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Sonae SGPS
Quarterly Report • May 9, 2019
1901_10-q_2019-05-09_982c4bf6-859b-4168-b08f-7ecaf8f125b9.pdf
Quarterly Report
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SONAE INDÚSTRIA, SGPS, SA
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 2019
ACCORDING TO THE INTERNATIONAL ACCOUNTING STANDARD 34 – INTERIM FINANCIAL REPORT
ACTIVITY REPORT
MESSAGE FROM THE CHAIRMAN
Following the difficulties faced during 4Q18, and despite not fully recovering momentum at our fully owned businesses, during the first quarter of 2019 we were able to improve Recurrent EBITDA and revert to positive net results reaching a profit of circa 1.2 million euros, after a net loss in 4Q18 due to a number of one off adjustments particularly in the Sonae Arauco accounts.
Considering our 50% share of Sonae Arauco's figures, LTM Proportional Recurrent EBITDA1 reached 71 million euros and the leverage ratio3 was of 4.5x.
However, notwithstanding the net profit achieved in the quarter, we continued to face challenges particularly in our fully owned businesses.
In our North American business, despite an improvement in Recurrent EBITDA when compared with 4Q18, we were still affected by high variable costs, particularly due to materially higher input wood prices, high thermal energy costs and still high maintenance costs in all cases negatively affected by extremely cold weather in January and February, a factor which also limited production efficiency and availability. On the other hand, although sales volumes in the quarter were still conditioned by the lower than desired production and inventory levels, it should be noted that volumes have increased when compared with 4Q18 with further room for improvement as the negative effects of the extreme weather and November fire are dissipated. On a more positive note, our North American business continued to improve its sales mix in alignment with our strategic guidelines, with decorative products steadily increasing their weight particularly with our high end EIR decorative offer, today complemented with our matching Surforma® Laminates produced in Portugal.
Profitability at our Laminates & Components business continued to suffer from shortfall of sales volumes notwithstanding the fact that Turnover was higher than last year. However, on a positive note, good progress is being made on the development of the strategic project between our Laminates and North America businesses with the sales ramp up evolving favorably. This strategic project, together with several actions currently under implementation at commercial and operational levels should provide us the base to begin recovering the desired profitability for this business.
Results at Sonae Arauco improved during the quarter generating a better Recurrent EBITDA when compared with the two previous quarters, despite enduring competitive tensions in Iberia and sluggish market demand in South Africa. Sonae Arauco made a positive contribution to Sonae Indústria's net results in the quarter, after the negative one off effects in 4Q18. In terms of commercial initiatives, I would like to highlight that in April we launched our new Innovus decorative collection including matching laminates. The 2019 Innovus collection, which will be presented at Interzum (Cologne, Germany) in May, includes the introduction of a significant number of new textures and colours and a simplified and improved service proposition further strengthening our decorative solutions offer.
Paulo Azevedo
Chairman, Sonae Indústria
1 Figures without the effects from the adoption of the IFRS 16, effective from 1 January 2019. See note related with the adoption of IFRS 16 in consolidated results section (page 5).
1. SONAE INDÚSTRIA RESULTS
1.1 PROPORTIONAL RESULTS (UNAUDITED)
SUMMARY OF 1Q19 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 unaudited Proportional Indicators, which consider the full results of our wholly owned businesses and the proportional consolidation of the 50% contribution from Sonae Arauco.
For comparative purposes, Proportional Results section (1.1) excludes effects from the adoption of the IFRS 16 in 2019 (meaning all indicators for 1Q19 are like for like those presented for 1Q18).
FINANCIAL INDICATORS2
(UNAUDITED)
| 1Q18 | 1Q19 | |
|---|---|---|
| Proportional Turnover | 153 | 159 |
| Proportional Rec. EBITDA | 19 | 16 |
| Proportional Rec. EBITDA margin | 12.3% | 10.0% |
| LTM 1Q18 | LTM 1Q19 | |
| Proportional LTM Turnover | 619 | 619 |
| Proportional LTM Rec. EBITDA | 85 | 71 |
| Proportional LTM Rec. EBITDA margin | 13.7% | 11.4% |
| LEVERAGE | ||
| Proportional Net Debt | 320 | 317 |
| Proportional Leverage (Net Debt / LTM Rec. EBITDA) | 3.8 x | 4.5 x |
| LOAN TO VALUE | ||
| Net Debt of Sonae Indústria | 209 | 206 |
| Asset Value 3 | 473 | 430 |
| LTV (Net Debt of Sonae Indústria / Asset Value) | 44% | 48% |
Proportional Turnover in 1Q19 was circa 6.5 million euros higher than in the same period of last year. This evolution was driven by an higher contribution from our fully owned businesses (circa 2.5 million euros), due to a favourable exchange rate effect (of circa 1.5 million euros) resulting from the appreciation of the Canadian dollar vs. the EUR and to an increase in average selling prices y.o.y. of the North American business, and by a circa 4.0 million euros improvement in Sonae Arauco contribution due to higher sales volumes.
Calculated as described in the Glossary of Terms. This compares with a Consensus 'Asset Value' of EUR 443M based on the average of the sum of the parts valuation (as at year-end 2019) of Sonae Indústria assets carried out by two independent equity research houses.
Figures (including 1Q19) without the effects from the adoption of the IFRS 16, effective from 1 January 2019. See note related with the adoption of IFRS 16 in consolidated results section (page 5).
Proportional Recurrent EBITDA in 1Q19 (excluding IFRS 16 effects) reached circa 15.9 milion euros, circa 2.9 million euros lower than in 1Q18 driven by a lower contribution from both fully owned businesses and by Sonae Arauco, but higher than 4Q18 by circa 2.1 million euros.
In the first quarter of the year, Net Debt to Recurrent EBITDA (proportional) stood at circa 4.5x (excluding IFRS 16 effects), which represents an increase of 0.7x vs. 1Q18. During 1Q19 Sonae Arauco received the full amount of insurance compensation outstanding at the end of 2018 (circa 32 million euros). Loan to Value also increased when compared to 1Q18, reaching circa 48% (excluding IFRS 16 effects) at the end of 1Q19.
PROPORTIONAL TURNOVER BY DESTINATION MARKET 1Q18 PROPORTIONAL TURNOVER BY DESTINATION MARKET 1Q19 Iberian Peninsula 21.5% UK 2.7% Scandinavia Canada 3.2% 17.0% United States 15.1% South Africa 4.8% Germany 21.3% Other European countries 8.3% Others 1.8% Poland 4.2% Iberian Peninsula 20.8% UK 2.3% Scandinavia Canada 3.0% 16.4% United States 15.4% South Africa 6.6% Germany 23.5% Other European countries 7.7% Others 0.8% Poland 3.5%
1.2 CONSOLIDATED RESULTS
Note IFRS 16: The mandatory adoption of the IFRS 16 from the beginning of 2019 financial year, affects the comparability of Sonae Indústria's results in 2019 with previous years. This new accounting standard on leases implies that lease contracts (except short term and low value leases) previously classified as operational leases, are now recognized in the balance sheet as an asset with a corresponding liability equal to the present value of the lease payments (under financial liabilities). This new treatment also affects the consolidated income statement, with corresponding rental or lease charges being replaced by the recognition of depreciation charges and interest expense.
0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0%
SUMMARY OF 1Q19 RESULTS
TURNOVER and RECURRENT EBITDA
MILLION EUROS
*Quarterly information unaudited.
Consolidated Turnover for the first quarter of the year reached circa 56.8 million euros, an improvement of 4.5% vs. same period of last year (circa +2.5 million euros), driven by circa 1.5 million euros favourable exchange rate effect resulting from the appreciation of the Canadian dollar vs. the EUR but also by an increase in average selling prices y.o.y. in our North American business. When compared to the previous quarter, consolidated turnover increased by circa 5.5 million euros driven by our North American business, with higher sales volumes and average selling prices, but also by our Laminates & Components business.
Variable costs per cubic meter in local currency increased, when compared to the same period of last year, with an increase in most input costs. When compared to 4Q18, variable costs per cubic meter also increased, mainly driven by higher costs of wood (affected by higher transportation costs).
Recurrent EBITDA for the first quarter of the year reached circa 4.8 million euros (including a positive effect from the adoption of the IFRS 16 of 0.6 million euros), a reduction of 1.0 million euros euros vs. 1Q18. The lower Recurrent EBITDA, despite the increase in turnover as aforementioned, when compared to the previous year, is mainly explained by an increase in operational costs, particularly in variable costs as explained above. When compared to 4Q18 Recurrent EBITDA increased circa 0.8 million euros. The 1Q19 Recurrent EBITDA margin reached 8.4%, down by circa 2.3 p.p. vs. 1Q18, but up by 0.6 p.p. vs. 4Q18.
Consolidated EBITDA for the quarter reached 4.6 million euros, a reduction of 1.1 million euros vs. the same period of last year, mainly due to the aforementioned evolution in Recurrent EBITDA, and a reduction of 2.5 million euros vs. the previous quarter, noting that 4Q18 benefited from a capital gain of circa 3.2 million euros as a result of the sale of Solsona inactive site real estate.
CONSOLIDATED INCOME STATEMENT
MILLION EUROS
| 1Q18 | 4Q18 | 1Q19 | 1Q19 / | 1Q19 / | |
|---|---|---|---|---|---|
| Unaudited | Unaudited | Unaudited | 1Q18 | 4Q18 | |
| Turnover | 54.3 | 51.3 | 56.8 | 4.5% | 10.6% |
| Other operational income | 0.9 | 5.1 | 0.9 | (0.6%) | (82.8%) |
| EBITDA | 5.7 | 7.1 | 4.6 | (19.9%) | (35.6%) |
| Non recurrent items | (0.1) | 3.1 | (0.2) | - | (105.8%) |
| Recurrent EBITDA | 5.8 | 4.0 | 4.8 | (17.7%) | 19.5% |
| Recurrent EBITDA Margin % | 10.7% | 7.8% | 8.4% | -2.3 pp | 0.6 pp |
| Depreciation and amortisation | (3.1) | (3.5) | (3.9) | (25.1%) | (13.3%) |
| Provisions and impairment Losses | 0.0 | 0.2 | 0.0 | - | (90.2%) |
| Operational profit (EBIT) | 2.6 | 3.9 | 0.7 | (73.2%) | (81.8%) |
| Net financial charges | (2.8) | (3.0) | (2.9) | (2.0%) | 5.2% |
| o.w. Net interest charges | (2.0) | (2.1) | (2.0) | (1.6%) | 5.0% |
| o.w. Net exchange differences | (0.0) | (0.0) | (0.1) | - | - |
| o.w. Net financial discounts | (0.4) | (0.4) | (0.4) | 2.8% | 13.2% |
| Gains and losses in Joint-Ventures - Net Results | 4.7 | (9.5) | 3.4 | (27.7%) | 135.6% |
| Gains and losses in Joint-Ventures - Other | 0.0 | 0.5 | 0.0 | - | (100.0%) |
| Profit before taxes (EBT) | 4.5 | (8.2) | 1.2 | (72.7%) | 115.0% |
| Taxes | (0.7) | (3.4) | (0.0) | 95.6% | 99.1% |
| o.w. Current tax | (1.1) | (1.1) | (0.5) | 56.1% | 56.9% |
| o.w. Deferred tax | 0.4 | (2.3) | 0.4 | 23.0% | 119.0% |
| Consolidated net profit/(loss) for the period | 3.8 | (11.6) | 1.2 | (68.5%) | 110.4% |
Total fixed costs for the first quarter of the year represented circa 16.9% of turnover, in line with the values booked for 1Q18 and a decrease of 2.0 p.p. vs. 4Q18, driven by both an increase in turnover and a reduction in fixed costs (which includes lower lease rents as a result of the adoption of IFRS 16).
Total headcount of Sonae Indústria was 499 FTE's, at the end of March 2019, excluding Sonae Arauco, which compares with 495 and 485 FTE's at the end of December 2018 and March 2018, respectively.
Depreciation and amortization charges in 1Q19 were 3.9 million euros, which represents an increase of circa 0.8 million euros and 0.5 million euros vs. 1Q18 and 4Q18, respectively, mainly due to the impact of circa 0.5 million euros of the adoption of the IRFS 16.
Net financial charges during 1Q19 were circa 2.9 million euros, an increase of circa 0.1 million euros when compared to 1Q18 and a reduction of circa 0.2 million euros vs. 4Q18. 1Q19 figures include a marginally negative effect due to the adoption of the IFRS 16 (circa 0.1 million euros).
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 amounted to circa 3.4 million euros, a reduction of 1.3 million euros when compared to 1Q18, despite the increase in turnover. It should be noted that 1Q18 included higher insurance income recognition related to the fires that affected two Sonae Arauco plants in Portugal in October 2017. When compared to 4Q18, Gains and losses in Joint-Ventures – Net Results increased 12.9 million euros, noting that 4Q18 included (considering the 50% contribution) one off negative effects (namely full impairment of the accounting values of its investment (including a loan) in the joint venture LaminatePark (circa 8 million euros) and impairment of the accounting value of tangible assets (circa 3.5 million euros)).
Current tax charges were circa 0.5 million euros for the first quarter of the year, a decrease of 0.6 million euros when compared to 1Q18, mainly driven by lower tax charges in Canada.
Net results in 1Q19 were positive of circa 1.2 million euros, a reduction of 2.6 million euros when compared to 1Q18, mainly explained by the aforementioned reduction in EBITDA and in Gains and losses in Joint-Ventures – Net Results. Net Results have improved materially when compared to 4Q18, mainly due Gains and losses in Joint-Ventures – Net Results which were affected by a number of negative non recurrent items in 4Q18.
| CONSOLIDATED STATEMENT OF FINANCIAL POSITION | |
|---|---|
| MILLION EUROS |
| 1Q18 | 2018 | 1Q19 | |
|---|---|---|---|
| Unaudited | Unaudited | ||
| Non current assets | 357.1 | 354.5 | 368.2 |
| Tangible assets | 138.5 | 135.7 | 145.7 |
| Investments in joint ventures | 210.7 | 212.5 | 216.2 |
| Deferred tax asset | 1.5 | 0.0 | 0.0 |
| Other non current assets | 6.5 | 6.3 | 6.3 |
| Current assets | 40.2 | 47.4 | 45.8 |
| Inventories | 16.7 | 18.2 | 18.1 |
| Trade debtors | 16.2 | 12.3 | 19.4 |
| Cash and cash equivalents | 1.8 | 10.6 | 2.2 |
| Other current assets | 5.5 | 6.2 | 6.2 |
| Non-current assets classified as available for sale | 0.0 | 0.0 | 0.0 |
| Total assets | 397.4 | 401.8 | 414.0 |
| Shareholders' Funds | 126.4 | 135.5 | 139.7 |
| Equity holders | 126.4 | 135.5 | 139.7 |
| Non-controlling interests | 0.0 | 0.0 | 0.0 |
| Liabilities | 271.0 | 266.3 | 274.2 |
| Interest bearing debt | 210.4 | 206.5 | 214.1 |
| Non current | 195.8 | 188.6 | 193.8 |
| Current | 14.6 | 17.9 | 20.3 |
| Trade creditors | 22.5 | 21.6 | 24.2 |
| Other liabilities | 38.1 | 38.3 | 36.0 |
| Liabilities directly associated with non-current assets classified as available for sale |
0.0 | 0.0 | 0.0 |
| Total Shareholders' Funds and liabilities | 397.4 | 401.8 | 414.0 |
Tangible assets reached 145.7 million euros at the end of March 2019, an increase of 10.0 million euros vs. December 2018, mainly due to the impact of the adoption of the IFRS 16 of 6.2 million euros.
Investments in Joint-Ventures (50% shareholding in Sonae Arauco) reached circa 216.2 million euros, which is 3.7 million euros higher than the book value of this investment at the end of 2018, due to our share of Sonae Arauco's results of circa 3.4 million euros and the impact of the favorable exchange rate evolution of the South African Rand in the quarter of 0.3 million euros.
Total Shareholders' Funds, at the end of March 2019, totaled 139.7 million euros, which represents an increase of 4.2 million euros when compared to December 2018, explained by the positive impacts from the exchange rate evolution of the Canadian Dollar vs. the Euro of 2.7 million euros, the net results in the quarter and from the exchange rate evolution of the South African Rand of 0.3 million euros.
NET DEBT and WORKING CAPITAL
MILLION EUROS
| 1Q18 Unaudited |
2018 | 1Q19 (A) Unaudited |
|
|---|---|---|---|
| Net Debt | 208.6 | 195.8 | 205.6 |
| Working Capital | 10.4 | 9.0 | 13.2 |
(A) For comparability purposes, 1Q19 Net Debt figure excludes the effects from the adoption of the IFRS 16.
Consolidated Working Capital reached 13.2 million euros, an increase of circa 4.3 million euros when compared to December 2018, explained by the seasonal increase in trade debtors, which more than offset the increase in trade creditors.
Net Debt, stood at 205.6 million euros at the end of March 2019 (excluding IFRS 16 effects), representing an increase of circa 9.8 million euros vs. 2018, but a decrease of 3.0 million euros vs. March 2018. Considering capitalized operating leases (as per IFRS 16) Net Debt would be of 211.9 million euros at the end of March 2019.
Additions to Gross Tangible Fixed Assets reached circa 2.6 million euros in the first quarter of the year, essentially investments in our North American business (circa 2.4 million euros).
SONAE INDÚSTRIA, SGPS, S. A. ACTIVITY REPORT - 1 st QUARTER 2019
8th May 2019
The Board of Directors
Duarte Paulo Teixeira de Azevedo
Carlos António da Rocha Moreira da Silva
Albrecht Olof Lother Ehlers
Berta Maria Nogueira Dias da Cunha
Isabel Sofia Bragança Simões de Barros
Javier Veja de Seoane Azpilicueta
José Joaquim Romão de Sousa
George Christopher Lawrie
Louis Brassard
GLOSSARY OF TERMS
| Asset Value | Asset Value is calculated as follows: [6.5 x two year moving average of Recurrent EBITDA of fully consolidated business (100%)] + [market value of inactive sites real estate properties owned 100% by Sonae Indústria] + [50% x (6.5 x two year moving average of Recurrent EBITDA of Sonae Arauco – Sonae Arauco Net Debt)] |
|---|---|
| CAPEX | Investment in Tangible Fixed Assets |
| EBITDA | Earnings Before Interests and Taxes + Depreciations and Amortizations + (Provisions and impairment losses - Impairment losses in trade receivables + Reversion of impairment losses in trade receivables) |
| FTEs | Full Time Equivalent; the equivalent of one person working full time, according to the working schedule of each country where Sonae Indústria has operations |
| Fixed Costs | Overheads + Personnel costs (internal and external); management accounts concept |
| Gross Debt | Bank loans + Debentures + Obligations under finance leases + other loans + Loans from related parties |
| Headcount | Total number of internal FTEs, excluding trainees |
| Loan to Value | Net Debt of Sonae Indústria / Asset value |
| LTM | Last Twelve Months |
| Net Debt | Gross Debt - Cash and cash equivalents |
| Proportional: Turnover, Recurrent EBITDA (unaudited) |
Proportional Turnover and Proportional Recurrent EBITDA consider, in what regards to Turnover and Recurrent EBITDA, the full contribution of the wholly owned businesses and the proportional consolidation of the 50% contribution from Sonae Arauco. |
| Proportional Leverage (unaudited) |
Proportional Net Debt / Proportional LTM Recurrent EBITDA |
| Proportional Net Debt (unaudited) |
Proportional Net Debt considers the full contribution of the Net Debt of the wholly owned businesses and the proportional consolidation of the 50% contribution from Sonae Arauco. |
| Recurrent EBITDA | EBITDA excluding non-recurrent operational income / costs |
| Recurrent EBITDA margin |
Recurrent EBITDA / Turnover |
| Working Capital | Inventories + Trade Debtors – Trade Creditors |
Consolidated Financial Statements
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AT 31 MARCH 2019 AND 31 DECEMBER 2018
(Amounts expressed in Euros)
| ASSETS | Notes | 31.03.2019 Unaudited |
31.12.2018 |
|---|---|---|---|
| NON-CURRENT ASSETS Tangible fixed assets Goodwill Intangible assets |
3, 7 | 145 721 195 347 081 85 831 |
135 704 644 347 082 86 449 |
| Investment properties Investment in joint ventures Other investments Total non-current assets |
5, 6 6 |
5 687 413 216 182 817 135 628 368 159 965 |
5 750 140 212 459 264 133 952 354 481 531 |
| CURRENT ASSETS Inventories Trade debtors Other current debtors Current tax asset Other taxes and contributions Other current assets Cash and cash equivalents Total current assets TOTAL ASSETS |
8 9 |
18 058 751 19 360 960 362 034 3 225 236 1 691 403 957 906 2 182 052 45 838 342 413 998 307 |
18 224 036 12 302 439 124 360 2 506 968 1 552 714 2 033 291 10 624 192 47 368 000 401 849 531 |
| SHAREHOLDERS`FUNDS AND LIABILITIES | |||
SHAREHOLDERSFUNDS<br>Share capital<br>Legal reserve<br>Other reserves and accumulated earnings<br>Accumulated other comprehensive income<br>Total shareholders' funds attributabble to equity holders of Sonae Indústria<br>TOTAL SHAREHOLDERSFUNDS |
3 10 |
253 319 797 1 807 489 (171 558 505) 56 180 806 139 749 587 139 749 587 |
253 319 797 1 807 489 (172 733 307) 53 139 528 135 533 507 135 533 507 |
| LIABILITIES NON-CURRENT LIABILITIES Bank loans - net of current portion Lease creditors - net of current portion Post-retirement liabilities Other non-current liabilities Deferred tax liability Provisions Total non-current liabilities |
11 3, 11 |
188 927 298 4 833 733 766 587 1 090 410 19 180 693 1 762 033 216 560 754 |
188 102 256 491 753 785 667 1 128 038 18 883 485 1 778 290 211 169 489 |
| CURRENT LIABILITIES Current portion of non-current bank loans Current bank loans Current portion of non-current lease creditors Trade creditors Current tax liability Other taxes and contributions Other current liabilities Provisions Total current liabilities |
11 11 3, 11 12 |
13 300 001 4 612 774 2 379 237 24 209 037 677 183 396 850 8 837 165 3 275 719 57 687 966 |
15 192 246 2 136 274 529 015 21 567 484 29 283 490 083 11 926 431 3 275 719 55 146 535 |
| TOTAL SHAREHOLDERS' FUNDS AND LIABILITIES | 413 998 307 | 401 849 531 |
The notes are an integral part of the consolidated financial statements
The Board of Directors
CONSOLIDATED INCOME STATEMENT
FOR THE THREE-MONTH PERIODS ENDED 31 MARCH 2019 AND 31 MARCH 2018
(Amounts expressed in Euros)
| Sales 15 56 371 052 53 949 375 Services rendered 15 393 500 357 393 Other income and gains 13, 15 876 621 881 718 Cost of sales 15 (32 464 971) (30 394 133) Increase / (decrease) in production 15 ( 933 617) ( 415 536) External supplies and services 15 (12 098 267) (11 655 266) Staff expenses 15 (6 785 627) (6 198 688) Depreciation and amortisation (3 915 472) (3 129 925) Provisions and impairment losses (increase / reduction) 15 14 722 ( 1 678) Other expenses and losses 14, 15 ( 756 462) ( 777 121) Operating profit / (loss) 15 701 479 2 616 139 Financial income 16 201 628 214 204 Financial expenses 16 (3 073 177) (3 029 032) Gains and losses in joint ventures 5 3 398 958 4 703 794 Net profit/(loss) before taxation 1 228 888 4 505 105 Taxation 17 ( 31 009) ( 707 617) Consolidated net profit / (loss) for the period 1 197 879 3 797 488 Attributable to: Equity holders of Sonae Industria 1 197 879 3 797 488 Consolidated net profit/(loss) per share Basic 0.0264 0.0836 Diluted 0.0264 0.0836 |
Notes | 31.03.2019 Unaudited |
31.03.2018 Unaudited |
|---|---|---|---|
The notes are an integral part of the consolidated financial statements
The board of directors
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE THREE-MONTH PERIODS ENDED 31 MARCH 2019 AND 31 MARCH 2018
(Amounts expressed in Euros)
| Notes | 31.03.2019 Unaudited |
31.03.2018 Unaudited |
|
|---|---|---|---|
| Consolidated net profit / (loss) for the period (a) | 1 197 879 | 3 797 488 | |
| Consolidated other comprehensive income | |||
| Items that may be subsequently transferred to profit or loss | |||
| Change in currency translation reserve | 10 | 2 693 606 | (3 901 010) |
| Group share of other comprehensive income of joint ventures | 10 | 324 595 | 362 169 |
| Consolidated other comprehensive income for the period, net of tax (b) | 3 018 201 | (3 538 841) | |
| Total consolidated comprehensive income for the period (a) + (b) | 4 216 080 | 258 647 | |
| Total consolidated comprehensive income attributable to: | |||
| Equity holders of Sonae Industria | 4 216 080 | 258 647 |
The notes are an integral part of the consolidated financial statements
The board of directors
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS` FUNDS AT 31 DECTEMBER 2018 AND 31 DECEMBER 2017
(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 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 |
| Share capital | Legal reserve |
Other Reserves and accumulated |
Accumulated other comprehensive |
Total shareholders` funds attributable to the equity holders of |
Total shareholders' funds |
|
| earnings | income | Sonae Indústria | ||||
| Notes | 10 | |||||
| Balance as at 1 January 2018 | 253 319 797 | (182 494 467) | 55 287 278 | 126 112 608 | 126 112 608 | |
| Total consolidated comprehensive income for the period Consolidated net profit/(loss) for the period Consolidated other comprehensive income for the period |
3 797 488 | (3 538 841) | 3 797 488 (3 538 841) |
3 797 488 (3 538 841) |
||
| Total | 3 797 488 | (3 538 841) | 258 647 | 258 647 |
The notes are an integral part of the consolidated financial statements
Balance as at 31 March 2018 - unaudited 253 319 797 (178 641 652) 51 697 582 126 375 727 126 375 727
The board of directors
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE THREE-MONTH PERIODS ENDED 31 MARCH 2019 AND 31 MARCH 2018
(Amounts expressed in Euros)
| OPERATING ACTIVITIES Receipts from trade debtors 47 417 129 48 818 306 Payments to trade creditors (42 022 449) (38 394 430) Payments to staff (6 254 039) (5 472 393) Net cash flow from operations ( 859 359) 4 951 483 Payment / (receipt) of corporate income tax ( 479 507) (1 756 396) Other receipts / (payments) relating to operating activities ( 361 978) 242 250 Net cash flow from operating activities (1) (1 700 844) 3 437 337 INVESTMENT ACTIVITIES Cash receipts arising from: Investments Tangible fixed assets and intangible assets 163 303 494 163 303 494 Cash Payments arising from: Investments ( 1 676) ( 908) Tangible fixed assets and intangible assets (4 153 129) (3 119 188) (4 154 805) (3 120 096) Net cash used in investment activities (2) (4 154 642) (2 816 602) FINANCING ACTIVITIES Cash receipts arising from: Interest and similar income 11 630 3 577 Loans obtained 338 704 450 363 106 048 338 716 080 363 109 625 Cash Payments arising from: Interest and similar charges (2 135 897) (2 153 673) Loans obtained (363 892 833) (343 254 117) Leases - repayment of principal ( 511 888) ( 26 613) (345 901 902) (366 073 119) Net cash used in financing activities (3) (7 185 822) (2 963 494) Net increase/(decrease) in cash and cash equivalents resulting from cash flows (4) = (1) + (2) + (3) (13 041 308) (2 342 759) Cash and cash equivalents at the beginning of the period (a) 9 10 487 918 4 084 771 Cash and cash equivalents at the end of the period (b) 9 (2 430 722) 1 606 702 Net increase/(decrease) in cash and cash equivalents (b) - (a) (12 918 640) (2 478 069) Effect of foreign exchange rate in cash and cash equivalents (c) 122 668 ( 135 310) Net increase/(decrease) in cash and cash equivalents resulting from cash flows (b) - (a) - (c) (13 041 308) (2 342 759) |
Notes | 31.03.2019 Unaudited |
31.03.2018 Unaudited |
|---|---|---|---|
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 2019
(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 period ended 31 March 2019 and 31 March 2018 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 2018.
2.1. Basis of Preparation
These consolidated financial statements were prepared in accordance with the International Accounting Standard 34 – Interim Financial Reporting. As such, they do not include all the information which should be included in annual consolidated financial statements and should therefore be read in connection with the consolidated financial statements for fiscal year 2018.
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 2019 and endorsed by the European Union.
2.2.1. In the period ended 31 March 2019, the following standards and interpretations, which had been endorsed by the European Union, became effective:
IAS 19 (amendment), Plan Amendment, Curtailment or Settlement (effective for annual periods beginning on or after 1 January 2019). If a plan amendment, curtailment or settlement occurs, it is now mandatory that the current service cost and the net interest for the period after the remeasurement are determined using the assumptions used for the remeasurement. In addition, amendments have been included to clarify the effect of a plan amendment, curtailment or settlement on the requirements regarding the asset ceiling;
IAS 28 (amendment), Long-term Interests in Associates and Joint Ventures (effective for annual periods beginning on or after 1 January 2019). The amendment clarifies that long-term investments in associates and joint ventures (components of an entity's investments in associates and joint ventures), that are not being measured through the equity method, are to be measured in accordance with IFRS 9, being subject to
impairment expected credit loss model prior to any impairment test of the investment as a whole;
Annual Improvement 2015 – 2017, (effective for annual periods beginning on or after 1 January 2019). The 2015-2017 annual improvements affects: IAS 23, IAS 12, IFRS 3 and IFRS 11.
The application of these amendments to the standards from 1 January 2019 did not have significant effects on these consolidated financial statements.
2.2.2. At 31 March 2019, the following standards, effective 1 January 2019 or later, had been issued by IASB but still had not been endorsed by the European Union:
IAS 1 and IAS 8 (amendment), Definition of Material (effective for annual periods beginning on or after 1 January 2020). This amendment is still subject to endorsement by the European Union. 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 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;
Amendments to References to the Conceptual Framework in IFRS Standards (effective for annual periods beginning on or after 1 January 2020). This amendment is still subject to endorsement by the European Union. This amendment contains changes to several standards, whose references to the Conceptual Framework have been updated.
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:
| 31.03.2019 | 31.12.2018 | 31.03.2018 | ||||
|---|---|---|---|---|---|---|
| Closing | Average | Closing | Average | Closing | Average | |
| rate | rate | rate | rate | rate | rate | |
| Great Britain Pound | 0.8583 | 0.8723 | 0.8945 | 0.8847 | 0.8749 | 0.8832 |
| South African Rand | 16.2655 | 15.9134 | 16.4582 | 15.5715 | 14.6220 | 14.7059 |
| Canadian Dollar | 1.5000 | 1.5101 | 1.5605 | 1.5294 | 1.5895 | 1.5538 |
| American Dollar | 1.1235 | 1.1357 | 1.1450 | 1.1799 | 1.2321 | 1.2291 |
Source: Bloomberg
3. COMPARABILITY OF THE CONSOLIDATED FINANCIAL STATEMENTS
The comparability of the consolidated financial statements as at 31 March 2019, 31 December 2018 and 31 March 2018 was affected by the application of IFRS 16 – Leases from 1 January 2019. Under this new standard, leases previously classified as operating leases are stated as Tangible fixed assets and Lease creditors, on the Consolidated Statement of Financial Position, excepting lowvalue and short-term leases, for which no change in accounting took place.
Liabilities recognized under Lease creditors correspond to the present value at 1 January 2019 of the remaining lease payments of contracts which had been classified as operating leases under IAS 17 and which are not low-value or
short-term leases in accordance with IFRS 16. The corresponding right-of-use asset was recognized for the same amount under Tangible fixed assets, on the Consolidated Statement of Financial Position, and is detailed on note 7 in accordance with the nature of the underlying assets.
If this standard had not been applied on the said date, the consolidated financial statements at 31 March 2019 would be stated as follows:
| ASSETS | 31.03.2019 | Effect of IFRS 16 |
31.03.2019 without effect of IFRS16 |
31.12.2018 |
|---|---|---|---|---|
| NON-CURRENT ASSETS | ||||
| Tangible fixed assets | 145 721 195 | 6 127 959 | 139 593 236 | 135 704 644 |
| Goodwill | 347 081 | 347 081 | 347 082 | |
| Intangible assets Investment properties |
85 831 5 687 413 |
85 831 5 687 413 |
86 449 5 750 140 |
|
| Investment in joint ventures | ||||
| Other investments | 216 182 817 135 628 |
216 182 817 135 628 |
212 459 264 133 952 |
|
| Total non-current assets | 368 159 965 | 6 127 959 | 362 032 006 | 354 481 531 |
| CURRENT ASSETS | ||||
| Inventories | 18 058 751 | 18 058 751 | 18 224 036 | |
| Trade debtors | 19 360 960 | 19 360 960 | 12 302 439 | |
| Other current debtors | 362 034 | 362 034 | 124 360 | |
| Current tax asset | 3 225 236 | 3 225 236 | 2 506 968 | |
| Other taxes and contributions | 1 691 403 | 1 691 403 | 1 552 714 | |
| Other current assets | 957 906 | 957 906 | 2 033 291 | |
| Cash and cash equivalents Total current assets |
2 182 052 45 838 342 |
2 182 052 45 838 342 |
10 624 192 47 368 000 |
|
| TOTAL ASSETS | 413 998 307 | 6 127 959 | 407 870 348 | 401 849 531 |
| SHAREHOLDERS`FUNDS AND LIABILITIES | ||||
| SHAREHOLDERS`FUNDS | ||||
| Share capital | 253 319 797 | 253 319 797 | 253 319 797 | |
| Legal reserve | 1 807 489 | 1 807 489 | 1 807 489 | |
| Other reserves and accumulated earnings | (171 558 505) | ( 31 422) | (171 527 083) | (172 733 307) |
| Accumulated other comprehensive income | 56 180 806 | 201 | 56 180 605 | 53 139 528 |
| Total shareholders' funds attributabble to equity holders of Sonae Indústria | 139 749 587 | ( 31 221) | 139 780 808 | 135 533 507 |
| TOTAL SHAREHOLDERS`FUNDS | 139 749 587 | ( 31 221) | 139 780 808 | 135 533 507 |
| LIABILITIES | ||||
| NON-CURRENT LIABILITIES | ||||
| Bank loans - net of current portion Lease creditors - net of current portion |
188 927 298 4 833 733 |
4 283 888 | 188 927 298 549 845 |
188 102 256 491 753 |
| Post-retirement liabilities | 766 587 | 766 587 | 785 667 | |
| Other non-current liabilities | 1 090 410 | 1 090 410 | 1 128 038 | |
| Deferred tax liability | 19 180 693 | 19 180 693 | 18 883 485 | |
| Provisions | 1 762 033 | 1 762 033 | 1 778 290 | |
| Total non-current liabilities | 216 560 754 | 4 283 888 | 212 276 866 | 211 169 489 |
| CURRENT LIABILITIES | ||||
| Current portion of non-current bank loans | 13 300 001 | 13 300 001 | 15 192 246 | |
| Current bank loans | 4 612 774 | 4 612 774 | 2 136 274 | |
| Current portion of non-current lease creditors | 2 379 237 | 1 875 292 | 503 945 | 529 015 |
| Trade creditors | 24 209 037 | 24 209 037 | 21 567 484 | |
| Current tax liability Other taxes and contributions |
677 183 396 850 |
677 183 396 850 |
29 283 490 083 |
|
| Other current liabilities | 8 837 165 | 8 837 165 | 11 926 431 | |
| Provisions | 3 275 719 | 3 275 719 | 3 275 719 | |
| Total current liabilities | 57 687 966 | 1 875 292 | 55 812 674 | 55 146 535 |
| TOTAL SHAREHOLDERS' FUNDS AND LIABILITIES | 413 998 307 | 6 127 959 | 407 870 348 | 401 849 531 |
| Sales 56 371 052 56 371 052 53 949 375 Services rendered 393 500 393 500 357 393 Other income and gains 876 621 876 621 881 718 Cost of sales (32 464 971) (32 464 971) (30 394 133) Increase / (decrease) in production ( 933 617) ( 933 617) ( 415 536) External supplies and services (12 098 267) 563 652 (12 661 919) (11 655 266) Staff expenses (6 785 627) (6 785 627) (6 198 688) Depreciation and amortisation (3 915 472) ( 528 344) (3 387 128) (3 129 925) Provisions and impairment losses (increase / reduction) 14 722 14 722 ( 1 678) Other expenses and losses ( 756 462) ( 756 462) ( 777 121) Operating profit / (loss) 701 479 35 308 666 171 2 616 139 Financial income 201 628 214 204 Financial expenses (3 073 177) ( 66 730) (3 006 447) (3 029 032) Gains and losses in joint ventures 3 398 958 3 398 958 4 703 794 Net profit/(loss) before taxation 1 228 888 ( 31 422) 1 260 310 4 505 105 Taxation ( 31 009) ( 31 009) ( 707 617) |
31.03.2019 | Effect of IFRS 16 |
31.03.2019 without effect of IFRS16 |
31.03.2018 | |
|---|---|---|---|---|---|
| Consolidated net profit / (loss) for the period | 1 197 879 | ( 31 422) | 1 229 301 | 3 797 488 |
4. 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 2019, 31 December 2018 and 31 March 2018 are as follows:
| PERCENTAGE OF CAPITAL HELD | ||||||||
|---|---|---|---|---|---|---|---|---|
| COMPANY | HEAD OFFICE | 31.03.2019 | 31.12.2018 | 31.03.2018 | TERMS FOR INCLUSION |
|||
| Direct | 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. | Liverpool (United Kingdom) |
100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | a) |
| Glunz UkA GmbH | Meppen (Germany) | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | a) |
| Isoroy, SAS | La Garenne Colombes (France) |
100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | a) |
| Maiequipa - Gestão Florestal, SA | Maia (Portugal) | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | a) |
| Megantic B.V. | Amsterdam (The Netherlands) |
100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | a) |
| Movelpartes - Comp. para a Indús tria do Mobiliário, SA |
Paredes (Portugal) | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | a) |
| Novodecor (Pty) Ltd | Woodmead (South Africa) |
100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | a) |
| Parcelas e Narrativas - Imobiliária, SA | Maia (Portugal) | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | a) |
| Poliface North America | Lac-Mégantic (Canada) |
100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | a) |
| Sonae Indús tria - Management Services, S. A. | Maia (Portugal) | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | a) |
| Sonae Indús tria - Soc. Gestora de Participações Sociais, SA |
Maia (Portugal) | Parent | Parent | Parent | Parent | Parent | Parent | Parent |
| Sonae Indús tria 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 Garenne Colombes (France) |
100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | a) |
a) Majority of voting rights;
5. JOINT VENTURES
Joint ventures, their head offices, percentage of share capital held on 31 March 2019, 31 December 2018 and 31 March 2018 are as follows:
| PERCENTAGE OF CAPITAL HELD | TERMS FOR INCLUSION |
||||||||
|---|---|---|---|---|---|---|---|---|---|
| COMPANY | HEAD OFFICE | 31.03.2019 | 31.12.2018 | 31.03.2018 | |||||
| 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 Inves timentos, 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 - Indús trias Quimicas , S.A. | Maia (Portugal) | 100.00% | 50.00% | 100.00% | 50.00% | 100.00% 50.00% | a) | ||
| GHP Glunz Holzw erkstoffproduktions 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% | - | - | 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. | Barcelona (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 | ||||
|---|---|---|---|---|
| 31.03.2019 | 31.12.2018 | |||
| Non-current assets | 537 621 166 | 517 837 693 | ||
| Current assets (without cash and cash equivalents) | 210 155 765 | 217 573 340 | ||
| Cash and cash equivalents | 11 982 691 | 20 234 918 | ||
| Non-current financial liabilities | 236 646 170 | 234 035 312 | ||
| Other non-current liabilities | 72 874 488 | 73 156 014 | ||
| Current financial liabilities | 13 755 616 | 17 146 842 | ||
| Other current liabilities | 174 122 969 | 176 394 509 |
| Sonae Arauco - Consolidated | ||
|---|---|---|
| 31.03.2019 | 31.03.2018 | |
| 216 502 870 (191 807 524) (12 111 269) 110 612 (1 501 345) (2 042 204) |
216 584 513 (191 896 386) (10 579 228) 289 569 (1 616 054) ( 745 682) |
|
| 6 797 916 | 9 407 588 | |
| 6 797 916 | 9 407 588 | |
| 3 398 958 | 4 703 794 | |
| 649 190 | 724 337 | |
| 649 190 | 724 337 | |
| 324 595 | 362 169 | |
In October 2017, industrial plants of Mangualde and Oliveira do Hospital, which are controlled by Sonae Arauco, S. A., a company 50%-owned by Sonae Indústria, SGPS, S. A., were hit by wild fires that affected central Portugal. As a consequence, the wood yards, the exposed equipment within the wood yards and the electrical and cabling systems were significantly damaged, forcing these plants to stop operating.
In the first half of 2018, both industrial plants resumed normal activity.
These plants are subject to an insurance policy that will indemnify them for property damage and business interruption losses.
In the period ended 31 March 2019, Sonae Arauco was paid the last portion of the insurance compensation agreed with the insurers, which amounted to EUR 32 005 488. The total insurance compensation paid amounted to EUR 76 677 048. The corresponding gain was recognized in the consolidated accounts of Sonae Arauco of 2017 (EUR 16 940 254), 2018 (EUR 56 098 220) and 2019 (EUR 3 638 574).
The consolidated net profit of Sonae Arauco Group is recognized using the equity method in the Consolidated Income Statement for 50% of its amount, under Gains and losses in joint ventures, which therefore include 50% of the abovementioned effects, in each of the said periods.
6. INVESTMENTS
At 31 March 2019 and 31 December 2018, details of Investments, on the Consolidated Statement of Financial position, are as follows:
| 31.03.2019 | 31.12.2018 | |
|---|---|---|
| Investment in joint ventures | ||
| Opening balance | 212 459 264 | 205 616 464 |
| Effect of equity method | 3 723 553 | 13 249 147 |
| Dividends | (6 406 347) | |
| Closing balance | 216 182 817 | 212 459 264 |
| 31.03.2019 | 31.12.2018 | |
| Other investments | ||
| Opening balance | 137 941 | 134 476 |
| Acquisition | 1 676 | 3 465 |
| Closing balance | 139 617 | 137 941 |
| Accumulated impairment losses | 3 989 | 3 989 |
| Net other investments | 135 628 | 133 952 |
7. TANGIBLE FIXED ASSETS
At 31 March 2019 and 31 December 2018, movements in tangible assets, accumulated depreciation and impairment losses were as follows:
| 31.03.2019 | 31.12.2018 | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| 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 | 89 748 157 | 261 542 564 | 2 679 485 | 96 237 | 3 452 656 | 344 407 | 5 583 497 | 363 447 003 | 373 979 158 |
| Capital expenditure | 3 463 333 | 3 166 712 | 4 863 | 2 510 233 | 9 145 141 | 10 602 640 | |||
| Disposals Trans fers and reclassifications |
100 508 | ( 267 505) 646 963 |
( 14 223) | ( 13 884) 10 403 |
1 890 | ( 759 764) | ( 295 612) | (9 300 840) ( 11 061) |
|
| Exchange rate effect | 2 808 193 | 9 598 787 | 114 821 | 73 999 | 19 | 234 206 | 12 830 025 | (11 822 894) | |
| Closing balance | 96 120 191 | 271 520 809 | 5 946 795 | 96 237 | 3 528 037 | 346 316 | 7 568 172 | 385 126 557 | 363 447 003 |
| Accumulated depreciation and impairment losses | |||||||||
| Opening balance Depreciations for the period |
37 580 404 741 800 |
185 363 671 2 682 021 |
1 483 939 376 638 |
95 255 164 |
2 998 318 33 524 |
220 772 7 460 |
227 742 359 3 841 607 |
227 509 254 12 762 241 |
|
| Impairment losses for the period - through P/L | 55 225 | ||||||||
| Disposals Exchange rate effect |
1 187 699 | ( 209 784) 6 752 695 |
( 2 246) 48 741 |
( 13 884) 58 165 |
10 | ( 225 914) 8 047 310 |
(5 257 101) (7 327 260) |
||
| Closing balance | 39 509 903 | 194 588 603 | 1 907 072 | 95 419 | 3 076 123 | 228 242 | 239 405 362 | 227 742 359 | |
| Carrying amount | 56 610 288 | 76 932 206 | 4 039 723 | 818 | 451 914 | 118 074 | 7 568 172 | 145 721 195 | 135 704 644 |
At the closing date of these consolidated financial statements, mortgaged net tangible fixed assets amounted to EUR 124 640 445 (EUR 120 743 778 at 31 December 2018), as collateral for loans amounting to EUR 38 601 099 (EUR 37 259 448 at 31 December 2018).
Leased assets, which are stated under Tangible fixed assets, on the Consolidated Statement of Financial Position, are detailed as follows:
| 31.03.2019 | 31.12.2018 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Opening balance |
Increase | Decrease | Exchange rate effect |
Closing balance |
Opening balance |
Increases | Decreases | Exchange rate effect |
Closing balance |
|
| Gross cost: | ||||||||||
| Land and Buildings | 5 121 453 | 3 463 333 | ( 889) | 8 583 897 | 5 121 453 | 5 121 453 | ||||
| Plant and Machinery | 194 104 | 7 830 | 201 934 | 201 410 | ( 7 306) | 194 104 | ||||
| Vehicles | 575 053 | 3 166 712 | ( 14 223) | 43 647 | 3 771 189 | 1 203 070 | ( 596 250) | ( 31 767) | 575 053 | |
| Fixtures and Fittings | 183 245 | 4 863 | 7 415 | 195 523 | 283 139 | 152 139 | ( 243 584) | ( 8 449) | 183 245 | |
| Closing balance | 6 073 855 | 6 634 908 | ( 14 223) | 58 003 | 12 752 543 | 6 809 072 | 152 139 | ( 839 834) | ( 47 522) | 6 073 855 |
| Accumulated depreciation and | ||||||||||
| impairment losses: | ||||||||||
| Land and Buildings | 768 601 | 239 449 | ( 155) | 1 007 895 | 661 651 | 106 950 | 768 601 | |||
| Plant and Machinery | 65 850 | 3 347 | 2 679 | 71 876 | 54 887 | 13 217 | ( 2 254) | 65 850 | ||
| Vehicles | 363 395 | 304 353 | ( 2 246) | 16 537 | 682 039 | 927 371 | 55 138 | ( 596 250) | ( 22 864) | 363 395 |
| Fixtures and Fittings | 37 242 | 10 413 | 1 569 | 49 224 | 282 725 | 3 577 | ( 243 584) | ( 5 476) | 37 242 | |
| Closing balance | 1 235 088 | 557 562 | ( 2 246) | 20 630 | 1 811 034 | 1 926 634 | 178 882 | ( 839 834) | ( 30 594) | 1 235 088 |
| Carrying amount | 4 838 767 | 6 077 346 | ( 11 977) | 37 373 | 10 941 509 | 4 882 438 | ( 26 743) | ( 16 928) | 4 838 767 | |
Net increases in the period ended 31 March 2019 disclosed on this note are different from the amount disclosed on note 3 because the former include the depreciation of leased assets which were recognized under Tangible fixed assets on the previous year.
8. OTHER CURRENT DEBTORS
At 31 March 2019 and 31 December 2018, detail of Other current assets, on the Consolidated Statement of Financial Position, was as follows:
| 31.03.2019 | 31.12.2018 | ||||
|---|---|---|---|---|---|
| Gross Value | Net Value | Gross Value | Net Value | ||
| Derivatives instruments | 10 017 | 10 017 | 27 676 | 27 676 | |
| Financial Instruments | 10 017 | 10 017 | 27 676 | 27 676 | |
| Accrued income | 78 643 | 78 643 | 321 549 | 321 549 | |
| Deferred expenses | 869 246 | 869 246 | 1 684 066 | 1 684 066 | |
| Assets out of scope of IFRS 9 | 947 889 | 947 889 | 2 005 615 | 2 005 615 | |
| Total | 957 906 | 957 906 | 2 033 291 | 2 033 291 |
9. CASH AND CASH EQUIVALENTS
At 31 March 2019 and 31 December 2018, detail of Cash and Cash Equivalents, on the Consolidated Statement of Financial Position, was as follows:
| 31.03.2019 | 31.12.2018 | |
|---|---|---|
| Cash at Hand | 5 752 | 5 840 |
| Bank Deposits and Other Treasury Applications | 2 176 300 | 10 618 352 |
| Cash and Cash Equivalents on the Consolidated Statement of Financial Position |
2 182 052 | 10 624 192 |
| Bank Overdrafts | 4 612 774 | 136 274 |
| Cash and Cash Equivalents on the Consolidated Statement of Cash Flows |
(2 430 722) | 10 487 918 |
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 |
|||||||||
|---|---|---|---|---|---|---|---|---|---|
| Revaluation Reserve |
Remeasurements on defined benefit plans |
Share of Other Comprehensive Income of Joint Ventures |
Income tax related to |
||||||
| Currency translation |
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 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 |
| Accumulated other comprehensive income Atributable to the parent's shareholders |
|||||||
|---|---|---|---|---|---|---|---|
| Remeasurements on defined benefit plans |
Share of Other Comprehensive Income of Joint Ventures |
Income tax related to |
|||||
| Currency translation |
Revaluation Reserve |
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 2018 | 6 873 920 | 12 164 031 | ( 86 071) | 3 850 335 | 35 054 610 | (2 569 547) | 55 287 278 |
| Consolidated other comprehensive income for the period | (3 901 010) | 362 169 | (3 538 841) | ||||
| Others | ( 50 855) | ( 50 855) | |||||
| Balance as at 31 March 2018 | 2 972 910 | 12 164 031 | ( 86 071) | 4 161 649 | 35 054 610 | (2 569 547) | 51 697 582 |
11. LOANS
As at 31 March 2019 and 31 December 2018, Sonae Indústria had the following outstanding loans:
| 31.03.2019 | |||||
|---|---|---|---|---|---|
| Amortized cost | Nominal value | ||||
| Current | Non-current | Current | Non-current | ||
| Current portion of non-current bank loans | 13 300 001 | 13 300 001 | |||
| Bank loans | 4 612 774 | 188 927 298 | 4 612 774 | 189 834 436 | |
| Obligations under leases | 2 379 237 | 4 833 733 | 2 379 237 | 4 833 733 | |
| Gross debt | 20 292 012 | 193 761 031 | 20 292 012 | 194 668 169 |
| 31.12.2018 | |||||
|---|---|---|---|---|---|
| Amortized cost | Nominal value | ||||
| Current | Non-current | Current | Non-current | ||
| Current portion of non-current bank loans | 15 192 246 | 15 192 246 | |||
| Bank loans | 2 136 274 | 188 102 256 | 2 136 274 | 189 112 411 | |
| Obligations under finance leases | 529 015 | 491 753 | 529 015 | 491 753 | |
| Gross debt | 17 857 535 | 188 594 009 | 17 857 535 | 189 604 164 |
At 31 March 2019, loans can be detailed as follows:
| Company(ies) | Loan | Contract date | Maturity (with reference to 31.03.2019) |
Currency | Outstanding principal at 31.03.2019 (EUR) |
Outstanding principal at 31.12.2018 (EUR) |
|---|---|---|---|---|---|---|
| Tafisa Canada Inc. | Bank loan (Revolving ) |
July 2011 | October 2023 | CAD | 38 692 049 | 33 259 448 |
| Sonae Indústria, SGPS, S.A. | Commercial paper programme |
June 2013 | June 2023 Note: programme without subscription guarantee |
EUR | 2 000 000 | |
| Sonae Indústria, SGPS, S.A. | Commercial paper programme |
July 2014 | to be repaid from May 2020 to May 2022 |
EUR | 10 000 000 | 8 100 000 |
| Sonae Indústria, SGPS, S.A. | Commercial paper programme |
May 2016 | to be repaid from May 2019 to May 2021 |
EUR | 134 500 000 | 136 500 000 |
| Sonae Indústria, SGPS, S.A. | Commercial paper programme |
July 2016 | July 2019 | EUR | 4 000 000 | 4 000 000 |
| Sonae Indústria, SGPS, S.A. | Commercial paper programme |
December 2016 | to be repaid from June 2018 to December 2019 |
EUR | 5 600 000 | 7 500 000 |
| Sonae - Indústria de Revestimentos, S. A. |
Bank loan | September 2017 | to be repaid from March 2019 to September 2022 |
EUR | 3 500 000 | 4 000 000 |
| Sonae Indústria, SGPS, S. A. | Commercial paper programme |
June 2018 | to be repaid from December 2019 to June 2021 |
EUR | 10 000 000 | 10 000 000 |
| Others | EUR | 1 455 162 | 1 081 483 | |||
| Total | EUR | 207 747 211 | 206 440 931 |
All these loans are subject to variable interest rates.
Figures detailed on the previous table correspond to the nominal value of bank loans disclosed on this note.
At 31 March 2019, in addition to mortgaged tangible fixed assets referred to on note 7, there were other assets amounting to EUR 31 871 112 (EUR 27 549 025 at 31 December 2018) which were pledged as collateral for the Group's liabilities. These assets consisted mostly of inventories and accounts receivable.
12. OTHER CURRENT LIABILITIES
At 31 March 2019 and 31 December 2018, Other current liabilities on the Consolidated Statement of Financial Position were composed of:
| 31.03.2019 | 31.12.2018 | ||
|---|---|---|---|
| Derivatives | 15 801 | 5 621 | |
| Tangible fixed assets suppliers | 479 433 | 1 955 451 | |
| Other creditors | 462 545 | 531 520 | |
| Financial instruments | 957 779 | 2 492 592 | |
| Other creditors | 476 959 | 482 866 | |
| Accrued expenses | |||
| Insurances | 23 098 | 19 068 | |
| Personnel expenses | 4 759 475 | 3 912 764 | |
| Accrued financial expenses | 219 260 | 229 540 | |
| Rebates | 981 782 | 3 050 847 | |
| External supplies and services | 415 014 | 391 968 | |
| Other accrued expenses | 690 070 | 1 036 838 | |
| Deferred income | |||
| Investment subventions | 164 792 | 161 013 | |
| Other deferred income | 148 936 | 148 935 | |
| Liabilities out of scope of IFRS 9 | 7 879 386 | 9 433 839 | |
| Total | 8 837 165 | 11 926 431 |
13. OTHER INCOME AND GAINS
Details of Other income and gains on the Consolidated Income Statement for the periods ended 31 March 2019 and 31 March 2018 are as follows:
| 31.03.2019 | 31.03.2018 | |
|---|---|---|
| Gains on disp. and write off of invest. prop., tang. and intang. assets | 37 397 | 57 413 |
| Supplementary revenue | 343 017 | 264 139 |
| Investment subventions | 42 022 | 41 552 |
| Positive exchange gains | 183 021 | 379 335 |
| Adjustment to fair value of financial instruments at fair value through profit or loss | 46 228 | 39 295 |
| Others | 224 936 | 99 984 |
| 876 621 | 881 718 |
14. OTHER EXPENSES AND LOSSES
Details of Other expenses and losses on the Consolidated Income Statement for the periods ended 31 March 2019 and 31 March 2018 are as follows:
| 31.03.2019 | 31.03.2018 | |
|---|---|---|
| Taxes | 310 037 | 313 508 |
| Losses on disp. and write off of invest. prop., tang. and intang. assets | 57 721 | 66 971 |
| Negative exchange gains | 258 020 | 279 244 |
| Adjustment to fair value of financial instruments at fair value through profit or loss | 74 067 | 48 485 |
| Others | 56 617 | 68 913 |
| 756 462 | 777 121 |
15. RECURRING AND NON-RECURRING ITEMS
Recurring operating items on the Consolidated Income Statement are detailed as follows:
| 31.03.2019 | 31.03.2018 Recurring |
||
|---|---|---|---|
| Recurring | |||
| Sales | 56 371 052 | 53 949 375 | |
| Services rendered | 393 500 | 357 393 | |
| Other income and gains | 839 224 | 824 305 | |
| Cost of sales | (32 464 971) | (30 394 133) | |
| Increase / (decrease) in production | ( 933 617) | ( 415 536) | |
| External supplies and services | (11 974 301) | (11 601 226) | |
| Staff expenses | (6 751 767) | (6 198 678) | |
| Impairment losses in trade debtors - (increase)/reduction | (1 535) | ( 1 678) | |
| Other expenses and losses | ( 693 824) | ( 710 151) | |
| Recurring operating profit/(loss) before amortization, depreciation, provisions and impairment losses (except trade debtors) |
4 783 761 | 5 809 671 | |
| Non-Recurring operating profit/(loss) before amortization, depreciation, provisions and impairment losses (except trade debtors) |
( 183 066) | ( 63 608) | |
| Total operating profit/(loss) before amortization, depreciation, provisions and impairment losses (except trade debtors) |
4 600 695 | 5 746 063 |
16. FINANCIAL RESULTS
Financial results for the periods ended 31 March 2019 and 31 March 2018 were as follows:
| 31.03.2018 | |
|---|---|
| 2 195 | |
| 1 300 | 2 195 |
| 352 | |
| 181 768 | |
| 182 281 | 182 120 |
| 16 638 | 28 439 |
| 1 409 | 1 450 |
| 201 628 | 214 204 |
| (1 933 605) (77 576) (4 028) |
(1 975 026) (16 338) (1 490) (1 992 854) |
| (7 465) | |
| ( 180 806) | |
| ( 240 944) | ( 188 271) |
| ( 386 259) | ( 408 709) |
| ( 430 765) | ( 439 198) |
| (3 073 177) | (3 029 032) |
| (2 814 828) | |
| 1 300 8 001 174 280 (2 015 209) (9 640) ( 231 304) (2 871 549) |
17. TAXES
Corporate income tax accounted for in the periods ended 31 March 2019 and 31 March 2018 is detailed as follows:
| 31.03.2019 | 31.03.2018 | |
|---|---|---|
| Current tax | 465 514 | 1 060 850 |
| Deferred tax | (434 505) | ( 353 233) |
| 31 009 | 707 617 |
18. 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 during the years 2015 and 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. For the cases still in progress, the complaints submitted specifically to the former subsidiaries Sonae Arauco Deutschland GmbH (formerly Glunz AG) and GHP GmbH amount to a maximum contingency (based on the claimed values) of EUR 31.5 million. Regarding other cases in which these former subsidiaries are jointly involved with other German producers, the maximum contingency amounted to EUR 26 million at 31 March 2019. 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 remaining 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, 110 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). At the date of approval of these consolidated financial statements, legal proceedings are under way and it is not possible to predict whether the outcome will result in any obligation to be recognized under the consolidated liabilities of Sonae Indústria Group.
19. APPROVAL OF THE CONSOLIDATED FINANCIAL STATEMENTS
These consolidated financial statements were approved by the Board of Directors and authorized for issuance 8 May 2019.