RELATÓRIO E CONTAS - Fisipe · precursors in other than experimental quantities. The year 2012...
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Transcript of RELATÓRIO E CONTAS - Fisipe · precursors in other than experimental quantities. The year 2012...
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Chairman’s message 3
Corporate Boards 4
The Company and its Strategic Vision 5
The Group of Companies 6
A - CONSOLIDATED MANAGEMENT REPORT
1. Introduction 7
2. Macroeconomic Background and Value Chain 8
3. Industrial Activity 11
4. Commercial Activity 11
5. Research and Development 12
6. Investments 14
7. Economic and Financial Situation 15
8. Quality, Environment and Safety 16
9. Human Resources 17
10. Main Risks and Uncertainties 18
11. Associated Companies 19
12. Prospects for the Future 20
13. Proposed Appropriation of Results 20
14. Acknowledgements 21
15. Declaration of Responsibility 21
NOTES TO THE MANAGEMENT REPORT 22
B - CORPORATE GOVERNANCE REPORT
0. Declaration of compliance 23
I. Shareholders’ General Meeting 25
II. Administration and Monitoring Boards 28
III. Information and Audit 43
IV. Conflicts of Interest 45
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ACCOUNTS FOR 2011
Consolidated accounts
Statements of financial position
Statements of profit and loss by nature
Statements of comprehensive income
Statements of changes in equity
Statements of cash flow
Notes to the financial statements
Report and opinion of the Audit Board (Consolidated and non-consolidated accounts)
Statutory Audit Report and Auditor’s Report (Consolidated and non-consolidated accounts)
Non-consolidated accounts
Statements of financial position
Statements of profit and loss by nature
Statements of comprehensive income
Statements of changes in equity
Statements of cash flow
Notes to the financial statements
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CHAIRMAN’S MESSAGE
It still was not this year that FISIPE achieved a comfortable result adjusted to the capital
invested and the high volume of sales.
A breakdown in a special sensitive area – Recovery of Solvent – seriously affected the quality of
fibre produced in April/May. In that period we were obliged to decrease production and
disqualify a large quantity of fibre.
In April 2011 acrylonitrile reached the highest price ever, around 3000 dollars per ton, thereafter
starting to fall significantly, ending the year at 1700 dollars per ton. Fortunately, the high price
reached by competitors of acrylic fibres (cotton and polyester) enabled the increases in the raw
material to be reflected on the sales prices of our fibre, up to May.
Entry into the market of precursors of oxidized carbon fibre was more difficult especially slower
than expected. It was not yet in 2011 that that the Company managed to obtain orders of the
precursors in other than experimental quantities.
The year 2012 will therefore be determinant in launching the precursor and the budget
establishes the sale of 1200 tons of the product. This is an ambitious target but the Company
must achieve it.
The problem of financing our business, namely our working capital, was and will continue to be
one of the main concerns. FISIPE being essentially an exporter (the Company exports 98% of
its production), with a very good net debt/EBITDA ratio, can only understand these difficulties as
being due to the difficult situation of the domestic Banking Sector. The Company has thus
gradually sought support from foreign banks that operate in Portugal or in countries to which the
Company exports.
The increases in the price of electric energy and gas, the latter due to the reflex it has on the
price of steam produced by FISIGEN and consumed by FISIPE, are also reasons for concern.
We are very pleased that in 2011 the Company had the highest number of days without
accidents resulting in absence – 313 days.
Finally, a word on the effort the Company continues to make, through specialized training, to
improve the professional performance of its employees at all levels. This effort will continue to
be made in 2012.
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CORPORATE BOARDS MANAGEMENT BOARDS - 2009/2011 PERIOD
GENERAL MEETING OF SHAREHOLDERS
Chairman José Ferreira de Almeida e Francisco Dias Antunes -
Sociedade de Advogados, represented by Francisco
Neves Dias Antunes Fernandes
Vice-Chairman José Alexandre Teixeira de Sousa Machado
Secretary Paulo Alexandre da Silva Pernes Mota
BOARD OF DIRECTORS
Chairman João Manuel Caminha Dotti
João Rodrigo Guedes de Castro Pereira
José Miguel Duarte Martins Contreiras
Celestino Vieira de Freitas
Takanori Mikuni
EXECUTIVE COMMITTEE
Chairman João Manuel Caminha Dotti
João Rodrigo Guedes de Castro Pereira
José Miguel Duarte Martins Contreiras
AUDIT BOARD
Members
Chairman José Jorge da Costa Martins Reimão
Pedro Manuel da Silva Leandro (ROC nº 392)
Luís Jacinto Pereira
Substitute Carlos Pedro Machado de Sousa Góis (ROC nº 597)
RELATIONS WITH THE MARKET
Representative João Rodrigo Guedes de Castro Pereira
REMUNERATION COMMITTEE
Chairman José Domingos Vístulo de Abreu
José Miguel Leal da Silva
Alberto António Justiniano
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THE COMPANY
The Company was founded in 1973 as a result of the merger of the knowledge and capital of
Companhia União Fabril (at the time the largest business group in Portugal) and the Japanese
group Mitsubishi.
The Company is currently essentially an exporter, listed on the Lisbon Stock Exchange,
operating on a global basis.
The Company’s great structural flexibility enables it to respond rapidly to the demands of its
Clients and make the necessary resources available to render an extensive range of Services.
Certification of the Company’s Quality Guarantee System, as well as voluntary adherence to the
“Responsible Operation” Program and the Environmental Panel of Barreiro reaffirm the
Company’s commitment to sustainable development and so respect the environment.
STRATEGIC VISION
A - Mission (FISIPE’s reason to be)
Create value through the development and improvement of innovative acrylic fibres that
effectively meet the technical and economic requirements of the target markets, Textiles and
Technical Products, on a worldwide scale, stimulating the Company’s competitiveness and that
of its Clients.
B - Values (Management guiding principles, decision criteria)
Ethics
Innovation as a factor for progress
Professional Competence and Human Development
Social and Environmental Responsibility C – Strategic Purpose (what the Company wants to be)
The Company wants to be financially balanced and innovative and an international reference as a manufacturer of special acrylic fibres – namely pre-dye and functional fibres, fibres for technical applications and carbon fibre precursor.
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THE FISIPE GROUP OF COMPANIES
FISIPE - FIBRAS SINTÉTICAS DE
PORTUGAL S.A.
MUNDITÊXTIL, LDA.
100%
FISIGEN, S.A.
49%
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A –CONSOLIDATED MANAGEMENT REPORT
1. Introduction
The global economy continued to recover in 2011, but at a much slower rate than initially
expected.
The European economy, one of the pillars of international commerce, ended up feeling the
sovereign debt crisis, given the negative impact resulting from the austerity programs and
financial adjustment implemented in several countries.
The Euro zone entered into recession in the last quarter of 2011. With the exception of some
countries in the north of Europe, the unemployment problem spread worryingly and the
disposable income of many families decreased considerably.
The Company’s geographic dispersion in terms of market enables it to compensate the
decrease in demand in Europe with greater exports to non European markets.
The year 2011 was marked by great volatility of the price of acrylonitrile, the price of which
increased continuously in the early months of the year, reaching a maximum in April/May, close
to 3000 USD/t. The price decreased significantly in the remaining months of the year, reaching
less than 1700 USD/t at the end of the year. This situation was caused essentially by
imbalances between supply and demand of this raw material in the international markets.
Despite the great fluctuation in the price of acrylonitrile throughout the year, the Company was
able to adjust the sales price of fibre and maintain its commercial margins. In the first half of the
year in which prices increased and acrylonitrile reached the highest price ever, it was possible
to reflect these increases in the sales price of acrylic fibre because all the competitive fibres also
reached historically high levels, especially cotton, the price of which tripled.
Consolidated net profit after tax amounted to 153 203 euros.
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2. Macroeconomic Background of the Sector and Value Chain
The external variables with the greatest impact on the Company were undoubtedly the price of
raw material and energy, the rates of exchange, rates of interest, the price of competitive
textiles and, less directly, the increase in GDP and the situation of the balance of current
transactions of the destination countries of the Company’s exports.
FIBRE SECTOR MARKET
Main factors that determine the price of Acrylic fibres
The following illustration summarizes schematically all the factors that contribute to the
formation of the price of acrylic fibres:
Source: FISIPE
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In 2011, evolution of the price of acrylonitrile resulted fundamentally from imbalances between
supply and demand and not so much from evolution of the price of the barrel of oil or the cost of
the raw materials used in the manufacturing process, namely propylene and ammonia. The next
graph shows the evolution of the price of acrylonitrile, as well as the spread in relation to the
cost of the raw materials used in production.
Graphic 1
In the following graph, it is possible to see the evolution of the acrylic fibre in the several
regions, since the outbreak of the 2008 international crisis. In mid-2011, acrylic fibre reached in
Europe, the highest price ever, slightly above 4 USD/Kg.
Same price level in all
regions
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In graph 3 it is possible to evaluate the behaviour of the principal fibre competitors of acrylic
fibre in the last 4 years. We should emphasize the evolution in cotton price, which reached a
value above 5 USD/Kg, remaining for a few months with a price higher than acrylic fibre. Such
situation was due to the sense of panic lived in the cotton markets, consequence of productions
below the expected generated by extreme weather phenomena such as floods in Pakistan and
the period of drought in China. Wool also followed an upward trend, reaching a maximum of 15
USD/Kg (prices in the right scale of the graph).
Graph 3
As mentioned before, the rise in the price of different textile, natural and synthetic fibres,
allowed for a sustained rise in the price of acrylic fibre, during the first semester of 2011.
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3. Industrial Activity
Industrial activity in 2011, in terms of the Manufacture of Fibre, reached 96% of budget.
Some delays in the supply of the main raw material, cuts in the supply of steam and electric
energy, and finally the losses due to the use of an intermediate product with quality problems,
were the main reasons for not achieving budgeted production.
Manufacturing performance was also affected negatively by the specific consumption steam and
losses of solvent – a sub-product used in the manufacturing process – which, although they
evolved favourably in relation to the preceding year, were below the budgeted amounts.
In terms of Quality, Grade A fibre evolved positively, increasing 1.5% in relation to 2010, but
below the desirable, the accumulated amount being 92.6% against 94% in the budget. The
measures taken in terms of recovery of regenerated fibre and greater strictness in the operating
procedures contributed significantly to this improvement, which is expected to evolve positively
in 2012.
It was a very good year in terms of Safety, which reached a record of 313 days without
accidents resulting in absence. Frequency indices and the seriousness of accidents consistently
improved, currently representing the best indices since the foundation of FISIPE.
In terms of the Environment, the monitoring indicators show that the majority are under control.
There have been significant investments in the effluent networks and, in the specific case of
industrial effluents, changes to decrease the cost of treating them.
The percentage of special and technical fibres increased to 50%, which represents a 1%
variation in relation to the budget. The percentage of special “non Gel Dyed” fibres increased
from 10 to 13% in all Specialities.
In terms of major productive equipment maintenance, in 2011 the Company carried out major
maintenance of the Spinning Machines and substituted lubricating oil with Synthetic oil, a
program started in 2009 and is expected to be completed in 2012.
In terms of personnel, absenteeism continued to be high, final overtime was around 40% below
Budget and Training was intense, continuous and of significant coverage.
The major challenges facing Operations Management for 2012 is to achieve global
improvement in manufacturing indices, focusing on improvement in Stability and Quality,
continuation of the good performance of Safety and improve Environmental Performance.
4. Commercial Activity
In the commercial area in 2011 there were 2 completely different half years in terms of the
demand for fibre. In the first half year there was strong demand, marked by constant increase in
the prices of acrylonitrile (ACN) and a generalized increase in the price of the various textile
fibres.
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In the second half year, mainly in the last quarter, demand fell significantly, due on the one hand
to decrease in consumption in Europe but also due to decreases in the price of raw materials.
Clients preferred to reduce inventories and buy only when prices reached their lowest point.
The Company sold in 43 countries, with a good gross margin in the USA, Spain and Italy.
Specialities were sold in 88% of the markets (38 countries).
In 2011 the Company extended its active client base (274), specialities being sold to 74% of the
clients.
In the specialities area the Company achieved the position of the second largest worldwide
producer of paint fibres (increasing sales to the USA).
It was also a year of significant increase in Flat fibre (fibre imitating animal hair). The Company
sold around 3 times the amount budgeted. China was the main market.
Expectations for 2012 are very optimistic, as in December the Company signed an agreement
with the main Chinese client to sell this type of fibre.
Another fibre that had much higher growth than expected was Pluma (for knitting fibre and
imitating hair). Prospects for 2012 are growth – consolidation of sales to Canada and increases
in China.
The sale of larger quantities of specialities enabled the Company to have very good commercial
margins.
In the technical fibre market sales were below expectations, it not being possible to reach the
sales budget for L60/L62 fibres used for construction.
In precursor carbon fibre in 2011 the Company continued to make tests with clients, and so it is
expected that only in 2012 it will be possible to start regular sales of the product.
Despite having increased sales to the main Sunlast (ultraviolet resistant) client by 9%, it was not
possible to reach the budget, as a second large client is needed for this fibre (already identified).
The Company had some small quantity sales to clients in Canada, Turkey and South Africa.
Sales of Specialties represented 53% of sales in quantities and 69% in margin. Sales of non
textile Specialties represented 8% of total Specialties.
5. Research and Development
The efforts of the Research and Development team in 2011 were focused on the development
and optimization of raw materials – precursors – for the composite materials sector.
Precursors of oxidized Fibre – this year FISIPE launched two new oxidized fibre
Precursors on an experimental basis: PREOX-OPF and ACTIVOX by FISIPE. They are
technical fibres for the manufacture of Flame Retardant textiles and friction materials (such
as clutch disks and brake pastilles).
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Precursors of carbon Fibre – The 24 and 48k new carbon fibre precursors are also
available for market test. The line of products in final optimization is called PREOX-CF. The
investment necessary to complete the prototype line that will enable production for larger
size tests is in progress.
At the end of March, during the JEC Show in Paris, FISIPE presented these new oxidized and
carbon fibre precursor products to the market. In addition, it disclosed an innovative R&D
service to support the utilization of these precursors that facilitates the development of new
carbon fibre business models, especially the entry of new players.
In the second half year important steps were taken to adjust the manufacturing process to the
production of this new range of products, directed to the composite materials sector, that require
totally different production, packaging and quality control conditions.
In the new production of the carbon fibre pilot installation the development work to define the
standard carbon fibre production conditions continued. With this work FISIPE aims at
dominating the transformation of its carbon fibre precursor technology and so provide products
that are adequate for this market.
This year FISIPE started its operations as the render of external Innovative and Development
services, profiting from its human resources and installations dedicated to this type of activity. In
this activity new acrylic polymers were produced and extrusion tests of non acrylic polymers
were carried out.
In 2011 FISIPE presented two applications for financing by QREN. They relate to the I&DT
STRATEGICARBON and MOBICOMPOSITE projects. The first aims at the development of
Intermediate and High Module Carbon Fibre production and was approved recently. The
second, in co-promotion with OPTIMAL, aims at the production of components for the motor
industry involving composite materials with Carbon Fibre produced by FISIPE. The second
project awaits final decision of AdI - Agência de Inovação.
In December 2011 the most important I&DT Project financed by the EU and included in the 7 th
PQ started up. It is a EUCARBON - European Space Qualified Carbon Fibres and Pre-
Impregnated Based Materials Project, which aims at attempting to decrease dependence of
Europe on Japan and the USA for obtaining these strategic materials. FISIPE was therefore
invited to participate in a consortium involving several renowned partners, such as EADS Casa
Espacio and INEGI to try in a three year project, to develop production technology for these
strategic materials.
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6. Investment Throughout 2011 consolidation of the recovery of the significant level of investment of the Company was achieved. This recovery of investment occurred after the period of significant restriction in the second half of 2010, resulting from a particularly negative economic environment that resulted from major restrictions on the access to bank credit. Despite the worsening of restrictions to bank credit, improvement in the Company’s results and the consequent improvement in cash flow generated enabled the rhythm of investment to be recovered. In 2011 investment was made in the production of dyed fibres by the gel-dying process, such as alteration to the two extrusion lines for the production of dyed fibres and the construction of a new retention basin in the preparation of dyes installation. The policy of substituting some poorly performing equipment at the end of its useful life was maintained, with the objective of reducing production costs and improving the Company’s performance in the environmental and safety areas. Work was completed in the interconnection of the domestic and industrial effluent networks to the Barreiro-Moita residual water treatment plant that recently started working. The reception of domestic and industrial effluents by the Barreiro-Moita residual water treatment plant will start in 2012 on a phased basis, to enable the adaptation of the biomass used in the biological treatment of the residual water treatment plant to the physical-chemical characteristics of FISIPE’s effluents. Investment was made in the Information Systems and Human Resources, which consisted of a new control of access and management of HR time. Investment was also made in expansion of the fibre optic network to increase performance of the computer systems placed in network and reliability of the network itself. In accordance with the Company’s strategic plan, strategic investment aimed at the production of greater value added fibres was continued, especially the CARBOGEN Project, that is expected to be completed in 2012 (Project supported by QREN – Quadro de Referência Estratégico Nacional). With implementation of this industrial project, the Company will be in a better position to produce and sell Oxidized Fibre Precursors and Carbon Fibre Precursors (PFO – Precursores de Fibras Oxidadas and PFC – Precursores de Fibras de Carbono).
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7. Economic and Financial Situation
Net consolidated profit after tax was 153 203 Euros.
It should be noted the recovery of consolidated operating results in relation to 2010.
The non-consolidated net result of FISIPE, excluding the effect of the associated companies’
results, amounts to 507,770 euros.
In 2011 the Company invested 4 million euros in shareholders’ loans to FISIGEN. Cash flow
generated also enabled current investment to be made without increasing financial liabilities in
relation to the preceding year
EBITDA evolved as follows:
M€ 2006 2007 2008 2009 2010 2011
EBITDA 5,530 2,985 4,258 7,374 4,520 7,331
Financial Liability:
Shareholders’ loans 5,000 500 Medium and long term loans 2,123 1,737 4,482 3,063 2,060
Leasing 2,689 3,633 3,174 2,226
Short term loans 5,987 5,997 6,374 3,178 4,407 4,497
Other loans 380 525 543 487 Factoring with recourse 7,819 7,231 7,520 1,574 9,607 10,219
(Cash) -2,836 -750 -534 -2,825 -1,845 -1,381
Total 15,970 15,101 18,166 10,567 18,949 18,107
Net debt/EBITDA 2.89 5.06 4.27 1.43 4.19 2.47
Despite having a good Debt/EBITDA ratio, the Company has a slightly unbalanced financial
structure and so it must restructure part of its financial liability through contracting a medium and
long term loan, which is already being negotiated with banks.
Non-current provisions were recorded for defined benefit pension fund liabilities in the amount of
129 thousand euros and for potential indemnity problems in the amount of 89 thousand euros.
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8. Quality, Environment and Safety
The Quality Management System, certified under the ISO 9001 standard is currently fully
integrated into the operations of the Company. The system is subject to internal audits, in
accordance with the requirements of the standard, and to annual external audits carried out by
APCER.
The Company participated in the activities of APEQ - Associação Portuguesa das Empresas
Químicas, acting on the principles of Responsible Action for a more effective preservation of the
environment, safety and health of the employees.
It was under the Responsible Action program, to which the Company adhered in 1994, that it
assumed some guiding principles that it has developed and implemented:
- Decrease in the environmental impact of its operations
- Prevention and reduction of industrial risks
- Efficient utilization of natural resources
- Training and raising the sensitivity of employees to Environmental, Safety and
Occupational Health
- Climate of dialogue with the surrounding community and cooperation with the official
entities.
The Safety Management System is subject to annual audit in the area of the prevention of
serious accidents, conducted by external auditors accredited by the Portuguese Agency for the
Environment.
In the Safety Management System Requirements, simulations of the Company’s Internal
Emergency Plan are carried out. These exercises have involved the participation of FISIPE’s
Emergency Brigade and the Volunteer Firefighters of the South and Southwest, in accordance
with the requirements of the cooperation protocol signed with that Corporation.
The Environmental Management System was adjusted to the requirements of the
Environmental Licence issued under the Integrated Pollution Prevention and Control regime
(Prevenção e Controlo Integrados da Poluição - PCIP) under Decree-Law 194/2000 of 21
August. The Company has prepared Annual Environmental Reports, so as to keep the
authorities informed of its environmental performance.
FISIPE has endeavoured to strengthen its relationship with the surrounding community and
local and national authorities, as well as give visibility to the good practices it has carried out in
the various areas, namely the environment, safety and health, developing new products, new
processes and the consequences for the social and economic developments of the region. In
this respect it has made its installations available for visits by high school and college students.
In 2011 it had several visits.
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9. Human Resources
In 2011 there was a decrease in the number of employees due to rationalization and
organization of the work and exclusion through retirement in the last quarter of the year.
Therefore, 2011 ended with 321 employees and an average of 334.8 employees compared to
334 and 328.5 employees in 2010.
The average years of schooling continues to increase. At the end of 2010 the Company had
11.18 average years of schooling and 2011 ended with 11.89. Around 60% of the employees
are Chemical Operators that are currently hired with the 12th year or obligatory schooling (9th
year) plus relevant professional job training. Therefore evolution of average schooling is slow,
as it occurs through rejuvenation of the group.
The average age at the end of 2011 was 38.52. This figure was 38.94 in 2010 and 41.58 in
2005.
The average years of service that in 2005 was 16.75 decreased to 12.78 in 2010 and 12.18 in
2011. In 6 years, the years of service fell therefore by more than 4.
The Company continues make an effort to continuously qualify its employees through
professional training. In 2011 there were 260 training sessions, corresponding to 11 774 hours
which amount to a cost of 223.5 thousand euros. Each employee received an average of 35.16
hours of training.
The main reason for absenteeism continues to be sickness, which represents 61.4% of total
absenteeism. Maternity/paternity, which represents 13% of total absenteeism, is the second
greatest cause, which, as can be seen, is a long way behind sickness. The third greatest cause
is work accidents, which represent 6.3% of total absenteeism.
Despite the progress made in the fight against labour accidents, the very much pursued
objective of ZERO ACCIDENTS was not achieved this year. However, the Company managed
to have 313 consecutive days without an accident resulting in absenteeism. This is the longest
period without accidents ever for the Company. There were 4 accidents that caused 317 lost
days of work. The Company continues to try to achieve the objective of zero labour accidents.
This is a very ambitious objective but which must continue to be maintained as achievable, and
which depends on the labour conditions and mainly the adequate action of each employee.
The Company continues to apply the Performance Evaluation system for the 11th consecutive
year. The evaluations of each employee, and the number of years it covers, gives a very
consistent indication of the performance and evolution of each employee. In 2012 the Company
is going to review the system and introduce the necessary changes so as to have a useful and
current management tool.
Despite the cost cutting, which remains as a general guide, the policy of salary and professional
progression has continued with 71 promotions, in recognition of the merit of those that take their
effort, dedication, interest and diligence always a bit further.
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Implementation continues to be made of continuous professional training programs. The
objective continues to be the promotion of individual development, providing the majority of
employees with greater knowledge of the process, the business and the company, at the same
time as contributing to standardize more correct, strict and safe procedures through training and
recycling of the actions. In 2011 260 training sessions were ministered, which correspond to 11
800 hours of training.
10. Main Risks and Uncertainties
FISIPE’s main risks are either operating, market or financial.
a) Operating risks
These are risks relating to the operation itself. FISIPE is a company covered by the SEVESO
standard, as regards serious industrial accidents, therefore being covered by very strict
safety and audit standards. The fact of it being a certified ensures the audits necessary of all
the mandatory implementation standards. In this respect and as a measure to minimize risks,
FISIPE has its own intervention brigade.
b) Exchange risk
FISIPE is subject to exchange risk relating to the US dollar. The Company seeks to minimize
this risk by hedging between its purchases and sales. Its main raw material is purchased in
dollars and the majority of its sales are also in dollars.
c) Interest rate risk
This is also a risk that the Company must consider, hedging its exposure through adequate
instruments in the market, namely options over interest rates.
d) Credit risk
FISIPE seeks to minimize this risk demanding credit export letters or through credit
insurance, where these exists.
e) Another risk that FISIPE faces relates to variations in the price of acrylonitrile. As there is no
financial market in which this product can be traded, the Company seeks to minimize this risk
by purchasing part of its supply through the use of a formula that takes into consideration the
average evolution of the price of this raw material in the European market.
f) The price of natural gas is also a risk and an uncertainty. The price of steam produced by
FISIGEN and supplied to FISIPE is calculated by a formula in which the price of gas is
determinant. The gas supply contract and related formula are defined annually by
competitive bid between the suppliers of gas in the domestic market.
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11. Associated companies
11.1 Munditêxtil
The company had a profit of 230 488 euros determined in accordance with international
accounting standards.
Despite a decrease in quantities sold in relation to 2010 and an increase in the price of acrylic
fibre, demand for the thread remained strong throughout 2011.
Unit margins increased significantly in relation to the preceding year, especially in the Italian
market, which continues to be the principal destination of the company’s exports.
Production of the Open-End thread mill was very satisfactory, having operated on a three shift
basis with a fixed rest period.
The strong demand of the acrylic thread market caused a return to work on Saturdays, resulting
in an increase in manufacturing costs, fully justified in financial terms by the increase in
commercial margins.
The financial position of Munditêxtil improved slightly in relation to the preceding year. The
amount invested in inventories increased slightly but there was a significant improvement in
collections, which enabled the liability to suppliers, namely FISIPE, to decrease. The average
term of payments to FISIPE decreased from 121 days in 2010 to around 108 days in 2011.
There was no need to make a provision for uncollectible receivables.
A negative fact that affected the company’s results was the recognition throughout the year of
quality problems in the amount of 56 thousand euros.
In terms of prospects, the company will continue to consolidate its presence in the Italian
market, producing special threads in mixtures with cotton and wool, for greater value added
applications.
However, the open-end thread market is extremely competitive, with very small margins. The
company is aware that its future in this area depends on having a competitive productive mix in
which the special products have increasingly greater weight.
The company will continue its efforts to start the production of technical and special threads to
the detriment of the production of commodities.
The concern to decrease the payment terms to the main supplier – FISIPE – will continue to be
one of the main objectives for 2012.
The company will exert strict control over the level of inventories of finished goods, avoiding
excessive increases in them.
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11.2 FISIGEN
FISIGEN – Empresa de Cogeração, S.A., a company which was formally founded in January
2009 to build and operate a Cogeneration plant for the supply of thermal energy to the industrial
installations of FISIPE and electric energy to Rede Eléctrica de Serviço Público (RESP), started
production on 1 April 2010, providing, since 1 January 2010, for the steam consumption needs
of FISIPE.
FISIGEN had a good operating performance in 2011.
Despite some drawbacks caused by breakdowns, maintenance and decrease in the level of
consumption of steam by FISIPE, it had an operating profit of 780 129 euros, which exceeded
that of 2010.
The current financial structure of FISIGEN, marked by insufficient equity, resulted in very high
financial costs, which exceeded operating profit.
The company had a net loss of 1 541 537 euros and negative equity of 1 205 630 euros.
In 2012 the company’s Management will propose measures to restructure its equity.
12. Future Prospects
The year 2011 was marked in the first months by a significant increase in price of acrylonitrile,
which reached historically high levels, and as from May by a decrease in prices to amounts well
below the normal. This instability in the price of the Company’s main raw material will tend to
continue and is a negative factor in its business.
The Company continues to be convinced that only a consistent entry into the technical fibre
market, namely in the oxidized and carbon fibre precursor market, can FISIPE ensure a problem
free future.
The Company has made numerous tests with its precursor and continues to actively search for
a technological and financial partner that can facilitate entry into this promising but difficult
carbon fibre market.
13. Proposed appropriation of results
The Board of Directors proposes that the net profit of 153 203 euros determined in accordance
with the separate financial statements be appropriated to retained earnings.
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14. Acknowledgements
The Company thanks its agents, suppliers and financial institutions, namely Banco Comercial
Português, Caixa Geral de Depósitos, Banco Espírito Santo, BANIF, Deutsche Bank, Barclays
Bank, BBVA and Banco Comercial de Marrocos for the important cooperation they have always
given.
Finally the Company acknowledges with gratitude and enthusiasm, the effort and dedication of
its employees.
15. Declaration of Responsibility
In compliance with the requirements of the law and articles of association, the Board of
Directors submits to the Shareholders the Director’s Report, Statement of Financial Position and
Accounts for the year 2011, with the firm conviction that, to the best of its knowledge, the
information contained therein was prepared in accordance with the applicable accounting
standards, giving a true and fair view of the Company’s assets and liabilities, its financial
situation and its results and those of the companies included in the consolidation, they show
faithfully the evolution of the business, the performance and position of the Company and the
companies included in the consolidation and contain a description of the main risks and
uncertainties which it faces.
Lavradio, 8 March 2012
The Board of Directors
22
APPENDIX TO THE MANAGEMENT REPORT OF 2011
Shareholder composition of FISIPE, S.A. as of 31 December 2011 (Art. 448 item 4 of the
Commercial Company Code):
NEGOFOR, SGPS, S.A. 86.19%
QUIMIFÉRTIL, SGPS, S.A. 10.05%
Participations of the members of the Board of Directors and Audit Board in the Company’s
capital as of 31 December 2011 (Art. 447 item 5 of the Commercial Company Code):
Balance at 31-12-2011
Board of Directors
João Manuel Caminha Dotti 50 782
João Rodrigo Guedes de Castro Pereira -
José Miguel Martins Contreiras 160
Celestino Vieira de Freitas 792 586
Takanori Mikuni -
Audit Board
José Jorge da Costa Martins Reimão 30 000
Pedro Manuel da Silva Leandro -
Luís Jacinto Pereira -
Carlos Pedro Machado de Sousa Góis -
The Board of Directors
23
B – REPORT ON CORPORATE GOVERNANCE Chapter 0. Declaration of compliance
FISIPE declares, in accordance with Regulation CMVM (Stock Exchange Code) 1/2007, that the
degree of compliance with the recommendations contained in the Corporate Governance Code
of the Stock Exchange Code (CMVM) is as follows:
Recommendation Compliance Justification (Page)
I.1.1 Yes 25
I.1.2 Yes 25
I.2.1 Yes 25
I.2.2 Yes 26
I.3.1 Yes, partially 26
I.3.2 Yes 26
I.3.3 Yes 26
I.4.1 Yes 26
I.5.1 No 27
I.6.1 Yes 27
I.6.2 Yes 27
II.1.1.1 Yes 28
II.1.1.2 Yes 28
II.1.1.3 Yes 29
II.1.1.4. Yes 29
II.1.1.5 Yes 30
II.1.2.1 Yes 31
II.1.2.2 No 31
II.1.2.3. Not applicable 31
II.1.3.1 Yes 32
II.1.3.2 Yes 32
II.1.4.1 Yes 32
II.1.4.2 Yes 32
II.1.5.1 No 33
II.1.5.2 No 34
II.1.5.3 Not applicable 35
II.1.5.4 Yes 35
II.1.5.5 No 35
II.1.5.6 Yes 36
II.2.1 Yes 36
24
II.2.2 Yes 38
II.2.3 Yes 38
II.2.4 Yes 38
II.2.5 No 38
II.3.1 Yes 39
II.3.2 Yes 39
II.3.3 Not applicable 39
II.4.1 Not applicable 40
II.4.2 Yes 40
II.4.3 Yes 40
II.4.4 Yes 40
II.4.5 Yes 41
II.4.6 Yes 41
II.5.1 Not applicable 41
II.5.2 Yes 41
II.5.3 Yes 42
II.5.4. Yes 42
III.1.1 Yes 42
III.1.2 No 43
III.1.3 Yes 44
III.1.4 Yes 44
III.1.5 No 44
IV.1 Yes 45
IV.1.2 Yes 45
25
I. SHAREHOLDERS’ GENERAL MEETING
I.1. BOARD OF THE SHAREHOLDERS’ GENERAL MEETING
Recommendation I.1.1. The Chairman of the Board of the Shareholders’ General Meeting must
have the human and logistics support necessary for his/her needs, considering the financial
situation of the Company.
The Company complies with this: The Company provides the Chairman of the Board of the
Shareholders’ General Meeting with all the means necessary for him/her to prepare and carry
out the Shareholders’ General Meeting in an independent, efficient and competent way.
The Chairman of the Board of the Shareholders’ General Meeting has the support of the
administrative services of FISIPE, of the Secretariat of the Executive Committee and of the
members of the Executive Committee in preparing and obtaining all the documentation
necessary for the Shareholders’ General Meeting and preparation of the inherent formalities.
Recommendation I.1.2. Remuneration of the chairman of the Shareholders’ General Meeting
must be disclosed in the annual report on Corporate Governance.
The Company complies with this: Remuneration of the Chairman of the Shareholders’ General
Meeting is 350 euros per meeting and is disclosed in this report.
I.2. PARTICIPATION IN THE SHAREHOLDERS’ GENERAL MEETING
Recommendation 1.2.1. The minimum prior period imposed by the articles of association for the
reception by the Board of the declarations of deposit or blocking of the shares to participate in
the Shareholders’ General Meeting, should not exceed 5 working days.
The Company complies with this: Article 26 item 1 of the articles of association establishes, as a
requirement for admission to the Shareholders’ General Meeting, the registration or deposit of
the shares in the 5 (five) days prior to the date of the Shareholders’ General Meeting. The
articles of association do not establish any prior period for reception by the Board of the
declarations. The Chairman of the Board of the Shareholders’ General Meeting does not have
the practice or understanding of requiring any prior period for the reception of the proof of such
deposit or registration, so long as the proof is present on the day of the Shareholders’ General
Meeting.
26
Recommendation I.2.2. In the case of suspension of the Shareholders’ General Meeting the
Company must not require the blocking during the whole period up to the time of resumption of
the session, the ordinary prior period required for the first session being sufficient.
The Company complies with this: Not only do the articles of association omit this, but it is not
the practice of the Chairman of the Board of the Shareholders’ General Meeting to require
blocking of the shares during the whole period up to the time of resumption of the session.
I.3. VOTE AND EXERCIZE OF THE RIGHT TO VOTE
Recommendation I.3.1. Companies must not establish any articles of association restriction on
voting by correspondence and, when adopted and admissible, vote by electronic
correspondence.
The Company complies with this partially: Article 30 of the articles of association establishes
voting by correspondence without restrictions.
The articles of association do not consider the possibility of voting by electronic mail.
Recommendation I.3.2. The advance period of the articles of association for the reception of the
declaration of vote issued by correspondence must not exceed three working days.
The Company complies with this: Item 3, article 30 of the articles of association.
Recommendation I.3.3.Companies must ensure proportionality between the rights to vote and
shareholder participation, preferentially through providing for this in the articles of association
that makes one share correspond to one vote. Companies that provide for the following do not
comply with proportionality: i) have shares that do not give the right to vote; ii) establish that
rights of vote are not counted for shares above a certain number, when issued by a single
shareholder or shareholders related to him/her.
The Company complies with this: Item 3, article 30 of the articles of association.
I.4. QUORUM IN DECISIONS
Recommendation I.4.1. Companies must not establish decision quorums in excess of that
provided for by law.
The Company complies with this: The articles of association remit this to the legal regime of Art.
30, Item 3.
27
I.5. MINUTES AND INFORMATION ON DECISIONS TAKEN
Recommendation I.5.1. Extracts of minutes of Shareholders’ General Meetings, or documents
of equivalent content, must be provided to the shareholders on the Company’s internet site
within 5 days of the realization of the Shareholders’ General Meeting even if they do not contain
privileged information. The information disclosed must cover the decisions made, the capital
represented and the results of the voting. This information must be retained in the company’s
internet site during at least three years.
The Company does not comply with this: Although the Company provides extracts of the
minutes of Shareholders’ General Meetings and documents of account, as well as orders of
work of meetings of Shareholders’ General Meetings realized in the three preceding years, it
has not been possible to do this within the period of 5 days from realization of the Shareholders’
General Meetings
I.6. MEASURES RELATING TO THE CONTROL OF COMPANIES
Recommendation I.6.1. The measures that are adopted to prevent the success of public share
acquisition offers must respect the interests of the Company and its shareholders. The articles
of association of the companies that, respecting this principle, establish a limitation on the
number of votes that can be held or exercised by a single shareholder, individually or together
with other shareholders, must also establish that at least every five years, the change or
maintenance of that articles of association item is subject to a decision of the Shareholders’
General Meeting – without requirements of a greater quorum than that established by law – and
that in that decision all the votes issued without that limitation are counted.
The Company complies with this: There are no measures that aim to prevent the success of
public share acquisition offers.
Recommendation I.6.2. Defensive measures must not be taken that have the effect of
automatically cause serious erosion of the Company’s assets in the case of the transfer of
control or change in the composition of of the administration board, therefore prejudicing the
free transmissibility of the shares and free appreciation by the shareholders of the performance
of the members of the Management Board.
The Company complies with this: There are no defensive measures that have the effect of
automatically causing serious erosion of the Company’s assets in the event of transition of
control or change in the composition of the Management Board. There are also no agreements
or understandings that prevent the free transmissibility of shares and free appreciation by the
shareholders of the performance of the members of the Management Board.
28
II – ADMINISTRATION AND MONITORING BOARDS
II.1. GENERAL MATTERS
II.1.1. STRUCTURE AND COMPETENCE
Recommendation II.1.1.1. The Management Board must assess in its report on governance the
model adopted, identifying possible constraints in its operation and propose measures that in its
opinion are capable of overcoming them.
The Company complies with this: FISIPE, by decision of its shareholders adopted as its
governance model the Board of Directors, the Audit Board and the Monitoring Entity and so the
monitoring function is clearly independent of the executive function. No constraints were
detected in the model adopted and so no measures were proposed.
Recommendation II.1.1.2. Companies must create systems of control and management of risks
to safeguard its value and in benefit of the transparency of its corporate governance that enable
it to identify and manage the risk. The systems must include at least the following components:
i) establishment of the company’s strategic objectives in terms of the assumption of risks; ii)
identify the main risks relating to the activity carried out and the events susceptible of giving rise
to risk; iii) analysis and measurement of the impact and of the probability of the occurrence of
each of the potential risks; iv) management of the risk with a view to aligning the risks effectively
incurred with the company’s strategic options as regards the assumption of risks; v) control
mechanisms for carrying out risk management measures adopted and their effectiveness; vi)
adoption of internal information and communication mechanisms of the various components of
the system of alert to risks; vii) periodic assessment of the system implemented and adoption of
the modifications that are shown to be necessary.
The Company complies with this: FISIPE has a set of risks and uncertainties relating to its
operations. The main risks identified are operating, environmental, and financial risk (interest
rate risk, exchange rate risk, credit risk and liquidity risk).
FISIPE has implemented several internal and external control systems to effectively detect
these risks.
As a certified company, FISIPE has developed, implemented and made public operational and
environmental safety manuals, of mandatory application by all the employees and collaborators.
In addition, it promotes the systematic organization of audits to control and assess the
standards implemented, this assessment being made at least once a year by an external
independent company.
29
FISIPE has multi-risk insurance that covers the risks of its operations.
Assessment and control of credit risk is entrusted to COSEC that also insures it against credit
risk.
Exchange and interest rate risk are covered by resorting periodically to derivative instruments to
hedge such risks.
Recommendation II.1.1.3. The Board of Directors must ensure the creation and functioning of
systems of internal control and management of risks, the monitoring entity being responsible for
assessing the functioning of these systems and propose adjustments to the needs of the
company.
The Company complies with this: The internal risk management control is managed by the
following entities:
Operating risk – Is managed by the Operations Department
Environmental risk – Is managed by the Operations Department
Financial risk – Is managed by the Financial Department
Internal control is also monitored by various meetings carried out, in which the various persons
responsible for direct management of the activity risks are present:
Operational meeting – Every Monday
Management meeting – Fortnightly on Wednesdays
Executive Committee meeting – Monthly
These meetings are complemented by annual audits and analysis of the environmental and
operating risks for multi risk insurance purposes.
Recommendation II.1.1.4. Companies must in the annual report on Corporate Governance: i)
identify the main financial, economic and legal risks of its operations; ii) describe the functioning
and effectiveness of the risk management system.
The Company complies with this: FISIPE’s main risks are operational, market and financial.
a) Operational risks
These are risks relating to its activity. FISIPE is covered by the SEVESO standard on serious
industrial accidents, therefore being covered by very strict safety and audit standards. The
fact of the company being certified ensures that the audits necessary of all the mandatorily
implemented standards are carried out. In this respect and as a measure to minimize risks,
FISIPE has its own intervention brigade.
30
b) Exchange risks
FISIPE is subject to exchange risks, namely risks relating to the US dollar. The company
seeks to minimize these risks by trying to make a hedge between its purchases and sales.
The main raw material is purchased in US dollars and the majority of sales are also made in
US dollars.
c) Interest rate risk
This is also one of the risks the company must consider, covering exposure by appropriate
instruments available in the market, namely options over interest rates.
d) Credit risk
FISIPE seeks to minimize these risks by requiring the opening of credit export letters or
through credit insurance when this exists.
e) Another of FISIPE’s risks and uncertainties is fluctuation of the price of acrylonitrile. As there
is no financial market in which this product can be traded the company seeks to minimize the
risks of variation by guaranteeing part of its supply through the use of a formula that takes
into consideration the average evolution of the price of this raw material.
f) The price of natural gas is also an uncertainty. The price of steam produced by FISIGEN and
supplied to FISIPE is calculated using a formula in which the price of gas is determinant. The
gas supply contract and respective formula are defined annually by competitive bid between
the gas suppliers in the domestic market.
Recommendation II.1.1.5. The administrative and monitoring entities must have operating
regulations that must be disclosed in the company’s internet site.
The Company complies with this: The administrative and monitoring entities regulate their way
of functioning in accordance with articles 17, 18 and 23 of the articles of association as
disclosed in the company’s site.
The Board of Directors is exclusively responsible for the approval of budgets, annual operating
plans and long term plans, as well as the establishment transfer and closing of branches,
agencies and any other form of corporate representation. The Board of Directors is also
exclusively responsible for the acquisition of shares, quotas, bonds or participations in other
companies already founded or to be founded. Therefore, these matters are forbidden to the
Executive Committee that can only propose them to the Board of Directors. The Executive
Committee is also forbidden from the possibility of giving guarantees including personal
guarantees and real guarantees of the company.
In 2011 the Board of Directors met 4 times.
31
In 2011 the Company’s Executive Committee met 11 times. The Executive Committee is
permanently in the company, being responsible for its current management.
II.1.2. INCOMPATIBILITY AND INDEPENDENCE
Recommendation II.1.2.1. The Board of Directors must include a number of non executive
members that ensure their effective capacity to supervise, monitor and assess the executive
members.
The Company complies with this: Given the small size of the company the Board of Directors is
made up of 5 members, of which 2 are non executive, thus ensuring the intended supervision.
The non executive director Celestino Vieira de Freitas believes that he does not have the
effective ability to supervise, monitor or assess the activities of the executive members.
Recommendation II.1.2.2. The non executive directors must include an adequate number of
independent directors considering the size of the Company and its shareholder structure, which
under no circumstances can be less than one fourth of the total number of directors.
The Company does not comply with this.
Justification: The Company believes that this recommendation is not adequate to its specific
characteristics, namely its shareholder structure, the requirements of its articles of association
(obligatory) relating to the directors and its financial situation.
The Company ensures representation on the Board of Directors of representatives of all the
groups of known non-controlling shareholders. FISIPE adopted in its articles of association the
right of a minority of shareholders that represents at least 10% of the capital to appoint at least
one director.
As the Company’s financial situation does not allow for the contracting of more paid directors,
the substitution of the directors Vieira de Freitas and Takanori Mikuni by others that comply with
the requirements of independence would remove from the Board the representatives of the non-
controlling interests and would make them able to bring legal action regarding their right to
appoint a director.
Recommendation II.1.2.3. Assessment of the independence of its non executive members
made by the administrative entity must take into consideration the legal and regulation rules in
force on the independence requirements and regime of incompatibilities applicable to the
members of the other corporate entities, ensuring systematic and temporal coherence in the
application of criteria of independence to the whole company. A director that in another
32
corporate entity cannot assume that quality due to the applicable standards should not be
considered as independent.
Not applicable, as the Company does not have non executive directors that are not
shareholders or representatives of shareholders.
II.1.3. ELIGIBILITY AND APPOINTMENT
Recommendation II.1.3.1. Depending on the model applicable, the Chairman of the Monitoring
Entity, the audit committee or the commission for financial matters must be independent and
have the necessary competencies to carry out his/her functions.
The Company complies with this: The Chairman of the Monitoring Entity is independent and has
the competencies necessary to exercise his/her functions: is Statutory Auditor.
Recommendation II.1.3.2. The process of selection of candidates for the post of non-executive
directors must be conceived so as to impede interference of the executive directors.
The Company complies with this: The present non-executive directors were chosen by the
Shareholders’ General Meeting. The proposal was presented by the shareholder NEGOFOR
SGPS, SA, no alternative proposal appearing.
II.1.4. POLICY OF COMMUNICATING IRREGULARITIES
Recommendation II.1.4.1. The Company must adopt a policy of communicating irregularities
that allegedly occur within it, with the following information: i) indication of the means through
which the communication of irregular practices can be carried out internally, including the
people that can legitimately receive such communications; ii) indication of the treatment to be
given to such communications, including confidentiality, if this is the intention of the declarer.
The Company complies with this: The policy of communicating the Company’s irregularities
requires the communication of any lack of conformity with the law, regulations or applicable
standards, independently of the source, including rules and operating and environmental safety
manuals.
Recommendation II.1.4.2. The general lines of this policy must be disclosed in the report on
Corporate Governance.
The Company complies with this.
33
The Company has a policy of communicating irregularities. Irregularities can be classified as
operating, disciplinary, environmental, financial or commercial irregularities.
Communication is made at the level of each Department (as above II.1.1.3.) and subsequently
communicated to the Executive Committee.
II.1.5. REMUNERATION
Recommendation II.1.5.1. Remuneration of the administrative entity must be structured so as to
permit alignment of its interests with the long term interests of the Company, based on
evaluation of performance and discourages the excessive assumption of these risks. For this,
remuneration must be structured as follows: i) remuneration of directors that exercise executive
functions must be part of a variable component the determination of which depends on an
evaluation of performance, carried out by the competent entities of the company in accordance
with predetermined measurable criteria that takes into consideration the real growth of the
company, its long term sustainability and the risks assumed, as well as compliance with the
rules applicable to the company’s operations; ii) the variable component of the remuneration
must be globally reasonable in relation to the fixed remuneration, and maximum limits must be
fixed for all the components; iii) a significant part of the variable remuneration must be deferred
for a period not less than three years, and its payment must depend on continuation of the
positive performance throughout that period;(iv) the members of the administrative entity must
not enter into contracts with the company or third parties that have the effect of mitigating the
risk inherent in the variability of the remuneration attributed to them by the company; (v)until the
end of their mandate the executive directors must retain the shares in the company to which
they have become entitled due to the variable remuneration schemes, up to the limit of two
times their total annual remuneration, except those that need to be sold to pay the taxes
resulting from the same shares; (vi)when the variable remuneration includes the granting of
shares, the beginning of the exercise period must be deferred for a period of not less than three
years; (vii) adequate legal instruments must be established so that the compensation
established for any form of destitution without just cause of the director is not paid if the
destitution or cessation by agreement is due to inadequate performance of the director; (viii)
remuneration of the non executive members of the administrative entity must not include any
component which depends on the performance or value of the company.
The Company does not comply with this.
Justification:
34
i) and ii) The remuneration of directors that exercise executive functions includes a variable
component the determination of which is established in accordance with a decision of the
Remuneration Committee that issued a “Declaration on the remuneration policy of the
members of the corporate boards of FISIPE” that is included in Minute nº 45. This
declaration assumes equal performance of all the executive directors in obtaining the
Company’s results and its respective valuation, considering the complementariness of the
respective functions to obtain the results and valuation of the Company.
iii) A significant part of the variable remuneration is paid after the end of the mandate.
iv) The members of the administrative entity have not entered into any contracts with the
company or third parties that have the effect of mitigating the risk inherent to the variability
of the remuneration established for them by the company.
v) Not applicable.
vi) Not applicable.
vii) Not applicable.
viii) Remuneration of the non executive members of the Management Board does not include
any component the value of which depends on the company’s performance: of the non
executive members of the Board of Directors only Celestino Vieira de Freitas receives
remuneration, which is fixed and does not depend on the performance or value of the
company.
Recommendation II.1.5.2. The declaration on the remuneration policy of the administrative and
monitoring entities to which article 2 of Law 28/2009 of 19 June refers must, in addition to the
content referred to therein, include information: i) on which of the groups of companies from
which the remuneration policies and practices were taken as a comparative item for the
establishment of the remuneration; ii) on payments relating to the destitution or cessation by
agreement of administrative functions.
The declaration does not comply with these requirements.
Justification: Considering the specific nature and financial situation of the company,
remuneration was not established based on comparison with any other group of companies.
No payments are established relating to destitution and/or cessation by agreement of the
function of administrator, as the majority of executive directors are employees of the company,
with their respective labour contracts suspended while they carry out functions as members of
35
the corporate boards. Consequently, their destitution or cessation of functions will determine,
ipso facto, cessation or suspension of the respective labour contracts.
Recommendation II.1.5.3. The declaration on remuneration policy to which art. 2 of Law
28/2009 refers must also cover remuneration of directors in the sense of item 3, article 248 B of
the Stock Exchange Code the remuneration of which contains a significant variable component.
The declaration must be detailed and the policy presented must consider the long term
performance of the company, compliance with the standards applicable to it and restraint on the
taking of risks.
Not applicable: Apart from the executive directors there are no directors in the company that
receive variable remuneration.
Recommendation II.1.5.4. A proposal must be presented to the Shareholders’ General Meeting
for approval of the plan to grant shares and/or options to acquire shares or based on the
variation of the price of shares, to members of the administrative and monitoring entities and
other administrators in the sense of item 3, article 248 of the Stock Exchange Code. The
proposal must contain all the elements necessary for a correct evaluation of the plan. The
proposal must be accompanied by the regulations of the plan or, if this has not yet been
prepared, the general conditions which it must obey. In the same way the Shareholders’
General Meeting must approve the main characteristics of the retirement benefits system that
benefits the members of the of the administrative and monitoring entities and other
administrators, in the sense of item 3, article 248 B of the Stock Exchange Code.
The company complies with this.
The proposal of a part of the variable remuneration being related to evolution of the price of
shares was approved by the Shareholders’ General Meeting.
There are no specific retirement benefits systems that the members of the administrative
entities benefit from.
Recommendation II.1.5.5. At least one representative of the remuneration committee must be
present at the Shareholders’ General Meeting.
The company does not comply with this.
Justification: The members of the remuneration committee have not been present at the
Shareholders’ General Meeting.
36
The Company will make the members of the Remuneration Committee aware of the need to be
present at the annual Shareholders’ General Meeting.
Recommendation II.1.5.6. The total and individual amount of remuneration received in other
group companies and the pension rights acquired in the functions in question must be disclosed
in the annual Corporate Governance Report.
The Company complies with this: The members of the corporate boards do not receive any
remuneration from other group companies.
The pension rights acquired by the executive directors result from the defined contribution plan
and defined benefit plan existing in the company and managed by PensõesGere.
II.2. BOARD OF DIRECTORS
Recommendation II.2.1. Within the limits established by law for each administrative and
monitoring structure, and except for the small size of the company, the Board of Directors must
delegate the routine administration of the Company, the delegated powers being identified in the
annual Governance Report.
The Company complies with this: In compliance with Article 15 of its articles of association,
FISIPE’s Board of Directors delegate the current management of the Company to the Executive
Committee, composed of three members, having established by decision the limits of such
delegation and the way the Executive Committee works.
Following are the powers delegated to the Executive Committee:
One – Practice all current management acts of the Company and supervise and direct all the
corporate business included in that management.
Two – Supervise and direct all the Company’s services in accordance with the law, the articles
of association and the decisions of the Shareholders’ General Meeting and of the Board of
Directors.
Three – Direct, coordinate, execute and guide the corporate business within budgets, policies
and limits approved by the Board of Directors, in accordance with the objectives and policies
approved by the Shareholders’ General Meeting and by the Board of Directors.
Four – Ensure and promote the execution of decisions of the Board of Directors, permanently
supervising and guiding the operations relating to the corporate objectives.
Five – Prepare internal regulations and issue the instructions it considers appropriate.
37
Six – Prepare annual operating plans, annual budgets and long term plans for submission to the
Board of Directors.
Seven – Make investments and other acquisitions such as the purchase, rent and lease of
assets and equipment established in the annual budgets for amounts of up to 1 million euros.
Eight – Authorize the sale pledging and exchange of machinery, moveable equipment and any
other capital assets, except for immoveable assets, signing the respective contracts when
necessary.
Nine – Contract the rendering of services in accordance with the current operations.
Tem – Contract, fire and release employees, define their respective levels, categories,
remuneration conditions and other benefits or complements.
Eleven – Exercise disciplinary power, carry out the related procedures and apply sanctions.
Twelve – Issue, receive or endorse checks, promissory notes and other securities
Thirteen – Contract bank loans, through the signing of the appropriate contracts, open credit,
open current account credit, overdrafts up to 3 000 000 euros (three thousand euros) by
contract so long as they do not require pledges, personal or real guarantees by the company.
Fourteen – Propose to the Board of Directors the establishment, transfer or closing of branches,
agencies or any other form of corporate representation.
Fifteen – Propose to the Board of Directors the acquisition of shares, quotas, bonds or
participations in other companies, already existing or to be founded, as well as to propose the
appointment of representatives of the company in their corporate boards.
Sixteen - Propose to the Board of Directors participation in consortiums of companies European
consortiums of financial interest, as well as the entering into consortium and association in
participation contracts.
Seventeen – Without prejudice to the requirements of the articles of association, require
meetings of the Board of Directors that it believes they are necessary, establishing the agenda.
Eighteen - Without prejudice to the requirements of the articles of association, require meetings
of the Board of Directors and Audit Board when it believes appropriate.
Nineteen – Assign representatives at Shareholders’ General Meetings of FISIPE- Fibras
Sintéticas de Portugal, SA’s subsidiaries and determine the sense of voting in the meetings.
Twenty – Represent the company actively or passively, in court or out of it, including the
constitution, contestation and interposing of legal actions in any legal or arbitration process,
including the confession, desistence or transaction in any actions and the assumption of
arbitration commitments.
Twenty-one - Constitute individuals for the practice of certain acts or categories of acts defining
the respective mandates.
38
The Executive Committee is made up as follows – João Manuel Caminha Dotti, João Rodrigo
Guedes de Castro Pereira and José Miguel Duarte Martins Contreiras.
Recommendation II.2.2. The Board of Directors must ensure that the Company operates in
compliance with its objectives, not delegating its powers as regards: i) defining the Company’s
strategy and general policies; ii) define the group’s business structure; iii) decisions that should
be considered as strategic due to their amount, risk or their special characteristics.
The Company complies with this: The Board of Directors does not delegate the following
powers:
a) definition of the Company’s general policies
b) definition of the business structure of the group
c) making of strategic or high risk decisions.
Recommendation II.2.3. If the Chairman of the Board of Directors exercises executive functions,
the Board of Directors must find efficient mechanisms to coordinate the work of the non
executive members to ensure that they can decide in an independent and informed way and
must explain the mechanisms to the shareholders in the report on Corporate Governance.
The Company complies with this: The non executive members of the Board of Directors are
called to meetings of the Board of Directors fifteen days in advance, all the relevant
documentation for taking decisions on matters to be decided being supplied in advance.
Recommendation II.2.4. The annual Management Report must include a description of the
activities of the non executive directors, referring to possible constraints found.
The Company complies with this: The activities of the non executive directors corresponds to
monitoring and supervising the activities of the Executive Committee as well as carrying out the
competencies inherent to their position as members of the Board of Directors, and is carried out
through active participation in meetings of the Board of Directors and analysis of the relevant
documentation.
In 2011 the Board of Directors had 4 meetings.
No constraints were noted.
Recommendation II.2.5. The company must explain its policy of rotation of the functions in the
Board of Directors, notably the person responsible for the financial function and inform on this in
the annual Corporate Governance Report.
39
The Company does not comply with this requirement: At present there is no rotation of functions
in the Board of Directors. The size of the company fully justifies this situation.
II.3. MANAGING DIRECTOR, EXECUTIVE BOARD AND EXECUTIVE BOARD OF
DIRECTORS
Recommendation II.3.1. The directors that exercise executive functions, when requested by the
members of the other corporate boards, must punctually and adequately provide the required
information.
The Company complies with this: The Audit Board met five times in 2011. In these meetings it
consults systematically the financial director and whenever it sees fit the commercial and
operating directors. These executive directors provide the members of the Board of Directors
with all the documentation requested, as well as to all the persons and departments of the
company.
The Monitoring entity maintains regular and permanent contact with the financial director and
carries out at least one preliminary audit and annual audit, for which all the required information
is supplied.
Recommendation II.3.2. The Chairman of the Executive Committee should send to the
Chairman of the Board of Directors and, as applicable, the Chairman of the Monitoring Entity or
the Audit Committee, the call to and minutes of the respective meetings.
The Company complies with this: The functions of Chairman of the Executive Committee and
Chairman of the Board of Directors are carried out by the same person.
The Chairman of the Monitoring Entity, and the Monitoring Entity which he/she presides,
exercise their functions in the head office, where they meet periodically and where they have
access to all the minutes of the Executive Committee.
Recommendation II.3.3. The Executive Chairman of the Board of Directors must send the
Chairman of the General and Supervisory Committee and Chairman of the Financial Matters
Committee the callings to and minutes of the respective meetings
Not applicable.
40
II.4 AUDIT AND SUPEVISORY BOARD, FINANCIAL MATTERS COMMITTEE, AUDIT
COMMITTEE AND MONITORING ENTITY
Recommendation II.4.1. The General and Supervisory Committee, in addition to exercising its
monitoring functions, must carry out a counseling role, continuous accompaniment and
evaluation of the management of the Company by the executive Board of Directors. The matters
on which the General and Supervisory Committee must pronounce include: i) definition of the
strategy and general policies of the Company; ii) business structure of the group; iii) decisions
that should be considered strategic due to their amount, risk and special characteristics.
Not applicable. The Company does not have a General and Supervisory Committee.
Recommendation II.4.2. The annual reports of the activities of the General and Supervisory
Committee, Financial Matters Committee, Audit Committee and Monitoring Entity must be
subject to disclosure in the Company’s Internet site, together with the documents of account.
The Company complies with this: The Company does not have a General and Supervisory
Committee. However the report of the Monitoring Entity is disclosed together with the annual
documents of account.
Recommendation II.4.3. The annual reports on the activities of the of the General and
Supervisory Committee, Financial Matters Committee, Audit Committee and Monitoring Entity
must include a description of the monitoring activities carried out, referring to possible
constraints noted.
The Company complies with this: The Company does not have a General and Supervisory
Committee. However the report of the Monitoring Entity, which is disclosed together with the
annual documents of account mentions the possible constraints noted.
Recommendation II.4.4. The General and Supervisory Committee, Audit Committee and
Monitoring Entity, depending on the model adopted, must represent the Company, for all
purposes, with the external auditor, having to propose the entity to render that service, the
respective remuneration, make sure that within the company there are adequate conditions to
provide the services, as well as be the company’s interlocutor and the first person to receive the
reports.
The Company complies with this: The Monitoring Entity proposes the Auditor (that carries out
the function of auditor) to the Shareholders’ General Meeting. The remuneration is proposed by
the auditor and approved by the Monitoring Entity.
41
Recommendation II.4.5. The General and Supervisory Committee, Audit Committee and
Monitoring Entity, depending on the model adopted, must annually evaluate the external auditor
and propose to the Shareholders’ General Meeting his destitution whenever there is just cause
for this.
The Company complies with this: The Monitoring Entity evaluates the auditor annually.
Recommendation II.4.6. The internal audit services and those responsible for compliance with
standards applicable to the company (compliance services) must report functionally to the Audit
Committee, the General and Supervisory Committee, or, in the case of companies that adopt
the Latin model, an independent director or to the Monitoring Entity, independently of the
hierarchical relationship that these services have with the executive administration of the
company.
The Company complies with this: The Monitoring entity is free to contact directly any
department of the company. Such contacts are made on the days of the meetings, there being
no interference of the executive entity.
II.5. SPECIALIZED COMMITTEES
Recommendation II.5.1. Except for the small size of the Company, the Board of Directors and
the General and Supervisory Committee, depending on the model adopted, must create the
Committees that are necessary to: i) ensure a competent and independent evaluation of the
executive directors and evaluate their own overall performance, as well as that of the existing
committees; ii) reflect on the governance system adopted, verifying its effectiveness and
propose to the competent boards the measures to be taken to improve them; iii) identify on a
timely basis potential candidates with the high profile necessary to carry out the functions of
director.
Not applicable considering the small size of the Company.
Recommendation II.5.2. The members of the Remuneration Committee or equivalent must be
independent in relation to the members of administrative entity and include at least one member
with the knowledge and experience in matters of remuneration policy.
The Company complies with this: The members of the Remuneration Committee are José
Domingos Vístulo de Abreu, José Miguel Leal da Silva and Alberto António Justiniano. All the
42
three have ample knowledge and experience in matters of remuneration policies due to the
functions they have in the administration of large national companies in the area of the
Management of Human Resources.
Recommendation II.5.3. No person or entity that renders or has rendered services in the last
three years to any structure that is dependent on the Board of Directors, the Board of Directors
of the company or that has a current relationship as consultant to the company can be
contracted to support the Remuneration Committee in performing its work. This
recommendation is applicable to any person or entity that is related to them by labour or service
contract.
The Company complies with this: The contracting of any person to support the Remuneration
Committee is not justified considering the small size of the company
Recommendation II.5.4. All the Committees must prepare minutes of their meetings.
The Company complies with this as regards meetings of the Remuneration Committee (there
are no other such committees)
III – AUDIT AND INFORMATION
III.1 – GENERAL DUTIES OF INFORMATION
Recommendation III.1.1. Companies must ensure that there is permanent contact with the
market, considering the principle of the equality of shareholders and preventing differences in
the access to information by investors. The Company must have a Shareholder Support Office
for this.
The Company complies with this.
Despite because of its size, not having an Office dedicated exclusively to supporting the
investor, FISIPE achieves this by making regular and frequent contact with analysts and
investors, disclosing of the main decisions of its managers through the representative for
relations with the market.
FISIPE is constantly concerned with immediately disclosing all the significant facts that affect
the company’s operations, therefore avoiding the hiatus between the occurrence and disclosure
of such facts.
43
Such disclosure is made through publication on the Stock Exchange site (www.cmvm.pt) and
the Company’s Internet site (www.FISIPE.pt).
Communications issued the institutional presentation of the company, reports and accounts and
other information can be found in these sites. Information regarding reports and accounts is
provided on a quarterly basis.
In order to increase interaction with its shareholders and investors, the site also includes a
section dedicated to investors that contains information on:
General information on the Company
The Company’s articles of association
Investor support office
Corporate boards
Documents of account
Half year calendar
Proposals presented
Calling of meetings
The representative of the Company for relations with the market is a member of the Executive
Committee, João Rodrigo Guedes de Castro Pereira (telephone: +351 212 066 116; telefax:
+351 212 075 188; e-mail: [email protected], and address: Post Office Box 5, 2836-908
Lavradio), through whom FISIPE is permanently in contact with analysts and investors,
providing up-to-date information and clarifications on significant facts of the Company, disclosed
by it in accordance with the law, whenever this is requested.
The annual, half yearly and quarterly documents of account are sent by email to the
shareholders, investors and financial entities whenever requested, provided it is approved in
advance by the competent entities of the company
All the investor information required by article 3-A of Stock Exchange regulation 11/2003 is
included in the FISIPE Internet site (www.FISIPE.pt), that already has a version in English.
Recommendation III.1.2. The following information available in the Company’s Internet site must
be disclosed in English:
a) The company, the fact of being a Public Company, the Head Office and other items
mentioned in article 171 of the Commercial Company Code:
b) The Articles of Association;
44
c) Identity of the holders of office in the corporate boards and of the representative for relations
with the market;
d) Investor Support Office, related functions and means of access;
e) Documents of account;
f) Half year calendar of corporate events;
g) Proposals presented for discussion and voting at the Shareholders’ General Meeting;
h) Calls for the realization of the Shareholders’ General Meeting.
The Company does not comply with this requirement.
Recommendation III.1.3. Companies must rotate their auditors at the end of two or three
mandates depending on whether they are for four or three years. Their maintenance beyond
that period must be based on a specific opinion of the monitoring entity that expressly considers
the condition of independence of the auditor and the advantages and costs of substitution.
The Company complies with this: The external auditor has been with the company for less than
three years as from the date of implementation of this recommendation.
Recommendation III.1.4. The external auditor, within his responsibilities, must verify the
application of the policies and remuneration systems, the effectiveness of the functioning of the
internal control mechanisms and report any deficiencies to the company’s monitoring entity.
The Company complies with this.
Recommendation III.1.5. The company must not contract the external auditor or any entities that
have a participation relationship with that entity or is part of the same network, services other
than audit. If there are reasons for such services – that must be approved by the monitoring
entity and explained in the Company’s annual Governance Report – they cannot exceed 30% of
the amount of the total services rendered by the company.
The Company does not comply with this: During 2011 the auditor rendered non-audit services to
the Company in the amount of 30,000 euros. These services are greater than 30% of the total
services invoiced in 2011, however in the last three years this is the only non-audit service
rendered to the Company. Additionally all safeguarding measures are applied in order to
mitigate the risks of independence and conflict of interests.
45
IV. – CONFLICTS OF INTEREST
IV.1. – RELATIONSHIP WITH SHAREHOLDERS
Recommendation IV.1. The company’s business with shareholders with a qualified participation
or entities that have any relationship with them, in accordance with art. 20 of the Stock
Exchange Code, must be realized under normal market conditions.
The Company complies with this: There are no businesses or significant operations in financial
terms with any such parties. All those existing are realized under normal market conditions.
Recommendation IV.1.2. Significant business with shareholders having qualified participations
or with entities with a relationship with them, in accordance with art. 20 of the Stock Exchange
Code must be submitted to prior opinion of the monitoring entity. That entity must establish the
procedures and criteria necessary to define the level of significance of such business and the
other terms of their intervention.
The Company complies with this: There is no business between the company’s shareholders.
Chapter I. Disclosure of Information
1. Organization chart of the Company
46
2. List of Committees created by the Company
The composition of the remuneration committee is as shown in 8 below.
The Committee that accompanies the pension fund is made up of one representative of the
employees, the Director João Castro Pereira and the person responsible for Human
resources.
The Company also has an Employee Committee.
3. Evolution of the share price
Throughout 2011, 1 038 469 shares of FISIPE were traded in the Lisbon Stock Exchange,
corresponding to an average of 9 796 shares per session. The price of FISIPE shares was
0.12 euros at the end of the year compared to 0.12 euros at the end of the preceding year.
The maximum price was 0.14 euros and the minimum was 0.08 euros.
4. Dividend distribution policy
FISIPE does not have a dividend distribution policy established in its articles of association.
Such a policy is not justified as the Company has not had profits to enable it to make any
distribution of dividends.
The payment of dividends was interrupted in 1999 due to losses, as shown in the proposal
for appropriation of results.
5. Plan for granting shares and share acquisition options
FISIPE does not grant shares or share acquisition options.
6. Description of the main business elements and operations realized with interested parties
The Company has not realized any business or operation with members of the Board of
Directors or Monitoring Entity.
Transactions with companies with an owning or group relationship are realized under normal
market conditions and are a part of the Company’s normal operations, and so they do not
merit special mention.
7. Process for disclosing financial information
The company has several systems to support the control of financial information produced by
several teams, namely the accounting, treasury and management control teams. During the
consolidation of accounts process several controls are made, namely validation of the
47
schedules prepared by the accounting and treasury teams. Controls are also made of
adjustments to the consolidated accounts.
8. Composition of the remuneration committee.
Chairman - José Domingos Vístulo de Abreu - Independent
Member - José Miguel Leal da Silva - Independent
Member - Alberto António Justiniano – Independent
9. Auditor’s annual remuneration
The Company’s Auditor is Deloitte & Associados, SROC, S.A. that in 2011 invoiced the
Company and its subsidiary Munditêxtil the amount of 75,000 euros (60% audit services and
40% related consulting services, as referred in III.1.5).
Tax services are rendered by different technical personnel from those involved in the audit
and so the company considers that the Auditor is independent.
10. Remuneration of the Monitoring Entity
José Jorge da Costa Martins Reimão - 9 000 euros
Pedro Manuel da Silva Leandro - 8 400 euros
Luís Jacinto Pereira – Is not remunerated
Chapter II. Exercise of the right to vote and shareholders’ representative
1. Existence of articles of association rules on the exercise of the right to vote, namely that
withdraw the exercise of the right to vote by correspondence
There are no limitations in the articles of association regarding shareholders’ rights to vote.
Exercise of the right to vote is regulated by articles 30 and 30 A of the Articles of
Association and by the provisions of the Commercial Company Code.
2. Existence of a model to exercise the right to vote by correspondence.
The Articles of Association establish the right to vote by correspondence (art. 30 A of the
Articles of Association) and in 2010 the Company adopted a model voting bulletin that it
discloses in its Internet site before each Shareholders’ General Meeting.
3. Possibility of exercising the right to vote by electronic means The possibility of voting by electronic means does not exist.
48
4. Prior period required for the deposit or blocking of shares to participate in the Shareholders’
General Meeting The prior period required is 5 working days (item 1 of art. 26 of the Articles of Association).
5. Requirement of a period between the reception and declaration of vote by correspondence
and the date of the Shareholders’ General Meeting
Votes by correspondence must be received at the Head Office up to the 3rd working day
prior to the date of the Shareholders’ General Meeting (art 30 A, item 3 of the Articles of
Association).
6. Number of shares that correspond to a vote. Each share corresponds to a vote (art. 30, item 3 of the Articles of Association).
Chapter III. Corporate Rules
1. Reference and description of the codes of conduct of the corporate entities of the company
/ other internal regulations / access by investors to such codes of conduct / regulations.
All the written standards that can in any way be considered as codes of conduct of the
Company’s corporate entities are included in the articles of association, which are available
for consultation in www.FISIPE.pt .
There are no internal regulations that refer to or describe any codes of conduct of the
Company’s corporate entities.
2. Description of the internal procedures adopted, if such is the case, to control the risks of the
company’s operations, namely the existence of organic units dedicated to internal audit
and/or risk management.
FISIPE has a series of risks and uncertainties relating to its operations. The main risks
identified consist of operating, environmental and financial risks (interest rate, exchange
rate and credit and liquidity risks). FISIPE has several internal and external control systems
implemented to effectively detect these risks.
As a certified company FISIPE has developed, implemented and made public operating
safety and environmental manuals of mandatory application by all the employees and
collaborators. In addition the company systematically organizes audits to control and
49
evaluate the standards implemented and at least once a year the evaluation is made by an
independent external company.
FISIPE has a multi risk insurance policy that covers the risks of its activities.
Evaluation and control of the credit risk is conferred to COSEC which also insures the
Company against credit risk.
Interest and exchange rate risk are mitigated by systematic resorting to derivative
instruments to hedge such risks.
The following departments are connected to the management of risks:
Operating risk – Operations department
Environmental risk – Operations department
Financial risk – Financial department
3. Indication of the existence of limits to exercise the right to vote, of special rights of some
shareholder and shareholders’ agreements, if known to the company
There are no limits to exercise the right to vote or special rights to vote of some
shareholders.
The Board of Directors is unaware of any shareholders’ agreements involving the
Company’s shareholders.
Chapter IV. Management Board
1. Nature of the Management Board
a) Identity of the members of the Administrative Board
Chairman - João Manuel Caminha Dotti (Executive)
Member - João Rodrigo Guedes de Castro Pereira (Executive)
Member - José Miguel Duarte Martins Contreiras (Executive)
Member - Celestino Vieira de Freitas (Non-executive/Not independent)
Member - Takanori Mikuni (Non-executive/Not independent)
b) Functions that members of the Management Board exercise in other companies,
discriminating those exercised in other companies of the same group
50
João Manuel Caminha Dotti – Chairman of the Board of Directors of NEGOFOR, SGPS,
S.A. (Company of the same group).
João Rodrigo Guedes de Castro Pereira – member of the Board of Directors of NEGOFOR,
SGPS, S.A. (Company of the same group), manager of Munditêxtil, manager of FISIGEN
(Companies of the same group), Manager of SIULE, SA. .
José Miguel Duarte Martins Contreiras - member of the Board of Directors of NEGOFOR,
SGPS, S.A. (Company of the same group).
Celestino Vieira de Freitas (Non executive/Not independent) – Chairman of Board of
Directors of Fertigest, SGPS, SA, Agroquisa, SA, Agrototal, SA, Quimifértil, SGPS, SA,
Agrigénese, SA, Onoris, SA, Top Select, SA, Madeira Algarve, Lda.
Takanori Mikuni (Non-executive/Not independent).
2. Reference to the possible existence of an Executive Committee/composition
Refer to the contents of item II.2 of Chapter 0 of this Report, where the composition of the
Executive Committee is also shown.
The Company does not have any other committees with competence in management
matters.
3. Description of the method of functioning of the management board
a) Determination of the limits between the powers of the Chairman of the Board of Directors
and the Chairman of the Executive Committee
João Manuel Caminha Dotti is Chairman of both the Board of Directors and the Executive
Committee and so there is no way of distinguishing between the powers.
b) List of the matters forbidden to the Executive Committee
The powers of the Executive Committee are defined in article 20 of the Articles of
Association and by decisions to delegate and so all the competencies that have not been
expressly delegated are maintained with the Board of Directors.
The powers delegated to the Executive Committee are listed in item II.2.1, of Chapter 0 of
this report.
c) Information to the members of the Management Board regarding matters dealt with and
decisions taken by the Executive Committee
51
Minutes are prepared of all the meetings of the Executive Board and the minute book is
available to the Board of Directors.
d) Duty of confidentiality relating to matters discussed by the Management Board.
There are no written standards regarding duties of confidentiality. The members of the
Management Board maintain confidentiality on all matters that are commerce and industry
secrets of FISIPE, in accordance with rules of prudence applicable to any careful manager.
e) Conflicts of interest, incompatibilities within the management and the maximum number of
positions that can be accumulated in Management Boards of other companies
There are no specific rules regarding these matters. The Management Board complies
strictly with the existing general legislation, preventing the members from voting on matters
in which there is a situation of conflict of interest
f) Number of meetings of the Management Board during the year in question
In 2011 the Board of Directors met 4 times.
The Executive Committee met 11 times.
4. Indication of the fact of total or partial remuneration of all or some members of the
Management Board being dependent on the results of the company
The “Declaration regarding the remuneration policy of the members of the corporate boards
of FISIPE” establishes that part (variable) of the remuneration of the executive members of
the Management Boards depends on the results of the company.
As the results have been losses since the issuance of that declaration, the executive
administrators have not received that part of the remuneration.
5. Remuneration of the members of the Management Board
Chairman - João Manuel Caminha Dotti (Executive) 165 977 Euros
Member - João Rodrigo Guedes de Castro Pereira (Executive) 115 724 Euros
Member - José Miguel Duarte Martins Contreiras (Executive) 115 724 Euros
Member - Celestino Vieira de Freitas (Non-executive/Not independent) 12 000 Euros
Member - Takanori Mikuni (Non-executive/Not independent)
52
6. Appointment and powers of the Management Board
The rules regarding the appointment and substitution of the members of the Management
Board for the change in the articles of association and decisions of capital increase are
established in the company’s articles of association.
Consolidated
Financial Statements
Notes
31 December
2011
31 December
2010
NON CURRENT ASSETS:
4 22.268.447 24.241.171
5 - 170.337
Accounts receivables - loans granted to associated companies 5 3.457.338 -
Other investments 5 5.100 5.100
Deferred tax assets 6 781.378 918.156
Total non current assets 26.512.263 25.334.764
CURRENT ASSETS:
Inventories 7 8.062.332 10.147.709
Accounts receivable from customers 8 26.900.505 30.926.600
State and other public entities 9 1.704.495 1.157.304
Other accounts receivable 10 468.815 85.215
Other current assets 11 934.189 650.856
Cash and cash equivalents 12 1.381.217 1.844.643
Total current assets 39.451.553 44.812.327
65.963.816 70.147.091
EQUITY:
Share capital 13 15.500.000 15.500.000
Supplementary capital 14 9.500.000 9.500.000
Legal reserve 14 1.220.612 1.220.612
Retained earnings 14 (7.202.574) (5.290.621)
Consolidated net profit / (loss) attributable to the equity holders 153.203 (1.766.116)
Total equity 19.171.241 19.163.875
LIABILITIES
NON CURRENT LIABILITIES:
Bank loans 17 2.059.615 3.062.750
Finance lease creditors 17 965.205 1.918.117
Other loans 17 330.639 486.839
Provisions 16 181.858 167.371
Pension responsibility 25 129.965 61.451
Deferred tax liabilities 6 2.461.381 2.813.113
Total non current liabilities 6.128.663 8.509.641
CURRENT LIABILITIES:
Bank loans 17 4.497.257 4.407.454
Other loans 17 156.200 76.008
Other debts with financial institutions 17 10.219.213 9.606.665
Finance lease creditors 17 1.260.319 1.256.327
Derivative financial instruments 17 59.380 95.193
Accounts payables to suppliers 27 18.923.918 21.564.972
State and other public entities 9 359.180 356.309
Other accounts payable 18 e 27 114.948 470.156
Other current liabilities 19 5.073.497 4.640.491
Total current liabilities 40.663.912 42.473.575
Total liabilities 46.792.575 50.983.216
Total equity and liabilities 65.963.816 70.147.091
The Accountant
FISIPE - FIBRAS SINTÉTICAS DE PORTUGAL, S.A.
The accompanying notes form an integral part of this consolidated statement of financial position as of 31 December 2011.
Tangible fixed assets
Investments in associates
The Board of Directors
ASSETS
EQUITY AND LIABILITIES
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS OF 31 DECEMBER 2011 AND 2010
(Amounts stated in Euros)
Notes 2011 2010
Operating income:
Sales 20 129.141.577 112.004.320
Supplementary income 349.859 307.758
Variation of production 21 (859.661) 97.533
Other operating income 22 1.029.729 1.140.006
Total operating income 129.661.504 113.549.617
Operating expenses:
Cost of sales 23 (93.410.635) (81.866.091)
External supplies and services (17.283.651) (16.394.130)
Personnel expenses (10.347.951) (9.896.905)
Depreciation 4 (3.942.881) (3.572.742)
Provisions and impairment (losses)/gains 16 (1.290.656) (565.699)
Other operating expenses 22 (980.736) (563.515)
Gains/(losses) on exchange differences (307.255) (308.877)
Total operating expenses (127.563.765) (113.167.959)
Net operating profit 2.097.739 381.658
Share of results of investments in associates 5 e 16 (24.500) 145.837
Financial income 24 259.084 3.521
Financial expenses 24 (2.184.824) (2.086.169)
Profit /(Loss) before income tax 147.499 (1.555.153)
Income tax 6 5.704 (210.963)
Consolidated net profit / (loss) for the period 153.203 (1.766.116)
Attributable to:
Equity holders 153.203 (1.766.116)
153.203 (1.766.116)
Consolidated net loss per share:
Basic 0,001 (0,011)
Diluted 0,001 (0,011)
FISIPE - FIBRAS SINTÉTICAS DE PORTUGAL, S.A.
CONSOLIDATED STATEMENT OF PROFIT AND LOSS BY NATURE
(Amounts stated in Euros)
The Accountant
FOR THE YEARS ENDED 31 DECEMBER 2011 AND 2010
The accompanying notes form an integral part of the consolidated statement of profit and loss by nature
The Board of Directors
for the year ended 31 December 2011.
Notes 2011 2010
Consolidated net profit / (loss) for the period 153.203 (1.766.116)
Other movements in retained earnings (145.837) -
Total comprehensive income / (loss) for the period 7.366 (1.766.116)
Attributable to:
Equity holders 7.366 (1.766.116)
Non-controlling interests - -
7.366 (1.766.116)
FISIPE - FIBRAS SINTÉTICAS DE PORTUGAL, S.A.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
The Accountant The Board of Directors
The accompanying notes form an integral part of the statement of comprehensive income for the year ended 31 December 2011.
FOR THE YEARS ENDED 31 DECEMBER 2011 AND 2010
(Amounts stated in Euros)
FISIPE - FIBRAS SINTÉTICAS DE PORTUGAL, S.A.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEARS ENDED 31 DECEMBER 2011 AND 2010
(Amounts stated in Euros)
Share Supplementary Legal Retained Net
Notes capital capital Reserves earnings profit/ (loss) Total
Balance as of 1 January 2010 15.500.000 9.500.000 1.220.612 (7.040.486) 1.902.028 21.082.154
Appropriation of consolidated net profit for 2009 1.749.865 (1.902.028) (152.163)
Net loss for the year ended 31 December 2010 - - - - (1.766.116) (1.766.116)
Balance as of 31 December 2010 15.500.000 9.500.000 1.220.612 (5.290.621) (1.766.116) 19.163.875
Balance as of 1 January 2011 15.500.000 9.500.000 1.220.612 (5.290.621) (1.766.116) 19.163.875
Appropriation of consolidated net profit for 2010 13 - - (1.766.116) 1.766.116 -
Other movements in retained earnings 5 - - - (145.837) - (145.837)
Net profit for the year ended 31 December 2011 - - - - 153.203 153.203
Balance as of 31 December 2011 15.500.000 9.500.000 1.220.612 (7.202.574) 153.203 19.171.241
The accompanying notes form an integral part of this statement of changes in equity for the year ended 31 December 2011.
The Board of DirectorsThe Accountant
FISIPE - FIBRAS SINTÉTICAS DE PORTUGAL,S.A .
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED 31 DECEMBER 2011 AND 2010
(Amounts stated in Euros)
Notes 2011 2010OPERATING ACTIVITIES:
Receipts from customers 133.807.633 103.183.782
Payments to suppliers (115.256.934) (93.715.601)
Payments to personnel (9.587.560) (9.885.053)
Cash flows from operations 8.963.139 (416.872)
Receipt / (Payment) of income tax and other taxes (360.284) (293.813)
Other payments relating to operating activities (505.472) (3.847.305)
Cash flows from operating activities (1) 8.097.383 (4.557.990)
INVESTING ACTIVITIES:
Receipts relating to:
Investment subsidies 760.695 -
760.695 -
Payments relating to:
Fixed Assets (1.399.783) (3.077.145)
Financial Investments (4.048.097) -
(5.447.880) (3.077.145)
Cash Flows from investing activities (2) (4.687.185) (3.077.145)
FINANCING ACTIVITIES:
Receipts relating to:Loans 2.685.126 9.642.049
Loans by financial leasing 369.662 520.989
Interest income received 1.300 7.431
3.056.088 10.170.469
Payments relating to:Loans (3.674.466) (1.761.272)
Loans by financial leasing (1.318.582) (979.825)
Interest expense paid (1.936.664) (775.041)
(6.929.712) (3.516.138)
Cash Flows from financing activities (3) (3.873.624) 6.654.331
Variation in cash and cash equivalents (4) = (1) + (2) + (3) (463.426) (980.804)
Cash and cash equivalents at the beginning of the year 12 1.844.643 2.825.447
Cash and cash equivalents at the end of the year 12 1.381.217 1.844.643
The Board of Directors The Accountant
for the year ended 31 December 2011.The accompanying notes form an integral part of this statement of Cash Flows
Notes
to
Consolidated Financial Statements
FISIPE - FIBRAS SINTÉTICAS DE PORTUGAL, S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS OF 31 DECEMBER 2011
(Translation of notes originally issued in Portuguese – Note 33)
(Amounts expressed in Euros)
1
1. INTRODUCTION
The FISIPE Group consists of FISIPE – Fibras Sintéticas de Portugal, S.A. (“Fisipe” ou “the Company”) (parent company), which has its head office in Lavradio and its subsidiary (“the Group”, which in 31 December 2011 includes only Munditêxtil – Comércio Internacional de Têxteis, S.A.), and its main activity being to supply a complete range of innovative acrylic fibres to International Industry. The Group’s operations are carried out essentially from Portugal.
The accompanying consolidated financial statements are presented in Euros (functional currency) as it is the currency preferentially used in the economic environment in which the Group operates.
2. PRINCIPAL ACCOUNTING POLICIES
The principal accounting policies adopted in preparing the accompanying consolidated financial statements are as follows: 2.1. Basis of preparation
The accompanying consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board (“IASB”), endorsed by the European Union, in force for years beginning on 1 January 2011. These standards correspond to International Financial Reporting Standards issued by the International Accounting Standards Board (“IASB”) and interpretations issued by the International Financial Reporting Interpretation Committee (“IFRIC”) or the previous Standing Interpretations Committee (“SIC”) as endorsed by the European Union. The consolidated financial statements have been prepared on a going concern basis, in accordance with the accruals accounting procedures as from the accounting records of the Company and its subsidiary, maintained in accordance with International Financial Reporting Standards as endorsed by the European Union.
FISIPE - FIBRAS SINTÉTICAS DE PORTUGAL, S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS OF 31 DECEMBER 2011
(Translation of notes originally issued in Portuguese – Note 33)
(Amounts expressed in Euros)
2
New accounting standards and their impact in these consolidated financial statements Until the date of approval of these consolidated financial statements, the European Union endorsed the following standards, interpretations, amendments and revisions with mandatory application to the economic year beginning on 1 January 2011:
Standard/Interpretation
Effective Date
(financial years
beginning on or after)
IAS 24 – Disclosure of related parties (revision) 1-Jan-11
IFRS 1 – Amendment (Limited Exemption from Comparative IFRS 7 Disclosures for
First-time Adopters) 01-Jul-10
IAS 32 – Amendment (Classifications of the Rights Issues) 1-Feb-10
IFRIC 19 – Extinguishing Financial Liabilities with Equity Instruments 01-Jul-10
IFRIC 14 – Amendment (Prepayments of a Minimum Funding Requirement) 01-Jan-11
IFRS 7 – Amendment Financial instruments: Disclosures - Transfer of Financial Assets 01-Jul-11
All the above standards were applied by the Group for the first time in 2011, without having a significant retrospective impact on the accompanying financial statements. The following standards and interpretations, with mandatory application in future financial years, were, until the date of approval of these financial statements, endorsed by the European Union:
Standard/Interpretation
Effective Date
(financial years
beginning on or after)
Improvements to IFRS (2010)
Several (on / after
01-Jul-10)
These standards, despite being endorsed by the European Union, have not been adopted by the Group in 2011 as their adoption is not yet mandatory. Their adoption is not expected to have a significant impact on the Group’s consolidated financial statements.
FISIPE - FIBRAS SINTÉTICAS DE PORTUGAL, S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS OF 31 DECEMBER 2011
(Translation of notes originally issued in Portuguese – Note 33)
(Amounts expressed in Euros)
3
The following accounting standards and interpretations issued by the IASB have not yet been endorsed by the European Union:
Standard/Interpretation
Effective Date
(financial years
beginning on or after)
IFRS 9 - Financial Instruments 1-Jan-13
Amendments to IAS 12 - Deferred Tax: Recovery of Underlying Assets 1-Jan-12
Amendments to IFRS 1 - Severe Hyperinflaction and Removal of Fixed Dates for
First-time Adopters 1-Jul-11
Amendments to IFRS 7 - Financial Instruments: Disclosures 1-Jul-11
IFRS 10 - Consolidated Financial Statements 1-Jan-13
IFRS 11 - Joint Arrangements 1-Jan-13
IFRS 12 - Disclosure of Interests in Other Entities 1-Jan-13
IFRS 13 - Fair Value Measurement 1-Jan-13
IAS 27 (Revised 2011)- Separate Financial Statements 1-Jan-13
IAS 28 (Revised 2011)- Investments in Associates and Joint Ventures 1-Jan-13
Amendments to IAS 1 - Presentation of Comprehensive Income 1-Jan-13
Amendments to IAS 19 - Post Employment Benefits 1-Jan-13
IFRIC 20 - Stripping Costs in the Production Phase of a Surface Mine 1-Jan-13
The future adoption of these standards and interpretations not yet endorsed by the European Union is not expected to have a significant retrospective impact on these consolidated financial statements. The Group adopted IFRS in the preparation of its consolidated financial statements for the first time in 2005, having in the transition process complied with the requirements of IFRS 1 – First-time Adoption of International Financial Reporting Standards (IFRS 1). The effect of the adjustments as of 1 January 2005 relating to the transition to IFRS, in the amount of 14,196,980 Euros, was recorded by corresponding entry to the captions “Retained Earnings” and “Other revaluation reserves”.
2.2 Consolidation principles
The financial statements of the parent company and of its subsidiary included in the consolidated financial statements were prepared with reference to 31 December 2011, and were, when applicable, adjusted in order to ensure its consistency with the Group’s accounting policies, described below.
The consolidation methods adopted by the Group are as follows:
a) Investments in Subsidiaries
Investments in companies in which the Group owns, directly or indirectly, more than half of the voting rights in Shareholders’ General Meetings and has the power to control their financial and operating policies so as to benefit from their operations, are considered as investments in subsidiaries and have been included in these consolidated financial
FISIPE - FIBRAS SINTÉTICAS DE PORTUGAL, S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS OF 31 DECEMBER 2011
(Translation of notes originally issued in Portuguese – Note 33)
(Amounts expressed in Euros)
4
statements by the full consolidation method from the time control is acquired up to the time it terminates.
The purchase method of accounting is used to record the acquisition of subsidiaries.
The interests in the net assets of the subsidiaries that do not belong to the Group (Interests without control) are presented separately from equity attributable shareholders of the parent company, under the caption “Non-controlling interests”. The interests not controlled consist of the amount of these interests as of the date of their acquisition and their proportionate interest in changes in the equity of the subsidiaries acquired after the date of their acquisition. The net result and each component of comprehensive income is attributed to the Group and to the interests without control in proportion to their participation (property interest) even if it results in a deficit in interests without control. Transactions (including possible gain and loss resulting from sales between group companies), balances and dividends distributed between group companies are eliminated in the consolidation process. The changes in the Group’s interest in the subsidiary that do not result in the loss of control are recorded as equity transactions. The subsidiaries included in the consolidated financial statements by the full consolidation method are listed in Note 3. Whenever the Group has control, in substance, of other entities created for a specific purpose, even though it may not have direct participations in them, are consolidated by the full consolidation method. No such entities existed as of the date of the financial statements.
b) Investments in Associates
Associated companies are those over which the Group has significant influence (presumed to exist when the participation exceeds 20%), but does not have control or joint control over decisions relating to the operating and financial policies. Such companies are recorded by the equity method.
In accordance with the equity method, investments in associates are recorded at cost, adjusted after the acquisition date by the amount corresponding to the Group’s participation in the in the changes in equity (Including net profit or loss) of the associate after that date. In applying the equity method the Group’s proportion of the net profit or loss is recognized by corresponding entry to the statement of profit and loss and dividends received are deducted from the amount of the investment. The excess of cost over the fair value of the identifiable net assets of each associate as of the date of acquisition is recorded as goodwill and included in the book value of the investment. Where cost is lower than the fair value of the identifiable net assets, the difference is recognised as income in the statement of comprehensive income for the year of the acquisition.
FISIPE - FIBRAS SINTÉTICAS DE PORTUGAL, S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS OF 31 DECEMBER 2011
(Translation of notes originally issued in Portuguese – Note 33)
(Amounts expressed in Euros)
5
The Group makes impairment assessments on investments in associated companies whenever there are signs that the asset may be impaired, as well as an annual valuation of goodwill recorded on investments in associates, any impairment losses being recognised in the statement of profit and loss. When the Group’s share in the accumulated losses of the associate exceeds the book value of the investment, the investment is reported at nil value, unless the Group has a commitment with the associate. Unrealized gains on transactions with associates are eliminated in proportion of the Group’s interest in the associate, by corresponding entry to the investment in that associate. Unrealized losses are also eliminated but only to the extent that the loss does not provide evidence that the transferred asset is impaired. Investments in associates are listed in Note 5.
2.3 Tangible fixed assets
Tangible fixed assets acquired up to 1 January 2004 (date of transition to IFRS) are recorded at deemed cost, which corresponds to acquisition cost or acquisition cost restated based on price indices in accordance with legislation in force, except for some items of equipment which were revalued as of the transition date (1 January 2004) at corresponding fair value, determined by an independent specialized entity in accordance with IFRS 1 – First Application of International Financial Reporting Standards. The tangible fixed assets acquired after that date are stated at cost, less accumulated depreciation and impairment losses. The depreciation is provided on a straight-line basis as from when the assets are ready to be used, over the estimated period of useful life of each group of assets. The depreciation rates used correspond to the following periods of estimated useful life:
Years
Buildings and other constructions 20 – 50 Machinery and equipment 5 – 20 Transport equipment Administrative equipment
4 – 12 4 – 20
Tools and utensils 4 – 10 Other tangible fixed assets 3 – 14
Maintenance and repair costs of fixed assets are expensed as incurred. The fixed assets in progress correspond to fixed assets that still under construction and are recorded at acquisition cost. Such fixed assets are depreciated as from the time the underlying assets are completed or are in a usable state.
FISIPE - FIBRAS SINTÉTICAS DE PORTUGAL, S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS OF 31 DECEMBER 2011
(Translation of notes originally issued in Portuguese – Note 33)
(Amounts expressed in Euros)
6
2.4 Accounting for leases A lease is classified as (i) a finance lease if substantially all the risks and benefits of ownership are transferred, and (ii) as an operating lease where this does not occur. Finance and operating leases are classified based on the substance rather than the form of the legal contract. Leases in which the Group is the lessee Fixed assets acquired under finance lease contracts, as well as the corresponding liabilities are recognised in accordance with the financial method. In accordance with this method the cost of the assets (the lower of the fair value or the discounted amount of the lease instalments) is recognised in tangible fixed assets. The lease instalments are separated between financial cost and amortisation and depreciation cost in the income statement for the year to which they correspond. In the case of operating leases, the lease instalments are recorded as costs for the year, on a straight-line basis over the period of the contract.
2.5 Judgements and estimates In preparing the accompanying consolidated financial statements estimates were used that affect the reported amounts of assets and liabilities as well as the amounts of income and costs for the reporting period. The estimates were made based in the best information available of the events and transaction in progress at the time the consolidated financial statements were approved and the experience of the past and/or current events. However, events can occur in subsequent periods which, due to their unpredictability, were not considered in these estimates. Significant changes to these estimates, occurring after the date the financial statements were prepared, will be booked on the subsequent year, as defined in IAS 8.
The main estimates used by the Group relate to the measurement of the pension liability of the defined benefits pension plan, determination of the fair value of the derivative financial instruments, where applicable, and realizable value of the deferred tax assets, as follows:
a) Pension liability
The Group’s liability for retirement pension supplements (Defined Benefits Plan) is determined by actuarial studies thereof at the end of each year made by independent specialized entities in accordance with internationally accepted actuarial methods and assumptions.
b) Derivative financial instruments
Derivative financial instruments used by the Group to hedge cash flows consist basically of interest rate swaps. Determination of the fair value of these derivative financial instruments is made at the end of each financial year by external appraisers (usually by the entity with which the derivative financial instrument was contracted).
FISIPE - FIBRAS SINTÉTICAS DE PORTUGAL, S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS OF 31 DECEMBER 2011
(Translation of notes originally issued in Portuguese – Note 33)
(Amounts expressed in Euros)
7
c) Deferred tax assets
The deferred tax assets are recognised only if it is expectable that future fiscal profits will be enough to use the deferred tax assets. By the end of each reporting period the deferred tax assets are assessed, and they are reduced if it future recoverability is not expectable. This revision is based on projections of the future activity of each company where it is applicable.
The main assumptions used in the Group’s estimates are disclosed in the notes to the financial statements.
2.6 Inventories
Goods, raw, subsidiary and consumable materials are stated at average acquisition cost. Finished and semi-finished goods and work in process are stated at production cost, which includes the average cost of raw materials incorporated, direct labour and general production costs. Impairment loss on inventories are recorded when their net realizable value is lower than cost. Net realizable value corresponds to normal selling price less costs to complete production and costs to sell.
2.7 Financial assets and liabilities
Financial assets and liabilities are recognized in the statement of financial position when the Group becomes part of the corresponding contractual relationships. Financial assets are initially recognized at cost, which is the fair value of the amount paid, including transaction costs, except where the financial instruments are valued at fair value through profit and loss and the transaction costs are immediately recorded in profit and loss. The Group derecognizes financial assets when: (i) the contractual rights to their flows expire; (ii) the significant risks and benefits relating to their ownership are transferred to another entity or; (iii) despite having retained an unsubstantial part of the significant risks and benefits it transfers control over them.
The Group derecognizes financial liabilities only when the corresponding obligtion is settled, cancelled or expires. Financial assets are classified in the following categories:
Financial assets measured at fair value through profit or loss
Financial assets held to maturity
Loans and receivables
Financial assets available for sale
FISIPE - FIBRAS SINTÉTICAS DE PORTUGAL, S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS OF 31 DECEMBER 2011
(Translation of notes originally issued in Portuguese – Note 33)
(Amounts expressed in Euros)
8
The financial assets measured at fair value through profit or loss are financial assets held for trading, such as financial assets that the Group intends to trade in the short term. In the Group’s case this category includes essentially derivative financial instruments. Such assets are subsequently measured at fair value, recorded by corresponding entry to profit and loss statement. Financial assets held to maturity with fixed maturities which the Group intends and has the ability to hold to maturity. In the Group’s case there are no financial assets to be classified in this category. Loans and receivables arise in the normal course of the Company’s business, which it does not intend to trade. This category includes trade and other receivables and bank deposits. These assets are subsequently measured at amortized cost in accordance with the effective interest rate method. Financial assets available for sale are financial assets that are not classifiable in one of the preceding categories. In the Group’s case this classification would include financial participations which could not be classified as subsidiaries. However, as of the date of these financial statements there are no assets classifiable in this category. Financial liabilities are classified in the following categories:
Financial liabilities measured at fair value through profit or loss
Other financial liabilities
Financial liabilities, measured at fair value through profit or loss correspond to liabilities held for trading, such as financial liabilities that the Group intends to trade in the short term. In the Group’s case this category includes only derivative financial instruments. These financial liabilities are subsequently measured at fair value, recorded by corresponding entry to profit and loss.
Other financial liabilities correspond to other financial liabilities are not classifiable in the former category. This category includes loans from banks and other entities, including shareholders and trade and other payables. Such liabilities are subsequently measured at amortized cost in accordance with the effective interest rate method. a) Cash and cash equivalents
Cash and cash equivalents includes cash on hand, demand and term deposits and other treasury applications that mature in less than three months and are readily convertible to cash with an insignificant risk of change in value. These assets are measured at amortized cost. Amortized cost of these assets usually does not differ from their nominal value.
FISIPE - FIBRAS SINTÉTICAS DE PORTUGAL, S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS OF 31 DECEMBER 2011
(Translation of notes originally issued in Portuguese – Note 33)
(Amounts expressed in Euros)
9
b) Receivables Trade accounts receivable from customers and other accounts receivable are recognized at amortized cost less any impairment losses. Amortized cost of these financial assets usually does not differ from their nominal value.
c) Loans Loans are recorded as liabilities and measured at amortized cost. Any expenses with the obtaining of these loans, usually paid in advance when the loans are obtained, are recognized at amortized cost in accordance with the effective interest method in the statement of profit and loss for the year over the period of the loans. Such costs are classified as deductions from the caption “Bank loans”. Financial expenses relating to bank interest and similar costs (namely Stamp Duty) are recognized on an accruals basis in the statement of profit and loss, the amounts due and not paid at the balance sheet date being classified in the caption “Other current liabilities”.
d) Trade and other payables Accounts payables to supliers and other accounts payable are recorded at amortized cost. Usually, the amortized cost of these financial liabilities usually does not differ from its nominal value.
e) Financial instruments The Group is exposed to financial risk resulting basically from fluctuations in exchange and interest rates and uses derivative financial instruments to manage its financial risks relating to fluctuations in interest rates only as a way of hedging such risks. Derivative financial instruments are not used for speculation purposes. The derivative financial instruments used by the Group correspond essentially to interest rate swaps. Derivative financial instruments are initially recorded at fair value on the date of they are contracted. At each statement of financial position date, they are remeasured at fair value, with the corresponding gain or loss on the remeasurement recorded immediately in the statement of profit and loss, unless such instruments are designated as hedging instruments. In the case of the company does not exist, yet financial instruments that are eligible for hedge accounting. A derivative financial instrument with a positive fair value is recognised as a financial asset under the caption "Derivative financial instruments". A derivative financial instrument with a negative fair value is recognised under the same caption but as a financial liability. A derivative is presented as non-current if the remaining maturity exceeds 12 months and is not expected to be realized or settled within that period.
FISIPE - FIBRAS SINTÉTICAS DE PORTUGAL, S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS OF 31 DECEMBER 2011
(Translation of notes originally issued in Portuguese – Note 33)
(Amounts expressed in Euros)
10
Where there are derivatives embedded in other financial instruments or other host contracts, they are treated as separate derivatives in situations where the risks and characteristics are not closely related to the host contracts and where the host contracts are not presented at fair value with unrealised gains or losses recorded in the statement of profit and loss.
2.8 Risk management policies The Group’s operations are exposed to several risks: financial market risks (including exchange rate risk, interest rate risk and price risk), credit risk and liquidity risk. The Group’s overall risk management program is focused on the unpredictability of the markets and endeavours to minimize the resulting adverse effects on its financial performance. The Group’s risk management is controlled by Fisipe’s treasury department in accordance with policies approved by the Board of Directors. In this respect the Board of Directors has defined the main overall risk management principles, as well as specific policies in some areas, such as exchange rate risk, interest rate risk and credit risk. a) Market risk: One of Fisipe’s main risks is the variation in the price of acrylonitrile, a
petroleum derivative, which is the Group’s main raw material. As there is no financial market in which this product can be traded, the Group seeks to minimize the risks of variation ensuring part of its supply through the use of a formula that considers the average evolution of the price of this raw material.
b) Foreign exchange risk: Fisipe is subject to exchange risk, relating to the US dollar. The Company seeks to minimize this risk through trying to make a hedge between its purchases and sales. The main raw material is purchased in dollars and the majority of sales are made in the same currency.
c) Interest rate risk: This is also a risk that the Company considers, hedging its exposure
with the appropriate instruments available in the market, such as interest rate swaps. d) Credit risks: Credit risk of the Group’s clients is managed through adequate evaluation
of the risk before accepting a client and by adequate accompaniment of the credit limits assigned to each. On the other hand the Group seeks to minimize these risks, requiring the opening of export letters of credit or through credit insurance where this is available.
e) Liquidity risk: Treasury needs are managed by Fisipe’s central treasury department, that in an appropriate and opportune way manages the liquidity excesses and shortfalls. The random treasury needs are covered by control of accounts receivable and maintenance of adequate credit limits agreed between Fisipe and the banks.
2.8.1 Exchange rate sensitivity analysis The following sensitivity analysis was prepared considering the exposure of the Group’s result to a variation in the rate of the USD to the Euro and considered the
FISIPE - FIBRAS SINTÉTICAS DE PORTUGAL, S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS OF 31 DECEMBER 2011
(Translation of notes originally issued in Portuguese – Note 33)
(Amounts expressed in Euros)
11
following assumption: a 1% upwards/downwards variation the rate of exchange in relation to that in force on the date of the transactions and those in force on the dates of collection or payment. The impact on net result would be as follows:
2.8.2 Interest rate sensitivity analysis The following sensitivity analysis was prepared considering the Group’s exposure to interest rates on its borrowings, lease contracts and interest cost incurred on the discount of its invoices and letters of credit in banks. A 1% upwards/downwards variation the interest rate would have the following impact on the Group’s net result:
2.9 Provisions Provisions are recognised when, and only when, the Group has an obligation (legal or implicit) resulting from a past event and it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. Provisions are reviewed and adjusted at the statement of financial position date to reflect the best estimate as of that date.
2.10 Pension supplements The Group has assumed the commitment to grant its employees retirement pension supplements. In 2009, with authorization of the Portuguese Institute of Insurance (Instituto de Seguros de Portugal) the Group changed the plan for its employees, these being covered by a Defined Contribution Plan effective as from December 2009. The Defined Contribution Plan is a pension plan under which the Group’s only financial obligation is to make fixed contributions to the Fund. The Group maintains the Defined Benefits Plan for pensioners existing at 31 December 2009, the plan being one that defines the amount of the pension supplement that an employee will receive when he/she retires, normally dependent on one or more factors, such as age, years of service and remuneration. In order to know the amount of the liability of the Defined Benefits Plan and its cost, actuarial studies are made at the end of each accounting period using internationally acceptable methods and assumptions. The liability and cost thus determined are
+ 1% - 1%
Net profit (200,130) 200,130
+ 1% - 1%
Net profit (373,890) 381,443
FISIPE - FIBRAS SINTÉTICAS DE PORTUGAL, S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS OF 31 DECEMBER 2011
(Translation of notes originally issued in Portuguese – Note 33)
(Amounts expressed in Euros)
12
compared with the Group’s accounting records and the market value of the pension fund, so as to determine the amount of the difference and the possible additional contribution to be made to the fund. The Group follows the criteria defined in IAS 19 for recording pensions, which establishes that pension costs must be recognized as the services are being rendered by the benefiting employees. The cost of the Defined Contribution Plan is recorded annually based on a percentage of the payroll of each serving individual beneficiary of the pension plan.
2.11 Subsidies from the government and other public entities Investment subsidies relating to the acquisition of fixed assets are recorded in the caption “Other non-current liabilities” and are amortized on a straight-line basis in the profit and loss financial statement over the estimated period of useful life of the subsidized assets.
2.12 Contingent assets and liabilities Contingent liabilities are not recognized in the consolidated financial statements but disclosed in the notes thereto, unless the possibility of an outflow of funds affecting future financial benefits is remote, in which case they are not disclosed. Contingent assets are not recognized in the consolidated financial statements but disclosed in the notes thereto when there is a probable future financial benefit.
2.13 Income tax Income tax is computed based on the taxable results of the companies included in the consolidation and includes deferred taxes. Deferred taxes are calculated using the financial position liability method, reflecting the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred tax assets and liabilities are calculated and evaluated annually using the tax rates expected to be in force when the temporary differences reverse, based on the tax rates (and tax legislation) that has been formally or substantially issued as of the date of the financial statements. Deferred tax assets are recognised only when it is probable that sufficient taxable profits will be available against which the deferred tax assets can be utilized or in situations in which there are temporary taxable differences that offset temporary deductible differences in the period they reverse. At the statement of financial position date, a review is made of the deferred tax assets and they are reduced whenever their future use is no longer probable. Deferred tax assets and liabilities are recorded in the statement of profit and loss, except if they relate to items recorded directly in equity captions, in which case the corresponding deferred tax is also recorded under the same caption.
FISIPE - FIBRAS SINTÉTICAS DE PORTUGAL, S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS OF 31 DECEMBER 2011
(Translation of notes originally issued in Portuguese – Note 33)
(Amounts expressed in Euros)
13
2.14 Revenue Revenue from sales is recognized in the consolidated statement of profit and loss when all the risks and rewards of ownership are transferred to the buyer and the corresponding income can be reasonably quantified. Sales are recognized net of taxes, discounts and other costs relating to their realization, by the fair value of the amount received or receivable. Revenue from services rendered is recognised in the consolidated statement of profit and loss for the year to which it relates based on the percentage of completion of the services as the date of the financial statements. Interest and financial income are recognized on a accruals basis in accordance with the applicable effective rate of interest.
2.15 Accruals basis of accounting The income and expenses are recognized in the year to which they relate, regardless of the date of payment or receipt (in accordance with the accruals basis of accounting). The income and expenses for which the actual amount is not known are estimated. Under the captions "Other current assets" and "Other current liabilities” are recorded income and expenses attributable to the current year, which settlement or receipt will only occur in the future, as well as amounts paid and received that have occurred on the statement of financial position date, but which relates to future periods, and that will be charged to the profit and loss of the corresponding year.
2.16 Classification in the statement of financial position Assets realizable and liabilities payable in more than one year from the date of the statement of financial position are classified as non-current assets and liabilities, respectively.
2.17 Foreign currency balances and transactions Transactions in currencies other than the Euro are translated to the Euro using the exchange rates prevailing as of the transaction dates. At each statement of financial position date foreign currency monetary assets and liabilities are translated to Euros at the exchange rates prevailing as of that date. Exchange gains and losses arising from differences between the historical exchange rates and those prevailing at the date of collection, payment or at the date of the statement of financial position are recorded as income and costs in the consolidated statement of profit and loss for the year.
2.18 Non-current assets held for sale Non-current assets (and sets of assets and liabilities for sale) are classified as held for sale and recorded at the lower of their book value or fair value less costs to sell.
FISIPE - FIBRAS SINTÉTICAS DE PORTUGAL, S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS OF 31 DECEMBER 2011
(Translation of notes originally issued in Portuguese – Note 33)
(Amounts expressed in Euros)
14
Non-current assets (and sets of assets and liabilities for sale) are classified as held for sale if their book value is recovered by sale rather than by continued use. This condition is considered to be met when the sale of the asset (and set of assets and liabilities for sale) is very probable and it is available for immediate sale in its present condition. In addition, management at adequate levels must be involved in the sale and the sale is expected to be realized within the period of 12 months from the date of classification as assets held for sale.
2.19 Impairment of assets a) Non-financial assets, excluding “Goodwill”
Impairment analyses are made at each statement of financial position date and whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recovered. Whenever the book value of an asset exceeds its recoverable amount an impairment loss is recognised in the statement of profit and loss caption “Provisions and impairment losses”. The recoverable amount is the higher of the net selling price and the value in use. Net selling price is the amount that would be obtained from selling the asset in a transaction between independent knowledgeable parties, less the costs directly attributable to the sale. Value in use is the present value of the estimated future cash flows resulting from continued use of the asset and its sale at the end of its useful life. The recoverable amount is estimated for each asset individually or, where that is not possible, for the cash generating unit to which the asset belongs. Impairment losses recognized in prior periods are reversed when it is concluded that such losses no longer exist or have decreased. The reversal of impairment losses is recognized the statement of profit or loss caption “Provision for impairment losses”. However, the reversal of impairment losses is made up to the limit that would have been recognized (net of amortization and depreciation) if the impairment loss had not been recognized in prior years.
b) Financial assets (usually accounts receivable)
Whenever there is objective evidence that the Group will not collect the amounts to which it has the right in accordance with the conditions agreed between the parts an impairment loss is recognized in the statement of profit and loss. The following indicators are used by the Group to identify indications of impairment:
Non-compliance with the due date and/or other clauses agreed to by the parties;
Financial difficulties of the debtor;
Probable bankruptcy of the debtor.
FISIPE - FIBRAS SINTÉTICAS DE PORTUGAL, S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS OF 31 DECEMBER 2011
(Translation of notes originally issued in Portuguese – Note 33)
(Amounts expressed in Euros)
15
Whenever these indications exist an impairment analysis is made, which is determined by the difference between the book value of the asset and its recoverable value. Impairment losses are recognized in the caption “Provisions and impairment (losses)/ gains” in the period in which they are determined. If the impairment loss subsequently decreases, it is reversed to the statement of profit and loss caption “Provisions and impairment (losses)/ gains”.
2.20 Subsequent events Events occurred after the statement of financial position date that provide additional information about conditions that existed at statement of financial position date (adjusting events) are reflected in financial statements. Events occurred after the statement of financial position date that provide information on conditions that occur after that date (non-adjusting events) are disclosed in the consolidated financial statements, if materially significant.
3. GROUP COMPANIES INCLUDED IN THE CONSOLIDATION The group companies included in the consolidation, their head offices and the percentages of their share capital held by the group as of 31 December 2011 and 2010 are as follows:
Head office 31.12.11 31.12.10
Munditêxtil - Comércio Internacional de
Têxteis, Lda. ("Munditêxtil") Barreiro 100 100
Percentage of capital held
Munditêxtil was included in the consolidation by the full consolidation method.
4. TANGIBLE FIXED ASSETS The changes in tangible fixed assets and corresponding accumulated depreciation in the years
ended 31 December 2011 and 2010 were as follows:
2011 2010
Land Buildings and Machinery and Transport Administrative Tools and Other f ixed Fixed assets
other constructions equipment equipment equipment utensilis assets in progress Total Total
Gross assets
Opening balance 249.263 31.230.879 116.198.227 741.840 2.570.325 4.239.296 1.074.342 854.047 157.158.219 153.196.941
Increases - - 378.960 - 95.742 139.750 - 1.973.335 2.587.787 4.595.124
Impairment losses (Note 16) - - 79.221 - - - - (696.851) (617.630) (633.846)
Transfers - - 442.855 - - 12.112 - (454.967) - -
Closing balance 249.263 31.230.879 117.099.263 741.840 2.666.067 4.391.158 1.074.342 1.675.564 159.128.376 157.158.219
Depreciation and amortization
Opening balance - 28.680.917 96.048.767 738.184 2.374.140 4.000.698 1.074.342 - 132.917.048 129.340.251
Amortizations of the period - 288.110 3.456.456 2.034 115.620 80.661 - - 3.942.881 3.571.914
Others - - - - - - - - - 4.883
Closing balance - 28.969.027 99.505.223 740.218 2.489.760 4.081.359 1.074.342 - 136.859.929 132.917.048
Net value 249.263 2.261.852 17.594.040 1.622 176.307 309.799 - 1.675.564 22.268.447 24.241.171
FISIPE - FIBRAS SINTÉTICAS DE PORTUGAL, S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS OF 31 DECEMBER 2011
(Translation of notes originally issued in Portuguese – Note 33)
(Amounts expressed in Euros)
16
The increases in 2011 correspond essentially to major repairs of equipment, in the amount of 300,729 Euros, acquisition of informatics equipment in the amount of 95,742 Euros, ceramic bars in the amount of 57,620 Euros and spinnerretes H40 in the amount of 32,000 Euros. The caption “Fixed Assets in progress”, in the amount of 1,675,564 Euros corresponds essentially to equipments of the Carbogen, Polyblend and Acryforce projects (relating to the carbon fibre forerunner) that was in progress as of 31 December 2011. On 31 December 2010, the caption “Depreciation and amortization” in the amount of 3,572,742 Euros, includes the amount of 3,571,914 Euros and 828 Euros for the amortization of tangible and intangible assets, respectively. As of 31 December 2010, the intangible assets were fully depreciated.
5. FINANCIAL INVESTMENTS
The “Investments in associates” and “Other investments” at 31 December 2011 were made up as follows:
31.12.11
Impairment
Acquisition losses
Cost (Note 16) Total
Investments in associates 24,500 (24,500) -
Bonds and other financial assets 113,088 (107,988) 5,100
137,588 (132,488) 5,100
Loans granted to associates 4,048,097 (590,759) 3,457,338
4,185,685 (723,247) 3,462,438
The “Investments in associates” in the amount of 24,500 Euros corresponds to a 49% participation of Fisipe in Fisigen equity (the remaining 51% belongs to EDP). Fisigen is a cogeneration plant supplying steam to Fisipe as from the beginning of 2010. The caption “Loans granted to associated companies” respects to loans granted to Fisigen, which bear interest at 8.5% and matures in 2025. As of 31 December 2011 and 2010, the investments detail was made as of:
Total Net Acquisition Carrying Income
Head office Assets Equity income profit % cost amount propotion
Associated companies:
Fisigen - Empresa de Cogeração, S.A. ("Fisigen") Lisboa 40,026,484 (1,205,630) 24,732,509 (1,541,537) 49 4,072,597 3,457,338 (615,259)
Bonds and other financial assets:
Other investments 113,088 5,100 -
4,185,685 3,462,438 (615,259)
Financial information as of 31.12.11 Value of financial position
FISIPE - FIBRAS SINTÉTICAS DE PORTUGAL, S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS OF 31 DECEMBER 2011
(Translation of notes originally issued in Portuguese – Note 33)
(Amounts expressed in Euros)
17
Total Net Acquisition Carrying Income
Head office Assets Equity income profit % cost amount propotion
Associated companies:
Fisigen - Empresa de Cogeração, S.A. ("Fisigen") Lisboa 42,631,229 335,907 23,626,310 297,627 49 24,500 170,337 145,837
Bonds and other financial assets:
Other investments 113,088 5,100 -
137,588 175,437 145,837
Financial information as of 31.12.10 Value of financial position
In the years ended of 31 December 2011 and 2010, the changes in investments in associates were as follows:
31.12.11 31.12.10
Opening balance 170,337 24,500
Appropriated result by applying the equity method - 145,837
Loans granted 4,048,097 -
Impairment losses:
Recorded in caption Provisions and impairment (losses)/gains (Note 16) (590,759) -
Recorded in caption Losses of impairment on participation in subsidiaries and associated companies (Note 16) (24,500) -
Recorded in caption Retained earnings (145,837) -
Closing balance 3,457,338 170,337
6. INCOME TAX
As explained in Note 2.13, the Group recognizes in their consolidated financial statements, the tax effect of temporary differences between accounting and tax assets and liabilities, these having been recognized at 31 December 2011 and 2010 based on an aggregate tax rate of 26.5% (except for tax losses, in which the rate is 25%). As a result of amendments to article 116º of the Law 64-B/2011 of the Corporate Income Tax Code, starting on January 1
st, 2012, Portuguese companies with taxable income exceeding
1,500,000 Euros will be subject to an additional tax of 3% on taxable income exceeding that amount and lower than 10,000,000 Euros. For amounts above 10,000,000 Euros the tax will be 5%. However, the Board of Directors believes that the effect of this change on the Group’s financial statements will not have impact in the tax estimates of future periods and so it has not been reflected on the rate of deferred tax.
FISIPE - FIBRAS SINTÉTICAS DE PORTUGAL, S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS OF 31 DECEMBER 2011
(Translation of notes originally issued in Portuguese – Note 33)
(Amounts expressed in Euros)
18
The main temporary differences between the accounting and tax amounts at 31 December 2011 and 2010 and the corresponding deferred tax assets and liabilities and the effect on results for the years then ended, are as follows:
Increase /
(decrease) in period
Deferred Deferred in the income
Base tax Base tax statement
Assets:
Impairment losses and provisions 2,768,595 733,677 2,049,552 543,130 190,547
Tax losses carried forward:
2005 - - 1,309,299 327,325 (327,325)
2008 190,802 47,701 190,802 47,701 -
190,802 47,701 1,500,101 375,026 (327,325)
2,959,397 781,378 3,549,653 918,156 (136,778)
Liabilities:
Legal revaluations (214,771) (56,914) (232,761) (61,682) 4,768
Other revaluations (9,073,458) (2,404,467) (10,382,758) (2,751,431) 346,964
(9,288,229) (2,461,381) (10,615,519) (2,813,113) 351,732
(6,328,832) (1,680,003) (7,065,866) (1,894,957) 214,954
31.12.11
Temporary differences
31.12.10
The changes in deferred tax assets and liabilities in the years ended in 2011 and 2010 were as follows:
Deferred taxes Deferred taxes
Assets Liabilities Total Assets Liabilities Total
Opening balance 918,156 (2,813,113) (1,894,957) 1,211,454 (3,170,861) (1,959,407)
Effect in net result:
Period amortization of fixed assets
revaluations:
Legal revaluation - 4,768 4,768 - 10,784 10,784
Other revaluations - 346,964 346,964 - 346,964 346,964
Use / Increase of tax losses carried forward (327,325) - (327,325) (327,325) - (327,325)
Constitution / increase in provisions 190,547 - 190,547 34,027 - 34,027
Total period changes (136,778) 351,732 214,954 (293,298) 357,748 64,450
Closing balance 781,378 (2,461,381) (1,680,003) 918,156 (2,813,113) (1,894,957)
2011 2010
FISIPE - FIBRAS SINTÉTICAS DE PORTUGAL, S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS OF 31 DECEMBER 2011
(Translation of notes originally issued in Portuguese – Note 33)
(Amounts expressed in Euros)
19
The statement of financial position at 31 December 2011 includes deferred tax assets relating to tax losses carried forward in the amount of 47,701 Euros. In accordance with tax legislation in force, tax losses can be deducted from future tax profits during a period of six years following that in which they are generated for tax losses incurred up to 2009, for four subsequent years for tax losses generated after this date and for five years for those generated in 2011. Tax losses carried forward and their latest date of utilization at 31 December 2011 are as follows:
Limit
Amount uilization date
Generated in 2007 846,023 2013
Generated in 2008 190,802 2014
1,036,825
Tax losses
Reconciliation between the accounting and tax results and between current tax and income tax for the year on the results for the periods ended 31 December 2011 and 2010 is as follows:
2011 2010
Profit/(loss) before income tax 147,499 (1,555,153)
Permanent differences 177,557 (113,054)
Temporary differences 2,046,333 1,407,396
Taxable profit / (tax loss) 2,371,389 (260,811)
Use of tax losses of previous years (2,177,377) (43,947)
Use of reportable tax benefits (194,012) -
Tax losses with no recover expectations - 304,758
- -
Income tax rate in Portugal 26.5% 26.5%
Deferred tax on temporary differences (542,279) (391,775)
Use of deferred tax assets derivative from tax losses until
the occurrence of the corresponding deferred tax liabilities 327,325 327,325
Deferred tax (I) (214,954) (64,450)
Current tax:
Write-off of prepayment of corporate tax from previous years already expired 140,000 243,531
Autonomous taxation (Note 9) 30,546 32,676
Surtax (Note 9) 39,028 -
Excess / (shortfall) in the previous year estimate (325) (794)
(II) 209,249 275,413
Corporate taxes (I+II) (5,704) 210,963
Fisipe obtained with reference to year 2009 a tax benefit - SIFIDE System (Tax Incentives
System for Business Research and Development), established in accordance with the requirements established in Law No. 40/2005 of 3 August, amounting to 330,011.18 Euros resulting from R&D activities in the years 2007, 2008 and 2009, although it has not been deducted for tax purposes due to insufficient collections. This amount has been included in the Tax Returns (Annex F-Tax Benefits) as a value to transit, and could be used up to the financial year of 2014 (sixth immediate year).
FISIPE - FIBRAS SINTÉTICAS DE PORTUGAL, S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS OF 31 DECEMBER 2011
(Translation of notes originally issued in Portuguese – Note 33)
(Amounts expressed in Euros)
20
7. INVENTORIES
At 31 December 2011 and 2010, inventories was made up as follows:
Impairment
losses
Cost (Note 16) Net 31.12.10
Raw materials and others 5,206,925 (161,289) 5,045,636 6,261,093
Sub products and others 49,833 - 49,833 89,440
Finished and intermediate products 2,901,805 - 2,901,805 3,721,859
Goods 65,058 - 65,058 75,317
8,223,621 (161,289) 8,062,332 10,147,709
31.12.11
8. ACCOUNTS RECEIVABLE FROM CUSTOMERS
At 31 December 2011 and 2010, accounts receivable from customers were made up as follows:
31.12.11 31.12.10
Accounts receivable from customers 26,741,553 30,858,206
Doubtful accounts receivable 3,806,163 3,686,096
30,547,716 34,544,302
Accumulated impairment losses (Note 16) (3,647,211) (3,617,702)
26,900,505 30,926,600
The amounts included in the statement of financial position are net of accumulated impairment losses for accounts of doubtful collection, which were estimated by the Group based on its experience and assessment of the current economic situation. The Board of Directors believes that the book value of the receivables is close to its fair value. The Group does not have a significant concentration of credit risks, given that the risk is spread over a large number of clients.
FISIPE - FIBRAS SINTÉTICAS DE PORTUGAL, S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS OF 31 DECEMBER 2011
(Translation of notes originally issued in Portuguese – Note 33)
(Amounts expressed in Euros)
21
Following is an aging of trade receivables included in the Group’s consolidated statement of financial position at 31 December 2011 and 2010:
31.12.11 31.12.10
Not due 22,021,200 25,366,540
Due but not impaired:
0-30 days 2,566,780 3,867,605
30-90 days 1,212,894 848,266
+ 90 days 940,679 844,189
Due and impaired:
180-360 days 74,758 -
+ 360 days 3,731,405 3,617,702
30,547,716 34,544,302
9. STATE AND OTHER PUBLIC ENTITIES
Fisipe and Munditêxtil are subject to corporate income tax in accordance with the Special Tax Regime for the Taxation of Groups of Companies (RETGS). In accordance with current tax legislation, the tax returns of the Portuguese companies included in the consolidation are subject to a revision and adjustment by the tax authorities within a period of four years, exception made when fiscal losses have occurred, fiscal incentives have been granted or auditing or claims are in course, in cases, depending on circumstances, the final dates can be extended or suspended. Consequently, the tax returns of the Portuguese companies of the years 2008 until 2011 are still subject of review and adjustment.
The Board of Directors believes that any possible adjustments that may be made by the tax authorities as a result of their reviews will not have a significant effect on the consolidated financial statements as of 31 December 2011. As of 31 December 2011 and 2010 there are no overdue debts to the state and other public entities and the balances with these entities are as follows:
31.12.11 31.12.10
Assets Liabilities Assets Liabilities
Income tax:
Autonomous taxation (Note 6) - (30,546) - (32,676)
Surtax (Note 6) - (39,028) - -
Prepayment of corporate tax and special corporate tax 387,978 - 698,792 -
387,978 (69,574) 698,792 (32,676)
Social security contributions - (187,006) - (183,378)
VAT 1,316,517 - 458,512 -
Income taxes withheld to third parties - (102,600) - (100,007)
Other taxes - - - (40,248)
1,704,495 (359,180) 1,157,304 (356,309)
FISIPE - FIBRAS SINTÉTICAS DE PORTUGAL, S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS OF 31 DECEMBER 2011
(Translation of notes originally issued in Portuguese – Note 33)
(Amounts expressed in Euros)
22
10. OTHER ACCOUNTS RECEIVABLE Other accounts receivables at 31 December 2011 and 2010 were made up as follows:
31.12.11 31.12.10
Advances to suppliers 7,854 8,125
Other receivables:
Related parties (Note 15) 3,270 -
Others 561,576 180,985
572,700 189,110
Impairment losses (Note 16) (103,885) (103,895)
468,815 85,215
The caption “Others” in the amount of 561,576 Euros refers to a compensation to be received from the insurance company related with the contamination of acrylonitrile.
11. OTHER CURRENT ASSETS The caption “Other current assets” at 31 December 2011 and 2010 were made up as follows:
31.12.11 31.12.10
Accrued income:
Subsidies to be received 769,621 524,686
Other accrued income - 302
769,621 524,988
Deferred charge:
Prepaid Insurance 129,016 112,241
Other current assets 21,051 -
Other deferred charges 14,501 13,627
164,568 125,868
934,189 650,856
Subsidies receivable, in the amount of 769,621 Euros, are related to investment subsidies for the Carbopan, Carbogen and Plyblend projects.
12. CASH AND CASH EQUIVALENTS
Cash and cash equivalents at 31 December 2011 and 2010 were made up as follows:
31.12.11 31.12.10
Cash 12,679 4,991
Bank deposits payable on demand 1,368,538 1,839,652
Cash and cash equivalents 1,381,217 1,844,643
FISIPE - FIBRAS SINTÉTICAS DE PORTUGAL, S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS OF 31 DECEMBER 2011
(Translation of notes originally issued in Portuguese – Note 33)
(Amounts expressed in Euros)
23
13. SHARE CAPITAL Fisipe’s fully subscribed and paid up capital totalling 15,500,000 Euros at 31 December 2011 is made up of 155,000,000, shares of 0.1 Euros each held directly or indirectly by the following entities:
NEGOFOR, SGPS, S.A. 86,19%
Others 13,81%
100,00%
14. OTHER EQUITY CAPTIONS
Supplementay capital: In the Shareholders’ General Meeting held on 29 October 2007 it was decided to immediately make a free supplementary capital contribution of 4,500,000 Euros, through the conversion of loans already made by the shareholder NEGOFOR, SGPS, S.A. and so, after realization, they amounted to 9,500,000 Euros. In accordance with current legislation supplementary capital contributions, to which the supplementary capital contributions regime applies, can only be repaid to the shareholders if, after repayment, equity is not less than capital plus the legal reserve. Legal reserve: Portuguese law provides that at least 5% of annual profit must be appropriated to a legal reserve until the reserve equals the minimum requirement of 20% of share capital. The reserve is not available for distribution to the shareholders, except upon liquidation of the Company, but may be used to absorb losses, after all the other reserves have been exhausted, or to increase capital.
Retained earnings: The retained earnings of Fisipe (non-consolidated accounts) at 31 December 2011 include the amounts of 480,014 Euros (net of the corresponding deferred tax liability) and 6,668,993 Euros (net of the corresponding deferred tax liability) relating to the net amount of legal revaluations made prior to the date of transition to IFRS under legislation and the net amount of the revaluation to fair value of some manufacturing equipment under IFRS 1, upon transition to those accounting rules, respectively. The legal revaluations are not distributable to the shareholders and can only be used under certain circumstances for future capital increases of the Company or for other situations established in law. The revaluation made upon transition to fair value can only be distributed when realized. Appropriation of net loss of 2010: The Shareholders’ General Meeting of Fisipe held on 11 May 2011 decided that the net loss of 2010 in the amount of 1,766,116 Euros was to be transferred to retained earnings.
FISIPE - FIBRAS SINTÉTICAS DE PORTUGAL, S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS OF 31 DECEMBER 2011
(Translation of notes originally issued in Portuguese – Note 33)
(Amounts expressed in Euros)
24
15. RELATED PARTIES In order to permit an understanding of the accompanying financial statements the following main balances and transactions of Fisipe with Group companies are disclosed above: a) Current assets:
31.12.11 31.12.10
Shareholders:
Negofor 3,270 -
3,270 -
Other accounts receivable
(Note 10)
b) Current Liabilities:
31.12.11 31.12.10
Associated companies:
Fisigen 2,614,196 1,091,306
2,614,196 1,091,306
Accounts payables to
suppliers
c) Transactions in 2011:
Financial External supplies
expenses and services
Shareholders:
Negofor (77,791) - (77,791)
Associated companies:
Fisigen - (4,006,591) (4,006,591)
(77,791) (4,006,591) (4,084,382)
Total
d) Transactions in 2010:
Financial External supplies
expenses and services
Shareholders:
Negofor (108,555) - (108,555)
Associated companies:
Fisigen - (3,295,173) (3,295,173)
(108,555) (3,295,173) (3,403,728)
Total
FISIPE - FIBRAS SINTÉTICAS DE PORTUGAL, S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS OF 31 DECEMBER 2011
(Translation of notes originally issued in Portuguese – Note 33)
(Amounts expressed in Euros)
25
16. ACCUMULATED PROVISIONS AND IMPAIRMENT LOSSES The changes in the accumulated provisions and impairment losses in 2011 and 2010 were as follows:
Opening Closing
Accounts balance Increase Decrease Utilization balance
Impairment losses:
Accounts receivable from customers (Note 8) 3,617,702 235,603 (206,094) - 3,647,211
Other accounts receivable (Note 10) 103,885 - - - 103,885
Inventories (Note 7) 158,029 3,260 - - 161,289
Tangible fixed assets (Note 4) 1,534,446 617,630 - - 2,152,076
Loans granted to associated companies (Note 5) - 590,759 - - 590,759
Other investments (Note 5) 107,988 24,500 - - 132,488
5,522,050 1,471,752 (206,094) - 6,787,708
Provisions:
Non current 167,371 67,459 (17,961) (35,011) 181,858
167,371 67,459 (17,961) (35,011) 181,858
5,689,421 1,539,211 (224,055) (35,011) 6,969,566
Opening Closing
Accounts balance Increase Decrease Utilization balance
Impairment losses:
Accounts receivable from customers (Note 8) 3,479,196 309,518 (171,012) - 3,617,702
Other accounts receivable (Note 10) 100,000 3,885 - - 103,885
Inventories (Note 7) 167,146 - (9,117) - 158,029
Tangible fixed assets (Note 4) 900,600 690,725 (26,106) (30,773) 1,534,446
Other investments (Note 5) 107,988 - - - 107,988
4,754,930 1,004,128 (206,235) (30,773) 5,522,050
Provisions:
Non current 708,976 71,116 (303,310) (309,411) 167,371
708,976 71,116 (303,310) (309,411) 167,371
5,463,906 1,075,244 (509,545) (340,184) 5,689,421
2011
2010
Both increases and decreases in provisions and impairment losses were recorded by corresponding entry to the following captions of the statement of profit and loss:
2011 2010
Increase Decrease Total Increase Decrease Total
Provisions and impairment losses 1,514,711 (224,055) 1,290,656 1,075,244 (509,545) 565,699
Investment income:
Losses/ (gains) of impairment on participations
in subsidiaries and associated companies 24,500 - 24,500 - - -
1,539,211 (224,055) 1,315,156 1,075,244 (509,545) 565,699 The balance of the caption “Provisions – non-current” at 31 December 2011 and 2010 includes, essentially, the amounts of 89,486 Euros and 75,001 Euros relating to potential liabilities for claims from clients relating to quality problems of products sold by the Group.
FISIPE - FIBRAS SINTÉTICAS DE PORTUGAL, S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS OF 31 DECEMBER 2011
(Translation of notes originally issued in Portuguese – Note 33)
(Amounts expressed in Euros)
26
17. LOANS AND FINANCE LEASES Loans and payables resulting from finance leases contracts at 31 December 2011 and 2010 were as follows:
Financial
institution Limit Current Non-current Limit Current Non-current
Leasing:
Banif 300,440 82,968 217,472 - - -
Caixa Leasing e Factoring 73,300 73,300 - 200,012 129,588 70,424
Caixa Leasing e Factoring 149,338 149,338 - 348,599 203,508 145,091
Caixa Leasing e Factoring 204,547 204,547 - 426,672 225,806 200,866
Caixa Leasing e Factoring 68,676 68,676 - 131,516 63,534 67,982
Caixa Leasing e Factoring 152,540 127,761 24,779 273,100 121,233 151,867
Caixa Leasing e Factoring 958,095 417,264 540,831 1,343,317 379,109 964,208
Caixa Leasing e Factoring 318,588 136,465 182,123 451,228 133,549 317,679
2,225,524 1,260,319 965,205 3,174,444 1,256,327 1,918,117
Other loans::
IAPMEI 486,839 156,200 330,639 562,847 76,008 486,839
486,839 156,200 330,639 562,847 76,008 486,839
Bank loans:
Banco Comercial Português 964,958 385,982 578,976 1,350,941 385,984 964,957
Caixa Geral Depósitos 841,914 236,275 605,639 474,263 126,470 347,793
Banco Espirito Santo 1,750,000 875,000 875,000 2,625,000 875,000 1,750,000
Caixa Geral Depósitos 1,000,000 1,000,000 - 20,000 20,000 -
Bank overdrafts - BANIF 2,000,000 2,000,000 - 3,000,000 3,000,000 -
6,556,872 4,497,257 2,059,615 7,470,204 4,407,454 3,062,750
Other debts w ith f inancial
institutions - 10,219,213 - - 9,606,665 -
9,269,235 16,132,989 3,355,459 11,207,495 15,346,454 5,467,706
31.12.2011 31.12.2010
Used amount Used amount
The non-current loans at 31 December 2011 are made up as follows, by maturity:
Amount
2013 1,497,258
2014 397,651
2015 and following years 164,706
Bank loans 2,059,615
2013 156,200
2014 78,100
2015 and following years 96,339
Other loans 330,639
2013 661,112
2014 252,557
2015 and following years 51,536
Leasing 965,205
FISIPE - FIBRAS SINTÉTICAS DE PORTUGAL, S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS OF 31 DECEMBER 2011
(Translation of notes originally issued in Portuguese – Note 33)
(Amounts expressed in Euros)
27
The Group’s loans and overdrafts bear interest at normal market rates and were contracted in Euros. The finance lease contracts signed with Caixa Leasing e Factoring are to finance the fixed assets projects relating to implementation of the new production management system and remodeling of four spinning machines. The other liabilities to banks correspond to client’s invoices discounted with banks. The amounts are partly covered by promissory notes issued by the clients, credit insurance and bank guarantees issued by the banks with which the Group has transactions. The amount of 964,958 Euros relating to the loan from Banco Comercial Português was to cover the investment project under Sistema de Incentivos à Modernização Empresarial (SIME). The loan is repayable in 12 equal successive half year instalments paid in arrears in April and October. The amount of 1,750,000 Euros relating to loan from Banco Espírito Santo was applied in the new cogeneration plant project. The loan is repayable in eight equal successive half year instalments on the last day of the interest periods. Negofor has pledged the shares it holds in Fisipe in guarantee of the loan. All the loans are guaranteed by blank promissory notes. Derivative financial instruments: At 31 December 2011 the Group had eight derivative financial instruments contracted, which consisted of the following interest rate swaps:
Financial instruments Counterparty Maturity Receive Pay Notional
Interest Rate Swap - IRS BES 14-11-2013 EUR 6M 2.55% 1,750,000
Interest Rate Swap - IRS BCP 20-10-2014 EUR 6M 2.70% 964,958
Interest Rate Swap - IRS Caixa BI 01-06-2012 EUR1M 1.39% 73,300
Interest Rate Swap - IRS Caixa BI 20-08-2012 EUR1M 1.45% 149,338
Interest Rate Swap - IRS Caixa BI 10-10-2012 EUR1M 1.50% 204,547
Interest Rate Swap - IRS Caixa BI 01-12-2012 EUR1M 1.57% 68,676
Interest Rate Swap - IRS Caixa BI 20-02-2013 EUR1M 1.64% 152,540
Interest Rate Swap - IRS Caixa BI 01-01-2014 EUR1M 2.63% 958,095
2011
The fair value of the financial instruments as of the statement of financial position date, determined by the entity with which they were contracted, amounted to 59,380 Euros, having been recorded by corresponding entry to financial expenses, as they do not have the conditions necessary for hedging purposes.
FISIPE - FIBRAS SINTÉTICAS DE PORTUGAL, S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS OF 31 DECEMBER 2011
(Translation of notes originally issued in Portuguese – Note 33)
(Amounts expressed in Euros)
28
18. OTHER ACCOUNTS PAYABLE Other accounts payables at 31 December 2011 and 2010 are made up as follows:
31.12.11 31.12.10
Advance payment from customers 8,446 275,400
Other creditors 106,502 194,756
114,948 470,156
19. OTHER CURRENT LIABILITIES Other current liabilities at 31 December 2011 and 2010 are made up as follows:
31.12.11 31.12.10
Accrued expenses:
Accrued payroll costs 1,165,993 1,197,246
Commissions and bonuses 1,388,270 1,651,976
Interest payable 81,734 60,274
Electricity 34,788 -
Other accrued expenses 258,646 347,623
2,929,431 3,257,119
Deferred income:
Investment subsidies 2,144,066 1,383,372
5,073,497 4,640,491
20. SALES AND SERVICES RENDERED Sales and services rendered in the years ended 31 December 2011 and 2010 are made up as follows:
2011 2010
Sales and services rendered:
Domestic market 1,002,634 970,599
Foreign market:
- Intracommunity 34,425,768 33,683,943
- Other markets 93,713,175 77,349,778
129,141,577 112,004,320
FISIPE - FIBRAS SINTÉTICAS DE PORTUGAL, S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS OF 31 DECEMBER 2011
(Translation of notes originally issued in Portuguese – Note 33)
(Amounts expressed in Euros)
29
21. VARIATION OF PRODUCTION Variation of production for the years ended 31 December 2011 and 2010 was determined as follows:
2011 2010
Finished Subproducts Finished Subproducts
goods and others Total goods and others Total
Closing inventories 2,901,805 49,833 2,951,638 3,721,859 89,440 3,811,299
Opening inventories 3,721,859 89,440 3,811,299 3,546,130 167,636 3,713,766
Increase / (decrease) in year (820,054) (39,607) (859,661) 175,729 (78,196) 97,533
22. OTHER OPERATING INCOME AND EXPENSES
Other operating income for the years ended 31 December 2011 and 2010 is made up as follows:
31.12.11 31.12.10
Work for the company 760,666 794,272
Investments subsidies 244,935 291,183
Others 24,128 54,551
1,029,729 1,140,006
2011 2010
Expenses:
Contractual penalties incurred 342,708 16,082
Tax 248,315 200,418
Rates 163,316 217,465
Contributions 41,234 41,506
Donations 25,150 20,510
Others 160,013 67,634
980,736 563,615 The caption “Contractual penalties incurred” in the amount of 342,708 Euros corresponds essentially from claims of clients about defects in the quality of products.
23. COST OF SALES
The cost of sales in the years ended 31 December 2011 and 2010 was determined as follows:
2011 2010
Opening inventories 6,494,440 6,049,336
Purchase 92,192,411 82,311,195
Regularization of inventories (4,233) -
Closing inventories (5,271,983) (6,494,440)
93,410,635 81,866,091
FISIPE - FIBRAS SINTÉTICAS DE PORTUGAL, S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS OF 31 DECEMBER 2011
(Translation of notes originally issued in Portuguese – Note 33)
(Amounts expressed in Euros)
30
24. FINANCIAL EXPENSES AND INCOME Financial expenses and income for the years ended 31 December 2011 and 2010 is made up as follows:
2011 2010
Financial expenses:
Interest expense 512,306 .k 773,863
Costs with discounts of drafts 507,001 200,842
Other financial expenses 1,165,517 1,111,464
2,184,824 2,086,169
Net financial result (1,925,740) (2,082,648)
259,084 3,521
Financial incomes:
Interest income 246,718 3,521
Other financial income 12,366 -
259,084 3,521
The captation “Other financial expenses” in the amount of 1,165,517 Euros includes expenses with opening of credit, expenses with emission of letters to foreign suppliers and expenses with guarantees provided to others.
25. FISIPE PENSION FUND As explained in Note 2.10 the Group has assumed the commitment to grant retirement, incapacity, early retirement and survivor pensions to its employees. The pensions are determined based on the years of service of the employees and the salary scale in force. In prior years Fisipe established an autonomous pension fund to finance its liability for the payment of the pensions. In 2009, with authorization of Seguros de Portugal, the Group changed the plan for its serving employees to a Defined Contribution Plan as from December 2009. Therefore, given that the liability to pensioners was fully covered by the Fund, the Company reversed the balances of the captions “Pension responsability” and “Deferred actuarial losses” in the amounts of 832,866 Euros and 481,155 Euros, respectively, and so the effect of the change was a decrease in the liability and increase in net profit for 2009 of 351,711 Euros, this amount having been recorded as a credit to the caption “Personnel expenses”. In addition, at 31 December 2011 and 2010 the Group had a Defined Benefits Plan for its current pensioners and a Defined Contributions Plan for its serving employees. In accordance with an actuarial study made by the fund management company, the current amount of the Company’s past service liability of its pensioners was estimated at 2,497,880 Euros (2,685,795 Euros at 31 December 2010).
FISIPE - FIBRAS SINTÉTICAS DE PORTUGAL, S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS OF 31 DECEMBER 2011
(Translation of notes originally issued in Portuguese – Note 33)
(Amounts expressed in Euros)
31
The actuarial study was made based on the “Projected Unit Credit” method considering the following assumptions:
2011 2010 2009 2008 2007
Mortality Table TV 73/77 TV 73/77 TV 73/77 TV 73/77 TV 73/77
Income fund 4.50% 4.50% 5% 6% 6%
Wage growth rate N/A N/A N/A 3% 3%
Growth rate of pensions 0% 0% 0% 1% 1% The coverage of the Group’s liability by the pension fund and the caption “Pension responsibility” at 31 December 2011, 2010, 2009, 2008 and 2007 was as follows:
The evolution of the Group’s Pension Fund in the years ended 31 December 2011 and 2010 was as follows:
2011 2010
Balance at beginning of year 2,624,344 2,810,651
Expected return on fund 5,815 135,923
Pensions paid in the year (323,695) (324,905)
Contributions paid 61,451 2,675
Balance at end of year 2,367,915 2,624,344
Evolution of the Group’s liability in the year ended 31 December 2011 was as follows:
31.12.2011 31.12.2010 31.12.2009 31.12.2008 31.12.2007
Responsibilities
Actives - - - 903,613 576,311
Retired 2,497,880 2,685,795 2,810,651 3,001,400 3,425,189
2,497,880 2,685,795 2,810,651 3,905,013 4,001,500
Total Fund 2,367,915 2,624,344 2,810,651 3,072,147 3,499,940
Pension responsabilities 129,965 61,451 - 832,866 501,560
2,497,880 2,685,795 2,810,651 3,905,013 4,001,500
Percentage of coverage 100% 100% 100% 100% 100%
Balance at beginning of the year 2,685,795
Contributions paid (323,695)
Interest cost 127,829
Actuarial gains and losses 7,951
Balance at end of the year 2,497,880
FISIPE - FIBRAS SINTÉTICAS DE PORTUGAL, S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS OF 31 DECEMBER 2011
(Translation of notes originally issued in Portuguese – Note 33)
(Amounts expressed in Euros)
32
26. GUARANTEES GIVEN
Fisipe had assumed responsibilities for the following guarantees given at 31 December 2011:
Guarantees received from clients- APL 24,516
Customs (temporary storage) 75,000
Tax execution procedures 85,175
Projects QREN 925,767
Barreiro's Labour Court 27,774
Total 1,138,232
27. PAYABLES
Accounts payable to suppliers and other payables at 31 December 2011 and 2010 were made up as follows:
31.12.11 31.12.10
Accounts payable to suppliers 18,923,918 21,564,972
Other payables (Note 18) 114,948 470,156
19,038,866 22,035,128
At 31 December 2011 and 2010 this caption included amounts payable relating to acquisitions made in the normal course of the Group’s operations. The Group’s Board of Directors believes that the book value of the liability corresponds approximately to its fair value. In accordance with information in the consolidated statement of financial position, trade and other payables at those dates are payable as follows:
Short term: 2011 2010
0-30 days 1,995,827 1,236,821
30-90 days 15,485,453 19,948,358
90-180 days 1,345,326 102,641
+180 days 97,312 277,152
18,923,918 21,564,972
FISIPE - FIBRAS SINTÉTICAS DE PORTUGAL, S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS OF 31 DECEMBER 2011
(Translation of notes originally issued in Portuguese – Note 33)
(Amounts expressed in Euros)
33
28. ENVIRONMENTAL MATTERS In 2011 Fisipe incurred environmental costs of 198,121 Euros which are recorded in the caption “External supplies and services” and are made up as follows:
Solid waste treatment 137,324
Environmental management 14,459
Laboratory tests 46,338
198,121
In addition, at 31 December 2011 environmental investments made by Fisipe were as follows:
Connection to the ETAR Barreiro/Moita 209,243
Exchanger condensate DIW to CCB 23,944
Repair of sewer 109,040
Reuse rejected for reverse osmosis 20,986
363,213
Fisipe did not recognize any environmental contingent liability at 31 December 2011 as the Board of Directors believes that there are no requirements that could have a significant effect on the Company’s financial statements as of that date.
29. EARNINGS PER SHARE Basic earnings per share at of 31 December 2011 corresponds to net consolidated loss divided by the weighted average number of ordinary shares of the Group during the year, and was computed as follows:
2011
Profit for the purpose of calculating earnings per share (net profit for the year) 153,203
Number of shares 155,000,000
Earnings per share 0.001
FISIPE - FIBRAS SINTÉTICAS DE PORTUGAL, S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS OF 31 DECEMBER 2011
(Translation of notes originally issued in Portuguese – Note 33)
(Amounts expressed in Euros)
34
30. SEGMENT INFORMATION Segment information for the years ended 31 December 2011 and 2010 in accordance with the segments identified, which are the sale of fibre and the sale of thread is as follws:
Fibre Thread Eliminations Consolidated Fibre Thread Eliminations Consolidated
Revenue
External Sales 122,818,590 6,322,987 - 129,141,577 105,294,811 6,709,509 - 112,004,320
Inter-segmental sales 3,939,799 - (3,939,799) - 3,663,817 - (3,663,817) -
Other Revenu
Inter-segmental services rendered 1,358,894 - (1,358,894) - 1,354,988 - (1,354,988) -
Total revenue 128,117,283 6,322,987 (5,298,693) 129,141,577 110,313,616 6,709,509 (5,018,805) 112,004,320
Results
Segmental results 1,844,191 253,548 - 2,097,739 254,760 126,898 (126,898) 254,760
Operational results 2,097,739 254,760
Interests expenses (2,160,855) (23,969) - (2,184,824) (2,072,205) (13,964) 13,964 (2,072,205)
Interests income 258,175 909 - 259,084 2,237 1,284 (1,284) 2,237
Income tax 5,704 - - 5,704 (187,432) (23,531) - (210,963)
Results of ordinary results 177,703 (2,026,171)
Profit / (losses) in associated companies 205,988 - (230,488) (24,500) 114,218 - 145,837 260,055
Consolidated net profit / (loss) 153,203 (1,766,116)
OTHER INFORMATIONS
Segment non-current assets 27,282,290 40 (770,067) 26,512,263 25,727,578 928 (393,742) 25,334,764
Segment current assets 38,282,427 3,255,088 (2,085,962) 39,451,553 43,575,030 3,466,914 (2,229,617) 44,812,327
Total consolidated assets 65,564,717 3,255,128 (2,856,029) 65,963,816 69,302,608 3,467,842 (2,623,359) 70,147,091
Segment non-current liabilities 6,128,663 - 6,128,663 8,509,641 - - 8,509,641
Segment current liabilities 40,264,813 2,485,061 (2,085,962) 40,663,912 41,774,929 2,928,263 (2,229,617) 42,473,575
Total consolidated liabilities 46,393,476 2,485,061 (2,085,962) 46,792,575 50,284,570 2,928,263 (2,229,617) 50,983,216
20102011
31. INFORMATION REQUIRED BY LEGISLATION Fees invoiced by the Statutory Auditor Total fees invoiced for the legal revision and audit of the non-consolidated and consolidated annual accounts for the years ended 31 December 2011 and 2010 amounted to 45,000 Euros and 43,500 Euros, respectively. Additionally, in 2011 a total of 30,000 Euros were invoiced, related to a service other than audit and assurance.
32. APPROVAL OF THE FINANCIAL STATEMENTS These financial statements were approved by the Board of Directors and authorised to be issued on 8 March 2012. However, the financial statements are still subject to approval by the Shareholders’ General Meeting in accordance with the terms of commercial legislation in force in Portugal.
33. NOTE ADDED FOR TRANSLATION
The accompanying consolidated financial statements are a translation of consolidated financial statements originally issued in Portuguese, in accordance with IFRS. In the event of discrepancies, the Portuguese language version prevails.
The Accountant The Board of Directors
REPORT AND OPINION OF THE
FISCAL BORD
Audit Board
REPORT AND OPINION OF THE AUDIT BOARD
Shareholders,
In accordance with the legal and statutory rules, the Audit Board of FISIPE - Fibras
Sintéticas de Portugal, S.A., are hereby tabling their opinion on the Management Report
subscribed by the Board of Directors and on the consolidated financial statements for the year
ended 31 December 2011.
The Audit Board met in the legal terms and followed the Company's management and
activity regularly, keeping contacts with the Executive Committee.
The Board also met with the senior managers to obtain all the information necessary for the
performance of their duties.
The Audit Board analysed the Management Report and the individual and consolidated
financial statements presented by the Board of Directors.
As a result of the analysis, the Audit Board decided to point out the following facts:
1. The characterization presented in the Management Report of the multiple aspects that involve
the activity, that constitute the principal risk factors of the business;
2. The volatility of the results and of the profit margins and in particular the fluctuation of the
acrylonitrile (AN) price and of the demand evolution;
3. The rising importance of the energetic costs - electric power and steam - and the influence of
the price increase of the natural gas, still indexed to the oil price, in the costs of the second one;
4. The unavailability to improve the qualification of the fibre aiming at the improvement of the
results and the minimization of responsibilities and costs associated to claims;
5. The need of a more and more efficient management of the stocks that permits the minimization
of the stock holding costs, without rupture risks;
6. The continuation of the effort of investment in research and development, adjustment of
equipments;
7. The financing of the New Cogeneration Power Plant, through shareholders’ loans;
Audit Board
2
8. The financing difficulties in the domestic credit institutions and in the obtainment of bank
guaranties required by the foreign suppliers;
9. The continuation and reinforcement of the policy of reduction and contention of fixed costs.
The Board of Directors presents the strategy followed, consolidated in the Research and
Development of new products and markets, as well as in a job training policy.
The Audit Board expresses their wish and the need of results of the investments made in the
carbon fibre precursor and in the technology developed in the pilot plant, in order to be less
dependent on the low margin products in which it is impossible to reflect the increases of the raw
materials and the production. All efforts must be developed to assure the demand of the new
products so that the R&D expenses have the necessary return.
We also consider that the interest of a future integration of Munditêxtil in FISIPE shall be
evaluated, regarding that it is 100% held by the company, and that alternative conditions shall be
negotiated with EDP, FISIPE’s business partner in FISIGEN, of the present financing model of the
cogeneration plant, having in consideration the high financial costs of this company.
From the External Auditor we obtained the Legal Certification of Accounts and synthetic
information concerning the auditing of the accounts.
In accordance with the article 245 of the Código dos Valores Mobiliários (Securities Code),
we hereby declare that, as far as it is of our knowledge, the Consolidated Financial Statements for
the year ended 31 December 2011, as well as the Notes attached to them were prepared in
conformity with the applicable accounting rules, giving a true image of the assets and the liabilities,
the financial situation and the results of FISIPE- Fibras Sintéticas de Portugal, SA and of the
company included in its consolidation scope.
While performing our duties, we were not aware of any violation of the legal and statutory
rules nor had we knowledge of subsequent facts occurred after the end of the year that could affect
our Opinion.
OPINION
In the conditions above referred, and having in consideration the legal certification of
accounts subscribed by the Government Licensed Auditor, we are of the opinion that:
• The Management Report and the consolidated accounts of the year 2011 correspond
in general to the requirements of the Trading Companies Code;
Audit Board
3
• The accounting documents presented by the Board of Directors are in condition to be
approved;
• The proposal of application of profits should be approved.
Finally, the Audit Board, responsible for the control of the social affairs of the Company, wish
to express to the Board of Directors their recognition for the work developed in very hard conditions
and show their gratitude to the company Services for the availability shown, which simplified the
performance of their duties.
Lisbon, 20th of March of 2012
THE AUDIT BOARD,
José Jorge Martins Reimão - Chairman
Pedro Manuel da Silva Leandro - Member
Luís Jacinto Pereira - Member
STATUTORY AUDIT REPORT AND
AUDITORS’ REPORT
STATUTORY AUDIT REPORT AND AUDITORS’ REPORT
CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
(Translation of a report originally issued in Portuguese)
Introduction
1. In accordance with the applicable legislation, we present the Statutory Audit Report and the Auditors’ Report
on the consolidated and separate financial information contained in the Management report and the
consolidated and financial statements of Fisipe - Fibras Sintéticas de Portugal, S.A. (the “Company”) and
subsidiary, which comprise the Consolidated and Separate Statement of Financial Position as of 31
December 2011 (that presents total assets of 65,963,816 Euros and 65,564,717 Euros, respectively and total
equity of 19,171,241 Euros, including a net profit attributable to the equity holders of 153,203 Euros), the
Consolidated and Separate Statements of Profit and Loss, Comprehensive Income, Changes in Equity and
Cash Flows for the year then ended and the corresponding Notes.
Responsibilities
2. The Company’s Board of Directors is responsible for: (i) the preparation of consolidated and separate
financial information that present a true and fair view of the financial position of the companies included in
the consolidation, the consolidated and separate results and comprehensive income of their operations,
changes in equity and cash flows; (ii) the preparation of historical financial statements in accordance with
International Financial Reporting Standards as adopted by the European Union and that is complete, true,
timely, clear, objective and licit, as required by the Securities Market Code; (iii) the adoption of adequate
accounting policies and criteria and the maintenance of appropriate internal control systems; and (iv)
informing any significant facts that have influenced the operations of the companies included in the
consolidation, their financial position or their comprehensive income.
3. Our responsibility is to review the financial information contained in the above mentioned documents,
including verifying if, in all material respects, the information is complete, true, timely, clear, objective and
licit, as required by the Securities Market Code, and issue a professional and independent opinion, based on
our audit.
Scope
4. Our audit was performed in accordance with the auditing standards (“Normas Técnicas e as Directrizes de
Revisão/Auditoria”) issued by the Portuguese Institute of Statutory Auditors (“Ordem dos Revisores Oficiais
de Contas”), which require that the audit be planned and performed with the objective of obtaining
reasonable assurance about whether the consolidated and separate financial statements are free of material
misstatement. Our audit included verifying, on a sample basis, evidence supporting the amounts and
disclosures in the financial statements and assessing the significant estimates, based on judgments and
criteria defined by the Board of Directors, used in their preparation. Our audit also included verifying the
consolidation procedures used and that the financial statements of the companies included in the
consolidation have been appropriately audited, assessing the adequacy of the accounting policies used and
their uniform application and disclosure, taking into consideration the circumstances, verifying the
applicability of the going concern concept and assessing the adequacy of the overall presentation of the
consolidated and separate financial statements and assessing if, in all material respects, the information is
complete, true, timely, clear, objective and licit. Our audit also comprised verifying that the financial
information contained in the Management report is in accordance with the financial statements and the
verifications mentioned in numbers 4 and 5 of article 451º of the Portuguese Commercial Code. We believe that our audit provides a reasonable basis for expressing our opinion.
Page 2 of 2
Opinion
5. In our opinion, the consolidated and separate financial statements referred to in paragraph 1 above, present
fairly, in all material respects, the consolidated and separate financial position of Fisipe - Fibras Sintéticas de
Portugal, S.A. and subsidiary, as of 31 December 2011, the consolidated and separate results and
comprehensive income of its operations, the consolidated and separate changes in equity and the
consolidated and separate cash flows for the year then ended, in conformity with International Financial
Reporting Standards as adopted by the European Union, and the information there contained is, in
accordance with the definitions mentioned in paragraph 4 above, complete, true, timely, clear, objective and
licit.
Reporting over other legal requirements
6. It is also our opinion that the financial information contained in the Management report is in accordance with
the financial statements and the reporting of the corporate governance practices includes the elements
required to the Company under article 245º-A of the Securities Market Code.
Lisbon, 8 March 2012
________________________________________
Deloitte & Associados, SROC S.A.
Represented by Teresa Alexandra Martins Tavares
Financial Statements
Notes
31 December
2011
31 December
2010
NON CURRENT ASSETS:
3 22.268.407 24.240.243
Investments 4 775.167 569.179
4 3.457.338 -
Deferred tax assets 5 781.378 918.156
Total non current assets 27.282.290 25.727.578
CURRENT ASSETS:
Inventories 6 7.049.978 9.244.639
Accounts receivables from customers 7 26.327.140 29.979.041
State and other public entities 8 1.433.774 930.980
Other accounts receivable 9 1.204.262 975.363
Other current assets 10 934.189 650.856
Cash and cash equivalents 11 1.333.084 1.794.151
Total current assets 38.282.427 43.575.030
65.564.717 69.302.608
EQUITY:
Share capital 12 15.500.000 15.500.000
Supplementary capital 13 9.500.000 9.500.000
Legal reserve 13 1.220.612 1.220.612
Retained earnings 13 (7.202.574) (5.290.621)
Net profit / (loss) for the year 153.203 (1.911.953)
Total equity 19.171.241 19.018.038
LIABILITIES
NON CURRENT LIABILITIES:
Bank loans 16 2.059.615 3.062.750
Finance lease creditors 16 965.205 1.918.117
Other loans 16 330.639 486.839
Provisions 15 181.858 167.371
Pension responsibility 25 129.965 61.451
Deferred tax liabilities 5 2.461.381 2.813.113
Total non current liabilities 6.128.663 8.509.641
CURRENT LIABILITIES:
Bank loans 16 4.497.257 4.407.454
Other loans 16 156.200 76.008
Other debts with financial institutions 16 10.219.213 9.606.665
Finance lease creditors 16 1.260.319 1.256.327
Derivative financial instruments 16 59.380 95.193
Accounts payables to suppliers 27 18.860.160 21.484.291
State and other public entities 8 358.945 356.080
Other accounts payable 17 114.948 298.894
Other current liabilities 18 4.738.391 4.194.017
Total current liabilities 40.264.813 41.774.929
Total liabilities 46.393.476 50.284.570
Total equity and liabilities 65.564.717 69.302.608
The Accountant
STATEMENT OF FINANCIAL POSITION AS OF 31 DECEMBER 2011 AND 2010
FISIPE - FIBRAS SINTÉTICAS DE PORTUGAL, S.A.
(Amounts stated in Euros)
Tangible fixed assets
Accounts receivables from loans granted to associated companies
The Board of Directors
ASSETS
EQUITY AND LIABILITIES
The accompanying notes form an integral part of this statement of financial position as of 31 December 2011.
Notes 2011 2010
Operating income:
Sales 19 126.758.389 108.958.628
Services rendered 14 e 19 1.358.894 1.354.988
Supplementary income 14 730.841 725.821
Variation of production 20 (969.447) 631.464
Other operating income 21 1.010.546 1.131.664
Total operating income 128.889.223 112.802.565
Operating expenses:
Cost of sales 22 (93.414.365) (81.917.019)
External supplies and services (16.845.102) (15.853.172)
Personnel expenses (10.347.951) (9.835.454)
Depreciation 3 (3.941.993) (3.571.378)
Provisions and impairment (losses)/gains 15 (1.253.156) (533.111)
Other operating expenses 21 (924.849) (510.424)
Gains/(losses) on exchange differences (317.616) (327.247)
Total operating expenses (127.045.032) (112.547.805)
Net operating profit 1.844.191 254.760
Investment income 23 205.988 90.687
Financial income 24 258.175 2.237
Financial expenses 24 (2.160.855) (2.072.205)
Profit/(loss) before income tax 147.499 (1.724.521)
Income tax 5 5.704 (187.432)
Profit/(loss) after income tax 153.203 (1.911.953)
Net profit /(loss) for the period 153.203 (1.911.953)
Earnings per share:
Basic 0,001 (0,012)
Diluted 0,001 (0,012)
FISIPE - FIBRAS SINTÉTICAS DE PORTUGAL, S.A.
STATEMENT OF PROFIT AND LOSS BY NATURE
The Accountant The Board of Directors
The accompanying notes form an integral part of the statement of profit and loss by nature for the year ended 31 December 2011.
FOR THE YEARS ENDED 31 DECEMBER 2011 AND 2010
(Amounts stated in Euros)
Notes 2011 2010
Net profit/(loss) for the period 153.203 (1.911.953)
Total comprehensive income/ (loss) for the period 153.203 (1.911.953)
FISIPE - FIBRAS SINTÉTICAS DE PORTUGAL, S.A.
STATEMENT OF COMPREHENSIVE INCOME
The Accountant The Board of Directors
The accompanying notes form an integral part of the statement of comprehensive income
FOR THE YEARS ENDED 31 DECEMBER 2011 AND 2010
(Amounts stated in Euros)
for the year ended 31 December 2011.
FISIPE - FIBRAS SINTÉTICAS DE PORTUGAL, S.A.
STATEMENT OF CHANGES IN EQUITY
FOR THE YEARS ENDED 31 DECEMBER 2011 AND 2010
(Amounts stated in Euros)
Share Supplementary Legal Retained Net
Notes capital capital Reserves earnings profit/ (loss) Total
Balance as of 1 January 2010 15.500.000 9.500.000 1.220.612 (7.040.486) 1.902.028 21.082.154
Appropriation of consolidated net profit for 2009: - - - 1.749.865 (1.902.028) (152.163)
Net loss for the year ended 31 December 2010 - - - - (1.911.953) (1.911.953)
Balance as of 31 December 2010 15.500.000 9.500.000 1.220.612 (5.290.621) (1.911.953) 19.018.038
Balance as of 1 January 2011 15.500.000 9.500.000 1.220.612 (5.290.621) (1.911.953) 19.018.038
Appropriation of consolidated net profit for 2010 13 - - - (1.911.953) 1.911.953 -
Net profit for the year ended 31 December 2011 - - - - 153.203 153.203
Balance as of 31 December 2011 15.500.000 9.500.000 1.220.612 (7.202.574) 153.203 19.171.241
The accompanying notes form an integral part of this statement of changes in equity for the year ended 31 December 2011.
The board of directorsThe accountant
Notes 2011 2010
OPERATING ACTIVITIES:
Receipts from customers 132.361.493 102.420.175
Payments to suppliers (114.963.537) (94.479.167)
Payments to personnel (9.587.560) (9.885.053)
Cash flows from operations 7.810.396 (1.944.045)
Receipt / (Payment) of income tax and other taxes (360.284) (293.813)
Other payments relating to operating activities 649.630 (2.284.640)
Cash flows from operating activities (1) 8.099.742 (4.522.498)
INVESTING ACTIVITIES:
Receipts relating to:
Investment subsidies 760.695 -
760.695 -
Payments relating to:
Fixed Assets (1.399.783) (3.077.145)
Financial Investments (4.048.097) -
(5.447.880) (3.077.145)
Cash Flows from investing activities (2) (4.687.185) (3.077.145)
FINANCING ACTIVITIES:
Receipts relating to:
Loans 2.685.126 9.642.049
Loans by financial leasing 369.662 520.989
Interest income received 1.300 6.147
3.056.088 10.169.185
Payments relating to:
Loans (3.674.466) (1.761.272)
Loans by financial leasing (1.318.582) (979.825)
Interest expense paid (1.936.664) (775.041)
(6.929.712) (3.516.138)
Cash Flows from financing activities (3) (3.873.624) 6.653.047
Variation in cash and cash equivalents (4) = (1) + (2) + (3) (461.067) (946.596)
Cash and cash equivalents at the beginning of the year 11 1.794.151 2.740.747
Cash and cash equivalents at the end of the year 11 1.333.084 1.794.151
The accountant The Board of Directors
for the year ended 31 December 2011.
The accompanying notes form an integral part of this statement of Cash Flows
FISIPE - FIBRAS SINTÉTICAS DE PORTUGAL, S.A.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED 31 DECEMBER 2011 AND 2010
(Amounts stated in Euros)
Notes to
Financial Statements
FISIPE - FIBRAS SINTÉTICAS DE PORTUGAL, S.A.
NOTES TO THE FINANCIAL STATEMENTS
AS OF 31 DECEMBER 2011
(Translation of notes originally issued in Portuguese – Note 33)
(Amounts expressed in Euros)
1
1. INTRODUCTION The FISIPE Group consists of FISIPE – Fibras Sintéticas de Portugal, S.A. (“Fisipe” or “the Company”) has its head office in Lavradio, was founded on 7 September 1973 and its main activity is the production and sale of acrylic fibres. These financial statements refer to the Company’s non-consolidated operations and were prepared for approval and publication in accordance with current legislation. The Company will also prepare separate consolidated financial statements in accordance with current legislation. The accompanying financial statements are presented in Euros (functional currency) as it is the currency preferentially used in the economic environment in which the Company operates.
2. PRINCIPAL ACCOUNTING POLICIES The principal accounting policies adopted in preparing the accompanying financial statements are as follows: 2.1. Basis of preparation
The accompanying financial statements have been prepared in accordance with the International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board (“IASB”), endorsed by the European Union, in force for years beginning on 1 January 2011. These standards correspond to International Financial Reporting Standards issued by the International Accounting Standards Board (“IASB”) and interpretations issued by the International Financial Reporting Interpretation Committee (“IFRIC”) or the previous Standing Interpretations Committee (“SIC”) as endorsed by the European Union. The financial statements have been prepared on a going concern basis, in accordance with the accruals basis from the accounting records of the Company, maintained in accordance with International Financial Reporting Standards as endorsed by the European Union.
FISIPE - FIBRAS SINTÉTICAS DE PORTUGAL, S.A.
NOTES TO THE FINANCIAL STATEMENTS
AS OF 31 DECEMBER 2011
(Translation of notes originally issued in Portuguese – Note 33)
(Amounts expressed in Euros)
2
New accounting standards and their impact in these financial statements Until the date of approval of these financial statements, the European Union endorsed the following standards, interpretations, amendments and revisions with mandatory application to the economic year beginning on 1 January 2011:
Standard/Interpretation
Effective Date
(financial years
beginning on or after)
IAS 24 – Disclosure of related parties (revision) 1-Jan-11
IFRS 1 – Amendment (Limited Exemption from Comparative IFRS 7 Disclosures for
First-time Adopters) 01-Jul-10
IAS 32 – Amendment (Classifications of the Rights Issues) 1-Feb-10
IFRIC 19 – Extinguishing Financial Liabilities with Equity Instruments 01-Jul-10
IFRIC 14 – Amendment (Prepayments of a Minimum Funding Requirement) 01-Jan-11
IFRS 7 – Amendment Financial instruments: Disclosures - Transfer of Financial Assets 01-Jul-11
All the above standards were applied by the Company for the first time in 2011, without having a significant retrospective impact on the accompanying financial statements. The following standards and interpretations, with mandatory application in future financial years, were, until the date of approval of these financial statements, endorsed by the European Union:
Standard/Interpretation
Effective Date
(financial years
beginning on or after)
Improvements to IFRS (2010)
Several (on / after
01-Jul-10)
These standards, despite being endorsed by the European Union, have not been adopted by the Company in 2011 as their adoption is not yet mandatory. Their adoption is not expected to have a significant impact on the Company’s financial statements.
FISIPE - FIBRAS SINTÉTICAS DE PORTUGAL, S.A.
NOTES TO THE FINANCIAL STATEMENTS
AS OF 31 DECEMBER 2011
(Translation of notes originally issued in Portuguese – Note 33)
(Amounts expressed in Euros)
3
The following accounting standards and interpretations issued by the IASB have not yet been endorsed by the European Union:
Standard/Interpretation
Effective Date
(financial years
beginning on or after)
IFRS 9 - Financial Instruments 1-Jan-13
Amendments to IAS 12 - Deferred Tax: Recovery of Underlying Assets 1-Jan-12
Amendments to IFRS 1 - Severe Hyperinflaction and Removal of Fixed Dates for
First-time Adopters 1-Jul-11
Amendments to IFRS 7 - Financial Instruments: Disclosures 1-Jul-11
IFRS 10 - Consolidated Financial Statements 1-Jan-13
IFRS 11 - Joint Arrangements 1-Jan-13
IFRS 12 - Disclosure of Interests in Other Entities 1-Jan-13
IFRS 13 - Fair Value Measurement 1-Jan-13
IAS 27 (Revised 2011)- Separate Financial Statements 1-Jan-13
IAS 28 (Revised 2011)- Investments in Associates and Joint Ventures 1-Jan-13
Amendments to IAS 1 - Presentation of Comprehensive Income 1-Jan-13
Amendments to IAS 19 - Post Employment Benefits 1-Jan-13
IFRIC 20 - Stripping Costs in the Production Phase of a Surface Mine 1-Jan-13
The future adoption of these standards and interpretations not yet endorsed by the European Union is not expected to have a significant retrospective impact on these financial statements. The company adopted IFRS in the preparation of its financial statements for the first time in 2005, having in the transition process complied with the requirements of IFRS 1 – First-time Adoption of International Financial Reporting Standards (IFRS 1). The effect of the adjustments as of 1 January 2005 relating to the transition to IFRS, in the amount of 14,196,980 Euros, was recorded by corresponding entry to the captions “Retained Earnings” and “Other revaluation reserves”. 2.2 Tangible fixed assets
Tangible fixed assets acquired up to 1 January 2004 (date of transition to IFRS) are recorded at deemed cost, which corresponds to acquisition cost or acquisition cost restated based on price indices in accordance with legislation in force, except for some items of equipment which were revalued as of the transition date (1 January 2004) at corresponding fair value, determined by an independent specialized entity in accordance with IFRS 1 – First Application of International Financial Reporting Standards. The tangible fixed assets acquired after that date are stated at cost, less accumulated depreciation and impairment losses. Depreciation is provided on a straight-line basis as from when the assets are ready to be used, over the estimated period of useful life of each group of assets.
FISIPE - FIBRAS SINTÉTICAS DE PORTUGAL, S.A.
NOTES TO THE FINANCIAL STATEMENTS
AS OF 31 DECEMBER 2011
(Translation of notes originally issued in Portuguese – Note 33)
(Amounts expressed in Euros)
4
The depreciation rates used correspond to the following periods of estimated useful life:
Years
Anos
Buildings and other constructions 20 – 50 Edifícios e outras construções 20 – 50 Machinery and equipment 5 – 20 Equipamento básico 5 – 20 Transport equipment Administrative equipment
4 – 12 4 – 20
Equipamento de transporte 4 – 12
Tools and utensils 4 – 10 Ferramentas e utensílios 4 – 10 Other tangible fixed assets 3 – 14 Outras imobilizações corpóreas 3 – 14 Maintenance and repair costs of fixed assets are expensed as incurred. Fixed assets in progress correspond to fixed assets still under construction and are recorded at acquisition cost. Such fixed assets are depreciated as from the time the underlying assets are completed or are in a usable state.
2.3 Accounting for leases A lease is classified as (i) a finance lease if substantially all the risks and benefits of ownership are transferred, and (ii) as an operating lease where this does not occur.
Finance and operating leases are classified based on the substance rather than the form of the legal contract. Leases in which the Company is the lessee Fixed assets acquired under finance lease contracts, as well as the corresponding liabilities are recognised in accordance with the financial method. In accordance with this method the cost of the assets (the lower of the fair value or the discounted amount of the lease instalments) is recognised in tangible fixed assets. The lease instalments are separated between financial cost and amortisation and depreciation cost in the income statement for the year to which they correspond. In the case of operating leases, the lease instalments are recorded as costs for the year, on a straight-line basis over the period of the contract.
2.4 Investments in subsidiaries and associates
Investments in shares of subsidiaries and associates are stated at acquisition cost net of estimated impairment losses.
FISIPE - FIBRAS SINTÉTICAS DE PORTUGAL, S.A.
NOTES TO THE FINANCIAL STATEMENTS
AS OF 31 DECEMBER 2011
(Translation of notes originally issued in Portuguese – Note 33)
(Amounts expressed in Euros)
5
2.5 Judgements and estimates In preparing the accompanying financial statements estimates were used that affect the reported amounts of assets and liabilities as well as the amounts of income and costs for the reporting period. The estimates were made based on the best information available of the events and transaction in progress at the time the financial statements were approved and the experience of the past and/or current events. However, events can occur in subsequent periods which, due to their unpredictability, were not considered in these estimates. Significant changes to these estimates, occurring after the date the financial statements were prepared will be booked on the subsequent year, as defined in IAS 8. The main estimates used by the Company relate to the measurement of the pension liability of the defined benefits pension plan, determination of the fair value of the derivative financial instruments, where applicable, and realizable value of the deferred tax assets, as follows:
a) Pension liability
The Company’s liability for retirement pension supplements (Defined Benefits Plan) is determined by actuarial studies thereof at the end of each year made by independent specialized entities in accordance with internationally accepted actuarial methods and assumptions.
b) Derivative financial instruments
Derivative financial instruments used by the Company to hedge cash flows consist basically of interest rate swaps. Determination of the fair value of these derivative financial instruments is made at the end of each financial year by external appraisers (usually by the entity with which the derivative financial instrument was contracted).
c) Deferred tax assets
The deferred tax assets are recognised only if it is expectable that future fiscal profits will be enough to use the deferred tax assets. By the end of each reporting period the deferred tax assets are assessed, and they are reduced if it future recoverability is not expectable. This revision is based on projections of the Company future activity where it is applicable.
The main assumptions used in the Company’s estimates are disclosed in the notes to the financial statements.
FISIPE - FIBRAS SINTÉTICAS DE PORTUGAL, S.A.
NOTES TO THE FINANCIAL STATEMENTS
AS OF 31 DECEMBER 2011
(Translation of notes originally issued in Portuguese – Note 33)
(Amounts expressed in Euros)
6
2.6 Inventories Goods, raw, subsidiary and consumable materials are stated at average acquisition cost. Finished and semi-finished goods and work in process are stated at production cost, which includes the average cost of raw materials incorporated, direct labour and general production costs. Impairment loss on inventories are recorded when their net realizable value is lower than cost. Net realizable value corresponds to normal selling price less costs to complete production and costs to sell.
2.7 Financial assets and liabilities
Financial assets and liabilities are recognised in the statement of financial position when the Company becomes part of the corresponding contractual relationships. Financial assets are initially recognised at cost, which is the fair value of the amount paid, including transaction costs, except where the financial instruments are valued at fair value through profit and loss and the transaction costs are immediately recorded in profit and loss. The Company derecognizes financial assets when: (i) the contractual rights to their flows expire; (ii) the significant risks and benefits relating to their ownership are transferred to another entity or; (iii) despite having retained an unsubstantial part of the significant risks and benefits, it transfers control over them. The Company derecognizes financial liabilities only when the corresponding obligation is settled, cancelled or expires. Financial assets are classified in the following categories:
Financial assets measured at fair value through profit or loss
Financial assets held to maturity
Loans and receivables
Financial assets available for sale The financial assets measured at fair value through profit or loss are financial assets held for trading, such as financial assets that the Company intends to trade in the short term. In the Company’s case this category includes essentially derivative financial instruments. Such assets are subsequently measured at fair value, recorded by corresponding entry to profit and loss statement. Financial assets held to maturity are financial assets with fixed maturities which the Company intends and has the ability to hold to maturity. In the Company’s case there are no financial assets to be classified in this category.
FISIPE - FIBRAS SINTÉTICAS DE PORTUGAL, S.A.
NOTES TO THE FINANCIAL STATEMENTS
AS OF 31 DECEMBER 2011
(Translation of notes originally issued in Portuguese – Note 33)
(Amounts expressed in Euros)
7
Loans and receivables arise in the normal course of the Company’s business, which it does not intend to trade. This category includes trade and other receivables and bank deposits. These assets are subsequently measured at amortized cost in accordance with the effective interest rate method. Financial assets available for sale are financial assets that are not classifiable in one of the preceding categories. In the Company’s case this classification would include financial participations which could not be classified as subsidiaries. However, as of the date of these financial statements there were no assets classified in this category. Financial liabilities are classified in the following categories:
Financial liabilities measured at fair value through profit or loss
Other financial liabilities
Financial liabilities, measured at fair value through profit or loss correspond to liabilities held for trading, such as financial liabilities that the Company intends to trade in the short term. In the Company’s case this category includes only derivative financial instruments. These financial liabilities are subsequently measured at fair value, recorded by corresponding entry to profit and loss. Other financial liabilities correspond to the other financial liabilities are not classifiable in the former category. This category includes loans from banks and other entities, including shareholders and trade and other payables. Such liabilities are subsequently measured at amortized cost in accordance with the effective interest rate method. a) Cash and cash equivalents
Cash and cash equivalents includes cash on hand, demand and term deposits and other treasury applications that mature in less than three months and are readily convertible to cash with an insignificant risk of change in value. These assets are measured at amortized cost. Amortized cost of these assets usually does not differ from their nominal value.
b) Receivables Trade accounts receivables from customers and other accounts receivables are recognised at amortized cost net of any impairment losses. Amortized cost of these financial assets usually does not differ from their nominal value.
c) Loans Loans are recorded as liabilities and measured at amortized cost. Any expenses with the obtaining of these loans, usually paid in advance when the loans are obtained, are recognised at amortized cost in accordance with the effective interest method in the statement of profit and loss for the year over the period of the loans. Such costs are classified as deductions from the caption “Bank loans”.
FISIPE - FIBRAS SINTÉTICAS DE PORTUGAL, S.A.
NOTES TO THE FINANCIAL STATEMENTS
AS OF 31 DECEMBER 2011
(Translation of notes originally issued in Portuguese – Note 33)
(Amounts expressed in Euros)
8
Financial expenses relating to bank interest and similar costs (namely Stamp Duty) are recognised on an accruals basis in the statement of profit and loss, the amounts due and not paid at the balance sheet date being classified in the caption “Other current liabilities”.
d) Trade and other payables Trade and other payables are recorded at amortized cost. Usually, the amortized cost of these financial liabilities usually does not differ from its nominal value.
e) Financial instruments The Company is exposed to financial risk resulting basically from fluctuations in exchange and interest rates and uses derivative financial instruments to manage its financial risks relating to fluctuations in interest rates only as a way of hedging such risks. Derivative financial instruments are not used for speculation purposes. The derivative financial instruments used by the Company correspond to interest rate swaps. Derivative financial instruments are initially recorded at fair value on the date of they are contracted. At each statement of financial position date, they are remeasured at fair value, with the corresponding gain or loss on the remuneration being recorded immediately in the statement of profit and loss, unless such instruments are designated as hedging instruments. In the case of the company does not exist, yet financial instruments that are eligible for hedge accounting. A derivative financial instrument with a positive fair value is recognised as a financial asset under the caption "Derivative financial instruments". A derivative financial instrument with a negative fair value is recognised under the same caption but as a financial liability. A derivative instrument is presented as non-current if the remaining maturity exceeds 12 months and is not expected to be realized or settled within that period. Where there are derivatives embedded in other financial instruments or other host contracts, they are treated as separate derivatives in situations where the risks and characteristics are not closely related to the host contracts and where the host contracts are not presented at fair value with unrealised gains or losses recorded in the statement of profit and loss.
2.8 Risk management policies The Company’s operations are exposed to several risks: financial market risks (including exchange rate risk, interest rate risk and price risk), credit risk and liquidity risk. The Company’s overall risk management program is focused on the unpredictability of the markets and endeavours to minimize the resulting adverse effects on its financial performance.
FISIPE - FIBRAS SINTÉTICAS DE PORTUGAL, S.A.
NOTES TO THE FINANCIAL STATEMENTS
AS OF 31 DECEMBER 2011
(Translation of notes originally issued in Portuguese – Note 33)
(Amounts expressed in Euros)
9
The Company’s risk management is controlled by Fisipe’s treasury department in accordance with policies approved by the Board of Directors. In this respect, the Board of Directors has defined the main overall risk management principles, as well as specific policies in some areas, such as exchange rate risk, interest rate risk and credit risk.
a) Market risk: One of Fisipe’s main risks is the variation in the price of acrilonitrilo, a
petroleum derivative, which is the Company’s main raw material. As there is no financial market in which this product can be traded, the Company seeks to minimize the risks of variation ensuring part of its supply through the use of a formula that considers the average evolution of the price of this raw material.
b) Foreign exchange risk: Fisipe is subject to exchange risk, relating to the US dollar. The Company seeks to minimize this risk through trying to make a hedge between its purchases and sales. The main raw material is purchased in dollars and the majority of sales are made in the same currency.
c) Interest rate risk: This is also a risk that the Company considers, hedging its exposure
with the appropriate instruments available in the market, namely interest rate swaps.
d) Credit risks: Credit risk of the Company’s clients is managed through adequate evaluation of the risk before accepting a client and by adequate accompaniment of the credit limits assigned to each. On the other hand Fisipe seeks to minimize these risks, requiring the opening of export letters of credit or through credit insurance where this is available.
e) Liquidity risk: Treasury needs are managed by Fisipe’s central treasury department,
which in an appropriate and opportune way manages the liquidity excesses and shortfalls. The random treasury needs are covered by control of accounts receivable and maintenance of adequate credit limits agreed between Fisipe and the banks.
2.8.1 Exchange rate sensitivity analysis The following sensitivity analysis was prepared considering the exposure of the Company’s result to a variation in the rate of the USD to the Euro and considered the following assumption: a 1% upwards/downwards variation the rate of exchange in relation to that in force on the date of the transactions and those in force on the dates of collection or payment. The impact on net result would be as follows:
+ 1% - 1%
Net profit (373.890) 381.443
FISIPE - FIBRAS SINTÉTICAS DE PORTUGAL, S.A.
NOTES TO THE FINANCIAL STATEMENTS
AS OF 31 DECEMBER 2011
(Translation of notes originally issued in Portuguese – Note 33)
(Amounts expressed in Euros)
10
2.8.2 Interest rate sensitivity analysis The following sensitivity analysis was prepared considering the Company’s exposure to interest rates on its borrowings, lease contracts and interest cost incurred on the discount of its invoices and letters of credit in banks. A 1% upwards/downwards variation the interest rate would have the following impact on the Company’s net result:
2.9 Provisions
Provisions are recognised when, and only when, the Company has an obligation (legal or implicit) resulting from a past event and it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. Provisions are reviewed and adjusted at the statement of financial position date to reflect the best estimate as of that date.
2.10 Pension supplement The Company has assumed the commitment to grant its employees retirement pension supplements. In 2009, with authorization of the Portuguese Institute of Insurance (Instituto de Seguros de Portugal) the Company changed the plan for its employees, these being covered by a Defined Contribution Plan effective as from December 2009. The Defined Contribution Plan is a pension plan under which the Company’s only financial obligation is to make fixed contributions to the Fund. The Company maintains the Defined Benefits Plan for pensioners existing at 31 December 2009, the plan being one that defines the amount of the pension supplement that an employee will receive when he/she retires, normally dependent on one or more factors, such as age, years of service and remuneration. In order to know the amount of the liability of the Defined Benefits Plan and its cost, actuarial studies are made at the end of each accounting period using internationally acceptable methods and assumptions. The liability and cost thus determined are compared with the Company’s accounting records and the market value of the pension fund, so as to determine the amount of the difference and the possible additional contribution to be made to the fund. The Company follows the criteria defined in IAS 19 for recording pensions, which establishes that pension costs must be recognised as the services are being rendered by the benefiting employees. The cost of the Defined Contribution Plan is recorded annually based on a percentage of the payroll of each serving individual beneficiary of the pension plan.
+ 1% - 1%
Net profit (200.130) 200.130
FISIPE - FIBRAS SINTÉTICAS DE PORTUGAL, S.A.
NOTES TO THE FINANCIAL STATEMENTS
AS OF 31 DECEMBER 2011
(Translation of notes originally issued in Portuguese – Note 33)
(Amounts expressed in Euros)
11
2.11 Subsidies from the government and other public entities Investment subsidies relating to the acquisition of fixed assets are recorded in the caption “Other non-current liabilities” and are amortized on a straight-line basis to the statement of profit and loss over the estimated period of useful life of the subsidized assets.
2.12 Contingent assets and liabilities Contingent liabilities are not recognised in the financial statements but disclosed in the notes thereto, unless the possibility of an outflow of funds affecting future financial benefits is remote, in which case they are not disclosed. Contingent assets are not recognised in the financial statements but disclosed in the notes thereto when there is a probable future financial benefit.
2.13 Income tax Income tax is computed based on the taxable results of the Company and includes deferred taxes. Deferred taxes are calculated using the financial position liability method, reflecting the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred tax assets and liabilities are calculated and evaluated annually using the tax rates expected to be in force when the temporary differences reverse, based on the tax rates (and tax legislation) that has been formally or substantially issued as of the date of the financial statements. Deferred tax assets are recognised only when it is probable that sufficient taxable income will be available against which the deferred tax assets can be utilized or in situations in which there are temporary taxable differences that offset temporary deductible differences in the period they reverse. At the statement of financial position date, a review is made of the deferred tax assets and they are reduced whenever their future use is no longer probable. Deferred tax assets and liabilities are recorded in the statement of profit and loss, except if they relate to items recorded directly in equity captions, in which case the corresponding deferred tax is also recorded under the same caption.
2.14 Revenue Revenue from sales is recognised in the statement of profit and loss when all the risks and rewards of ownership have been significantly transferred to the buyer and the corresponding income can be reasonably quantified. Sales are recognised net of taxes, discounts and other costs relating to their realization, by the fair value of the amount received or receivable.
FISIPE - FIBRAS SINTÉTICAS DE PORTUGAL, S.A.
NOTES TO THE FINANCIAL STATEMENTS
AS OF 31 DECEMBER 2011
(Translation of notes originally issued in Portuguese – Note 33)
(Amounts expressed in Euros)
12
Revenue from services rendered is recognised in the statement of profit and loss for the year to which it relates based on the percentage of completion of the services as of the date of the financial statements. Interest and financial income are recognised on a accruals basis in accordance with the applicable effective rate of interest.
2.15 Accruals basis of accounting The income and expenses are recognised in the year to which they relate, regardless of the date of payment or receipt (in accordance with the accruals basis of accounting). The income and expenses for which the actual amount is not known are estimated. Under the captions "Other current assets" and "Other current liabilities” are recorded income and expenses attributable to the current year, which settlement or receipt will only occur in the future, as well as amounts paid and received that have occurred on the statement of financial position date, but which relates to future periods, and that will be charged to the profit and loss of the corresponding year.
2.16 Classification in the statement of financial position Assets realizable and liabilities payable in more than one year from the date of the statement of financial position are classified as non-current assets and liabilities, respectively.
2.17 Foreign currency balances and transactions Transactions in currencies other than the Euro are translated to the Euro using the exchange rates prevailing as of the transaction dates. At each statement of financial position date foreign currency monetary assets and liabilities are translated to Euros at the exchange rates prevailing as of that date. Exchange gains and losses arising from differences between the historical exchange rates and those prevailing at the date of collection, payment or at the date of the statement of financial position are recorded as income and costs in the statement of profit and loss for the year.
2.18 Non-current assets held for sale
Non-current assets (and sets of assets and liabilities for sale) are classified as held for sale and recorded at the lower of their book value or fair value less costs to sell. Non-current assets (and sets of assets and liabilities for sale) are classified as held for sale if their book value is recovered by sale rather than by continued use. This condition is considered to be met when the sale of the asset (and set of assets and liabilities for sale) is very probable and it is available for immediate sale in its present condition. In addition, management at adequate levels must be involved in the sale and the sale is expected to be realized within a period of 12 months from the date of classification as assets held for sale.
FISIPE - FIBRAS SINTÉTICAS DE PORTUGAL, S.A.
NOTES TO THE FINANCIAL STATEMENTS
AS OF 31 DECEMBER 2011
(Translation of notes originally issued in Portuguese – Note 33)
(Amounts expressed in Euros)
13
2.19 Impairment of assets
a) Non-financial assets, excluding “Goodwill”
Impairment analyses are made at each statement of financial position date and whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recovered. Whenever the book value of an asset exceeds its recoverable amount an impairment loss is recognised in the statement of profit and loss caption “Provisions and impairment losses”. The recoverable amount is the higher of the net selling price and the value in use. Net selling price is the amount that would be obtained from selling the asset in a transaction between independent knowledgeable parties, less the costs directly attributable to the sale. Value in use is the present value of the estimated future cash flows resulting from continued use of the asset and its sale at the end of its useful life. The recoverable amount is estimated for each asset individually or, where that is not possible, for the cash generating unit to which the asset belongs. Impairment losses recognised in prior periods are reversed when there are indications that such losses no longer exist or have decreased. The reversal of impairment losses is recognised the statement of profit or loss caption “Provisions and impairment losses”. However, the reversal of impairment losses is made up to the limit that would have been recognised (net of amortization and depreciation) if the impairment loss had not been recognised in prior years.
b) Financial assets (usually accounts receivables) Whenever there is objective evidence that the Company will not collect the amounts to which it has the right in accordance with the conditions agreed between the parts, an impairment loss is recognised in the statement of profit and loss. The following indicators are used by the Company to identify indications of impairment:
Non compliance with the due date and/or other clauses agreed to by the parties;
Financial difficulties of the debtor;
Probable bankruptcy of the debtor. Whenever these indications exist an impairment analysis is made, which is determined by the difference between the book value of the asset and its recoverable value. Impairment losses are recognised in the caption “Provisions and impairment (losses)/gains” in the period in which they are determined. If the impairment loss subsequently decreases, it is reversed to the statement of profit and loss caption “Provisions and impairment (losses)/ gains”.
FISIPE - FIBRAS SINTÉTICAS DE PORTUGAL, S.A.
NOTES TO THE FINANCIAL STATEMENTS
AS OF 31 DECEMBER 2011
(Translation of notes originally issued in Portuguese – Note 33)
(Amounts expressed in Euros)
14
2.20 Subsequent events Events occurred after the statement of financial position date that provide additional information about conditions that existed at statement of financial position date (adjusting events) are reflected in financial statements. Events occurred after the statement of financial position date that provide information on conditions that occur after that date (non-adjusting events) are disclosed in the consolidated financial statements, if materially significant.
3. TANGIBLE FIXED ASSETS The changes in tangible fixed assets and corresponding accumulated depreciation in the years ended 31 December 2011 and 2010 were as follows:
2011 2010
Land Buildings and Machinery and Transport Administrative Tools and Other f ixed Fixed assets
other construction equipment equipment equipment utensilis assets in progress Total Total
Gross assets
Opening balance 249,263 31,230,879 116,189,146 741,840 2,561,828 4,239,296 1,074,342 854,047 157,140,641 153,179,363
Increases - 378,960 - 95,742 139,750 - 1,973,335 2,587,787 4,595,124
Net changes of impairment
losses (Note 15) - - 79,221 - - - - (696,851) (617,630) (633,846)
Transfers - - 442,855 - - 12,112 - (454,967) - -
Closing balance 249,263 31,230,879 117,090,182 741,840 2,657,570 4,391,158 1,074,342 1,675,564 159,110,798 157,140,641
Depreciation and amortization
Opening balance - 28,680,917 96,040,548 738,184 2,365,709 4,000,698 1,074,342 - 132,900,398 129,324,965
Amortizations of the period - 288,110 3,455,634 2,034 115,554 80,661 - - 3,941,993 3,570,550
Others - - - - - - - - - 4,883
Closing balance - 28,969,027 99,496,182 740,218 2,481,263 4,081,359 1,074,342 - 136,842,391 132,900,398
Net value 249,263 2,261,852 17,594,000 1,622 176,307 309,799 - 1,675,564 22,268,407 24,240,243
The increases in 2011 correspond essentially to major repairs of equipment, in the amount of 300,729 Euros, acquisition of informatics equipment in the amount of 95,742 Euros, ceramic bars in the amount of 57,620 Euros and spinnerretes H40 in the amount of 32,000 Euros. The caption “Fixed Assets in progress”, in the amount of 1,675,564 Euros corresponds essentially to equipments of the Carbogen, Polyblend and Acryforce projects (relating to the carbon fibre forerunner) that was in progress as of 31 December 2011. On 31 December 2010, the caption “Depreciation and amortization” in the amount of 3,571,378 Euros, includes the amount of 3,570,550 Euros and 828 Euros for the amortization of tangible and intangible assets, respectively. As of 31 December 2010, the intangible assets were fully depreciated.
FISIPE - FIBRAS SINTÉTICAS DE PORTUGAL, S.A.
NOTES TO THE FINANCIAL STATEMENTS
AS OF 31 DECEMBER 2011
(Translation of notes originally issued in Portuguese – Note 33)
(Amounts expressed in Euros)
15
4. INVESTMENTS The Company’s investments at 31 December 2011 and 2010 were made up as follows:
31.12.11 31.12.10
Impairment Impairment
Acquisition losses Acquisition losses
costs (Note 15) Total costs (Note 15) Total
Financial investments in group companies 4,050,000 (3,279,933) 770,067 4,050,000 (3,510,421) 539,579
Financial investments in associated companies 24,500 (24,500) - 24,500 - 24,500
Bonds and other financial assets 113,088 (107,988) 5,100 113,088 (107,988) 5,100
4,187,588 (3,412,421) 775,167 4,187,588 (3,618,409) 569,179
Loans granted to associated companies 4,048,097 (590,759) 3,457,338 - - -
8,235,685 (4,003,180) 4,232,505 4,187,588 (3,618,409) 569,179
The amount of 24,500 Euros recorded in the caption “Financial investments in associated companies” corresponds to a 49% participation of Fisipe in Fisigen equity (the remaining 51% belongs to EDP), which is recorded at cost. Fisigen is a cogeneration plant supplying steam to Fisipe as from the beginning of 2010. The caption “Loans granted to associated companies” respects to loans granted to Fisigen, which bear interest at 8.5% and matures in 2025. Investments in subsidiaries and associates at 31 December 2011 were as follows:
Impairment
Total Net Acquisition losses
Head office Assets Equity income profit % costs (Note 15) Total
Munditêxtil Lavradio 3,255,128 770,067 6,451,956 230,488 100 4,050,000 (3,279,933) 770,067
Fisigen 40,026,484 (1,205,630) 24,732,509 (1,541,537) 49 4,072,597 (615,259) 3,457,338
8,122,597 (3,895,192) 4,227,405
Statement value of financial positionFinancial information on 31.12.11
5. INCOME TAX
As explained in Note 2.13 the Company recognizes in its financial statements the tax effect of temporary differences between accounting and tax assets and liabilities, these having been recognised at 31 December 2011 and 2010 based on an aggregate tax rate of 26.5% (except for tax losses, in which the rate is 25%). As a result of amendments to article 116º of the Law 64-B/2011 of the Corporate Income Tax Code, starting on January 1
st, 2012, Portuguese companies with taxable income exceeding
1,500,000 Euros will be subject to an additional tax of 3% on taxable income exceeding that amount and lower than 10,000,000 Euros. For amounts above 10,000,000 Euros the tax will be 5%. However, the Board of Directors believes that the effect of this change on the Company’s financial statements will not have impact in the tax estimates of future periods and so it has not been reflected on the rate of deferred tax.
FISIPE - FIBRAS SINTÉTICAS DE PORTUGAL, S.A.
NOTES TO THE FINANCIAL STATEMENTS
AS OF 31 DECEMBER 2011
(Translation of notes originally issued in Portuguese – Note 33)
(Amounts expressed in Euros)
16
The main temporary differences between the accounting and tax amounts at 31 December 2011 and 2010 and the corresponding deferred tax assets and liabilities and the effect on results for the years then ended, are as follows:
Increase /
(decrease) in
period
Deferred Deferred in the income
Base taxes Base taxes statement
Assets:
Impairment losses and provisions 2,768,595 733,677 2,049,552 543,130 190,547
Tax losses carried forward:
2005 - - 1,309,299 327,325 (327,325)
2008 190,802 47,701 190,802 47,701 -
190,802 47,701 1,500,101 375,026 (327,325)
2,959,397 781,378 3,549,653 918,156 (136,778)
Liabilities:
Legal revaluations (214,771) (56,914) (232,761) (61,682) 4,768
Other revaluations (9,073,458) (2,404,467) (10,382,758) (2,751,431) 346,964
(9,288,229) (2,461,381) (10,615,519) (2,813,113) 351,732
(6,328,832) (1,680,003) (7,065,866) (1,894,957) 214,954
Temporary differences
31.12.1031.12.11
The changes in deferred tax assets and liabilities in the years ended 2011 and 2010 were as follows:
Deferred taxes Deferred taxes
Assets Liabilities Total Assets Liabilities Total
Opening balance 918,156 (2,813,113) (1,894,957) 1,211,454 (3,170,861) (1,959,407)
Effect in net result:
Period amortization of fixed assets
revaluations:
Legal revaluations - 4,768 4,768 - 10,784 10,784
Other revaluations - 346,964 346,964 - 346,964 346,964
Use / Increase of tax losses carried forward (327,325) - (327,325) (327,325) - (327,325)
Constitution / increase in provisions 190,547 - 190,547 34,027 - 34,027
Total period changes (136,778) 351,732 214,954 (293,298) 357,748 64,450
Closing balance 781,378 (2,461,381) (1,680,003) 918,156 (2,813,113) (1,894,957)
2011 2010
FISIPE - FIBRAS SINTÉTICAS DE PORTUGAL, S.A.
NOTES TO THE FINANCIAL STATEMENTS
AS OF 31 DECEMBER 2011
(Translation of notes originally issued in Portuguese – Note 33)
(Amounts expressed in Euros)
17
The statement of financial position at 31 December 2011 includes deferred tax assets relating to tax losses carried forward in the amount of 47,701 Euros. In accordance with tax legislation in force, tax losses can be deducted from future tax profits during a period of six years following that in which they are generated for tax losses incurred up to 2009, for four subsequent years for tax losses generated after this date and for five years for those generated in 2011. Tax losses carried forward and their latest date of utilization at 31 December 2011 are as follows:
Limit
Amount utilization date
Generated in 2008 190,802 2014
190,802
Tax losses
Reconciliation between the accounting and tax results and between current tax and income tax for the year on the results for the years ended 31 December 2011 and 2010 is as follows:
2011 2010
Profit / (loss) before income tax 147,499 (1,724,521)
Permanent differences 177,557 (58,633)
Temporary differences 2,046,333 1,478,396
Taxable profit / (tax loss) 2,371,389 (304,758)
Use of tax losses from previous years (2,177,377) -
Use of reportable tax benefits (194,012) -
Tax losses with no recover expectations - 304,758
- -
Income tax rate in Portugal 26.5% 26.5%
Deferred tax on fiscal profit / (loss) - -
Deferred tax on temporary differences (542,278) (391,775)
Use of tax assets derived from tax losses until
the occurrence of the corresponding deferred tax liabilities 327,325 327,325
Deferred tax (I) (214,953) (64,450)
Current tax:
Write-off of prepayment of corporate tax from previous years already expired 140,000 220,000
Autonomous taxation (Note 8) 30,546 32,676
Surtax (Note 8) 39,028 -
Excess / (shortfall) in the estimate from the previous year (326) (794)
(II) 209,248 251,882
Corporate taxes (I+II) (5,704) 187,432
Fisipe obtained with reference to year 2009 a tax benefit - SIFIDE System (Tax Incentives System for Business Research and Development), established in accordance with the requirements established in Law No. 40/2005 of 3 August, amounting to 330,011.18 Euros resulting from R&D activities in the years 2007, 2008 and 2009, although it has not been deducted for tax purposes due to insufficient collections. This amount has been included in the Tax Returns (Annex F-Tax Benefits) as a value to transit, and could be used up to the financial year of 2014 (sixth immediate year).
FISIPE - FIBRAS SINTÉTICAS DE PORTUGAL, S.A.
NOTES TO THE FINANCIAL STATEMENTS
AS OF 31 DECEMBER 2011
(Translation of notes originally issued in Portuguese – Note 33)
(Amounts expressed in Euros)
18
6. INVENTORIES At 31 December 2011 and 2010, inventories were made up as follows:
Impairment
losses
Cost (Note 15) Net 31.12.10
Raw materials and others 4,753,855 (161,289) 4,592,566 5,817,780
Sub products and others 27,462 - 27,462 12,390
Finished and intermediate products 2,429,950 - 2,429,950 3,414,469
7,211,267 (161,289) 7,049,978 9,244,639
31.12.11
7. ACCOUNTS RECEIVABLE FROM CUSTOMERS
At 31 December 2011 and 2010, accounts receivables from customers were made up as follows:
31.12.11 31.12.10
Accounts receivables from customers:
Group companies (Note 14) 1,345,170 1,337,934
Other 24,823,018 28,571,179
Doubtful accounts receivables 3,003,006 2,921,973
29,171,194 32,831,086
Accumulated impairment losses (Note 15) (2,844,054) (2,852,045)
26,327,140 29,979,041
The amounts included in the statement of financial position are net of accumulated impairment losses for accounts of doubtful collection, which were estimated by the Company based on its experience and assessment of the current economic situation. The Board of Directors believes that the book value of the receivables is close to its fair value. The Company does not have a significant concentration of credit risks, given that the risk is spread over a large number of clients.
FISIPE - FIBRAS SINTÉTICAS DE PORTUGAL, S.A.
NOTES TO THE FINANCIAL STATEMENTS
AS OF 31 DECEMBER 2011
(Translation of notes originally issued in Portuguese – Note 33)
(Amounts expressed in Euros)
19
Following is an aging of trade receivables included in the Company’s consolidated statement of financial position at 31 December 2011 and 2010:
31.12.11 31.12.10
Not due 22,862,906 24,678,198
Due (no impairment loss)
0-30 days 2,430,947 3,850,814
30-90 days 464,595 848,184
+ 90 days 409,740 601,845
Due (with impairment loss)
180-360 days 74,758 -
+ 360 days 2,928,248 2,852,045
29,171,194 32,831,086
8. STATE AND OTHER PUBLIC ENTITIES
Fisipe is subject to corporate income tax in accordance with the Special Regime for the Taxation of Groups of Companies (RETGS), being the parent company of a group that includes its subsidiary Munditêxtil – Comércio Internacional de Têxteis, Sociedade Unipessoal, Lda.. In accordance with current tax legislation, the tax returns are subject to a revision and adjustment by the tax authorities within a period of four years, exception made when fiscal losses have occurred, fiscal incentives have been granted or auditing or claims are in course, in cases, depending on circumstances, the final dates can be extended or suspended. Consequently, the Company’s tax returns of the years from 2008 until 2011 are still subject of review and adjustment. The Company’s management believes that any changes resulting from revisions/inspections by the tax authorities of these tax returns will not have a significant effect on the financial statements as of 31 December 2011. At 31 December 2011 and 2010 there are no overdue debts to the state and other public entities and the balances with these entities were as follows:
31.12.11 31.12.10
Assets Liabilities Assets Liabilities
Corporate taxes
Autonomous taxation (Note 5) - (30,546) - (32,676)
Surtax (Note 5) - (39,028) - -
Prepayment of corporate tax and special corporate tax 387,978 - 472,468 -
387,978 (69,574) 472,468 (32,676)
Social security contributions - (187,006) - (183,378)
VAT 1,045,796 - 458,512 -
Income taxes withheld to third parties - (102,365) - (100,007)
Other taxes - - - (40,019)
1,433,774 (358,945) 930,980 (356,080)
FISIPE - FIBRAS SINTÉTICAS DE PORTUGAL, S.A.
NOTES TO THE FINANCIAL STATEMENTS
AS OF 31 DECEMBER 2011
(Translation of notes originally issued in Portuguese – Note 33)
(Amounts expressed in Euros)
20
9. OTHER ACCOUNTS RECEIVABLE
At 31 December 2011 and 2010, other accounts receivable were made up as follows:
31.12.11 31.12.10
Advances to suppliers 7,854 8,125
Other receivables:
Munditêxtil (Note 14) 744,062 891,683
Others 556,231 179,440
1,300,293 1,071,123
Impairment losses (Note 15) (103,885) (103,885)
1,204,262 975,363
10. OTHER CURRENT ASSETS
The caption “Other current assets” at 31 December 2011 and 2010 was made up as follows:
31.12.11 31.12.10
Accrued income:
Subsidies to be received 769,621 524,686
Other accrued incomes - 302
769,621 524,988
Deferred charge:
Prepaid Insurance 129,016 112,241
Other current assets 21,051 -
Other deferred charges 14,501 13,627
164,568 125,868
934,189 650,856
Subsidies receivable, in the amount of 769,621 Euros, are related to investment subsidies for the Carbopan, Carbogen and Polyblend projects, related to the forerunner of the carbon fibre.
FISIPE - FIBRAS SINTÉTICAS DE PORTUGAL, S.A.
NOTES TO THE FINANCIAL STATEMENTS
AS OF 31 DECEMBER 2011
(Translation of notes originally issued in Portuguese – Note 33)
(Amounts expressed in Euros)
21
11. CASH AND CASH EQUIVALENTS Cash and cash equivalents at 31 December 2011 and 2010 was made up as follows:
31.12.11 31.12.10
Cash 12,679 4,991
Bank deposits payable on demand 1,320,405 1,789,160
Cash and cash equivalents 1,333,084 1,794,151
12. SHARE CAPITAL
Fisipe’s fully subscribed and paid up capital, totalling 15,500,000 Euros at 31 December 2011, is made up of 155,000,000, shares of 0.1 Euros each held directly or indirectly by the following entities:
NEGOFOR, SGPS, S.A. 86,19%
Others 13,81%
100,00%
13. OTHER EQUITY CAPTIONS Supplementary capital: In the Shareholders’ General Meeting held on 29 October 2007 it was decided to immediately make a free supplementary capital contribution of 4,500,000 Euros, through the conversion of loans already made by the shareholder NEGOFOR, SGPS, S.A. and so, after realization, they amounted to 9,500,000 Euros. In accordance with current legislation supplementary capital contributions, to which the supplementary capital contributions regime applies, can only be repaid to the shareholders if, after repayment, equity is not less than capital plus the legal reserve. Legal reserve: Portuguese law provides that at least 5% of annual profit must be appropriated to a legal reserve until the reserve equals the minimum requirement of 20% of share capital. The reserve is not available for distribution to the shareholders, except upon liquidation of the Company, but may be used to absorb losses, after all the other reserves have been exhausted, or to increase capital. Retained Earnings: The retained earnings of Fisipe at 31 December 2011 include the amounts of 480,014 Euros (net of the corresponding deferred tax liability) and 6,668,993 Euros (net of the corresponding deferred tax liability) relating to the net amount of legal revaluations made prior to the date of transition to IFRS under legislation and the net amount of the revaluation to fair value of some manufacturing equipment under IFRS 1, upon transition to those accounting rules, respectively. The legal revaluations are not distributable to the shareholders and can only be used under certain circumstances for future capital increases of the Company or for other situations established in law. The revaluation made upon transition to fair value can only be distributed when realized.
FISIPE - FIBRAS SINTÉTICAS DE PORTUGAL, S.A.
NOTES TO THE FINANCIAL STATEMENTS
AS OF 31 DECEMBER 2011
(Translation of notes originally issued in Portuguese – Note 33)
(Amounts expressed in Euros)
22
Appropriation of the net loss of 2010: The Shareholders’ General Meeting held on 11 May 2011 decided that the net loss of 2010 in the amount of 1,911,953 Euros was to be transferred to retained earnings.
14. RELATED PARTIES In order to permit an understanding of the accompanying financial statements the following main balances and transactions of Fisipe with Group companies are disclosed above:
a) Current assets:
Accounts receivables from Other receivables
customers (Note 7) (Note 9) Total
31.12.11 31.12.10 31.12.11 31.12.10 31.12.11 31.12.10
Fisipe Group Companies:
Munditêxtil 1,345,170 1,337,934 740,792 891,683 2,085,962 2,229,617
Negofor - - 3,270 - 3,270 -
1,345,170 1,337,934 744,062 891,683 2,089,232 2,229,617
b) Current liabilities:
Accounts payables to
suppliers
31.12.11 31.12.10
Fisipe Group Companies:
Fisigen 2,614,196 1,091,306
2,614,196 1,091,306
c) Transactions in 2011:
Financial Supplies and Services Supplementary
expenses external services Sales rendered (Note19) income Total
Fisipe Group Companies:
Munditêxtil - - 3,939,799 1,358,894 380,982 5,679,675
Negofor (77,791) - - - - (77,791)
Associated Companies
Fisigen - (4,006,591) - - - (4,006,591)
(77,791) (4,006,591) 3,939,799 1,358,894 380,982 1,595,293
d) Transactions in 2010:
Financial Supplies and Services Supplementary
expenses external services Sales rendered (Note 19) income Total
Fisipe Group Companies:
Munditêxtil - - 3,663,817 1,354,988 418,063 5,436,868
Negofor (108,555) - - - - (108,555)
Associated Companies
Fisigen - (3,295,173) - - - (3,295,173)
(108,555) (3,295,173) 3,663,817 1,354,988 418,063 2,033,140
FISIPE - FIBRAS SINTÉTICAS DE PORTUGAL, S.A.
NOTES TO THE FINANCIAL STATEMENTS
AS OF 31 DECEMBER 2011
(Translation of notes originally issued in Portuguese – Note 33)
(Amounts expressed in Euros)
23
15. ACCUMULATED PROVISIONS AND IMPAIRMENT LOSSES The changes in the accumulated provisions and impairment losses in 2011 and 2010 were as follows:
Opening Closing
Account balance Increase Decrease Utilization balance
Impairment losses:
Accounts receivable from customers (Note 7) 2,852,045 160,191 (168,182) - 2,844,054
Other accounts receivable (Note 9) 103,885 - - - 103,885
Inventories (Note 6) 158,029 3,260 - - 161,289
Tangible fixed assets 1,534,446 617,630 - - 2,152,076
Loans granted to associated companies (Note 4) - 590,759 - - 590,759
Other investments (Note 4):
Subsidiaries 3,510,421 - (230,488) - 3,279,933
Others 107,988 24,500 - - 132,488
8,266,814 1,396,340 (398,670) - 9,264,484
Provisions:
Non current 167,371 67,459 (17,961) (35,011) 181,858
167,371 67,459 (17,961) (35,011) 181,858
8,434,185 1,463,799 (416,631) (35,011) 9,446,342
Opening Closing
Account balance Increase Decrease Utilization balance
Impairment losses:
Accounts receivables from customers (Note 7) 2,831,501 168,659 (148,115) - 2,852,045
Other accounts receivable (Note 9) 100,000 3,885 - 103,885
Inventories (Note 6) 159,486 - (1,457) - 158,029
Tangible fixed assets 900,600 690,725 (26,107) (30,772) 1,534,446
Other investments (Note 4):
Subsidiaries 3,601,108 - (90,687) - 3,510,421
Others 107,988 - - - 107,988
7,700,683 863,269 (266,366) (30,772) 8,266,814
Provisions:
Non current 637,976 132,567 (287,046) (316,126) 167,371
8,338,659 995,836 (553,412) (346,898) 8,434,185
2011
2010
Both increases and decreases in provisions and impairment losses were recorded by corresponding entry to the following captions of the statement of profit and loss:
Increase Decrease Total Increase Decrease Total
Provisions and impairment losses 1,439,299 (186,143) 1,253,156 995,836 (462,725) 533,111
Investment income (Note 23):
Losses/(gains) of impairment on participations
in subsidiaries and associated companies 24,500 (230,488) (205,988) - (90,687) (90,687)
1,463,799 (416,631) 1,047,168 995,836 (553,412) 442,424
2011 2010
FISIPE - FIBRAS SINTÉTICAS DE PORTUGAL, S.A.
NOTES TO THE FINANCIAL STATEMENTS
AS OF 31 DECEMBER 2011
(Translation of notes originally issued in Portuguese – Note 33)
(Amounts expressed in Euros)
24
The balance of the caption “Provisions – non-current” at 31 December 2011 and 2010 includes, essentially, the amounts of 89,486 Euros and 75,001 Euros relating to claims from clients relating to potential liabilities for quality problems of products sold by the Company.
16. LOANS AND FINANCE LEASES
Loans and payables resulting from finance leases contracts at 31 December 2011 and 2010 were as follows:
Financial
institution Limit Current Non-current Limit Current Non-current
Leasing:
Banif 300,440 82,968 217,472 - - -
Caixa Leasing e Factoring 73,300 73,300 - 200,012 129,588 70,424
Caixa Leasing e Factoring 149,338 149,338 - 348,599 203,508 145,091
Caixa Leasing e Factoring 204,547 204,547 - 426,672 225,806 200,866
Caixa Leasing e Factoring 68,676 68,676 - 131,516 63,534 67,982
Caixa Leasing e Factoring 152,540 127,761 24,779 273,100 121,233 151,867
Caixa Leasing e Factoring 958,095 417,264 540,831 1,343,317 379,109 964,208
Caixa Leasing e Factoring 318,588 136,465 182,123 451,228 133,549 317,679
2,225,524 1,260,319 965,205 3,174,444 1,256,327 1,918,117
Other loans:
IAPMEI 486,839 156,200 330,639 562,847 76,008 486,839
486,839 156,200 330,639 562,847 76,008 486,839
Bank loans
Banco Comercial Português 964,958 385,982 578,976 1,350,941 385,984 964,957
Caixa Geral Depósitos 841,914 236,275 605,639 474,263 126,470 347,793
Banco Espirito Santo 1,750,000 875,000 875,000 2,625,000 875,000 1,750,000
Caixa Geral Depósitos 1,000,000 1,000,000 - 20,000 20,000 -
Bank overdrafts - BANIF 2,000,000 2,000,000 - 3,000,000 3,000,000 -
6,556,872 4,497,257 2,059,615 7,470,204 4,407,454 3,062,750
Other debts w ith f inancial
institutions: - 10,219,213 - - 9,606,665 -
9,269,235 16,132,989 3,355,459 11,207,495 15,346,454 5,467,706
31.12.2011 31.12.2010
Used amount Used amount
FISIPE - FIBRAS SINTÉTICAS DE PORTUGAL, S.A.
NOTES TO THE FINANCIAL STATEMENTS
AS OF 31 DECEMBER 2011
(Translation of notes originally issued in Portuguese – Note 33)
(Amounts expressed in Euros)
25
The non-current loans at 31 December 2011 are made up as follows, by maturity:
Amount
2013 1,497,258
2014 397,651
2015 and following years 164,706
Bank loans 2,059,615
2013 156,200
2014 78,100
2015 and following years 96,339
Other loans 330,639
2013 661,112
2014 252,557
2015 and following years 51,536
Leasing 965,205 The Company’s loans and overdrafts bear interest at normal market rates and were contracted in Euros. The finance lease contracts signed with Caixa Leasing e Factoring are to finance the projects relating to implementation of the new production management system and remodeling of four spinning machines. The other liabilities to banks correspond to client’s invoices discounted with banks. The amounts are partly covered by promissory notes issued by the clients, credit insurance and bank guarantees issued by the banks with which the Company has transactions. The amount of 964,958 Euros relating to the loan from Banco Comercial Português was applied in the investment project under Sistema de Incentivos à Modernização Empresarial (SIME). The loan is repayable in 12 equal successive half year instalments paid in arrears in April and October. The amount of 1,750,000 Euros relating to the loan from Banco Espírito Santo was applied in the new cogeneration plant project. The loan is repayable in eight equal successive half year instalments on the last day of the interest periods. Negofor has pledged the shares it holds in Fisipe in guarantee of the loan. All the loans are guaranteed by blank promissory notes.
FISIPE - FIBRAS SINTÉTICAS DE PORTUGAL, S.A.
NOTES TO THE FINANCIAL STATEMENTS
AS OF 31 DECEMBER 2011
(Translation of notes originally issued in Portuguese – Note 33)
(Amounts expressed in Euros)
26
Derivative financial instruments: At 31 December 2011 the Company had eight derivative financial instruments contracted, which consisted of the following interest rate swaps:
Financial instruments Counterparty Maturity Receive Pay Notional
Interest Rate Swap - IRS BES 14-11-2013 EUR 6M 2.55% 1,750,000
Interest Rate Swap - IRS BCP 20-10-2014 EUR 6M 2.70% 964,958
Interest Rate Swap - IRS Caixa BI 01-06-2012 EUR1M 1.39% 73,300
Interest Rate Swap - IRS Caixa BI 20-08-2012 EUR1M 1.45% 149,338
Interest Rate Swap - IRS Caixa BI 10-10-2012 EUR1M 1.50% 204,547
Interest Rate Swap - IRS Caixa BI 01-12-2012 EUR1M 1.57% 68,676
Interest Rate Swap - IRS Caixa BI 20-02-2013 EUR1M 1.64% 152,540
Interest Rate Swap - IRS Caixa BI 01-01-2014 EUR1M 2.63% 958,095
2011
The fair value of the financial instruments as of the statement of financial position date, determined by the entity with which they were contracted, amounted to 59,380 Euros, having been recorded by corresponding entry to financial expenses, as they do not have the conditions necessary for hedging purposes.
17. OTHER ACCOUNTS PAYABLE Other payables at 31 December 2011 and 2010 were made up as follows:
31.12.11 31.12.10
Advance payment from customers 8,446 223,974
Other creditors 106,502 74,920
114,948 298,894
18. OTHER CURRENT LIABILITIES Other current liabilities at 31 December 2011 and 2010 are made up as follows:
31.12.11 31.12.10
Accrued expenses:
Accrued payroll costs 1,165,993 1,197,246
Commissions and bonuses 1,063,299 1,260,103
Interest payable 81,734 60,274
Electricity 34,788 -
Other accrued expenses 248,511 293,022
2,594,325 2,810,645
Deferred income:
Investment subsidies 2,144,066 1,383,372
4,738,391 4,194,017
FISIPE - FIBRAS SINTÉTICAS DE PORTUGAL, S.A.
NOTES TO THE FINANCIAL STATEMENTS
AS OF 31 DECEMBER 2011
(Translation of notes originally issued in Portuguese – Note 33)
(Amounts expressed in Euros)
27
19. SALES AND SERVICES RENDERED Sales and services rendered in the years ended 31 December 2011 and 2010 are made up as follows:
20. VARIATION OF PRODUCTION
Variation of production for the years ended 31 December 2011 and 2010 was determined as follows:
2011 2010
Finished Subproducts Finished Subproducts
goods and others Total goods and others Total
Closing inventories 2,429,950 27,462 2,457,412 3,414,469 12,390 3,426,859
Regularizations of inventories - - - - - -
Opening inventories 3,414,469 12,390 3,426,859 2,683,565 111,830 2,795,395
Increase / (decrease) in year (984,519) 15,072 (969,447) 730,904 (99,440) 631,464
21. OTHER OPERATING INCOME AND EXPENSES
Other operating income and expenses for the years ended 31 December 2011 and 2010 is made up as follows:
2011 2010
Income:
Work for the company 760,666 794,272
Investment subsidies 244,935 291,183
Others 4,945 46,209
1,010,546 1,131,664
2011 2010
Sales:
Domestic market 4,859,934 4,508,786
Foreign market:
- Intracommunity 28,967,539 28,482,369
- Other markets 92,930,917 75,967,473
126,758,389 108,958,628
Services rendered (Note 14) 1,358,894 1,354,988
128,117,283 110,313,616
FISIPE - FIBRAS SINTÉTICAS DE PORTUGAL, S.A.
NOTES TO THE FINANCIAL STATEMENTS
AS OF 31 DECEMBER 2011
(Translation of notes originally issued in Portuguese – Note 33)
(Amounts expressed in Euros)
28
2011 2010
Expenses:
Contractual penalties incurred 327,611 16,082
Tax 248,262 200,418
Rates 163,231 217,465
Contributions 41,234 41,506
Donations 25,150 20,510
Others 119,361 14,443
924,849 510,424
The caption “Contractual penalties incurred” in the amount of 327,611 Euros corresponds essentially from claims of clients about defects in the quality of products.
22. COST OF SALES The cost of sales in the years ended 31 December 2011 and 2010 was determined as follows:
23. RESULT OF INVESTMENTS
The result of investments for the years ended 31 December 2011 and 2010 corresponded to the following transactions:
2011 2010
Opening inventories 5,975,809 5,587,288
Purchase 92,192,411 82,305,540
Closing inventories (4,753,855) (5,975,809)
93,414,365 81,917,019
2011 2010
Impairment losses / (gains) related to the financial investment
in subsidiaries and associated companies (Note 15) (205,988) (90,687)
(205,988) (90,687)
FISIPE - FIBRAS SINTÉTICAS DE PORTUGAL, S.A.
NOTES TO THE FINANCIAL STATEMENTS
AS OF 31 DECEMBER 2011
(Translation of notes originally issued in Portuguese – Note 33)
(Amounts expressed in Euros)
29
24. FINANCIAL EXPENSES AND INCOME
Financial expenses and income for the years ended 31 December 2011 and 2010 are made up as follows:
2011 2010
Financial expense:
Interest expense 512,306 773,863
Costs with discounts of drafts 507,001 200,842
Other financial expenses 1,141,548 1,097,500
2,160,855 2,072,205
Net financial result (1,902,680) (2,069,968)
258,175 2,237
Financial income:
Interest income 245,809 2,237
Other financial income 12,366 -
258,175 2,237
The captation “Other financial expenses” in the amount of 1,141,548 Euros includes expenses with opening of credit, expenses with emission of letters to foreign suppliers and expenses with guarantees provided to others.
25. FISIPE PENSION FUND
As explained in Note 2.10 Fisipe has assumed the commitment to grant retirement, incapacity, early retirement and survivor pensions to its employees. The pensions are determined based on the number of years of service of the employees and the salary scale in force. In prior years Fisipe established an autonomous pension fund to finance its liability for the payment of the pensions. In 2009, with authorization of Seguros de Portugal, the Company changed the plan for its serving employees to a Defined Contribution Plan as from December 2009. Therefore, given that the liability to pensioners was fully covered by the Fund, the Company reversed the balances of the captions “Pension responsability” and “Deferred actuarial losses” in the amounts of 832,866 Euros and 481,155 Euros, respectively, and so the effect of the change was a decrease in the liability and increase in net profit for 2009 of 351,711 Euros, this amount having been recorded as a credit to the caption “Personnel expenses”. In addition, at 31 December 2010 and 2009 the Company had a Defined Benefits Plan for its current pensioners and a Defined Contributions Plan for its serving employees. In accordance with an actuarial study made by the fund management company, the current amount of the Company’s past service liability of its pensioners was estimated at 2,497,880 Euros (2,685,795 Euros at 31 December 2010).
FISIPE - FIBRAS SINTÉTICAS DE PORTUGAL, S.A.
NOTES TO THE FINANCIAL STATEMENTS
AS OF 31 DECEMBER 2011
(Translation of notes originally issued in Portuguese – Note 33)
(Amounts expressed in Euros)
30
The actuarial study was made based on the “Projected Unit Credit” method considering the following assumptions:
2011 2010 2009 2008 2007
Mortality Table TV 73/77 TV 73/77 TV 73/77 TV 73/77 TV 73/77
Income fund 4.50% 4.50% 5% 6% 6%
Wage growth rate N/A N/A N/A 3% 3%
Growth rate of pensions 0% 0% 0% 1% 1% The coverage of the Company’s liability by the pension fund and the caption “Pension responsibility” at 31 December 2011, 2010, 2009, 2008 and 2007 was as follows:
The evolution of the Company’s Pension Fund in the years ended 31 December 2011 and 2010 was as follows: Evolution of the Company’s liability in the year ended 31 December 2011 was as follows:
31.12.2011 31.12.2010 31.12.2009 31.12.2008 31.12.2007
Responsibilities
Actives - - - 903,613 576,311
Retired 2,497,880 2,685,795 2,810,651 3,001,400 3,425,189
2,497,880 2,685,795 2,810,651 3,905,013 4,001,500
Total Fund 2,367,915 2,624,344 2,810,651 3,072,147 3,499,940
Pension responsabilities 129,965 61,451 - 832,866 501,560
2,497,880 2,685,795 2,810,651 3,905,013 4,001,500
Percentage of coverage 100% 100% 100% 100% 100%
Balance at beginning of year 2,685,795
Pensions paid in the year (323,695)
Interest cost 127,829
Actuarial gains and losses 7,951
Balance at end of year 2,497,880
2011 2010
Balance at beginning of year 2,624,344 2,810,651
Expected return on fund 5,815 135,923
Pensions paid in the year (323,695) (324,905)
Contributions paid 61,451 2,675
Balance at end of year 2,367,915 2,624,344
FISIPE - FIBRAS SINTÉTICAS DE PORTUGAL, S.A.
NOTES TO THE FINANCIAL STATEMENTS
AS OF 31 DECEMBER 2011
(Translation of notes originally issued in Portuguese – Note 33)
(Amounts expressed in Euros)
31
26. GUARANTEES GIVEN Fisipe had assumed responsibilities for the following guarantees given at 31 December 2011:
27. PAYABLES
Accounts payable to suppliers and other payables at 31 December 2011 and 2010 were made up as follows:
As of 31 December 2011 and 2010 this caption included amounts payable relating to acquisitions made in the normal course of the Company’s operations. The Company’s Board of Directors believes that the book value of the liability corresponds approximately to its fair value. In accordance with information in the consolidated statement of financial position, trade and other payables at those dates are payable as follows:
31.12.11 31.12.10
Accounts payable to suppliers 18,860,160 21,484,291
Other payables (Note 17) 114,948 298,894
18,975,108 21,783,185
Guarantees received from clients- APL 24,516
Customs (temporary storage) 75,000
Tax execution procedure 85,175
Projects QREN 925,767
Barreiro's labour court 27,774
Total 1,138,232
2011 2010
Short term:
0-30 days 1,958,755 1,408,083
30-90 days 15,459,116 19,818,081
90-180 days 1,345,229 101,191
+180 days 97,060 156,936
18,860,160 21,484,291
FISIPE - FIBRAS SINTÉTICAS DE PORTUGAL, S.A.
NOTES TO THE FINANCIAL STATEMENTS
AS OF 31 DECEMBER 2011
(Translation of notes originally issued in Portuguese – Note 33)
(Amounts expressed in Euros)
32
28. ENVIRONMENTAL MATTERS
In 2011 Fisipe incurred environmental costs of 198,121 Euros which are recorded in the caption “Supplies and services” and are made up as follows:
Solid waste treatment 137,324
Laboratory tests 46,338
Environmental Management 14,459
198,121
In addition, at 31 December 2011 environmental investments made by Fisipe were as follows:
Connection to the ETAR Barreiro/Moita 209,243
Repair of sewer 109,040
Exchanger condensate DIW to CCB 23,944
Reuse rejected for reverse osmosis 20,986
363,213
Fisipe did not recognise any environmental contingent liability at 31 December 2011 as the Board of Directors believes that there are no requirements that could have a significant effect on the Company’s financial statements as of that date.
29. EARNINGS PER SHARE Basic earnings per share at 31 December 2011 corresponds to net consolidated loss divided by the weighted average number of ordinary shares of the Company during the year, and was computed as follows:
2011
Profit for the purpose of calculating earnings per share (net profit for the year) 153,203
Number of shares 155,000,000
Earnings per share 0.001
30. AVERAGE NUMBER OF EMPLOYEES
The average number of employees of the Company in 2011 and 2010 was 335 and 329, respectively.
FISIPE - FIBRAS SINTÉTICAS DE PORTUGAL, S.A.
NOTES TO THE FINANCIAL STATEMENTS
AS OF 31 DECEMBER 2011
(Translation of notes originally issued in Portuguese – Note 33)
(Amounts expressed in Euros)
33
31. INFORMATION REQUIRED BY LEGISLATION Fees invoiced by the Statutory Auditor Total fees invoiced for the legal revision and audit of the non-consolidated and consolidated annual accounts of the Company and its subsidiary for the year ended 31 December 2011 amounted to 45,000 Euros. Additionally, in 2011 a total of 30,000 Euros were invoiced, related to a service other than audit and assurance.
32. APPROVAL OF THE FINANCIAL STATEMENTS The financial statements for the year ended 31 December 2011 were approved by the Board of Directors and authorized for publication on 8 March 2012.
33. NOTE ADDED FOR TRANSLATION
The accompanying financial statements are a translation of financial statements originally issued in Portuguese, in accordance with IFRS. In the event of discrepancies, the Portuguese language version prevails. The Accountant The Board of Directors
