rate effect. Unlike other BU, the exchange rate effect on the results in this BU is unfavourable. Excluding this effect, this indicator has fall by 20%.
A good second quarter boosted sales growth of the Composite Cork BU. In fact, reaching a total of 49 M€, sales grew 15.7%, an acceleration relative to the 12.5% growth recorded in 1Q15.
As the BU more exposed to the USD exchange, an important part of this growth was due to that effect. But even allowing for this benefit, the BU had nonetheless an organic growth of over 6%, explained almost entirely by the volume effect.
Continued good performance of the US market has been key to the evolution of this BU. On the other hand the situation in Russia and Ukraine had a negative impact affecting almost totally the underlay market in this region.
Other product families had a positive performance. A special note for the sales in the IKEA project, together with the product area related to sports activity.
Rising prices in some raw materials, particularly those whose price is traded in USD impacted unfavourably the results.
Rubber Cork production overlap (Mozelos and Corroios) is still harming the performance of the BU. It is anticipated that this situation will end in the fourth quarter, with the Mozelos unit labouring in full in the first quarter 2016.
The activity of Amorim Compcork (new press), reached break even at the EBITDA level.
EBITDA value increased to 6.6 M€ (+ 66.6%), heavily influenced by the exchange rate.
Insulation BU sales dropped to 5 million € (-4.2%). However, on a comparable basis, i.e. excluding the sale of a semilaboured product to other UN occurred in the first half of 2014, the sales increase by 8.3%. If we count only on sales to customers outside of CORTICEIRA AMORIM, growth was 2.6%.
Lower sales of expanded agglomerated cork were offset by increased sales of regranulate cork and specialties.
French and Asian market registered decreases in expanded agglomerated cork.
EBITDA dropped to 0.8 M€ (-14.6%), impacted negatively by an impairment in customers.
As mentioned in the summary of the activity, sales reached 309 M€, up by 7%, exceeding for the first time the semester threshold of 300 million.
The currency effect remained during the 2T15, justifying substantial part of that rise. Excluding this effect, growth will be close to 2%, similar to the increase in the first quarter.
As already mentioned, from the four BU that sell to end customers, only the Floor and Wall Coverings BU had a negative contribution to consolidated sales.
During the second quarter, especially in the Cork Stoppers BU, change in manufactured inventories reached a significant value, even not considering the foreign exchange effect. The usual stoppage of the production units in August gives rise to the need for strengthening the level of finished product inventories at the end of the semester. To avoid breakage of stocks during the months of July and August and significantly reduce the need for air freight felt in similar periods of past years, are the reasons behind the said variation.
The increase in operating costs reflects, in part, the actual increase in production activity, which was higher than the increase in sales. But in this case the exchange rate effect on operating costs of some non-euro subsidiaries, particularly those located in the United States, was relevant. From the 7.6% increase recorded in these costs, it is estimated that 4.4% is a result of the increase in euros of operating costs (particularly personnel and external supplies) in non-euro currency. In addition, the registration of exchange differences, including the effect of exchange rate hedges also helps to explain that increase. Also to be noted the increase in the average number of workers, more ninety-one than in the same semester of 2014.
This increase resulted also in part from an important order from a large chain of distribution to the Composites Cork BU (IKEA), which, by their nature, forced the hiring of a large number of workers.
Also some overlap, not yet eliminated, in the rubber cork production in Corroios and Mozelos, explains part of the increase. Finally, the rapid growth of the Top Series activity, and the need for more personnel, completes the list of justifications for the increase in expenses with personnel and of the increase of the number of workers.
Still to note that the semester was impacted with some unusual records which were not considered non-current. The highlight goes to a one-off record of 1.1 M€ related with research and development expenses. This record refers to an important quality project which only now was possible to determine the value.
Still to refer another one-off register, which is due to a better assessment of impairment of finished goods in Composites Cork BU. Due to the characteristics of the products of this BU, and its similarity to the Floor and Wall Coverings BU, it was decided to apply in that BU the same criteria for the impairment register policy that the Floor and Wall Coverings BU uses. Thus the policy will start to use the concept of aging. The impact was an expense of € 1.1M.
As already mentioned EBITDA reached 54.3 M€ increasing by almost 25%. And yet as mentioned, excluding all currency effects the increase would be about 6%. If no mentioned one-off's were recorded, this growth rate would almost double.
The EBITDA / Sales ratio reached unprecedented values in both the semester (17.6%), as in 2Q15 (18.9%).
It would also underscore the value achieved by this ratio as for the Cork Stoppers BU. If we consider the Raw Materials and Cork Stoppers as a single activity, the ratio would reach 20.7% in the half year, having risen to 21% in 2Q15.
EBIT rose by 29.5%, reaching 40.3 M€.
During the first quarter it was recorded a non-recurring expense of 2.9 M€ for the impairment of Goodwill. After this record goodwill value was reduced to zero.
Financial expenses continue to fall, reaching 1.2 M€ in the period, a drop of more than one million euros compared to the same half of 2014. The sharp fall in interest rates was reinforced since the second quarter with the impact from the EIB loan. The continued debt reduction also explains the good performance of this expenditure.
In terms of the contributions of associates to the CORTICEIRA AMORIM results, recent quarters have been quite positive. The usual good results of associate Trescases, was joined with the performance of US Floors. This associate experienced a negative period covering the first years post acquisition, having recovered substantially in recent quarters.
The gain in associates reached 1.1 M€, a significant increase compared to 0.7 M€ from the first half of 2014.
The income tax estimate reached 11.1 M€. This estimate, as usual in the interim results does not include the effect of any tax benefits. This calculation is only available when the companies estimate annual data for each tax benefit situation.
Net income for the period attributable to CORTICEIRA AMORIM shareholders rose to 26.222 M€, an increase of 42.4% compared to 1H14. This growth is in line with that recorded in the first quarter.
Consolidated balance sheet totalled 666 M€. When comparing to year-end 2014, its value showed a considerable rise (49 M€). The increase in sales was reflected in a significant increase in customer accounts (33 M€). The traditional low value of the raw materials of the first half, around 14 M € from December to June, was virtually offset by an abnormally high amount of advances related with cork purchases occurred at the end of the semester (12 M€ versus 1 M€ in December 2014). The difference left refers to the usual increase in finished goods inventories and work in progress (20 M€), which, for the reasons already explained, was even more visible this semester.
In the liabilities side should highlighted changes in the debt account. The EIB loan, 35 M€ effective in March, recorded as non-current, allowed a substantial lengthening of the debt maturity of CORTICEIRA AMORIM. Consequently, the interest bearing current debt was strongly reduced. This ten years loan, with a grace period of four years, was obtained at an all-in rate lower than any existing line credit to date. This allowed for a significantly decrease of the average interest rate of CORTICEIRA AMORIM debt.
In terms of net interest bearing debt, since December, an increase of about 4 M€ was registered. For this it has to be taken into account, however, that during the semester CORTICEIRA AMORIM distributed 17.6 M€ dividend.
Shareholders' equity had a rise of around 11 M€, mainly explained by the results of the period and by the dividends paid.
The Equity/Net Assets ratio reached 49.0%, an improvement over the 47.4% ratio a year ago.
| 1H15 | 1H14 | Variation | 2Q15 | 2Q14 | Variation | |
|---|---|---|---|---|---|---|
| Sales | 309,197 | 289,044 | 7.0% | 161,846 | 150,448 | 7.6% |
| Gross Margin – Value | 165,259 | 146,618 | 12.7% | 86,083 | 76,118 | 13.1% |
| 1) | 50.2% | 50.2% | -0.07 p.p. | 50.6% | 51.9% | -1.34 p.p. |
| Operating Costs - current | 124,938 | 115,486 | 8.2% | 63,356 | 54,904 | 15.4% |
| EBITDA - current | 54,379 | 43,613 | 24.7% | 30,576 | 27,077 | 12.9% |
| EBITDA/Sales | 17.6% | 15.1% | + 2.5 p.p. | 18.9% | 18.0% | + 0.9 p.p. |
| EBIT - current | 40,321 | 31,132 | 29.5% | 22,727 | 21,214 | 7.1% |
| Non-current costs 2) |
2,912 | 2,735 | N/A | 3 | 2,735 | N/A |
| Net Income | 26,222 | 18,419 | 42.4% | 17,775 | 12,436 | 42.9% |
| Earnings per share | 0.209 | 0.147 | 42.4% | 0.142 | 0.099 | 42.9% |
| Net Bank Debt | 91,865 | 106,313 | - 14,448 | - | - | - |
| Net Bank Debt/EBITDA (x) 3) |
0.94 | 1.30 | -0.35 x | - | - | - |
| EBITDA/Net Interest (x) 4) |
73.4 | 27.6 | 45.84 x | 100.0 | 33.3 | 66.68 x |
| Equity/Net Assets | 49.0% | 47.4% | + 1.6 p.p. | - | - | - |
1) Related to Production
2) Due to property investment impairment and to industrial restructuring expenses (1S14) and a Goowill impairment (1S15)
3) Current EBITDA of the last four quarters
4) Net interest includes interest from loans deducted of interest from deposits (excludes stamp tax and commissions)
CORTICEIRA AMORIM does not anticipate significant changes at the macroeconomic level, so it will continue to profit from the economic situation, as well as profiting from the strengthening of the USD felt since the end of 2014.
However, cyclical and political factors, whether in Eastern Europe or in the EU context itself, can affect the progression of the markets, and generate even some greater exchange rate instability.
CORTICEIRA AMORIM will do its best to profit from the force of some markets, implementing inflections that will allow restoring profitability in markets with lower performance.
Thus, it is estimated that the result of the full year 2015 to exceed that recorded in 2014.
Being assured cork needs for next year, in the short term only a rapid deterioration of economic activity, or a significant depreciation of the USD, may adversely influence the performance of CORTICEIRA Amorim for the next six months.
During the first half of 2015, CORTICEIRA AMORIM did not acquire or sold treasury shares.
As of June 30, 2015, CORTICEIRA AMORIM held 7,399,362 own shares, representing 5.563% of its share capital.
| Shares held | Participation | Voting rights * | ||
|---|---|---|---|---|
| Shareholder | (quantity) | (%) | (%) | |
| Amorim Capital, S.G.P.S., S.A. | 67 830 000 | 51.000% | 54.004% | |
| Investmark Holdings, B.V. | 24 975 157 | 18.778% | 19.885% | |
| Amorim International Participations, B.V. | 20 064 387 | 15.086% | 15.975% | |
| Total of Qualified ownership | 112 869 544 | 84.864% | 89.864% |
List of members holding qualified ownership interests as of 30 June 2015:
(*) Considering the suspension of the voting rights regarding 7,399,262 of treasury stock held by the company.
| Shareholder Amorim Capital SGPS, S.A. |
Shares held | % Voting rights | |
|---|---|---|---|
| Directly | 67 830 000 | 54.004%(a) | |
| Total Attributable | 67 830 000 | 54.004% | |
(a) Considering the suspension of the voting rights regarding 7,399,262 of treasury stock held by Corticeira Amorim.
| Shareholder Amorim Investimentos e Participações, SGPS, S.A. |
Shares held | % Voting rights |
|---|---|---|
| Directly | - | - |
| Through Amorim Capital SGPS, S.A., 100% owned | 67 830 000 | 54.004% |
| Total Attributable | 67 830 000 | 54.004% |
| Shareholder Interfamília II, SGPS, S.A. (b) |
Shares held | % Voting rights |
|---|---|---|
| Directly | - | - |
| Through Amorim Investimentos e Participações, SGPS, S.A., 100% owned |
67 830 000 | 54.004% |
| Total Attributable | 67 830 000 | 54.004% |
(b) The capital of Interfamília II is wholly owned by three companies (Amorim Holding Financeira, SGPS, SA, Amorim Holding II SGPS, SA and Amorim - Sociedade Gestora de Participações Sociais, SA) none of which has a dominant share in society, being the capital of these three companies in turn, held, respectively, in the case of the first two, by Mr. Americo Ferreira de Amorim, wife and daughters and in the case of the third, by Mr. António Ferreira de Amorim, wife and sons.
| Shareholder Investmark Holding BV |
Shares held | % Voting rights | |
|---|---|---|---|
| Directly | 24 975 157 | 19.885%(c) | |
| Total Attributable | 24 975 157 | 19.885% |
(c) Considering the suspension of the voting rights regarding 7,399,262 of treasury stock held by Corticeira Amorim.
| Shareholder Warranties, SGPS, S.A. |
Shares held | % Voting rights |
|---|---|---|
| Directly | - | - |
| Through Investmark Holding BV, 100% owned | 24 975 157 | 19.885% |
| Total Attributable | 24 975 157 | 19.885% |
| Shareholder Américo Ferreira de Amorim |
Shares held | % Voting rights |
|---|---|---|
| Directly | - | - |
| Through Warranties, SGPS, S.A., 70% owned | 24 975 157 | 19.885% |
| Total Attributable | 24 975 157 | 19.885% |
| Shareholder Amorim International Participations, BV |
Shares held | % Voting rights |
| Directly | 20 064 387 | 15.975%(d) |
| Total Attributable | 20 064 387 | 15.975% |
(d) Considering the suspension of the voting rights regarding 7,399,262 of treasury stock held by Corticeira Amorim.
| Shareholder Amorim, Sociedade Gestora de Participações Sociais, S.A. (e) |
Shares held | % Voting rights |
|---|---|---|
| Directly | - | - |
| Through Amorim International Participations BV, 100% owned | 20 064 387 | 15.975% |
| Total Attributable | 20 064 387 | 15.975% |
(e) The capital of Amorim, Sociedade Gestora de Participações Sociais, SA is held by Mr. António Ferreira de Amorim, wife and sons, does not hold any of them a society domain share.
As of June 30, 2015, and as of the date of this report, no changes were reported.
In accordance with the provisions of Sections 14.6 and 14.7 of Regulation no.5/2008 of the Portuguese Securities Market Commission, no CORTICEIRA AMORIM shares were traded by any of its directors.
During that period no derivatives of CORTICEIRA AMORIM issued securities were traded by its directors or by any of the companies that control the company, neither by any of the persons related with them.
Since June 30, 2015, to the date of this report, no changes in those stakes have been recorded.
After June 30, 2015 and up to the date hereof, no other relevant events have occurred which might materially affect the financial position and future profit or loss of CORTICEIRA AMORIM and its subsidiaries included in the consolidation taken as a whole.
In accordance with the requirements of Section 246.1(c) of the Portuguese Securities Market Act, the directors state that, to the best of their knowledge, the financial statements for the half year ended June 30, 2014 and all other accounting documents have been prepared in accordance with the applicable accounting standards and give a true and fair view of the assets, liabilities, financial position and profit or loss of CORTICEIRA AMORIM, SGPS, SA and the undertakings included in the consolidation taken as a whole. The directors further state that the Directors' Report faithfully describes the development, performance and position of CORTICEIRA AMORIM's business and the undertakings included in the consolidation taken as a whole. The Directors' Report contains a special section describing the main risks and uncertainties that could impact our business in the next six months.
Mozelos, 27 July 2015
The Board of Directors of CORTICEIRA AMORIM, SGPS, SA
| thousand euro | ||||
|---|---|---|---|---|
| Notes | June 2015 |
December 2013 |
June 2014 |
|
| Assets | ||||
| Property, plant and equipment | VIII | 181,036 | 182,893 | 177,319 |
| Investment property | VIII | 4,930 | 5,190 | 7,226 |
| Goodwill | I X |
0 | 2,911 | 5,255 |
| Investments in associates | V e X | 12,302 | 10,841 | 9,219 |
| Intangible assets | VIII | 1,264 | 1091 | 618 |
| Other financial assets | X | 3,886 | 3,631 | 2,888 |
| Deferred tax assets | XI | 8,826 | 6,708 | 7,359 |
| Non-current assets | 212,245 | 213,265 | 209,884 | |
| Inventories | XII | 261,928 | 247,633 | 241,148 |
| Trade receivables | XIII | 155,821 | 122,606 | 147,006 |
| Income tax | XIV | 2,480 | 2,233 | 8,763 |
| Other current assets | XV | 26,610 | 25,673 | 27,137 |
| Cash and cash equivalents | XVI | 6,940 | 6,036 | 9,388 |
| Current assets | 453,778 | 404,181 | 433,442 | |
| Total Assets | 666,023 | 617,446 | 643,326 | |
| Equity | ||||
| Share capital | XVII | 133,000 | 133,000 | 133,000 |
| Treasury stock | XVII | -7,197 | -7,197 | -7,197 |
| Other reserves | XVII | 160,894 | 140,617 | 147,977 |
| Net Income | 26,222 | 35,756 | 18,419 | |
| Non-Controlling Interest | XVIII | 13,591 | 13,393 | 12,943 |
| Total Equity | 326,509 | 315,569 | 305,142 | |
| Liabilities | ||||
| Interest-bearing loans | XIX | 61,503 | 26,225 | 33,878 |
| Other borrowings and creditors | XXI | 10,251 | 11,533 | 11,221 |
| Provisions | XXIX | 28,961 | 27,951 | 24,490 |
| Deferred tax liabilities | XI | 7,036 | 6,970 | 7,387 |
| Non-current liabilities | 107,751 | 72,678 | 76,975 | |
| Interest-bearing loans | XIX | 37,302 | 67,369 | 81,823 |
| Trade payables | XX | 129,987 | 115,303 | 116,684 |
| Other borrowings and creditors | XXI | 51,682 | 44,007 | 53,111 |
| Income tax | XXII | 12,792 | 2,520 | 9,591 |
| Current liabilities | 231,762 | 229,199 | 261,209 | |
| Total Liabilities and Equity | 666,023 | 617,446 | 643,326 |
(this statement should be read with the attached notes to the consolidated financial statements)
| thousand euro | |||||
|---|---|---|---|---|---|
| 2Q15 | 2Q14 | Notes | 1H15 | 1H14 | |
| non audited | non audited | ||||
| 161,846 | 150,448 | Sales | VII | 309,197 | 289,044 |
| 84,167 | 70,533 | Costs of goods sold and materials consumed | 164,229 | 145,313 | |
| 8,403 | -3,797 | Change in manufactured inventories | 20,290 | 2,887 | |
| 27,005 | 25,074 | Third party supplies and services | XXIII | 51,414 | 49,260 |
| 29,107 | 25,697 | Staff costs | XXIV | 57,209 | 54,235 |
| 215 | -345 | Impairments of assets | XXV | 827 | 7 9 |
| 1,920 | 2,265 | Other gains | XXVI | 3,633 | 3,572 |
| 1,100 | 880 | Other costs | XXVI | 5,063 | 3,003 |
| 30,576 | 27,077 | Current EBITDA | 54,379 | 43,613 | |
| 7,849 | 5,863 | Depreciation | VIII | 14,058 | 12,481 |
| 22,727 | 21,214 | Current EBIT | 40,321 | 31,132 | |
| -3 | -2,735 | Non-current results | XXIV | -2,912 | -2,735 |
| 553 | 1,084 | Financial costs | XXVII | 1,208 | 2,235 |
| 6 3 |
4 | Financial income | XXVII | 7 0 |
9 2 |
| 716 | 527 | Share of (loss)/profit of associates | X | 1,084 | 745 |
| 22,952 | 17,925 | Profit before tax | 37,356 | 26,998 | |
| 5,275 | 5,229 | Income tax | XI | 11,081 | 8,145 |
| 17,676 | 12,696 | Profit after tax | 26,274 | 18,853 | |
| -99 | 259 | Non-controlling Interest | XVIII | 5 3 |
434 |
| 17,776 | 12,437 | Net Income attributable to the equity holders of Corticeira Amorim | 26,222 | 18,419 | |
| 0.142 | 0.099 | Earnings per share - Basic e Diluted (euros per share) | XXXIII | 0.209 | 0.147 |
(this statement should be read with the attached notes to the consolidated financial statements)
| thousand euro | ||||
|---|---|---|---|---|
| 2Q15 | 2Q14 | 1H15 | 1H14 | |
| non audited |
non audited |
|||
| 17,676 | 12,696 | Net Income (before Non-controlling interest) | 26,274 | 18,853 |
| Itens that could be reclassified through income statement: | ||||
| 177 | -1 | Change in derivative financial instruments fair value | 219 | 1 8 |
| -1,590 | 112 | Change in translation differences | 2,078 | -181 |
| -1,413 | 111 | Net Income directly registered in Equity | 2,297 | -163 |
| 16,263 | 12,807 | Total Net Income registered | 28,571 | 18,690 |
| Attributable to: | ||||
| 16,790 | 12,549 | Corticeira Amorim Shareholders | 28,325 | 18,543 |
| -527 | 258 | Non-controlling Interest | 246 | 147 |
(this statement should be read with the attached notes to the consolidated financial statements)
14
| thousand euro | ||||
|---|---|---|---|---|
| 2Q15 | 2Q14 | 1H15 | 1H14 | |
| (non audited) |
(non audited) |
|||
| OPERATING ACTIVITIES | ||||
| 164,525 | 156,147 | Collections from customers | 308,232 | 290,066 |
| -129,198 | -121,394 | Payments to suppliers | -247,510 | -248,506 |
| -29,608 | -20,177 | Payments to employees | -52,221 | -42,301 |
| 5,720 | 14,576 | Operational cash flow | 8,501 | -741 |
| -1,237 | -858 | Payments/collections - income tax | -1,859 | -2,613 |
| 19,081 | 5,095 | Other collections/payments related with operational activities | 18,201 | 27,915 |
| 23,564 | 18,813 | CASH FLOW BEFORE EXTRAORDINARY ITEMS (1) | 24,843 | 24,561 |
| INVESTMENT ACTIVITIES | ||||
| Collections due to: | ||||
| 125 | 330 | Tangible assets | 273 | 471 |
| 49 | 10 | Other assets | 79 | 78 |
| 15 | -51 | Interests and similar gains | 23 | 44 |
| 0 | -766 | Investment subsidies | 0 | 1 |
| Payments due to: | ||||
| -7,276 | -6,367 | Tangible assets | -10,829 | -9,381 |
| -11 | -412 | Financial investments | -108 | -911 |
| -166 | - 7 |
Intangible assets | -194 | -11 |
| -7,264 | -7,263 | CASH FLOW FROM INVESTMENTS (2) | -10,756 | -9,709 |
| FINANCIAL ACTIVITIES | ||||
| Collections due to: | ||||
| 0 | 2,724 | Loans | 1,572 | 0 |
| 514 | 1,041 | Others | 805 | 1,204 |
| Payments due to: | ||||
| -4,402 | 0 | Loans | 0 | -2,409 |
| -521 | -918 | Interests and similar expenses | -1,364 | -2,225 |
| -17,631 | -15,254 | Dividends | -17,631 | -15,366 |
| 0 | 0 | Acquisition of treasury stock | 0 | 0 |
| -104 | -131 | Others | -210 | -247 |
| -22,143 | -12,538 | CASH FLOW FROM FINANCING (3) | -16,828 | -19,043 |
| -5,844 | -988 | Change in Cash (1) + (2) + (3) | -2,741 | -4,191 |
| -75 | 10 | Exchange rate effect | 39 | -66 |
| -2,582 | -9,474 | Cash at beginning | -5,799 | -6,195 |
| -8,501 | -10,452 | Cash at end | -8,501 | -10,452 |
(this statement should be read with the attached notes to the consolidated financial statements)
| thousand euro | |||||||
|---|---|---|---|---|---|---|---|
| Balance Beginning |
Appropria tion of N-1 profit |
Divi dends |
Net Profit N |
Inc/ Dec/ Recl |
Translation Differences |
End Balance |
|
| June 30, 2015 | |||||||
| Equity: | |||||||
| Share Capital | 133,000 | - | - | - | - | - 133,000 | |
| Treasury Stock - Face Value | -7,399 | - | - | - | - | - | -7,399 |
| Treasury Stock - Discounts and Premiums | 201 | - | - | - | - | - | 201 |
| Paid-in Capital | 38,893 | - | - | - | - | - | 38,893 |
| Hedge Accounting | -45 | - | - | - | 219 | - | 174 |
| Reserves | |||||||
| Legal Reserve | 12,243 | 2,051 | - | - | - | - | 14,294 |
| Other Reserves | 89,300 | 33,705 | -17,584 | - | 1 | 0 105,422 | |
| Translation Difference | 226 | - | - | - | - | 1,884 | 2,110 |
| 266,419 | 35,756 | -17,584 | 0 | 220 | 1,884 286,695 | ||
| Net Profit for the Year | 35,756 | -35,756 | - | 26,222 | - | - | 26,222 |
| Minority interests | 13,393 | - | -47 | 52 | 0 | 193 | 13,591 |
| Total Equity | 315,569 | 0 | -17,631 | 26,274 | 220 | 2,077 326,509 | |
| June 30, 2014 | |||||||
| Equity: | |||||||
| Share Capital | 133,000 | - | - | - | - | - 133,000 | |
| Treasury Stock - Face Value | -7,399 | - | - | - | - | - | -7,399 |
| Treasury Stock - Discounts and Premiums | 202 | - | - | - | - | - | 202 |
| Paid-in Capital | 38,893 | - | - | - | - | - | 38,893 |
| IFRS Transition Adjustments | 0 | - | - | - | - | - | 0 |
| Hedge Accounting | 10 | - | - | - | 18 | - | 28 |
| Reserves | 0 | ||||||
| Legal Reserve | 12,243 | - | - | - | - | - | 12,243 |
| Other Reserves | 82,886 | 30,339 | -15,072 | - | 41 | 0 | 98,194 |
| Translation Difference | -1,445 | - | - | - | -43 | 108 | -1,380 |
| 258,390 | 30,339 | -15,072 | 0 | 16 | 108 273,781 | ||
| Net Profit for the Year | 30,339 | -30,339 | - | 18,419 | - | - | 18,419 |
| Minority interests | 13,009 | - | -213 | 434 | -13 | -274 | 12,943 |
| Total Equity | 301,738 | 0 | -15,285 | 18,853 | 3 | -166 305,143 |
(this statement should be read with the attached notes to the consolidated financial statements)
| I. | INTRODUCTION 18 | |
|---|---|---|
| II. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 18 | |
| III. | FINANCIAL RISK MANAGEMENT 25 | |
| IV. | CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS 28 | |
| V. | COMPANIES INCLUDED IN THE CONSOLIDATED FINANCIAL STATEMENTS 29 | |
| VI. | EXCHANGE RATES USED IN CONSOLIDATION 31 | |
| VII. | SEGMENT REPORT 31 | |
| VIII. | TANGIBLE, INTANGIBLE AND PROPERTY INVESTMENT ASSETS 34 | |
| IX. | GOODWILL 35 | |
| X. | EQUITY COMPANIES AND OTHER FINANCIAL ASSETS 36 | |
| XI. | INCOME TAX 36 | |
| XII. | INVENTORIES 38 | |
| XIII. | TRADE RECEIVABLES 38 | |
| XIV. | INCOME TAX 39 | |
| XV. | OTHER ASSETS 39 | |
| XVI. | CASH AND CASH EQUIVALENTS 40 | |
| XVII. | CAPITAL AND RESERVES 40 | |
| XVIII. | NON-CONTROLLING INTEREST 41 | |
| XIX. | INTEREST BEARING DEBT 41 | |
| XX. | TRADE PAYABLES 42 | |
| XXI. | OTHER BORROWINGS AND CREDITORS 43 | |
| XXII. | INCOME TAX 43 | |
| XXIII. | THIRD PARTY SUPPLIES AND SERVICES 44 | |
| XXIV. | STAFF COSTS 44 | |
| XXV. | IMPAIRMENTS OF ASSETS AND NON-CURRENT RESULTS 45 | |
| XXVI. | OTHER GAINS AND COSTS 45 | |
| XXVII. | FINANCIAL COSTS AND FINANCIAL INCOME 46 | |
| XXVIII. | RELATED-PARTY TRANSACTIONS 46 | |
| XXIX. | PROVISIONS, GUARANTEES, CONTINGENCIES AND COMMITMENTS 46 | |
| XXX. | EXCHANGE RATE CONTRACTS 48 | |
| XXXI. | ACTIVITY DURING THE YEAR 48 | |
At the beginning of 1991, Corticeira Amorim, S.A. was transformed into CORTICEIRA AMORIM, S.G.P.S., S.A., the holding company for the cork business sector of the Amorim Group. In this report, CORTICEIRA AMORIM will be the designation of CORTICEIRA AMORIM, S.G.P.S., S.A., and in some cases the designation of CORTICEIRA AMORIM, S.G.P.S. together with all of its subsidiaries.
CORTICEIRA AMORIM, directly or indirectly, holds no interest in land properties used to grow and explore cork tree. Cork tree is the source of cork, the main raw material used by CORTICEIRA AMORIM production units. Cork acquisition is made in an open market, with multiple agents, both in the demand side as in the supply side.
CORTICEIRA AMORIM is mainly engaged in the acquisition and transformation of cork into a numerous set of cork and cork related products, which are distributed worldwide through its network of sales company.
CORTICEIRA AMORIM is a Portuguese company with a registered head office in Mozelos, Santa Maria da Feira. Its share capital amounts to 133 million euros, and is represented by 133 million shares, which are publicly traded in the Euronext Lisbon – Sociedade Gestora de Mercados Regulamentados, S.A.
Amorim Capital - Sociedade Gestora de Participações Sociais, S.A. held 67,830,000 shares of CORTICEIRA AMORIM as of June 30, 2015 corresponding to 51.00 % of its share capital (December 2014: 67,830,000 shares). Amorim Capital - Sociedade Gestora de Participações Sociais, S.A. is fully owned by Amorim family.
These financial statements were approved in the Board Meeting of July 27, 2015.
Except when mentioned, all monetary values are stated in thousand euros (Thousand euros = K euros = K€ = € K).
Some figures of the following notes may present very small differences not only when compared with the total sum of the parts, but also when compared with figures published in other parts of this report. These differences are due to rounding aspects of the automatic treatment of the data collected.
The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented.
Consolidated statements were prepared based on a going concern basis and using the records as stated in the companies' books, which adopted Portuguese general accepted accounting principles. Accounting adjustments and reclassifications were made in order to comply with accounting policies followed by the IFRS, as adopted by the European Union (IAS – International Accounting Standards and the IFRS – International Financial Reporting Standards) and legal for use as of June 30, 2015, namely IAS 34.
Group companies, often designated as subsidiaries, are entities over which CORTICEIRA AMORIM has a shareholding of more than one-half of its voting rights, or has the power to govern its management, namely its financial and operating policies.
Group companies are consolidated line by line, being the position of third-party interests in the shareholding of those companies stated in the consolidated financial position in the "Non-controlling interest" account. Date of first consolidation or de-consolidation is, in general, the beginning or the end of the quarter when the conditions for that purpose are fulfilled.
Profit or loss is allocated to the shareholders of the mother company and to the non-controlling interest in proportion of their correspondent parts of capital, even in the case that non-controlling interest become negative.
IFRS 3 is applied to all business combinations past January 1, 2010, according to Regulamento no. 495/2009, of June 3, as adopted by the European Commission. When acquiring subsidiaries the purchasing method will be followed. According to the revised IFRS, the acquisition cost will be measured by the given fair value assets, by the assumed liabilities and equity interest issued. Transactions costs will be charged as incurred and the services received. The exceptions are the costs related with debt or capital issued. These must be registered according to IAS 32 and IAS 39. Identifiable purchased assets and assumed liabilities will be initially measured at fair value. The acquirer shall recognized goodwill as of the acquisition date measured as the excess of (i) over (ii) below:
In the case that (ii) exceeds (i), a difference must be registered as a gain.
Inter-company transactions, balances and unrealized gains on transactions between group companies are eliminated. Unrealized losses are also eliminated but considered an impairment indicator of the asset transferred.
Non-controlling Interest are recorded at fair value or in the proportion of the percentage held in the net asset of the acquire, as long as it is effectively owned by the entity. The others components of the non-controlling interest are registered at fair value, except if other criteria is mandatory.
Transactions with Non-controlling interests are treated as transactions with Group Equity holders.
In any acquisition from non-controlling interests, the difference between the consideration paid and the accounting value of the share acquired is recognised in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity.
When the Group ceases to have control or significant influence, any retained interest in the entity is remeasured to its fair value, with the change in carrying amount recognised in profit or loss.
Associates are all entities over which the Group has significant influence but not control, generally accompanying a shareholding between 20% and 50% of voting rights. Investments in associates are accounted for using the equity method of accounting and are initially recognised at cost. The Group's investment in associates includes goodwill. Future impairments of goodwill will be adjusted against the carrying amount of investments The Group's share of its associates post-acquisition profits or losses is recognised in the income statement, in the "Gain/(losses) in associates" account, and its share of post-acquisition movements in reserves is recognised in reserves. The carrying amount is also adjusted by dividends received. When the Group's share of losses in an associate equals or exceeds its interest in the associate, the group does not recognise further losses, unless it has incurred obligation on behalf of the associate, in this case the liabilities will be recorded in a "Provisions" account.
Euro is the legal currency of CORTICEIRA AMORIM, S.G.P.S., S.A., and is the currency in which two thirds of its business is made and so Euro is considered to be its functional and presentation currency.
In non-euro subsidiaries, all assets and liabilities denominated in foreign currency are translated to euros using yearend exchange rates. Net exchange differences arising from the different rates used in transactions and the rate used in its settlements is recorded in the income statement.
Assets and liabilities from non-euro subsidiaries are translated at the balance sheet date exchange rate, being its costs and gains from the income statement translated at the average exchange rate for the period / year.
Exchange differences are registered in an equity account "Translation differences" which is part of the line "Other reserves".
Whenever and a non-euro subsidiary is sold or liquidated, accumulated translation differences recorded in equity is registered as a gain or a loss in the consolidated income statement by nature.
Tangible fixed assets are originally their respective historical cost (including attributable expenses) or production cost, including, whenever applicable, interest costs incurred throughout the respective construction or start-up period, which are capitalised until the asset is ready for its projected use.
Tangible fixed assets are subsequently measured at acquisition cost, deducted from cumulative depreciations and impairments.
Depreciation is calculated on the straight-line basis, over the following years, which represent a reasonable estimate of the useful lives:
| Number of years | |
|---|---|
| Buildings | 20 to 50 |
| Plant machinery | 6 to 10 |
| Motor vehicles | 4 to 7 |
| Office equipment | 4 to 8 |
Depreciation is charged since the beginning of the moment in which the asset is ready to use. The asset's residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date.
Current maintenance on repair expenses are charged to the actual income statement in which they occurred. Cost of operations that can extend the useful expected life of an asset, or from which are expected higher and significative future benefits, are capitalized.
An asset's carrying amount is written down to its recoverable amount and charged to the income statement if the asset's carrying amount is greater than its estimated recoverable amount.
Gains and losses and disposals are included in the income statement.
Research expenditures are recognised in the income statement as incurred.
Development expenditure is recognised as intangible asset when the technical feasibility being developed can be demonstrated and the Group has the intention and capacity to complete their development and start trading or using them and that future economic benefits will occur.
Amortisation of the intangible assets is calculated by the straight-line method, and recorded as the asset qualifies for its required purpose:
| Number of years | |
|---|---|
| Industrial Property | 10 to 20 |
| Software | 3 to 6 |
The estimated useful life of assets are reviewed and adjusted when necessary, at the balance sheet date.
Investment property includes land and buildings not used in production.
Investment property are initially registered at acquisition cost plus acquisition or production attributable costs, and when pertinent financial costs during construction or installation. Subsequently are measured at acquisition cost less cumulative depreciations and impairment.
Periods and methods of depreciation are as follows in d) note for tangible fixed asset.
Properties are derecognized when sold. When used in production are reclassified as tangible fixed asset. When land and buildings are no mores used for production, they will be reclassified from tangible fixed asset to investment property.
Goodwill arises from acquisition of subsidiaries and represents the excess of the cost of an acquisition over the fair value of the net identifiable assets of the acquired at the date of acquisition. If positive, it will be included as an asset in the "goodwill" account. If negative, it will be registered as a gain for the period.
In Business combinations after January 1, 2010, Goodwill will be calculated as referred in b).
For impairment tests purposes, goodwill is allocated to the cash-generating unit or group of cash-generating units that are expected to benefit from the upcoming synergies.
Goodwill will be tested annually for impairment, or whenever an evidence of such occurs; impairment losses will be charged to the income statement and, consequently, its carrying amount adjusted.
Assets with indefinite useful lives are not amortised but are annually tested for impairment purposes.
Assets under depreciation are tested for impairment purposes whenever an event or change of circumstances indicates that its value cannot be recovered. Impairment losses are recognized as the difference between its carrying amount and its recoverable amount. Recoverable corresponds to the higher of its fair value less sales expenses and its value for use. Non-financial assets, except goodwill, that generated impairment losses are valued at each reporting date regarding reversals of said losses.
Relates, mainly, to financial applications corresponding to equity instruments measured at cost.
Inventories are valued at the lower of acquisition cost or production cost and net realisable value. Acquisition cost includes direct and indirect expenses incurred in order to have those inventories at its present condition and place. Production cost includes used raw material costs, direct labour, other direct costs and other general fixed production costs (using normal capacity utilisation).
Where the net realisable value is lower than production cost, inventory impairment is registered. This adjustment will be reversed or reduced whenever the impairment situation no longer takes place.
Year-end quantities are determined based on the accounting records, which are confirmed by the physical inventory taking. Raw materials, consumables and by-products are valued at weighted average cost, and finished goods and work-in-progress at the average production cost which includes direct costs and indirect costs incurred in production.
Trade and other receivables are registered initially at cost, adjusted for any subsequent impairment losses which will be charged to the income statement.
Medium and long-term receivables, if applicable, will be measured at amortised cost using the effective interest rate of the debtor for similar periods.
At each reporting date, the impairment of financial assets at amortised cost is evaluated.
Financial asset impairment occurs if after initial register, unfavourable cash flows from that asset can be reasonably estimated.
Impairment losses are recognized as the difference between its carrying amounts and expected future cash flows (excluding future losses that yet have not occurred), discounted at the initial effective interest rate of the asset. The calculated amount is deducted to the carrying amount and loss recognised in the earnings statement.
Cash includes cash in hand, deposits held at call in banks, time deposits and other no-risk short-term investments with original maturities of three months or less. In the Consolidated Statement of Cash Flow, this caption includes Bank overdrafts.
Debts to suppliers and other borrowings and creditors are initially registered at fair value. Subsequently are measured at amortised cost using effective interest rate method. They are classified as current liabilities, except if CORTICEIRA AMORIM has full discretion to defer settlement for at least another 12 months from the reporting date
This line includes interest bearing loans amounts. Any costs attributable to the lender, will be deducted to the loan amount and charged, during its life, using the effective interest rate.
Interests are usually charged to the income statement as they occur. Interests arising from loans related with capital expenditure for periods longer than 12 months will be capitalised and charged to the specific asset under construction. Capitalisation will cease when the project is ready for use or suspended.
Income tax includes current income tax and deferred income tax. Except for companies included in groups of fiscal consolidation, current income tax is calculated separately for each subsidiary, on the basis of its net result for the period adjusted according to tax legislation. Management periodically addresses the effect of different interpretations of tax law.
Deferred taxes are calculated using the liability method, reflecting the temporary differences between the carrying amount of consolidated assets and liabilities and their correspondent value for tax purposes.
Deferred tax assets and liabilities are calculated and annually registered using actual tax rates or known tax rates to be in vigour at the time of the expected reversal of the temporary differences.
Deferred tax assets are recognized to the extent that it is probable sufficient future taxable income will be available utilisation. At the end of each year an analysis of the deferred tax assets is made. Those that are not likely to be used in the future will be derecognised.
Deferred taxes are registered as an expense or a gain of the year, except if they derive from values that are booked directly in equity. In this case, deferred tax is also registered in the same line.
CORTICEIRA AMORIM Portuguese employees benefit exclusively from the national welfare plan. Employees from foreign subsidiaries (about 30% of total CORTICEIRA AMORIM) or are covered exclusively by local national welfare plans or benefit from complementary contribution plans.
As for the defined contribution plans, contributions are recognised as employee benefit expense when they are due.
CORTICEIRA AMORIM recognises a liability and an expense for bonuses attributable to a large number of directors. These benefits are based on estimations that take in account the accomplishment of both individual goals and a preestablished CORTICEIRA AMORIM level of profits.
Provisions are recognised when CORTICEIRA AMORIM has a present legal or constructive obligation as a result of past events, when it is more likely than not an outflow of resources will be required to settle the obligation and when a reliable estimation is possible.
Provisions are not recognised for future operating losses. Restructuring provisions are recognised with a formal detail plan and when third parties affected are informed.
When there is a present obligation, resulting from a past event, but it is not probable that an out flow of resources will be required, or this cannot be estimated reliably, the obligation is treated as a contingent liability. This will be disclosed in the financial statements, unless the probability of a cash outflow is remote.
Revenue comprises the value of the consideration received or receivable for the sale of goods and finished products. Revue is shown, net of value-added tax, returns, rebates, and discounts, including cash discounts. Revenue is also adjusted by any prior period's sales corrections.
Services rendered are immaterial and, generally, are refunds of costs related with finish product sales.
Sales revenue is recognised when the significant risk and rewards of ownership of the goods are transferred to the buyer and its amount can be reliably measured. Revenue receivable after one year will be discounted to its fair value.
Grants received are related generally with fixed assets expenditure. No-repayable grants are present in the balance sheet as deferred income, and recognised as income on a systematic basis over the useful life of the related asset. Repayable interest bearing grants are presented as interests bearing debt; if no-interest bearing, they are presented as "Other borrowings". Reimbursable grants with "out of market" interest rates are measured at fair value when they are initially recognised. Difference between nominal and fair value at initial recognition is treated as an income to be recognised. This will be presented in other gains during the useful life span of the said asset. Subsequently, these grants are measured at amortised cost.
When a contract indicates that the significant risks and rewards of the ownership of the asset are transferred to CORTICEIRA AMORIM, leasing contracts will be considered as financial leases.
All other leasing contracts are treated as operating leases. Payments made under operating leases are charged to the income statement.
CORTICEIRA AMORIM uses derivatives financial instruments as forward and spot exchange rate contracts, options and swaps; these are intended to hedge its business financial risks and are not used for speculative purposes. CORTICEIRA AMORIM accounts for these instruments as hedge accounting, following all its standards. Dealing is carried out by a central treasury department (dealing room) on behalf of the subsidiaries, under policies approved by the Board of Directors. Derivatives are initially recorded at cost in the consolidated statements of financial position and subsequently re-measured at their fair value. The method of recognising is as follows:
Changes in the fair value of derivatives that qualify as fair value hedges and that are expected to be highly effective, are recorded in the income statement, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.
Changes in the fair value of derivatives that qualify as cash flow edges and that are expected to be highly effective, are recognised in equity; the gain or loss relating to the ineffective portion is recognised immediately in the income statement.
For the moment, CORTICEIRA AMORIM is not considering any foreign exchange hedge over its net investments in foreign units (subsidiaries).
CORTICEIRA AMORIM has fully identified the nature of its activities' risk exposure and documents entirely and formally each hedge; uses its information system to guarantee that each edge is supported by a description of: risk policy, purpose and strategy, classification, description of risk, identity of the instrument and of the risk item, description of initial measurement and future efficiency, identification of the possible derivative portion which will be excluded from the efficiency test.
When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, or the forecasted transaction no longer remains highly provable or simply is abandoned, or the decision to consider the transaction as a hedge, the company will de-recognised the instrument.
Ordinary shares are included in equity.
When CORTICEIRA AMORIM acquires own shares, acquisition value is recognised deducting from equity in the line treasury stock.
CORTICEIRA AMORIM activities expose it to a variety of financial risks: market risks (including currency risk and interest rate risk), credit risk, liquidity risk and capital risk.
CORTICEIRA AMORIM operates in various international markets, being, consequently, exposed to exchange rates variations in the local currencies in which conducts its business. Around 30% of its total sales are denominated in currencies other than its reporting currency (euro), of which around 20% is USD denominated. The remaining sales are concentrated in South African rand, Chilean peso, British pound and Australian dollar. About 90% of the goods and services acquired are euro based. Most of the remaining value is denominated in USD.
Exchange rate risk derives not only from the effects of the exchange rates variations in non-euro assets and liabilities euro counter value, but also from the effects in the book orders (future transactions) and from net investments in operating units located in non-euro areas.
Exchange rate risk management policy established by CORTICEIRA AMORIM Board points out to a total hedging of the assets deriving from sales in the most important currencies and from USD acquisitions. As for book orders up to 90 days, each Business Unit responsible will decide according to exchange rate evolution. Book orders, considered relevant, due after 90 days, will be presented by the Business Unit responsible to the Board.
As of June 30, 2015, exchange rates different from the actual as of that date, would have no material effect in financial assets or liabilities values, due to the said hedging policy. As for book orders any effect would be registered in Equity. As for non-euro net investments in subsidiaries/associate, any exchange rate effect would be registered in Equity, because CORTICEIRA AMORIM does not hedge this type of assets. As these investments are not considered relevant, the register of the effects of exchange rates variations was 2,110 K€ as of June 30, 2015 (2014: 226 K€ and 1H2014: -1,380 K€). In these values is included the effect of not hedging net investments in subsidiaries/associate.
As of June 30, 2014, all interest bearing debt is linked to variable interest rate. As of June 30, 2015 from the total interest bearing debt, 25 M€ had a ten year fixed interest rate. Additionally, in 2013 Corticeira Amorim, SGPS, SA signed an interest rate swaps regarding the economic hedging of the interest rate risk. In its books, this swap was registered as an available-for-sale derivative.
Most of the risk derives from the noncurrent-term variable rate portion of that debt (June 30, 2015: 36.5 M€ and June 30, 2014: 33.9 M€). As for June 30, 2015, noncurrent-term debt was 37% of total interest bearing debt (June 30, 2014: 29%). As of June 30, 2015, for each 0.1% variation in euro based debt, a total effect of -99 K€ in CORTICEIRA AMORIM profits would be registered.
Credit risk is due, mainly, to receivables from customers related to trade sales. Credit risk is monitored by the operating companies Financial Departments, taking in consideration its history of trade relations, financial situation as well as other types of information that CORTICEIRA AMORIM business network has available related with each trading partner. Credit limits are analysed and revised, if necessary, on a regular basis. Due to the high number of customers, spread through all continents, the most important of them weighting less than 3% of total sales, credit risk is naturally diminished.
Normally no guarantees are due from customers. CORTICEIRA AMORIM does not make use of credit insurance.
Credit risk derives also from cash and cash equivalents balances and from financial derivative instruments. CORTICEIRA AMORIM previously analyses the ratings of the financial institutions so that it can minimize the failure of the counterparts.
The maximum credit risk is the one that results from the failure to receive all financial assets (June 2015: 195 million euros and December 2014: 159 million euros).
CORTICEIRA AMORIM financial department regularly analyses future cash flows so that it can deliver enough liquidity for the group to provide operating needs, and also to comply with credit lines payments. Excess of cash is invested in interest bearing short-term deposits. This police offer the necessary flexibility to conduct its business.
Financial liabilities estimated non-discounted cash flows maturities are as follows:
| thousand euro | |||||
|---|---|---|---|---|---|
| Up to 1 year | 1 to 2 years | 2 to 4 years | More than 4 years |
Total | |
| Interest-bearing loans | 67,369 | 20,957 | 1,219 | 4,049 | 93,594 |
| Other borrowings and creditors | 37,703 | 4,362 | 4,938 | 2,234 | 49,237 |
| Trade payables | 115,303 | 115,303 | |||
| Income tax liabilities | 2,520 | 2,520 | |||
| Total as of December 31, 2014 | 222,895 | 25,319 | 6,157 | 6,283 | 260,654 |
| Interest-bearing loans | 37,302 | 21,310 | 1,106 | 39,086 | 98,805 |
| Other borrowings and creditors | 45,870 | 4,431 | 4,770 | 1,050 | 56,121 |
| Trade payables | 129,987 | 129,987 | |||
| Income tax liabilities | 12,792 | 12,792 | |||
| Total as of June 30, 2015 | 225,950 | 25,741 | 5,876 | 40,136 | 297,704 |
Liquidity risk hedging is achieved by the existence of non-used credit line facilities and, eventually bank deposits.
Based in estimated cash flows, 2015 liquidity reserve, composed mainly by non-used credit lines, will be as follows:
| thousand euros | |
|---|---|
| 2015 | |
| Opening balance | 130 |
| Operating cash in and cash out | 74 |
| Investments | -20 |
| Interest and dividends | -27 |
| Income tax | -14 |
| Non-current debt payment | -15 |
| Saldo final | 128 |
CORTICEIRA AMORIM key objective is to assure business continuity, delivering a proper return to its shareholders and the correspondent benefits to its remaining stakeholders. A careful management of the capital employed in the business, using the proper combination of capital in order to reduce its costs, obtains the fulfilment of this objective. In order to achieve the proper combination of capital employed, the Board can obtain from the General Shareholders Meeting the approval of the necessary measures, namely adjusting the dividend pay-out ratio, the treasury stock, raising capital through new shares issue, sale of assets or other type of measures.
The key indicator for the said combination is the Equity / Assets ratio. CORTICEIRA AMORIM considers that a 40% ratio is a clear sign of a perfect combination, and a range between 40%-50%, depending on actual economic conditions and of the cork sector in particular, is the objective to be accomplished. The said ratio register was:
| Thousands euros | |||||
|---|---|---|---|---|---|
| June 2015 | 2014 | 2013 | |||
| Equity | 326,509 | 315,569 | 301,737 | ||
| Assets | 666,023 | 617,446 | 627,307 | ||
| Ratio | 49.0% | 51.1% | 48.1% |
As of June 30, 2015 and 2014, and as of December 2014, financial instruments measured at fair value in the financial statements of CORTICEIRA AMORIM were composed solely of derivative financial instruments. Derivatives used by CORTICEIRA AMORIM have no public quotation because they are not traded in an open market (over the counter derivatives).
According to accounting standards assets and liabilities fair value measurement hierarchy is as follows:
As of June 30, 2015, derivative financial instruments recognised in the consolidated statement of financial position are not material, reaching 722 thousand euros as assets (December 2014: 81 thousand euros) and 1,502 thousand euros as liabilities (December 2014: 2,589 thousand euros)), as stated in notes XV and XXI. These were solely composed by over the counter derivative financial instruments.
As stated in notes III b) and XIX, CORTICEIRA AMORIM entered two swaps to hedge interest rate risk. These swaps are recorded as trading derivatives and are evaluated by external financial entities. For one of these swaps, a proprietary model which utilises, on top of other inputs, a proprietary index (level 3). For the other, the evaluation uses observable inputs indirectly in the market (level 2).
CORTICEIRA AMORIM uses forward outrights and options to hedge exchange rate risk, as stated in note XXX. Evaluating exchange rate hedge instruments requires the utilisation of observable inputs (level 2). Fair value is calculated using a proprietary model of CORTICEIRA AMORIM, developed by Reuters, using discounted cash flows method for forwards outrights. As for options, it is used the Black & Scholes model.
| 30.06.2015 | 31.12.2014 | |||||
|---|---|---|---|---|---|---|
| Nature | Hierarchy | Type | Notional | Fair Value | Notional | Fair Value |
| Cash flow hedge | 10,119 | 242 | ||||
| Fair value hedge | 165 | 480 | 1,710 | 81 | ||
| Level 2 Total | 10,284 | 722 | 1,710 | 81 | ||
| Total Assets | 10,284 | 722 | 1,710 | 81 | ||
| Cash flow hedge | 8,910 | - 3 |
10,483 | -174 | ||
| Fair value hedge | 40,889 | -1,421 | 28,984 | -2,208 | ||
| Trading derivatives | 20,000 | -78 | 20,000 | -124 | ||
| Level 2 Total | 69,799 | -1,502 | 59,467 | -2,505 | ||
| Trading derivatives | 0 | 0 | 30,000 | -83 | ||
| Level 3 Total | 0 | 0 | 30,000 | -83 | ||
| Total Liabilities | 69,799 | -1,502 | 89,467 | -2,589 |
When evaluating equity and net income, CORTICEIRA AMORIM makes estimates and assumptions concerning events only effective in the future. In most cases, estimates were confirmed by future events. In such cases where it doesn't, variations will be registered when they'll be materialized.
As for 1H2015, no estimates and judgements were identified as having important impact in CORTICEIRA AMORIM results if not materialized.
As for assets, the value 8,826 K€ in Deferred tax assets (2014: 6,708 K€) will be recovered if the business plans of the companies that recorded those assets are materialized in the future.
| COMPANY | HEAD OFFICE | COUNTRY | 1H15 | 2014 | |
|---|---|---|---|---|---|
| Raw Materials | |||||
| Amorim Natural Cork, S.A. | Vale de Cortiças - Abrantes | PORTUGAL | 100% | 100% | |
| Amorim Florestal, S.A. | Ponte de Sôr | PORTUGAL | 100% | 100% | |
| Amorim Florestal España, SL | San Vicente Alcántara | SPAIN | 100% | 100% | |
| Amorim Florestal Mediterrâneo, SL | Cádiz | SPAIN | 100% | 100% | |
| Amorim Tunisie, S.A.R.L. | Tabarka | TUNISIA | 100% | 100% | |
| Augusta Cork, S.L. | San Vicente Alcántara | SPAIN | 100% | 100% | |
| Comatral - C. de Marocaine de Transf. du Liège, S.A. | Skhirat | SPAIN | 100% | 100% | |
| SIBL - Société Industrielle Bois Liége | Jijel | ALGERIA | 51% | 51% | |
| Société Nouvelle du Liège, S.A. (SNL) | Tabarka | TUNISIA | 100% | 100% | |
| Société Tunisienne d'Industrie Bouchonnière | (b) | Tabarka | TUNISIA | 45% | 45% |
| Vatrya - Serviços de Consultadoria, Lda | Funchal - Madeira | PORTUGAL | 100% | 100% | |
| Cork Stoppers | |||||
| Amorim & Irmãos, SGPS, S.A. | Santa Maria Lamas | PORTUGAL | 100% | 100% | |
| Agglotap, SA | Girona | SPAIN | 91% | 91% | |
| Amorim & Irmãos, S.A. | Santa Maria Lamas | PORTUGAL | 100% | 100% | |
| Amorim Argentina, S.A. | Buenos Aires | ARGENTINA | 100% | 100% | |
| Amorim Australasia Pty Ltd | Adelaide | AUSTRALIA | 100% | 100% | |
| Amorim Bartop, S.A. | (f) | Mozelos | PORTUGAL | 100% | - |
| Amorim Cork América, Inc. | California | U. S. AMERICA | 100% | 100% | |
| Amorim Cork Beijing Ltd | Beijing | CHINA | 100% | 100% | |
| Amorim Cork Bulgaria EOOD | Plovdiv | BULGARIA | 100% | 100% | |
| Amorim Cork Deutschland GmbH & Co KG | Mainzer | GERMANY | 100% | 100% | |
| Amorim Cork España, S.L. | San Vicente Alcántara | SPAIN | 100% | 100% | |
| Amorim Cork Itália, SPA | Conegliano | ITALY | 100% | 100% | |
| Amorim Cork South Africa (Pty) Ltd | Cape Town | SOUTH AFRICA | 100% | 100% | |
| Amorim France, S.A.S. | Champfleury | FRANCE | 100% | 100% | |
| Amorim Top Series, SA | Vergada - Mozelos | PORTUGAL | 100% | 100% | |
| Bouchons Prioux | Epernay | FRANCE | 91% | 91% | |
| Carl Ed. Meyer Korken | Delmenhorst | GERMANY | 100% | 100% | |
| Chapuis, S.L. | Girona | SPAIN | 100% | 100% | |
| Corchera Gomez Barris | Santiago | CHILE | 50% | 50% | |
| Corchos de Argentina, S.A. | (b) | Mendoza | ARGENTINA | 50% | 50% |
| Equipar, Participações Integradas, Lda. | Coruche | PORTUGAL | 100% | 100% | |
| FP Cork, Inc. | California | U. S. AMERICA | 100% | 100% | |
| Francisco Oller, S.A. | Girona | SPAIN | 92% | 92% | |
| Hungarocork, Amorim, RT | Budapeste | HUNGARY | 100% | 100% | |
| Indústria Corchera, S.A. | (c) | Santiago | CHILE | 50% | 50% |
| Korken Schiesser Ges.M.B.H. | Viena | AUSTRIA | 69% | 69% | |
| Olimpiadas Barcelona 92, S.L. | Girona | SPAIN | 100% | 100% | |
| Portocork América, Inc. | California | U. S. AMERICA | 100% | 100% | |
| Portocork France, S.A.S. | Bordéus | FRANCE | 100% | 100% | |
| Portocork Internacional, S.A. | Santa Maria Lamas | PORTUGAL | 100% | 100% | |
| Portocork Itália, s.r.l | Milão | ITALY | 100% | 100% | |
| Sagrera et Cie | Reims | FRANCE | 91% | 91% | |
| S.A. Oller et Cie | Reims | FRANCE | 92% | 92% | |
| S.C.I. Friedland | Céret | FRANCE | 100% | 100% | |
| S.C.I. Prioux | Epernay | FRANCE | 91% | 91% | |
| Société Nouvelle des Bouchons Trescases | (b) | Perpignan | FRANCE | 50% | 50% |
| Trefinos Australia | Adelaide | AUSTRALIA | 91% | 91% | |
| Trefinos Italia, s.r.l | Treviso | ITALY | 91% | 91% | |
| Trefinos USA, LLC | Fairfield, CA | U. S. AMERICA | 91% | 91% | |
| Trefinos, S.L | Girona | SPAIN | 91% | 91% | |
| Victor y Amorim, Sl | (c) | Navarrete - La Rioja | SPAIN | 50% | 50% |
| Wine Packaging & Logistic, S.A. | (b) | Santiago | CHILE | 50% | 50% |
| COMPANY | HEAD OFFICE | COUNTRY | 1H15 | 2014 | |
|---|---|---|---|---|---|
| Floor & Wall Coverings | |||||
| Amorim Revestimentos, S.A. | Lourosa | PORTUGAL | 100% | 100% | |
| Amorim Benelux, BV - AR | Tholen | NETHERLANDS | 100% | 100% | |
| Amorim Deutschland, GmbH - AR | (a) | Delmenhorts | GERMANY | 100% | 100% |
| Amorim Flooring (Switzerland) AG | Zug | SWITZERLAND | 100% | 100% | |
| Amorim Flooring Austria GesmbH | Vienna | AUSTRIA | 100% | 100% | |
| Amorim Flooring Investments, Inc. | Hanover - Maryland | U. S. AMERICA | 100% | 100% | |
| Amorim Flooring North America Inc | Hanover - Maryland | U. S. AMERICA | 100% | 100% | |
| Amorim Japan Corporation | Tokyo | JAPAN | 100% | 100% | |
| Amorim Revestimientos, S.A. | Barcelona | SPAIN | 100% | 100% | |
| Cortex Korkvertriebs GmbH | Fürth | GERMANY | 100% | 100% | |
| Dom KorKowy, Sp. Zo. O. | (c) | Kraków | POLAND | 50% | 50% |
| Timberman Denmark A/S | Hadsun | DENMARK | 51% | 51% | |
| US Floors, Inc. | (b) | Dalton - Georgia | U. S. AMERICA | 25% | 25% |
| Zodiac Kork- und Holzprodukte GmbH | (d) | Fürth | GERMANY | - | 100% |
| Composites Cork | |||||
| Amorim Cork Composites, S.A. | Mozelos | PORTUGAL | 100% | 100% | |
| Amorim (UK) Ltd. | Horsham West Sussex | UNITED KINGDOM | 100% | 100% | |
| Amorim Compcork, Lda | Mozelos | PORTUGAL | 100% | 100% | |
| Amorim Cork Composites Inc. | Trevor Wisconsin | U. S. AMERICA | 100% | 100% | |
| Amorim Deutschland, GmbH - ACC | (a) | Delmenhorts | GERMANY | 100% | 100% |
| Amorim Industrial Solutions - Imobiliária, S.A. | Corroios | PORTUGAL | 100% | 100% | |
| AmorLink | (b) | Istambul | TURKEY | 25% | 25% |
| Amosealtex Cork Co., Ltd | (b) | Shanghai | CHINA | 30% | 30% |
| Chinamate (Xi'an) Natural Products Co. Ltd | Xi'an | CHINA | 100% | 100% | |
| Chinamate Development Co. Ltd | Hong Kong | CHINA | 100% | 100% | |
| Corticeira Amorim - France SAS - ACC | Lavardac | FRANCE | 100% | 100% | |
| Florconsult – Consultoria e Gestão, Lda | Mozelos | PORTUGAL | 100% | 100% | |
| Postya - Serviços de Consultadoria, Lda. | Funchal - Madeira | PORTUGAL | 100% | 100% | |
| Insulation Cork | |||||
| Amorim Isolamentos, S.A. | Vendas Novas | PORTUGAL | 80% | 80% | |
| Holding | |||||
| Corticeira Amorim, SGPS, S.A. | Mozelos | PORTUGAL | 100% | 100% | |
| Ginpar, S.A. (Générale d' Invest. et Participation) | Skhirat | MOROCCO | 100% | 100% | |
| Amorim Cork Research, Lda. | Mozelos | PORTUGAL | 100% | 100% | |
| Amorim Cork Services, Lda. | Mozelos | PORTUGAL | 100% | 100% | |
| Amorim Cork Ventures, Lda | Mozelos | PORTUGAL | 100% | 100% | |
| Corkyn Composites, Lda | (e) (b) Mozelos | PORTUGAL | 25% | - | |
| Ecochic portuguesas – footwear and fashion | (e) (b) Mozelos | PORTUGAL | 24% | - | |
| products, Lda Soc. Portuguesa de Aglomerados de Cortiça, Lda |
Montijo | PORTUGAL | 100% | 100% | |
(a) One single company: Amorim Deutschland, GmbH & Co. KG.
(b) Equity method consolidation.
(c) CORTICEIRA AMORIM controls the operations of the company – line-by-line consolidation method.
(d) Merged with Cortex during 1H15
(e) Associate set-up during 2015
(f) Subsidiary set-up during 2015
30
| Exchage rates | First Half End 2015 |
First Half Average 2015 |
Year end 2014 |
Average 2014 |
|
|---|---|---|---|---|---|
| Argentine Peso | ARS | 10.12918 | 9.84770 | 10.77468 | 10.12833 |
| Australian Dollar | AUD | 1.45500 | 1.42608 | 1.47188 | 1.48290 |
| Lev | BGN | 1.95570 | 1.95574 | 1.95471 | 1.95580 |
| Brazilian Real | BRL | 3.46990 | 3.31015 | 3.12113 | 3.22070 |
| Canadian Dollar | CAD | 1.38390 | 1.37736 | 1.46614 | 1.40630 |
| Swiss Franc | CHF | 1.04130 | 1.05673 | 1.21462 | 1.20240 |
| Chilean Peso | CLP | 711.440 | 692.980 | 756.917 | 733.560 |
| Yuan Renminbi | CNY | 6.93660 | 6.94081 | 8.18575 | 7.53580 |
| Danish Krone | DKK | 7.46040 | 7.45616 | 7.45482 | 7.44530 |
| Algerian Dinar | DZD | 109.93 | 106.5945 | 106.635 | 106.1185 |
| Euro | EUR | 1 | 1 | 1 | 1 |
| Pound Sterling | GBP | 0.71140 | 0.73230 | 0.80612 | 0.77890 |
| Hong Kong Dollar | HKD | 8.6306 | 8.6579 | 10.2999 | 9.3798 |
| Forint | HUF | 314.930 | 307.506 | 308.706 | 315.540 |
| Yen | JPY | 137.010 | 134.204 | 140.306 | 145.230 |
| Moroccan Dirham | MAD | 10.831 | 10.8013 | 11.1387 | 10.93 |
| Norwegian Krone | NOK | 8.79100 | 8.64826 | 8.35438 | 9.04200 |
| Zloty | PLN | 4.19110 | 4.14086 | 4.18426 | 4.27320 |
| Ruble | RUB | 61.6325 | 64.4613 | 51.0224 | 67.2950 |
| Swedish Kronor | SEK | 9.21500 | 9.34008 | 9.09852 | 9.39300 |
| Tunisian Dinar | TND | 2.17220 | 2.16163 | 2.25012 | 2.25770 |
| Turkish Lira | TRL | 2.99530 | 2.86265 | 2.90650 | 2.83200 |
| US Dollar | USD | 1.1189 | 1.1158 | 1.3285 | 1.2141 |
| Rand | ZAR | 13.6416 | 13.3048 | 14.4037 | 14.0353 |
CORTICEIRA AMORIM is organised in the following Business Units (BU):
For purposes of this Report, the Business approach was selected as the primary segment. This is consistent with the formal organization and evaluation of business.
The following table shows the main indicators of the said units, and, whenever possible, the reconciliation with the consolidated indicators (values in thousand EUR):
| thousand euro | ||||||||
|---|---|---|---|---|---|---|---|---|
| 1H2015 | Raw Materials |
Cork Stoppers |
Cork Floor Coverings |
Composite Cork |
Insulation Cork |
Holding | Ajustm. | Consolidated |
| Trade Sales | 3,270 | 199,541 | 56,265 | 45,855 | 4,252 | 14 | 0 | 309,197 |
| Other BU Sales | 69,560 | 2,202 | 1,225 | 3,173 | 724 | 905 | -77,789 | - |
| Total Sales | 72,830 | 201,743 | 57,490 | 49,028 | 4,976 | 919 | -77,789 | 309,197 |
| Current EBITDA | 11,063 | 32,231 | 5,352 | 6,604 | 824 | -1,763 | 6 7 |
54,379 |
| Assets | 139,672 | 338,526 | 93,108 | 83,326 | 13,282 | 574 | -2,466 | 666,023 |
| Liabilities | 37,622 | 127,404 | 30,864 | 29,910 | 2,470 | 25,814 | 85,428 | 339,513 |
| Capex | 1,771 | 6,437 | 802 | 1,405 | 6 5 |
127 | 0 | 10,608 |
| Year Depreciation | -1,475 | -6,407 | -2,568 | -3,255 | -334 | -19 | 0 | -14,058 |
| Non-cash cost | -38 | -3,660 | -181 | -56 | -40 | 0 | 0 | -3,976 |
| Gains/Losses in associated companies |
-7 | 875 | 228 | -12 | 0 | 0 | 0 | 1,084 |
| 1H2014 | Raw Materials |
Cork Stoppers |
Cork Floor Coverings |
Composite Cork |
Insulation Cork |
Holding | Ajustm. | Consolidated |
|---|---|---|---|---|---|---|---|---|
| Trade Sales | 2,370 | 181,407 | 60,637 | 39,778 | 4,144 | 709 | 0 | 289,044 |
| Other BU Sales | 66,894 | 1,860 | 1,653 | 2,580 | 1,052 | 4,404 | -78,443 | - |
| Total Sales | 69,264 | 183,267 | 62,289 | 42,358 | 5,196 | 5,113 | -78,443 | 289,044 |
| Current EBITDA | 9,848 | 24,665 | 7,733 | 3,964 | 965 | -1,579 | -1,983 | 43,613 |
| Assets | 134,216 | 313,861 | 101,149 | 81,931 | 13,823 | 6,421 | -8,075 | 643,326 |
| Liabilities | 37,029 | 109,284 | 39,128 | 26,934 | 2,368 | 20,594 | 102,847 | 338,184 |
| Capex | 904 | 5,435 | 641 | 885 | 344 | 562 | 0 | 8,772 |
| Year Depreciation | -2,121 | -5,813 | -2,545 | -1,595 | -327 | -80 | 0 | -12,481 |
| Non-cash cost | -23 | 1 6 |
733 | -260 | 5 5 |
0 | 0 | 521 |
| Gains/Losses in associated companies |
2 | 596 | 147 | 0 | 0 | 0 | 0 | 745 |
Adjustments = eliminations inter-BU and amounts not allocated to BU.
EBITDA = Profit before interests, depreciation, equity method, non-controlling interests and income tax.
Provisions and asset impairments were considered the only relevant non-cash material cost.
Segments assets do not include DTA (deferred tax asset) and non-trade group balances.
Segments liabilities do not include DTL (deferred tax liabilities), bank loans and non-trade group balances.
The decision to report EBITDA figures allows a better comparison of the different BU performances, disregarding the different financial situations of each BU. This is also coherent with the existing Corporate Departments, as the Financial Department is responsible for the bank negotiations, being the tax function the responsibility of the Holding Company.
Cork Stoppers BU main product is the different kinds of existing cork stoppers. The main markets are the bottling countries, from the traditional ones like France, Italy, Germany, Spain and Portugal, to the new markets like USA, Australia, Chile, South Africa and Argentina.
Raw Materials BU is, by far, the most integrated in the production cycle of CORTICEIRA AMORIM, with 95% of its sales to others BU, specially to Cork Stoppers BU. Main products are bark and discs.
The remaining BU produce and sell a vast number of cork products made from cork stoppers waste. Main products are cork floor tiles, cork rubber for the automotive industry and antivibratic systems, expanded agglomerates for insulation and acoustic purposes, technical agglomerates for civil construction and shoe industry, as well as granulates for agglomerated, technical and champagne cork stoppers.
Major markets for flooring and insulation products are in Europe and for composites products the USA. Major production sites are in Portugal, where most of the invested capital is located. Products are distributed in practically all major markets through a fully owned network of sales companies. About 70% of total consolidated sales are achieved through these companies.
Capex was concentrated in Portugal. Assets in foreign subsidiaries totalize 283 million euros, and are mostly composed by inventories (105 million), customers (100 million) and tangible fixed assets (47 million).
Sales by markets:
| thousand euros | ||||
|---|---|---|---|---|
| Markets | 1H15 | 1H14 | ||
| European Union | 185,780 | 60.1% | 178,307 | 61.7% |
| From which: Portugal | 17,156 | 5.5% | 11,853 | 4.1% |
| Other European countries | 13,025 | 4.2% | 14,593 | 5.0% |
| United States | 68,936 | 22.3% | 55,550 | 19.2% |
| Other American countries | 21,494 | 7.0% | 19,426 | 6.7% |
| Australasia | 15,706 | 5.1% | 17,240 | 6.0% |
| Africa | 4,255 | 1.4% | 3,928 | 1.4% |
| TOTAL | 309,197 | 100% | 289,044 | 100% |
33
| thousand euros | ||||||
|---|---|---|---|---|---|---|
| Land and buildings |
Machinery | Other | Total tangible assets |
Intangible assets |
Investment property |
|
| Gross Value | 225,357 | 326,674 | 45,828 | 597,859 | 4,136 | 15,489 |
| Depreciation and impairments | -140,187 | -248,092 | -24,918 | -413,197 | -3,444 | -10,240 |
| Opening balance (Jan 1, 2014) | 85,170 | 78,582 | 20,910 | 184,662 | 692 | 5,250 |
| INCREASE | 416 | 1,521 | 6,820 | 8,757 | 15 | 0 |
| PERIOD DEPREC. AND IMPAIRMENTS | -2,363 | -8,082 | -1,680 | -12,125 | -91 | -1,486 |
| SALES AND OTHER DECREASES | -378 | -90 | -103 | -571 | 0 | - 2 |
| TRANSFERS AND RECLASSIFICATIONS | -2,049 | 2,446 | -3,665 | -3,268 | 2 | 3,533 |
| TRANSLATION DIFFERENCES | -32 | -104 | 1 | -135 | 0 | -68 |
| Gross Value | 217,345 | 327,929 | 50,000 | 595,274 | 4,112 | 23,220 |
| Depreciation and impairments | -136,581 | -253,656 | -27,717 | -417,954 | -3,494 | -15,994 |
| Closing balance (Jun 30, 2014) | 80,764 | 74,273 | 22,283 | 177,320 | 618 | 7,226 |
| Gross Value | 229,817 | 348,850 | 37,020 | 615,687 | 4,670 | 15,432 |
| Depreciation and impairments | -143,133 | -260,835 | -28,826 | -432,794 | -3,579 | -10,242 |
| Opening balance (Jan 1, 2015) | 86,684 | 88,015 | 8,194 | 182,893 | 1,091 | 5,190 |
| INCREASE | 1,690 | 2,949 | 5,776 | 10,415 | 193 | 0 |
| PERIOD DEPREC. AND IMPAIRMENTS | -3,957 | -8,685 | -1,056 | -13,698 | -100 | -260 |
| SALES AND OTHER DECREASES | - 3 |
-83 | -108 | -193 | 0 | 0 |
| TRANSFERS AND RECLASSIFICATIONS | 1,847 | 526 | -1,672 | 675 | 80 | 0 |
| TRANSLATION DIFFERENCES | 635 | 243 | 67 | 945 | 0 | 0 |
| Gross Value | 234,208 | 352,707 | 40,395 | 627,310 | 4,896 | 15,432 |
| Depreciation and impairments | -147,312 | -205,441 | -29,194 | -446,274 | -3,632 | -10,502 |
| Closing balance (Jun 30, 2015) | 86,897 | 82,939 | 11,201 | 181,037 | 1,264 | 4,930 |
The amount of 4,930 K€, referred as Property Investment (June 2014: 7,226 K€), is due, mainly, to land and buildings that are not used in production.
During the 1H14, following an evaluation made by an independent entity, it was booked a 1,224 K€ impairment in land and buildings regarding Corroios real estate. Taking in account the discontinuing of the operations during the second half of 2014 (which will be completed during 2015) the property value is no longer recoverable through use. As a result, an impairment was registered. The report was issued by Cushman & Wakefield, which concluded that the market value was superior to the book value. The evaluation was based on the value that would result from the development of an allotment project for logistics, trade and services. Comparative market for construction and development costs were used. The gross yield used for rental purposes was 10%, with the discount rate of financial flows being 11%. This figure was presented in the Consolidated Statement of Income as non-recurring expenses.
The increase in depreciation / impairments in 1H2015 is related to an impairment loss of 1,434 K€ recognized in fixed assets of the group in China, coupled with the decision of the management to change the Composite Cork BU strategy for this market.
Expenses related with tangible fixed assets had no impact. No interest was capitalised during 1H2015.
| thousand euros | |||||
|---|---|---|---|---|---|
| 1H2014 | Openning | Increases | Decreases | Reclassification | Closing |
| Oller et cie | 751 | 751 | |||
| Industria Corchera | 1,314 | 1,314 | |||
| Amorim France | 250 | 250 | |||
| Amorim Cork Italia | 274 | 274 | |||
| Korken Schiesser | 164 | 164 | |||
| Amorim Deutschland | 2,503 | 2,503 | |||
| Goodwill | 5,255 | 0 | 0 | 0 | 5,255 |
| milhares de euros | |||||
|---|---|---|---|---|---|
| 1H2015 | Openning | Increases | Decreases | Reclassification | Closing |
| Oller et cie | 751 | 751 | 0 | ||
| Industria Corchera | 1,314 | 1,314 | 0 | ||
| Amorim France | 159 | 159 | 0 | ||
| Amorim Cork Italia | 250 | 250 | 0 | ||
| Korken Schiesser | 274 | 274 | 0 | ||
| Amorim Deutschland | 164 | 164 | 0 | ||
| Goodwill | 2,911 | 0 | 2,911 | 0 | 0 |
As stated in point II f), goodwill impairment test is made each year.
Exceptionally an impairment test to the goodwill was achieved in 1H15, resulting in an impairment registered of 2,911 K€.
This was done utilizing the value in use.
Cash flows were estimated, based on budget and plans approved by management. The growth assumptions had in mind the expected growth in the wine market, champagne and sparkling wine, as well as the evolution of the market share of CORTICEIRA AMORIM in this business.
In this semester, the profitability of the subsidiary Industria Corchera changed significantly, accompanied by a drop in sales and increased operating costs. These changes impacted the expected cash flows of this subsidiary. As a result, the test performed led to the need to write-off of the goodwill associated with this subsidiary. In that test, the growth rates were used in 1% to 2% for the period 2016-2018 and 1.5% for the following years. The discount rate used was 8%. Compared to the test performed in 2014, a drop was observed of approximately 30% in the estimated cash flows for the implied period and about 40% regarding perpetuity.
The volumes expected from the underlying business goodwill of the subsidiary SA Oller et Cie are not being met, due to the substitution effect on customers by other group's products. The test performed in this period considered a growth rate of 1% and an 8% discount rate.
| thousand euros | |||
|---|---|---|---|
| 1H15 | 2014 | 1H14 | |
| Initial Balance | 10,841 | 8,129 | 8,129 |
| In / Out | 5 | 1,533 | 523 |
| Results | 1,084 | 1,280 | 745 |
| Dividends | 0 | -250 | 0 |
| Exchange Differences | 366 | 167 | -179 |
| Other | 6 | -19 | 0 |
| End Balance | 12,302 | 10,841 | 9,219 |
As for 2014, Industria Corchera, S.A. registered a capital increase in Wine Packaging & Logistic, S.A., corresponding to 1,495 of the 1,533 in "In / Out". The remaining relates to the set-up of two associates in Turkey and China.
Exchange Differences are due mainly to US Floors.
In Other Financial Assets, the most important values refers to financial applications.
The differences between the tax due for the current period and prior periods and the tax already paid or to be paid of said periods is registered as "deferred tax" in the consolidated income statement, according to note II j), and amounts to 1,745 K€ (1H14: 876 K€).
On the consolidated statement of financial position this effect amounts to 8,826 K€ (1H14: 7,359 K€) as Deferred tax asset, and to 7,036 K€ (1H14: 7,387 K€) as Deferred tax liability.
It is conviction of the Board that, according to its business plan, the amounts registered in deferred tax assets will be recovered as for the tax carry forward losses concerns.
| thousand euros | |||
|---|---|---|---|
| 1H15 | 2014 | 1H14 | |
| Related with Inventories and third parties | 5,296 | 3,981 | 4,362 |
| Related with Tax Losses | 1,236 | 749 | 837 |
| Related with Fixed Tangible Assets / Intag. / P.Inv | 1,237 | 1,294 | 1,769 |
| Others | 1,057 | 684 | 391 |
| Deferred Tax Assets | 8,826 | 6,708 | 7,359 |
| Related with Fixed Tangible Assets | 4,807 | 4,806 | 5,374 |
| Related with other taxable temporary differences | 2,230 | 2,164 | 2,013 |
| Deferred Tax Liabilities | 7,036 | 6,970 | 7,387 |
| Current Income Tax | -12,826 | -17,536 | -9,020 |
| Deferred Income Tax | 1,745 | 760 | 876 |
| Income Tax | -11,081 | -16,776 | -8,145 |
The difference between the variation in the financial position and the value expensed in income statement is justified by a reclassification (254 K€) between differed tax due to tax benefits and current tax to be paid with no counterpart in income tax expenses. The remaining is justified by translation differences in the non-euro subsidiaries financial position values.
During 1H2015, a 800 K€ income tax provision regarding tax contingencies was recorded. This value was considered as current income tax.
Following chart explains the effective income tax rate, from the original income tax rate of most of Portuguese companies:
| Income Tax Conciliation | 1H15 | 1H14 |
|---|---|---|
| Income Tax - Legal | 21.0% | 23.0% |
| Effect arising from extraordinary taxation (Portugal) | 6.0% | 6.5% |
| Effect due to provisions for contingencies | 2.0% | - |
| Effect due to diferent tax rates (foreign subsidiaries) and other | 0.8% | 0.6% |
| Effect due to not registering deferred tax (prudence) | - | 1.5% |
| Effect due to reversal of prior year tax estimates | -2.3% | -0.7% |
| Other | -0.2% | - |
| Income tax - effective (1) | 27.3% | 31.0% |
(1) Income Tax / Pre-tax Profit, Equity Gains, Non-controlling Interests and non-taxable costs
CORTICEIRA AMORIM and a large group of its Portuguese subsidiaries are taxed since January 1, 2001, as a group special regime for tax purposes (RETGS), as according to article 69, of the income tax code (CIRC). The option for this special regime is renewable every five years.
According to law, tax declarations for CORTICEIRA AMORIM and its Portuguese subsidiaries are subject of revision and possible correction from tax authorities generally during the next four years.
No material effects in the financial statements are expected by the Board of CORTICEIRA AMORIM from the revisions of tax declarations that will be held by the tax authorities.
Tax losses to be carried forward are related with foreign subsidiaries. Total amounts to 35 M€, of which around 6 M€ are considered to be utilised. These losses can be fully used up to 2019 and beyond.
As the tax forms are only filled after year-end closure, values at closure of 2014 were updated by the activity of the first half.
All values are related with foreign subsidiaries. The year 2019 and further was considered for those situations that correspond to tax losses to carry forward with no limit of utilization. For the purpose of deferred tax assets, no values were registered regarding tax losses related with foreign subsidiaries included in reorganization projects that turn the use of these losses not likely.
| thousand euros | |||
|---|---|---|---|
| 1H15 | 2014 | 1H14 | |
| Goods | 7,154 | 8,862 | 15,117 |
| Finished and semi-finished goods | 109,575 | 95,055 | 82,085 |
| By-products | 511 | 291 | 307 |
| Work in progress | 17,090 | 11,540 | 14,110 |
| Raw materials | 119,042 | 133,239 | 122,726 |
| Advances | 11,797 | 1,059 | 9,211 |
| Goods impairments | -1,091 | -1,180 | -1,065 |
| Finished and semi-finished goods impairments | -1,988 | -965 | -1,060 |
| Raw materials impairments | -162 | -267 | -283 |
| Inventories | 261,928 | 247,633 | 241,148 |
Impairment increases hit costs of goods sold and materials consumed in income statement.
| thousand euros | |||
|---|---|---|---|
| Impairment losses | 1H15 | 2014 | 1H14 |
| Initial Balance | 2,413 | 2,253 | 2,253 |
| Increases | 1,138 | 76 | 2 |
| Decreases | 104 | 177 | 38 |
| Others | -205 | 261 | 192 |
| End Balance | 3,242 | 2,413 | 2,409 |
The increase in impairment losses in the first half of 2015, 1,076 K€ resulted from the revision of the estimate of the impairment of finished products Composites Cork BU. Given the similarity of the products with the Floor and Wall Coverings BU, it is considered that the criterion of this BU, based on aging, is the most suitable for estimating impairment that BU.
| thousand euros | |||
|---|---|---|---|
| 1H15 | 2014 | 1H14 | |
| Gross amount | 166,180 | 132,384 | 157,437 |
| Impairments | -10,359 | -9,777 | -10,432 |
| Trade receivables | 155,821 | 122,606 | 147,005 |
At the end of each period, Trade receivables credit quality is analysed. Due to specific business environment, balances unpaid up to 120 days are not impaired. From 120 to 180 days a 60% impairment register is considered. Over 180 days as well as all doubtful balances are fully impaired. These rules do not overcome specific cases analysis.
| milhares de euros | |||
|---|---|---|---|
| Impairment losses | 1H15 | 2014 | 1H14 |
| Initial Balance | 9,777 | 10,463 | 10,463 |
| Increases | 1,195 | 2,163 | 1,401 |
| Decreases | 264 | 1,813 | 1,314 |
| Others | -349 | -1,036 | -118 |
| End Balance | 10,359 | 9,777 | 10,432 |
| thousand euros | |||
|---|---|---|---|
| 1H15 | 2014 | 1H14 | |
| Income tax - advances / minimum / excess est. | 481 | 426 | 6,242 |
| Income tax - advances | 1,775 | 1,568 | 2,336 |
| Income tax - withholding | 225 | 239 | 185 |
| Income tax - special payment (RERD) | 4,265 | 4,265 | 4,265 |
| Income tax - special payment (RERD) impairment | -4,265 | -4,265 | -4,265 |
| Income tax | 2,481 | 2,233 | 8,763 |
The decrease in "Income tax - advances / minimum / excess est." compared to June 2014, is due, mainly, to the fact that Portuguese companies made advance payments that at year-end 2013 were higher than what it should be, taking in account the regularization that was made in August 2014. This situation was due especially from the tax benefits approved by Decree Law 49/2013 (CFEI).
The amount of 4,265 K€ refers to a payment made under an exceptional regime of regularisation of debts to the tax authority and to social security (DL 151-A/2013) (RERD). CORTICEIRA AMORIM has decided to partially adhere. A total of 4,265 K€ was paid in December. This payment refers to stamp tax (1,678 K€) and income tax cases (2,587 K€). The amount related with stamp tax was provisioned. As for the income tax cases, they were already provisioned, including late payment interest. To be noted that CORTICEIRA AMORIM was not a debtor to the social security and to the tax authority. Those amounts were subject to court ruling. The cases that were chosen to adhere are old cases (1996, 1997, 1998 and 2008), but, in circumstance of unfavourable ruling by the court, the outcome could impose heavy penalties and late payment interests. These contingencies are still live and it is the purpose of CORTICEIRA AMORIM to keep defending its position.
| thousand euros | |||
|---|---|---|---|
| 1H15 | 2014 | 1H14 | |
| Advances to suppliers / suppliers | 3,183 | 3,988 | 5,142 |
| Accrued income | 129 | 94 | 139 |
| Deferred costs | 980 | 1,192 | 2,019 |
| Hedge accounting assets | 722 | 81 | 132 |
| TVA | 18,408 | 17,045 | 16,273 |
| Others | 3,186 | 3,273 | 3,433 |
| Other current assets | 26,609 | 25,673 | 27,136 |
| thousand euros | |||
|---|---|---|---|
| 1H15 | 2014 | 1H14 | |
| Cash | 144 | 173 | 172 |
| Bank Balances | 5,628 | 5,486 | 6,706 |
| Time Deposits | 1,149 | 359 | 2,490 |
| Others | 19 | 18 | 20 |
| Cash and cash equivalents according to Balance Sheet | 6,940 | 6,036 | 9,388 |
| Overdraft | -15,440 | -11,835 | -19,839 |
| Cash and cash equivalents according to Cash Flow Stat. | -8,501 | -5,799 | -10,451 |
As of June 30, 2015, the share capital is represented by 133,000,000 ordinary registered shares, conferring dividends, with a par value of 1 Euro.
The Board of CORTICEIRA AMORIM is authorised to raise the share capital, one or more times, respecting the conditions of the commercial law, up to 250,000,000 euros.
During the first half, CORTICEIRA AMORIM did not acquire or sell its own shares.
As of June 30, 2015, CORTICEIRA AMORIM held 7,399,262 of its own shares, representing 5.563% of its share capital.
Legal reserve and share premium are under the legal reserve rule and can only be used for (art. 296 CSC):
Legal reserve and share premium values are originated from Corticeira Amorim, SGPS, SA books.
Value is composed from other reserves account and prior year's results of Corticeira Amorim, SGPS, SA books, as well as non-distributed cumulative results of Corticeira Amorim, SGPS, S.A. subsidiaries.
In the Shareholders' General Meeting of March 24, 2015, a dividend distribution of 0.14 euros per share was approved. The dividend was paid at April, 20.
| thousand euros | |||
|---|---|---|---|
| 1H15 | 2014 | 2013 | |
| Dividends paid: | 18,620 | 25,270 | 21,280 |
| Portion attributable to own shares | -1,036 | -1,406 | -1,184 |
| Dividends paid | 17,584 | 23,864 | 20,096 |
| thousand euros | |||
|---|---|---|---|
| 1H15 | 2014 | 1H14 | |
| Initial Balance | 13,393 | 13,008 | 13,008 |
| In / Out | 0 | -12 | 0 |
| Results | 53 | 924 | 434 |
| Dividends | -47 | -433 | -213 |
| Exchange Diferrences | 193 | -87 | -274 |
| Others | 0 | - 7 |
-13 |
| End Balance | 13,591 | 13,393 | 12,943 |
At the end of the period, interest bearing loans was as follows:
| thousand euros | |||
|---|---|---|---|
| 1H15 | 2014 | 1H14 | |
| Bank loans and Overdrafts | 37,302 | 42,383 | 66,323 |
| Commercial Paper | 0 | 24,985 | 15,500 |
| Interest-bearing loans - current | 37,302 | 67,369 | 81,823 |
Loans were denominated in euros, except 30% (Dec. 2014: 16%).
| thousand euros | |||
|---|---|---|---|
| 1H15 | 2014 | 1H14 | |
| Bank loans | 40,517 | 5,258 | 5,788 |
| Bonds | 19,947 | 19,929 | 19,909 |
| Reimbursable subsidies | 1,039 | 1,039 | 682 |
| Commercial Paper | 0 | 0 | 7,499 |
| Interest-bearing loans - non-current | 61,503 | 26,225 | 33,878 |
Loans were denominated in euros, except 6% (Dec. 2014: 12%).
As of June 30, 2015, maturity of non-current interest bearing debt was as follows:
| Total | 61,503 |
|---|---|
| After 01/07/2019 | 39,086 |
| Between 01/07/2018 and 30/06/2019 | 164 |
| Between 01/07/2017 and 30/06/2018 | 942 |
| Between 01/07/2016 and 30/06/2017 | 21,310 |
| thousand euros |
Non-current and current interest bearing debt value 73,805 K€ carries floating interest rates. The remaining 25,000 K€ carries fixed interest rates. Average cost, during the first half, for all the credit utilized was 2.25% (Dec. 2014: 3.73%).
During first quarter 2013, a three year interest rate swap with a notional of 20,000 K€ was contracted. With the contract, CORTICEIRA AMORIM pays interest at a fixed rate and in exchange receives interest at a variable rate, according to euribor 6 month rate.
At the end of 1H15, CORTICEIRA AMORIM had credit lines with contractual clauses that include covenants generally used in these type of contracts, namely: cross-default, pari-passu and in some cases negative pledge.
At the same date, CORTICEIRA AMORIM had utilized credit lines with associated financial covenants. These included, namely, ratios accomplishment that allowed for an accompaniment of the financial position of the company, most of all its capacity to pay its debt. The most common ratio was the one that relates Debt with EBITDA (net interest bearing debt/current EBITDA). Other ratios that relate EBITDA with interest costs (current EBITDA/net interest) and Equity with total assets are part of the said contracts.
As of June 30, 2015, these ratios were as follows:
| Net interest bearing debt / current EBITDA (X) | 0.94 |
|---|---|
| Current EBITDA / net interest (X) | 73.4 |
| Equity / Assets | 49.0% |
Ratios above fully and easily accomplished the demands of the contracts that formalized said loans. If by chance they did not accomplish the possibility of an early payment was conceivable.
On top of the said full accomplishment, it has to be noted that the capacity of full repayment was reinforced by the existence, as of that date, of approved non-used credit lines that amounted to 151 M€.
In the ratio "Net interest bearing debt / current EBITDA (X)", current EBITDA is calculated using the sum of the last four quarters.
| thousand euros | |||
|---|---|---|---|
| 1H15 | 2014 | 1H14 | |
| Suppliers - current account | 53,998 | 53,479 | 53,417 |
| Suppliers - confirming | 63,152 | 57,377 | 53,709 |
| Suppliers - accrualls | 12,837 | 4,447 | 9,559 |
| Suppliers | 129,987 | 115,303 | 116,684 |
| thousand euros | |||
|---|---|---|---|
| 1H15 | 2014 | 1H14 | |
| Non interest bearing grants | 9,474 | 10,831 | 10,377 |
| Other | 777 | 702 | 844 |
| Other borrowings and creditors - non current | 10,251 | 11,533 | 11,221 |
| Non interest bearing grants | 1,881 | 1,442 | 1,809 |
| Deferred costs | 26,826 | 18,646 | 26,212 |
| Deferred income - grants | 5,556 | 6,130 | 5,787 |
| Deferred income - others | 256 | 173 | 593 |
| TVA | 8,308 | 5,879 | 8,158 |
| State and social security - withholding and others | 4,003 | 5,023 | 3,953 |
| Other | 4,851 | 6,713 | 6,599 |
| Other borrowings and creditors - current | 51,682 | 44,006 | 53,111 |
Changes in Deferred costs are related with variation of salaries (vacations and Christmas bonus and vacations paid).
In Other borrowings and creditors – current, it is included a value of 1,502 K€ (2014: 2,589 K€), which refers to the fair value of exchange risk and interest rate risk derivatives.
In Other borrowings and creditors – non-current (10,251 K€), maturity is as follows: 1 to 2 years (4,431 K€), 2 to 4 years (4,770 K€), more than 4 years (1,050 K€).
Includes income tax estimate to be paid.
| thousand euros | ||
|---|---|---|
| 1H15 | 1H14 | |
| Communications | 576 | 572 |
| Information systems | 2,256 | 2,276 |
| Insurance | 1,781 | 1,737 |
| Subcontractors | 1,498 | 2,997 |
| Power | 6,265 | 6,037 |
| Security | 523 | 547 |
| Professional Fees | 500 | 439 |
| Tools | 782 | 975 |
| Oil and gas | 865 | 846 |
| Royalties | 663 | 735 |
| Rentals | 2,360 | 2,275 |
| Transports | 11,106 | 10,438 |
| Travel - Board | 431 | 387 |
| Travel | 2,093 | 1,980 |
| Commissions | 3,328 | 3,121 |
| Special Services | 5,207 | 3,945 |
| Advertising | 3,821 | 3,362 |
| Maintenance | 4,179 | 3,571 |
| Others | 3,177 | 3,020 |
| Third party supplies and services | 51,414 | 49,260 |
| thousand euros | ||
|---|---|---|
| 1H15 | 1H14 | |
| Board remuneration | 388 | 271 |
| Employees remuneration | 41,741 | 39,232 |
| Social Security and other | 9,213 | 8,873 |
| Severance costs | 542 | 1,094 |
| Other | 5,326 | 4,765 |
| Staff costs | 57,209 | 54,235 |
| Average number of employees | 3,662 | 3,571 |
In Severance costs (1H14), the value of 1,511 K€ related with the industrial reorganization of Corroios unit is not included. This value was registered as non-current results.
| thousand euros | ||
|---|---|---|
| 1H15 | 1H14 | |
| Receivables | 931 | 84 |
| Inventories | -104 | -38 |
| Others | 0 | 33 |
| Impairments of Assets | 827 | 79 |
| thousand euros | ||
|---|---|---|
| 1H15 | 1H14 | |
| Property impairment | 0 | 1,224 |
| Goodwill impairment | 2,912 | 0 |
| Severance costs | 0 | 1,511 |
| Non-current results | 2,912 | 2,735 |
In 1H15, goodwill impairment was registered, as stated in Note IX.
In 1H14, the value refers to the effect of the industrial reorganization of the Corroios unit.
| thousand euros | ||
|---|---|---|
| 1H15 | 1H14 | |
| Gain in fixed assets disposals | 187 | 310 |
| Operating subsidies | 491 | 262 |
| Investment subsidies | 671 | 598 |
| Other | 2,284 | 2,402 |
| Other gains | 3,633 | 3,572 |
| thousand euros | ||
|---|---|---|
| 1H15 | 1H14 | |
| Net exchange diffences | 2,453 | 236 |
| Taxes (other than income) | 391 | 524 |
| Provisions | 181 | 122 |
| Loss in fixed assets disposals | 60 | 10 |
| Bank charges | 209 | 229 |
| Other | 1,769 | 1,882 |
| Other losses | 5,063 | 3,003 |
Exchange differences include also the effect due to the changes in the derivatives fair value.
| thousand euros | ||
|---|---|---|
| 1H15 | 1H14 | |
| Interest costs - bank loans | 808 | 1,588 |
| Interest costs - other entities | 369 | 609 |
| Stamp tax - interest | 8 | 22 |
| Stamp tax - capital | 46 | 81 |
| Interest costs - other | -24 | -65 |
| 1,208 | 2,235 | |
| Interest gains - bank deposits | 63 | 26 |
| Interest gains - delayed payments | 7 | 66 |
| 70 | 92 | |
| Net financial costs | 1,138 | 2,144 |
Interest costs – other entities includes 145 K€ of interest related with the swaps (1H14: 345 K€), as well as 176 K€ (1H14: 238 K€) of discounted interests on non-interest bearing loans.
Interest costs - other value of -24 K€ (-65K€) includes a gain of 129 K€ (1H14: 299K€) due to the change in the fair value of the swap. Includes also costs related with loans commissions and others.
CORTICEIRA AMORIM consolidates indirectly in AMORIM - INVESTIMENTOS E PARTICIPAÇÕES, S.G.P.S., S.A. (AIP) with head-office at Mozelos (Santa Maria da Feira, Portugal), Amorim Group holding company.
As of June 30, 2015, indirect stake of AIP in CORTICEIRA AMORIM was 51% corresponding as 54.004% of the voting rights.
CORTICEIRA AMORIM related party transactions are, in general, due to the rendering of services through some of AIP subsidiaries (Amorim Serviços e Gestão, S.A., Amorim Viagens e Turismo, S.A., OSI – Sistemas Informáticos e Electrotécnicos, Lda.).
Balances at June 30, and year-end 2014 are those resulting from the usual payment terms (from 30 to 60 days) and so are considered to be immaterial.
Services rendered from related-parties are based on the "cost plus" basis raging from 2% to 5%
Provisions
| thousand euros | |||
|---|---|---|---|
| 1H15 | 2014 | 1H14 | |
| Income tax contingencies | 26,444 | 25,617 | 21,464 |
| Guarantees to customers | 691 | 727 | 1,368 |
| Others | 1,826 | 1,607 | 1,658 |
| Provisions | 28,961 | 27,951 | 24,490 |
As stated in Note XI, a total of 800 K€ of provisions regarding income tax contingencies was recorded during the period.
Tax cases are in general related with Portuguese companies and correspond to fiscal years of 1994, 1997, 1998, 1999 and from 2003 till 2012. The most recent fiscal year analysed by Portuguese tax authorities was 2012.
Tax cases are basically related with questions like non-remunerated guarantees given between group companies, group loans (stamp tax), interest costs of holding companies (SGPS), and with the acceptance as fiscal costs of losses related with the closing of subsidiaries.
Claims by the tax authorities are related with income tax, stamp tax and marginally TVA.
Income tax provisions refer to live tax cases, in court or not, as well as accounting recorded situations that can raise question in future inspections by the tax authority.
Provisions correspond to situations that, for its procedural development or for doctrine and jurisprudence newly issued, indicate a probability of an unfavourable outcome for CORTICEIRA AMORIM and, if that happens, a cash outflow can be reasonably estimated.
It is considered appropriate the total value of 26.4 M€ of provisions related with contingencies regarding income tax and 2.5 M€ regarding other contingencies.
The total contingent liabilities resulting from not accrued tax proceedings and other contingencies not recorded as liabilities, amounts to 3.9 M € as of December 2014. No significant changes occurred during the period.
During its operating activities CORTICEIRA AMORIM issued in favour of third-parties guarantees amounting to 111,663 K€ (2014: 66,030 K€).
| thousand euros | ||
|---|---|---|
| Beneficiary | Amount | Purpose |
| Government agencies | 4,557 | Capex grants / subsidies |
| Tax authority | 2,984 | Tax lawsuits |
| Banks | 103,797 | Credit lines |
| Other | 324 | Miscellaneous guarantees |
| TOTAL | 111,663 |
As of June 30, 2015, future expenditure resulting from long-term motor vehicle rentals totals 1,553 K€. Future expenditure resulting from software and hardware rentals totals 391 K€.
47
As of June 30, 2015, forward outright and options contracts related with sales currencies were as follows:
| thousand euros | ||||||
|---|---|---|---|---|---|---|
| 1H15 | 2014 | 1H14 | ||||
| USD | 35,091 | 93% | 13,186 | 79% | 26,331 | 88% |
| ZAR | 2,303 | 6% | 2,812 | 17% | 2,952 | 10% |
| HUF | 165 | 0% | 115 | 1% | 227 | 1% |
| GBP | 0 | 0% | 571 | 3% | 307 | 1% |
| Forward - long positions | 37,559 | 100% | 16,684 | 100% | 29,816 | 100% |
| USD | 3,450 | 100% | 1,595 | 100% | 0 | - |
| Forward - short positions | 3,450 | 100% | 1,595 | 100% | 0 | - |
| USD | 16,911 | 100% | 22,899 | 100% | 7,346 | 100% |
| Options - long positions | 16,911 | 100% | 22,899 | 100% | 7,346 | 100% |
| USD | 2,163 | 100% | 0 | - | 2,489 | 100% |
| Options - short positions | 2,163 | 100% | 0 | - | 2,489 | 100% |
CORTICEIRA AMORIM sales are composed by a wide range of products that are sold through all the five continents, over 100 countries. Due to this notorious variety of products and markets, it is not considered that this activity is concentrated in any special period of the year. Traditionally first half, specially the second quarter, has been the best in sales; third and fourth quarter switch as the weakest one.
a) Net profit per share calculation used the average number of issued shares deducted by the number of average owned shares. The non-existence of potential voting rights justifies the same net profit per share for basic and diluted.
| 1H15 | 2014 | 1H14 | |
|---|---|---|---|
| Total issued shares | 133,000,000 | 133,000,000 | 133,000,000 |
| Average nr. of treasury shares | 7,398,429 | 7,398,429 | 7,398,429 |
| Average nr. of outstanding shares | 125,601,571 | 125,601,571 | 125,601,571 |
| Net Profit (thousand euros) | 26,222 | 35,756 | 18,419 |
| Net Profit per share (euros) | 0.209 | 0.285 | 0.147 |
Annual Improvements 2011 - 2013. The 2011-2013 annual improvements affects: IFRS 1, IFRS 3, IFRS 13 and IAS 40. The adoption of these improvements had no impact on the financial statements of CORTICEIRA AMORIM.
IAS 16 and IAS 38 (amendment), 'Acceptable methods of depreciation and amortisation calculation' (effective for annual periods beginning on or after 1 January 2016). This amendment is still subject to endorsement by the European Union. This amendment clarifies that the use of revenue-based methods to calculate the depreciation / amortization of an asset is generally presumed to be an inappropriate basis for measuring the consumption of the economic benefits embodied in an asset. It shall be applied prospectively. The adoption of this amendment will have no impact on the financial statements of CORTICEIRA AMORIM.
IAS 16 and IAS 41 (amendment), 'Agriculture: bearer plants' (effective for annual periods beginning on or after 1 January 2016). This amendment is still subject to endorsement by the European Union. This amendment defines the concept of a bearer plant and removes it from the scope of IAS 41 – Agriculture, to the scope of IAS 16 – Property, plant and equipment, with the consequential impact on measurement. However, the produce growing on bearer plants will remain within the scope of IAS 41 - Agriculture. The adoption of this amendment will have no impact on the financial statements of CORTICEIRA AMORIM.
financial statements. The adoption of this standard will have no impact on the financial statements of CORTICEIRA AMORIM.
IFRS 15 (new), 'Revenue from contracts with customers' (effective for annual periods beginning on or after 1 January 2017). This standard is still subject to endorsement by European Union. 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. The adoption of this standard will have no impact on the financial statements of CORTICEIRA AMORIM.
Financial Assets are mainly registered in the Loans and Other Receivables caption. As for Financial Liabilities they are included in the Amortized Liabilities caption.
Detail is as follows:
| thousand euros | |||||
|---|---|---|---|---|---|
| Loans and receivables |
Fair value through profit or loss |
Derivatives as hedging |
Available for sale assets |
Total | |
| Trade receivables | 122,606 | 122,606 | |||
| Income tax assets | 2,233 | 2,233 | |||
| Other current assets | 24,400 | 81 | 3,631 | 28,112 | |
| Cash and cash equivalents | 6,036 | 6,036 | |||
| Total as of December 31, 2014 | 155,275 | 0 | 81 | 3,631 | 158,987 |
| Trade receivables | 155,821 | 155,821 | |||
| Income tax assets | 2,480 | 2,480 | |||
| Other current assets | 24,907 | 722 | 3,886 | 29,515 | |
| Cash and cash equivalents | 6,940 | 6,940 | |||
| Total as of June 30, 2015 | 190,147 | 0 | 722 | 3,886 | 194,755 |
| thousand euros | ||||
|---|---|---|---|---|
| Fair value through profit or loss |
Derivatives as hedging |
Other financial liabilities at amortized cost |
Total | |
| Interest-bearing loans | 93,594 | 93,594 | ||
| Other borrowings and creditors | 207 | 2,382 | 46,648 | 49,237 |
| Trade payables | 115,303 | 115,303 | ||
| Income tax liabilities | 2,520 | 2,520 | ||
| Total as of December 31, 2014 | 207 | 2,382 | 258,065 | 260,654 |
| Interest-bearing loans | 98,805 | 98,805 | ||
| Other borrowings and creditors | 78 | 1,424 | 54,619 | 56,120 |
| Trade payables | 129,987 | 129,987 | ||
| Income tax liabilities | 12,792 | 12,792 | ||
| Total as of June 30, 2015 | 78 | 1,424 | 296,202 | 297,704 |
| António Rios de Amorim | |
|---|---|
| Chairman | |
| Nuno Filipe Vilela Barroca de Oliveira | |
| Vice-President | |
| Fernando José de Araújo dos Santos Almeida | |
| Member | |
| Cristina Rios de Amorim Baptista | |
| Member | |
| Luísa Alexandra Ramos Amorim | |
| Member | |
| Juan Ginesta Viñas | |
| Member | |
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