Quarterly Report • May 30, 2016
Quarterly Report
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| 0. | HIGHLIGHTS | 3 |
|---|---|---|
| 1. | LEADING INDICATORS | 4 |
| 2. | ANALYSIS OF RESULTS | 5 |
| 3. | MARKET ANALYSIS | 8 |
| 4. | OPERATING INDICATORS | 10 |
| 5. | STRATEGIC DEVELOPMENT | 11 |
| 6. | COST CUTTING MEASURES | 12 |
| 7. | FINANCIAL PERFORMANCE | 13 |
| 8. | CAPITAL MARKETS | 14 |
| 9. | OUTLOOK | 16 |
| 10.CONSOLIDATED FINANCIAL STATEMENTS & NOTES | 18 |
On 5 February 2016 the Portucel Soporcel Group changed its corporate brand to The Navigator Company. Inspired by their leading paper brand, this new identity represents the coming together of companies with a history dating back more than 60 years. The rebranding sets out to convey a contemporary image in tune with the reputation enjoyed by one of Portugal's largest business groups, with a strong international presence.
The 2016 1st Quarter accounts are the first to be reported using the new identity.
| Q1 | Q1 | Variation | Q4 | Variation | |
|---|---|---|---|---|---|
| Million euros | 2016 | 2015 | % | 2015 | % |
| Total Sales | 384.6 | 388.8 | -1.1% | 423.7 | -9.2% |
| EBITDA (1) | 93.5 | 81.4 | 14.9% | 96.0 | -2.6% |
| Operating profits (EBIT): | 56.4 | 54.2 | 4.1% | 75.1 | -24.9% |
| Financial Results | - 2.7 | - 8.7 | -68.7% | - 5.4 | -49.3% |
| Net Income | 44.7 | 41.8 | 7.0% | 54.5 | -17.9% |
| Operating Cash Flow | 81.8 | 69.0 | 18.6% | 75.3 | 8.6% |
| Free Cash Flow(2) | 18.0 | 51.7 | -33.7 | 62.6 | -44.5 |
| Capital Expenditure | 49.0 | 12.8 | 36.2 | 35.4 | 13.6 |
| Interest-bearing Debt (3) | 636.4 | 282.2 | 354.2 | 654.5 | -18.0 |
| EBITDA / Sales | 24.3% | 20.9% | 3.4 pp | 22.7% | 1.7 pp |
| ROS | 11.6% | 10.7% | 0.9 pp | 12.9% | -1.2 pp |
| ROE | 14.5% | 11.4% | 3.1 pp | 17.5% | -3.0 pp |
| ROCE | 12.0% | 12.4% | -0.4 pp | 16.1% | -4.1 pp |
| Financial Autonomy | 51.2% | 55.0% | -3.8 pp | 52.9% | -1.7 pp |
| Net Debt / EBITDA(4) | 1.6 | 0.9 | 1.7 |
(1) Operating profits + depreciation + provisions
(2) Var. Net debt + dividends + purchase of own shares
(3) Interest-bearing net debt – liquid assets
(4) EBITDA corresponding to last 12 months
The Navigator Company recorded sound performance during the first quarter of 2016, with turnover totalling € 384.6 million. Despite positive performance in paper, pulp and tissue, the Group's turnover was negatively affected by a reduction in the value of power sales, caused by the revision of the national grid tariff for power from the Figueira da Foz cogeneration plant.
In the European uncoated woodfree (UWF) paper sector, production capacity contracted significantly (by around 7%), allowing an improvement in capacity utilization rates. At the same time, exports fell and imports into the European market increased, whilst estimates point to a reduction in apparent consumption of approximately 3%. In this context, the Group recorded sales of 378 thousand tons, its highest ever figure for the first quarter of the year, up by 4.6% on its sales volume in Q1 2015. The Pix A4-B copy index improved by 2.8%, and the Group's price in the European market rose in line with the index. As a result, paper sales totalled € 297 million euros in value, representing growth of 4.9%.
In bleached eucalyptus pulp (BEKP) business, the Navigator Company enjoyed strong performance in the first quarter of 2016, sustained by the sales volume and the average sales price, up respectively by 13% and 2% in relation to the first quarter of 2015. The increase in the sales volume was due essentially to the increased availability of pulp resulting from capacity expansion at the Cacia mill carried out in 2015. Pulp prices were higher than in the first quarter of 2015, despite the downward tendency observed globally since late 2015. Since the start of 2016, the PIX BHKP index has dropped 10% in USD and approximately 13% in Euros, with an even more significant downward adjustment in prices in the Asian market. Accordingly, pulp sales in the quarter grew by 15%, to a total of € 35 million.
In the power sector, maintenance operations and major repairs were completed on the pulp mill turbogenerators in Cacia and Setúbal during the first quarter of 2016. Planned maintenance operations were also carried out at the natural gas cogeneration plant at the Setúbal industrial complex. As from February, natural gas cogeneration has switched to an own-consumption only basis, reducing the volume of power sales to the national grid and also reducing purchases of electricity.
Falling Brent prices in recent months have influenced the price of power sales from the Setúbal gas co-generation plant and reduced purchase prices for natural gas for a range of users.
Total gross power generation in the first half of 2016 was accordingly down by 14.4% in relation to the same period in 2015. The volume of power sales (in MWh) fell by 25%, due in part to the switch to own-consumption at the Figueira da Foz gas co-generation plant. The two standalone biomass power plants recorded an increase in gross power output of 3.3%.
In the tissue sector, business progressed as expected, with growth of approximately 22% in the sales of products and goods from the Vila Velha de Ródão plant (in tons sold) in the first quarter of 2016, thanks to the expansion in production and converting capacity over the course of 2015. The increase in quantities sold, combined with a slight decline in the average sales price, resulted in tissue sales worth € 15.9 million.
On the cost side, a reduction in specific consumption of wood has made it possible to bring down production costs. Evolution of the wood supply mix, with larger percentages of wood sourced from the Portuguese market and of own wood, has made it possible to cut the overall cost of this raw material.
Improvements were also recorded in logistical costs for paper and pulp, thanks to falling oil prices and to efforts to improve and achieve efficiencies in the Group's export logistics.
In this scenario, consolidated EBITDA surged to € 93.5 million, up by approximately 15% on the first quarter of 2015 and pushing the margin up by 3.4 pp to 24.3%.
Attention should also be drawn to the negative impact on EBITDA of approximately € 2.7 million from application of the anti-dumping duty in the United States in the reporting quarter.
Operating cash flow stood at € 81.8 million, up by 18.6 % on the same period in 2015. Despite sound operational performance, free cash flow was brought down (to € 18 million, as compared to € 51.7 million), as a result of the higher level of capital expenditure and increased investment in working capital, especially in relation to stocks, reflecting a normal reaction after the sales effort at the end of the year. Operating income also rose by 4.1%, to a total of € 56.4
million. Depreciation in the quarter stood at € 36 million, up by € 2.9 million on the same quarter in 2015, as a result of the new capital projects.
Financial results in the period showed a clear improvement, with a loss of € 2.7 million, in contrast to a loss of € 8.7 million in the first quarter of 2015. This improvement was due fundamentally to a reduction in borrowing costs as a result of the Group's restructuring of its debt in the second half of 2015. In September, the Navigator Company redeemed Portucel Senior Notes 5.375% worth € 200 million, ahead of their maturity in 2020, and then issued new notes with the same value but a longer maturity, and a spread of 1.9%; the Group also renegotiated and extended the maturity of a commercial paper programme with a value of € 125 million, on more favourable market terms. Despite a drop in financial investment income as a result of lower liquidity, the net cost of financial operations fell by approximately € 3.1 million in the quarter. Foreign exchange income also performed well, improving by € 2.8 million in relation to the same period in the previous financial year.
As a result, consolidated net income for the period stood at € 44.7 million, up by 7.0% in relation to the first quarter of 2015.
Comparison with the final quarter of 2015 points to the seasonal fluctuations observed at the end and at the start of each year. Turnover in the first quarter of 2016 was down by 9.2% in relation to the figure recorded in the previous quarter, as a result of a reduction in the volume of pulp and paper sales, as well as lower pulp prices.
Despite setting a new record for the first quarter, the volume of paper sales was around 11% lower than in the 4th quarter of 2015. In terms of price, the tendency was positive, with the Group's average price rising by close to 1.9%. This figure reflects the latest price increase, implemented in early 2016.
In volume, pulp sales (BEKP) fell by 4.5% in relation to the 4th quarter, and the Group's average price was also lower, in line with the downwards tendency in the market.
In the power business, as reported above, application of the new tariff for power sales to the national grid from the Figueira da Foz natural gas co-generation plant lay behind the decision to switch to an own-consumption only basis, resulting in a reduction in sales to the national grid and also a reduction in the Group's overall average sales price.
In this context, EBITDA totalled € 93.5 million for the quarter, as compared to € 96.0 million in the fourth quarter, although the EBITDA / Sales margin improved to 24.3% from 22.7%.
In late 2015, two units of significant size in the European market discontinued operations in the UWF market. This development pushed the capacity utilization rate to a high level at the same time as European exports fell sharply, optimising the sales mix of European manufacturers. Another consequence of the reduction in capacity was an increase in imports, especially from Asia. Despite difficulties in reliably measuring the evolution of consumption, estimates point to a drop in apparent consumption in Europe of around 3%, clearly smaller than the year-on-year reduction in the number of working days in Europe.
In this context, market prices in Europe continued to rise, in line with the trend which started in 2015, and the Navigator Company put up its standard prices in Europe during the period.
In the US, apparent consumption of UWF paper rose by 1.2% up to February, with a very significant drop in imports, down by around 16%, as a result of anti-dumping measures imposed on Chinese, Australian, Brazilian and Portuguese manufacturers. Even so, the capacity utilization rate stood at 92%, with no significant change from the figure recorded in the previous year.
In this context, the Group recorded in the first quarter of 2016 its highest ever figure for the volume of paper sales, up by around 5% on 2015, on the strength of continued expansion into new geographical regions and improved penetration in Latin America, the Middle East and Africa. Sales in Europe were up by 3% on 2015, supported by the Group's mill brands and premium products, widely recognised for their quality in European markets.
As a result, the Group continued to operate, as usual, at 100% of its capacity, with order books at fairly comfortable levels. Special attention should be drawn to the performance of the Soporset brand over the period, with significant growth in the European printing market.
The sharp slowdown in BEKP purchases by Chinese buyers continued into early 2016, with a significant impact on the balance of the international market. The global capacity utilization rate in BEKP dropped from 91% in 2015 to 85% in the first quarter of 2016. As a result, the benchmark price in the industry opened the year at a high level but then started on a downwards course, and has dropped around 10% in USD and 13% in EUR since the start of the year.
The Group's sales bucked this trend and totalled 65 thousand tons, 9% up on the same period in 2015; once again, the Group improved its position in the decorative and special papers segment, for which its market pulps are ideally suited.
Demand for tissue paper in Western Europe started the year on an upwards course, growing by around 5% in relation to the first quarter of the previous period. This shows that demand growth is holding steady in relation to the overall figure of 4% recorded in 2015. The corresponding figures for growth in output in Western Europe are 4% and 3% (2016 versus 2015 and 2015 versus 2014 respectively).
The Group's tissue business grew by 17% in relation to the first quarter of 2015. Sales on the
Portuguese market stood at around € 10 million, accounting for 66% of total volume. Practically all the Group's other tissue sales were to Spain, totalling approximately € 5 million.
Although performance was clearly positive, the increase in capacity achieved in September 2015 means that 2016 will be a challenging year, in which the company's aim will be to move quickly to maximise the utilization rate of the production lines.
| (in 000 tons) | Q1 2016 | Q2 2015 | % | Q4 2015 | % |
|---|---|---|---|---|---|
| BEKP output | 370 | 343 | +8.1% | 364 | +1.6% |
| BEKP sales | 65 | 57 | +12.7% | 68 | -4.5% |
| UWF output | 398 | 374 | +6.2% | 426 | -6.7% |
| UWF sales | 378 | 361 | +4.6% | 425 | -11.2% |
| FOEX – BHKP Euros/ton |
695 | 660 | +5.2% | 730 | -4.8% |
| FOEX – A4- BCopy Euros/ton |
836 | 814 | +2.8% | 832 | +0.5% |
| (in 000 tons) | Q1 2016 | Q2 2015 | % | Q4 2015 | % |
|---|---|---|---|---|---|
| Reels Output | 11 | 7 | 56% | 11 | 0% |
| Output of finished goods |
10 | 9 | +16% | 10 | 0% |
| Sales of reels and goods |
2 | 0 | na | 1 | na |
| Sales of finished products |
10 | 9 | 9% | 9 | 8% |
| (in 000 tons) | Q1 2016 | Q2 2015 | % | Q4 2015 | % |
|---|---|---|---|---|---|
| Output (GWh) | 508 | 594 | -14% | 507 | 0% |
| Sales (GWh) | 390 | 518 | -25% | 413 | -6% |
Over the course of the first quarter, the Group pressed ahead with developing the alternative areas for growth set out in its strategic plan. Investment totalled approximately € 49 million, including € 10 million in pulp, paper and tissue business, € 6 million on the project in Mozambique, and € 33 million on the pellets factory in the United States.
One year on from the acquisition of the former AMS (now Navigator Ródão), marking the Group's move into the tissue segment, with rated capacity of 6 thousand tons of reels and 64 thousand tons of converted products, the company has been successfully integrated into the wider Navigator Group in terms of its information, organisation, marketing, logistical, financial and human resources systems. Significant synergies have been achieved and have contributed to this quarter's results.
For the Cacia site, the Group has conditionally approved a project for a tissue production line, including conversion into final products, with rated annual capacity of 70 thousand tons. This project is budgeted at € 121 million and is expected to increase the Group's production capacity to 130 000 tons/year. The go-ahead for this project is dependent on the approval of state incentives. Preliminary studies on the paper machine are practically complete and work is nearing completion on the technical and business analysis for the converting facilities.
Colombo Energy Inc. is the company soon to start operating the new pellets factory in the USA (in Greenwood, South Carolina). Construction is already at the final stage and contracts have been awarded for 96.5% of the capital investment of USD 116.5 million; 53 members of the planned workforce of 70 have already been recruited.
Work on fitting the equipment is due to be completed in May 2016, and commissioning and trials are set to start before the end of the same month, with production planned to start up in late July.
Planting work continued during the first quarter of 2016, using plants supplied by the Forestry Nurseries in Luá, the largest facility of its kind in Africa. A total of 2,200 hectares were planted in the reporting period.
The political and economic situation in the country is unstable, which presents additional challenges, in terms of the security of everyone involved and also the security of supplies of products needed for the project. Pressure on the Metical has resulted in inflation, a problem which became serious in 2015 and continues to get worse.
Efforts have continued to implement the company's Social Development Programme. This consists of investing in the communities living in the project area and is expected to make a significant contribution to improving the living conditions of all those involved.
The M2 programme moved into its second phase in 2016. A total of around 100 initiatives are now under way, some of them new and others continuing from 2015, with an estimated impact on EBITDA in 2016 of approximately € 11 million, once again focussed primarily on manufacturing divisions.
A number of measures have been implemented during the first quarter of 2016 to stabilise and apply the programme more systematically. These included monthly progress meetings at Plant Management level, a new template for recording and monitoring the financial impact of measures and allocation of M2 coordination responsibilities to a specific member of management at each plant, who will coordinate the programme internally and liaise with central management.
The Lean programme completed the design stage in 2015 and efforts during the reporting period centred on finalising and validating needs assessments in the pilot areas, identifying a
catalogue of 70 operational improvement projects with an estimated impact on EBITDA of € 4.6 million, including € 1.2 million in 2016.
In keeping with the organisational strategy of rolling out new approaches, the operational model currently being piloted will be replicated initially in all other manufacturing divisions, with opportunity assessments scheduled for the end of this year. The first quarter also saw the startup of the Lean Management training programme aimed at manufacturing and service personnel. This will create the skills base in waste reduction methods needed to consolidate the lean manufacturing strategy established.
At the end of the first quarter, the Group's net debt stood at € 636.4 million, down by € 18 million from year-end 2015, reflecting capital expenditure of € 49 million. Gross debt stood at € 693 million, down by € 34.1 in relation to the amount recorded at the end of the previous year. This reduction was due essentially to repayment of a loan of 15 million euros and a decrease in use of a commercial paper facility at the end of the quarter.
The Net Debt/EBITDA ratio stood at 1.6 at the end of March, as compared with 1.7 at the end of 2015; this level was in line with expectations, considering the investment plan currently being implemented.
After concluding a series of refinancing operations during the second half of 2015, the Group increased its interest rate exposure. This led it to negotiate a series of interest rate swaps, some of them in early 2016, and at the end of the 1st quarter it had 69% of its borrowing on a fixed rate basis, with an average total cost of gross borrowing of 2.58%.
After the close of the quarter, the Company announced the early repayment of the remainder of the Portucel Senior Notes 5.375% issue, maturing in 2020, with a value of 150 million euros. The notes will be repaid on 13 May 2013 by completing fresh financing operations, for which the contractual arrangements are currently being finalised and which reflect current market conditions, more favourable than those prevailing when the notes were issued. This operation will provide a saving, net of the redemption premium, of € 16 million over the next four years.
The Navigator Company estimates that the average cost of its borrowing after completing these transactions will be less than 2%.
In early March, Moody's upgraded the Group's long term rating from Ba3 to Ba2, classifying its outlook as stable. Explaining its decision, the rating agency pointed to Portucel's consistently sound performance over a period when prices have been extremely volatile and UWF consumption has declined, and also to the conservative financial profile the Group has maintained.
Equity markets around the world got off to a poor start, with the main indexes recording very sharp losses in January, which continued into the following month. Falling oil prices and fears of an economic slowdown in Asian countries were amongst the concerns that triggered the slump in share prices. The main stock markets rallied in March, as investors reacted positively to the announcement by the ECB of measures to stimulate the Euro Zone economy and inflation, and also to the publication of better than expected economic figures for the USA. But this recovery still fell short of reversing the losses recorded since the start of the year.
The European stock exchanges closed the quarter in negative territory, with Eurostoxx 50 down 10%, IBEX 35 down 8.6% and DAX down 7.2%. The Portuguese market index enjoyed a degree of buoyancy during the quarter, driven by banking sector shares, but also recorded an overall loss of 5.5%, reflecting the downwards revision of growth forecasts for the Portuguese economy and the revision by Fitch of its outlook rating for Portuguese debt, down from positive to stable.
Equities in the pulp and paper sector were hit very badly over the period, especially in the case of pulp manufacturer stocks, due to the more negative outlook for pulp prices.
In this environment, the Navigator Company's shares ended the quarter down 11%, recording their highest level on 4 January (3.59 €/share) and their lowest level on 9 February (2.687€/share). Average daily trading in the shares was significantly higher than the average for 2015 (up 48%), reflecting increased liquidity.
With the change of corporate name, and after approval at the General Meeting, shares will be trading with the new ticker - NVG - as from April 28th 2016.
The latest IMF and OECD projections have downgraded expectations of global growth in 2016 and 2017. The world economy continues to grow, but expansion is slower, and dependent on stimulus policies implemented in developed countries. The impact of a slowdown in China and other emerging countries in the world economy and the instability associated with the shift in monetary policy pursued by the US Federal Reserve are both factors generating instability. In the Euro Zone, positive factors can be observed, such as the accommodative policy pursued by the European Central Bank. However, the economic slowdown in emerging countries combined with other factors generating uncertainty, in particular political factors, could result in investment decisions being postponed, undermining growth.
In this setting, after the strong pressure on pulp prices in recent months, signs have started to emerge that the downward tendency is easing. Business has picked up in pulp purchases in China and other markets, suggesting that stocks of eucalyptus pulp may be at a low level and the spot price has bottomed out. At the same time, the price differential between short fibre pulp and long fibre pulp has started to widen again, and is once more close to the all-time record of 100 USD/ton. However, although the second quarter may bring a degree of improvement in pulp demand, supply is forecast to continue growing at a fast pace in 2016. Careful management of the introduction of new capacity in Latin America will be fundamental in maintaining balance in the pulp market.
In the Iberian tissue market, the second and third quarters are traditionally the months when consumption is highest, especially in the away-from-home segment, due to the high season in the tourist trade and restaurant/catering industry. Tendencies in the wider economy in Portugal and Spain, and their impact on consumption, will be crucial to successful performance in this sector.
In terms of paper, the European market is expected to continue to benefit throughout 2016 from the recent reduction and conversion of capacity at a number of manufacturing facilities in Europe. However, the impact of the anti-dumping proceedings brought by the US authorities has continued to disrupt the balance of supply and demand in a number of geographical regions, with increased pressure in Asia, Latin America, the Middle East and certain countries in
Africa. In Europe, the level of imports from the Asian markets has been increasing, and this may intensify the pressure of competition, and lead to increased discounting on prices.
In the United States, the closure of 340 thousand tons of uncoated paper capacity, announced for April, will have a positive impact on the market, and a price increase has already been announced for May. Exchange rate trends will of course be a crucial factor in determining the competitiveness of pulp and paper manufacturers.
After the close of the quarter, the Company's General Meeting, held on 19 April, approved payment of a 2015 dividend of € 114 million (0.1590€/share), as well as distribution of reserves of € 56 million (0.07810€/share).
Setúbal, April 28th 2016
| Amounts in Euro | Notes | 3 months 31-03-2016 |
3 months 31-03-2015 |
|---|---|---|---|
| (unaudited) | (unaudited) | ||
| Revenues | 3 | ||
| Sales | 383,603,980 | 387,716,738 | |
| Services rendered | 963,156 | 1,084,255 | |
| Other operating income | |||
| Gains on the sale of non-current assets | 95,062 | 4,488 | |
| Other operating income | 6,175,301 | 2,335,034 | |
| Change in the fair value of biological assets | 10 | (271,889) | 652,554 |
| Costs | |||
| Cost of inventories sold and consumed | (182,637,816) | (191,452,432) | |
| Variation in production | 16,887,070 | 20,047,396 | |
| Cost of materials and services consumed | (92,297,938) | (100,669,053) | |
| Payroll costs | (35,363,220) | (33,754,762) | |
| Other costs and losses | (3,650,348) | (4,590,183) | |
| Provisions | 17 | (1,117,864) | 5,906,473 |
| Depreciation, amortization and impairment losses | (35,980,113) | (33,083,703) | |
| Operating results | 56,405,381 | 54,196,807 | |
| Net financial results | 4 | (2,715,629) | (8,687,762) |
| Profit before tax | 53,689,752 | 45,509,045 | |
| Income tax | 5 | (9,066,576) | (3,718,632) |
| Net Income | 44,623,176 | 41,790,413 | |
| Non-controlling interests | 96,915 | (5,092) | |
| Net profit for the period | 44,720,091 | 41,785,321 | |
| Earnings per share | |||
| Basic earnings per share, Eur | 6 | 0.062 | 0.058 |
| Diluted earnings per share, Eur | 6 | 0.062 | 0.058 |
| Amounts in Euro | Notes 31-03-2016 |
31-12-2015 | |
|---|---|---|---|
| (unaudited) | |||
| ASSETS | |||
| Non-Current Assets | |||
| Goodw ill | 377,339,466 | 377,339,466 | |
| Other intangible assets | 8 | 6,365,081 | 4,931,507 |
| Plant, property and equipment | 9 | 1,331,388,014 | 1,320,799,086 |
| Investment properties | 426,838 | 426,838 | |
| Biological assets | 10 | 116,725,038 | 116,996,927 |
| Available-for-sale financial assets | 11 | 260,486 | 229,136 |
| Deferred tax assets | 15 | 54,615,374 | 50,934,325 |
| 1,887,120,297 | 1,871,657,286 | ||
| Current Assets Inventories |
231,899,105 | 212,554,956 | |
| Receivable and other current assets | 12 | 232,211,873 | 215,370,516 |
| State and other public entities | 13 | 56,543,163 | 57,642,795 |
| Cash and cash equivalents | 18 | 56,580,163 | 72,657,585 |
| Total Assets | 577,234,304 2,464,354,601 |
558,225,851 2,429,883,137 |
|
| EQUITY AND LIABILITIES | |||
| Capital and Reserves | |||
| Share capital | 14 | 767,500,000 | 767,500,000 |
| Treasury shares | 14 | (96,974,466) | (96,974,466) |
| Fair value reserves | (4,665,982) | (1,869,064) | |
| Other reserves | 91,781,112 | 91,781,112 | |
| Currency translation reserves | 7,396,774 | 5,688,140 | |
| Retained earnings | 442,056,147 | 273,081,975 | |
| Net profit for the period | 44,720,091 | 196,404,220 | |
| Early Earnings | - | (29,971,019) | |
| 1,251,813,674 | 1,205,640,898 | ||
| Non-controlling interests | 8,425,701 | 8,622,303 | |
| 1,260,239,376 | 1,214,263,201 | ||
| Non-current liabilities | |||
| Deferred taxes liabilities | 15 | 87,398,447 | 88,296,253 |
| Post-retirement benefits | 16 | - | - |
| Provisions | 17 | 54,521,726 | 59,205,593 |
| Interest-bearing liabilities | 18 | 521,820,243 | 686,570,753 |
| Other non-current liabilities | 18 | 38,746,912 | 38,538,726 |
| 702,487,328 | 872,611,325 | ||
| Current liabilities | |||
| Interest-bearing liabilities | 18 | 171,208,161 | 40,578,590 |
| Payables and other current liabilities | 19 | 245,573,319 | 225,084,110 |
| State and other public entities | 13 | 84,846,418 | 77,345,911 |
| 501,627,898 | 343,008,611 | ||
| Total liabilities | 1,204,115,226 | 1,215,619,936 | |
| Total equity and liabilities | 2,464,354,601 | 2,429,883,137 |
| 3 months 31-03-2016 |
3 months 31-03-2015 |
|
|---|---|---|
| Amounts in Euro | (unaudited) | (unaudited) |
| Net profit for the period | 44,623,176 | 41,790,413 |
| Itens that can be reclassified subsequently to profit or loss | ||
| Fair value in derivative financial instruments | (3,857,818) | (8,084,885) |
| Currency translation differences | 1,708,634 | 1,202,184 |
| Tax on items above w hen applicable | 1,060,900 | 1,812,362 |
| (1,088,284) | (5,070,339) | |
| Itens that will not be reclassified subsequently to profit or loss | ||
| Share of other comprehensive income of associates | 2,457,255 | 4,537 |
| Actuarial gains / (losses) | 367,060 | (9,712,676) |
| Tax on items above w hen applicable | (186,430) | 58,358 |
| 2,637,885 | (9,649,781) | |
| 1,549,601 | (14,720,120) | |
| Total recognized income and expense for the period | 46,172,777 | 27,070,292 |
| Attributable to: | ||
| Portucel's shareholders | 46,172,777 | 27,070,847 |
| Non-controlling interests | (196,602) | (555) |
| 45,976,175 | 27,070,292 |
| Amounts in Euro | st January 2016 1 |
Gains/losses recognized in the period |
Transactions with Non-controlling interests |
Dividends paid and reserves distributed (Note 25) |
Early Earnings | Application of prior year's net profit (Note 25) |
31st March 2016 |
|---|---|---|---|---|---|---|---|
| Share capital | 767,500,000 | - | - | - | - | - | 767,500,000 |
| Treasury shares | (96,974,466) | - | - | - | - | - | (96,974,466) |
| Fair value reserves | (1,869,064) | (2,796,918) | - | - | - | - | (4,665,982) |
| Other reserves | 91,781,112 | - | - | - | - | - | 91,781,112 |
| Translation reserves | 5,688,140 | 1,708,634 | - | - | - | - | 7,396,774 |
| Retained earnings | 273,081,975 | 2,540,970 | - | - | (29,971,019) | 196,404,220 | 442,056,147 |
| Net profit for the period | 196,404,220 | 44,720,091 | - | - | - | (196,404,220) | 44,720,091 |
| Early Earnings | (29,971,019) | - | - | - | 29,971,019 | - | - |
| Total | 1,205,640,898 | 46,172,777 | - | - | - | - | 1,251,813,674 |
| Non Controlling Interests | 8,622,303 | (196,602) | - | - | - | - | 8,425,701 |
| Total | 1,214,263,201 | 45,976,175 | - | - | - | - | 1,260,239,375 |
| Amounts in Euro | 1 st January 2015 |
Gains/losses recognized in the period |
Transactions with Non-controlling interests |
Dividends paid and reserves distributed (Note 25) |
Early Earnings | Application of prior year's net profit (Note 25) |
31st March 2015 |
|---|---|---|---|---|---|---|---|
| Share capital | 767,500,000 | - | - | - | - | - | 767,500,000 |
| Treasury shares | (96,974,466) | - | - | - | - | - | (96,974,466) |
| Fair value reserves | (2,329,120) | (6,272,524) | - | - | - | - | (8,601,644) |
| Other reserves | 83,644,527 | - | - | - | - | - | 83,644,527 |
| Translation reserves | 724,832 | 1,202,184 | - | - | - | - | 1,927,016 |
| Retained earnings | 519,395,217 | (9,644,134) | - | - | - | 181,466,696 | 691,217,779 |
| Net profit for the period | 181,466,696 | 41,785,321 | - | - | - | (181,466,696) | 41,785,321 |
| Total | 1,453,427,686 | 27,070,847 | - | - | - | - | 1,480,498,533 |
| Non Controlling Interests | 235,253 | (555) | - | - | - | - | 234,698 |
| Total | 1,453,662,938 | 27,070,292 | - | - | - | - | 1,480,733,231 |
| Amounts in Euro | Notes | 31-03-2016 | 31-03-2015 |
|---|---|---|---|
| (unaudited) | (unaudited) | ||
| OPERATING ACTIVITIES | |||
| Receipts from customers | 407,476,759 | 403,669,845 | |
| Payments to suppliers | 345,108,162 | 329,686,825 | |
| Payments to personnel | 22,062,827 | 21,791,138 | |
| Cash flow from operations | 40,305,770 | 52,191,882 | |
| Income tax received / (paid) | - | 1,198,870 | |
| Other receipts / (payments) relating to operating activities | 6,322,471 | (30,926,219) | |
| Cash flow from operating activities (1) | 46,628,241 | 22,464,533 | |
| INVESTING ACTIVITIES Inflows |
|||
| Interest and similar income | 651,475 | 1,168,476 | |
| Inflows from investment activities (A) | 651,475 | 1,168,476 | |
| Outflows | |||
| Tangible assets | 26,240,968 | 11,015,450 | |
| Outflows from investment activities (B) | 26,240,968 | 11,015,450 | |
| Cash flows from investment activities (2 = A - B) | (25,589,493) | (9,846,974) | |
| FINANCING ACTIVITIES | |||
| Inflows | |||
| Borrow ings | 135,000,000 | - | |
| Interest and similar income | - | - | |
| Inflows from financing activities (C) | 135,000,000 | - | |
| Outflows | |||
| Borrow ings | 168,673,116 | 160,000,000 | |
| Interest and similar costs | 3,443,054 | 2,355,099 | |
| Dividends paid and distibuted reserves | 7 | - | - |
| Outflows from financing activities (D) | 172,116,170 | 162,355,099 | |
| Cash flows from financing activities (3 = C - D) | (37,116,170) | (162,355,099) | |
| CHANGES IN CASH AND CASH EQUIVALENTS (1)+(2)+(3) | (16,077,422) | (149,737,540) | |
| CHANGES IN THE CONSOLIDATION SCOPE | - | 9,739,020 | |
| CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD | 72,657,585 | 499,552,853 | |
| CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD | 18 | 56,580,163 | 359,554,333 |
AS OF 31st MARCH 2016 AND 2015
(In these notes, unless indicated otherwise, all amounts are expressed in Euro)
The Navigator Group ("Group") comprises The Navigator Company, S.A. (formerly Portucel, S.A.) and its subsidiaries.
The Group was created in the mid 1950's, when a group of technicians from "Companhia Portuguesa de Celulose de Cacia" made this company the first in the world to produce bleached eucalyptus sulphate pulp.
In 1976 Portucel EP was created as a result of the nationalization of all of Portugal's cellulose industry. As such, Portucel – Empresa de Celulose e Papel de Portugal, E.P. resulted from the merger with CPC – Companhia de Celulose, S.A.R.L. (Cacia), Socel – Sociedade Industrial de Celulose, S.A.R.L. (Setúbal), Celtejo – Celulose do Tejo, S.A.R.L. (Vila Velha de Ródão), Celnorte – Celulose do Norte, S.A,R.L. (Viana do Castelo) and Celuloses do Guadiana, S.A.R.L. (Mourão), being converted into a mainly public anonymous society by Decree- Law No. 405/90, of 21st December.
Years after, as a result of the restructuring of Portucel – Empresa de Celulose e Papel de Portugal, S.A., which was redenominated to Portucel, SGPS, S.A., towards to its privatization, Portucel S.A. was created, on 31st May 1993, through Decree-law 39/93, with the former assets of the two main companies, based in Cacia and Setúbal.
In 1995, the company was reprivatized, and became a publicly traded company.
Aiming to restructure the paper industry in Portugal, Portucel, S.A. acquired Papeis Inapa, S.A. (Setúbal) in 2000 and Soporcel – Sociedade Portuguesa de Papel, S.A. (Figueira da Foz) in 2001. Those key strategic decisions resulted in the Portucel Group (currently The Navigator Company Group), which is the largest European and one of the world's largest producers of bleached pulp. It is also the biggest European producer of uncoated wood-free paper.
In June 2003, the Portuguese State sold a 30% stake of Portucel's equity, which was acquired by Semapa Group. In September 2003, Semapa launched a public acquisition offer tending to assure the Group's control, which was accomplished by guaranteeing a 67.1% stake of Portucel's equity.
In November 2006, the Portuguese State concluded the third and final stage of the sale of Portucel, S.A., by moving Parpublica SGPS, S.A. (formerly Portucel SGPS, S.A.) sell the remaining 25.72% it still held.
From 2009 to July 2015, more than 75% of the company's share equity was held directly and indirectly by Semapa - Sociedade de Investimento e Gestão SGPS, S.A. (excluding treasury shares) having the percentage of voting rights been reduced to 70% following the conclusion of the offer for the acquisition, in the form of an exchange offer, of the ordinary shares of Semapa, SGPS, S.A., in July 2015.
In February 2015, the Group started its activity in the Tissue segment with the acquisition of Navigator Tissue Ródão, S.A. (ex-AMS- BR Star Paper, S.A.) a company that holds and explores a tissue paper mill, located in Vila Velha de Ródão.
The Group's main business is the production and sale of writing and printing paper and related products as well as tissue, and it is present in the whole value added chain, from research and development of forestry and agricultural production, to the purchase of wood and the
production and sale of bleached eucalyptus kraft pulp – BEKP and electric and thermal energy, as well as its commercialization.
On February 6th 2016, the Portucel Group changed its corporate brand to The Navigator Company. This new corporate identity represents the union of companies with a history of more than 60 years, aiming to give the Group a more appealing and modern image.
Following this event, and after approval in the General Shareholder's Meeting, held on April 19th 2016, Portucel S.A. changed its designation to The Navigator Company, S.A..
The Navigator Company, S.A. (hereafter referred to as the Company or Navigator) is a publicly traded company with its share capital represented by nominal shares.
Head Office: Mitrena, 2901-861 Setúbal
Share Capital: Euros 767,500,000
Registration No: 503 025 798
These consolidated financial statements were approved by the Board of Directors on the 27th of April 2016.
The Group's senior management, who are also the members of the Board of Directors that sign this report, declare that, to the best of their knowledge, the information contained herein was prepared in conformity with the applicable accounting standards, providing a true and fair view of the assets and liabilities, the financial position and results of the companies included in the Group's consolidation scope.
The Group's consolidated financial statements for the three period ended 31st March 2016 have been prepared in accordance with International Accounting Standard 34 – Interim Financial Reporting.
The accompanying consolidated financial statements were prepared on a going concern basis from the accounting books and records of the companies included in the consolidation (Note 23), and under the historic cost convention, except for biological assets, available for sale financial assets and derivative financial instruments, which are recorded at fair value (Notes 20 and 10).
The accounting policies used in interim consolidated financial statements are those used to prepare the financial statements for the year ended on the 31st December 2015, and are described in the respective notes.
The application of the interpretations and amendments to the standards mentioned below, are mandatory by the European Union, for the financial years beginning on or after 1 January 2015:
| Standards that became effective, on or after 1 February 2015 | Effective Date * |
|---|---|
| Annual improvements to IFRSs 2010 - 2012 | 1 February 2015 |
| IAS 19 – Employee benefits | 1 February 2015 |
| IAS 16 e IAS 38 – Acceptable methods of depreciation / amortisation | 1 January 2016 |
| IAS 16 e IAS 41 – Agriculture: bearer plants | 1 January 2016 |
| IFRS 11 – Joint arrangements | 1 January 2016 |
| IAS 1 – Presentation of financial statements | 1 January 2016 |
| IAS 27 – Separate financial statements | 1 January 2016 |
| Annual improvements to IFRSs 2012 - 2014 | 1 January 2016 |
| * Periods beginning on or after |
The application of the standards did not have any significant impact on the consolidated financial statements of the Group.
There are new standards, interpretations and amendments of existing standards that, despite having already been published, are only mandatory for the periods starting after 1st January 2016 and which the Group decided not to early-adopt in the current period, as follows:
| Standards and effective changes, on or after 1 January 2016, not yet endorsed by EU | Effective Date * |
|---|---|
| Amendments to IFRS 10, 12 and IAS 28: Investments - applying consolidation exception | 1 January 2016 |
| IFRS 9 – Financial instruments | 1 January 2018 |
| IFRS 15 – Revenue from contracts w ith customers | 1 January 2018 |
| * Periods beginning on or after |
Up to the date of issuing this report, the Group had not yet concluded the estimate of the effects of changes arising from the adoption of these standards, for which it decided not to early-adopt them. However, no material effect is expected in the financial statements as a result of their adoption.
In accordance to the approach defined in IFRS 8, operational segments should be identified based in the way internal financial information is organized and reported to the management. An operating segment is defined by IFRS 8 as a component of the Group:
The Executive Committee is the ultimate operating decision maker, analysing periodic reports with operational information on segments, using them to monitor the operating performance of its businesses, as well as to decide on the best allocation of resources.
Segment information is presented for business segments identified by the Group, namely:
In 2015, the business segments identified were:
In 2016, forestry and energy segments have been included in Other.
Revenues, assets and liabilities of each segment correspond to those directly allocated to them, as well as to those that can be reasonably attributed to those segments.
Financial data by operational segment for the periods ended 31 March 2016 and 2015 is shown as follows:
| 3 months 31-03-2016 | |||||||
|---|---|---|---|---|---|---|---|
| PULP TO MARKET | UWF PAPER | TISSUE | OTHER | ELIMINATIONS/ UNALLOCATED |
TOTAL | ||
| REVENUE | |||||||
| Sales and services - external | 36,041,064 | 325,684,230 | 15,842,531 | 6,999,311 | - | 384,567,136 | |
| Sales and services - intersegment | - | - | - | 92,269,584 | (92,269,584) | - | |
| Total revenue | 36,041,064 | 325,684,230 | 15,842,531 | 99,268,895 | (92,269,584) | 384,567,136 | |
| Profit/(loss) | |||||||
| Segmental Profit | 3,040,643 | 47,684,495 | 352,746 | 5,327,497 | - | 56,405,381 | |
| Opertaing Profit | - | - | - | - | - | 56,405,381 | |
| Financial costs- net | - | - | - | - | (2,715,629) | (2,715,629) | |
| Income tax | - | - | - | - | (9,066,576) | (9,066,576) | |
| Net profit before non-controling interest | - | - | - | - | - | 44,623,176 | |
| Non-controling interest | - | - | - | - | 96,915 | 96,915 | |
| Net profit | - | - | - | - | - | 44,720,091 | |
| Other Information | |||||||
| Capital expenditure | 1,400,626 | 10,164,851 | 79,513 | 34,733,528 | - | 46,378,517 | |
| Depreciation and impairment | (2,593,100) | (26,605,019) | (2,398,872) | (4,383,122) | - | (35,980,113) | |
| Provisions | - | - | - | - | (1,117,864) | (1,117,864) | |
| Other Informations | |||||||
| Segment assets | 155,266,160 | 1,553,508,680 | 97,098,680 | 658,251,945 | - | 2,464,125,465 | |
| Financial investments | - | 229,136 | - | - | - | 229,136 | |
| Total assets | 155,266,160 | 1,553,737,816 | 97,098,680 | 658,251,945 | - | 2,464,354,601 | |
| Segment liabilities | 44,024,739 | 238,154,977 | 36,221,579 | 885,713,931 | - | 1,204,115,226 | |
| Total liabilities | 44,024,739 | 238,154,977 | 36,221,579 | 885,713,931 | - | 1,204,115,226 | |
The capital expenditure in the "Other" segment includes Euro 33,590,660 related to the "pellets" factory investment located in the United States of America.
In general, all major assets of the business segments are located in Portugal, USA and Mozambique.
| 3 months 31-03-2015 | ||||||
|---|---|---|---|---|---|---|
| PULP TO MARKET | UWF PAPER | TISSUE | OTHER | ELIMINATIONS/ UNALLOCATED |
TOTAL | |
| REVENUE | ||||||
| Sales and services - external | 30,928,268 | 333,607,663 | 13,567,000 | 10,698,062 | - | 388,800,993 |
| Sales and services - intersegment | - | - | - | 147,033,748 | (147,033,748) | - |
| Total revenue | 30,928,268 | 333,607,663 | 13,567,000 | 157,731,810 | (147,033,748) | 388,800,993 |
| Profit/(loss) | ||||||
| Segmental Profit | 5,707,660 | 39,166,400 | 891,317 | 8,431,430 | - | 54,196,807 |
| Opertaing Profit | - | - | - | - | - | 54,196,807 |
| Financial costs- net | - | - | - | - | (8,687,762) | (8,687,762) |
| Income tax | - | - | - | - | (3,718,632) | (3,718,632) |
| Net profit before non-controling interest | - | - | - | - | - | 41,790,413 |
| Non-controling interest | - | - | - | - | (5,092) | (5,092) |
| Net profit | - | - | - | - | - | 41,785,321 |
| Other Information | ||||||
| Capital expenditure | 8,300,113 | 2,335,906 | 21,050 | 3,070,301 | - | 13,727,370 |
| Depreciation and impairment | (968,736) | (29,136,950) | (905,699) | (2,072,318) | (33,083,703) | |
| Provisions | - | - | - | - | 5,906,473 | 5,906,473 |
| Other Informations | ||||||
| Segment assets | 126,344,960 | 1,883,651,535 | 74,428,762 | 607,976,628 | - | 2,692,401,885 |
| Financial investments | - | 229,136 | - | - | - | 229,136 |
| Total assets | 126,344,960 | 1,883,880,671 | 74,428,762 | 607,976,628 | - | 2,692,631,021 |
| Segment liabilities | 28,881,282 | 316,479,712 | 56,356,420 | 810,180,376 | - | 1,211,897,790 |
| Total liabilities | 28,881,282 | 316,479,712 | 56,356,420 | 810,180,376 | - | 1,211,897,790 |
Financial results are detailed as follows for the three month periods ended 31 March 2016 and 2015:
| Amounts in Euro | 3 months 31-03-2016 |
3 months 31-03-2015 |
|---|---|---|
| Interest paid on borrow ings | (3,673,284) | (7,387,657) |
| Interest earned on investments | 651,479 | 897,301 |
| Exchange rate differences | (962,477) | 314,392 |
| Gains / (losses) on financial instruments - trading (Note 31) | 2,256,677 | (698,574) |
| Gains / (losses) on financial instruments - hedging (Note 31) | (376,603) | (1,374,596) |
| Guarantees and bank charges | (682,668) | (607,959) |
| Compensatory interest | 147,874 | 64,886 |
| Other financial income / (expenses) | (76,627) | 104,445 |
| (2,715,629) | (8,687,762) |
During the second half of 2015, The Navigator Company went through a debt restructuring, hiring new lines of financing and renegotiating the terms and conditions of existing debt. The Group renegotiated an existing commercial paper line of Euro 125,000,000, extending its maturity and reducing the related financing costs, and proceeded to the partial early repayment (Euro 200 million) of Portucel Senior Notes 5.375 % bonds. With these operations, the Group was able to significantly reduce its financing costs.
Income tax is detailed as follows for the three month periods ended 31 March 2016 and 2015:
| Amounts in Euro | 3 months 31-03-2016 |
3 months 31-03-2015 |
|---|---|---|
| Current tax | 18,192,338 | 12,878,430 |
| Provision / (reversal) for current tax | (5,438,520) | (5,866,085) |
| Deferred tax (Note 15) | (3,687,242) | (3,293,713) |
| 9,066,576 | 3,718,632 |
The current income tax includes Euro 18,002,922 (31 March 2015: Euro 11,613,613) due to the liability generated under the aggregated income tax regime.
For the three month periods ended 31 March 2016 and 2015, the reconciliation of the effective income tax rate was as follows:
| Amounts in Euro | 3 months 31-03-2016 |
3 months 31-03-2015 |
||
|---|---|---|---|---|
| Profit before tax | 53,689,752 | 45,509,045 | ||
| Expected tax | 21.00% | 11,274,848 | 21.00% | 9,556,899 |
| Municipal surcharge | 2.05% | 1,099,387 | 1.55% | 703,985 |
| State surcharge | 4.35% | 2,337,113 | 2.69% | 1,223,416 |
| Differences (a) | 1.53% | 820,370 | (13.53%) | (6,157,668) |
| Impairment and reversal of provisions | (10.80%) | (5,800,629) | (3.53%) | (1,608,000) |
| Tax benefits | (1.24%) | (664,513) | 0.00% | - |
| 16.89% | 9,066,576 | 8.17% | 3,718,632 |
(a) This amount is made up essentially of:
| 3 months | 3 months | |
|---|---|---|
| 31-03-2016 | 31-03-2015 | |
| Capital gains / (losses) for tax purposes | 3,535 | - |
| Capital gains / (losses) for accounting purposes | (4,791) | - |
| Taxable provisions | 1,118,830 | (6,830,481) |
| Tax benefits | (70,396) | (174,237) |
| Effect of pension funds | 690,792 | - |
| Other | 1,245,195 | (15,386,804) |
| 2,983,164 | (22,391,522) | |
| Tax Effect (27,5%) | 820,370 | (6,157,668) |
In July 2015, following the public exchange offer of ordinary shares of Semapa, SGPS, S.A. with shares of The Navigator Company S.A (ex-Portucel, S.A.), Semapa ceased to have more than 75% interest in The Navigator Company, and therefore the necessary conditions for the maintenance of The Navigator Company and its subsidiaries within Semapa's fiscal group.
Therefore, Semapa group companies, including The Navigator Company group companies, have changed their fiscal period to the period starting on 1st July and ending on 30th June, following the disposed in the nº 2 of article 8º of the Portuguese Corporate Income Tax Code.
On July 1st 2015, a new fiscal group led by The Navigator Company, S.A. arose, comprising all the companies located in Portugal in which the Group holds an interest or voting rights of at least 75%, for more than a year.
Earnings per share were determined as follows:
| Amounts in Euro | 3 months 31-03-2016 |
3 months 31-03-2015 |
|---|---|---|
| Profit attributable to the company's shareholders | 44,720,091 | 41,785,321 |
| Number of issued shares | 767,500,000 | 767,500,000 |
| Average of treasury shares | (50,489,973) | (50,489,973) |
| 717,010,027 | 717,010,027 | |
| Basic earnings per share, Eur | 0.062 | 0.058 |
| Diluted earnings per share, Eur | 0.062 | 0.058 |
Since there are no financial instruments convertible in Group shares, its earnings are undiluted.
The changes on the average number of treasury shares were as follows:
| 3 months | 3 months | |||
|---|---|---|---|---|
| 31-03-2016 | 31-03-2015 | |||
| Accumulated | Accumulated | |||
| Quantity | Quantity | Quantity | Quantity | |
| Treasury shares held on 1st January | 50,489,973 | 50,489,973 | ||
| Acquisitions | ||||
| January | - | 50,489,973 | - | 50,489,973 |
| February | - | 50,489,973 | - | 50,489,973 |
| March | - | 50,489,973 | - | 50,489,973 |
| Treasury shares held on 31st March | 50,489,973 | 50,489,973 | ||
| Average treasury shares held for the period | 50,489,973 | 50,489,973 |
The appropriations made over the 2015 and 2014 net profits were as follows:
| Amounts in Euro | 2015 | 2014 |
|---|---|---|
| Distribution of dividends (excluding treasury shares) | 143,975,613 | 150,572,106 |
| Legal reserves | 7,927,924 | 8,136,585 |
| Gratification | 6,000,000 | 2,998,525 |
| Other reserves | - | - |
| Net income from prior years | 654,946 | 19,759,480 |
| 158,558,483 | 181,466,696 |
The resolution for the appropriation of the 2015 net profit that passed at The Navigator Company's General Meeting held on 19th April 2016, was based on the net profit for the year as defined by the accounting principles generally accepted in Portugal (Portuguese GAAP). The difference in net profit between the two standards, totaling Euro 7,874,718 (2014: Euro 18,734,999) was transferred to retained earnings.
During 2016 and 2015, changes in other intangible assets were as follows:
| Amounts in Euro | Industrial property and other rights |
CO2 emission allowances |
Total |
|---|---|---|---|
| Acquisition Cost | |||
| Amount as of 1st January 2015 | 59,979 | 3,416,269 | 3,476,248 |
| Changes in the consolidation scope | - | 245,541 | 245,541 |
| Acquisitions | - | 3,509,026 | 3,509,026 |
| Disposals | - | - | - |
| Adjustments, transfers and w rite-off's | - | (11,595) | (11,595) |
| Amount as of 31st March 2015 | 59,979 | 7,159,241 | 7,219,220 |
| Changes in the consolidation scope | - | 42,735 | 42,735 |
| Acquisitions | - | 2,689,564 | 2,689,564 |
| Disposals | - | - | - |
| Adjustments, transfers and w rite-off's | (58,879) | (4,934,534) | (4,993,413) |
| Amount as of 31st December 2015 | 1,100 | 4,957,006 | 4,958,106 |
| Acquisitions | 3,300 | 3,230,781 | 3,234,081 |
| Disposals | - | - | - |
| Adjustments, transfers and w rite-off's | - | - | - |
| Amount as of 31st March 2016 | 4,400 | 8,187,788 | 8,192,188 |
| Accumulated depreciation and impairment losses Amount as of 1st January 2015 |
(59,979) | - | (59,979) |
| Changes in the consolidation scope | - | - | - |
| Amortizations and impairment losses | - | - | - |
| Disposals | - | - | - |
| Adjustments, transfers and w rite-off's | - | - | - |
| Amount as of 31st March 2015 | (59,979) | - | (59,979) |
| Changes in the consolidation scope | - | - | - |
| Amortizations and impairment losses | - | (144,997) | (144,997) |
| Disposals | - | - | - |
| Adjustments, transfers and w rite-off's | 58,879 | 119,497 | 178,376 |
| Amount as of 31st December 2015 | (1,100) | (25,500) | (26,600) |
| Amortizations and impairment losses | (1,998) | (1,798,510) | (1,800,508) |
| Disposals | - | - | - |
| Adjustments, transfers and w rite-off's | - | - | - |
| Amount as of 31st March 2016 | (3,098) | (1,824,010) | (1,827,108) |
| Net book value as of 1st January 2015 | - | 3,416,269 | 3,416,269 |
| Net book value as of 31st March 2015 | - | 7,159,241 | 7,159,242 |
| Net book value as of 31st December 2015 | - | 4,931,506 | 4,931,506 |
| Net book value as of 31st March 2016 | 1,302 | 6,363,778 | 6,365,081 |
The acquisitions in the three month periods ended 31 st March 2016 and 2015 are related to the award of CO2 emission rights allowances under CELE - 488,844 Ton and 498,008 Ton respectively, which are detailed by company as follows:
| Aw ard of C02 emmisions allow ances | 2016 | 2015 |
|---|---|---|
| The Navigator Company | - | 29,215 |
| Navigator Paper Figueira | 237,131 | 241,576 |
| Navigator Pulp Figueira | 808 | 823 |
| Navigator Tissue Ródão | 7,102 | 7,235 |
| About the Future | 125,763 | 128,121 |
| Navigator Pulp Cacia | 28,677 | - |
| Navigator Paper Setúbal | 89,363 | 91,038 |
| 488,844 | 498,008 |
During the three month periods ended 31st March 2016 and 31st March 2015, changes in tangible fixed assets, depreciations and impairment losses were as follows:
| Amount in Euro | Land | Building and other constructions |
Equipments and other tangibles |
Assets under construction |
Total |
|---|---|---|---|---|---|
| Acquisition Cost | |||||
| Amount as of 1st January 2015 | 117,338,267 | 500,649,942 | 3,251,808,955 | 46,256,600 | 3,916,053,766 |
| Change in the consolidation scope | 349,744 | 12,131,326 | 39,374,625 | 6,425,600 | 58,281,295 |
| Acquisitions | - | 56,581 | 2,249,499 | 11,421,289 | 13,727,369 |
| Disposals | - | - | (55,928) | - | (55,928) |
| Adjustments, transfers and w rite-off's | - | 151,201 | 2,528,249 | (2,639,109) | 40,341 |
| Amount as of 31st March 2015 | 117,688,011 | 512,989,050 | 3,295,905,400 | 61,464,380 | 3,988,046,839 |
| Change in the consolidation scope | (217,533) | (2,495,605) | 3,726,933 | (1,102,838) | (89,043) |
| Acquisitions | 2,813,659 | - | (569,539) | 132,484,482 | 134,728,602 |
| Disposals | - | - | (85,484) | - | (85,484) |
| Adjustments, transfers and w rite-off's | (135,656) | 10,611,140 | 104,624,521 | (115,014,439) | 85,566 |
| Amount as of 31st December 2015 | 120,148,481 | 521,104,585 | 3,403,601,831 | 77,831,585 | 4,122,686,481 |
| Acquisitions | - | - | 2,729,052 | 43,649,466 | 46,378,517 |
| Disposals | - | - | (216,795) | - | (216,795) |
| Adjustments, transfers and w rite-off's | (97) | 97,569 | 7,451,264 | (7,747,922) | (199,185) |
| Amount as of 31st March 2016 | 120,148,385 | 521,202,154 | 3,413,565,352 | 113,733,129 | 4,168,649,018 |
| Accumulated depreciation and impairment losses Amount as of 1st January 2015 |
(18,232) | (337,474,955) | (2,328,209,063) | - | (2,665,702,251) |
| Change in the consolidation scope | - | (1,833,750) | (12,190,361) | - | (14,024,111) |
| Acquisitions | - | (2,500,719) | (29,503,303) | - | (32,004,022) |
| Disposals | - | - | 37,112 | - | 37,112 |
| Adjustments, transfers and w rite-off's | - | (45,639) | 316,637 | - | 270,998 |
| Amount as of 31st March 2015 | (18,232) | (341,855,065) | (2,369,548,978) | - | (2,711,422,276) |
| Change in the consolidation scope | - | 136,181 | 930,678 | - | 1,066,859 |
| Acquisitions | (77,419) | (8,159,605) | (87,518,318) | - | (95,755,342) |
| Disposals | - | - | (42,575) | - | (42,575) |
| Adjustments, transfers and w rite-off's | - | 4,572,231 | (306,292) | - | 4,265,939 |
| Amount as of 31st December 2015 | (95,652) | (345,306,258) | (2,456,485,485) | - | (2,801,887,394) |
| Acquisitions | - | (2,680,938) | (33,069,585) | - | (35,750,524) |
| Disposals | - | - | 214,455 | - | 214,455 |
| Adjustments, transfers and w rite-off's | - | 12,756 | 149,703 | - | 162,459 |
| Amount as of 31st March 2016 | (95,652) | (347,974,440) | (2,489,190,912) | - | (2,837,261,004) |
| Net book value as of 1st January 2015 | 117,320,035 | 163,174,987 | 923,599,892 | 46,256,600 | 1,250,351,515 |
| Net book value as of 31st March 2015 | 117,669,779 | 171,133,985 | 926,356,422 | 61,464,380 | 1,276,624,563 |
| Net book value as of 31st December 2015 | 120,052,830 | 175,798,327 | 947,116,346 | 77,831,585 | 1,320,799,086 |
| Net book value as of 31st March 2016 | 120,052,733 | 173,227,714 | 924,374,439 | 113,733,129 | 1,331,388,014 |
On 31st March 2016, assets under construction included Euro 507,172 (31st December 2015: Euro 15,833,210), related to advance payments and supplies of Property Plant and Equipment, under the scope of the investment projects being developed by the Group. These amounts are fully guaranteed by first demand bank guarantees, handed by the respective suppliers that are promoting the investments of the Group companies, in accordance with the implemented policies for the mitigation of credit risk.
Additionally this caption includes Euros 75,325,596 related to the investment in the new "pellets" plant located in the United States and Euro 33,993,442 related to investments in Mozambique.
On 31st March 2016, Land included Euro 93,368,168 of forest land where the Group has installed part of its forestry assets, the remainder being installed on leased land. It also includes Euro 1,609,030 of land in which will be built the new pellets plant in the USA, and Euro 3,652,351 of expenditure with land preparation in Mozambique, that is being depreciated through the period of the concession, as well as Euro 21,943,489 of land related to the industrial complexes of Cacia, Vila Velha de Ródão, Figueira da Foz and Setubal.
During 2016 and 2015, changes in biological assets were as follows:
| Amounts in Euro | 2016 | 2015 |
|---|---|---|
| Amount as of 1st January | 116,996,927 | 113,969,423 |
| Logging in the period | (5,080,835) | (6,316,525) |
| Grow th | 3,756,430 | 4,472,840 |
| New plantations (at cost) | 451,382 | 566,783 |
| Other changes in fair value | 601,135 | 1,929,456 |
| (271,889) | 652,554 | |
| Amount as of 31st March | 116,725,038 | 114,621,977 |
| Remaining Quarters | 2,374,950 | |
| Amount as of 31st December | 116,996,927 |
The amounts shown as growth correspond to forestry costs, costs of asset management and rents incurred in the period as follows:
| 3 months | 3 months | |
|---|---|---|
| Amounts in Euro | 31-03-2016 | 31-03-2015 |
| Costs of asset mangement | ||
| Forestry | 366,394 | 596,652 |
| Structure | 691,893 | 805,687 |
| Fixed and variable rents | 2,698,143 | 3,070,501 |
| 3,756,430 | 4,472,840 |
As of 31st March 2016 and 31st December 2015, biological assets were detailed as follows:
| Amounts in Euro | 31-03-2016 | 31-12-2015 |
|---|---|---|
| Eucalyptus (Portugal) | 104,571,615 | 104,896,897 |
| Pine (Portugal) | 5,407,458 | 5,407,458 |
| Cork (Portugal) | 1,346,681 | 1,346,681 |
| Other Species (Portugal) | 128,000 | 74,606 |
| Eucalyptus (Mozambique) | 5,271,285 | 5,271,285 |
| 116,725,038 | 116,996,927 |
This amounts result from the management expectation of extraction of related production detailed as follows:
| Amounts in Euro | 31-03-2016 | 31-12-2015 |
|---|---|---|
| Eucalyptus (Portugal) - m3 ssc'000 | 11,822 | 11,822 |
| Pine - Wood - Ton '000 | 481 | 481 |
| Pine - cones - Ton '000 | n/a | n/a |
| Other species - @ '000 | 626 | 626 |
| Eucalyptus (Mozambique) - m3 ssc'000 (1) | 1,400 | 1,400 |
(1) Only evaluated in areas w ith a year or more by the end of 2014
Concerning Eucalyptus, the most relevant biological asset, for the three month periods ended 31st March 2016 and 2015 the Group extracted 137,693 m3ssc and 136.054 m3ssc of wood from its forests.
This caption includes the interest held by the Group in Liaision Technologies, originally acquired in 2005 by exchange of shares of Express Paper. Until 2012, the Group held a 1.52% interest, having disposed in 2013 a 0.85% interest with a gain of Euro 182,911. The Group intends to sell the remaining interest held in Liaision Techonolgies.
As of 31st March 2016 and 31st December 2015, receivables and other current assets were detailed as follows:
| Amounts in Euro | 31-03-2016 | 31-12-2015 | |
|---|---|---|---|
| Accounts receivable | 188,004,314 | 182,136,452 | |
| Other accounts receivable | 24,710,020 | 18,090,522 | |
| Derivative financial instruments (Note 20) | 5,000,559 | 1,701,467 | |
| Accrued income | 566,449 | 1,621,162 | |
| Deferred costs | 13,930,531 | 11,820,913 | |
| 232,211,873 | 215,370,516 |
The receivables shown above are net of impairment losses.
On 31st March 2015 and 31st December 2015, other receivables are detailed as follows:
| Amounts in Euro | 31-03-2016 | 31-12-2015 |
|---|---|---|
| UWF Paper | 153,819,053 | 145,602,874 |
| Tissue | 16,024,675 | 15,875,615 |
| Pulp to market | 17,762,383 | 16,624,529 |
| Other | 398,203 | 4,033,433 |
| 188,004,314 | 182,136,451 |
On 31st March 2016 and 31st December 2015, other receivables were detailed as follows:
| Amounts in Euro | 31-03-2016 | 31-12-2015 |
|---|---|---|
| Advances to employees | 409,265 | 380,172 |
| Advances to suppliers | 5,610,453 | 240,453 |
| Financial gransts to receive | 646,157 | - |
| Tax Consolidation (Semapa) | - | 1,212,515 |
| Capital subscribers | 5,713,991 | 5,713,991 |
| Other | 12,330,155 | 10,543,390 |
| 24,710,020 | 18,090,522 |
In 2015 the Group was subject to an investigation of alleged dumping practices in UWF imports to the United States of America, having been imposed an anti-dumping provisional tax rate over those sales of 29.53%. On January 11th 2016, the US Department of Commerce has settled the final tax rate in 7.8%. Other debtors essentially include the receivable amount corresponding to the difference between the anti-dumping tax rates over paper sales to the United States.
Capital subscribers include the amount of Portucel Mozambique share equity that was subscribed by IFC - International Finance Corporation but not yet realized.
The amount shown as Advances to suppliers refers to advanced payments made to wood suppliers. As a way of ensuring the sustainability of the forest value chain to the industry, the Group advances payments to its suppliers upon presentation of guarantees, for the wood to be bought throughout the year. Those advances are settled as supplies are performed.
The movements in financial grants to receive were as follows:
| Amounts in Euro | 2016 | 2015 | |
|---|---|---|---|
| Amount as of 1st January | - | - | |
| Increase/(adjustment) | - | - | |
| Assignments | 646,157 | 14,113,127 | |
| Received in the year | - | (14,113,127) | |
| Amount as of 31st March | 646,157 | - |
As of 31st March 2016 and 31st December 2015, accrued income and deferred costs were detailed as follows:
| Amounts in Euro | 31-03-2016 | 31-12-2015 |
|---|---|---|
| Accrued income | ||
| Interest receivable | - | - |
| Other | 566,449 | 1,621,162 |
| 566,449 | 1,621,162 | |
| Deferred costs | ||
| Pensions and other post-employment benefits (Note 16) | 3,312,462 | 3,755,326 |
| Rents | 4,761,054 | 4,491,494 |
| Insurance | 5,630,421 | 485,663 |
| Other | 226,594 | 3,088,430 |
| 13,930,531 | 11,820,913 | |
| 14,496,980 | 13,442,075 |
As of 31st March 2016 and 31st December 2015, there were overfunded plans, recognized as current assets, as they will allow the Group to reduce its future contributions and to finance those plans as a result of any changes in discount rate.
As of 31st March 2016 and 31st December 2015, there were no overdue debts to the State and other public entities. The balances related with these entities were as follows:
| Amounts in Euro | 31-03-2016 | 31-12-2015 |
|---|---|---|
| State and other public entities | ||
| Value added tax - refunds requested | 49,695,363 | 46,758,171 |
| Value added tax - to recover | 6,847,800 | 10,884,624 |
| 56,543,163 | 57,642,795 |
As at 31st March 2016, the outstanding VAT refunds requested comprised the following, by month and by company:
| Amounts in Euro | Feb/2016 | Mar/2016 | Total |
|---|---|---|---|
| Navigator Fine Paper, S.A. | 20,611,263 | 24,143,826 | 44,755,089 |
| EMA Figueira da Foz - Engenharia e Manutenção Industrial, ACE | 14,582 | - | 14,582 |
| Bosques do Atlântico, S.L. | - | 4,925,693 | 4,925,693 |
| 20,625,845 | 29,069,518 | 49,695,363 |
Until the date of issuing this report, Euro 20,625,845 of the amounts to be received as of 31st March 2016, had already been received.
As at 31st December 2015, the outstanding VAT refunds requested comprised the following, by month and by company:
| Amounts in Euro | Nov/2015 | Dec/2015 | Total |
|---|---|---|---|
| Navigator Fine Paper, S.A. | 21,849,656 | 22,332,360 | 44,182,016 |
| Bosques do Atlântico, S.L. | - | 2,576,155 | 2,576,155 |
| 21,849,656 | 24,908,515 | 46,758,171 |
All these amounts were received during the first quarter of 2016.
| Amounts in Euro | 31-03-2016 | 31-12-2015 |
|---|---|---|
| State and other public entities | ||
| Corporate income tax | 47,432,490 | 31,065,030 |
| Personal income tax - w itheld on salaries | 1,982,951 | 2,003,600 |
| Value added tax | 31,358,543 | 34,227,978 |
| Social security | 2,327,232 | 2,059,064 |
| Additional liabilities | 1,675,017 | 8,044,968 |
| Other | 70,186 | (54,730) |
| 84,846,418 | 77,345,911 |
As previously mentioned, since 2014 until June 2015, The Navigator Company and its subsidiaries were part of the fiscal group led by Semapa, SGPS, S.A. Therefore, although each group company calculates its income taxes as if it was taxed independently, the determined liabilities are recognized as due to the leader of the fiscal group, currently Semapa, SGPS, S.A., who will proceed with the overall computation and the settlement of the income tax.
From July 1st, 2015, the subsidiaries of The Navigator Company Group failed to integrate the fiscal group Semapa and have joined the fiscal group The Navigator Company.
Corporate income tax is detailed as follows:
| Amounts in Euro | 31-03-2016 | 31-12-2015 |
|---|---|---|
| Corporate income tax | 18,192,338 | 65,212,803 |
| Corporate income tax from 01/07/2015 to 31/12/2015 | 26,625,498 | - |
| Payments on account of corporate income tax | (279,335) | (1,964,638) |
| Corporate income tax payable to corporate income tax group Leader (Semapa, | ||
| SGPS) | - | (34,150,871) |
| Withholding tax | (20,318) | (6,762) |
| Responsability w ith corporate income tax of societies not located in Portugal | 2,914,306 | 1,974,498 |
| 47,432,490 | 31,065,030 |
The changes in the provision for additional tax liabilities in 2016 and 2015 were as follows:
| 2016 | 2015 |
|---|---|
| 8,044,968 | 44,041,599 |
| - | - |
| (6,369,952) | (1,608,000) |
| 1,675,017 | 42,433,599 |
| (34,388,631) | |
| 8,044,968 | |
On 31st March 2016 and 31st December 2015 the additional tax liabilities include interest on deferred payments and are detailed as follows:
| Amounts in Euro | 31-03-2016 | 31-12-2015 |
|---|---|---|
| Income tax Group | 4,422,958 | 10,941,848 |
| Other | (2,747,941) | (2,896,880) |
| 1,675,017 | 8,044,968 |
The Navigator Company is a public company with its shares quoted on the Euronext Lisbon.
As at 31st March 2015, Navigator's share capital was fully subscribed and paid for and it is represented by 767,500,000 shares with nominal value of 1 Euro each, of which 50,489,973 were
These shares were mainly acquired during 2008 and 2012, and the changes were as follows:
| 2016 | 2015 | |||
|---|---|---|---|---|
| Amounts in Euro | Quantity | Amount | Quantity | Amount |
| Treasury shares held in January | 50,489,973 | 96,974,466 | 50,489,973 | 96,974,466 |
| Accquisitions | ||||
| January | - | - | - | - |
| February | - | - | - | - |
| March | - | - | - | - |
| - | - | - | - | |
| Treasury shares held in March | 50,489,973 | 96,974,466 | 50,489,973 | 96,974,466 |
| Remaining Quarters | - | - | - | - |
| Treasury shares held in December | 50,489,973 | 96,974,466 |
The market value of the treasury shares held on 31st March 2016 amounted to Euro 161,567,914 (31st December 2015: Euro 181,763,903), corresponding to an unit value of Euro 3.20 (31st December 2015: Euro 3.60) and the market capitalization as at 31st March 2016 amounted to Euro 2,456,000,000 compared to an equity, net of non-controlling interests, of Euro 1,251,813,674.
As at 31st March 2016 and 31st December 2015, the shareholders with significant positions in the Company's capital were as follows:
| 31-03-2016 | 31-12-2015 | |||
|---|---|---|---|---|
| Entity | Nr. of shares | % Entity | Nr. of shares | % Entity |
| Seinpar Investments, BV | 241,583,015 | 31.48% | 241,583,015 | 31.48% |
| Semapa, SGPS, S.A. | 256,033,284 | 33.36% | 340,571,392 | 44.37% |
| Other Semapa Group's entities | 1,000 | 0.00% | 2,000 | 0.00% |
| Treasury shares | 50,489,973 | 6.58% | 50,489,973 | 6.58% |
| Banco BPI Pensions | 36,875,907 | 4.80% | - | 0.00% |
| Norges Bank (the Central Bank of Norw ay) | 25,360,219 | 3.30% | - | 0.00% |
| Other shareholders | 157,156,602 | 20.48% | 134,853,620 | 17.57% |
| Total shares | 767,500,000 | 100.00% | 767,500,000 | 100.00% |
Following the conclusion of the offer for the acquisition, in the form of an exchange offer, of the ordinary shares of Semapa, SGPS, S.A., registered in the Securities Market Commission and with the Offer period occurring between 6th July 2015 and 24th July 2015, Semapa delivered as compensation of the 24,864,477 own shares acquired, 84,539,108 shares of The Navigator Company. As a consequence of this exchange offer, Semapa reduced its attributable participation in The Navigator Company to 497,617,299 shares, representative of 64.836% of The Navigator Company's share capital and 69.402% of voting rights, of which 256,032,284 held by Semapa, SGPS, S.A..
In 2016 and 2015, the changes in assets and liabilities as a result of deferred taxes were as follows:
| Income Statement | |||||||
|---|---|---|---|---|---|---|---|
| 1 st January 2016 |
Change in the consolidation |
31st March 2016 | |||||
| Amounts in Euro | Increases | Decreases | Equity | Other Liabilities | scope | ||
| Temporary differences originating deferred tax assets | |||||||
| Taxed provisions | 257,908 | 1,118,830 | (3) | - | - | - | 1,376,735 |
| Adjustments in fixed assets | 99,675,505 | - | (5,521,882) | - | - | - | 94,153,623 |
| Financial instruments | 2,263,058 | - | - | 5,525,492 | - | - | 7,788,550 |
| Deferred accounting gains on inter-group transactions | 25,439,698 | 13,652,312 | - | - | - | - | 39,092,010 |
| Valuation of biological assets | 1,275,824 | - | (1,024,396) | - | - | - | 251,429 |
| Government grants - Investment incentives | 10,766,964 | - | (364,723) | - | - | - | 10,402,241 |
| 139,678,958 | 14,771,141 | (6,911,004) | 5,525,492 | - | - | 153,064,587 | |
| Temporary differences originating deferred tax liabilities | |||||||
| Revaluation of fixed assets | (6,748,157) | - | 22 | - | - | - | (6,748,136) |
| Retirement benefits | (2,137,958) | - | 1,012,317 | (677,927) | - | - | (1,803,568) |
| Derivative financial Instruments at fair value | (234,446) | - | - | (1,667,674) | - | - | (1,902,121) |
| Government grants | (11,991,792) | - | - | 62,332 | - | - | (11,929,460) |
| Extension of useful lives of tangible fixed assets | (299,964,933) | - | 4,535,669 | - | - | - | (295,429,264) |
| (321,077,287) | - | 5,548,008 | (2,283,269) | - | - | (317,812,548) | |
| Amounts as presented on consolidated statement of financial position | |||||||
| Deferred tax assets | 38,411,713 | 4,062,064 | (1,900,526) | 1,519,510 | - | - | 42,092,762 |
| Tax Incentives for Investment | 12,522,612 | - | - | - | - | - | 12,522,612 |
| 50,934,325 | 4,062,064 | (1,900,526) | 1,519,510 | - | - | 54,615,374 | |
| Deferred tax liabilities | (88,296,253) | - | 1,525,704 | (627,899) | - | - | (87,398,447) |
| (88,296,253) | - | 1,525,704 | (627,899) | - | - | (87,398,447) |
| Income Statement | Change in the | ||||||
|---|---|---|---|---|---|---|---|
| Amounts in Euro | 1 st January 2015 |
Increases | Decreases | Equity | Other Liabilities | consolidation scope |
31st December 2015 |
| Temporary differences originating deferred tax assets | |||||||
| Tax losses carried forw ard | 1,155,104 | - | (1,155,104) | - | - | - | - |
| Taxed provisions | 6,079,638 | - | (5,821,730) | - | - | - | 257,908 |
| Adjustments in fixed assets | 42,172,563 | 69,095,053 | (11,592,110) | - | - | - | 99,675,505 |
| Financial instruments | 3,093,055 | - | - | (829,997) | - | - | 2,263,058 |
| Deferred accounting gains on inter-group transactions | 20,432,177 | 7,962,925 | (2,955,405) | - | - | - | 25,439,698 |
| Valuation of biological assets | - | 1,275,824 | - | - | - | - | 1,275,824 |
| Government grants - Investment incentives | 12,225,910 | - | (1,458,946) | - | - | - | 10,766,964 |
| 85,158,448 | 78,333,803 | (22,983,296) | (829,997) | - | - | 139,678,958 | |
| Temporary differences originating deferred tax liabilities | |||||||
| Revaluation of fixed assets | (7,462,129) | 713,971 | - | - | - | - | (6,748,157) |
| Retirement benefits | (1,110,760) | 74,934 | (7,929,697) | 6,827,564 | - | - | (2,137,958) |
| Derivative financial Instruments at fair value | (144,728) | - | - | (89,718) | - | - | (234,446) |
| Deferred accounting losses on inter-group transactions | (3,068,885) | (358,958) | 3,747,934 | (320,092) | - | - | - |
| Government grants | - | - | - | - | - | (11,991,792) | (11,991,792) |
| Extension of useful lives of tangible fixed assets | (336,438,878) | (25,094,311) | 65,321,140 | (3,752,884) | - | - | (299,964,933) |
| Valuation of biological assets | (477,515) | - | 477,515 | - | - | - | - |
| (348,702,895) | (24,664,363) | 61,616,893 | 2,664,870 | - | (11,991,792) | (321,077,287) | |
| Amounts as presented on consolidated statement of financial position | |||||||
| Deferred tax assets | 23,418,573 | 21,541,796 | (6,320,406) | (228,249) | - | - | 38,411,713 |
| Tax Incentives for Investment | - | - | (773,715) | - | 13,296,327 | - | 12,522,612 |
| 23,418,573 | 21,541,796 | (7,094,121) | (228,249) | 13,296,327 | - | 50,934,325 | |
| Deferred tax liabilities | (95,893,297) | (6,782,700) | 16,944,647 | 732,839 | - | (3,297,743) | (88,296,253) |
| (95,893,297) | (6,782,700) | 16,944,647 | 732,839 | - | (3,297,743) | (88,296,253) |
In the measurement of the deferred taxes as at 31st March 2015 and 31st December 2015, the corporate income tax rate used was 27.5%.
By the end of 2015, the defined benefit plan shown a deficit resulting, amongst other factors, from the changes on the actuarial and financial assumptions, namely from the review on the discount rates used in computing the actuarial liabilities.
Thus, in order to face that increase in the liabilities, the Group carried out additional contributions to the defined benefit plan in 2015.
The Group also holds liabilities related to post-employment defined benefit plans regarding the employees of The Navigator Company that choose not to accept the conversion to defined contribution plan, together with former employees, retirees or, when applicable, with granted rights.
As at 31st March 2016 and 2015 the coverage of the companies' liabilities by the assets of the funds was as follows:
| Amounts in Euro | 31-03-2016 | 31-12-2015 |
|---|---|---|
| Past service liabilities | ||
| - Active Employees | 58,105,846 | 59,309,768 |
| - Former Employees | 16,370,135 | 16,865,214 |
| - Retired Employees | 63,256,194 | 63,137,380 |
| Market value of the pension funds | (141,044,636) | (143,067,688) |
| (3,312,462) | (3,755,326) | |
| Insufficient funds/ overfunding | (3,312,462) | (3,755,326) |
As at 31st March 2016 the amount of assigned responsibilities to plans for post-employment benefits relating to two members of the Board of The Navigator Company Group amounted to Euro 1,099,186 (31st December 2015: Euro 1,697,024).
The actuarial studies carried out by an independent entity for the purpose of determining the accumulated liabilities as at 31st March 2016 and 31st December 2015 were based on the following assumptions:
| Real outcome | |||||
|---|---|---|---|---|---|
| 31-03-2016 | 31-12-2015 | 31-03-2016 | 31-12-2015 | ||
| Disability Table | EKV 80 | EKV 80 | - | - | |
| Mortality Table | TV 88/90 | TV 88/90 | - | - | |
| Wage grow th rate | 1.00% | 2.00% | 1.00% | 1.00% | |
| Technical interest rate | 2.50% | 3.50% | - | - | |
| Return rate on plan assets | 2.50% | 3.50% | 2.40% | 2.40% | |
| Pensions grow th rate | 0.75% | 0.75% | 0.75% | 0.75% | |
The discount rates used in this study were selected over the return rates of a bonds' portfolio, namely Markit iBoxx Eur Corporates AA 10+. From the portfolio, bonds with adequate maturity and rating were selected according to the amount and period cash outflows that will occur in regard to the payment of the benefits to employees.
The following table presents the five-year historical information on the present value of liabilities, the market value of the funds, non-financed liabilities and net actuarial gains/ (losses). This information from 31st December 2010 to 31st March 2016 was as follows:
| Amounts in Euro | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 03_2016 |
|---|---|---|---|---|---|---|---|
| Present value of liabilities | 116,568,257 | 121,323,084 | 122,365,002 | 65,657,042 | 70,188,472 | 139,312,363 | 137,732,174 |
| Fair value of plan assets | 102,854,501 | 104,716,904 | 117,050,324 | 69,558,535 | 71,666,181 | 143,067,688 | 141,044,636 |
| Surplus/(deficit) | (13,713,756) | (16,606,180) | (5,314,678) | 3,901,493 | 1,477,709 | 3,755,326 | 3,312,462 |
The movements in liabilities with retirement and pensions plans in 2016 and 2015 were as follows:
| Amounts in Euro | 2016 | 2015 |
|---|---|---|
| Opening Balance | 139,312,363 | 70,188,472 |
| Changes in assumptions | 238,289 | 12,775,869 |
| Individual accounts | (1,990,100) | - |
| Curtailment | - | - |
| Costs recognised in the Income Statement | 1,367,175 | 620,539 |
| Pensions paid | (1,195,553) | (976,120) |
| As of 31st March | 137,732,174 | 82,608,760 |
| Remaining Quarteres | 56,703,603 | |
| As of 31st December | 139,312,363 |
The funds set up to cover the above mentioned liabilities had the following movement in 2016 and 2015:
| Amounts in Euro | 2016 | 2015 |
|---|---|---|
| Opening Balance | 143,067,688 | 71,666,181 |
| Contributions made in the period | - | 215,000 |
| Expected return in the period | 882,332 | 622,108 |
| Actuarial gains/(losses) (difference betw een actual and expected returns) |
291,568 | 3,063,192 |
| Pensions paid | (1,195,553) | (976,120) |
| Other | (2,001,400) | - |
| As of 31st March | 141,044,636 | 74,590,361 |
| Remaining Quarters | 68,477,327 | |
| As of 31st December | 143,067,688 |
In the three month period ended 31st March 2016 and year ended 31st December 2015 the effect in the income statement of these plans was as follows:
| 3 months | 3 months | |
|---|---|---|
| Amounts in Euro | 31-03-2016 | 31-03-2015 |
| Defined Benefit Plans | ||
| Current services | 525,401 | 23,587 |
| Interest expenses | 841,774 | 596,953 |
| Return of the plan assets | (882,332) | (622,108) |
| Other | 15,996 | - |
| 500,840 | (1,568) | |
| Defined Contribution Plans | ||
| Contribution to the plan | 275,951 | 474,694 |
| 275,951 | 474,694 | |
| Costs for the period | 776,791 | 473,126 |
The costs with current services includes Euro 8,558 corresponding to 1 Board members (31st March 2015: Euro 43,080).
At 2016 and 2015, changes in provisions were as follows:
| Amount in Euro | Legal Claims |
Tax Claims |
Other | Total |
|---|---|---|---|---|
| Amount as of 1st January 2015 | 2,943,470 | 24,107,664 | 14,097,671 | 41,148,805 |
| Changes in the consolidation scope | - | - | - | - |
| Increases | 13,191 | - | (3,286,993) | (3,273,802) |
| Reversals | (52,236) | - | (2,580,434) | (2,632,670) |
| Transfers | - | (4,231,371) | - | (4,231,371) |
| Amount as of 31st March 2015 | 2,904,425 | 19,876,293 | 8,230,244 | 31,010,963 |
| Changes in the consolidation scope | - | - | - | - |
| Increases | 8,000 | - | 3,286,993 | 3,294,993 |
| Reversals | 0 | - | (11,950,876) | (11,950,876) |
| Transfers | (286,376) | 36,338,301 | 798,590 | 36,850,515 |
| Amount as of 31st December 2015 | 2,626,049 | 56,214,594 | 364,951 | 59,205,593 |
| Increases | - | - | 1,118,830 | 1,118,830 |
| Reversals | (965) | - | - | (965) |
| Transfers | (1,102) | (5,800,629) | - | (5,801,731) |
| Amount as of 31st March 2016 | 2,623,982 | 50,413,965 | 1,483,780 | 54,521,726 |
The amount shown as "Others" relates to provisions for multiple risks, which may originate cash outflows in the future.
The amount of provisions stated as "Tax claims" results from the Group's judgement at the date, about the potential disagreement with tax authorities, considering most recent updates about this events.
As at 31st March 2016 and 31st December 2015, non-current interest-bearing debt comprised the following:
| 31-03-2016 | ||||||
|---|---|---|---|---|---|---|
| Amount in Euro | Available Amount | Debt | Due Date | Interest Rate | Current | Non-Current |
| Bond Loans | ||||||
| Portucel Senior Notes 5.375% 2020 | 150,000,000 | 150,000,000 | May 2016 * | Fixed Rate | 150,000,000 | - |
| Portucel 2015-2023 | 200,000,000 | 200,000,000 | September 2023 | Variable Rate indexed to Euribor | - | 200,000,000 |
| Comissions | (4,064,579) | (2,410,883) | (1,653,696) | |||
| Bank Loans | ||||||
| Bank Loan - AMS | 17,875,002 | 17,875,002 | July 2021 | Variable Rate indexed to Euribor | 3,249,996 | 14,625,006 |
| Bank Loan - AMS | 3,666,667 | 3,666,667 | July 2021 | Variable Rate indexed to Euribor | 666,667 | 3,000,000 |
| European Investment Bank | ||||||
| BEI Ambiente A Loan | 27,857,143 | 27,857,143 | December 2018 | Variable Rate indexed to Euribor | 9,285,714 | 18,571,429 |
| BEI Ambiente B Loan | 18,333,333 | 18,333,333 | June 2021 | Variable Rate indexed to Euribor | 3,333,333 | 15,000,000 |
| BEI Energia Loan | 63,750,000 | 63,750,000 | December 2024 | Variable Rate indexed to Euribor | 7,083,333 | 56,666,667 |
| Commercial Paper | ||||||
| Commercial Paper 125M | 125,000,000 | 125,000,000 | May 2020 | Variable Rate indexed to Euribor | - | 125,000,000 |
| Commercial Paper 75M | 75,000,000 | 75,000,000 | July 2020 | Variable Rate indexed to Euribor | - | 75,000,000 |
| Commercial Paper 50M | 50,000,000 | 10,000,000 | July 2020 | Variable Rate indexed to Euribor | - | 10,000,000 |
| Commisions | (487,045) | (487,045) | ||||
| Refundable Subsidies | ||||||
| Refundable Subsidies | 6,097,883 | 6,097,883 | ||||
| Comissions | ||||||
| 693,028,403 | 171,208,161 | 521,820,243 | ||||
| 31-12-2015 Amount in Euro |
Available Amount | Debt | Due Date | Interest Rate | Current | Non-Current |
| Bond Loans | ||||||
| Portucel Senior Notes 5.375% 2020 | 150,000,000 | 150,000,000 | May 2016 * | Fixed Rate | - | 150,000,000 |
| Portucel 2015-2023 | 200,000,000 | 200,000,000 | September 2023 | Variable Rate indexed to Euribor | - | 200,000,000 |
| Commisions | (4,264,228) | (4,264,228) | ||||
| Bank Loans | ||||||
| Bank Loan - AMS | 19,423,085 | 19,423,085 | July 2021 | Variable Rate indexed to Euribor | 3,249,996 | 16,173,089 |
| Bank Loan - AMS | 3,833,333 | 3,833,333 | July 2021 | Variable Rate indexed to Euribor | 666,667 | 3,166,667 |
| Bank Loan - AMS | 1,959,546 | 1,959,546 | January 2016 | Variable Rate indexed to Euribor | 1,959,546 | - |
| Bank Loan - 15M | 15,000,000 | 15,000,000 | Variable Rate indexed to Euribor | 15,000,000 | - | |
| European Investment Bank | ||||||
| BEI Ambiente A Loan | 27,857,143 | 27,857,143 | December 2018 | Variable Rate indexed to Euribor | 9,285,714 | 18,571,429 |
| BEI Ambiente B Loan | 18,333,333 | 18,333,333 | June 2021 | Variable Rate indexed to Euribor | 3,333,333 | 15,000,000 |
| BEI Energia Loan | 63,750,000 | 63,750,000 | December 2024 | Variable Rate indexed to Euribor | 7,083,333 | 56,666,667 |
| Commercial Paper | ||||||
| Commercial Paper 125M | 125,000,000 | 125,000,000 | May 2020 | Variable Rate indexed to Euribor | - | 125,000,000 |
| Commercial Paper 75M | 75,000,000 | 75,000,000 | July 2020 | Variable Rate indexed to Euribor | - | 75,000,000 |
| Commercial Paper 50M | 50,000,000 | 25,000,000 | July 2020 | Variable Rate indexed to Euribor | - | 25,000,000 |
| Commisions | (531,266) | (531,266) | ||||
| Refundable Subsidies | ||||||
| Refundable Subsidies | ||||||
| 6,788,396 | 6,788,396 |
In September 2015, the Group proceeded to the partial early repayment of Portucel Senior Notes 5.375% bonds, in the amount of Euro 200 million. After the early repayment, this loan was reduced to Euro 150 million.
727,149,343 40,578,590 686,570,753
Simultaneously, the Group issued a new bond loan underwritten by two banks, also in the amount of Euro 200 million. This new issue, with an 8 year maturity, is indexed to the six months Euribor (with a 0% floor) plus a 1.9% spread. After the quarter end, the company announced the early repayment of the remaining loan in May 2016.
In March 2016, was contracted a new credit line with EIB related to the Cacia's expansion project. The amount of new funding is Euro 25 million. On 31st March the funding had not yet been disbursed.
On 31st March 2016 and 2015, the average cost of debt, considering both interest rate and annual fees was 2.3% and 2.4%, respectively.
The repayment terms related to non-current loans show the following maturity profile:
| Amount in Euro | 31-03-2016 | 31-12-2015 |
|---|---|---|
| Non-current | ||
| 1 to 2 yeas | 24,672,514 | 23,619,051 |
| 2 to 3 years | 27,684,303 | 23,619,048 |
| 3 to 4 years | 14,333,334 | 14,333,334 |
| 4 to 5 years | 224,333,334 | 389,333,334 |
| More than 5 years | 232,937,499 | 240,461,480 |
| 523,960,984 | 691,366,247 | |
| Commisions | (2,140,741) | (4,795,494) |
| 521,820,243 | 686,570,753 |
As at 31st March 2016, in addition to the Commercial paper, the Group had available but unused credit lines amounting to Euro 160,450,714 (31st December 2015: Euro 145,450,714).
On 31st March 2016 and 31st December 2015, the Group's net debt was detailed as follows:
| 31-03-2016 | 31-12-2015 |
|---|---|
| 521,820,243 | 686,570,753 |
| 171,208,161 | 40,578,590 |
| 693,028,403 | 727,149,342 |
| 80,623 | 79,355 |
| 18,294,233 | 35,024,398 |
| 38,205,307 | 37,553,832 |
| 56,580,163 | 72,657,585 |
| 636,448,240 | 654,491,758 |
The Group has a strict policy regarding the approval of its financial counterparties, limiting its exposure in accordance to an individual risk analysis, with previously approved limits. It also has in place a diversification policy applied to the number of Group's counterparties. As such, as on 31st March 2016, the Group had no term deposit in financial institutions. The amount of Euro 38,205,307 under the heading of other cash and cash equivalents is invested in a portfolio of bonds from issuers with an adequate credit rating.
The evolution of the Group's net debt in the three month periods ended 31st March 2016 and 2015, was as follows:
| Amounts in Euro | 3 months 31-03-2016 |
3 months 31-03-2015 |
Remaining Quarters |
12 months 2015 |
|---|---|---|---|---|
| As of 1 st de January | 654,491,758 | 273,640,542 | - | 273,640,542 |
| Changes in the consolidation scope | - | 20,645,690 | (3,499,089) | 17,146,601 |
| Expenses w ith the issue of bond loans | - | - | 1,908,000 | 1,908,000 |
| Interest paid | 3,443,054 | 2,355,099 | 39,534,149 | 41,889,248 |
| Interest received | (651,475) | (1,168,476) | (64,909) | (1,233,385) |
| Dividens paid and reserves distributed | - | - | 440,459,260 | 440,459,260 |
| Acquisition of treasury shares | - | - | - | - |
| Receipts related to investment activities | - | - | (14,113,127) | (14,113,127) |
| Payments related to acquisition of subsidiaries | - | - | 40,949,794 | 40,949,794 |
| Payments related to investment activities | 26,240,968 | 11,015,450 | 142,834,525 | 153,849,975 |
| Accumulated exchange rate diferences | (447,825) | (1,783,996) | 6,648,705 | 4,864,709 |
| Dividend receipts | - | - | - | - |
| Net receipts of operating activities | (46,628,241) | (22,464,533) | (282,405,325) | (304,869,858) |
| Changes in Net Debt | (18,043,518) | 8,599,234 | 380,851,216 | |
| 636,448,240 | 282,239,776 | 654,491,758 |
Also, the movements in the Group's net debt in the three months periods ended in 31st March 2016 and 2015 were as follows:
| Remaining | ||||
|---|---|---|---|---|
| Amount in Euro | 31-03-2016 | 31-03-2015 | Quarters | 31-12-2015 |
| Net profit for the year | 44,623,176 | 41,790,413 | 154,975,109 | 196,765,522 |
| Depreciation, amortization and impairment losses | 35,980,113 | 33,083,703 | 88,632,232 | 121,715,935 |
| Net changes in provisions | 1,117,864 | (5,906,473) | (8,655,882) | (14,562,355) |
| 81,721,154 | 68,967,643 | 234,951,459 | 303,919,102 | |
| Change in w orking capital | (7,966,323) | 36,622,147 | (70,442,101) | (33,819,954) |
| Variation in the consolidation scope | (19,589,407) | (262,425) | (19,851,832) | |
| Acquisitions of tangible fixed assets | (44,770,427) | (59,332,620) | (132,685,893) | (192,018,513) |
| Dividens paid and reserves distributed | - | - | (440,459,260) | (440,459,260) |
| Acquisition of treasury shares | - | - | - | - |
| Net changes in post-employment benefits | (162,724) | (9,496,107) | 11,261,302 | 1,765,195 |
| Other changes in equity | 1,452,686 | (14,720,121) | 19,014,119 | 4,293,998 |
| Expenses w ith the issue of bond loans | 2,654,752 | 576,263 | 1,110,465 | 1,686,728 |
| Other | (14,885,599) | (11,627,032) | 5,260,351 | (6,366,681) |
| Changes in net debt (Free Cash Flow) | 18,043,519 | (8,599,234) | (372,251,982) | (380,851,216) |
On 31st March 2016 and 31st December 2015, the other non-current liabilities were as follows:
| Amounts in Euro | 31-03-2016 | 31-12-2015 |
|---|---|---|
| Non-current | ||
| Grants | 35,664,097 | 37,215,981 |
| Equipment | 3,082,815 | 1,322,745 |
| 38,746,912 | 38,538,726 |
The amount of grants corresponds to the investment grants received in order to support the investment projects carried out by the group in the past, with regard to its non-current component. From this amount, it is subject to conversion into non-repayable incentives Euros 6,947,450 for investment in the expansion of Cacia BEKP production unit Cacia. It is also subject to conversion into non-repayable incentives Euros 4,823,850 relating to the investment expansion of the Tissue paper production unity in Vila Velha de Ródão, which reduced the amount of goodwill recognized on the acquisition.
On 31st March 2016 and 31st December 2015, the Group showed the following equipment under finance lease plans recognized under IFRIC 4:
| 31-03-2016 | |||
|---|---|---|---|
| Amount in Euro | Acquisition | Accumulated | Net book |
| Value | depreciation | value | |
| Equipments | 14,000,000 | (9,837,838) | 4,162,162 |
| 14,000,000 | (9,837,838) | 4,162,162 | |
| 31-12-2015 | |||
| Acquisition | Accumulated | Net book | |
| Amount in Euro | Value | depreciation | value |
| Equipments | 14,000,000 | (9,459,460) | 4,540,540 |
| 14,000,000 | (9,459,460) | 4,540,540 |
The non-current and current liabilities related to those equipment are recorded under "Other liabilities" and "Payables and other current liabilities", respectively, and are detailed as follows:
| Amount in Euro | 31-03-2016 | 31-12-2015 |
|---|---|---|
| Non-current | ||
| Equipment | 3,082,815 | 1,322,745 |
| Current (Note 19) | 3,748,295 | 3,995,996 |
| 6,831,110 | 5,318,741 |
As at 31st March 2016 and 31st December 2015, Payables and other current liabilities were detailed as follows:
| Amount in Euro | 31-03-2016 | 31-12-2015 |
|---|---|---|
| Accounts payable to suppliers | 152,965,038 | 139,127,591 |
| Accounts payable to fixed assets suppliers | 4,713,447 | 2,945,204 |
| Accounts payable to fixed assets suppliers - leases (Note 18) | 3,748,295 | 3,995,996 |
| Accounts payable - Related parties | 908,570 | 1,192,990 |
| Derivative financial instruments (Note 20) | 5,604,771 | 646,872 |
| Other creditors - CO2 emissions | 5,422,481 | 6,855,147 |
| Sales comissions | 174,852 | 137,740 |
| Other creditors | 1,995,242 | 2,846,437 |
| Accrued costs | 61,568,488 | 61,100,959 |
| Deferred income | 8,472,135 | 6,235,175 |
| 245,573,319 | 225,084,110 |
The current accounts payable balances were detailed as follows by business segment:
| Amount in Euro | 31-03-2016 | 31-12-2015 |
|---|---|---|
| UWF Paper | 104,434,686 | 93,581,883 |
| Tissue | 5,972,468 | 8,312,536 |
| Pulp to Market | 6,624,526 | 5,721,367 |
| Other | 37,933,358 | 31,511,806 |
| 154,965,038 | 139,127,592 |
On 31st March 2016 and 31st December 2015, accrued costs and deferred income were detailed as follow:
| Amount in Euro | 31-03-2016 | 31-12-2015 |
|---|---|---|
| Accrued costs | ||
| Payroll expenses - Annual Performance Bonus | 20,044,349 | 15,688,962 |
| Payroll expenses - Other | 22,061,667 | 18,855,256 |
| Interests payable, including compensatory interest | 8,202,058 | 8,533,687 |
| Other | 11,260,414 | 18,023,054 |
| 61,568,488 | 61,100,959 | |
| Deferred income | ||
| Government grants | 6,274,879 | 6,274,879 |
| Grants - CO2 emission licenses | 2,154,008 | (26,680) |
| Other | 43,249 | (13,024) |
| 8,472,135 | 6,235,175 |
As at 31st March 2016 and 31st December 2015, deferred income on government grants was detailed as follows:
| Amount in Euro | 31-13-2016 | 31-12-2015 |
|---|---|---|
| AICEP investment contracts (Note 9) | ||
| Portucel, S.A. | 8,543,435 | 10,668,532 |
| Navigator Pulp Cacia, S.A. | 14,521,824 | 17,424,719 |
| Navigator Pulp Setúbal, S.A. | 761,596 | 1,456,647 |
| Navigator Pulp Figueira, S.A. | 8,943,728 | 10,767,344 |
| Navigator Parques Industriais, S.A. | 2,151,583 | 2,225,779 |
| Navigator Paper Figueira, S.A. | 204,101 | 564,192 |
| 35,126,267 | 43,107,213 | |
| Other | ||
| Raiz | 9,128 | 72,883 |
| Viveiros Aliança, SA | 528,702 | 711,342 |
| 537,830 | 784,225 | |
| 35,664,097 | 43,891,438 |
Moreover, the amount of Euros 18,359,405 related to the Navigator Tissue Ródão, S.A., deducted to the acquisition difference within the consolidation operations.
During 2016 and 2015, Grants – CO2 emissions had the following movements:
| Amount in Euro | 2016 | 2015 |
|---|---|---|
| Grants - CO2 emissions | ||
| Opening balance | - | - |
| Increase | 4,280,610 | 3,197,487 |
| Utilization | (2,123,366) | (584,582) |
| Balance as of 31st March | 2,157,244 | 2,612,905 |
| Remaining Quarters | (2,612,905) | |
| Balance as of 31st December | - |
This amount regards the C02 emission allowances granted for free to several group companies (2016: 488,844 and 498,008 in 2015).
On 31st March 2016 and 31st December 2015, the fair value of derivative financial instruments was as follows:
| 31-03-2016 | |||||
|---|---|---|---|---|---|
| Amount in Euro | Notional | Positive | Negative | Net | Net |
| Trading | |||||
| Exchange rate forw ards | 78,481,231 | 1,839,241 | - | 1,839,241 | (417,437) |
| 78,481,231 | 1,839,241 | - | 1,839,241 | (417,437) |
The Group has a currency exposure on sales invoiced in foreign currencies, namely US dollars (USD) and pounds sterling (GBP). As the Group's financial statements are translated into Euro, it runs an economic risk on the conversion of these currency flows to the Euro. The Group is also obliged, albeit to a lesser degree, to make certain payments in those same currencies which, for currency exposure purposes, act as a natural hedge. Thus, the hedge is aimed at safeguarding the net value of items in the statement of financial position denominated in foreign currencies against the respective currency fluctuations.
The hedging instruments used in this operation are foreign exchange forward contracts covering the net exposure to the foreign currencies at the time the invoices are issued, for the same maturity dates and the same amounts of these documents in such a way as to fix the exchange rate associated with the sales. The nature of the risk hedged is change in the carrying amount of on sales and purchases expressed in foreign currencies due to foreign currency fluctuations. At the end of each month, customer and suppliers' balances expressed in foreign currency are updated, with the gain or loss offset against the fair value change of the forwards negotiated.
The net fair value of trading instruments – forwards – as at 31st March 2016 is Euro 1,839,241 (31st December 2015: Euro 417,437).
As at 31st March 2016 and 31st December 2015, the fair value of derivative financial instruments designated as hedging instruments was as follows:
| 31-03-2016 | |||||
|---|---|---|---|---|---|
| Amount in Euro | Notional | Positive | Negative | Net | Net |
| Hedging | |||||
| Interest Rates Sw aps | 325,000,000 | - | (5,604,771) | (5,604,771) | 870,373 |
| Commercial Paper | 125,000,000 | - | (1,030,059) | (1,030,059) | 515,042 |
| Bond Loans | 200,000,000 | - | (4,574,712) | (4,574,712) | 355,332 |
| Hedges (net investment) | 22,002,635 | 1,493,644 | - | 1,493,644 | 543,992 |
| Hedges (future sales)* | 175,800,000 | 1,667,674 | - | 1,667,674 | |
| 522,802,635 | 3,161,318 | (5,604,771) | (2,443,453) | 1,414,365 |
* Amount in USD
The Group hedges the economic risk associated with exposure to the exchange rate of its participation in PortucelSoporcel North America. For that purpose, the Group has entered into a foreign exchange forward maturing in May 2016, with a notional outstanding of USD 25,050,000.
This instrument is designated as a hedging of the investment in the North America subsidiary of the Group, with fair value changes recognized in comprehensive income.
The Group makes use of derivative financial instruments in order to limit the net exchange risk arising from its sales and purchases denominated in USD.
In this context, throughout 2016, the Group signed a set of financial structures to cover part of the net exchange rate exposure of the sales denominated in USD for 2016. Derivative financial instruments entered were put options amounting to USD 175.8 million, which will reach their maturity on 31st January 2017.
The Group hedges of future interest payments on commercial paper loans, through an interest rate swap, in which The Navigator Company pays a fixed rate and receives a variable rate. This instrument is designated as a cash flow hedge of the interest rate risk associated with the commercial paper programme and the bond loan. The credit risk is not part of the hedging relationship.
This hedge is designated for the entire life of the hedging instruments.
These amounts are initially recognized at fair value, and subsequently measured at amortized cost less any impairment losses identified during the course of the credit risk analysis of the credit portfolios held (Note 12).
These items are recognized at their amortized cost, corresponding to the value of the respective cash flows discounted at the effective interest rate associated with each of the liabilities (Note 18).
The effect in net income of the period of the financial assets and liabilities held is detailed as follows:
| Amounts in Euro | 31-03-2016 | 31-03-2015 |
|---|---|---|
| Gain/ (loss) on loans and receivables | (962,477) | 314,392 |
| Gains / (losses) on financial instruments - hedging | (376,603) | (1,374,596) |
| Gains / (losses) on financial instruments - trading | 2,256,677 | (698,574) |
| Interest Income: | ||
| From deposits and other receivables | 651,479 | 1,055,911 |
| Interest expense: | ||
| Financial liabilities measured at amortized cost | (3,673,284) | (7,546,267) |
| Other | (611,421) | (438,628) |
| (2,715,629) | (8,687,762) |
The fair value of derivative financial instruments is included in "Receivables and other current assets" (Note 12) and "Payables and other current liabilities" (Note 19).
The movement in the balances recognized in the statement of financial position (Notes 12 and 19) related with financial instruments was as follows:
| Change in fair value (Trading) |
Change in fair value (Hedging) |
Total | |
|---|---|---|---|
| Amount as of 1st January 2015 | (1,342,225) | (2,842,640) | (4,184,865) |
| Maturity (Note 10) | 924,788 | (7,954,725) | (7,029,937) |
| Increase/decrease in fair value | 57,667 | 12,211,730 | 12,269,397 |
| Amount as of 1st January 2016 | (359,770) | 1,414,365 | 1,054,596 |
| Maturity (Note 10) | 2,256,677 | (376,603) | 1,880,075 |
| Increase/decrease in fair value | (673,481) | (3,481,215) | (4,154,696) |
| Amount as of 31st March 2016 | 1,223,427 | (2,443,453) | (1,220,026) |
On 31st March 2016 and 31st December 2015, the derivative financial instruments previously summarized had the following maturities:
| 31-03-2016 | 31-12-2015 | |||||
|---|---|---|---|---|---|---|
| Nominal value | Maturity | Type | Fair Value | Fair Value | ||
| Exchange rate forw ards | USD | 71,300,000 | 24-ago-16 | Trading | 1,294,576 | (646,872) |
| GBP | 12,550,000 | 16-ago-16 | Trading | 544,665 | 229,435 | |
| Future purchase of C02 emission licences | EUR | 1,931,000 | 15-mar-18 | Trading | (615,814) | 57,667 |
| 1,223,427 | (359,770) | |||||
| Foreign Exchange forw ards - Net Equity | USD | 25,050,000 | 27-mai-16 | Hedging | 1,493,644 | 543,992 |
| Hedging for future sales | USD | 175,800,000 | 31-dez-16 | Hedging | 1,667,674 | - |
| Interest rate sw ap for comercial Paper issued | EUR | 125,000,000 | 26-mai-20 | Hedging | (1,030,059) | 515,042 |
| Interest rate sw ap for loans | EUR | 200,000,000 | 22-set-23 | Hedging | (4,574,712) | 355,332 |
| (2,443,453) | 1,414,365 | |||||
| (1,220,026) | 1,054,596 |
As at 31st March 2016 and 31st December 2015, the Group had presented the following bank guarantees to the following entities:
| Amounts in Euro | 31-03-2016 | 31-12-2015 |
|---|---|---|
| Customs clearence | 2,901,165 | 2,723,960 |
| Simria | 338,829 | 327,775 |
| IAPMEI | 8,980,505 | 6,573,110 |
| Other | 622,257 | 605,540 |
| 12,842,756 | 10,230,385 |
The guarantees in favour of IAPMEI were provided under the investment contracts celebrated between the Portuguese State and Navigator Pulp Cacia, S.A. (Euro 2,438,132) and Navigator Tissue Ródão, S.A. (Euro 6,542,373), as per the terms and conditions defined in the Payment Standard applicable to projects approved under QREN Incentive Systems.
In addition to the commitments described in the preceding Note, purchase commitments assumed with suppliers at 31st March 2016 amounted to Euro 17,050,613 and referred to capital expenditure on Property, plant and equipment. In 31st December 2015 these commitments amounted to Euro 23,107,821.
On 31th March 2016 and 31th December 2015, the commitments relating to 327 (2015:308) operating lease contracts comprised the following:
| Amounts in Euro | 31-03-2016 | 31-12-2015 | |
|---|---|---|---|
| Settlement date | |||
| 2016 | 1,188,801 | 1,506,712 | |
| 2017 | 1,320,909 | 1,202,577 | |
| 2018 | 934,908 | 810,035 | |
| 2019 | 557,732 | 434,663 | |
| 2020 | 125,643 | 52,956 | |
| 4,127,994 | 4,006,943 |
As at 31st March 2016 and 31st December 2015, the undiscounted commitments relating to 2,970 and 2,980 forestry land rents comprised the following:
| Amounts in Euro | 31-03-2016 | 31-12-2015 | ||
|---|---|---|---|---|
| 2016 | 3,251,977 | 4,583,742 | ||
| 2017 | 4,544,396 | 4,426,222 | ||
| 2018 | 4,363,270 | 4,149,697 | ||
| 2019 | 4,129,793 | 3,980,008 | ||
| 2020 | 3,807,418 | 3,657,728 | ||
| Later | 50,087,065 | 47,542,248 | ||
| 70,183,918 | 68,339,646 |
At 31st March 2016 and 31st December 2015, the additional tax settlements paid and disputed by the Group, are detailed as follows:
| Amounts in Euro | 31-03-2016 | 31-12-2015 |
|---|---|---|
| Aggregate corporate income tax 2005 | 10,394,386 | 10,394,386 |
| Aggregate corporate income tax 2006 | 8,150,146 | 8,150,146 |
| Aggregate corporate income tax - result of the income tax calculation - 2010 | 4,448,387 | 4,448,387 |
| Aggregate corporate income tax - result of the income tax calculation - 2011 | 2,208,268 | 2,208,268 |
| Aggregate corporate income tax 2012 | 6,876,545 | - |
| 32,077,732 | 25,201,187 |
| Share equity owned | ||||
|---|---|---|---|---|
| Company | Head office | Directly | Indirectly | Total |
| Parent-Company: | ||||
| The Navigator Company, S. A. | Setúbal | - | - | - |
| Subsidiaries: | ||||
| Navigator Paper Figueira, S.A. | Figueira da Foz | 100.00 | - | 100.00 |
| Portucel Florestal, SA | Setúbal | 100.00 | - | 100.00 |
| Navigator Parques Industriais, SA | Setúbal | 100.00 | - | 100.00 |
| About the Balance - SGPS, SA | Lisboa | 100.00 | - | 100.00 |
| Navigator Tissue Rodão, SA | Vila Velha de Ródão | - | 100.00 | 100.00 |
| Navigator Tissue Cacia, SA | Aveiro | - | 100.00 | 100.00 |
| Navigator Internacional Holding SGPS SA | Setúbal | 100.00 | - | 100.00 |
| Portucel Moçambique - Sociedade de Desenvolvimento Florestal e Industrial, Lda | Moçambique | 20.05 | 60.15 | 80.20 |
| Portucel Florestal Brasil - Gestão de Participações, Ltda | Brasil | 25.00 | 75.00 | 100.00 |
| Colombo Energy Inc. | EUA | - | 100.00 | 100.00 |
| Portucel Finance, Zoo | Polónia | 25.00 | 75.00 | 100.00 |
| Portucel Africa, SRL | Itália | - | 100.00 | 100.00 |
| Navigator Floresta, SGPS, SA | Setúbal | 100.00 | - | 100.00 |
| Sociedade de Vinhos da Herdade de Espirra - Produção e Comercialização de Vinhos, SA | Setúbal | - | 100.00 | 100.00 |
| Gavião - Sociedade de Caça e Turismo, S.A. | Setúbal | 100.00 | 100.00 | |
| Navigator Forest Portugal, SA | Setúbal | - | 100.00 | 100.00 |
| Afocelca - Agrupamento complementar de empresas para protecção contra incêndios ACE | Portugal | - | 64.80 | 64.80 |
| Viveiros Aliança - Empresa Produtora de Plantas, SA | Palmela | - | 100.00 | 100.00 |
| Atlantic Forests, SA | Setúbal | - | 100.00 | 100.00 |
| Raiz - Instituto de Investigação da Floresta e Papel | Aveiro | - | 94.00 | 94.00 |
| Bosques do Atlantico, SL | Espanha | - | 100.00 | 100.00 |
| Navigator Pulp Holding ,SGPS, S.A. | Setúbal | 100.00 | - | 100.00 |
| Navigator Pulp Figueira, SA | Figueira da Foz | - | 100.00 | 100.00 |
| Navigator Pulp Setúbal, S.A. | Setúbal | - | 100.00 | 100.00 |
| Navigator Pulp Cacia, S.A. | Aveiro | - | 100.00 | 100.00 |
| Portucel International GmbH | Alemanha | - | 100.00 | 100.00 |
| Navigator Paper Holding ,SGPS, S.A. | Setúbal | 100.00 | - | 100.00 |
| About the Future - Empresa Produtora de Papel, SA | Setúbal | - | 100.00 | 100.00 |
| Navigator Paper Setúbal, S.A. | Setúbal | - | 100.00 | 100.00 |
| Portucel Soporcel North America Inc. | EUA | - | 100.00 | 100.00 |
| Navigator Sales & Marketing, SA | Bélgica | 25.00 | 75.00 | 100.00 |
| Navigator Lusa, Lda | Figueira da Foz | - | 100.00 | 100.00 |
| Navigator Fine Paper , S.A. | Setúbal | - | 100.00 | 100.00 |
| Navigator Sw itzerland Ltd. | Suiça | 25.00 | 75.00 | 100.00 |
| PortucelSoporcel Afrique du Nord | Marrocos | - | 100.00 | 100.00 |
| PortucelSoporcel España, SA | Espanha | - | 100.00 | 100.00 |
| PortucelSoporcel Netherlands, BV | Holanda | - | 100.00 | 100.00 |
| PortucelSoporcel France, EURL | França | - | 100.00 | 100.00 |
| PortucelSoporcel United Kingdom, Ltd | Reino Unido | - | 100.00 | 100.00 |
| PortucelSoporcel Italia, SRL | Itália | - | 100.00 | 100.00 |
| PortucelSoporcel Deutschland, GmbH | Alemanha | - | 100.00 | 100.00 |
| PortucelSoporcel Handels, GmbH | Austria | - | 100.00 | 100.00 |
| PortucelSoporcel Poland SP Z O | Polónia | - | 100.00 | 100.00 |
| PortucelSoporcel Eurasia | Turquia | - | 100.00 | 100.00 |
| PortucelSoporcel Russia, LLC | Russia | - | 100.00 | 100.00 |
| Navigator Biomass Energy ,SGPS, S.A. | Setúbal | 100.00 | - | 100.00 |
| Enerpulp – Cogeração Energética de Pasta, SA | Setúbal | - | 100.00 | 100.00 |
| Navigator Participações Holding ,SGPS, S.A. | Setúbal | 100.00 | - | 100.00 |
| Arboser – Serviços Agro-Industriais, SA | Setúbal | - | 100.00 | 100.00 |
| EMA21 - Engenharia e Manutenção Industrial Século XXI, SA | Setúbal | - | 100.00 | 100.00 |
| Ema Cacia - Engenharia e Manutenção Industrial, ACE | Aveiro | - | 91.15 | 91.15 |
| Ema Setúbal - Engenharia e Manutenção Industrial, ACE | Setúbal | - | 92.56 | 92.56 |
| Ema Figueira da Foz- Engenharia e Manutenção Industrial, ACE | Figueira da Foz | - | 91.47 | 91.47 |
| Empremédia - Corretores de Seguros, SA | Lisboa | - | 100.00 | 100.00 |
| EucaliptusLand, SA | Setúbal | - | 100.00 | 100.00 |
| Headbox - Operação e Contolo Industrial, SA | Setúbal | - | 100.00 | 100.00 |
| Cutpaper - Transformação, Corte e Embalagem de Papel, ACE | Figueira da Foz | - | 50.00 | 50.00 |
| Navigator Added Value, SA | Setúbal | - | 100.00 | 100.00 |
| Navigator Abastecimento de Madeira, ACE | Setúbal | - | 100.00 | 100.00 |
Pedro Mendonça de Queiroz Pereira
President
Diogo António Rodrigues da Silveira
Luis Alberto Caldeira Deslandes
João Nuno de Sottomayor Pinto de Castello Branco
Manuel Soares Ferreira Regalado
António José Pereira Redondo
José Fernando Morais Carreira de Araújo
Nuno Miguel Moreira de Araújo Santos
João Paulo Araújo Oliveira
Adriano Augusto da Silva Silveira
Paulo Miguel Garcês Ventura
José Miguel Pereira Gens Paredes
Ricardo Miguel dos Santos Pacheco Pires
Vitor Manuel Galvão Rocha Novais Gonçalves
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