Interim / Quarterly Report • Sep 28, 2018
Interim / Quarterly Report
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1ST HALF 2018
CORTICEIRA AMORIM, SGPS, S.A. – CONSOLIDATED FINANCIAL STATEMENTS First half 2018 (1H18) (Audited) Second quarter 2018 (2Q18) (Non-audited)
Dear Shareholders,
In accordance with the law, the Directors of CORTICEIRA AMORIM S.G.P.S., S.A., a public company, present their consolidated management report:
The outlook during the second quarter of 2018 remained unchanged from the first quarter. Among CORTICEIRA AMORIM's main markets, the US showed substantial and generalised expansion, growing above the rate of both the first quarter and the average for the four quarters of 2017. In the Eurozone, the second quarter was the worst registered since the end of 2016, confirming the deceleration of economic growth witnessed in the first quarter. An acceleration in growth in June, especially in the services sector, failed to offset the more moderate performance registered in April and May.
On January 10, 2018, CORTICEIRA AMORIM announced the acquisition of 70% of Elfverson. The acquired company, which has a portfolio of premium products and outstanding customers, will strengthen the Group's supply sources for high quality wooden stopper caps, enabling it to keep pace with growing customer demand in the capsule stopper segment. Elfverson was integrated into the consolidation perimeter of Corticeira Amorim and the Cork Stopper Business Unit (BU) from the beginning of 2018.
CORTICEIRA AMORIM's total sales increased 12.7% to 399.9 M€. Growth in business activity and the change in the consolidation perimeter (mainly due to the integration of Bourrassé and Elfverson) contributed to sales growth, more than compensating for the negative impact of the depreciation of the US dollar on group sales (-102 M€). Excluding the changes in the consolidation perimeter and the exchange rate effect, sales would have increased 5.5%.
Sales growth was not uniform across BUs. Sales by the Cork Stopper (+18%), Raw Materials (+15.2%) and Insulation (+8.3%) BUs increased strongly. Sales for the other BUs fell, however the decrease being more pronounced in the first quarter. As previously mentioned, the variation in sales was influenced by changes in the consolidation perimeter (+35.7 M€) and the exchange rate effect (-10.2 M€). The impact of sales volume changes was almost nil, with the effect of prices accounting for the remaining changes in sales revenue.
EBITDA rose to 77.4 M€, up 9.6% on the first six months of 2017. The EBITDA/sales ratio fell slightly in comparison with the first half of last year (from 19.9% to 19.4%). Excluding the changes in the consolidation perimeter and the exchange rate effect, EBITDA would have increased 9.7% and the EBITDA margin would have been 20.7%.
In a context of increased pressure on the gross margin, it was particularly important to achieve gains in operational efficiency together with tight cost control and reduced impairments.
At the end of the first half of 2018, net interest-bearing debt totalled 102.1 M€, compared with 11.1 M€ at the end of the same period of 2017 and 92.8 M€ at the end of December 2017. Despite low interest rates, the financial function registered a slight increase, due to an increase in average indebtedness, caused mainly by the Group's recent acquisitions: Bourassé, Sodiliège and Elfverson.
After earnings attributable to non-controlling interests, net income totalled 41.214 M€, an increase of 9.2% on the 37.757 M€ recorded for the first six months of 2017.
In compliance with the decision of the General Shareholders' Meeting held on April 13, a dividend of 0.185 euro per share, totalling 24.6 M€, was distributed on April 30.
The Raw Materials BU recorded sales of 95.4 M€, an increase of 15.2% over the same period last year. The BU's sales were mainly to other companies in the Corticeira Amorim group, although the weight of sales outside the group also increased. EBITDA reached 18.5 M€, a significant increase over the same period last year (1H17: 10.5 M€).
The increase in EBITDA reflected higher sales, cost control, efficiency gains and the consumption of raw material acquired in the 2016 and, partly, 2017 raw material purchasing campaigns. Profitability is expected to decelerate in the second half of 2018, reflecting the use in production of higher-priced raw materials.
The 2018 cork purchasing campaign progressed as planned in terms of quantity and prices (+17%), with the market evolving as expected. Price pressure on other cork raw materials (specifically "falca", that is, cork from the branches rather than the trunk of the cork oak, and granulated cork) remained unchanged.
The first phase of Systems, Applications and Products (SAP) implementation at the BU was completed successfully. Projects for increasing automation and efficiency are also proceeding as planned.
The Cork Stopper BU recorded sales of 282.5 M€, an increase of 18% over the same period of 2017. The change in the consolidation perimeter accounted for a large part of the increase. Sales would have increased 3.1% if the perimeter had remained unchanged. Additionally, excluding the exchange rate effect, sales would have grown 5.9%. Sales growth accelerated in the second quarter.
Excluding the change in the consolidation perimeter and exchange rate effect, the sales increase mainly related to prices, although increased volume sales also contributed to growth (+1.8%). Sales growth was balanced between different segments: spirits (+14%), still wines (+4%) and sparkling wines (+3%). Sales of NDtech® service stoppers reached 25 million units in the first half.
Performance was positive across most markets, especially in traditional markets (Spain, France and Italy), the only exceptions being the US (due to the exchange rate effect) and Argentina.
EBITDA increased to 54 M€, while the EBITDA/sales ratio fell to 19.1%, lower than in the same period of 2017 (20.8%). Excluding changes in the consolidation perimeter and the exchange rate effect, EBITDA would have grown by 3.5% and the EBITDA margin would have been 20.4% (close to that for the same period last year).
A non-recurring (net) income of 1.5 M€ was recorded, reflecting the reversal of provisions related to legal processes in the areas of labour and customs as well as a process involving the Argentine Central Bank relating to Amorim Argentina. Provisions totalling 2 M€ were made in 2016 during the liquidation of Amorim Argentina, a process completed in the first half of 2018. There were no materially significant financial outflows at the end of this process. Non-recurring transaction expenses related to the acquisition of subsidiary companies reduced the income resulting from the provision reversals detailed above.
First-half sales by the Composite Cork BU totalled 51.3 M€, down 1.2% over the same period last year. Excluding the exchange rate effect, sales would have grown by 3.3%. Sales growth in the second quarter reversed the downward trend of the first quarter.
Grow was strongest in the footwear and sport surfaces segments. As expected, the BU ceased supplying inlay for the Floor and Wall Coverings BU's Hydrocork® products. Sales fell in the distribution flooring and related products segment as well as for panels and composites.
In terms of regional markets, sales growth was strong in Europe, the Middle East and Africa, but dropped in Asia.
EBITDA totalled 5.4 M€ in the first half of 2018, while the EBITDA margin decreased to 10.4% (1H17: 16.0%) as a result of the evolution of exchange rates (excluding the exchange rate effect, the EBITDA margin would have been 13.1%), higher raw material (cork and non-cork) prices and a reduction in the production efficiency of grinding operations. These factors were partially offset by higher end-product prices and a more favourable product mix.
Sales by the Floor and Wall Coverings BU fell 7.9% to 57.4 M€. Excluding the exchange rate effect, sales would have dropped 6.4%. The BU's activities were affected by lower sales in the US, Germany and Russia. Sales to Scandinavia and Portugal offset some of this decrease. Sales of Hydrocork® and Authentica® products (up by an average of 14.7%) continued to expand, with Hydrocork® becoming the BU's second best-selling product.
Affected by lower sales, increased impairments (0.86 M€), higher raw material (cork and HDF) prices and an increase in commercial expenses, EBITDA totalled 1.3 M€. A broad range of measures was taken to improve efficiency and reduce costs.
The BU recorded non-recurring expenses of 0.85 M€ reflecting new restructuring measures and management changes.
The BU acquired the percentage (49%) of the subsidiary Timberman that it did not already own for 2.4 M€.
Sales by the Insulation BU totalled €6.1 million, an increase of 8.3% compared with the same period last year, reversing a first-quarter fall in sales (-4.1%). Rising prices and increased activity supported the increase in sales. In terms of markets, sales in Europe offset decreases in Asia and the Middle East.
EBITDA totalled 0.8 M€ (1H17: 1.1 M€). Despite the increase in sales, consumption of more expensive raw materials, increased expenses, higher impairments and a less favourable product mix saw EBITA fall in comparison with the first half of 2017.
The increase in sales was mainly a result of the change in the consolidation perimeter, the impact of which largely exceeded the unfavourable exchange rate effect, including a 10.2 M€ impact resulting from the evolution of the EUR/USD exchange rate. The change in the gross margin (from 53.3% to 49.3%) reflects increased production costs, mainly resulting from increases in the cost of raw materials.
In terms of operating costs, the increase of approximately 7.3 M€ in staff costs (+11.5%) was largely a result of the change in the consolidation perimeter (the increase in this cost would have been +0.4% without the change in the perimeter). The cost of external supplies and services increased 9.2%. Without the change in the consolidation perimeter, this cost would have fallen 0.3% as a result of the cost containment efforts the Group has undertaken. Impairment charges were close to zero.
In regard to the other operating income/expenditures items impacting EBITDA, the change was positive, totalling about 3 M€. It should be noted that the impact of exchange rate differences on assets receivable and liabilities payable together with the respective foreign exchange hedging measures, included under other operating income/gains, was positive in the amount of approximately 0.1 M€ (1H17: -1.1 M€).
The changes in the consolidation perimeter, the exchange rate effect and other variations resulted in EBITDA increasing by 9.6% to 77.4 M€. The EBITDA/sales ratio was 19.4% (1H17: 19.9%). Excluding the change in the consolidation perimeter and the exchange rate effect, the ratio would have been 20.7%.
CORTICEIRA AMORIM, SGPS, S.A. – CONSOLIDATED FINANCIAL STATEMENTS 1ST HALF 2018
As previously mentioned, non-recurring income (net) reflects the reversal of provisions for Amorim Argentina, the recognition of the transaction costs of subsidiary companies and the restructuring of the Floor and Wall Coverings BU.
The increase in financial expenditure reflects the update of Bourrassé's agreement to acquire non-controlling interest, while the increase in interest costs results from an increase in average debt.
Income from associate companies totalled 1.3 M€, essentially due to the recognition as earnings of part of the contingent amount receivable from the sale of US Floors in 2016. The outstanding amount is expected to be settled by the end of 2018.
As usual, it will only be possible to estimate the value of investment tax benefits (RFAI and SIFIDE) at the end of the year. For this reason, any tax gains will be recorded only at the closing of accounts for 2018.
After estimated tax of 16.3 M€ and the allocation of profits to non-controlling interests, total net income attributable to CORTICEIRA AMORIM shareholders totalled 41.214 M€, an increase of 9.2% compared with the 37.757 M€ posted for the first half of 2017.
Earnings per share were 0.310 euro, compared with 0.284 euro in the first half of the previous year.
Net assets at the end of June 2018 totalled 932 M€. Changes in the items affected by the change in the consolidation perimeter mainly reflect the integration of Bourrassé, but also of Sodiliège and Elfverson. The increase in relation to December 2017 was 63 M€. The only change in the consolidation perimeter reflected in this period is the acquisition of Elfverson. Elfverson's goodwill was valued at 4.2 M€, representing the amount that could not be identified in the fair value of the assets and liabilities of the acquired company.
Other changes in comparison with December 2017 include an increase in the customer balance (+35.2 M€, reflecting increased sales and seasonal effects) and other assets (+13 M€).
The change in the second item of the balance sheet (equity and liabilities) is justified by recognition of first-half earnings (41.2 M€), dividend distribution, an increase in remunerated debt (14.8 M€) and in other loans and other creditors (+15.8 M€).
At the end of the first half, net interest-bearing debt totalled 102.1 M€, an increase of 9.3 M€ in comparison with the end of 2017. EBITDA generated by business activity was offset by CAPEX, working capital needs, dividend payments and the investment made in Elfverson. Excluding any extraordinary factors, net interest-bearing debt is expected to decrease in the second half of 2018 as a result of lower cash flow requirements in terms of working capital.
At the end of June 2018, the Group's shareholder equity totalled 475 M€. The financial autonomy ratio stood at 51%.
| 1) R elated to Production |
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|---|---|---|---|---|---|---|---|
| 2) Figures refer to the reversal of provisions for A m orim A rgentina, A m orim R evestim entos restructuring and transaction costs for subsidiaries acquisition |
3) C urrent EB ITD A of the last four quarters
4) N et interest includes interest from loans deducted of interest from deposits (excludes stam p tax and com m issions)
In the second half of 2018, the reduced impact of the change in the consolidation perimeter resulting from the consolidation of Bourrassé, which began on July 1, 2017, will be of note. The variations resulting from the perimeter effect will be diluted in the second half.
Excluding the change in the consolidation perimeter and not withstanding expectations of a slowdown in economic growth in some of the Group's main markets (except for the US), CORTICEIRA AMORIM is likely to maintain its current level of activity. The exchange rate issue will be key to the final outcome. In the European Union, factors of a conjunctural and political nature (Italy, Brexit and others) could affect market growth and even generate some instability.
As in the first half, CORTICEIRA AMORIM should continue to benefit from the investments made in improving its operational efficiency.
Because raw material cork supplies are already guaranteed for the coming year, only a rapid deterioration in economic activity or a significant depreciation of the US dollar could adversely affect CORTICEIRA AMORIM's performance over the next six months.
During the first half of 2018, CORTICEIRA AMORIM did not acquire or dispose of any treasury shares.
As of June 30, 2018, CORTICEIRA AMORIM held no treasury shares.
| Shares held | Participation | Voting rights | |
|---|---|---|---|
| Shareholder | (quantity) | (%) | (%) |
| Qualifying interests: | |||
| Amorim Investimentos e Participações, S.G.P.S, S.A. | 67,830,000 | 51.000% | 51.000% |
| Investmark Holdings, B.V. | 18,325,157 | 13.778% | 13.778% |
| Amorim International Participations, B.V. | 13,414,387 | 10.086% | 10.086% |
| Freefloat | 33,430,456 | 25.136% | 25.136% |
| Total | 133,000,000 | 100.000% | 100.000% |
| Shareholder Amorim Investimentos e Participações, SGPS, S.A. (a) |
Shares held | % Voting rights |
|---|---|---|
| Directly | 67,830,000 | 51.000% |
| Total Attributable | 67,830,000 | 51.000% |
| (a) The capital of Amorim Investimentos e Participações, SGPS, S.A is wholly owned by three companies (Amorim Holding Financeira, SGPS, SA (5.63%), Amorim Holding II SGPS, SA (44.37%) and Amorim - Sociedade Gestora de Participações Sociais, SA (50%)) without any of them having a controlling stake in the company, thereby terminating in this, the imputation chain, under the terms of Article 20 of Cod.VM. The share capital and voting rights of the three companies are held, respectively, in the case of the two companies, directly and indirectly (through Imoeuro SGPS, SA and Oil Investment0, BV) by Ms Maria Fernanda Ramos Oliveira Amorim and daughters, |
and, in the case of the third, by Mr. António Ferreira de Amorim, wife and children. Shareholder Investmark Holding BV Shares held % Voting rights Directly 18,325,157 13.778% Total Attributable 18,325,157 13.778% Shareholder Great Prime S.A. (b) Shares held % Voting rights
| Directly | - | - | |
|---|---|---|---|
| Through Investmark Holding BV, 100% owned | 18,325,157 | 13.778% | |
| Total Attributable | 18,325,157 | 13.778% |
| Maria Fernanda Ramos Oliveira Amorim | Shares held | % Voting rights |
|---|---|---|
| Directly | - | - |
| Through Warranties, SGPS, S.A., 70% owned | 18,325,157 | 13.778% |
| Total Attributable | 18,325,157 | 13.778% |
(b) The capital of Great Prime, S.A. is wholly owned by three companies (API Amorim Participações Internacionais, SGPS, S.A. (33.33%), Vintage Prime, SGPS, S.A. (33.33%) e Stockprice, SGPS, S.A. (33.33%)). Mrs. Maria Fernanda Ramos Oliveira Amorim, holds 95% of each company.
| Shareholder Amorim International Participations, BV |
Shares held | % Voting rights | |
|---|---|---|---|
| Directly | 13,414,387 | 10.086% | |
| Total Attributable | 13,414,387 | 10.086% | |
| Shareholder Amorim, Sociedade Gestora de Participações Sociais, S.A. (c) |
Shares held | % Voting rights |
|---|---|---|
| Directly | - | - |
| Through Amorim International Participations BV, 100% owned | 13,414,387 | 10.086% |
| Total Attributable | 13,414,387 | 10.086% |
(c) The capital of Amorim, Sociedade Gestora de Participações Sociais, SA is held by Mr. António Ferreira de Amorim, wife and sons, but none of them holds a controlling interest in the company.
The situation described was as on 30 June, 2018 and remained unchanged on the date of publication of this report.
In compliance with the provisions of paragraphs 6 and 7 of article 14 of CMVM Regulation no. 5/2008, we declare that in the first half of 2018 no transactions of CORTICEIRA AMORIM shares were carried out by its Directors.
There were no transactions in financial instruments related to securities issued by the Company, either by its Directors, or by the companies that dominate CORTICEIRA AMORIM, or by persons closely related to them.
The situation described was as on 30 June, 2018 and remained unchanged on the date of publication of this report.
Subsequent to June 30, 2018 and up to the date of publication of this report, no other material events occurred that would materially affect the financial position or future results of CORTICEIRA AMORIM or any of the subsidiary companies that it consolidates.
In accordance with the requirements of Section 246.1(c) of the Portuguese Securities Market Act, the directors state that, to the best of their knowledge, the financial statements for the half year ended June 30, 2018 and all other accounting documents have been prepared in accordance with the applicable accounting standards and give a true and fair view of the assets, liabilities, financial position and profit or loss of CORTICEIRA AMORIM, SGPS, SA and the undertakings included in the consolidation taken as a whole. The directors further state that the Directors' Report faithfully describes the development, performance and position of CORTICEIRA AMORIM's business and the undertakings included in the consolidation taken as a whole. The Directors' Report contains a special section describing the main risks and uncertainties that could impact our business in the next six months.
Mozelos, July 27, 2018
The Board of Directors of CORTICEIRA AMORIM, S.G.P.S., S.A.
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(this statement should be read with the attached notes to the consolidated financial statements)
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(this statement should be read with the attached notes to the consolidated financial statements)
At the beginning of 1991, Corticeira Amorim, S.A. was transformed into CORTICEIRA AMORIM, S.G.P.S., S.A., the holding company for the cork business sector of the Amorim Group. In this report, CORTICEIRA AMORIM will be the designation of CORTICEIRA AMORIM, S.G.P.S., S.A., and in some cases the designation of CORTICEIRA AMORIM, S.G.P.S. together with all of its subsidiaries.
CORTICEIRA AMORIM, directly or indirectly, holds no interest in land properties used to grow and explore cork tree. Cork tree is the source of cork, the main raw material used by CORTICEIRA AMORIM production units. Cork acquisition is made in an open market, with multiple agents, both in the demand side as in the supply side.
CORTICEIRA AMORIM is mainly engaged in the acquisition and transformation of cork into a numerous set of cork and cork related products, which are distributed worldwide through its network of sales company.
CORTICEIRA AMORIM is a Portuguese company with a registered head office in Mozelos, Santa Maria da Feira. Its share capital amounts to 133 million euros, and is represented by 133 million shares, which are publicly traded in the Euronext Lisbon – Sociedade Gestora de Mercados Regulamentados, S.A.
Amorim Capital, S.A. held, as of June 30, 2017, 67,830,000 shares of CORTICEIRA AMORIM, corresponding to 51.00% of the capital stock. As a result of the merger of this company with Amorim - Investimentos e Participações, S.G.P.S, S.A. occurred in the second half of 2017, these shares are now held by this company. Accordingly, the company Amorim - Investimentos e Participações, S.G.P.S, S.A. held, on June 30, 2018, 67,830,000 shares of CORTICEIRA AMORIM as of June 30, 2018 corresponding to 51.00 % of its share capital (December 31, 2017: 67,830,000 shares). Corticeira Amorim, Sociedade Gestora de Participações Sociais, S.A., is included in the consolidation perimeter of Amorim – Investimentos e Participações, S.G.P.S., S.A., this being its controlling parent company. Amorim – Investimentos e Participações, S.G.P.S. is fully owned by Amorim family.
These financial statements were approved in the Board Meeting of July 27, 2018. Shareholders have the capacity to modify these financial statements even after their release.
Except when mentioned, all monetary values are stated in thousand euros (Thousand euros = K euros = K€ = € K).
The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented.
Pursuant to Decree No. 35/2005, dated 17 February, as subsequently amended by Decree-Law No. 98/2015 of 2 July, which transposed into Portuguese legislation the provisions of Regulation (EC) No. 1606/2002 of the European Parliament and of the Council of 19 July 2002, these consolidated financial statements were prepared in accordance with the International Financial Reporting Standards (IAS/IFRS) issued by the International Accounting Standards Board (IASB) and the Interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC) or the former Standing Interpretations Committee (SIC), adopted by the EU, effective as of 1 January 2017. Consolidated statements were prepared based on a going concern basis and using the records as stated in the companies' books included in the consolidation which adopted local general accepted accounting principles. Accounting adjustments were made in order to comply with the International Financial Reporting Standards (IFRS) as adopted in the European Union as of June 30, 2018, particularly with IAS 34 (Interim Report). These are based on the historical cost principle, except for financial instruments measured at fair value.
The consolidated financial statements include, in reference to December 30, 2018, assets, liabilities, profit and loss of the companies in the Group, understood as the entirety of CORTICEIRA AMORIM and its subsidiaries, which are presented in Note VI.
An entity is classified as a subsidiary when it is controlled by the Group. Control exists only where the Group has, cumulatively:
(a) power over the investee;
(b) exposure to or rights over variable results derived from its relationship with the investee; and
(c) the ability to use its power over the investee to affect the amount of the results for investors.
Generally, it is assumed that there is control when the Group holds the majority of voting rights. In order to support this assumption and in cases where the Group does not hold the majority of voting rights in the investee, all relevant facts and circumstances are taken into account when determining the existence of power and control, such as:
(a) Any contractual agreements with other holders of voting rights;
(b) Any rights arising from other contractual agreements;
(c) Existing and potential voting rights.
The existence of control by the Group is re-evaluated whenever there is a change in any facts and circumstances that lead to changes in one of the three factors of control mentioned above.
Subsidiaries are included in the consolidation according to the full consolidation method, from the date when control is acquired until the date it effectively ends.
Intergroup balances and transactions, as well as any unrealised gains on transactions between companies in the Group, are eliminated. Unrealised losses are also eliminated, unless the transaction evidences impairment of a transferred asset.
The accounting policies of subsidiaries are changed whenever necessary to ensure consistency with the policies adopted by the Group.
A change in the participating interest in a subsidiary that does not entail loss of control is recorded as a transaction between shareholders. If the Group loses control over the subsidiary, the corresponding assets (including goodwill), liabilities, non-controlling interests and other equity components are derecognised and any gains or losses are recognised in the income statement. Investments retained are recognised at fair value at the time of the loss of control.
In situations where the Group has substantial control of entities created for a specific purpose, even if it has no direct shareholdings in these entities, they shall be consolidated using the full consolidation method.
Net assets of subsidiaries consolidated through the full consolidation method attributable to the equity stake or shares held by any third parties are recorded in the consolidated statement of financial position, in the line item
Interests held by any third parties over the net income of subsidiaries are identified and adjusted by deduction from the equity attributable to the Group shareholders and recorded in the consolidated income statement, in the line item Non-Controlling Interests.
Associates are companies over which CORTICEIRA AMORIM exercises significant influence, understood as the power to participate in the financial and operating policy-making process, without, however, exercising control or joint control. Generally, it is assumed that there is a significant influence whenever the holding percentage exceeds 20%.
The classification of financial investments in joint ventures is determined based on the existence of shareholders' agreements that demonstrate and regulate joint control, which is understood to exist when decisions on activities relevant to the venture require a unanimous agreement between the parties.
The Group owns no interest in joint ventures, as defined in IFRS 11.20.
The existence of significant influence or joint control is determined based on the same type of facts and circumstances applicable in the assessment of control over subsidiaries.
These holdings are consolidated by the equity method; i.e., the consolidated financial statements include the Group's interest in the total recognised gains and losses of the associate/joint venture, from the date on which significant influence/control begins until the date on which it effectively ends. Dividends received from these companies are recorded as a reduction in the value of financial investments.
The Group's share of gains and losses in associates/joint ventures is recognised in the income statement, and its share of operations in Post-acquisition Reserves are recognised in Reserves. The cumulative postacquisition operations are adjusted according to the cumulative operations in the financial investment. When the Group's share of losses in an associate/joint venture equals or exceeds its investment in that entity, including any unsecured receipt transaction, the Group does not recognise any further losses, unless it has incurred obligations or made payments on behalf of the associate/joint venture.
Any excess of the cost of acquisition of a financial investment over the Group's share in the fair value of the assets, liabilities and contingent liabilities identified on the date of acquisition of the associate/joint venture is recognised as goodwill, which is included in the value of the financial holding and whose recovery is assessed annually as part of the financial investment. If the cost of acquisition is lower than the fair value of the net amount of the assets of the associate/joint venture, the difference is recorded directly in the consolidated income statement.
Unrealised gains from transactions between the Group and its associates/joint ventures are eliminated to the extent of the Group's share in the respective associates/joint ventures. Unrealised losses are also eliminated, unless the transaction evidences impairment of a transferred asset.
The accounting policies of associates/joint ventures are changed whenever necessary to ensure consistency with the policies adopted by the Group.
Following the application of the equity method, the Group assesses the existence of impairment indicators; should they exist, the Group calculates the recoverable amount of the investment and recognises an impairment loss if the recoverable amount is lower than the carrying amount of the investment, in the line item "Gains/losses in associates and joint ventures" of the income statement.
After the loss of significant influence or joint control, the Group initially recognises the retained investment at fair value, and the difference between the carrying value and the fair value held plus the revenue from the sale, are recognised in the income statement.
Euro is the legal currency of CORTICEIRA AMORIM, S.G.P.S., S.A., and is the currency in which two thirds of its business is made and so Euro is considered to be its functional and presentation currency.
In non-euro subsidiaries, all assets and liabilities denominated in foreign currency are translated to euros using year-end exchange rates. Net exchange differences arising from the different rates used in transactions and the rate used in its settlements is recorded in the income statement. These differences are recognized in operating results because they are not financial.
Assets and liabilities from non-euro subsidiaries are translated at the balance sheet date exchange rate, being its costs and gains from the income statement translated at the average exchange rate for the period / year.
Exchange differences are registered in an equity account "Translation differences" which is part of the line "Other reserves".
Whenever and a non-euro subsidiary is sold or liquidated, accumulated translation differences recorded in equity is registered as a gain or a loss in the consolidated income statement by nature.
The acquisition method is the method used to recognise the entry of subsidiaries in the Group upon their acquisition.
In the acquisition method, the difference between: (i) the consideration transferred along with the non-controlling interests and the fair value of the equity interests previously held, and (ii) the net amount of identifiable assets acquired and liabilities assumed, is recognised, on the date of acquisition, as goodwill, if positive, or as a gain, if negative.
The consideration transferred is measured at fair value, calculated as the aggregate amount of fair values, on the date of acquisition, of assets transferred, liabilities incurred and equity instruments issued by Corticeira Amorim. For the purpose of determining goodwill/gains resulting from the combination, the transferred consideration is removed from any part of the consideration that concerns another transaction (e.g. remuneration for the provision of future services or settlement of pre-existing relationships) whose margin is recognised separately in profit or loss.
The transferred consideration includes the fair value, on the date of acquisition, of any contingent consideration. Subsequent changes in this value are recognised: (i) as equity if the contingent consideration is classified as equity, (ii) as an expense or income in profit or loss or as other comprehensive income if the contingent consideration is classified as a financial asset or liability and (iii) as expenses, pursuant to IAS 37 or other applicable standards, in remaining cases.
Expenses related to the acquisition are not part of the transferred consideration, so they do not affect the determination of goodwill/gains resulting from the acquisition and are recognised as expenses in the year they occur.
On the date of acquisition, the classification and designation of all assets acquired and liabilities transferred are reassessed in accordance with IFRS, with the exception of lease and insurance contracts, which are classified and designated based on the contractual terms and conditions, on the commencement date.
Assets arising from contractual indemnities paid by the seller concerning the outcome of contingencies related, in whole or in part, to a specific liability of the combined entity, shall be recognised and measured using the same principles and assumptions of the related liabilities.
The determination of the fair value of assets acquired and liabilities assumed takes into account the fair value of contingent liabilities arising from a present obligation caused by a past event (if the fair value can be reliably measured), regardless of whether an outflow is expected or not.
For each acquisition, the Group can choose to measure "non-controlling interests" at their fair value or by their respective share in the assets and liabilities transferred from the acquiree. The choice of a method influences the determination of the amount of goodwill to be recognised. When the business combination is achieved in stages, the fair value on the date of acquisition of the interests held is remeasured to the fair value on the date when control is obtained, by contra entry of the income for the period in which control is achieved, affecting the determination of goodwill.
Whenever a combination is not completed on the reporting date, the provisional amounts recognised on the date of acquisition shall be adjusted retrospectively, for a maximum period of one year from the date of acquisition and any additional assets and liabilities shall be recognised if new information is obtained on facts and circumstances existing on the date of acquisition which would result in the recognition of such assets and liabilities, should it have been known on that date.
Goodwill is considered to have an indefinite useful life and thus is not amortisable, being subject to annual impairment tests, regardless of whether or not there is any indication of impairment.
For the purpose of impairment testing, goodwill is allocated, on the date of acquisition, to each of the cash generating units expected to benefit from the business combination, regardless of the remaining assets and liabilities also associated with the cash-generating unit. When the operation, or part of it, associated with a cash generating unit is disposed of, the allocated goodwill is also derecognised and included in the balance of gains/losses of the disposal, calculated as the base for its relative value.
Goodwill related to investments in companies based abroad, is recorded in those companies' reporting currency and translated into Euro at the exchange rate in force on the balance sheet date.
Corticeira Amorim chooses to treat multiple transactions in a business combination as separate acquisitions.
When the facts and circumstances indicate that Corticeira Amorim has no control over the shares subject to the agreement, Corticeira Amorim chooses the approach of full recognition of non-controlling interest, in which non-controlling interest continue to be recognized in equity until the moment when the subsequent agreement is implemented. The recognized value of non-controlling interest changes due to allocation of results, changes in other comprehensive income and dividends declared in the reporting period as referred to in note II letter b).
When there is an agreement to acquire an additional interest in a subsidiary, a financial liability is recorded. The financial liability for the agreement is accounted for under IFRS 9. On initial recognition, the corresponding debit is made to another component of "Equity" attributable to the parent company. Subsequent changes in the value of the financial liability that result from the remeasurement of the present value payable are recognized in the profit or loss attributable to the parent company.
When the agreement is realized, Corticeira Amorim accounts for an increase in its ownership interests. At the same time, the financial liability and recognizes an offsetting credit in the same component of equity reduced on initial recognition.
Tangible fixed assets are recorded at acquisition cost net of accumulated depreciation and impairment losses.
Subsequent costs are included in the carrying amount of the asset or recognized as separate assets when it is probable that future economic benefits that exceed the originally measured level of performance of the existing asset will flow to the enterprise and the cost of the asset to the enterprise can be measured with reliability. All other subsequent expenditures are recognized as an expense in the period in which they are incurred.
Financial charges related to financing for production / acquisition of assets are added to the cost of these assets.
Depreciation is calculated on the straight-line basis, over the following years, which represent a reasonable estimate of the useful lives:
| Number of years | |
|---|---|
| Buildings | 20 to 50 |
| Plant machinery | 4 to 10 |
| Motor vehicles | 4 to 7 |
| Office equipment | 4 to 8 |
Depreciation is charged since the beginning of the moment in which the asset is ready to use. The asset's residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date.
Current maintenance on repair expenses are charged to the actual income statement in which they occurred. Cost of operations that can extend the useful expected life of an asset, or from which are expected higher and significative future benefits, are capitalized.
An asset's carrying amount is written down to its recoverable amount and charged to the income statement if the asset's carrying amount is greater than its estimated recoverable amount.
Gains and losses and disposals are included in the income statement.
Intangible assets are initially measured at cost. Subsequently they are measured at cost less accumulated depreciation.
Research expenditures are recognised in the income statement as incurred.
Development expenditure is recognised as intangible asset when the technical feasibility being developed can be demonstrated and the company has the intention and capacity to complete their development and start trading or using them and that future economic benefits will occur.
Amortisation of the intangible assets is calculated by the straight-line method, and recorded as the asset qualifies for its required purpose:
| Number of years | |
|---|---|
| Industrial Property | 10 to 20 |
| Software | 3 to 6 |
The estimated useful life of assets are reviewed and adjusted when necessary, at the balance sheet date.
Investment property includes land and buildings not used in production.
Investment property are initially registered at acquisition cost plus acquisition or production attributable costs, and when pertinent financial costs during construction or installation. Subsequently are measured at acquisition cost less cumulative depreciations and impairment, until the residual value.
Periods and methods of depreciation are as follows in note for tangible fixed asset.
Properties are derecognized when sold. When used in production are reclassified as tangible fixed asset. When land and buildings are no longer used for production, they will be reclassified from tangible fixed asset to investment property.
Assets with indefinite useful lives are not amortised but are annually tested for impairment purposes, or more frequently if there are events or changes in circumstances that indicate impairment.
Assets under depreciation are tested for impairment purposes whenever an event or change of circumstances indicates that its value cannot be recovered.
For the estimate of impairments, assets are allocated to the lowest level for which there is separate identifiable cash flows (cash generating units).
In assessing impairment, both internal and external sources of information are considered. Tests are carried out if the level of profitability of cash-generating units is consistently below a minimum threshold, from which there is risk of impairment of assets. Impairment tests are also performed whenever management makes significant changes in operations (for example, total or partial discontinuation of the activity).
Impairment tests are performed internally. Whenever impairment tests are performed, future cash flows are discounted at a specific rate for the cashgenerating unit, which includes the risk of the market where it operates.
The group uses external experts (appraisers) only to determine the market value of land and buildings in situations of discontinuation of operations, where they are no longer recovered by use.
Impairment losses are recognized as the difference between its carrying amount and its recoverable amount. Recoverable corresponds to the higher of its fair value less sales expenses and its value for use.
Impairment losses, if any, are allocated specifically to the individual assets that are part of the cash flow generating unit.
Non-financial assets, except goodwill, that generated impairment losses are valued at each reporting date regarding reversals of that losses.
Financial assets are recognised in the statement of financial position of CORTICEIRA AMORIM on the trade or contract date, which is the date on which the Group undertakes to purchase or sell the asset.
At the initial time, with the exception of commercial accounts receivable, financial assets are recognised at fair value plus directly attributable transaction costs, except for assets at fair value through income in which transaction costs are immediately recognised in income. Trade accounts receivable, at the initial time, are recognised at their transaction price, as defined in IFRS 15.
The financial assets are derecognised when: (i) the Group's contractual rights to receive their cash flows expire; (ii) the Group has substantially transferred all the risks and benefits associated with their ownership; or (iii) although it retains part but not substantially all of the risks and benefits associated with their ownership, the Group has transferred control of the assets.
The financial assets and liabilities are offset and shown as a net value when, and only when, CORTICEIRA AMORIM has the right to offset the recognised amounts and intends to settle for the net value.
CORTICEIRA AMORIM classifies its financial assets into the following categories: financial assets at fair value through profit or loss, financial assets measured at amortised cost, financial assets at fair value through other comprehensive income. Its classification depends on the entity's business model to manage the financial assets and the contractual characteristics in terms of the cash flows of the financial asset.
This category includes financial derivatives and equity instruments that CORTICEIRA AMORIM has not classified as financial assets through other comprehensive income at the time of initial recognition. This category also includes all financial instruments whose contractual cash flows are not exclusively capital and interest.
Gains and losses resulting from changes in the fair value of assets measured at fair value through profit or loss are recognised in results in the year in which they occur, including the income from interest and dividends.
Financial assets measured at fair value through other comprehensive income are those that are part of a business model whose objective is achieved through the collection of contractual cash flows and the sale of financial assets, being that these contractual cash flows are only capital and interest reimbursement on the capital in debt.
Financial assets measured at amortised cost are those that are included in a business model whose purpose is to hold financial assets in order to receive the contractual cashflows, being that these contractual cash flows are only capital reimbursement and interest payments on the capital in debt.
This caption is primarily related to investments in equity instruments available for sale, which have no stock exchange share price and whose fair value cannot be estimated reliably and are therefore measured at cost. Dividends, if any, are recognized in the period in which they occur, when the right to receive is established.
The amounts included in "Cash and equivalents" correspond to the amounts of cash, bank deposits, term deposits and other investments with maturities of less than three months which may be immediately realisable and with a negligible risk of change of value.
For the purposes of the statement of cash flows, "Cash and equivalents" also includes bank overdrafts included in the statement of financial position under "Net Debt".
Financial liabilities and equity instruments are classified according to their contractual substance irrespective of their legal form. Equity instruments are contracts that show a residual interest in CORTICEIRA AMORIM assets after deducing the liabilities. The equity instruments issued by Group companies are recorded at the amount received, net of the costs incurred in their issue. Financial liabilities are derecognised only when extinguished, i.e. when the obligation is settled, cancelled, or extinguished.
In accordance with IFRS 9, financial liabilities are classified as subsequently measured at amortised cost, except for:
a) Financial liabilities at fair value through profit or loss. These liabilities, including derivatives that are liabilities, should subsequently be measured at fair value;
b) Financial liabilities that arise when a transfer of a financial asset does not meet the conditions for derecognition or when it is applied the continued involvement approach;
c) Financial guarantee contracts;
d) The commitments to grant a loan at a lower interest rate than the market;
e) The recognised contingent consideration by a buyer in a concentration of business activities too which IFRS 3 applies. Such contingent consideration shall be subsequently measured at fair value, with changes recognised in profit or loss.
The group contracts confirming operations with financial institutions, which will be classified as reverse factoring agreements. These agreements are not used to manage the liquidity needs of the group as long as the payment remains on the due date of the invoices (on that date the advance amounts are paid to the financial institution by the group). For this reason, and since they do not give rise to financial expenses for the group, the amounts of the invoices advanced to the suppliers that adhere to these contracts are kept in the Liabilities, in the Suppliers account, and the payments at the due time are treated as operational payments. The supplier confirming operations are classified as operating in the Statement of Cash Flows.
Financial liabilities of the Group include: borrowings, accounts payable and derivative financial instruments.
At each date of the financial position statement, CORTICEIRA AMORIM analyses and recognises expected losses on its debt securities, loans and accounts receivable. The expected loss results from the difference between all contractual cash flows that are due to an entity in accordance with the contract and all the cash flows that the entity expects to receive, discounted at the original effective interest rate.
The objective of this impairment policy is to recognise expected credit losses over the respective duration of financial instruments that have undergone significant increases in credit risk since initial recognition, assessed on an individual or collective basis, taking into account all reasonable and sustainable information, including prospects. If, at the reporting date, the credit risk associated with a financial instrument has not increased significantly since the initial recognition, the Group measures the provision for losses relating to that financial instrument by an amount equivalent to the expected credit losses within a period of 12 months.
This rule does not overlap the analysis of each specific case. The analysis of the specific cases is determined on the individual accounts receivable, taking into account the historical information of the clients, their risk profile and other observable data in order to assess if there is objective proof of impairment for these accounts receivable.
Impairment of Other Financial Assets is verified through the analysis of the companies' approved financial statements, as well as the evaluation of the expected future cash flows of their activity.
The Group did not find any impact on its balance sheet or equity, as a result of the application of the impairment requirements of IFRS 9, since the impairments found and recognised by the Group already include an estimate of expected losses.
The Group has a policy of contracting derivative financial instruments with the objective of hedging the financial risks to which it is exposed, resulting from variations in exchange rates. The Group does not contract derivative financial instruments for speculative purposes, and the use of this type of financial instruments complies with the internal policies determined by the Board.
In relation to financial derivative instruments which, although contracted in order to provide hedging in line with the Group's risk management policies, do not meet all the requirements of IFRS 9 Financial instruments: in terms of their classification as hedge accounting or which have not been specifically assigned to a hedge relationship, the related changes in fair value are stated in the income statement for the period in which they occur.
CORTICEIRA AMORIM, SGPS, S.A. – CONSOLIDATED FINANCIAL STATEMENTS 1ST HALF 2018 Derivative financial instruments are recognised on the respective trade date at their fair value. Subsequently, the fair value of the derivative financial instruments is revalued on a regular basis, and the gains or losses resulting from this revaluation are recorded directly in profit and loss for the period, except in the case of hedge derivatives. Recognition of the changes in fair value of hedge derivatives depends on the nature of the risk hedged and the type of hedge used.
The possibility of designating a (derivative or non-derivative) financial instrument as a hedging instrument meets the requirements of IFRS 9 - Financial instruments.
Derivative financial instruments used for hedging purposes can be classified as hedges for accounting purposes when they cumulatively meet the following conditions:
a) At the start date of the transaction, the hedge relationship is identified and formally documented, including the identification of the hedged item, the hedging instrument and the evaluation of effectiveness of the hedge;
b) There is the expectation that the hedge relationship is highly effective at the start date of the transaction and throughout the life of the operation;
c) The effectiveness of the hedge can be reliably measured at the start date of the transaction and throughout the life of the operation;
d) For cash flow hedge operations, it must be highly probable that they will occur.
Whenever expectations of changes in exchange rates and interest rates so warrant, the Group aims to anticipate any adverse impact through the use of derivatives.
The method of recognizing is as follows:
Fair value hedge
Changes in the fair value of derivatives that qualify as fair value hedges and that are expected to be highly effective, are recorded in the income statement, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.
Cash flow hedge
Changes in the fair value of derivatives that qualify as cash flow edges and that are expected to be highly effective, are recognized in equity, being transferred to income statement in the same period as the respective hedged item affects results; the gain or loss relating to the ineffective portion is recognized immediately in the income statement.
Net investment hedge
For the moment, the company is not considering any foreign exchange hedge over its net investments in foreign units (subsidiaries).
CORTICEIRA AMORIM has fully identified the nature of its activities' risk exposure and documents entirely and formally each hedge; uses its information system to guarantee that each edge is supported by a description of: risk policy, purpose and strategy, classification, description of risk, identity of the instrument and of the risk item, description of initial measurement and future efficiency, identification of the possible derivative portion which will be excluded from the efficiency test.
When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, or the forecasted transaction no longer remains highly provable or simply is abandoned, or the decision to consider the transaction as a hedge, the company will de-recognized the instrument.
Inventories are valued at the lower of acquisition cost or production cost and net realisable value. Acquisition cost includes direct and indirect expenses incurred in order to have those inventories at its present condition and place. Production cost includes used raw material costs, direct labour, other direct costs and other general fixed production costs (using normal capacity utilisation).
Year-end quantities are determined based on the accounting records, which are confirmed by the physical inventory taking. Raw materials, consumables and byproducts are valued at weighted average cost, and finished goods and work-inprogress at the average production cost which includes direct costs and indirect costs incurred in production.
Where the net realisable value is lower than production cost, inventory impairment is registered. This adjustment will be reversed or reduced whenever the impairment situation no longer takes place.
The raw materials usually present alternative use without significant loss of value (for example through changes in caliber, reprocessing or use as raw material in other units). In these cases a specific analysis of impairment is made, being that impairment situations in this instance are very reduced.
The intermediate and finished products are not as susceptible of alternative use. In these cases, the amount by which inventories are expected to be realized is influenced by the age of those inventories. Thus, in addition to the specific analysis (priority form of determination of net realizable value), the group applies a criteria based on the rotation to estimate the reduction of expected value of these materials in function of their ageing.
Income tax includes current income tax and deferred income tax. Except for companies included in groups of tax consolidation, current income tax is calculated separately for each subsidiary, on the basis of its net result for the period adjusted according to tax legislation. Management periodically addresses the effect of different interpretations of tax law.
Deferred taxes are calculated using the liability method, reflecting the temporary differences between the carrying amount of consolidated assets and liabilities and their correspondent value for tax purposes.
Deferred tax assets and liabilities are calculated and annually registered using actual tax rates or known tax rates to be in vigour at the time of the expected reversal of the temporary differences.
Deferred tax assets are recognized to the extent that it is probable sufficient future taxable income will be available utilization. At the end of each year an analysis of the deferred tax assets is made. Those that are not likely to be used in the future will be derecognized.
Deferred tax liabilities are recognized for all taxable temporary differences, except those related to i) the initial recognition of goodwill; or ii) the initial recognition of assets and liabilities that do not result from a business combination, and that at transaction date does not affect the accounting or tax result.
Deferred taxes are registered as an expense or a gain of the year, except if they derive from values that are booked directly in equity. In this case, deferred tax is also registered in the same line.
Deferred tax liabilities are not recognized in respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures when the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.
CORTICEIRA AMORIM Portuguese employees benefit exclusively from the national welfare plan. Employees from foreign subsidiaries or are covered exclusively by local national welfare plans or benefit from complementary defined contribution plans.
As for the defined contribution plans, contributions are recognized as employee benefit expense when they are due.
CORTICEIRA AMORIM recognizes a liability and an expense for bonuses attributable to a large number of directors. These benefits are based on estimations that take in account the accomplishment of both individual goals and a pre-established CORTICEIRA AMORIM level of profits.
Provisions are recognized when CORTICEIRA AMORIM has a present legal or constructive obligation as a result of past events, when it is more likely than not an outflow of resources will be required to settle the obligation and when a reliable estimation is possible.
Provisions are not recognized for future operating losses. Restructuring provisions are recognized with a formal detail plan and when third parties affected are informed.
The main items of provisions were recorded based on their nominal value. Provisions for ongoing tax proceedings are annually increased by the calculation of interest and fines, as defined by law. In all other cases, given the uncertainty regarding the timing of the outflow of resources to cover liability, it is not possible to reliably estimate the effect of the discount, which is estimated to be not material.
When there is a present obligation, resulting from a past event, but it is not probable that an out flow of resources will be required, or this cannot be estimated reliably, the obligation is treated as a contingent liability. This will be disclosed in the financial statements, unless the probability of a cash outflow is remote.
Contingent assets are not recognized in the financial statements but disclosed when it is probable the existence of an economic future inflow of resources.
The Group's revenue is based on the five-step model established by IFRS 15:
4) Allocation of the price of the transaction to the performance obligations; and
5) Recognition of revenue.
The transactions carried out by the companies of the CORTICEIRA AMORIM universe may assume several characteristics:
Formalized through specific agreement that defines the terms of the transaction;
Informal, in the sense that there is no written contract, but whose transaction terms are defined in the client order and the order acceptance request issued by the Group company that participates in the transaction. The acceptance of the order formalizes the terms in which the transaction will be effected. In both situations, the terms of the transaction are perfectly identified.
Thus, at the beginning of each contract, CORTICEIRA AMORIM evaluates the promised goods or services and identifies, as a performance obligation, every promise to transfer to the client of any good or service (or package of goods or services). These promises in customer contracts may be express or implied, provided such promises create a valid expectation in the client that the entity will transfer a good or service to the client, based on the entity's published policies, specific statements or usual business practices.
The recognition of revenue occurs at the time of performance of each performance obligation.
Interest income is recognized using the effective interest method, provided that it is probable that economic benefits will flow to the Group and its amount can be measured reliably.
Grants received are related generally with fixed assets expenditure. Norepayable grants are present in the balance sheet as deferred income, and recognized as income on a systematic basis over the useful life of the related asset. Repayable interest bearing grants are presented as interests bearing debt.
Reimbursable grants with "out of market" interest rates are measured at fair value when they are initially recognized. For each grant, the fair value determination at the initial time corresponds to the present value of the future payments associated with the grant, discounted at the company's financing rate at the date of recognition, for loans with similar maturities.
Difference between nominal and fair value at initial recognition is included in norepayable grants, at other loans and creditors, being afterwards recognized in net result, in "other gains" during the estimated useful life for the asset. Afterwards this grants are measured at amortized cost.
The grants received are classified as a financial activity in the Statement of Cash Flows.
When a contract indicates that the significant risks and rewards of the ownership of the asset are transferred to CORTICEIRA AMORIM, leasing contracts will be considered as financial leases.
All other leasing contracts are treated as operating leases. Payments made under operating leases are charged to the income statement.
Whenever CORTICEIRA AMORIM qualifies as lessee of finance leases, assets under lease are recognized as Tangible Fixed Assets and are depreciated over the shorter of the term of the contract and the useful life of the assets.
Ordinary shares are included in equity.
When CORTICEIRA AMORIM acquires own shares, acquisition value is recognized deducting from equity in the line treasury stock.
Non-recurring operating results that due to their material or nature may distort the financial performance of Corticeira Amorim, as well as their comparability, are presented in a separate line on the Consolidated Income Statement by Nature. These results include, but are not limited to, restructuring costs, transaction costs for the acquisition of subsidiaries and expenses for leaving from certain countries.
Corticeira Amorim recognizes in the financial statements the events that, after the balance sheet date, provide additional information on the conditions that existed on the balance sheet date, including the estimates inherent in the preparation of the financial statements. The group does not recognize events that, after the balance sheet date, provide information on conditions that occur after the balance sheet date.
CORTICEIRA AMORIM activities expose it to a variety of financial risks: market risks (including currency risk and interest rate risk), credit risk, liquidity risk and capital risk.
1ST HALF 2018
Exchange rate risk management policy established by CORTICEIRA AMORIM Board points out to a total hedging of the assets deriving from sales in the most important currencies and from purchasing in USD. As for book orders up to 90 days, each Business Unit responsible will decide according to exchange rate evolution. Book orders, considered relevant, due after 90 days, will be presented by the Business Unit responsible to the Board.
CORTICEIRA AMORIM, SGPS, S.A. – CONSOLIDATED FINANCIAL STATEMENTS As of June 30, 2018, taking into account the relationship between the amount of the group's exposure to financial assets and liabilities in foreign currency and the notional amount of hedges contracted, exchange rates different from the Euro currency (particularly USD), would have no material effect in the consolidated results of the group. As for book orders any effect would be registered in Equity. As for non-euro net investments in subsidiaries/associate, any exchange rate effect would be registered in Equity, because CORTICEIRA AMORIM does not hedge this type of assets. As these investments whose functional currency is not "Euro" are not considered relevant, the effect is not material. The amount of the effects of exchange rates variations was -4,036 K€ as of June 30, 2018 (December 31, 2017: -1,045 K€).
As of June 30, 2017 and 2018, from the total interest bearing debt, 25 M€ were linked to fixed interest rate for a 10 year period.
Most of the risk derives from the noncurrent-term portion of that debt at variable rate (15.9 M€ as of 30/06/2018 and 12.7 M€ as of 30/06/2017).
As of June 30, 2018, if interest rates were 0.1 percentage points higher, with the remaining variables remaining constant, the pre-tax result would be lower by around 100 thousand euros (85 thousand euros in 2017) as a result of the increase in Financial costs with variable rate debt.
In view of the critical nature of this factor, the procurement, storage and preparation management of the only variable common to all CORTICEIRA AMORIM activities, which is the raw material (cork), is assembled in an autonomous BU, which, among other objectives, makes it possible to prepare, discuss and decide within the Board of Directors the orientation or the multiannual supply policy to be developed.
The Group's cork procurement team is made up of a group of highly specialized staff, mainly in Portugal, Spain and North Africa. The objective of the buyers team is to maximize the price / quality ratio of the purchased cork and simultaneously ensure the purchase of sufficient quantity for the desired level of production.
The cork market is an open market where price is determined by the supply and demand law. The price offered by CORTICEIRA AMORIM is determined business by business, and depends essentially on the estimated quality of cork. CORTICEIRA AMORIM does not have the ability to set the purchase price of the campaign, and this is a result of the operation of the market.
The purchase is concentrated in a certain period of the year, in which the raw material supply is guaranteed for the whole of the following year, the sales prices of the finished products and margins of the business are defined taking into account the cost of acquiring the raw material.
Credit risk is due, mainly, to receivables from customers related to trade sales. Credit risk is monitored by the operating companies Financial Departments, taking in consideration its history of trade relations, financial situation as well as other types of information that CORTICEIRA AMORIM business network has available related with each trading partner. Credit limits are analysed and revised, if necessary, on a regular basis. Due to the high number of customers, spread through all continents, the most important of them weighting less than 3% of total sales, credit risk is naturally diminished.
Normally no guarantees are due from customers. CORTICEIRA AMORIM does not make use of credit insurance.
Credit risk derives also from cash and cash equivalents balances and from financial derivative instruments. CORTICEIRA AMORIM previously analyses the ratings of the financial institutions so that it can minimize the failure of the counterparts.
The maximum credit risk is the one that results from the failure to receive all financial assets (June 2018: 276 million euros and December 2017: 224 million euros).
CORTICEIRA AMORIM financial department regularly analyses future cash flows so that it can deliver enough liquidity for the group to provide operating needs, and also to comply with credit lines payments. Excess of cash is invested in interest bearing short-term deposits. This police offer the necessary flexibility to conduct its business.
Financial liabilities estimated non-discounted cash flows maturities are as
follows: thousand euros
| Up to 1 | 1 to 2 | 2 to 4 | More | Total | |
|---|---|---|---|---|---|
| vear | vears | vears | than 4 | ||
| Interest-bearing loans | 61,695 | 10,170 | 12,914 | 25,011 | 109,789 |
| Other borrowings and creditors | 49,654 | 11,331 | 15,851 | 9,592 | 86,428 |
| Trade payables | 157,096 | 157,096 | |||
| Total as of December 31, 2017 | 268,445 | 21,501 | 28,765 | 34,602 | 353,313 |
| Interest-bearing loans | 83,697 | 9,175 | 12,017 | 19,705 | 124,594 |
| Other borrowings and creditors | 64,647 | 12,665 | 15,162 | 10,116 | 102,590 |
| Trade payables | 160,616 | 160,616 | |||
| Total as of June 30, 2018 | 308,959 | 21,839 | 27.179 | 29,821 | 387.799 |
Liquidity risk hedging is achieved by the existence of non-used credit line facilities and, eventually bank deposits.
Based in estimated cash flows, 2018 liquidity reserve, composed mainly by nonused credit lines, will be as follows:
| m illion euros |
|---|
Note: includes dividends approved in the April 13, 2018 shareholders meeting
The financial flow assumes that at the end of 2018, the level of unused credit lines is equal to that of the beginning of the year and cash and cash equivalents will be approximately 10 M€.
CORTICEIRA AMORIM key objective is to assure business continuity, delivering a proper return to its shareholders and the correspondent benefits to its remaining stakeholders. A careful management of the capital employed in the business, using the proper combination of capital in order to reduce its costs, obtains the fulfilment of this objective. In order to achieve the proper combination of capital employed, the Board can obtain from the General Shareholders Meeting the approval of the necessary measures, namely adjusting the dividend pay-out ratio, the treasury stock, raising capital through new shares issue, sale of assets or other type of measures.
The key indicator for the said combination is the Equity/Assets ratio. CORTICEIRA AMORIM establishes as a target a level of not less than 40% of Equity/Assets ratio, and should not deviate significantly from the range 40%-50%, depending on actual economic conditions and of the cork sector in particular, is the objective to be accomplished.
| thousand euros | |
|---|---|
The said ratio register was:
As of June 30, 2018 and 2017, and as of December 2017, financial instruments measured at fair value in the financial statements of CORTICEIRA AMORIM were composed solely of derivative financial instruments. Derivatives used by CORTICEIRA AMORIM have no public quotation because they are not traded in an open market (over the counter derivatives).
According to the accounting standards, a fair value hierarchy is established that classifies three levels of data to be used in measurement techniques at fair value of financial assets and liabilities:
Level 1 data – public quotation (non-adjusted) in liquid markets for comparable assets or liabilities;
Level 2 data – different data of public quotation observable for the asset or the liability, directly or indirectly;
Level 3 data – non observable data for the assets or the liability.
During the financial period, there were no transfers between the levels mentioned above.
As of June 30, 2018, derivative financial instruments recognized as assets in the consolidated statement of financial position reached 48 thousand euros as assets (December 31, 2017: 800 thousand euros) and 1,380 thousand euros as liabilities (December, 31 2017: 265 thousand euros), as stated in notes XVI and XXII. The agreement for the acquisition of additional ownership interest in a subsidiary is described in Note VI.
CORTICEIRA AMORIM uses forward outrights and options to hedge exchange rate risk, as stated in note XXX. Evaluating exchange rate hedge instruments requires the utilization of observable inputs (level 2). Fair value is calculated using a proprietary model of CORTICEIRA AMORIM, developed by Reuters, using discounted cash flows method for forwards outrights. As for options, it is used the Black & Scholes model.
Summary of the financial instruments derivatives fair value:
| thousand euros | ||||
|---|---|---|---|---|
The main inputs used in valuation are forward exchange rate curves and estimates of currency volatility.
When evaluating equity and net income, CORTICEIRA AMORIM makes estimates and assumptions concerning events only effective in the future. In most cases, estimates were confirmed by future events. In such cases where it doesn't, variations will be registered when they'll be materialized.
The useful lives used represent best estimate for the expected period of use of property. They are periodically reviewed and adjusted if necessary, as described in Note II. c.
Still to be noted 12,215 K€ registered in deferred tax assets (31/12/2017: 13,146 K€). These values will be recovered if the business plans of the companies that recorded those assets are materialized in the future (Note XII).
Provisions for tax contingencies and other processes are based on the best estimate of management regarding losses that may exist in the future that are associated with these processes (Note XXIX).
The description of the main elements of the internal control system and risk management of the group, in relation to the process of the consolidated accounts, is as follows:
The financial information preparation process is dependent on the actors in the registration process of operations and support systems. In the group there is an Internal Control Procedures Manual and Accounting Manual, implemented at the level of the CORTICEIRA AMORIM Group. These manuals contain a set of rules and policies to ensure that in the financial information preparation process homogeneous principles are followed, and to ensure the quality and reliability of financial information.
The implementation of accounting policies and internal control procedures relating to the preparation of financial information is subject to the evaluation by the internal and external audit.
Every quarter, the consolidated financial information by business unit is assessed, validated and approved by the management of each of the group's business units.
Before its release, the consolidated financial information of CORTICEIRA AMORIM is approved by the Board of Directors and presented to the Supervisory Board.
| Company | Head Office | Country 1H18 2017 | |||
|---|---|---|---|---|---|
| Raw Materials | |||||
| Amorim Natural Cork, S.A. | Vale de Cortiças - Abrantes | PORTUGAL 100% | 100% | ||
| Amorim Florestal, S.A. | Ponte de Sôr | PORTUGAL 100% | 100% | ||
| Amorim Florestal España, SL | San Vicente Alcántara | SPAIN 100% 100% | |||
| Amorim Florestal Mediterrâneo, SL | Cádiz | SPAIN 100% | 100% | ||
| Amorim Tunisie, S.A.R.L. | Tabarka | TUNISIA 100% | 100% | ||
| Augusta Cork, S.L. | (f) | San Vicente Alcántara | SPAIN | $\overline{\phantom{a}}$ | 100% |
| Comatral - C. de Maroc. de Transf. du Liège, S.A. | Skhirat | MOROCCO 100% | 100% | ||
| SIBL - Société Industrielle Bois Liége | Jijel | ALGERIA | 51% | 51% | |
| Société Nouvelle du Liège, S.A. (SNL) | Tabarka | TUNISIA 100% | 100% | ||
| Société Tunisienne d'Industrie Bouchonnière | (c) | Tabarka | TUNISIA | 55% | 55% |
| Vatrya - Serviços de Consultadoria, Lda | Funchal - Madeira | PORTUGAL 100% 100% | |||
| Cork Stoppers | |||||
| Amorim & Irmãos, SGPS, S.A. ACI Chile Corchos, S.A. |
Santa Maria Lamas | PORTUGAL 100% CHILE 100% |
100% 100% |
||
| ACIC USA, LLC | Santiago California |
U.S. AMERICA 100% | 100% | ||
| Agglotap, S.A. | Girona | SPAIN | 91% | 91% | |
| All Closures In, S.A. | Paços de Brandão | PORTUGAL | 75% | 75% | |
| Amorim & Irmãos, S.A. | Santa Maria Lamas | PORTUGAL 100% | 100% | ||
| Amorim Argentina, S.A. | Buenos Aires | ARGENTINA 100% | 100% | ||
| Amorim Australasia Pty Ltd | Adelaide | AUSTRALIA 100% | 100% | ||
| Amorim Bartop, S.A. | Vergada | PORTUGAL | 75% | 75% | |
| Amorim Cork América, Inc. | California | U.S. AMERICA 100% | 100% | ||
| Amorim Cork Beijing Ltd. | Beijing | CHINA 100% | 100% | ||
| Amorim Cork Bulgaria EOOD | Plovdiv | BULGARIA 100% | 100% | ||
| Amorim Cork Deutschland GmbH & Co KG | Mainzer | GERMANY 100% | 100% | ||
| Amorim Cork España, S.L. | San Vicente Alcántara | SPAIN 100% | 100% | ||
| Amorim Cork Itália, SPA | Conegliano | ITALY 100% | 100% | ||
| Amorim Cork South Africa (Pty) Ltd | Cape Town | SOUTH AFRICA 100% | 100% | ||
| Amorim France, S.A.S. | Champfleury | FRANCE 100% | 100% | ||
| Amorim Top Series France, S.A.S. | Gensac La Pallue | FRANCE 100% | 100% | ||
| Amorim Top Series, S.A. | Vergada | PORTUGAL | 75% | 75% | |
| Biocape - Importação e Exportação de Cápsulas, Lda (d) | Mozelos | PORTUGAL | 60% | ||
| Bouchons Prioux | Epernay | FRANCE | 91% | 91% | |
| Chapuis, S.L. | Girona | SPAIN 100% | 100% | ||
| Corchera Gomez Barris | (c) | Santiago | CHILE | 50% | 50% |
| Corchos de Argentina, S.A. | (b) | Mendoza | ARGENTINA | 50% | 50% |
| Corpack Bourrasse, S.A. | Santiago | CHILE | 60% | 60% | |
| Elfverson & Co. AB | (d) | Parid | SWEDEN | 53% | |
| Equipar, Participações Integradas, Lda. | Coruche | PORTUGAL 100% | 100% | ||
| S.A.S. Ets Christian Bourassé | Tosse | FRANCE | 60% | 60% | |
| FP Cork, Inc. | California | U.S. AMERICA 100% | 100% | ||
| Francisco Oller, S.A. | Girona | SPAIN | 92% | 92% | |
| Hungarocork, Amorim, RT | Budapeste | HUNGARY 100% 100% | |||
| Indústria Corchera, S.A. | (c) | Santiago | CHILE | 50% | 50% |
| Korken Schiesser Ges.M.B.H. | Viena | AUSTRIA | 69% | 69% | |
| Olimpiadas Barcelona 92, S.L. | Girona | SPAIN 100% | 100% | ||
| Portocork América, Inc. | California | U.S. AMERICA 100% | 100% | ||
| Portocork France, S.A.S. | Bordéus | FRANCE 100% | 100% | ||
| Portocork Internacional, S.A. | Santa Maria Lamas | PORTUGAL 100% | 100% | ||
| Portocork Itália, s.r.l | Milão | ITALY 100% | 100% | ||
| Sagrera et Cie | Reims | FRANCE | 91% | 91% | |
| S.A. Oller et Cie | Reims | FRANCE | 92% | 92% | |
| S.C.I. Friedland | Céret | FRANCE 100% | 100% | ||
| S.C.I. Prioux | Epernay | FRANCE | 91% | 91% | |
| Socori, S.A. | Rio Meão | PORTUGAL | 60% | 60% | |
| Sodiliège | Cognac | FRANCE | 75% | 75% | |
| Société Nouvelle des Bouchons Trescases | (b) | Perpignan | FRANCE | 50% | 50% |
| Trefinos Australia | Adelaide | AUSTRALIA | 91% | 91% | |
| Trefinos Italia, s.r.l | Treviso | ITALY | 91% | 91% | |
| Trefinos USA, LLC | Fairfield, CA | U.S. AMERICA | 91% | 91% | |
| Trefinos, S.L | Girona | SPAIN | 91% | 91% | |
| Victory Amorim, Sl | Navarrete - La Rioja | SPAIN | 50% | 50% | |
| (c) |
CORTICEIRA AMORIM, SGPS, S.A. – CONSOLIDATED FINANCIAL STATEMENTS 1ST HALF 2018
| Company | Head Office | Country 1H18 2017 | |||
|---|---|---|---|---|---|
| Floor & Wall Coverings | |||||
| Amorim Revestimentos, S.A. | S. Paio de Oleiros | PORTUGAL 100% | 100% | ||
| Amorim Benelux, BV | Tholen | NETHERLANDS 100% | 100% | ||
| Amorim Deutschland, GmbH - AR | (a) | Delmenhorts | GERMANY 100% | 100% | |
| Amorim Flooring, SA | S. Paio de Oleiros | PORTUGAL 100% | 100% | ||
| Amorim Flooring (Switzerland) AG | Zug | SWITZERLAND 100% | 100% | ||
| Amorim Flooring Austria GesmbH | Viena | AUSTRIA 100% | 100% | ||
| Amorim Flooring Investments, Inc. | Hanover - Maryland | U.S. AMERICA 100% | 100% | ||
| Amorim Flooring North America Inc. | Hanover - Maryland | U.S. AMERICA 100% | 100% | ||
| Amorim Flooring Rus, LLC | Moscovo | RUSSIA 100% | 100% | ||
| Amorim Flooring UK, Ltd | Manchester | UNITED KINGDOM 100% | 100% | ||
| Amorim Japan Corporation | Tóquio | JAPAN | 100% | 100% | |
| Amorim Revestimientos, S.A. | Barcelona | SPAIN 100% | 100% | ||
| Cortex Korkvertriebs GmbH | Fürth | GERMANY 100% | 100% | ||
| Dom KorKowy, Sp. Zo. O. | (c) | Kraków | POLAND | 50% | 50% |
| Timberman Denmark A/S | (e) | Hadsund | DENMARK 100% | 51% | |
| Composite Cork | |||||
| Amorim Cork Composites, S.A. | Mozelos | PORTUGAL 100% | 100% | ||
| Amorim (UK) Ltd. | Horsham West Sussex | UNITED KINGDOM 100% | 100% | ||
| Amorim Compcork, Lda | Mozelos | PORTUGAL 100% | 100% | ||
| Amorim Cork Composites LLC | São Petersburgo | RUSSIA 100% | 100% | ||
| Amorim Cork Composites Inc. | Trevor - Wisconsin | U.S. AMERICA 100% | 100% | ||
| Amorim Deutschland, GmbH - ACC | (a) | Delmenhorts | GERMANY 100% | 100% | |
| Amorim Industrial Solutions - Imobiliária, S.A. | Corroios | PORTUGAL 100% | 100% | ||
| Amosealtex Cork Co., Ltd | (b) | Xangai | CHINA | 50% | 50% |
| Chinamate (Shaanxi) Natural Products Co. Ltd | Shaanxi | CHINA 100% | 100% | ||
| Chinamate Development Co. Ltd | Hong Kong | CHINA 100% | 100% | ||
| Compruss - Investimentos e Participações Lda | Mozelos | PORTUGAL 100% | 100% | ||
| Corticeira Amorim - France SAS | Lavardac | FRANCE 100% | 100% | ||
| Florconsult - Consultoria e Gestão, Lda | Mozelos | PORTUGAL 100% | 100% | ||
| Postya - Serviços de Consultadoria, Lda. | Funchal - Madeira | PORTUGAL 100% | 100% | ||
| Insulation Cork | |||||
| Amorim Isolamentos, S.A. | Vendas Novas | PORTUGAL 100% 100% | |||
| Holding | |||||
| Corticeira Amorim, SGPS, S.A. | Mozelos | PORTUGAL 100% | 100% | ||
| Ginpar, S.A. (Générale d'Invest. et Participation) | Skhirat | MOROCCO 100% | 100% | ||
| Amorim Cork Research, Lda. | Mozelos | PORTUGAL 100% | 100% | ||
| Amorim Cork Services, Lda. | Mozelos | PORTUGAL 100% | 100% | ||
| Amorim Cork Ventures, Lda | Mozelos | PORTUGAL 100% | 100% | ||
| Ecochic portuguesas - footwear and fashion | Mozelos | PORTUGAL | 12% | 12% | |
| products, Lda | |||||
| Corecochic - Corking Shoes Investments, Lda | (b) | Mozelos | PORTUGAL | 50% | 50% |
| Gröwancork - Estruturas isoladas com cortiça, Lda | (b) | Mozelos | PORTUGAL | 25% | 25% |
| PrimaLynx - Sustainable Solutions, Lda. | (b) | Mozelos | PORTUGAL | 24% | 24% |
| TDCork - Tapetes Decorativos com Cortiça, Lda | (b) | Mozelos | PORTUGAL | 25% | 25% |
| Soc. Portuguesa de Aglomerados de Cortiça, Lda | Montijo | PORTUGAL 100% | 100% | ||
| Supplier Portal Limited | Hong Kong | CHINA 100% | 100% | ||
(a) One single company: Amorim Deutschland, GmbH & Co. KG.
(b) Equity method consolidation.
(c) CORTICEIRA AMORIM controls the operations of the company – line-by-line consolidation method.
(d) Company acquired in 2018
(e) Increase in the percentage of interest
(f) Company merged in Amorim Florestal España
For entities consolidated by the full consolidation method, the percentage of voting rights held by "Non-Controlling Interests" is equal to the percentage of share capital held.
In early 2018, CORTICEIRA AMORIM acquired 70% of Elfverson (for SEK 50.5 million), which has been consolidated since January 1 of this year. This company has a portfolio of premium products and a portfolio of outstanding customers, allowing the reinforcement of sources of supply of wooden tops of recognized quality, which will allow to keep up with the growth of the needs of the customers in the segment of capped caps.
The group chose to measure the non-controlling interest at the proportionate share of the acquiree's net assets and liabilities.
The fair values of the assets and liabilities identified under this transaction are shown in the table below:
| m illions euros |
||||
|---|---|---|---|---|
No significant differences were identified between the fair value and the respective carrying amount. Goodwill represents the remaining amount that could not be identified in the acquiree. Goodwill recognized in the accounts is not expected to be deductible for tax purposes.
The fair value of the non-controlling interest results from the participation being acquired by a subsidiary that is not 100% owned.
Transaction costs of 139 thousand euros were recorded as non-recurring expense For the first quarter financial statements, an adjustment was made to the acquisition price effective for Goodwill.
| Exchange rates | Average 1H18 |
June 30, 2018 |
December 31, 2017 |
Average 2017 |
|
|---|---|---|---|---|---|
| Argentine Peso | ARS | 26.0599 | 33.7417 | 22.3054 | 18.7356 |
| Australian Dollar | AUD | 1.5688 | 1.5787 | 1.5346 | 1.4732 |
| Lev | BGN | 1.9557 | 1.9558 | 1.9557 | 1.9557 |
| Brazilian Real | BRL | 4.1415 | 4.4876 | 3.9729 | 3.6054 |
| Canadian Dollar | CAD | 1.5457 | 1.5442 | 1.5039 | 1.4647 |
| Swiss Franc | CHF | 1.1697 | 1.1569 | 1.1702 | 1.1117 |
| Chilean Peso | CLP | 739.987 | 763.730 | 737.330 | 732.134 |
| Yuan Renminbi | CNY | 7.7086 | 7.7170 | 7.8044 | 7.6290 |
| Danish Krona | DKK | 7.4476 | 7.4525 | 7.4449 | 7.4386 |
| Algerian Dinar | DZD | 138.717 | 137.073 | 137.539 | 125.091 |
| Euro | EUR | 1.0000 | 1.0000 | 1.0000 | 1.0000 |
| Pound Sterling | GBP | 0.8798 | 0.8861 | 0.8872 | 0.8767 |
| Hong Kong Dollar | HKD | 9.4842 | 9.1667 | 9.3720 | 8.8048 |
| Forint | HUF | 314.113 | 329.770 | 310.330 | 309.193 |
| Yen | JPY | 131.606 | 129.040 | 135.010 | 126.711 |
| Moroccan Dirham | MAD | 11.2426 | 11.0738 | 11.2091 | 10.9494 |
| Zloty | PLN | 4.2207 | 4.3732 | 4.1770 | 4.2570 |
| Ruble | RUB | 71.9601 | 73.1582 | 69.3920 | 65.9383 |
| Swedish Krona | SEK | 10.1508 | 10.4530 | 9.8438 | 9.6351 |
| Tunisian Dinar | TND | 2.9769 | 3.0812 | 2.9444 | 2.7198 |
| Turkish Lira | TRL | 4.9566 | 5.3385 | 4.5464 | 4.1206 |
| US Dollar | USD | 1.2104 | 1.1658 | 1.1993 | 1.1297 |
| Rand | ZAR | 14.8913 | 16.0484 | 14.8054 | 15.0490 |
CORTICEIRA AMORIM is organized in the following Business Units (BU): Raw Materials, Cork Stoppers, Floor and Wall Coverings, Composite Cork and Insulation Cork.
There are no differences between the measurement of profit and loss and assets and liabilities of the reportable segments, associated to differences in accounting policies or centrally allocated cost allocation policies or jointly used assets and liabilities.
For purposes of this Report, the Business approach was selected as the primary segment. This is consistent with the formal organization and evaluation of business. Business Units correspond to the operating segments of the company and the segment report is presented the same way they are analysed for management purposes by the board of CORTICEIRA AMORIM.
The following table shows the main indicators of the Business Units, and, whenever possible, the reconciliation with the consolidated indicators (values in thousand EUR):
| thousand euros | ||||
|---|---|---|---|---|
| 1H17 | Raw | Cork Materials Stoppers |
Floor & Wall Coverings |
Cork | Composite Insulation Cork |
Holding Adjustm. | Consolidated | |
|---|---|---|---|---|---|---|---|---|
| Trade Sales | 5,095 | 236,843 | 60,670 | 46,938 | 5,072 | 143 | 354,762 | |
| Other BU Sales | 77,785 | 2,637 | 1,619 | 4,968 | 517 | 994 | $-88,519$ | |
| Total Sales | 82,879 239,480 | 62,289 | 51,906 | 5,590 | 1,137 | $-88,519$ | 354,762 | |
| EBITDA (current) | 10.497 | 49,926 | 4,260 | 8,308 | 1,053 | $-3,445$ | 23 | 70,622 |
| Assets (non-current) | 21,146 | 125,801 | 34,894 | 31,064 | 3,945 | 990 | 9,080 | 226,919 |
| Assets (current) | 155,800 246,989 | 66,821 | 38,358 | 7.649 | 44.655 | -9,715 | 550,556 | |
| Liabilities | 48.319 | 137,917 | 38,766 | 27,791 | 2.360 | 24,605 | 57.810 | 337,569 |
| Capex | 2,718 | 8,083 | 2,198 | 1,307 | 124 | 185 | $\mathbf o$ | 14,616 |
| Depreciation | $-2,903$ | $-8,694$ | $-2,453$ | -1,413 | -282 | -46 | $\mathbf o$ | -15,790 |
| Gains/Losses in associated companies |
$\mathbf o$ | 1,424 | $\mathbf o$ | -185 | $\mathbf{o}$ | $-410$ | 0 | 829 |
Adjustments = eliminations inter-BU and amounts not allocated to BU.
EBITDA = Profit before interests, depreciation, equity method, non-controlling interests and income tax.
Provisions and asset impairments were considered the only relevant non-cash material cost.
Segments assets do not include DTA (deferred tax asset) and non-trade group balances.
Segments liabilities do not include DTL (deferred tax liabilities), bank loans and non-trade group balances.
The decision to report EBITDA figures allows a better comparison of the different BU performances, disregarding the different financial situations of each BU. This is also coherent with the existing Corporate Departments, as the Financial Department is responsible for the bank negotiations, being the tax function the responsibility of the Holding Company.
Cork Stoppers BU main product is the different kinds of existing cork stoppers. The main markets are the production and bottling wine countries, from the traditional ones like France, Italy, Germany, Spain and Portugal, to the new markets like USA, Australia, Chile, South Africa and Argentina.
Raw Materials BU is, by far, the most integrated in the production cycle of CORTICEIRA AMORIM, with 85% of its sales to others BU, specially to Cork Stoppers BU. Main products are bark and discs.
The remaining BU produce and sell a vast number of cork products made from cork stoppers waste. Main products are cork floor tiles, cork rubber for the automotive industry and antivibratic systems, expanded agglomerates for insulation and acoustic purposes, technical agglomerates for civil construction and shoe industry, as well as granulates for agglomerated, technical and champagne cork stoppers.
Major markets for flooring and insulation products are in Europe and for composites products the USA. Major production sites are in Portugal, where most of the invested capital is located. Products are distributed in practically all major markets through a fully owned network of sales companies. About 70% of total consolidated sales are achieved through these companies.
Capex was concentrated in Portugal. Assets in foreign subsidiaries totalize 376 million euros, and are mostly composed by inventories (123 million), trade receivables (124 million) and tangible fixed assets (58 million).
| thousand euros | ||
|---|---|---|
Sales by markets:
| Land and buildings |
Machinery | Other | Tangible Fixed Assets in Progress |
Advances for tangible assets |
Total tangible assets |
Intangible assets |
Investment property |
|
|---|---|---|---|---|---|---|---|---|
| Gross Value | 232,385 | 375,088 | 33,346 | 5,773 | 3,400 | 649,992 | 8,053 | 30,897 |
| Depreciation and impairments | $-142.664$ | $-278.499$ | $-31.374$ | $\circ$ | $\circ$ | $-452.537$ | $-4,277$ | $-23,797$ |
| Opening balance (Jan 1, 2017) | 89.720 | 96.589 | 1.972 | 5.773 | 3,400 | 197,454 | 3,776 | 7,100 |
| INCREASE | 1,889 | 4,040 | 1,018 | 7,472 | $\circ$ | 14,420 | 195 | $\circ$ |
| PERIOD DEPREC. AND IMPAIRMENTS | $-2,849$ | $-10,638$ | $-725$ | 0 | $\circ$ | $-14,212$ | $-1,304$ | $-128$ |
| SALES AND OTHER DECREASES | 14 | $-1,196$ | $-65$ | $-29$ | $\circ$ | $-1,276$ | 0 | $-264$ |
| TRANSFERS AND RECLASSIFICATIONS | $-662$ | 125 | 45 | $-555$ | $\circ$ | $-1,047$ | 0 | $\circ$ |
| TRANSLATION DIFFERENCES | $-680$ | $-401$ | $-47$ | $-13$ | $\circ$ | $-1,141$ | $-12$ | $-23$ |
| Gross Value | 233.097 | 374,081 | 32,956 | 12,648 | 3,400 | 656,182 | 8,194 | 30,580 |
| Depreciation and impairments | $-145, 413$ | $-285,492$ | $-30,747$ | 0 | 0 | $-461,652$ | -5,540 | $-23,895$ |
| Closing balance (Jun 30, 2017) | 87.684 | 88.589 | 2,209 | 12.648 | 3,400 | 194,530 | 2,654 | 6,686 |
| Gross Value | 256,656 | 402,649 | 33,620 | 28,040 | $\circ$ | 720,964 | 10,217 | 22,127 |
| Depreciation and impairments | $-158,628$ | $-304,938$ | $-29,103$ | $-390$ | $\circ$ | $-493,059$ | $-6,140$ | $-16,449$ |
| Opening balance (Jan 1, 2018) | 98,029 | 97,711 | 4,516 | 27,650 | o | 227,905 | 4,077 | 5,678 |
| IN COMPANIES | 138 | 903 | 73 | $\circ$ | $\circ$ | 1,114 | $\circ$ | $\circ$ |
| INCREASE | 2,310 | 3,045 | 899 | 16,354 | $\circ$ | 22,608 | 841 | $\circ$ |
| PERIOD DEPREC. AND IMPAIRMENTS | $-2,704$ | $-11,968$ | $-1,113$ | $\circ$ | $\circ$ | $-15,785$ | $-251$ | $-542$ |
| SALES AND OTHER DECREASES | 47 | 76 | $-84$ | -69 | $\circ$ | $-30$ | $-42$ | $-1$ |
| TRANSFERS AND RECLASSIFICATIONS | $-134$ | 816 | $-15$ | $-1,110$ | $\circ$ | $-444$ | 0 | 447 |
| TRANSLATION DIFFERENCES | 125 | $-15$ | $-15$ | 87 | 0 | 181 | 3 | $\circ$ |
| Gross Value | 259.432 | 407,123 | 34,017 | 43,300 | 0 | 743.872 | 10,848 | 22,119 |
| Depreciation and impairments | $-161,622$ | $-316,556$ | $-29,707$ | -390 | o | $-508,275$ | $-6,221$ | $-16,537$ |
| Closing balance (Jun 30, 2018) | 97,810 | 90,567 | 4,310 | 42,910 | o | 235,597 | 4,627 | 5,582 |
Impairment losses recognized in 2018 and 2017 were recognized on the "Depreciation / Amortization" line in the consolidated income statement by nature.
The amount of 5,582 K€, referred as Property Investment (June 2017: 6,686 K€), is due, mainly, to land and buildings that are not used in production.
Expenses related with tangible fixed assets had no impact. No interest was capitalized during 1H2018.
The fair value of the Investment Property related to the lands and buildings of Corroios corresponds to the amount recorded in the accounts. This item also includes a property (Interchampagne with a value of 1,513 K€) with a recent valuation that corresponds to the book value. The remaining Investment Properties include a property with an accounting value of 963 K€ whose yield, updated to a 10% wacc, will correspond approximately to the amount by which they are recorded in the financial statements.
Intangible Assets essentially include autonomous product development projects and innovative solutions.
Detail of goodwill according to the following table:
| thousand euros | ||
|---|---|---|
As stated in point II f), impairment tests are made each year.
Cash flows were estimated, based on the budget and plans approved by management. The growth assumptions contemplated the expected growth in the wine, champagne and sparkling wine markets, as well as the evolution of the market share of the subsidiaries in this business. In those tests, growth rates of 4% for the period 2018-2022 and 2% for the following years were used. The discount rate used was 7.8%.
| thousand euros | ||||
|---|---|---|---|---|
The associates are entities through which the group operates in the markets in which they are based, acting as distribution channels of products. The performance in these markets is done through several channels, so these investments, being important, are not considered strategic.
A portion of the contingent amount receivable from the sale of US Floors occurred in 2016 amounting to 779 K€ was recognized in the associates' income.
Assets included in Other financial assets refer essentially to available-for-sale equity instruments, which are not quoted on an active market and whose fair value is not reliably estimated, and are therefore measured at cost. The assets were acquired with the main purpose of sale or resale, as appropriate, and in certain cases ensuring the maintenance and survival of entities that Corticeira Amorim considers partners for its business. The effective management of the underlying operations and assets continues to be exclusively provided by the partners, serving the financial participation as a mere "guarantee" of the investment made.
The differences between the tax due for the current period and prior periods and the tax already paid or to be paid of said periods is registered as "deferred tax" in the consolidated income statement, according to note II n), and amounts to 25 K€ (1H2017: 715 K€).
On the consolidated statement of financial position this effect amounts to 12,215 K€ (30/06/2017: 9,653 K€) as Deferred tax asset, and to 6,550 K€ (30/06/2017: 6,652 K€) as Deferred tax liability.
It is conviction of the Board that, according to its business plan, the amounts registered in deferred tax assets will be recovered as for the tax carry forward losses concerns.
| thousand euros | |
|---|---|
Following chart explains the effective income tax rate, from the original income tax rate of most of Portuguese companies:
| Income Tax Conciliation | 1H18 | 1H17 |
|---|---|---|
| Income Tax - Legal | 21.0% | 21.0% |
| Effect arising from extraordinary taxation (Portugal) | 5.1% | 6.1% |
| Effect due to provisions for contingencies | $-2.2%$ | $-0.8%$ |
| Effect due to different tax rates (foreign subsidiaries) and others | 3.4% | 2.3% |
| Effect due to reversal of prior year tax estimates | 1.1% | 1.2% |
| Other | $-0.2%$ | $-0.6%$ |
| Income tax - effective (1) | 28.1% | 29.2% |
CORTICEIRA AMORIM and a large group of its Portuguese subsidiaries are taxed since January 1, 2001, as a group special regime for tax purposes (RETGS), as according to article 69, of the income tax code (CIRC). The option for this special regime is renewable every five years.
According to law, tax declarations for CORTICEIRA AMORIM and its Portuguese subsidiaries are subject of revision and possible correction from tax authorities generally during the next four years.
No material effects in the financial statements are expected by the Board of CORTICEIRA AMORIM from the revisions of tax declarations that will be held by the tax authorities.
Tax losses to be carried forward are related with foreign subsidiaries.
As the tax forms are only filled after year-end closure, values at closure of 2017 were updated by the activity of the first half.
| thousand euros | |
|---|---|
| thousand euros | |
Raw materials essentially include reproduction cork ("amadia") and virgin cork from pruning the tree ("falcas") (Raw Material BU), products and work in progress essentially include boiled cork and discs (Raw Materials BU) and finished products essentially include a variety of types of cork stoppers (Cork Stoppers BU), coverings (Floor and Wall Coverings BU) and composite products (Composite Cork BU).
Increases and decreases in inventories impairment are booked on Costs of goods sold and materials consumed in the income statement.
| thousand euros | |
|---|---|
Increases and decreases were recognized under impairment of assets caption in the income statement.
At the end of each period, Trade receivables credit quality is analysed. Due to specific business environment, balances unpaid up to 90 days are not impaired. From 90 to 120 days a 30% impairment register is considered and from 120 to 180 days 60%. Over 180 days as well as all doubtful balances are fully impaired. These rules do not overcome specific cases analysis.
| thousand euros | |
|---|---|
The amount of RERD refers to a payment made under an exceptional regime of regularization of debts to the tax authority and to social security (DL 151-A/2013) (RERD). CORTICEIRA AMORIM has decided to partially adhere. A total of 4,265 K€ was paid in December 2014. This payment refers to stamp tax (1,678 K€) and income tax cases (2,587 K€). The amount related with stamp tax was provisioned. As for the income tax cases, they were already provisioned, including late payment interest.
During 2016, CORTICEIRA AMORIM was notified that its appeal regarding the tax procedure related to the Stamp tax paid in the RERD was almost entirely won. The value of the reversal of the respective provisions was of 1.7 M€, positively affecting the financial result. As these processes were included in the 2013 RERD, and consequently paid to date, CORTICEIRA AMORIM was reimbursed at approximately 1.2 M€.
At the end of 2016, a special Plan for the Reduction of Indebtedness to the State (PERES) was approved by Decree-Law no. CORTICEIRA AMORIM decided to partially adhere to that measure. In December, approximately 7.4 M€ were paid in respect of Stamp Tax / VAT (2 M€) and Income Tax (IRC) in the amount of 5.4 M€.
To be noted that CORTICEIRA AMORIM was not a debtor to the social security and to the tax authority. Those amounts were subject to court ruling. The cases that were chosen to adhere are old cases but, in circumstance of unfavourable ruling by the court, the outcome could impose heavy penalties and late payment interests.
RERD and PERES allowed for the payment of the capital without any payment regarding late payment interests and other costs. Due to the fact that adhesion to RERD and PERES does not imply a mandatory abandonment of the court cases and those processes are still in court, CORTICEIRA AMORIM will continue to fight for its rights.
The liability amount under this caption includes the estimated income tax payable by some foreign subsidiaries when filing the tax return for the year 2017.
| thousand euros | |
|---|---|
| thousand euros | |
|---|---|
As of June 30, 2018, the share capital is represented by 133,000,000 ordinary registered shares, conferring dividends, with a par value of 1 Euro.
The Board of CORTICEIRA AMORIM is authorized to raise the share capital, one or more times, respecting the conditions of the commercial law, up to 250,000,000 euros.
As of June 30, 2018, CORTICEIRA AMORIM held no treasury stock.
During the first half, CORTICEIRA AMORIM did not acquire or sell its own shares.
Legal reserve and share premium are under the legal reserve rule and can only be used for (art. 296 CSC):
Legal reserve and share premium values are originated from Corticeira Amorim, SGPS, S.A. books.
Value is composed from other reserves account and prior year's results of Corticeira Amorim, SGPS, S.A. books, as well as non-distributed cumulative results of Corticeira Amorim, SGPS, S.A. subsidiaries.
In the Shareholders' General Meeting of April 13, 2018, a dividend distribution of 0.185 euros per share was approved. The dividend was paid at April, 30. The total distributed was 24.6 M€.
| thousand euros | |
|---|---|
| thousand euros | |
|---|---|
The amount of Dividends corresponds to the amounts paid by the entities to noncontrolling interests.
At year-end, interest bearing loans was as follows:
| thousand euros | |
|---|---|
Loans were denominated in euros, except 19% (Dec. 2017: 15%).
| thousand euros | |
|---|---|
At the end of June 30, 2017, loans were denominated in euros 100% (Dec. 2017: 100%).
As of June 30, 2018, maturity of non-current interest bearing debt was as follows:
| thousand euros |
|---|
From non-current and current interest bearing debt, 99,594 K€ carries floating interest rates. Remaining 25,000 K€ carries fixed interest rate. Average cost, during 2018, for all the credit utilized was 1.40% (1H2017: 1.64%).
Note that at the end of the first quarter 2015 CORTICEIRA AMORIM effected a loan agreement with the EIB. This ten year loan, in the amount of 35 M€, with a grace period of four years, was negotiated at an all-in cost lower than any existing loan to date. With this financing CORTICEIRA AMORIM could substantially lengthen the terms of its debt and, at same time, lowering considerably average rate of interest-bearing debt.
At the end of 1H18, CORTICEIRA AMORIM had credit lines with contractual clauses that include covenants generally used in these type of contracts, namely: crossdefault, pari-passu and in some cases negative pledge.
At the same date, CORTICEIRA AMORIM had utilized credit lines with associated financial covenants. These included, namely, ratios accomplishment that allowed for an accompaniment of the financial position of the company, most of all its capacity to pay its debt, of which the most important is Debt to EBITDA ratio (net interest bearing debt/current EBITDA). Also ratio related with balance sheet structure.
As of June 30, 2018, these ratios were as follows:
| Net interest bearing debt / current EBITDA (X) | 0.73 |
|---|---|
| Equity / Assets | 51.0% |
Ratios above fully and easily accomplished the demands of the contracts that formalized said loans. If by chance they did not accomplish the possibility of an early payment was conceivable.
On top of the said full accomplishment, it has to be noted that the capacity of full repayment was reinforced by the existence, as of that date, of approved nonused credit lines that amounted to 142 M€.
In the ratio "Net interest bearing debt / current EBITDA (X)", current EBITDA is calculated using the sum of the last four quarters.
| m ilhares de euros |
|
|---|---|
From the total values, 60% comes from Cork Stoppers BU (Dec. 2017: 53%) and 16% from Raw Materials BU (Dec. 2017: 26%).
| thousand euros | |
|---|---|
In Other (current) is included a value of 1,380 K€ (1H2017: 161 K€), which refers to the fair value of exchange risk and interest rate risk derivatives.
In Other loans and creditors – non-current (37,942 K€), maturity is as follows: 1 to 2 years (12,665 K€), 2 to 4 years (15,162 K€), more than 4 years (10,116 K€).
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|---|---|---|
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| thousand euros | ||
|---|---|---|
During the first half of 2018, net non-recurring income of 681 K€ was recorded. These revenues include the reversal of the provision related to legal processes in the areas of labour, customs as well as a process involving the Argentine Central Bank relating to Amorim Argentina in the amount of 2 M€. These provisions were created in 2016 during the liquidation of Amorim Argentina, a process completed in the first half of 2018. There were no materially significant financial outflows at the end of this process. Transaction costs related to the acquisition of subsidiaries and the restructuring of Floor & Wall coverings BU are recorded, offsetting this income.
| thousand euros | ||
|---|---|---|
| thousand euros | |
|---|---|
| thousand euros | ||
|---|---|---|
CORTICEIRA AMORIM consolidates indirectly in AMORIM - INVESTIMENTOS E PARTICIPAÇÕES, S.G.P.S., S.A. (AIP) with head-office at Mozelos (Santa Maria da Feira, Portugal), Amorim Group holding company.
As of June 30, 2018, indirect stake of AIP in CORTICEIRA AMORIM was 51% corresponding as 51% of the voting rights.
CORTICEIRA AMORIM related party transactions are, in general, due to the rendering of services through some of AIP subsidiaries (Amorim Serviços e Gestão,
Balances at June 30, 2018 and year-end 2017 are those resulting from the usual payment terms (from 30 to 60 days) and so are considered to be immaterial.
Services rendered from related-parties are based on the "cost plus" basis ranging from 2% to 5%
| thousand euros | |
|---|---|
Tax processes are in general related with Portuguese companies. Open processes, in judicial phase as in graceful stage, which can affect adversely CORTICEIRA AMORIM, correspond to fiscal years of 1997, 1998, 1999, and from 2003 to 2014. The most recent fiscal year analysed by Portuguese tax authorities was 2014. It should be noted, however, that the approval of the tax benefits cannot be considered as complete, since their obligations continue for several years.
These tax cases are basically related with questions like non-remunerated guarantees given between group companies, group loans (stamp tax), interest costs of holding companies (SGPS), and with the acceptance as fiscal costs of losses related with the closing of subsidiaries.
Claims by the tax authorities are related with income tax, stamp tax and marginally TVA.
Income tax provisions refer to live tax cases, in court or not, as well as situations that can raise question in future inspections.
At the end of each year, an analysis of the tax cases is made. The procedural development of each case is important to decide new provisions, or reverse or reinforce existing ones. Provisions correspond to situations that, for its procedural development or for doctrine and jurisprudence newly issued, indicate a probability of an unfavourable outcome for CORTICEIRA AMORIM and, if that happens, a cash outflow can be reasonably estimated.
Note that during the period there were no developments worthy of note in the processes mentioned above.
It is considered appropriate the total value of 35.4 M€ of provisions related with contingencies regarding income tax and 3.4 M€ regarding other contingencies.
During its operating activities CORTICEIRA AMORIM issued in favour of thirdparties guarantees amounting to 2,423 K€ (31/12/2017: 3,470 K€).
thousand euros
| Beneficiary | Amount | Purpose |
|---|---|---|
| Government agencies | 2,305 | Capex grants / subsidies |
| Other | 118 | Miscellaneous quarantees |
| TOTAL | 2,423 |
As of June 30, 2016, future expenditure resulting from long-term transportation equipment rentals totals 1,666 K€. Future expenditure resulting from software and hardware rentals totals 421 K€.
As of June 30, 2018, forward outright and options contracts related with sales currencies were as follows:
| thousand euros | |||
|---|---|---|---|
CORTICEIRA AMORIM sales are composed by a wide range of products that are sold through all the five continents, over 100 countries. Due to this notorious variety of products and markets, it is not considered that this activity is concentrated in any special period of the year. Traditionally first half, especially the second quarter, has been the best in sales; third and fourth quarter switch as the weakest one.
a) O Net profit per share calculation used the average number of issued shares deducted by the number of average owned shares. The nonexistence of potential voting rights justifies the same net profit per share for basic and diluted.
| 1H18 | 2017 | 1H17 | |
|---|---|---|---|
| Total issued shares | 133,000,000 | 133,000,000 | 133,000,000 |
| Average nr. of treasury shares | 0 | O | |
| Average nr. of outstanding shares | 133,000,000 | 133,000,000 | 133,000,000 |
| Net Profit (thousand euros) | 41.214 | 73.027 | 37,757 |
| Net Profit per share (euros) | 0.310 | 0.549 | 0.284 |
b) IFRS disclosures - New standards as at 30 June 2018:
Changes in accounting policies and disclosures
The standards and interpretations that became effective as of 1 January 2018 are as follows:
• IFRIC 22 (interpretation), "Foreign currency transactions and advance consideration" (effective for periods beginning on or after 1 January 2018). Interpretations clarify the accounting for transactions that include the receipt or payment of advance consideration in a foreign currency.
These changes had no material impact on the Group's consolidated financial statements. With respect to IFRS 15, CORTICEIRA AMORIM verified the fulfilment of the recognition criteria in the established transactions. The impacts of the adoption of IFRS 15 in the consolidated statements of CORTICEIRA AMORIM were immaterial.
The impacts of the adoption of IFRS 15 in the consolidated statements of comprehensive income were null and in the consolidated statement of cash flows were immaterial.
At the date of approval of these financial statements, the standards and interpretations endorsed by the European Union, with mandatory application in future financial years are the following:
The following standards, interpretations, amendments and revisions, with mandatory application in future financial years have not yet been endorsed by the European Union, at the date of approval of these financial statements:
the application of the IAS 12. The interpretation is not applicable to taxes and charges that are outside the scope of the IAS 12, nor include specific requirements relating to interest and penalties associated with uncertainty over tax treatments.
The Group has been evaluating the impact of these amendments. It will apply this standard once it becomes effective or when earlier application is permitted.
c) Financial Assets e Liabilities
Financial Assets are mainly registered in the Loans and Other Receivables caption. As for Financial Liabilities they are included in the Amortized Liabilities caption.
thousand euros
| thousand euros | |||
|---|---|---|---|
The value of the agreement for acquisition of additional participation in subsidence (19,035 K€) on December 31, 2017 was restated from the column Other financial liabilities at amortized cost to Fair value through profit and loss.
The Board of Directors of CORTICEIRA AMORIM, S.G.P.S., S.A.
Tracing its roots back to the 19th century, Amorim has become the world's largest cork and corkderived company in the world, generating more than Euro 700 million in sales to more than 100 countries through a network of dozens of fully owned subsidiaries.
With a multi-million Euro R&D investment per year, Amorim has applied its specialist knowledge to this centuries-old traditional culture, developing a vast portfolio of 100% sustainable products that are used by blue-chip clients in industries as diverse and demanding as wines & spirits, aerospace, automotive, construction, sports, interior and fashion design.
Amorim's responsible approach to raw materials and sustainable production illustrates the remarkable interdependence between industry and a vital ecosystem - one of the world's most balanced examples of social, economic and environmental development.
Corticeira Amorim, SGPS, S.A. Sociedade Aberta Edifício Amorim I Rua de Meladas, n.º 380 4536-902 Mozelos VFR Portugal
[email protected] www.corticeiraamorim.com Instagram: @Amorimcork
Share Capital: EUR 133 000 000,00 A company incorporated in Santa Maria da Feira Registration and Corporate Tax ID No: PT 500 077 797
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