Quarterly Report • Sep 1, 2008
Quarterly Report
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1st Half 2008 (1H08)
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]
Shareholders of CORTICEIRA AMORIM,
According to Law and to IAS 34, as adopted by CORTICEIRA AMORIM, SGPS, S.A, a public company, presents:
Continuous downward economic revisions were announced during the first half of 2008 and a consensus on a long and lasting hard landing was reached.
On top of the subprime crisis, not yet fully diluted, world economy is being hurt by a mixture of rising inflation, tough credit facilities, high energy costs and a general risk aversion. In the developed countries the situation is even more negative due to the economic stagnation and to the worsening of the business community confidence.
As for Portugal, the semester registered a sluggish economic growth, driven by a decreasing external demand to domestic companies and by tougher credit facilities. All this within a deteriorating international economic environment and the difficulties arising from a USD devaluation against the Euro and by high oil prices.
Exporting more than 90% of its sales, CORTICEIRA AMORIM was not immune to these serious economic conditions. Two negative factors have to be highlighted: the devaluation of almost all of the CORTICEIRA AMORIM export currencies, namely the 13% USD devaluation when compared to 1H07, and the negative economic environment of its two major markets (European Union and the USA). Weak USD and a fierce resistance of USA customers to price increases due to USD devaluation, hit euro converted sales and, naturally, CORTICEIRA consolidated profits. As for the economic environment, high volatility and a widespread mistrust climate have to be emphasized. Mistrust between financial institutions was already a fact in late 2007, but during the first half of 2008, it spread though all the economic tissue. These two negative factors got even worse and consequently led to delays in investments and consumers spending due to interest rate hikes and to ever more difficult credit facilities. During the semester, orders were received in the last moment, making industrial and logistical conditions more difficult due to the short time delivery requests. The change in order allocations and the tightening of delivery schedules were especially visible in multinational companies. As never seen before, the first half 2008, registered monthly sales so erratic, going from bad to record high monthly figures.
On top of this, high energy costs, mainly the power bill and transportation costs hit CORTICEIRA AMORIM results. It was within this negative economic environment that CORTICEIRA AMORIM conducted its first half 2008 business.
Raw Materials BU increased its business to the Group value chain. Sales to external customers represent now more than 6% of total sales. Sales to outside clients will be always a fact due to the need to get rid of cork that doesn't fit to the Group's requirements. Operating activities were very similar to 1H07. Total sales reached 56,1M€, of which 94% were meant to fill the Group's needs (88% in 1H07). Sales were flat (-0,9%), but the swing between Group and non Group sales (meaning - 3,5M€ sales to outside customers) impacted consolidated figures adversely. As disclosed in prior periods, the decrease in outside sales reflects a policy of prudence when it comes to local industry payment credibility. EBIT reached 3,3M€ (+3%).
Following a tepid first quarter and an extraordinary month of April, May and June sales plummeted. Excluding Oller sales, sales for the first half were flat, meaning that the two million euro 1Q08 increase was offset during 2Q08.
This was due to the main European markets evolution and to major multinational clients.
As for markets, it seems that there was a bottling delay trend for north hemisphere countries, hurting end semester sales. Chilean wine industry is facing difficulties due to Chilean peso strength against the USD.
As said, most of these sluggish sales were due to export currencies devaluation. CORTICEIRA AMORIM estimates a 4,4M€ sales adverse impact, with minor recovery coming from price increases. This devaluation hit average prices much more than the said price increases decisions. This was particularly felt in natural corks. As for volume, TwinTop® sales kept its decreasing trend, which was offset by an increase in most of the other corkstoppers families.
Consolidate corkstoppers sales totaled 142,1M€ (+5,6%) driven by the Oller entry in the consolidation of the BU. EBIT reached 10,2M€ (-2%), affected by an exchange rate effect which amounted to 3M€.
Markets conditions during the first half of the year were significantly different from the plan. Hit by the economic environment, German retail market and contracting registered poor performances, thus preventing the leverage of sales and margins usually associated with them. Sales growth (5,8%) derives mostly from wood flooring (NCFC). Though this increase adds value to sales and profits, this line of complementary products allows for a smaller absorption of fixed costs than high value corkflooring (CFC) allows. As for markets, Central and Southern Europe came flat, while Northern and Eastern Europe registered growing sales. Total sales were 68,1M€ (+5,8%) and EBIT registered 3,8M€ (-22%).
As disclosed, Amorim Revestimentos, S.A., acquired in late June, the whole capital of German distributor Cortex Group. This acquisition is in line with the ongoing project in Amorim Revestimentos to double production capacity, bringing higher flexibility as for finished products. Started as 2007, this project is planned to be finalized at the end of 2009. During second half 2008, a partial startup is scheduled.
This new BU merged, as of January 2008, the two businesses of former Corkrubber and Agglomerated Business Units. Reasons behind this merger relate to the planned gains coming from new business generated by commercial synergies, and from a better use of the fixed assets, together with the integration of the know-how and expertise of the different teams coming from the former BU's.
On top of the usual initial difficulties, the BU suffered from the said hard economic conditions. Lack of confidence in the markets, the postponement of customers' orders and an aggressive inventory management caused highly volatile monthly sales, making production and sales logistics very difficult. All of these market changes affected sales in most of its lines, and almost all markets and customers. Besides, this new Business Unit has a high risk exposure to exchange rate, namely the USD. It is estimated that this BU registered 2M€ sales adverse impact due to this exposure, with only a small part of it offset by price increases. Apart from this gloomy scenario, the fact that the US market sales in local currency has not decreased is a clear sign of the flexibility and resistance that this BU can show even in the present hard conditions. Additionally, benefits are arising from new industrial processes and from the launching of new products lines (backing and inlay). These are some of the fruits of the I&D activity that this BU started in a formal way a few years ago.
Sales reached 40,3M€ (-9,5%) versus the 1H07 pro-forma sales. If it is taking in account the effects of the changes in the Group value chain that hurt 1H08 sales, namely 1,8M€ in sales, to Group companies, mostly granulated cork, that did not occur during 1H08, the sales decrease is only - 5,5%. In this deviation is included the exchange rate devaluation effect.
Operating costs reduction was not enough to offset the effect of the sales decrease and, mainly, the effect of the USD devaluation. Consequently, EBIT reach a negative value of 0,4M€, which includes an estimated 1,6M€ negative USD devaluation effect.
During the semester, sales continued to perform positively, reaching 5.0M€ (+8,5%). Second quarter showed a slowdown in growth when compared to the first quarter (+9,9%). Due to the use of fuel capacity, black agglomerated cork from other producers was traded. This contributed to a little less than half of the said growth. Gross margin, in value and in percentage, was hurt by sales of trade black agglomerated cork and by the consumption of raw materials bought during 2007. Due to the full utilization of the production capacity and higher energy and transportation cost, operating costs increased by 3,8%, leading to a decrease of 12% in EBIT values (0,7M€).
Consolidated activity, seen largely as the sum of the different BU activities, suffered from the same negative conditions as the BU's did. Consolidated sales for the first half of 2008 totalled 248,1M€ (+2,4%). In a vast universe as CORTICEIRA AMORIM, such an increase came from several factors. An explanation summary follows. The first major factor for such an increase comes from the Oller entry in the consolidation perimeter, meaning a positive 3% effect. One negative factor offsetting that positive variation relates with the planned reduction of non-transformed cork sales (as referred to in the Raw Materials analysis chapter). This justifies an adverse effect of 1,5% in consolidated sales. But, above all and on top of the effects of the economic slowdown, is the effect of the export currencies devaluation. CORTICEIRA AMORIM estimates an adverse effect of around 6,2M€ in consolidated sales. Only a fraction of this value was recovered through price increases. A negative 2% effect on consolidated sales was calculated as the result of the said devaluations.
All in all it can be said that CORTICEIRA AMORIM registered a weak sales growth, in line with its main market unfavourable economic conditions.
Sales for Corkstoppers (+5,6%), Corkflooring (+5,8%) and for Insulation (8,5%) impacted positively. Negative impact came from Raw Materials BU (decrease in cork sales to outside customers) and from the new BU Cork Composites.
Percentual Gross Margin decreased approximately 10% (47,7% vs 46,7%). This variation was mostly due to the devaluation effect, namely in the Corkstoppers and Cork Composites BU, by far the most exposed to the exchange rate risk. Corkflooring BU also contributed to the Gross Margin reduction (-0,5%), due to the increase of the wood flooring (NCFC) in the overall business of the BU. As it is known, percentual Gross Margin for the trade products, which is the case for NCFC, is well below the Gross Margin of the Group's own finished products. Additionally, Insulation Gross Margin registered a decrease, caused by trade sales and by the consumption of raw materials acquired during 2007 with an unfavourable price/quality ratio to be noted that this BU is increasing its sales to the Gulf region (20%), and because these countries' currencies are pegged to the USD, the effect of the devaluation is hurting its results.
Raw Material BU was the only BU to register a good showing (+3,2%) in its percentual Gross Margin. This was due to the consumption cheaper 2007 cork, and to a better factory yields in Coruche plant.
Operating costs totalled 102,7M€ (+2,8%), in line with sales growth. Oller entry in the consolidation perimeter justified an increase of 3% in those costs. This means that for the same universe, operating costs levelled when compared to 1H07. As for staff costs, excluding the Oller effect, the increase was a mere 0,7%. This corresponds to the increase registered in the severance costs. This stabilization was possible, as in recent years, because productivity gains offset annual increases in salaries.
EBIT reached 16,0M€ (-9,6%). Operating costs reductions were not enough to offset the 1% percentual Gross Margin decrease. The same explanation can be use for the EBITDA value (28,2M€), though in this case the variation is softened by a higher comparable value. Interest costs increased by some 25% of which two thirds are directly related to interest rate increase. Half of the remaining part of the increase is explained by higher bank debt. The other half is explained by the register of interest costs associated with the fair value of debts related with past financial acquisitions and by subsidies. After the proper register of the income tax estimation and of minority interests, net profit attributable to the CORTICEIRA AMORIM shareholders reached 6.890K€, decreasing 24,7% from 1H07.
No material changes from December 2007 total amount were registered in the consolidated Balance of CORTICEIRA AMORIM as of June 30, 2008 (599M€ versus 596M€). Current and Non Current Assets allocation was virtually the same. As for the liabilities, the Non Current caption was reduced by 30M€, due to a 40M€ reclassification to Current of a bank loan due during the first half of 2009 and to a 10M€ Commercial Paper issue.
To be noted, in the Assets side, the stabilization of the Fixed Asset value. This was due to the fact that CAPEX was very similar to depreciations.
Interest bearing Net Debt reached 238,9M€, rising 7M€ since December 2007.
Dividends amounting to 7,8M€ were paid as of end of April 2008 (6 cents versus 5,5 cents per share).
Equity/Total Assets ratio stood at a sound 41%.
| (Thousand euros) | |||||||
|---|---|---|---|---|---|---|---|
| 2Q08 | 2Q07 | Variation | 1H08 | 1H07 | Variation | ||
| Sales | 124.504 | 124.669 | - 0,13% | 248.124 | 242.230 | + 2,43% | |
| Gross Margin – Value | 59.227 | 59.954 | - 1,21% | 118.635 | 117.461 | + 1,00% | |
| % | 1) | 46,70 | 47,34 | -0,64 p.p. | 46,68 | 47,73 | -1,05 p.p. |
| Operating Costs | 2) | 50.420 | 49.372 | + 2,12% | 102.680 | 99.801 | + 2,88% |
| EBITDA | 15.004 | 16.550 | - 9,34% | 28.177 | 29.616 | - 4,86% | |
| EBIT | 8.807 | 10.582 | - 16,77% | 15.955 | 17.660 | - 9,65% | |
| Net Income | 3.510 | 5.271 | - 33,41% | 6.890 | 9.145 | - 24,66% | |
| Earnings per share | 3) | 0,0269 | 0,0404 | - 33,39% | 0,0528 | 0,0701 | - 24,63% |
| EBITDA/Net Interest (x) | 4,31 | 5,62 | - 1,31 X | 4,33 | 5,67 | - 1,34 X | |
| Equity /Net Assets | - | - | - | 40,77% | 40,90% | -0,130 p.p. | |
| Net Bank Debt | - | - | - | 238.931 | 223.821 | + 6,75% |
1) Related to Production
2) Includes financial costs and revenues other than interest, and extraordinary items
3) Net Income / Average outstanding shares (euros/share)
For the second year in a row CORTICEIRA AMORIM disclosed its Sustainability Report 2008, available from:
In this second issue, CORTICEIRA AMORIM gives an account of its sustainability-related policies and practices as well as the main initiatives and objectives achieved so far in this area, highlighting:
The maintenance, or even the worsening of the actual adverse economic conditions, is the only thing that business takes for granted for the near future. Companies will face a second half even more demanding. Most likely the need to secure volume and market share, will lead to greater margin depreciations.
As for BUs it is estimated that Corkfloor Coverings will register a more sound second half. This is due in part to Cortex entry in the consolidation perimeter, but also to the planned recovery in the cork coverings (CFC). As of a consequence of the present reorganization efforts, it is expected that Composite Cork will register a better performance.
In spite of the said positive registers in some of the BUs, the maintenance of feeble economic conditions (weak USD, high interest rates and a general feeling of a lack of confidence), together with the fact that the second half of 2007, was particularly a very good semester, there is no foreseeable recovery from the unfavourable variations registered at first half closing.
During the Company's long history, which already encompasses three centuries, it has successfully coped with profound, sometimes radical transformations in society and come through two World Wars. Throughout this history, CORTICEIRA AMORIM as correctly and in a timely fashion identified the risks and uncertainties associated with its business and faced them with confidence as opportunities and challenges.
CORTICEIRA AMORIM which has 137 years of accumulate know-how of the cork sector, recognises that over the short-term its performance can be affected by the following factors, which are closely scrutinised and evaluated:
From the long term factors that CORTICEIRA AMORIM recognises as possibly affecting its performance, the following are to be highlighted:
post-war society, has been mooted for many years, but has not, however, materialised. No indications are available that in the next six months any major breakthroughs will affect the CORTICEIRA AMORIM activity.
In accordance with the Law, it is announced that the company has acquired, during the first half, 21.500 treasury stocks (0,016% of its share capital), at an average price of 1,761 euros per share, totaling 37.861,11 euros. No sales were held during the period.
At the end of June 2008, 2.589.334 of treasury stock, representing 1,947% of its share capital, remained in the portfolio.
After June 30, 2008, and up to the date of the present report, no relevant events have occurred that will materially affect the financial position and future results of CORTICEIRA AMORIM and the group of affiliated companies included in the consolidated company.
The Board of Directors would like to take this opportunity to express its gratitude to:
To all our Employees, whose willingness and commitment have contributed so much to the development and growth of the companies belonging to the CORTICEIRA AMORIM Group, we express our sincere appreciation.
In accordance with line c) of number 1 of article 245 of the Portuguese Securities Code, the members of the Board of Directors state that, to the best of their knowledge, the first semester 2008 accounts and other documents included in the statement of accounts were drawn up in accordance with the applicable accounting standards, giving a true and accurate account of assets and debts, of the financial situation and profits/losses of CORTICEIRA AMORIM, S.G.P.S., S.A. and the companies that are consolidated by the group. They also state that the management report faithfully expresses the business evolution, performance and position of CORTICEIRA AMORIM, S.G.P.S., S.A. and the companies that are consolidated by the Group and that the report includes a special chapter describing the main risks and uncertainties of the Company's businesses.
Mozelos, July 31, 2008
The Board of Directors of CORTICEIRA AMORIM, S.G.P.S., S.A.
Chairman of the Board of Directors
Vice-Chairman of the Board of Directors
Member of the Board of Directors
Member of the Board of Directors
Member of the Board of Directors
Member of the Board of Directors
Member of the Board of Directors
In accordance with the Law, it is informed that:
i) As of June 30, 2008 Board Member André de Castro Amorim Coelho held 245.038 shares of CORTICEIRA AMORIM, S.G.P.S., S.A, having not carried out any share transaction during the first half of 2008;
ii) The remaining Board Members do not own, nor have traded any company share capital.
In accordance with the Law, it is stated that at June 30, 2008, Amorim Capital – Sociedade Gestora de Participações Sociais, S.A., holds 90.162.161 shares of CORTICEIRA AMORIM, S.G.P.S., S.A., corresponding to 67,791% of its share capital.
Major stockholders, as of June 30, 2008:
| Qt. of | Percentage of | |
|---|---|---|
| Stockholders | Shares | participation |
| Amorim Capital - Sociedade Gestora de Participações | ||
| Sociais, S.A. | 90.162.161 | 67,791% |
| Luxor – Sociedade Gestora de Participações Sociais, S.A. | 3.069.230 | 2,308% |
| Portus Securities – Sociedade Corretora, Lda. | 7.400.000 | 5,564% |
| Directamente | 6.400.000 | 4,812% |
| Via Accionista/Gestor | 1.000.000 | 0, 752% |
| Bestinver Gestión, SGIIC, S.A. por imputação de: | 6.752.309 | 5,077% |
| Bestinver Bolsa, F.I. | 4.541.582 | 3,415% |
| Bestinfond F.I. | 1.267.969 | 0,953% |
| Bestinver Mixto, F.I. | 545.929 | 0,410% |
| Soixa Sicav, S.A, | 163.296 | 0,123% |
| Texrenta Inversiones Sicav, S.A. | 31.111 | 0,023% |
| Corfin Inversiones Sicav, S.A. | 25.103 | 0,019% |
| Rodaon Inversiones Sicav, S.A. | 21.602 | 0,016% |
| Tibest Cinco, Sicav, S.A. | 18.965 | 0,014% |
| Invers. En Bolsa Siglo XXI, Sicav, S.A. | 17.209 | 0,013% |
| Aton Inversiones Sicav, S.A. | 13.384 | 0,010% |
| Tigris Inversiones, Sicav, S.A. | 11.805 | 0,009% |
| Stockholders | Qt. of Shares |
Percentage of participation |
|---|---|---|
| Mercadal de Valores Sicav, S.A. | 11.691 | 0,009% |
| H202 Inversiones Sicav, S.A. | 10.875 | 0,008% |
| Divalsa de Inversiones Sicav, S.A. | 10.491 | 0,008% |
| Pasgom Inversiones, Sicav, S.A. | 9.645 | 0,007% |
| Entrecar Inversiones, Sicav, S.A. | 8.971 | 0,007% |
| Accs., Cups. Y Obs. Segovianas, Sicav, S.A. | 7.224 | 0,005% |
| Cartera Millennium Sicav, S.A. | 6.592 | 0,005% |
| Campo de Oro, Sicav, S.A. | 5.576 | 0,004% |
| Linker Inversiones, Sicav, S.A. | 5.359 | 0,004% |
| Heldalin Inversiones Sicav, S.A. | 4.133 | 0,003% |
| Zamarron Sicav, S.A. | 4.068 | 0,003% |
| Opec Inversiones, Sicav, S.A. | 3.720 | 0,003% |
| Tawarzar 2-S2 Sicav, S.A. | 3.440 | 0,003% |
| Iberfarma Sicav, S.A. | 2.569 | 0,002% |
| Total of Major stockholders | 107.383.700 | 80,740% |
As of June 30, 2008, Amorim – Investimentos e Participações, S.G.P.S., S.A. has an indirect financial stake in CORTICEIRA AMORIM, S.G.P.S., S.A., of 90.162.161 shares which correspond to 67,791% of the share capital. The above mentioned indirect stake is held through Amorim Capital – Sociedade Gestora de Participações Sociais, S.A..
As of June 30, 2008, 100% of Amorim – Investimentos e Participações, S.G.P.S., S.A., is held by Interfamília II, S.G.P.S., S.A..
As of June 30, 2008, CORTICEIRA AMORIM held 2.589.334 of treasury stock, corresponding to 1,947% of it share capital. During the semester, the balance was:
The above mentioned transactions were made profiting from market opportunities, taking advantage from the financial capacities of CORTICEIRA AMORIM and considering that no material impact in the normal price building and in free float of the CORTICEIRA AMORIM shares was registered.
Mozelos, July 31, 2008
The Board of Directors of CORTICEIRA AMORIM, S.G.P.S., S.A.
| Thousand euros | ||||
|---|---|---|---|---|
| NOTES | 1H2008 | 2007 | 1H2007 | |
| Assets | ||||
| Property, plant and equipment | VI | 174.925 | 176.130 | 161.204 |
| Investment property | VI | 9.369 | 9.709 | 9.712 |
| Goodwill | VII | 13.440 | 13.304 | 13.250 |
| Investments in associates | 3.232 | 2.906 | 3.048 | |
| Intangible assets | VI | 543 | 632 | 94 |
| Other financial assets | III | 5.848 | 2.265 | 2.067 |
| Deferred tax assets | VIII | 10.286 | 9.225 | 8.896 |
| Other non current assets | 0 | 0 | 90 | |
| Non-current assets | 217.642 | 214.171 | 198.361 | |
| Inventories | IX | 214.952 | 227.415 | 196.515 |
| Trade receivables | X | 124.247 | 114.132 | 123.444 |
| Current tax assets | XI | 19.774 | 20.981 | 23.935 |
| Other current assets | XII | 15.650 | 12.922 | 16.157 |
| Cash and cash equivalents | 6.318 | 6.393 | 5.474 | |
| Current assets | 380.942 | 381.843 | 365.524 | |
| Total Assets | 598.584 | 596.014 | 563.886 | |
| Equity | ||||
| Share capital | XIII | 133.000 | 133.000 | 133.000 |
| Own shares | XIII | -2.501 | -2.463 | -2.425 |
| Other reserves | XIII | 96.710 | 82.036 | 82.345 |
| Net Income | 6.890 | 23.245 | 9.145 | |
| Minority interest | 9.493 | 9.573 | 8.368 | |
| Equity | 243.592 | 245.390 | 230.433 | |
| Liabilities | ||||
| Interest-bearing loans | XIV | 132.520 | 162.994 | 163.319 |
| Other borrowings and creditors | XV | 6.201 | 6.521 | 1.809 |
| Provisions | 4.597 | 5.202 | 5.248 | |
| Deferred tax liabilities | VIII | 5.579 | 4.827 | 3.747 |
| Non-current liabilities | 148.898 | 179.544 | 174.123 | |
| Interest-bearing loans | XIV | 112.729 | 75.180 | 65.976 |
| Trade payables | 32.033 | 49.155 | 42.236 | |
| Other borrowings and creditors | XV | 49.544 | 36.344 | 38.956 |
| Tax liabilities | 11.790 | 10.402 | 12.162 | |
| Current liabilities | 206.095 | 171.081 | 159.329 | |
| Total Liabilities and Equity | 598.584 | 596.014 | 563.886 |
| Thousand euros | |||
|---|---|---|---|
| NOTES | 1H2008 | 1H2007 | |
| Sales | V | 248.124 | 242.230 |
| Costs of goods sold and materials consumed | 135.500 | 128.610 | |
| Change in manufactured inventories | 6.012 | 3.841 | |
| Gross Margin | 118.635 | 117.461 | |
| 46,7% | 47,7% | ||
| Third party supplies and services | 39.820 | 38.800 | |
| Staff costs | XVI | 49.827 | 47.667 |
| Depreciation | VI | 12.222 | 11.956 |
| Impairments of assets | 363 | 605 | |
| Other gains (+) and cost (-) | XVII | -448 | -772 |
| EBIT | 15.955 | 17.660 | |
| Net interest | XVIII | -6.505 | -5.220 |
| Share of (loss)/profit of associates | III | 444 | 412 |
| Profit before tax | 9.894 | 12.852 | |
| Income tax | VIII | 2.410 | 2.932 |
| Profit after tax | 7.483 | 9.921 | |
| Minority interest | 594 | 776 | |
| Net Income attributable to the equity holders of Corticeira Amorim | 6.890 | 9.145 | |
| Earnings per share - Basic e Diluted (euros per share) | XXIII | 0,052 | 0,070 |
| Thousand euros | ||
|---|---|---|
| 2Q2008 | 2Q2007 | |
| Sales Costs of goods sold and materials consumed |
124.504 | 124.669 |
| Change in manufactured inventories | 67.607 | 66.689 |
| 2.331 | 1.975 | |
| Gross Margin | 59.228 | 59.955 |
| 46,7% | 47,3% | |
| Third party supplies and services | 20.248 | 19.201 |
| Staff costs | 24.393 | 23.489 |
| Depreciation | 6.197 | 5.968 |
| Impairments of assets | 206 | -68 |
| Other gains (+) and cost (-) | 623 | -783 |
| EBIT | 8.807 | 10.582 |
| Net interest | -3.481 | -2.945 |
| Share of (loss)/profit of associates | 215 | 225 |
| Profit before tax | 5.540 | 7.862 |
| Income tax | 1.811 | 2.244 |
| Profit after tax | 3.729 | 5.618 |
| Minority interest | 219 | 347 |
| Net Income attributable to the equity holders of Corticeira Amorim | 3.510 | 5.271 |
| Earnings per share - Basic e Diluted (euros per share) | 0,026 | 0,040 |
| Thousand euros | ||
|---|---|---|
| 1H2008 | 1H2007 | |
| OPERATING ACTIVITIES | ||
| Collections from customers | 246 539 | 223 695 |
| Payments to suppliers | - 207 938 | - 190 062 |
| Payments to employees | - 45 219 | - 42 547 |
| Operational cash flow | - 6 618 | - 8 914 |
| Payments/collections - income tax | - 1 842 | - 1 580 |
| Other collections/payments related with operational activities | 27 014 | 28 930 |
| CASH FLOW BEFORE EXTRAORDINARY ITEMS | 18 554 | 18 436 |
| INVESTMENT ACTIVITIES | ||
| Collections due to: | ||
| Tangible assets | 973 | 337 |
| Investment property | 413 | 118 |
| Interests and similar gains | 129 | 110 |
| Investment subsidies | 2 571 | 264 |
| Dividends | 100 | 81 |
| Payments due to: | ||
| Tangible assets | - 12 978 | - 10 238 |
| Financial investments Intangible assets |
- 1 338 - 15 |
- 1 529 - 94 |
| CASH FLOW FROM INVESTMENTS | - 10 145 | - 10 951 |
| FINANCIAL ACTIVITIES | ||
| Collections due to: | ||
| Loans | 7 075 | 5 993 |
| Others | 82 | 92 |
| Payments due to: | ||
| Loans | 0 | 0 |
| Interests and similar expenses | - 6 852 | - 4 189 |
| Dividends | - 8 087 | - 7 429 |
| Acquisition of treasury stock | - 38 | 0 |
| Others | - 315 | - 468 |
| CASH FLOW FROM FINANCING | - 8 135 | - 6 001 |
| Change in cash | 274 | 1 484 |
| Exchange rate effect | - 349 | - 7 |
| Perimeter effect | 0 | 0 |
| Cash at beginning | 6 393 | 3 997 |
| Cash at end | 6 318 | 5 474 |
| Thousand euros | ||||||||
|---|---|---|---|---|---|---|---|---|
| Balance Beginning |
Appropriation of N-1profit |
Dividends | Net Profit N |
Increases | Decreases | Translation Differences |
End Balance |
|
| June 30, 2007 | ||||||||
| Equity: | ||||||||
| Share Capital | 133,000 | $\overline{\phantom{a}}$ | 133.000 | |||||
| Treasury Stock - Face Value | $-2.548$ | $-2.548$ | ||||||
| Treasury Stock - Discounts and Premiums | 123 | ÷, | 123 | |||||
| Paid-in Capital | 38.893 | 38.893 | ||||||
| IFRS Transition Adjustments | $-12.866$ | 434 | 31 | $-12.401$ | ||||
| Hedge Accounting | $-177$ | 171 | -6 | |||||
| Reserves | ||||||||
| Legal Reserve | 7.445 | 7.445 | ||||||
| Other Reserves | 37.119 | 20.104 -7.175 | 235 | $-434$ | 49.849 | |||
| Translation Difference | $-982$ | $-454$ | $-1.436$ | |||||
| 200.007 | 20.104 - 7.175 | $\mathbf 0$ | 840 | $-434$ | -423 212.919 | |||
| Net Profit for the Year | 20.104 | $-20.104$ | $\omega$ | 9.145 | 9.145 | |||
| Minority interests | 10.648 | ÷, | $-252$ | 776 | 108 | $-2.811$ | $-100$ | 8.368 |
| Total Equity | 230.760 | $0 -7.4279.921$ | 948 | $-3.245$ | -523 230.432 | |||
| June 30, 2008 | ||||||||
| Equity: | ||||||||
| Share Capital | 133,000 | 133.000 | ||||||
| Treasury Stock - Face Value | $-2.568$ | $-21$ | $-2.589$ | |||||
| Treasury Stock - Discounts and Premiums | 105 | $-17$ | 88 | |||||
| Paid-in Capital | 38.893 | $\overline{\phantom{a}}$ | 38.893 | |||||
| IFRS Transition Adjustments | $-12.312$ | $\overline{\phantom{a}}$ | 3691 | 57 $\overline{\phantom{a}}$ |
$-8.564$ | |||
| Hedge Accounting | $-219$ | 130 | -89 | |||||
| Reserves | ||||||||
| Legal Reserve | 7.445 | 7.445 | ||||||
| Other Reserves | 49.909 | 23.245 -7.825 | $\equiv$ | $-3809$ | $\equiv$ | 61.520 | ||
| Translation Difference | $-1.681$ 212.572 |
23.245 - 7.825 | $\mathbf 0$ | $-26$ | ÷ 0 |
$-815$ | $-2.496$ -758 227.208 |
|
| Net Profit for the Year | 23.245 | $-23.245$ | $-6.890$ | $\equiv$ | 6.890 | |||
| Minority interests | 9.573 | $\equiv$ | $-242$ | 594 | 150 | $-582$ | 9.493 |
| I. | INTRODUCTION 17 | ||
|---|---|---|---|
| II. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 17 | ||
| III. | COMPANIES INCLUDED IN THE CONSOLIDATED FINANCIAL STATEMENTS 23 | ||
| IV. | EXCHANGE RATES USED IN CONSOLIDATION 25 | ||
| V. | SEGMENT REPORT 25 | ||
| VI. | TANGIBLE AND INTANGIBLE FIXED ASSETS 28 | ||
| VII. | GOODWILL 29 | ||
| VIII. | INCOME TAX 29 | ||
| IX. | INVENTORIES 31 | ||
| X. | TRADE RECEIVABLES 31 | ||
| XI. | RECOVERABLE TAXES 31 | ||
| XII. | OTHER ASSETS 32 | ||
| XIII. | CAPITAL AND RESERVES 32 | ||
| Ê | • SHARE CAPITAL 32 |
||
| Ê | • TREASURY STOCK 32 |
||
| Ê | • DIVIDENDS 32 |
||
| XIV. | INTEREST BEARING DEBT 33 | ||
| XV. | OTHER LOANS AND CREDITORS 33 | ||
| XVI. | THIRD PARTY SUPPLIES AND SERVICES 34 | ||
| XVII. | STAFF COSTS 34 | ||
| XVIII. | OTHER OPERATING GAINS AND LOSSES 35 | ||
| XIX. | NET INTEREST 35 | ||
| XX. | RELATED-PARTY TRANSACTIONS 35 | ||
| XXI. | GUARANTEES, CONTINGENCIES E COMMITMENTS 36 | ||
| XXII. | EXCHANGE RATE CONTRACTS 36 | ||
| XXIII. | ACTIVITY DURING THE YEAR 36 | ||
| XXIV. | OTHER INFORMATION 37 | ||
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 millions euros, and is represented by 133 millions shares, which are publicly traded in the Euronext Lisboa – Sociedade Gestora de Mercados Regulamentados, S.A.
These financial statements were approved in the Board Meeting of July 31, 2008.
Except when mentioned, all monetary values are stated in thousand euros (Thousand euros = K euros = 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 International Accounting Standards (IFRS) as of January 1, 2008, particularly IAS 34 (interim report). The transition date from the local GAAP was January 1, 2004.
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 balance sheet in the "Minority Interests" 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.
Losses for the period that are attributable to Minority Interests will be debited to the Minority Interest account until its balance equals to zero, being all subsequent losses fully attributed to CORTICEIRA AMORIM. In subsequent reversal of losses, all profits will be attributed to CORTICEIRA AMORIM up to the full recovery of prior losses appropriated. Afterwards the usual appropriation of results between CORTICEIRA AMORIM and third-party interests will be reassumed.
In the rare case where the minority part has the obligation to share its portion for the losses after its balance sheet account is cancelled, a receivable will be recorded in the consolidated Balance sheet.
The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The excess of the cost of acquisition over the fair value of the Group's share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the income statement.
Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated but considered an impairment indicator of the asset transferred.
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.
Consolidated financial statements are presented in thousands of euros. 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.
Assets and liabilities denominated in foreign currency are translated to euros using year-end 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.
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 begins operating.
As part of the allocation of the fair value to the identifiable assets and liabilities in an acquisition process (IFRS 3), land and buildings of the subsidiaries as of January 1, 1991, were revalued by independent experts. Same procedure was followed for companies acquired later than that date.
Under IFRS 1, 16, and as of January 1, 2004, some of the relevant industrial equipment, fully, or in the near-term, depreciated, and of which is expected a medium or long term use, was subject to a revaluation process.
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 a 50 |
| Plant machinery | 6 a 10 |
| Motor vehicles | 4 a 7 |
| Office equipment | 4 a 8 |
Depreciation is charged since the beginning of the financial year in which the asset is brought into use, except for big investment projects where depreciation begins with the start-up of production. The asset's residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet 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. When revalued assets are sold, the amounts included in the revaluation reserve are transferred to reserves.
Includes the value of land and buildings not used in production.
Goodwill represents the excess of the cost of an acquisition over the fair value of the net identifiable assets of the acquired subsidiary/associate at the date of acquisition. If positive, will be included as an asset in the "goodwill" account, if it refers to a subsidiary; if it refers to an associate it will be included in the amount of the cost of acquisition. If negative, it will be registered as a gain for the period.
Goodwill will be tested annually for impairment; impairment losses will be charged to the income statement and, consequently, its carrying amount adjusted.
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. Where the net realisable value is lower than production cost, an adjustment is made to reduce inventories to this lower value. 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 receivables are registered initially at cost, adjusted for any subsequent impairment losses which, when occurred, will be charged to the income statement.
Medium and long-term receivables will be measured at amortised cost using the effective interest rate of CORTICEIRA AMORIM for similar periods.
Cash includes cash in hand, deposits held at call in banks, time deposits and other no-risk shortterm investments with original maturities of three months or less. Bank overdrafts are recorded within the interest bearing loans line in the current liabilities on the balance sheet.
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 complete or suspended.
Except for companies included in groups of fiscal consolidation, income tax is calculated separately for each subsidiary, on the basis of its net result for the period adjusted according to tax legislation.
In the consolidated financial statements differences between the tax due for the current period and prior periods and the tax already paid or to be paid by each of the group companies are registered whenever it is likely that, on an individual company basis, a deferred tax will have to be paid or to be recovered in the foreseeable future (liability method).
CORTICEIRA AMORIM Portuguese employees benefit, generally, from defined contribution plan that is complementary to the national welfare plan. Employees from foreign subsidiaries (about 25% of total CORTICEIRA AMORIM) or are covered exclusively by local national welfare plans or benefit from complementary plans, being it defined contribution plans or defined benefit plans.
As for the defined contribution plans, contributions are recognised as employee benefit expense when they are due. The liability recognised in the balance sheet in respect of defined benefit plans is the present value of the defined benefit obligation, less the fair value of plan assets, as calculated annually by pension fund experts.
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 pre-established 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.
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". Medium and longterm no-interest bearing repayable grants are presented with its net present value, using an interest discount rate similar to CORTICEIRA AMORIM interest bearing debt for same period.
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 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 derecognised the instrument.
| COMPANY | HEAD OFFICE | COUNTRY | |
|---|---|---|---|
| Cork Stoppers | |||
| Portocork France | Bordéus | FRANCE | |
| Portocork Internacional, S.A. | Santa Maria Lamas | PORTUGAL | |
| Portocork América, Inc. | California | UNITED STATES | |
| S.C.I. Friedland | Céret | FRANCE | |
| Société Nouv elle des Bouchons Trescases | (e) Perpignan | FRANCE | |
| Victor y Amorim, Sl | (f) | Nav arrete - La Rioja | SPAIN |
| Floor and Wall Coverings | |||
| Amorim Benelux, BV - AR | (b) Tholen | NETHERLANDS | |
| Amorim Cork GmbH | Delmenhorts | GERMANY | |
| Amorim Cork Distribution Netherlands BV | Tholen | NETHERLANDS | |
| Amorim Rev estimentos, S.A. | Lourosa | PORTUGAL | |
| Amorim Wood Suplies, GmbH | Bremen | GERMANY | |
| Corticeira Amorim - France SAS - AR | (c) Lav ardac | FRANCE | |
| Amorim Rev estimientos, S.A. | Barcelona | SPAIN | |
| Amorim Deutschland, GmbH & Co. KG - AR | (d) Delmenhorts | GERMANY | |
| Dom KorKowy, Sp. Zo. O. | (f) | Kraków | POLAND |
| Amorim Flooring North America Inc | Hanov er | UNITED STATES | |
| Amorim Flooring Austria GesmbH | Viena | AUSTRIA | |
| Amorim Flooring Nordic A/s | Grev e | DENMARK | |
| Amorim Flooring (Switzerland) AG | Zug | SWITZERLAND | |
| Composite Cork | |||
| Amorim Benelux, BV - ACC | (b) Tholen | NETHERLANDS | |
| Amorim (UK) Ltd. | Horsham West Sussex | UNITED KINGDOM | |
| Corticeira Amorim - France SAS - ACC | (c) Lav ardac | FRANCE | |
| Amorim Cork Composites, S.A. | Mozelos | PORTUGAL | |
| Amorim Deutschland, GmbH & Co. KG - ACC | (d) Delmenhorts | GERMANY | |
| Chinamate Dev elopment Co. Ltd | Hong Kong | CHINA | |
| Chinamate (Xi'an) Natural Products Co. Ltd | Xi'an | CHINA | |
| Amorim Industrial Solutions - Ind. de Cortiça e Borracha I, S.A. | Corroios | PORTUGAL | |
| Drauv il Europea, SL | San Vicente Alcantara | SPAIN | |
| Amorim Cork Composites, Inc. | Trev or Wisconsin | UNITED STATES | |
| Samorim (Joint Stock Company Samorim) | (e) Samara | RUSSIA | |
| Insulation Cork | |||
| Amorim Isolamentos, S.A. | Vendas Nov as | PORTUGAL | |
| Holding - Other | |||
| Corticeira Amorim, SGPS, S.A. | Mozelos | PORTUGAL | |
| Ginpar, S.A. (Générale d' Inv estissements et Participation) | Skhirat | MOROCCO | |
| Amorim Cork Research, Lda. | (h) Mozelos | PORTUGAL | |
| Sopac - Soc. Portuguesa de Aglomerados de Cortiça, Lda | Montijo | PORTUGAL | |
| Vatrya - Serv iços de Consultadoria , Lda | Funchal - Madeira | PORTUGAL |
(a) – One single company: Amorim & Irmãos, S.A.
(b) – One single company: Amorim Benelux, BV.
(c) – One single company: Corticeira Amorim - France SAS.
(d) – One single company: Amorim Deutschland, GmbH & Co. KG.
(e) – Equity method consolidation
(f) – CORTICEIRA AMORIM controls the operations of the company – line-by-line consolidation method
(g) – Set-up during 2008
(h) – Company name change (ex-Labcork).
At the end of the first half, the following subsidiaries, which will consolidate beginning next semester, were acquired (100%):
| COMPANY | HEAD OFFICE | COUNTRY | 1H08 |
|---|---|---|---|
| Floor and Wall Coverings | |||
| Cortex Korkvertriebs GmbH | Furth | GERMANY | 100% |
| Zodiac Kork - und Holzprodukte GmbH | Furth | GERMANY | 100% |
| Cork Stoppers | |||
| Llosent & Forschner Korken GmbH | Oberw altersdorf | AUSTRIA | 100% |
Total cost of acquisitions was 3.656 K€ and it is registered in Other financial assets. These companies will be consolidated beginning July 1st, 2008.
| Consolidation June 30, 2008 |
Fisrt Half End |
Average | |
|---|---|---|---|
| Argentine Peso | ARS | 4,7613 | 4,8034 |
| Australian Dollar | AUD | 1,6371 | 1,6546 |
| Brazilian Real | BRL | 2,5112 | 2,5953 |
| Canadian Dollar | CAD | 1,5942 | 1,5401 |
| Swiss Franc | CHF | 1,6056 | 1,6065 |
| Chilean Peso | CLP | 826,19 | 714,81 |
| Yuan Renminbi | CNY | 10,7989 | 10,8056 |
| Danish Krone | DKK | 7,4579 | 7,4567 |
| Algerian Dinar | DZD | 97,364 | 98,645 |
| Euro | EUR | 1 | 1 |
| Pound Sterling | GBP | 0,79225 | 0,77521 |
| Hong Kong Dollar | HDK | 12,2817 | 11,9409 |
| Forint | HUF | 235,430 | 253,584 |
| Moroccan Dirham | MAD | 11,4271 | 11,3896 |
| Metical | MZM | 37,260 | 36,450 |
| Norwegian Krone | NOK | 8,0090 | 7,9491 |
| Zloty | PLN | 3,3513 | 3,4901 |
| Ruble | RUB | 36,9318 | 36,6196 |
| Swedish Kronor | SEK | 9,4703 | 9,3753 |
| Tunisian Dinar | TND | 1,8353 | 1,8099 |
| US Dollar | USD | 1,5764 | 1,5304 |
| Rand | ZAR | 12,3426 | 11,7263 |
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 euros | ||||||||
|---|---|---|---|---|---|---|---|---|
| 1H2008 | Raw Materials |
Cork Stoppers |
Floor & Wall Cov erings |
Composite Cork |
Insulation Cork |
Holding | Adjust. | Consolid. |
| Trade Sales | 3.628 | 139.930 | 66.911 | 33.114 | 4.477 | 63 | 248.123 | |
| Other BU Sales | 52.487 | 2.199 | 1.183 | 7.188 | 547 | 267 | -63.872 | |
| Total Sales | 56.115 | 142.129 | 68.094 | 40.302 | 5.024 | 330 | -63.872 | 248.123 |
| EBIT(i) | 3.273 | 10.195 | 3.829 | -445 | 705 | -1.651 | 49 | 15.955 |
| Assets | 138.072 | 279.804 | 111.035 | 85.486 | 11.822 | 5.296 | -32.931 | 598.584 |
| Liabilities (ii) | 21.602 | 65.978 | 25.425 | 17.844 | 2.277 | 6.923 | 214.944 | 354.993 |
| Capex | 409 | 4.157 | 5.986 | 1.407 | 292 | 25 - | 12.276 | |
| Year Depreciation | -1.765 | -5.117 | -2.948 | -2.061 | -300 | -31 - | -12.222 | |
| Non-cash cost (iii) | -79 | 411 | -327 | -213 | -29 | -49 - | -286 | |
| Gains/Losses in associated companies |
9 | 435 - | - | - | - | - | 444 |
| 1H2007 | Raw Materials |
Cork Stoppers |
Floor & Wall Cov erings |
Composite Cork |
Insulation Cork |
Holding | Adjust. | Consolid. |
|---|---|---|---|---|---|---|---|---|
| Trade Sales | 7.008 | 132.124 | 63.047 | 35.968 | 4.046 | 37 | 242.230 | |
| Other BU Sales | 49.598 | 2.488 | 1.337 | 8.574 | 587 | 300 | -62.884 | |
| Total Sales | 56.606 | 134.612 | 64.384 | 44.542 | 4.633 | 337 | -62.884 | 242.230 |
| EBIT(i) | 3.164 | 10.426 | 4.915 | 493 | 806 | -2.075 | -70 | 17.660 |
| Assets | 131.560 | 254.958 | 104.247 | 83.588 | 10.109 | 3.869 | -24.444 | 563.886 |
| Liabilities (ii) | 22.475 | 53.619 | 22.271 | 20.696 | 2.217 | 25.084 | 187.090 | 333.452 |
| Capex | 249 | 4.684 | 3.052 | 1.918 | 426 | 77 | - | 10.407 |
| Year Depreciation | -1.786 | -4.793 | -2.743 | -2.284 | -310 | -40 | - | -11.956 |
| Non-cash cost (iii) | -2 | -996 | -412 | 198 | -7 | - | 0 | -1.218 |
| Gains/Losses in associated companies |
2 | 410 | - | - | - | - | - | 412 |
Adjustments = eliminations inter-BU and amounts not allocated to BU.
EBIT =Profit before interests, minorities and income tax.
Provisions and asset impairments were considered the only relevant 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.
Composite Cork 1H07 was recalculated in order to reflect the merger of the Agglomerate Cork and Rubbercork BUs.
The decision to report EBIT 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 80% 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, black 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 cork rubber 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 257 million euros, and are mostly composed by inventories (88 million), customers (80 million) and tangible fixed assets (38 million).
Sales by markets (values in thousand EUR):
| Markets | 1H2008 | 1H2007 | ||
|---|---|---|---|---|
| Euroepan Union | 163.364 | 65,8% | 157.944 | 65,2% |
| From which: Portugal | 14.009 | 5,6% | 13.938 | 5,8% |
| Other European countries | 14.482 | 5,8% | 11.443 | 4,7% |
| United States | 35.528 | 14,3% | 39.226 | 16,2% |
| Other American countries | 16.352 | 6,6% | 15.986 | 6,6% |
| Australasia | 13.509 | 5,4% | 11.340 | 4,7% |
| Africa | 4.081 | 1,6% | 5.804 | 2,4% |
| Others | 807 | 0,3% | 487 | 0,2% |
| TOTAL | 248.123 | 100% | 242.230 | 100% |
| Land and Buildings |
Plant Equipment |
Other | Adv ances and In progress |
Tangible Fixed Assets |
Thousand euros Intangible Fixed Assets |
|
|---|---|---|---|---|---|---|
| Gross Value | 223.392 | 240.624 | 39.118 | 6.834 | 509.968 | - |
| Depreciation and impairments | -127.351 | -172.106 | -34.792 | 0 | -334.249 | - |
| Opening balance (Jan 1, 2006) | 96.041 | 68.518 | 4.326 | 6.834 | 175.719 | 0 |
| IN COMPANIES | 0 | - | ||||
| INCREASE | 831 | 1.593 | 611 | 7.275 | 10.310 | 94 |
| REVALUATION PERIOD DEPRECIATION AND |
0 | 0 | 0 | 0 | 0 | - |
| S | -3.289 | -7.798 | -869 | 0 | -11.956 | - |
| SALES AND OTHER DECREASES | 77 | -108 | -81 | -313 | -425 | - |
| TRANSFERS AND RECLASSIFICATIONS | -11.462 | 1.589 | 46 | -2.406 | -12.233 | - |
| TRANSLATION DIFFERENCES | -82 | -100 | -17 | -12 | -210 | - |
| Gross Value | 202.858 | 240.403 | 37.989 | 11.377 | 492.628 | 94 |
| Depreciation and impairments | -120.742 | -176.708 | -33.973 | 0 | -331.424 | - |
| Closing balance (Dec 30, 2006) | 82.116 | 63.695 | 4.016 | 11.377 | 161.204 | 94 |
| Gross Value | 213.510 | 250.323 | 39.036 | 13.883 | 516.752 | 784 |
| Depreciation and impairments | -124.045 | -181.962 | -34.616 | 0 | -340.623 | -152 |
| Opening balance (Jan 1, 2007) | 89.465 | 68.361 | 4.420 | 13.883 | 176.129 | 632 |
| IN COMPANIES | 0 | 0 | 0 | 0 | 0 | - |
| INCREASE | 287 | 3.152 | 490 | 8.505 | 12.434 | 14 |
| REVALUATION | 0 | 0 | 0 | 0 | 0 | - |
| PERIOD DEPRECIATION AND | -3.178 | -8.158 | -869 | 0 | -12.205 | -7 |
| S SALES AND OTHER DECREASES |
-527 | -994 | -19 | 621 | -919 | - |
| TRANSFERS AND RECLASSIFICATIONS | 1.100 | 2.811 | -271 | -3.480 | 160 | -96 |
| TRANSLATION DIFFERENCES | -151 | -440 | -62 | -22 | -675 | - |
| Gross Value | 213.865 | 249.112 | 37.864 | 19.506 | 520.347 | 787 |
| Depreciation and impairments | -126.869 | -184.380 | -34.174 | 0 | -345.423 | -244 |
| Closing balance (Jun 30, 2007) | 86.996 | 64.732 | 3.690 | 19.506 | 174.924 | 543 |
Accordingly with d) of point II (accounting policies), as of June 30, 2008, the net effect of the said revaluation, amounts to 26,1 million of euros, of which19,2 refers to land. A part of the total amount (4,5 million euros) was reclassified as Investment Property (of which 3,4 million refers to land). Applying the same policy, the effect of the Fixed Assets revaluation (as for pgf. 16 of IFRS 1) was 14,4 million euros at transition date. At closing balance date it was 7,7 million euros.
The value registered in Transfers and Reclassifications (first half 2007), refers mainly to a reclassification from land and buildings not used in production to Investment Property.
| OPENING | INCREASES | TRANSLATION DIFFERENCES |
Thousand euros CLOSING |
|
|---|---|---|---|---|
| Raw material BU | 4.197 | - | -3 | 4.194 |
| Cork Stoppers BU | 4.836 | - | - | 4.836 |
| Flooring BU | 4.160 | 143 | - | 4.303 |
| Composites BU | 111 | - | -4 | 107 |
| Goodwill | 13.304 | 143 | -7 | 13.440 |
Increase is due to the acquisition of the remaining shares of Benelux.
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 K€ 171 (1H2007: K€ -803).
On the Balance sheet this effect amounts to K€ 10.286 (31/12/2007: K€ 9.225) as Deferred tax asset, and to K€ 5.579 (31/12/2007: K€ 4.826) 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 | |||
|---|---|---|---|
| 1H2008 | 2007 | 1H2007 | |
| Related with Intangible Fixed Assets cancelled | 526 | 589 | 900 |
| Related with Inventories / Customers and Debtors | 1.009 | 1.180 | 1.318 |
| Related with Tax Losses | 6.221 | 5.219 | 6.136 |
| Related with Tax Incentives | 2.146 | 2.146 | 0 |
| Other | 384 | 91 | 542 |
| Deferred Tax Assets | 10.286 | 9.225 | 8.896 |
| Related with Fixed Tangible Assets | 4.010 | 3.999 | 2.754 |
| Related with Inventories | 1.185 | 702 | 765 |
| Other | 384 | 125 | 228 |
| Deferred Tax Liabilities | 5.579 | 4.826 | 3.747 |
| Current Income Tax | -2.581 | -1.548 | -2.128 |
| Deferred Income Tax | 171 | 61 | -803 |
| Income Tax | -2.410 | -1.487 | -2.931 |
Following chart explains the effective income tax rate, from the original income tax rate of most of Portuguese companies:
| Income Tax Conciliation | |
|---|---|
| Income Tax - Legal | 26,5% |
| Effect arising from non-taxed profit, from reduced income taxes and from tax losses with no Defferred Tax Assets (DTA) |
-4,4% |
| Insufficient 2007 tax accrual | 3,4% |
| Income tax - effective (1) | 25,5% |
| (1) Income Tax / PBT |
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 63, 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 as of June 30, 2008, are expected by the Board of CORTICEIRA AMORIM and its subsidiaries from the revisions of tax declarations that will be held by the tax authorities.
As first half does not correspond to a normal tax period, following is presented the information regarding tax losses amounts and its time limits for utilisation as stated in December 2007 accounts:
| Thousand euros | |||||
|---|---|---|---|---|---|
| 2009 | 2010 | 2011 | 2012 e seg. |
TOTAL | |
| RETGS | 24.550 | 24.550 | |||
| Other Portuguese companies | 349 | 2.572 | 439 | 3.360 | |
| Foreign companies | 214 | 633 | 19.836 | 20.683 | |
| Non utilised tax losses | 214 | 982 | 2.572 | 44.825 | 48.593 |
As for foreign companies, 2012 and further was considered for those situations that correspond to tax losses to carry forward with no limit of utilisation.
In RETGS there are doubts regarding the future utilisation of around 20,5 million euros.
| Thousand euros | |||
|---|---|---|---|
| 1H2008 | 2007 | 1H2007 | |
| Goods | 14.779 | 14.681 | 9.707 |
| Finished and semi-finished goods | 88.744 | 86.406 | 91.992 |
| By-products | 248 | 259 | 305 |
| Work in progress | 11.850 | 10.887 | 8.663 |
| Raw materials | 100.137 | 118.399 | 85.021 |
| Advances | 2.620 | 199 | 4.496 |
| Goods impairments | -785 | -854 | -938 |
| Finished and semi-finished goods impairments | -2.422 | -2.342 | -2.495 |
| Raw materials impairments | -219 | -220 | -236 |
| Inventories | 214.952 | 227.415 | 196.515 |
| Thousand euros | |||
|---|---|---|---|
| 1H2008 | 2007 | 1H2007 | |
| Gross amount | 133.129 | 123.271 | 132.601 |
| Impairments | -8.883 | -9.139 | -9.157 |
| Trade receivables | 124.246 | 114.132 | 123.444 |
| Thousand euros | |||
|---|---|---|---|
| 1H2008 | 2007 | 1H2007 | |
| Value added tax | 15.277 | 15.866 | 20.418 |
| Other taxes | 4.497 | 5.115 | 3.517 |
| Recoverable taxes | 19.774 | 20.981 | 23.935 |
| Thousand euros | |||
|---|---|---|---|
| 1H2008 | 2007 | 1H2007 | |
| Advances to suppliers | 4.328 | 2.497 | 6.918 |
| Deferred assets | 4.593 | 4.076 | 3.817 |
| Hedge accounting assets | 591 | 837 | 868 |
| Other | 6.138 | 5.512 | 4.554 |
| Other current assets | 15.650 | 12.922 | 16.157 |
As of June 30, 2008, 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.
In several trading sessions, CORTICEIRA AMORIM bought 21.500 of its own shares, representing 0,016% of its total share capital, with an average unit price of € 1,761, totalling € 37.861,11. No sales were held.
As of June 30, 2008, CORTICEIRA AMORIM held 2.589.334 of its own shares, representing 1,947% of its share capital
In the Shareholders' General Meeting of March 28, 2008, a dividend totalling € 7.980.000,00 (seven million, nine hundred and eighty thousand euros), corresponding to a € 0,06 (six cents of euro) per share was approved. Payment was made as of April, 28.
| Thousand euros | |||
|---|---|---|---|
| 1H2008 | 1H2007 | 1H2006 | |
| Dividends approved - 2008: 0.060; 2007: 0.055; 2006:0.050 (euros per share) | 7.980 | 7.315 | 6.650 |
| Portion attributable to treasury stock | 155 | 140 | 127 |
| Dividends paid | 7.825 | 7.175 | 6.523 |
As of June 30, 2008, interest bearing loans was as follows:
| Total | 132.520 |
|---|---|
| After 2013/01/01 | 1.803 |
| Between 2012/1/1 and 2012/31/12 | 590 |
| Between 2011/1/1 and 2011/31/12 | 77.696 |
| Between 2010/1/1 and 2010/31/12 | 52.315 |
| Between 2009/30/06 and 2009/31/12 | 116 |
| Thousand euros |
As of June 30, 2008, loans were denominated in Euros (91%), the remaining of it was denominated mainly in USD.
Non-current and current interest bearing debt carries floating interest rates. Average cost, during first half, for all the credit utilized was 5,15% (1H07: 4,56%).
At the same date, three subsidiaries had a 2,9 million euros loan mortgage guarantee.
Non-utilized loan facilities amounted to 114 million euros as of June 30, 2008.
| Thousand euros | |||
|---|---|---|---|
| 1H2008 | 2007 | 1H2007 | |
| Non interest bearing grants | 1.063 | 1.390 | 1.166 |
| Other | 5.138 | 5.131 | 643 |
| Other loans and creditors - non current | 6.201 | 6.521 | 1.809 |
| Non interest bearing grants | 4.376 | 2.517 | 2.084 |
| Deferred costs | 25.361 | 16.985 | 24.674 |
| Deferred gains - grants | 7.953 | 9.284 | 8.975 |
| Hedge accounting - deferred liabilities | 147 | 141 | 160 |
| Other | 11.707 | 7.417 | 3.063 |
| Other loans and creditors - current | 49.544 | 36.344 | 38.956 |
In Deferred costs the part related with salaries (vacations and vacations paid) amounted to K€ 14.634 (Dec-07: K€ 8.426, Jun-07: 14.656). In Other a total of 11,2 million euros is included regarding acquisition of subsidiaries.
| Thousand euros | ||
|---|---|---|
| 1H2008 | 1H2007 | |
| Communications | 878 | 841 |
| Insurance | 2.202 | 2.148 |
| Subcontractors | 530 | 704 |
| Power | 3.696 | 4.091 |
| Tools | 738 | 754 |
| Oil and gas | 636 | 559 |
| Rentals | 2.212 | 2.236 |
| Transports | 7.495 | 7.704 |
| Travel | 1.750 | 1.789 |
| Commissions | 2.700 | 2.189 |
| Special Services | 4.615 | 4.090 |
| Advertising | 3.961 | 3.700 |
| Maintenance | 2.845 | 2.692 |
| Others | 5.561 | 5.303 |
| Third party supplies and services | 39.820 | 38.800 |
Oller entry effect was 872 K€.
| Thousand euros | ||
|---|---|---|
| 1H2008 | 1H2007 | |
| Board remuneration | 306 | 733 |
| Employees remuneration | 37.573 | 35.752 |
| Social Security and other | 7.923 | 8.608 |
| Severance costs | 1.782 | 1.400 |
| Other | 2.243 | 1.173 |
| Staff costs | 49.827 | 47.666 |
| Average number of employees | 3.886 | 3.817 |
Oller entry effect in Staff costs was 1.822 K€ and 120 in Average number of employees.
| Thousand euros | ||
|---|---|---|
| 1H2008 | 1H2007 | |
| Indirect taxes | -704 | -674 |
| Provisions | 77 | -613 |
| Net exchange differences | -1.000 | -603 |
| Gains (losses) in disposal of assets | 397 | 485 |
| Other gains | 1.209 | 1.441 |
| Subsidies - operating | 77 | 50 |
| Subsidies - equipment | 744 | 885 |
| Other | -1.248 | -1.743 |
| Other operating gains (+) and losses (-) | -448 | -772 |
| Thousand euros | ||
|---|---|---|
| 1H2008 | 1H2007 | |
| Interest costs - bank loans | 6.098 | 4.982 |
| interest costs - delayed payments | 0 | 32 |
| Stamp tax - interest | 85 | 112 |
| Stamp tax - capital | 42 | 52 |
| Interest costs - other | 379 | 160 |
| 6.604 | 5.338 | |
| Interest gains - bank deposits | -28 | -23 |
| Interest gains - loans - other | -5 | -8 |
| Interest gains - other financial aplications | 0 | 0 |
| Interest gains - delayed payments | -17 | -5 |
| Interest gains - other | -50 | -82 |
| -100 | -118 | |
| Net interest | 6.505 | 5.220 |
In Interest costs – other (1H2008), 215 K€ are explained by the register of interest costs associated with the fair value of debts related with past financial acquisitions and by subsidies.
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, 2008, indirect stake of AIP in CORTICEIRA AMORIM was 69.14% 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.).
Services rendered during first half 2008 reached K€ 2,619 (1S07: K€ 1,145)
Balances at first half-end 2008 and year-end 2007 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%
During its operating activities CORTICEIRA AMORIM issued in favour of third-parties guarantees amounting to K€ 198,161 (Dec-07: K€ 196,767).
| Beneficiary | Amount | Purpose |
|---|---|---|
| Government agencies | 8.284 | Capex grants/subsidies |
| Value added tax agency | 1.310 | VAT refund |
| Tax authority | 5.032 | Tax lawsuits |
| Banks | 182.648 | Loans guarantees |
| Other | 887 | Miscellaneous |
| TOTAL | 198.161 | g arantees |
The total amount recorded as "provisions" (2.931 K€) is considered to be adequate to face any tax lawsuit effect. Regarding June 18th disclosure, up to now, there are no further developments.
As of June 30, 2008, future expenditure resulting from long-term motor vehicle rentals totals K€ 1,691, and for computer hardware and software totals K€ 45.
Commitments related with fixed assets suppliers are no recorded and amount to K€ 5,349.
As of June 30, 2008, a total of K€ 6,474 of forward contracts concerning currencies used in CORTICEIRA AMORIM transactions were in place. From that total, the AUD represents 50%, ZAR 26%.
At the same date, there were USD option contracts, with a total nominal amount of K€ 17,507.
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.
| 1H2008 | 2007 | 1H2007 | |
|---|---|---|---|
| Nr. shares issued | 133,000,000 | 133,000,000 | 133,000,000 |
| Average nr. of own shares | 2,584,871 | 2,558,096 | 2,548,357 |
| Average nr. of outstanding shares | 130,415,129 | 130,441,904 | 130,451,643 |
| Net profit (thousand euros) | 6,890 | 23,245 | 9,145 |
| Net profit per share (euros) | 0.0528 | 0.1782 | 0.0701 |
Mozelos, July 31, 2008
The Board of Directors of CORTICEIRA AMORIM, S.G.P.S., S.A.
Chairman of the Board of Directors
Vice-Chairman of the Board of Directors
Member of the Board of Directors
Member of the Board of Directors
Member of the Board of Directors
Member of the Board of Directors
Member of the Board of Directors
PricewaterhouseCoopers & Associados - Sociedade de Revisores Oficiais de Contas, Lda. o′Porto Bessa Leite Complex Rua António Bessa Leite, 1430 - 5º 4150-074 Porto Portugal Tel +351 225 433 000 Fax +351 225 433 499
1 In accordance with the Portuguese Securities Market legislation ("Código dos Valores Mobiliários") we present the limited review report on the consolidated financial information for the period of six months ended 30 June 2008 of Corticeira Amorim, SGPS, SA, comprising the consolidated Management Report, the consolidated balance sheet (which shows total assets of Euros 598.584 thousand and total shareholder's equity of Euros 243.592 thousand, which includes a net profit of Euros 6.890 thousand), the consolidated statements of income by nature, the consolidated statement of changes in equity and the consolidated cash flow statement for the period then ended and the corresponding notes to the accounts.
2 It is the responsibility of the Company's Management: (i) to prepare consolidated financial statements which present fairly, in all material respects, the financial position of the company and its subsidiaries, the consolidated changes in equity and the consolidated results and cash flows of their operations; (ii) to prepare consolidated financial statements applying the International Financial Reporting Standards (IFRS), as adopted in the European Union, in particular the International Accounting Standard nº 34 – Interim Financial Information, and the principles requested by the Portuguese Security Market legislation; (iii) to adopt appropriate accounting policies and criteria; (iv) to maintain adequate systems of internal accounting controls; and (v) to disclose any relevant fact that has influenced the activity of the company and its subsidiaries, its financial position or results.
3 Our responsibility is to verify the consolidated financial information presented on these documents, in particular if it is complete, faithful, actual, comprehensible, objective and lawful, in accordance with Portuguese Security Market legislation with the objective of expressing an independent and professional report on this information based on our review.
Corticeira Amorim, SGPS, SA
4 We conducted our limited review in accordance with the Standards and Technical Recommendations approved by the Portuguese Institute of Statutory Auditors applicable to limited review engagements, which require that we plan and perform the review to obtain moderate assurance as to whether the consolidated financial statements are free of material misstatement. Our limited review consisted, principally, in inquiries and analytical procedures designed to evaluate: (i) the faithfulness of the assertions in the financial information; (ii) the adequacy and consistency of the accounting principles adopted, taking into account the circumstances; (iii) the applicability, or not, of the going concern basis; (iv) the overall presentation of the financial statements; and (v) verification of the completeness, faithfulness, actuality, comprehensiveness, objectivity and lawfulness of the information presented, in accordance with the Portuguese Securities Market legislation.
5 Our review also included the verification of the consistency of the consolidated Management Report with the information contained in the financial statements
6 We believe that our review provides a reasonable basis for our limited review report.
7 Based in our limited review, which was performed in order to provide a moderate level of assurance, nothing has come to our attention that cause us to conclude that the consolidated financial statements of the period of six months ended 30 June 2008 contain material errors that affect their conformity with the International Financial Reporting Standards (IFRS), as adopted in the European Union, in particular the International Accounting Standard nº 34 – Interim Financial Information, and the information there included is complete, faithful, actual, comprehensible, objective and lawful.
Porto, 28 August 2008
PricewaterhouseCoopers & Associados, S.R.O.C., Lda. represented by:
José Pereira Alves, R.O.C.
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