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The Navigator Company
Quarterly Report • Jun 6, 2023
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Quarterly Report
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FIRST QUARTER REPORT 0 | 54
CONTENTS
- 1. PERFORMANCE 1st QUARTER 2023
- 2. LEADING INDICATORS
- 3. ANALYSIS OF RESULTS
- 4. OUTLOOK
- 5. FINANCIAL STATEMENTS AND NOTES
1. PERFORMANCE 1st QUARTER 2023
In 2022, the sector experienced unique conditions, with several factors contributing simultaneously to a shortage of paper in Europe, especially in the first half of the year. The inevitable correction of this abnormal conjuncture has strongly conditioned the situation of the sector in the first quarter of this year.
After a year of market shortages, leading to an abnormal level of orders, the first quarter of 2023 saw a high volume of stocks throughout the supply chain, significantly constraining demand in all paper segments, except in tissue. The destocking which has been in progress since the second half of 2022 is taking longer than anticipated, and the return to normal levels will depend on supply chains normalizing, on the greater or lesser extent of the economic downturn and market perceptions in relation to the evolution of prices.
In this context, Navigator, an integrated Forestry, Pulp, Paper, Tissue, Packaging and Energy producer, succeeded in adjusting to market conditions, protecting its margins, and presenting its best ever first quarter results, as well as pressing ahead with its strategy of investment, growth and business diversification.
1st Quarter Analysis (vs Q4 2022 and vs Q1 2022)
- Navigator recorded turnover of € 501 million (down 22% on the 4th quarter of 2022; up 2% on the 1 st quarter of 2022);
- EBITDA stood at € 131 million (down 29% on the 4th quarter; up 8% on the 1st quarter of 2022), reflected in an EBITDA margin of 26% (down 2.6 pp on the previous quarter; up 1.4 pp on the 1st quarter of 2022);
- Net income of € 72 million (down 41% on the 4th quarter; up 42% on the 1st quarter of 2022);
- The volume of paper sales was down by 16% on the same period in 2022, in an environment featuring a persistently high level of stocks throughout the supply chain and a sharp economic downturn. Even so, prices remain at historically high levels which, combined with a richer product mix, made it possible to offset the reduction in volumes, in relation to the same period last year;
- The Packaging segment was where the sudden downturn in demand was felt most keenly. Nonetheless, despite the unfavorable environment, the new segment continues to score successes, such as the recognition of the quality of our products, and consequently of the GKraft brand, already counting with a client base of more than 230 active clients keen to contribute to the global movement to de-plastify the world economy (+45% YoY);
- Sales volumes for pulp were up by 75% on the previous quarter and 19% on the 1 st quarter of 2022. A reduction in incorporation of pulp into paper in the quarter increased the availability of pulp for sale. There was also strong performance in production, with the Aveiro and Figueira da Foz complexes recording high levels of output;
- In the Tissue segment, demand for finished products proved resilient, allowing sales to perform well. Driven by rising prices, sales presented growth of 27% year-on-year, and a drop of 2.4% in relation to the final quarter;
- In line with our strategy of diversification, the acquisition of Gomà-Camps Consumer in Spain was concluded on March, 31 with the aim of increasing our presence in the At Home segment, as previously announced; The integration of this new mill will enable Navigator to position itself as Iberia's second largest tissue manufacturer;
• Attention is drawn to our Health and Safety Strategy, Mission Zero. This is an ambitious plan that promotes (and incentivizes) a Company-wide commitment, from top management down to sector managers, supervisors and operatives. With Mission Zero, Navigator has been achieving increasingly positive results, in line with best practices. March was a month with no accidents leading to sick leave, as well as the lowest Frequency Rate since records have been kept of this indicator.
| Q1 | Q1 | Q4 | |||||
|---|---|---|---|---|---|---|---|
| Million euros | 2023 | 2022 | Q1 23/Q1 22 (8) | 2022 | Q1 23/Q4 22 (8) | ||
| Total Sales | 501.2 | 492.2 | 1.8% | 642.2 | -22.0% | ||
| EBITDA (1) | 130.7 | 121.6 | 7.5% | 184.4 | -29.1% | ||
| Operating Profits (EBIT) | 99.2 | 89.4 | 11.0% | 135.5 | -26.8% | ||
| Financial Results | - 2.7 | - 4.7 | 43.1% | 3.1 | 185.2% | ||
| Net Earnings | 71.7 | 50.6 | 41.7% | 122.1 | -41.3% | ||
| Cash Flow | 103.1 | 82.8 | 20.3 | 171.0 | - 67.8 | ||
| Free Cash Flow (2) | 30.8 | 77.0 | - 46.1 | 140.2 | - 109.4 | ||
| Capex | 41.7 | 14.7 | 27.0 | 47.9 | - 6.2 | ||
| Net Debt (3) | 351.4 | 517.9 | - 166.5 | 382.2 | - 30.8 | ||
| EBITDA/Sales | 26.1% | 24.7% | 1.4 pp | 28.7% | -2.6 pp | ||
| ROS | 14.3% | 10.3% | 4.0 pp | 19.0% | -4.7 pp | ||
| ROCE (4) | 23.8% | 22.1% | 1.8 pp | 33.0% | -9.2 pp | ||
| ROE (5) | 22.1% | 19.1% | 3.0 pp | 42.4% | -20.3 pp | ||
| Equity Ratio | 44.4% | 40.6% | 3.8 pp | 43.2% | 1.2 pp | ||
| Net Debt/EBITDA (6)(7) | 0.47 | 1.28 | -0.81 | 0.52 | -0.05 |
2. LEADING INDICATORS
-
Operating profits + depreciation + provisions;
-
Variation net debt + dividends + purchase of own shares
-
Interest-bearing liabilities - liquid assets (not including effect of IFRS 16)
-
ROCE = Annualized operating income / Average Capital invested (N+(N-1))/2
-
ROE = Annualized net income / Average Shareholders' Funds (N+(N-1))/2
-
(Interest-bearing liabilities - liquid assets) / EBITDA corresponding to last 12 months
-
Impact of IFRS 16: Net Debt / EBITDA (2023) of 0.56; Net Debt / EBITDA (2022) of 1.41;
-
Variation in figures not rounded up/down
3. ANALYSIS OF RESULTS
The good results recorded in the quarter benefited from the slowdown in cash costs in the first quarter (currently at levels close to, or below, those recorded in the third quarter of 2022), along with continued
high prices internationally for paper and tissue, still at historically high levels, despite some downward adjustment from the peaks recorded in 2022.
The printing and writing papers industry
The financial year of 2022 was divided into two very different periods. The first half was characterized by a shortfall in UWF supply, logistical restrictions, low stocks along the chain and the high level of manufacturers' order books. In contrast, the second half saw an increase in imports from Asia, due to the normalization of logistics and high prices in Europe, and mounting stocks along the supply chain, causing new orders to manufacturers to fall off. In Europe, in particular, demand in the 4th quarter was sluggish, comparable to the worst months of the pandemic (2nd quarter of 2020), and stocks rose to high levels along the chain.
In early 2023, the effects were still felt of this build-up of stocks along the supply chain, which has been slow in working itself through the system, due essentially to the economic downturn. As a result, new orders to manufacturers have continued to decline. Europe in particular experienced a first quarter in which new orders stood at historically low levels.
As a result, capacity utilization rates in the industry fell sharply, although Navigator's utilization rate (84%) was well above the industry average (69%).
Global demand for printing and writing papers
In a context of a sharp decline in apparent demand (down 10.5%), UWF remains the most resilient, with a decrease of 5.2%, as compared to CWF papers for which apparent demand dropped by 17.2%. Paper produced from mechanical pulp also saw demand plummet, by 21.5% (uncoated) and 17.8% (coated).
In Europe in particular, apparent demand for UWF paper in the first half dropped by 20%, although still proving the most resilient of all paper grades. Other printing paper grades experienced a more severe
decline in demand in the period (YoY): CWF -42%, Uncoated Mechanical -30%, Coated Mechanical - 29%, Supercalendered -27% and Newsprint -22% (Euro-Graph).
In the United States, demand dropped by 8%, falling most sharply for folio formats and reels (down 11%), whilst demand for cut-size fell by 4% (RISI).
Apparent UWF consumption in other world regions was down by 2.4%, comparing with the same period last year.
At the end of March, the benchmark index for office paper in Europe stood at 1,302 €/tons, slightly down from the start of the year (1,334 €/tons) and 4% down from the all-time high recorded at the end of October 2022 (1,358 €/tons), but still 28% higher than the average price for the same period last year.
Navigator's UWF sales totaled 273 thousand tons, representing a drop of 16% in relation to the same period in 2022 and 25% in relation to the final quarter, in an environment where stock levels remain fairly high throughout the supply chain. The level of prices and a richer product mix (with premium products and mill brands accounting for a record share) made it possible to offset the decline in volumes, in relation to the first quarter of 2022.
Packaging - From Fossil to Forest – commitment to sustainability and innovation
It was in the Packaging segment that the downturn in demand was felt most quickly, reflecting highly adverse conditions, in the form of high stocks at manufacturers, and high stocks of finished products at their clients, as well as a severe slowdown in demand from end consumers.
Despite the difficult economic climate, the new Packaging segment continues to score successes, such as the recognition of the quality of our products, and consequently of the gKraft brand, serving high profile brands, in sectors ranging from fashion to food retail, e-commerce, manufacturing and agriculture, thanks to a growing and increasingly diversified customer base keen to contribute to the global movement to de-plastify the world economy. The customer base has been consistently increasing and today exceeds 230 active customers (+45% YoY).
Of the various development projects under way, Navigator made use of the first quarter to press ahead with the development of products for the food industry, consumer and construction products.
Navigator has continued to make progress on its capital project for a new factory producing receptacles in formed fibre, designed to replace single use plastics at points of sale in the food packaging and food service segments. The Formed Fibre Project has proceeded according to plan, with the aim of starting up production in the first half of 2024. This has involved work on various fronts, including construction work on the factory, acquisition of production technology, product development, where the Research and Development Laboratory at RAIZ is closely involved, recruitment of specialist staff and market prospection.
Pulp Market
The benchmark index for short fibre (hardwood) pulp in Europe – PIX BHKP in dollars – rose to historically high levels in 2022 (1,380 USD/tons). A process of downward adjustment started in the first quarter, and the index dropped to 1,280 USD/tons at the end of March, down 7% on the start of the
year (1.101 USD/ton on May 9). Despite this, the average price in the quarter was 15% higher than the average price recorded in the same period last year.
In China, the benchmark index for hardwood pulp dropped by 12% in relation to the start of the year, standing at the end of the quarter at 709 USD/tons (500 USD/tons on May 9).
The first quarter of 2023 was therefore marked by falling pulp prices, down from recent record levels. This was driven by: (i) a drop in global demand this quarter vs same period last year (down 3.4% for bleached chemical pulp (BCP), down 3,1% for hardwood (HW) pulp, down 4.9% for eucalyptus pulp (EUCA), in particular, in Europa (BCP down 15.4%, HW down 17.9%, EUCA down 14.8% ); (ii) rising stock levels along the supply chain in late 2022 and early 2023; (iii) the easing of the logistical constraints experienced in 2022; and (iv) an increase in supply, due to the arrival of new capacity and less shutdowns than in the same period in 2022.
Over the course of the quarter, Navigator had a larger quantity of pulp for sale, due to less integration of pulp into paper. Sales accordingly stood at 92 thousand tons, representing an increase of 19% in relation to the same period in 2022 and of 75% in relation to the previous quarter.
Tissue business continues to perform strongly
Demand for finished products proved resilient in the first quarter of 2023, allowing tissue sales to perform well. Driven by high prices, sales presented growth of approximately 27% YoY, and a drop of 2.4% in relation to the final quarter.
The volume of tissue sales stood at 24 thousand tons, down by close to 7.7% in relation to Q1 2022 and 2.2% in relation to the previous quarter. The YoY reduction is explained essentially by a sharp slowdown in sales of reels, due to reduced production availability.
Growth in sales of finished products was achieved above all in the At Home channel, driven by new customers and consolidation of the existing client base.
Energy and external fibre costs slowed over the course of the quarter, although still at historically high levels. In this segment also, Navigator has continued to pursue a responsible pricing policy, whilst sticking to prudent management of its variable and fixed costs, with balanced margins and an ongoing focus on innovation and differentiation, reflected in its growing market appeal and reputation.
On March 31, Navigator concluded the acquisition of the Gomà-Camps Group's consumer tissue business in Spain. The integration of the new mill will enable Navigator to position itself as the second largest Iberian manufacturer of Tissue, adding 35 thousand tons to its Tissue production capacity, which now totals 165 thousand tons, and increasing its converting capacity from 60 to 180 thousand tons.
What is now called Navigator Tissue Ejea closed the quarter with turnover exceeding 32 million euros, a sum not yet consolidated this quarter in our results for the segment, as the venture is recorded in the accounts as a financial holding.
Energy
In the first quarter of 2023, electricity sales totaled € 49 million, down by approximately 25% from the
figure for the same period in the previous year.
The reduction in income is explained essentially by the fact that: (i) the arithmetical mean price for the Portuguese area of the Iberian electricity market (OMIE) stood at 97.8 €/MWh in the first quarter, down from a level of 228.6 €/MWh in the same period last year; and (ii) the combined cycle natural gas power station in Setúbal is operating with only one generator set, as compared to 2 generator sets last year, given that evolution of the price differential (electricity and natural gas) means that operation of the second set is not economically rewarding.
By way of compensation, the lower level of energy sales has meant lower energy acquisition costs, both because of the lower unit prices for market purchases and because of the acquisition of smaller volumes, in particular of natural gas (due to the decision not to operate the second generator set, as mentioned).
The Group's industrial units continue to participate in the Regulation Reserve Band Market, a service provided by qualified power consumers to the operator of the power grid, designed to help safeguard the security of supply in the National Electrical System.
Slowdown in costs and price evolution offset drop in demand and result in EBITDA of € 131 million
The first quarter of 2023 saw a slowdown in costs, in particular for logistics, certain raw materials and energy, which in combination with efforts to maintain prices and enrich the product mix, partially offset the reduction in sales volumes.
Total fixed costs ended the period at 9% higher than in the same period in 2022, a figure explained essentially by personnel costs, due to pay rises and increase performance and productivity bonuses, but also by maintenance costs, impacted by the annual pulp shutdown in Setúbal, which did not take place in 2022, and the increase in running costs, in particular the rise in the costs of projects to support and diversify the Group's business.
In this context, Navigator recorded EBITDA of € 131 million in the 1st quarter and an EBITDA / Sales margin of 26% (up 1.4 p.p. YoY and down 2.6 p.p. on the previous quarter).
Financial Results
Financial results stood at € -2.7 million (vs. € -4.7 million in the same period in 2022), reflecting a YoY reduction of € 2.0 million. This result was achieved thanks to the interest rate risk hedging policy which, despite the rapid rises in reference rates, enabled financing costs to remain stable.
At the same time, rising interest rates enabled the Company to optimize management of surplus funds, generating positive income of € 1.6 million.
Pre-tax profits totaled € 96.6 million and corporation tax payable stood at € 24.9 million, with a taxation rate for the period of 26%. Net income stood at € 71.7 million, as compared to € 50.6 million in the first quarter of 2022 and € 122.1 million in the previous quarter.
Free Cash Flow Generation of € 31 million
Free cash flow generation for the quarter totaled € 31 million (compared to € 77 million in Q1 2022 and €140 million in the previous quarter). This reflects the impact of disbursement on the acquisition of Gomà-Camps Consumer, without which free cash flow would have risen by more than 50% YoY.
The impact of the variation in working capital is of little significance overall: substantial investment in inventories over the period was offset by a reduction of similar magnitude in customer balances.
Sustainable Financial Management, with reduction in borrowing - fixed rate basis guarantees competitive financing costs
Net debt was down from year-end 2022 to € 351 million euros, despite the sum disbursed for acquisition of Gomà-Camps Consumer. As a result, the ratio of Interest Bearing Net Debt to EBITDA stood at 0.47, further consolidating the financial strength displayed by the Group in recent years.
Borrowing of approximately € 50 million was repaid during the first quarter. Average debt maturity remains at an appropriate level, with well staggered repayments. Close to 40% of total debt issues is linked to sustainability and 93% of total debt issued by the Group is on a fixed rate basis, enabling us to maintain low financing costs in a scenario of sharply rising interest rates. Unused long term finance facilities total € 167 million.
Capex of € 42 million
In the first quarter of 2023, capital expenditure totaled € 42 million (compared to € 15 million in the same period last year and € 48 million in the previous quarter), of which approximately € 15.1 million is classified as environmental or sustainability investment, accounting for 36% of total capex.
The quarterly capex figure consists mostly of projects aimed at maintaining production capacity, modernizing plant, achieving efficiency gains, and structural and safety projects. Notable among these
capital projects are the new Recovery Boiler in Setúbal, the New Wood Yard in Figueira, investment in treatment of waste water (WWTP in Setúbal), washing and sieving of HYKEP pulp and treatment of fly ash from the Aveiro Recovery Boiler.
4. OUTLOOK
The current political and economic situation, marked by slowing economies, inflation and the ongoing war in Ukraine, means that markets remain highly unpredictable and extremely volatile. The effectiveness of monetary and economic policies in Europe, and the evolution of geopolitical risk, will play a crucial role.
In Europe there may be scope for further temporary or definitive capacity reductions in line with strategy decisions or due to profitability issues caused by the continued high level of variable costs, and energy costs in particular, as already announced by certain European players, since the close of the quarter.
Production costs are at a far higher level than before the pandemic, and this continues to put downward pressure on the margins of paper manufacturers, especially those which are not integrated. Navigator has pressed ahead with and stepped up its programs to improve efficiency and control costs.
Despite persisting inflationary pressures, the drop in pulp prices in China and Europe, together with the recovery in imports from Asian or American players, could result in further downward pressure on prices in Europe.
On the other hand, the normalization of the volume of stocks along the supply chain could help to moderate this negative pressure. Although slower than could have been expected, it is anticipated that the effect of destocking along the supply chain will result in a moderate increase in the inflow of new orders in the second quarter. The speed of the recovery in new orders will be highly dependent on buyer sentiment in relation to the evolution of consumer demand and prices.
In the pulp segment, slower demand and the substantial increase in the supply of pulp on the market will keep up the current downward pressure on pulp prices in 2023. For the rest of the year, analysts predict that market prices will stay on a gradual downward course, although a recovery is expected during 2024. This forecast of falling prices largely reflects the arrival of new short fibre capacity in Latin America, in Chile (1.6 million tons), which started up in December 2022, and in Uruguay (2.1 million tons), where start-up occurred in April 2023.
The Group is pressing ahead with an ambitious plan for product diversification and development, especially in the Tissue and Packaging segments. The project for production of formed fibre pieces is planned to start up production in the first half of 2024. The new unit will initially have capacity for 100 million pieces, with the possibility of scaling up production in subsequent years.
The current situation makes it impossible to see far into the geopolitical and macroeconomic future, requiring a constant process of adapting to a changing scenario. The rapid action taken by the Company - carefully managing and planning production of all products, successfully implementing its commercial strategies and focusing on industrial efficiency and cost control programs, as well as its financial robustness and new business areas, will again highlight the resilience of Navigator's business model.
A BIOINDUSTRY ON THE RIGHT SIDE OF THE FUTURE
Navigator belongs to the select group of the world's most sustainable companies. Navigator scored the top grade ("A") for global leadership in fighting climate change, in the rankings published by CDP - Disclosure Insight Action. The Company also takes part in CDP Forest, focused on forestry management, and in only the second year saw its performance in this category classified as "A-", meaning that, here too, it occupies a leadership position.
In a further success, the annual ratings published by Sustainalytics in late January again classified Navigator as a low risk company for investors, and recognized its status as an ESG Industry Top-Rated company. Navigator's rating and excellent ranking are important facts that reflect its ongoing efforts to integrate sustainability as a priority in its business model, demonstrating its capacity to anticipate and manage ESG risks in the conduct of its operations.
Lisbon, 10th May 2023
Conference Call and Webcast for Analysts and Investors
Date: Monday, 15th of May 2023
Time: 16:00 WET (Western European Time, GMT)
Link to the Conference Call webcast:
https://streamstudio.world-television.com/1076-1695-35714/en
Link for advance registration for telephone access to Conference Call:
https://aiti.capitalaudiohub.com/navigator/reg.html
5. CONSOLIDATED FINANCIAL STATEMENTS
Condensed consolidated income statement
For the three-month periods ended 31 March 2023 and 2022
| 3 months | 3 months | ||
|---|---|---|---|
| Amounts in Euro | Note | 31-03-2023 | 31-03-2022 |
| Revenue | 2.1 | 501,159,485 | 492,229,639 |
| Other operating income | 2.2 | 14,368,110 | 13,196,064 |
| Changes in fair value of biological assets | 3.7 | (602,190) | (5,484,454) |
| Cost of goods sold and materials consumed | (254,355,100) | (215,360,445) | |
| Variation in production | 27,368,170 | 38,075,961 | |
| External services and supplies | 2.3 | (95,559,176) | (140,129,861) |
| Payroll costs | 7.1 | (44,549,310) | (42,095,667) |
| Other operating expenses | 2.3 | (17,128,963) | (18,856,698) |
| Depreciation, amortisation and impairment losses in non-financial assets | 3.6 | (31,453,578) | (32,189,183) |
| Operating income | 99,247,447 | 89,385,356 | |
| Financial income and gains | 5.7 | 2,176,846 | 163,870 |
| Financial expenses and losses | 5.7 | (4,853,519) | (4,865,782) |
| Net financial results | (2,676,673) | (4,701,912) | |
| Profit before income tax | 96,570,774 | 84,683,444 | |
| Income tax | 6.1 | (24,886,855) | (34,084,876) |
| Net profit for the period | 71,683,919 | 50,598,568 | |
| Attributable to Navigator's equity holders | 71,680,074 | 50,602,596 | |
| Atrributable to non-controlling interests | 5.3 | 3,845 | (4,028) |
| Earnings per share | |||
| Basic earnings per share, Eur | 5.2 | 0.101 | 0.071 |
| Diluted earnings per share, Eur | 5.2 | 0.101 | 0.071 |
Condensed consolidated statement of comprehensive income
For the three-month periods ended 31 March 2023 and 2022
| 3 months | 3 months | ||
|---|---|---|---|
| Amounts in Euro | Note | 31-03-2023 | 31-03-2022 |
| Net profit for the period | |||
| before non-controlling interests | 71,683,919 | 50,598,568 | |
| Items that may be reclassified to the income statement | |||
| Hedge derivative financial instruments | |||
| Changes in fair value | 8.1 | 4,309,347 | (10,319,990) |
| Tax effect | (1,185,070) | 2,837,997 | |
| Currency translation differences | (153,412) | 2,409,831 | |
| Items that cannot be reclassified to the income statement | |||
| Remeasurement of post-employment benefits | |||
| Remeasurements | 7.2.2 | 1,835,323 | (9,537,450) |
| Comprehensive income of associated companies and joint ventures | (338,565) | (2,329,646) | |
| Total other comprehensive income net of taxes | 4,467,623 | (16,939,258) | |
| Total comprehensive income | 76,151,542 | 33,659,310 | |
| Attributable to: | |||
| Navigator's equity holders | 76,147,697 | 33,658,394 | |
| Non-controlling interests | 3,845 | 916 | |
| 76,151,542 | 33,659,310 |
Condensed consolidated statement of financial position
As at 31 March 2023 and 31 December 2022
| Amounts in Euro | Note | 31-03-2023 | 31-12-2022 |
|---|---|---|---|
| ASSETS | |||
| Non-current assets | |||
| Goodwill | 3.1 | 377,339,466 | 377,339,466 |
| Intangible assets | 3.2 | 87,383,851 | 44,813,091 |
| Property, plant and equipment | 3.3 | 1,108,229,781 | 1,099,689,407 |
| Investment properties | 3.4 | 90,531 | 90,943 |
| Right-of-use assets | 3.5 | 59,895,377 | 57,934,840 |
| Biological assets | 3.7 | 121,897,049 | 122,499,875 |
| Investments in associates and joint ventures | 3.8 | 85,135,620 | - |
| Non-current receivables | 4.2 | 23,634,682 | 25,282,858 |
| Deferred tax assets | 6.2 | 27,836,204 | 27,204,659 |
| 1,891,442,561 | 1,754,855,139 | ||
| Current assets | |||
| Inventories | 4.1 | 324,764,466 | 298,729,217 |
| Current receivables | 4.2 | 460,536,625 | 499,143,408 |
| Income tax | 6.1 | 16,216,543 | 16,216,543 |
| Cash and cash equivalents | 5.6 | 324,303,020 | 343,083,788 |
| 1,125,820,654 | 1,157,172,956 | ||
| Total Assets | 3,017,263,215 | 2,912,028,095 | |
| EQUITY AND LIABILITIES | |||
| Capital and Reserves | |||
| Share capital | 5.1 | 500,000,000 | 500,000,000 |
| Currency translation reserve | 5,190,294 | 5,343,706 | |
| Fair value reserve | 37,122,105 | 33,997,828 | |
| Legal reserves | 100,000,000 | 100,000,000 | |
| Other reserves | 3,481,014 | 3,481,014 | |
| Retained earnings | 618,083,747 | 224,049,919 | |
| Net profit for the period | 71,680,074 | 392,537,070 | |
| Equity attributable to Navigator's equity holders | 1,335,557,234 | 1,259,409,537 | |
| Non-controlling interests | 5.3 | 301,822 | 297,977 |
| Total Equity | 1,335,859,056 | 1,259,707,514 | |
| Non-current liabilities | |||
| Interest-bearing liabilities | 5.4 | 593,377,113 | 643,006,886 |
| Lease liabilities | 5.5 | 57,354,544 | 55,089,083 |
| Pensions and other post-employment benefits | 7.2 | 1,000,407 | 2,835,730 |
| Deferred tax liabilities | 6.2 | 98,488,382 | 98,314,430 |
| Provisions | 9.1 | 28,437,645 | 28,432,877 |
| Non-current payables | 4.3 | 31,520,860 | 34,852,398 |
| 810,178,951 | 862,531,404 | ||
| Current liabilities | |||
| Interest-bearing liabilities | 5.4 | 82,294,836 | 82,294,836 |
| Lease liabilities | 5.5 | 6,571,507 | 6,551,966 |
| Current payables | 4.3 | 630,717,990 | 575,467,689 |
| Income tax | 6.1 | 151,640,875 | 125,474,686 |
| 871,225,208 | 789,789,177 | ||
| Total Liabilities | 1,681,404,159 | 1,652,320,581 | |
| Total Equity and Liabilities | 3,017,263,215 | 2,912,028,095 |
Condensed statement of changes in equity
For the three-month periods ended 31 March 2023 and 2022
| Share capital | Currency translation |
Fair value reserve |
Legal reserves | Other reserves | Retained earnings Net profit for the period |
Prepaid dividends Total | Non-controlling interests |
Total | ||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Amounts in Euro | Note | reserve | ||||||||||
| Equity as at 1 January 2023 | 500,000,000 | 5,343,706 | 33,997,828 | 100,000,000 | 3,481,014 | 224,049,919 | 392,537,070 | - | 1,259,409,537 | 297,977 | 1,259,707,514 | |
| Net profit for the period | - | - | - | - | - - |
71,680,074 | - | 71,680,074 | 3,845 | 71,683,919 | ||
| Other comprehensive income (net of taxes) | - | (153,412) | 3,124,277 | - | 1,496,758 - |
- | - | 4,467,623 | - | 4,467,623 | ||
| Total comprehensive income for the period | - | (153,412) | 3,124,277 | - | - | 1,496,758 | 71,680,074 | - | 76,147,697 | 3,845 | 76,151,542 | |
| Application of 2022 net profit for the period: | ||||||||||||
| - Dividends paid | - | - | - | - | - - |
- | - | - | - | - | ||
| - Application of prior period's net profit | - | - | - | - | 392,537,070 - |
(392,537,070) | - | - | - | - | ||
| - Bonus to employees | - | - | - | - | - - |
- | - | - | - | - | ||
| Transfer of free reserves to retained earnings | - | - | - | - | - - |
- | - | - | - | - | ||
| Total transactions with shareholders | - | - | - | - | - | 392,537,070 | (392,537,070) | - | - | - | - | |
| Equity as at 31 March 2023 | 500,000,000 | 5,190,294 | 37,122,105 | 100,000,000 | 3,481,014 | 618,083,747 | 71,680,074 | - | 1,335,557,234 | 301,822 | 1,335,859,056 |
| Share capital | Currency translation |
Fair value reserve |
Legal reserves | Other reserves | Retained earnings Net profit for the period |
Prepaid dividends Total | Non-controlling interests |
Total | ||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Amounts in Euro | Note | reserve | ||||||||||
| Equity as at 1 January 2022 | 500,000,000 | (24,346,001) | (5,604,076) | 100,000,000 | 121,836,100 | 231,525,876 | 171,411,455 | (49,996,170) | 1,044,827,184 | 286,896 | 1,045,114,080 | |
| Net profit for the period | - | - | - | - | - - |
50,602,596 | - | 50,602,596 | (4,028) | 50,598,568 | ||
| Other comprehensive income (net of taxes) | - | 2,409,831 | (7,481,993) | - | (11,868,012) - |
- | - | (16,940,174) | 916 | (16,939,258) | ||
| Total comprehensive income for the period | - | 2,409,831 | (7,481,993) | - | - | (11,868,012) | 50,602,596 | - | 33,662,422 | (3,112) | 33,659,310 | |
| Application of 2021 net profit for the period: | ||||||||||||
| - Dividends paid | - | - | - | - | - - |
- | - | - | - | - | ||
| - Application of prior period's net profit | - | - | - | - | 121,415,285 - |
(171,411,455) | 49,996,170 | - | - | - | ||
| - Bonus to employees | - | - | - | - | - - |
- | - | - | - | - | ||
| Transfer of free reserves to retained earnings | - | - | - | - | - - |
- | - | - | - | - | ||
| Total transactions with shareholders | - | - | - | - | - | 121,415,285 | (171,411,455) | 49,996,170 | - | - | - | |
| Equity as at 31 March 2022 | 500,000,000 | (21,936,170) (13,086,069) | 100,000,000 | 121,836,100 | 341,073,149 | 50,602,596 | - | 1,078,489,606 | 283,784 | 1,078,773,390 |
Condensed consolidated cash flow statement
For the three-month periods ended 31 March 2023 and 2022
| 3 months | 3 months | ||
|---|---|---|---|
| Amounts in Euro | Note | 31-03-2023 | 31-03-2022 |
| OPERATING ACTIVITIES | |||
| Receipts from customers | 504,772,319 | 493,430,543 | |
| Payments to suppliers | (345,857,506) | (372,250,129) | |
| Payments to employees | (29,283,004) | (24,174,757) | |
| Cash flows from operations | 129,631,809 | 97,005,657 | |
| Income tax received/(paid) | 6.1 | (326,985) | (4,413) |
| Other (payments)/receipts relating to operating activities | 24,801,398 | (3,014,783) | |
| Cash flows from operating activities (1) | 154,106,222 | 93,986,461 | |
| INVESTING ACTIVITIES | |||
| Inflows: | |||
| Property, plant and equipment | 7,456 | 603,521 | |
| Interest and similar income | - 7,456 |
691,932 1,295,453 |
|
| Outflows: | |||
| Property, plant and equipment | (27,154,850) | (12,172,741) | |
| Intangible assets | (2,400,000) | (28,416) | |
| Investments in associates | 3.8 | (85,135,621) | - |
| (114,690,471) | (12,201,157) | ||
| Cash flows from investing activities (2) | (114,683,015) | (10,905,704) | |
| FINANCING ACTIVITIES | |||
| Inflows: | |||
| Interest-bearing liabilities | - | 233,742 | |
| - | 233,742 | ||
| Outflows: | |||
| Interest-bearing liabilities | (49,857,143) | (100,000,000) | |
| Amortisation of lease agreements | 5.5 | (2,332,664) | (2,147,573) |
| Interest and similar expenses | (5,235,288) | (3,899,696) | |
| Other financing activities | (100,982) | (187,268) | |
| (57,526,077) | (106,234,537) | ||
| Cash flows from financing activities (3) | (57,526,077) | (106,000,795) | |
| CHANGES IN CASH AND CASH EQUIVALENTS (1)+(2)+(3) Effect of exchange rate differences |
(18,102,870) (677,898) |
(22,920,038) 36,800 |
|
| CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD | 5.6 | 343,083,788 | 239,171,252 |
| CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD | 5.6 | 324,303,020 | 216,288,014 |
CONTENTS
| 1.Introduction | 18 |
|---|---|
| 1.2 IMPACTS ARISING FROM THE MILITARY CONFLICT IN UKRAINE | 19 |
| 1.3 SUBSEQUENT EVENTS | 20 |
| 1.4 BASIS FOR PREPARATION | 20 |
| 1.5 SIGNIFICATE ACCOUNTING ESTIMATES AND JUDGMENTS | 21 |
| 2.Operational performance | 22 |
| 2.1 REVENUE AND SEGMENT REPORTING | 22 |
| 2.2 OTHER OPERATING INCOME | 25 |
| 2.3 OTHER OPERATING EXPENSES | 26 |
| 3.Investments | 27 |
| 3.1 GOODWILL | 27 |
| 3.2 INTANGIBLE ASSETS | 28 |
| 3.3 PROPERTY, PLANT AND EQUIPMENT | 29 |
| 3.4 INVESTMENT PROPERTIES | 30 |
| 3.5 RIGHT-OF-USE ASSETS | 31 |
| 3.6 DEPRECIATION, AMORTISATION AND IMPAIRMENT LOSSES | 31 |
| 3.7 BIOLOGICAL ASSETS | 32 |
| 4.Working capital | 33 |
| 4.1 INVENTORIES | 33 |
| 4.2 RECEIVABLES | 34 |
| 4.3 PAYABLES | 36 |
| 5.Capital Structure | 37 |
| 5.1 SHARE CAPITAL AND TREASURY SHARES | 37 |
| 5.2 EARNINGS PER SHARE | 37 |
| 5.3 NON-CONTROLLING ASSETS | 38 |
| 5.4 INTEREST-BEARING LIABILITIES | 39 |
| 5.5 LEASE LIABILITIES | 41 |
| 5.6 CASH AND CASH EQUIVALENTS | 41 |
| 5.7 NET FINANCIAL RESULTS | 42 |
| 6.Income tax | 42 |
| 6.1 INCOME TAX FOR THE PERIOD | 42 |
| 6.2 DEFERRED TAXES | 45 |
| 7.Payroll | 46 |
| 7.1 PAYROLL COSTS | 46 |
| 7.2 EMPLOYEE BENEFITS | 47 |
| 8.Financial Instruments | 49 |
|---|---|
| 8.1 DERIVATIVE FINANCIAL INSTRUMENTS | 49 |
| 9.Provisions, commitments and contingencies | 51 |
| 9.1 PROVISIONS | 51 |
| 9.2 COMMITMENTS | 51 |
| 10. Group structure 10.1 COMPANIES INCLUDED IN THE CONSOLIDATION PERIMETER 10.2 CHANGES IN THE CONSOLIDATION PERIMETER 10.3 TRANSACTIONS WITH RELATED PARTIES |
52 52 53 53 |
1. Introduction
1.1. The Group
The Navigator Group (Group) is comprised by The Navigator Company, S.A. and its subsidiaries.
The Navigator Group was created in the mid 1950's, when a group of technicians from "Companhia Portuguesa de Celulose de Cacia" made this company the first in the world to produce bleached eucalyptus sulphate pulp.
In 1976, Portucel EP was created as a result of the nationalisation of the cellulose industry which, through the merger of CPC – Companhia de Celulose, S.A.R.L. (Cacia), Socel – Sociedade Industrial de Celulose, S.A.R.L. (Setúbal), Celtejo – Celulose do Tejo, S.A.R.L. (Vila Velha de Ródão), Celnorte – Celulose do Norte, S.A.R.L. (Viana do Castelo) and Celuloses do Guadiana, S.A.R.L. (Mourão), being converted into a Public Limited Company with a majority public shareholding by Decree-Law no. 405/90, of 21 December.
Years after, as a result of the restructuring of Portucel – Empresa de Celulose e Papel de Portugal, S.A., which was renamed Portucel, SGPS, S.A., towards to its privatisation, Portucel S.A. was created, on 31 May 1993, through Decree-law no. 39/93, of 13 February, with the former assets of the two main companies, based in Aveiro and Setúbal.
In 1995, the Company was privatised, and became a publicly traded company.
Aiming to restructure the paper industry in Portugal, Portucel acquired Papéis Inapa, S.A. (Setúbal), in 2000, and Soporcel – Sociedade Portuguesa de Papel, S.A. (Figueira da Foz), in 2001. Those key strategic decisions resulted in the Portucel Soporcel Group (currently Navigator Group), which is currently the largest European and one of the world's largest producers of bleached eucalyptus pulp and uncoated wood-free paper (UWF), with a capacity of 1.6 and 1.6 million of tonnes, respectively, and it sells approximately 255 thousand tonnes of pulp, annually, integrating the remainder in the production of UWF paper and Tissue paper.
In June 2004, the Portuguese Government sold 30% of Portucel's capital, which was acquired by the Semapa Group. In September of the same year, Semapa launched a public acquisition offer tending to assure the Group's control, which was accomplished by guaranteeing a 67.1% stake of Portucel's equity.
In November 2006, the Portuguese State concluded the third and final stage of the sale of Portucel, S.A., and Párpublica, SGPS, S.A. and Párpublica, SGPS, S.A. (formerly Portucel, SGPS, S.A.) sold the remaining 25.72% it still held.
From 2009 to June 2015, more than 75% of the Company's share capital was held directly and indirectly by Semapa – Sociedade de Investimento e Gestão SGPS, S.A.. (excluding treasury shares) having the percentage of voting rights been reduced to 70% following the conclusion of the offer for the acquisition, in the form of an exchange offer, of the ordinary shares of Semapa, SGPS, S.A., in July 2015. The voting rights currently amount to 69.97%.
In February 2015, the Group started its activity in the Tissue segment with the acquisition of AMS-BR Star Paper, S.A. (currently denominated Navigator Tissue Ródão, S.A.), a Company that holds and explores a tissue paper mill, located in Vila Velha de Ródão. A new industrial facility was built in Aveiro, in August 2018, being operated by Navigator Tissue Aveiro, S.A., which is currently the largest Portuguese producer and the third in the Iberian Peninsula, with a production and transformation capacity of 130 thousand tonnes and 120 thousand tonnes, respectively.
On 31 March 2023 the acquisition of the Gomà-Camps Group's consumer Tissue business in Spain was concluded, with a view to strengthening the Group's presence in this business segment. The integration of this new mill will enable Navigator to position itself as the second largest Tissue producer in the Iberian Peninsula, adding 35 thousand tonnes of Tissue paper production capacity, bringing the total to 165 thousand tonnes, and increasing its converting capacity by 60 thousand tonnes to 180 thousand tonnes.
The Navigator Group's main business is the production and sale of writing and printing thin paper (UWF) and domestic consumption paper (Tissue), and it is present in the entire value-added chain, from research and development of forestry and agricultural production to the purchase and sale of wood and the production and sale of bleached eucalyptus kraft pulp – BEKP – and electric and thermal energy, as well as its commercialisation.
The Navigator Company, S.A. (The Navigator Company or Company) is a publicly traded company, listed in Euronext Lisbon, with its share capital represented by nominal shares.
Company: The Navigator Company, S.A. Head Office: Mitrena – Apartado 55 | 2901-861 Setúbal | Portugal Legal Form: Public Limited Company Share Capital: €500,000,000 TIN: 503 025 798
Navigator is included in the consolidation perimeter of Semapa – Sociedade de Investimento e Gestão, SGPS, S.A., the Parent Company, and Sodim - SGPS, S.A., the ultimate controlling entity.
1.2 Impacts Arising from the Military Conflict in Ukraine
On 21 February 2022, the Russian Federation officially recognised two breakaway republics in eastern Ukraine and authorised the use of military forces in that territory. On 24 February, Russian troops invaded Ukraine and a widespread military conflict began in this country entailing high material and human losses, leading to massive population displacements.
In response, multiple jurisdictions, including the European Union, United Kingdom, Switzerland, United States of America, Canada, Japan and Australia, condemned this conflict and initiated the application of several economic sanctions against Russia, several of its economic agents and, in some cases, Belarus. In turn, Russia also started retaliating with economic measures, especially affecting the operations of foreign companies located in Russia and with Russian counterparts.
The change in the European macroeconomic and geopolitical framework as a result of this conflict has increased uncertainty and insecurity globally, with: i) the suspension and/or disruption of business with entities headquartered or with origins in Russia and Ukraine; ii) an increase in commodity prices, with fossil fuels, metals and cereals being particularly noteworthy; iii) increased global economic uncertainty, with more volatility expected in exchange rates, interest rates and an increase in the inflation rate. Possible energy supply risks, as well as disruptions in the supply of raw and subsidiary materials or in logistical means will continue to put pressure on the global economy and make it difficult for European industrial and transport operations to run smoothly.
As announced in March 2022, the Navigator Group halted the sale of its products in the markets of Russia and Belarus and is following and continuously monitoring the situation in the markets where it operates
geographically and throughout the supply chain – from the supply of wood, energy, raw and subsidiary materials (including logistical issues), in technical and support services provided by foreign companies and outsourcing service providers, amongst others.
In view of the weight of the markets of Russia and Ukraine in the Group's sales, which currently represent 0%, and the fact that these markets do not directly affect the supply chain, the Group's direct exposure to the markets of Ukraine and Russia is not significant.
Navigator continues to analyse the potential impacts on its financial position, performance and cash flows of the Group resulting from the military conflict in Ukraine, namely in what concerns relevant accounting estimates and judgements. No evidence of impairment resulted from this analysis.
1.3 Subsequent events
No subsequent events that would require disclosure in these financial statements had taken place up to the date of issue of this report.
1.4 Basis for preparation
1.4.1 Authorisation to issue financial statements
These consolidated financial statements were approved by the Board of Directors and authorised for issue on 9 May 2023.
1.4.2 Basis for presentation
The condensed consolidated financial statements for the three-month period ended 31 March 2023 were prepared in accordance with International Accounting Standard 34 – Interim Financial Reporting.
The accompanying consolidated financial statements have been prepared on the going concern basis from the accounting books and records of the companies included in the consolidation (Note 10), and under the historical cost convention, except for available-for-sale financial assets, derivative financial instruments and biological assets, which are recorded at their fair value.
The following Notes were selected in order to contribute to the understanding of the most significant changes in the Group's consolidated financial position and its performance in relation to the last reporting date. In this context, these interim financial statements should be read together with the Navigator Group's consolidated financial statements for the period ended 31 December 2022.
The condensed consolidated financial statements have been prepared in Euro, except if mentioned otherwise.
1.5 Significant accounting estimates and judgments
The preparation of consolidated financial statements requires that the Group's Board of Directors make judgements and estimates that affect the amount of revenue, costs, assets, liabilities and disclosures at the date of the consolidated statement of financial position. To that effect, the Group's Board of Directors are based on:
- i) the best information and knowledge of current events and in certain cases on the reports of independent experts; and
- ii) the actions that the Group considers it may have to take in the future.
On the date on which the operations are realised, the outcome could differ from those estimates.
More significant estimates and judgements are presented below:
| Estimates and judgements | Notes |
|---|---|
| Recoverability of Goodwill | 3.1 – Goodwill |
| Uncertainty over Income Tax Treatments | 6.1 - Income tax for the period 6.2 - Deferred taxes |
| Actuarial assumptions | 7.2 - Employee Benefits |
| Fair value of biological Assets | 3.7 – Biological assets |
| Recognition of provisions | 9.1 - Provisions |
| Recoverability, useful life and depreciation of property, plant and equipment |
3.3 – Property, plant and equipment |
2. Operational performance
2.1 Revenue and segment reporting
Financial information by operating segment in 2023 and 2021
| 31-03-2023 | |||||||
|---|---|---|---|---|---|---|---|
| PULP MARKET | UWF PAPER | TISSUE PAPER | ENERGY | SUPPORT | CANCELLATIONS* | TOTAL | |
| REVENUE | |||||||
| Sales and services rendered - external | 66,028,888 | 332,933,985 | 53,092,550 | 49,104,062 | - | - | 501,159,485 |
| Sales and services rendered - intersegment | 841,190 | - | - | 10,424,644 | - | (11,265,833) | - |
| Total Revenue | 66,870,078 | 332,933,985 | 53,092,550 | 59,528,706 | 177,810,230 | (189,076,063) | 501,159,485 |
| PROFIT/(LOSS) Operating income (1) |
|||||||
| Net financial results | 11,388,240 | 69,939,867 | 10,557,934 | 20,044,768 | (12,683,362) | - | 99,247,447 |
| Income tax | - | - | - | - | (2,676,673) | - | (2,676,673) |
| - | - | - | - | (24,886,855) | - | (24,886,855) | |
| Net profit for the period Non-controlling interests |
(3,845) | 71,683,919 (3,845) |
|||||
| Profit/(loss) attributable to Navigator's equity | - | - | - | - | - | ||
| holders | - | - | - | - | - | - | 71,680,074 |
| OTHER INFORMATION | |||||||
| Capital expenditure | 2,984,117 | 34,149,686 | 1,441,375 | 2,278,236 | 843,895 | 41,697,309 | |
| Depreciation and impairment | (3,874,419) | (19,227,702) | (2,559,403) | (4,195,267) | (1,596,787) | - - |
(31,453,578) |
| Provisions ((increases)/ reversal) | - | - | - | - | - | - | - |
| OTHER INFORMATION | |||||||
| SEGMENT ASSETS | |||||||
| Goodwill | - | 376,756,383 | 583,083 | - | - | - | 377,339,466 |
| Property, plant and equipment | 134,274,441 | 687,751,167 | 143,212,682 | 138,234,137 | 4,757,354 | - | 1,108,229,781 |
| Right-of-use assets | 12,235,774 | 45,378,722 | - | - | 2,280,881 | - | 59,895,377 |
| Biological assets | 30,474,262 | 91,422,787 | - | - | - | - | 121,897,049 |
| Investments in associates and joint ventures | - | - | 85,135,620 | - | - | - | 85,135,620 |
| Non-current receivables | 750,550 | 7,427,611 | 2,210,636 | - | 13,245,885 | - | 23,634,682 |
| Inventories | 42,794,109 | 251,404,447 | 27,264,942 | 923,533 | 2,377,435 | - | 324,764,466 |
| Other current receivables | 59,997,846 | 225,943,878 | 50,932,078 | 14,972,682 | 108,690,141 | - | 460,536,625 |
| Other assets | 6,385,421 | 101,836,031 | 6,070,002 | - | 341,538,695 | - | 455,830,149 |
| Total Assets | 286,912,403 | 1,787,921,026 | 315,409,043 | 154,130,352 | 472,890,391 | - | 3,017,263,215 |
| SEGMENT LIABILITIES | |||||||
| Interest-bearing liabilities Lease liabilities |
- | 415,573 | 36,912,589 | - | 638,343,787 | - | 675,671,949 |
| Other current payables | 13,205,217 65,680,413 |
48,313,115 384,497,489 |
- 22,873,533 |
- 73,423,355 |
2,407,719 84,243,200 |
- | 63,926,051 630,717,990 |
| Other liabilities | 9,344,914 | 107,444,786 | 12,418,943 | 7,981,698 | 173,897,828 | - | 311,088,169 |
| Total Liabilities | 88,230,544 | 540,670,963 | 72,205,065 | 81,405,053 | 898,892,534 | - - |
1,681,404,159 |
* Cancellation of inter-segment transactions. Consolidation adjustments related to inter-segmental transactions are considered not significant. (1) Includes the effect of hedging derivatives in the amount of Euro 7,975,753 in the Energy segment.
The Energy segment also includes revenues from guarantees of origin of Euro 1,392,534.
In the first quarter of 2023, The Navigator Company recorded turnover in the amount of Euro 501,159,485, with paper sales accounting for approximately 67% of turnover (vs. 68%), pulp sales 13% (vs. 11%), Tissue sales 10% (vs. 8%) and energy sales 10% (vs. 13%).
Following a year of scarce supply in the market, leading to an unusual volume of orders, the first quarter of 2023 was affected by the accumulation, during 2022, of a high volume of stocks throughout the distribution chain, which significantly conditioned demand in all paper segments, with the exception of the Tissue segment. This accumulation of stocks has had a slower than expected outflow, mainly due to the economic slowdown, with the resulting drop in incoming orders at producers.
In this context, there was a decrease in the volume of paper sales, offset by maintaining prices at a high level and improving the product mix.
The investment in the packaging business line continues to be consolidated even though this segment was the one where the strong slowdown in demand was felt the quickest. This new business area, in its current stage of development, is included in the UWF Paper segment, insofar as, considering IFRS 8, the quantitative levels have not yet been exceeded, and due to the fact that this business line have a similar nature to UWF Paper and share a significant set of production and commercial processes.
The volume of pulp sales increased compared to the same period last year, due to the greater availability of pulp for the market, as a result of less integration into paper.
The amount corresponding to total energy sales was Euro 49,104,062 compared to Euro 65,042,755 in 2022, a decrease of approximately 25%. This reduction stems from the drop in the average sale price of energy and from the fact that the Setúbal natural gas combined cycle power station is operating with only one group whereas last year it was operating with two groups. This is because the evolution of the price differential (electricity vs. natural gas) means that operating the second group is not economically worthwhile.
In the first quarter of 2023, the total amount of investments was Euro 41,697,309 (vs. 14,588,450 in the same period of the previous year), of which approximately 36% are classified as environmental or sustainable investments. The amount of investment in the quarter includes mainly investments in maintenance of production capacity, upgrading of equipment and improvement of efficiency, structural and safety projects. The most important investments included the new recovery boiler in Setúbal (Euro 9,500,000), the new evaporation line in Aveiro (Euro 12,691,625) and the new natural gas boiler in Setúbal (Euro 4,280,075).
| PULP MARKET UWF PAPER TISSUE PAPER ENERGY SUPPORT CANCELLATIONS * REVENUE Sales and services rendered - external 53,998,799 331,617,701 41,570,384 65,042,755 - Sales and services rendered - intersegment 632,314 13,902,592 - - - Total Revenue 54,631,113 331,617,701 41,570,384 78,945,347 - PROFIT/(LOSS) Operating income 11,897,933 73,684,450 3,508,204 9,003,204 (8,708,435) Net financial results (4,701,912) - - - - Income tax (34,084,876) - - - - Net profit for the period Non-controling interests 4,028 - - - - Profit/(loss) attributable to Navigator's equity holders - - - - - |
31-03-2022 | |
|---|---|---|
| TOTAL | ||
| - | 492,229,639 | |
| (14,534,906) | - | |
| (14,534,906) | 492,229,639 | |
| - | 89,385,356 | |
| - | (4,701,912) | |
| - | (34,084,876) | |
| 50,598,568 | ||
| - | 4,028 | |
| - | 50,602,596 | |
| OTHER INFORMATION | ||
| Capital expenditure 1,886,322 11,231,723 853,702 78,684 538,019 |
- | 14,588,450 |
| Depreciation and impairment (3,346,887) (21,072,596) (2,510,264) (4,145,565) (1,113,871) |
- | (32,189,183) |
| Provisions ((increases)/ reversal) - - - - - |
- | - |
| OTHER INFORMATION | ||
| SEGMENT ASSETS | ||
| Goodwill 376,756,383 583,083 - - - |
- | 377,339,466 |
| Property, plant and equipment 131,121,645 618,932,776 148,720,434 224,567,907 4,546,390 |
- | 1,127,889,151 |
| Right-of-use assets 10,127,994 37,172,603 2,752,150 - - |
- | 50,052,747 |
| Biological assets 35,514,733 106,324,875 - - - |
- | 141,839,607 |
| Non-currente receivables 64,661 461,118 70,336 9,274,634 - |
- | 9,870,750 |
| Inventories 23,130,779 186,028,494 23,523,055 629,662 1,452,443 |
- | 234,764,434 |
| Other current receivables 36,100,694 184,230,282 35,319,320 36,238,077 111,923,715 |
- | 403,812,088 |
| Other assets 3,577,595 81,308,269 4,333,447 38,500 226,112,969 |
- | 315,370,780 |
| Total Assets 239,638,101 1,591,214,799 212,549,676 261,474,146 356,062,301 |
- | 2,660,939,023 |
| Interest-bearing liabilities 554,367 35,794,505 697,828,920 - - |
- | 734,177,791 |
| Lease liabilities 10,627,532 38,695,857 2,869,106 - - |
- | 52,192,495 |
| Other current payables 88,077,458 357,310,783 22,010,169 2,135,897 77,799,205 |
- | 547,333,512 |
| Other liabilities 12,301,964 109,531,992 12,615,437 9,935,127 104,077,314 Total Liabilities |
- | 248,461,835 |
| 111,006,955 506,092,998 70,420,111 12,071,024 882,574,544 * Cancellation of inter-segment transactions. Consolidation adjustments related to inter-segmental transactions are considered not significant. |
- | 1,582,165,633 |
Revenue by business segment, by geographic area and by recognition pattern
| 31-03-2023 | Total | Total | ||||
|---|---|---|---|---|---|---|
| Amounts in Euro | Pulp | UWF Paper | Tissue Paper | Energy | Amount | % |
| Portugal | 701,907 | 20,202,367 | 21,777,528 | 49,104,062 | 91,785,864 | 18.31% |
| Rest of Europe | 33,899,622 | 213,091,399 | 30,796,047 | - | 277,787,068 | 55.43% |
| Northe America | - | 14,904,049 | - | - | 14,904,049 | 2.97% |
| Latin America | 327,606 | 10,556,965 | 104,794 | - | 10,989,366 | 2.19% |
| Africa | 8,107,838 | 28,306,430 | 414,180 | - | 36,828,448 | 7.35% |
| Asia | 22,991,915 | 45,872,775 | - | - | 68,864,690 | 13.74% |
| Oceania | - | - | - | - | - | 0.00% |
| 66,028,888 | 332,933,985 | 53,092,550 | 49,104,062 | 501,159,485 | 100.00% | |
| Recognition standard | ||||||
| At a point in time | 66,028,888 | 332,933,985 | 53,092,550 | 49,104,062 | 501,159,485 | 100.00% |
| Over time | - | - | - | - | - | 0.00% |
31-03-2022
| Total | Total | |||||
|---|---|---|---|---|---|---|
| Amounts in Euro | Pulp | UWF Paper | Tissue Paper | Energy | Amount | % |
| Portugal | 1,230,694 | 19,179,328 | 16,874,819 | 65,042,755 | 102,327,596 | 20.79% |
| Rest of Europe | 39,229,253 | 190,926,004 | 23,441,386 | - | 253,596,643 | 51.52% |
| Northe America | 399,025 | 38,562,008 | 305,299 | - | 39,266,332 | 7.98% |
| Latin America | - | 12,020,585 | - | - | 12,020,585 | 2.44% |
| Africa | 8,051,852 | 41,032,178 | 901,652 | - | 49,985,682 | 10.15% |
| Asia | 5,087,975 | 29,894,796 | 47,229 | - | 35,030,001 | 7.12% |
| Oceania | - | 2,801 | - | - | 2,801 | 0.00% |
| 53,998,799 | 331,617,701 | 41,570,384 | 65,042,755 | 492,229,639 | 100.00% | |
| Recognition standard | ||||||
| At a point in time | 53,998,799 | 331,617,701 | 41,570,384 | 65,042,755 | 492,229,639 | 100.00% |
| Over time | - | - | - | - | - | 0.00% |
Group's revenue distribution by geographic area
In 2023 and 2022, no single Customer accounted for 10% or more of the Group's total revenues.
2.2 Other operating income
For the three-month periods ended 31 March 2023 and 2022, Other operating income is detailed as follows:
| 3 months | 3 months 31-03-2022 |
||
|---|---|---|---|
| Amounts in Euro | 31-03-2023 | ||
| Gains on disposal of non-current assets | 5,440 | 141,372 | |
| Grants - CO2 emission allowances | 9,921,845 | 10,006,410 | |
| Supplementary gains | 115,524 | 358,300 | |
| Operating grants | 378,183 | 227,010 | |
| Impairment reversal on receivables | 2,053,479 | 2,463 | |
| Impairment reversal on inventories (Note 4.1.2) | 7,532 | 29,127 | |
| Gains on inventories | 170,045 | 1,653,363 | |
| Own work capitalised | 361,658 | 50,079 | |
| Compensations | 50,560 | 163,078 | |
| Other operating income | 1,303,844 | 564,862 | |
| 14,368,110 | 13,196,064 |
Gains on CO2 allowances correspond to the recognition of free allocation of allowances for 473,314 tonnes of CO2, at the average price of Euro 83.85 (444,457 tonnes of CO2, at the average price of Euro 84.01 as at 31 December 2022) (Note 3.2).
The caption Impairment reversal on receivables includes the amount of Euro 1,992,975 related to the impairment reversal on Trade receivables from Egypt.
2.3 Other operating expenses
| 3 months | 3 months | |
|---|---|---|
| Amounts in Euro | 31-03-2023 | 31-03-2022 |
| Cost of goods sold and materials consumed | 254,355,100 | 215,360,445 |
| External services and supplies | ||
| Energy and fluids | 17,269,937 | 57,381,300 |
| Transportation of goods | 32,837,237 | 43,524,865 |
| Specialised work | 23,961,525 | 19,970,384 |
| Maintenance and repair | 7,881,674 | 8,128,312 |
| Rentals | 1,788,265 | 1,664,520 |
| Advertising and marketing | 2,653,708 | 2,704,812 |
| Insurance | 2,393,323 | 1,764,623 |
| Travel and accommodation | 1,052,487 | 691,441 |
| Fees | 1,447,798 | 923,963 |
| Subcontracts | 207,476 | (11,917) |
| Materials | 433,784 | 496,406 |
| Communications | 310,921 | 319,498 |
| Other | 3,321,041 | 2,571,656 |
| 95,559,176 | 140,129,861 | |
| Variation in production | (27,368,170) | (38,075,961) |
| Payroll costs (Note 7.1) | 44,549,310 | 42,095,667 |
| Other operating expenses | ||
| CO2 emission expenses | 12,289,955 | 11,173,111 |
| Impairment losses on receivables | 41,853 | 22,353 |
| Impairment losses on inventories (Note 4.1.2) | 728,407 | 5,295,103 |
| Other losses on inventories | 1,580,558 | 200,464 |
| Indirect taxes and fees | 668,345 | 721,258 |
| Losses on the disposal of non-current assets | - | 171,183 |
| Water resources fee | 442,140 | 340,826 |
| Other operating expenses | 1,377,705 | 932,400 |
| 17,128,963 | 18,856,698 | |
| Net provisions (Note 9.1) | - | - |
| Total operating expenses | 384,224,379 | 378,366,710 |
In the first quarter of 2023, there was a slowdown in costs, namely in logistics and energy. In energy, there was a significant reduction in the purchase price of electricity compared with the same period of the previous year, as well as a reduction in natural gas consumption.
The increase in specialised work results essentially from the increase in costs with projects to support and diversify the Group's activity.
In 31 March 2023 and 2022, external services and supplies costs incurred for investigation and research activities amounted to Euro 1,509,477 and Euro 1,491,432, respectively.
The expenses with CO2 correspond to the emission of 127,252 tonnes of CO2 1 (31 March 2022: 136,627 tonnes).
In 2022, Impairment losses on inventories included the strengthening of the impairment for UWF paper waste.
In the first quarter of 2023, the increase in Other inventory losses resulted mainly from wood inventory adjustments (Euro 612,000) and pulp in suspension (Euro 730,000).
1 CO2 emissions from assets in factories, Scope 1 - EU ETS basis.
3. Investments
3.1 Goodwill
Goodwill – net amount
Goodwill is attributed to the Group's cash generating units (CGU's), as follows:
| Amounts in Euro | 31-03-2023 | 31-12-2022 |
|---|---|---|
| CGU of UWF paper production on Figueira da Foz (goodwill resulting from the acquisition of Navigator Brands, S.A.) |
376,756,383 | 376,756,383 |
| CGU of Tissue paper production on Vila Velha de Ródão (goodwill resulting from the acquisition of Navigator Tissue Ródão, S.A.) |
583,083 | 583,083 |
| 377,339,466 | 377,339,466 |
As mentioned in Note 3.8, at this date the Group is carrying out the necessary procedures to calculate the Goodwill associated with the acquisition of the share capital of Gomà-Camps Consumer, S.L.U. occurred on March 31, 2023
Navigator España, S.A. / Navigator Paper Figueira, S.A.
Following the acquisition of 100% of the former Soporcel - Sociedade Portuguesa de Papel, S.A. (now Navigator Brands, S.A.), for Euro 1,154,842,000, Goodwill amounting to Euro 428,132,254 was determined.
The Goodwill generated on the acquisition of Navigator Paper Figueira was deemed to be allocable to the integrated paper production in Figueira da Foz Industrial Complex cash generating unit.
Navigator Tissue Ródão, S.A.
On 6 February 2015 the procedures and agreements for the acquisition of AMS-BR Star Paper, S.A. (later merged into Navigator Tissue Ródão, S.A.) were concluded, with the authorisation to conclude this transaction being formalised on 17 April 2015.
To the initial acquisition difference, of Euro 21,337,916, was deducted the AICEP's investment grant and the fair value of the acquired property, plant and equipment, with a goodwill amounting to Euro 583,083.
3.2 Intangible assets
Movements in intangible assets
| Amounts in Euro | Industrial property and |
C O2 emission | Intangible assets in |
|
|---|---|---|---|---|
| Gross amount | other rights | allowances | progress | Total |
| Balance as at 1 January 2022 | 34,487 | 24,736,507 | - | 24,770,994 |
| Granting | - | 40,025,640 | - | 40,025,640 |
| Adjustments, transfers and write-offs | 28,417 | - | - | 28,417 |
| Balance as at 31 March 2022 | 62,904 | 64,762,147 | - | 64,825,051 |
| Granting | - | (2,686,807) | - | (2,686,807) |
| Acquisitions | - | 3,251,520 | 17,823 | 3,269,343 |
| Adjustments, transfers and write-offs | 8,079 | (20,545,709) | (17,823) | (20,555,453) |
| Balance as at 31 December 2022 | 70,983 | 44,781,151 | - | 44,852,134 |
| Granting | - | 39,687,379 | - | 39,687,379 |
| Acquisitions | 2,400,000 | - | - | 2,400,000 |
| Adjustments, transfers and write-offs | 522,194 | - | - | 522,194 |
| Balance as at 31 March 2023 | 2,993,177 | 84,468,530 | - | 87,461,707 |
| Accumulated amortisation and impairment losses | ||||
| Balance as at 1 January 2022 | (18,464) | - | - | (18,464) |
| Amortisation for the period (Note 3.6) | (4,619) | - | - | (4,619) |
| Balance as at 31 March 2022 | (23,083) | - | - | (23,083) |
| Amortisation for the period | (15,960) | - | - | (15,960) |
| Balance as at 31 December 2022 | (39,043) | - | - | (39,043) |
| Amortisation for the period (Note 3.6) | (38,813) | - | - | (38,813) |
| Balance as at 31 March 2023 | (116,899) | - | - | (77,856) |
| Net book value as at 1 January 2022 | 16,023 | 24,736,507 | - | 24,752,530 |
| Net book as at 31 March 2022 | 39,821 | 64,762,147 | - | 64,801,968 |
| Net book as at 31 December 2022 | 31,940 | 44,781,151 | - | 44,813,091 |
| Net book as at 31 March 2023 | 2,876,278 | 84,468,530 | - | 87,383,851 |
As part of the acquisition of the consumer Tissue business in Spain (Note 3.8), two brands previously owned by the Gomà-Camps Group (My Tissue and My Tissue Ecological+) were also acquired for the amount of Euro 2,400,000.
CO2 allowances
| 31-03-2023 | 31-12-2022 | |
|---|---|---|
| CO2 allowances (units) | 1,047,436 | 574,122 |
| Average unit value (Euro) | 80.64 | 77.99 |
| Market quotation (Euro) | 90.09 | 81.49 |
CO2 allowances – movements of the period
| 2023 | 2022 | |||
|---|---|---|---|---|
| Amounts in Euro | Tonnes | Amount | Tonnes | Amount |
| Opening balance | 574,122 | 44,781,151 | 620,805 | 24,736,507 |
| CO2 allowances awarded free of charge (Note 2.2) | 473,314 | 39,687,379 | 444,457 | 37,338,833 |
| CO2 allowances acquired | - | - | 48,000 | 3,251,520 |
| CO2 allowances returned to the Licensing Coordinating Entity | - | - | (539,140) | (20,545,709) |
| Closing balance | 1,047,436 | 84,468,530 | 574,122 | 44,781,151 |
3.3 Property, plant and equipment
Movements in property, plant and equipment
| Buildings and | |||||
|---|---|---|---|---|---|
| other | Equipment and | Assets under | |||
| Amounts in Euro | Land | constructions | other tangibles | construction | Total |
| Gross amount | |||||
| Balance as at 1 January 2022 | 114,391,431 | 542,873,640 | 3,718,884,937 | 40,476,332 | 4,416,626,340 |
| Acquisitions | - | - | 3,589,763 | 10,970,271 | 14,560,033 |
| Disposals | (619,462) | - | (37,298) | - | (656,760) |
| Adjustments, transfers and write-offs | 402,098 | 327,247 | 5,612,075 | (6,341,462) | (43) |
| Balance as at 31 March 2022 | 114,174,066 | 543,200,887 | 3,728,049,477 | 45,105,140 | 4,430,529,570 |
| Acquisitions | - | - | 9,052,753 | 88,411,023 | 97,463,777 |
| Disposals | (120,927) | - | (39,875,707) | - | (39,996,634) |
| Adjustments, transfers and write-offs | 1,721,178 | 1,298,981 | 29,965,205 | (41,359,679) | (8,374,314) |
| Balance as at 31 December 2022 | 115,774,318 | 544,499,868 | 3,727,191,728 | 92,156,485 | 4,479,622,399 |
| Acquisitions | - | - | 8,476,298 | 30,821,011 | 39,297,309 |
| Disposals | (2,280) | - | (28,685) | - | (30,965) |
| Adjustments, transfers and write-offs | 219,187 | 449,990 | 11,657,225 | (12,894,665) | (568,263) |
| Balance as at 31 March 2023 | 115,991,225 | 544,949,858 | 3,747,296,566 | 110,082,831 | 4,518,320,480 |
| Accumulated depreciation and impairment losses | |||||
| Balance as at 1 January 2022 | - | (362,865,639) | (2,908,516,193) | - | (3,271,381,833) |
| Depreciation for the period (Note 3.6) | - | (2,820,590) | (28,460,489) | - | (31,281,079) |
| Disposals | - | - | 22,020 | - | 22,020 |
| Adjustments, transfers and write-offs | - | 87,029 | (86,556) | - | 473 |
| Balance as at 31 March 2022 | - | (365,599,200) | (2,937,041,218) | - | (3,302,640,418) |
| Depreciation for the period | - | (16,007,036) | (109,170,443) | - | (125,177,479) |
| Disposals | - | - | 39,421,647 | - | 39,421,647 |
| Adjustments, transfers and write-offs | - | (80,102) | 8,543,361 | - | 8,463,259 |
| Balance as at 31 December 2022 | - | (381,686,338) | (2,998,246,653) | - | (3,379,932,992) |
| Depreciation for the period (Note 3.6) | - | (3,373,835) | (26,830,285) | - | (30,204,120) |
| Disposals | - | - | (775) | - | (775) |
| Adjustments, transfers and write-offs | - | 5,042,446 | (4,995,258) | - | 47,188 |
| Balance as at 31 March 2023 | - | (380,017,727) | (3,030,072,971) | - | (3,410,090,699) |
| Net book value as at 1 January 2022 | 114,391,431 | 180,008,001 | 810,368,744 | 40,476,332 | 1,145,244,507 |
| Net book value as at 31 March 2022 | 114,174,066 | 177,601,687 | 791,008,259 | 45,105,140 | 1,127,889,152 |
| Net book value as at 31 December 2022 | 115,774,318 | 162,813,530 | 728,945,075 | 92,156,485 | 1,099,689,407 |
| Net book value as at 31 March 2023 | 115,991,225 | 164,932,131 | 717,223,595 | 110,082,831 | 1,108,229,781 |
As at 31 March 2023 the caption Assets under construction includes investments associated with ongoing development projects, in particular those related to the new wood preparation line in Figueira da Foz (Euro 21,406,943), the new evaporation line in Aveiro (Euro 12,958,783), the new recovery boiler in Setúbal (€9,500,000), the new natural gas boiler in Setúbal (Euro 4,566,332) and the upgrade of the control system of Coiler 1 in Figueira da Foz (Euro 2,161,647). The remainder is related to several projects for improving and optimising the production process.
Lands includes Euro 114,824,382 (31 December 2022: Euro 114,586,831) classified in the individual financial statements as investment properties, from which Euro 75,686,267 (31 December 2022: Euro 75,448,716) relate to forestry land and Euro 39,138,115 (31 December 2022: Euro 39,138,115) to land allocated to industrial sites.
3.4 Investment properties
Movement in investment properties
| Buildings and | ||
|---|---|---|
| Total | ||
| 424,744 | 82,307 | 507,051 |
| - | - | - |
| 424,744 | 82,307 | 507,051 |
| - | - | - |
| 424,744 | 82,307 | 507,051 |
| - | - | - |
| 424,744 | 82,307 | 507,051 |
| (414,462) | ||
| - | - | - |
| - | (412) | |
| (414,874) | ||
| - | - | - |
| - | (1,234) | |
| (416,108) | ||
| - | - | - |
| - | (412) | |
| (416,520) | ||
| 25,372 | 67,217 | 92,589 |
| 25,372 | 66,805 | 92,177 |
| 25,372 | 65,571 | 90,943 |
| 25,372 | 65,159 | 90,531 |
| Land (399,372) (399,372) (399,372) (399,372) |
other constructions (15,090) (412) (15,502) (1,234) (16,736) (412) (17,148) |
These assets are not allocated to the Group's operating activity, nor do they have any future use determined.
3.5 Right-of-use assets
Movements in right-of-use assets
| Amounts in Euro | Forestry lands | Buildings | Vehicles | Software licences |
Other lease assets |
Total |
|---|---|---|---|---|---|---|
| Gross amount | ||||||
| Balance as at 1 January 2022 | 49,921,267 | 4,655,055 | 8,547,629 | 1,324,360 | 6,655,276 | 71,103,587 |
| Acquisitions | 310 | - | 646,959 | - | - | 647,269 |
| Adjustments, transfers and write-offs | (1,206) | - | - | - | - | (1,206) |
| Balance as at 31 March 2022 | 49,920,371 | 4,655,055 | 9,194,588 | 1,324,360 | 6,655,276 | 71,749,650 |
| Acquisitions | 8,908,521 | - | 2,383,726 | 232,253 | 2,765,111 | 14,289,611 |
| Adjustments, transfers and write-offs | 1,206 | - | (353) | - | - | 853 |
| Balance as at 31 December 2022 | 58,830,098 | 4,655,055 | 11,577,960 | 1,556,613 | 9,420,387 | 86,040,113 |
| Acquisitions | 3,141,380 | 10,062 | 882,473 | - | - | 4,033,915 |
| Balance as at 31 March 2023 | 61,971,478 | 4,665,117 | 12,460,433 | 1,556,613 | 9,420,387 | 90,074,028 |
| Accumulated depreciation and impairment losses | - | |||||
| Balance as at 1 January 2022 | (9,153,696) | (1,885,048) | (5,482,622) | (665,511) | (2,723,749) | (19,910,627) |
| Depreciation (Note 3.6) | (725,728) | (128,975) | (414,972) | (72,540) | (444,061) | (1,786,276) |
| Balance as at 31 March 2022 | (9,879,424) | (2,014,023) | (5,897,593) | (738,051) | (3,167,810) | (21,696,902) |
| Depreciation | (2,942,339) | (386,925) | (1,384,427) | (375,527) | (1,319,507) | (6,408,723) |
| Balance as at 31 December 2022 | (12,821,763) | (2,400,948) | (7,281,667) | (1,113,577) | (4,487,317) | (28,105,274) |
| Depreciation (Note 3.6) | (988,620) | (129,551) | (484,259) | (50,844) | (420,104) | (2,073,378) |
| Balance as at 31 March 2023 | (13,810,383) | (2,530,499) | (7,765,926) | (1,164,421) | (4,907,421) | (30,178,652) |
| Net book value as at 1 January 2022 | 40,767,570 | 2,770,007 | 3,065,007 | 658,849 | 3,931,527 | 51,192,959 |
| Net book as at 31 March 2022 | 40,040,947 | 2,641,032 | 3,296,994 | 586,309 | 3,487,466 | 50,052,746 |
| Net book as at 31 December 2022 | 46,008,334 | 2,254,107 | 4,296,293 | 443,036 | 4,933,070 | 57,934,840 |
| Net book as at 31 March 2023 | 48,161,094 | 2,134,618 | 4,694,507 | 392,192 | 4,512,966 | 59,895,377 |
The item Land relates essentially to the land use rights of existing forest exploration, whose agreements usually have a duration of 24 years, and may be cancelled in advance if the 2nd harvest takes place before the 24th year of the agreement term.
The caption Buildings refers to the lease agreement entered between The Navigator Company, S.A. and MaxiRent – Fundo de Investimento Imobiliário Fechado for the building located at Avenida Fontes Pereira de Melo, in Lisbon, for use as an office.
The caption Other includes the forklift truck rental contracts signed since 2020.
3.6 Depreciation, amortisation and impairment losses
| Amounts in Euro | 31-03-2023 | 31-03-2022 |
|---|---|---|
| Depreciation of property, plant and equipment for the period (Note 3.3) Charge-off of investments grants |
30,204,120 (863,145) |
31,281,079 (883,203) |
| Depreciation of property, plant and equipment, net of grants charged-off | 29,340,975 | 30,397,876 |
| Amortisation of intangible assets for the period (Note 3.2) | 38,813 | 4,619 |
| Depreciation of right-of-use assets for the period (Note 3.5) | 2,073,378 | 1,786,276 |
| Impairment of investment properties (Note 3.4) | 412 | 412 |
| 31,453,578 | 32,189,183 |
3.7 Biological assets
Movements in biological assets
| Amounts in Euro | 2023 | 2022 |
|---|---|---|
| Opening balance | 122,499,875 | 147,324,061 |
| Logging in the period | (6,638,503) | (6,076,734) |
| Growth | 6,430,848 | 5,275,745 |
| New planted areas and replanting (at cost) | 1,307,213 | 1,049,010 |
| Other changes in fair value | ||
| - changes in other species | (389,526) | (4,701,000) |
| - other changes of expectation | (1,312,858) | (1,031,475) |
| Total changes | (602,826) | (5,484,454) |
| Balance as at 31 March | 121,897,049 | 141,839,607 |
| Remaining quarters | (19,339,732) | |
| Balance as at 31 December | 122,499,875 |
As at 31 March 2023 and 2022, biological assets, by species, is detailed as follows:
| Amounts in Euro | 31-03-2023 | 31-12-2022 |
|---|---|---|
| Eucalyptus (Portugal) | 93,028,095 | 93,301,990 |
| Eucalyptus (Spain) | 2,993,125 | 2,932,530 |
| Pine (Portugal) | 7,759,880 | 8,149,506 |
| Cork oak (Portugal) | 819,980 | 819,980 |
| Other species (Portugal) | 73,208 | 73,108 |
| Eucalyptus (Mozambique) | 17,222,761 | 17,222,761 |
| 121,897,049 | 122,499,875 |
These amounts correspond to Board of Directors' expectation of the volumes to be extracted from its woodlands in the future, as follows:
| Amounts in Euro | 31-03-2023 | 31-12-2022 |
|---|---|---|
| Eucalyptus (Portugal) - Potential future of wood extractions k m3ssc | 10,371 | 10,371 |
| Eucalyptus (Spain) - Potential future of wood extractions k m3ssc | 207 | 207 |
| Softwoods (Portugal) - Future Potential for timber extraction k ton | 309 | 309 |
| Softwoods (Portugal) - Future potential of pine extraction kton | n/a | n/a |
| Cork oak (Portugal) - Potencial future of cork exctractions k @ | 563 | 563 |
| Eucalyptus (Mozambique) - Potential future of wood extractions k m3ssc | 4,451 | 4,451 |
Concerning Eucalyptus, the most relevant biological asset in the financial statements, in the three-month period ended 31 March 2023 and 2022, 163,536 m3ssc and 170,431 m3ssc of wood were extracted from the forests owned and operated by the Group, respectively.
As at 31 March 2023 and 2022, (i) there are no amounts of biological assets whose property is restricted and/or pledged as guarantee for liabilities, nor there are non-reversible commitments related to the acquisition of biological assets, and (ii) there are no investment grants related to biological assets recognised in the Group's consolidated financial statements.
3.8 Investments in associates and joint ventures
Following the diversification strategy of the Navigator Group, on 31 March 2023 the acquisition of the consumer Tissue business in Spain of the Gomà-Camps Group was concluded.
Navigator acquired all the shares representing the share capital of Gomà-Camps Consumer, S.L.U., based in Zaragoza, Spain, which in turn holds the entire share capital of Gomà-Camps France SAS, based in Castres, France.
The integration of this new mill will enable Navigator to position itself as the second largest Tissue producer in the Iberian Peninsula, adding 35,000 tonnes of annual Tissue paper production capacity, bringing the total to 165,000 tonnes per year, and increasing annual converting capacity by 60,000 tonnes to 180,000 tonnes per year.
The transaction was based on an Enterprise Value of Euro 85 million, adjusted for changes in working capital between the date of conclusion of the sale and purchase agreement and the date of completion of the transaction.
The Navigator Group will initiate the necessary procedures for the recognition and measurement of Goodwill and related assets and liabilities acquired in the Consolidated Financial Statements.
4. Working capital
4.1 Inventories
4.1.1. Inventories - detail by nature
Amounts net of accumulated impairment losses
| Amounts in Euro | 31-03-2023 | 31-12-2022 |
|---|---|---|
| Raw materials | 141,514,562 | 141,023,694 |
| Goods | 148,460 | 144,304 |
| Subtotal | 141,663,022 | 141,167,998 |
| Finished and semi-finished products | 181,091,307 | 155,208,607 |
| Goods and work in progress | 1,800,501 | 2,061,232 |
| By-products and waste | 209,636 | 291,380 |
| Subtotal | 183,101,444 | 157,561,219 |
| Total | 324,764,466 | 298,729,217 |
4.1.2. Movements in impairment losses in inventories
| Amounts in Euro | 2023 | 2022 |
|---|---|---|
| Opening balance | (16,374,423) | (3,934,904) |
| Increases (Note 2.3) | (728,407) | (13,241,209) |
| Reversals (Note 2.2) | 7,532 | 813,732 |
| Impact in profit and loss for the period | (720,875) | (12,427,477) |
| Charge-off | - | (12,042) |
| Closing balance | (17,095,298) | (16,374,423) |
Impairment losses on inventories recorded in 2023 and 2022 relate to adjustments to the UWF wastepaper stock.
4.2 Receivables
| 31-03-2023 | 31-12-2022 | |||||
|---|---|---|---|---|---|---|
| Amounts in Euro | Non-current | Current | Total | Non-current | Current | Total |
| Trade receivables | - | 304,009,316 | 304,009,316 | - | 341,601,458 | 341,601,458 |
| State | - | 52,510,043 | 52,510,043 | - | 59,852,618 | 59,852,618 |
| Financial grants receivable | 12,742,262 | 13,424,725 | 26,166,987 | 13,219,416 | 13,239,885 | 26,459,301 |
| Enviva Pellets Greenwood, LLC (EUA) | - | - | - | - | 8,168,426 | 8,168,426 |
| Accrued income | - | 6,600,653 | 6,600,653 | - | 2,970,381 | 2,970,381 |
| Deferred expenses | - | 11,685,442 | 11,685,442 | - | 11,321,493 | 11,321,493 |
| Derivative financial instruments (Note 8.1) | - | 52,495,656 | 52,495,656 | - | 48,514,443 | 48,514,443 |
| Other | 10,892,420 | 19,810,790 | 30,703,211 | 12,063,442 | 13,474,704 | 25,538,146 |
| 23,634,682 | 460,536,625 | 484,171,308 | 25,282,858 | 499,143,408 | 524,426,266 |
State and other public entities
State is detailed as follows:
| Valores em Euros | 31-03-2023 | 31-12-2022 |
|---|---|---|
| Imposto sobre o Valor Acrescentado a recuperar | 14.122.221 | 15.023.507 |
| Imposto sobre o Valor Acrescentado - Reembolsos pedidos | 38.387.822 | 44.829.111 |
| 52.510.043 | 59.852.618 |
As at 31 March 2023, the amount of refund requests comprised the following, by month and by company:
| Amounts in Euro | Feb-2023 | Mar-2023 | Total |
|---|---|---|---|
| The Navigator Company, S.A. | - | 25,480,586 | 25,480,586 |
| Navigator Paper Setúbal, S.A. | 4,627,865 | - | 4,627,865 |
| Navigator Paper Figueira, S.A. | 3,000,000 | - | 3,000,000 |
| Navigator Abastecimento de Madeira, ACE | 1,200,000 | - | 1,200,000 |
| Bosques do Atlântico, S.L. | - | 4,079,371 | 4,079,371 |
| 8,827,865 | 29,559,957 | 38,387,822 |
Up to the date of issuing this report, Euro 35,387,822 of the outstanding amounts as at 31 March 2023, had already been received.
As at 31 December 2022, the amount of refund requests comprised the following, by month and by Company:
| Amounts in Euro | Nov-2022 | Dec-2022 | Total |
|---|---|---|---|
| The Navigator Company, S.A. Bosques do Atlântico, S.L. |
10,628,467 - 10,628,467 |
31,706,624 2,494,020 34,200,644 |
42,335,091 2,494,020 44,829,111 |
All these amounts were received during the first quarter of 2023.
Grants receivable
Grants receivable are detailed as follows:
| 31-03-2023 | 31-12-2022 | |||||
|---|---|---|---|---|---|---|
| Amounts in Euro | Non-current | Current | Total | Non-current | Current | Total |
| - | - | |||||
| AICEP contracts | 6,596,378 | 9,813,682 | 16,410,060 | 6,596,378 | 9,721,792 | 16,318,170 |
| Recovery and Resilience Plan | 3,197,717 | 483,757 | 3,681,474 | 3,621,520 | 483,757 | 4,105,277 |
| Other | 2,948,167 | 3,127,286 | 6,075,453 | 3,001,518 | 3,034,336 | 6,035,854 |
| 12,742,262 | 13,424,725 | 26,166,987 | 13,219,416 | 13,239,885 | 26,459,301 |
Enviva Pellets Greenwood, LLC (EUA)
It reflects the present value of the amount still receivable from the sale of the pellets business in the US in 2018. The nominal receivable, in USD, shall bear interest at the rate of 2.5%. The last instalment was received in February 2023.
Accrued Income and Deferred Expenses
Accrued income and deferred expenses are detailed as follows:
| Amounts in Euro | 31-03-2023 | 31-12-2022 |
|---|---|---|
| Accrued income | ||
| Interest receivable | 870,086 | - |
| Energy sales | 843,596 | 1,871,271 |
| Other | 4,886,971 | 1,099,110 |
| 6,600,653 | 2,970,381 | |
| Deferred expenses | ||
| Insurance | - | 289,531 |
| Rentals | 10,216,970 | 9,938,537 |
| Other | 1,468,472 | 1,093,425 |
| 11,685,442 | 11,321,493 | |
| 18,286,095 | 14,291,874 |
Other receivables
Other current and non-current receivables consist of the following:
Other non-current receivables
| Amounts in Euro | 31-03-2023 | 31-12-2022 |
|---|---|---|
| Captive insurance value | 10,000,000 | 11,200,000 |
| Work Compensation Fund | 781,818 | 752,840 |
| Collateral | 41,002 | 41,002 |
| Other shareholdings (Almascience, Forestwise, Cecolab, Colab BIOREF) | 69,600 | 69,600 |
| 10,892,420 | 12,063,442 |
Other current receivables
| Amounts in Euro | 31-03-2023 | 31-12-2022 |
|---|---|---|
| Advances to personnel | 108,918 | 113,456 |
| Advances to trade payables | 15,531,766 | 11,286,508 |
| Other payables | 4,170,106 | 2,074,740 |
| 19,810,790 | 13,474,704 |
4.3 Payables
| Amounts in Euro | 31-03-2023 | 31-12-2022 |
|---|---|---|
| Trade payables | 349,068,119 | 361,131,296 |
| Trade payables - current account | 21,826,224 | 5,134,947 |
| State | 50,208,736 | 44,299,175 |
| Related parties (Note 10.3) | 2,196,640 | 2,196,640 |
| Other payables - CO2 emission allowances | 57,118,414 | 44,830,523 |
| Other payables | 7,179,575 | 5,693,320 |
| Derivative financial instruments (Note 8.1) | 3,914,870 | 4,682,533 |
| Payroll cost accruals | 59,793,849 | 52,435,012 |
| Accrued expenses - interest payable | 3,268,032 | 4,032,370 |
| Wood supplier bonus | 2,884,098 | 5,687,729 |
| Water resources fee | 1,904,078 | 1,461,937 |
| Rent liabilities | 18,130,970 | 17,461,167 |
| Other accrued expenses | 14,301,457 | 17,130,610 |
| Non-refundable grants | 38,922,928 | 9,290,430 |
| Current payables | 630,717,990 | 575,467,689 |
| Non-refundable grants | 29,680,298 | 30,545,424 |
| Department of Commerce (USA) | 1,840,562 | 4,306,974 |
| Non-current payables | 31,520,860 | 34,852,398 |
| 662,238,850 | 610,320,087 |
State - Details
| Amounts in Euro | 31-03-2023 | 31-12-2022 |
|---|---|---|
| Personal income tax withhold (IRS) | 2,133,673 | 4,209,006 |
| Value added tax (IVA) | 44,311,600 | 36,628,850 |
| Social Security contributions | 2,822,652 | 2,470,143 |
| Other | 940,811 | 991,176 |
| 50,208,736 | 44,299,175 |
As at 31 March 2023 and 2022, there were no arrears with the State.
Non-refundable grants – Details
| Amounts in Euro | 31-03-2023 | 31-12-2022 |
|---|---|---|
| Investment grants | 3,278,037 | 3,271,135 |
| Grants - CO2 emission allowances | 29,764,010 | - |
| Other grants | 5,880,881 | 6,019,295 |
| Non-refundable grants - current | 38,922,928 | 9,290,430 |
| Investment grants | 29,680,299 | 30,545,424 |
| Non-refundable grants - non-current | 29,680,299 | 30,545,424 |
| 68,603,227 | 39,835,854 |
Department of Commerce (EUA)
As at 31 March 2023 and 2022, the balance corresponds to the amount receivable from the Department of Commerce (DoC) following the investigation initiated in 2015 of alleged dumping practices in exports of UWF
paper to the United States by the subsidiary Navigator. At this date, the review periods 6, 7 and 8, which comprise the period March 2021 to March 2023, are still open.
5. Capital structure
5.1 Share Capital and treasury Shares
Navigator's Shareholders
The Navigator Company is a public company with its shares quoted on the Euronext Lisbon.
As at 31 March 2023, The Navigator Company, S.A.'s share capital of Euro 500,000,000 was fully subscribed and is represented by 711,183,069 shares without nominal value (31 December 2022: 711,183,069 shares).
As at 31 March 2023 and 2022, the Shareholders with qualified shareholdings in the Company's capital were as follows:
| 31-03-2023 | 31-12-2022 | |||
|---|---|---|---|---|
| Entity | No. of shares | % | No. of shares | % |
| Semapa, SGPS, S.A. | 497,617,299 | 69.97% | 497,617,299 | 69.97% |
| Treasury shares | - | 0.00% | - | 0.00% |
| Floating shares | 213,565,770 | 30.03% | 213,565,770 | 30.03% |
| 711,183,069 | 100.0% | 711,183,069 | 100.0% |
As at 31 March 2023 and 31 December 2022, Navigator did not hold any treasury shares, the unit value of the share as that date being Euro 3.30 (31 December 2022: Euro 3.454) and the market capitalisation of the Company at this date amounted to Euro 2,346,904,128 (31 December 2022: Euro 2,456,426,320) compared to an equity, net of non-controlling interests, of Euro 1,335,557,234 (31 December 2022: Euro 1,259,409,537).
5.2 Earnings per share
| 31-03-2023 | 31-12-2022 | |
|---|---|---|
| Profit attributable to Navigator's shareholders (Euro) | 71,680,074 | 50,602,596 |
| Total number of shares issued | 711,183,069 | 711,183,069 |
| Average treasury shares in the portfolio | - | - |
| Weighted average number of shares | 711,183,069 | 711,183,069 |
| Basic earnings per share (Euro) | 0.101 | 0.071 |
| Diluted earnings per share (Euro) | 0.101 | 0.071 |
5.3 Non-controlling interests
Detail of non-controlling interests, by subsidiary
| % | Equity | Net profit | |||
|---|---|---|---|---|---|
| Amounts in Euro | held | 31/03/2023 | 31/12/2022 | 2023 | 2022 |
| Raiz - Instituto de Investigação da Floresta e Papel | 3.0% | 301,822 | 297,977 | 3,845 | (4,028) |
| Portucel Moçambique | 9.98% | - | i) - |
- | - |
| 301,822 | 297,977 | 3,845 | (4,028) |
Non-controlling interests are related to RAIZ – Instituto de Investigação da Florestal e Papel, in which the Group holds 97% of the share capital and voting rights. The remaining 3% are held by external associates.
In 2014, the Group signed agreements with IFC – Internacional Finance Corporation for the entry of this institution into the share capital of the subsidiary Portucel Moçambique, S.A., thus ensuring the construction phase of the Group's forestry project in Mozambique. In 2015, this Company performed a capital increase from MZM 1,000 million to MZM 1,680.798 million subscribing MZM 332,798 million corresponding to 19.98% of the capital at that date.
In February 2019, there was a reduction in the subscribed, underwritten and paid-up capital of the shareholder The Navigator Company, S.A. to MZM 456,596,000, corresponding to 90.02% of the Company's share capital, and the IFC's holding was revised to MZM 50,620,000, corresponding to 9.98% of the Portucel Moçambique's share capital.
As at the reporting date, there are no rights of protection of non-controlling interests that significantly restrict the entity's ability to access or use assets and settle liabilities of the Group.
5.4 Interest-bearing liabilities
| 31-03-2023 | 31-12-2022 | |||||
|---|---|---|---|---|---|---|
| Amounts in Euro | Non-current | Current | Total | Non-current | Current | Total |
| Bond loans | 410,000,000 | 22,500,000 | 432,500,000 | 420,000,000 | 22,500,000 | 442,500,000 |
| Commercial paper | 70,000,000 | 35,000,000 | 105,000,000 | 105,000,000 | 35,000,000 | 140,000,000 |
| Bank loans | 86,654,762 | 17,575,397 | 104,230,159 | 91,511,905 | 17,575,397 | 109,087,302 |
| Charges with bond issuances | (3,386,371) | - | (3,386,371) | (3,480,083) | - | (3,480,083) |
| Refundable grants | 30,108,722 | 7,219,439 | 37,328,161 | 29,975,064 | 7,219,439 | 37,194,503 |
| Deferrals and adjustments | - | - | - | - | - | - |
| Debt securities and bank debt | 593,377,113 | 82,294,836 | 675,671,949 | 643,006,886 | 82,294,836 | 725,301,722 |
| Average interest rate, considering charges for annual fees and hedging operations |
2.0% | 1.5% |
At the end of June 2022, Navigator issued a Euro 150 million bond loan maturing in 2028, under the Sustainability-Linked Bonds Framework, having simultaneously repaid early a loan of the same amount valid until 2023. This was the last financing transaction undertaken up to this reporting period.
During the quarter, the development of financing was determined by the repayments related to contracted debt, leading to the reduction observed.
The refundable grants include grants from AICEP – Agência para o Investimento e Comércio Externo de Portugal, as part of a number of research and development projects, which includes the grant under the investment agreement entered into with the Group's subsidiary Navigator Tissue Aveiro, S.A., for the construction of the new Tissue plant in Aveiro. This agreement comprises a financial incentive in the form of a refundable grant, up to a maximum amount of Euro 42,166,636, without interest payment, with a grace period of two years, with the last refund happening in 2027.
Interest-bearing liabilities – Details
| 31-03-2023 | ||||||
|---|---|---|---|---|---|---|
| Outstanding | ||||||
| Amounts in Euro | Amount | amount | Maturity | Interest rate | Current | Non-current |
| Bond loans | ||||||
| Navigator 2022-2028 ESG | 150,000,000 | 150,000,000 | June 2028 | Floating rate indexed to Euribor, with swap to fixed rate | - | 150,000,000 |
| Navigator 2019-2026 | 50,000,000 | 50,000,000 | January 2026 | Fixed rate | - | 50,000,000 |
| Navigator 2019-2025 | 40,000,000 | 40,000,000 | March 2025 | Floating rate indexed to Euribor, with swap to fixed rate | 20,000,000 | 20,000,000 |
| Navigator 2021-2026 | 17,500,000 | 17,500,000 | April 2026 | Floating rate indexed to Euribor | 2,500,000 | 15,000,000 |
| Navigator 2020-2026 | 75,000,000 | 75,000,000 | December 2026 | Floating rate indexed to Euribor, with swap to fixed rate | - | 75,000,000 |
| Navigator 2021-2026 ESG | 100,000,000 | 100,000,000 | August 2026 | Floating rate indexed to Euribor, with swap to fixed rate | - | 100,000,000 |
| Commissions | - | (3,386,371) | - | (3,386,371) | ||
| European Investment Bank (EIB) | ||||||
| Loan EIB - Energy | 14,166,667 | 14,166,667 | December 2024 | Floating rate indexed to Euribor | 7,083,333 | 7,083,333 |
| Loan EIB - Cacia | 15,277,778 | 15,277,778 | May 2028 | Fixed rate | 2,777,778 | 12,500,000 |
| Loan EIB - Figueira | 34,285,714 | 34,285,714 | February 2029 | Fixed rate | 5,714,286 | 28,571,429 |
| Loan EIB - Biomass Boiler ESG | 27,500,000 | 27,500,000 | March 2031 | Fixed rate | - | 27,500,000 |
| Commercial Paper Program | ||||||
| Commercial Paper Program 175M | 105,000,000 | 105,000,000 | February 2026 | Fixed rate | 35,000,000 | 70,000,000 |
| Commercial Paper Program 65M ESG | 42,250,000 | - | February 2026 | Floating rate indexed to Euribor | - | - |
| Commercial Paper Program 75M | 75,000,000 | - | January 2026 | Floating rate indexed to Euribor | - | - |
| Commercial Paper Program 50M | 50,000,000 | - | December 2025 | Floating rate indexed to Euribor | - | - |
| Loans | ||||||
| Long-term investment | 13,000,000 | 13,000,000 | March 2026 | Floating rate indexed to Euribor | 2,000,000 | 11,000,000 |
| Refundable grants | ||||||
| AICEP / … | 37,328,161 | 37,328,161 | November 2027 | Fixed rate | 7,219,439 | 30,108,722 |
| Deferrals and adjustments | - | |||||
| Bank credit facilities | ||||||
| Short-term facility - 20M | 20,450,714 | - | - | - | ||
| 675,671,949 | 82,294,836 | 593,377,113 |
| 31-12-2022 | |
|---|---|
| ------------ | -- |
| Amounts in Euro | Outstanding | |||||
|---|---|---|---|---|---|---|
| Amount | amount | Maturity | Interest rate | Current | Non-current | |
| Bond loans | ||||||
| Navigator 2022-2028 ESG | 150,000,000 | 150,000,000 | June 2028 | Floating rate indexed to Euribor, with swap to fixed rate | - | 150,000,000 |
| Navigator 2019-2026 | 50,000,000 | 50,000,000 | January 2026 | Fixed rate | - | 50,000,000 |
| Navigator 2019-2025 | 50,000,000 | 50,000,000 | March 2025 | Floating rate indexed to Euribor, with swap to fixed rate | 20,000,000 | 30,000,000 |
| Navigator 2021-2026 | 17,500,000 | 17,500,000 | April 2026 | Floating rate indexed to Euribor | 2,500,000 | 15,000,000 |
| Navigator 2020-2026 | 75,000,000 | 75,000,000 | December 2026 | Floating rate indexed to Euribor, with swap to fixed rate | - | 75,000,000 |
| Navigator 2021-2026 ESG | 100,000,000 | 100,000,000 | August 2026 | Floating rate indexed to Euribor, with swap to fixed rate | - | 100,000,000 |
| Commissions | - | (3,480,083) | - | (3,480,083) | ||
| European Investment Bank (EIB) | ||||||
| Loan EIB - Energy | 14,166,667 | 14,166,667 | December 2024 | Floating rate indexed to Euribor | 7,083,333 | 7,083,334 |
| Loan EIB - Cacia | 15,277,778 | 15,277,778 | May 2028 | Fixed rate | 2,777,778 | 12,500,000 |
| Loan EIB - Figueira | 37,142,857 | 37,142,857 | February 2029 | Fixed rate | 5,714,286 | 31,428,571 |
| Loan EIB - Biomass Boiler ESG | 27,500,000 | 27,500,000 | March 2031 | Fixed rate | - | 27,500,000 |
| Commercial Paper Program | ||||||
| Commercial Paper Program 175M | 140,000,000 | 140,000,000 | February 2026 | Fixed rate | 35,000,000 | 105,000,000 |
| Commercial Paper Program 65M ESG | 65,000,000 | - | December 2026 | Floating rate indexed to Euribor | - | - |
| Commercial Paper Program 75M | 75,000,000 | - | February 2026 | Floating rate indexed to Euribor | - | - |
| Commercial Paper Program 50M | 50,000,000 | - | December 2025 | Floating rate indexed to Euribor | - | - |
| Loans | ||||||
| Long-term investment | 15,000,000 | 15,000,000 | March 2026 | Floating rate indexed to Euribor | 2,000,000 | 13,000,000 |
| Refundable grants | ||||||
| AICEP | 37,194,503 | 37,194,503 | November 2027 | Fixed rate | 7,219,439 | 29,975,064 |
| Deferrals and adjustments | - | - | - | - | ||
| Bank credit facilities | ||||||
| Short-term facility - 20M | 20,450,714 | - | - | - | ||
| 725,301,722 | 82,294,836 | 643,006,886 | ||||
As at 31 March 2023, the average cost of debt, considering the interest rate, annual fees and hedging operations, was 2.0% (31 December 2022: 1.5%).
At 31 March 2023, 41% of the Group's financing is linked to compliance with sustainability commitments (31 December 2022: 38%).
The refund terms for the interest-bearing liabilities recorded as non-current are detailed as follows:
| Amounts in Euro | 31-03-2023 | 31-12-2022 |
|---|---|---|
| Non-current | ||
| 1 to 2 years | 84,259,122 | 84,259,122 |
| 2 to 3 years | 153,640,074 | 156,640,074 |
| 3 to 4 years | 217,140,074 | 261,140,074 |
| 4 to 5 years | 19,773,732 | 19,640,074 |
| More than 5 years | 121,950,482 | 124,807,625 |
| 596,763,484 | 646,486,969 | |
| Fees | (3,386,371) | (3 480 083) |
| 593,377,113 | 643,006,886 |
As at 31 March 2023, the Group had contracted Commercial Paper Programs, contracted and undisbursed long-term financing, as well as available and undrawn credit facilities of Euro 187,700,714 (31 December 2022: Euro 210,450,714).
As at 31 March 2023 and 31 December 2022, the Group's interest-bearing net debt was as follows:
| Amounts in Euro | 31-03-2023 | 31-12-2022 |
|---|---|---|
| Interest-bearing liabilities | 675,671,949 | 725,301,722 |
| Cash and cash equivalents (Note 5.6) | (324,303,020) | (343,083,788) |
| Interest-bearing net debt | 351,368,929 | 382,217,934 |
| Lease liabilities (Note 5.5) | 63,926,050 | 61,641,049 |
| Interest-bearing net debt with lease liabilities | 415,294,979 | 443,858,983 |
5.5 Lease liabilities
Lease liabilities - Nature
| 31-03-2023 | 31-12-2022 | |||||
|---|---|---|---|---|---|---|
| Amounts in Euro | Non-current | Current | Total | Non-current | Current | Total |
| Forestry land | 49,358,216 | 2,774,116 | 52,132,332 | 46,724,663 | 2,666,086 | 49,390,749 |
| Buildings | 1,746,078 | 517,759 | 2,263,837 | 1,868,940 | 513,178 | 2,382,118 |
| Vehicles | 3,223,958 | 1,521,841 | 4,745,799 | 3,070,109 | 1,540,904 | 4,611,013 |
| Software licences | 59,340 | 139,162 | 198,502 | 94,312 | 155,401 | 249,713 |
| Other lease liabilities | 2,966,952 | 1,618,629 | 4,585,581 | 3,331,059 | 1,676,397 | 5,007,456 |
| 57,354,544 | 6,571,507 | 63,926,051 | 55,089,083 | 6,551,966 | 61,641,049 |
Lease liabilities - Movements
| Amounts in Euro | 2023 | 2022 |
|---|---|---|
| Balance as at 1 January | 61,641,049 | 53,240,925 |
| Amortisation of contracts | (2,332,664) | (2,147,573) |
| New contracts | 4,033,915 | 647,269 |
| Interest expenses | 583,751 | 453,078 |
| Other changes | - | - |
| Total changes in related liabilities |
2,285,002 | (1,047,226) |
| Balance as at 31 March | 63,926,051 | 52,193,699 |
| Remaining quarters | 9,447,350 | |
| Balance as at 31 December | 61,641,049 | |
Lease liabilities - Future liabilities
| Amounts in Euro | 31-03-2023 | 31-12-2022 | |||||
|---|---|---|---|---|---|---|---|
| Maturing rents | Interest on liabilities |
Present value of liabilities |
Maturing rents | Interest on liabilities |
Present value of liabilities |
||
| Less than 1 year | 4,384,744 | 2,186,763 | 6,571,507 | 4,435,662 | 2,116,304 | 6,551,966 | |
| 1 to 2 years | 3,974,313 | 2,017,571 | 5,991,884 | 3,891,713 | 1,952,737 | 5,844,450 | |
| 2 to 3 years | 2,932,565 | 1,860,154 | 4,792,719 | 3,041,072 | 1,797,386 | 4,838,458 | |
| 3 to 4 years | 2,893,765 | 1,710,563 | 4,604,328 | 2,809,096 | 1,653,338 | 4,462,434 | |
| 4 to 5 years | 2,102,057 | 1,572,059 | 3,674,116 | 2,165,139 | 1,516,362 | 3,681,501 | |
| Present value of liabilities | 16,287,445 | 9,347,110 | 25,634,554 | 16,342,682 | 9,036,127 | 25,378,809 |
5.6 Cash and cash equivalents
| Amounts in Euro | 31-03-2023 | 31-12-2022 |
|---|---|---|
| Cash | 35,621 | 32,356 |
| Short-term bank deposits | 103,045,260 | 191,824,254 |
| Other short-term investments | 221,222,139 | 151,227,178 |
| 324,303,020 | 343,083,788 |
As at 31 March 2023, the caption Other short-term investments includes Euro 221,222,139 (31 December 2021: Euro 151,227,178) of amounts invested by Navigator in a portfolio of short-term, highly liquid financial assets and issuers with adequate ratings.
As at 31 March 2023 and 31 December 2022, there are no significant balances of cash and cash equivalents that are subject to restrictions on use by the Group.
5.7 Net financial results
| 3 months | 3 months | |
|---|---|---|
| Amounts in Euro | 31-03-2023 | 31-03-2022 |
| Interest paid on debt securities and bank debt | (4,918,007) | (2,298,790) |
| Commissions on loans and expenses with the opening of credit facilities | (730,316) | (784,577) |
| Interest paid using the effective interest method | (5,648,323) | (3,083,367) |
| Interest paid on lease liabilities | (583,751) | (453,078) |
| Financial expenses related to the Group's capital structure | (6,232,074) | (3,536,445) |
| Gains/ (Losses) on financial instruments - interest-rate hedging (Note 8.1) | 1,678,243 | (710,245) |
| Gains/ (Losses) on financial instruments - trading (Note 8.1) | - | (174,549) |
| Other expenses and financial losses | (299,688) | (444,544) |
| Financial expenses and losses | (4,853,519) | (4,865,782) |
| Interest earned on financial assets at amortised cost | 1,507,826 | - |
| Favourable exchange rate differences | 228,249 | 163,870 |
| Gains on financial instruments - foreign exchange hedging (Note 8.1) | 440,771 | - |
| Financial income and gains | 2,176,846 | 163,870 |
| Net financial results | (2,676,673) | (4,701,912) |
Financial results were negative Euro 2.6 million (31 December 2022: negative Euro 4.7 million), reflecting a reduction of Euro 2.0 million compared to the same period last year. The interest rate risk hedging policy contributed to this result, which despite the rapid rise in indexing factors, allowed financing costs to remain stable.
In turn, the rise in interest rates allowed the optimisation of the surplus cash management, resulting in a positive result of Euro 1.5 million.
6. Income tax
6.1 Income tax for the period
6.1.1. Income tax recognised in the consolidated income statement
| 3 months | 3 months | |
|---|---|---|
| Amounts in Euro | 31-03-2023 | 31-03-2022 |
| Current tax | 26,524,713 | 26,095,422 |
| Changes in uncertain tax positions | (829) | 6,936,059 |
| Deferred tax (Note 6.2) | (1,637,029) | 1,053,395 |
| 24,886,855 | 34,084,876 |
As at 31 March 2023, current tax includes Euro 24,745,431 (31 March 2022: Euro 23,452,098) regarding the liability created under the aggregated income tax regime of The Navigator Company, S.A..
As at 31 March 2023 and 2022, the caption Changes in uncertain tax positions in the period reflects the excess/insufficiency of tax estimates, the favourable outcome of some cases related to matters with high uncertainty, as well as requests for binding information, claims to the Tax Administration and jurisprudence of the courts.
There have not been, nor are any expected changes arising from variations in the rate used to determine the expected tax amount.
Nominal tax rate
In the periods presented, the Group considers a nominal tax rate in Portugal of 27.5%, resulting from the tax legislation as follows:
| 2023 | 2022 | |
|---|---|---|
| Portugal | ||
| Nominal income tax rate | 21.0% | 21.0% |
| Municipal surcharge | 1.5% | 1.5% |
| 22.5% | 22.5% | |
| State surcharge - on the share of taxable profit between Euro 1,500,000 and Euro 7,500,000 | 3.0% | 3.0% |
| State surcharge - on the share of taxable profit between Euro 7,500,000 and Euro 35,000,000 | 5.0% | 5.0% |
| State surcharge - on the share of taxable profit above Euro 35,000,000 | 9.0% | 9.0% |
Reconciliation of the effective income tax rate for the period
| 3 months | 3 months | |
|---|---|---|
| Amounts in Euro | 31-03-2023 | 31-03-2022 |
| Profit before income tax | 96,570,774 | 84,683,444 |
| Expected tax at nominal rate (21%) | 20,279,863 | 17,783,523 |
| Municipal surcharge (2023: 1.49% ; 2022: 2.16%) | 1,435,425 | 1,830,823 |
| State surcharge (2023: 3.17% ; 2022: 6.83%) | 3,059,128 | 5,783,879 |
| Income tax resulting from the applicable tax rate | 24,774,415 | 25,398,225 |
| Nominal tax rate for the period | 25.7% | 30.0% |
| Differences (a) | (132,235) | 8,589,785 |
| Autonomous taxation | 244,675 | 96,866 |
| 24,886,855 | 34,084,876 | |
| Effective tax rate | 25.8% | 40.2% |
| (a) This amount concerns mainly : | 3 months | 3 months |
|---|---|---|
| 31-03-2023 | 31-03-2022 | |
| Capital gains / (losses) for tax purposes | 1,088 | 29,533 |
| Capital gains / (losses) for accounting purposes | (1,476) | (82,774) |
| Taxable provisions and impairment | - | 30,539,024 |
| Tax benefits | (313,927) | (133,760) |
| Post-employment benefits | - | - |
| Other | (166,540) | 883,560 |
| (480,855) | 31,235,583 | |
| Tax effect (27.5%) | (132,235) | 8,589,785 |
6.1.2. Tax recognised in the consolidated statement of financial position
| Amounts in Euro | 31-03-2023 | 31-03-2022 |
|---|---|---|
| Assets | ||
| Amounts pending refund | 16,216,543 | 16,216,543 |
| 16,216,543 | 16,216,543 | |
| Liabilities | ||
| Corporate income tax (IRC) | 136,911,254 | 110,712,325 |
| Additional tax liabilities (IRC) | 14,729,621 | 14,762,361 |
| 151,640,875 | 125,474,686 |
Detail of Corporate Income Tax – IRC (net)
| Amounts in Euro | 31-03-2023 | 31-03-2022 |
|---|---|---|
| Income tax for the period | 26,524,713 | 150,703,440 |
| Payments on account, Special payments on account and Additional payments on account | - | (37,500,934) |
| Withholding tax receivable | (295,074) | (44,686) |
| Income tax payable/ (refundable) from previous periods | 110,712,325 | - |
| Other payables / (receivables) | (30,710) | (2,445,495) |
| 136,911,254 | 110,712,325 |
The amounts of corporate income tax paid in the period are detailed as follows:
| Amounts in Euro | 31-03-2023 | 31-03-2022 |
|---|---|---|
| Withholding tax | 295,074 | 4,413 |
| Payments of additional tax liabilities | 32,740 | - |
| Other income tax payments (refunds) | (829) | - |
| Income tax payments/receipts | 326,985 | 4,413 |
Amounts pending refund
| Amounts in Euro | 31-03-2023 | 31-03-2022 |
|---|---|---|
| 2005 Corporate income tax (RETGS) | 13,886,728 | 13,886,728 |
| RFAI 2010 to 2012 - compensatory interests | 1,076,611 | 1,076,611 |
| 2016 Corporate income tax - Navigator Tissue Rodão | 861,866 | 861,866 |
| 2016 Corporate income tax - CAAD 7/2022 Process | 272,697 | 272,697 |
| 2020 Corporate income tax (RETGS) | 62,867 | 62,867 |
| Other | 55,774 | 55,774 |
| 16,216,543 | 16,216,543 |
The movements in the period are detailed as follows:
| Amounts in Euro | 31-03-2023 | 31-03-2022 |
|---|---|---|
| Balance at the beginning of the period | 16,216,543 | 1,118,815 |
| Increases | - | 16,075,026 |
| Payments / (receipts) | - | (977,298) |
| Reversals | - | - |
| 16,216,543 | 16,216,543 |
Uncertain tax positions –Liabilities
| Amounts in Euro | 31-03-2023 | 31-03-2022 |
|---|---|---|
| Balance at the beginning of the period | 14,762,361 | 19,967,180 |
| Increases | - | 4,572,566 |
| Payments / (receipts) | (32,740) | 17,350,270 |
| Reversals | - | (27,127,655) |
| Changes in the period | (32,740) | (5,204,819) |
| 14,729,621 | 14,762,361 |
Taxes paid in litigation
As at 31 March 2023 and 31 December 2022, the additional tax assessments that are already paid and contested, not recognised in assets, refer to the Navigator Group and are summarised as follows:
| Amounts in Euro | 31-03-2023 | 31-03-2022 |
|---|---|---|
| 2005 Aggregated corporate income tax (Note 10.3) | - | 10,394,386 |
| 2006 Aggregated corporate income tax (Note 10.3) | 8,150,146 | 8,150,146 |
| 2015 Corporate income tax - Navigator Tissue Ródão, S.A. | 7,586,361 | 7,586,361 |
| 2018 Aggregated corporate income tax | 14,433,913 | 14,433,913 |
| 2016 State surcharge | 3,761,397 | 3,761,397 |
| 2017 State surcharge | 8,462,724 | 8,462,724 |
| 2018 State surcharge | 12,223,705 | 12,223,705 |
| 2016 and 2017 CDTJI corporate income tax | 1,522,660 | 1,522,660 |
| 56,140,906 | 66,535,292 |
6.2 Deferred taxes
Movements in deferred taxes
| As at 1 January | Income Statement | ||||
|---|---|---|---|---|---|
| Amounts in Euro | 2023 | Increases | Decreases | Equity As at 31 March 2023 | |
| Temporary differences originating deferred tax assets | |||||
| Taxed provisions | 13,913,990 | 1,616,686 | - | - | 15,530,676 |
| Adjustment of property, plant and equipment | 43,767,507 | - | (9,459,453) | - | 34,308,054 |
| Financial instruments | - | - | - | - | - |
| Deferred accounting gains on intra-Group transactions | 26,228,453 | 9,686,793 | - | - | 35,915,246 |
| Valuation of biological assets | 14,456,082 | 452,498 | - | - | 14,908,580 |
| Investment grants | - | - | - | - | - |
| Conventional capital remuneration | 560,000 | - | - | - | 560,000 |
| 98,926,032 | 11,755,977 | (9,459,453) | - | 101,222,557 | |
| Temporary differences originating deferred tax liabilities | |||||
| Pensions and post-employment benefits | (358,483) | - | - | - | (358,483) |
| Financial instruments | (47,174,485) | - | - | (4,304,833) | (51,479,318) |
| Deferred accounting losses on intra-Group transactions | - | - | - | - | - |
| Valuation of biological assets | (5,403,744) | - | - | - | (5,403,744) |
| Adjustment of property, plant and equipment | (300,707,813) | 3,538,974 | - | (297,168,839) | |
| Investment grants | (3,862,494) | 117,333 | - | 15,976 | (3,729,185) |
| (357,507,019) | 3,656,307 | - | (4,288,857) | (358,139,569) | |
| Deferred tax assets | 27,204,659 | 3,232,894 | (2,601,349) | - | 27,836,203 |
| Investment tax incentives (Note 3.5) | - | - | - | - | - |
| Deferred tax assets | 27,204,659 | 3,232,894 | (2,601,349) | - | 27,836,204 |
| Deferred tax liabilities | (98,314,430) | 1,005,485 | - | (1,179,436) | (98,488,382) |
| As at 1 January | Income Statement | ||||
|---|---|---|---|---|---|
| Amounts in Euro | 2022 | Increases | Decreases | Equity | As at 31 December 2022 |
| Temporary differences originating deferred tax assets | |||||
| Taxed provisions | 4,544,163 | 9,369,827 | - | - | 13,913,990 |
| Adjustment of property, plant and equipment | 62,470,397 | - | (18,702,890) | - | 43,767,507 |
| Financial instruments | 7,448,830 | - | - | (7,448,830) | - |
| Deferred accounting gains on intra-Group transactions | 21,090,053 | 5,138,400 | - | - | 26,228,453 |
| Valuation of biological assets | - | 14,456,082 | - | - | 14,456,082 |
| Investment grants | 203,588 | - | (203,588) | - | |
| Conventional capital remuneration | 4,200,000 | - | (3,640,000) | - | 560,000 |
| 99,957,031 | 28,964,309 | (22,546,478) | (7,448,830) | 98,926,032 | |
| Temporary differences originating deferred tax liabilities | |||||
| Pensions and post-employment benefits | (388,758) | (213,971) | - | 244,246 | (358,483) |
| Financial instruments | - | (47,174,485) | (47,174,485) | ||
| Valuation of biological assets | (25,294,177) | 21,570,514 | (1,680,081) | - | (5,403,744) |
| Adjustment of property, plant and equipment | (306,642,712) | 5,934,899 | - | - | (300,707,813) |
| Investment grants | (4,142,627) | 213,450 | - | 66,683 | (3,862,494) |
| (336,468,274) | 27,504,892 | (1,680,081) | (46,863,556) | (357,507,019) | |
| Deferred tax assets | 27,488,184 | 7,965,185 | (6,200,281) | (2,048,428) | 27,204,659 |
| Investment tax incentives (Note 3.5) | 549,224 | - | (549,224) | - | - |
| Deferred tax assets | 28,037,408 | 7,965,185 | (6,749,505) | (2,048,428) | 27,204,659 |
| Deferred tax liabilities | (92,528,775) | 7,563,845 | (462,022) | (12,887,478) | (98,314,430) |
As at 31 March 2022 and 31 December 2022, the rate of 27.50% was used in the measurement of deferred taxes.
7. Payroll
7.1 Payroll costs
| Amounts in Euro | 31-03-2023 | 31-03-2022 |
|---|---|---|
| Remuneration of Corporate bodies - fixed | 812,201 | 833,115 |
| Remuneration of Corporate bodies - variable | 1,514,080 | 1,200,000 |
| Other remunerations | 32,840,168 | 29,578,916 |
| Social Security contributions | 6,369,172 | 5,705,136 |
| Post-employment benefits (Note 7.2) | 307,323 | 295,921 |
| Other payroll costs | 2,706,366 | 4,482,579 |
| Payroll costs | 44,549,310 | 42,095,667 |
The increase in Payroll costs was in line with Navigator's good performance in the quarter, enabling the Company to increase remunerations, employee bonuses and productivity bonuses.
Number of employees by segment at the end of the period
| 31-03-2023 | 31-03-2022 | Var. 23/22 | |
|---|---|---|---|
| Market pulp | 262 | 262 | - |
| UWF | 1,801 | 1,801 | - |
| Tissue | 410 | 410 | - |
| Other | 773 | 773 | - |
| 3,246 | 3,246 | - |
Other Payroll costs are detailed as follows during the periods ended 31 March 2023 and 2022:
| Amounts in Euro | 31-03-2023 | 31-03-2022 |
|---|---|---|
| Training | 382,038 | 77,090 |
| Social action | 825,329 | 378,706 |
| Insurance | 1,171,414 | 1,090,078 |
| Compensations | 247,177 | 2,918,291 |
| Other | 80,408 | 18,414 |
| 2,706,366 | 4,482,579 |
7.2 Employee benefits
7.2.1. Introduction
Some Group companies grant their employees post-retirement benefits, either in the form of defined benefit plans or in the form of defined contribution plans.
The plans are funded through a closed Pension Fund, managed by an external entity, which subcontracts the management of its assets to external asset management entities.
A. Pension Plan – Defined benefit
The Group has responsibilities with post-employment benefit plans for a reduced group of Employees who have chosen to maintain the Defined Benefit Plan (The Navigator Company) or who have chosen to maintain a Safeguard Clause, the latter following the conversion of their plan into a Defined Contribution Plan (The Navigator Company). In effect, the safeguard clause gives the Employee the option, at the time of retirement, to pay a pension in accordance with the provisions laid down on the Defined Benefit Plan. For those who choose to activate the Safeguard Clause, the accumulated balance in the Defined Contribution Plan (Conta 1) will be used to finance the liability of the Defined Benefit Plan.
B. Pension Plan – Defined contribution
As at 31 March 2023, three Defined Contribution plans were in force covering 3,089 employees (2022: 3,097 Employees) (Note 7.2.3).
7.2.2. Defined benefit plan
Net Liabilities
Net liabilities reflected in the consolidated statement of financial position and the number of beneficiaries of the defined benefit plans in force in the Group are detailed as follows:
| 31-03-2023 | 31-12-2022 | |||
|---|---|---|---|---|
| No. of | ||||
| No. of beneficiaries | Amount | beneficiaries | Amount | |
| Past service liabilities | ||||
| Active employees, including individual accounts | 367 | 49,465,578 | 367 | 49,465,578 |
| Alumni | 140 | 22,728,925 | 140 | 22,728,925 |
| Retired employees | 590 | 85,075,143 | 590 | 85,075,143 |
| Market value of pension funds | (156,269,239) | (154,433,916) | ||
| Total net liabilities | 1,097 | 1,000,407 | 1,097 | 2,835,730 |
Funds
Funds allocated to the defined benefit pension plans – Evolution
| Amounts in Euro | 2023 | 2022 |
|---|---|---|
| Balance as at 1 January | 154,433,916 | 185,327,671 |
| Remeasurement | 1,835,323 | (9,537,450) |
| Balance as at 31 March | 156,269,239 | 175,790,221 |
| Remaning quarters | (21,356,305) | |
| Balance as at 31 December | 154,433,916 |
The assets of the pension fund related to the defined benefit plan are under the management of Ageas Pensões, Schroders, Santander AM and Julius Baer, as detailed below:
| Amounts in Euro | 31-03-2023 | 31-12-2022 |
|---|---|---|
| Defined benefit and Conta 1: | ||
| AGEAS - Pensions | - | 105,079 |
| Schroders | 62,879,808 | 62,325,236 |
| Santander AM | 63,418,417 | 62,244,783 |
| Conta 1 - Julius Baer | 29,971,015 | 29,758,819 |
| Total defined benefit and Conta 1 | 156,269,239 | 154,433,916 |
Funds allocated to defined benefit plans - Composition of assets
| Amounts in Euro | 31-03-2023 | % | 31-03-2022 | % |
|---|---|---|---|---|
| Listed securities in active market | ||||
| Bonds | 94,205,734 | 60.28% | 94,778,925 | 61.37% |
| Shares | 38,143,816 | 24.41% | 40,402,326 | 26.16% |
| Public debt | 20,233,572 | 12.95% | 17,282,244 | 11.19% |
| Liquidity | 3,686,117 | 2.36% | 1,865,342 | 1.21% |
| Real estate | - | 0.00% | - | 0.00% |
| Other short-term investments | - | 0.00% | 105,079 | 0.07% |
| 156,269,239 | 100.00% | 154,433,916 | 100.00% |
The assets of the pension fund do not include any assets of the Group.
7.2.3. Defined contributions plan
As at 31 March 2023 and 31 December 2021, two defined contribution plans were in force on behalf of employees.
The assets of the pension fund that finance the defined contribution plans are under the management of Ageas Pensões, as detailed below:
| Amounts in Euro | No. of | Profitability | No. of | Profitability | ||
|---|---|---|---|---|---|---|
| beneficiaries | % | 31-03-2023 | beneficiaries | % | 31-12-2022 | |
| Defined contribution (Ageas Pensões): | ||||||
| Defensive sub-fund | 127 | 2.55% | 7,289,169 | 112 | 2.92% | 6,804,787 |
| Conventional sub-fund | 400 | 3.16% | 15,371,957 | 370 | 5.89% | 14,513,526 |
| Dynamic sub-fund | 732 | 4.14% | 14,467,301 | 716 | 10.46% | 14,840,248 |
| Aggressive sub-fund | 1,830 | 5.22% | 5,441,250 | 1,899 | 16.04% | 5,541,395 |
| Total defined contribution | 3,089 | 42,569,677 | 3,097 | 41,699,956 |
* of which 284 are former employees
7.2.4. Expenses incurred with post-employment benefit plans
The effect in the income statement for the periods ended 31 March 2023 and 2022 was as follows:
| 31-03-2023 | 31-03-2022 | |||
|---|---|---|---|---|
| Amounts in Euro | Defined Contribution - Contributions for the period |
Impact on net profit (Note 7.1) |
Defined Contribution - Contributions for the period |
Impact on net profit (Note 7.1) |
| Pensions with Autonomous Fund | - | - | - | - |
| Defined contribution plans | 307,323 | 307,323 | 295,921 | 295,921 |
| 307,323 | 307,323 | 295,921 | 295,921 |
8. Financial instruments
8.1 Derivative financial instruments
Movements in derivative financial instruments
| 31-03-2023 | 31-12-2022 | |||||
|---|---|---|---|---|---|---|
| Amounts in Euro | Trading derivatives |
Hedging derivatives |
Net total | Trading derivatives |
Hedging derivatives |
Net total |
| Balance at the beginning of the period | (3,106,233) | 46,938,143 | 43,831,910 | (1,728,458) | (4,771,149) | (6,499,606) |
| New contracts / settlements | - | (1,679,485) | (1,679,485) | (1,818,546) | 45,721,702 | 43,903,155 |
| Change in fair value through profit and loss (Note 5.7) | 440,771 | 1,678,243 | 2,119,014 | 440,771 | 1,678,243 | 2,119,014 |
| Change in fair value through other comprehensive income | - | 4,309,347 | 4,309,347 | - | 4,309,347 | 4,309,347 |
| Balance at the end of the period | (2,665,462) | 51,246,248 | 48,580,786 | (3,106,233) | 46,938,143 | 43,831,910 |
8.1.1. Detail and maturity of derivative financial instruments by nature
| 31 December 2022 | Positive | Negative (Note | ||||
|---|---|---|---|---|---|---|
| Amounts in Euro | Notional | Currency | Maturity | (Note 4.2) | 4.3) | Net amount |
| Hedging | ||||||
| Hedging (future sales) | 265,000,000 | USD | 2,023 | 6,115,768 | - | 6,115,768 |
| Hedging (future sales) | 108,000,000 | GBP | 2,023 | 268,173 | (45,413) | 222,760 |
| Interest rate swaps - Bonds | 375,000,000 | EUR | 2,028 | 27,832,493 | - | 27,832,493 |
| Energy | 35,044,407 | EUR | 2,023 | 17,075,227 | - | 17,075,227 |
| 51,291,661 | (45,413) | 51,246,248 | ||||
| Trading | ||||||
| Foreign exchange forwards (future sales) | 82,500,000 | USD | 2,023 | 1,199,000 | (3,835,331) | (2,636,331) |
| Foreign exchange forwards (future sales) | 16,400,000 | GBP | 2,023 | - | (34,126) | (34,126) |
| Foreign exchange forwards (future sales) | 625,000 | CHF | 2,023 | 4,995 | - | 4,995 |
| 1,203,995 | (3,869,457) | (2,665,462) | ||||
| 52,495,656 | (3,914,870) | 48,580,786 |
| 31 December 2022 | Positive | |||||
|---|---|---|---|---|---|---|
| Amounts in Euro | Notional | Currency | Maturity | (Note 4.2) | Negative (Note 4.3) |
Net amount |
| Hedging | ||||||
| Hedging (future sales) | 345,000,000 | USD | 2,023 | 6,011,256 | - | 6,011,256 |
| Hedging (future sales) | 144,000,000 | GBP | 2,023 | 1,294,665 | - | 1,294,665 |
| Interest rate swaps - Bonds | 375,000,000 | EUR | 2,028 | 31,949,130 | - | 31,949,130 |
| Energy | 50,521,199 | EUR | 2,023 | 7,683,092 | - | 7,683,092 |
| 46,938,143 | - | 46,938,143 | ||||
| Trading | ||||||
| Foreign exchange forwards (future sales) | 76,977,456 | USD | 2,023 | 1,325,016 | (4,679,289) | (3,354,273) |
| Foreign exchange forwards (future sales) | 18,800,000 | GBP | 2,023 | 251,284 | - | 251,284 |
| Foreign exchange forwards (future sales) | 1,750,000 | CHF | 2,023 | - | (3,243) | (3,243) |
| 1,576,300 | (4,682,532) | (3,106,232) | ||||
| 48,514,443 | (4,682,533) | 43,831,911 |
Cash flow hedge | Exchange rate risk EUR/USD and EUR/GBP
During the last quarter of 2022, the Group concluded the contracting of derivative financial instruments by acquiring USD 345,000,000 and GBP 144,000,000 in Zero Cost Collar, thus guaranteeing total coverage of the estimated value of exposure for 2023.
Energy Hedging
During the last quarter of 2022, the Group concluded the contracting of derivative financial instruments by acquiring USD 345,000,000 and GBP 144,000,000 in Zero Cost Collar, thus guaranteeing total coverage of the estimated value of exposure for 2023.
9. Provisions, commitments and contingencies
9.1 Provisions
Movements in provisions
| Legal | Other | ||
|---|---|---|---|
| Amounts in Euro | proceedings | provisions | Total |
| 1 January 2022 | 6,951,274 | 19,800,806 | 26,752,080 |
| Increases | - | - | - |
| Reversals | - | - | - |
| Impact in profit and loss for the period | - | - | - |
| Exchange rate adjustment | 892 | - | 892 |
| Other transfers and adjustments | 5,273 | - | 5,273 |
| 31 March 2022 | 6,957,439 | 19,800,806 | 26,758,245 |
| Increases | 3,488,765 | 4,576,941 | 8,065,706 |
| Reversals | (5,392,411) | (1,051,848) | (6,444,259) |
| Impact in profit and loss for the period | (1,903,646) | 3,525,093 | 1,621,447 |
| Exchange rate adjustment | 1,331 | - | 1,331 |
| Other transfers and adjustments | 51,854 | - | 51,854 |
| 31 December 2020 | 5,106,978 | 23,325,899 | 28,432,877 |
| Increases | - | - | - |
| Reversals | - | - | - |
| Impact in profit and loss for the period | - | - | - |
| Exchange rate adjustment | (3,088) | - | (3,088) |
| Other transfers and adjustments | 7,856 | - | 7,856 |
| 31 March 2023 | 5,111,746 | 23,325,899 | 28,437,645 |
No refunds of any nature are expected in respect of these provisions.
9.2 Commitments
Guarantees provided to third parties
| Amounts in Euro | 31-03-2023 | 31-12-2022 |
|---|---|---|
| Guarantees provided | ||
| Navigator guarantees for EIB loans | 32,499,999 | 37,708,333 |
| Ocean Network Express | 2,751,947 | - |
| CCDR | 354,083 | 354,083 |
| IAPMEI | 1,280,701 | 1,280,701 |
| Customs clearance | 1,250 | 1,250 |
| Portuguese Environment Agency | 2,390,006 | 2,390,006 |
| Simria | 338,829 | 338,829 |
| Other | 838,256 | 838,256 |
| 40,455,071 | 42,911,458 |
Purchase commitments
| Amounts in Euro | 31-03-2023 | 31-12-2022 |
|---|---|---|
| Purchase commitments | ||
| Property, plant and equipment - Industrial equipment | 60,843,712 | 57,737,388 |
| Wood | ||
| Commitements with acquisitions in the subsequent period | 291,900,000 | 362,700,000 |
| Commitements to long-term acquisitions | 117,600,000 | 117,600,000 |
| 470,343,712 | 538,037,388 |
Other commitments
The Navigator Group has made a commitment to achieve carbon neutrality by 2035, with an estimated global investment of Euro 235 million, of which Euro 58.7 million have already been invested until 31 March 2023.
10. Group structure
10.1Companies included in the consolidation perimeter
11.1.1. Navigator Group subsidiaries
| Share equity owned | ||||||
|---|---|---|---|---|---|---|
| 31-03-2023 | 31-12-2022 | |||||
| Company | Head Office | Direct Indirect | Total | Total | ||
| Main activity | ||||||
| Parent Company: | ||||||
| The Navigator Company, S.A. Subsidiaries: |
Portugal | - | - | - | - | Sale of paper and pulp |
| Acquisition, operation, lease or concession of the use and | ||||||
| Navigator Brands , S.A. | Portugal | 100.0 | - | 100.0 | 100.0 | disposal of trademarks, patents and other industrial or |
| intelectual property | ||||||
| Navigator Parques Industriais, S.A. | Portugal | 100.0 | - | 100.0 | 100.0 | Management of industrial real estate |
| Navigator Paper Figueira, S.A | Portugal | 100.0 | - | 100.0 | 100.0 | Paper production |
| Empremédia - Corretores de Seguros, S.A. | Portugal | 100.0 | - | 100.0 | 100.0 | Insurance mediation and advisory services |
| Empremedia, DAC | Irland | 100.0 | - | 100.0 | 100.0 | Management of shareholdings |
| Empremedia RE, DAC | Irland | - | 100.0 | 100.0 | 100.0 | Insurance mediation and advisory services |
| Raiz - Instituto de Investigação da Floresta e Papel | Portugal | 97.0 | 97.0 | 97.0 | Applied research in the field of pulp and paper industry and | |
| - | forestry activity | |||||
| Promotion of business units directly or indirectly related to | ||||||
| About the Future , SA * | Portugal | - | - | - | - | research, development and innovation activities in the field of |
| forest-based bioeconomy | ||||||
| Enerpulp – Cogeração Energética de Pasta, S.A. | Portugal | 100.0 | - | 100.0 | 100.0 | Energy production Production of pulp and provision of administration, |
| Navigator Pulp Figueira, S.A. | Portugal | 100.0 | - | 100.0 | 100.0 | management and internal advisory services |
| Ema Cacia - Engenharia e Manutenção Industrial, ACE | Portugal | - | 73.8 | 73.8 | 73.8 | |
| Ema Setúbal - Engenharia e Manutenção Industrial, ACE | Portugal | - | 79.7 | 79.7 | 79.7 | Provision of industrial maintenance services |
| Ema Figueira da Foz- Engenharia e Manutenção Industrial, ACE | Portugal | - | 80.7 | 80.7 | 80.7 | |
| Navigator Pulp Setúbal, S.A. | Portugal | 100.0 | - | 100.0 | 100.0 | Pulp production |
| Navigator Pulp Aveiro, S.A. | Portugal | 100.0 | - | 100.0 | 100.0 | Pulp production |
| Navigator Fiber Solutions , S.A. | Portugal | 0.1 | 99.9 | 100.0 | Wholesale marketing and manufacturing of packaging and other pulp, paper and cardboard products and related products. |
|
| Navigator Tissue Aveiro, S.A. | Portugal | 100.0 | - | 100.0 | 100.0 | Tissue paper production |
| Navigator Tissue Ródão , S.A. | Portugal | - | 100.0 | 100.0 | 100.0 | |
| Navigator Tissue Iberica , S.A. | Spain | - | 100.0 | 100.0 | 100.0 | Sale of tissue paper |
| Portucel Moçambique - Sociedade de Desenvolvimento Florestal e | Mozambique | 90.0 | - | 90.0 | 90.0 | Forestry production |
| Industrial, Lda Navigator Forest Portugal, S.A. |
Portugal | 100.0 | - | 100.0 | 100.0 | Forestry production |
| EucaliptusLand, S.A. | Portugal | - | 100.0 | 100.0 | 100.0 | Forestry production |
| Sociedade de Vinhos da Herdade de Espirra - Produção e | ||||||
| Comercialização de Vinhos, S.A. | Portugal | - | 100.0 | 100.0 | 100.0 | Wine production |
| Gavião - Sociedade de Caça e Turismo, S.A. | Portugal | - | 100.0 | 100.0 | 100.0 | Management of hunting resources |
| Afocelca - Agrupamento complementar de empresas para | Portugal | - | 64.8 | 64.8 | 64.8 | Provision of forest fire prevention and fighting services |
| protecção contra incêndios, ACE | ||||||
| Viveiros Aliança - Empresa Produtora de Plantas, S.A. | Portugal | - | 100.0 | 100.0 | 100.0 | Plant production in nurseries |
| Bosques do Atlantico, SL | Spain | - | 100.0 | 100.0 | 100.0 | Trade in wood, biomass and logging |
| Navigator Africa, SRL | Italy | - | 100.0 | 100.0 | 100.0 | Trade in wood, biomass and logging |
| Navigator Paper Setúbal , S.A. | Portugal | 100.0 | - | 100.0 | 100.0 | Paper and energy production |
| Navigator North America Inc. | USA | - | 100.0 | 100.0 | 100.0 | Sale of paper |
| Navigator Afrique du Nord | Morocco | - | 100.0 | 100.0 | 100.0 | |
| Navigator España, S.A. | Spain | - | 100.0 | 100.0 | 100.0 | |
| Navigator Netherlands, BV | The Netherlands | - | 100.0 | 100.0 | 100.0 | |
| Navigator France, EURL | France | - | 100.0 | 100.0 | 100.0 | |
| Navigator Paper Company UK, Ltd | UK | - | 100.0 | 100.0 | 100.0 | |
| Navigator Italia, SRL | Italy | - | 100.0 | 100.0 | 100.0 | |
| Navigator Deutschland, GmbH | Germany | - | 100.0 | 100.0 | 100.0 | Provision of sales intermediation services |
| Navigator Paper Austria, GmbH | Austria | - | 100.0 | 100.0 | 100.0 | |
| Navigator Paper Poland SP Z o o | Poland | - | 100.0 | 100.0 | 100.0 | |
| Navigator Eurasia | Turkey | - | 100.0 | 100.0 | 100.0 | |
| Navigator Paper Mexico | Mexico | 25.0 | 75.0 | 100.0 | 100.0 | |
| Navigator Middle East Trading DMCC | Dubai | - | 100.0 | 100.0 | 100.0 | |
| Navigator Egypt, ELLC | Egypt South Africa |
1.0 1.0 |
99.0 99.0 |
100.0 100.0 |
100.0 100.0 |
|
| Navigator Paper Southern Africa | 97.0 | 3.0 | 100.0 | 100.0 | Sale of timber | |
| Navigator Abastecimento de Madeira, ACE | Portugal |
11.1.2. Incorporated joint operations
| Share equity owned | ||||||
|---|---|---|---|---|---|---|
| 31-03-2023 | 31-12-2022 | |||||
| Company | Head Office | Direct Indirect | Total | Total | Main activity | |
| Pulpchem Logistics, A.C.E. | Portugal | 50 | - | 50 | 50 | Purchases of materials, subsidiary materials and services used in the pulp and paper production processes |
10.2 Changes in the consolidation perimeter
During the three-month period ended 31 March 2023, the following changes took place in the consolidation perimeter:
• Incorporation of the Navigator Fiber Solutions, S.A.
10.3Transactions with related parties
Balances with related parties
| 31-03-2023 | 31-12-2022 | |||
|---|---|---|---|---|
| Amounts in Euro | Receivables (Note 4.2) |
Payables (Note 4.3) |
Receivables (Note 4.2) |
Payables (Note 4.3) |
| Shareholders (Note 5.1) | ||||
| Semapa - Soc. de Investimento e Gestão, SGPS, S.A. | - | 2,038,420 | - | - |
| Other subsidiaries of Semapa Group | ||||
| Secil - Companhia Geral Cal e Cimento, S.A. | - | 66,723 | - | 19,049 |
| Secil Britas, S.A. | - | 72,205 | - | 126,329 |
| CMP ‐ Cimentos Maceira e Pataias, S.A. | - | - | - | 9,659 |
| Unibetão, S.A. | - | 18,463 | - | - |
| Other related parties | ||||
| Hotel Ritz, S.A. | - | 828 | - | 1,727 |
| - | 2,196,640 | - | 156,764 |
Transactions with related parties
| 31-03-2023 | 31-03-2022 | |||
|---|---|---|---|---|
| Valores em Euros | Compras de bens e serviços |
(Gastos)/ Rendimentos financeiros |
Compras de bens e serviços |
(Gastos)/ Rendimentos financeiros |
| Acionistas (Nota 5.2) | ||||
| Semapa - Soc. de Investimento e Gestão, SGPS, S.A. | 2.624.273 | - | 2.325.661 | - |
| 2.624.273 | - | 2.325.661 | - | |
| Outras subsidiárias do Grupo Semapa | ||||
| Secil - Companhia Geral Cal e Cimento, S.A. | 58.986 | - | 46.847 | - |
| Secil Britas, S.A. | 62.686 | - | 66.777 | - |
| CMP ‐ Cimentos Maceira e Pataias, S.A. | - | - | - | 403 |
| Unibetão, S.A. | 5.703 | - | 8.483 | - |
| 127.375 | - | 122.107 | 403 | |
| Outras entidades relacionadas | ||||
| Hotel Ritz, S.A. | 829 | - | 8.547 | - |
| 829 | - | 8.547 | - | |
| 2.752.476 | - | 2.456.315 | 403 |
On 1 February 2013, a contract to render administrative and management services was signed between Semapa - Sociedade de Investimentos e Gestão, SGPS, S.A. (currently owner of 69.97% of the Group´s share capital) and Navigator Group, establishing a remuneration system based in equal criteria for both parties in the continuous cooperation and assistance relationships, that meets the rules applicable to commercial relationships between Group companies.
The operations performed with the Secil Group arise from normal market operations.
In the identification of related parties for the purpose of financial reporting, the members of the Board of Directors and other Corporate Bodies were considered as related parties.
11. Explanation added for translation
These financial statements are a free translation of the financial statements originally issued in Portuguese. In the event of discrepancies, the Portuguese language version prevails.
BOARD OF DIRECTORS
Ricardo Miguel dos Santos Pacheco Pires Chairman of the Board of Directors
António José Pereira Redondo Chairman of the Executive Board
Adriano Augusto da Silva Silveira Executive Board Member
José Fernando Morais Carreira de Araújo Executive Board Member
Nuno Miguel Moreira de Araújo Santos Executive Board Member
João Paulo Araújo Oliveira Executive Board Member
João Paulo Cabete Gonçalves Lé Executive Board Member
Manuel Soares Ferreira Regalado Member
Maria Teresa Aliu Presas Member
Mariana Rita Antunes Marques dos Santos Member
Sandra Maria Soares Santos Member
Vítor Manuel Rocha Novais Gonçalves Member
Vítor Paulo Paranhos Ferreira Member