Semapa : First quarter of 2019 results

Presentation of Results

1st Quarter 2019

(translation from the original text in Portuguese)

Semapa - Sociedade de Investimento e Gestão, SGPS, S.A.

Public Limited Company

Av. Fontes Pereira de Melo, nº 14, 10º, 1050-121 Lisboa

Companies Registry and Corporate Person no.: 502 593 130

Share Capital: 81.270.000 euros

ISIN: PTSEM0AM0004

LEI: 549300HNGOW85KIOH584

Ticker: Bloomberg (SEM PL); Reuters (SEM.LS)

Presentation of Results:1st Quarter 2019

1.SEMAPA'S PERFORMANCE

REVENUE

In the first quarter of 2019 the Semapa Group recorded consolidated revenue of 551.3 million euros, an increase of 8.4%from the same period in the previous year. Exports and foreign sales amounted to 403.4 million euros, accounting for 73.2% of revenue.

million euros

									8.4%	551.3
9.6%								508.7
			Q1 2018		Q1 2019
384.9	421.8
			4.5%
		118.3	123.6	7.2%
						5.5	5.9
Pulp and Paper		Cement		Environment	Consolidated

EBITDA

EBITDA for the first quarter of 2019 grew by 2.3%in relation to the same period in the previous year, standing at 132.6 million euros. The consolidated EBITDA margin stood at 24.0%, -1.4p.p. bellowthe one recorded in the first quarter of 2018.

million euros

-5.5%							2.3%	132.6
			Q1 2018		Q1 2019	129.6
110.9	104.9
	48.7%	-18.9%	96%
		26.5
	17.8
		1.5	1.3	-0.7	0.0

NET PROFITS ATTRIBUTABLE TO SEMAPA SHAREHOLDERS

Profits before taxes increased 6.4% and net profit attributable to Semapa shareholders stood at 39.7 million euros, up by 46.3%in relation to the same period in the previous year.

million euros

-7.7%			Q1 2018		Q1 2019	46.3%	39.7
35.0	32.3						27.2
	349.4%	-11.8%
	10.1
	0.5	0.5			25.6%
	-4.1				-4.3	-3.2

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Presentation of Results:1st Quarter 2019

The Net Profit evolution is explained essentially by the combined effect of the following factors:

An increase in EBITDA of approximately 3.0 million euros, Secil being mainly responsible for this growth. Excluding the impact of 9.4 million euros from the sale of the pellets business by Navigator that was recorded in the first quarter of 2018, the EBITDA would have increased by 12.4 million euros;

An increase in depreciation, amortisation, impairment losses and provisions of 8.4 million euros (IFRS 16 impact and the beginning of depreciation of new Navigator investments);

An improvement of net financial results by about 9.4 million euros, in relation to the previous year;

Decrease of about 6.4 million euros in income taxes.

NET DEBT

On 1 January 2019 the Group adopted Accounting Standard IFRS 16, although the 2018 results were not restated. As a result of the implementation of the standard Net Debt increased 69.4 million euros (lease liabilities), against fixed assets, which were amortised against the corresponding cost recognized in External Supplies and Services.

Million euros

Pulp and paper

Cement

Environment

Holdings

Semapa

1,551.6 1,620.0

683.0 727.4

386.4	410.2	471.3	470.8
	11.0	11.7

44.4	23.8	0.7	-0.5	68.4

31/12/18 31/03/19

On 31 March 2019, consolidated net debt stood at 1,620.0 million euros, representing an increase of 68.4 million euros over the figure recorded at year-end 2018. Excluding the effect of IFRS 16, net debt would have been 1,550.6 million euros, below the figure at the end of 2018. Such changes are positively influenced by the generation of operating cash flow and:

 Pulp and paper: +44.4 million euros, including investments of about 32.5 million euros, of which 4.6 million euros are own shares acquisition. The cash flow was impacted by the significant amount of investment in working capital, specifically due to (i) a significant rise in the balance receivable from the State in 2019, as a result of the deferral of VAT reimbursements, seeing that the receipt of debts owed by the State for two months

(corresponding to January and February), totalling 45.1 million euros, only occurred in April, payments that in Page 3

Presentation of Results:1st Quarter 2019

2018 had already been made during the 1st quarter; (ii) the increase of 27.4 million euros in the amount of inventory of tissue, in particular, due to the development of new business, and of stocks of finished and intermediate products in Pulp, Tissue and UWF, in order to improve customer service and through initiatives of controlling the supply. Additionally, the impact of implementing IFRS 16 was 50.5 million euros;

Cement: +23.8 million euros, which includes investments of 5.5 million euros and investment in working capital of approximately 14.5 million euros, mostly due to the increase in accounts receivable in Portugal due rising revenues. Furthermore, the impact of the implementation of IFRS 16 was 17.9 million euros;

Environment: +0.7 million euros, mainly arising from difficulty in collecting the amounts billed to the Government. The impact of implementing IFRS was 0.3 million euros; and,

Holdings: -0.5 million euros;

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Presentation of Results:1st Quarter 2019

LEADING BUSINESS INDICATORS

IFRS - accrued amounts (million euros)		Q1 2019						Q1 2018	Var.
Revenue
551.3	508.7	8.4%
EBITDA	132.6	129.6	2.3%
EBITDA margin (%)	24.0%	25.5%	-1.4 p.p.
Depreciation, amortisation and impairment losses	(57.8)							-14.3%
(50.6)
Provisions	0.1	1.3	-92.8%
EBIT	74.9	80.3	-6.8%
EBIT margin (%)	13.6%		15.8%	-2.2 p.p.
Net financial results	(9.2)		(18.6)	50.5%
Profit before taxes		65.7		61.7	6.4%
Income taxes		(12.1)		(18.5)	34.7%
Net profit for the period		53.6			43.2	24.0%
Attributable to Semapa shareholders		39.7		27.2	46.3%
Attributable to non-controlling interests (NCI)		13.9		16.1	-13.7%
Cash-flow		111.3				92.5	20.3%
		31/03/2019				31/12/2018	Mar19 vs.
									Dec18
Equity (before NCI)		927.9		890.4	4.2%
Interest-bearing net debt		1,551.0				1,551.6	0.0%
Lease liabilities (IFRS 16)		69.1					0.0	-
Total		1,620.0		1,551.6	4.4%

LEADING OPERATING INDICATORS

	Unit	Q1 2019		Q1 2018	Var.
Pulp and Paper
BEKP Sales (pulp)	1 000 t	62.1	53.1	17.0%
UWF Sales (paper)	1 000 t	353.0	361.2	-2.3%
Total sales of tissue	1 000 t	23.7		13.4	76.2%
Cement
Sales of Grey cement	1 000 t	1,204		1,241	-3.0%
Sales of Ready-mix	1 000 m3	427		372	14.8%
Environment
Collection of raw materials - Animal w aste	1 000 t	28.5		30.4	-6.5%

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