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Sonae SGPS
Quarterly Report • May 7, 2020
1901_10-q_2020-05-07_3ad5ec73-328b-4094-83fb-aa7ca4471493.pdf
Quarterly Report
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Registered Office: Lugar do Espido, Via Norte, Maia, Portugal Registered at the Commercial Registry of Maia Registry and Tax Identification No. 506 035 034 Share Capital: € 253 319 797.26 Publicly Traded Company
ACTIVITY REPORT AND CONSOLIDATED FINANCIAL STATEMENTS
JANUARY – MARCH 2020
ACCORDING TO INTERNATIONAL ACCOUNTING STANDARD 34 – INTERIM FINANCIAL REPORT
ACTIVITY REPORT
MESSAGE FROM THE CHAIRMAN
In 1Q20 Sonae Indústria's fully owned businesses delivered improved EBITDA results when compared to both 4Q19 and 1Q19. Despite this EBITDA improvement and Sonae Arauco delivering again a small but positive net result in the quarter, Sonae Indústria's net results were 1.2 million euros negative in 1Q20.
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Considering our 50% share of Sonae Arauco's figures, LTM Proportional Recurrent EBITDA reached 62.0 million euros and the proportional senior leverage ratio was of 4.9x.
The results in 1Q20 were marked by the weaker performance in March when we started witnessing a reduction in the level of customers' orders in some geographies and, later in the month, with activity being materially curtailed as a result of the government imposed lockdowns in several countries (including Canada, USA, South Africa and Spain) aimed at containing the COVID-19 outbreak and that led to the partial or full temporary shutdown of our plants in those regions.
During March and April, we have implemented significant measures to protect the health and safety of our people both at the plants and at our offices, and fortunately as at today the number of confirmed cases within our people is extremely low.
The human and social effects of the COVID-19 pandemic were significantly amplified in April and economic effects of the pandemic are now also being felt globally with deep implications in many of the regions where we operate including on employment levels, economic growth and public debt levels, raising significant social, political and economic challenges going forward.
Following the COVID-19 outbreak and as a result of market limitations or government impositions, we currently have many plants running at very low level of activity or stopped. The financial impact in the year will be very significant and we are working with our banks to accommodate this extraordinary situation. In these conditions, extending the subordinated bonds offer to the market as we had hoped to do, is unfortunately judged to be unviable.
We have taken measures at all levels of our businesses to mitigate the negative impacts of the COVID-19 crisis including adapting our production levels, cost structures and investment plans in order to protect liquidity and safeguard the future.
We are also preparing the ground for the gradual ramp up of operations in order to respond as effectively as possible to changes in circumstances be they the easing of pandemic containment restrictions and / or the increasing levels of customer orders.
The outlook for Sonae Indústria in 2020 will be largely determined by the duration of the pandemic, the success of government policies to fight the virus while at the same time protecting the economy and the effectiveness of our actions to mitigate the negative impacts on our businesses and prepare for the easing of government measures as the pandemic is hopefully gradually controlled.
Our teams will keep working relentlessly to cope with this new reality and to allow Sonae Indústria to overcome this enormous challenge.
Paulo Azevedo Chairman, Sonae Indústria
1. SONAE INDÚSTRIA RESULTS
1.1 PROPORTIONAL RESULTS
SUMMARY OF 1Q20 RESULTS
Due to the fact that one of Sonae Indústria's main assets (its 50% shareholding in Sonae Arauco) is accounted by the Equity method, this section 1.1. provides Proportional Indicators which consider the full results of our wholly owned businesses and the proportional consolidation of the 50% contribution from Sonae Arauco.
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PROPORTIONAL FINANCIAL INDICATORS
| 1Q19 | 1Q20 | |
|---|---|---|
| Proportional Turnover | 159 | 146 |
| Proportional Rec. EBITDA | 17 | 15 |
| Proportional Rec. EBITDA margin | 10.7% | 10.3% |
| LTM 1Q19 | LTM 1Q20 | |
| Proportional LTM Turnover | 619 | 593 |
| Proportional LTM Rec. EBITDA | 72 | 62 |
| Proportional LTM Rec. EBITDA margin | 11.6% | 10.5% |
| LEVERAGE | ||
| Proportional Senior Net Debt (excluding Subordinated Bonds) | 329 | 303 |
| Proportional Senior Leverage (Senior Net Debt / LTM Rec. EBITDA) | 4.6 x | 4.9 x |
Proportional Turnover in 1Q20 was circa 12.9 million euros lower than in the same period of last year. This evolution was driven by a lower contribution from Sonae Arauco (-10.4 million euros), affected by a reduction in total sales volumes and average selling prices, and from Sonae Indústria (-2.5 million euros), with lower sales volumes in our North American business. In the month of March, Turnover started to be affected in some countries by the Covid-19 pandemic. When compared to 4Q19, Proportional Turnover improved 2.6 million euros driven by Sonae Arauco.
Proportional Recurrent EBITDA in 1Q20 reached circa 15.1 milion euros, 1.9 million euros lower than in 1Q19, driven by a lower contribution from Sonae Arauco (-2.5 million euros), explained by difficult business conditions, which more than offset the positive contribution of our fully owned businesses (circa +0.6 million euros). However, when compared to 4Q19, Proportional Recurrent EBITDA improved 2.4 million euros driven both by Sonae Arauco and our fully owned businesses.
In the first quarter of the year, Senior Net Debt to Recurrent EBITDA (proportional) stood at circa 4.9x, which compares with 4.6x in 1Q19. Proportional Senior Net Debt excludes Subordinated Bonds (50 million euros issued during 4Q19).
ACTIVITY REPORT – 1 stQUARTER 2020
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1.2 CONSOLIDATED RESULTS
SUMMARY OF 1Q20 RESULTS
* Quarterly information unaudited.
0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0%
Consolidated Turnover for the first quarter of the year reached circa 54.3 million euros, a reduction of 4.4% vs. same period of last year (-2.5 million euros), driven by our North American business with lower sales volumes. When compared to the previous quarter, consolidated turnover decreased by 0.9 million euros, mostly driven by the unfavourable exchange rate evolution of the Canadian dollar vs. the EUR, but also by some reduction in the average selling prices in our North American business.
Variable costs per cubic meter decreased both in local currency and in euros, when compared to the same period of the last year, mainly due to a decrease in chemical and thermal energy costs (1Q19 had been affected by the extreme cold weather in Canada). When compared to 4Q19, variable costs per cubic meter increased in local currency, mainly explained by higher costs of wood in North America, but decreased in euros affected by the depreciation of the Canadian dollar.
Recurrent EBITDA for the first quarter of the year reached 5.3 million euros, an increase of circa 0.6 million euros vs. 1Q19, mainly explained by a decrease in variable costs as referred above. When compared to 4Q19, Recurrent EBITDA increased circa 0.3 million euros. The 1Q20 Recurrent EBITDA margin reached 9.8%, up by 1.4 p.p. vs. 1Q19 and by circa 0.7 p.p. vs. 4Q19.
ACTIVITY REPORT – 1 stQUARTER 2020
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Consolidated EBITDA for the quarter reached 5.3 million euros, an increase of 0.7 million euros vs. the same period of last year and of circa 0.4 million euros vs. the previous quarter, mainly due to the aforementioned evolution in Recurrent EBITDA.
CONSOLIDATED INCOME STATEMENT
MILLION EUROS
| 1Q19 | 4Q19 | 1Q20 | 1Q20/ | 1Q20/ |
|---|---|---|---|---|
| Unaudited | Unaudited | Unaudited | 1Q19 | 4Q19 |
| 56.8 | 55.2 | 54.3 | (4.4%) | (1.6%) |
| 0.9 | 1.4 | 2.0 | 131.7% | 45.3% |
| 4.6 | 4.9 | 5.3 | 15.8% | 8.1% |
| (0.2) | (0.1) | (0.0) | 92.2% | 88.3% |
| 4.8 | 5.1 | 5.3 | 11.7% | 5.8% |
| 8.4% | 9.2% | 9.8% | 1.4 pp | 0.7 pp |
| (3.9) | (4.0) | (4.0) | (2.5%) | (0.6%) |
| 0.0 | (5.4) | 0.0 | (100.0%) | 100.0% |
| 0.7 | (4.5) | 1.3 | 87.5% | 129.4% |
| (2.9) | (2.8) | (3.2) | (11.3%) | (15.1%) |
| (2.4) | (2.4) | (2.6) | (7.5%) | (11.4%) |
| (0.1) | (0.0) | (0.2) | - | - |
| (0.4) | (0.4) | (0.3) | 6.3% | 12.3% |
| 3.4 | (1.2) | 0.6 | (81.7%) | - |
| 0.0 | (0.3) | (0.1) | - | 81.3% |
| 1.2 | (8.7) | (1.3) | - | 85.0% |
| (0.0) | (0.4) | 0.1 | - | 119.5% |
| (0.5) | 0.3 | 0.1 | 117.5% | (72.2%) |
| 0.4 | (0.7) | 0.0 | (100.0%) | 100.0% |
| 1.2 | (9.2) | (1.2) | - | 86.6% |
Total fixed costs for the first quarter of the year represented circa 18.6% of turnover, a decrease of 0.6 p.p. vs. 4Q19, driven by a reduction in overhead expenses.
The number of employees of Sonae Indústria was 513 FTE's, at the end of March 2020, excluding Sonae Arauco and trainees, which compares with 506 and 499 FTE's at the end of December 2019 and March 2019, respectively.
Depreciation and amortization charges in 1Q20 were 4.0 million euros, an increase of circa 0.1 million euros vs. 1Q19 and in line with the values booked for 4Q19.
Net financial charges during 1Q20 were circa 3.2 million euros, an increase of 0.3 million euros vs. 1Q19 mainly due to a circa 0.2 million euros increase in net interest and other charges (partially explained by an increase in the debt in Canada) and to a 0.2 million euros increase in the net negative effect of exchange differences.
Gains and losses in Joint-Ventures – Net Results refers to 50% of the net results of Sonae Arauco in the period. For the first quarter of the year, this totaled 0.6 million euros, a reduction of circa 2.8 million euros when compared to 1Q19, with 2.5 million euros lower Recurrent EBITDA (considering the 50% contribution). Compared to 4Q19 (when circa 3.9 million euros of Provisions, considering the 50% contribution, were booked in relation with the decision to close industrial activities at Horn site), Gains and losses in Joint-Ventures – Net Results increased 1.8 million euros.
Current tax charges were positive of circa 0.1 million euros for the first quarter of the year, an improvement of 0.5 million euros when compared to 1Q19, mainly driven by our North American business.
indirectly in Sonae Arauco).
ACTIVITY REPORT – 1 stQUARTER 2020
…………………………………………………………………………………………………………………………………………………………… Net results in 1Q20 were negative of 1.2 million euros, which compares with positive net results of circa 1.2 million euros in 1Q19. The evolution of the net results when compared to the same period of the previous year is essentially explained by the aforementioned reduction in Gains and losses in Joint-Ventures - Net Results and in Turnover. Net Results have improved when compared to 4Q19, mainly due to the fact that 4Q19 included one off charges of circa 9.2 million euros as previously reported (Provisions booked directly in Sonae Indústria and
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
MILLION EUROS
| 1Q19 | 2019 | 1Q20 | |
|---|---|---|---|
| Unaudited | Unaudited | ||
| Non current assets | 368.2 | 370.0 | 357.2 |
| Tangible assets | 145.7 | 153.6 | 144.4 |
| Investments in joint ventures | 216.2 | 209.1 | 205.1 |
| Deferred tax asset | 0.0 | 0.0 | 0.0 |
| Other non current assets | 6.3 | 7.3 | 7.8 |
| Current assets | 45.8 | 50.6 | 46.0 |
| Inventories | 18.1 | 22.0 | 20.6 |
| Trade debtors | 19.4 | 14.1 | 15.3 |
| Cash and cash equivalents | 2.2 | 7.1 | 3.7 |
| Other current assets | 6.2 | 7.5 | 6.4 |
| Non-current assets classified as available for sale | 0.0 | 0.1 | 0.1 |
| Total assets | 414.0 | 420.7 | 403.4 |
| Shareholders' Funds | 139.7 | 127.3 | 117.1 |
| Equity holders | 139.7 | 127.3 | 117.1 |
| Non-controlling interests | 0.0 | 0.0 | 0.0 |
| Liabilities | 274.2 | 293.4 | 286.3 |
| Subordinated bonds loan | 0.0 | 50.0 | 49.9 |
| Senior interest bearing debt | 214.1 | 166.0 | 166.8 |
| Non current | 193.8 | 157.6 | 159.7 |
| Current | 20.3 | 8.4 | 7.1 |
| Trade creditors | 24.2 | 26.0 | 20.1 |
| Other liabilities | 36.0 | 51.4 | 49.4 |
| Liabilities directly associated with non-current assets classified as available for sale |
0.0 | 0.0 | 0.0 |
| Total Shareholders'Funds and liabilities | 414.0 | 420.7 | 403.4 |
| Senior Net Debt | 211.9 | 158.9 | 163.1 |
| Total Net Debt | 211.9 | 208.9 | 213.0 |
| Working Capital | 13.2 | 10.0 | 15.7 |
Tangible assets of circa 144.4 million euros at the end of March 2020, a reduction of circa 9.3 million euros vs. December 2019, mainly due to the effect of the depreciation of the Canadian Dollar in the quarter of 8.8 million euros.
Investments in Joint-Ventures (50% shareholding in Sonae Arauco) reached 205.1 million euros, which represents a reduction of circa 4.0 million euros when compared to the book value of this investment at the end of 2019, due to the unfavorable exchange rate evolution of the South African Rand in the quarter of circa 4.7 million euros and despite the positive effect of our share of Sonae Arauco's results of 0.6 million euros.
Consolidated Working Capital reached 15.7 million euros, an increase of 5.7 million euros when compared to December 2019, explained by the decrease in trade creditors and the seasonal increase in trade debtors, which more than offset the reduction in inventories.
SONAE INDÚSTRIA, SGPS, S.A. ACTIVITY REPORT – 1 stQUARTER 2020
0.0
1.5
3.0
4.5
Senior Net Debt stood at circa 163.1 million euros at the end of March 2020, representing an increase of 4.1 million euros vs. 2019. Note: Senior Net Debt does not include the Subordinated Bonds1 issued during 4Q19 which are however included in Total Net Debt.
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Total Shareholders' Funds, at the end of March 2020, totaled 117.1 million euros, which represents a decrease of 10.2 million euros when compared to 2019, mainly explained by the negative impacts from the exchange rate evolution of the South African Rand and of the Canadian Dollar vs. the Euro of circa 4.7 million euros and 4.1 million euros, respectively, and from the net results in the quarter.
Additions to Gross Tangible Fixed Assets reached circa 3.7 million euros for the first quarter of the year, essentially investments in our North American business (3.5 million euros).
2. COVID-19
The Covid-19 outbreak and the related extraordinary containment measures imposed by the authorities in the several regions where Sonae Indústria conducts its business (namely Europe, North America and South Africa) are having a significant impact in Sonae Indústria operations which broadly started being felt in the second half of March.
The health and safety of our people is a foremost concern in all actions we take and since March Sonae Indústria implemented important measures to protect the health of our people at the workplace (plants and offices) under the context of the pandemic.
As for our businesses, they have been particularly affected by the containment measures imposed by local governments with the aim of mitigating the Covid-19 pandemic, but also by the reduction in customer orders as a result of the lower market demand in most countries. Operations may also be conditioned by the potential disruption of the supply of materials and services.
The following major impacts of Covid-19 in industrial operations should be highlighted:
- North American business: partial shutdown since last days of March due to government lockdown restrictions (not only in Quebec but also in other Canadian provinces and in the USA). Accordingly, we have been operating the largest of the two particleboard lines and two or three of the five MFC surfacing lines. The lockdown restrictions in Quebec started to be gradually eased on 20 April (residential construction) and all construction and manufacturing may restart (with restrictions) on 11 May. This is also occurring in other regions of Canada and in the US, although there is a considerable level of uncertainty in relation to the pace of the process and to the economic situation.
- Laminates and Components: the Laminates plants in Maia and Horn kept operating during the months of March and April. The Components plant in Vilela has operated during the month of March and part of April until a confirmed Covid-19 case led to the temporary stoppage of the plant during two weeks. In
1 Subordinated Bonds of 50 million euros (with book value, including amortised cost effect, of 49.9 million euros).
SONAE INDÚSTRIA, SGPS, S.A. ACTIVITY REPORT – 1 stQUARTER 2020
Maia a reduction in activity (partial layoff) was implemented during May. Horn plant will be also be operating at a lower level in May.
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Sonae Arauco: industrial sites in Spain and South Africa were stopped due to strict temporary lockdown measures implemented by the respective national authorities to fight the Covid-19 crisis. The reduction in demand from several customer segments in all regions caused by this crisis, also led to having to curtail production in other sites and activity in the offices. When possible layoff or short work schemes were implemented, according to the countries' legislations, to minimize fixed costs and preserve available cash and financing facilities. Sonae Arauco continues to monitor demand in the markets and will adjust production accordingly.
As referred above, important actions are being taken at all levels of all businesses including adjusting our cost structures and investment plans in order to protect liquidity and safeguard the future. Whenever possible and adequate we are making use of governments support measures that were created to partially offset the negative effects of the pandemic in the businesses.
Actions are also being taken to prepare for the gradual restart of temporarily closed operations as soon as a recovery is possible.
In relation to the effects of Covid-19 on liquidity and financing, it should be noted that due to the refinancings concluded between December 2019 and March 2020, Sonae Indústria scheduled debt repayments from 1 April to 31 December 2020 were reduced to approx. 6 million euros. Taking into consideration the significant impacts of Covid-19 on our businesses, close communication is being kept with Sonae Indústria's bank creditors in Europe and Canada in order to seek their support as we go through the crisis.
Due to the uncertainty, not only on the Covid-19 pandemic intensity and duration but also on its impact in our operations and markets, Sonae Indústria cannot estimate the impact on the company's results, but we envisage that it will be significant over the next quarters, namely due to the direct impact in profitability deriving from the low activity levels: the material reduction of turnover is only partially compensated by a reduction in costs (proportional reduction of fixed and semi fixed costs is particularly constrained).
6 May 2020 The Board of Directors
Duarte Paulo Teixeira de Azevedo
Carlos António Rocha Moreira da Silva
Albrecht Olof Lothar Ehlers
Berta Maria Nogueira Dias da Cunha
Isabel Sofia Bragança Simões de Barros
Javier Vega de Seoane Azpilicueta
José Joaquim Romão de Sousa
George Christopher Lawrie
Louis Brassard
GLOSSARY OF TERMS
| CAPEX | Investment in Tangible Fixed Assets |
|---|---|
| EBITDA | Earnings Before Interests and Taxes + Depreciations and Amortizations + (Provisions and impairment losses - Impairment losses in trade receivables + Reversion of impairment losses in trade receivables) |
| FTEs | Full Time Equivalent; the equivalent of one person working full time, according to the working schedule of each country where Sonae Indústria has operations |
| Fixed Costs | Overheads + Personnel costs (internal and external); management accounts concept |
| Gross Debt | Bank loans + Subordinated bonds + Other bonds + Obligations under finance leases + other loans + Loans from related parties |
| LTM | Last Twelve Months |
| Proportional Senior Leverage (unaudited) |
Proportional Senior Net Debt / Proportional LTM Recurrent EBITDA |
| Proportional Senior Net Debt (unandited) |
Proportional Senior Net Debt considers the full contribution of the Senior Net Debt of the wholly owned businesses and the proportional consolidation of the 50% contribution from Sonae Arauco Net Debt |
| Proportional: Turnover, Recurrent EBITDA (unaudited) |
Proportional Turnover and Proportional Recurrent EBITDA consider, in what regards to Turnover and Recurrent EBITDA, the full contribution of the wholly owned businesses and the proportional consolidation of the 50% contribution from Sonae Arauco. |
| Recurrent EBITDA | EBITDA excluding non-recurrent operational income / costs |
| Recurrent EBITDA margin | Recurrent EBITDA / Turnover |
| Senior Net Debt | Total Gross Debt - Subordinated Bonds - Cash and cash equivalents |
| Total Net Debt | Total Gross Debt - Cash and cash equivalents |
| Working Capital | Inventories + Trade Debtors – Trade Creditors |
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CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AT 31 MARCH 2020 AND 31 DECEMBER 2019
(Amounts expressed in Euros)
| ASSETS | 31.03.2020 Unaudited |
31.12.2019 | |
|---|---|---|---|
| NON-CURRENT ASSETS | |||
| Tangible fixed assets | 6 | 144 359 429 | 153 648 978 |
| Goodwill | 347 080 | 347 082 | |
| Intangible assets | 50 768 | 68 755 | |
| Investment properties | 5 436 511 | 5 499 237 | |
| Biological assets | 238 894 | 238 894 | |
| Investment in joint ventures | 4, 5 | 205 135 158 | 209 128 627 |
| Other investments Other non-current assets |
5 | 21 684 1 658 817 |
19 829 1 095 969 |
| Total non-current assets | 357 248 341 | 370 047 371 | |
| CURRENT ASSETS | |||
| Inventories | 20 574 515 | 21 961 930 | |
| Trade debtors | 15 285 103 | 14 079 419 | |
| Other current debtors | 7 | 1 192 214 | 1 054 515 |
| Current tax asset | 2 105 853 | 2 345 193 | |
| Other taxes and contributions | 1 489 254 | 1 783 339 | |
| Other current assets | 8 | 1 657 192 | 2 281 415 |
| Cash and cash equivalents | 9 | 3 742 933 46 047 064 |
7 059 662 50 565 473 |
| Total current assets | |||
| Non-current assets held for sale | 131 070 | 131 070 | |
| TOTAL ASSETS | 403 426 475 | 420 743 914 | |
| SHAREHOLDERS`FUNDS AND LIABILITIES | |||
| SHAREHOLDERS`FUNDS | |||
| Share capital | 253 319 797 | 253 319 797 | |
| Legal reserve | 1 807 489 | 1 807 489 | |
| Other reserves and accumulated earnings | (187 535 942) | (186 140 089) | |
| Accumulated other comprehensive income | 10 | 49 519 955 | 58 331 221 |
| Total shareholders' funds attributabble to equity holders of Sonae Indústria TOTAL SHAREHOLDERS`FUNDS |
117 111 299 117 111 299 |
127 318 418 127 318 418 |
|
| LIABILITIES | |||
| NON-CURRENT LIABILITIES | |||
| Subordinated bonds | 11 | 49 939 663 | 49 938 116 |
| Unsubordinated bonds | 11 | 15 436 441 | 7 951 240 |
| Bank loans - net of current portion | 11 | 141 270 855 | 146 393 538 |
| Lease creditors - net of current portion | 11 | 2 966 035 | 3 335 541 |
| Post-retirement liabilities | 904 548 | 904 548 | |
| Other non-current liabilities | 4 944 471 | 6 654 222 | |
| Deferred tax liability | 19 629 233 | 20 957 005 | |
| Provisions Total non-current liabilities |
7 137 752 242 228 998 |
7 137 752 243 271 962 |
|
| CURRENT LIABILITIES | |||
| Current portion of non-current bank loans | 11 | 1 192 099 | 5 755 509 |
| Current bank loans | 11 | 4 219 198 | 830 938 |
| Current portion of non-current lease creditors | 11 | 1 719 432 | 1 790 941 |
| Trade creditors | 20 122 486 | 26 026 430 | |
| Current tax liability | 29 812 | 29 812 | |
| Other taxes and contributions | 483 732 | 580 396 | |
| Other current liabilities | 13 003 063 | 11 823 152 | |
| Provisions Total current liabilities |
3 316 356 44 086 178 |
3 316 356 50 153 534 |
|
| TOTAL SHAREHOLDERS' FUNDS AND LIABILITIES | 403 426 475 | 420 743 914 |
The notes are an integral part of the consolidated financial statements.
The Board of Directors
CONSOLIDATED INCOME STATEMENT
FOR THE PERIODS ENDED 31 MARCH 2020 AND 31 MARCH 2019
(Amounts expressed in Euros)
| Notes | 31.03.2020 | 31.03.2019 | ||
|---|---|---|---|---|
| Unaudited | Unaudited | |||
| Sales | 14 | 53 905 913 | 56 371 052 | |
| Services rendered | 14 | 387 549 | 393 500 | |
| Other income and gains | 12, 14 | 2 031 467 | 876 621 | |
| Cost of sales | 14 | (30 082 506) | (32 464 971) | |
| Increase / (decrease) in production | 14 | ( 639 798) | ( 933 617) | |
| External supplies and services | 14 | (11 816 306) | (12 098 267) | |
| Staff expenses | 14 | (7 150 891) | (6 785 627) | |
| Depreciation and amortisation | (4 014 674) | (3 915 472) | ||
| Provisions and impairment losses (increase / reduction) | 14 | 3 510 | 14 722 | |
| Other expenses and losses | 13, 14 | (1 309 220) | ( 756 462) | |
| Operating profit / (loss) | 14 | 1 315 044 | 701 479 | |
| Financial income | 15 | 466 099 | 201 628 | |
| Financial expenses | 15 | (3 661 669) | (3 073 177) | |
| Gains and losses in joint ventures | 4 | 567 833 | 3 398 958 | |
| Net profit/(loss) before taxation | (1 312 694) | 1 228 888 | ||
| Taxation | 16 | 81 477 | ( 31 009) | |
| Consolidated net profit / (loss) for the period | (1 231 217) | 1 197 879 | ||
| Attributable to: | ||||
| Equity Holders of Sonae Industria | ||||
| Equity holders of Sonae Industria | (1 231 217) | 1 197 879 | ||
| Consolidated net profit/(loss) per share: | ||||
| Basic | (0.0271) | 0.0264 | ||
| Diluted | (0.0271) | 0.0264 |
The notes are an integral part of the consolidated financial statements.
O Conselho de Administração
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIODS ENDED 31 MARCH 2020 AND 31 MARCH 2019
(Amounts expressed in Euros)
| Notes | 31.03.2020 Unaudited |
31.03.2019 Unaudited |
|
|---|---|---|---|
| Consolidated net profit / (loss) for the period (a) | (1 231 217) | 1 197 879 | |
| Consolidated other comprehensive income | |||
| Items that may be subsequently transferred to profit or loss | |||
| Change in currency translation reserve | 10 | (4 142 958) | 2 693 606 |
| Currency translation reserve reclassified to profit or loss in the period | 10 | ( 1 680) | |
| Group share of other comprehensive income of joint ventures | 10 | (4 666 628) | 324 595 |
| Consolidated other comprehensive income for the period, net of tax (b) | (8 811 266) | 3 018 201 | |
| Total consolidated comprehensive income for the period (a) + (b) | (10 042 483) | 4 216 080 | |
| Total consolidated comprehensive income attributable to: | |||
| Equity holders of Sonae Industria | (10 042 483) | 4 216 080 |
The notes are an integral part of the consolidated financial statements
The board of directors
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS` FUNDS AT 31 MARCH 2020 AND 31 MARCH 2019
(Amounts expressed in Euros)
| Share capital | Legal reserve |
Other Reserves and accumulated earnings |
Accumulated other comprehensive income |
Total shareholders` funds attributable to the equity holders of Sonae Indústria |
Total shareholders' funds |
||
|---|---|---|---|---|---|---|---|
| Notes | 10 | ||||||
| Balance as at 1 January 2020 | 253 319 797 | 1 807 489 | (186 140 089) | 58 331 221 | 127 318 418 | 127 318 418 | |
| Total consolidated comprehensive income for the period Consolidated net profit/(loss) for the period Consolidated other comprehensive income for the period |
(1 231 217) | (8 811 266) | (1 231 217) (8 811 266) |
(1 231 217) (8 811 266) |
|||
| Total | (1 231 217) | (8 811 266) | (10 042 483) | (10 042 483) | |||
| Others | ( 164 636) | ( 164 636) | ( 164 636) | ||||
| Balance as at 31 March 2020 - Unaudited | 253 319 797 | 1 807 489 | (187 535 942) | 49 519 955 | 117 111 299 | 117 111 299 |
| Share capital | Legal reserve |
Other Reserves and accumulated earnings |
Accumulated other comprehensive income |
Total shareholders` funds attributable to the equity holders of Sonae Indústria |
Total shareholders' funds |
|
|---|---|---|---|---|---|---|
| Notes | 10 | |||||
| Balance as at 1 January 2019 | 253 319 797 | 1 807 489 | (172 733 307) | 53 139 528 | 135 533 507 | 135 533 507 |
| Total consolidated comprehensive income for the period Consolidated net profit/(loss) for the period Consolidated other comprehensive income for the period |
1 197 879 | 3 018 201 | 1 197 879 3 018 201 |
1 197 879 3 018 201 |
||
| Total | 1 197 879 | 3 018 201 | 4 216 080 | 4 216 080 | ||
| Others | ( 23 077) | 23 077 | ||||
| Balance as at 31 March 2019 - Unaudited | 253 319 797 | 1 807 489 | (171 558 505) | 56 180 806 | 139 749 587 | 139 749 587 |
The notes are an integral part of the consolidated financial statements.
The board of directors
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIODS ENDED 31 MARCH 2020 AND 31 MARCH 2019
(Amounts expressed in Euros)
| Notes | 31.03.2020 Unaudited |
31.03.2019 Unaudited |
|
|---|---|---|---|
| OPERATING ACTIVITIES | |||
| Receipts from trade debtors | 49 936 292 | 47 417 129 | |
| Payments to trade creditors | ( 46 276 924) | ( 42 022 449) | |
| Payments to staff | ( 6 378 557) | ( 6 254 039) | |
| Net cash flow from operations | ( 2 719 189) | ( 859 359) | |
| Payment / (receipt) of corporate income tax | 248 886 | ( 479 507) | |
| Other receipts / (payments) relating to operating activities | ( 302 038) | ( 361 978) | |
| Net cash flow from operating activities (1) | ( 2 772 341) | ( 1 700 844) | |
| INVESTMENT ACTIVITIES | |||
| Cash receipts arising from: Tangible fixed assets and intangible assets |
|||
| Investment subventions | 37 972 | 163 | |
| 1 187 331 1 225 303 |
163 | ||
| Cash Payments arising from: | |||
| Investments | ( 1 855) | ( 1 676) | |
| Tangible fixed assets and intangible assets | ( 4 046 888) | ( 4 153 129) | |
| ( 4 048 743) | ( 4 154 805) | ||
| Net cash used in investment activities (2) | ( 2 823 440) | ( 4 154 642) | |
| FINANCING ACTIVITIES | |||
| Cash receipts arising from: | |||
| Interest and similar income | 9 908 | 11 630 | |
| Unsubordinated bonds | 7 500 000 | ||
| Bank loans | 279 850 980 | 338 704 450 | |
| 287 360 888 | 338 716 080 | ||
| Cash Payments arising from: | |||
| Interest and similar charges Loans obtained |
( 1 435 534) | ( 2 135 897) ( 343 254 117) |
|
| Leases - repayment of principal | ( 285 100 662) ( 510 997) |
( 511 888) | |
| ( 287 047 193) | ( 345 901 902) | ||
| Net cash used in financing activities (3) | 313 695 | ( 7 185 822) | |
| Net increase/(decrease) in cash and cash equivalents resulting from cash flows (4) = (1) + (2) + (3) | ( 5 282 086) | ( 13 041 308) | |
| Cash and cash equivalents at the beginning of the period (a) | 9 | 6 228 724 | 10 487 918 |
| Cash and cash equivalents at the end of the period (b) | 9 | 804 395 | ( 2 430 722) |
| Net increase/(decrease) in cash and cash equivalents (b) - (a) | ( 5 424 329) | ( 12 918 640) | |
| Effect of foreign exchange rate in cash and cash equivalents (c) | ( 142 243) | 122 668 | |
| Net increase/(decrease) in cash and cash equivalents resulting from cash flows (b) - (a) - (c) | ( 5 282 086) | ( 13 041 308) |
The notes are an integral part of the consolidated financial statements.
The board of directors
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE-MONTH PERIOD ENDED 31 MARCH 2020 (Amounts expressed in euros)
1. INTRODUCTION
SONAE INDÚSTRIA, SGPS, SA has its head-office at Lugar do Espido, Via Norte, 4470-177 Maia, Portugal.
The shares of the company are listed on Euronext Lisbon.
Consolidated financial statements for the three-month periods ended 31 March 2020 and 31 March 2019 were not subject to a limited revision carried out by the company's statutory external auditor.
2. ACCOUNTING POLICIES
This set of consolidated financial statement has been prepared on the basis of the accounting policies that were disclosed on the notes to the consolidated financial statements for fiscal year 2019.
2.1. Basis of Preparation
These consolidated financial statements were prepared in accordance with International Accounting Standard 34 – Interim Financial Reporting. As such, they do not include all the information which should be included in annual consolidated financial statements and should therefore be read in connection with the consolidated financial statements for fiscal year 2019.
2.2. Changes to accounting standards
These consolidated financial statements were prepared on the basis of International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) and with Interpretations issued by the IFRS Interpretations Committee (IFRS IC), effective from 1 January 2020 and endorsed by the European Union.
2.2.1. In the period ended 31 March 2020, the following standards and interpretations, which had been endorsed by the European Union, became effective:
Amendments to References to the Conceptual Framework in IFRS Standards (effective for annual periods beginning on or after 1 January 2020). This amendment contains changes to several standards, whose references to the Conceptual Framework have been updated.
IAS 1 and IAS 8 (amendment), Definition of Material (effective for annual periods beginning on or after 1 January 2020). Under this amendment, information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the user of financial statements make on the basis of those financial statements.
IFRS 9, IAS 39 and IFRS 7 (amendments), Interest rate benchmark reform (effective 1 January 2020).
The application of these amendments to the standards from 1 January 2020 did not have significant effects on these consolidated financial statements.
2.2.2. At 31 March 2020, the following standards, effective 1 January 2020 or later, had been issued by IASB but still had not been endorsed by the European Union:
IAS 1 (amendment), Presentation of Financial Statements (effective for annual periods beginning on or after 1 January 2022). This amendment is still subject to endorsement by the European Union. This amendment clarifies certain aspects of classification of liabilities as current or noncurrent, namely, that this classification should be based on rights that are in existence at the end of the reporting period, that it should not be affected by expectations about whether an entity will exercise its rights to defer settlement of a liability and it makes clear that settlement refers to the transfer to the counterparty of cash, equity instruments and other assets or services;
IFRS 3 (amendment), Business Combinations (effective for annual periods beginning on or after 1 January 2020). This amendment is still subject to endorsement by the European Union. This amendment clarifies that to be considered a business combination, an acquired set of activities and assets must include, at minimum, an input and a substantive process that together significantly contribute to the ability to create outputs;
IFRS 17 (new), Insurance contracts (effective for annual periods beginning 1 January 2021). This standard is still subject to endorsement by the European Union. This standard will revoke IFRS 4 – Insurance contracts and applies to all entities issuing insurance contracts, reinsurance contracts and investment contracts with discretionary participation characteristics. IFRS 17 is based on the current measurement of technical liabilities at each reporting date. The current measurement can be based on a complete "building block approach" or "premium allocation approach". The recognition of the technical margin is different depending on whether it is positive or negative. IFRS 17 is of retrospective application;
The Company does not estimate any significant effect to arise from the application of these standards.
2.3. Translation of financial statements of foreign companies
Exchange rates used for translating into euros the financial statements of subsidiaries whose functional currency is not the euro are listed below:
| 31.03.2020 | 31.12.2019 | 31.03.2019 | |||||
|---|---|---|---|---|---|---|---|
| Closing | Average | Closing | Average | Closing | Average | ||
| rate | rate | rate | rate | rate | rate | ||
| Great Britain Pound | 0.8864 | 0.8614 | 0.8508 | 0.8768 | 0.8583 | 0.8723 | |
| South African Rand | 19.6078 | 16.8719 | 15.7778 | 16.1551 | 16.2655 | 15.9134 | |
| Canadian Dollar | 1.5617 | 1.4804 | 1.4598 | 1.4852 | 1.5000 | 1.5101 | |
| American Dollar | 1.0956 | 1.1024 | 1.1234 | 1.1193 | 1.1235 | 1.1357 | |
Source: Bloomberg
3. COMPANIES INCLUDED IN CONSOLIDATION PERIMETER
Group companies included in the consolidated financial statements, their head offices and percentage of capital held by the Group as at 31 March 2020, 31 December 2019 and 31 March 2019 are as follows:
| PERCENTAGE OF CAPITAL HELD | ||||||||
|---|---|---|---|---|---|---|---|---|
| COMPANY | HEAD OFFICE | 31.03.2020 | 31.12.2019 | 31.03.2019 | TERMS FOR INCLUSION |
|||
| Dire ct | Total | Direct | Total | Direct | Total | |||
| Frases e Frações - Imobiliária e Serviços, SA | Maia (Portugal) | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | a) |
| Glunz UK Holdings, Ltd. | Live rpool (United Kingdom) |
100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | a) |
| Glunz UkA GmbH | Meppen (Ge rmany) | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | a) |
| Isoroy, SAS | La Ga renne-Colombes (France) |
100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | a) |
| Maiequipa - Gestão Florestal, SA | Maia (Portugal) | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | a) |
| Megantic B.V. | Amste rdam (The Netherlands) |
100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | a) |
| Movelpartes - Comp. pa ra a Indústria do Mobiliário, SA |
Paredes (Portugal) | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | a) |
| Novode cor (Pty) Ltd | W oodmead (South Africa) |
100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | a) |
| Parcelas e Narrativas - Imobiliária , SA | Maia (Portugal) | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | a) |
| 1) Polifa ce North America | Lac-Mégantic (Canada) | - | - | 100.00% | 100.00% | 100.00% | 100.00% | a) |
| Sonae Indústria - Management Services, S. A. | Maia (Portugal) | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | a) |
| Sonae Indústria - Soc. Ge stora de Participações Sociais, SA |
Maia (Portugal) | Parent | Parent | Parent | Parent | Parent | Pa rent | Parent |
| Sonae Indústria de Revestimentos, SA | Maia (Portugal) | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | a) |
| Tafisa Canada Inc | Lac-Mégantic (Canada) | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | a) |
| Tafisa France S.A.S. | La Ga renne-Colombes (France) |
100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | a) |
- a) Majority of voting rights;
- 1) Company liquidated in January 2020.
The liquidation of subsidiary Poliface North America did not have any significant effects on these consolidated financial statements.
4. JOINT VENTURES
Joint ventures, their head offices, percentage of share capital held on 31 March 2020, 31 December 2019 and 31 March 2019 are as follows:
| PERCENTAGE OF CAPITAL HELD | TERMS FOR | |||||||
|---|---|---|---|---|---|---|---|---|
| COMPANY | HEAD OFFICE | 31.03.2020 | 31.12.2019 | 31.03.2019 | INCLUSION | |||
| Direct | Total | Direct | Total | Direct | Total | |||
| Sonae Arauco, S.A. | Madrid (Spain) | 50.00% | 50.00% | 50.00% | 50.00% | 50.00% 50.00% | ||
| Agepan Eiweiler Management, GmbH | Eiw eiler (Germany) | 100.00% | 50.00% | 100.00% | 50.00% | 100.00% 50.00% | a) | |
| Agloma Investimentos, SGPS, S. A. | Maia (Portugal) | 100.00% | 50.00% | 100.00% | 50.00% | 100.00% 50.00% | a) | |
| Aserraderos de Cuellar, S.A. | Madrid (Spain) | 100.00% | 50.00% | 100.00% | 50.00% | 100.00% 50.00% | a) | |
| Ecociclo, Energia e Ambiente, S. A. | Maia (Portugal) | 100.00% | 50.00% | 100.00% | 50.00% | 100.00% 50.00% | a) | |
| Euroresinas - Indústrias Quimicas, S.A. | Maia (Portugal) | 100.00% | 50.00% | 100.00% | 50.00% | 100.00% 50.00% | a) | |
| GHP Glunz Holzwerkstoffproduktions GmbH | Meppen (Germany) | 100.00% | 50.00% | 100.00% | 50.00% | 100.00% 50.00% | a) | |
| Imoplamac – Gestão de Imóveis, S. A. | Maia (Portugal) | 100.00% | 50.00% | 100.00% | 50.00% | 100.00% 50.00% | a) | |
| Impaper Europe GmbH | Meppen (Germany) | 100.00% | 50.00% | 100.00% | 50.00% | 100.00% 50.00% | a) | |
| Laminate Park GmbH & Co. KG | Eiw eiler (Germany) | 50.00% | 25.00% | 50.00% | 25.00% | 50.00% 25.00% | b) | |
| Somit – Imobiliária, S.A. | Mangualde (Portugal) | 100.00% | 50.00% | 100.00% | 50.00% | 100.00% 50.00% | a) | |
| Sonae Arauco Beeskow GmbH | Meppen (Germany) | 100.00% | 50.00% | 100.00% | 50.00% | 100.00% 50.00% | a) | |
| Sonae Arauco Deutschland GmbH | Meppen (Germany) | 100.00% | 50.00% | 100.00% | 50.00% | 100.00% 50.00% | a) | |
| Sonae Arauco Espana - Soluciones de Madera , S. L. | Madrid (Spain) | 100.00% | 50.00% | 100.00% | 50.00% | 100.00% 50.00% | a) | |
| Sonae Arauco France SAS | La Garenne-Colombes (France) |
100.00% | 50.00% | 100.00% | 50.00% | 100.00% 50.00% | a) | |
| Sonae Arauco Maroc SARL | Casablanca (Morocco) | 100.00% | 50.00% | 100.00% | 50.00% | 100.00% 50.00% | a) | |
| Sonae Arauco Netherlands B. V. | Woerden (The Netherlands) |
100.00% | 50.00% | 100.00% | 50.00% | 100.00% 50.00% | a) | |
| Sonae Arauco Portugal, S.A. | Mangualde (Portugal) | 100.00% | 50.00% | 100.00% | 50.00% | 100.00% 50.00% | a) | |
| Sonae Arauco South Africa (Pty) Ltd. | Woodmead (South Africa) |
100.00% | 50.00% | 100.00% | 50.00% | 100.00% 50.00% | a) | |
| Sonae Arauco Suisse, S.A. | Tavannes (Switzerland) | 100.00% | 50.00% | 100.00% | 50.00% | 100.00% 50.00% | a) | |
| Sonae Arauco (UK), Ltd. | Liverpool (United Kingdom) |
100.00% | 50.00% | 100.00% | 50.00% | 100.00% 50.00% | a) | |
| Taiber, Tableros Aglomerados Ibéricos, S.L. | Madrid (Spain) | 100.00% | 50.00% | 100.00% | 50.00% | 100.00% 50.00% | a) | |
| Tecnologias del Medio Ambiente, S.A. | Madrid (Spain) | 100.00% | 50.00% | 100.00% | 50.00% | 100.00% 50.00% | a) | |
| Tecmasa . Reciclados de Andalucia, S. L. | Madrid (Spain) | 50.00% | 25.00% | 50.00% | 25.00% | 50.00% 25.00% | b) | |
| Tool, GmbH | Meppen (Germany) | 100.00% | 50.00% | 100.00% | 50.00% | 100.00% 50.00% | a) |
a) Company included in the consolidation perimeter of Sonae Arauco, S. A.;
b) Company whose investment is measured using equity method in the consolidated financial statement of Sonae Arauco, S. A..
Net assets and net profit/loss for these jointly-controlled companies, whose 50% share was recognized on these consolidated financial statements using equity method, are detailed as follows:
| Sonae Arauco - Consolidated | ||||
|---|---|---|---|---|
| 31.03.2020 | 31.12.2019 | |||
| Unaudited | ||||
| Non-current assets | 564 486 702 | 568 458 085 | ||
| Current assets (without cash and cash equivalents) | 198 831 423 | 179 847 374 | ||
| Cash and cash equivalents | 24 373 967 | 12 232 705 | ||
| Non-current financial liabilities | 258 636 478 | 247 326 201 | ||
| Other non-current liabilities | 75 471 967 | 78 644 839 | ||
| Current financial liabilities | 46 059 231 | 12 990 883 | ||
| Other current liabilities | 166 806 857 | 172 981 116 |
| Sonae Arauco - Consolidated | |||
|---|---|---|---|
| 31.03.2020 Unaudited |
31.03.2019 Unaudited |
||
| Operating revenues Operating expenses (without Depreciation and amortization) Depreciation and amortization |
195 202 923 (176 646 446) (12 078 266) |
216 502 870 (191 807 524) (12 111 269) |
|
| Interest expense Taxation |
(1 799 192) (1 463 203) |
(1 501 345) (2 042 204) |
|
| Net profit/(loss) from continuing operations (a) | 1 245 036 | 6 797 916 | |
| Adjustments to the Group's accounting policies (b) | ( 109 372) | ||
| Net profit/(loss) from continuing operations - adjusted (a) + (b) | 1 135 665 | 6 797 916 | |
| Group's share in net profit/(loss) [(a) + (b)] x 0.5 | 567 833 | 3 398 958 | |
| Other comprehensive income (c) | (9 333 256) | 649 190 | |
| Adjustments to the Group's accounting policies (d) | |||
| Other comprehensive income - adjusted (c) + (d) | (9 333 256) | 649 190 | |
| Group's share in other comprehensive Income (c) x 0.5 | (4 666 628) | 324 595 |
Adjustments to the Group's accounting policies:
These adjustments are carried out whenever net profit/(loss) from continuous operations and other comprehensive income of joint ventures have underlying accounting policies which are different from the ones used by Sonae Indústria. It is the case of land and buildings, which are recognized for their acquisition cost by joint ventures and are recognized for their revalued amounts by Sonae Indústria. These adjustments are done so as to make these accounting policies uniform.
5. INVESTMENTS
At 31 March 2020 and 31 December 2019, details of Investments, on the Consolidated Statement of Financial position, are as follows:
| 31.03.2020 | 31.12.2019 | |
|---|---|---|
| Investment in joint ventures | ||
| Opening balance | 209 128 627 | 212 459 264 |
| Effect of equity method | (3 993 469) | 2 656 092 |
| Dividends | (5 986 729) | |
| Closing balance | 205 135 158 | 209 128 627 |
| 31.03.2020 | 31.12.2019 | |
| Other investments | ||
| Opening balance | 145 244 | 137 941 |
| Acquisition | 1 855 | 7 303 |
| Closing balance | 147 099 | 145 244 |
| Accumulated impairment losses | 125 415 | 125 415 |
| Net other investments | 21 684 | 19 829 |
6. TANGIBLE FIXED ASSETS
At 31 March 2020 and 31 December 2019, movements in tangible fixed assets, accumulated depreciation and impairment losses were as follows:
| 31.03.2020 | 31.12.2019 | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Land and Buildings |
Plant and Machinery |
Vehicles | Tools | Fixtures and Fittings |
Other Tangible Fixed Assets |
Tangible Fixed Assets under construction |
Total tangible fixed assets |
Total tangible fixed assets |
|
| Gross cost | |||||||||
| Opening balance | 101 766 684 | 282 270 491 | 6 403 793 | 66 147 | 3 387 104 | 346 373 | 14 762 093 | 409 002 685 | 363 447 003 |
| Capital expenditure | 1 905 | 35 278 | 1 303 | 3 811 356 | 3 849 842 | 23 891 282 | |||
| Disposals | (1 259 255) | ( 24 793) | ( 26 597) | (1 310 645) | (6 013 677) | ||||
| Revaluation | 5 398 224 | ||||||||
| Transfers and reclassifications | 7 824 | 173 989 | 1 398 | 7 503 | 25 539 | ( 307 725) | ( 91 472) | ||
| Exchange rate effect | (5 317 322) | (16 858 825) | ( 391 619) | ( 131 480) | ( 330) | (1 130 552) | (23 830 128) | 22 279 853 | |
| Closing balance | 96 459 091 | 264 326 400 | 6 048 850 | 41 354 | 3 237 833 | 371 582 | 17 135 172 | 387 620 282 | 409 002 685 |
| Accumulated depreciation and impairment losses Opening balance |
43 435 125 | 205 603 594 | 3 084 807 | 65 819 | 2 920 536 | 243 826 | 255 353 707 | 227 742 359 | |
| Depreciations for the period | 740 913 | 2 767 364 | 381 625 | 164 | 38 223 | 8 933 | 3 937 222 | 15 629 431 | |
| Impairment losses for the period - through P/L | 5 389 | ||||||||
| Disposals | (1 257 512) | ( 24 793) | ( 24 716) | (1 307 021) | (4 370 968) | ||||
| Revaluation | 2 378 532 | ||||||||
| Transfers and reclassifications | 269 907 | 269 907 | |||||||
| Exchange rate effect | (2 374 043) | (12 314 587) | ( 197 827) | ( 106 219) | ( 286) | (14 992 962) | 13 968 964 | ||
| Closing balance | 41 801 995 | 195 068 766 | 3 268 605 | 41 190 | 2 827 824 | 252 473 | 243 260 853 | 255 353 707 | |
| Carrying amount | 54 657 096 | 69 257 634 | 2 780 245 | 164 | 410 009 | 119 109 | 17 135 172 | 144 359 429 | 153 648 978 |
Exchange rate effect refers to tangible fixed assets and related accumulated depreciation held in Canadian dollars.
At the closing date of these consolidated financial statements, mortgaged net tangible fixed assets amounted to EUR 129 801 707 (EUR 138 121 229 at 31
December 2019), as collateral for loans amounting to EUR 61 898 106 (EUR 60 291 056 at 31 December 2019).
Right-of-use assets utilized under lease contracts, which are included under Tangible fixed assets, on the Consolidated Statement of Financial Position, were detailed as follows:
| 31.12.2019 | |||||
|---|---|---|---|---|---|
| Land and Buildings |
Vehicles | Fixtures and Fittings |
Total tangible fixed assets |
Total tangible fixed assets |
|
| Gross cost | |||||
| Opening balance | 3 157 654 | 3 869 760 | 164 379 | 7 191 793 | 6 073 855 |
| Capital expenditure | 1 905 | 35 278 | 37 183 | 6 712 320 | |
| Disposals | ( 31 580) | ||||
| Transfers and reclassifications | (5 681 590) | ||||
| Exchange rate effect | ( 22 065) | ( 246 204) | ( 10 634) | ( 278 903) | 118 788 |
| Closing balance | 3 137 494 | 3 658 834 | 153 745 | 6 950 073 | 7 191 793 |
| Accumulated depreciation and | |||||
| impairment losses | |||||
| Opening balance | 701 087 | 1 336 497 | 46 065 | 2 083 649 | 1 235 088 |
| Depreciations for the period | 182 071 | 315 324 | 10 187 | 507 582 | 2 120 725 |
| Disposals | ( 19 603) | ||||
| Transfers and reclassifications | (1 300 927) | ||||
| Exchange rate effect | ( 14 521) | ( 100 002) | ( 3 444) | ( 117 967) | 48 366 |
| Closing balance | 868 637 | 1 551 819 | 52 808 | 2 473 264 | 2 083 649 |
| Carrying amount | 2 268 857 | 2 107 015 | 100 937 | 4 476 809 | 5 108 144 |
Exchange rate effect refers to tangible fixed assets and related accumulated depreciation held in Canadian dollars.
7. OTHER CURRENT DEBTORS
At 31 March 2020 and 31 December 2019, Other current debtors, on the Consolidated Statement of Financial Position, were detailed as follows:
| 31.03.2020 | 31.12.2019 | ||||
|---|---|---|---|---|---|
| Gross Value | Net Value | Net Value | |||
| Other debtors Related parties |
1 186 187 6 027 |
1 186 187 6 027 |
1 054 515 | 1 054 515 | |
| Financial Instruments | 1 192 214 | 1 192 214 | 1 054 515 | 1 054 515 | |
| Total | 1 192 214 | 1 192 214 | 1 054 515 | 1 054 515 |
8. OTHER CURRENT ASSETS
At 31 March 2020 and 31 December 2019, detail of Other current assets, on the Consolidated Statement of Financial Position, was as follows:
| 31.03.2020 | 31.12.2019 | ||||
|---|---|---|---|---|---|
| Gross Value | Net Value | Gross Value | Net Value | ||
| Derivatives instruments | 338 086 | 338 086 | |||
| Debtors from income accruals | 158 452 | 158 452 | 384 181 | 384 181 | |
| Financial Instruments | 496 538 | 496 538 | 384 181 | 384 181 | |
| Deferred expenses | 1 160 654 | 1 160 654 | 1 897 234 | 1 897 234 | |
| Assets out of scope of IFRS 9 | 1 160 654 | 1 160 654 | 1 897 234 | 1 897 234 | |
| Total | 1 657 192 | 1 657 192 | 2 281 415 | 2 281 415 |
9. CASH AND CASH EQUIVALENTS
At 31 March 2020 and 31 December 2019, detail of Cash and Cash Equivalents, on the Consolidated Statement of Financial Position, was as follows:
| 31.03.2020 | 31.12.2019 | |
|---|---|---|
| Cash at Hand | 6 053 | 6 439 |
| Bank Deposits and Other Treasury Applications | 3 736 880 | 7 053 223 |
| Cash and Cash Equivalents on the Consolidated Statement of Financial Position |
3 742 933 | 7 059 662 |
| Bank Overdrafts | 2 938 538 | 830 938 |
| Cash and Cash Equivalents on the Consolidated Statement of Cash Flows |
804 395 | 6 228 724 |
10. OTHER COMPREHENSIVE INCOME
Accumulated other comprehensive income on the Consolidated Statement of Financial Position, is detailed as follows:
| Accumulated other comprehensive income Atributable to the parent's shareholders |
|||||||
|---|---|---|---|---|---|---|---|
| Share of Other Comprehensive Income of Joint Ventures |
Income tax related to |
||||||
| Currency translation |
Revaluation Reserve |
Remeasurements on defined benefit plans |
Which may be subsequently transferred to profit or loss |
Which may not be subsequently transferred to profit or loss |
components of other comprehensive income |
Total | |
| Balance as at 1 January 2020 | 8 470 258 | 14 977 091 | ( 60 632) | 1 895 996 | 36 418 273 | (3 369 765) | 58 331 221 |
| Consolidated other comprehensive income for the period | (4 144 638) | (4 666 628) | (8 811 266) | ||||
| Balance as at 31 March 2020 | 4 325 620 | 14 977 091 | ( 60 632) | (2 770 632) | 36 418 273 | (3 369 765) | 49 519 955 |
| Accumulated other comprehensive income Atributable to the parent's shareholders |
|||||||
|---|---|---|---|---|---|---|---|
| Currency Revaluation translation Reserve |
Remeasurements | Share of Other Comprehensive Income of Joint Ventures |
Income tax related to components of other comprehensive income |
||||
| on defined benefit plans |
Which may be subsequently transferred to profit or loss |
Which may not be subsequently transferred to profit or loss |
Total | ||||
| Balance as at 1 January 2019 | 4 159 959 | 11 957 399 | ( 6 633) | 1 067 932 | 38 530 418 | (2 569 547) | 53 139 528 |
| Consolidated other comprehensive income for the period | 2 693 606 | 324 595 | 3 018 201 | ||||
| Others | 23 077 | 23 077 | |||||
| Balance as at 31 March 2019 | 6 876 642 | 11 957 399 | ( 6 633) | 1 392 527 | 38 530 418 | (2 569 547) | 56 180 806 |
11. LOANS
As at 31 March 2020 and 31 December 2019, Sonae Indústria had the following outstanding loans:
| 31.03.2020 | |||||||
|---|---|---|---|---|---|---|---|
| Amortized cost | Nominal value | ||||||
| Current | Non-current | Current | Non-current | ||||
| Subordinated bonds | 49 939 663 | 50 000 000 | |||||
| Unsubordinated bonds | 15 436 441 | 15 500 000 | |||||
| Current portion of non-current bank loans | 1 192 099 | 1 192 099 | |||||
| Bank loans | 4 219 198 | 141 270 855 | 4 219 198 | 142 244 979 | |||
| Obligations under leases | 1 719 432 | 2 966 035 | 1 719 432 | 2 966 035 | |||
| Gross debt | 7 130 729 | 209 612 994 | 7 130 729 | 210 711 014 | |||
| 31.12.2019 | ||||
|---|---|---|---|---|
| Amortized cost | Nominal value | |||
| Current | Non-current | Current | Non-current | |
| Subordinated bonds | 49 938 116 | 50 000 000 | ||
| Unsubordinated bonds | 7 951 240 | 8 000 000 | ||
| Current portion of non-current bank loans | 5 755 509 | 5 755 509 | ||
| Bank loans | 830 938 | 146 393 538 | 830 938 | 147 559 519 |
| Obligations under leases | 1 790 941 | 3 335 541 | 1 790 941 | 3 335 541 |
| Gross debt | 8 377 388 | 207 618 435 | 8 377 388 | 208 895 060 |
At 31 March 2020, loans can be detailed as follows:
a) Bonds:
| Company(ies) | Loan | Contract date | Maturity (with reference to 31.03.2020) |
Currency | Outstanding principal at 31.03.2020 (EUR) |
Outstanding principal at 31.12.2019 (EUR) |
|---|---|---|---|---|---|---|
| Sonae Indústria, SGPS, S.A. | 1) Subordinated bonds |
December 2019 | December 2029 | EUR | 50 000 000 | 50 000 000 |
| Sonae Indústria, SGPS, S.A. | 2) Unsubordinated bonds |
October 2019 | October 2022 | EUR | 8 000 000 | 8 000 000 |
| Sonae Indústria, SGPS, S.A. | 2) Unsubordinated bonds |
March 2020 | March 2024 | EUR | 7 500 000 |
- 1) Contract subject to fixed interest rate (7%);
- 2) Contract subject to variable interest rate.
b) Bank loans:
| Company(ies) | Loan | Contract date | Maturity (with reference to 31.03.2020) |
Currency | Outstanding principal at 31.03.2020 (EUR) |
Outstanding principal at 31.12.2019 (EUR) |
|---|---|---|---|---|---|---|
| Tafisa Canada Inc. | Bank loan (Revolving ) | July 2011 | October 2023 | CAD | 49 898 106 | 50 291 056 |
| Sonae Indústria, SGPS, S.A. | Commercial paper programme |
July 2014 | to be repaid from July 2020 to January 2025 |
EUR | 9 000 000 | 6 800 000 |
| Sonae Indústria, SGPS, S.A. | Commercial paper programme |
May 2016 | to be repaid from December 2020 to December 2024 |
EUR | 71 000 000 | 79 500 000 |
| Sonae Indústria, SGPS, S.A. | Commercial paper programme |
July 2016 | April 2021 | EUR | 4 000 000 | 2 000 000 |
| Sonae - Indústria de Revestimentos, S. A. |
Bank loan | September 2017 | to be repaid from March 2019 to September 2022 |
EUR | 2 500 000 | 3 000 000 |
| Sonae Indústria, SGPS, S. A. | Commercial paper programme |
June 2018 | to be repaid from December 2019 to June 2021 |
EUR | 6 750 000 | |
| Sonae Indústria, SGPS, S. A. | Commercial paper programme |
February 2019 | February 2022 | EUR | 5 000 000 | 5 000 000 |
| Sonae Indústria, SGPS, S. A. | Commercial paper programme |
December 2019 | to be repaid from January 2021 to January 2024 |
EUR | 5 000 000 | |
| Others | EUR | 1 258 170 | 804 910 | |||
| Total | EUR | 147 656 276 | 154 145 966 |
Bank loans described above are subject to variable interest rates.
Figures detailed on the previous tables correspond to the nominal value of bank loans disclosed on this note.
At 31 March 2020, in addition to mortgaged tangible fixed assets referred to on note 6, there were other assets amounting to EUR 34 017 017 (EUR 36 645 370 at 31 December 2019) which were pledged as collateral for the Group's liabilities. These assets consisted mostly of inventories and accounts receivable.
12. OTHER INCOME AND GAINS
Details of Other income and gains on the Consolidated Income Statement for the periods ended 31 March 2020 and 31 March 2019 are as follows:
| 31.03.2020 | 31.03.2019 | |
|---|---|---|
| Gains on disposals of non-current investments | 1 682 | |
| Gains on disp. and write off of invest. prop., tang. and intang. assets | 50 905 | 37 397 |
| Supplementary revenue | 417 669 | 343 017 |
| Investment subventions | 119 719 | 42 022 |
| Positive exchange gains | 892 565 | 183 021 |
| Adjustment to fair value of financial instruments at fair value through profit or loss | 465 015 | 46 228 |
| Others | 83 912 | 224 936 |
| 2 031 467 | 876 621 |
13. OTHER EXPENSES AND LOSSES
Details of Other expenses and losses on the Consolidated Income Statement for the periods ended 31 March 2020 and 31 March 2019 are as follows:
| 31.03.2020 | 31.03.2019 | |
|---|---|---|
| Taxes | 354 422 | 310 037 |
| Losses on disp. and write off of invest. prop., tang. and intang. assets | 2 226 | 57 721 |
| Negative exchange gains | 881 969 | 258 020 |
| Adjustment to fair value of financial instruments at fair value through profit or loss | 1 735 | 74 067 |
| Others | 68 868 | 56 617 |
| 1 309 220 | 756 462 |
14. RECURRING AND NON-RECURRING ITEMS
Recurring operating items on the Consolidated Income Statement are detailed as follows:
| 31.03.2020 | 31.03.2019 | ||
|---|---|---|---|
| Recurring | Recurring | ||
| Sales | 53 905 913 | 56 371 052 | |
| Services rendered | 387 549 | 393 500 | |
| Other income and gains | 1 973 379 | 839 224 | |
| Cost of sales | (30 082 506) | (32 464 971) | |
| Increase / (decrease) in production | ( 639 798) | ( 933 617) | |
| External supplies and services | (11 752 187) | (11 974 301) | |
| Staff expenses | (7 150 891) | (6 751 767) | |
| Impairment losses in trade debtors - (increase)/reduction | 3 510 | (1 535) | |
| Other expenses and losses | (1 300 930) | ( 693 824) | |
| Recurring operating profit/(loss) before amortization, depreciation, provisions and impairment losses (except trade debtors) |
5 344 039 | 4 783 761 | |
| Non-Recurring operating profit/(loss) before amortization, depreciation, provisions and impairment losses (except trade debtors) |
( 14 321) | ( 183 066) | |
| Total operating profit/(loss) before amortization, depreciation, provisions and impairment losses (except trade debtors) |
5 329 718 | 4 600 695 |
15. FINANCIAL RESULTS
Financial results for the periods ended 31 March 2020 and 31 March 2019 were as follows:
| 31.03.2020 | 31.03.2019 | |
|---|---|---|
| Financial income: | ||
| Interest income | ||
| related to bank loans | 8 485 | 1 300 |
| 8 485 | 1 300 | |
| Gains in currency translation | ||
| related to loans | 130 | 8 001 |
| related to cash and cash equivalents | 418 032 | 174 280 |
| 418 162 | 182 281 | |
| Cash discounts obtained | 38 028 | 16 638 |
| Other finance gains | 1 424 | 1 409 |
| 466 099 | 201 628 | |
| Financial expenses: Interest expenses |
||
| related to bank loans | (1 350 300) | (1 933 605) |
| related to bonds | ( 925 858) | |
| related to leases | (50 826) | (77 576) |
| others | (1 592) | (4 028) |
| (2 328 576) | (2 015 209) | |
| Losses in currency translation | ||
| related to loans | (17 128) | (9 640) |
| related to cash and cash equivalents | ( 624 561) | ( 231 304) |
| ( 641 689) | ( 240 944) | |
| Cash discounts granted | ( 384 440) | ( 386 259) |
| Other finance losses | ( 306 964) | ( 430 765) |
| (3 661 669) | (3 073 177) | |
| Finance profit / (loss) | (3 195 570) | (2 871 549) |
16. TAXES
Corporate income tax accounted for in the periods ended 31 March 2020 and 31 March 2019 is detailed as follows:
| 31.03.2020 | 31.03.2019 | |
|---|---|---|
| Current tax Deferred tax |
( 81 477) | 465 514 ( 434 505) |
| ( 81 477) | 31 009 |
17. CONTINGENCIES
Former subsidiary Sonae Arauco Deutschland GmbH (formerly Glunz AG) and other German producers of wood-based panels are involved in certain litigation procedures filed by some customers for damages resulting from alleged breaches
of competition law, after which former subsidiaries Sonae Arauco Deutschland GmbH (formerly Glunz AG) and GHP GmbH received, in March 2010, a statement of objections from the German Competition Authority. Some of these processes were resolved from 2015 to 2018 and their respective effects were recognized on the individual financial statements of each company and on the consolidated financial statements of the joint venture Sonae Arauco, S. A. (in which perimeter of consolidation these former subsidiaries are included) for the respective periods. As of the end of first quarter 2020, there were two processes still outstanding. One of which the complaint was submitted specifically to the former subsidiaries Sonae Arauco Deutschland GmbH e GHP GmbH with a maximum contingency (based on claimed values) of EUR 31.5 million. In the other pending case, these subsidiaries are jointly involved with other German producers and the maximum contingency (based on claimed values) amounted to EUR 26 million as at 31 March 2020. According to the opinion of these former subsidiaries' lawyers, at the closing date of these consolidated financial statements, it is not possible to reliably estimate the outcome of the proceedings in progress or the amount of any payments that may be established. Under the terms of the agreement for the subscription of Sonae Arauco, S. A. shares, entered into in 2015 by Sonae Arauco, S. A., Sonae Indústria SGPS S. A. and the Arauco Group, Sonae Indústria, SGPS, S. A. assumes the obligation to compensate Sonae Arauco, S. A. for any losses resulting from these proceedings.
Darbo SAS, a former subsidiary of Sonae Indústria, SGPS, S.A located in France, was sold on 3 July 2015 to a subsidiary of Gramax Capital and was excluded from the Group's consolidated financial statements on that date. This company's insolvency was requested at the Trade Court of Dax, in France, in September 2016, and was declared by that court to be liquidated, in October of that year.
Following that case, one hundred and ten former employees of Darbo filed various lawsuits with the Labour Court of Dax, in France, against, among others, Sonae Indústria, SGPS, SA and Gramax Capital, through which they claim compensation for alleged dismissal without fair reason, for a total amount of EUR 13 653 917.28. The same former employees also filed a lawsuit at the Civil Court of Dax against the seller and buyer companies and against Sonae Indústria, SGPS, SA, through which they claim annulment of the sale of Darbo SAS and the payment of compensation for alleged damages suffered, in the same amount claimed before the Labour Court of Dax (EUR 13 653 917.28).
In relation to one hundred and five former employees of Darbo, in July 2019 the Labour Court of Dax judged that Sonae Indústria SGPS and two Gramax Capital companies have the joint and several obligation to pay compensation to those employees in a total amount of c. 3.6 million euros on the grounds of the existence of 'co-employment'. The court also ordered Sonae Indústria SGPS and two Gramax Capital companies to reimburse the French "Pôle Emploi" (unemployment insurance organisation) any amounts of compensations it could have paid to those employees. Sonae Indústria SGPS appealed such decisions considering there are no grounds for the co-employment thesis. In January 2020, the court, in relation to the lawsuit of five former employees of Darbo, handed down a sentence in the same direction and on the same grounds, with the amount of the sentence being around EUR 950 000. Sonae Indústria appealed this decision
18. OTHER INFORMATIONS
The Covid-19 outbreak and the related extraordinary containment measures imposed by the authorities in the several regions where Sonae Indústria conducts its business (namely Europe, North America and South Africa) are having a significant impact in Sonae Indústria operations which broadly started being felt in the second half of March.
The health and safety of our people is a foremost concern in all actions we take and since March Sonae Indústria implemented important measures to protect the health of our people at the workplace (plants and offices) under the context of the pandemic.
As for our businesses, they have been particularly affected by the containment measures imposed by local governments with the aim of mitigating the Covid-19 pandemic, but also by the reduction in customer orders as a result of the lower market demand in most countries. Operations may also be conditioned by the potential disruption of the supply of materials and services.
The following major impacts of Covid-19 in industrial operations should be highlighted:
North American business: partial shutdown since last days of March due to government lockdown restrictions (not only in Quebec but also in other Canadian provinces and in the USA). Accordingly, we have been operating the largest of the two particleboard lines and two or three of
the five MFC surfacing lines. The lockdown restrictions in Quebec started to be gradually eased on 20 April (residential construction) and all construction and manufacturing may restart (with restrictions) on 11 May. This is also occurring in other regions of Canada and in the US, although there is a considerable level of uncertainty in relation to the pace of the process and to the economic situation.
- Laminates and Components: the Laminates plants in Maia and Horn kept operating during the months of March and April. The Components plant in Vilela has operated during the month of March and part of April until a confirmed Covid-19 case led to the temporary stoppage of the plant during two weeks. In Maia a reduction in activity (partial layoff) was implemented during May. Horn plant will be also be operating at a lower level in May.
- Sonae Arauco: industrial sites in Spain and South Africa were stopped due to strict temporary lockdown measures implemented by the respective national authorities to fight the Covid-19 crisis. The reduction in demand from several customer segments in all regions caused by this crisis, also led to having to curtail production in other sites and activity in the offices. When possible layoff or short work schemes were implemented, according to the countries' legislations, to minimize fixed costs and preserve available cash and financing facilities. Sonae Arauco continues to monitor demand in the markets and will adjust production accordingly.
As referred above, important actions are being taken at all levels of all businesses including adjusting our cost structures and investment plans in order to protect liquidity and safeguard the future. Whenever possible and adequate we are making use of governments support measures that were created to partially offset the negative effects of the pandemic in the businesses.
Actions are also being taken to prepare for the gradual restart of temporarily closed operations as soon as a recovery is possible.
In relation to the effects of Covid-19 on liquidity and financing, it should be noted that due to the refinancings concluded between December 2019 and March 2020, Sonae Indústria scheduled debt repayments from 1 April to 31 December 2020 were reduced to approx. 6 million euros. Taking into consideration the significant
impacts of Covid-19 on our businesses, close communication is being kept with Sonae Indústria's bank creditors in Europe and Canada in order to seek their support as we go through the crisis.
Due to the uncertainty, not only on the Covid-19 pandemic intensity and duration but also on its impact in our operations and markets, Sonae Indústria cannot estimate the impact on the company's results, but we envisage that it will be significant over the next quarters, namely due to the direct impact in profitability deriving from the low activity levels: the material reduction of turnover is only partially compensated by a reduction in costs (proportional reduction of fixed and semi fixed costs is particularly constrained).
19. APPROVAL OF THE CONSOLIDATED FINANCIAL STATEMENTS
These consolidated financial statements were approved by the Board of Directors and authorized for issuance 6 May 2020.