A BIOINDUSTRY
ON THE RIGHT SIDE OF THE FUTURE
2021 Consolidated Annual Report
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A bio-industry
on the right side of the future
At The Navigator Company, everything begins and ends with
nature, in a sustainable cycle that has eucalyptus as its core and
innovation as its ally.
In a time and society in which countless transformational
movements are shaping the way we live, progress redefines
priorities, raises demands and calls for new ways of of meeting
needs.
The ability to think outside the box and find innovative and
sustainable business opportunities is in our DNA. We face today's
complex global challenges with the same nonconformity and will
to that, in the 1950s, a group of pioneers looked to the
Eucalyptus Globulus and envisaged the future.
This natural and renewable raw material, obtained from
sustainably managed and duly certified forests, allows us today
to lead an agenda "from fossil to forest", seeking, through
technology and knowledge, to establish a true forest-based
circular economy.
It is in this framework that we carry out research and create
new bioproducts from trees, seeking to find more sustainable
sustainable alternatives to fossil-based materials and leading the
transition to a climate-neutral, nature-friendly bioeconomy.
Our vision for growth is based on a path of innovation and
differentiation that allows us to explore new business
opportunities and invest in the immense possibilities of forest-
based raw materials.
But technology and innovation only make sense as a strategic
pillar strategic pillar if they are used to create a better world,
serving people. Those of today and those of future generations.
This is why we are a bio-industry on the right side of the future.
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CONTENTS
1. OVERVIEW 6
MESSAGE FROM THE CHAIRMAN OF THE BOARD OF DIRECTORS .................................. 7
MESSAGE FROM THE CEO ........................................................................................ 9
NAVIGATOR IN 2021 ............................................................................................. 13
A Responsible Business .......................................................................................... 22
2. BUSINESS PERFORMANCE 27
2.1. UWF paper ..................................................................................................... 28
2.2. Bleached eucalyptus kraft pulp (BEKP) .............................................................. 31
2.3. Tissue ........................................................................................................... 33
2.4. Energy .......................................................................................................... 35
2.5. Packaging ...................................................................................................... 37
2.6. Financial performance ..................................................................................... 38
2.7. Debt management .......................................................................................... 40
2.8. Capital market performance ............................................................................. 41
2.9. Contribution to State tax revenue in 2021 ......................................................... 42
2.10. Risk management ......................................................................................... 45
3. ENGAGEMENT WITH STAKEHOLDERS 49
3.1. Our team ....................................................................................................... 49
3.2. Our Customers ............................................................................................... 54
3.3. Our suppliers ................................................................................................. 55
3.4. Logistics ........................................................................................................ 56
3.5. Social Responsibility ........................................................................................ 57
4. STRATEGIC PRIORITIES 63
4.1. Forestry......................................................................................................... 63
4.2. Research and Development .............................................................................. 74
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4.3. Packaging ...................................................................................................... 79
4.4. Mozambique................................................................................................... 81
4.5. Decarbonization project ................................................................................... 86
5. PROPOSED ALLOCATION OF RESULTS 88
6. DECLARATION REFERRED TO IN ARTICLE 29-G(1)(C) OF THE PORTUGUESE SECURITIES
CODE 89
7. CORPORATE GOVERNANCE REPORT 90
PART I – INFORMATION ON SHAREHOLDER STRUCTURE, ORGANISATION AND
CORPORATE GOVERNANCE ..................................................................................... 93
PART II – CORPORATE GOVERNANCE ASSESSMENT ................................................. 167
PARTE III – OTHER INFORMATION ......................................................................... 180
8. CONSOLIDATED FINANCIAL STATEMENTS 195
CONSOLIDATED INCOME STATEMENT ..................................................................... 196
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME ...................................... 197
CONSOLIDATED STATEMENT OF FINANCIAL POSITION ............................................. 198
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY .............................................. 199
CONSOLIDATED STATEMENT OF CASH FLOWS ......................................................... 200
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ......................................... 201
9. STATUTORY AUDITOR’S REPORT AND AUDIT REPORT • CONSOLIDATED FINANCIAL
STATEMENTS 313
10. REPORT AND OPINION OF THE SUPERVISORY BOARD FISCAL CONSOLIDATED
FINANCIAL STATEMENTS 322
11. SEPARATE FINANCIAL STATEMENTS 326
SEPARATE INCOME STATEMENT FOR THE PERIODS ENDED 31 DECEMBER 2021 .......... 327
SEPARATE STATEMENT OF COMPREHENSIVE INCOME FOR THE PERIODS ENDED 31
DECEMBER 2021 .................................................................................................. 328
SEPARATE STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2021 AND 2020329
SEPARATE STATEMENT OF CHANGES IN EQUITY FOR THE PERIODS ENDED 31 DECEMBER
2021 .................................................................................................................. 330
SEPARATE STATEMENT OF CASH FLOWS FOR THE PERIODS ENDED 31 DECEMBER 2021
.......................................................................................................................... 331
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NOTES TO THE SEPARATE FINANCIAL STATEMENTS ................................................. 332
12. STATUTORY AUDITOR’S REPORT AND AUDIT REPORT • SEPARATE FINANCIAL
STATEMENTS 403
13. REPORT AND OPINION OF THE SUPERVISORY BOARD • SEPARATE FINANCIAL
STATEMENTS 410
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1. OVERVIEW
Purpose
People, their quality of life, and the planet's future are what inspire and move us.
We want to share with society not only our outcomes, but also our knowledge, experience and
resources in the search for a better future.
This is why we are committed to creating sustainable value for our shareholders and for society
at large, making a better planet to hand down to future generations through sustainable
products and solutions that are natural, recyclable and biodegradable, and that contribute
towards carbon sequestration, oxygen production, the protection of biodiversity, soil
formation, and the fight against climate change.
Mission
Our mission is to be a global company with a reputation for innovation and sustainability in
processing forestry materials into products and services that improve people's lives.
Vision
To extend our leadership position in printing and writing paper to other business areas and
add to Portugal's international stature.
Values
Trust − We believe in people, we welcome everyone's contribution, we respect their identity,
promoting development, cooperation and communication.
Integrity − We are guided by principles of transparency, ethics and respect in our dealings
among ourselves and with others.
Entrepreneurship − We are passionate about what we do, we like to get out of our comfort
zone, we have the courage to make decisions and to accept risks in a responsible way.
Innovation – We seek to bring out everyone's skills and creative potential to achieve the
impossible.
Sustainability− Industrial, social and environmental sustainability is our business model.
Excellence − In our work we focus on quality, efficiency, safety and getting it right.
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MESSAGE FROM THE CHAIRMAN
OF THE BOARD OF DIRECTORS
The Navigator Company's 2021 results confirm the Company's stability and the merits of its
strategy. But, above all, they are a testament to the perseverance, nonconformity and capacity
for anticipation and innovation of all Navigator employees, much more than simply reaction,
in a global context that is difficult and, above all, full of uncertainty and volatility.
The first signs of economic recovery were accompanied by unequivocal pressure factors, of
which I would like to highlight the high prices of raw materials, as well as the logistics and
energy components, to which Navigator was able to respond with a policy of controlling fixed
costs, with the increase in printing and writing paper (UWF) volumes and with an adjusted
strategy of increasing the prices of its products, in order to ensure the consolidation of
profitability and the prospects for business development.
In a complex year, Navigator demonstrated its strength as a business project and its vitality
as a pillar of the Portuguese economy, where it represents around 1% of GDP and is
responsible for around 3% of national exports of goods. The Company is the third largest
exporter in the country and creates the greatest National Added Value as a result of high local
incorporation.
The socio-economic impact is, moreover, decisive, since an overwhelming majority of its value
chain comprises national suppliers. Navigator also generates more than 30,000 direct, indirect
and induced jobs, many of them in rural regions, so often far from development opportunities
in a country still dominated by flagrant territorial asymmetries.
In addition to the results themselves, the way in which they were achieved allows us to
confidently look to the future and position The Navigator Company in a changing world,
increasingly guided by the awareness of the urgency of new, more sustainable development
models.
Even in a year full of challenges, the second consecutive year of marked disruption in the lives
of people and companies, Navigator has not lost sight of the commitment, expressed in its
corporate purpose, to the creation of sustainable value for its shareholders, and for employees,
customers, suppliers and society as a whole, leaving future generations a better planet,
through natural, recyclable and biodegradable sustainable products and solutions, which
contribute to carbon sequestration, the production of oxygen, the protection of biodiversity,
soil formation and combating climate change.
The launch of the new line of packaging papers in 2021, in addition to being a sign of business
vitality in an adverse year, is a clear sign of the contribution to a more sustainable future,
through the development of new forest-based products that substitute fossil products, within
the framework of a socially just transition to a climate-neutral economy that is good for nature.
Called gKraft, this new brand is also a sign of Navigator's unwavering commitment to
innovation and scientific and technological research, a feature that is always present in the
Company's DNA.
Also for this reason, and as a result of this drive that endures and defines its identity, Navigator
is a company that understands the times in which it lives. Understands and acts, as the
Company intends to lead the new opportunities for forest-based products in the replacement
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of articles of fossil origin with others made from cellulose, thus contributing to the response to
the challenges of climate change and the loss of biodiversity.
Navigator is therefore involved in promising research projects to generate a wide range of
bioproducts from forest raw materials, in a process that brings together skills and entities,
from RAIZ - Forest and Paper Research Institute to non-business organisations in research and
innovation, such as universities, collaborative laboratories and other R&D institutions.
This model of systematic and coherent collaboration is an example of leadership and should
serve as a reference for the country in the field of technology transfer, promoting the
conversion of scientific knowledge into solutions for the market and, consequently, the
sustainable development of companies and the economy alike.
As a forest-based company with a technological and scientific vocation, The Navigator
Company is already positioned today in this transition from the current linear model of
development to a circular bioeconomy based on innovation.
The last two years have clearly and unquestionably demonstrated the extent to which
companies, and organisations in general, are engines of change in a world undergoing profound
transformation.
More than a challenge, Navigator takes it as an unavoidable part of the future.
Ricardo Pires
(Chairman of the Board of Directors)
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MESSAGE FROM THE CEO
In physics, the concept of “resilience” translates the ability of a material to absorb energy (for
example, upon sudden impact) and to return to its original shape. In ecology, the term goes
further, defining in ecosystems this capacity for regeneration, but also for growth after
disturbances of greater or lesser severity. The nature of this process means it is commonly
applied equally to people and companies. It is quite distinct from “resistance”, which essentially
means a defensive attitude in the face of adversity.
The year 2021 at The Navigator Company was lavish in the way it highlighted the difference
between one thing and another.
The work carried out in the previous year, in which the Company and its people collectively
converged on an action of resistance in the face of what was, at the time, an unknown health
emergency on a global scale, would not be consequential, nor would it do it justice, if we did
not have the ability, in 2021, to turn the page and look to the future with confidence and
motivation. To demonstrate the resilience of Navigator and its teams.
That is why, despite the global uncertainties and the multiple challenges of the current context,
we took on an investment position, giving impetus to existing businesses and intensifying an
R&D&I programme that culminated in the launch of new products, including a range of globally
pioneering packaging papers.
Called gKraft, the new range embodies the diversification and growth of the Group's portfolio
and represents an expression of the “From Fossil to Forest” strategy. This, one of the most
important launches in Navigator's recent history, demonstrates how innovation is an
unavoidable path when we seek lasting sustainability that is relevant to people's lives and
future. In this case, by offering an alternative to the use of materials of fossil origin, such as
plastic, replacing them with renewable-based materials from the forest.
In 2021, the packaging sector represented sales in excess of €40 million, serving the bag,
flexible packaging and corrugated board manufacturing industries. This performance was
rooted in favourable conditions for demand, as well as in the effort to develop innovative
products and the creation of a broad base of new customers, reaching 125 active packaging
customers. This ambitious plan, which started in 2021, will continue in 2022, on a path that
involves expanding the offer in grammages, as well as innovating and developing new
sustainable packaging solutions.
During the year, there were also launches of differentiated and innovative products in the
Tissue segment, such as Amoos ® Naturally Soft, with high softness and without the use of
bleaching chemicals, Amoos Aquactive™, which represents a new generation of tissue paper
with soap and Amoos Air Sense™, with scent activated with each use.
During 2021, we also did not give up on our responsible management agenda for the next
decade, including the implementation of the Decarbonisation Roadmap, the path towards
carbon neutrality of industrial complexes that the Company voluntarily proposed to achieve in
2035. This was the first full year of the new biomass boiler at the Figueira da Foz plant, a 55-
million-euro investment that represents a 57% reduction in emissions in this plant.
Symptomatic of the commitment of the Company and its teams was the fact that we mobilised
ourselves to join the Science Based Targets Initiative (SBTi) and, above all, we submitted
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validation targets from the outset. Contrary to what has been done by most companies that
adhere to the SBTi, Navigator decided to take on this challenge assertively, committing itself
to short-term science-based goals consistent with the ambition to reduce GHG emissions to
levels necessary to limit global warming to 1.5°C for scope 1 and 2, and well below 2°C for
scope 3. By joining the SBTi, Navigator will foster significant reductions in emissions from its
suppliers within scope 3.
It was also in 2021 that the Company was once again recognised for its efforts to reduce its
environmental impact, increasing its ESG Risk Rating by Sustainalytics, an assessment
according to ESG (Environmental, Social and Corporate Governance) criteria. Navigator ranks
3rd in this category out of a total of 81 global companies that are part of the Paper & Forestry
industry cluster, and 3rd out of a subset of 60 global companies that make up the Paper &
Pulp cluster, having been reclassified as a “Low ESG Risk Company” for investors.
Navigator thus reinforces its commitment and objectives for the next decade around one of
the relevant themes identified within the scope of its 2030 Agenda for responsible business
management – “Climate Change and CO
2
Sequestration” –, pursuing the ambition of
contributing to Sustainable Development Goal 13 (Climate Action) and making a positive
impact on people and the planet.
And because people are the most critical elements of the business, strengthening and
differentiating it daily, 2021 was also a period during which we focused on strengthening the
qualification and support for the Company's human capital. The actions implemented in 2021
benefited 94% of employees and represented a total investment of 3.7 million euros. In an
extremely demanding phase for everyone, due to the pandemic situation, the company also
focused on improving benefits, including co-payments for education expenses, health and life
insurance, in addition to expanding compensation for illness.
These are some of the milestones of a strategic path that returned robust results in 2021 and
allowed us to assertively overcome a year full of challenges at the most varied levels.
The year was characterised by the general increase in the cost of raw materials; with an
emphasis on the price of wood, energy, and logistics, especially during the second half of the
year. Navigator offset this unfavourable trend in variable costs with an effort to contain fixed
costs, as well as increasing the volume of UWF and implementing price increases across all
businesses, which in UWF stood at almost 30%, an increase unparalleled in the history of the
Group.
The resilience and agility of the business model allowed the Company, in this adverse context,
to stand out positively by recording a strong inflow of orders, with historically high values in
the third and fourth quarters, and by reaching, in particular in the case of UWF paper, the
largest stock of orders ever in the final months of the year. At the same time, Navigator
reduced inventories to their lowest levels ever.
Sales of printing and wrapping paper represented around 72% of turnover, compared with
68% in 2020, in a year that would eventually be characterised by the growth in demand for
UWF, particularly in Europe, following a significant drop in global paper consumption as a result
of the pandemic. Throughout 2021, successive price increases were carried out along with
significant optimisation of sales mixes.
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Portucel Moçambique began harvesting and exporting wood from pilot plantations set up in
the Manica province some eight years ago, under responsible management and with controlled
certification of origin. As part of this initiative, the company provided training and qualifications
for local workers in the cutting and extraction of wood, along with the transport, loading, and
shipping of the wood on the first three cargo vessels from the port of Beira to Portugal. This is
a crucial step towards the creation of a new forestry-based industry cluster and towards
positioning the company and Mozambique in the wider international forestry industry sector.
This pioneering export operation in Mozambique enables us to test various stages of this value
chain and hopefully to prepare the launch of the first stage of the industrial project, which
includes the construction of a chip mill adding significant value on a national scale.
The 2021 results reflect and reinforce our strategic priorities, but also project the future of a
Company whose corporate purpose advocates the commitment to “leaving a better planet to
future generations, through natural, recyclable and biodegradable sustainable products and
solutions, which contribute to carbon sequestration, the production of oxygen, the protection
of biodiversity, the formation of soil and the fight against climate change”.
Based on the robust results already achieved and on the competence of our human capital, we
are confidently looking today at new opportunities for forest-based products and are engaged
in promising scientific and technological-based projects to generate a wider range of
bioproducts, some of them replacing products currently obtained by petrochemicals, reducing
the fossil-based paradigm.
At the base of this development model are the more than 104,000 hectares of forest that
Navigator sustainably manages, making production objectives compatible with the multiple
ecosystem services that planted forests offer.
The globulus eucalyptus, which we plant in Portugal and which serves as an excellent raw
material for world-renowned products, plays an especially effective role in one of these
ecosystem services, CO
2
sequestration: annually, and per hectare, this species sequesters
around of 11.3 tonnes of CO
2
, equivalent to the emissions of each Portuguese citizen for more
than 22 months. These values represent the highest levels of annual sequestration of species
present in the national forest.
Moreover, the National Energy and Climate Plan 2021-2030, of Dec 2019, points out that it is
not enough to simply reduce emissions: Portugal's forests and woodland, which currently
absorb 8.7 million tonnes of CO2, will have to increase absorption levels to 12.7 million tonnes
by 2030. This goal can only be achieved through a significant increase in fast-growing forests,
which absorb at least 3 to 7 times more CO 2 than other species present in pinewoods and
cork oak forests, as well as through sustainably managed forests, composed of mosaic species
that are resilient to pests and disease, and which present a lower fire risk, as has been
advocated and practised by the industry for decades.
The balance between natural forests and planted and well-managed forests, focusing on those
with a shorter rotation, may contain one of the fundamental keys to the future of the planet,
enhancing the preservation of the former and recognising the substitutive role and carbon sink
of the products derived from the latter. In 2020, CEPI, the European confederation of the paper
sector, estimated that, in Europe, this “substitution effect” of forest-based industries was
almost equal to the (net) sequestration in forests, that is, corresponding to 10% of annual
fossil emissions on the continent.
And there is still a lot of room for progress!
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The Navigator Company is today a bioindustry aware of its time and attentive to people's
concerns, sharing with them the desire to find new models of development within the
framework of the circular bioeconomy.
It is with this human dimension, and guided by it, that we innovate, cultivate excellence and
rigour in implementation and create new solutions for a more sustainable future.
Because the real engine of resilience lies with people, not physics.
António Redondo
(Chief Executive Officer)
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NAVIGATOR IN 2021
Key Indicators 2021
Turnover
€1,596 million
3rd exporter
≈1% of GDP
≈3% of exported goods
1st in National Added Value
EBITDA
€355 million
EBITDA/sales margin
22.2%
Net profit
€171 million
Free cash flow
€235 million
CapEx
€80 million
Dividends paid
€150 million
Net debt/EBITDA
1.68 times
ROE
16.4%
ROCE
13.7%
.
No. of employees
3,150
> 30,000 jobs (direct, indirect and induced)
74% of suppliers (7,172) are Portuguese
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Value generated and distributed
Revenues
€1.627 million (vs. 1,424 million in 2020)
Supplier expenses
€1.382 million (vs. 1,159 million in 2020)
Shareholders – Payment of dividends
€150 million (vs. 198 million in 2020)
Employees – Salaries and benefits
€155 million (vs. 132 million in 2020)
State – Taxes borne
€90 million (vs. 56 million in 2020)
Community investments
€1,65 million (vs. 1.7 million in 2020)
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OUR BUSINESS
R&D + I
Aveiro/Espirra
RAIZ – Forestry and Paper Research Institute
Largest private European institute, and one of the biggest in
the world, dedicated to R&D for the eucalyptus forest and its
products (pulp, paper, tissue, biomass by-products, etc.).
93 employees
8 patents submitted in 2021
Forestry
104,673 ha*
of forest with certified management in 166 municipalities
12 million
plants/year at the nurseries in Espirra, Caniceira and Ferreiras
73% eucalyptus
11.8% conservation and Natura 2000 Network areas (4,075
ha of classified habitats)
16.3% other forest species (pine, cork oak, etc.)
245 species of fauna
>800 species of flora
5.9 million tCO
2
sequestered
Pulp
Setúbal, Figueira da Foz e Aveiro
1.6 million tonnes**
1st European producer of bleached eucalyptus kraft pulp
(BEKP)
and 5th worldwide
UWF paper
Setúbal e Figueira da Foz
1.6 million tonnes**
1st European producer of printing and writing paper
(UWF/Uncoated Woodfree Paper)
and 6th worldwide
Tissue paper
Vila Velha de Ródão e Aveiro
130,000 tonnes**
of finished product
1st Portuguese producer and 3rd Iberian
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* 105,274 ha, including Galicia (Spain)
** Nominal capacity
Energy
1.74 TWh
electricity
77% of renewable energy
€135 million in sales
35% of the electricity produced from biomass, in the country
Project in
development
Mozambique
USD $125 million
invested
More than USD $6 million
invested in social development project
since 2015
13,600 ha
planted
90,000 m
3
of own wood harvested, in 2021, for export
1.7 million tonnes*
of CO
2
captured
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ECONOMIC AND FINANCIAL INDICATORS
2017
2018
2019
2021
Million euros
Total Sales
1,636.8
1,691.6
1,687.9
1,595.9
EBITDA
(1)
403.8
455.2
372.1
354.7
Operating Profit (EBIT)
255.0
303.2
233.6
229.6
Financial Results
-7.7
-22.5
-18.9
-17.8
Net Profit
207.8
225.1
168.3
171.4
Operating Cash Flow
(2)
356.6
377.2
306.8
296.6
Free cash flow
198.1
210.5
186.2
234.7
Investments
114.7
216.5
158.0
80.1
Net Interest-Bearing Debt
(3)
693
683
715
595
Net Assets
2,427.6
2,549.8
2,533.7
2,534.4
Liabilities
1,248.0
1,362.6
1,506.2
1,489.3
Equity
1,179.6
1,187.2
1,027.4
1,045.1
Gross Debt
818.1
763.8
877.1
833.9
Cash
125.3
80.9
161.9
239.2
Own shares (vs. market)
(4)
2.1
3.1
22.7
0.0
No. of own shares held on 31/12 (million)
0.5
0.9
6.3
0.0
EBITDA/Sales (%)
24.7%
26.9%
22.0%
22.2%
ROS (%)
12.7%
13.3%
10.0%
10.7%
(1) Operating profit + depreciation + provisions
(2) Net profit + depreciation + provisions
(3) Gross interest-bearing debt - cash
(4) In 2021, 6.3 million treasury shares were extinguished due to capital reduction, followed by a capital increase through
incorporation of reserves
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Profile
The Navigator Company is an integrated producer of forest, pulp, paper, tissue, sustainable
packaging solutions, and bioenergy, whose business is founded on state-of-the-art factories
on a worldwide scale, with cutting-edge technology. It is recognised as a benchmark in quality
in its sector throughout the world.
People, their quality of life and the planet's future are what inspire and guide The Navigator
Company. The company is committed to creating sustainable value for its shareholders and
for society at large, making a better planet to hand down to future generations through
sustainable products and solutions that are natural, recyclable and biodegradable, and that
contribute towards carbon sequestration, oxygen production, the protection of biodiversity,
soil formation, and the fight against climate change.
The Navigator Company produces pulp and paper using forests which are planted exclusively
for this purpose. Each year, Navigator’s nurseries give life to more than 12 million trees. These
nurseries – the largest in Europe – produce 135 different species of plants and shrubs. Many
of these, although not economically viable per se, are produced by the Company for the
conservation of biodiversity and to guarantee the continuity of the species.
The forests managed by The Navigator Company in Portugal have a carbon stock, excluding
carbon in the soil, equivalent to 5.9 million tonnes of CO
2
, an amount that remains stable
thanks to the sustainable management model followed by the Company.
The Group’s forestry business is vertically integrated, with its own Forestry Research Institute.
The Group is responsible for planting a vast forested area in Portugal mainland (1.2% of the
country’s land area), 100% certified by FSC®
1
and PEFC™
2
systems. The company also boasts
a production capacity of 1.6 million tonnes of paper, 1.6 million tonnes of pulp, 130,000 tonnes
of tissue and 2.5 TWh of renewable energy per year. In 2021, 66% (vs. 60% in 2020) of
energy produced by Navigator at its four industrial complexes came from biomass, giving it
the leading role in the sector, with this ecological non-fossil fuel accounting for about 35% of
the country's overall energy.
In November 2021, The Navigator Company launched a new line of packaging products, based
on the new gKraft brand, with the aim of helping to accelerate the transition from the use of
plastic to the use of natural, sustainable, recyclable and biodegradable fibres, thus affirming,
once again, its commitment to sustainability and the preservation of the environment.
The Company is the third largest exporter in Portugal and the largest generator of National
Added Value, representing approximately 1% of the national GDP, about 3% of national
exports of goods, and more than 30,000 direct, indirect and induced jobs. In 2021, The
Navigator Company had a turnover of €1.596 billion. More than 90% of the Group's products
are sold outside Portugal and are shipped to approximately 130 countries.
The Navigator Company has taken on the formal commitment of achieving carbon neutrality
at its industrial complexes by 2035, reaching the targets laid out by the European Union and
Portugal 15 years early. It thus became the first Portuguese company, and one of the first
1
FSC – Forest Stewardship Council® (FSC® License no. – C010852)
2
PEFC – Programme for the Endorsement of Forest Certification schemes (PEFC License no./13-23-001)
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19
worldwide, to set this ambitious goal, for which it allocated a total investment of €154 million,
of which €55 million had already been allocated by the end of 2021.
This commitment is the culmination of a responsible business management strategy that had
already been distinguished by the CDP (formerly Carbon Disclosure Project, now Disclosure
Insight Action), in 2019 and 2020, with the classification of global leader in the fight against
climate change. The Navigator Company was recognised for its efforts to reduce emissions,
reduce climate risks and develop a low-carbon economy.
At the end of 2021, The Navigator Company joined the Science Based Targets initiative (SBTi),
having submitted its greenhouse gas (GHG) emission reduction targets based on the most
current climate science at the time of joining, thus dispensing with the two-year grace period
that companies have and typically use to do so. The Company has been developing a set of
strategies to measure and reduce its total GHG footprint, as well as to promote mitigation and
adaptation to the risks generated by climate change. By joining SBTi, the Company advances
in its alignment with scientific-based criteria and methodologies that deserve international
recognition within the scope of the global climate agenda, affirming its leadership in
sustainability.
In 2022, Navigator obtained a score of 14.3 in the Environmental Social and Governance Risk
Rating for 2021 – the best rating obtained since being added to Sustainalytics assessments –
once again positioning itself among the best companies in the world in terms of sustainability.
With this classification, the Company remains in the "Low Risk" category, meaning that it
presents a low risk for investors, and occupies third place, both in the ranking of companies in
the "Paper and Forest" industry group – in a total of 81 global companies that are part of this
cluster – and in the “Paper and Pulp” subgroup, in a total of 60 companies worldwide.
Grow through innovation
After a 2020 dominated by the pandemic, in which the safety of people and business continuity
were the driving force of the Company's activities, in 2021 The Navigator Company focused
on increasing the contribution it can make to a fairer, more inclusive and more sustainable
future.
Navigator's Responsible Business Management Strategy, reflected in the Responsible
Management Agenda for the 2020-2030 decade, represents a new, even more ambitious and
comprehensive level of a commitment that Navigator has been systematically making with
sustainability.
Completed in 2020 and consolidated in 2021, the 2030 Agenda reflects the commitment to
Creating Value with Responsibility, in line with global sustainability macro trends, such as the
climate emergency and the loss of biodiversity, demographic and social transformations and
technological innovations.
The forest sector has a prominent position in the transition to a circular bioeconomy, not only
for its own attributes, but for the efforts and leadership in terms of developing innovative
solutions to achieve this goal – the forest is not only the largest terrestrial storage ecosystem
and the main hub of biodiversity, it is also the biggest source of natural resources that are
renewable and circular by nature when managed sustainably.
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In addition to traditional applications, Navigator is involved in promising R&D projects to
generate a wide range of bioproducts from trees, some of them replacing products currently
obtained from petrochemicals.
2021 strengthened this vision of the Company's growth, based on a path of innovation and
differentiation.
Historic year in packaging
The year 2021 stands out in the history of The Navigator Company's brands for the launch of
the gKraft line of packaging papers, which complemented the Company's portfolio in a segment
with rapid growth potential in the current context of replacing single-use plastics with
alternatives of sustainable origin.
This product, in line with Navigator's commitment to contributing to the replacement of fossil-
based products with others that are of forest origin, renewable, biodegradable, recyclable and
carbon neutral, is the result of an intense programme carried out by RAIZ - Forest and Paper
Research Institute, in close collaboration with the manufacturing departments of Aveiro and
Setúbal, and the Technical Product Department.
At its base is an innovative high-performance pulp, made from virgin Eucalyptus globulus fibre,
which has given the product several advantages, namely in terms of sustainability: cellulose
is a material of natural, renewable, recyclable and biodegradable origin, which replaces plastic
from a circular bioeconomy perspective, and the particular characteristics of globulus give it
benefits also compared to other long cellulosic fibres, such as less wood consumption to
produce the same paper (nordic pine consumes between 65% and 105% more), higher
compostability (due to lower lignin content) and higher recyclability (60% to 150% more).
gKraft paper also has a strong argument in terms of food safety and hygiene: by using only
virgin fibre, it is safer and more hygienic for contact with food, since, unlike recycled fibre, it
avoids the danger of contamination.
Towards 2035
In 2021, Navigator carried out a project to complete its greenhouse gas (GHG) inventory,
which culminated in joining the Science Based Targets initiative (SBTi) and submitting targets
for validation, based on the most up-to-date climate science.
The Company's direct CO
2
emissions fell from 717,000 tonnes recorded in 2020 to 562,000
tonnes. The entry into operation, at the end of 2020, of the new biomass boiler at the Figueira
da Foz industrial complex, financed at 50% of its cost by the European Investment Bank (EIB),
was decisive for this sharp reduction, being responsible for the decrease in 57% of CO
2
emissions in this industrial complex.
Moreover, decarbonisation is one of the three axes of action in Navigator’s 2030 Responsible
Management Agenda (the Climate axis, which aims to contribute to a circular and low-carbon
economy), on the way to achieving carbon neutrality in its industrial complexes by 2035.
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With the objective of creating sustainable value and long-term competitiveness, Navigator's
2030 Agenda, which guided the Company's responsible business strategy in 2021, includes a
central focus – A Responsible Business – and three strategic axes of action. In addition to the
Climate axis, the Nature axis aims to preserve and enhance natural capital, and the Society
axis aims to develop its employees, create involvement with communities and share value with
society in a fair and inclusive way.
Investing in the forest
Navigator managed a total of 104,673 hectares of forest in mainland Portugal, representing a
direct investment in the forestry value chain in mainland Portugal's 18 districts of 35.6 million
euros (€32.4 M in 2020).
The low levels of rainfall in 2021 were not favourable to forestry operations, which reduced
reforestation levels compared to the previous year, settling at 2,162 hectares.
The same weather conditions were, however, favourable for wood cutting operations, having
been intensified in mature plantations, in order to overcome the great difficulty in supplying
raw material from the factories, due to the lower availability of wood on the market.
Navigator continued to promote forest management certification, increasing the percentage of
certified national wood it purchased (since the wood it produces is 100% certified) to 63%.
The percentage of certified wood purchased on the national market is one of the ESG indicators
to which the financial conditions of a €100 million bond loan (Sustainability-linked bond 2021-
2026) issued by Navigator are indexed.
In terms of biodiversity, the challenge for 2021 was to promote the quantification of the gains
from the various actions and projects for the conservation and restoration of habitats carried
out in the last ten years.
In a managed forest heritage that includes 12,364 hectares of Areas of Interest for
Conservation (11.8% of the total, and 441 hectares more than in 2020) and in which 31% of
the total is intersected by different types of Classified Areas, Navigator protects 245 species
of fauna and over 800 species and subspecies of flora.
Mozambique starts harvesting and exporting
Portucel Moçambique, which currently has 250 direct and indirect employees, began harvesting
and exporting wood from pilot plantations installed in the province of Manica in December
2020, 12 years after its creation, under responsible management and with certification of
controlled origin – an important step towards the formation of a cluster of a forest-based
industry in Mozambique and for the positioning of the Company and the country in the
international market of exporters of products originating from planted forests.
As part of this operation, three ships left the port of Beira in 2021 with a load of 90,000 m
3
,
destined for The Navigator Company's manufacturing centres.
The harvesting and exporting activity was also accompanied by an involvement with
institutional stakeholders, including government entities at the central level, as well as
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provinces and districts in the project areas, with a view to exposing the benefits of the value
chain of planting trees, for the economy, the surrounding communities and the environment.
This operation has also been monitored by our know-how and capital partner, the IFC, given
its experience with similar projects in other geographies.
The Social Development Programme, which aims to contribute to responding to the socio-
economic priorities of communities, reinforced its areas of action in 2021, including the
promotion of food security, the promotion of agricultural, livestock, beekeeping and fish
farming and, in the area of improvement of well-being, health and education infrastructure,
access to clean water and energy and access roads.
Value people
The Navigator Company placed particular emphasis on enhancing and managing careers in all
sectors and business areas throughout 2021.
Of note is the creation of the Young Staff Plan, a New Career Plan for operational technicians
in the tissue, paper and pulp areas, and a new salary scale with discrete pay scales, in which
the progression stages are clearly defined. The signing of a new collective regulation
instrument for tissue companies also deserves a mention.
With an execution period extended until the end of the first quarter of 2022, the 2021 training
plan, which provided for 588 courses, ended up including 306 extra-plan courses, reaching a
total of 744 courses actually taught.
Within the scope of the Group's Human Resources Policy and under the ATIVAR Programme of
the IEFP – Instituto do Emprego e Formação Profissional, The Navigator Company hired 89
interns, of which 33 had bachelor's/master's degrees and 56 were potential future employees.
The Internship Programme reflects the role of dynamism in the training of future professionals,
while reinforcing the Group's commitment to linking the worlds of academia and school to the
reality of business.
With fewer effects of Covid-19 lockdowns, external training was resumed, although at a slower
pace than in the pre-pandemic period. At the same time, there was a reinforcement of the
online training on offer available through the Learning Centre portal.
The continuation of the pandemic in 2021 meant that the implementation of the Covid-19
Contingency Plan, created the previous year, remained on the agenda. The measures taken
made it possible to keep the spread of the disease under control, namely through the testing
of all internal and external employees, carried out every 15 days, and it was only everyone's
joint effort that made it possible for the factories to operate 24/7, despite absences due to
Covid-19 and prophylactic isolations.
A Responsible Business
2021 saw the publication of Navigator's 2030 Responsible Management Agenda, which aims
to increase the Company's positive contribution to the creation of value and sustainable growth
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in a changing world. The 2030 Agenda was prepared based on a process of strategic reflection
that included the analysis of global macro trends and main challenges for the business,
considering their importance, ESG (Environmental, Social & Governance) risks and
opportunities, in addition to a broad listening exercise to more than 540 internal and external
stakeholders.
This Agenda is a reflection of The Navigator Company's Responsible Management Strategy,
which is based on Ethics, Responsibility and Transparency. The Company is responsible for
forest-based products that contribute to sustainable development and the well-being of
society, in line with the United Nations 2030 Agenda. Its strategy is based on a governance
structure that aims to achieve economic success, in a fair and responsible manner, taking into
account the interests of stakeholders and encouraging cooperation with them.
Navigator's 2030 Agenda includes a central focus – A Responsible Business – and three
strategic axes of action: for Nature, for Climate and for Society. The Nature axis aims to
preserve and enhance Natural Capital; the Climate axis aims to contribute to a circular and
low-carbon economy; and the Society axis aims to develop Company employees, create
involvement with communities and share value with society in a fair and inclusive way.
The Company's experience in building its 2030 Agenda, through an extensive and effective
process of involving stakeholders, was the subject of a case study published in the Case Study
Library of BCSD Portugal (Business Council for Sustainable Development).
Involvement with stakeholders also resulted, during 2021, in the holding of two sessions of
the Navigator Sustainability Forum: an internal session, for presenting and reflecting on the
results of the consultation process within the scope of the materiality analysis of the 2030
Agenda, and an external one dedicated to the theme of “Dynamic Protection of the Forest”,
which took place in Torres Vedras.
The Company's full commitment to sustainability has been recognised by independent external
entities, and in 2021 it was possible to obtain a very positive assessment in the ESG Risk
Rating by Sustainalytics. In the review carried out at the end of the year, Navigator achieved
a rating of 14.3, which places it in third place among 81 companies in the Paper & Forestry
industrial sector. The Company is thus among the best companies in the world in terms of
sustainability, having been classified again as a “Low ESG Risk Company” for investors.
At the end of the year, the Company joined the Science Based Targets initiative (SBTi),
submitting its greenhouse gas (GHG) emission reduction targets for validation based on the
most up-to-date climate science, an aspect that reinforces its commitment to contributing to
the fight against climate change.
This was also a year for deepening key sustainability issues, to improve alignment with
initiatives on the international agenda and respond to the Company's growing external
scrutiny. In this regard, Navigator continued to actively participate in The Forests Dialogue
initiative and in the Forests Forward programme of the WWF – World Wide Fund for Nature,
multi-stakeholder platforms that contribute to the debate of diverse themes connected with
the forest.
As a member of the Forest Solutions Group of the WBCSD – World Business Council for
Sustainable Development, one of the activities in which Navigator participated was the
preparation of a video on the theme “Choose Sustainable Projects”, with the aim of raising
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awareness of the role of planted forests and forest products within the framework of the global
sustainable development agenda. Recall that these forests are managed in balance with their
natural surroundings and that the trees are replaced after each harvest, continuing to remove
carbon dioxide from the atmosphere, guaranteeing biodiversity, ecosystems, water quality and
wildlife habitats, as well as livelihood conditions for local communities.
For further details about the 2030 Agenda and The Navigator Company's Responsible Business
Management strategy on the whole, please see our 2020 Sustainability Report.
SBTi: a commitment to reducing GHG emissions
In 2021, The Navigator Company completed its greenhouse gas (GHG) inventory,
a process that culminated in joining the Science Based Targets initiative (SBTi) at
the end of the year. Contrary to common practice, the Company dispensed with
the two-year period that companies have to submit their commitments, having
immediately submitted their GHG emission reduction targets for validation, based
on the most up-to-date climate science.
Science Based Targets, created in 2015, is an organisation that integrates the
CDP, the United Nations Global Compact, the World Resources Institute and the
World Wide Fund for Nature, with the aim of mobilising the private sector to
assume a leadership role in urgent action on climate change.
Distinction in Sustainalytics rating
The Navigator Company is among the world's best companies in terms of
sustainability, according to the ESG Risk Rating produced by specialised auditor
Sustainalytics. In the review carried out at the end of 2021, the Company obtained
a rating of 14.3, an improvement compared to the previous assessment. This
ranking places Navigator in third place, both out of a total of 81 companies
worldwide that are part of the Paper & Forestry cluster of industries, and in the
subset of 60 companies that make up the Paper & Pulp cluster.
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New circularity quantification tool
As part of Navigator's participation in the Circular Economy working group of BCSD
Portugal, the Company carried out a pilot test of the Circular Transition Indicators
(CTI tool), developed by the WBCSD and Circular IQ, to measure and quantify the
circularity of products and processes in companies. Navigator was part of the pilot
group that prepared the Portuguese version of CTI V2.0, moving ahead with a
pilot test involving the areas of R&D, Environment and Sustainability. The
experience confirmed the high circularity of the UWF paper produced at the
Figueira da Foz mill and underlined the importance of involving the various actors
in the value chain in circularity metrics.
An alliance for the circular bioeconomy
Navigator was one of the first companies to join the Circular Bioeconomy Alliance
(CBA) in 2021, a platform established on the initiative of the Prince of Wales, as
part of his Sustainable Markets Initiative, to accelerate the transition to a circular,
climate-neutral bioeconomy that is inclusive and in harmony with nature. CBA has
developed a conceptual framework for using renewable natural capital as a basis
for managing and transforming land, food, industrial and health systems, and
cities. In this context, the Company has been working with the European Forest
Institute (EFI), which facilitates the platform.
“Acting for nature”
Navigator co-organised, sponsored and actively participated in one of the panels
of BCSD Portugal – Business Council for Sustainable Development's annual
conference, focused on the theme "Sustainability: challenges of the 20-30
decade", which took place after COP26 – United Nations Climate Change
Conference. The panel, working under the theme “Acting for nature”, discussed
the challenges of the loss of natural values and the role of governments and
companies in the transition to a climate-neutral and environmentally positive
economy. An opportunity for the Company to make known its positioning and the
main activities carried out in the contribution to the conservation of nature and
biodiversity through the sustainable management of forest spaces.
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SUSTAINABILITY IN NUMBERS
BUSINESS
€12.1 million investment in R&D+i*
* Navigator's global expense, based on the amount eligible for SIFIDE (the amount shown is for 2020,
as the final amount for 2021 will only be determined in June 2022)
FOR NATURE
90% of raw materials used are renewable in origin
88% of waste is recovered
84% of water is returned to the environment
104,673 ha of managed forest area
FOR CLIMATE
30% reduction in direct CO
2
emissions (base year: 2018)
77% renewable energy consumed
5.9 Mt CO
2
retained in managed forests
FOR SOCIETY
3,150 employees
136,118 hours of training*
744 courses held*
More than 7,000families supported in Mozambique
€1.65 Million invested in the community
* Data in relation to total training given.
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2. BUSINESS PERFORMANCE
SUMMARY OF MAIN INDICATORS
Year
Year
Variation
(7)
Million euros
2021
2020
2021/2020
Total Sales
1,595.9
1,385.4
15.2%
EBITDA
(1)
354.7
285.5
24.2%
Operating Profit (EBIT)
229.6
140.4
63.5%
Financial Results
-17.8
-14.7
21.1%
Net Profit
171.4
109.2
57.0%
Operating Cash Flow
296.6
254.3
42.3
Free Cash Flow
(2)
234.7
233.5
1.2
Investments
80.1
80.6
- 0.5
Net Interest-Bearing Debt
(3)
594.8
680.0
- 85.2
EBITDA/Sales
22.2%
20.6%
1.6 pp
ROS
10.7%
7.9%
2.9 pp
ROCE
(4)
13.7%
8.1%
5.6 pp
ROE
(5)
16.4%
10.6%
5.8 pp
Financial Autonomy
41.2%
40.2%
1.0 pp
Net Interest-Bearing Debt/EBITDA
(6)(7)
1.68
2.38
-0.70
(1) Operating profit + depreciation + provisions;
(2) Change in net debt + dividends + purchase of own shares
(3) Interest-bearing liabilities – cash and cash equivalents (does not include the effect of IFRS 16)
(4) ROCE = Annualised operating profit / Average capital employed (N+(N-1))/2
(5) ROE = Annualised Net Profit / Average Equity (N+(N-1))/2
(6) (Earning liabilities – cash) / EBITDA corresponding to the last 12 months; IFRS 16 Impact: Net Debt / EBITDA
2021 of 1.83; Net Debt / EBITDA 2020 of 2.58;
(7) Variation of unrounded values
The economic recovery that boosted the recovery in paper consumption, combined with the
improvement in the balance between supply and demand in the United States, Europe and the
MENA region, following the exit of capacities and conversions already announced, and the
reduction of imports in Europe, as a result of logistical constraints, allowed the industry - and
Navigator in particular - to perform well in 2021. After 2020 was marked by the strong impact
of the pandemic on demand and a sharp drop in prices, in 2021 the Group registered a strong
inflow of orders, reaching historically high values in the 3rd quarter and again in the 4th
quarter. On the other hand, Navigator managed, with the increase in UWF volumes and the
transversal increase in prices, to offset the strong increase in raw material and logistics costs,
which was felt mainly in the second half of the year, demonstrating yet again the resilience
and flexibility of its business model.
Navigator had a turnover of €1,596 million in 2021, with paper sales representing around 72%
of turnover (vs. 68%), pulp sales representing 11% (vs. 11%), sales of tissue 9% (vs. 10%)
2021 Consolidated Annual Report
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and sales of energy 8% (vs. 10%). The year was marked by the growing demand for UWF,
particularly in Europe, after a year of significant decline in global paper consumption as a result
of the pandemic. On the other hand, it was a year marked by a strong increase in raw material,
energy and logistics costs, essentially in the 2nd half. Navigator managed to offset the strong
increase in variable costs, continuing the effort started in 2020 to contain fixed costs, with the
increase in UWF volume and the implementation of price increases across all businesses.
Successive price increases were carried out throughout 2021, together with the significant
optimisation of the sales mix, namely through the upgrade of the product mix. In the UWF
business, the price increased by almost 30% between January and December, an increase
unparalleled in the Group's history.
2.1. UWF paper
Market recovers in year of challenges
The printing and writing paper (UWF) market reached a turnover of €1,154 million in 2021
(€212 million more than in 2020), which translated into a sales volume growth of 198,000
tonnes compared to the previous year in a context in which, particularly in the 2nd half, there
were supply restrictions and increased demand, which, in turn, led to a stock of orders that
reached record maximum levels in the final months of the year, exceeding 80 days of
production.
At the same time, we witnessed a large increase in the price of commodities, highlighting an
increase in the price of pulp of more than 450 dollars per tonne between the beginning and
the end of the year, reaching historic highs. At the end of the summer, there was also a
significant increase in the cost of energy, chemicals, packaging materials, sea and land
logistics, and Brent crude, as well as the lack of human resources to drive trucks, among other
factors.
In fact, the challenges arose in different vectors. Commercial actions had to quickly reflect the
market, with rapid price increases, as a means of protecting the margin, and an adaptation of
strategy throughout the year, which influenced, for example, the options for improving the
product mix. Navigator started to concentrate the production of its machines in the segments
with more satisfactory margins, such as Premium (52% of volume), to the detriment of
cheaper products. It was also possible to increase the quantities sold to European and North
American customers.
The entry into 2021, and the worsening of the pandemic crisis across Europe, with lockdowns
and mandatory remote work in many markets, resulted in a reduction in the apparent
consumption of paper, which, at the end of April, had decreased by 3% compared to the same
period in 2020 and 11% compared to the same period in 2019. From May onwards, with the
improvement of the pandemic situation, paper consumption gradually recovered, especially in
Leaf and Reels, less affected than Office Paper, which suffered greater impact due to remote
work.
The year ended up in European markets with an overall demand for paper around 7% higher
than in 2020, although also around 7% lower than in 2019. Leaf and Reels consumption was
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close to 2019 levels and above 2020 levels, at 14% and 10% respectively, but in Cut Size still
around 12% below 2019 and only 2% above 2020. Overall, Factory Brands represented 69%
of the volume sold and Premium Products 52% (reaching 73% and 59%, respectively, in the
last quarter of the year), in the latter case, the best result recorded in the last 10 years.
In total, Navigator sold 815,000 tonnes of paper in Europe, 9% more than in 2020 and around
5% less than in 2019, a performance above market consumption, with emphasis on sales of
packaging paper, which exceeded the established objective.
In international markets outside Europe, 2021 was also a record year for sales, with a 25%
growth in volume. Premium Products accounted for 43% of volume (5% above 2020) and
Factory Brands accounted for 74% (up 1%). The results also translated into an increase in
market share, due to the continued focus on growth in these markets. Navigator's presence in
European exports grew by 6% to 57%, taking advantage of the fact that some companies had
left the market or reduced their capacity.
In the US market, demand for paper grew by 3%, but was still significantly below 2019 and,
in addition, there were supply restrictions through capacity closures/conversions (partly due
to the pandemic situation). The market reacted quickly to the lack of paper, with a faster rise
in prices, and the year ended for Navigator with a sharp increase in sales.
Despite the atypical market situation, the Company also continued to invest in the
development of its range of products, with the year being marked by the research,
development and launch of several new products in segments as diverse as packaging paper
(with characteristics of a substitute of plastic of fossil origin), Cut Size for office and domestic
use, and papers for industrial processing, designed for areas such as editorial and notebooks.
Approaching Customers: Challenges and Opportunities
As part of the “Together for the Win” initiative, an incentive created at the
beginning of the pandemic for distributors and their sales forces, one of the prizes
in 2021 consisted of a visit to the factory, at a time when access to the public was
restricted. The action had very positive feedback and is yet another example of
how Navigator dealt with the constraints created by the lockdown in its
relationship with customers, transforming challenges into opportunities. And even
the fact that the meetings were no longer face-to-face made it possible to work
more comprehensively. If, before going virtual, a meeting with a large customer
took place in a more limited way at its facilities, in 2021, on the contrary, meetings
in remote mode started to allow the discussion of topics and the sharing of
experiences from different markets, in real time and simultaneously with all the
Company's offices.
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Eco-efficient repositioning of the Discovery brand
In 2021, Discovery paper, which already had a sustainable DNA (product
exclusively available in 70 g/m
2
and 75 g/m
2
, using fewer resources and
producing less waste), was repositioned, now focusing on its arguments in eco-
efficiency, reinforcing the advantages of products originating from certified and
renewable forests, which retain carbon dioxide. In addition, they are recyclable
and biodegradable products, a perfect example of a circular bioeconomy.
Diversification of the Navigator paper range
In 2021, the Company launched two new products for niche industrial markets:
the Navigator Premium Writing and Navigator Premium Books ranges. The first
had been an ambition for some time and was developed with the notebooks and
diaries market in mind, as it is more opaque and resistant to water-based media,
which allows ink, even from a permanent pen or felt-tip pen, not to bleed through
to the back of the sheet. Incidentally, this was the paper chosen by the well-
known Portuguese brand Ambar for its sustainable collection #ClassroomMates.
Navigator Premium Books, a natural offset with different weights, is dedicated,
above all, to the production of books and is distinguished by its excellent
smoothness, greater longevity and, thanks to its natural whiteness, for providing
greater comfort during reading, regardless of ambient light. It has yet another
advantage for printing paperback books: it enables the use of lower grammages
while maintaining opacity. The latter was the paper used in the book collection
“Ex-libris - Treasures of the Libraries of Portugal”, a partnership between
Navigator and Público newspaper.
Home Pack XS: new life, new ream
The launch of this new ream of paper reflected the needs arising from the change
in work reality, with the substantial increase in remote working. Home Pack XS
offers the renowned quality of Navigator brand printing paper but now with a lower
number of sheets per ream, only 150, compared to the 250 of the original Home
Pack version, which reduces weight, facilitates transport and home storage.
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OPERATIONAL DATA
UWF PAPER (kton)
2017
2018
2019
2020
2021
Figueira da Foz
771.3
744.1
718.9
649.2
729.0
Setúbal
821.3
791.2
721.8
646.3
732.0
Total Paper Output
1,592.6
1,535.3
1,440.8
1,295.5
1,461.0
Total Paper Sales
1,578.1
1,512.9
1,447.0
1,276.1
1,474.4
FOEX - A4-Bcopy EUR/t
815
873
903
836
844
2.2. Bleached eucalyptus kraft pulp (BEKP)
Pulp price in Europe reached a record high of 1,140 USD/tonne.
At the beginning of the year, while Europe was in lockdown, overseas markets were recording
significant activity, with China working at full capacity and witnessing a consistent rise in the
price of pulp, which reached 780 USD/tonne. However, with the reopening of the European
market and the logistical crisis imposing difficulties in exporting paper from China to Europe
Universal Navigator with CO
2
Neutral seal
In 2021, The Navigator Company launched the Navigator Universal paper with the
CO
2
Neutral seal, reflecting its commitment to the carbon neutrality of its
industrial complexes by 2035 and the fight against climate change. During the
month of October, the Company developed a pine reforestation programme,
certified by the independent entity Ecoprogresso, which neutralises the carbon
footprint of the production and distribution of all reams of this 80 g/m
2
paper.
#PioneerInspireHope against breast cancer
During October – International Breast Cancer Prevention Month – the paper brand
Pioneer once again promoted its partnership with the iMM-Laço Fund, which
supports research carried out by the Instituto de Medicina Molecular in the area
of breast cancer. As part of the #PioneerInspireHope campaign, on the Pioneer
website it was possible to send personalised messages and create an origami
paper flower to offer and share hope. On World Breast Health Day, 15 October,
The Navigator Company distributed 1,200 white paper flowers at its headquarters,
Hospital de Santa Maria and iMM. Since 2005, Pioneer has supported the fight
against this disease by funding the iMM-Laço-HUB project.
2021 Consolidated Annual Report
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32
and North Africa, prices in the Chinese market recorded successive drops, falling to 550
USD/tonne at the end of November. At the same time, South America, the world's largest pulp
producer, was unable to make the necessary logistical changes to significantly redirect
operations from China to Europe.
The increase in the price of logistics (which, in terms of sea freight, approached 100%), energy
and chemical products also had a negative impact on the pulp market, which felt greater
pressure in terms of costs.
Environmental issues and international guidelines for a more sustainable economy have once
again had a positive impact on the pulp market, in a trend that has shown increasing intensity
in recent years. The gradual replacement of plastic by more environmentally responsible
materials, and, in terms of the textile sector, the increasing demand for materials based on
wood fibre, have been benefiting pulp – a sustainable and 100% recyclable product, which
plays a key role in the transition to a green economy.
All these factors together led to an increase in demand for pulp in Europe, which, at the same
time, witnessed a growth in demand for graphic papers, accentuated during the second half of
the year, with the consequent increase in pulp prices and the maintenance of low stocks.
Although the rise in pulp value started later in Europe, it was consistent, with the price rising
from USD 680/tonne in January to USD 1,140/tonne at the end of July, a price that remained
until the end of the year.
During 2021, The Navigator Company recorded a 26% decrease in global pulp sales, which
reached 292,000 tonnes. It should be noted that this drop was partly due to the greater
integration in paper and the reduction in sales was solely in the overseas markets – with a
drop of 72% –, since in Europe sales in volume grew by 20%. Due to market conditions, this
was an overall favourable year for pulp, with the rise in prices having a positive influence on
the final result and sales reaching 161 million euros.
Throughout the year, and also as a reflection of the pandemic and successive lockdowns, the
packaging segment was very strong, as well as the specialties segment (representing 70% of
The Navigator Company's sales to Europe), which was joined by the graphic paper segment as
of mid-year. Taking into account the weight of the specialties area in the Group's sales,
throughout 2021 the Company carried out several technical-commercial initiatives with the
aim of reinforcing its presence in this segment in 2022. At the same time, benchmarketing
actions were carried out, which led to an increasing presence of Navigator's portfolio among
its customers.
20% sales growth in Europe
€161 million sales in 2021
2021 Consolidated Annual Report
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OPERATIONAL DATA
BEKP PULP KtAD
2017
2018
2019
2020
2021
Aveiro
353.9
357.5
350.2
323.9
347.4
Figueira da Foz
593.1
575.1
585.5
572.7
582.9
Setúbal
542.1
519.1
490.2
467.5
529.7
Total Pulp Output
1,489
1,452
1,426
1,364
1,460
Total Pulp Sales
310.9
253.4
313.8
394.1
292.2
FOEX - BHKP EUR/t
729
880
762
596
867
FOEX - BHKP USD/t
819
1,038
855
680
1,023
2.3. Tissue
Iberian Peninsula leverages sales growth
In 2021, the tissue market continued to feel the effects of the pandemic environment. Southern
Europe has already recorded some recovery in demand, despite the delay in reopening
economies and restrictions on mobility limiting the recovery of the Away from Home segment,
which is essentially related to tourism and the Horeca channel. In the At Home segment, there
was an effect of reducing stocks, especially when compared to the same period last year,
translating into a normalisation of consumption compared to the peak of demand recorded in
2020.
In 2020, the tissue business area recorded a diametrically opposite behaviour in the At Home
and Away from Home segments, with the first showing great growth and the second suffering
from the various lockdowns caused by the pandemic.
The growth in the Away from Home business in 2021 was largely due to sales made in Portugal
and Spain. However, this segment has not returned to pre-pandemic levels overall, mainly due
to the impact of international markets, in particular North Africa, which have not yet recovered.
In the At Home segment, after the peak felt in 2020, it was possible to maintain growth, a
trend that the Group wants to continue, by investing in organic growth, attracting more
customers and strengthening current customers. Here too, sales in the Iberian Peninsula,
which grew by around 11%, were decisive for the good result.
At the same time, the sharp rise throughout the year in energy, logistics and commodities
costs, in particular pulp prices, put great pressure on tissue producers' margins, with a large
number of them announcing price increases. Consequently, Navigator raised prices twice
during the year, in April and in December.
Tissue sales volume reached 105,000 tonnes, a reduction of close to 1% compared to 2020,
with finished product sales exceeding 80,000 tonnes, 1% above 2020. The value of sales was
driven by the rise in prices, thus delivering growth of around 3% in 2021.
2021 Consolidated Annual Report
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Throughout 2021, The Navigator Company continued to invest in Research & Development,
with the launch of more sustainable products adapted to the current reality, also focusing on
disruptive innovation and the development of value-added products. With this strategy –
developed in partnership with universities and research centres – the Company is determined
to gain market share among consumers.
In the At Home segment, the Naturally Soft range was launched, which uses unbleached virgin
fibres, and two new ranges of products with additives – Amoos Aquactive™, with incorporated
soap, and Amoos Air Sense™, with fragrance pearls. In the Away from Home segment, a super-
absorption range was launched, with a differentiated technology that introduces air pockets
between the two sheets, resulting in high-performance products. The existing technology was
enhanced, namely in the Cacia complex in Aveiro.
A development line was also created to bring to the Away from Home market some product
novelties with added functionality. Given that this is a segment that is coming out of a deep
crisis, a line of cost-competitive products was developed in order to respond to this market
need.
The Group also continued to invest in working with customers, investing in knowledge sharing,
both through training actions and through partnership work focused on the business and
category management.
Innovation and sustainability
In 2021, The Navigator Company developed and launched the Naturally Soft
range, a range of toilet paper and napkins with raw fibres – unbleached virgin
fibre. This more sustainable product, produced without bleaching chemicals, was
designed as a multidisciplinary project that was born at RAIZ – Forest and Paper
Research Institute and involved the whole Company. Its implementation made
use of existing technologies, but in a differentiating way, and required process
changes, namely at the pulp mill level. Currently, it is a technology used both in
the Group's own brand and in customer brands, which are given access to
innovation developed internally.
Also noteworthy were the launches of the Amoos Aquactive™ and Amoos Air
Sense™ ranges, which represent a new generation of tissue products. Aquactive™
technology makes the paper foam when in contact with water, and Amoos Air
Sense™ contains scented pearls activated with each use by the movement of the
paper. These new ranges were also developed in a multidisciplinary project
environment in deep collaboration with RAIZ - Forest and Paper Research
Institute.
2021 Consolidated Annual Report
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35
OPERATIONAL DATA
TISSUE (Ktonne)
2017
2018
2019
2020
2021
Reel Output
56.2
71.7
102.3
112.7
111.1
Finished Product Output
48.9
66.0
72.8
79.5
82.0
Reel Sales
7.3
1.9
21.1
25.9
24.5
Finished Product Sales
48.1
61.2
74.5
80.1
80.9
Total Tissue Sales
55.4
63.1
95.7
106.0
105.4
2.4. Energy
Self-consumption of renewable energy increases, in a year of severely
reduced sales
Since the beginning of 2021, the natural gas combined cycle plant at the Setúbal industrial
complex started to operate on a self-consumption basis, supplying one of the paper machines,
and selling only its surplus production to the network. This led to a decrease in the volume of
energy sold, which went from a total of 1,655 GWh in 2020 to 1,439 GWh. This reduction,
which also accompanied lower energy production, was reflected in sales figures, which fell from
144 million euros to 135 million euros.
With the entry into operation of the new photovoltaic solar power stations in Figueira da Foz
and, at the end of the year, in Setúbal, Navigator has a total of around 7 MW of installed power
for self-consumption. This was another step taken by the Group in its energy sustainability
policy, as it is energy generated locally, from a renewable source, and which allows for a
reduction in energy purchases from the grid.
With 7,700 panels and an installed capacity of 2.6 MWp, the Figueira da Foz plant, installed on
the roof of paper machine no. 2, has an annual production of approximately 3,500 MWh of
renewable energy for self-consumption, which is channelled to the paper machine and pulp
mill. Savings in the energy bill will be approximately 300,000 euros per year. This is also a
project with an impact on Navigator's decarbonisation strategy, allowing it to avoid the
emission of 1,296 tonnes of CO
2
per year.
In Setúbal, the project suffered some delays, and the plant, with an installed capacity of 1.9
MWp, only started operating at the end of the year. Located on a plot of approximately 4,000
square metres, it has 4,086 solar panels and an estimated annual production of approximately
3,200 MWh. The normal operation of the new plant could represent an annual reduction in the
electricity bill of more than 250,000 euros, and avoid emissions in the order of 1,187 tonnes
of CO
2
.
During 2021, Navigator evaluated another project in the area of photovoltaic solar energy,
which, after the award scheduled for the beginning of 2022, will add more than 20 MW of
installed power for self-consumption. This is a substantial leap, which makes it possible to
immediately triple the capacity installed in recent years. With an estimated execution time of
2021 Consolidated Annual Report
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36
between 12 and 15 months, this project – which will be installed in several industrial units of
the Group – will start operating in 2023.
The global investment already made by Navigator in photovoltaic solar energy amounts to
around 4.7 million euros, of which 0.9 million were made in 2021.
Energy Efficiency Plans
Aveiro
An investment of €170,000 made it possible to improve the efficiency of three screens in the
raw pulp washing and screening equipment, which is responsible for the greater use of energy
at the Aveiro industrial unit. This improvement led to a reduction in consumption of 752
MWh/year, resulting in savings of €68,000/year.
Figueira da Foz
The area of indoor and outdoor lighting at the Figueira da Foz industrial complex has great
potential for reducing consumption, and has already completed more than 20 LED lighting
projects, with a cumulative investment of over €600,000. In 2021, approximately €30,000 was
invested in a new outdoor lighting project in one of the complex's car parks.
Vila Velha de Ródão
The investment of around €20,000 in the installation of a new heat exchanger in Boiler No. 2
of the Vila Velha de Ródão plant allows the use of heat from the exhaust gases to heat the
combustion air. The operation's efficiency gains translate into a reduction in natural gas
consumption.
Setúbal
The installation of LEDs in the disintegration area of the No. 4 paper machine at the Setúbal
industrial complex allowed the energy bill for that space to be reduced by approximately
€9,000 per year. This energy efficiency project, also equipped with sensors, involved an
investment of around €25,000.
2020
2021
Energy produced
1,802 GWh
1,744 GWh
Energy sold
€144 million
€135 million
2021 Consolidated Annual Report
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37
68,000 euros – annual savings achieved at the Aveiro unit,
under the Energy Efficiency Plan.
1,296 tonnes of CO
2
per year – emission savings associated
to the Figueira da Foz Photovoltaic Power Station.
2.5. Packaging
New gKraft brand boosts sales
The start of the sale of the new line of gKraft packaging paper, in 2021, complemented
Navigator's portfolio in a segment with rapid growth potential in the current scenario of
replacing single-use plastics with alternatives of sustainable origin. [See more about gKraft
paper in the “Strategic Priorities” section]
E-commerce grew even more sharply during the pandemic and is referred to as one of the
growth vectors of the packaging business.
In terms of packaging, sales exceeded the established target of 53,000 tonnes of this type of
paper, reaching 54,000 tonnes. Of these, around 47,000 tonnes were new gKraft paper.
Sales, although mainly focused on the Iberian Peninsula and Southern Europe, took place in
23 countries and reached more than 120 customers. In accordance with the defined strategy,
sales in Europe accounted for 91% of the total volume, with the Iberian region representing
around 36% and Italy around 31%.
With a Net Turnover of 42.4 million euros, Navigator's packaging paper accounted for 3.8% of
UWF's turnover this year. In 2022, the objective will be to diversify into other attractive
markets – such as Germany, the UK and North Africa – and create a customer base based on
products and segments with the highest added value, with sales expected to double in the
next two years, improving the attractiveness of the business.
2021 Consolidated Annual Report
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38
2.6. Financial performance
Transverse price increases and UWF volumes offset the increase in raw
material costs and allow for an EBITDA of €355 million
Navigator achieved an EBITDA of €355 million and an EBITDA/sales of 22.2%, benefiting from
the growth in paper volumes, improvement in the prices of paper, pulp and tissue.
Over the course of the year, there was an increase in production costs of around €20 million,
penalised essentially by the increase in the cost of wood, due to a greater predominance of
wood from outside the Iberian Peninsula, and also by the increase in the cost of external fibres,
energy and chemicals.
There was also a significant increase in logistics costs, which increased by €35 million,
particularly in the second half of the year, following the current logistical constraints that are
affecting the economy in a transversal way. Despite the difficult moment we are going through,
both in terms of prices and in terms of availability of resources, Navigator managed to maintain
its activity at 100% and operate without any disruption of upstream and downstream supply.
In Energy, we highlight the increase in electricity and natural gas prices as a result of the
volume exposed to the market. It should be noted that the effect of the increase in energy
costs was mitigated by the risk coverage policy with fixed rate contracting for most of the 2021
purchases, as well as the reduction in natural gas consumption, due to the new biomass boiler
in Figueira from Foz. It should also be noted that the aforementioned changeover of the natural
gas combined cycle plant at the Setúbal industrial complex to self-consumption, since the
14.103
26%
19.619
36%
13.261
25%
7.115
13%
Sales volume of the packaging paper range
(in tonnes)
Premium packaging (Superior white kraft) Natural premium packaging (Natural white kraft)
Packaging Unbleached Premium Offset Standard (for packaging market)
2021 Consolidated Annual Report
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39
beginning of the year, supplying one of the complex's paper machines, made it possible to
eliminate the purchase of electricity for paper machine no. 4.
The efforts to contain fixed costs started in 2020 continued, with a further reduction in
operating costs of €3 million compared to 2020, with personnel and maintenance costs
recording an opposite change, as anticipated, increasing by 18% and 5% respectively. In the
case of maintenance costs, the increase is largely justified by the incomplete maintenance
programmes in 2020, due to the difficulties created by the pandemic situation.
The increase in personnel costs accompanied the good performance of Navigator in 2021,
which allowed the distribution of bonuses to employees and the resumption of the rejuvenation
programme suspended in 2020. On the other hand, the amount of personnel expenses in 2021
compares with expenses in 2020 that were favourably impacted by the support measures in
force in the context of the pandemic. On the other hand, exhaustive work was carried out
during the year with the structures representing workers within the scope of labour
negotiations in the different business areas of Navigator. Within the scope of the
aforementioned negotiation process, the new career regulation for operational technicians
stands out, which, in January 2022, allowed the career development of more than 1,235
employees, representing around 70% of the employees in the business areas. For the first
time, a collective agreement was also signed for the tissue segment with conditions that reflect
the current reality of this business.
Total fixed costs ended up being 7% above the fixed costs of the same period last year. This
amount is essentially explained by the heading of personnel expenses.
In this context, efforts to contain costs, the transversal price increase and the increase in UWF
volumes offset the strong increase in production factor prices and allowed EBITDA to reach
€355 million in 2021, a value that compares with €286 million from 2020 (+24%). The
EBITDA/Sales margin was 22.2% and compares with a margin of 20.6% in 2020. The net
negative impact of the exchange rate on EBITDA of around €10 million should be highlighted,
with an average EUR/USD in 2021 of 1.18 vs. 1.14 in 2020.
Financial costs of €17.8 million
Financial results stood at €17.8 million (vs. €14.7 million), an increase of €3.1 million,
essentially resulting from the negative variation of a set of financial income that, in 2020, was
a very significant value, related to amounts still receivable from the sale of the pellets business
in 2018, compensatory interest obtained and amounts associated with the anti-dumping case
in the US (together - €3 million vs. 2020), as well as the cancellation of an interest rate swap
associated with a bond loan repaid in December 2020 (€-1.5 million). On the other hand, the
costs of financing operations dropped (€1.1 million) due to the decrease in the average debt
compared to the same period of the previous year, despite a small increase in the average
cost resulting from the lower weight of short-term debt, which became significant in 2020 due
to the liquidity obtained to deal with the pandemic.
Pre-tax income totalled €211.8 million and the corporate tax charge for the year was €40.4
million, with a tax rate for the period of 19.1%, compared to 13.1% in the same period last
year, which stems from the increase in the Group's results, which is offset by updates of
liabilities with tax matters. Net income was €171.4 million vs. €109.2 million in 2020.
2021 Consolidated Annual Report
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40
Strong free cash flow generation in 2021 of €235 million
In 2021, Navigator generated a very significant amount of free cash flow of around €235
million.
The generation of Free Cash Flow followed the improvement of the Group's operating
performance, particularly with regard to sales and prices. The systematic focus on working
capital management continues to be a relevant complementary element to improve the
regularity of financial flows.
Over the course of the year, the amount invested in working capital remained at low levels, in
a context in which there is a moderate rise in the levels of some stocks, accompanying the
progressive recovery in activity levels, especially in pulp which, despite maintaining historically
low volumes, increased, in 2021, by around 25,000 tonnes compared to the very low level
reached at the end of 2020.
It is also worth mentioning the impact of our supplier management policy which, combined
with the availability of solutions to support the liquidity of our Partners, actively contributed to
the level of cash generation shown.
2.7. Debt management
In 2021, two important financing operations were carried out, namely due to their sustainable
financing nature. In the first half of the year, €27.5 million was taken out of a loan contracted
in 2020 with the EIB, financing directly linked to the new biomass boiler at the Figueira da Foz
industrial complex, with a global investment equivalent to €55 million, which will allow the
Company to reduce fossil carbon dioxide emissions. In the second half, a €100 million bond
loan was issued, indexed to ESG objectives. With these financing operations, we ended 2021
with around 20% of the total debt issued with a sustainable nature.
It should be noted that this bond loan, valued at €100 million, with a maturity of five years,
was issued against the early repayment of a loan in the same amount, which was due to
mature in 2023. This operation – to which a fixed rate swap was added – determined the
extension of the average life of the Group's debt, as well as the reduction of the Company's
financing cost, in addition to representing a commitment to alignment with sustainability
objectives.
The loan conditions are indexed to two ESG indicators already present in the Company's
Sustainability Agenda and, in turn, aligned with the United Nations Sustainable Development
Goals. The first indicator defines CO
2
emission reduction targets and is part of the Company's
Carbon Neutrality Roadmap, in which the Company undertakes to be carbon neutral in its
industrial complexes by the year 2035. The second indicator sets targets for increasing the
percentage of certified wood purchased on the national market. Wood certification is one of
the factors most directly and specifically associated with sustainability objectives in our
business area and is the best guarantee of the adoption of processes conducive to sustainable
forest management.
2021 Consolidated Annual Report
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41
After having distributed dividends for 2020 of €100 million in the first half, in December the
Group anticipated the distribution of profits for 2021 in the amount of €50 million, maintaining
a cash position of €239 million at the end of the year.
Net debt recorded a relevant reduction compared to the end of 2020 of €85 million, supported
by the improvement in operational performance. The Net Debt/EBITDA ratio of 1.68x shows a
downward trend, which consolidates the profile of financial strength displayed by the Group
over the last few years and fulfils a structural objective assumed within the scope of the
Group's financing policy.
2.8. Capital market performance
After 2020 was marked by high volatility, largely resulting from the pandemic, 2021 proved to
be very positive for world stock markets. Although during 2021 there were still several periods
of lockdown and new Covid-19 outbreaks, with mandatory remote working and learning, there
was, especially during the second half of the year, a progressive reopening of economies, with
the normalisation of academic activities and a return to in-person work. Positive economic
projections and the advance of vaccination plans led most indices to close the year with gains
between 8% and 29%, with the exception of the Brazilian index, which fell nearly 12%.
From the second half of the year onwards, there was also an upward trend in raw materials,
as a result of the economic recovery and the constraints felt on the supply and logistics sides,
in particular oil, natural gas and carbon, which reached historic peaks.
In this context, the shareholding performance of most companies in the pulp and paper sector
was positive, in a period marked by an increase in demand and production and by a significant
rise in prices, in order to combat the successive increases in the cost of raw materials and
logistics.
The Navigator share led the sector's gains, with shares up about 34% during the year. It also
followed the trend of the PSI-20, which recorded a mixed performance, although most
companies ended the year positively.
Since the beginning of the year, Navigator share prices have been moving upward, having
traded at a low of €2.45 on 27 January. The high for the year was €3.40, on 29 October, the
day Navigator announced to the market the launch of the new packaging brand “gKraft”. The
share price at the end of the year stood at €3.35. As for liquidity, in 2021 the shares registered
an average daily volume of 840,194, which compares with an average daily volume of more
than 1 million shares during the previous year.
The Navigator Company held a general meeting on 11 May 2021 and, on 25 May, distributed
dividends in the amount of €99.6 million, equivalent to a gross value of €0.1400/share. At the
end of the year, the Company announced an advance on profits for 2021 to shareholders. The
sum amounted to around €50 million, equivalent to €0.0703/share and payment was made as
of 28 December.
2021 Consolidated Annual Report
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42
2.9. Contribution to State tax revenue in 2021
Within the scope of the activity carried out by companies that make up the Navigator Group,
such companies incur a multitude of taxes, fees and contributions, making the Group an
important contributor to government revenue in Portugal, and thus to the achievement of
social objectives and national development. Fiscal policy has a significant impact on the
business community, affecting the Group's entire value chain.
For this reason, the Navigator Group has a tax policy in line with the Group's business
development strategy, defined in accordance with the economic substance of its activity,
aiming to ensure that the entities that make up the Group are fully compliant with their tax
obligations in all jurisdictions in which they carry out their activity, seeking to maintain full
compliance with the spirit and letter of the applicable legislation.
Aware of the role that it represents in the Portuguese business community, and as required
from a transparency perspective by its stakeholders, Navigator in recent years has sought to
determine its tax footprint, identifying the level of taxes it incurs economically and the values
of tax that it collects and administers on behalf of the State or third parties, thereby
contributing in this dual aspect to the State's tax revenue.
As shown in the graph “Taxes borne”, in 2020, in terms of taxes paid – which includes more
than 20 different taxes, contributions and fees – the Group paid a total of €90 million (2020:
€56.4 million), equivalent to an effective tax burden of 42.51% in 2021 (2020: 44.82%),
calculated on pre-tax profit. Such tax burden pertained primarily to the amount paid for
Corporate Income Tax (IRC), including "derrama" surcharges (municipal and state),
Autonomous Taxation (TA) and Social Security contributions, the latter two totalling €44 million
(€23 million in 2020) and €20 million (€18 million in 2020), respectively.
The taxes borne include significant environmental taxes, totalling 23.5 million euros - including
Tax on Petroleum Products, Water Resources Tax, Maritime Public Domain Fee, Water Public
Domain Fee, Waste Management Fee, Special Consumption Tax (IEC) on electricity,
Extraordinary Contribution on the Energy Sector (CESE), Single Circulation Tax (IUC) and CO
2
-, with a notable increase, to almost double (80% ), compared to the previous year (2021:
54%
31%
14%
1%
Main taxes borne
IRC (Corporate Tax)
Social Security under responsibility of Company
Municipal and State Tax (Derrama)
Autonomous Taxation
Main taxes borne
2021 Consolidated Annual Report
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43
23.5 million euros versus 2020: 13 million), which also demonstrates the tax contribution to
the pursuit of sustainability objectives in line with the Group's policy and its relevant
investment in forest resources in Portugal. The amounts borne by the Group demonstrate its
high sectoral contribution, even today, which, in the future, with the creation of new rates or
financial contributions, will certainly imply double taxation and a negative tax burden on the
Group, the consequence of which will be to limit the Navigator's ability to invest in new, more
sustainable projects, as it has been doing.
With regard to taxes collected in favour of the State, in 2021 Navigator concentrated an
amount of 1,004 million euros (2020: €798 million), once again, VAT contributed the most to
this amount (2021: 904 million versus 2020: 720 million), which highlights the Group's
collaboration in collecting tax revenue for the Portuguese State. It should be noted that
Navigator is not remunerated by the State for the collection of these taxes, unlike in other
jurisdictions and, even among us, other economic operators are remunerated by the Tax
Authority (e.g. pledges made at the request of the Tax Authority), which means that Navigator
internalises and fully bears the costs inherent to collecting these taxes in favour of the State.
49%
22%
26%
1%
1%
1%
0%
Total taxes borne
IRC (Corporate Tax)
Social Security under responsability of Company
Environmental taxes
Non-deductible VAT
Wealth taxes
Stamp duty
Other taxes
2021 Consolidated Annual Report
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44
It is also important to mention the VAT assessed and self-assessed by Navigator in other
jurisdictions where it is registered for VAT purposes outside Portugal, where it collected an
additional total of almost €66 million of VAT for the respective states.
VAT collected for other states
Country
Total
(million euros)
Netherlands
15.1
Poland
15.4
United Kingdom
14.1
Germany
17.6
Spain
2.1
France
1.1
Switzerland
0.3
Italy
0.2
TOTAL
65.9
The Group also collects €9.4 million of Social Security contributions owed to employees (2020:
€9.3 million) and €22.7 million of withholding income tax (2020: €21.5 million), essentially on
salaries paid to its employees. The "labour tax rate" in 2021 was 24.7% (2020: 38.47%), with
the variation essentially due to the improvement in the Group's consolidated results. This
indicator is calculated through the ratio between tax on labour resources (Social Security
90%
2%
1%
0%
7%
Taxes collected
VAT paid and self-assessed
IRS/IRC withholding
Social Security under responsability of Employees
Pledges
Paid and self-assessed VAT (VAT records abroad)
2021 Consolidated Annual Report
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45
contributions by both the company and employees and Personal Income Tax [IRS]
withholdings on revenue from employed work) and pre-tax profit.
As for the geographic distribution in Portugal of taxes levied on a territorial basis ("derrama
municipal" [municipal surcharge], IMI [municipal property tax], IMT [municipal real estate
transfer tax] and other municipal taxes), the Group has the greatest presence in the regions
of Setúbal, Figueira da Foz, Vila Velha de Ródão and Aveiro, with taxes of €2 million, €1 million,
€0.49 million and €0.21 million, respectively.
In the context of complying with the country-by-country tax reporting obligations presented
by the Group, it is evident that, in 2020, the Group paid in Portugal 80.92% of the global IRC
borne (2019: 95.95%, 2018: 92.93%, 2017: 93.78%, with the 2020 amount impacted by
refunds of gains in tax litigation relating to previous years) in the 16 jurisdictions (2019: 16,
2018: 18, 2017:17) where it is located represented by corporations, with 2.32% in Europe,
1.74% in Africa & Middle East and 15.01% in America with 15.01% of the global total corporate
income tax.
The Tax Footprint report is particularly important for the Group in an effort to digitise the tax
function, the reliability of tax information in order to comply with reporting and tax obligations,
also insofar as it aggregates the compilation and analysis of the key indicators concerning the
multiplicity of taxes borne and collected in favour of the State and the Group's significant
contribution to public revenue in Portugal.
2.10. Risk management
The Company regards risk management as a core process in its business activities. A
permanent risk management monitoring system is therefore in place in The Navigator
Company Group, involving all organisational units, the Risk Management Division (DGR) and
the Supervisory Board.
This system is based on a systematic and explicit assessment of business risks by all
organisational divisions in The Navigator Company Group and identification of the main
controls in place in all business processes. This basis allows the Company to continually
evaluate the adequacy of its internal control system for the risks perceived to be the most
critical at each moment.
As part of this periodic assessment, an annual internal audit programme has been instituted,
to be implemented by DGR in conjunction with each division involved, to monitor and evaluate
the appropriateness of the internal control system to the perceived risks and to help the
organisation to implement programmes to improve this system.
This risk governance system is headed by the Supervisory Board and the Board of Directors.
The Navigator Company Group has therefore identified a variety of economic, financial and
legal risks to which it is exposed in the course of its business, and a selection of these risks is
shown below:
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RISK
(Non-exhaustive selection)
SUMMARY DESCRIPTION
Industrial accidents at work
Risk of the occurrence of accidents at work potentially
resulting in
injuries, disability or fatalities.
Increase in transport costs
Risk of increase in pulp, paper
or tissue transport costs, which may result in a reduction in
sales margins or
the need to increase prices charged to customers.
Higher demand for raw materials
(wood)
Risk associated with an increase in demand for raw material
(wood) due to competitors expanding their capacity,
triggering an increase in wood prices and a consequent
increase in production costs.
Foreign exchange
Risk of variation in the exchange rate between the euro and
other currencies, which may significantly affect the Group's
results, either through revenues (sales) or costs (purchases).
Cybersecurity Failures
Risk associated with security flaws in the
Company's IT systems that allow undue or illicit activities by
third parties resulting in losses for the Company.
Environmental consequences
of operations
Risk of occurrences with adverse environmental
consequences, directly or indirectly attributed to industrial
activities, potentially resulting in a breach of environmental
legislation or
customer and stakeholder dissatisfaction, namely as regards
the local community.
Forest damage
Risk of forest damage resulting from natural
or man-made causes, which may jeopardise the quantity of
raw material needed for the Group's activities and
consequently lead to increased costs or loss of revenues.
Energy business less competitive
due to regulatory issues
Risk of less competitive terms for power sales caused to a
certain extent by the regulatory environment; volatility in the
regulation of the sector may lead to sudden loss (total or
partial) of the contribution from this business to the Group's
profitability.
Reduction in paper demand
due to technological substitution
Risk associated with a reduction in demand for the products
sold by the Group, which may result in a significant reduction
in sales.
Failure in wood supplies
Risk of failure in wood supplies, which may result in
production
stoppages and consequent increase in costs or
lost revenues.
Equipment failures
Risk of failure in production equipment, which may result in
production stoppages and consequent increase in costs or lost
revenues.
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RISK
(Non-exhaustive selection)
SUMMARY DESCRIPTION
Data security
failures
Risk of failures in data security relating to the confidentiality,
availability and integrity of data over the process of
acquisition, processing, communication, storage and
destruction, potentially leading to information losses/leaks,
fraud, discontinuity
of operations.
Shortage of certified raw material
Risk associated with inability to obtain certified raw material,
potentially resulting in a loss of value in end product
and consequently in sales values.
Fraud
Risk of fraud in processes involving movements in
funds/valuables,
causing the Group to incur losses.
Non-compliance with legislation
and regulations
Risk of non-compliance with legislation on tax, employment,
environmental, accounting and/or other matters or with
industry regulations. Non-compliance with accounting
standards.
Irregularities in purchases
and payments
Risk of inefficient or inappropriate processes in purchases
of materials and services critical for the business, resulting in
items being out of stock, financial losses, non-performance by
and in relation to suppliers or occurrence of situations of
fraud.
Occurrence of fires or natural
disasters
Risk of loss of assets or even personal injury due to fires or
other natural phenomena.
Loss of new
business/product/process
opportunities
Risk of failing to capture opportunities to develop new
business, products or processes due to ineffective R&D or
technology scouting.
Loss of forest productivity
Risk of not being able to achieve full production potential
of the season due to failure to apply best available forestry
practices.
Losses on loans to customers
Risk of credit granted to clients, which may result
in unrecoverable debts and a consequent increase in costs.
Paper pulp price
Risk associated with pulp price fluctuations, which may result
in losses for the Group.
Product quality
Risk associated with product quality, potentially resulting
in consumer dissatisfaction and a consequent drop in sales
and lost revenues.
Reduction in paper price
Risk of pressure of competition, which may result in a drop
in sales or reduction of market share.
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RISK
(Non-exhaustive selection)
SUMMARY DESCRIPTION
Environmental restrictions on
industrial production
Risk of environmental restrictions on industrial production,
which may result in changes being required in the production
process,
thereby increasing costs.
Legal restrictions on forestry
production
Risk of legal restrictions being imposed on forestry
production, which may result in a reduction in raw material
output
and a consequent increase in acquisition costs.
Legal restrictions on
paper imports
Risk of restriction on paper imports in producer countries
through the erection of customs barriers, potentially resulting
in a reduction in sales.
Inadequate sourcing
Risk of inefficiency in management of relationship with critical
suppliers for the business, or over-dependence on these
supplies, compromising the quality of services provided,
limiting Group operations or potentially leading to operational
inefficiencies.
Sustainability of forestry operations
Risk of compromising the future operations of the
organisation
or of local society and the business community, in general,
due to overuse or irrational use of the natural resources
involved in forestry operations.
Sustainability of industrial
operations
Risk of soil contamination or excess atmospheric emissions
of noxious gases, resulting directly
or indirectly from the process of supply, sanitation or
processing of solid urban waste (e.g. accidents, breakdowns,
techniques used) or from natural causes such as floods or
droughts
at intake points or serious pollution accidents.
Variation in energy prices
Risks associated with changes in the purchase and sale price
of energy, resulting in additional costs and lost revenues.
Many of the risk factors identified are beyond The Navigator Company Group's control,
especially in the case of market factors which can have a fundamental and negative effect on
the market price of the Company’s shares, irrespective of the Group’s operational and financial
performance.
The risks brought about by climate change not directly listed in this table are actually present in
many of the risks described herein. In fact, and because these risks are, under our risk
management structure, directly linked to Navigator's business processes, with mitigation controls
described and subject to monitoring, climate change appears to be spread across multiple fronts.
For example, obviously the loss of forest productivity, forest damage or the risk of fires to a large
extent stem from drought or other factors; the sustainability of industrial activity or the risk of
environmental restrictions on industrial production are derived in part from the issues of
(de)carbonisation of economies, which Navigator intends to anticipate and which are addressed
extensively in other sections of this report.
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3. ENGAGEMENT WITH STAKEHOLDERS
3.1. Our team
Aware of the needs of the people who make up its teams, The Navigator Company placed
particular emphasis on valuing and managing careers in all sectors and business areas
throughout 2021.
The pandemic remained unfavourable for dissemination and communication activities, which,
as in the previous year, continued to be carried out, in large part, through workshops and
webinars, with care being taken to bring people closer to this new model.
Within the scope of the Group's Human Resources Policy and under the ATIVAR Programme of
the IEFP – Instituto do Emprego e Formação Profissional, The Navigator Company hired 89
interns, of which 33 had bachelor's/master's degrees and 56 were potential future employees.
The Internship Programme reflects the role of dynamism in the training of future professionals,
while reinforcing the Group's commitment to linking the worlds of academia and school to the
reality of business.
The concern with valuing Employees led to the creation of the Young Executives Plan, to show
younger workers their potential career path from arrival at the Company and for the following
three to four years. This also provides a response to the individual needs of the different
population groups at Navigator.
In negotiation with the workers' representative organisations, a New Career Plan was also
designed for operational technicians in the areas of tissue – who until now had no career plans
– paper and pulp.
With a view to greater transparency and better capacity for Employees to plan their future, a
new salary scale was also implemented with discrete pay scales, in which the stages of
progression are clearly defined.
Employees
Portugal
Mozambique
Rest of the world
Total
2020
2021
2020
2021
2020
2021
2020
2021
Forestry
195
200
126
129
7
7
328
336
Industrial
2,510
2,391
0
0
10
9
2,520
2,400
Commercial
145
201
0
0
62
61
207
262
Support
177
152
0
0
0
0
177
152
Total
3,027
2,944
126
129
79
77
3,232
3,150
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520
1.137
1.003
235
123
9
521
1.070
1.000
230
114
9
0
200
400
600
800
1.000
1.200
Complexo
Industrial
de Aveiro
Complexo
Industrial
de Setúbal
Complexo
Industrial
da Figueira da
Foz
Complexo
Industrial
de Vila Velha de
Ródão
Lisbon Viveiros Aliança
National distribution
Total 2021: 2,944
Total 2020: 3,027
2020 2021
16%
84%
17%
83%
Distribution by gender
(Total universe of employees)
Women Men
2020
2021
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72%
70%
68%
67%
28%
30%
32%
33%
0%
20%
40%
60%
80%
100%
2018 2019 2020 2021
Middle and senior management
(Data without Mozambique employees)
Men Women
22%
17%
12%
16%
78%
83%
88%
84%
0%
20%
40%
60%
80%
100%
<30 30-50 >50 Total
Distribution by age
(Data without Mozambique employees)
Women Men
Looking to the future
"There are so many reasons to join us". This was the motto for Navigator's
Employer Branding strategy in 2021, with which the Company sought to enhance
its ability to attract talent and expand its recruitment bases. In a joint initiative
with the Academy, Navigator participated in 25 job fairs at universities and
polytechnics, where it was present through a virtual stand, and also used quick
interviews, presentations, workshops and conferences.
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Health and Safety
The continuation of the pandemic in 2021 meant that the implementation of the Covid-19
Contingency Plan, created the previous year, remained on the agenda. The measures taken
made it possible to keep the spread of the disease under control, through the testing of all
internal and external Employees, carried out every 15 days, a measure that required
considerable effort in terms of human and material resources.
Health month was celebrated in October, with several initiatives under the motto “Movement
is Medicine”. The Occupational Health team worked with Employees to show how exercise,
combined with a healthy diet, can make a difference in maintaining good physical and mental
health. For the first time, health was also addressed from a financial point of view, with Deco
Proteste joining The Navigator Company team to share strategies to improve the domestic
economy.
During the year, an ergonomics project took place which started at the Setúbal plant and was
extended to workers in the tissue areas of the Vila Velha de Ródão and Aveiro factories. This
project, which involved more than 145 workers, had a multidisciplinary team that included a
company specialising in ergonomics, responsible for risk assessment and development of
technical solutions, a physiotherapist, Navigator's Occupational Health and Safety team, and
the workers covered, as well as the various team leaders. By working directly with the teams
involved, it was possible to better diagnose their needs and create the most appropriate
responses. One of the cases highlighted was the development of a shovel in which the
aerodynamics and the type of handle – in different sizes, suitable for the different sizes of the
workers’ hands – made it possible to work more correctly and appropriately, protecting the
user from future injuries.
In the last quarter of 2021, training was held on “Civil and Criminal Liability” within the scope
of Occupational Health and Safety. This was aimed at supervisors, area managers and
directors. It involved a total of 349 Employees and had very positive feedback from the
participants.
Safer equipment
Lockout/Tagout (LOTO) of equipment, fluid lines and others is a key issue in
operational safety. To this end, a pilot project was carried out in the additives line
during 2021, at the Figueira da Foz industrial complex, with encouraging and very
promising results. This pilot, developed with an external partner, uses new
technologies to ensure greater redundancy of the equipment with regard to its
complete isolation. In the traditional model, padlocks are placed at specific points,
in order to ensure that the equipment does not come into operation while it is, for
example, undergoing maintenance. The new system identifies the locations to be
locked out from a workstation, using QR Codes, so that lockout is achieved without
intermediate validation. Without eliminating the use of the physical padlock,
technological redundancies are thus introduced that guarantee team safety.
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Training
The training plan approved for 2021 included 588 courses and its implementation period was
extended until the end of the first quarter of 2022. Specific needs identified throughout the
year meant that 306 extra courses were run, which meant a total of 744 courses taught.
With fewer effects of Covid-19 lockdowns, external training was resumed, although at a slower
pace than in the pre-pandemic period. At the same time, the process of adapting to the “new”
reality continued, with an increasing focus on technologies and the transition to the online
training format (e-learning and webinars, both available through the Learning Centre portal)
for courses that, until now, had only existed in face-to-face format.
For Employees, there was a greater take-up of self-learning training, with increased demand
for voluntary enrolment webinars and the more than 600 courses available in e-learning
format, which registered a total of 7,433 participants.
In order to support the new career plan, the Valencies Project is underway, with the
development of 213 new training programmes that will support career plans in the areas of
maintenance, production, tissue and quality process control. Coordination is carried out by the
Learning Centre and involves more than 150 specialists from different areas of the business.
Navigator Training
2019
2020
2021
No. of courses
588
551
744
Enrolments
12,189
15,362
11,581
Training hours
229,186
135,787
136,118
In-house training hours
165,343
113,974
104,260
% of internal training
72%
84%
77%
No. of Employees involved
3,111
2,753
2,283
% of Employees involved
95%
85%
72%
No. of hours per Employee
70
42
43
7,433 enrolments in e-learning training (64% of the total)
1,438 enrolments in Live Training, in webinar format (12% of the total)
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3.2. Our Customers
The year 2021 was marked by a bottleneck in global supply chains for all industrialised
products, mainly due to changes in Asian markets. The logistical constraints of exporting in
Asia led local Suppliers to turn to their own region, causing unprecedented demand in Western
factories in recent decades, with Customers unable to obtain a response to their demand. At
the same time, there was a general increase in costs, which led to an unprecedented rise in
prices, which also affected the paper sector.
In Europe, Navigator's sales were constrained, on the one hand, by the evolution of the
pandemic, and, on the other hand, by the implementation of a firm policy of recovery in the
Company's profitability, which resulted in a lead role in the rise in paper prices on the European
market during 2021. The Company increased its prices four times, starting 15 February across
Europe, then May and June, then 27 September and 1 November. In early December, it
announced a new price hike, which it implemented on 2 January, 2022.
Thanks to Navigator's product availability, and despite the pandemic, personal and online
contacts intensified, and sales teams recruited a record number of over 150 new Customers in
Europe.
With the expansion of the packaging paper portfolio, which introduced new qualities that met
the expectations of Customers, the effort of the entire team resulted in more than 100 new
Customers being acquired for this segment, especially in the markets of Southern Europe.
Particularly noteworthy was the growth in sales in the markets managed by the offices in
England (United Kingdom and Ireland) and Italy (Italy, Greece and the Balkans).
In response to the challenges posed, the partnerships that the Europe Sales Department
strengthened with several Customers were fundamental for Navigator's performance in the
European market. Sales in Europe once again exceeded 60% of the paper business's total
contribution, and were decisive for the Group's results.
In the non-European markets where it operates – America, the Middle East, North Africa and
Sub-Saharan Africa – demand from Customers remained above the Company's ability to
deliver. Adjustments in prices were required almost monthly in order to compensate cost
increases, and delivery times lengthened. However, most Customers understood the particular
contingencies of the market situation and, faced with uncertain stabilisation, many chose to
bring forward orders throughout 2022, in order to ensure supply, even if prices were open-
ended, as they change in the short term – due to changes in energy, transport, raw materials,
chemicals and packaging costs.
This situation required very close communication with Customers, and priority was given to
regular business and strategic products with a long-term perspective. In this sense, even
taking into account the more restricted context in relation to supply, the Company continued
to boost its openings to new Customers, with the number growing above expectations (63 new
Customers, compared to the objective of 40, particularly in Latin America and Sub-Saharan
Africa).
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3.3. Our suppliers
The year 2021 continued to be heavily affected by the Covid-19 pandemic, now marked by the
reopening of markets and a rapid growth in demand, to which supply had difficulty in
responding. As a result of this imbalance in the markets, worsened by the increase in energy
and natural gas prices, there was also a significant increase in the prices of chemicals and
packaging raw materials.
55%
45%
Geographic distribution of paper sales
(in volume)
Europe Rest of the world
Recognition of Customer Value
Navigator's commitment to Customers goes beyond the local salesperson, and the
demonstration of strategic interest carried out in 2021 allowed them to feel
valued. When it was possible to make face-to-face contacts with the Navigator
core team – in Turkey (end of 2020), in Egypt (first quarter of 2021), in Mexico
(second quarter of 2021) and in the USA (November 2021) – these were highly
appreciated, with several Customers mentioning that Navigator was the first
supplier they saw in person since the beginning of the pandemic.
New Navigator Hub platform
In 2021, Navigator started offering its Customers the option of placing orders
through the Navigator Hub. This is a cloud platform, which was very well received,
providing ease and agility in placing orders and monitoring their status online.
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In chemical products, price increases had a greater effect and impact on those with greater
dependence on energy in their production process, such as, for example, sodium chlorate and
caustic soda, reaching values above 10%.
As far as packaging materials were concerned, strong pressure in the demand for pine wood
in the Iberian market led to increases of more than 15% in pallets, while plastic film increased
by around 40% as a result of the rise in prices in petroleum derivatives.
The international changes in Brent prices also led to a general increase in petroleum-dependent
chemicals, with a greater impact on fuel, where increases of more than 50% occurred.
Throughout 2021, the Materials Management team was therefore fully focused on minimising
the impact of these general increases in raw material prices.
Despite strong market pressure, Navigator's Supplier base remained practically unchanged,
both in terms of materials and services.
3.4. Logistics
In a year in which logistics faced multiple challenges, The Navigator Company handled 1.9
million tonnes (paper, pulp and tissue).
Around 1.8 million tonnes were handled in primary transport, between factories and
customers, in more than 130 countries and approximately 3,800 delivery points. Secondary
transport – between logistics platforms in Europe and the United States of America – handled
a total of 160,000 tonnes.
During 2021, the Company transported 67% of its paper cargo by sea and 33% by road. With
respect to pulp activity, maritime transport accounted for approximately 84%, while the
remainder was carried by road. About 6% of tissue was shipped by sea and 94% by road.
Due to Covid-19, economies have been recovering asymmetrically throughout the year,
causing the entire transport chain to become unbalanced. Added to this was a change in the
profile of consumption patterns, which pivoted towards durable goods. Bearing in mind that
90% to 95% of world trade is goods transported by sea, this situation has led to a considerable
increase in the demand for maritime transport. There were also blockages in the system, the
most high-profile of which occurred in March in the Suez canal, in addition to the closure of
the main Asian ports due to the pandemic.
Together with the increase in demand, these imbalances generated congestion at ports,
cancellation of stopovers and an increase in the cycle of container use, which saw the
occupancy rate of the maritime transport system reach 105%, according to international
analysts. This situation led to an increase in transport costs, which was also driven by fuel
price inflation that occurred throughout 2021.
Faced with this situation, The Navigator Company had to manage not only the increase in sea
freight costs, but also the cancellation of stopovers and the capacity and availability of
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containers that would allow it to continue supplying its manufacturing units and serving its
Customers.
In part, thanks to a strategy based on medium and long-term partnerships with its suppliers,
Navigator managed to minimise these impacts. The Company reinforced partnerships with the
implementation of a programme to increase transport capacity, responding to business growth
needs. For this programme, the focus on proximity terminals (maritime and rail) was
fundamental, as well as measures to increase the rotation of containers.
Internally, and following what was done in 2020, Navigator maintained its commitment to
railways, which ensured the transport of containers from factories to ports. The focus on short-
sea maritime transport was also reinforced, which is more advantageous both in terms of cost
and CO
2
emissions, with deliveries to northern Europe, normally carried out by road transport,
being made by sea.
1.9 k tonnes transported
More than 130 destination countries
Around 3,800 delivery points
3.5. Social Responsibility
Navigator's sustained growth is carried out in harmony with nature and has people and their
desires as a starting and end point. Our Corporate Social Responsibility (CSR) policy is based
on community involvement and value creation. It is through the sharing of knowledge and
resources that we contribute to better forests, a better environment, a better society and a
better country. A better planet.
The year 2021 continued to be marked by the pandemic, which with successive lockdowns put
our resilience, our willpower and even our mental health to the test. More than ever, we needed
each other, and the value of sharing has increased in importance.
We were apart, but close. At home, but in contact with nature. We write postcards, read
magazines and books, play with the kids, plant trees, care about the planet… Always with The
Navigator Company by our side.
Forest Producers
2021 was the year of consolidating the Forest Producers project, started in July 2020, to
strengthen proximity to the rural world and create a united community among all those who
have a professional or income relationship with the forest. Within this project, it is possible to
share technical and scientific knowledge about forestry.
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Through The Navigator Company and its partners, namely RAIZ – Forest and Paper Research
Institute, and CELPA – Paper Industry Association, the community of forest producers benefits
from the sharing of knowledge and good forestry practices. In 2021, partnerships also
extended to the legislative and regulatory framework, with the collaboration of the Authority
for Working Conditions and consultancy company Ernst & Young.
In addition to its own channels (paper magazine, website, Facebook, Instagram, and also a
YouTube channel launched in 2021), the information conveyed by the Forest Producers project
is often replicated in other information bodies, in partnership, so that the message reaches as
many interested parties as possible.
In 2021, training, communication or awareness-raising activities on the ground continued to
be heavily affected by the pandemic, with several forestry/agroforestry events being cancelled.
Forest Producers participated in Agroglobal, the largest national agroforestry fair, which had
about one thousand visitors.
A pioneering project in the forestry sector, the Forestry Producers initiative aims to contribute
to a better forest in Portugal, giving a voice to landowners, producers, service providers, local
authorities and industry, among others.
Magazine
30,000 subscribers
Web site
www.produtoresflorestais.pt
67,995 visitors
Social networks
6,903 Facebook followers
2,321 Instagram followers
141 YouTube followers
Expresso newspaper subscription offer
The last issue of the year of the magazine Produtores Florestais expanded the
range of information shared by giving away a digital subscription to the Expresso
newspaper for eight weeks. And taking advantage of the giveaway couldn't be
simpler: subscribers just had to insert the code shown inside that issue so that,
in addition to everything they needed to know about forestry activity, they also
had access to news from all over the country and the world.
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My Planet
In 2021, the My Planet project continued to focus on sustainability issues, with a focus on
climate change, forest and biodiversity preservation, responsible consumption and healthy
lifestyles.
With field activity “frozen” by the pandemic, the sharing of knowledge, experiences and good
examples with society that this project embodies was found in the paper editions of the
magazine, on the web site and on social networks.
Throughout the year, stories and issues were publicised with the aim of motivating people to
act in favour of a better Planet. Because “The Planet is us!”
In the summer, the My Planet project promoted a photography contest called “Olhares sobre
a Floresta”, with the support of the website Olhares.com. With the motto “What if defending
the forest starts with knowing how to capture its beauty, its visual nuances, its details or its
fullness?”, this action aimed to raise awareness of the knowledge and appreciation of Portugal's
forests, and encouraged new points of view on this important natural resource to be explored.
In 15 days, it received more than 600 submissions.
Magazine
12,900 subscribers
Web site
www.myplanet.pt
175,893visitors
Social networks
26,670 Facebook followers
7,808 Instagram followers
Support for reforestation
Offering trees for planting is a common My Planet practice. In 2021, there was
good support for the “Trees of Hope” initiative by the National Scout Body. This
was an initiative to replant Portuguese forests, to which My Planet contributed
with all the 1,100 trees planted, providing 275 specimens of each of four native
species: strawberry tree, holm oak, black oak and black oak.
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Give the Forest a Hand
Between lockdowns and isolations, in 2021 children continued to spend more time at home,
and the Dá a Mão à Floresta (Give the Forest a Hand) project, dedicated to children, did not
stop entertaining, educating and helping to study and teach.
Partnerships were established with various professionals, including teachers, nutritionists,
speech therapists and psychologists, to prepare specialised articles. And with influencers, to
publicise the project.
In 2021, Dá a Mão à Floresta had a new character to help in its mission of contributing to
children's environmental education by putting them in contact with the world of nature and
the forest: Abelha Maria, a fearless environmental activist, always ready to raise her
megaphone to fight for a better planet. She joins Nádia and Vasco, teacher Patrícia, firefighter
Bruno, scientist Cíntia, journalist Joca, forester Gustavo, beekeeper Alice, farmer Agostinho,
the dog Sebastião and the cat Renata in the adventure of guiding young ones through areas
such as sustainability, the importance of rural life or biodiversity.
It was also the year for revamping the initiative's website, introducing, for example, a new
area for teachers, educators and parents, with teaching materials and activity sheets, an event
area and the introduction of a carbon calculator.
The cartoons created for the project's website and social networks reached the big screen in
2021, appearing on SIC Kids. And the paper content also had a wider distribution, through a
partnership with “Expressinho”, a detachable supplement of the Expresso newspaper, aimed
at young readers.
The magazine is now published every two months and the number of pages has grown,
providing more educational content so that, through playful and fun activities on paper – a
natural, recyclable and biodegradable material – children internalise the importance of
protecting and valuing the forests and nature.
Papies'21 Award
Dá a Mão à Floresta won the Papies'21 Award in the Multiplatform category. This
award, which honours the best graphic communication works in Portugal,
recognised the project for the way it boosted activities, videos and interactive
games developed specifically to help parents who stayed at home with their
children during the pandemic.
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Magazine
14,858 subscribers
Web site
www.daamaoafloresta.pt
274,382 visitors
Social networks
44,200 TikTok followers
38,378 Facebook followers
12,019 followers on Instagram
Paper that brings people closer
In December, Navigator relaunched the campaign “Closer Christmas”, in
partnership with the postal service, CTT – Correios de Portugal. The Company
offered paper postcards that could be sent free of charge through the CTT website,
with exclusive illustrations or a personal photo to bring people together during the
pandemic and lockdown.
Inspire hope
Pioneer, the paper brand of The Navigator Company that has been funding
research projects into breast cancer since 2005, promoted the
#PioneerInspireHope campaign again this year, as part of the Pioneer Paper
Flowers movement. During October, the international month for fighting breast
cancer, and in partnership with the IMM-Laço Hub fund, from the Institute of
Molecular Medicine, Pioneer promoted a symbol of hope: the creation and sharing
of white origami flowers. On 15 October, World Breast Health Day, the brand took
the message to Santa Maria Hospital, to the IMM and The Navigator Company,
where it delivered 1,200 paper flowers, to convey hope to those who live and deal
with this disease.
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Bags and mask holders at the Book Fair
For the third consecutive year, Navigator and APEL – Portuguese Association of
Publishers and Booksellers joined forces to promote a better environment at the
Lisbon Book Fair. The Company provided 30,000 paper bags and 7,500 mask
holders, the latter produced with the new line of packaging paper, to be shared
with visitors on arrival at the venue.
Library Treasures reissued
Some of the most precious books in Portugal's libraries have been given new life
on Navigator paper. In 2021, the Company joined the Público newspaper in the
launch of the collection “Ex-libris – Library Treasures of Portugal”, providing the
paper for the printing of facsimile editions of rare works of national literary history.
The books were printed on the new Navigator Premium Books paper, which is
distinctive in that it has greater longevity and provides superior reading comfort,
regardless of light, thanks to its cream colour.
Council of the European Union with Portuguese paper
Portugal chaired the Council of the European Union during the first half of 2021,
and The Navigator Company produced and provided support material, namely
notebooks and notepads for the various high-level meetings that took place, in
Portugal and Brussels, during this period.
Gifts of autographed books
Due to the importance of reading on paper, Navigator promoted a competition on
Children's Day, through which it offered 100 copies of Alice Vieira's "Livro com
Cheiro a Chocolate", a work that is part of the National Reading Plan, autographed
by the author for this initiative.
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4. STRATEGIC PRIORITIES
4.1. Forestry
The year 2021 was particularly dry, not offering the best weather conditions for forestry
operations, which constrained the pace of preparation and planting.
The levels of reforestation in the area managed by Navigator in Portugal therefore dropped
compared to the previous year – which had set a record in recent decades – standing at 2,162
hectares.
On the other hand, the low rainfall helped wood cutting operations, which is good news given
the great difficulty felt in supplying the factories, due to the lower availability of wood on the
market. This limitation led The Navigator Company to speed up its usual plan for cutting wood
and contract more resources; however, despite the fact that the volume of wood harvested
was greater than expected, it did not jeopardise the sustainability of the Company's forestry
heritage, with the intensification of operations taking place only in mature plantations.
The scarcity of national raw materials makes the issue of the decreasing productivity of the
Portuguese forest increasingly important, so in 2021 Navigator continued to invest in projects
to enhance Portugal's forests. That is the case of Limpa & Aduba (CELPA - Paper Industry
Association initiative to adopt good practices for the maintenance of eucalyptus stands), which
intervened 14,880 hectares this year, and the Replantar programme, which is complementary
to it, dedicated to the stands of lower productivity; the Navigator Premium Programme, which
provides advice to landowners who want to boost the productivity of their forest, and which
has already supported 2,184 hectares; and rePLANT, a programme for developing innovative
technological solutions for forest problems.
In total, the forest area managed by the Company in mainland Portugal fell this year by around
2% compared to 2020. This added an expectation created among the owners about the
possible installation of photovoltaic plants, which prevented the renewal of some lease
contracts, especially in the Alto Tejo region, where the land has lower slopes and better
exposure to the sun. The area managed in Galicia, all under lease, increased by 69%.
Navigator maintained its promotion of sustainable certified forest management, having
managed to once again increase the percentage of certified Portuguese wood it purchased
(since the wood it produces is 100% certified). This figure, which was only 12.5% in 2016,
had reached 61% in 2020 and, in 2021, rose to 63%.
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Forest training academy
Navigator is associated with several initiatives that aim to promote training,
strengthen management skills and find technologies that are less dependent and
more sustainable in terms of workforce. One such example is the Transform
Project, an agenda for the digital transformation of forest value chains, which is
part of the Recovery and Resilience Plan (PRR) within a consortium promoted by
ForestWise. One of the human resources training projects is the creation of a
forestry training academy, which gets people to train with simulators and undergo
on-the-job training to become more productive and efficient – Forest Knowledge
Academy.
Restoration of burnt areas
In 2021, a new programme was launched at CELPA to rehabilitate burnt areas in
an affected area in Mortágua, with the difficult aim of identifying the owners (due
to the absence of a land registry) and then establishing an agreement on the
necessary recovery. CELPA – Associação da Indústria Papeleira pays for the
clearing of invasive species and burnt wood, and the land is reconditioned and put
back into production, so that it will not burn again.
The importance of the forest for the Green Deal
Within the scope of the Recovery and Resilience Plan (PRR), to contribute to the
climate transition (Green Deal), Navigator is part of the consortium that in 2021
submitted the application “From Fossil To Forest” to the Mobilising Agendas for
Business Innovation. This represents a historic milestone in the development of
solutions originating in the forest space, namely more linked to raw materials from
eucalyptus and pine, improvement of manufacturing processes for wood
processing, and identification of new products used in the circularity aspect. The
objectives of the Company's agenda are based, above all, on the production of
cellulose-based packaging to replace plastic, and new biocomposites.
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THE NAVIGATOR FOREST IN MAINLAND PORTUGAL IN 2021
104,673 ha – Total managed area (2,697 ha less than in 2020)
76,499 ha – Eucalyptus (73% of the total and 2,667 ha less than in 2020)
3,931 ha – Cork oak (3.8% of the total and 6 ha more than in 2020)
3,362 ha – Pine and other softwoods (3.2% of the total and 41 ha less than in 2020)
1,696 ha – Other forest species (1.6% of the total and 545 ha less than in 2020)
1,608 ha – Agricultural area (1.5% of the total and 1 ha less than in 2020)
8,038 ha – Protection paths and firebreaks (7.7% of the total
and 116 ha more than in 2020)
790 ha – Infrastructure and buildings (0.8% of the total and 32 ha less than in 2020)
8,748 ha - Other occupations (8.4% of the total and 464 ha more than in 2020)
12,364 ha – Areas of Interest for Conservation (11.8% of the total and 441 more ha
than in 2020, including 4,075 ha of Rede Natura 2000)
1.809
2.257
2.548
3.141
3.767
2.162
0
500
1.000
1.500
2.000
2.500
3.000
3.500
4.000
2016 2017 2018 2019 2020 2021
Reforested hectares in managed areas
within Portugal
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NAVIGATOR FOREST IN GALICIA 2020-2021
+ 69% total (from 356 to 601 hectares, from 2020 to 2021)
+ 150% new plantations (82 → 206 ha)
+ 131% of eucalyptus (203 → 470 ha)
+ 20% other forests (33 → 40 ha)
- 93% agriculture (8 → 1 ha)
+122% paths and firebreaks (9 → 21 ha)
- 69% infrastructure (3 → 1 ha)
- 31% other occupations (99 → 68 ha)
+ 176% investment in forestry (€151,101 → €417,233)
+ 440% loans paid to third parties (€94,222 → €508,352)
NAVIGATOR FOREST IN MOZAMBIQUE
13,600 ha of plantations
2,348 of Protection and Conservation areas
4,000 Land Assignment Agreements signed with families and communities
€1,580,000 investment in Forestry
LEASE IN PORTUGAL
46,478 ha of leased properties (44% of the total managed, 1% less than in 2020)
1,860 owners with lease agreements with the Company
€5,374,170 paid in loans to third parties
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Investment in the national value chain
by district
Amounts in euros
District
2020
2021
Santarém
8,403,451
5,301,080
Beja
3,638,112
7,575,875
Coimbra
3,956,497
3,315,999
Castelo Branco
3,198,556
3,479,910
Faro
2,453,025
1,926,838
Évora
2,228,303
2,849,492
Porto
2,010,447
2,136,356
Aveiro
1,558,506
933,280
Setúbal
1,182,667
2,516,918
Portalegre
1,148,908
1,884,056
Viseu
837,260
740,565
Viana do Castelo
699,253
424,759
Braga
316,848
391,708
Lisbon
297,770
681,699
Leiria
265,303
669,174
Bragança
128,029
469,204
Vila Real
63,033
103,410
Guarda
0
5,226
TOTAL
32.4 M
35.6 M
92
43
50
30%
37%
33%
Suppliers' cost
Total: 185 suppliers
Forestry Operation Transport
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Wood supply and logistics
Navigator's forestry business strategy has strong roots in Portugal, due to the location of its
industrial complexes and the quality of the eucalyptus product. However, as the amount of
wood available in the country is insufficient for the Company's needs, the acquisition of wood
(roundwood and shavings) is extended to other locations in the world, such as Spain (Galicia
and Andalusia region), Brazil, Uruguay and Mozambique. In fact, as in our country, in the
Galicia region the Company has a complete and integrated supply chain, with leasing, purchase
of land, acquisition of wood on the market and all the logistics necessary for the reception of
wood (logistics parks) and the transport to factories by rail and sea.
However, of the total wood supplied to the industrial complexes in 2021, around 23% came
from imports from outside the Iberian Peninsula, which represents a very significant figure,
which could be capitalised in Portugal, with major contributions to the national economy, if the
law allowed it.
In terms of wood supply, the impacts of the Covid-19 pandemic made the year atypical, in
addition to the shortage of labour and the lower availability of wood as a result of the fires that
occurred mainly in 2016-2017. In view of this situation, Navigator implemented price
incentives to cover the cost increases in the supply chain, in addition to the development and
consolidation of financial initiatives (advances, aid for the purchase of machinery, confirming,
among others) integrated in the qualification and mobilization of Suppliers. It also
implemented initiatives for more efficient management of certified wood, through the use of
the Black Box portal, developed by CELPA, with the technical support of an external consultant.
For producers, initiatives to support forest management were reinforced.
The supply of wood (roundwood and shavings) and biomass is a very complex activity, due to
the circumstances in terms of road, rail, maritime transport, Iberian logistics parks,
provenance of product, and is normally carried out for six days a week. (24 hours a day).
In 2021, this activity increased substantially in terms of biomass supply, compared to the
previous year, as it was a complete year of supply to the Figueira da Foz boiler, which started
its activity in August 2020. In terms of forest management, this implied increased work to
collect leftovers and stumps before reforestation, but always under assessment, since it is
necessary to maintain the balance of sustainability of the plots, removing organic matter
without compromising soil fertility.
In Logistics activity, which continues to play a crucial role in ensuring a large part of the flows
to the factories, in 2021 some optimisation projects were developed that contributed to an
even greater efficiency in the supply chain, strengthening the Supplier base outside the Iberian
Peninsula and new wood species were identified. In addition to a logistics optimiser that makes
it possible to shorten distances, reduce costs and environmental impacts, an initiative was
implemented to support operators in some ports closer to the Company's factories,
guaranteeing volume in the medium term with gains in efficiency of operations. The rolling mill
operation in the port of Setúbal was consolidated, which did not take place until 2020, and the
size of ships calling at the Port of Aveiro was also increased (ships 200 meters long and 30
meters wide) which was, for years, a limitation to the growth of cargo in this port, which is
very close to the mills in Aveiro and Figueira da Foz.
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These logistical optimisations reinforced the need to shorten the distances travelled “point-to-
point”, with positive environmental impacts, with rail transport being widely used in existing
traffic managed directly by Navigator.
WOOD ACQUIRED IN 2021
63% national wood supplied certified (61% in 2020)
71% of the total raw material that entered the industrial complexes with certification
76%
13%
11%
68%
10%
22%
Wood transport managed by the Group
Road Rail Maritime
2020
2021
77%
13%
10%
65%
10%
25%
Origin of wood
National (Market and Own) Spanish market Extra-Iberian import
2020
2021
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Biodiversity
The sustainable management of the forest and the conservation of biodiversity are part of the
core initiative of Navigator's Responsible Management Agenda 2030 with regard to Nature.
With investment in habitat conservation and restoration activities being part of the Company's
daily activity in the last decade, the challenge in 2021 was to quantify the gain in terms of
biodiversity that these projects have achieved. It should be remembered that, in 2021, 12,364
hectares of the area under Navigator's management (11.8% of the total and 441 hectares
more than in 2020) are Areas of Interest for Conservation, and that 31% of the total heritage
is intersected by different types of Classified Areas (31,961 hectares).
The year was marked by the opening of these Company forest spaces to master's degree
students for carrying out field work.
Thanks to the constant effort to monitor the natural values in six properties, and the
investment in specialised and expert personnel in this sector, the number of species of special
interest for conservation identified in areas managed by Navigator increased again in 2021:
four more species of fauna, out of a total of 245, and another five of flora, increasing the flower
list to above 800 species and subspecies.
In Parque das Serras do Porto, for example – a protected area where Navigator has production
and in which several afforestation projects were carried out and areas identified and protected
only for biodiversity management – in 2021 a greater effort was made to monitor the areas
that have some restoration action (sampling in plots of about 68 hectares), whose information
will serve as a basis for producing action scenarios and evaluating the gain in biodiversity. The
first result was the discovery, in the Special Conservation Area (ZEC) of Valongo, of two species
on the Red List of the Vascular Flora of Mainland Portugal: one with “Vulnerable” status
(Agrostis juressi) and another “Near threatened” (Cheirolophus uliginosus), [see box “New
species in Parque das Serras do Porto]). Two species listed in Annex IV of the Habitats Directive
were also found, the broom (Ruscus aculeatus) and the sphagnum moss (Sphagnum
auriculatum). In relation to fauna with conservation interest in the Red Book of Vertebrates of
Mainland Portugal, a “Vulnerable” species was identified which has already been found in other
Navigator properties, the Lusitanian salamander (Chioglossa lusitanica).
Further south, in the Monchique ZEC, in a new monitoring of two areas (about 18 hectares)
with Monchique oak (Quercus canariensis is “Critically Endangered”), two other species of flora
with conservation interest were identified, listed with “Vulnerable” status on the Red List of
Vascular Flora of Mainland Portugal, Carex helodes and Campanula alata . In this protected
habitat area, continuation of the work to improve the state of conservation was carried out by
Navigator which allowed for denser planting of Monchique oak plants, thanks to around one
hundred collected acorns, which went to the Company's nurseries and returned as 40 new
plants. It is believed that there are only 350 of these trees in the area and, as not all of them
produce acorns, the objective is to reproduce those found to increase the population and help
improve the conservation status of the Iberian oak forests of Quercus faginea and Quercus
canariensis.
As part of the regular work to protect biodiversity, the Company also monitored nine nesting
sites for the Bonelli's eagle (Aquila fasciata) during the winter and spring (breeding period). In
only one of these was reproduction successful (with at least two offspring), although it is
possible that it also occurred in other alternative nests. A nest of black stork (Ciconia nigra)
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with reproductive success was also monitored (two young), and a nest of goshawk was also
discovered with young.
New species in Serras do Porto Park
The monitoring of natural values in the areas managed by The Navigator Company
in Parque das Serras do Porto discovered a small cluster of Cheirolophus
uliginosus, a species of flora endemic to the Iberian Peninsula, found for the first
time within the Protected Landscape Area of this Park, as well as on the Company's
properties. This species is regarded as "Near Threatened" on the Red List of the
Portuguese Vascular Flora and as "Critically Endangered" in the Red Book of
Spanish Vascular Flora. Despite being typical of peat bogs which are mainly
located on the coast in areas with scattered populations, it is often found in urban
and peri-urban environments, which makes this discovery, made by Floradata –
Biodiversidade, Ambiente e Recursos Naturais, even more significant.
Biodiversity assessment right from the design stage
Because the protection of biodiversity is common to all of Navigator's forestry
activity, in 2021 an internal workshop was held to present the results of the
WildForest project - implemented between 2018 and 2020 by the Faculty of
Sciences of the University of Lisbon, the University of Aveiro and the National
Institute for Agricultural and Veterinary Research (INIAV) on Navigator properties,
with a view to assessing how mammals use eucalyptus plantations and their
importance.
At the same time, the occasion was used to carry out training for Design
Department Employees responsible for carrying out the environmental impact
assessment before any installation and operation. The targeted training, including
a debate with the Academy about the presence of mammals and how and where
they can be found, since they are not always visible, aimed for a more rigorous
assessment of biodiversity heritage. For example, WildForest detected 11 species
of medium and large mammals in eucalyptus forests (roe deer, red deer, fallow
deer, wild boar, hare, wild rabbit, fox, badger, weasel, genet and mongoose) and
four species of micromammals (field mouse, Algerian mouse, Cabrera's vole and
greater white-toothed shrew).
These were some of the conclusions: the presence of well-preserved native
environments, inside or in the areas bordering eucalyptus plantations, promotes
the biodiversity and permeability of these production forests for native terrestrial
mammals; the maintenance of these natural habitats breaks the homogeneity of
the landscape and can be considered a management tool, promoting the
sustainability of production, by allowing the occurrence of native species and,
thus, mitigating the possible negative effects of plantations on biodiversity.
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Biodiversity gain in plots under restoration
In the heart of the Southwest Alentejo and Vicentine Coast Natural Park, in
Odemira, on the Vale de Beja property, restoration and conservation activities
have been taking place for over 10 years to convert to natural vegetation (such
as cork oak and oak) an area that has been extended, especially in the wetlands
of the property, to create an ecological corridor along the River Mira.
To confirm the gain in biodiversity from this investment, Navigator asked the
Faculty of Sciences at the University of Lisbon to carry out a comparative study of
the production areas with intervention areas, as regards micromammals. The first
work (carried out by Miguel Rosalino, Assistant Professor at the Department of
Animal Biology at FCUL, and Beatriz Pinho, from cE3c - the Centre for Ecology,
Evolution and Environmental Changes), has the theme “Effect of restoration
initiatives in eucalyptus plantations on the composition and structure of the
micromammal community” and began in September with the placement of traps,
observation of animals and subsequent release. The first results indicate that the
average capture of individuals in eucalyptus is 3.5 captures/site, and in the areas
under restoration it is 5.5 captures/site; species captured include Mus spretus
(Algerian mouse), Crocidura russula (greater white-toothed shrew), Apodemus
sylvaticus (field mouse), and Rattus rattus (black rat).
Artificial nests provide an ecosystem service
In 2021, another 20 artificial nests were placed at Herdade de Espirra, in Pegões,
for insectivorous bird species such as the blue tit and the nuthatch, and monitoring
made it possible to find several chicks (six or seven per nest). Of the 40 already
installed, more than 30 have been occupied, which constitutes a significant
ecosystem service in terms of controlling cork oak pests and diseases, such as
Coroebus undatus, which has no other solution and causes damage to cork. This
pest digs into cork and leaves its larvae inside, devaluing the product and,
therefore, it can no longer be used for the production of high quality stoppers. The
results of this initiative to balance the habitat may be monitored in 2022/2023 by
students from the School of Agriculture.
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NEW SPECIES DISCOVERED IN NAVIGATOR AREAS
In 2021, four more species of fauna were found on the properties under the Company's
management, out of a total of 245, and another five of flora, exceeding 800 plants:
Apodemus sylvaticus – Field mouse (in various locations in the centre of the country)
Microtus cabrerae – Cabrera's Rat (in Malcata)
Aythya nyroca – Ferruginous duck (sighting at Herdade do Gavião, Aljustrel area)
Dama dama – Fallow deer (Malcata)
Sphagnum auriculatum – Sphagnum moss (Parque das Serras do Porto)
Agrostis juressi (Parque das Serras do Porto)
Cheirolophus uliginosus (Parque das Serras do Porto)
Carex helodes (Monchique)
Campanula alata (Monchique)
3
13
27
19
171
3
13
27
19
168
4
13
31
20
180
4
13
36
21
182
0 50 100 150 200
Critically endangered
Endangered
Vulnerable
Almost endangered
Of minimal concern
Protected species in the Navigator Forest
2021 2020 2019 2018
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4.2. Research and Development
The activity carried out by RAIZ – Forest and Paper Research Institute – a non-profit entity
whose associates are The Navigator Company and the universities of Aveiro, Coimbra and
Lisbon (through the School of Agriculture) resulted, in 2021, in a record number of patents
submitted (8) and publications (80).
This private centre with 93 Employees (48 staff, contracted researchers and 9 grantholders),
including 23 PhD holders, carries out research, innovations and specialised services to support
forestry, industrial and commercial activities, and generates knowledge to promote
competitiveness and sustainability in the business.
19.040 €
16.500 €
4.300 €
39.840 €
40.000 €
10.000 €
4.300 €
54.300 €
0 € 10.000 €20.000 €30.000 €40.000 €50.000 €60.000 €
Restoration actions
Biodiversity monitoring, including nesting sites
Monitoring the riparian woodland quality index
Total
Investment in conservation
2021 2020
“Dynamic forest protection”
The 12th session of the Navigator Sustainability Forum, an annual initiative to
bring the Company closer to Stakeholders and communities, took place in October
2021 in Torres Vedras, a municipality with which the Company works to defend
the forest against fires and manage the Local Protected Landscape of the Serras
do Socorro and Archeira. Under the theme “Dynamic Protection of the Forest”, the
meeting highlighted the value of the forest as a crucial resource for the sustainable
development of Portugal, as part of the responsible management of the land and
landscape.
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Forest area
In producing improved genetic materials that increase forest productivity and resilience in the
face of climate change, RAIZ's contributions in 2021 included the development of two new
clones, offering gains of 40% in terms of tonnes of pulp per hectare of eucalyptus plantation,
compared to unimproved forest.
At the level of natural selection through silviculture, two kilos of improved seeds were delivered
to Viveiros Aliança, with around 25% in productivity gains.
In order to continue to obtain better quality plants, a new five-hectare orchard was created at
Herdade de Espirra, where the best seeds are planted, stimulated and then collected, taking
care to avoid crosses. It is estimated that this will produce four million improved plants.
Dissemination of knowledge
In terms of promoting knowledge, several RAIZ projects grew and received awards in 2021.
As part of the Floresta do Saber (Forest of Knowledge) initiative, focused on education and
communicating the forest-based bioeconomy to the school community (which, in 2020,
received recognition by RAIZ as a UNESCO Club, for the defence of the Sustainable
Development Goals of the UN 2030 Sustainable Development Agenda), a new physical space
was created, with the renovation of the house of Jaime de Magalhães Lima, in Quinta de São
Francisco, Aveiro, where RAIZ is located. With an area for experiences dedicated to the forest,
an auditorium, a space for exhibitions and one for co-creation, the house is open to the general
public, especially to youngsters of school age.
2021 was also a year of consolidation for the florestas.pt project, an initiative of The Navigator
Company under the technical-scientific coordination of RAIZ with the support of the national
scientific community and other institutions linked to the forest. On its first anniversary in June,
had already reached more than 300,000 visitors, becoming a benchmark for clarifying essential
issues and challenging society to find out about, value and care for the Portuguese forest. This
mission was given two honorable mentions in March at the Meios & Publicidade Awards, one
in the “Environment and Energy” category and the other in the “Site” category. At the end of
the year, a bi-monthly digital newsletter was launched, with a selection of content and news
from the platform.
Natural forest protection
In 2021, RAIZ obtained authorisation from ICNF – Institute for Nature
Conservation and Forests – to make the first release into nature of a natural
enemy of the bronze bug, a pest that affects thousands of hectares of eucalyptus
forest in Portugal. The parasitoid Cleruchoides noackae, harmless to local
biodiversity, was produced in a biofactory environment, so that its colonisation
reduces the impact of the pest.
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www.florestas.pt
In 2021, the florestas.pt platform received the bronze medal at the Lusophone Creativity
Awards and was given two Honorable Mentions at the Meios & Publicidade Communication
Awards, in the Website and Environment & Energy categories.
447,427 web site visitors
6,852 followers on Facebook
5,542 followers on Instagram
1,953 followers on Twitter
213 Youtube channel subscribers
521 Newsletter subscribers
Industry and technology
The year was marked by the development of new products and businesses. Fueled by the third
year of activity of the Inpactus – Innovative Products and Technologies from Eucalyptus
project, RAIZ presented three proposals in the area of biorefinery for potential new businesses
under evaluation: bioactive compounds from foliage and biomass, bioethanol extracted from
bark, and biocomposites (with bioplastics), the latter already in the pre-industrialisation phase
and included in Navigator's applications for the PRR.
In terms of processes, RAIZ coordinated or participated in corporate projects aimed at
optimising wood consumption and reducing the use of water in cooking, bleaching and
production of UWF and tissue paper. Equally significant was activity carried out in the area of
industrial waste (UpCycling project), in terms of reduction (internal measures) and recovery
in new applications, within the circular economy. Two applications, developed in partnership
with universities and companies within the scope of the European PaperChain project, reached
Best Doctoral Thesis Award
Ana Filipa Lourenço, Senior Technical Officer at RAIZ, was the winner, ex aequo,
of the António Portugal Prize – Best Doctoral Thesis at CIEPQPF (Research Centre
in Chemical Process Engineering and Forest Products). The work, entitled
“Nanocelluloses in the production of fine papers: influence on the process and on
product quality”, was carried out at the University of Coimbra, to respond to the
growing scientific interest in the search for sustainable and environmentally-
friendly raw materials, possible replacement for plastics or as additives in the food
industry, rheological controllers (deformation and flow of materials), for 3D
printing of various structures, among other possibilities. The conclusions made it
possible to take the first steps towards the industrial feasibility of its application
and to publish a Portuguese patent (with submission of an international
application). The results were presented at 15 international conferences.
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the industrial demonstration stage this year: the incorporation of inorganic waste in bituminous
materials (road surfaces) and in concrete (civil construction).
But the highlight of the year, both from a business perspective and as a contribution to the
transition from a linear fossil-based economy to a circular bioeconomy, goes to the strategic
projects in the area of packaging. RAIZ's support for the industrial development of high-yield
pulps, with less wood consumption, made it possible to submit a patent – and two more are
in the pre-submission phase. These pulps are at the origin of the new line of gKraft packaging
products, launched by The Navigator Company on 1 November [see next topic “4.3.
Packaging”].
Two other areas in the field of sustainable packaging are being tested (and entered in the PRR
application). The first aims to find industrial solutions with barrier properties (to oxygen, water
and fat) that allow papers to maintain their recyclability, biodegradability and composting
ability. The second seeks to identify business opportunities for the use of moulded cellulose in
the production of rigid packaging, such as trays and food service products.
New tissue product produced with the support of RAIZ
In 2021, Navigator launched an innovative and differentiating tissue product,
leveraged by the R&D activities carried out under the Inpactus project. This
project made it possible to develop internal skills, recruit specialised staff, equip
laboratories and work with partner universities, for the use of unbleached pulp in
the production of tissue papers. The chemical and morphological specificity of the
eucalyptus fibres revealed excellent properties in terms of absorption capacity and
softness, which made it possible to submit a patent application. The teamwork
that followed, involving the industrial and commercial tissue areas, culminated in
the launch of the Amoos Naturally Soft range.
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Forest-based bioproducts under assessment
for technical and economic feasibility
Within the scope of the Inpactus project, scheduled to be concluded in October
2022, the field of bioeconomy and forest-based bioproducts has received
particular attention. The most promising projects, including sugars, bacterial
cellulose and bioethanol from forest biomass, biocomposites with cellulose fibres
and bioplastics, prebiotics from white pulp, bioactive compounds from biomass,
and lignin applications in foams, adhesives and cements are in the technical-
economic assessment or pre-assessment phase, depending on their TRL. The TRL
(Technology Readiness Level) is a NASA model adopted by the European Union to
measure the maturity level of technologies with a view to their use in the market,
which ranges from 1 to 9:
New Pilot Laboratory in Biorefineries and Bioproducts
A Pilot Laboratory was built during 2021, with funding from the Centre's
Coordination and Regional Development Commission, a €1.4 million project. To
help increase the TRL (Technology Readiness Level) of RAIZ projects, it will
encouarge the demonstration and scale-up of innovative processes and products,
and promote the creation of new businesses and entrepreneurship linked to the
Forest and its products. RAIZ is, in fact, an Entity of the National Scientific and
Technological System, an Interface Centre and a Business Innovation Centre
(recognised by the European Business Network).
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4.3. Packaging
The year 2021 went down in the history of The Navigator Company's brands as the culmination
of a product research and development process, which involved all areas of the Company and
resulted in the launch of the gKraft brand of paper for packaging on 1 November.
This product, in line with the Company's commitment to helping replace fossil-based products
with others of forest origin, which are renewable, biodegradable, recyclable and carbon neutral,
is the result of an intense programme carried out by RAIZ - Forest and Paper Research Institute
- in close collaboration with the manufacturing departments of Aveiro and Setúbal, and the
Technical Product Department.
It is based on an innovative high-performance pulp, with less use of wood, which provides very
interesting mechanical resistance. This was a technological project carried out by RAIZ, while
developing several studies to solve other challenges – for example, in the field of food
packaging, in terms of coatings with barrier properties to sustainably replace plastic films.
For almost 20 years, Navigator has been working in the packaging segment, albeit on a small
scale and for internal consumption, on the paper used to wrap the paper reams. About five
years ago, it applied the quality attributes of its printing and writing paper to the world of
packaging and entered the paper bag market, with an innovative product, in terms of its fibrous
composition, essentially with eucalyptus short fibre. This has a mechanical resistance that
responds to the demands and needs of its applications, such as retail bags, and offers superior
print quality - the current superior white Kraft, which is seen by the market as a differentiated
product, with premium features and positioning.
In 2020, with the impact of the pandemic on sales, the Company decided to leverage the
production of kraft paper and enter the packaging paper business in a more determined way.
To this end, a new line of natural white kraft paper was developed, without optical brighteners
or dyes; a brown kraft line, including for light weight bags for the food industry (for bread and
cakes, for example); and paper for the production of corrugated cardboard boxes, which are
in high demand with the expansion of e-commerce.
If it proves to be a promising market, an investment in new production capacity is to be
expected in the coming years, as it currently depends on two of the machines in the Setúbal
industrial complex (the smallest). The basic assumption is to make an improvement in the
profitability of the UWF volumes associated with these machines, while taking advantage of
their flexibility, which is important at this early stage, and their technical characteristics, which
favour critical aspects of packaging products, namely their excellent homogeneity in sheet
formation. According to the project's Medium Term Plan (PMP), the growth strategy will reach
the total capacity of both (above 200 kt) within four years, after which additional production
capacity will be required.
How the gKraft brand was created
The “g” – for acceleration force – in gKraft, which represents both the eucalyptus globulus
species (used in the production of paper), and the various characteristics that define this new
product: good, green, game changer, guaranteed results.
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Product development was carried out in parallel with investment in knowledge of the market,
competition and customers and consumers, resulting in a line of papers with three sub-brands:
BAG, intended for a range of bags, sachets, packages and even some type of high-resistance
envelopes, used, for example, in e-commerce. This is currently used by major international
brands such as Zara, Intimissimi, Victoria's Secret, Desigual, Nike, Cristiano Ronaldo Museum
and Real Madrid; by food retail chains such as Aldi or Lidl, as well as in bags from fast-food
chains such as McDonalds, or takeaways; it also extends to industrial applications of multi-ply
bags, such as food meal bags, animal feed, or sand bags for animal hygiene.
FLEX, designed for flexible packaging for multiple uses, serving in the food industry (for
example, in the production of sugar packets or wrapping paper for sliced foods), in industry
(in complex solutions sometimes with other materials, namely for wrapping paper and
coatings), supporting logistics/shipping areas, stabilising loads and filling empty spaces
between products and primary packaging, or between primary and secondary packaging.
BOX, especially suitable for corrugated cardboard packaging, providing a reduction in
grammage (sometimes up to 10%) and, as a result, lighter or more resistant boxes, which are
used for packaging products, from the agricultural, industrial, retail sectors and e-commerce
– sectors that increasingly need shelf-ready packaging, which provides good resistance, but
also increasingly better print quality and touch experience.
Portuguese eucalyptus fibre, which comes from responsibly managed and certified forests, has
given the product several advantages. The most obvious is sustainability, since not only is
cellulose a material of natural origin, renewable, recyclable and biodegradable, which replaces
plastic from a circular bioeconomy perspective, but the particular characteristics of globulus
also give it benefits in comparison with other long cellulose fibres: less wood consumption to
produce the same paper (Nordic pine consumes between 65% to 105% more), greater
compostability (due to lower lignin content) and greater recyclability (60% to 150% more) –
Eucalyptus globulus is, for this reason, an ally of the circular economy.
In terms of functionality, this short fibre not only gives the paper a better performance in the
processing machines, but also enables high quality printing, which is an asset for the brand's
image. As for the protection needs of the products, it offers benefits in terms of resistance
(especially to compression).
Finally, gKraft offers a strong argument in favour of food safety and hygiene: by using only
virgin fibre, it guarantees the highest ISEGA certification for contact with food and skin, since,
unlike recycled fibre, it avoids any danger of contamination.
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4.4. Mozambique
In December 2020, Portucel Moçambique began harvesting and exporting wood from pilot
plantations established in the province of Manica about 8 years ago, under responsible
management and with certification of controlled origin. This was an important step towards
the formation of a forest-based industry cluster in Mozambique and towards the positioning of
the Company and the country in the international market of exporters of products originating
from planted forests, along with countries such as South Africa, Australia, Brazil, Chile,
Uruguay and Vietnam.
Harvesting and exporting are part of the industry cycle in which Portucel operates. This
involves planting, caring for and harvesting eucalyptus forest at maturity, replanting it and
successively starting new production cycles. Portucel's investment project in Mozambique
boosts a value chain that adds the economic dimension of the project to a solid environmental
commitment and a Social Development Programme that reaches more than seven thousand
families.
Social Development Programme
The Social Development Programme (PDSP) aims to respond to the socio-economic priorities
identified in the phase of environmental and social studies prior to the start of the project,
through three lines of action: food safety, increased income and improved well-being.
The PDSP is an integral part and monitors the implementation of the forestry project, in a
continuous process of dialogue and cooperation between the Company, Administrative
Authorities and Communities. It has covered around seven thousand families to date in the
provinces of Manica and Zambézia, with an investment of over 5.5 million euros.
One year of validation testing
Throughout 2021, Navigator developed an intense campaign to test the new
gKraft line, even with customers in markets further away from the factory, where
there were business opportunities, and thus obtained more feedback on the range
of products. For technical validation of the product, test coils were sent to more
than a hundred potential customers, followed by a testing phase, which is still in
progress, to validate new businesses associated with the expansion of the
customer base and business growth in the main target markets.
In parallel with market testing, it was possible to develop a very close and fruitful
technical collaboration, in which from a basic design of the products, optimised
designs evolved, depending on the numerous applications for which they are
intended. It is in this collaboration with Customers that Navigator seeks to adapt
and optimise its production capacity, acquiring knowledge and embodying it in its
brands and products, on the path to success.
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This Programme has several areas of action, including the promotion of food safety, the
promotion of agricultural, livestock, beekeeping and fish farming, and, in the area of improving
well-being, health and education infrastructure, access to drinking water and energy, and
access roads. For example, Portucel contributed US$150,000 for the construction of an
operating room at the district hospital of Ile, in Zambézia province, which began in 2021 and
will benefit several tens of thousands of inhabitants.
Continuous communication and engagement with stakeholders
The returns on the project in Mozambique throughout the value chain include employment
with different levels of qualifications and professional development, the generation of wealth
and added value in the country, environmental protection and investment in communities, and
ongoing communication with stakeholders, particularly with communities in the project areas,
traditional leaders, government entities and civil society organisations. For example,
communication with communities was a priority in harvesting and exporting, to involve these
stakeholders in the various stages of the process, some of which were carried out for the first
time.
Harvesting and exporting was also accompanied by involvement with institutional
stakeholders, including government entities at the central level, as well as provinces and
districts in the project areas, to reveal the benefits to the value chain of planting trees for the
economy, for surrounding communities and for the environment. We are pleased to note the
visits to the project by the Governors of the Provinces of Manica and Zambézia, as well as the
National Director for the Promotion of Commercial Agriculture, together with monitoring by
Administrators of the Districts covered by the operation.
Job creation
Job creation is an essential aspect of the Portucel project in Mozambique. There are already
more than 250 full-time direct and indirect employees of the Company, 90% of whom are
Mozambicans, and 30% are women. In cumulative terms, the Company has created the
equivalent of more than 1,000 full-time local jobs on average per year through casual work
since 2013, which has given rise to more than 4.3 million jobs in total, for which it paid around
12.7 million dollars (11.3 million euros).
The harvesting and exporting project was covered by a chain of custody certification process,
and for the first time, audits of controlled wood were carried out. These guaranteed that the
wood comes from legal sources and controlled activities, based on the principles of responsible
forest management.
One of the important dimensions of the harvesting and exporting process is Health and Safety
at Work, since it involves many activities, some of which were carried out for the first time.
We are pleased to note that there were no fatalities registered in 2021 during forestry
operations.
During 2021, the implementation of a Forest Promotion Programme continued. This is a
government initiative that has funding from the World Bank and other cooperation partners.
The objective is to promote sustainable small and medium-scale commercial forest plantations
and encourage the restoration of degraded areas. About 2,000 hectares were restored in the
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2019-2020 and 2020-2021 campaigns. Portucel Moçambique has played an active role in
building and implementing the Programme, contributing various forms of support, such as
defining the forestry model and supplying clonal plants at subsidised prices, access to raw
materials, and creation and transfer of know-how. The Programme had 171 beneficiaries at
the end of 2021.
The harvest and import process also provided an opportunity to establish a partnership with
South African company MozFibra, in a project that could increase in scale in the coming years.
It could also evolve into activities with greater added value, thereby strengthening the forest
market in Mozambique.
Forest Fire Defence
In 2021, Portucel Moçambique consolidated its Forest Fire Defence strategy, with which it has
substantially reduced the area affected by fire, from around 2,800 hectares in 2017 to 66
hectares in 2021. This development is a result of the cooperation of various bodies, including
the creation of rapid intervention teams, the use of new forestry practices based on controlled
fire, the placement of beehives and agricultural buffers (especially cassava) on the edge of the
forest to encourage the protection of family and community assets, the involvement and
awareness of communities and a campaign on local radio.
It is worth noting that a large number of initiatives to raise environmental awareness among
the communities were carried out, led by Portucel staff. These have already covered more than
4,000 families, with a focus on risks such as deforestation, the extinction of species, soil
erosion and uncontrolled burning. There is also an emphasis on the efficient use of land,
through agriculture conservation techniques (replacing traditional slash & burn), which are an
important contribution to preventing deforestation and forest degradation. According to data
from the World Bank, the clearing of new areas for small-scale agriculture and the search for
wood for cooking fuel are responsible for 65% of deforestation in Mozambique.
Partnerships for Sustainability and Carbon
The year 2021 was important for developing partnerships that consolidate and amplify the
sustainability of the project and its surroundings. On the one hand, with the Circular
Bioeconomy Alliance, an organisation led by Prince Charles of the UK; on the other hand, with
the reinforced commitment of Forest Forward (formerly NGP). In both cases, Portucel is
preparing to be a “living laboratory” of good environmental and social practices, which embody
the purpose, in a symbiotic way, of protecting the environment and developing communities,
thus promoting more resilient rural ecosystems. This purpose is particularly relevant in
Mozambique, a country that is among the most vulnerable to the devastating effects of
extreme weather events, such as cyclones Idai and Kenneth in 2019.
Forests play an essential role in carbon capture and are recognised as natural solutions to
climate change. In line with the Company's commitment to carbon neutrality, Portucel
Mozambique has sought to understand its contribution to carbon storage, mainly through three
dimensions: the planted forest; the preservation of the forest of conservation interest; the
reduction of carbon emissions resulting from Social Development Programme activities (for
example, improved stoves that reduce the use of firewood, agricultural conservation
techniques that reduce deforestation for cultivation and water consumption and environmental
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awareness initiatives). The intention is to broaden this knowledge in 2022 and develop
initiatives that enhance carbon capture, such as the implementation of a forest restoration
project.
New operating room at Ile District Hospital
Portucel donated US$150,000 to support the construction of an operating room in
the district hospital of Ile, in Zambézia province. This was in response to an appeal
from local entities in a district where its forestry and social project has been
developing, with benefits for local communities. Construction is already underway
and will benefit tens of thousands of people.
At the ceremony for laying the foundation stone, in March 2021, the governor of
the province of Zambézia, Pio Matos, took the opportunity to encourage the
Company's work: “the production relationship that Portucel has brought to our
Zambézia as an investor is a relationship of proximity. It is a relationship of doing
together, not going it alone, doing it with people, doing it with the community,
doing it with governance, to develop Zambézia. I want to believe that these signs
that we are seeing will lead us to seal a relationship that is here to stay”. The
governor also had the opportunity to visit the Luá nursery in Ile to learn about
some of the activities of the Social Development Programme and the
Communication and Relationship model with Communities and other Portucel
Stakeholders.
Educational support
Portucel supported the refurbishment of the Complete Primary School in
Nantucua, Namarrói district, Zambézia province. The replacement of the roof and
its support structure and some repairs and painting represented an investment of
around US$12,000.
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FIGURES FROM THE PORTUCEL MOZAMBIQUE PROJECT
50 DUATs
allocated by the Mozambican government
13,600 ha
Area with eucalyptus stands
USD 12.7 million
Salaries paid to seasonal and casual workers since 2013
90% Employees
of Mozambican nationality
30% Employees
are women
250 jobs
Permanent, direct and indirect
USD 125 million
Investment made until 2021
USD 73 million
Goods and services contracted to Mozambican suppliers since 2010
USD 4.7 million
Taxes, fees and social contributions paid to the Mozambican State
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SOCIAL DEVELOPMENT PROGRAMME
7,000 families covered
Support for improving agricultural production . Families have already been given:
• 795,000 kilos of improved seeds with higher productivity
• 770,000 cassava cuttings from a pest-resistant variety
• 98,500 kilos of orange-fleshed sweet potato vines
• 15,000 fruit trees
Livestock and fish farming to improve family income
and increase animal protein intake
• 499 families received lots of three goats for breeding
• 430,000 chickens vaccinated against Newcastle disease
• 22 tanks for fish production
Beekeeping to increase family income
and encourage the defence of the forest
• 881 families received beehives
Access to drinking water
• 26 open water holes
• 32 water holes repaired
• 20,000 people benefited
Energy
• 4,000 families received solar lamps
Access routes
•
5,000 km of improved roads and paths
•
20 small rural bridges and other infrastructure rehabilitated
4.5. Decarbonization project
In 2021, The Navigator Company's direct CO
2
emissions fell from the 717,000 tonnes recorded
in the previous year to 562,000 tonnes
3
, in what was another important step towards the goal
of carbon neutrality of its industrial complexes in 2035, defined in the Roadmap for Carbon
Neutrality. Created in 2018, this document has four main objectives: achieving 100%
electricity from renewable sources; to reduce fossil CO
2
emissions by implementing cleaner
3
CO
2
emissions of factory assets, Scope 1 – CELE data.
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technologies; to cut specific energy consumption; and to offset the emissions that cannot be
eliminated.
The entry into operation, at the end of 2020, of the new biomass boiler at the Figueira da Foz
industrial complex, was decisive for the sharp reduction in emissions recorded throughout
2021, a decrease of around 57% in this complex alone. 2021 was the year for this new boiler
to enter cruising speed, which involved carrying out acceptance tests for which a high
consumption of gas was necessary, something that will not be repeated in 2022 and which will
allow for a further reduction in the volume of emissions.
At the industrial unit in Setúbal, the replacement of fuel-fired boilers with gas, whose
construction started in 2021, will allow for a significant reduction in CO
2
emissions when it
starts operating, scheduled for the end of 2022. This replacement makes it possible, from the
outset, to reduce emissions to a level corresponding to the fuel and gas emission factor, and
will also make it possible to stop using one of the gas turbines. The new boiler is designed to
produce steam, allowing greater efficiency for each thermal unit of gas.
At a time when all the Company's industrial complexes are equipped with co-generation
biomass units, in 2021 Navigator proceeded with the conversion of one of the lime kilns at the
industrial unit in Setúbal, to replace fossil fuel with biomass. The lime kiln at that unit is being
prepared to start using powdered biomass, something unprecedented so far in Portugal. This
is an important demonstration project for the Company (which successfully applied for the
Innovation Fund), and which, if successful, should be replicated at lime oven 2 in Setúbal and
at the Aveiro unit.
This is an initiative that promotes sustainability at multiple levels. Firstly, it allows the
decarbonization of the ovens. In addition, it allows the conversion of existing equipment,
avoiding the construction of new ovens and the associated carbon footprint. Finally, by using
the sawdust generated in wood preparation operations, it promotes circularity within the
Group's industrial units.
562,000 tonnes of CO
2
emitted in 2021 (717,000 in 2020)
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5. PROPOSED ALLOCATION OF RESULTS
Whereas:
a) The net results of the individual accounts amounted to 171,411,454.76 Euros,
calculated in accordance with IFRS;
b) The Company proceeded with the early distribution of profits, in the amount of
49,996,169.75 Euros, equivalent to the gross amount of 0.0703 Euros per share, in
accordance with the resolution of the Board of Directors of 16 December 2021;
The Board of Directors proposes the following allocation of net profit from individual accounts,
in the amount of €121,415,285.01, calculated according to IFRS rules:
Dividends for shares outstanding .................................................... 99,992,339.50 Euros
(€0.1406 per share)
Results carried forward .................................................................. 10,422,945.51 Euros
Employee profit sharing up to ......................................................... 11,000,000.00 Euros
(already assumed in the financial statements)
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6. DECLARATION REFERRED TO
IN ARTICLE 29-G(1)(C) OF THE PORTUGUESE
SECURITIES CODE
“Article 29-G(1)(c) of the Securities Code provides that each of the responsible persons of the
issuer, whose names and functions must be clearly stated, must make a series of declarations
provided for therein. A uniform declaration was adopted in the case of Navigator, which reads
as follows:
I hereby declare under the terms and for the purposes of Article 29_G(1)(c) of the Securities
Code, that to the best of my knowledge, the annual report, annual accounts, statutory audit
and other reporting documents of The Navigator Company, S.A., all related to the 2021
financial year, were prepared according to applicable accounting standards, providing a true
and fair view of assets and liabilities, the financial situation and results of this company and
the companies included in the scope of consolidation, and that the annual report faithfully
reflects the evolution of the business, performance and position of this company and the
companies included in the scope of consolidation, containing a description of the main risks
and uncertainties faced."
Under the terms of the cited legal provision, the following is a list of the names of the
undersigned persons and their duties:
Ricardo Miguel dos Santos Pacheco Pires Chairman of the Board of Directors
António José Pereira Redondo Chief Executive Officer
Adriano Augusto da Silva Silveira Executive Director
João Paulo Araújo Oliveira Executive Director
Joao Paulo Cabete Gonçalves Lé Executive Director
José Fernando Morais Carreira de Araújo Executive Director
Nuno Miguel Moreira de Araújo Santos Executive Director
Manuel Soares Ferreira Regalado Non-Executive Director
Maria Teresa Aliu Presas Non-Executive Director
Mariana Rita A. Marques dos Santos Non-Executive Director
Sandra Maria Soares Santos Non-Executive Director
Vítor Manuel Galvão Rocha Novais Gonçalves Non-Executive Director
Vitor Paulo Paranhos Pereira Non-Executive Director
José Manuel Oliveira Vitorino Chairman of the Audit Board
Gonçalo Nuno Palha Gaio Picão Caldeira Member of the Audit Board
Maria da Graça Torres Ferreira da Cunha Gonçalves Member of the Audit Board
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7. CORPORATE GOVERNANCE REPORT
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CONTENTS
PART I – INFORMATION ON SHAREHOLDER STRUCTURE, ORGANISATION AND CORPORATE
GOVERNANCE 93
A. SHAREHOLDER STRUCTURE ................................................................................ 93
I. Capital Structure .............................................................................................................................................. 93
II. Holdings of Shares and Bonds ....................................................................................................................... 96
B. STATUTORY BODIES AND COMMITTEES ............................................................... 97
I. General Meeting .............................................................................................................................................. 97
II. Management and Supervision ........................................................................................................................ 99
III. Auditing ....................................................................................................................................................... 131
IV. Statutory Auditor ......................................................................................................................................... 139
V. External Auditor ........................................................................................................................................... 140
C. INTERNAL ORGANISATION ................................................................................ 143
I. Articles of Association ................................................................................................................................... 143
II. Reporting of irregularities (whistleblowing) .................................................................................................... 143
III. Internal control and risk management .......................................................................................................... 144
IV. Investor Support .......................................................................................................................................... 152
V. Website ........................................................................................................................................................ 153
D. REMUNERATION AND REMUNERATION REPORT ................................................... 154
I. Powers to determine remuneration ................................................................................................................ 154
II. Remuneration Committee ............................................................................................................................. 154
III. Remuneration structure ............................................................................................................................... 155
IV. Disclosure of remuneration ......................................................................................................................... 158
V. Agreements with implications for remuneration ............................................................................................ 162
VI. Stocks or stock option plans ........................................................................................................................ 163
E. RELATED PARTY TRANSACTIONS AND CONFLICTS OF INTEREST ............................ 163
I. Control mechanisms and procedures ............................................................................................................ 163
II. Details of transactions .................................................................................................................................. 166
PART II – CORPORATE GOVERNANCE ASSESSMENT 167
1. IDENTIFICATION OF THE CORPORATE GOVERNANCE CODE ADOPTED .................... 167
2. ANALYSIS OF COMPLIANCE WITH THE CORPORATE GOVERNANCE CODE ADOPTED .. 167
PARTE III – OTHER INFORMATION 180
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ANNEX 1 – Disclosures referred to in article 447 of the Companies’ Code 181
ANNEX 2 – Remuneration Policy 182
ANNEX 3 – Code of Ethics and Conduct 190
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PART I – INFORMATION ON SHAREHOLDER STRUCTURE,
ORGANISATION AND CORPORATE GOVERNANCE
A. SHAREHOLDER STRUCTURE
I. Capital Structure
1. Capital structure (share capital, number of shares, capital distribution among
shareholders, etc.), including indication of shares not admitted to trading, different
categories of shares, rights and duties attached to the same, and the percentage of
the capital represented by any such category (article 245-A (1) (a)).
The Navigator Company, S.A. has a share capital of 500,000,000 euros, fully paid up,
represented solely by 711,183,069 ordinary shares, without nominal value, the same rights
and duties being attached to all shares.
All shares representing the Company’s share capital are admitted to trading on the Euronext
Lisbon regulated market, managed by Euronext Lisbon – Sociedade Gestora de Mercados
Regulamentados, S.A.
At the end of 2021, the Company carried out a new analysis of its shareholder base, identifying
and characterising its main institutional shareholders.
In addition to the Semapa Group, the majority shareholder with 69.67% of Navigator's share
capital, about 170 institutional shareholders were identified and characterised, representing
about 15% of the shares issued.
Thus, in December 2020, the shareholder composition identified was as follows:
* Others include unidentified, brokerage/trading and miscellaneous
Navigator's institutional shareholders, excluding the majority shareholder, were mainly from
Europe at the end of 2021, with Portuguese shareholders at 32% (vs. 33%), Spanish-based
shareholders 13% (vs. 10%), around 7% from the UK (vs. 5%) and Norwegian-based
shareholders close to 2%. The weight of US-based Shareholders grows again in 2021 to 26%
(vs. 22% in 2020 and 14% in 2019).
Semapa 70%
(2020: 69%)
Institutional
investors 15%
(2020: 14%)
Private Investors 12%
(2020: 12%)
Others 3%
(2020:3%)
Shareholder composition
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In addition, a breakdown by investment style shows that around 26% of the shares were held
by institutional investors with a growth-oriented strategy, whilst approximately 25% of
investors pursue an Index Funds style strategy and 20% a Value-focused strategy. Investors
with types of strategies such GARP (Growth at a Reasonable Price) accounted for around 9%
of investors.
2. Restrictions on the transferability of shares, such as consent clauses for disposal,
or limitations on ownership of shares (article 245-A (1) (b)).
All Navigator shares are freely transferable.
Portugal
32%
United States of
America
26%
Spain
13%
United Kingdom
7%
Norway
2%
Rest of Europe
18%
Rest of the World
2%
Shareholders by geography
(Institutional - Excluding Semapa)
Growth
26%
Index
25%
Value
20%
GARP
19%
Other
6%
Yield
3%
Hedge Fund
1%
Shareholders by type of investment
(Institucional)
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3. Number of own shares, corresponding percentage of share capital and percentage
of voting rights which would correspond to own shares (article 245-A (1) (a)).
As of December 31, 2021, Navigator does not hold any own shares. Following the approval at
the General Meeting of May 11, 2021 of the share capital reduction by cancellation of 6,316,931
own shares, with no nominal value, held by the Company, Navigator no longer holds any own
shares in its portfolio.
4. Significant agreements to which the Company is a party and which take effect, are
amended or terminate in the event of a change in the control of the Company as a
result of a takeover bid, together with the respective effects, unless, due to its
nature, disclosure of such agreements would be seriously detrimental to the
Company, except if the Company is specifically required to disclose such information
by other mandatory provisions of law (article 245-A (1) (j)).
The Company is not a party to significant financing, debt issue or other agreements entering
into effect, being amended or terminating in the event of a change to the Company’s control
following a takeover bid.
The Company has not adopted any mechanisms that determine payments or assumption of
fees in the case of the change of control or in the composition of the managing body, and
which are likely to harm the free transferability of shares and a shareholder assessment of the
performance of the members of the managing body.
5. Rules applicable to the renewal or revocation of defensive measures, in particular
those providing for limits on the number of votes which can be held or cast by a
single shareholder individually or in a concerted manner with other shareholders.
No defensive measures exist in the Company, particularly those providing for limits on the
number of votes which can be held or cast by a single shareholder individually or in a concerted
manner with other shareholders.
6. Shareholders’ agreements known to the Company or which might lead to
restrictions on the transfer of securities or voting rights (article 245-A (1) (g)).
The Company is not aware of the existence of any shareholder agreement which might lead to
restrictions on the transfer of securities or voting rights.
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II. Holdings of Shares and Bonds
7. Identification of persons and organisations who, directly or indirectly, own
qualifying holdings (articles 245-A (1) (c), 245-A (1) (d) and 16), detailing the
attributable percentage of the share capital and votes and the respective grounds.
The owners of qualifying holdings in Navigator on 31 December 2021 are identified in the
following table:
Entity
Imputation
No. of shares
% capital
% not
suspended
voting rights
Semapa - Sociedade
de Investimento e Gestão,
SGPS, S.A.
Direct
497,617,299
69.9704%
69.9704%
8. Indication of the number of shares and bonds held by members of the
management and supervisory bodies.
This information is provided in Annex I to this Report.
9. Special powers of the management board, in particular concerning resolutions to
increase capital (article 245-A (1) (i)) indicating, with regard to these, the date on
which they were granted, the period during which such powers may be exercised,
the upper limit for the increase in share capital, shares already issued under the
powers granted and the manner in which the powers granted are implemented.
The Company’s Articles of Association do not authorise the Board of Directors to adopt
resolutions approving increases in share capital.
10. Information on the existence of significant dealings of a commercial nature
between holders of qualifying holdings and the Company.
All transactions taking place in 2021 between the company and qualifying shareholders are
described in Note 11.3 of the Annex to the consolidated accounts and Note 10.2 of the annex
to the individual financial statements. In 2021, in accordance with the Regulation on Conflict
of Interests and Related Parties Transactions and under the terms and conditions set out
therein, as described in point 89 et seq. of this report, there were no significant dealings of a
commercial nature between qualifying shareholders and the Company.
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B. STATUTORY BODIES AND COMMITTEES
I. General Meeting
a) Composition of the general meeting*
*over the reporting period
11. Officers of the General Meeting and their term of office (starting and ending
dates).
The Board of the General Meeting is composed of the following persons:
Chairman: vacant
4
Secretary: Luís Nuno Pessoa Ferreira Gaspar (mandate from 9/04/2019 to 31/12/2022)
b) Exercise of voting rights
12. Any restrictions on voting rights, such as limitations on the exercise of voting
rights based on the ownership of a given number or percentage of shares, time limits
for exercising voting rights, or systems for detaching voting rights from ownership
rights (article 245-A (1) (f));
There are no limits, in the Company, to the exercise of voting rights by the respective
shareholders.
Under Navigator’s Articles of Association, each share in the Company carries one vote.
Although the articles of association set out time limits for attending the General Meeting, the
mandatory legal rules governing this matter apply, such as Article 23-C of the Securities Code.
The time limit established in the Articles of Association for exercise of postal rights is the day
prior to the General Meeting.
The Articles of Association make no provision for electronic voting. However, they authorise
the Board of Directors to regulate alternative ways to vote other than on paper, as long as
authenticity and confidentiality of the votes are also guaranteed until the moment when votes
are cast.
Although the Board of Directors never used this capacity, the Chairman of the General Meeting
has always accepted electronic votes, provided they were received under equivalent conditions
as the vote by post, in what regards the deadline, comprehensibility, the guarantee of
authenticity, confidentiality and other formal issues.
4
Since the passing away of Francisco Xavier Zea Mantero, on 10 June 2021.
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Within the General Meetings of the Company held in 2021, considering the adverse context
arising from the Covid-19 pandemic outbreak, and as a result of the relevant convening
notices, shareholders were encouraged to exercise their respective voting rights preferably by
electronic correspondence.
To exercise the right to vote by electronic correspondence, shareholders should send by email
a statement addressed to the Chairman of the Meeting, in PDF format, duly signed - in
accordance with the signature contained in the respective valid identification document, a copy
of which should accompany the same declaration -, expressing the intention to vote, as well
as the voting declarations, independent for each item on the agenda, in PDF format, with the
indication in the document title of the item on the agenda to which it relates.
Still in the referred pandemic context, and considering the Recommendations of 20 March 2020
regarding the holding of General Meetings, issued within the cooperation between the Market
and Securities Commission (“Comissão do Mercado de Valores Mobiliários”, CMVM), the
Portuguese Institute of Corporate Governance (“Instituto Português de Corporate
Governance”, IPCG) and the Association of Listed Companies (“Associação de Empresas
Emitentes de Valores Cotados em Mercado”, AEM), the Company implemented appropriate
means for the participation of shareholders in the aforementioned Annual General Meeting of
202, which was held exclusively by telematic means, under the provisions of paragraph b) of
no. 6 of article 377 of the Commercial Companies Code.
For the purpose of the shareholders' participation in these meetings, they had to declare their
intention to participate, indicating for this purpose an email address, to which the Company
sent the instructions to participate in such telematic sessions, and which served to verify the
identification of each shareholder in the electronic platform used. Declarations of participation
in the general meeting were received from Shareholders holding 570,222,908 shares with
unsuspended voting rights, corresponding to 80.18% of the voting rights.
There are no systems for detaching equity content rights.
13. Indication of the maximum percentage of the voting rights which can be
exercised by a single shareholder or by shareholders connected in any of the forms
envisaged in article 20 (1).
There are no provisions to this effect in the Articles of Association.
14. Identification of shareholder resolutions which, under the Articles of Association,
can only be adopted with a qualified majority, in addition to those provided for by
law, and details of the majorities required.
The Company's Articles of Association do not contain specific rules regarding constitutive or
deliberative quorums at General Meetings, so the legal precepts of the Companies Code apply
in full.
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II. Management and Supervision
(Board of Directors, Executive Committee and General and Supervisory Board)
a) COMPOSITION*
* During the reference year.
15. Identification of the governance model adopted.
The Company’s Articles of Association provide for a unitary management model, with a Board
of Directors comprising Executive and Non-executive members and an Audit Board, in
accordance with articles 278 (1) (a) and 413 (1) (b) of the Companies Code.
16. Rules in the Articles of Association on procedural and material requirements
applicable to the appointment and replacement of members, as the case may be, of
the Board of Directors, the Executive Committee and the General and Supervisory
Board (article 245-A (1) (h)). Diversity Policy.
Presently, the Company’s Articles of Association contain no special rules on the appointment
and replacement of directors, and the general supplementary rules contained in the Companies
Code therefore apply here, i.e. shareholders have the power to appoint the directors (three to
seventeen) (and the supervisory body).
However, the Articles of Association establish that a Director may be elected individually if
there are proposals subscribed and tabled by groups of shareholders, provided none of these
groups holds shares representing more than twenty per cent and less than ten per cent of the
share capital. No shareholder shall sign the proposal form for more than one list. Each proposal
shall identify no less than two electable persons.
If there are various proposals signed by different shareholders or shareholder groups, the
voting shall apply to the collection of these lists.
During 2020, the Navigator Board of Directors approved the Company's Diversity Principles,
which were reviewed in 2021, which enshrine the requirements and criteria regarding the
profile of new members of corporate bodies and managers. These principles are published on
the company's website (http://www.thenavigatorcompany.com/investidores/governo-da-
sociedade).
These Diversity Principles consist of the formal recognition by the Company of the benefits of
diversity in its governing bodies, namely as a way to ensure greater balance in its composition,
to enhance the performance of each member and, together, in each body, to improve the
quality of decision-making processes and to contribute to their sustainable development.
Accordingly and for the promotion of diversity within the Company, it accepted that, in addition
to individual attributes, such as competence, independence, integrity of character, availability
and experience, other requirements and criteria of diversity are also relevant in the
composition of its governing bodies, such as gender diversity, different professional
qualifications and experiences, the inclusion of members of different ages, as well as different
geographical backgrounds or experiences.
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Additionally, in 2019, the Board of Directors changed the Regulations of the Appointments and
Appraisals Committee, which has consulting powers in terms of the appointment of the
governing bodies, to support the identification of potential members of the governing bodies
and in assessing the adequacy of their profile, knowledge, and curriculum, and should induce
transparent selection processes and that candidates who have greater merit be proposed and
better adapt to the requirements of the function, and promote within the organisation,
adequate diversity, including gender.
In this way, the Company understands that all the objectives resulting from the formal
adoption of a diversity policy are achieved, which is also demonstrated in reality.
Finally, and reinforcing the promotion of diversity, in 2020 the Company approved the 2021
Plan for Equality, with progress in relation to the 2020 Plan for Equality, approved in 2019,
and disclosed this Plan to the CMVM, and on the Navigator website, where it is also published.
17. Composition, as the case may be, of the Board of Directors, the Executive
Committee and the General and Supervisory Board, detailing the provisions of the
Articles of Association concerning the minimum and maximum number of directors,
duration of term of office, number of full members, and the date when first appointed
and the end of their terms of office for each member.
The Articles of Association establish that the Board of Directors comprises of three to seventeen
members appointed for a renewable four-year term. On 9 April 2019, the Company’s General
Meeting approved a resolution electing the members of the Board of Directors for a four-year
term from 2019 to 2022. During the term of office, in 2020 a cooptation took place, so that in
2021 the Board of Directors integrated fourteen members - one Chairman and thirteen
Members. Due to the termination of the President's duties effective December 31, 2021, the
Board of Directors now includes thirteen members - one President and twelve Members.
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We indicate below the date of first appointment of each member, together with the date on
which their term of office expires:
Name
Date of first appointment and
end date of term of office
João Nuno de Sottomayor Pinto de Castello Branco
5
2015 - 2022
Ricardo Miguel dos Santos Pacheco Pires
6
2015 – 2022
António José Pereira Redondo
2007 – 2022
Adriano Augusto da Silva Silveira
2007 – 2022
João Paulo Araújo Oliveira
2015 - 2022
João Paulo Cabete Gonçalves Lé
2020 - 2022
José Fernando Morais Carreira de Araújo
2007 – 2022
Nuno Miguel Moreira de Araújo Santos
2015 - 2022
Manuel Soares Ferreira Regalado
2004 – 2022
Maria Teresa Aliu Presas
2019 - 2022
Mariana Rita Antunes Marques dos Santos
2019 - 2022
Sandra Maria Soares Santos
2019 - 2022
Vítor Manuel Rocha Novais Gonçalves
2015 - 2022
Vítor Paulo Paranhos Pereira
2020 - 2022
The composition of the Board of Directors is freely available on the Company’s website at
http://www.thenavigatorcompany.com/Investidores/Governo-da-Sociedade.
18. Distinction between executive and non-executive members of the Board of
Directors and, in relation to non-executive directors, identification of those who can
be regarded as independent or, if applicable, identification of the independent
members of the General and Supervisory Board.
During 2021, six members of the Board of Directors exercised executive functions and formed
an Executive Committee, which was elected and whose powers were delegated by the Board
of Directors, and eight of the Directors exercised non-executive functions.
The executive members of the Board of Directors belong to the Executive Committee and are
identified below in point 28, the remaining being non-executive members.
Since throughout 2021 the number of non-executive directors represented 57.1% of the
members of the Board of Directors, we consider this percentage to be adequate to the size of
the Company and to the complexity of the risks associated to its activities and sufficient to
carry our efficiently the functions that are committed to them.
This suitability judgment took into account, in particular, the size of the Executive Committee
and the delegation of powers entrusted to it by the Board of Directors, the profile, age,
background and professional experience and the integrity of the members of that body, the
set of diversified competencies and the availability of non-executive members to carry out
their duties, which through the close cooperation developed with the Chairman of the Board of
Directors and the members of the Executive Committee, ensure an effective capacity for
5
Served as Chairman of the Board of Directors until December 31, 2021.
6
Serves as Chairman of the Board of Directors since January 1, 2022.
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monitoring, supervising and evaluating the activity of the executive members of the Board of
Directors, the company’s activities, its family nature and the stability of its capital structure.
At the annual General Meeting held on 9 April 2019, which elected members of the governing
bodies, three new non-executive members of the Board of Directors were elected - Maria
Teresa Aliu Presas, Mariana Rita Antunes Marques dos Santos and Sandra Maria Soares Santos
- which can be considered independent, according to the criteria for measuring independence
defined in point 18.1 above and in Recommendation III.4 of the IPCG Corporate Governance
Code. The company therefore includes a number of independent non-executive directors of
37.5%, over one third, in accordance with the Recommendations of the IPCG Corporate
Governance Code.
The remaining 6 Non-Executive Directors, although not independent according to the above
criteria, gather the necessary suitability, experience and proved professional competence,
which allows to enrich and optimise the management of the Company from the perspective of
creating value, as well as ensuring an effective defence of the interests of all shareholders and
to ensure that Executive Directors are supervised and evaluated in an impartial, independent
and objective manner and, at the same time, that there are no conflicts of interest between
the interest and position of the shareholder and the Company.
19. Professional qualifications and other relevant biographical details of each
member, as applicable, of the Board of Directors, the General and Supervisory Board
and the Executive Committee.
João Nuno de Sottomayor Pinto de Castello Branco
7
João Castello Branco has served as Chairman of the Executive Committee of Semapa since
July 2015, as well as Chairman of the Board of Directors of The Navigator Company and Secil
since the end of 2018. Since 2019 he is the Chairman of the Board of Directors of the Business
Council for Sustainable Development (BCSD) Portugal and is a member of the Executive
Committee of the World Business Council for Sustainable Development (WBCSD). He is also a
member of the General Board of AEM – Portuguese Association of Listed Companies. Previously
and after completing his degree, he worked at the Renault engine development centre in
France. In 1991 he joined McKinsey, where he developed his activity in a variety of industries,
in Portugal and in Spain, and was, until July 2015, Managing Partner of the Iberia Office of
McKinsey. João Castello Branco holds a degree in mechanical engineering from Instituto
Superior Técnico and an MBA from INSEAD.
Ricardo Miguel dos Santos Pacheco Pires
8
Ricardo Pires is a graduate in business administration from the Portuguese Catholic University,
with a specialisation in Corporate Finance from ISCTE and an MBA in business management
from Universidade Nova de Lisboa. He began his career in management consulting between
1999 and 2002, first at BDO Binder and later at GTE Consultores. From 2002 to 2008, he
worked at the Corporate Finance Department of ES Investment, where he carried out a number
7
As stated above, João Nuno de Sottomayor Pinto de Castello Branco terminated his respective
directorships at The Navigator Company, Semapa and Secil, by resignation effective as from 31
December 2021.
8
Assumed the position as Chairman of the Executive Board of Semapa and Chairman of the Board of
Directors of Semapa Next, The Navigator Company and Secil, with effect from 1 January 2022.
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of M&A and capital market projects in the sectors of Energy, Pulp & Paper and Food &
Beverages. Since 2008 he has worked at Semapa, initially as a Strategic Planning and New
Business Manager and later, starting in 2011, as Head of the Office of the Chairman of the
Board of Directors. He has been an Executive Director at Semapa since 2014, as well as holding
positions at other related companies. Since 2015, he has performed management duties at
The Navigator Company and at Secil. Since 2017, he is CEO of Semapa Next and took over in
March 2020 as Chairman of the Board of Directors of ETSA. In 2021, he taught a subject in a
master's course at the Catholic University of Lisbon.
António José Pereira Redondo
António Redondo holds a degree in chemical engineering from the Science and Technology
Faculty of the University of Coimbra (1987); he attended 4th year in Business Management at
Universidade Internacional and has an MBA specialising in marketing, from the Portuguese
Catholic University (1998). He joined Soporcel in 1987 and until December 1998 held a series
of posts in technical, production, marketing and sales management areas of the company. He
was marketing manager of Soporcel from January 1998 to December 2002 and was then
appointed sales manager for the Navigator Group (then called the Portucel Soporcel Group)
from January 2003 to March 2007. He has been an executive director of the Company since
April 2007 as Chief Commercial Officer, and Chairman of the Executive Committee since 1
January 2020. He is Chairman of CELPA (Associação da Indústria Papeleira), Director of CIP
(Confederação Empresarial de Portugal) and member of the Boards of CEPI (Confederation of
European Paper Industries) and EUROGRAPH (European Association of Graphic Paper
Producers).
Adriano Augusto da Silva Silveira
Adriano Silveira has a degree in chemical engineering from the School of Engineering of the
University of Porto. He began his career at the Environmental Studies Service, having been
part of Empresa Nacional de Urânio (1979) and Empresa Minas de Jales (1983). He joined
Soporcel in 1983, where he held several positions of responsibility in the areas of energy
recovery, pulp and paper production, project management, maintenance and engineering. He
has been a member of the Company’s Board of Directors since 2007, serving as an Executive
Director from April 2007 to July 2015, having reinstated the Executive Committee on 1 January
2020.
João Paulo Araújo Oliveira
João Paulo Oliveira has a degree in industrial engineering from the Faculty of Science and
Technology, Universidade Nova de Lisboa (1988) and an MBA in Commercial Engineering and
Management from AEP – ESADE, Spain (1994). He began his career at the Bosch Group in
1989. He was industrial manager for Bosch in China from 1994 to 1996. Subsequently, he was
involved in an acquisition project for a company in Chile, and also held positions in the Bosch
Group’s operations in France and Germany. From 2002 to 2015, he was Managing Director of
Bosch Termotecnologia S.A. In his last 8 years at the Bosch Group, he was Chairman of the
Group’s Hot Water Business Unit, whose global competence centre is located in Aveiro. He was
chairman of the Portuguese-German Chamber of Commerce and Industry from 2009 to 2012.
He also sits on the General Council of the University of Aveiro, the AICEP Advisory Board and
the Supervisory Board of the Fraunhofer Institute in Portugal. He has been an executive
director of the Company since July 2015.
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João Paulo Cabete Gonçalves Lé
João Lé has a degree in Agronomy in the specialty of Agrarian Economics from the Instituto
Superior de Agronomia (ISA) of the Technical University of Lisbon, has a Postgraduate Diploma
in Silviculture of the Fast-Growing Species by ISA and University of Trás-os-Montes and Alto
Douro and a Postgraduate Diploma in Management with a Specialisation in Finance from ISCTE,
University of Lisbon. He has been with The Navigator Company Group for about 30 years
having assumed responsibility for the Forestry Area in August 2007 and in July 2016 he was
appointed CEO of Portucel Mozambique, responsible for the project to implement a forest-
based industry in Mozambique through DUAT (areas assigned by the Government) with about
360 thousand hectares in two provinces. He has been an Executive Director of the Company
since January 2020.
José Fernando Morais Carreira de Araújo
Fernando Araújo has a Law degree from Universidade Lusíada do Porto (2000) and a bachelor's
degree in Accounting and Management from Instituto Superior de Contabilidade e
Administração do Porto (ISCAP - 1986) and a specialist diploma in Financial Control from the
same institution (1992). He is a Chartered Accountant since 1995. Certified Accountant since
1987. Chairman of the General Meeting of CELPA since 2020. He is a member of the Audit
Board of the Order of Statutory Auditors since January 2021. And a member of the Board of
the Portuguese Tax Association since 2019. He has postgraduate qualifications in advanced
financial accounting (ISCTE – 2002/2003), in tax law (Lisbon Faculty of Law – 2002/2003) and
in corporate governance (Instituto Superior de Economia e Gestão de Lisboa – 2006/2007).
He concluded an MBA in Corporate Reporting at ISCTE – IUL in 2016. He started his
professional career in 1987, with Sportrade, and was subsequently head of accounts at Eurofer
from 1988 to 1993 and Head of Administrative Services at COLEP from 1991 to 1993. From
1993 to 2001 he worked in the field of tax management at KPMG and was Senior Tax Manager
from 1993 to 2001. He was head of Tax Management and Accounts at Secil, from 2001 to
2005, at SEMAPA from 2002 to 2006, and in the Company from 2006 to 2007. He has been
an executive director of the Company since April 2007.
Nuno Miguel Moreira de Araújo Santos
Nuno Santos has a degree in Civil Engineering from Instituto Superior Técnico (1993) and an
MBA from INSEAD (1996). He started his professional career at McKinsey & Company in 1993
and until March 2015 he was Senior Partner (Director) and leader of the Energy, Commodities
& Industry Practice at the Iberian Office of McKinsey & Company. He was also a member of
the McKinsey & Company Global Energy, Commodities & Industry Practice Leadership
Committee. He assumed the functions of Executive Director of The Navigator Company in April
2015.
Manuel Soares Ferreira Regalado
Manuel Regalado has a degree in finance from Instituto Superior de Economia e Gestão (ISEG)
in Lisbon (1972) and completed the Senior Executive Programme of the London Business
School (1997). He began his professional career in 1971, holding various internal auditing,
management control and planning and investment project analysis positions from this year
until 1984. From 1984 to 1994, and from 1998 to 2004, he was appointed to a variety of
management positions and directorships in a range of sectors, including banking, insurance,
manufacturing and energy, in Edinfor, COSEC, IAPMEI and Hidroelétrica de Cahora-Barra and
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Banco BPI (in Portugal, Africa and Latin America). Between 1994 and 1998, he served on the
Board of Directors of Portucel, and was also part of the statutory bodies of INAPA and CELPA.
He is member of the Board of Directors of The Navigator Company since 2004 and was an
executive director until 2016.
Maria Teresa Aliu Presas
Maria Teresa Aliu Presas is a graduate of the Instituto Superior de Psicologia Aplicada, in
Lisbon. She made her career in the paper industry, having joined the Tetra Pak Group in 1982,
where she held several positions in Portugal, Switzerland, international headquarters, and in
Brussels, in the areas of Marketing and Communication, Environment and European Affairs,
namely Vice President for Europe and responsible for the environment for the entire Group.
From 2003 to 2011 she directed the European Confederation of the Paper Industry (CEPI). She
was a member of the board of directors of several European associations as well as a non-
executive director of the company Powerflute Oy. She currently collaborates with the
consultant Magellan in Brussels, is a non-executive director of the World Bioeconomy Forum
and has been a non-executive director of Navigator since 2019.
Mariana Rita Antunes Marques dos Santos
Mariana Marques dos Santos graduated in Business Management from Universidade Católica
Portuguesa and complemented her training with an MBA from INSEAD (Fontainebleau), having
also attended the same programme at Kellogg - Northwestern University, in Chicago. From
1989 to 2006, she was a university professor, both in the areas of quantitative methods at
ISCTE, and in internationalisation strategy and policies, at the executive school, IBS-ISCTE
Business School. Along with academic activities, she developed a business career linked to
different areas and functions. Starting by experiencing the dynamics of the financial markets,
she collaborated with Lloyds Bank in the area of securities portfolio management. She then
joined a venture capital team - SFIR, where she was a project analyst from 1991 to 1992. She
was also a consultant in Madrid, in a multinational company, Arthur D. Little, being associated
with several projects, including the launch of the Portuguese branch, in the years 1995 and
1996. She then took on a succession of international areas, within Grupo Abrantina, between
1996 and 2007, namely in Mozambique and Germany, managing projects in several areas such
as food and the production and distribution of construction materials. At the end of 2007, she
embraced her own business project, launching NBC Medical, in the area of international trade
of medicine, to which she is currently dedicated. She has been a non-executive Director of The
Navigator Company since May 2019.
Sandra Maria Soares Santos
Sandra Maria Soares Santos has a degree in management from the Faculty of Economics of
Porto (1989-94) and completed an MBA at PBS - Porto Business School (1999). She started
her career at Banco Espírito Santo and at the University of Porto in 1994, where she taught as
a guest lecturer. At BES, she performed several technical and commercial functions, at a time
when the Bank was incorporating young managers and substantially transforming its
organisational and business structure. She started her career at Grupo BA, at the end of 1999,
as Controller, a role she built when the group started its geographical expansion. Since then,
she has held various positions, such as financial director, human resources director, factory
director and CFO. As CFO (2007) she had an active participation in the acquisition and
integration processes of the acquired companies. In 2012, she was posted to be CFO in another
business, plastic packaging, in which BA shareholders decided to invest, a mission that ended
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a year later. Since 2014 she is CEO and member of the Board of Directors of Grupo BA. Grupo
BA now has industrial operations in 7 European countries, 12 industrial units, 3,800 workers
and an annual turnover of 950 million euros. She has been a non-executive director of
Navigator since April 2019.
Vítor Manuel Rocha Novais Gonçalves
Vítor Novais Gonçalves has a degree in business management from ISC-HEC in Brussels and
has more than 30 years of professional experience with executive management responsibilities
in the Consumer Products, Telecommunications and Finance sectors. He began his professional
career in 1984 at Unilever as a Management Trainee, and subsequently as a Product Manager
and Market Manager. From 1989 to 1992, he worked at Citibank Portugal, initially as a Venture
Capital Business Manager and later as head of Corporate Finance and member of the
Management Committee. Between 1992 and 2000, he worked in the financial area of the José
de Mello Group, served as director at several companies and serving, among other things, as
Strategic Marketing and Development Manager of Banco Mello and General Manager of
Companhia de Seguros Império. From 2001 to 2009, he worked in the telecommunications
area of the SGC Group as a director of SGC Comunicações, where he was in charge of strategic
marketing and international business development. Among other positions, he has been a
Director at Zoom Investment, Semapa and The Navigator Company.
Vítor Paulo Paranhos Pereira
Vítor Paranhos Pereira has a degree in Economics from the Catholic University of Portugal and
attended AESE (University of Navarra). He started his professional activity in 1982, at the
company Gaspar Marques Campos Correia & Cª. Lda., as Financial Director until 1987. From
1987 to 1989, he held the position of Deputy Financial Director at the Instituto do Comércio
Externo de Portugal (ICEP). In 1989 he joined the Group as Financial Director of Sodim, having
been appointed member of the Board of Directors of Sodim in 2009, a function he held until
May 2018 and afterwards, from March 2020 to the present date.
He also performs management functions in several companies related to Sodim, namely at
Hotel Ritz, since 1998. Between 2001 and 2016, he held management positions at Hotel Villa
Magna. He has been a director of Sonagi since 1995, and is Chairman of the Board of Directors
since June 2020. He was appointed director of Refundos in 2005, serving as Chairman of the
Board of Directors of that company from 2018 until May 2020. From 2006 to 2015, he held
the position of Chairman of the Audit Board of the Portuguese Hospitality Association (AHP)
and in April 2019 he was appointed Chairman of the Board of the General Meeting of this
entity. From 2007 to 2016, he was Chairman of the Board of the General Meeting of the
Portuguese Association of Investment Funds, Pensions and Wealth (APFIPP). He served as
Member of the Supervisory Board of Eurovida - Companhia de Seguros, S.A. and Popular
Seguros - Companhia de Seguros, S.A. from 2009 to 2018. In 2014, he was appointed member
of the Board of Directors of Semapa. Since 2020 he has been an Executive Director of Semapa,
and other related companies, and has been a director at The Navigator Company and Secil
since March and February 2020, respectively.
20. Regular and significant family, professional or business relationships of the
members, as applicable, of the Board of Directors, General and Supervisory Board
2021 Consolidated Annual Report
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107
and Executive Committee with shareholders with qualified holdings exceeding 2%
of voting rights.
Among the members of the Company's Board of Directors, during the year under analysis, the
Directors João Nuno de Sottomayor Pinto de Castello Branco, José Miguel Pereira Gens
Paredes, Ricardo Miguel dos Santos Pacheco Pires and Vítor Paulo Paranhos Pereira were also
Directors of the shareholder SEMAPA.
21. Organisational or functional charts showing the division of powers between the
different corporate boards, committees and/or company divisions, including
information on delegated powers, in particular with regard to delegation of the daily
management of the Company.
2021 Consolidated Annual Report
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E X E CUT IVE COM MIT T EE
GENERAL MEETING
E T HICS COMM IT T EE
CORP ORAT E
GOVERNANCE
COM M IT T EE
SUS T AINABILIT Y FORUM
PENS ION FUND
SUP E RVIS ORY
COM M IT T EE
ENV IRONM ENT AL
COM M IT T EE
ASS E T RISK
ANALY SIS AND
SUP E RVIS ION
COM M IT T EE
BOARD OF DIRECT ORS
BOARD OF T HE
GE NERAL M E E T ING
COM P ANY SECRE T ARY
NOM INAT ION AND
ASS E S S M E NT S
COM M IT T EE
STATUTORY
AUDIT FIRM
AUDIT
BOARD
REM UNERAT ION
COM M IT T EE
2021 Consolidated Annual Report
13/04/2022 109
* The following changes occurred in 2021 ** On 01/01/2022, the following changes occurred: **** Positions held provisionally
- Investor Relations division led by Joana Lã until september 2021; - João Escobar Henriques (Diretor of Management and Control) transitioned to Pulp Sales;
- Setúbal Industrial Complex held by José Nordeste until march 2021; - Gonçalo Veloso de Sousa (Diretor of Internal Audit and Risk Management) transitioned to Management and Control;
- Aveiro Industrial Complex led by Alexandre Vale until march 2021; - Gonçalo Duarte started to lead the Intern Audit and Risk Management Division;
- Environment and Energy division led Oscar Arantes until may 2021; - Dorival Almeida started to lead the Figueira da Foz Industrial Complex;
- Marketing division led by Eduardo Scarlatti until october 2021;
- Mário França started to lead the Europe Sales Division;
- Logistics division led by João Paulo Oliveira until june 2021; - José Tátá Anjos transitioned to Executive Committee advisor;
- Information Systems division led by Mário Roque Póvoa until september 2021; - João Paulo Oliveira will lead the International Sales division in 2022;
- New Projects area led by Adriano Silveira since october 2021; - The Information Systems Division was integrated in the Digital Technology Division;
- New Packaging area led by João Paulo Oliveira since 2021 - Pedro Matos Silva started to lead the Digital Technology division;
- Legal Services is integrated in the Legal, Compliance & Public Affairs division;
- António Neto Alves started to lead the Legal, Compliance & Public Affairs division;
- António da Cunha Reis started to lead the Legal Services division;
- Vítor Coelho started to lead the Public Affairs division;
*** Em 01/02/2022, the following changes occurred:
- Ricardo Peres started to lead the Human Resources Division;
- Ana Marques started to lead the Compliance division of Legal, Compliance & Public Affairs.
José Fernando Araújo
Executive Committee
António Redondo
Adriano Silveira
João Paulo Lé
João Paulo Oliveira
Mário Roque Póvoa
Nuno Miguel Santos
Portucel Moçambique
Investor Relations *
Paulo Silva
Ana Canha
Advisory to the Executive Committee
António da Cunha Reis
Bernd Bunzen
Eduardo Veiga
João Prina
João Ventura
Figueira da Foz Industrial Complex
Europe Sales
Communication and Brand
Human Resources
Oscar Arantes
Research Area
Industrial Area
Comercial Area
Corporate Area
RAIZ
Setúbal Industrial Complex *
Pulp Sales
Internal Audit and Risk Management
Legal Services**
Carlos Pascoal Neto
Alexandre Vale
José Tátá Anjos**
Gonçalo Veloso de Sousa**
António Neto Alves
Pedro Matos Silva**
Vítor Coelho**
Rui Pedro Batista
José Fernando Araújo***
Forestry Area
Aveiro Industrial Complex*
International Sales
Finance
Talent Management
António Oliveira
Mário França **
Manuel Arouca
Paula Castelão
Forestry Management
Central Technical Division
Supply Chain
Management and Control
Information Systems**
Nuno Neto
Carlos Brás
António Quirino
João Escobar Henriques**
Roberto Mantovani*
Wood Supply
Environment and Energy *
Marketing*
Accounting and Remuneration
Sustainability
Gonçalo Vieira
José Nordeste
Catarina Novais
Carla Guimarães
João Lé****
Projects*
Logistics*
Business Development
Materials Management
Adriano Silveira****
Nuno Soares
Vasco Ferreira
Pedro Sousa
Tissue Area
Technical Product
Tax Division
Tissue Sales
Vítor Crespo
José Almeida Fernandes
Hermano Mendonça
Revenue Management Department
Empremédia
Tissue Supply Chain
João Paulo Oliveira****
Fernando Gaga
Tissue Operations
Cristina Campos
Alexandra Fernandes
Joaquim Belfo
Packaging*
2021 Consolidated Annual Report
13/04/2022 110
EXECUTIVE COMMITTEE
Between 1 January and 31 December 2021, the Executive Committee (which can include three to
nine members, in accordance with the articles of association) was composed of six members, who
shared among themselves the following list of responsibilities:
António José Pereira Redondo
− Communication and Brand Division
− Risk Management Division
− Talent Management and Organisational Development Division
Adriano Augusto da Silva Silveira
− Environment Division
− Aveiro Industrial Division
− Figueira da Foz Industrial Division
− Setubal Industrial Division
− Central Technical Division
João Paulo Araújo Oliveira
− Logistics Division
− Marketing Division
− Revenue Management Department Division
− Supply Chain Division
− Technical Product Division
− Europe Paper Sales Division
− International Paper Sales Division
João Paulo Cabete Gonçalves Lé
− Wood Supply Division
− Forestry Management Division
− Portucel Mozambique
− Raiz – Forest and Paper Research Institute
− Sustainability Division
José Fernando Morais Carreira de Araújo
− Accounting and Remuneration Division
− Management Control Division
− Financial Division
− Tax Division
− Human Resources Division
− Legal Services Division
− Information Systems Division
− Empremédia – Insurance Brokers
− Investor Relations
2021 Consolidated Annual Report
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Nuno Miguel Moreira de Araújo Santos
− Business Development and New Business Division
− Tissue Sales Division
− Energy
− Tissue Operations Division
− Materials Management Division
− Supply Chain Tissue
− Pulp Sales Division
The following powers are delegated to the Executive Committee:
a) To propose the Company’s policies, aims and strategies to the Board of Directors;
b) To propose to the Board of Directors operating budgets and medium- and long-term
investment and development plans, and to implement these once approved;
c) To approve budget alterations during the year, including transfers between cost centres not
exceeding twenty million euros each year;
d) To approve contracts for the acquisition of goods and services of a value each year no greater
than twenty million euros;
e) To approve financing contracts, to apply for bank guarantees, or to accept any other
liabilities which represent increased indebtedness, totalling no more than twenty million
euros each year;
f) To acquire, dispose of or encumber the Company’s fixed assets of a value, in each individual
case, of up to five per cent of the paid-up share capital;
g) To lease or let any immoveable property;
h) To represent the Company in or out of court, as claimant or respondent, and to bring or
follow up any judicial or arbitral actions, confess or desist, settle or agree to arbitration;
i) To acquire, dispose of or encumber holdings in other companies, of a value of no more than
twenty million euros each year;
j) To resolve on executing acquisition and disposal of own shares, when this has been
deliberated by the General Meeting, in keeping with the terms of such resolution;
k) To manage holdings in other companies, jointly with the Chairman of the Board of Directors,
namely by designating, with the agreement of the latter, the representatives in the
respective governing bodies, and setting guidelines for the acts of these representatives;
l) To enter into, amend and terminate employment contracts;
m) To open, transact and close bank accounts;
n) To appoint Company attorneys;
o) In general, all powers which may lawfully be delegated, with any limitations deriving from
the provisions of the preceding paragraphs.
Jointly with the Chairman of the Board of Directors, the Executive Committee may also resolve on
the matters indicated in items c), d), e) and i) above when the respective values, calculated on the
terms set out therein, are greater than twenty million euros but no greater than fifty million euros.
The Chairman of the Board of Directors has the powers assigned to him by Law and the Articles of
Association. The competence to change any conditions of contracts previously entered into and
covered by the aforementioned items c), d), e) and i) will fall to the body or bodies that would be
competent to execute them.
The Executive Committee may discuss all matters within the sphere of competence of the Board of
Directors, notwithstanding that it may only resolve on matters delegated to it.
2021 Consolidated Annual Report
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The Regulation of the Executive Committee, approved by the Board of Directors, also establishes
the performance regime for Executive Directors.
Decisions regarding the definition of the Company's strategy, as well as its general policies and the
corporate structure of the Navigator Group, are matters for the Board of Directors, and the Executive
Committee does not have delegated powers in this regard. Thus, Non-Executive Directors participate
in the definition of the strategy, main policies, business structure and decisions that should be
considered strategic due to their amount or risk, as well as in the assessment of their compliance.
The Company's management is centered on the articulation between the Board of Directors and the
Executive Committee.
Coordination and approximation were ensured by the close cooperation developed by the Chairman
of the Board of Directors, Eng. João Castello Branco, with the executive team, by the availability of
the members of the Executive Committee for the regular transmission of all relevant or urgent
information, or that is requested, regarding the current management of the Company to the non-
executive members of the Board of Directors, in order to allow permanent monitoring of corporate
life, and by calling meetings of the Board of Directors for all strategic decisions or considered
especially relevant, even if these fall within the scope of generally delegated powers, and also by
the presence of the Chairman of the Board of Directors in some meetings of the Executive Committee
of the Company.
Also, for the other members of the governing bodies, the requested information is provided by the
members of the Executive Committee in a timely and appropriate manner.
To ensure a regular transmission of information, the notices and minutes of the respective meetings
are available for consultation by the Audit Board. The Company's other committees and governing
bodies also ensure, in a timely and appropriate manner and in accordance with the respective
operating regulations, the flow of information, namely, through the availability of notices and
minutes, under the terms necessary and appropriate to the exercise of legal and statutory powers
by the remaining bodies and commissions.
In relation to strategic planning and investment policy, and without prejudice to the portfolio to
which reference is made, it is clarified that it is by nature an area of greater intervention by non-
executive members and that had significant involvement by the Chairman of the Board of Directors.
Thus, non-executive directors participate in the definition of the strategy, main policies, business
structure and decisions that should be considered strategic due to their amount or risk, as well as
in the assessment of their compliance.
It is important to mention, in terms of sustainability, the functions of the Sustainability Division
which, jointly with those of the different Divisions of the Company and the Sustainability Forum,
form several working groups to deal with specific topics, which have been developing their activity
under the supervision of Executive Committee and involving all group companies in a transversal
way. As a result of this activity, the Company prepares its “Sustainability Report” annually, which,
in a consolidated perspective, and in response to the legal requirements introduced by Decree-Law
no. 89/2017, of 28 July, contains a detailed analysis of the approach and commitment of the
Company to sustainability topics. Thus, and through the observance and implementation of the
mentioned strategic principles and in the terms best developed in the referred report, the Company
ensures long-term success, and with a significant contribution to the community in general.
2021 Consolidated Annual Report
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At the end of 2018, internal regulations of the Board of Directors and Supervisory Board were
reviewed, approved and disclosed, as well as the internal commissions identified below, which
contain rules of operation, competence and articulation between the various bodies and
commissions. Under the terms of the aforementioned regulations and other applicable rules, the
corporate bodies and the other committees of the Company must prepare complete minutes of the
respective meetings.
The governing bodies and internal commissions identified above are required, under their terms,
internal operating regulations to make available to each other, under the legally and statutory
required terms, all the information and documentation necessary for the exercise of the legal and
statutory powers of each of the other bodies and commissions, and the various departments and
divisions of the Company must collaborate in the production, treatment and dissemination of said
information, in an appropriate, rigorous and timely manner.
The regulations of the Board of Directors and of the Audit Board also establish, in particular,
mechanisms that guarantee, within the limits of the applicable legislation and regulations, the access
of its members to the Company's Employees and to all information that is necessary for the
assessment of the performance, situation and development prospects of the Company, including
and without limiting minutes, supporting documentation of the resolutions taken, notices and
archives of the meetings of the Board of Directors and the respective Executive Committee, without
prejudice to being able to access other documents or people who may be asked for clarification.
It should be noted that the internal regulations of the Board of Directors and the Audit Board were
revised in 2020, following the publication of Law no. 50/2020, of 25 August and the revision to the
2018 IPCG Corporate Governance Code that took place in 2020.
b) OPERATION
22. Existence of rules of procedure for the Board of Directors, the General and Supervisory
Board and the Executive Committee, as the case may be, and place where these may be
consulted.
The Internal Rules of Procedure of the Board of Directors of Navigator are published on the
Company’s website, in the Investor Relations area, and are therefore freely available for consultation
at http://www.thenavigatorcompany.com/Investidores/Governo-da-Sociedade.
The Internal Rules of Procedure of the Board of Directors govern the exercise of the functions,
chairman, frequency of the meetings, functioning and framework of duties of its members.
In accordance with these Rules of Procedure, and the applicable legislation:
− Directors may have access to all Company information and staff for assessing performance,
the situation and the outlooks on the development of the Company, including, namely,
minutes, documents supporting decisions taken, convening notices and records on the
meetings of the Executive Committee, without prejudice to access to all other documents or
persons who may be called upon to provide clarifications.
− The Board of Directors must ensure the timely and suitable flow of information, especially
regarding the respective calls for meetings and minutes, required for the performance of the
functions, determined by law and the bylaws, of each of the remaining corporate bodies and
committees.
2021 Consolidated Annual Report
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Non-executive Directors should participate in the definition, by the managing body, of the strategy,
main policies, business structure and decisions that should be deemed strategic for the Company
due to their amount, risk or special characteristics as well as in the assessment of the
accomplishment of these actions.
The Directors in the Executive Committee may not perform executive functions in entities outside of
the Company’s group, except if the activity of such entities is deemed to be ancillary or
complementary to the group’s activity or is not very time-consuming.
The Directors who are not in the Executive Committee may perform management functions
(executive or not) in entities outside of the Company’s group, where such companies do not carry
out activities that compete with that of the Company, or in companies directly or indirectly held by
the Company, and the Chairman of the Board of Directors must be notified before the start of such
functions.
The following matters may not be generally delegated: a) The definition of the strategy and main
policies of the Company, although the Board of Directors may delegate to the Executive Committee
the drafting of the preliminary strategic plan and investment policy, subject to the approval of the
Board of Directors; b) the organisation and coordination of the business structure; and c) matters
that should be considered strategic, by virtue of the amounts involved, the risk, or special
characteristics.
The Board of Directors shall evaluate its performance annually, as well as the performance of the
Executive Committee and of other Committees and managing directors, if any, taking into account
the compliance with the Company’s strategic plan and budget, risk management, its internal
operation and the contribution of each member to that purpose, and the functioning between the
Company’s Bodies and Committees, identifying the ways in which such performance may be
improved.
23. Number of meetings held and rate of meeting attendance of each member of the Board
of Directors, General and Supervisory Board and Executive Committee, as applicable.
During 2021, the Board of Directors held nine meetings, and minutes were prepared. At the eleven
meetings held, all of the members of the Board of Directors were present, which corresponds to an
100% attendance level. At the nine meetings held, all members of the Board of Directors were
present, which corresponds to an attendance rate of 100%, except for Ricardo Pires and Nuno
Santos, who were unable to attend one meeting, and whose absences were duly justified.
Detailed minutes are drawn up for the Board of Directors’ meetings, in accordance with its Rules of
Procedure.
The number of meetings of the Board of Directors is freely available on the Company’s website at
http://www.thenavigatorcompany.com/Investidores/Governo-da-Sociedade.
24. Indication of the company bodies empowered to assess the performance of executive
directors.
The Remuneration Committee draws up the Remuneration Policy, which defines how the system will
work, and prepares the entire framework for the assessment of the executive directors. The
performance assessment of each executive director follows an internal process structured under the
leadership of the respective manager (i.e. under the responsibility of the person who chairs the
team, in the case of the members of the Executive Committee, and under the responsibility of the
2021 Consolidated Annual Report
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Chairman of the Board of Directors, in the case of the Chairman of the Executive Committee) and in
which the non-executive directors whom the manager considers pertinent to involve also participate.
The Appointments and Assessment Committee is also involved in this process, currently made up of
three non-executive members of the Board of Directors, which is responsible for monitoring the
system for assessing the performance of executive management and for allocating remuneration by
the Company, and for pronouncing on proposals for individual performance assessments of executive
management, which makes it unnecessary for the Board of Directors to be involved in assessing the
performance of executive directors.
Finally, the Remuneration Committee is responsible for confirming, with regard to the performance
evaluation, the respective achievement factors and ensuring the overall consistency of the process
by setting the variable remuneration.
Therefore, in 2021 and for the financial year of 2020, the Appointments and Assessment Committee
pronounced itself on the individual performance proposals of the members of the Executive
Committee, issued by the respective Chairman, and of the latter, issued by the Chairman of the Board
of Directors, communicating its opinion to the Remuneration Committee.
In turn, and as provided for in the Board of Directors Regulation and in the Remunerations Committee
Regulation, the Board of Directors, with the monitoring of the Remunerations Committee, shall assess
annually its performance, as well as the performance of its committees, including the Executive
Committee, taking into account compliance with the company's strategic plan and budget, risk
management, its internal operation and the contribution of each member to this effect, and the
relationship between the company's bodies and committees. Under the terms foreseen in the
respective regulations, the Appointments and Assessment Committee monitors the overall
performance assessment of the Board of Directors.
The evaluation of the executive directors, as well as the self-assessment of the Board of Directors and
its committees, took place in 2021 for the performance in 2020 and will take place in 2022 for the
performance in 2021, as described above.
25. Predetermined criteria for assessing the performance of executive directors.
The basic criteria for assessing the performance of executive directors for the 2021-2024 period are
those defined in section 7 of chapter IV of the Remuneration Policy for defining the variable
component of remuneration. These criteria are implemented through a system of quantitative and
qualitative KPIs, related to the performance of the company (general business indicators, with a
weight of 65%) and of the director in question (specific objectives, with a weight of 20%, and
behavioral indicators, with a weight of 15%). Within the general business indicators, EBITDA, net
income, cash flow, and Total Shareholder Return vs. It should be clarified that in the 2020
performance evaluation carried out in 2021, the Total Shareholder Return vs Peers indicator was not
yet included in the general business indicators considered for performance evaluation purposes.
In addition to these criteria, in alignment with the commitments assumed by the Company in its
sustainability strategy and recognizing the importance of the efficient use of energy and the need to
reduce fossil CO2 emissions from economic activities, the implementation of the corporate program
for energy efficiency, approved in 2016, is also considered in the weighting.
26. Availability of each of the members of the Board of Directors, the General and
Supervisory Board and the Executive Committee, as the case may be, indicating office held
2021 Consolidated Annual Report
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simultaneously in other companies, inside and outside the Group, and other relevant
activities carried out by the members of these bodies during the period.
The members of the Board of Directors have the appropriate availability to perform the duties
entrusted to them. The Directors’ other activities, outside the business group to which Navigator
belongs, do not impede their availability for performing their duties within the Navigator Group.
In addition to the activities listed in item 19, the directors also hold corporate office in other
companies as detailed below:
JOÃO NUNO DE SOTTOMAYOR PINTO DE CASTELO BRANCO
Offices held in Navigator Group Companies
− Chairman of the Board of Directors of The Navigator Company, S.A.
9
− Chairman of the Board of Directors of Bosques do Atlantico, S.L.
− Chairman of the Board of Directors of Navigator Financial Services Spółka Z Ograniczona
Odpowiedzialnoscia
10
− Chairman of the Board of Directors of Navigator North America, INC.
Funções desempenhadas em outras sociedades/entidades
− Chairman of the Board of Directors of Aphelion, S.A.
11
− Chairman of the Board of Directors of Semapa Next, S.A.
12
− Member of the General Board of AEM – Associação de Empresas Emitentes de Valores
Cotados em Mercado
− Member of the Board of Associação Business Roundtable Portugal
13
− Chairman of BCSD - Conselho Empresarial para o Desenvolvimento Sustentável
− Member of the Governing board of Fórum Para a Competitividade
− Chairman of the Board of Directors of Secil - Companhia Geral de Cal e Cimento, S.A.
14
− Chairman of the Board of Directors of Sodim, SGPS, S.A.
15
− Chairman of the Executive Committee of WBCSD - World Business Council for Sustainable
Development
ANTÓNIO JOSÉ PEREIRA REDONDO
Offices held in Navigator Group Companies
− Chief of the Executive Committee and director of The Navigator Company, S.A.
− Director of Bosques do Atlantico, S.L.
− Chairman of the Board of Directors of Enerpulp - Cogeração Energética de Pasta, S.A.
− Chairman of the Board of Directors of Eucaliptusland - Sociedade de Gestão de Património
Florestal, S.A.
− Chairman of the Board of Directors of Navigator Brands, S.A.
− Director of Navigator Deutschland GMBH
16
− Director of Navigator Financial Services Spółka Z Ograniczona Odpowiedzialnoscia
17
9
Served as Chairman of the Board of Directors until 31 December 2021.
10
In office until 16 August 2021, date of company liquidation.
11
Office terminated by resignation, effective as from 31 December 2021.
12
Office terminated by resignation, effective as from 31 December 2021.
13
Office terminated by resignation, effective as from 31 December 2021.
14
Office terminated by resignation, effective as from 31 December 2021.
15
Office terminated by resignation, effective as from 31 December 2021.
16
In office until 3 December 2021.
17
In office until 16 August 2021, date of company liquidation.
2021 Consolidated Annual Report
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− Chairman of the Board of Directors of Navigator International Holding, SGPS, S.A.
− Director of Navigator North America, INC.
− Director of Navigator Paper Austria GMBH
18
− Chairman of the Board of Directors of Navigator Paper Figueira, S.A.
− Director of Navigator Paper México, S. de R.L. de C.V.
− Chairman of the Board of Directors of Navigator Paper Setúbal, S.A.
− Director of Navigator Paper UK Ltd.
19
− Chairman of the Board of Directors of Navigator Parques Industriais, S.A.
− Chairman of the Board of Directors of Navigator Pulp Aveiro, S.A.
− Chairman of the Board of Directors of Navigator Pulp Figueira, S.A.
− Chairman of the Board of Directors of Navigator Pulp Setúbal, S.A.
− Chairman of the Board of Directors of Navigator Tissue Aveiro, S.A.
− Chairman of the Board of Directors of Navigator Tissue Ródão, S.A.
Offices held in other companies/entities
In 2021 he held no positions in other companies/entities.
ADRIANO AUGUSTO DA SILVA SILVEIRA
Offices held in Navigator Group Companies
− Director and member of the Executive Committee of The Navigator Company, S.A.
− Chairman of the Board of Directors of About The Future - Essential Oils, S.A.
20
− Director of Enerpulp - Cogeração Energética de Pasta, S.A.
− Director of Eucaliptusland - Sociedade De Gestão de Património Florestal, S.A.
− Director of Navigator Brands, S.A.
− Director of Navigator International Holding, SGPS, S.A.
− Director of Navigator Paper Figueira, S.A.
− Director of Navigator Paper Setúbal, S.A.
− Director of Navigator Parques Industriais, S.A.
− Director of Navigator Pulp Aveiro, S.A.
− Director of Navigator Pulp Figueira, S.A.
− Director of Navigator Pulp Setúbal, S.A.
− Director of Navigator Tissue Aveiro, S.A.
− Director of Navigator Tissue Ródão, S.A.
− Director of RAIZ - Instituto de Investigação da Floresta e Papel
Offices held in other companies/entities
− Director of APIGEE as representative of The Navigator Company, S.A.
− Member of the Consulting Committee of APCER – Associação Portuguesa de Cerificação
JOÃO PAULO ARAÚJO OLIVEIRA
Offices held in Navigator Group Companies
− Director and member of the Executive Committee of The Navigator Company, S.A.
− Director of Bosques do Atlantico, S.L.
− Director of Enerpulp - Cogeração Energética de Pasta, S.A.
− Director of Eucaliptusland - Sociedade de Gestão de Património Florestal, S.A.
− Director of Navigator Afrique du Nord, SARLAU
− Director of Navigator Brands, S.A.
18
In office until 7 December 2021.
19
In office until 1 January 2021.
20
In office until 28 December 2021, date of merger of the company in Raiz Ventures, S.A.
2021 Consolidated Annual Report
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− Director of Navigator Deutschland GMBH
21
− General manager of Navigator Egypt (LLC)
− Chairman of the Board of Directors of Navigator Eurasia Kağit Ve Kağit Ürünleri Sanayi Ve
Ticaret Anonim Şirketi
− Director of Navigator Financial Services Spółka Z Ograniczona Odpowiedzialnoscia
22
− Chairman of the Board of Directors of Navigator France SAS
− Director of Navigator International Holding, SGPS, S.A.
− Chairman of the Board of Directors of Navigator Itália, S.R.L.
− Chairman of the Board of Directors of Navigator Middle East Trading DMCC
− Chairman of the Board of Directors of Navigator Netherlands B.V.
− Director of Navigator North America, INC.
− Director of Navigator Paper Austria GMBH
23
− Chairman of the Board of Directors of Navigator Paper España S.A.
− Director of Navigator Paper Figueira, S.A.
− Director of Navigator Paper Setúbal, S.A.
− Director of Navigator Paper UK Ltd.
24
− Director of Navigator Parques Industriais, S.A.
− Chairman of the Board of Directors of Navigator Poland Paper Spółka Z Ograniczoną
Odpowiedzialnością
− Director of Navigator Pulp Aveiro, S.A.
− Director of Navigator Pulp Figueira, S.A.
− Director of Navigator Pulp Setúbal, S.A.
− Chairman of the Board of Directors of Navigator Rus Company LLC
25
− Director of Navigator Tissue Aveiro, S.A.
− Director of Navigator Tissue Ródão, S.A.
− Director of RAIZ - Instituto de Investigação da Floresta e Papel
Offices held in other companies/entities
− Member of the General Board of CELPA – Associação da Indústria Papeleira, as
representative of Navigator Paper Setúbal, S.A.
− Member of the General Board of Aveiro University
− Member of the Consulting Committee AICEP
− Member of the Supervisory Committee of Fraunhofer Institute em Portugal
JOÃO PAULO CABETE GONÇALVES LÉ
Offices held in Navigator Group Companies
− Director and member of the Executive Committee of The Navigator Company, S.A.
− Chairman of the Board of Directors of Atlantic Forests - Comércio de Madeiras, S.A.
− Director of Enerpulp - Cogeração Energética de Pasta, S.A.
− Director of Eucaliptusland - Sociedade de Gestão de Património Florestal, S.A.
− Director of Navigator Abastecimento De Madeira, ACE
− Director of Navigator Africa, S.R.L.
− Director of Navigator Brands, S.A.
− Chairman of the Board of Directors of Navigator Forest Portugal, S.A.
− Director of Navigator International Holding, SGPS, S.A.
− Director of Navigator Paper Figueira, S.A.
21
Start of the term of office on 3 December 2021.
22
In office until 16 August 2021, date of company liquidation.
23
Start of the term of office on 7 December 2021.
24
Start of the term of office on 1 January 2021.
25
In office until 2 August 2021, date of company liquidation.
2021 Consolidated Annual Report
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− Director of Navigator Paper Setúbal, S.A.
− Director of Navigator Parques Industriais, S.A.
− Director of Navigator Pulp Aveiro, S.A.
− Director of Navigator Pulp Figueira, S.A.
− Director of Navigator Pulp Setúbal, S.A.
− Director of Navigator Tissue Aveiro, S.A.
− Director of Navigator Tissue Ródão, S.A.
− Chairman of the Board of Directors of
26
and Director
27
of Portucel Moçambique - Sociedade
de Desenvolvimento Florestal e Industrial, S.A.
− Chairman of the Board of Directors of RAIZ - Instituto de Investigação da Floresta e Papel
− Chairman of the Board of Directors of Sociedade de Vinhos da Herdade de Espirra - Produção
e Comercialização de Vinhos, S.A.
− Chairman of the Board of Directors of Viveiros Aliança - Empresa Produtora de Plantas, S.A.
Offices held in other companies/entities
In 2021 he held no positions in other companies/entities.
JOSÉ FERNANDO MORAIS CARREIRA DE ARAÚJO
Offices held in Navigator Group Companies
− Director and member of the Executive Committee of The Navigator Company, S.A.
− Director of Bosques do Atlantico, S.L.
− Director of Empremedia Designated Activity Company
28
− Director of Empremedia Re Designated Activity Company
29
− Director of Enerpulp - Cogeração Energética de Pasta, S.A.
− Director of Eucaliptusland - Sociedade de Gestão de Património Florestal, S.A.
− Director of Navigator Africa, S.R.L.
− Director of Navigator Afrique du Nord, SARLAU
− Director of Navigator Brands, S.A.
− Director of Navigator Deutschland GMBH
− Director of Navigator Egypt (LLC)
30
− Vice-Chairman of the Board of Directors of Navigator Eurasia Kağit Ve Kağit Ürünleri Sanayi
Ve Ticaret Anonim Şirketi
− Director of Director of Navigator Financial Services Spółka Z Ograniczona
Odpowiedzialnoscia
31
− General Director of Navigator France SAS
− Director of Navigator International Holding, SGPS, S.A.
− Director of Navigator Itália, S.R.L.
− Director of Navigator Middle East Trading DMCC
− Director of Navigator Netherlands B.V.
− Director of Navigator North America, INC.
− Director of Navigator Paper Austria GMBH
− Director of Navigator Paper España S.A.
− Director of Navigator Paper Figueira, S.A.
− Director of Navigator Paper México S. de R.L. de C.V.
− Director of Navigator Paper Setúbal, S.A.
26
Start of term of office on 11 March 2021.
27
In office until 11 March 2021.
28
In office until 7 October 2021.
29
Start of term of office on 11 March 2021.
30
Start of term of office on 18 August 2021.
31
In office until 16 August 2021, date of company liquidation.
2021 Consolidated Annual Report
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− Director of Navigator Paper UK Ltd.
− Director of Navigator Parques Industriais, S.A.
− Director of Navigator Poland Paper Spółka Z Ograniczoną Odpowiedzialnością
− Director of Navigator Pulp Aveiro, S.A.
− Director of Navigator Pulp Figueira, S.A.
− Director of Navigator Pulp Setúbal, S.A.
− Director of Navigator Rus Company LLC
32
− Director of Navigator Tissue Aveiro, S.A.
− Director of Navigator Tissue Iberica, S.A.
− Director of Navigator Tissue Ródão, S.A.
− Director of Portucel Moçambique - Sociedade de Desenvolvimento Florestal e Industrial, S.A.
Offices held in other companies/entities
− Chairman of the General Meeting of CELPA – Associação da Indústria Papeleira.
− Director of AFP – Associação Fiscal Portuguesa
− Member of the Audit Board of the Statutory Auditors Association
NUNO MIGUEL MOREIRA DE ARAÚJO SANTOS
Offices held in Navigator Group Companies
− Director and member of the Executive Committee of The Navigator Company, S.A.
− Director of Bosques do Atlantico, S.L.
− Director of Enerpulp - Cogeração Energética de Pasta, S.A.
− Director of Eucaliptusland - Sociedade de Gestão de Património Florestal, S.A.
− Chairman of the Board of Directors of Navigator Africa, S.R.L.
− Director of Navigator Brands, S.A.
− Director of Navigator Financial Services Spółka Z Ograniczona Odpowiedzialnoscia
33
− Director of Navigator International Holding, SGPS, S.A.
− Director of Navigator North America, INC.
− Director of Navigator Paper Figueira, S.A.
− Director of Navigator Paper Setúbal, S.A.
− Director of Navigator Parques Industriais, S.A.
− Director of Navigator Pulp Aveiro, S.A.
− Director of Navigator Pulp Figueira, S.A.
− Director of Navigator Pulp Setúbal, S.A.
− Director of Navigator Tissue Aveiro, S.A.
− Chairman of the Board of Directors of Navigator Tissue Iberica, S.A.
− Director of Navigator Tissue Ródão, S.A.
− Chairman of the Board of Directors of Portucel Moçambique - Sociedade de Desenvolvimento
Florestal e Industrial, S.A.
34
− Chairman of the Board of Directors of Pulpchem Logistics, ACE
− Director of RAIZ - Instituto de Investigação da Floresta e Papel
Offices held in other companies/entities
− Member of the General Board of CELPA – Associação da Indústria Papeleira, as
representative of Navigator Forest Portugal, S.A. and Navigator Pulp Aveiro, S.A.
32
In office until 2 August 2021, date of company liquidation.
33
In office until 16 August 2021, date of company liquidation.
34
In office until 11 March 2021.
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MANUEL SOARES FERREIRA REGALADO
Offices held in Navigator Group Companies
− Director of The Navigator Company, S.A.
Offices held in other companies/entities
In 2021 he held no positions in other companies/entities.
MARIA TERESA ALIU PRESAS
Offices held in Navigator Group Companies
− Director of The Navigator Company, S.A.
Offices held in other companies/entities
− Director of World Bioeconomy Forum.
− Senior consultant at Magellan Association.
MARIANA RITA ANTUNES MARQUES DOS SANTOS
Offices held in Navigator Group Companies
− Director of The Navigator Company, S.A.
Offices held in other companies/entities
− Director of NBC Medical, S.A.
35
SANDRA MARIA SOARES SANTOS
Offices held in Navigator Group Companies
− Director of The Navigator Company, S.A.
Offices held in other companies/entities
− Chairman of the Board of Directors of Moldin, S.A.
− Chairman of the Board of Directors of Barbosa & Almeida, SGPS, S.A.
− Chairman of the Board of Directors of BA Vidro II, SGPS, S.A.
− Chairman of the Board of Directors of BA Glass Packaging, S.A.
− Director of Artividro, Lda.
− Director of BA Glass I – Serviços de Gestão e Investimentos, S.A.
− Director of BA Glass Portugal, S.A.
− Chairman of the Board of Directors of BA Glass Spain, S.A.U.
− Chairman of the Board of Directors of BA - Vidrio Distribución y Comercialización de Envases
de Vidrio, S.A.
− Chairman of the Board of Directors of Minas de Valdeastillo, S.A.U.
− Director of BA Glass Germany, GmbH.
− Director of BA Glass Poland, Sp. z.o.o.
− Chairman of the Board of Directors of BA Glass Bulgaria, S.A.
− Chairman of the Board of Directors of BA Glass Romania, S.A.
RICARDO MIGUEL DOS SANTOS PACHECO PIRES
Offices held in Navigator Group Companies
− Director of The Navigator Company, S.A.
36
35
In office until 8 July 2021.
36
Serves as Chairman of the Board of Directors since 1 January 2022.
2021 Consolidated Annual Report
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Offices held in other companies/entities
− Chairman of the Board of Directors of Abapor - Comércio e Indústria de Carnes, S.A.
− Director of Aphelion, S.A.
37
− Director of CIMO – Gestão de Participações, SGPS, S.A.
− Director of Biological - Gestão de Resíduos Industriais, Lda.
− Chairman of the Board of Directors of ETSA Log, S.A.
− Chairman of the Board of Directors of ETSA - Investimentos, SGPS, S.A.
− Chairman of the Board of Directors of I.T.S. - Indústria Transformadora de Subprodutos,
S.A.
− Chairman of the Board of Directors of Sebol - Comércio e Indústria de Sebo, S.A.
− Director of Semapa Inversiones, S.L.
− Chairman of the Executive Committee of Semapa Next, S.A.
38
− Director of Pyrus Agricultural LLC
− Director of Pyrus Investments LLC
− Director of Pyrus Real Estate LLC
− Director of Secil - Companhia Geral de Cal e Cimento, S.A.
39
− Director of Sodim, SGPS, S.A.
− Director and member of the Executive Committee of Semapa – Sociedade de Investimento
e Gestão, SGPS, S.A.
40
− Director of Upsis, S.A.
VÍTOR PAULO PARANHOS PEREIRA
Offices held in Navigator Group Companies
− Director of The Navigator Company, S.A.
Offices held in other companies/entities
− Director of Aphelion, S.A.
− Director of Antasobral – Sociedade Agropecuária, S.A.
− Director of Capital Hotels - Sociedade de Investimentos e Gestão, S.A.
− Chairman of the Board of Directors of Celcimo, S.L.
41
− Director of CIMO – Gestão de Participações, SGPS, S.A.
− Chairman of the Board of Directors of Galerias Ritz, S.A.
− Director of Hotel Ritz, S.A.
− Chairman of the Board of Directors of Parque Ritz, S.A.
− Director of Secil - Companhia Geral de Cal e Cimento, S.A.
− Chairman of the Board of Directors of Semapa Inversiones, S.L.
− Director and member of the Executive Committee of Semapa – Sociedade de Investimento
e Gestão, SGPS, S.A.
− Director of Sodim, SGPS, S.A.
− Director of Sociedade Agrícola da Herdade dos Fidalgos, Unip., Lda
− Chairman of the Board of Directors of Sonagi, SGPS, S.A.
− Chairman of the Board of Directors of Sonagi – Imobiliária, S.A.
− Chairman of the General Meeting of Associação da Hotelaria de Portugal
37
Was appointed Chairman of the Board of Directors from 1 January 2022.
38
Until 2 August 2021, served as Executive Director, and after that date until 31 December 2021, as Chairman
of the Executive Committee, having ceased to perform these duties as of 1 January 2022 and been appointed,
on that date, as Chairman of the Board of Directors.
39
Serves as Chairman of the Board of Directors since 1 January 2022.
40
Serves as Chairman of the Executive Committee since 1 January 2022.
41
Ceased his duties due to the dissolution and liquidation of this company on 23 December 2021.
2021 Consolidated Annual Report
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VÍTOR MANUEL ROCHA NOVAIS GONÇALVES
Offices held in Navigator Group Companies
− Director of The Navigator Company, S.A.
Offices held in other companies/entities:
− Director of Beldevelopment, S.A.
− Director of Extrasearch, SGPS, S.A.
− Director of Euromidlands - Sociedade Imobiliária, Lda.
− Director of Magalhães e Gonçalves – Consultoria e Gestão, Lda.
− Director of Prudentarbítrio, Lda.
− Director of Qualquer Ponto – Sociedade Imobiliária, Lda.
− Director of Qualquer Prumo – Sociedade Imobiliária, Lda.
− Director of Terraponderada, Lda.
− Director of Semapa – Sociedade de Investimento e Gestão, SGPS, S.A.
− Director of Vanguardintegral, Lda.
− Director of VRES – Vision Real Estate Solutions, S.A.
− Director of Zoom Investment, SGPS, S.A.
− Director of Zoom Investment Turismo, S.A.
− Director of 2For Venture, SGPS, S.A.
c) COMMITTEES BELONGING TO THE MANAGEMENT OR SUPERVISORY BODIES AND
MANAGING DIRECTORS
27. Identification of committees set up by the Board of Directors, the General and
Supervisory Board and the Executive Committee, as the case may be, and place where the
rules of procedure may be consulted.
The following committees report to the Company’s Board of Directors:
− Executive Committee
− Corporate Governance Committee
− Sustainability Forum
− Pension Fund Supervisory Board
− Property Risks Analysis and Monitoring Committee
− Ethics Committee
− Environmental Board (instituted by the Articles of Association)
− Appointments and Appraisals Committee
The Operating Rules of these Committees make reference to their respective powers, presidency,
meeting frequency, functioning and duties of the members, with detailed minutes of their meetings
drawn up, available at the Company’s website at
http://www.thenavigatorcompany.com/Investidores/Governo-da-Sociedade.
The composition and number of annual meetings of internal committees are published at the
Company’s website at http://www.thenavigatorcompany.com/Investidores/Governo-da-Sociedade.
In accordance with their respective Operating Rules, Internal Committees must ensure a timely and
adequate flow of information, from their respective meeting notices and minutes, as required to
exercise the powers under the law and Articles of Association of each of the remaining boards and
committees.
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28. Composition, if applicable, of the Executive Committee and/or identification of the
Managing Director(s).
On 31 December 2021, the Executive Committee comprised the following Directors:
Chairman
− António José Pereira Redondo
Members
− Adriano Augusto da Silva Silveira
− João Paulo Araújo Oliveira
− João Paulo Cabete Gonçalves Lé
− José Fernando Morais Carreira de Araújo
− Nuno Miguel Moreira de Araújo Santos
29. Indication of the powers of each of the committees created and summary of the
activities carried on the exercise of these responsibilities.
EXECUTIVE COMMITTEE
The powers of the Executive Committee are described in item 21 of this report.
The Executive Committee is the Company’s executive management body and has performed its
duties by exercising the powers entrusted to it by the Board of Directors. This Committee meets
regularly and whenever required by the evolution of the Company’s affairs and to monitor its
business activities; a total of 47 meetings were held in 2021. In addition to the members of the
Executive Committee, whenever the matters so justify, Non-Executive Directors and Group
Companies are present at these meetings and members of the various Navigator Boards.
CORPORATE GOVERNANCE COMMITTEE
The Corporate Governance Committee comprises of three members: Mariana Marques dos Santos,
Manuel Regalado and António Neto Alves.
The Corporate Governance Committee, in addition to monitoring, on a continuous basis, the
Company’s compliance with the provisions of the law, regulations and articles of association
applicable to corporate governance, is responsible for the critical analysis of the Company’s practices
and conduct in the field of corporate governance, and for the initiative of proposing for debate,
amendment and introducing new procedures designed to improve the structure and governance of
the Company. The Corporate Governance Committee is also required to assess annually the
corporate governance status of the Company and submit to the Board of Directors any proposals as
it sees fit.
In 2021, in addition to the work and current communications carried out by telematic means, the
Committee held three meetings in which the following topics were analysed:
− Analysis of the Corporate Governance Report for 2020;
− Analysis and response to a communication addressed to the Corporate Governance
Committee by a shareholder of the Company;
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− Analysis of the assessment of compliance with the Corporate Governance Code of the
Portuguese Corporate Governance Institute (“Instituto Português de Corporate
Governance”, “IPCG”) conducted by the Executive Committee for Follow-Up and Monitoring
(“Comissão Executiva de Acompanhamento e Monitorização”, “CEAM”), with reference to the
period of 2020;
− Preparation of a Proposal, to be submitted to the Audit Board and the Board of Directors,
regarding the revision of the Regulation on Conflicts of Interest and Related Party
Transactions, following the monitoring and assessment of the degree of compliance with the
Corporate Governance Code by the Company.
Accordingly, the Corporate Governance Committee carried out its oversight and corporate
governance assessment activities throughout the financial year and participated actively in drafting
the Annual Corporate Governance Report, for which it obtained the necessary information,
particularly by its member António Neto Alves, who is the Company’s General Counsel.
SUSTAINABILITY FORUM
In recognition of the fundamental role of sustainability in its strategic development, in 2015 the
Navigator Group created the Sustainability Forum.
The main aim of the Forum is to allow the Navigator Group to work hand-in-hand with experts and
leaders within its sphere of activity, from NGOs and universities to social organisations as well as
clients and suppliers.
It is an initiative aimed at strengthening dialogue with its main stakeholders, encouraging proactive
listening and discussion on topics relevant to the Company and to society.
In general, the Sustainability Forum meets twice per year: one session dedicated to Permanent
Members, and another session extended to various stakeholders. The extended sessions have a core
topic to be discussed and explored in greater depth, helping to shape corporate and strategic policies
on matters involving social and environmental responsibility, thereby enabling platforms of
understanding and cooperation between the Navigator Group and its main stakeholders.
The Sustainability Forum comprises External Members and Internal Members from the Navigator
Group, and is chaired by the Chief Executive Officer, António Redondo, with Manuel Regalado as
General Secretary.
Internal members are António Redondo (Chairman of the Executive Committee), Adriano Silveira,
João Paulo Oliveira, João Lé, Fernando Araújo, and Nuno Santos (members of the Executive
Committee), Manuel Regalado (member of the Board of Directors and Secretary General), Teresa
Presas (member of the Board of Directors), and Maria da Conceição Cunha, Casimiro Pio, Margarida
Tomé, and Joaquim Poças Martins, of the Environmental Board.
The following relevant personalities linked to the activities of the Company's main stakeholders are
external members of the Sustainability Forum: Cristina Tomé, Filipe Duarte Santos, Francisco Gomes
da Silva, José Júlio Norte, Luís Neves da Silva, Manuel Martins, Rosário Alves, Sofia Crisóstomo Silva,
Vítor Bento and Winfried Brüeggmann.
Two sessions of the Sustainability Forum were held in 2021, one internal, aimed at permanent
members of the Forum (internal and external), and the other external, with participation by a wide
range of the Company's stakeholders.
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The internal session, held in May 2021, involved debate on Agenda 2030 and Navigator's
sustainability reporting, in addition to reflection on the theme of the Forum's external session, held
in Torres Vedras in October 2021, devoted to the topic of "Dynamic Forest Protection".
PENSION FUND SUPERVISORY COMMITTEE
The Committee’s responsibilities include checking compliance with the rules applicable to the pension
plan and to the management of the respective pension fund, issuing opinions on proposals for
transferring management and other significant changes in the contractual arrangements for the fund
and its management, and on the winding up of the pension fund or of part thereof.
In the beginning of 2021, the Pension Fund Supervisory Committee, appointed in 2019. Had three
representatives of the Company: Manuel Arouca, António Cunha Reis and João Ventura, and two
representatives of the fund beneficiaries, João Manuel Nunes de Oliveira and António Tavares Melo.
This Committee met on March 18, 2021 to discuss, among other matters, Law 27/2020 of July 23,
which introduced various alterations to the Legal Regime of Pension Funds, namely with regard to
the composition of the Supervisory Committee, which, in addition to the two representatives of the
Fund's participants and beneficiaries, now also includes the participation of two representatives
indicated by the Company's two most significant unions, and a representative of the Workers'
Commission.
Following this legislative change, a new Supervisory Committee was appointed, consisting of 6
representatives of the Company (Manuel Arouca, António Cunha Reis, João Ventura, Alexandre Vale,
Ana Duarte Ferreira and Teresa Valdez), two representatives of the participants (João Manuel Nunes
de Oliveira and António Tavares Melo) and one representative of the Workers' Commission (Ricardo
David Gomes Arede). The unions have not yet nominated any representatives.
This new Commission met on December 13, 2021, to take office and discuss several topics related
to the Pension Fund.
PROPERTY RISKS ANALYSIS AND MONITORING COMMITTEE
The Company has a Property Risks Analysis and Monitoring Committee, coordinated by the directors
responsible for financial affairs, risk and assets, Fernando Araújo and Adriano Silveira, respectively.
The Committee also comprises of the Plant Managers, who during 2021 were Alexandre Vale, Pedro
Matos Silva, António Estudante de Oliveira and Joaquim Belfo, the Financial Director, Manuel Arouca,
the Risk Management Director, Gonçalo Monteiro Duarte, and the Management Control Director,
Gonçalo Veloso de Sousa. Meetings have also been regularly attended by Alexandra Fernandes, the
manager responsible for operations at Empremédia.
This Committee meets whenever necessary to give its opinion on systems for preventing property
risk in effect at the Company, mainly measures taken to address recommendations from inspections
performed by reinsurers, as well as give its opinion on the suitability of the scope, type of coverages
and insured values purchased by the Navigator Group; to discuss and issue opinions or
recommendations on policies, procedures, significant risks, risk limits and extraordinary situations
in terms of property risk; and to monitor and keep track of the most significant risks involving
property, in close connection with the risk governance system in effect at the Navigator Group.
During 2021, the Property Risks Analysis and Monitoring Committee held a meeting on June 29, to
examine a number of issues, including: a progress report on recommendations following the 2021
2021 Consolidated Annual Report
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risk analysis and pending recommendations from previous years; identification and quantification of
claims over the last ten years (2010-2021); consideration of Navigator's risk retention policy for
2022; capital to be insured in 2022, Gross Profit Insured in 2021 and estimates for 2022; and
Calculation of the Estimated Maximum Loss (PML).
ETHICS COMMITTEE
Following the elaboration and approval of the Code of Ethics by the Executive Committee during
2010, the Ethics Committee was created, which annually produces a report on compliance with the
rules contained in the Code of Ethics. This report should explain all irregular situations that the
Committee is aware of, as well as the conclusions and proposals for follow-up that it has adopted in
the various cases analysed.
The Ethics Committee is responsible for monitoring the Company's bodies with impartiality and
independence in the disclosure and compliance with the Code of Ethics in all companies of the
Navigator Group.
In carrying out its duties, the Ethics Committee is especially responsible for:
a) Verifying that the Code of Ethics and Conduct is integrated in the company's usual internal
control systems, namely within the scope of the Risk Management Department (DGR);
b) Assessing the conclusions that the DGR draws from any audits that it carries out within the
scope of topics covered by the Code of Ethics and Conduct;
c) Ensuring the functioning of a mechanism for reporting violations of the Code of Ethics and
Conduct, as part of the scope of the irregularity reporting mechanism in force in the Group;
d) Assessing and evaluating any situation that may arise regarding the fulfilment of the
precepts included in the Code of Ethics and Conduct in which a member of a corporate body
is covered;
e) Submitting to the Corporate Governance Committee the adoption of any measures it deems
convenient in this area, including the review of internal procedures;
f) Submitting to the Board of Directors, if deemed necessary, proposals for changes to the
Group's Code of Ethics and Conduct;
g) Preparing an annual report on its performance in compliance with the rules contained in the
Code of Ethics and Conduct in the Group's companies.
The Ethics Committee includes three members, Henrique Trocado, Rui Gouveia and Jaime Falcão.
Three meetings were held, at which the activities carried out in 2020 and 2021 were reviewed, as
were the main issues which have been reported and raised under the Company's Code of Ethics and
Conduct and the Company's Irregularities' Reporting System, in Portugal and abroad, and the
functioning and mode of operation of the same were debated. The report on the Ethics Committee's
activities during the year ended December 31, 2020 was also discussed and approved.
ENVIRONMENTAL BOARD
In view of the specific nature of the Group’s business and the corresponding environmental concerns,
in 2008 the Board of Directors decided to set up an Environmental Board to monitor and issue its
opinion on environmental aspects of the Company’s operations, and to make recommendations
concerning the environmental impact of its main projects, paying special attention to legal
requirements, licensing terms and the Navigator Group’s policy in this area.
2021 Consolidated Annual Report
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The Environmental Board is currently comprised of four members: Maria da Conceição
(Chairperson)
42
, Casimiro Pio, Maria Margarida Tomé and Joaquim Poças Martins, all independent
academic personalities of known scientific and technical expertise, particularly in the most important
domains of the environmental concerns of the Navigator Group as it is currently configured.
The Environmental Board is in direct contact with the Navigator Group’s business world through
meetings held at its industrial facilities, main forest plantations and its research institute, “RAIZ”.
In the course of 2021, the Environmental Board held two meetings, where the following topics were
addressed:
a) Environmental Issues - Overview of compliance with legal obligations;
b) Navigator's decarbonization plan - Replacement of oil-fired boilers NPS1 in Setúbal;
c) Circular Economy - EDM Project; Application of Tecnosolos;
d) Conservation of Biodiversity at Navigator - recent projects;
e) Study of Effluent Dispersion in the Sado Estuary;
f) Environmental situation - Overview of compliance with legal obligations;
g) Energy situation and impact on Navigator;
h) PRR, applications in the scope of the mobilizing agendas;
i) Eucalyptus and water: case studies in Navigator's watersheds.
REMUNERATION COMMITTEE
The remuneration assignment process, which is monitored by the Nomination and Appraisals
Committee, is in particular the responsibility of the Remuneration Committee existing in the
Company, created under article 399 of the Portuguese Companies Code.
Until the date of entry into force of Law no. 50/2020, of 25 August, the Remuneration Committee
drew up annually – which happened in 2020 - the statement on the remuneration policy for the
members of the management and supervisory bodies. After the entry into force of the referred Law,
this Committee has the functions to prepare the remuneration policy for the members of the
management and supervisory bodies and to carry out all the work of analyzing and fixing the
remuneration of the directors.
The Remuneration Committee participates, equally and actively, in the performance evaluation, and
it is responsible for carrying out all work concerning analyses and setting Directors’ remuneration,
in particular setting the variable remuneration of the Executive Directors.
In 2020, the Committee is composed of three members, namely José Gonçalo Maury, Joao Moreira
Rato and João Vicente Ribeiro.
Over the course of 2021, and in keeping with its responsibilities, the Remuneration Committee held
three meetings at which various matters relating to the remuneration of the corporate bodies were
discussed, the Remuneration Policy was approved, designed to be in force for a period of 4 years
(2021-2024), and the setting of the variable remuneration to be attributed to the executive directors
with respect to 2020 was deliberated.
In order to provide information or clarifications to the shareholders, the members of the
42
Position held since Prof. Fernando Santana passed away on January 2021.
2021 Consolidated Annual Report
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Remuneration Committee are present at the annual General Meeting and in any others if the
respective agenda includes a matter related to the remuneration of the members of the bodies and
committees of the Company or if such presence has been required by shareholders.
Within the budgetary limitations of the Company, the Remuneration Committee can freely decide
whether to hire, through the Company, the necessary or convenient consultancy services to perform
its functions.
The Remuneration Committee must ensure that the services are provided independently and that
the respective providers are not contracted to provide any other services to the Company itself or
to others that are in a controlling or group relationship without the express authorisation of the
Committee.
APPOINTMENTS AND APPRAISALS COMMITTEE
In 2018, the Company established an Appointments Committee. In 2019, the Committee's powers
were extended, as described below, and its designation changed to the Appointments and Appraisals
Committee.
This Committee is composed of three to seven members, including a majority of Directors who do
not perform executive functions, one of whom will be Chairman, appointed by the Board of Directors,
for a period of four years, coinciding with the mandate of the Board of Directors.
In 2020, this Committee integrated four members: João Nuno de Sottomayor Pinto de Castello
Branco (Presidente)
43
, Ricardo Miguel dos Santos Pacheco Pires, Mariana Rita Antunes Marques dos
Santos and Vítor Paulo Paranhos Pereira.
In accordance with its Internal Regulations, the Appointments and Appraisals Committee is
responsible for monitoring and supporting the appointments of management officers of the Company
and the Navigator Group, as well as assessing the performance of the same management staff.
In the performance of its duties, and without prejudice to other powers attributed to it by the
Company's Board of Directors, the Appointments and Appraisals Committee is particularly
responsible for the governing bodies:
(a) In terms of appointments:
i. Assist the Board of Directors in identifying and assessing the adequacy of the profile,
knowledge, and curriculum of members of the governing bodies to be designated, namely,
the appointment by co-option for the performance of functions of member of the Board of
Directors of the Company, as well as, in the choice of administrators who will perform
executive functions;
ii. Make its terms of reference available and induce, to the extent of its competencies,
transparent selection processes that include effective mechanisms for identifying potential
candidates, through which the ones with the greatest merit are selected, that are best suited
to the job requirements and promote, within the organisation, adequate diversity including
gender;
43
In office until 31 December 2021.
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iii. Make its terms of reference available and induce, to the extent of its competencies,
transparent selection processes that include effective mechanisms for identifying potential
candidates, through which the ones with the greatest merit are selected, that are best suited
to the job requirements and promote, within the organisation, adequate diversity including
gender.
(b) In terms of appraisals:
i. To monitor the management's performance evaluation and remuneration attribution system;
ii. To comment on the proposals for individual annual performance evaluation of the members
of the Executive Committee, issued by the respective Chairman, and on the latter, issued
by the Chairman of the Board of Directors;
iii. To monitor the overall assessment of the performance of the Board of Directors, as a body,
taking into account compliance with the Company's strategic plan and budget, risk
management, its internal functioning and the contribution of each member.
In addition to other functions that are expressly assigned to it by the Board of Directors, the
Appointments and Appraisals Committee is responsible, especially with regard to the remaining
management staff, to:
a) Monitor and issue recommendations on the Group's internal talent management policies and
procedures;
b) Periodically assess the need and availability of talent at the Group level and recommend
appropriate actions to ensure the Group's capacity to respond to the challenges that arise,
namely to monitor and issue recommendations on internal policies and procedures related
to selection, hiring, remuneration, evaluation remuneration and incentives policies, as well
as the succession plan for management staff, and formulate the recommendations that it
considers appropriate.
The Committee is also responsible for talent management, particularly with respect to senior
management: (i) monitor and make recommendations on the Group's internal talent management
policies and procedures and (ii) periodically assess the need for and availability of talent at the Group
level and recommend appropriate actions to ensure the Group's ability to respond to the challenges
that arise.
By virtue of the members who comprise it and their competencies, in matters of remuneration,
performance evaluation and appointments, the existence of this Committee reflects adherence to
Recommendation III.9 of the IPCG Corporate Governance Code.
In view of its responsibilities, in early 2021, the Appointments and Evaluation Committee held a
meeting in which a proposal for an evaluation model and variable remuneration of the executive
directors for 2021 was discussed, including (a) different models and risks that may be associated,
(b) the weighting of different general indicators, specific objectives, behavioral indicators and bonus
factor, and (c) general indicators such as EBITDA, net income, cash flow and TSR vs Peers, pillars
and weightings.
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III. Auditing
(Audit Board, Audit Committee or General and Supervisory Board)
a) COMPOSITION*
* During the reference year.
30. Identification of the supervisory body (Supervisory Board, Audit Committee or General
Supervisory Board) corresponding to the model adopted.
Under the single-tier management model adopted, the Company’s supervisory body is the Audit
Board.
31. Composition, as applicable, of the Supervisory Board, the Audit Committee, the
General and Supervisory Board or the Committee for Financial Affairs, indicating the
minimum and maximum numbers of members and duration of their term of office, as
established in the Articles of Association, number of full members, date of first
appointment and end date of the term of office of each member; reference may be made
to the item in the report where this information is contained in accordance with paragraph
18.
Chairman
− José Manuel Oliveira Vitorino
Full Members
− Gonçalo Nuno Palha Gaio Picão Caldeira
− Maria da Graça Torres Ferreira da Cunha Gonçalves
Alternate Member
− Ana Isabel Moraes Nobre de Amaral Marques
Under the Articles of Association, the Company’s Audit Body comprises of three full members, one
of whom is Chairman, and two alternate members, elected by the General Meeting for a four-year
term.
The current members of the Audit Board were appointed for the current term, from 2019 to 2022,
at the General Meeting held on 9 April 2019, at which the members of Navigator's governing bodies
were elected.
José Manuel Oliveira Vitorino was initially elected as alternate member on 29 April 2015. On 2 July
2015, he took the position of full member of the Audit Board for the 2015-2018 term in office,
replacing full member Duarte Nuno d’Orey da Cunha, following his resignation.
At the ordinary General Meeting of 19 April 2016, José Manuel de Oliveira Vitorino was appointed as
a full member of the Supervisory Board, until the end of the current term in office of the other
members of statutory bodies. However, since the composition of Navigator’s Audit Board and its
majority shareholder Semapa – Sociedade de Investimento e Gestão, SGPS, S.A. have been
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coinciding; since an election was held in 2018 for the 2018-2022 term in office of the Semapa Audit
Board, thereby changing its composition; and given the intent expressed by the Chairman of the
Audit Board, Miguel Camargo de Sousa Eiró, to also resign from Navigator in the General Meeting of
23 May 2018, José Manuel Oliveira Vitorino, previously a full member of the Audit Board, was
appointed Chairman of the Audit Board until the end of the current term in office of other members
of statutory bodies. He was elected Chairman of the Audit Board on 9 April 2019 for the term of
2019 to 2022.
Gonçalo Nuno Palha Gaio Picão Caldeira was elected as a full member of the Audit Board for the first
time with effect as from the start of the term running from 2007 to 2010 and was re-elected for the
terms from 2011 to 2014, 2015 to 2018 and 2019 to 2022.
Maria da Graça Torres Ferreira da Cunha Gonçalves was appointed as full member of the Audit Board
in the General Meeting on 23 May 2018, until the end of the current term in office of the other
members of statutory bodies, having been re-elected for the 2019-2022 term.
Ana Isabel Moraes Nobre de Amaral Marques was appointed as alternate member of the Supervisory
Board on 19 April 2016, until the end of the current term in office of the other members of statutory
bodies, having been re-elected for the 2019-2022 term.
The Company believes that the number of members of the Supervisory Board is perfectly adequate
in view of its size and the complexity of risks inherent to its activity, efficiently ensuring the duties
entrusted to them. This suitability judgment took into account, in particular, the activities of the
Company, the stability of the shareholder structure, as well as the set of diversified skills and the
availability of the members of the Audit Board to carry out their duties, namely, through close
collaboration with the remaining bodies and commissions of the Company and the External Auditor
and Statutory Auditor.
32. Identification, as applicable, of the members of the Audit Board, the Audit Committee,
the General and Supervisory Board or the Committee for Financial Affairs who are deemed
independent, in accordance with article 414 (5) of the Companies Code; reference may be
made to the item in the report where this information is contained in accordance with
item 19.
The members of the Audit Board José Manuel Oliveira Vitorino (Chairman) and Maria da Graça Torres
Ferreira da Cunha Gonçalves are considered by Navigator to be independent, in the light of the
criteria laid down in Article 414 no. 5 of the Companies Code, with the former serving his second
term in office and the latter her first.
As a result of the appointment of Gonçalo Nuno Palha Gaio Picão Caldeira at the Annual General
Meeting of May 24, 2018 for a fourth term in office as a member of the Audit Board, he became a
non-independent member of the said corporate body, as is clear from the application of Article
414.5(b) of the Companies Code.
33. Professional qualifications, as applicable, of each of the members of the Audit Board,
the Audit Committee or the General and Supervisory Board or the Committee for Financial
Affairs and other relevant biographical details; reference may be made to the item in the
report where this information is contained in accordance with item 21.
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JOSÉ MANUEL OLIVEIRA VITORINO (Chairman of the Audit Board)
José Manuel Vitorino graduated in Business Administration and Organisation from the University of
Lisbon’s Instituto Superior de Economia. He is qualified as a statutory auditor, and in the executive
training programme of Universidade Nova de Lisboa.
He lectured at the Faculty of Economics, University of Coimbra, where he remained until 1980,
having then joined PricewaterhouseCoopers, where he divided his time between audit and financial
consultancy work, both in Portuguese and foreign companies and groups, and also on projects where
he worked with international teams. After several years as a partner, he left PricewaterhouseCoopers
in 2013, as he reached the age limit for his position. He also served as Chairman of the Audit Board
of Novo Banco, S.A. until 2017 and currently serves as a member of the Audit Board of ANA –
Aeroportos de Portugal, S.A.
He has served as a member of the Audit Board of The Navigator Company since 2015 and that of
Semapa and Secil since 2016, while performing duties as Chairman of such oversight bodies since
2018.
GONÇALO NUNO PALHA GAIO PICÃO CALDEIRA (Full member of the Audit Board)
Gonçalo Picão Caldeira has a degree in law and has been registered with the Portuguese Bar
Association since 1991, after completing his legal internship. He holds an MBA from Universidade
Nova de Lisboa and also attended a property management and valuation course at ISEG. He has
worked in property management and development through family companies since 2004. Prior to
this, he worked for the BCP Group from 1992 to 1998, and with the Sorel Group from October 1998
to March 2002. He also worked for Semapa from April 2002 to February 2004. He has sat on the
Company’s Audit Board since 2007, and on the Audit Boards of Semapa, since 2006, and of Secil,
since 2013.
MARIA DA GRAÇA TORRES FERREIRA DA CUNHA GONÇALVES (Full member of the Audit Board)
Maria da Graça Torres Ferreira da Cunha Gonçalves has a degree in business administration and
organisation from Instituto de Ciências do Trabalho e da Empresa (ISCTE), and is a chartered
accountant. From June 1978 to November 1985, she held various positions in the areas of general
accounting, analytical accounting, and financial planning and analysis at Magnetic Peripherals Inc.
Portugal. She was a financial analyst at Shell Portuguesa, S.A. from December 1985 to November
1989. From December 1989 to July 1994, she was controller and CFO of United Distillers Comp.
Velha, Lda., in charge of the entire financial, IT and purchasing area. From August 1994 to July
1995, she was CFO of ITT Automotive Europe GmbH, in charge of the entire financial and staffing
area. From August 1995 to June 2015, she was Back Office Director at Pernod Ricard Portugal, in
charge of the areas of finance, management control, purchasing, logistics, production, human
resources and legal. In 2001 and 2002, she was in charge of the acquisition process of Seagram
(Sandeman & Co.) in Portugal. Subsequently, in 2005 and 2006, she was in charge of the areas of
finance and human resources in the acquisition process of Allied Domecq (Cockburn Smithes & Co.).
She was Deputy Chairperson at the sector’s association, ACIBEV, as a representative of Allied
Domecq. She is a member of the Company’s Supervisory Board, and of the Supervisory Boards of
Semapa and Secil, since 2018.
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b) OPERATION
34. Existence of operating regulations, and place where they can be consulted, as
applicable, of the Audit Board, the Audit Committee, the General and Supervisory Board
or the Committee for Financial Affairs; reference may be made to the item in the report
where this information is contained in accordance with item 24.
The Company’s Audit Board has internal operating regulations, which are published at the Company’s
website in the investors’ area (corporate governance section), freely available for consultation at
http://www.thenavigatorcompany.com/ Investidores/Governo-da-Sociedade.
The annual report issued by the Audit Board on its work during the year is published in conjunction
with the Report & Accounts and is available at the Navigator Group’s website.
35. Number of meetings held and rate of attendance at meetings of the Supervisory Board,
the Audit Committee or the General and Supervisory Board and the Committee for
Financial Affairs, as the case may be; reference may be made to the item in the report
where this information is contained in accordance with item 25.
In 2021, the Audit Board held fifteen meetings. The relevant agendas and minutes were forwarded
to the Chairman of the Board of Directors and made available to the Risk Management Division.
Its members were in attendance at all meetings held during the performance of their duties, resulting
in an attendance rate of 100%.
The number of meetings of the Audit Board is freely available at the company’s website at
http://www.thenavigatorcompany.com/Investidores/Governo-da-Sociedade.
Detailed minutes are drawn up for the Audit Board’s meetings, in accordance with its Rules of
Procedure.
36. Availability of each of the members of the Audit Board, the Audit Committee or the
General and Supervisory Board and the Committee for Financial Affairs, as the case may
be, indicating offices held simultaneously in other companies, inside and outside the
group, and other relevant activities carried out by the members of these bodies during the
period; reference may be made to the item in the report where this information is
contained in accordance with item 26.
This information is available in item 33 on the professional qualifications and other relevant
biographical details of each member of the above statutory bodies.
The members of the Audit Board have the appropriate availability to perform the duties entrusted
to them.
In addition to the activities listed in item 33, the members of the Audit Board also hold corporate
office in other companies as detailed below:
JOSÉ MANUEL OLIVEIRA VITORINO
Offices held in Navigator Group companies:
No offices held in other companies belonging to the same group as Navigator.
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Offices held in other companies/entities:
− Member of the Audit Board of ANA Aeroportos de Portugal, S.A.
− Chairman of the Audit Board of Secil - Companhia Geral de Cal e Cimento, S.A.
− Chairman of the Audit Board of Semapa - Sociedade de Investimento e Gestão, SGPS, S.A.
GONÇALO NUNO PALHA GAIO PICÃO CALDEIRA
Offices held in Navigator Group companies:
No offices held in other companies belonging to the same group as Navigator.
Offices held in other companies/entities:
− Director at Linha do Horizonte Investimentos Imobiliários, Lda.
− Director at Loftmania – Gestão Imobiliária, Lda.
− Member of the Audit Board of Secil Companhia Geral de Cal e Cimento, S.A.
− Member of the Audit Board of Semapa Sociedade de Investimento e Gestão, SGPS, S.A.
MARIA DA GRAÇA TORRES FERREIRA DA CUNHA GONÇALVES
Offices held in Navigator Group companies:
No offices held in other companies belonging to the same group as Navigator.
Offices held in other companies/entities:
− Member of the Audit Board of Secil Companhia Geral de Cal e Cimento, S.A.
− Member of the Audit Board of Semapa – Sociedade de Investimento e Gestão, SGPS, S.A.
c) POWERS AND RESPONSIBILITIES
37. Description of applicable procedures and criteria for the supervisory body’s
involvement in hiring additional services from the external auditor.
In accordance with the rules established in article 77 no. 10 and 11 of the Statute of the Association
of Statutory Auditors, approved by Law no. No. 140/2015 of September 7, in the version in force
until December 31, 2021, in the Internal Regulations of the Audit Board, in the version in force, and
in the Internal Regulations on the approval of non-audit services, approved on June 1, 2016, the
hiring of non-audit services that are not required by law nor constitute prohibited services, to the
External Auditor and Statutory Auditor or to any member of their network, by Navigator or by
companies in a controlling or group relationship with it, is subject to prior approval by Navigator's
Audit Board, with due justification.
As such, proposals submitted are handed over to the Supervisory Board for analysis and validation,
with a view to essentially ensuring (i) that the services in question are permitted, (ii) that the
provision of services will not affect the independence and impartiality of the External Auditor, as
needed to provide auditing services, (iii) that the combined value of fees for the provision of services
other than auditing services does not exceed the limit of the Bylaws of the Association of Statutory
Auditors (EOROC), and (iv) that the additional services in question are provided with a high degree
of quality and independence.
The Audit Board has thus applied the rules set out in the Statute of the Order of Statutory Auditors,
approved by Law 140/2015 of September 7, in the version in force until December 31, 2021, and
observes the internal procedures instituted in the Internal Regulations on the approval of non-audit
services to ensure that the legal provisions are complied with.
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38. Other duties of the supervisory bodies and, if applicable, of the Committee for
Financial Affairs.
1. The Audit Board has the powers that result from the law, with no delegated powers or
responsibilities. The functions and duties of the Audit Board are expressly set out in its Internal Rules
of Procedure, which governs the exercise of the functions, the chairman, the frequency of the
meetings, functioning and framework of duties of its members and determines that detailed minutes
of its meetings are written. These Rules are published the Company’s website, at
http://www.thenavigatorcompany.com/Investidores/Governo-da-Sociedade.
In accordance with the Rules of Procedure, amended on December 2020, the Audit Board ensures
the timely and suitable flow of information, especially regarding the respective calls for meetings
and minutes, required for the performance of the functions, determined by law and the bylaws, of
each of the remaining corporate bodies and committees.
2. In the performance of its duties, without prejudice to other powers assigned to it by law, in
particular by Article 420 of the Companies Code, in accordance with its Rules of Procedure, the Audit
Board has the following functions and powers:
a. To supervise the management of the Company, including, in this context, annually
assessing the budget, the internal functioning of the Board of Directors and its
committees, as well as the relationship between the various bodies and committees
of the Company;
b. To ensure compliance with the law and the articles of association;
c. To verify that books, accounting records and the respective supporting documents
are in order;
d. To verify, when it deems to be appropriate and as it sees fit, the state of cash and
inventories of any type of goods or assets belonging to the Company or received by
the same as security, deposit or on another basis;
e. To verify the accuracy of the financial statements;
f. To verify that the accounting policies and valuation criteria adopted by the Company
lead to a correct valuation of the Company’s assets and results;
g. To draw up an annual report on its audit activities and issue its opinion on the report,
accounts and proposals submitted by management;
h. To convene the General Meeting when the Chairman of the meeting fails to do so;
i. To evaluate and comment on strategic lines and risk policy prior to their final
approval by the management body;
j. To supervise and evaluate the effectiveness of the internal control system, including
the functions of risk management and internal audit, being able to propose any
necessary adjustments;
k. To issue an opinion on the work plans and resources allocated to the services of the
internal control system, including the functions of risk management and internal
audit, and may propose any necessary adjustments;
l. To receive reports of irregularities (whistleblowing) submitted by shareholders,
collaborators of the Company or others;
m. To contract the provision of services by experts to assist one or more of its members
in the exercise of their functions; whereas the contracts with and remuneration to
be paid to such experts shall be in line with the importance of the matters entrusted
to them and the economic situation of the Company;
n. To supervise the appropriateness of the procedure for preparation and disclosure of
financial information by the Board of Directors, including the adequacy of the
accounting policies, estimates, evaluations, relevant disclosures and a consistent
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implementation thereof in each year, that shall be fully documented and
communicated;
o. To propose to the General Meeting the appointment of the Statutory Auditor and its
remuneration, indicating the criteria which governed the selection of the statutory
auditor and describing the auditor’s selection procedure it conducted;
p. To propose to the General Meeting the dismissal of the Statutory Auditor or the
termination of the services provision agreement, whenever there are justifiable
grounds for that purpose;
q. To supervise the auditing of the Company’s financial statements and reports;
r. To supervise the independence of the Statutory Auditor, namely with regard to the
provision of additional services, and assess, yearly, the work carried out by the
Statutory Auditor and its suitability for the performance of the tasks assigned to it;
s. To confirm if the disclosed report on the corporate governance structure and
practices includes the information listed in Article 245-A of the Portuguese Securities
Code;
t. To issue a previous and binding opinion on the Regulation on Conflicts of interests
and Related Party Transactions to be drawn up and approved by the Board of
Directors or, in the absence of such Regulation, on the definition to be made by
management, on whether the transactions that the company carries out with related
parties are carried out within the scope of its current activity and under market
conditions;
u. To issue, within a reasonable period, a prior opinion regarding any business with
related parties that are not carried out within the scope of the Company's current
activity and under market conditions;
v. To verify that the transactions with related parties that the Company carries out are
carried out within the scope of the Company's current activity and under market
conditions;
w. Comply with the other attributions contained in the law or in the articles of
association.
3. Concerning its powers, in the performance of its functions, and without prejudice to other powers
assigned to it by law, members of the Audit Board may, acting jointly or separately:
a. Obtain from the Management, for examination and certification, any books, records
and documents belonging to the Company, and verify the existence of any type of
assets, namely cash, securities and commodities;
b. Obtain from the Management or any of the Directors, information or clarifications on
the course of operations or activities of the Company or on any of its businesses;
c. Have access to all Company information and Staff for assessing performance, the
situation and the outlooks on the development of the Company, including, namely,
minutes, documents supporting decisions taken, convening notices and records on
the meetings of other corporate bodies, without prejudice to access to all other
documents or people who may be called upon to provide clarifications;
d. Obtain the reports made by the Company's internal control services, including
regarding the risk management and internal audit functions, in particular those on
matters related to the rendering of accounts, the identification or resolution of
conflicts of interest and the detection of potential irregularities;
e. Receive from the Company’s Statutory Auditor the clarifications which are necessary
for the annual assessment, by the Audit Board, of the work carried out by the
Statutory Auditor, and of its independence and its suitability for the performance of
the tasks assigned to it;
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f. To obtain from third parties who have carried out transactions on behalf of the
Company any information required for proper clarification of such transactions;
g. Attend meetings of the Board of Directors, whenever it deems appropriate.
4. In order to perform their duties, the Audit Board may be assisted by a technical team specially
appointed for this purpose and also by a specialised audit firm, and may contract the provision of
services by experts, to assist one or more of its members in the exercise of their duties.
5. In the performance of its functions, without prejudice to other powers assigned to it by law,
members of the Audit Board have the following duties:
a. To inform themselves and prepare Supervisory Board meetings diligently;
b. To participate in Board meetings and attend General Meetings and meetings of the
Board of Directors to which they are summoned by the Chairman or in which the
accounts for the financial year are to be discussed;
c. To exercise a conscientious and impartial supervision;
d. To keep confidential any facts and information which come to their knowledge by
virtue of their functions, without prejudice to the duties enshrined in paragraphs 2
and 3 of this Article;
e. To inform the Board of Directors of any verifications, inspections and measures,
undertaken and the results thereof;
f. To report, at the first general meeting held, all irregularities and inaccuracies verified
by this Board and whether it obtained all clarifications required for the performance
of its functions;
g. To record in writing all checks, inspections, complaints received, and measures taken
and their outcome;
h. To inform the Board of Directors of the results of the statutory audit and explain how
this has contributed to the integrity of the procedure for preparing and disclosing
financial information, as well as the role that the audit body played in this process;
i. To monitor the process for preparation and disclosure of the financial information
and submit recommendations or proposals to ensure their integrity;
j. To supervise the effectiveness of the internal quality control and risk management
systems and, if applicable, of the internal audit, with regard to the procedure for
preparing and disclosing financial information, while preserving its independence;
k. To monitor the annual statutory audit of individual and consolidated accounts,
namely the execution thereof;
l. To verify and monitor the audit firm’s independence in the exercise of its activity of
statutory audit or in the provision of other services legally permitted under the terms
defined in the applicable law and regulation, namely:
i. Demonstrate, during the selection process of the company of statutory
auditors, that this company has and has implemented internal mechanisms
that ensure independence and prevention of conflicts of interest;
ii. Regular verification by the audit firm that the aforementioned internal
mechanisms remain adequate and in compliance with the applicable
legislation and regulations;
iii. Obtain an annual declaration of independence;
iv. Annual communication of the different audit services that have been
provided;
v. Reasoned proposal regarding the possible extension of the functions of the
audit firm, beyond the maximum legal period, with the weighting of the
respective conditions of independence and the advantages and costs
associated with their replacement;
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vi. Communication from the audit firm on exceeding the threshold in terms of
fees; and
vii. Joint analysis of possible threats to its independence and the application of
safeguards to mitigate them;
m. To select audit firms to submit to the General Meeting for election and justifiably
recommend one of them for approval;
n. To treat in confidence any documents of the Company which they have access to in
the exercise of their functions, including the content of the Board meetings and of
the other corporate bodies in which they participate and the preparatory information
of the meetings; and
o. To provide other corporate bodies and committees, in accordance with legal
statutory requirements, with all necessary information and documents required for
the exercise of legal and statutory functions of such bodies and committees.
6. The members of the Audit Board must refer to the Public Prosecution Office any criminal offences
that they are aware of and which constitute a public crime.
7. If any of the members of the Audit Board becomes aware of any difficulties in the pursuit of its
corporate purpose, they must inform the Statutory Auditor immediately.
In addition, the Supervisory Board is the main correspondent of the Statutory Auditor and Chartered
Accountant of the Company and has access to and direct knowledge of the activities carried out by
it. The Company believes that this supervisory activity by the Audit Board, without any interference
from the Board of Directors, of the works of the Statutory Auditor and Chartered Accountant,
provided it does not jeopardise the timely and adequate knowledge of the Board of Directors,
ultimately responsible for Company matters and financial statements, in what concerns these tasks.
In compliance with this principle, reports of the Statutory Auditor and Chartered Accountant are
addressed to the Supervisory Board and discussed in joint meetings of the Supervisory Board with
a member of the Board of Directors, where the Supervisory Board informs, notably, of the results of
the statutory audit, ensuring that conditions required to provide audit services exist within the
Company. It is also the responsibility of the Supervisory Board to propose and monitor, with support
from internal divisions of the Company, the fees of the Statutory Auditor and Chartered Accountant.
The Statutory Auditor and Chartered Accountant also cooperates with the Supervisory Board,
providing, immediately and in accordance with applicable laws and regulations, information on
irregularities relevant for the exercise of its functions that the Audit Board has detected, as well as
any issues arising in the exercise of its duties.
Under the terms of the Audit Board's regulations, the Statutory Auditor and the Company maintain
permanent and adequate communication channels, namely through regular meetings with the Board
of Directors, the Audit Board and with the services and departments with responsibilities in matters
under analysis and with the consequent discussion and analysis of all the information that is pertinent
in the scope of the exercise of the corresponding activity.
IV. Statutory Auditor
39. Identification of the statutory audit firm and the partner and statutory auditor
representing the same.
The Company’s acting Statutory Auditor is KPMG & Associados – Sociedade de Revisores Oficiais de
Contas, S.A., registered with the Association of Statutory Auditors (Ordem dos Revisores Oficiais de
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Contas) under no. 189 and registered with the Portuguese Securities Market Commission (CMVM)
under no. 20161489, represented by Rui Filipe Dias Lopes (statutory auditor [ROC] no. 1715).
The alternate Statutory Auditor is Vítor Manuel da Cunha Ribeirinho (statutory auditor [ROC] no.
1081).
40. Indication of the consecutive number of years for which the statutory audit firm has
held office in the Company and/or Group.
The Statutory Auditor referred to in item 39 has been working with the Company since 2018, and
until 2021 was represented by the partner Paulo Alexandre Martins Quintas Paixão (ROC no. 1427).
41. Description of other services provided by the statutory auditor to the company.
In addition to the statutory auditing services provided to the Company and its subsidiaries, the
Statutory Auditor also provided other assurance services, pursuant to Law 140/2015, of 7
September.
The amounts paid for these services over the course of 2020 are detailed in items 46 and 47 below.
V. External Auditor
42. Identification of the external auditor appointed for the purposes of article 8 and the
partner and statutory auditor representing such firm in the performance of these duties,
together with their respective registration number with the Portuguese Securities Market
Commission.
The Company’s external auditor is KPMG & Associados – Sociedade de Revisores Oficiais de Contas,
S.A., registered with the Association of Statutory Auditors (Ordem dos Revisores Oficiais de Contas)
under no. 189 and registered with the Portuguese Securities Market Commission (CMVM) under no.
20161489, represented in the performance of these duties by partner Rui Filipe Dias Lopes (statutory
auditor [ROC] no. 1715).
43. Indication of the consecutive number of years for which the external auditor and the
respective partner and statutory auditor representing the same in the performance of
these duties has held office in the Company and/or Group.
The external auditor and its partner statutory auditor representing it in the performance of these
duties were appointed by the General Meeting in September 2017 to provide services beginning on
1 January 2018. They were re-elected for the position at the General Meeting held on 9 April 2019.
Thus, 2021 was the fourth year of exercise of functions with the Company and/or the Group.
44. Policy on rotation of the external auditor and the respective partner and statutory
auditor representing the same in the performance of these duties, and the respective
frequency of rotation.
The Statute of the Chamber of Statutory Auditors, approved by Law 140/2015, of 7 September, took
effect on 1 January 2016 and established new mandatory legal rules on the rotation of statutory
auditors in companies of public interest, such as Navigator.
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Under said legal rules, and considering PricewaterhouseCoopers & Associado - SROC, Lda. had
reached the time limit on serving as statutory auditor to the main shareholder SEMAPA, with which
the Company consolidates its accounts, in 2017, the Audit Board, supported by the management
and divisions of the companies involved, conducted an organised procedure, open to a number of
firms, for selecting the Statutory Auditor, for 2018, until the end of term in office of the other
corporate bodies. The tenders submitted were analysed and assessed by the Supervisory Board on
the basis of the criteria adopted in the selection process.
As a result of this selection procedure, the Supervisory Board submitted to the shareholders a
recommendation and proposal to appointment KPMG & Associados - Sociedade de Revisores Oficiais
de Contas, S.A. as External Auditor, which was approved by the shareholders at the General Meeting.
45. Indication of the body responsible for assessing the external auditor and the intervals
at which this assessment is conducted.
Within the scope of its oversight and auditing function for the Company’s accounting documents, the
Audit Board continuously evaluates the external auditor and the Statutory Auditor, particularly with
regard to the preparatory work for its Report and Opinion on the annual accounts.
In addition to its responsibility for proposing the appointment of the statutory auditor and its
respective remuneration to the General Meeting, the Audit Board is responsible for assessing and
monitoring all audit work conducted by the external auditor on an ongoing basis, and has the
possibility of proposing its dismissal with due cause at General Meetings, when the proper formalities
are complied with. To this end, the Audit Board holds frequent meetings during the year with the
statutory auditor and external auditor, and a permanent and established relationship is established
between the Board and the auditor, the Board being the final recipient of the auditor’s reports,
including when matters related to accountability and the detection of potential irregularities are at
stake. At these meetings the Audit Board is able to assess all the accounting and financial information
it deems necessary at any time and is able to request from them any information it deems necessary
for its supervisory functions.
Furthermore, in the exercise of its supervisory duties and in its audit of the Company’s accounts,
the Audit Board conducts an annual appraisal of the performance of the external auditor in
connection with the preparatory work on its Report and Opinion on the annual accounts, and also
verifies its independence, by obtaining written confirmation of the independence of the auditor as
provided for in article 62 of the Bylaws of the Association of Statutory Auditors (EOROC),
confirmation of compliance with requirements for rotation of the partner responsible and identifying
threats to independence and safeguards adopted to mitigate these threats.
To this extent, the Supervisory Board has unrestricted access to the documentation produced by the
Company’s auditors and may request that they provide any additional information deemed
necessary. It is also the first recipient of the final reports prepared by the external auditors.
Pursuant to article 420 (2) b) of the Companies Code, the Supervisory Board is responsible for
proposing the appointment of the Company’s Statutory Auditor to the General Meeting.
46. Identification of work, other than auditing, done by the external auditor for the
company and/or for companies in a control relationship with it, together with internal
procedures for approving the hiring of such services, specifying the reasons for doing so.
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As described in point 47, in the year ended on 31 December 2020, KPMG, a company of statutory
auditors, and other entities belonging to the same network, were billed the fees related to the
statutory audit of annual accounts, limited review of interim accounts and reliability assurance
services and services other than accounts. The breakdown of billing for these services is detailed
below in point 47.
The services indicated as “assurance services” relate to the issue of reports on financial information
and verification services of the Sustainability Information. With regard to services other than
auditing, these refer to opinions on merger operations as part of the Statutory Auditor's duties at
companies in the Navigator Company Group and the provision of due diligence services to a number
of companies in a group as part of a potential acquisition by Navigator. As stated above these
services do not fall within the list of prohibited services set out in Article 77(8) of the EOROC, and,
the legal requirements of independence, threats to this independence, and the safeguard measures
to limit these threats by the auditor were guaranteed.
In 2021, the provision of non-audit services by the Statutory Audit Firm to the Company and
subsidiaries is regulated in the Internal Regulation on the approval of non-audit services, approved
on June 1, 2016, which provides for non-audit services that cannot be provided by the SROC and
processes for prior control and authorization of such services by the Audit Board. The regime defined
in that internal rule is fully consistent with the provisions of the Statute of the Association of
Statutory Auditors, approved by Law 140/2015, and the Legal Regime of Audit Supervision,
approved by Law 148/2015.
47. Indication of the annual remuneration paid by the company and/or controlled,
controlling or group entities to the auditor and other individuals or organisations
belonging to the same network, specifying the percentage relating to the following
services (for the purposes of this information, the concept of network is as defined in
Commission Recommendation No. C [2002] 1873 of 16 May 2002).
Values in euros
By the Company *
Value of audit services
104,746
40%
Value of assurance services
87,875
33%
Value of tax consultancy services
0
0%
Value of services other than account review
72,250
27%
By entities that are part of the Group *
Value of audit services
124,970
98%
Value of assurance services
0
0%
Value of tax consultancy services
0
0%
Value of services other than account review
2,000
2%
* Including individual and consolidated accounts
In 2021, services other than audit services billed to the company or to entities that maintain a
dominant relationship with it by the External Auditor and Statutory Auditor, including entities that
are in a participation relationship with or that integrate the same network, represented 41% of the
total services provided.
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C. INTERNAL ORGANISATION
I. Articles of Association
48. Rules applicable to amendment of the Company’s Articles of Association (article 245-
A (1) (h)).
The Company’s Articles of Association contain no specific rules on amendments of the articles, so
the general supplementary rules contained in the Companies Code therefore apply here.
II. Reporting of irregularities (whistleblowing)
49. Means and policy for reporting of irregularities (whistleblowing) occurring in the
company.
The Company has “Whistleblowing Regulations” designed to provide a procedure and rules for
communication by any stakeholders, be they Employees, clients, suppliers, partners or any other
organisations or individuals which have dealings with the Company or its subsidiaries, of any
irregularities allegedly occurring in the Navigator Group.
In these Regulations, “irregularity” is defined as any alleged breach of provisions under the law,
regulations and/or Articles of Association occurring at the The Navigator Company Group.
Irregularities also include non-compliance with ethical principles and duties per the Company’s Code
of Ethics.
These Regulations lay out the general obligation of reporting alleged irregularities and establish a
multidisciplinary team in charge of handling them. The rules of procedure of the company’s boards
and committees also foresee the adoption of and compliance with such Regulations.
This multidisciplinary team, comprised of Legal Services and the Risk Management Division, must
investigate all facts needed to properly assess the alleged irregularity. This process ends with the
report being filed or submission to the Board of Directors or the Executive Committee, depending
on whether a member of a statutory body is implicated or not, of a proposal for application of the
measures most appropriate in light of the irregularity in question. The Audit Board must also be
informed of all reports received.
The Regulations also contain other provisions, namely with regard to ensuring the confidentiality of
whistleblowing, the non-prejudicial treatment of reporting stakeholders and the dissemination of the
respective scheme at the Company.
During the 2021 financial year, two potential irregularities were reported. For these, the mechanisms
for assessing the facts reported were, or are being, duly followed, the respective investigation and
the decision on measures to be taken. The irregularities reported in 2021 relate to issues concerning
the alleged hiring of workers and potential differences of understanding in relations with a forestry
supplier.
It should be noted that, in accordance with the mechanisms in place, the proceedings were
unsuccessful and were closed.
It should also be noted that the 2020 criminal investigation into alleged corruption in the activity of
receiving wood from one of our mills is being handled. In fact, during 2021 and as a result of the
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aforementioned investigation, NVG dismissed 28 employees with just cause, and, following the
dismissals with just cause, the employees filed the appropriate judicial actions to challenge the
regularity and lawfulness of the dismissals.
Therefore, at the present date, the NVG is monitoring and supporting the due diligence both from
the labor point of view, given the ongoing legal actions, and from the criminal point of view, taking
into account the developments of the criminal case, together with the authorities.
III. Internal control and risk management
50. People, bodies or committees responsible for internal audits and/or implementation
of internal control systems.
The Company regards Risk Management as a core process in its business activities. A system for
permanent monitoring of risk management has therefore been implemented in the The Navigator
Company Group, involving all organisational units, DGR and the Audit Board.
This system is based on a systematic and explicit assessment of business risks by all organisational
divisions in The Navigator Company Group and identification of the main controls in place in all
business processes. This platform will allow the Company to assess on an ongoing basis the extent
to which its internal control system is appropriate to the risks regarded as most critical from time to
time.
As part of this periodic assessment, an annual internal audit programme has been instituted, to be
implemented by DGR in conjunction with each division involved, to monitor the appropriateness of
the internal control system to the perceived risks and to help the organisation to implement
programmes to improve this system.
This risk governance system is headed by the Audit Board and the Board of Directors, as detailed
below.
Board of Directors
The Board of Directors has the following responsibilities:
− Review and approve the risk policy defined for The Navigator Company Group, including risk
appetite and tolerance;
− Set goals with regard to the assumption of risks, and ensure that they are achieved;
− Approve the risk governance model adopted by The Navigator Company Group;
− Oversee application of the risk policy in The Navigator Company Group;
− Discuss and approve the Company’s risk policy and strategic plan, including the
determination of acceptable risk levels;
− Approve strategies for dealing with risks, especially very high risks;
− Promote a risk culture within The Navigator Company Group.
Audit Board
The powers and responsibilities of the Audit Board in this area are:
− To supervise the effectiveness of the risk management system, the internal control system
and the internal audit system, proposing adjustments as necessary;
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− To evaluate and propose improvements to the risk management and internal control model,
processes and procedures
− To monitor the execution of the activity plans in the scope of risk management and internal
control;
− To monitor, evaluate and express an opinion on the strategic guidelines, objectives and risk
policy defined by the Board of Directors, proposing and implementing periodic control
mechanisms and procedures with a view to ensuring that the risks effectively incurred by
the company are consistent with the objectives set by the management body;
− To issue an opinion on the work plans and resources allocated to the internal control services,
including the control of compliance with the rules applied to the Company and internal audit;
− To be informed of the internal control and risk assessment reports issued by the SROC and
to propose the adoption of measures deemed necessary or appropriate in light of such
reports;
− To be informed of the risk management follow-up reports issued by the Risk Management
Department and to propose the adoption of the measures deemed necessary or convenient
in light of those reports with regard to internal control;
− To be aware of and express an opinion on the activity carried out in this area by the Risk
Management Department, on the resources allocated to the services that also perform
internal control functions, being the recipient, if any, of reports or opinions made by these
services when matters relating to accountability, the identification or resolution of conflicts
of interest and the detection of potential illegalities and irregularities are at issue.
Chief Executive Officer
The Chief Executive Officer has the following responsibilities:
− Define The Navigator Company Group’s risk policy, including its risk appetite;
− Take the risk policy into account when setting the Navigator Group’s strategic objectives;
− Provide the means and resources to assure that risk management is effective and efficient;
− Approve the risk management model, processes and procedures;
− Define the risk management governance model to be adopted by the Group, including the
division of responsibilities;
− Approve activities plans in the field of risk management;
− Ensure that the main risks to which The Navigator Company Group is exposed are identified
and reduced to acceptable levels, in line with the risk appetite and tolerance defined;
− Discuss and approve options for handling risks where the residual risk level is in excess of
the risk tolerance levels;
− Oversee and review the work of the Risk Management Division, in the field of risk
management;
− Report on results to the Board of Directors.
Risk Management Division
The Risk Management Division has the following responsibilities in this area:
− Define the risk management model, processes and procedures;
− Draw up activities plans in the field of risk management;
− Identify and implement the means and resources (human, procedural and technological) to
facilitate risk identification, analysis and management;
− Warn of potential risks when strategic and operational objectives are being defined;
− Help define risk appetite and risk tolerance;
− Help decide on the division of responsibilities in the field of risk management;
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− Help identify and characterise risks;
− Monitor risk indicators;
− Help design risk mitigation measures;
− Assess the effectiveness of risk mitigation measures;
− Assess compliance with risk tolerance;
− Ensure compliance with action plans for mitigating risks;
− Draw up risk management monitoring reports.
Business Areas/Divisions
Business areas/divisions have the following responsibilities:
− Define risk tolerance;
− Identify and characterise risks;
− Define and monitor risk indicators;
− Define, implement and execute risk mitigation measures, in keeping with the risk mitigation
action plans;
− Conduct risk assessments and controls.
At the end of 2021, in accordance with the evolution of best international practices, the company
specifically established a Compliance Area, integrated in the Legal, Compliance and Public Affairs
Department, underlining the importance of pursuing a compliance policy that frames its activity
throughout the value chain, legal and regulatory, in a logic of transparency and justice, within the
scope of preventing and combating illegal acts.
This area is responsible for defining a Compliance Model focused on
− Prevention (prevent, detect and correct, starting by establishing unambiguous policies and
clear procedures);
− Continuous Improvement (by applying the PDCA methodology - Plan, Do, Check, Act).
The following actions are being developed in order to achieve the intended objectives with the
creation of this new area:
− Risk analysis, through the evaluation of the conduct problems that the Company may be
subject to according to its area of activity.
− Definition of the action plan, through the planning of a strategy for the implementation of a
compliance program, which should describe each step, how it will be carried out,
disseminated, monitored and the training of all employees.
− Promoting awareness campaigns and internal communication about the compliance program
and code of conduct.
− Contributing to the establishment of communication channels, through the creation and/or
dissemination of channels for denunciations and analysis of situations, open to Employees
and, to Clients and Suppliers.
− Involving and training all employees, making them aware of the responsibilities of their
actions.
− Monitoring the operation of each of the pillars of the compliance program, through
monitoring the implementation and testing to ensure its effectiveness.
− Evaluation and correction of problems.
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51. Description of the lines of command in this area in relation to other bodies or
committees; an organisational chart may be used to provide this information.
It follows clearly from the previous section that risk management in the Company is the responsibility
of the entire organisation; specific duties are detailed above.
In terms of the hierarchical and functional structure, it should be noted that, in addition to reporting
to the Chief Executive Officer, the Internal Audit Division (Risk Management Division) also reports
to the Supervisory Board, thereby providing the support needed for the Board to exercise its
responsibilities. The following chart illustrates the reporting and functional relations within the
Company:
52. Existence of other divisions with responsibilities in the field of risk control.
The Company has committees which complement the work of the Audit Board and the Chief
Executive Officer with regard to control and monitoring of specific risks:
− Risks Analysis and Monitoring Committee – pronounces on asset risk prevention
systems in place in the Company, in close connection with the risk governance system in
the Navigator Group; and assesses the suitability of asset risk insurance policies in force in
the Navigator Group, and the individual policies.
− Corporate Governance Committee – oversees application of the Group’s corporate
governance rules, and also the Code of Ethics and Conduct, as well as supervising internal
procedures relating to matters of conflicts of interest, in particular with regard to relations
between the Group and its shareholders or other stakeholders.
− Sustainability Forum – implements corporate and strategic policy on questions of social
and environmental responsibility, and prevention of potential risks in these areas.
− Ethics Committee – oversees compliance with the requirements of the Code of Ethics and
Conduct and identifies situations which constrain compliance with this code.
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53. Identification of the main risks (economic, financial and legal) to which the company
is exposed in the course of its business.
In the course of its activity, The Navigator Company Group is exposed to a variety of economic,
financial and legal risks. The following is a selection of the principal risks identified:
RISK
(Non-exhaustive selection)
SUMMARY DESCRIPTION
Industrial workplace accidents
Risk of the occurrence of accidents at work potentially resulting in
injuries, incapacity or fatalities.
Increase in transport costs
Risk of increase in pulp, paper or tissue transport costs, which may
result in a reduction in sales margins or the need to increase prices
charged to customers.
Higher demand for raw materials
(wood)
Risk associated with an increase in demand for raw material (wood) due
to competitors expanding their capacity, triggering an increase in wood
prices and a consequent increase in production costs.
Foreign exchange
Risk of variation in the exchange rate between the Euro and other
currencies, which can significantly affect the Group's results, either
through revenues (sales) or costs (purchases).
Environmental consequences of
operations
Risk of occurrences with adverse environmental consequences, directly
or indirectly attributed to industrial activities, potentially resulting in a
breach of environmental legislation or customer and stakeholder
dissatisfaction, namely regarding the local community.
Forest damage
Risk of forest damage resulting from natural or man-made causes, which
may jeopardise the quantity of raw materials needed for the Group's
activities and consequently lead to increased costs or loss of revenues.
Energy business less competitive
due to regulatory issues
Risk of less competitive terms for power sales, caused to a certain extent
by the regulatory environment; volatility in regulation of sector may lead
to sudden loss (total or partial) of the contribution from this business to
the Group's profitability.
Reduction in paper demand due to
technological substitution
Risk associated with a reduction in demand for the products sold by the
Group, which may result in a significant reduction in sales.
Cybersecurity Flaws
Risk associated with security breaches in the company's computer
systems that allow undue and/or unlawful activities by third parties to
the detriment of the company.
Failure in wood supplies
Risk of failure in wood supplies, which may result in production
stoppages and consequent increase in costs or lost revenues.
Equipment failure
Risk of failure in the operation of production equipment, which may
result in production stops and a consequent increase in costs or loss of
revenue.
Data security failures
Risk of failures in data security relating to the confidentiality, availability
and integrity of data over the process of acquisition, processing,
communication, storage and destruction, potentially leading to
information losses/leaks, fraud, discontinuity of operations.
Shortage of certified raw material
Risk associated with inability to obtain certified raw material, potentially
resulting in a loss of value in end product and consequently in sales
values.
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RISK
(Non-exhaustive selection)
SUMMARY DESCRIPTION
Fraud
Risk of fraud in processes involving movements in funds/valuables,
causing losses to the Group.
Non-compliance with legislation
and regulations
Risk of non-compliance with legislation on tax, employment,
environmental, accounting and/or other matters or with industry
regulations. Non-compliance with accounting standards.
Irregularities in purchases and
payments
Risk of inefficient or inappropriate processes in purchases of materials
and services critical for the business, resulting in items being out of
stock, financial losses, non-performance by and in relation to suppliers
or occurrence of situations of fraud.
Occurrence of fires or other natural
disasters
Risk of loss of assets or even personal injury due to fires or other natural
phenomena.
Pandemic
Risk of occurrence of pandemic events, with generalized impacts on the
Company’s business model, both in terms of the health and safety of its
employees, demand for its products, supply chains and others.
Loss of new
business/product/process
opportunities
Risk of failing to capture opportunities to develop new business,
products or processes due to ineffective R&D or technology scouting.
Loss of Forestry Yields
Risk of not being able to achieve full production potential of plantations
due to failure to apply best available forestry practices.
Losses on client credit
Risk of credit granted to customers, which may result in uncollectable
debts and a consequent increase in costs.
Pulp price
Risk associated with pulp price fluctuations, which may result in losses
for the Group.
Product quality
Risk associated with product quality, potentially resulting in consumer
dissatisfaction and a consequent drop in sales and lost revenues.
Reduction in paper price
Risk of pressure of competition, which may result in a drop-in sales or
reduction of market share.
Environmental restrictions on
industrial production
Risk of environmental restrictions on industrial production, which may
result in changes being required in the production process, thereby
increasing costs.
Legal restrictions on forestry
production
Risk of legal restrictions being imposed on forestry production, which
may result in a reduction in raw material output and a consequent
increase in acquisition costs.
Legal restrictions on paper imports
Risk of restriction on paper imports in producer countries through the
implementation of cost barriers, potentially resulting in a reduction in
sales.
Inadequate sourcing
Risk of inefficiency in managing the relationship with suppliers critical to
the business, or excessive dependence on them and which compromises
the quality of the services provided, limits the Group's operations or
increases operational inefficiencies.
Sustainability of forestry
operations
Risk of compromising the future operations of the organisation or of local
society and the business community, in general, due to over-use or
irrational use of the natural resources involved in forestry operations.
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RISK
(Non-exhaustive selection)
SUMMARY DESCRIPTION
Sustainability of industrial
operations
Risk of soil contamination or excess atmospheric emissions of noxious
gases, resulting directly or indirectly from the process of supply,
sanitation or processing of solid urban waste (e.g. accidents,
breakdowns, techniques used) or from natural causes such as floods or
droughts at intake points or serious pollution accidents.
Variation in energy prices
Risks associated with changes in the purchase and sale price of energy,
resulting in additional costs and lost revenues.
Many of the risk factors identified are beyond The Navigator Company Group’s control, especially in
the case of market factors which can have a fundamental and negative effect on the market price of
the Company’s shares, irrespective of the Navigator Group’s operational and financial performance.
The risks brought about by climate change, not directly listed in this table, are actually present in
many of the ones described here. In fact, and because these risks are, in our risk management
structure, directly linked to Navigator's business processes, with mitigation controls described and
subject to monitoring, climate change appears here dispersed on multiple fronts. For example, it is
obvious that the loss of forest productivity, forest damage or the risk of fire can to a large extent
stem from drought or other phenomena; the sustainability of industrial activity or the risk of
environmental restrictions on industrial production derive in part from the themes of
(de)carbonisation of economies, which Navigator intends to anticipate and which are extensively
addressed in another section of this report.
The Company kept its Crisis Management Office active throughout the year to continue to cope with
the pandemic crisis, ensuring the health conditions of all employees and allowing all our sites to
remain in full operation. This office met 75 times in 2021 and reviewed the Contingency Plan 11
times.
54. Description of the process of identification, assessment, monitoring, control and
management of risks.
The Navigator Company Group regards risk management as an essential decision-making tool,
involving permanent monitoring of the risks to which it is exposed, raising awareness throughout
the Group of a risk culture which seeks to avoid risks but also includes a positive approach to risk-
taking.
At the same time, the different divisions/areas benefit from risk management insofar as it allows
them to anticipate situations of uncertainty, mitigating the risks of adverse consequences and
making the most of risks which offer opportunities. Risk management also provides The Navigator
Company Group with greater and more sustained decision-making capability with regard to risk
events, allowing it to respond in a coordinated and integrated manner to risks with causes, impacts
or vulnerabilities which extend across more than one area.
Finally, from the point of view of Internal Audit and the control environment, risk management is of
particular importance, through the possibility of continuous assessment of the risk profile of The
Navigator Company Group and the strengthening of the level of internal control. Risk management
also makes an important contribution to Internal Auditing, pointing it to areas/processes where
business risks and concerns are greater “Risk-based Internal Audit”. As an immediate result of this
approach, it will be possible to plan and execute audits which take into consideration the risks most
relevant to the Navigator Group, by using an audit planning methodology.
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The Navigator Company Group’s risk management process follows the best internationally accepted
risk management practices, models and frameworks, including the “COSO II Integrated framework
for Enterprise Risk Management”, the “AS/NZS 4360 Risk Management Standard” and the ISO 31000
standard.
In putting together the risk management process, the ISO 31000 standard was taken into account
with regard to its main phases, while COSO II was used to organise and structure risks. This process
comprises a series of seven inter-related phases, which together comprise an interactive process of
ongoing improvement. This takes the form of a process of communication and consultation, and a
process of monitoring and review. The diagram below illustrates the flow for the risk management
process.
The entire process is built on a computer tool disseminated throughout the Company.
KPMG is in charge of external auditing. The Company’s External Auditor checks, in particular, the
application of remuneration policies and systems, and the effectiveness and functioning of internal
control procedures through the information and documents provided by the Company.
The respective findings are reported by the External Auditor to the Supervisory Board which then
reports the shortcomings detected, if any.
In view of the main risks identified, the Risk Management Division has retained its monitoring and
control function, which it exercises by conducting internal control.
In this context, during 2021, a set of internal control audits and follow-up on open issues from
previous audits were carried out. In particular, this year's work focused mainly on internal control
processes, namely the completion of the work on the processes of treatment of gaseous effluents,
including checks of the process of evaluation of biological assets and monitoring of internal control
issues identified by the External Auditor. Additionally, work was conducted to evaluate the internal
control system, in the context of information systems (IT), made possible by the integration of an
IT Auditor in the team in 2021.
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55. Main components of internal control and risk management systems implemented at
the company for the disclosure of financial information (article 245-A (1) (m)).
The Company has an internal control system for the preparation and disclosure of financial
information, operated by the Supervisory Board, in conjunction with other Divisions/Business Areas
in the Company, in particular the Accounting and Tax Division, the Management Control Division,
the Risk Management Division and the Investor Relations Office. In connection with this system, the
Supervisory Board assesses financial information each quarter on the basis of reports from the
Division preparing them and with support from the opinions formulated by the statutory and external
auditors. Meetings are held for this purpose with the Risk Management Division, members of the
Executive Committee, the Statutory Auditor and external auditor and the staff in charge of accounts
and management planning and control, in order to monitor the processes underway. The elements
of the internal control and risk management system are described in item 54.
IV. Investor Support
56. Office responsible for investor support, composition, functions, information provided
and contact details.
The Company has had an Investor Relations Office since November 1995, whose mission is to plan,
manage and coordinate all the activities needed to handle contacts, on a permanent and appropriate
basis, with the financial community – investors, shareholders, financial analysts and regulatory
authorities – and to publish the Company’s financial reports and any other information of relevance
to the stock market performance of Navigator shares in the capital market.
In keeping with the principles of coherence, integrity, regularity, fairness, credibility and opportunity,
the office helps to facilitate the investment decision-making process and sustained value creation
for shareholders.
The mission of the Investor Relations Office is to comply with its legal obligations of reporting to the
regulator and to the market, and in particular to disclose the Group’s profits and activities, reply to
information requests from investors, financial analysis and other agents and also to support the
Executive Committee in making public The Navigator Company’s strategy for growth and
development.
As such, this office adequately and rigorously handles the production, processing and timely
disclosure of information to the Management, shareholders, investors, other stakeholders, financial
analysts and the market in general.
The Investor Relations Office comprises of a single person, who also acts as market relations officer
and whose contact details are provided in the following item.
All mandatory disclosures, such as information on the Company name, its status as a public
company, registered offices and other details required by article 171 of the Companies Code, are
available on the Navigator Group’s website, at http://www.thenavigatorcompany.com/. Also
available in the investors’ section of the Navigator website, in Portuguese and English, are
disclosures of quarterly results, half-yearly and annual reports and accounts, together with the
respective statements and press releases, description of statutory bodies, the financial calendar, the
Company’s Articles of Association, notices of General Meetings, and all motions tabled for discussion
and vote at General Meetings, resolutions approved and statistics relating to attendance, together
with relevant developments.
2021 Consolidated Annual Report
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57. Investor Relations Officer.
The Company's investor relations officer was, until September 30, 2021, Joana de Avelar Pedrosa
Rosa Lã Appleton; presently, Ana Rosa Pinelo Esteves Canha is the investor relations officer and can
be contacted by phone at (+351) 219 017 434 or through the following e-mail address:
ana.canha@thenavigatorcompany.com. These contacts are available on Navigator's website, in the
Investors area.
58. Information on the proportion and response time to information requests during the
year or pending from previous years.
Information requests to the Investor Relations Office are primarily done by email, although some
phone calls are also received. All requests are answered or forwarded to the appropriate areas, with
an average response time of less than three working days.
Throughout 2021, approximately 75 information requests were received by email and 70 by
telephone, with 15 meetings and 5 virtual conferences with investors having been held. On 31
December 2021, all information requests received had been considered completed, so there were
no pending requests up to that date.
V. Website
59. Address(es).
Navigator’s website is at: http://www.thenavigatorcompany.com/.
60. Location information on the company name, public company status, registered office
and other items referred to in article 171 the Companies Code.
The above information is available in the Investors’ area of Navigator’s website at
http://www.thenavigatorcompany.com/Investidores/Accao-Navigator.
61. Location of the articles of association and operating regulations of boards and/or
committees.
The above information is available in the Investors’ area (Corporate Governance section) of
Navigator’s website at http://www.thenavigatorcompany.com/Investidores/Governo-da-Sociedade.
62. Location of information on the identities of members of statutory bodies, the market
relations officer and the Investor Support Office or equivalent structure, and their
respective duties and means of access.
The above information is available in the Investors’ area (specifically in the Corporate Governance
section) as well as in the area entitled “Profile” of Navigator’s website, respectively, at
http://www.thenavigatorcompany.com/Investidores/Governo-da-Sociedade and
http://www.thenavigatorcompany.com/Investidores/Contactos.
63. Location for consultation of financial statements and reports, which must be
accessible for no less than five years, together with the six-monthly corporate diary,
disclosed at the start of each semester, including, amongst other things, General
Meetings, disclosure of annual, half-yearly and (if applicable) quarterly accounts.
2021 Consolidated Annual Report
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Navigator’s quarterly, half-yearly and annual results, published since 2003, are available in the
Investors’ area (in the section entitled “Financial information”), at
http://www.thenavigatorcompany.com/Investidores/Informacao-Financeira. There is a specific tab
in the investors’ area for the corporate diary for the current year, available at
http://www.thenavigatorcompany.com/Investidores/Calendário.
64. Location for publishing the meeting notice for the General Meeting and all preparatory
and subsequent information related to it.
General Meeting notices and all related preparatory and subsequent information are available in the
Investors’ area (in a separate tab entitled “General Meetings”) at
http://www.thenavigatorcompany.com/Investidores/Assembleias-Gerais.
65. Location for publishing a historical archive of decisions made at the company’s general
meetings, share capital representation and voting results for the 3 preceding years.
The above information is available at the same location as information on General Meetings, i.e. in
the investors’ area (in a separate tab entitled “General Meetings”) at
http://www.thenavigatorcompany.com/Investidores/Assembleias-Gerais.
D. REMUNERATION AND REMUNERATION REPORT
Navigator opted, under the terms of article 26º-G paragraph 8 of the Securities Code, to include in
this chapter of the Corporate Governance Report the Report on Remuneration of the Navigator's
management and supervisory bodies, thus including in the relevant points of this chapter the
necessary information to comply with the referred to legal provision.
I. Powers to determine remuneration
66. Indication of the powers for determining the remuneration of statutory bodies,
members of the executive committee or managing director and company managers.
Powers to determine the remuneration of the Board of Directors and the Audit Board lie with the
Remuneration Committee.
Powers to determine the remuneration of company managers lie with the Board of Directors.
II. Remuneration Committee
67. Composition of the Remuneration Committee, including identification of individuals or
organisations contracted to provide support, and declaration regarding the independence
of each member and adviser.
The Remuneration Commission is composed of Mr. José Gonçalo Ferreira Maury, Mr. João Rodrigo
Appleton Moreira Rato and Mr. João do Passo Vicente Ribeiro, and does not have any persons hired
to assist it. The company may freely indicate the hiring of services that are deemed necessary or
convenient, within the company's budget limits. In this case, it must ensure that the services are
provided independently and that the respective providers are not hired to provide other services to
the company itself or to others that are in a group or control relationship without the express
authorization of the committee. The company considers that the composition of the Remuneration
2021 Consolidated Annual Report
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Committee ensures its independence in relation to the administration, as all its members are
independent.
With regard to Mr. José Maury, he left his post in 2014 at Egon Zehnder, a company specializing in
human resources with which Navigator and other related companies have had a number of
contractual arrangements over the years. In view of the time separation referred to, we consider
that the independence of this member of the Committee has not been jeopardized.
In the company, the Remuneration Committee provides all information or clarification to the
shareholders at the respective Annual General Meetings or at any other General Meeting if the
respective agenda includes a matter relating to the remuneration of members of the company's
governing bodies and committees, or if this is requested by shareholders, and does so through the
presence of at least one of its members. This was the case at the Annual General Meeting of May
11, 2021, which was attended by all members by electronic means.
68. Expertise and experience of the members of the Remuneration Committee in the field
of remuneration policy.
All of the Remuneration Committee’s members have extensive experience in and knowledge of
matters concerning remuneration for members of Statutory Bodies, due to the positions they have
held over the course of their professional careers.
Furthermore, one of the members of this Committee, Mr. José Maury, Chairman of this Committee,
has vast knowledge and experience in the matter of remuneration policy, having been for several
years a partner of the firm Egon Zehnder, which has wide experience and is a leader in executive
recruitment, and is a speaker on remuneration issues in several courses, which involves in-depth
and permanently updated knowledge of the evaluation processes and criteria and the associated
remuneration packages.
III. Remuneration structure
69. Description of the remuneration policy for members of the management and
supervisory bodies as referred to in article 2 of Law 28/2009 of 19 June.
The remuneration policy for the management and supervisory bodies ("Remuneration Policy") for
the year 2021, prepared by the Remuneration Committee, was approved at the Annual General
Meeting of May 11, 2021, and corresponds to Annex II of this Report, and there is no departure from
the procedure for applying the approved remuneration policy or any derogations to it.
70. Information on the means of structuring remuneration to align the interests of
managing board’s members with the long-term interests of the company, and how this is
based on performance assessment, discouraging the assumption of excessive risk.
The way in which the remuneration of the corporate bodies was structured and how the performance
assessment of the executive board was based in 2021 followed the model and the principles - duties
performed, the state of the company's affairs and market criteria - set out in the Remuneration
Policy for members of Navigator's management and supervisory bodies in force, namely in chapters
III and IV and V, to which reference is made. The process and the bodies involved in assessing the
performance of executive directors are described in point 24 above.
2021 Consolidated Annual Report
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The remuneration system in force in Navigator ensures its business strategy and also, in the long
term, the alignment of the interests of the members of the Board of Directors with the interests of
the company and its sustainability, in particular because the remuneration is fair and equitable within
the scope of the principles set out and because it links the members of the Board of Directors to
results through a variable remuneration component which is based on results but also takes into
account the behavioural skills of each director such as their alignment with the long-term interests
of the company and its sustainability.
In relation to remuneration components: (i) the remuneration of the members of the Board of
Directors consists of a fixed component, corresponding to an annual amount, payable throughout
the year, and, for the executive directors, also includes a variable component which may correspond
to a percentage not exceeding five per cent of the net profit of the previous year in accordance with
the articles of association, (ii) the remuneration of the members of the Audit Board corresponds to
an annual fixed amount, payable throughout the year, and (iii) the remuneration of the members of
the Board of the General Meeting consists only of a fixed amount determined according to the
meetings actually held.
With regard to the variable component of the remuneration of executive directors, this is based on
a target value applicable to each director and which is due under the conditions of performance of
the individual and of the company which correspond to the expectations and objectives previously
set. This target value is defined by weighting the principles mentioned above - market, specific
duties, the company's situation -, with emphasis on comparable market situations in functions of
equivalent relevance. The weightings of the actual performance against expectations and goals,
which determine the variation in relation to the target, are based on a set of KPIs, as mentioned in
point 25 above, quantitative and qualitative, related to the performance of the company (general
business indicators) and of the director in question (specific goals and behavioural indicators). Within
the general business indicators, EBITDA, net income, cash flow and Total Shareholder Return vs.
This system has ensured that Navigator has no discretionary variable remuneration.
In addition to the statutory limit on directors' profit sharing, the company also has mechanisms for
limiting variable remuneration: (i) the variable component is eliminated in the event of the results
showing a deterioration which is considered to be significant in the Company's performance in the
last reporting period or when such a deterioration may be expected in the period underway, and (ii)
the amount of the variable component assignable has a cap defined in order to prevent good
performance at a given moment, with immediate remuneration advantages for the directors, being
at the expense of good performance in the future. In view of the foregoing, it is clear that the criteria
for assigning remuneration contribute towards implementing the strategy defined by Navigator, and
also towards the long term interests and sustainability of the company.
Although the company has no independent remuneration mechanism with the specific aim of
discouraging excessive risk-taking, Navigator does not include in its directors' performance targets
any specific objectives which encourage excessive risk-taking, nor has it instituted any mechanism
which allows future remuneration to be paid in advance. Risk is a characteristic inherent to any act
of management and, as such, is unavoidably and permanently subject to consideration in any
management decision. Its qualitative or quantitative assessment as good or bad cannot be made in
isolation in itself, but only in its result in the performance of the company over time, thus being
confused with long-term interests, and therefore benefiting from the incentives to general long-term
alignment and sustainability referred to above.
2021 Consolidated Annual Report
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71. Reference, if applicable, to the existence of a variable remuneration component and
information on any impact on this from performance assessments.
The remuneration of Executive Directors effectively includes a variable component which depends
on a performance assessment, as described in the previous point and in the Remuneration Policy, in
particular in items 3 and 7 of chapter IV. Point 24. above describes the process and the corporate
bodies involved in the performance evaluation of executive directors.
The individual and qualitative component of the performance evaluation had, in corporate year 2021,
a 35% impact on this component of remuneration.
With regard to non-executive directors, it should be noted that although it is only composed of a
fixed part, it may be differentiated by virtue of the accumulation of functions and added
responsibilities, namely through the performance of functions in specialized committees or
commissions.
There are no maximum remuneration limits, except for the limit on management profit-sharing,
pursuant to the Articles of Association and no mechanism has been set up allowing the Company to
ask for the return of paid up variable compensation.
The remuneration of Audit Board members has no variable component.
72. Deferred payment of the variable remuneration component, with reference to the
deferral period.
In the Company there is no deferment of payment of the variable component of
remuneration.
73. Criteria applied in allocating variable remuneration in shares and on the continued
holding by executive directors of these shares, on any contracts concluded with regard to
these shares, specifically hedging or transferring risk, the respective limits and the
respective proportion represented of total annual remuneration.
In the Company, the variable remuneration includes no component consisting of shares.
74. Criteria applied on the allocating of variable remuneration in options and an indication
of the deferral period and value.
In the Company, the variable remuneration includes no component consisting of shares.
75. Main parameters and grounds for any annual bonus system and any other non-cash
benefits.
The criteria for setting annual bonuses are those relating to the variable remuneration as described
in item 7 of chapter IV of the Remuneration Policy, and in items 25 and 70 above.
In addition to the variable component that may be attributed to the members of the executive
management bodies, no other non-pecuniary benefits are attributed to the members of the
management and supervisory bodies, without prejudice to the means made available to them for
the performance of their duties and a health and personal accident insurance policy in line with
market practices.
2021 Consolidated Annual Report
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76. Main features of complementary or early retirement schemes for directors, and the
date of approval by the General Meeting for each individual.
In the company there are currently no complementary pension or early retirement schemes for
directors.
In 2019, a proposal was submitted to the Insurance and Pension Fund Supervisory Authority (ASF)
to alter the Pension Fund Contract whereby The Navigator Company Pension Plan was altered, so
that directors would no longer be entitled to a pension supplement under the Plan. This change was
approved by ASF in 2022 with retrospective effects from 2 December 2021.
However, under the terms of the Regulation of The Navigator Company Pension Plan (former Portucel
SA Pension Plan) in force until the amendment of the Plan, the Directors of the Company who
received as such, and who had fulfilled, at least, a complete mandate under the statutory terms,
were entitled, after retiring or in a situation of disability, if it occurred during the term of the
mandate, to a monthly supplement of retirement pension for old age or disability, respectively.
If the disability occurred after the term of office, the members in question of the Board of Directors
would only be entitled to the disability pension supplement if they were awarded the corresponding
disability pension by the Social Security authority with which they were enrolled, and if so requested
from the Company.
This complementary pension was set on the basis of a formula which considered gross monthly
remuneration and length of service; no less than 10 years’ service is required and no more than 30
years’ service will be considered.
On 31 December 2021, Manuel Soares Ferreira Regalado was the only Director who benefited from
The Navigator Company’s Pension Plan.
In addition, the Board members António José Pereira Redondo, Adriano Augusto da Silva Silveira
and João Lé are participants in the pension plan of Navigator Brands, SA, one of the Company’s
subsidiaries, in their capacity as Employees of that company before holding management positions.
Due to the specific nature of the Navigator Group’s pension plan, to date, the General Meeting has
in no way intervened in approving the main characteristics of the specific rules applicable to
Directors’ retirement.
In this regard, it should be noted that the Company was a public company until 1991, with the
activity and form of operation regulated by the special law applicable to this type of companies, and
it was in this period that the specific rules applied to the retirement of members of the Board were
approved.
However, it is important to mention that the retirement pension supplement plans in force in the
Company are described in note 7 of the annexes to the consolidated accounts for the year, which
are part of the Report and Accounts subject to approval by the General Meeting.
IV. Disclosure of remuneration
77. Indication of the annual amount of remuneration earned, in aggregate and individual
form, by the members of the management bodies of the company, from the company,
2021 Consolidated Annual Report
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including fixed and variable remuneration and, in relation to this, mention of the different
components that gave rise to it.
Indicated below is the amount of remuneration earned in 2021, with variable remuneration paid in
2021 but relating to performance in 2020 and 2021, by members of the Company's Board of
Directors, from Navigator, with a distinction between fixed and variable remuneration, but without
distinguishing the different components that gave rise to the variable remuneration, because the
variable component is defined as a whole, weighting the elements explained in the Remuneration
Policy, without identifying components.
Amounts in euros
Board of Directors
Fixed Remuneration
Variable Remuneration
Amount
Relative
Percentage
Amount
44
Relative
Percentage
António José Pereira Redondo
668,348.94
44.31%
839,967.14
55.69%
Adriano Augusto da Silva Silveira
319,214.00
33.66%
628,891.25
66.33%
João Paulo Cabete Gonçalves Lé
319,214.00
37.85%
524,140.94
62.15%
João Paulo Araújo Oliveira
319,805.66
35.45%
582,448.09
64.55%
José Fernando Morais Carreira de Araújo
319,213.16
34.75%
599,172.44
65.25%
Nuno Miguel Moreira de Araújo Santos
319,198.74
40.24%
474,022.49
59.76%
Manuel Soares Ferreira Regalado
77,000.00
100%
0.00
0%
Maria Teresa Aliu Presas
77,000.00
100%
0.00
0%
Mariana Rita Antunes Marques dos Santos
105,000.00
100%
0.00
0%
Sandra Maria Soares Santos
77,000.00
100%
0.00
0%
Vítor Manuel Galvão Rocha Novais Gonçalves
77,000.00
100%
0.00
0%
The table above shows the annual amount corresponding to the period during which the members
of the Board of Directors held office.
The tables below set out, for the purposes of Article 26.2.c) of the Securities Code, the annual
variations over the last five financial years in the remuneration paid individually by the Company to
the members of the Board of Directors, as well as the average remuneration of the full-time
equivalent of the Company's Collaborators, and the Company's performance indicators:
44
The amounts indicated include a portion of the variable remuneration relating to 2019 performance, paid in
2021.
2021 Consolidated Annual Report
13/04/2022 160
Amounts in euros
Board of Directors
2017
2018
2019
2020
2021
António José Pereira Redondo
Fixed Remuneration
309,838
314,486
319,203
655,699
668,349
Variable Remuneration
527,175
523,551
548,702
185,984
839,967
% Variation
2.0%
0.1%
3.6%
-3.0%
79.2%
Adriano Augusto da Silva Silveira
Fixed Remuneration
397,108
397,108
297,108
313,172
319,214
Variable Remuneration
0,00
0,00
0,00
117,000
628,891
% Variation
-29.0%
0.0%
-25.2%
44.8%
120.4%
João Paulo Cabete Gonçalves Lé
Fixed Remuneration
-
-
-
315,392
319,214
Variable Remuneration
-
-
-
15,074
524,141
% Variation
-
-
-
100.0%
155.2%
João Paulo Araújo Oliveira
Fixed Remuneration
309,834
314,482
319,190
313,157
319,806
Variable Remuneration
530,754
456,349
485,485
121,627
582,448
% Variation
48.2%
-8.3%
4.4%
-46.0%
107.5%
José Fernando Morais Carreira
de Araújo
Fixed Remuneration
309,848
314,496
319,213
313,171
319,213
Variable Remuneration
543.455
489.410
554.110
175.663
599.172
% Variation
9.5%
-5.8%
8.6%
-44.0%
87.9%
Nuno Miguel Moreira de Araújo
Santos
Fixed Remuneration
309,834
314,482
319,199
313,157
319,199
Variable Remuneration
512,920
562,493
415,447
128,915
474,022
% Variation
26.8%
6.6%
-16.2%
-39.8%
79.4%
Manuel Soares Ferreira Regalado
Fixed Remuneration
77,000
77,000
77,000
75,543
77,000
Variable Remuneration
177,015
0
0
0
0
% Variation
-63.6%
-69.7%
0.0%
-1.9%
1.9%
Maria Teresa Aliu Presas
Fixed Remuneration
-
-
56,023
75,522
77,000
Variable Remuneration
-
-
-
-
-
% Variation
-
-
100.0%
34.8%
2.0%
Mariana Rita Antunes Marques
dos Santos
Fixed Remuneration
-
-
76,395
102,984
105,000
Variable Remuneration
-
-
-
-
-
% Variation
-
-
100.0%
34.8%
2.0%
Sandra Maria Soares Santos
Fixed Remuneration
-
-
56,023
75,522
77,000
Variable Remuneration
-
-
-
-
-
% Variation
-
-
100.0%
34.8%
2.0%
Vítor Manuel Galvão Rocha Novais
Gonçalves
Fixed Remuneration
98,000
98,000
98,000
96,145
77,000
Variable Remuneration
-
-
-
-
-
% Variation
-21.5%
0.0%
0.0%
-1.9%
-19.9%
Pedro Mendonça de Queiroz Pereira
Fixed Remuneration
830,914
689,200
-
-
-
Variable Remuneration
987,021
967,061
-
-
-
% Variation
3.9%
-8.9%
-
-
-
Diogo António Rodrigues
da Silveira
Fixed Remuneration
510,062
517,713
259,033
-
-
Variable Remuneration
636,559
620,627
653,534
-
-
% Variation
2.3%
-0.7%
-19.8%
-
-
Luís Alberto Caldeira Deslandes
Fixed Remuneration
158,158
117,579
77,000
-
-
Variable Remuneration
-
-
-
-
-
% Variation
0.0%
-25.7%
31%
-
-
2021 Consolidated Annual Report
13/04/2022 161
Amounts in euros
Audit Board
2017
2018
2019
2020
2021
José Manuel
Vitorino
Fixed Remuneration
16.002
19.854
21.994
21.994
21.994
% Variation
2.1%
24.1%
10.8%
0.0%
0.0%
Gonçalo Picão
Caldeira
Fixed Remuneration
16.002
16.002
16.002
16.002
16.002
% Variation
2.1%
0.0%
0.0%
0.0%
0.0%
Maria da Graça
Gonçalves
Fixed Remuneration
-
9.399
16.002
16.002
16.002
% Variation
-
100.0%
70.3%
0.0%
0.0%
Miguel Camargo
de Sousa Eiró
Fixed Remuneration
21,994
31,957
-
-
-
% Variation
1.5%
45.3%
45
-
-
-
Amounts in euros
Company Collaborators
2017
2018
2019
2020
2021
Total
Remuneration
1
Average Remuneration
(€)
33,668
35,840
30,810
31,236
33,477
% Variation
4.9%
6.5%
-14.0%
1.4%
7.2%
Amounts in euros
Group Performance
2017
%
2018
%
2019
%
2020
%
2021
%
Performance
Indicators
EBITDA
403,838,089
455,217,531
372,091,044
285,507,801
354,716,330
% Variation
1.6%
12.7%
-18.3%
-23.3%
24.2%
Earnings per Share
0.29
0.31
0.24
0.15
0.24
% Variation
-4.5%
8.4%
-24.7%
-35.1%
55.6%
78. Amounts paid on any basis by other controlled, controlling or group companies or
companies under common control.
It should be clarified that the amounts referred to in this item do not relate only to companies
controlled by the Company. They also include amounts over which the Company and its officers have
no control, as they are the concern of its shareholders, the shareholders of shareholders and other
companies controlled by shareholders, where a controlling relationship is involved.
The following directors earned remunerations in other controlling companies or companies under
common control: João Nuno de Sottomayor Pinto de Castello Branco, Ricardo Miguel dos Santos
Pacheco Pires, Vítor Manuel Galvão Rocha Novais Gonçalves and Vítor Paulo Paranhos Pereira, in the
total amounts of 1,695,300.21 euros, 902,102.90 euros, 898,128.55 euros and 77,825.00 euros,
respectively. It is clarified that the members of the Board of Directors did not receive remuneration
in other companies in a group relationship.
79. Remuneration paid in the form of profit sharing and/or payment of bonuses, and the
grounds on which these bonuses and/or profit sharing were granted.
The amount of the remuneration paid by the Company in the form of profit-sharing and/or payment
of bonuses corresponds to the variable remuneration referred to in item 77 of this Report, which
45
The apparent increase in the fixed remuneration of the Chairman of the Audit Board in 2018 was due to the
fact that he terminated his term of office early and therefore earned the remuneration he would have received
until the end of the period for which he was elected.
2021 Consolidated Annual Report
13/04/2022 162
amounts were determined by the Remuneration Committee based on the actual application of the
criteria described in item 7 of chapter IV of the Remuneration Policy.
80. Compensation paid or due to former executive directors for their dismissal during the
year.
No compensation was paid during the year, nor is any compensation due, to former Executive
Directors for their dismissal.
81. Indication of the annual remuneration earned, on an aggregate and individual basis,
by the members of the Company’s supervisory bodies, for the purposes of Law 28/2009
of 19 June.
(in euros)
Audit Board
Fixed Remuneration
Variable Remuneration
Amount
Relative
percentage
Amount
Relative
percentage
José Manuel Vitorino
21,994
100%
0
0%
Gonçalo Picão Caldeira
16,002
100%
0
0%
Maria da Graça Gonçalves
16,002
100%
0
0%
The chart above indicates the annual amount corresponding to the period in which members of the
Supervisory Board performed their functions.
This information is in the Remuneration Report to be submitted to the annual General Meeting of
Shareholders, to take place this year.
82. Indication of remuneration earned in the reporting period by the Chairman of the
General Meeting.
The Chairman of the General Meeting only receives a fixed remuneration.
In 2021, the Chairman of the General Meeting earned a remuneration of 3,000 euros (three thousand
euros).
V. Agreements with implications for remuneration
83. Contractual limits on severance pay for directors, and the respective relationship with
the variable remuneration component.
The Company has no contract with directors limiting or otherwise altering the supplementary legal
rules on fair or unfair termination; the Remuneration Policy approved by the Company’s
Remuneration Committee provides that the supplementary legal rules will apply in case of
termination of directors’ term in office.
Therefore, considering the absence of individual contracts with directors in this regard and the
provisions of the Remuneration Policy approved by the Company's Remuneration Committee, where
the removal of a director is not due to serious breach of their duties nor to their unfitness for the
normal exercise of their functions, the Company will be obliged to pay compensation in accordance
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with the general terms of the law, although such compensation shall not exceed the value of the
remuneration they would presumably have received through to the end of their term of office.
Dismissal before the expiry of the mandate does not entitle the director, either directly or indirectly,
to compensation beyond the statutory amounts.
84. Reference to the existence and description, with indication of the amounts involved,
of agreements between the company and the members of the management body and
directors, as defined by article 248-B (3) of the Securities Code, which provide for
compensation in the event of dismissal, unfair dismissal or termination of employment as
a result of a change in control of the company. (article 245-A, (1) (l)).
There are also no agreements between the Company and Board members or managers, which
provide for compensation in the event of resignation, dismissal without due cause or termination of
employment contract as a result of a change of control of the Company.
VI. Stocks or stock option plans
85. Identification of plan and beneficiaries.
The company has no stock or stock option plans.
86. Description of plan (terms of allocation, non-transfer of share clauses, criteria on the
price of shares and the price of exercising options, the period during which the options
may be exercised, the characteristics of the shares to be distributed, the existence of
incentives to purchase shares and/or exercise options).
Not aplicable.
87. Stock-option rights for which the company’s workers and Employees are the
beneficiaries.
Not aplicable.
88. Control mechanisms in an employee ownership scheme insofar as voting rights are
not directly exercised by Employees (article 245-A (1) (e)).
There is no employee ownership scheme in Navigator.
E. RELATED PARTY TRANSACTIONS AND CONFLICTS OF INTEREST
I. Control mechanisms and procedures
89. Procedures implemented by the Company for controlling related party transactions
(reference is made for this purpose to the concept deriving from IAS 24).
The Company has a Regulation on Conflicts of Interest and Related Party Transactions through which
rules were defined relating to conflicts of interest and transactions with related parties, to which the
Company is party, which supplement internal mechanisms which the Company has in place for the
purposes of complying with international accounting standards (IAS 24 - Related Party Disclosures),
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and shall apply notwithstanding the obligations of the Company and its managers with regard to
insider information, the legal framework governing company business deals with directors, rules of
procedure relating to the Internal Whistleblowing Regulations and other legislation applicable in this
regard. This regulation was amended in 2020, due to the changes resulting from Law no. 50/2020,
of August 25, and in 2021, by resolution of the Board of Directors of December 2021, with a
favourable and binding opinion from the Audit Board, which now includes the applicable legal and
regulatory regime in force on this matter.
Such regulations are available for consultation on the company website
(http://www.thenavigatorcompany.com/Investidores/Governo-da-Sociedade).
In accordance with the Regulation on Conflicts of Interest and Related Party Transactions, Related
Party Transactions are the transactions that are defined as such by the international accounting
standards adopted in accordance with Regulation (EC) No. 1606/2002 of the European Parliament
and of the Council, of 19 July, and in particular by the International Accounting Standard (IAS) 24
(Related Party Disclosures). They are subject to the following approval procedures:
The following Transactions are approved by the Executive Committee:
a) Loans granted to the Company by shareholder companies with a value of less than or equal
to one hundred million euros;
b) Transactions under the taxation regime for company groups, with a value of less than or
equal to one hundred million euros;
c) Transactions with controlled companies that consolidate accounts with the Company, with
an individual or accumulated annual value of less than or equal to two percent of the
controlled company's revenue, assessed according to the latest approved annual accounts;
d) Loans to controlled companies that consolidate accounts with the Company and, thus, holds
their debt, (i) with a maturity of less than six months, (ii) individual or cumulative annual
value of less than one fifth of the controlled company's revenue, assessed according to the
latest approved annual accounts and not exceeding one hundred million euros and (iii) as
long as the controlled company ensures credit lines for the reimbursement of the operation,
and
e) All other Transactions with an individual or cumulative annual amount of less than or equal
to one million euros.
Transactions that (i) do not fall within the scope of sub‐paragraphs a) to e) of the previous paragraph
1. or (ii) fall within that paragraph but are not carried out within the Company’s ordinary course of
business, are adopted by the Board of Directors, subject to prior approval by the Audit Board.
Under said Regulation, only Transactions carried out under market conditions and in full respect of
the justified interest of the Company shall be permitted.
With regard to the procedures for information, verification and formalization of transactions with
related parties, the Regulation provides that:
− The Board of Directors is informed every six months of the decisions regarding transactions
in which it has not participated;
− The Audit Board is informed of the transactions that the Company carries out for the
purposes of verifying the compliance of the transactions with the above described regime
and with the applicable legislation and regulations, and the related parties will not be able
to participate in the verification in question;
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− It is also incumbent upon the Company's Managers who intervene in the formalization of
transactions with related parties to ensure that the transactions are previously submitted to
the deliberations required by the regulation and in the applicable legislation and regulation,
and
− The formalization and execution of resolutions on transactions with related parties must be
subject to special monitoring by the Executive Committee.
The Company will disclose the transactions that must be disclosed under applicable legislation and
regulations, namely because they have not met any of the legal requirements or due to the amount
in question, in accordance with and in the period provided for in the applicable laws and regulations.
The Regulation will not apply to transactions treated as exempt by applicable law and regulation.
With regard to the procedures applicable in the area of conflicts of interest, the regulation provides
that a situation of conflict exists whenever any manager is in a position that, viewed objectively,
may compromise his independence and cause in his judgment an influence of interests that differ
from the interests of the Company, be they financial or not, his own or belonging to third parties,
and that, for the purposes of its adequate prevention, identification and resolution, the Manager
must:
− Communicate the existence of a conflict of interest, even if potential, to his superior or, in
the case of a member of a collegiate body, to the body in question, in accordance with the
relevant operating regulations, and
− Refrain from interfering or participating in the decision-making process whenever they are
in conflict of interest, and record this impediment in the minutes or other written document
that registers the decision, without prejudice to the duty to provide information and
clarifications the body concerned and its members request.
In addition, all regulations governing the operation of the corporate bodies and internal commissions
contain provisions on conflicts of interest in accordance with the rules described above.
90. Indication of transactions subject to control in the reporting period.
In 2021, there were no other transactions subject to control given that, in accordance with the
criteria referred to in item 91 below, none of the Company’s transactions with qualifying shareholders
or any other related entities, under article 20 of the Securities Code, were subject to prior clearance
by the Supervisory Board.
It should also be noted that there was no business between the Company and qualifying shareholders
outside normal market conditions.
91. Description of the procedures and criteria applicable to intervention by the
supervisory body for the purposes of prior evaluation of transactions to be carried out
between the Company and qualifying shareholders or related entities, under article 20 of
the Securities Code.
The procedures and criteria applicable to intervention by the supervisory body for the purposes of
prior evaluation of transactions to be carried out between the Company and qualifying shareholders
or related entities, under article 20 of the Securities Code, are described in item 89.
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II. Details of transactions
92. Indication of the place in the financial reports and account where information is
available on related party transactions, in accordance with IAS 24, or, alternatively,
reproduction of this information.
The information available on related party transactions is included in the Company’s Report and
Accounts, in no. 11.3 of the Notes to the Consolidated Financial Statements.
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PART II – CORPORATE GOVERNANCE ASSESSMENT
1. IDENTIFICATION OF THE CORPORATE GOVERNANCE CODE ADOPTED
In 2018, Navigator adopted the Corporate Governance Code of the Portuguese Institute of Corporate
Governance (“IPCG”) of 2018, in accordance with and for purposes of article 2 of CMVM Regulation
no. 4/2013.
The adopted Code was revised by the IPCG in 2020. It is released by the IPCG and can be accessed
on the respective website, at https://cam.cgov.pt/images/ficheiros/2020/revis%C3%A3o_codigo_
en_2018_ebook-05.11.2020.pdf
2. ANALYSIS OF COMPLIANCE WITH THE CORPORATE GOVERNANCE CODE
ADOPTED
Navigator has adopted most of the IPCG Corporate Governance Code Recommendations. The
Principles and Recommendations of this Code are listed in the table below, with indication of the
Recommendations adopted, not applicable and not adopted, and reference is made to the points in
this Report where the matter is developed. In relation to the Recommendations not adopted,
justification for non-adoption and a mechanism equivalent to the adopted “explain”.
Compliance
Comments
CHAPTER I – GENERAL PROVISIONS
General Principle
Corporate Governance should promote and enhance the performance of companies, as well as of the capital
markets, and strengthen the trust of investors, employees and the general public in the quality and
transparency of management and supervision, as well as in the sustained development of the companies.
I.1. Company’s relationship with investors and disclosure
Principle
Companies, in particular its directors, should treat shareholders and other investors equitably, namely by
ensuring mechanisms and procedures are in place for the suitable management and disclosure of
information.
Recommendation
I.1.1. The Company should establish mechanisms to ensure the timely
disclosure of information to its governing bodies, shareholders,
investors and other stakeholders, financial analysts, and to the markets
in general.
Adopted
Part I, nos. 21,
22, 38 and 56 to
65
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Compliance
Comments
I.2. Diversity in the composition and functioning of the company’s governing bodies
Principles
I.2.A. Companies ensure diversity in the composition of its governing bodies, and the adoption of
requirements based on individual merit, in the appointment procedures that are exclusively within the
powers of the shareholders.
I.2.B. Companies should be provided with clear and transparent decision structures and ensure a maximum
effectiveness of the functioning of their governing bodies and commissions.
I.2.C. Companies ensure that the functioning of their bodies and committees is duly recorded, namely in
minutes, to allow an understanding not only of the meaning of the decisions taken, but also of their grounds
and opinions expressed by their members.
Recommendations
I.2.1. Companies should establish standards and requirements
regarding the profile of new members of their governing bodies, which
are suitable according to the roles to be carried out. Besides individual
attributes (such as competence, independence, integrity, availability,
and experience), these profiles should take into consideration general
diversity requirements, with particular attention to gender diversity,
which may contribute to a better performance of the governing body
and to the balance of its composition.
Adopted
Part I, no. 16
I.2.2. The company’s managing and supervisory boards, as well as
their committees, should have internal regulations — namely regulating
the performance of their duties, their Chairmanship, periodicity of
meetings, their functioning and the duties of their members —,
disclosed in full on the company’s website. Minutes of the meetings of
each of these bodies should be drawn out.
Adopted
Part I, nos. 22,
27, 29, 34 and 38
I.2.3. The composition and the number of annual meetings of the
managing and supervisory bodies, as well as of their committees,
should be disclosed on the company’s website.
Adopted
Part I, nos 22,
27, 34 and 61
I.2.4. A policy for the communication of irregularities (whistleblowing)
should be adopted that guarantees the suitable means of
communication and treatment of those irregularities, with the
safeguarding of the confidentiality of the information transmitted and
the identity of its provider, whenever such confidentiality is requested.
Adopted
Part I, nos. 49,
50, 54 and 89
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Compliance
Comments
I.3. Relationships between the company bodies
Principle
Os membros dos órgãos sociais, mormente os administradores, deverão criar as condições para que, na
medida das responsabilidades de cada órgão, seja assegurada a tomada de medidas ponderadas e eficientes
e, de igual modo, para que os vários órgãos da sociedade atuem de forma harmoniosa, articulada e com a
informação adequada ao exercício das respetivas funções.
Recommendations
I.3.1 The bylaws, or other equivalent means adopted by the company,
should establish mechanisms that, within the limits of applicable laws,
permanently ensure the members of the managing and supervisory
boards are provided with access to all the information and company’s
collaborators, in order to appraise the performance, current situation
and perspectives for further developments of the company, namely
including minutes, documents supporting decisions that have been
taken, calls for meetings, and the archive of the meetings of the
managing board, without impairing the access to any other documents
or people that may be requested for information.
Adopted
Part I, nos. 21,
22 and 38
I.3.2. Each of the company’s boards and committees should ensure the
timely and suitable flow of information, especially regarding the
respective calls for meetings and minutes, necessary for the exercise of
the competences, determined by law and the bylaws, of each of the
remaining boards and committees.
Adopted
Part I, nos. 21,
22, 27 and 38
I.4. Conflicts of Interests
Principle
The existence of current or potential conflicts of interest, between members of the company’s boards or
committees and the company, should be prevented. The non-interference of the conflicted member in the
decision process should be guaranteed.
Recommendations
I.4.1. The members of the managing and supervisory boards and the
internal committees are bounded, by internal regulation or equivalent,
to inform the respective board or committee whenever there are facts
that may constitute or give rise to a conflict between their interests and
the company’s interest.
Adopted
Part I, no. 89
I.4.2. Procedures should be adopted to guarantee that the member in
conflict does not interfere in the decision-making process, without
prejudice to the duty to provide information and other clarifications that
the board, the committee or their respective members may request.
Adopted
Part I, no. 89
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Compliance
Comments
I.5. Related Party Transactions
Principle
Pelos potenciais riscos que comportam, as transações com partes relacionadas devem ser justificadas pelo
interesse da sociedade e realizadas em condições de mercado, sujeitando-se a princípios de transparência e
a adequada fiscalização.
Recommendations
I.5.1. The managing body should disclose in the corporate governance
report or by other means publicly available the internal procedure for
verifying transactions with related parties.
Adopted
Part I, nos. 38
and 89 to 91
I.5.2. The managing body should report to the supervisory body the
results of the internal procedure for verifying transactions with related
parties, including the transactions under analysis, at least every six
months.
Adopted
Not applicable
Recommendation,
due to the
provisions of Note
3 on
Interpretation of
the of the
Corporate
Governance Code
IPCG 2018
(revised in 2020)
Chapter II. SHAREHOLDERS AND THE GENERAL MEETING
Principles
II.A. As an instrument for the efficient functioning of the company and the fulfilment of the corporate purpose
of the company, the suitable involvement of the shareholders in matters of corporate governance is a positive
factor for the company’s governance.
II.B. The company should stimulate the personal participation of shareholders in general meetings, which is
a space for communication by the shareholders with the company’s boards and committees, and for reflection
about the company itself.
II.C. The company should implement adequate means for the participation and remote voting by
shareholders in meetings.
Recommendations
II.1. The company should not set an excessively high number of
shares to confer voting rights, and it should make its choice clear in the
corporate governance report every time its choice entails a diversion
from the general rule: that each share has a corresponding vote.
Adopted
Part I, nos. 12
and 13
II.2. The company should not adopt mechanisms that make decision
making by its shareholders (resolutions) more difficult, specifically, by
setting a quorum higher than that established by law.
Adopted
Part I, no. 14
II.3. The company should implement adequate means for the remote
participation by shareholders in the general meeting, which should be
proportionate to its size.
Adopted
Part I, no. 12
II.4. The company should also implement adequate means for the
exercise of remote voting, including by correspondence and electronic
means.
Adopted
Part I, no. 12
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Compliance
Comments
II.5. The bylaws, which specify the limitation of the number of votes
that can be held or exercised by a sole shareholder, individually or in
coordination with other shareholders, should equally provide that, at
least every 5 years, the amendment or maintenance of this rule will be
subject to a shareholder resolution — without increased quorum in
comparison to the legally established — and in that resolution, all votes
cast will be counted without observation of the imposed limits.
Adopted
Part I, nos. 5, 13
and 14
II.6. The company should not adopt mechanisms that imply payments
or assumption of fees in the case of the transfer of control or the change
in the composition of the managing body, and which are likely to harm
the free transferability of shares and a shareholder assessment of the
performance of the members of the managing body.
Adopted
Part I, nos. 4, 83
and 84
Chapter III - NON - EXECUTIVE MANAGEMENT, MONITORING AND SUPERVISION
Principles
III.A. The members of governing bodies who possess non-executive management duties or monitoring and
supervisory duties should, in an effective and judicious manner, carry out monitoring duties and incentivise
executive management for the full accomplishment of the corporate purpose, and such performance should
be complemented by committees for areas that are central to corporate governance.
III.B. The composition of the supervisory body and the non-executive directors should provide the company
with a balanced and suitable diversity of skills, knowledge, and professional experience.
III.C. The supervisory body should carry out a permanent oversight of the company’s managing body, also
in a preventive perspective, following the company’s activity and, in particular, the decisions of fundamental
importance.
Recommendations
III.1. Without prejudice to the legal powers of the chair of the
managing body, if he or she is not independent, the independent
directors should appoint a coordinator from amongst them, namely, to:
(i) act, when necessary, as an interlocutor near the chair of the board
of directors and other directors, (ii) make sure there are the necessary
conditions and means to carry out their functions; and (iii) coordinate
the independent directors in the assessment of the performance of the
managing body, as established in recommendation V.1.1.
Not adopted
Explanation of
recommendations
not adopted
below.
III.2. The number of non-executive members in the managing body,
as well as the number of members of the supervisory body and the
number of the members of the committee for financial matters should
be suitable for the size of the company and the complexity of the risks
intrinsic to its activity, but sufficient to ensure, with efficiency, the
duties which they have been attributed. The formation of such
suitability judgment should be included in the corporate governance
report.
Adopted
Part I, nos. 18,
31, 50, 51 and 54
III.3. In any case, the number of non-executive directors should be
higher than the number of executive directors.
Adopted
Part I, no. 18
2021 Consolidated Annual Report
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Compliance
Comments
III.4. Each company should include a number of non-executive
directors that corresponds to no less than one third, but always plural,
who satisfy the legal requirements of independence. For the purposes
of this recommendation, an independent person is one who is not
associated with any specific group of interest of the company, nor under
any circumstance likely to affect his/her impartiality of analysis or
decision, namely due to:
i. having carried out functions in any of the company’s bodies for more
than twelve years, either on a consecutive or non- consecutive basis;
ii. having been a prior staff member of the company or of a company
which is considered to be in a controlling or group relationship with the
company in the last three years;
iii. having, in the last three years, provided services or established a
significant business relationship with the company or a company which
is considered to be in a controlling or group relationship, either directly
or as a shareholder, director, manager or officer of the legal person;
iv. having been a beneficiary of remuneration paid by the company or
by a company which is considered to be in a controlling or group
relationship other than the remuneration resulting from the exercise of
a director’s duties;
v. having lived in a non-marital partnership or having been the spouse,
relative or any first degree next of kin up to and including the third
degree of collateral affinity of company directors or of natural persons
who are direct or indirect holders of qualifying holdings, or
vi. having been a qualified holder or representative of a shareholder of
qualifying holding.
Adopted
Part I, no. 18
III.5. The provisions of paragraph (i) of recommendation III.4 does
not inhibit the qualification of a new director as independent if, between
the termination of his/her functions in any of the company’s bodies and
the new appointment, a period of 3 years has elapsed (cooling-off
period).
Not applicable
Part I, no. 18
III.6. The supervisory body, in observance of the powers conferred to
it by law, should assess and give its opinion on the strategic lines and
the risk policy prior to its final approval by the management body.
Adopted
Part I, nos. 38
and 50
III.7. Companies should have specialised committees, separately or
cumulatively, on matters related to corporate governance,
appointments, and performance assessment. In the event that the
remuneration committee provided for in article 399 of the Commercial
Companies Code has been created and should this not be prohibited by
law, this recommendation may be fulfilled by conferring competence on
such committee in the aforementioned matters.
Adopted
Part I, nos. 21,
27 and 29
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Compliance
Comments
Chapter IV – EXECUTIVE MANAGEMENT
Principles
IV.A. As way of increasing the efficiency and the quality of the managing body’s performance and the
suitable flow of information in the board, the daily management of the company should be carried out by
directors with qualifications, powers and experience suitable for the role. The executive board is responsible
for the management of the company, pursuing the company’s objectives and aiming to contribute towards
the company’s sustainable development.
IV.B. In determining the number of executive directors, it should be taken into account, besides the costs
and the desirable agility in the functioning of the executive board, the size of the company, the complexity
of its activity, and its geographical spread.
Recommendations
IV.1. The managing body should approve, by internal regulation or
equivalent, the rules regarding the action of the executive directors
applicable to their performance of executive functions in entities outside
of the group.
Adopted
Part I, no. 22
IV.2. The managing body should ensure that the company acts
consistently with its objects and does not delegate powers, namely, in
what regards: i) the definition of the strategy and main policies of the
company; ii) the organisation and coordination of the business
structure; iii) matters that should be considered strategic in virtue of
the amounts involved, the risk, or special characteristics.
Adopted
Part I, nos. 21 e
22
IV.3. In the annual report, the managing body explains in what terms
the strategy and the main policies defined seek to ensure the long-term
success of the company and which are the main contributions resulting
therein for the community at large.
Adopted
Part I, no. 21
Management
Report
Sustainability
Report, notable:
pages 3, 4-6, 8,
10, 22, 48, 50,
52, section 6
Chapter V - EVALUATION OF PERFORMANCE , REMUNERATION AND APPOINTMENT
V.1. Annual evaluation of performance
Principle
The company should promote the assessment of performance of the executive board and of its members
individually, and also the assessment of the overall performance of the managing body and its specialized
committees.
Recommendation
The managing body should annually evaluate its performance as well
as the performance of its committees and executive directors, taking
into account the accomplishment of the company’s strategic plans and
budget plans, the risk management, the internal functioning and the
contribution of each member of the body to these objectives, as well as
the relationship with the company’s other bodies and committees.
Adopted
Part I, nos. 22,
24 and 25
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Compliance
Comments
V.2. Remunerations
Principles
V.2.A. The remuneration policy of the members of the managing and supervisory boards should allow the
company to attract qualified professionals at an economically justifiable cost in relation to its financial
situation, induce the alignment of the member’s interests with those of the company’s shareholders —
taking into account the wealth effectively created by the company, its financial situation and the market’s —
and constitute a factor of development of a culture of professionalization, sustainability, promotion of merit
and transparency within the company.
V.2.B. Directors should receive compensation:
i) that suitably remunerates the responsibility taken, the availability and the expertise placed at the
disposal of the company;
ii) that guarantees a performance aligned with the long-term interests of the shareholders and promotes
the sustainable performance of the company; and
iii) that rewards performance.
Recommendations
V.2.1. The company should create a remuneration committee, the
composition of which should ensure its independence from the
management, which may be the remuneration committee appointed
under the terms of article 399 of the Commercial Companies Code.
Adopted
Part I, nos. 24,
27, 66 and 67
V.2.2. The remuneration should be set by the remuneration committee
or the general meeting, on a proposal from that committee.
Adopted
Part I, nos. 24,
27, 66 and 67
V.2.3. For each term of office, the remuneration committee or the
general meeting, on a proposal from that committee, should also
approve the maximum amount of all compensations payable to any
member of a board or committee of the company due to the respective
termination of office. The said situation as well as the amounts should
be disclosed in the corporate governance report or in the remuneration
report.
Not adopted
Explanation of
recommendations
not adopted
below
V.2.4. In order to provide information or clarifications to shareholders,
the chair or, in case of his/her impediment, another member of the
remuneration committee should be present at the annual general
meeting, as well as at any other, whenever the respective agenda
includes a matter linked with the remuneration of the members of the
company’s boards and committees or, if such presence has been
requested by the shareholders.
Adopted
Part I, no. 76
V.2.5. Within the company’s budgetary limitations, the remuneration
committee should be able to decide, freely, on the hiring, by the
company, of necessary or convenient consulting services to carry out
the committee’s duties.
Adopted
Part I, no. 66
V.2.6. The remuneration committee should ensure that those services
are provided independently and that the respective providers do not
provide other services to the company, or to others in controlling or
group relationship, without the express authorization of the committee.
Adopted
Part I, no. 66
2021 Consolidated Annual Report
13/04/2022 175
Compliance
Comments
V.2.7. Taking into account the alignment of interests between the
company and the executive directors, a part of their remuneration
should be of a variable nature, reflecting the sustained performance of
the company, and not stimulating the assumption of excessive risks.
Adopted
Part I, no. 70, 71
and 75, Annex II
V.2.8. A significant part of the variable component should be partially
deferred in time, for a period of no less than three years, being
necessarily connected to the confirmation of the sustainability of the
performance, in the terms defined by a company’s internal regulation.
Not adopted
Explanation of
recommendations
not adopted
below
V.2.9. When variable remuneration includes the allocation of options or
other instruments directly or indirectly dependent on the value of
shares, the start of the exercise period should be deferred in time for a
period of no less than three years.
Not applicable
Part I, n.
os
73
e 74
V.2.10. The remuneration of non-executive directors should not
include components dependent on the performance of the company or
on its value.
Adopted
Part I, no. 71
V.3. Appointments
Principle
Regardless of the manner of appointment, the profile, the knowledge, and the curriculum of the members of
the company’s governing bodies, and of the executive staff, should be suited to the functions carried out.
Recommendations
V.3.1. The company should, in terms that it considers suitable, but in
a demonstrable form, promote that proposals for the appointment of
the members of the company’s governing bodies are accompanied by a
justification in regard to the suitability of the profile, the skills and the
curriculum vitae to the duties to be carried out.
Adopted
Part I no. 16
V.3.2. The overview and support to the appointment of members of
senior management should be attributed to a nomination committee
unless this is not justified by the company’s size.
Adopted
Part I no. 29
V.3.3. This nomination committee includes a majority of non-
executive, independent members.
Not adopted
Explanation of
recommendations
not adopted
below
V.3.4. The nomination committee should make its terms of reference
available, and should foster, to the extent of its powers, transparent
selection processes that include effective mechanisms of identification
of potential candidates, and that those chosen for proposal are those
who present a higher degree of merit, who are best suited to the
demands of the functions to be carried out, and who will best promote,
within the organisation, a suitable diversity, including gender diversity.
Adopted
Part I, no. 16 and
29
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Compliance
Comments
CHAPTER VI – INTERNAL CONTROL
Principle
Based on its mid and long-term strategies, the company should establish a system of risk management and
control, and of internal audit, which allow for the anticipation and minimization of risks inherent to the
company’s activity.
Recommendations
VI.1. The managing body should debate and approve the company’s
strategic plan and risk policy, which should include the establishment
of limits on risk-taking.
Adopted
Part I no. 22, 24
and 50
VI.2. The supervisory board should be internally organised,
implementing mechanisms and procedures of periodic control that seek
to guarantee that risks which are effectively incurred by the company
are consistent with the company’s objectives, as set by the managing
body.
Adopted
Part I no. 38, 50
and 54
VI.3. The internal control systems, comprising the functions of risk
management, compliance, and internal audit should be structured in
terms adequate to the size of the company and the complexity of the
inherent risks of the company’s activity. The supervisory body should
evaluate them and, within its competence to supervise the effectiveness
of this system, propose adjustments where they are deemed to be
necessary.
Adopted
Part I no. 50, 51,
52, 54 and 55
VI.4. The supervisory body should provide its view on the work plans
and resources allocated to the services of the internal control system,
including the risk management, compliance and internal audit
functions, and may propose the adjustments deemed to be necessary.
Adopted
Part I no. 38 and
50
VI.5. The supervisory body should be the recipient of the reports
prepared by the internal control services, including the risk
management functions, compliance and internal audit, at least
regarding matters related to the approval of accounts, the identification
and resolution of conflicts of interest, and the detection of potential
irregularities.
Adopted
Part I no. 45 and
50
VI.6. Based on its risk policy, the company should establish a risk
management function, identifying (i) the main risks it is subject to in
carrying out its activity; (ii) the probability of occurrence of those risks
and their respective impact; (iii) the devices and measures to adopt
towards their mitigation; and (iv) the monitoring procedures, aiming at
their accompaniment.
Adopted
Part I no. 38, 49,
50, 51, 52, 53,
54 and 55
VI.7. The company should establish procedures for the supervision,
periodic evaluation, and adjustment of the internal control system,
including an annual evaluation of the level of internal compliance and
the performance of that system, as well as the perspectives for
amendments of the risk structure previously defined.
Adopted
Part I no. 38, 49,
50, 51, 52, 53, 54
and 55
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Compliance
Comments
CHAPTER VII – FINANCIAL INFORMATION
VII.1. Financial Information
Principles
VII.A. The supervisory body should, with independence and in a diligent manner, ensure that the managing
body complies with its duties when choosing appropriate accounting policies and standards for the company,
and when establishing suitable systems of financial reporting, risk management, internal control, and
internal audit.
VII.B. The supervisory body should promote an adequate coordination between the internal audit and the
statutory audit of accounts.
Recommendation
VII.1.1. The supervisory body’s internal regulation should impose the
obligation to supervise the suitability of the preparation process and the
disclosure of financial information by the managing body, including
suitable accounting policies, estimates, judgments, relevant disclosure
and its consistent application between financial years, in a duly
documented and communicated form.
Adopted
Part I no. 38
VII.2. Statutory Audit of Accounts and Supervision
Principle
The supervisory body should establish and monitor clear and transparent formal procedures on the
relationship of the company with the statutory auditor and on the supervision of compliance, by the auditor,
with rules regarding independence imposed by law and professional regulations.
Recommendations:
VII.2.1. By internal regulations, the supervisory body should define,
according to the applicable legal regime, the monitoring procedures
aimed at ensuring the independence of the statutory audit.
Adopted
Part I no. 37, 38
and 46
VII.2.2. The supervisory body should be the main interlocutor of the
statutory auditor in the company and the first recipient of the respective
reports, having the powers, namely, to propose the respective
remuneration and to ensure that adequate conditions for the provision
of services are ensured within the company.
Adopted
Part I no. 38 and
45
VII.2.3. The supervisory body should annually assess the services
provided by the statutory auditor, their independence and their
suitability in carrying out their functions, and propose their dismissal or
the termination of their service contract by the competent body when
this is justified for due cause.
Adopted
Part I no. 38 and
45
EXPLANATION OF NON ADOPTION OF ADOPTED RECOMMENDATIONS:
III.1. Without prejudice to the legal powers of the chair of the managing body, if he or she
is not independent, the independent directors should appoint a coordinator from amongst
them, namely, to: (i) act, when necessary, as an interlocutor near the chair of the board
of directors and other directors, (ii) make sure there are the necessary conditions and
means to carry out their functions; and (iii) coordinate the independent directors in the
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assessment of the performance of the managing body, as established in recommendation
V.1.1.
Taking into consideration the specificities of the Company, notably its family owned nature and
capital concentration, and the total number of non-executive directors, and, among these,
independent directors, as well as the characteristics and position of the Chairman of the Board of
Directors, the Company believes that the appointment of a coordinator would not be appropriate
and would simply aim for the mere formal adoption of this recommendation, with which the company
does not agree.
In fact, and as has been mentioned in this report, the Company has implemented several rules and
mechanisms which allow for a regular liaison between different members of the Board of Directors,
notably in what concerns the Chairman and other directors, and the existence of required conditions
and means for the performance of their functions.
Therefore, this recommendation is not formally adopted by the Company, although all its objectives
are attained.
V.2.3. For each term of office, the remuneration committee or the general meeting, on
a proposal from that committee, should also approve the maximum amount of all
compensations payable to any member of a board or committee of the company due to
the respective termination of office. The said situation as well as the amounts should be
disclosed in the corporate governance report or in the remuneration report.
This recommendation is not complied with since the Remuneration Committee, although it is a
matter within its power, did not define the maximum amount of all compensation to be paid to the
member of any body or committee of the Company due to the respective termination of duties.
In fact, the Remuneration Committee has never, until today, felt the need to create a self-limitation
in relation to the aforementioned maximum amount regardless of the form of termination of duties
that is at stake. The specific circumstance to which this limitation refers does not take place
frequently and, when it happens, the sensitivity and specificity is always so great that it cannot fail
to impose a case-by-case assessment, even if integrated into the general remuneration regime and
with historical weighting.
It should be noted, however, that where the dismissal of directors does not result from a serious
violation of the duties of the director or from inability to carry out the normal duties, the company
will be obliged to pay compensation under the general terms of law, that may not exceed the amount
of remuneration that it would presumably receive until the end of the period for which it was elected.
V.2.8. A significant part of the variable component should be partially deferred in time,
for a period of no less than three years, being necessarily connected to the confirmation
of the sustainability of the performance, in the terms defined by a company’s internal
regulation.
The explanation for the non-adoption of this recommendation is set out in the remuneration policy
in force, which corresponds to Annex II to this Report, and reads as follows:
“Several writings sustain profusely the deferral of the payment of the variable part of remuneration
to a later time, which will enable the establishment of a direct relation between remuneration and
the impact of management on the Company over a longer period.
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We accept this principle as theoretically sound, but the historical element, associated to the stability
and the practice that has been followed successfully for years without the element of deferral, leads
us to not adopt that option for the time being.
As for the obligation to refund variable remuneration already delivered, and without prejudice to the
applicable legal regime, no mechanism is in place to allow the company to request the same from
the respective members of the management.”
The recommendation is thus not adopted by the Company, albeit it guarantees the substance which
would justify it even more than it would with its adoption.
In addition, it is noted that Navigator’s yearly consolidated results have always been, repeatedly and
consistently, highly positive, evidencing the sustainability in performance that the Recommendation
seeks to preserve. As a result, thereof, the possible partial deferment for a period of not less than
three years, of the variable component of remuneration, would have no impact on the right to a
variable component of Navigator directors.
However, it is important to clarify that Navigator is analysing the deferral model for the payment of
part of the variable remuneration with a view to its eventual implementation.
V.3.3. This nomination committee includes a majority of non- executive, independent
members.
The Nomination and Appraisal Committee of the Company is entirely composed of non-executive
directors, but only one is independent – Mariana Rita Antunes Marques dos Santos. In the selection
of the members of this committee, emphasis was placed on the diversity of profiles (age, gender,
qualifications, experience and professional background), ensuring that all have exempt analysis and
decision power and evidenced integrity of character.
The Company considers that this diversity of profiles, coupled with the fact that the Appointments
and Appraisals Committee resorts, whenever necessary, to market studies and the analysis of
comparable situations within the group, is enough to ensure that its analyses are in line with best
practices and strengthen independent and impartial decision-making.
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PARTE III – OTHER INFORMATION
There are no other elements or additional information that are relevant to the understanding of the
governance model and practices adopted.
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ANNEX 1 – Disclosures referred to in article 447
of the Companies’ Code
1) DISCLOSURES REFERRED TO IN ARTICLES 447 OF THE COMPANIES’ CODE (WITH
REFERENCE TO 2021)
Securities issued by Company and held by company officers:
− António José Pereira Redondo: 6,000 shares
− Adriano Augusto da Silva Silveira: 2,000 shares
2) INFORMATION ON OWN SHARES (required by Articles 66 and 324 no. 2 of the Companies
Code)
On 31 December 2021, the Company did not hold ay shares in its own share capital.
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ANNEX 2 – Remuneration Policy
REMUNERATION POLICY
FOR THE MEMBERS OF THE MANAGEMENT AND SUPERVISORY BODIES
OF NAVIGATOR
(2021 TO 2024)
I. Introduction
The Remuneration Committee of Navigator has been drawing up the remuneration policy
statement since 2008, originally in the context of a recommendation from the Securities Market
Commission (Comissão de Mercado de Valores Mobiliários – CMVM), from 2009 according to
Law no. 28/2009, of 19 June, and more recently in line with the recommendations of the 2018
Corporate Governance Code of the Portuguese Corporate Governance Institute.
With the entry into force of Law no. 50/2020, of 25 August, and the consequent repeal of Law
no. 28/2009, of 19 June, the Navigator Remuneration Committee must prepare a Remuneration
Policy for the members of its management and supervisory bodies in accordance with the new
legal regime.
It should be noted that, with the 2020 revision to the Corporate Governance Code of the
Portuguese Institute of Corporate Governance, and in view of the necessary harmonization with
Law no. 50/2020, of 25 August, the content of the policy remuneration is no longer based on a
recommendation.
This Remuneration Policy thus reflects the work carried out by the Remuneration Committee,
based on the previous statement on the remuneration policy and taking into account the
aforementioned new framework.
Considering Navigator's trajectory, this Committee continued to choose to reconcile, on the one
hand, new trends in terms of management remuneration options, and on the other, the weight
of history, previous options and the own features of this company.
The elaboration of the remuneration policy is the exclusive responsibility of the Remuneration
Committee, composed of three members, all of whom are independent from the management,
and must approved by the General Meeting, at least every four years and at every material
change to it.
In its performance, namely in determining, reviewing and applying the Policy, the Remuneration
Committee observes the applicable legislation and the policies and regulations in force at
Navigator, namely, the regulation on Conflicts of Interest and Related Parties Transactions,
which sets out operating rules with a view to preventing, identifying and resolving conflicts of
interest between society and its managers.
II. Legal and statutory regime
This policy is issued within the legal framework of the above mentioned Law 50/2020, of 25
August, which amended the Securities Code.
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As for that legal diploma, in addition to what it determines as to the frequency of the policy, its
approval and the disclosure of its content, it determines, in number 2 of article 26-C of the
Securities Code, in respect of its content, that the Policy have in consideration:
a) An explanation of how it contributes to the company’s business strategy, its long-
term interests and sustainability;
b) An explanation of how the employment and pay conditions of employees of the
company were taken into account when establishing the remuneration policy;
c) A description of the different components of fixed and variable remuneration,
d) A explanation of all bonuses and other benefits, in whatever form, which can be
awarded to members of the management and supervisory bodies, and indicate their
relative proportion;
e) An indication of the duration of the contracts or arrangements with members of the
management and supervisory bodies, the applicable notice periods, termination
clauses and payments linked to their termination;
f) Indication of the main characteristics of supplementary pension or early retirement
schemes.
In addition, paragraph 3 of article 26-C of the Securities Code stipulates that, in case the
provision of variable remuneration to directors is foreseen, the remuneration policy must
identify:
a) The criteria applied to the attribution of variable remuneration, including financial
and non-financial criteria and, if applicable, the criteria related to corporate social
responsibility, in a clear and comprehensive manner, and explain how these criteria
contribute to the company's corporate strategy, to its long-term interests and to its
sustainability;
b) The methods to be applied to determine to which extent the performance criteria
have been met;
c) The deferral periods and the possibility for the company to request the refund of the
variable remuneration already delivered.
On the other hand, number 4 of article 26-C of the Securities Code establishes that, in case the
provision of a share-based remuneration component is foreseen, the remuneration policy must
identify:
a) The periods for acquiring rights;
b) If applicable, the period for keeping shares after acquiring said rights;
c) The way in which share-based remuneration contributes to the company's corporate
strategy, its long-term interests and its sustainability.
In addition to the aforementioned Law no. 50/2020, of 25 August, any definition of
remuneration cannot fail to take into account both the general legal regime and the specific
regime adopted in the company's articles of association, when applicable.
The legal regime for the Board of Directors is essentially established in article 399 of the
Commercial Companies Code, and it essentially establishes the following:
• The setting of remunerations is the responsibility of the general meeting of
shareholders or of a commission appointed by it.
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• That definition of the remuneration must take into account the functions performed
and the economic situation of the company.
• The remuneration may be fixed or consist partially of a percentage of the profits of
the financial year, but the maximum percentage intended for the directors must be
authorized by a clause of the articles of association and not cover distributions of
reserves or any part of the profit of the year that could not, by law, be distributed
to shareholders.
For the Audit Board and for the members of the Board of the General Meeting, the law
determines that the remuneration must consist of a fixed amount, and that it be determined in
the same way by the general meeting of shareholders or by a committee appointed by the
same, taking into account functions performed and the economic situation of the company.
As for the articles of association, in the case of Navigator, there is a specific article only for the
Board of Directors, twenty-one, which simultaneously governs the retirement scheme, and has,
in the part that matters here, the following content:
“Article 21 – 1 - The remunerations of the directors, which may be different, shall be
established by a remunerations committee elected by the General Meeting for such
purpose, for periods of four years.”
This is the formal framework within which the remuneration policy must be defined.
III. General Principles
The general principles to be observed when setting the remuneration of the Company officers
are essentially those which in very general terms derive from the law: on the one hand, the
duties performed and on the other the state of the Company’s affairs. If we add to these the
general market terms for similar situations, we find that these appear to be the three main
general principles:
a) Duties performed.
The functions performed by each Company officer include functions in the formal sense, but
also the functions in the broader sense of the specific level of responsibility of the function
carried out, taking into account criteria as varied as, for example, commitment and dedicated
time, the nature, dimension, complexity and required skills for the function or the added value
to the Company resulting from a given type of intervention or an institutional representation.
The fact that time is spent by the officer on duties in other controlled companies also cannot be
taken out of the equation, due to the added responsibility this represents and in terms of the
existence of another source of income.
b) The state of the Company’s affairs.
The size of the Company and the inevitable complexity of the associated management
responsibilities, are clearly relevant aspects of the state of affairs, understood in the broadest
sense. And these aspects have implications in the need to remunerate a responsibility which is
greater in larger companies with complex business models and for the capacity to remunerate
management duties appropriately.
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c) Market Criteria.
It is unavoidably necessary to match supply to demand when setting any level of pay, and the
officers of a corporation are no exception.
It is essential to have the ability to attract, develop and retain competent professionals, which
requires that the Remuneration Policy be competitive and attractive in order to ensure the
legitimate individual interests, but essentially those of the Company, and the generation of
sustainable value to shareholders.
In the case of this Company, in view of its characteristics and size, the market criteria and
practices to be considered are those prevailing internationally, as well as those to be observed
in Portugal.
IV. Compliance of principles with the legal regime
Having stated the adopted general principles, it is now necessary to frame the principles in the
applicable legal regime.
1. Paragraph a) of number 2 of article 26-C of the Securities Code. Strategy, long-term
interests and sustainability.
Practice has shown that the remuneration system in force at Navigator is successful in
ensuring its corporate strategy and, in the long term, in aligning the interests of the members
of the management body with the interests of the company and its sustainability, especially
for the reasons set out below.
Firstly, for it is a remuneration that is sought to be fair and balanced within the principles
set out, and secondly, by associating the members of the management body to the results
through a variable component of the remuneration, which has the results as its main factor,
but also takes into account the behaviour skills of each director, such as their alignment with
the long-term interests of the company.
2. Paragraph b) of number 2 of article 26-C of the Securities Code. Employment and pay
conditions of employees.
The alignment between this Policy and the pay and employment conditions of Navigator
employees is ensured given that both remuneration systems are based on the same General
Principles set out in this Remuneration Policy, in particular market conditions in the reference
markets for the functions performed.
3. Paragraph c) of number 2 of article 26-C of the Securities Code. Fixed and variable
components of the remuneration.
The remuneration of the members of the Board of Directors consists of a fixed component,
corresponding to an annual amount, payable throughout the year, and, for Executive
Directors, it also incorporates a variable component that may correspond to a percentage
not exceeding five per percent of the previous year's net result.
The remuneration of the members of the Audit Board corresponds to a fixed annual amount,
payable throughout the year.
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Finally, the remuneration of the members of the Board of the General Meeting consists only
of a fixed amount, determined in accordance with the meetings that are actually held.
It should be noted that the specific values of the remunerations are fixed in compliance with
the principles defined above in chapter III of this Policy.
4. Paragraph d) of number 2 of article 26-C of the Securities Code. Bonuses and other benefits.
In addition to the variable component that may be attributed to the members of the
management bodies, no other non-cash benefits are attributed to the members of the
management and supervisory bodies, without prejudice to the means made available to
them for the exercise of their functions. and health and personal accident insurance in line
with market practices.
5. Paragraph e) of number 2 of article 26-C of the Securities Code. Arrangements relating to
the termination of Directors’ functions
There are not and have never been fixed by this Committee any arrangements relating to
the dismissal or termination of Directors’ functions. This fact is the natural result of the
particular situations existing in the company, and not a position of principle taken by this
Committee against the existence of agreements of this nature. Therefore, only the
supplementary legal regime defined in the Companies’ Code applies, which governs the
payment of any amounts to directors in case of termination of their mandates before expiry
of the term in office.
6. Paragraph f) of number 2 of article 26-C of the Securities Code. Supplementary pension or
early retirement schemes.
At Navigator there are presently no Supplementary pension or early retirement schemes for
Directors.
7. Paragraph a) of number 3 of article 26-C of the Securities Code. Criteria for the variable
component.
The definition, by this Committee, of a variable component of remuneration is based on a
target amount applied to each Director which is due in accordance with the individual's
performance and performance of the Company, that meet the expectations and the criteria
defined previously. The target amount is weighed by the aforementioned principles - market,
specific functions, state of the Company -, in particular comparable market circumstances in
positions equivalent in function. Another important factor that is taken into account when
setting the targets is Navigator’s option not to provide any share or share acquisition option
plans.
Actual performance compared to the expectations and goals, which determine variations vis-
à-vis the target, is weighed against a set of quantitative and qualitative KPIs of the
Company's performance (general business indicators) and of the relevant board member
(specific targets and behaviour indicators). Within the general business indicators, EBITDA,
net results, cash flow and Total Shareholder Return vs Peers are particularly relevant, and
in the behavioral skills, the alignment of each director with the long-term interests of the
company is highlighted.
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In addition to those criteria, in accordance with commitments undertaken by the Company
within its sustainability strategy and recognizing the importance of an efficient use of energy,
and the need to reduce fossil CO2 emissions from its economic activities, the implementation
of a corporate program for energy efficiency, approved in 2016, is also included in the
weighing.
In addition to the limit on management's profit sharing for the year, the Company also has
mechanisms for limiting variable remuneration.
On the one hand, the variable component is eliminated if the results show a deterioration
considered relevant to the company's performance in the last year or when it is expectable
in the year in course. And, on the other hand, the amount of the attributable variable
component has a cap defined in order to prevent that the positive performance at a time,
with immediate remuneration advantages for the management, be made at the sacrifice of
a good future performance.
In view of the above, it is clear that the criteria for the attribution of remuneration contribute
to the implementation of the strategy defined by Navigator, as well as to the long-term
interests and the sustainability of the Company.
8. Paragraph b) of number 3 of article 26-C of the Securities Code. Compliance with
performance criteria.
The performance criteria referred to in the previous paragraph are applied mathematically
in their quantitative part, and through valuation assessments with regard to the qualitative
part.
Within the process of determining the variable remuneration, the Remuneration Committee
prepares this Policy, and the performance assessment of each executive director follows an
internal structured process under the responsibility / leadership of the respective person in
charge (i.e., under the responsibility of the person who chairs the team, in the case of the
members of the Executive Committee, and under the responsibility of the Chairman of the
Board of Directors, in the case of the Chairman of the Executive Committee) and in which
also participate the non-executive directors that the responsible person deems relevant to
involve.
This process also involves the Appointments and Appraisals Committee, which is responsible
for monitoring the management's performance appraisal and remuneration attribution
system and giving its opinion on the individual performance appraisal proposals of the
executive management.
Finally, the Remuneration Committee is responsible for confirming, with regard to
performance assessment, the respective factors of achievement and ensuring the overall
consistency of the process, setting the variable remuneration.
9. Paragraph c) of number 3 of article 26-C of the Securities Code. Deferral and repayment of
remuneration.
Several writings sustain profusely the deferral of the payment of the variable part of
remuneration to a later time, which will enable the establishment of a direct relation between
remuneration and the impact of management on the Company over a longer period.
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We accept this principle as theoretically sound, but the historical element, associated to the
stability and the practice that has been followed successfully for years without the element
of deferral, leads us to not adopt that option for the time being.
As for the obligation to refund variable remuneration already delivered, and without
prejudice to the applicable legal regime, no mechanism is in place to allow the company to
request the same from the respective members of the management.
10. Number 4 of article 26-C of the Securities Code. Stock plans.
At Navigator, remuneration does not include a stock component.
VI. Specific Options
The specific options for the proposed remuneration policy can therefore be summarized as
follows:
1 In setting all remunerations, the general principles set out above will be observed: functions
performed, the state of the company and market criteria.
2 Executive Directors
• The remuneration of the executive directors will consist of a fixed component and a
variable component;
• The fixed component of the remuneration will consist of an annual amount, payable
throughout the year;
• The variable component of remuneration is associated with both the performance of
Navigator and the individual performance of each director;
• The process of attributing variable remuneration to executive directors, which is
monitored by the Appointments and Appraisals Committee, must follow the criteria
defined by the Remuneration Committee, and must not exceed the overall value of five
percent of the result consolidated net in IFRS format.
3 Non-Executive Directors
• The remuneration of non-executive directors will only consist of a fixed component, which
may be differentiated due to the accumulation of functions and increased responsibilities,
for example members of specialized committees or committees;
• The fixed component of remuneration will consist of an annual amount, payable
throughout the year, or a predetermined amount for each participation in the Board of
Directors' meeting.
4 Audit Board
• The remuneration of the members of the Audit Board will consist only of a fixed
component, which will consist of a fixed annual amount, payable throughout the year.
5 Board of the General Meeting
• The remuneration of the members of the Board of the General Meeting will consist only
of a fixed component, which will consist of a predetermined amount for each meeting,
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where the amount for the second and subsequent meetings that take place during the
same year is lower that the amount for the first meeting.
Lisbon, 6 April 2021
The Remuneration Committee
José Gonçalo Ferreira Maury
João Rodrigo Appleton Moreira Rato
João do Passo Vicente Ribeiro
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ANNEX 3 – Code of Ethics and Conduct
CODE OF ETHICS AND CONDUCT
I. General Objectives and Values
1. The Code of Ethics and Conduct
as the basis of the culture of
The Navigator Group
The pursuit of the aims set out in this Code of
Ethics and Conduct, respect for its values and
compliance with its rules of conduct together
form the professional ethos of The Navigator
Group business universe.
The Code of Ethics and Conduct is to be viewed
as setting standards of conduct interpreted as a
benchmark for behaviour, which The Navigator
Group and all its Collaborators should follow
and respect.
2. Fundamental Mission and Objectives
The Navigator Group aspires to extend the
leadership earned in the printing and writing
paper business to other businesses, thereby
asserting Portugal in the world, as a global
company, renown for developing, in an
innovative and sustainable manner, the forest
and providing products and services which
contribute to the prosperity of individuals.
The fundamental aims pursued by The
Navigator Group are based on the sustained
creation of value and the protection of
shareholders’ interests, with an appropriate
level of investor return, by offering the highest
standards of quality in the supply of goods and
services to customers, and through the
recruitment, motivation and development of
the most able and highly skilled professionals.
The Navigator Group will always promote a
meritocratic culture which allows the personal
and professional development of its
Collaborators and, through their commitment,
position the Group at the forefront of the
markets in which it operates, maintaining a
policy on the sustainable management of
natural resources, mitigation of environmental
impacts and fostering social development in the
areas in which it carries on its business
operations.
Due to their being core principles and of a
general nature, the matters governed in the
Code of Ethics and Conduct may be detailed in
internal guidelines, policies and procedures, or
in specific codes of conduct.
3. Values
The principles and rules of conduct set out in
the Code of Ethics and Conduct result from the
establishment of values deemed to be
fundamental to The Navigator Group, and
which should be permanently pursued within its
corporate activity, in particular:
(a) Trust – We believe in people, we welcome
everyone’s contribution, we respect their
identity, promoting development,
cooperation and communication;
(b) Integrity – We are guided by principles of
transparency, ethics and respect in our
dealings amongst ourselves and with
others;
(c) Entrepreneurship – We are passionate
about what we do, we like to get out of our
comfort zone, we have the courage to take
decisions and to accept risks in a
responsible way;
(d) Innovation – We seek to bring out
everyone’s skills and creative potential to
do the impossible;
(e) Sustainability – Corporate, social and
environmental sustainability is our business
model;
(f) Excellence – In our work we focus on
quality, efficiency, safety and getting it
right.
II. Scope of Application and Interpretation
4. Scope of Application
The Code of Ethics and Conduct applies to all
Collaborators of all entities in The Navigator
Group.
The rules set out herein should govern the
ethical and professional conduct of all those
working in The Navigator Group, in the
pursuance of its corporate activity and in their
relationships with third parties, and are an
essential tool of the corporate policy and
culture followed and fostered by The Navigator
Group.
2021 Consolidated Annual Report
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5. Interpretation
For the purposes of this Code of Ethics and
Conduct, the following defined terms shall have
the following meanings:
(a) Collaborators – all persons who work in or
provide services, in a permanent or merely
casual form, to companies in The Navigator
Group, including, notably, members of
corporate bodies, employees, service
providers, representatives and auditors or
consultants;
(b) Clients – natural or legal entities to which
companies in The Navigator Group supply
their products or provide their services;
(c) Suppliers – natural or legal entities which
supply products or provide services to The
Navigator Group companies;
(d) Stakeholders – natural or legal entities
with which The Navigator Group companies
deal in their business, institutional or social
activities, including shareholders, members
of corporate bodies, Collaborators, Clients,
Suppliers, business partners or members of
the communities with whom The Navigator
Group interacts.
II. Rules of Conduct
6. Compliance with Legislation and
Regulation
The activity of The Navigator Group and its
Collaborators shall be based on strict
compliance with legal, statutory and regulatory
regulations, applicable to the activity and
companies of The Navigator Group, in the
jurisdictions of the countries where they
operate.
7. Public Authorities
The activity of The Navigator Group and its
Collaborators shall be based on a permanent
collaboration with public authorities, notably
with regulatory bodies, complying with requests
legitimately made to them and which are at
their reach and adopting the behaviour which
permits these authorities to exercise their
powers.
8. Integrity
The practice of corruption and bribery is
forbidden, in all active or passive forms,
through act or omission, by creating or
maintaining situations of favouritism or other
irregularities, or adopting behaviours which
may create, in their counterparts, expectations
of favouritism in their relations with The
Navigator Group.
9. Transparency
The Navigator Group is committed to reporting
is performance in a transparent way, taking
into consideration applicable legal duties and
good practices of the capital and financial
markets.
10. Confidentiality
10.1. Collaborators must keep the confidentiality of
all information concerning The Navigator Group,
other Collaborators, Clients, Suppliers or
Stakeholders, of which they have knowledge by
virtue of carrying out their functions and which
are not publicly known or notorious. Such
information is restricted and only for internal use
in The Navigator Group.
10.2. Collaborators must maintain confidential the
information mentioned in the previous
paragraph, even after termination of their
functions in The Navigator Group and regardless
of the cause of such termination.
10.3. Confidential information may only be
disclosed to third parties in accordance with
legal requirements or provided disclosure
thereof is previously authorized, in writing, by
the Board of Directors.
11. Securities trading
Any Collaborators who are in possession of
information relating to The Navigator Company,
of a precise nature, which has not been made
public, and which, if it were made public, would
be likely to have a significant effect on the
prices of The Navigator Company shares and
other related financial instruments, may not, in
the period prior to disclosure of such
information, trade securities issued by The
Navigator Company, its strategic partners or
companies involved in transactions or dealings
with The Navigator Company, not disclose
same information to third parties.
In particular, estimates of results, decisions on
significant acquisitions, sales or partnerships
and winning or losing of important contracts
constitute forms of inside information.
12. Conflicts of Interest
12.1. The Navigator Group undertakes to adopt
measures which ensure impartiality of decision
making processes, in cases of a potential conflict
of interests involving The Navigator Group or its
Collaborators.
2021 Consolidated Annual Report
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12.2. Collaborators may not pursue private
objectives in competition with The Navigator
Group and obtain benefits, advantages or
personal favours by virtue of the position held or
the functions performed.
12.3. Collaborators must promptly inform their
immediate superior of any situation which might
create a conflict of interests, notably if, as part
of their functions, they are called on to intervene
in procedures or decisions which involve, directly
or indirectly, organisations, entities or persons
with whom they collaborate or have
collaborated, or with whom they have a relation,
by virtue of family ties, proximity or influence.
In addition, they may also make such
communication in any other cases where their
impartiality may be questioned.
13. Relations with Shareholders
13.1. The primary objectives of The Navigator
Group are the protection of shareholders and
investors and a quest to create value for
Shareholders.
13.2. The Navigator Company undertakes to respect
the principle of equal treatment of Shareholders,
taking into consideration the proportion of their
holdings in the share capital of The Navigator
Company, notably ensuring the timely provision
of information, in accordance with the applicable
legal duties.
14. Competition
The competition practices of The Navigator
Group shall comply strictly with applicable
competition laws, in accordance with market
rules and criteria, and with a view to promoting
fair competition.
15. Intellectual and Industrial Property
The Navigator Group and its Collaborators must
respect Intellectual and Industrial Property of
Suppliers, Clients and Stakeholders.
16. Relations with Clients, Suppliers, Services
Providers and Third Parties
16.1. The Navigator Group shall ensure that the
conditions of sale of products to its Clients are
clearly defined, and all companies in The
Navigator Group and its Collaborators must
ensure compliance with such conditions.
16.2. Suppliers and providers of services to The
Navigator Group shall be selected on the basis
of objective criteria, taking into consideration
the terms proposed, guarantees effectively
provided and the overall optimization of
advantages for The Navigator Group.
16.3. Suppliers and services providers of The
Navigator Group must comply with the
provisions of The Code of Ethics and Conduct for
Suppliers and services providers of The
Navigator Group.
16.4. The Navigator Group and its Collaborators
shall always negotiate in compliance with the
principle of good faith and applicable legal
obligations and good practices.
17. Relations with Political Parties and
Movements
Dealings between The Navigator Group and its
Collaborators with political parties or
movements shall be conducted in compliance
with applicable legal rules, and in the course of
such dealings Collaborators may not invoke
their relation with The Navigator Group.
18. Social Responsibility and Sustainable
Development
18.1. The Navigator Group accepts its social
responsibility to the communities in which it
carries on its business activities, as a means of
contributing to their advancement and well-
being.
18.2. The Navigator Group undertakes to adopt,
comply with and promote a Policy on
sustainability and environment protection.
19. Safety and Working Conditions
19.1. The Navigator Group will never employ child
or forced labour, nor will it ever collude with such
practices, and it shall adopt the measures
deemed appropriate to combat such situations,
notably by public denunciation, whenever they
come to its attention.
19.2. The health and safety of its Collaborators is a
priority for The Navigator Group, and
accordingly all Collaborators shall seek to know
and comply with the legislation in force and with
internal rules and recommendations on such
matters.
19.3. Collaborators must give immediate notice of
any accident or hazard to hygiene, safety and
health in the workplace, in accordance with the
above mentioned rules, and the necessary or
advisable preventative measures shall be
adopted.
20. Professional development and
progression
20.1. The Navigator Group provides appropriate
training activities to its Collaborators and fosters
2021 Consolidated Annual Report
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their continued training, as a driver of their
motivation and improved performance,
recognizing the added value of their professional
and personal development.
20.2. The Navigator Group values and holds
responsible Collaborators in the performance of
their functions, taking into consideration their
individual merit, allowing them to assume the
level of independence and responsibilities
associated with their skills and commitment.
20.3. The Navigator Group policies on selection,
hiring, remuneration and professional
progression are based on merit criteria and
reference market practices.
20.4. The Navigator Group shall ensure equality of
opportunities and respect for gender equality in
recruitment, hiring and professional
development, attaching value only to
professional aspects. To that effect, all
Collaborators shall adopt the measures deemed
appropriate to combat and prevent any form of
discrimination or differentiated treatment on the
basis of, notably, ethnic or social origin, religious
beliefs, nationality, gender, marital status,
sexual orientation or physical disability.
21. Respect
In their relations with other Collaborators and
Suppliers, counterparts, Clients and
Stakeholders, all Collaborators shall proactively
act in a correct, respectful, loyal and civil
manner.
22. Non-discrimination and harassment
22.1. Collaborators may not act in a discriminatory
manner in relation to other Collaborators or
other persons, notably based on race, religion,
gender, sexual orientation, origin, age,
language, territory of origin, political or
ideological convictions, economic situation,
social and economic situation or type of
contract, and must foster respect for human
dignity as one of the basic principles of the
culture and policy of The Navigator Group.
22.2. Any practice which may correspond to a form
of harassment, notably through personal
offence, mobbing, moral or sexual harassment
or bullying is strictly forbidden.
23. Use of Assets
23.1. Collaborators shall make sensible and
reasonable use of the working resources at their
disposal, avoiding waste and undue use.
23.2. Collaborators shall care for the property of The
Navigator Group, and not behave wilfully or
negligently in any manner which might
undermine its state of repair.
24. Personal Data Protection
24.1. The Navigator Group understands the key role
of privacy and protection of personal data of its
Clients, Stakeholders, Suppliers, Collaborators
or any other natural persons or collaborators of
any other entities. Accordingly, The Navigator
Group and its Collaborators undertake to use
such information in a responsible manner, in
strict compliance with laws and regulations
governing the protection of personal data.
24.2 Collaborators must not collect personal data,
create lists of personal data or process or
transfer personal data without prior consultation
and authorisation from the division which is
responsible for data protection.
25. External Communication – Media and
Advertising
Information provided by The Navigator Group
and its Collaborators to the media, including for
advertising purposes, shall:
(a) Be released exclusively by management and
divisions authorised for that purpose and to
act as representative or spokesman of The
Navigator Group;
(b) To comply with the principles of legality,
accuracy, opportunity, objectivity,
truthfulness and clarity;
(c) Protect the secrecy and confidentiality of the
information, in order to protect the interests
of The Navigator Group;
(d) Respect cultural and ethical parameters of
the community and human dignity;
(e) Contribute to an image of consistency,
creation of value and dignity of The
Navigator Group, promoting its good name
in society.
26. Communicating in social networks and
media
Collaborators are fully aware that the new
forms of communication, which are continually
evolving, may have a strong impact on The
Navigator Group and its Collaborators and that
the dissemination and distribution of
information through those channels may easily
represent loss of control over those contents.
Accordingly, Collaborators undertake as their
commitment that, when using social networks
2021 Consolidated Annual Report
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and means of communication (both traditional
and recent), they:
(a) Shall act in an ethically responsible way,
contributing to the creation of value and
dignity of The Navigator Group and to
reinforce its image in society;
(b) Shall respect, comply with and reflect the
principles, values and rules of conduct
established in this Code of Ethics and
Conduct;
(c) Shall not post or otherwise disclose
confidential or internal information of The
Navigator Group;
(d) Shall not communicate, identifying
themselves as Collaborators of The
Navigator Group, without authorization for
that purpose.
IV. Supervision, Default and Communication
27. Non-compliance
Failure to comply with the rules of conduct
established in this Code of Ethics and Conduct
shall constitute serious misconduct, subject to
disciplinary proceedings, in addition to any
possible civil, administrative or criminal liability,
in accordance with applicable laws and
regulations.
28. Reporting
28.1 Collaborators should report the occurrence of
any conduct which is not compatible with the
rules set out in this Code of Ethics and Conduct,
of which they are aware or justifiably suspicious,
in a timely and efficient way, through the proper
channels, in accordance with the internal rules
of procedure governing the reporting of
irregularities.
28.2. The Navigator Group guarantees the
confidentiality of information conveyed in
reports, in accordance with the internal rules of
procedure governing the reporting of
irregularities.
28.3. The Navigator Group shall not retaliate, in any
way, against a person who reports any non-
compliance with the Code of Ethics and Conduct
or another irregularity, shall ensure a fair
treatment of the persons addressed therein and
will not allow the resulting detrimental
treatment where a Collaborator has acted in
good faith, thoughtfully and diligently.
28.4. In accordance with the general terms of the
law, misuse or abuse of the arrangements for
reporting irregularities may render the author of
a report liable to disciplinary measures and/or
legal proceedings.
29. Doubts and Queries
Collaborators may place doubts and queries in
respect of the interpretation or application of
the Code of Ethics and Conduct, to the Risk
Management Division or to the Legal Services
Division. The Navigator Group also establishes
a permanent arrangement for communications,
direct and confidential, through the Board of
Directors, to which any Collaborator may
resort, through the internal rules of procedure
governing the reporting of irregularities.
30. Procedure
30.1. All reports received by The Navigator
Company will be dealt with in accordance with
the internal rules of procedure governing the
reporting of irregularities.
30.2. The Executive Committee and the Audit Board
will be informed of all reports received which
concern a member of the Board of Directors or
of the Audit Board.
31. Annual Report
31.1. The Ethics Committee shall draw up an annual
report on compliance with the rules established
in this Code of Ethics and Conduct, detailing all
irregularities of which it is aware, and setting out
the conclusions and follow-up proposals adopted
in the different cases which it examined.
31.2. For the purposes of the preceding paragraph,
the Risk Management and Legal Services
Divisions shall report to the Ethics Committee all
relevant facts which come to their attention.
V. Communication
32. Communication of the Code of Ethics and
Conduct
32.1. The Code of Ethics and Conduct of The
Navigator Group shall be published on the
company’s website and as an appendix to the
annual account reporting documents, so that
they may be known by Shareholders, Clients,
Suppliers, Stakeholders, investors and other
entities with whom the Group relates.
32.2. The Navigator Group shall make the Code of
Ethics and Conduct available to all Collaborators
and promote its disclosure and general
awareness and mandatory compliance with its
provisions.
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195
8. CONSOLIDATED FINANCIAL STATEMENTS
2021 Consolidated Annual Report
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196
CONSOLIDATED INCOME STATEMENT
FOR THE PERIODS ENDED 31 DECEMBER 2021 AND 2020
The accompanying notes form an integral part of these consolidated financial statements.
Amounts in Euro
Note 2021 2020
Revenue 2.1 1,595,870,445 1,385,360,624
Other operating income 2.2 31,380,233 38,960,170
Changes in the fair value of biological assets 3.8 (1,260,391) 16,814,611
Costs of goods sold and materials consumed 4.1 (629,794,745) (569,724,151)
Variation in production 4.1 1,612,980 (32,545,175)
External services and supplies 2.3 (449,402,361) (392,254,701)
Payroll costs 7.1 (155,015,795) (132,129,704)
Other operating expenses 2.3 (38,674,036) (28,973,873)
Net provisions 10.1 (3,142,944) (2,310,288)
Depreciation, amortisation and impairment losses in non-financial
assets
3.7 (121,999,345) (142,772,875)
Operating income 229,574,041 140,424,638
Financial income and gains 5.11 3,430,634 7,971,811
Other financial expenses and losses 5.11 (21,207,843) (22,657,443)
Net financial results (17,777,209) (14,685,632)
Gains/(losses) of associated companies and joint ventures - -
Profit before income tax 211,796,832 125,739,006
Income tax 6.1 (40,378,319) (16,522,754)
Net profit for the period 171,418,513 109,216,252
Attributable to Navigator's equity holders 171,411,455 109,213,720
Attributable to non-controlling interests 5.6 7,058 2,532
Earnings per share
Basic earnings per share, Eur 5.3 0.241 0.154
Diluted earnings per share, Eur 5.3 0.241 0.154
2021 Consolidated Annual Report
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197
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIODS ENDED 31 DECEMBER 2021 AND 2020
The accompanying notes form an integral part of these consolidated financial statements.
Amounts in Euro Note 2021 2020
Net profit for the period
before non-controlling interests 171,418,513 109,216,252
Items that may be reclassified to profit and loss
Hedging derivative financial instruments
Changes in fair value 8.2 1,430,747 (354,422)
Tax effect (393,456) 96,299
Currency translation differences (3,464,432) (2,152,620)
Tax on conventional capital remuneration (770,000) (827,750)
Items that cannot be reclassified to profit and loss
Remeasurement of post-employment benefits
Remeasurement 7.2.5 1,924,988 (10,245,329)
Tax effect 7.2.5 (223,719) 254,213
Comprehensive income of associated companies and joint ventures (1,448,450) 1,934,870
Total other comprehensive income net of taxes (2,944,322) (11,294,739)
Total comprehensive income 168,474,191 97,921,513
Attributable to:
Navigator's equity holders 168,462,477 97,920,148
Non-controlling interests 11,714 1,365
168,474,191 97,921,513
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198
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2021 AND 2020
The accompanying notes form an integral part of these consolidated financial statements.
Amounts in Euro Note 2021 2020
ASSETS
Non-current assets
Goodwill 3.1 377,339,466 377,339,466
Intangible assets 3.2 24,752,529 11,912,684
Property, plant and equipment 3.3 1,145,244,507 1,183,949,592
Right-of-use assets 3.6 51,192,959 51,827,000
Biological assets 3.8 147,324,061 148,584,452
Investment properties 3.4 92,589 94,236
Non-current receivables 4.2 8,604,547 34,696,105
Deferred tax assets 6.2 28,037,408 30,629,217
1,782,588,066 1,839,032,752
Current assets
Inventories 4.1 186,550,658 176,735,137
Current receivables 4.2 317,882,760 231,772,282
Income tax 6.1 1,118,815 3,482,762
Cash and cash equivalents 5.9 239,171,252 302,399,831
744,723,485 714,390,012
Total Assets 2,527,311,551 2,553,422,764
EQUITY AND LIABILITIES
Capital and Reserves
Share capital 5.2 500,000,000 500,000,000
Treasury shares 5.2 - (20,189,264)
Currency translation reserve 5.5 (24,346,001) (20,881,569)
Fair value reserve 5.5 (5,604,076) (6,641,368)
Legal reserves 5.5 100,000,000 100,000,000
Other reserves 5.5 121,836,100 266,443,646
Retained earnings 5.5 231,525,876 97,981,342
Net profit for the period 171,411,455 109,213,720
Prepaid dividends 5.4 (49,996,170) -
Equity attributable to Navigator's equity holders 1,044,827,184 1,025,926,507
Non-controlling interests 5.6 286,896 275,182
Total Equity 1,045,114,080 1,026,201,689
Non-current liabilities
Interest-bearing liabilities 5.7 714,625,892 690,878,427
Lease liabilities 5.8 47,417,092 47,473,102
Pensions and other post-employment benefits 7.2 5,674,918 12,562,465
Deferred tax liabilities 6.2 92,528,775 85,962,014
Provisions 10.1 26,752,081 23,409,335
Non-current payables 4.3 37,014,427 30,234,237
924,013,185 890,519,580
Current liabilities
Interest-bearing liabilities 5.7 119,318,157 291,532,356
Lease liabilities 5.8 5,823,833 5,607,817
Current payables 4.3 393,161,894 303,649,690
Income tax 6.1 39,880,402 35,911,632
558,184,286 636,701,495
Total Liabilities 1,482,197,471 1,527,221,075
Total Equity and Liabilities 2,527,311,551 2,553,422,764
2021 Consolidated Annual Report
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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE PERIODS ENDED 31 DECEMBER 2021 AND 2020
The accompanying notes form an integral part of these consolidated financial statements.
Amounts in Euro Note Share capital
Treasury
shares
Currency
translation
reserve
Fair value
reserves
Legal reserves Other reserves
Retained
earnings
Net profit for the
period
Prepaid
dividends
Total
Non-
controlling
interests
Total
Equity as at 01 January 2021 500,000,000 (20,189,264) (20,881,569) (6,641,368) 100,000,000 266,443,646 97,981,342 109,213,720 - 1,025,926,507 275,182 1,026,201,689
Net profit for the period - - - - - - - 171,411,455 - 171,411,455 7,058 171,418,513
Other comprehensive income (net of taxes) - - (3,464,432) 1,037,292 - - (521,838) - - (2,948,978) 4,656 (2,944,322)
Total comprehensive income for the period - - (3,464,432) 1,037,292 - - (521,838) 171,411,455 - 168,462,477 11,714 168,474,191
Application of 2020 net profit for the period:
- Dividends paid 5.4 - - - - - - (99,565,630) - - (99,565,630) - (99,565,630)
- Application of prior period's net profit - - - - - - 116,213,720 (109,213,720) - 7,000,000 - 7,000,000
- Bonus to employees - - - - - - (7,000,000) - - (7,000,000) - (7,000,000)
Transfer of free reserves to retained earnings - - - - - (138,290,615) 138,290,615 - - - - -
Incorporation of reserves 6,316,931 - - - - (6,316,931) - - - - - -
Cancellation of treasury shares 5.2 (6,316,931) 20,189,264 - - - - (13,872,333) - - - - -
Prepaid dividends 5.4 - - - - - - - - (49,996,170) (49,996,170) - (49,996,170)
Total transactions with shareholders - 20,189,264 - - - (144,607,546) 134,066,372 (109,213,720) (49,996,170) (149,561,800) - (149,561,800)
Equity as at 31 December 2021 500,000,000 - (24,346,001) (5,604,076) 100,000,000 121,836,100 231,525,876 171,411,455 (49,996,170) 1,044,827,184 286,896 1,045,114,080
Amounts in Euro Note Share capital
Treasury
shares
Currency
translation
reserve
Fair value
reserves
Legal reserves Other reserves
Retained
earnings
Net profit for the
period
Prepaid
dividends
Total
Non-
controlling
interests
Total
Equity as at 01 January 2020 500,000,000 (20,189,264) (18,728,949) (6,384,412) 100,000,000 98,153,331 206,004,258 168,290,315 - 1,027,145,277 273,817 1,027,419,094
Net profit for the period - - - - - - - 109,213,720 - 109,213,720 2,532 109,216,252
Other comprehensive income (net of taxes) - - (2,152,620) (256,956) - - (8,883,996) - - (11,293,572) (1,167) (11,294,739)
Total comprehensive income for the period - - (2,152,620) (256,956) - - (8,883,996) 109,213,720 - 97,920,148 1,365 97,921,513
Application of 2019 net profit for the period:
- Dividends paid 5.4 - - - - - - - - - - - -
- Application of prior period's net profit - - - - - 168,290,315 (99,138,920) (168,290,315) - (99,138,920) - (99,138,920)
- Bonus to employees - - - - - - - - - - - -
Acquisition of treasury shares 5.2 - - - - - - - - - - - -
Total transactions with shareholders - - - - - 168,290,315 (99,138,920) (168,290,315) - (99,138,920) - (99,138,920)
Equity as at 31 December 2020 500,000,000 (20,189,264) (20,881,569) (6,641,368) 100,000,000 266,443,646 97,981,342 109,213,720 - 1,025,926,507 275,182 1,026,201,689
2021 Consolidated Annual Report
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CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIODS ENDED 31 DECEMBER 2021 AND 2020
Interest and similar income: essentially correspond to the receipt of compensatory interest (Note 5.11);
Interest and similar expenses: essentially correspond to payments related to interest borne on debt securities and financial debt
(Note 5.11);
Intangible assets: corresponds to the purchase of CO
2
allowances from Vertis (Note 3.2)
The accompanying notes form an integral part of these consolidated financial statements.
Amounts in Euro Note 2021 2020
OPERATING ACTIVITIES
Receipts from customers 1,585,718,491 1,499,083,337
Payments to suppliers (1,165,320,806) (1,071,334,375)
Payments to employees (111,579,111) (108,465,914)
Cash flow from operations 308,818,574 319,283,048
Income tax received/ (paid) 6.1 (20,649,602) 19,422,440
Other (payments)/ receipts relating to operating activities 65,584,535 18,265,756
Cash flows from operating activities (1) 353,753,507 356,971,244
INVESTING ACTIVITIES
Inflows:
Property, plant and equipment 3,065,224 1,122,990
Interest and similar income 5,308,813 5,256,538
8,374,037 6,379,528
Outflows:
Property, plant and equipment (86,841,984) (94,195,589)
Intangible assets (17,416,194) (4,611,698)
(104,258,178) (98,807,287)
Cash flows from investing activities (2) (95,884,141) (92,427,759)
FINANCING ACTIVITIES
Inflows:
Interest-bearing liabilities 5.10 147,500,000 240,000,000
147,500,000 240,000,000
Outflows:
Interest-bearing liabilities 5.10 (291,527,778) (133,194,444)
Amortisation of lease agreements (8,965,290) (8,789,630)
Interest and similar expense (14,161,246) (20,907,437)
Distribution of dividends 5.4 (149,561,800) (99,138,920)
Distribution of reserves 5.4 - (99,138,920)
Other financing activities 5.10 (4,472,875) (1,371,910)
(468,688,989) (362,541,261)
Cash flows from financing activities (3) (321,188,989) (122,541,261)
CHANGES IN CASH AND CASH EQUIVALENTS (1)+(2)+(3) (63,319,623) 142,002,224
Effect of exchange rate changes on cash and cash equivalents 91,044 (1,482,795)
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD 5.9 302,399,831 161,880,403
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD 5.9 239,171,252 302,399,831
2021 Consolidated Annual Report
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT 31 DECEMBER 2021
1. INTRODUCTION 204
1.1. THE GROUP ...................................................................................................204
1.2. NAVIGATOR STRATEGY UPDATE ......................................................................206
1.3. IMPACTS OF THE COVID-19 PANDEMIC ............................................................206
1.4. SUBSEQUENT EVENTS ....................................................................................208
1.5. BASIS FOR PREPARATION ...............................................................................209
1.6. IFRS ADOPTED AND TO BE ADOPTED ...............................................................214
1.7. SIGNIFICANT ESTIMATES AND JUDGMENTS ......................................................218
2. OPERATIONAL PERFORMANCE 219
2.1. REVENUE AND SEGMENT REPORTING...............................................................219
2.2. OTHER OPERATING INCOME ...........................................................................225
2.3. OTHER OPERATING EXPENSES ........................................................................226
3. INVESTMENTS 229
3.1. GOODWILL ...................................................................................................229
3.2. INTANGIBLE ASSETS ......................................................................................232
3.3. PROPERTY, PLANT AND EQUIPMENT .................................................................234
3.4. INVESTMENT PROPERTIES ..............................................................................237
3.5. GOVERNMENT GRANTS...................................................................................237
3.6. RIGHT-OF-USE ASSETS ..................................................................................240
3.7. DEPRECIATION, AMORTISATION AND IMPAIRMENT LOSSES ...............................241
3.8. BIOLOGICAL ASSETS .....................................................................................241
4. WORKING CAPITAL 244
4.1. INVENTORIES ...............................................................................................244
4.2. RECEIVABLES ................................................................................................246
2021 Consolidated Annual Report
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4.3. PAYABLES .....................................................................................................249
5. CAPITAL STRUCTURE 250
5.1. CAPITAL MANAGEMENT ..................................................................................250
5.2. SHARE CAPITAL AND THEASURY SHARES .........................................................250
5.3. EARNINGS PER SHARE ...................................................................................252
5.4. DIVIDENDS AND RESERVES DISTRIBUTED .......................................................252
5.5. RESERVES AND RETAINED EARNINGS ..............................................................253
5.6. NON-CONTROLLING INTERESTS ......................................................................255
5.7. INTEREST-BEARING LIABILITIES .....................................................................255
5.8. LEASE LIABILITIES ........................................................................................259
5.9. CASH AND CASH EQUIVALENTS ......................................................................260
5.10. CASH FLOWS FROM FINANCING ACTIVITIES ...................................................261
5.11. NET FINANCIAL RESULTS ..............................................................................261
6. INCOME TAX 262
6.1. INCOME TAX FOR THE PERIOD ........................................................................262
6.2. DEFERRED TAXES ..........................................................................................266
7. PAYROLL 267
7.1. PAYROLL COSTS ............................................................................................267
7.2. EMPLOYEE BENEFITS .....................................................................................268
7.3. REMUNERATION OF CORPORATE BODIES .........................................................273
8. FINANCIAL INSTRUMENTS 274
8.1. FINANCIAL RISK MANAGEMENT .......................................................................274
8.2. DERIVATIVE FINANCIAL INSTRUMENTS ............................................................282
8.3. FINANCIAL ASSETS AND LIABILITIES ...............................................................285
9. OPERATIONAL RISK MANAGEMENT 287
9.1. SPECIFIC RISKS INHERENT TO THE SECTORS OF ACTIVITY IN WHICH THE GROUP
OPERATES ...........................................................................................................287
2021 Consolidated Annual Report
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10. PROVISIONS, COMMITMENTS AND CONTINGENCIES 304
10.1. PROVISIONS ...............................................................................................304
10.2. COMMITMENTS ............................................................................................305
10.3. CONTINGENT ASSETS AND LIABILITIES .........................................................306
11. GROUP STRUCTURE 308
11.1. COMPANIES INCLUDED IN THE CONSOLIDATION PERIMETER ............................308
11.2. CHANGES IN THE CONSOLIDATION PERIMETER ...............................................309
11.3. TRANSACTIONS WITH RELATED PARTIES .......................................................309
12. Explanation added for translation 311
2021 Consolidated Annual Report
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1. INTRODUCTION
The following symbols are used in the presentation of the Notes to the financial statements:
Accounting policies
This symbol indicates
the disclosure of accounting
policies specifically applicable
to the items
in the respective Note.
Significant
Estimates and
Judgements
This symbol indicates
the disclosure of the estimates
and/or judgements made
regarding the items
in the respective Note.
Significant estimates and
judgements
are indicated in Note 1.8.
Reference
This symbol indicates
a reference to another Note or
another section of the
Financial Statements
were more information about
the items disclosed is
presented.
1.1. THE GROUP
The Navigator Group (Group) is comprised by The Navigator Company, S.A., whose designation has
not changed during the year (until 2015 designated as Portucel, S.A.), and its subsidiaries.
The Navigator Group was created in the mid 1950’s, when a group of technicians from “Companhia
Portuguesa de Celulose de Cacia” made this company the first in the world to produce bleached
eucalyptus sulphate pulp.
In 1976, Portucel EP was created as a result of the nationalization of all of Portugal’s cellulose
industry. As such, Portucel – Empresa de Celulose e Papel de Portugal, E.P. resulted from the merger
with CPC – Companhia de Celulose, S.A.R.L. (Cacia), Socel – Sociedade Industrial de Celulose,
S.A.R.L. (Setúbal), Celtejo – Celulose do Tejo, S.A.R.L. (Vila Velha de Ródão), Celnorte – Celulose
do Norte, S.A.R.L. (Viana do Castelo) and Celuloses do Guadiana, S.A.R.L. (Mourão), being
converted into a mainly public anonymous society by Decree-Law No. 405/90, of 21 December.
Years after, as a result of the restructuring of Portucel – Empresa de Celulose e Papel de Portugal,
S.A., which was renamed Portucel, SGPS, S.A., towards to its privatization, Portucel S.A. was
created, on 31 May 1993, through Decree-law No. 39/93, of 13 February, with the former assets of
the two main companies, based in Aveiro and Setúbal.
In 1995, the Company was privatised, and became a publicly traded company.
Aiming to restructure the paper industry in Portugal, Portucel acquired Papéis Inapa, S.A. (Setúbal),
in 2000, and Soporcel – Sociedade Portuguesa de Papel, S.A. (Figueira da Foz), in 2001. Those key
strategic decisions resulted in the Portucel Soporcel Group (currently Navigator Group), which is
currently the largest European and one of the world’s largest producers of bleached eucalyptus pulp
and uncoated wood-free paper (UWF), with a capacity of 1.6 and 1.6 millions of tons, and it sells
approximately 300 thousand tons of pulp (393 thousand tons in 2020), annually, integrating the
remainder in the production of UWF paper and tissue paper.
2021 Consolidated Annual Report
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In June 2004, the Portuguese State sold 30% of Portucel's equity, which was acquired by Semapa
Group. In September of the same year, Semapa launched a public acquisition offer tending to assure
the Group’s control, which was accomplished by guaranteeing a 67.1% stake of Portucel’s equity.
In November 2006, the Portuguese State concluded the third and final stage of the sale of Portucel,
S.A., and Párpublica, SGPS, S.A. (formerly Portucel, SGPS, S.A.) sold the remaining 25.72% it still
held.
From 2009 to June 2015, more than 75% of the Company’s share capital was held directly and
indirectly by Semapa – Sociedade de Investimento e Gestão SGPS, S.A. (excluding treasury shares)
having the percentage of voting rights been reduced to 70% following the conclusion of the offer for
the acquisition, in the form of an exchange offer, of the ordinary shares of Semapa, SGPS, S.A., in
July 2015.
In February 2015, the Group started its activity in the Tissue segment with the acquisition of AMS-
BR Star Paper, S.A. (currently denominated Navigator Tissue Ródão, S.A.), a company that holds
and explores a tissue paper mill, located in Vila Velha de Ródão. A new industrial facility was built in
Aveiro, in August 2018, being operated by Navigator Tissue Aveiro, S.A., which is currently the
largest Portuguese producer and the third in the Iberian Peninsula, with a production and
transformation capacity of 130 thousand tons and 120 thousand tons, respectively.
The Navigator Group’s main business is the production and sale of writing and printing thin paper
(UWF) and domestic consumption paper (Tissue), and it is present in the entire value added chain,
from research and development of forestry and agricultural production, to the purchase and sale of
wood and the production and sale of bleached eucalyptus kraft pulp – BEKP – and electric and
thermal energy.
The Navigator Company, S.A. (hereinafter referred to as The Navigator Company or Company) is a
publicly traded company, listed in Euronext Lisbon, with its share capital represented by nominal
shares.
Company: The Navigator Company, S.A.
Head Office: Mitrena – Apartado 55 | 2901-861 Setúbal | Portugal
Legal Form: Public Limited Company
Share Capital: € 500,000,000
Registration No.: 503 025 798
A more detailed description of the activity in each business line of the Group is disclosed in
Note 2.1 - Revenue and segment reporting.
Navigator is included in the consolidation perimeter of
Semapa – Sociedade de Investimento e Gestão, SGPS, S.A., the Parent Company, and
Sodim - SGPS, S.A., the final controlling entity.
2021 Consolidated Annual Report
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1.2. NAVIGATOR STRATEGY UPDATE
The Navigator Company Group's strategic thinking has led it to move decisively into the production
of new packaging products, developing a new business area in a fast-growing segment and
responding to the need felt worldwide to reduce consumption of plastics, namely single-use plastics,
confirming its role in replacing plastics with sustainable materials.
From Fossil to Forest - a strategy aligned with the purpose of creating sustainable value, for its
Shareholders, and for society as a whole, leaving future generations a better planet. Through
natural, recyclable and biodegradable sustainable products and solutions which contribute upstream
to carbon fixing, oxygen production, biodiversity protection, soil formation and the fight against
climate change, Navigator has decided to invest in making safer and more hygienic packaging paper
available to the food industry without the risks of contamination by bacteria, micro-organisms and
even dangerous substances that recycled fibre typically contains. With a unique texture and unique
printing performance, these products are resistant and fully in line with the concept of sustainable
shelf ready packaging.
This new development strategy foresees a gradual growth and will allow to take advantage, in this
first phase, of Setúbal's PM1 and PM3 paper machines, which are smaller but with a great production
flexibility, creating the opportunity for future conversions or a greenfield investment in new
machines.
In 2021, sales of over Euro 40 million were achieved for the packaging sector, serving industries
that manufacture bags, flexible packaging and corrugated board. The Company's aim is to gradually
increase production until it reaches around 200,000 tonnes in 2025/2026. The Capex forecast in this
first phase for the production of these products is approximately Euro 10-12 million, per year, in the
coming years.
The reporting of this business will continue to be done as hitherto within the UWF Paper segment,
until it gains sufficient materiality.
1.3. IMPACTS OF THE COVID-19 PANDEMIC
The Navigator Group has continued to monitor the evolution of the pandemic on an ongoing basis,
with constant updates of its contingency plan in line with guidance from the Portuguese Directorate-
General of Health and Government.
In a highly adverse environment, Navigator demonstrated great flexibility and resilience in its
business model, adjusting swiftly to changes in the market and making significant adjustments to
its entire fixed and variable cost base.
The Group continues to study the potential impacts on its financial position, performance and cash
flows of the Group, as well as in the future projections arising from the decline in economic activity
as a result of the COVID-19 pandemic, namely the impacts on significant accounting estimates and
judgements. No evidence of impairment resulted from this analysis.
Recoverability of Goodwill
The Group analysed whether there were signs of impairment arising from the impacts of COVID-19,
according to the current forecasts, based on the projections of GDP growth and inflation in Portugal,
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according to the IMF and Banco de Portugal, which could indicate the existence of impairment on
goodwill. No signs of impairment on goodwill were identified and there is a substantial gap compared
to the book value of the cash-generating units (note 3.1).
Recoverability, useful life and depreciation of property, plant and equipment
Considering the prospects for overall consumption of UWF paper, the pulp and paper prices and the
substantial gaps in relation to the book values of assets, do not indicate the existence of impairment
on property, plant and equipment.
Actuarial assumptions
The Group assessed the discount rate applicable to the defined benefit plan for employees and other
post-employment benefits. The definition of the rate used to discount the liabilities (technical interest
rate) is based on yield curves of highly rated bonds with a maturity consistent with the duration of
the plan's liabilities. As a result of this assessment and based on the actuarial study as at 31
December 2021, Navigator maintained the discount rate in 1.25%, in line with benchmark interest
rates. The Group presents in Note 7.2 a sensitivity analysis that allows assessing the impact of a
possible change in the discount rate.
Biological assets
When calculating the fair value of forests, the discounted cash-flows method is used, being the
discount rate, growth period and price some of the key assumptions that may be subject to change
due to the COVID-19 pandemic. In this sense, during 2021, the harvesting plans were carried out
as expected and there were no significant impacts that might influence the fair value model.
Regarding the discount rates, the Group presents in Note 3.8 a sensitivity analysis that allows
assessing the impact of a possible change in the discount rate, considering the current discount rate
as the Board of Directors' best estimate in this matter.
Inventories
In view of the impacts on demand, namely at the UWF level, the Group considers that given the
mark-ups charged during the pandemic, the net realisable value of its inventories is higher than the
book value and concluded that no adjustments to the book value are necessary.
Recoverability of Trade and other receivables
Impairment losses are recorded based on the simplified model provided for in IFRS 9, recording
expected losses until maturity. In the Navigator Group, the impacts of IFRS 9 on the consolidated
statement of financial position are low considering that a significant part of its sales are either insured
or adequately covered by collaterals.
Nevertheless, the Group periodically assesses the expected credit losses and the impacts on all
financial assets measured at amortised cost. In this regard, the Group assessed the current exposure
to credit risk and the potential impact of future economic forecasts and concluded that the impact
of this component is small.
2021 Consolidated Annual Report
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Liquidity
The Company currently has a comfortable liquidity situation, which has been the result of a careful
management of working capital, containment of the pace of implementation of the investment plan
and implementation of a confirming program to extend payment deadlines without, however,
impacting Suppliers.
Navigator has been working and will continue to work thoroughly within its reach, namely in its
operational and commercial planning, cost efficiency, cash flow allocation and effective liquidity
management to ensure it remains a going concern and the health of its Employees. The degree of
uncertainty associated with the COVID-19 pandemic has decreased compared to the previous year,
being higher than usual, however, it is worth noting the Group's response in 2021 with the recovery
in turnover and profitability of the several areas of business, which will make it possible to face
future challenges.
1.4. SUBSEQUENT EVENTS
1.4.1. US Anti-dumping Proceedings sunset review
After a five-year period since the beginning of the anti-dumping proceedings, Navigator requested
in 2021 a procedure called “sunset review”, to reassess whether the process should be maintained
or discontinued. The US authorities performed a thorough review of the anti-dumping proceedings
on UWF paper imports into the United States subject to the original order, including imports from
Portugal, with Navigator actively participating in the process.
In January 2022, the US authorities decided on the continuation of the anti-dumping proceedings
for another 5 years, despite the continued increase in Navigator's prices in the US market and the
reduction in supply in that market by local producers.
1.4.2. Sustainalytics ESG Risk Rating 2021
In January 2022, the annual performance rating in the ESG (environmental, social and corporate
governance) areas was published, with Navigator obtaining a score of 14.3, positioning it in 3
rd
place,
out of a total of 81 global companies that are part of the Paper & Forestry industry cluster, and 3
rd
in the subset of 60 global companies that make up the Paper & Pulp cluster. The assessment and
good positioning in this ranking reflect the continuous work performed by the Company to integrate
sustainability as a priority in its business model, demonstrating its ability to anticipate and manage
ESG risks in the development of its activities.
1.4.3. Military conflict in Ukraine and economic sanctions imposed on the Russian
Federation
On 21 February 2022, the Russian Federation officially recognised two breakaway republics in
eastern Ukraine and authorised the use of military forces in that territory. On 24 February, Russian
troops invaded Ukraine and a widespread military conflict began in this country entailing high
material and human losses, leading to massive population displacements.
In response, multiple jurisdictions, including the European Union, United Kingdom, Switzerland,
United States of America, Canada, Japan and Australia, condemned this conflict and initiated the
application of several economic sanctions against Russia, several of its economic agents and, in
2021 Consolidated Annual Report
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some cases, Belarus. The sanctions imposed include the prohibition of transactions of some basic
and relevant goods in the context of conflict, the freezing of the assets and reserves of certain
Russian financial institutions, companies, and individuals of the Government. Additionally, many
Russian banks have been removed from the international SWIFT payment system, limiting their
ability to operate globally.
Some countries also announced the closure of airspace to Russian aircrafts and stopped operating
flights to Russia. It should also be noted that several companies have suspended the acquisition of
oil products from both Russia and Russian companies, with the Nord Stream 2 pipeline project that
would link Russia to Germany having been suspended.
Further sanctions may be implemented in the short term and could cover more individuals, entities,
a wider range of goods and services. Moreover, Russia has also begun to retaliate with economic
measures, and, at the international level, a growing number of companies have announced voluntary
measures to limit their business with Russia.
Therefore, the economic impact of this conflict is expected to be very relevant and may include: i)
the suspension and/or disruption of business with entities based or originating in Russia and Ukraine;
ii) increase in commodity prices, with emphasis on fossil fuels, metals and cereals; iii) increased
global economic uncertainty, with more volatility in exchange rates and interest rates and an
increase in the inflation rate to be expected; iv) possible increase in cyber-attacks, which may arise
on public and private entities in the main sectors of the economy, especially in countries that have
imposed sanctions on Russia or that support Russia.
Group Navigator is following and continuously monitoring the situation in the markets where it
operates geographically and throughout the supply chain – from the supply of wood, energy, raw
and supplementary materials (including logistical issues), in technical and support services provided
by foreign companies and outsourcing service providers, amongst others. The Group is convinced
that in view of the weight of the markets of Russia and Ukraine in the Group's sales, which represent
less than 1% as at the period ended 31 December 2021, and the fact that these markets do not
directly affect the supply chain, the Group's direct exposure to the markets of Ukraine and Russia is
not significant.
With regard to the international economic context, a deterioration of the current economic
environment is expected, which is forecasted to be one of high uncertainty and rapid evolution, so
it is not possible to estimate with reasonable confidence the possible impacts, if any, on the Group's
activity. According to the accounting standards, these events, which occurred after the balance sheet
date, were considered as non-adjustable subsequent events, and therefore the assumptions made
by the Board of Directors for the purpose of assessing the impairment and recoverability of the
Group's assets as at 31 December 2021 do not take into account the potential effect of these events.
1.5. BASIS FOR PREPARATION
1.5.1. Authorisation to issue financial statements
These consolidated financial statements were approved by the Board of Directors on 09 March 2022.
However, they are still subject to approval by the General Shareholders’ Meeting, in accordance with
the Portuguese commercial legislation.
2021 Consolidated Annual Report
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The Group’s senior management, which are the members of the Board of Directors who sign this
report, declare that, to the best of their knowledge, the information contained herein was prepared
in conformity with the applicable accounting standards, providing a true and fair view of the assets
and liabilities, the financial position and results of the companies included in the Group’s
consolidation scope.
1.5.2. Accounting standards
The consolidated financial statements for the period ended 31 December 2021 were prepared in
accordance with the International Financial Reporting Standards (IFRS), effective 1 January 2021
and as adopted by the European Union.
1.5.3. Basis for consolidation
1.5.3.1. Subsidiaries
Subsidiaries are all entities over which the Group has control, which occurs when the Group is
exposed or entitled to the variable returns resulting from its involvement with the entities and has
the capacity to affect that return through the exercise of power over the entities, regardless of the
percentage they hold over equity.
The existence and the effect of potential voting rights which are currently exercisable or convertible
are considered when the Group assesses whether it has control over another entity.
Subsidiaries are consolidated using the full consolidation method with effect from the date on which
control is transferred to the Group while they are excluded as from the date control ceases.
These companies’ equity and net profit corresponding to the third-party investment in such
companies are presented under non-controlling interests in the consolidated statement of financial
position (in a separate component of equity) and in the Consolidated income statement. The
companies included in the consolidated financial statements are detailed in Note 11.
The purchase method is used in recording the acquisition of subsidiaries. The cost of an acquisition
is measured by the fair value of the assets transferred, the equity instruments issued, and liabilities
incurred or assumed on acquisition date, and the best estimate of any agreed contingent payment.
The identifiable assets and liabilities acquired, and contingent liabilities assumed in a business
combination are initially measured at fair value on the date of acquisition, irrespective of the
existence of non-controlling interests. The excess of the acquisition cost over the fair value of the
Group’s share of the identifiable assets and liabilities acquired is recorded as goodwill, as described
in Note 3.1.
If the acquisition cost is less than the fair value of the net assets of the acquired subsidiary (negative
goodwill), the difference is recognised directly in the income statement in the period it takes place.
Transaction costs directly attributable to the acquisition are immediately expensed.
Intercompany transactions, balances, unrealised gains on transactions and dividends distributed
between group companies are eliminated. Unrealised losses are also eliminated, except where the
transaction displays evidence of impairment of a transferred asset.
2021 Consolidated Annual Report
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When, at the date of the acquisition of control, The Navigator Company already holds a previously
acquired interest in the subsidiary, its fair value is considered in determining the goodwill or negative
goodwill.
On a step acquisition process resulting in the acquisition of control, the revaluation of any
participation previously held is recognised against the income statement when Goodwill is calculated.
When subsequent transactions of disposal or acquisition of shares with non-controlling interests with
no impact in control take place, no gain, loss or goodwill is determined, and the differences between
the transaction cost and the book value of the share acquired are recognised in equity.
Negative results generated in each period by subsidiaries with non-controlling interests are allocated,
in the percentage held, to non-controlling interests, regardless of whether they become negative.
In the case of disposals of interests, resulting in a loss of control over a subsidiary, any remaining
interest is revalued to the market value at the date of sale, and the gain or loss resulting from such
revaluation, is recorded against income, as well as the gain or loss resulting from such disposal.
The subsidiaries’ accounting policies are adjusted, whenever necessary, so as to ensure that they
are applied consistently by all the Group's companies.
1.5.3.2 Associates
Associates are all the entities in which the Group exercises significant influence but do not have
control, which is generally the case with investments representing between 20% and 50% of the
voting rights. Investments in associates are accounted under the equity method.
In accordance with the equity method, financial investments are recorded at their acquisition cost,
adjusted by the amount corresponding to the Group’s share of changes in the associates’
Shareholders’ equity (including net income/loss) with a corresponding gain or loss recognised for
the period on earnings or on changes in capital, and by dividends received.
Differences between the acquisition cost and the fair value of the assets and liabilities attributable
to the affiliated company on the acquisition date are, if positive, recognised as Goodwill and recorded
as investments in affiliated companies. If negative, goodwill is recorded as income for the period
under the caption “Group share of (loss)/gains of associated companies and joint ventures”.
Transaction costs directly attributable to the acquisition are immediately expensed.
In the event that impairment loss indicators arise on investments in associates, an evaluation of the
potential impairment is made, and if deemed necessary, a loss is recognised in the consolidated
income statement.
When the Group’s share of losses in associate companies equals or exceeds its investment in that
associate, the Group ceases the recognition of additional losses, unless it has incurred in liabilities
or has made payments on behalf of that associate.
Unrealised gains on transactions with associates are eliminated to the extent of the Navigator
Company Group’s investment in the associates. Unrealised losses are also eliminated, except where
the transaction displays evidence of impairment of a transferred asset.
2021 Consolidated Annual Report
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The associates’ accounting policies used in the preparation of the individual financial statements are
adjusted, whenever necessary, so as to ensure consistency with the policies adopted by the Group.
1.5.4. Presentation currency and foreign currency transactions
i. Functional and reporting currency
The items included in the Financial Statements of each one of the Group’s entities are measured
using the currency of the economic environment in which the entity operates (functional currency).
These consolidated financial statements are presented in Euro, which is the Group’s functional and
reporting currency.
ii. Balances and Transactions expressed in foreign currencies
All the Group’s assets and liabilities denominated in currencies other than the reporting currency
have been translated to Euro using the exchange rates prevailing at the consolidated statement of
financial position date (Note 8.1.1).
Currency adjustments, favourable and unfavourable, arising from differences between the exchange
rates prevailing at the date of the transaction and those at the date of collection, payment or
statement of financial position, are recorded as income and costs in the Consolidated income
statement for the period.
iii. Group companies
The results and the financial position of the Group’s entities which have a different functional
currency from the Group’s reporting currency are translated into the reporting currency as follows:
(i) The assets and liabilities of each Statement of financial position are translated at the
exchange rates prevailing at the date of the consolidated statement of financial position;
(ii) Equity balances are translated at the historical exchange rate;
(iii) The income and expenses disclosed in the Income Statement are converted at the exchange
rate prevailing at the dates of the transactions. When this is not possible or when benefits
do not arise from the use of this procedure, income and expenses are translated at the
average exchange rate of the period.
The exchange differences resulting from the topics i) and iii) are recognised in the consolidated
comprehensive income under the equity caption “Currency translation reserves”, being transferred
to the income statement when the disposal of the investments occur.
2021 Consolidated Annual Report
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iv. Exchange rates used
31-12-2021 31-12-2020
Valuation /
(Devaluation)
GBP (Sertling pound)
Average exchange rate for the period 0.86 0.89 3.38%
Closing exchange rate for the period 0.84 0.90 6.53%
USD (American dollar)
Average exchange rate for the period 1.18 1.14 -3.55%
Closing exchange rate for the period 1.13 1.23 7.70%
PLN (Polish zloti)
Average exchange rate for the period 4.57 4.44 -2.75%
Closing exchange rate for the period 4.60 4.56 -0.82%
SEK (Swedish krona)
Average exchange rate for the period 10.15 10.48 3.23%
Closing exchange rate for the period 10.25 10.03 -2.15%
CZK (Czech koruna)
Average exchange rate for the period 25.64 26.46 3.08%
Closing exchange rate for the period 24.86 26.24 5.27%
CHF (Swiss franc)
Average exchange rate for the period 1.08 1.07 -0.99%
Closing exchange rate for the period 1.03 1.08 4.36%
DKK (Danish krone)
Average exchange rate for the period 7.44 7.45 0.23%
Closing exchange rate for the period 7.44 7.44 0.06%
HUF (Hungarian forint)
Average exchange rate for the period 358.52 351.25 -2.07%
Closing exchange rate for the period 369.19 363.89 -1.46%
AUD (Australian dollar)
Average exchange rate for the period 1.57 1.65 4.83%
Closing exchange rate for the period 1.56 1.59 1.77%
MZM (Mozambican metical)
Average exchange rate for the period 77.75 80.23 3.10%
Closing exchange rate for the period 78.09 92.92 15.96%
MAD (Moroccan dirham)
Average exchange rate for the period 10.67 10.82 1.33%
Closing exchange rate for the period 10.52 10.94 3.83%
NOK (Norway kroner)
Average exchange rate for the period 10.16 10.72 5.22%
Closing exchange rate for the period 9.99 10.47 4.60%
MXN (Mexican peso)
Average exchange rate for the period 23.99 24.52 2.18%
Closing exchange rate for the period 23.14 24.42 5.21%
AED (Dirham)
Average exchange rate for the period 4.34 4.19 -3.54%
Closing exchange rate for the period 4.16 4.51 7.70%
CAD (Canadian dollar)
Average exchange rate for the period 1.48 1.53 3.10%
Closing exchange rate for the period 1.44 1.56 7.93%
ZAR (South African rand)
Average exchange rate for the period 17.48 18.77 6.87%
Closing exchange rate for the period 18.06 18.02 -0.23%
RUB (Russian roubles)
Average exchange rate for the period 87.15 82.72 -5.35%
Closing exchange rate for the period 85.30 91.47 6.74%
BRL (Brazilian real)
Average exchange rate for the period 6.38 5.89 -8.21%
Closing exchange rate for the period 6.31 6.37 0.99%
EGP (Egyptian pound)
Average exchange rate for the period 18.55 18.62 0.40%
Closing exchange rate for the period 17.82 18.63 4.34%
TRY (Turkish lira)
Average exchange rate for the period 10.51 8.05 -30.51%
Closing exchange rate for the period 15.23 9.11 -67.16%
2021 Consolidated Annual Report
13/04/2022 214
1.5.5 Basis for measurement
The accompanying consolidated financial statements have been prepared on the going concern basis
from the accounting books and records of the companies included in the consolidation (Note 11.1),
and under the historical cost convention, except for biological assets (Note 3.8), and for financial
instruments measured at fair value through profit or loss or at fair value through other
comprehensive income (Note 8.3), in which derivative financial instruments are included (Note 8.2).
The liability related to responsibilities for defined benefits is recognised at its present value deducted
from the respective asset.
1.5.6 Comparability
These financial statements are comparable in all material respects with those of the previous year.
Notwithstanding the previous paragraph, following the change in the internal reporting of information
to the management bodies, in Note 2.1 – Revenue and reporting by segments, the assets and
liabilities associated with the forestry activity are now allocated to the Pulp and UWF Paper segments,
depending on the production capacity of each of the segments (until 2020 they were included in the
support segment). Additionally, the Group's real estate assets are now allocated to the respective
business segment (until 2020 it was included in the support segment). For this reason, the 2020.1.6
comparative information has been restated.
1.6. IFRS ADOPTED AND TO BE ADOPTED
1.6.1. Other standards, amendments and interpretations adopted or to be
adopted
Standards, amendments and interpretations adopted in 2021
No impacts on the financial statements
Amendment
Date of
application
Standards and amendments endorsed by the European Union
COVID-19-Related
Rent Concessions
(Amendment to IFRS
16)
In May 2020, the International Accounting Standards Board (IASB)
issued COVID-19-Related Rent Concessions, which amended IFRS
16 Leases.
If certain conditions are met, the Amendment would permit lessees,
as a practical expedient, not to assess whether particular COVID-19-
related rent concessions are lease modifications. Instead, lessees
that apply the practical expedient would account for those rent
concessions as if they were not lease modifications, so that, for
example, the amount of rent forgiven on or before 30 June 2021 is
taken to income the same year that the concession is granted,
instead of being allocated over the duration of the contract as would
be the case were the practical expedient not allowed.
The Amendment shall be applied for annual reporting periods
beginning on or after 1 June 2020.
1 June 2020
2021 Consolidated Annual Report
13/04/2022 215
Amendment
Date of
application
Interest Rate
Benchmark Reform -
Phase 2 (amendments
to IFRS 9, IAS 39,
IFRS 7, IFRS 4 and
IFRS 16)
In August 2020, the IASB issued Interest Rate Benchmark Reform -
Phase 2, which amends IFRS 9 Financial Instruments, IAS 39
Financial Instruments: recognition and measurement, IFRS 7
Financial Instruments: Disclosures, IFRS 4 Insurance Contracts and
IFRS 16 Leases.
The objective of the Amendments is to assist entities with providing
useful information to users of financial statements and to support
preparers in applying IFRS Standards when changes are made to
contractual cash flows or hedging relationships, as a result of the
transition from an IBOR benchmark rate to alternative benchmark
rates, in the context of the ongoing risk-free rate reform (IBOR
reform). The amendments are the result of the second phase of the
IASB project addressing the accounting impacts of the IBOR reform,
which gave rise to the Interest Rate Benchmark Reform
(Amendments to IFRS 9, IAS 39 and IFRS 7) issued by the IASB on
26 September 2019. They complement the first phase of the project
that addressed the pre-replacement accounting impacts of the IBOR
reform and were issued by the IASB in 2019.
The amendments shall be applied retrospectively for annual periods
beginning on or after 1 January 2021.
1 January
2021
Extension of the
temporary exemption
from application of
IFRS 9 (amendments
to IFRS 4)
The IASB issued the 'Extension of the Temporary Exemption from
Applying IFRS 9 (amendments to IFRS 4) on 25 June 2020.
The objective of the amendments is to extend the expiry date of the
temporary exemption from applying IFRS 9 by two years (i.e., from
2021 to 2023) in order to align the effective dates of IFRS 9 Financial
Instruments with IFRS 17 Insurance Contracts.
1 January
2021
Standards, amendments and interpretations to be adopted in subsequent periods
No impacts on the financial statements
Amendment
Date of
application
Standards and amendments endorsed by the European Union which the Group has
opted not to apply in advance
Reference to the
Conceptual Framework
(Amendments to IFRS
3)
In May 2020 the IASB issued Reference to the Conceptual
Framework, which made amendments to IFRS 3 Business
Combinations.
The amendments updated IFRS 3 by replacing a reference to an old
version of the Board’s Conceptual Framework for Financial Reporting
with a reference to the latest version, which was issued in March
2018.
The Amendments shall be applied to business combinations for
which the acquisition date is on or after the beginning of the first
annual reporting period beginning on or after 1 January 2022. Earlier
application is permitted if at the same time or earlier an entity also
applies all the amendments made by Amendments to References to
the Conceptual Framework in IFRS Standards, issued in March 2018.
1 January
2022
Property, Plant and
Equipment — Proceeds
before Intended Use
(Amendments to IAS
16 Property, Plant and
Equipment)
In May 2020, the IASB issued Property, Plant and Equipment—
Proceeds before Intended Use, which made amendments to IAS 16
Property, Plant and Equipment.
The Amendments would prohibit deducting from the cost of an item
of property, plant and equipment any proceeds from selling items
produced while bringing that asset to the location and condition
necessary for it to be capable of operating in a manner intended by
management. Instead, an entity would recognise those sales
proceeds in profit or loss.
The Amendments shall be applied retrospectively for annual periods
beginning on or after 1 January 2022, with earlier application
permitted.
1 January
2022
2021 Consolidated Annual Report
13/04/2022 216
Amendment
Date of
application
Onerous Contracts —
Cost of Fulfilling a
Contract
In May 2020, the IASB issued Onerous Contracts — Cost of Fulfilling
a Contract, which made amendments to IAS 37 Provisions,
Contingent Liabilities and Contingent Assets.
The objective of the Amendments is to clarify the requirements of
IAS 37 on onerous contracts regarding the assessment of whether,
in a contract, the unavoidable costs of meeting the obligations under
the contract exceed the economic benefits expected to be received
under it.
The Amendments shall be applied for annual periods beginning on
or after 1 January 2022, with earlier application permitted.
1 January
2022
Annual Improvements
to IFRS Standards
2018-2020
On 14 May 2020, the IASB issued Annual Improvements to IFRS
Standards 2018–2020 containing the following amendments to
IFRSs:
(a) permit an entity that is a subsidiary, associate or joint venture,
who becomes a first-time adopter later than its parent and elects to
apply paragraph D16(a) of IFRS 1 First-time Adoption of
International Financial Reporting Standards, to measure the
cumulative translation differences using the amounts reported by
the parent, based on the parent’s date of transition to IFRS;
(b) clarify that the reference to fees in the 10 per cent test includes
only fees paid or received between the borrower and the lender,
including fees paid or received by either the borrower or lender on
the other’s behalf (IFRS 9);
(c) remove the potential confusion regarding the treatment of lease
incentives applying IFRS 16 Leases as was illustrated in Illustrative
Example 13 accompanying IFRS 16; and
(d) remove the requirement in paragraph 22 of IAS 41 Agriculture
for entities to exclude cash flows for taxation when measuring fair
value applying IAS 41.
The Amendments shall be applied for annual periods beginning on
or after 1 January 2022, with earlier application permitted.
1 January
2022
Clarification of
requirements for
classifying liabilities as
current or non-current
(amendments to IAS 1
- Presentation of
Financial Statements)
The IASB issued on 23 January 2020 an amendment to IAS 1
Presentation of Financial Statements to clarify how to classify debt
and other liabilities as current and non-current.
The amendments clarify an IAS 1 criteria for classifying a liability as
non-current: the requirement for an entity to have the right to defer
the liability’s settlement at least 12 months after the reporting
period.
The amendments aim to:
a. specify that an entity's right to defer settlement must
exist at the end of the reporting period;
b. clarify that the classification is not affected by
management's intentions or expectations as to whether
the entity will exercise its right to postpone settlement
c. clarify how loan conditions affect classification; and
d. clarify the requirements to classify the liabilities that an
entity will settle, or may settle, by issuing its own equity
instruments.
This amendment is effective for periods starting on 1 January 2023.
1 January
2023
2021 Consolidated Annual Report
13/04/2022 217
Amendment
Date of
application
Disclosure of
Accounting policies
(Amendments to IAS 1
Presentation of
Financial Statements
and IFRS Practice
Statement 2)
Following feedback that more guidance was needed to help
companies decide what accounting policy information should be
disclosed, the IASB issued on 12 February 2021 amendments to
IAS 1 Presentation of Financial Statements and IFRS Practice
Statement 2 Making Materiality Judgements.
The key amendments to IAS 1 include: i) requiring companies to
disclose their material accounting policies rather than their
significant accounting policies; ii) clarifying that accounting policies
related to immaterial transactions, other events or conditions are
themselves immaterial and as such need not be disclosed; and iii)
clarifying that not all accounting policies that relate to material
transactions, are themselves material to a company’s financial
statements.
The IASB also amended IFRS Practice Statement 2 to include
guidance and two additional examples on the application of
materiality to accounting policy disclosures. The amendments are
consistent with the refined definition of material:
“Accounting policy information is material if, when considered
together with other information included in an entity’s financial
statements, it can reasonably be expected to influence decisions
that the primary users of general-purpose financial statements
make on the basis of those financial statements”.
The amendments are effective from 1 January 2023 but may be
applied earlier.
1 January
2023
Standards and amendments not yet endorsed by the European Union
Amendments to IAS 8
Accounting policies,
Changes in Accounting
Estimates and Errors:
Definition of
Accounting Estimates
The IASB has issued amendments to IAS 8 Accounting Policies,
Changes in Accounting Estimates and Errors to clarify how
companies should distinguish changes in accounting policies from
changes in accounting estimates, with a primary focus on the
definition of and clarifications on accounting estimates.
The amendments introduce a new definition for accounting
estimates: clarifying that they are monetary amounts in the
financial statements that are subject to measurement uncertainty.
The amendments also clarify the relationship between accounting
policies and accounting estimates by specifying that a company
develops an accounting estimate to achieve the objective set out
by an accounting policy. The effects of changes in such inputs or
measurement techniques are changes in accounting estimates.
The amendments are effective for periods beginning on or after 1
January 2023, with earlier application permitted, and will apply
prospectively to changes in accounting estimates and changes in
accounting policies occurring on or after the beginning of the first
annual reporting period in which the company applies the
amendments.
1 January
2023
2021 Consolidated Annual Report
13/04/2022 218
Amendment
Date of
application
Amendments to IAS
12: deferred tax
related to assets and
liabilities arising from
a single transaction
The IASB issued amendments to IAS 12 Income Taxes on 7 May
2021.
The amendments require companies to recognise deferred tax on
transactions that, on initial recognition, give rise to equal amounts
of taxable and deductible temporary differences.
In specified circumstances, companies are exempt from recognising
deferred tax when they recognise assets or liabilities for the first
time. Previously, there had been some uncertainty about whether
the exemption applied to transactions such as leases and
decommissioning obligations—transactions for which companies
recognise both an asset and a liability. The amendments clarify that
the exemption does not apply and that companies are required to
recognise deferred tax on such transactions. The aim of the
amendments is to reduce diversity in the reporting of deferred tax
on leases and decommissioning obligations.
The amendments are effective for annual reporting periods
beginning on or after 1 January 2023. Earlier application is
permitted.
1 January
2023
IFRS 17 — Insurance
Contracts
The IASB issued on 18 May 2017 a standard that superseded IFRS
4 and completely reformed the treatment of insurance contracts.
The standard introduces significant changes to the way in which the
performance of insurance contracts is measured and presented with
various impacts also at the level of the financial position. The
standard expected to be effective for annual periods beginning on
or after 1 January 2023.
1 January
2023
1.7. SIGNIFICANT ESTIMATES AND JUDGMENTS
The preparation of consolidated financial statements requires that the Group’s Board of Directors
make judgements and estimates that affect the amount of revenue, costs, assets, liabilities and
disclosures at the date of the consolidated statement of financial position. To that effect, the Group’s
Board of Directors are based on:
(i) the best information and knowledge of current events and in certain cases on the reports of
independent experts; and
(ii) the actions that the Group considers it may have to take in the future.
On the date on which the operations are realised, the outcome could differ from those estimates.
More significant estimates and judgements are presented below:
Estimates and judgements
Notes
Recoverability of Goodwill
3.1 – Goodwill
Uncertainty over Income Tax Treatments
6.1 - Income tax for the period
6.2 - Deferred taxes
Actuarial assumptions
7.2 - Employee Benefits
Fair value of biological Assets
3.8 – Biological assets
Recognition of provisions
10.1 - Provisions
Recoverability, useful life and depreciation of
property, plant and equipment
3.3 – Property, plant and equipment
2021 Consolidated Annual Report
13/04/2022 219
2. OPERATIONAL PERFORMANCE
2.1. REVENUE AND SEGMENT REPORTING
Accounting policies
Navigator Group business areas
The Navigator Group’s main business is the production and sale of writing and printing thin paper
(UWF) and domestic consumption paper (Tissue), and it is present in the whole value added chain,
from research and development of forestry and agricultural production, to the purchase and sale of
wood and the production and sale of bleached eucalyptus kraft pulp – BEKP and electric and thermal
energy, as well as its commercialisation.
The Navigator Group has four industrial plants. BEKP, energy and UWF paper are produced in two
plants located in Figueira da Foz and Setúbal. BEKP energy and tissue paper are also produced in a
plant located in Aveiro and the fourth plant, located in Vila Velha de Ródão, only produces tissue
paper.
Wood and cork are produced from woodlands owned or leased by the Group in Portugal and Spain,
and also form granted lands in Mozambique. The production of cork and pine wood are sold to third
parties while the eucalyptus wood is mainly consumed in the production of BEKP.
A significant portion of the Group’s own BEKP production is consumed in the production of UWF and
tissue paper. Sales of BEKP, UWF and tissue paper are made to more than 130 countries around the
world.
With regard to energy production, the Group has three cogeneration plants, integrated in the
production of pulp, producing heat and electricity. Heat production is used for internal consumption
while electricity is mainly sold to the national energy grid or in the market. The Navigator Group also
owns another two cogeneration units using natural gas, integrated in the production of paper in
Figueira da Foz and in Setúbal, and two separate units using biofuel, the production of which is
entirely sold to the national energy grid or in the market. It also has three photovoltaic unitss for
self-consumption, two in Setúbal and one in Figueira da Foz.
Segment reporting
In accordance with IFRS 8, the Group considers an operating segment as a component of the group
that develops business activities from which it can obtain revenue and incur expenses, whose
operating results are regularly reviewed by the Executive Committee, which is primarily responsible
for the the Group's operational decision-making for allocation of resources to the segment and the
assessment of its performance and for which separate financial information is available.
Each reportable segment corresponds to the value chain of the integrated production process
associated with the product of each business segment, (Market Pulp, UWF paper, Tissue Paper and
Energy) considering the sales activity of the respective products on the market, in a manner
consistent with the information used by the Executive Committee for operational monitoring of its
businesses.
2021 Consolidated Annual Report
13/04/2022 220
Accordingly, intra-segmental sales are those that occur within the same manufacturing plant and
whose production inputs are used in the production process of that segment. In this way, the values
reported for each operating segment result from the aggregation of the business units and
subsidiaries defined in the perimeter of each segment, as well as the cancellation of intra-segment
transactions.
Intra-segmental sales correspond to sales between business segments or when there are
transactions between manufacturing plants, which are eliminated for consolidation purposes, being
this effect reported in the “Cancelations”. When aggregating the Group's operating segments,
Management defined as reportable segments those that correspond to each of the business areas
developed by the Group, as follows:
i. Market pulp – bleached eucalyptus BEKP for sale in the market;
ii. UWF paper – production and sale of UWF uncoated writing and printing thin paper;
iii. Tissue Paper – production and sale of domestic consumption paper;
iv. Biomass renewable energy – which includes the cogeneration units and the two
independent thermoelectric power plants;
v. Support - segment that includes the corporate center (holding).
Regarding the allocation of assets and liabilities to business segments, it should be noted that:
• All the equipment allocated to the UWF pulp and paper production are included in Property,
plant and equipment of the respective segments.
• The Group's real estate assets are allocated to the respective business segment (until 2020
it was included in the support segment).
• The assets related to forests are allocated to the Pulp and UWF paper segments, according
to the production capacity of each segment (until 2020 it was included in the support
segment).
• The majority of the assets allocated to each of the individual segments, with the exception
of receivables, is located in Portugal.
• In accordance with the Navigator Company Group's financing policy, all loans are contracted
by the Group's holding company, The Navigator Company, S.A., which is responsible for
bearing all debt and related charges. Accordingly, interest-bearing liabilities (Note 5.7) are
allocated to the "Support" segment, which includes the Group's corporate centre (Holding),
with the exception of the repayable grant related to the construction of the new tissue plant,
allocated to the "Tissue Paper" segment and a portion of the "Inpactus" grant allocated to
the "UWF Paper” segment.
Revenue
Revenue is presented by operating segment and by geographic area, based on the country of
destination of the goods and services sold by the Group.
Commercial contracts with Customers refer essentially to the sale of goods such as paper, pulp,
tissue and energy, and to an extent, to the transportation inherent to those goods, when applicable.
2021 Consolidated Annual Report
13/04/2022 221
Revenue recognition in each operating segment is described as follows:
Market pulp
Pulp revenue results from sales to international paper and decor producers. Revenue is
recognised at a specific time, by the amount of the performance obligation satisfied, the
price of the transaction corresponding to a fixed amount invoiced on the basis of quantities
sold, less cash discounts and quantity discounts, which are reliably determinable. On the
export side, the transfer of control of the products occurs in general when there is a
transfer of control to the Customer, according to the Incoterms negotiated.
UWF
Paper revenue refers to sales made through Retail Stores (B2C) or Commercial Distributors
(B2B) which include large distributors, wholesalers or commercial operators. Revenue is
recognised at a specific time, on the date of delivery of the product to the Customer when
the transfer of control occurs, by the amount of the performance obligation satisfied, and
the price of the transaction corresponds to a fixed amount invoiced according to the
quantities sold, less cash discounts and quantity discounts, which are reliably
determinable.
Tissue
Tissue revenue results from sales of tissue paper produced for the private label of modern
national and international retail chains. Revenue is recognised at a specific moment, by
the amount of the performance obligation satisfied, and the price of the transaction
corresponds to a fixed amount invoiced according to quantities sold, less cash discounts
and quantity discounts, which are reliably determined. Revenue is recognised against the
delivery of the product, at which time the transfer of control over the product is deemed
to take place.
Energy
The energy revenue results from the valuation of the energy delivered to the National
Energy Network or sold on the market, as metered, valued at the tariff defined in the
agreementfor an ongoing 25-year period in the first case or at the market price in the
second case.
From November 2021 onwards, the surplus electricity from the natural gas combined cycle
plant at the Setúbal industrial complex has been sold at market prices rather than the
regulated tariff. It is expected that, in 2022, the same will happen with the surplus
production of the Group's other power plants.
Support
The revenue from the sale of other products such as waste, or services (brokerage, for
example) is recognised on the date of delivery of the product to the Customer by the
amount of the performance obligation satisfied. The revenues associated with this segment
were reclassified to less cost.
The Navigator Group considers the facts and circumstances when analysing the terms of each
Customer contract and its usual business practices in determining the transaction price. In this
sense, in terms of sales tax, from the assessment performed by Navigator, there are no situations
that could be included in the transaction price. Regarding specifically to the anti-dumping tax, this
is a tax for the entry of goods into the country (in the case of the USA) and is not a tax determined
a priori but depends on the analysis of the Department of Commerce a posteriori. Therefore, it
represents a decrease to the gross margin obtained in the United States of America and not an
adjustment to the transaction price.
2021 Consolidated Annual Report
13/04/2022 222
Financial information by operating segment in 2021 and 2020
In 2021, The Navigator Company recorded turnover in the amount of Euro 1,596 million, with paper
sales accounting for approximately 72% of turnover (vs.68%), pulp sales 11% (vs.11%), tissue
sales 9% (vs.10%) and energy sales also 8% (vs.10%). The year was marked by the positive
evolution of demand for UWF, particularly in Europe, after a year of significant decline in global paper
consumption as a result of the COVID-19 pandemic.
During 2021, there was a growth in paper sales volumes, with successive price increases for UWF,
pulp and tissue, along with significant optimization of the sales mix.
The commitment to the packaging business line allowed the Group to achieve sales of over Euro 40
million in the packaging sector in 2021, reflecting favourable demand conditions and the effort to
develop innovative products. This commitment will continue in 2022, either by expanding the ranges
in terms of weights, or by innovating and developing new sustainable packaging solutions,
contributing to the decrease of the use of plastics.
This new business area, in its current stage of development, is included in the UWF Paper segment,
insofar as, considering IFRS 8, the quantitative levels have not yet been exceeded, and due to the
fact that this business line have a similar nature to UWF Paper and share a significant set of
production and commercial processes.
The amount corresponding to the total energy sales was Euro 135,173,674 compared to Euro
143,693,997 in 2020. This decrease is essentially due to the fact that the natural gas combined cycle
plant at the Setúbal industrial complex started operating on a self-consumption basis since the
beginning of the year, supplying one of the complex paper machines and selling only the surplus
production to the network. Following the volatility of electricity prices recorded in the market and
legislative changes published in November 2021, the surplus production of this plant started to be
sold at market prices to the detriment of the regulated tariff since that date.
MARKET
PULP
UWF PAPER TISSUE PAPER ENERGY SUPPORT CANCELLATIONS* TOTAL
REVENUE
Sales and services - external 161,241,425 1,153,642,635 145,812,710 135,173,674 - - 1,595,870,445
Sales and services - intersegment 2,428,613 - - 10,519,440 - (12,948,054) -
Total revenue 163,670,038 1,153,642,635 145,812,710 145,693,114 - (12,948,054) 1,595,870,445
PROFIT/ (LOSS)
Segmental profit 40,791,295 210,733,857 18,996,161 8,312,210 (49,259,482) - 229,574,041
Operating income 229,574,041
Net financial results - - - - (17,777,209) - (17,777,209)
Income tax - - - - (40,378,319) - (40,378,319)
Net profit for the period 171,418,513
Non-controlling interests - - - - (7,058) - (7,058)
Profit/ (loss) attributable to equity holders - - - - - - 171,411,455
OTHER INFORMATION
Capital expenditure 17,547,329 49,476,764 4,574,712 6,547,053 1,887,715 - 80,033,573
Depreciation and impairment (10,819,597) (70,212,588) (10,114,964) (25,860,263) (4,991,933) - (121,999,345)
Provisions ((increases) / reversal) (12,000) (2,839,925) - (36,000) (255,019) - (3,142,944)
OTHER INFORMATION
SEGMENT ASSETS
Goodwill - 376,756,383 583,083 - - - 377,339,466
Property, plant and equipment 113,818,709 570,750,077 150,555,169 226,611,114 83,509,438 - 1,145,244,507
Right-of-use assets 10,318,973 37,985,826 - - 2,888,159 - 51,192,959
Biological assets 36,885,846 110,438,215 - - - - 147,324,061
Non-current receivables 74,861 530,535 91,076 - 7,908,076 - 8,604,547
Inventories 12,607,349 151,206,224 21,445,680 498,296 793,109 - 186,550,658
Trade receivables 27,516,273 144,048,402 31,270,504 791,242 7,162,662 - 210,789,083
Other current receivables 3,812,894 23,355,908 3,106,937 2,021,281 74,796,656 - 107,093,677
Other assets 1,053,682 48,859,236 1,347,605 38,500 241,873,570 - 293,172,593
Total Assets 206,088,588 1,463,930,805 208,400,055 229,960,433 418,931,670 - 2,527,311,551
SEGMENT LIABILITIES
Interest-bearing liabilities - 554,367 35,647,751 - 797,741,932 - 833,944,049
Lease liabilities 10,792,437 39,443,439 - - 3,005,049 - 53,240,925
Other payables 35,865,521 214,109,691 14,194,351 1,942,885 127,049,446 - 393,161,894
Other liabilities 12,841,723 103,296,985 12,832,704 9,596,076 63,283,115 - 201,850,603
Total Liabilities 59,499,681 357,404,481 62,674,806 11,538,961 991,079,541 - 1,482,197,471
* Cancellation of intersegment operations
2021
2021 Consolidated Annual Report
13/04/2022 223
The fixed capital expenditure in 2021 stood at Euro 80,033,573, compared with Euro 80,643,437 in
the previous year. As a result of the economic slowdown caused by the COVID-19 pandemic,
Navigator decided to review the 2020 investment plan, and in 2021 there was less willingness from
the Suppliers to resume deliveries, which justifies the decrease verified compared to the previous
years. With the progressive resumption of activity, the investment plan is expected to return to
normal levels.
The investment made during the year includes mostly investments directed at maintaining
production capacity and efficiency improvements. It also includes approximately Euro 14 million in
the environmental and decarbonization area, with particular emphasis on the last component of the
investment in the New Biomass Boiler in Figueira da Foz (Euro 6 million) and the new evaporation
line in Aveiro (Euro 3.5 million). Other investments are also worthy of note, such as the new wood
park in Figueira da Foz (Euro 7.2 million), the new chip pile in Aveiro (Euro 1.1 million), the
remodelling of the wetland in Aveiro (Euro 9.3 million) and the photovoltaic plants in Figueira da Foz
and Setúbal (Euro 1 million), in a total amount of Euro 18.8 million.
2021 Consolidated Annual Report
13/04/2022 224
Following the aforementioned change regarding the allocation of assets and liabilities to business
segments, the restated segment reporting as at 31 December 2020 is as follows:
** As disclosed in note 1.5.6, the assets and liabilities related to the forestry activity are now allocated to the Pulp and UWF Paper segments, according to the production capacity
of each segment. For this reason, the intersegmental sales that were presented in 2020 in the Support segment, in the amount of Euro 243,361,483 were allocated to the
Pulp and Paper UWF segments in the amounts of Euro 60,840,371 and Euro 182,521,112, respectively, as well as the respective intragroup eliminations. This change had
an impact on the balance sheet captions presented. Similarly, the Group's real estate assets, previously disclosed in the support segment, are now allocated to the
respective business segment.
Revenue by business segment, by geographic area and by recognition pattern
MARKET
PULP
UWF PAPER TISSUE PAPER ENERGY SUPPORT CANCELLATIONS* TOTAL
REVENUE
Sales and services - external 157,821,044 942,400,510 141,445,074 143,693,996 - - 1,385,360,624
Sales and services - intersegment 3,817,525 - - 154,918,648 - (158,736,173) -
Total revenue 161,638,569 942,400,510 141,445,074 298,612,644 - (158,736,173) 1,385,360,624
PROFIT/ (LOSS)
Operating income 9,756,411 131,564,720 10,846,428 21,447,231 (33,190,152) - 140,424,638
Net financial results - - - - (14,685,632) - (14,685,632)
Income tax - - - - (16,522,754) - (16,522,754)
Net profit for the period 109,216,252
Non-controlling interests - - - - (2,532) - (2,532)
Profit/ (loss) attributable to equity holders - - - - - - 109,213,720
OTHER INFORMATION
Capital expenditure 19,837,834 29,725,845 5,089,476 23,090,104 2,900,178 - 80,643,437
Depreciation and impairment (12,517,621) (91,951,269) (15,527,692) (17,729,192) (5,047,101) - (142,772,875)
Provisions ((increases) / reversal) (12,000) (292,704) (24,000) - (1,981,584) - (2,310,288)
OTHER INFORMATION
SEGMENT ASSETS
Goodwill - 376,756,383 583,083 - - - 377,339,466
Property, plant and equipment 110,723,675 675,958,753 157,001,815 157,781,230 82,484,119 - 1,183,949,592
Right-of-use assets 10,320,154 38,026,121 - - 3,480,725 - 51,827,000
Biological assets 37,146,113 111,438,339 - - - - 148,584,452
Non-current receivables 60,590 3,694,221 93,786 - 30,847,508 - 34,696,105
Inventories 9,796,231 145,250,401 18,489,151 315,510 2,883,844 - 176,735,137
Trade receivables 15,451,304 84,257,576 26,684,915 1,377,272 6,263,979 - 134,035,047
Other current receivables 11,077,543 38,898,651 1,388,737 3,014,344 43,357,960 - 97,737,235
Other assets 79,522 25,236,686 537,684 79,150 322,585,687 - 348,518,729
Total Assets 194,655,132 1,499,517,130 204,779,171 162,567,506 491,903,823 - 2,553,422,764
SEGMENT LIABILITIES
Interest-bearing liabilities - 420,151 36,922,455 - 945,068,176 - 982,410,783
Lease liabilities 10,600,063 38,909,235 - - 3,571,621 - 53,080,919
Other payables 23,420,059 158,059,745 10,893,183 11,678,594 99,598,109 - 303,649,690
Other liabilities 13,329,879 89,934,845 13,648,970 6,890,219 64,275,771 - 188,079,683
Total Liabilities 47,350,000 287,323,976 61,464,608 18,568,812 1,112,513,678 - 1,527,221,075
* Cancellation of intersegment operations. Consolidation adjustments related to inter-segment transactions are considered non-significant.
** The items that were affected by the restatement are disclosed in Note 1.5.6
2020 Restated**
2021
Amounts in Euro
Pulp UWF Paper Tissue Paper Energy
Total
Amount
Total
%
Portugal 2,857,768 61,336,753 55,941,695 135,173,674 255,309,890 16%
Rest of Europe 125,606,144 586,522,363 83,886,052 - 796,014,559 50%
North America 1,800,302 128,791,201 231,616 - 130,823,119 8%
Latin America - 69,778,306 2,020,481 - 71,798,787 4%
Africa 13,336,229 193,679,141 3,706,845 - 210,722,215 13%
Asia 17,640,982 111,852,939 26,022 - 129,519,943 8%
Oceania - 1,681,932 - - 1,681,932 0%
161,241,425 1,153,642,635 145,812,710 135,173,674 1,595,870,445 100%
Recognition pattern
At a certain moment in time 161,241,425 1,153,642,635 145,812,710 135,173,674 1,595,870,445 100%
Over time - - - - 0%
2020
Amounts in Euro
Pulp UWF Paper Tissue Paper Energy
Total
Amount
Total
%
Portugal 3,999,267 55,988,813 52,869,793 143,693,996 256,551,869 19%
Rest of Europe 91,621,356 595,203,524 81,447,990 - 768,272,870 55%
North America 1,010,697 87,790,410 3,433,315 - 92,234,422 7%
Latin America - 38,992,998 563,093 - 39,556,091 3%
Africa 6,029,084 128,587,469 3,074,995 - 137,691,548 10%
Asia 55,160,640 35,229,242 55,888 - 90,445,770 7%
Oceania 608,053 - - 608,053 0%
157,821,044 942,400,510 141,445,074 143,693,996 1,385,360,624 100%
Recognition pattern
At a certain moment in time 157,821,044 942,400,510 141,445,074 143,693,996 1,385,360,624 100%
Over time - - - - - 0%
2021 Consolidated Annual Report
13/04/2022 225
Group's revenue distribution by geographic area
In 2021 and 2020, no single Customer accounted for 10% or more of the Group's total revenues.
2.2. OTHER OPERATING INCOME
For the periods ended 31 December 2021 and 2020, Other operating income is detailed as follows:
In 2021, Gains on disposal of non-current assets includes the sale of the wood and biomass park in
Albergaria-a-Velha that was inactive, which generated a gain of Euro 2,458,230. The remainder
relates to the sale of land with reduced forestry suitability.
Gains on CO
2
allowances correspond to the recognition of the estimate of free allocation of
allowances for 442,732 tons of CO
2
, at the average price of Euro 33.69 (482,453 tons of CO
2
, at the
average price of Euro 23.82 as at 30 September 2020) (Note 3.2).
The operating grants correspond to grants granted under research and development projects
performed by the RAIZ institute, such as the IPLANT project, INPACTUS, FitoGlobulus, Proteus,
among others.
In 2020, the reversal of impairment in inventories resulted mainly from the sale of UWF (Euro
8,624,342) and Tissue (Euro 1,196,905) paper waste.
Insurance compensation in 2020 includes the compensation associated with the failure of the steam
turbine at the Setúbal combined gas power station.
Amounts in Euro 2021 2020
Gains on disposal of non-current assets 2,785,295 619,810
Grants - CO
2
emission allowances (Note 3.2) 14,915,653 10,066,383
Supplementary gains 1,169,398 1,519,921
Operating grants 2,703,017 2,539,897
Impairment reversal on receivables (Note 8.1.4) 77,603 47,052
Impairment reversal on inventories (Note 4.1.4) 866,224 9,900,226
Gains on inventories 1,029,340 1,735,837
Own work capitalised 824,120 418,565
Compensations 418,549 2,121,913
Other operating income 6,591,035 9,990,566
31,380,233 38,960,170
2021 Consolidated Annual Report
13/04/2022 226
Accounting policies
Government grants
Operating grants
Government grants are only recognised when there is a reasonable assurance that the grant will be
received, and the Group will comply with all required conditions. Operating grants, received with the
purpose of compensating the Group for costs incurred, are systematically recorded in the income
statement during the periods in which the costs that those grants are intended to compensate are
recorded.
Grants related to biological assets
Grants related to biological assets (Note 3.8) carried at fair value, in accordance with IAS 41, are
recognised in the income statement when the terms and conditions of the grant are met.
Grants - CO
2
emission allowances
Grants related to CO
2
emission allowances (Note 3.2) are recognised as deferred income and are
systematically recorded in the income statement during the periods in which the expenses that those
grants are intended to compensate are recorded.
2.3. OTHER OPERATING EXPENSES
2021 2020
Cost of goods sold and materials consumed (Note 4.1.2) 629,794,745 569,724,151
External services and supplies
Energy and fluids 134,874,499 121,404,375
Transportation of goods 152,168,311 112,407,334
Specialised work 83,265,324 70,339,591
Maintenance and repair 29,676,463 33,749,621
Rentals 8,216,430 9,838,708
Advertising and marketing 9,754,042 10,906,452
Insurance 7,865,892 8,473,222
Travel and accommodation 2,624,556 2,309,764
Fees 5,008,210 4,840,766
Subcontracts 2,086,188 1,994,246
Materials 2,737,852 1,879,596
Communications 1,469,281 1,369,141
Other 9,655,313 12,741,886
449,402,361 392,254,701
Variation in production (Note 4.1.3) (1,612,980) 32,545,175
Payroll costs (Note 7.1) 155,015,795 132,129,704
Other operating expenses
CO
2
emission expenses (Note 3.2) 24,788,284 15,947,338
Impairment losses on receivables 408,238 306,018
Impairment losses on inventories (Note 4.1.4) 2,643,558 933,009
Other inventory losses (Note 4.1) 1,555,909 2,684,182
Indirect taxes and fees 1,663,855 2,553,283
Water resources fee 1 689 769 1 536 970
Other operating expenses 5,924,423 5,013,073
38,674,036 28,973,873
Net provisions (Note 10.1) 3,142,944 2,310,288
-
Total operating expenses 1,271,273,957 1,155,627,603
Amounts in Euro
2021 Consolidated Annual Report
13/04/2022 227
In order to mitigate the expected drop in revenue resulting from the reduction in turnover due to
the pandemic, Navigator has implemented several cost reduction measures. Nevertheless, during
2021 there was a significant increase in energy, logistics and CO
2
costs.
In Energy, there was an increase in electricity and natural gas prices, although the increase in costs
was partially mitigated by the risk hedging policy with fixed-rate contracts for most of the 2021
purchases.
Logistics costs show a negative evolution as a result of the current logistical constraints that are
transversally affecting the economy. Nevertheless, Navigator managed to maintain its activity at
100%, without any disruption of supplies.
In 2021 and 2020, external supplies and services costs incurred for investigation and research
activities amounted to Euro 4,475,304 and Euro 4,492,905, respectively.
The Group plans to apply for SIFIDE approximately Euro 12 million (Euro 13 million in 2020) relating
to research and development expenditure (which also includes eligible payroll expenses). This
expenditure will make it possible to secure grants of around Euro 4.7 million (2020: Euro 6 million).
The expenses with CO
2
correspond to the emission of 561,613 tons of CO
2
46
(31 December 2020:
717,121 tons), thus observing a 22% reduction in CO
2
emissions when compared to 2020. For this
decrease, the start-up of the new biomass boiler at the Figueira da Foz industrial complex was
decisive. The increase in this caption is mainly due to the rise of unit price of CO2 allowances.
Losses in inventories recorded in the first quarter of 2021 derive from timber and chip count
adjustments.
Audit fees
In 2021, the services other than auditing services invoiced to the company or to entities in a parent-
subsidiary relationship with it by the External Auditor and Statutory Auditor, including entities in a
holding relationship with it or that are part of the same network, represented 41% (2020: 26%) of
the total services rendered.
46
CO2 emissions from assets in factories, Scope 1 - EU ETS basis.
Amounts in Euro
KPMG &
Associados SROC
Other entities
belonging to the
same network
The Navigator Company, S.A.
Audit fees 104,746 -
Other reliability assurance services 87,875 -
Other services 72,250 -
264,871 -
To entities belonging to Navigator Group
Audit fees 108,770 16,200
Other reliability assurance services - -
Other services 2,000 -
110,770 16,200
375,641 16,200
2021 Consolidated Annual Report
13/04/2022 228
The services indicated as "Other assurance services" relate to the reporting of financial information,
verification services of the Sustainability Information and limited reviews to interim financial
information. Other services refer to a financial statements’ due diligence assignment.
The Board of Directors believes there are adequate procedures safeguarding the independence of
auditors, through the Supervisory Board process analysis of the work proposed and careful definition
of the work to be performed by the auditors.
Expenses in the
period
Fees invoiced
Expenses in the
period
Fees invoiced
KPMG (SROC) and other entities belonging to the same network
Audit fees 367,450 229,716 317,038 463,795
Permissible tax assurance services - - - -
Other reliability assurance services 87,875 87,875 30,300 35,402
Other services 74,250 74,250 800 3,825
529,575 391,841 348,138 503,022
Amounts in Euro
2021
2020
2021 Consolidated Annual Report
13/04/2022 229
3. INVESTMENTS
3.1. GOODWILL
Goodwill – net amount
Goodwill is attributed to the Group’s cash generating units (CGU’s), as follows:
NAVIGATOR BRANDS, S.A. / NAVIGATOR PAPER FIGUEIRA, S.A.
Following the acquisition of 100% of the former Soporcel - Sociedade Portuguesa de Papel, S.A.
(now Navigator Brands, S.A.), for Euro 1,154,842,000, Goodwill amounting to Euro 428,132,254
was determined.
For the purposes of allocation, Goodwill is deemed to be allocable to the integrated paper production
in Figueira da Foz Industrial Complex cash generating unit.
The book value of Goodwill amounts to Euro 376,756,383 for having been subject to annual
amortisations until 31 December 2003 (date of transition to IFRS: 1 January 2004), and amortisation
as from that date, the accumulated amount of which was Euro 51,375,871, has ceased. From that
date on, depreciation ceased and was replaced by annual impairment tests. If this amortisation had
not been interrupted, the net book value of the Goodwill as at 31 December 2021 would amount to
Euro 68,501,149 (31 December 2020: Euro 85,626,441).
NAVIGATOR TISSUE RÓDÃO, S.A.
On 6 February 2015 the procedures and agreements for the acquisition of AMS-BR Star Paper, S.A.
(later merged into Navigator Tissue Ródão, S.A.) were concluded, with the authorization to conclude
this transaction being formalized on 17 April 2015.
To the initial acquisition difference, of Euro 21,337,916, was deducted the AICEP’s investment grant
and the fair value of the acquired property, plant and equipment, with a goodwill amounting to Euro
583,083.
Goodwill Recoverability Analysis
Every year, the Navigator Company Group calculates the recoverable amount of each business,
based on value-in-use calculations, in accordance with the Discounted Cash Flow method. The
calculations are based on past performance and business expectations with the actual production
structure, using the budget for the following year and projected cash flows for the following 4 years.
As a result of the calculations, up to this date no impairment losses relating to Goodwill have been
identified.
Amounts in Euro 31-12-2021 31-12-2020
CGU of UWF paper production on Figueira da Foz site
(goodwill resulting from the acquisition of Navigator Brands, S.A.)
376,756,383 376,756,383
CGU of Tissue paper production on Vila Velha de Ródão site
(goodwill resulting from the acquisition of Navigator Tissue Ródão,
S.A.)
583,083 583,083
377,339,466 377,339,466
2021 Consolidated Annual Report
13/04/2022 230
The main assumptions for the above-mentioned calculation were as follows:
Assumptions on the basis of the business plan
Macroeconomic assumptions
The main assumptions considered at the macroeconomic level are projections of GDP growth rate
and inflation in Portugal. The sources of forecasts are the IMF and Banco de Portugal.
The perpetuity growth rate reflects the Boards of Directors' vision of the medium and long term for
the different Cash Generating Units (CGUs), bearing in mind the macroeconomic assumptions.
Financial assumptions
Accounting policies
Goodwill
Goodwill represents the difference between the fair value of the cost of acquisition and the fair value
of the identifiable assets, liabilities and contingent liabilities of the subsidiaries included in the
consolidation on the acquisition date and is allocated to each CGU or to the lower group of CGUs to
which it belongs.
Amount of sales (kt)
Reference UWF Paper UWF Paper
CAGR amount of sales (kt) 0.7% 2.0%
Reference Tissue Paper Tissue Paper
CAGR amount of sales (kt) 0.4% 1.6%
Average price of sale ML/t
Reference UWF Paper UWF Paper
CAGR average price of sale ML/t (1.2%) 0.9%
Reference Tissue Paper Tissue Paper
CAGR average price of sale ML/t 0.0% 1.6%
Perpetuity growth rate - UWF Paper (1.0%) (1.0%)
Perpetuity growth rate - Tissue Paper 1.56% 1.5%
Assumptions
2021
(CAGR 2022-2026)
2020
(CAGR 2021-2025)
Macroeconomic assumptions 2022 2023 2024 2025
Real GDP growth rate 5.60% 2.40% 2.30% 1.80%
Inflation EUR 0.90% 1.00% 1.40% 1.47%
Macroeconomic assumptions 2021 2022 2023 2024
Real GDP growth rate 5.20% 3.80% 2.90% 2.00%
Inflation EUR 0.80% 1.10% 1.24% 1.37%
2021 Financial Year
2020 Financial Year
Financial assumptions
Risk-free
interest rate*
WACC
rate EUR
Perpetuity
growth rate
EUR EUR
Tax rate
Risk-free
interest
rate*
WACC
rate EUR
Perpetuity
growth rate
EUR EUR
Tax rate
UWF Paper
Explicit planning period 0.30% 4.46% 0.00% 27.50% 0.53% 4.67% 0.00% 27.50%
Perpetuity 2.31% 6.34% (1.0%) 27.50% 2.71% 6.66% (1.0%) 27.50%
* Includes Country Risk Premium
2020
2021
2021 Consolidated Annual Report
13/04/2022 231
Amortisation and impairment
Goodwill is not amortised. The Group annually carries out impairment tests to the goodwill, or where
there are signs of impairment. The recoverable amounts of cash-generating units are determined as
the higher of value in use and fair value less cost of sale. Impairment losses on goodwill cannot be
reversed.
Disposal and loss of control
Gains or losses arising from the sale or loss of control over an entity or business to which Goodwill
is allocated include the amount of the corresponding goodwill.
Tax deductibility
Derived from the current tax legislation in Portugal, it is not expected that Goodwill generated or to
be recognised will be tax deductible.
Estimates and judgements
Recoverability of Goodwill
The Group tests Goodwill impairment annually, recorded in its Statement of Financial Position. For
impairment tests of CGUs, the recoverable amount was determined based on the value in use,
according to the discounted cash flow method. The recoverable amount of CGUs derives from
assumptions related to the activity, namely, sales volumes, average sales prices and variable costs
that in the projection periods result from a combination of economic forecasts for the regions and
markets where the Group operates, industry forecasts, including changes in markets derived from
changes in installed capacity for each operating activity, internal management projections and
historical performance. These calculations require the use of estimates.
Sensitivity analysis
As at 31 December 2021, a possible increase of 0.5% in the discount rate used in the impairment
test of Goodwill allocated to the cash-generating unit in Figueira da Foz integrated Paper, would
imply a decrease in the assessment in the amount of Euro 138,398,565 (31 December 2020: Euro
152,647,490), which is still approximately 2.5 times higher than the book value of this cash-
generating unit. With regard to the Goodwill allocated to Navigator Tissue Ródão, given the
immateriality of its value, any impacts would not be materially relevant.
2021 Consolidated Annual Report
13/04/2022 232
3.2. INTANGIBLE ASSETS
Movements in intangible assets
CO
2
allowances
CO
2
allowances – movements of the period
Accounting policies
Intangible assets are recorded at acquisition cost less depreciation and impairment losses.
The Group performs impairment tests whenever events or circumstances indicate that the book
value exceeds the recoverable amount, and the difference, if any, is recognised in the income
statement.
CO
2
Emission Rights
CO
2
emission allowances attributed to the Group within the European Union Emissions Trading
Scheme (EU ETS) for the assignment of CO2 emission allowances at no cost, gives rise to an
intangible asset for the allowances, a Government grant and a liability for the obligation to deliver
allowances equal to the emissions that have been made during the compliance period.
Amounts in Euro
Industrial
property and
other rights
CO
2
emission
allowances
Assets under
construction
Total
Gross amount
Balance as at 1 January 2020 12,329 4,496,487 - 4,508,816
Attributions - 11,492,030 - 11,492,030
Acquisitions 4,335 10,269,089 - 10,273,424
Adjustments, transfers and write-offs - (14,354,986) - (14,354,986)
Balance as at 31 December 2020 16,664 11,902,620 - 11,919,284
Attributions - 14,915,653 17,823 14,933,476
Acquisitions - 22,706,518 - 22,706,518
Adjustments, transfers and write-offs 17,823 (24,788,284) (17,823) (24,788,284)
Balance as at 31 December 2021 34,487 24,736,507 - 24,770,993
Accumulated amortisation and impairment losses
Balance as at 1 January 2020 (2,127) - - (2,127)
Depreciation and amortisation for the period (Note 3.7) (4,473) - - (4,473)
Balance as at 31 December 2020 (6,600) - - (6,600)
Depreciation and amortisation for the period (Note 3.7) (11,864) - - (11,864)
Balance as at 31 December 2021 (18,464) - - (18,464)
Net book value as at 1 January 2020 10,202 4,496,487 - 4,506,689
Net book value as at 31 December 2020 10,064 11,902,620 - 11,912,684
Net book value as at 31 December 2021 16,023 24,736,507 - 24,752,529
31-12-2021 31-12-2020
CO2 emission allowances (units) 620,805 516,319
Average unit value (Euro) 39.85 23.05
Market quotation (Euro) 80.65 32.72
Amounts in Euro Tons Amount Tons Amount
Opening balance 516,319 11,902,620 267,222 4,496,487
CO2 allowances awarded free of charge (Note 2.2) 442,732 14,915,653 482,453 11,492,030
CO2 allowances acquired 368,598 22,706,518 510,962 10,269,089
CO2 allowances returned to the Licensing Coordinating Entity (706,844) (24,788,284) (744,318) (14,354,986)
Closing balance 620,805 24,736,507 516,319 11,902,620
2021
2020
2021 Consolidated Annual Report
13/04/2022 233
Emission allowances are only recorded as intangible assets when the Group is able to exercise
control. In such circumstances these are initially measured at fair value (Level 1). When the market
value of the emission allowances falls significantly below its carrying amount and such decrease is
considered permanent, an impairment charge is booked for allowances which the group will not use
internally.
The liability to deliver allowances is recognised based on actual emissions. This liability will be settled
using allowances on hand, measured at the book value of those allowances. Any additional emissions
are valued at market value as at the reporting date. FIFO is used in the costing of intangible asset
decreases by the refund to the Licensing Coordinating Entity.
In the Consolidated Income Statement, the Group expenses, under Other costs and losses, actual
emissions at fair value at the grant date, except for acquired allowances, where the expense is
measured at their purchase price.
Such costs will offset other operating income resulting from the recognition of the original
Government grant (also recognised at fair value at grant date) as well as any disposal of excess
allowances.
The effect on the income statement will, therefore, be neutral regarding the consumption of granted
allowances. Any net effect on the Income Statement will result from the purchase of additional
allowances to cover excess emissions, from the sale of effective consumption or from impairment
losses booked to allowances that are not used at operational level.
Brands
Whenever brands are identified in a business combination, the Group records them separately in the
consolidated financial statements as an asset at cost, which represents their fair value on the
acquisition date.
On subsequent valuation exercises, brands are recognised in the Group’s consolidated financial
statements at cost. They are not subject to annual amortisation, but instead tested for impairment
at each reporting date.
Own brands are not recognised in the Group’s financial statements, as they represent internally
generated intangible assets.
Intangible assets developed internally
Development expenses are only recognised as intangible assets to the extent that the technical
capacity to complete the development of the asset is demonstrated and that it is available for own
use or commercialisation. Expenses that do not meet these requirements, namely research
expenses, are recorded as costs when incurred.
2021 Consolidated Annual Report
13/04/2022 234
3.3. PROPERTY, PLANT AND EQUIPMENT
Movements in property, plant and equipment
As at 31 December 2021, Assets under construction includes investments associated with ongoing
development projects, in particular those related to the the new wood preparation pile in Figueira
da Foz (Euro 7,195,672), the new evaporation line in Aveiro (Euro 3,515,154), and the replacement
of the Figueira da Foz lime kiln cooler (Euro 1,284,227). The remainder is related to several projects
for improving and optimizing the production process.
Lands includes Euro 113,358,585 (31 December 2020: Euro 113,471,718) classified in the individual
financial statements as investment properties, from which Euro 74,220,470 (31 December 2019:
Euro 74,264,447) relate to forestry land and Euro 39,138,115 (31 December 2020: Euro
39,207,271) to land allocated to industrial sites leased to the Group.
The commitments assumed by the Group for the acquisition of property, plant and equipment
are detailed in Note 10.2 - Commitments.
Accounting policies
Property, plant and equipment
Recognition and initial measurement
Property, plant and equipment acquired up to 1 January 2004 (transition date to IFRS) are recorded
at acquisition cost, or revalued acquisition cost in accordance with generally accepted accounting
principles in Portugal until that date, net of amortisation and accumulated impairment losses.
Property, plant and equipment acquired after the transition date are shown at cost, less accumulated
depreciation and impairment losses.
Depreciation and impairment
We use the straight-line method from the moment the asset is available for use and using the rates
that best reflect their estimated useful life.
Amounts in Euro
Gross amount
Balance as at 1 January 2020 115,028,864 539,358,347 3,522,159,862 107,798,987 4,284,346,060
Acquisitions - - - 80,639,102 80,639,102
Disposals (536,404) (9,246) (45,825) - (591,475)
Adjustments, transfers and write-offs 12,104 1,891,374 45,643,800 (65,012,658) (17,465,380)
Balance as at 31 December 2020 114,504,564 541,240,475 3,567,757,837 123,425,431 4,346,928,307
Acquisitions - - 14,551,550 65,482,023 80,033,573
Disposals (339,267) - (511,368) - (850,635)
Adjustments, transfers and write-offs 226,134 1,633,165 137,086,918 (148,431,122) (9,484,905)
Balance as at 31 December 2021 114,391,431 542,873,640 3,718,884,937 40,476,332 4,416,626,340
Accumulated depreciation and impairment losses
Balance as at 1 January 2020 - (340,877,824) (2,693,816,638) - (3,034,694,462)
Depreciation and amortisation for the period (Note 3.6) - (11,322,316) (134,278,558) - (145,600,874)
Disposals - 7,918 45,825 - 53,743
Adjustments, transfers and write-offs - - 17,262,878 - 17,262,878
Balance as at 31 December 2020 - (352,192,222) (2,810,786,493) - (3,162,978,715)
Depreciation and amortisation for the period (Note 3.6) - (11,240,522) (107,130,884) - (118,371,406)
Disposals - - 505,759 - 505,759
Adjustments, transfers and write-offs - 567,105 8,895,424 - 9,462,529
Balance as at 31 December 2021 - (362,865,639) (2,908,516,194) - (3,271,381,833)
Net book value as at 1 January 2020 115,028,864 198,480,523 828,343,224 107,798,987 1,249,651,598
Net book value as at 31 December 2020 114,504,564 189,048,253 756,971,344 123,425,431 1,183,949,592
Net book value as at 31 December 2021 114,391,431 180,008,001 810,368,743 40,476,332 1,145,244,507
Land
Buildings and other
constructions
Equipment and
other tangibles
Assets under
construction
Total
2021 Consolidated Annual Report
13/04/2022 235
The residual values of the assets and respective useful lives are reviewed and adjusted, on the date
of the consolidated statement of financial position. If there are changes to useful lives, they are
treated as a change in accounting estimate and are applied prospectively.
When the book value of the asset exceeds its realisable value, the asset is written down to the
estimated recoverable amount, and an impairment charge is booked (Note 3.7).
Subsequent costs
Scheduled maintenance expenses are considered a component of the acquisition cost of property,
plant and equipment and are fully depreciated by the next forecasted maintenance date.
All other repairs and maintenance costs are charged in the financial period in which they are incurred.
Spare and maintenance parts
Spare parts are considered strategic as they are directly related to production equipment and their
use is expected to last for more than two economic years. Maintenance parts considered as "critical
spare parts" are recognised in non-current assets, as Property, plant and equipment. Respecting
this classification, spare parts are depreciated from the moment they become available for use and
are assigned a useful life that follows the nature of the equipment, where they are expected to be
integrated, not exceeding the remaining useful life of these.
Spare parts are accounted for as property, plant and equipment if they are material and used for
more than one period, or if they are used only in relation to an item of property, plant and equipment.
In other situations, spare parts are accounted for as part of inventories and recognized in the period
when consumed.
Borrowing costs
Borrowing costs directly related to the acquisition or construction (if the construction or development
period exceeds one year) of property, plant and equipment are capitalised and form part of the
asset’s cost.
During the periods presented, no financial charges for loans directly related to the acquisition or
construction of property, plant and equipment were capitalised.
Average useful life
Land (cost of preparing for afforestation) 50
Buildings and other constructions 12 – 30
Basic equipment 6 – 25
Transportation equipment 4 – 9
Tools 2 – 8
Administrative equipment 4 – 8
Other property, plant and equipment 4 – 10
2021 Consolidated Annual Report
13/04/2022 236
Write-offs and disposals
Gains or losses arising from the write-off or disposal represent the difference between the proceeds
received on disposal less costs to sell and the asset’s book value, and are recognised in the income
statement as Other operating income (Note 2.2) or Other operating expenses (Note 2.3).
Estimates and judgements
Recoverability of Property, plant and equipment
The recoverability of property, plant and equipment requires the Board of Directors to use estimates
and assumptions, namely, whenever applicable, regarding the determination of the value in use for
impairment tests to the Group's cash-generating units.
Useful life and depreciation
Property, plant and equipment present the most significant component of the Group's total assets.
These assets are subject to systematic depreciation for the period that is determined to be their
economic useful life. The determination of assets useful lives and the depreciation method to be
applied is essential to determine the amount of depreciation to be recognised in the consolidated
income statement of each period.
These two parameters are defined according to the best judgement of the Board of Directors for the
assets and businesses in question, also considering the practices adopted by companies of the sector
at the international level and the evolution of the economic conditions in which the Group operates.
Given the importance of this estimate, the Group uses, with some regularity, external and
independent experts to assess the adequacy of the estimates used, having the last report been
reported as at 31 December 2019.
2021 Consolidated Annual Report
13/04/2022 237
3.4. INVESTMENT PROPERTIES
Movement in investment properties
These assets are not allocated to the Group's operating activity, nor do they have any future use
determined.
Accounting policies
The Group classifies the assets held for the purpose of capital appreciation and/or the generation of
rental income as investments properties in the consolidated financial statements.
An investment property is initially measured by its acquisition or production cost, including the
transaction costs that are directly attributable to it. After initial recognition, investment properties
are measured at cost less amortisation and impairment losses.
Subsequent expenditure is capitalised only when it is probable that it will result in future economic
benefits to the entity comparing to those considered in initial recognition.
3.5. GOVERNMENT GRANTS
Government grants - movements
Amounts in Euro
Gross amount
Balance as at 1 January 2020 424,744 82,307 507,051
Acquisitions - - -
Disposals - - -
Balance as at 31 December 2020 424,744 82,307 507,051
Acquisitions - - -
Disposals - - -
Balance as at 31 December 2021 424,744 82,307 507,051
Accumulated depreciation and impairment losses
Balance as at 1 January 2020 (399,372) (11,797) (411,169)
Depreciation and amortisation for the period (Note 3.7) - - -
Disposals - - -
Impairment losses (Note 3.7) - (1,646) (1,646)
Balance as at 31 December 2020 (399,372) (13,443) (412,815)
Depreciation and amortisation for the period (Note 3.7) - - -
Disposals - - -
Impairment losses (Note 3.7) - (1,646) (1,646)
Balance as at 31 December 2021 (399,372) (15,089) (414,461)
Net book value as at 1 January 2020 25,372 70,510 95,882
Net book value as at 31 December 2020 25,372 68,864 94,236
Net book value as at 31 December 2021 25,372 67,218 92,589
Land
Buildings and
other
constructions
Total
Amounts in Euro Financial Tax Total Financial Tax Total
Opening balance 13,768,051 21,463,619 35,231,670 18,562,558 24,214,013 42,776,571
Granting 721,599 - 721,599 1,112,066 - 1,112,066
Charge-off (Note 3.7) (2,365,089) (1,737,488) (4,102,577) (6,403,518) (3,183,826) (9,587,344)
Other movements (38,804) (117,166) (155,970) 496,945 433,432 930,377
Closing balance (Note 4.3) 12,085,757 19,608,965 31,694,722 13,768,051 21,463,619 35,231,670
31-12-2021
31-12-2020
2021 Consolidated Annual Report
13/04/2022 238
As at 31 December 2021 and 31 December 2020, Government grants, by company, were detailed
as follows:
The Group expects to recognise subsidies in earnings as follows:
Non-refundable Government grants
Incentive to increase pulp production capacity in Figueira da Foz
On 27 December 2018, Navigator Pulp Figueira, S.A signed a tax investment agreement with AICEP,
related to the investment associated with the increase of pulp production capacity in Figueira da Foz,
which includes a tax incentive up to the maximum amount of Euro 17,278,657, corresponding to
19.5% of the investment made, through the fulfilment, until 31 December 2025, of the contractually
defined objectives. This grant is being recognised over 20 years, although it has been fully utilised
since 2018.
Incentives for the expansion project of the Cacia pulp mill
On 18 June 2014, the Group’s subsidiary, Navigator Pulp Aveiro, S.A., signed two financial and tax
incentive agreements with the AICEP - Agência para o Investimento e Comércio Externo de Portugal
(Agency for Investment and Foreign Trade of Portugal) to support the investment to be promoted
by that company in the capacity increase project of Aveiro pulp mill, with a total amount of Euro
49.3 million.
The grants approved amount to Euro 9,264 million (refundable) and Euro 5,644 million (tax
incentive) to be used until 2024, being fully used since the end of 2016, although it will be recognised
in results until 2034. The contract includes an achievement bonus already recognised in balance
sheet, which corresponds to the conversion of the refundable grant in a non-refundable grant, up to
a limit of 75% (Euro 6,947,450), subject to compliance with the objectives established in the
contract until 31 December 2023.
Amounts in Euro Financial Tax Total Financial Tax Total
AICEP investment contracts
Enerpulp, S.A. 328,243 - 328,243 859,211 - 859,211
Navigator Pulp Figueira, S.A. 4,790,430 2,015,570 6,806,000 5,821,817 2,475,075 8,296,893
Navigator Pulp Figueira, S.A. 101,018 - 101,018 254,271 - 254,271
Navigator Pulp Figueira, S.A. 13,324 8,885,363 8,898,687 17,342 9,595,438 9,612,781
Navigator Parques Industriais, S.A. 1,869,640 - 1,869,640 1,928,996 - 1,928,996
Navigator España, S.A. 499,805 - 499,805 - - -
Navigator Tissue Aveiro, S.A. 2,982,150 8,708,031 11,690,181 3,057,117 9,393,105 12,450,222
10,584,609 19,608,965 30,193,574 11,938,753 21,463,619 33,402,373
Other
Raiz 1,479,841 - 1,479,841 1,748,208 - 1,748,208
Viveiros Aliança, SA 21,306 - 21,306 81,089 - 81,089
1,501,147 - 1,501,147 1,829,297 - 1,829,297
12,085,757 19,608,965 31,694,722 13,768,051 21,463,619 35,231,670
31-12-2021
31-12-2020
Amounts in Euro Financial Tax Total Financial Tax Total
2021 - - - 2,039,499 1,740,836 3,780,335
2022 1,748,315 1,708,516 3,456,831 1,850,129 1,716,550 3,566,679
2023 1,654,211 1,666,401 3,320,612 1,757,983 1,674,435 3,432,419
2024 1,608,887 1,666,401 3,275,288 1,716,452 1,674,435 3,390,887
2025 1,260,106 1,398,687 2,658,793 1,367,728 1,406,721 2,774,450
2026 1,197,809 1,390,347 2,588,156 1,001,869 1,406,721 2,408,591
After 2026 4,616,429 11,778,612 16,395,041 4,034,391 11,843,920 15,878,310
12,085,757 19,608,965 31,694,722 13,768,051 21,463,619 35,231,670
31-12-2021
31-12-2020
2021 Consolidated Annual Report
13/04/2022 239
Government grants refundable
As at 13 December 2017, the subsidiary Navigator Tissue Aveiro, S.A. entered into an investment
agreement with AICEP, for the construction of the new Tissue plant in Aveiro. This agreement
comprises a financial incentive in the form of a refundable grant, which includes a grace period of
two years, without payment of interest, up to a maximum amount of Euro 42,166,636,
corresponding to 35% on the amount of expenses considered eligible, which were estimated at Euro
120,476 million. As at 31 December 2021, the amount receivable relating to the total refundable
grant amounts to Euro 2,108,332.
On 20 April 2018, the same entity was also awarded with a tax incentive granted through the
compliance of contractually defined requirements until 31 December 2028, whose maximum amount
will be Euro 11,515,870, corresponding to 10% of the expenses associated with the project
investment. See Note 5.7. This amount has been fully utilised since 2019 and will be recognised in
profit or loss in 24 years.
There are no unfulfilled conditions and other contingencies linked to Government grants that have
been recognised and Navigator is complying with the conditions according to plan.
Accounting policies
Government grants
Government grants received to compensate the Group for investments made in Property, plant and
equipment, including those attributed as tax credits, are classified as Deferred income (Note 4.3 -
Payables) and are recognised in income over the estimated useful life of the respective subsidised
assets, and are associated with the depreciation of the period (Note 3.7), for presentation purposes.
Government grants refundable
Government grants, in the form of loans refundable at a subsidised rate, are discounted on the date
of initial recognition based on the market interest rate at the date of grant, the value of the discount
constituting the value of the grant to be amortised over the period of the loan or asset whose
acquisition it is intended to finance, depending on the activities financed. These liabilities are included
in the caption Interest-bearing liabilities (Note 5.7). Grants received are classified as a financing
activity in the statement of cash flows.
2021 Consolidated Annual Report
13/04/2022 240
3.6. RIGHT-OF-USE ASSETS
MOVEMENTS IN RIGHT-OF-USE ASSETS
The item Land relates essentially to the land use rights of existing forest exploration, whose
agreements usually have a duration of 24 years, and may be cancelled in advance if the 2
nd
harvest
takes place before the 24
th
year of the agreement term.
The item Buildings refers to the lease agreement entered into between The Navigator Company,
S.A. and Refundos - Sociedade Gestora de Fundos de Investimento Imobiliário, S.A. for the building
located at Avenida Fontes Pereira de Melo, in Lisbon, for use as an office.
The item Other includes the forklift truck rental contracts signed in 2020 and 2021.
Accounting policies
At the date the lease enters into force, the Group recognises a right-of-use asset at its cost, which
corresponds to the initial amount of the lease liability adjusted for: i) any prepayments; ii) lease
incentives received; and iii) initial direct costs incurred.
To the right-of-use asset, the estimate of removing and/or restoring the underlying asset and/or the
location where it is located may be added, when required by the lease agreement.
The right-of-use asset is subsequently depreciated using the straight-line method, from the start
date until the lower between the end of the asset's useful life and the lease term. Additionally, the
right-of-use asset reduced of impairment losses, if any, and adjusted for any remeasurement of the
lease liability. The useful life considered for each class of right-of-use asset is equal to the useful life
of Property, plant and equipment (Note 3.3) in the same class when there is a call option, and the
Group expects to exercise it.
Short-term leases and low-value asset leases
The Group recognises payments for leases of 12 months or less and for leases of assets whose
individual acquisition value is less than Euro 5,000 directly as operating expenses of the period (Note
2.3), on a straight-line basis.
Amounts in Euro
Forestry lands Buildings Vehicles
Software
licenses
Other lease
assets
Total
Gross amount
Balance as at 1 January 2020 41,463,008 4,547,372 4,508,865 358,732 189,517 51,067,494
Acquisitions 6,246,360 103,667 2,428,965 197,639 5,158,458 14,135,089
Adjustments, transfers and write-offs (862,347) - (30,691) (195,783) - (1,088,821)
Balance as at 31 December 2020 46,847,021 4,651,039 6,907,139 360,588 5,347,975 64,113,762
Acquisitions 3,509,715 4,016 1,663,898 963,772 1,307,301 7,448,703
Adjustments, transfers and write-offs (435,469) - (23,409) - - (458,878)
Balance as at 31 December 2021 49,921,267 4,655,055 8,547,629 1,324,360 6,655,276 71,103,587
Accumulated depreciation and impairment losses -
Balance as at 1 January 2020 (3,006,912) (702,301) (1,612,924) (162,455) (64,977) (5,549,570)
Depreciation (3,179,144) (666,983) (2,082,337) (113,479) (822,907) (6,864,850)
Adjustments, transfers and write-offs 5,314 - 10,723 111,622 - 127,659
Balance as at 31 December 2020 (6,180,742) (1,369,284) (3,684,538) (164,312) (887,884) (12,286,761)
Depreciation (3,066,093) (515,764) (1,798,084) (501,199) (1,835,865) (7,717,005)
Adjustments, transfers and write-offs 93,139 - - - - 93,139
Balance as at 31 December 2021 (9,153,696) (1,885,048) (5,482,622) (665,511) (2,723,749) (19,910,627)
Net book value as at 1 January 2020 38,456,096 3,845,071 2,895,941 196,277 124,540 45,517,924
Net book value as at 31 December 2020 40,666,279 3,281,755 3,222,601 196,276 4,460,091 51,827,001
Net book value as at 31 December 2021 40,767,570 2,770,007 3,065,007 658,849 3,931,527 51,192,959
2021 Consolidated Annual Report
13/04/2022 241
3.7. DEPRECIATION, AMORTISATION AND IMPAIRMENT LOSSES
At the end of 2020, the Navigator Group changed the useful life of the assets allocated to pulp
production in Figueira da Foz and to the assets allocated to tissue production, according to the
evaluation report carried out by an independent entity, with a prospective effect from 1 January
2021.
3.8. BIOLOGICAL ASSETS
Movements in biological assets
Work also started on harvesting timber from Portucel Moçambique's plantations in Manica, for export
from the Port of Beira, which will make it possible, amongst other goals, to put Mozambique on the
world map for this forest-based industry. In the first half of 2021, Portucel Mozambique made its
first export of wood produced in Mozambique, from its plantations in Manica, with the shipment of a
vessel containing 32,000 cubic metres of bark-free solid wood from the port of Beira, in Mozambique,
to the port of Aveiro, bound for the Figueira da Foz Industrial Complex. Already in the second half
of the year, two more ships were shipped, totalling 58,000 cubic meters.
The Navigator Group considers, in accordance with IAS 41, mature assets to be those that have
reached the necessary specifications to obtain the maximum yield based on their profitability, supply
needs and opportunity cost. Typically, the forest in Portugal reaches its maturity between 8 and 12
years, and this reference depends on the species, soil conditions, as well as edaphoclimatic
conditions. Data on the forest, its condition and its future potential are measured at least twice
throughout its growth cycle. As at 31 December 2021, mature assets accounted for approximately
48% of Navigator’s forest in Portugal, being recognised at fair value.
Amounts in Euro
2021 2020
Depreciation of property, plant and equipment for the period (Note 3.3) 118,371,406 145,600,874
Government grants charged-off (Note 3.5) (4,102,577) (9,587,344)
Depreciation of property, plant and equipment, net of grants charged-off 114,268,829 136,013,530
Amortisation of intangible assets for the period (Note 3.2) 11,864 4,473
Depreciation of right-of-use assets for the period (Note 3.6) 7,717,005 6,753,227
Impairment of investment properties (Note 3.4) 1,646 1,646
121,999,345 142,772,875
Amounts in Euro
2021 2020
Opening balance 148,584,451 131,769,841
Logging in the period (25,277,834) (23,238,185)
Growth 19,653,667 20,134,057
New planted areas and replanting (at cost) 3,313,648 4,313,757
Other changes in fair value
- change in the price of wood - 466,300
- change in the cost-of-capital rate 1,212,800 8,854,000
- impact of forest fires (68,794) (424,914)
- transport logistics costs (2,417,700) (3,152,000)
- impairment in Mozambique project - 16,714,433
- other changes in expectations 2,323,823 (6,852,837)
Total changes (1,260,391) 16,814,611
Closing balance 147,324,061 148,584,451
2021 Consolidated Annual Report
13/04/2022 242
As at 31 December 2021 and 31 December 2020, biological assets, by species, is detailed as follows:
These amounts correspond to Board of Directors’ expectation of the volumes to be extracted from
its woodlands in the future, as follows:
Concerning Eucalyptus, the most relevant biological asset in the financial statements, the Group
extracted, in 2021, 651.654 m3ssc of wood from its owned and explored forests (31 December
2020: 574,507 m3ssc).
As at 31 December 2021 and 2020, (i) there are no amounts of biological assets whose property is
restricted and/or pledged as guarantee for liabilities, nor there are non-reversible commitments
related to the acquisition of biological assets, and (ii) there are no Government grants related to
biological assets recognised in the Group's consolidated financial statements.
Accounting policies
The Group’s biological assets comprise the forests held for the production of timber, suitable for
incorporating in the production of BEKP or for sale on the market, mostly eucalyptus, but also include
other species such as pine and cork oak.
Fair Value (level 3 of the IFRS 13 fair value hierarchy)
When calculating the fair value of forests, the Group uses the discounted cash flows method, based
on a model developed in house, regularly tested by independent external assessments.
In the model developed, assumptions are considered corresponding to the nature of the assets under
evaluation, namely, the development cycle of the different species, the productivity of the forests,
the wood sales price (when there is an active market) less the cost of harvesting, the rents of own,
leased land, replanting and transport, the costs of planting and maintenance, the cost inherent in
leasing the forest land, and the discount rate.
The main unobservable inputs of the fair value model are detailed as follows, and the amount of the
fair value of biological assets will increase / (decrease) respectively if:
• Wood sales prices increase / (decrease);
• Estimated cutting, replanting and transport costs decrease / (increase);
• Estimated planting and maintenance costs decrease / (increase);
• The discount rate decrease / (increase).
Amounts in Euro
31-12-2021 31-12-2020
Eucalyptus (Portugal) 113,826,448 118,916,833
Pine (Portugal) 6,697,561 6,311,003
Cork oak (Portugal) 6,268,821 6,050,894
Other species (Portugal) 1,015,078 591,289
Eucalyptus (Mozambique) 19,516,153 16,714,433
147,324,061 148,584,452
Amounts in Euro
31-12-2021 31-12-2020
Eucalyptus (Portugal) - Potential future of wood extractions k m3ssc 10,207 10,245
Pine (Portugal) - Potential future of wood extractions k ton 311 306
Pine (Portugal) - Potential future of pine extractions k ton n/a n/a
Cork oak (Portugal) - Potential future of cork extractions k @ 461 573
Eucalyptus (Mozambique) - Potential future of wood extractions k m3ssc 2,758 3,394
2021 Consolidated Annual Report
13/04/2022 243
The discount rate corresponds to a market rate without inflation, in a manner consistent with the
structure of projections, determined on the basis of the Navigator Company Group’s expected rate
of return on its forests, which are intended to be sold intragroup.
Concession areas
The costs incurred with the site preparation before the first forestation are recorded as property,
plant and equipment and depreciated in line with its expected useful lives corresponding to the
concession period.
Change of estimates
Changes in estimates of growth, growth period, price, cost and other assumptions are recognised in
the income statement as fair value adjustments of biological assets.
Harvesting
At the time of harvesting, wood is recognised at fair value less estimated costs since that point until
the point of sale, which is the initial cost of the inventory.
Estimates and judgements
Assumptions
Assumptions corresponding to the nature of the assets being valued were considered:
− productivity of forests;
− wood sales price (when there is an active market) less the cost of harvesting, rents for own,
rented and leased land, replanting and transport, planting and maintenance costs, the cost
inherent in leasing forest land;
− discount rate, 2021: 2.99% (2020: 3.07%). It should be noted that the Group incorporates
the fire risk into the model's cash flows. If this risk were incorporated into the discount rate,
it would be of 4.61%.
Sensitivity analysis
The Group takes into account the discount rate used in Portugal and the forward price of wood as
the most significant variables.
Changes in the assumptions may imply the appreciation/depreciation of these assets.
Amounts in Euro
31-12-2021 31-12-2020
1) Increase of 0.5% in the discount rate in Portugal
Devaluation of Portugal's forest assets
2) Decrease of 3% in forward price
Devaluation of Portugal's forest assets
7,039,798
11,335,171
7,896,515
11,731,495
2021 Consolidated Annual Report
13/04/2022 244
4. WORKING CAPITAL
4.1. INVENTORIES
4.1.1. Inventories - detail by nature
Amounts net of accumulated impairment losses
Inventories of finished and intermediate products - distribution by geographical area
Finished and intermediate products inventories include Euro 11,730,049 (31 December 2020: Euro
9,419,705) relating to inventories for which invoices have already been issued but whose control
has not been transferred to Customers.
As at 31 December 2021 and 31 December 2020, there are no inventories in which ownership is
restricted and/or pledged as collateral for liabilities.
4.1.2. Cost of goods sold and materials consumed in the period
Amounts in Euro
31-12-2021 31-12-2020
Raw materials 102,851,009 92,421,384
Goods 185,541 268,916
Subtotal (Note 4.1.2) 103,036,550 92,690,300
Finished and semi-finished products 75,870,145 77,760,647
Goods and work in progress 2,440,632 3,101,027
By-products and waste 5,203,331 3,183,163
Subtotal (Note 4.1.3) 83,514,108 84,044,837
Total 186,550,658 176,735,137
Amounts in Euro
31-12-2021 % 31-12-2020 %
Portugal
57,009,921 75.1% 52,182,710 67.1%
Rest of Europe 6,277,358 8.3% 10,675,568 13.7%
USA 12,582,866 16.6% 14,902,369 19.2%
75,870,145 100.0% 77,760,647 100.0%
Amounts in Euro
2021 2020
Opening balance 92,690,300 109,291,268
Purchases 639,900,753 554,126,387
Inventory losses 170,677 (863,209)
Impairment losses 69,565 (139,995)
Closing balance (103,036,550) (92,690,300)
Cost of goods sold and materials consumed (Note 2.3) 629,794,745 569,724,151
2021 Consolidated Annual Report
13/04/2022 245
Costs of goods and materials consumed - detail by product
The cost of wood / biomass only relates to wood purchases to entities outside the Group, either
domestic or foreign.
In 2021 it was verified a negative evolution in production costs, penalised essentially by the increase
in the cost of wood, energy and chemicals.
There is also a decrease in the consumption of natural gas due to the new biomass boiler in Figueira
da Foz.
4.1.3. Variation in production in the period
4.1.4. Movements in impairment losses in inventories
The impairment losses in inventories recorded in 2021 and 2020 relate to adjustments in the stock
of UWF and Tissue paper. In 2020, the Group reversed impairments on inventories arising mainly
from the sale of UWF (Euro, 8,624,342) and Tissue (Euro 1,174,905) paper waste (Note 2.2).
Amounts in Euro
2021 2020
Wood / Biomass (external acquisitions) 278,459,294 243,028,640
Natural gas 25,882,421 44,604,627
Other fuels 13,951,755 11,953,148
Chemicals 141,263,702 128,443,795
BEKP pulp 24,290,827 18,276,376
Pine pulp 42,620,975 70,517,407
Paper (heavyweight) 2,995,088 3,528,745
Tissue paper - subcontracts 2,015,997 1,561,849
Consumables / Warehouse material 26,761,199 19,751,881
Packaging material 68,739,504 24,220,219
Other materials 2,813,983 3,837,464
629,794,745 569,724,151
Amounts in Euro
2021 2020
Opening balance (84,044,837) (108,588,432)
Adjustments (400,436) 1,020,497
Inventory losses 697,246 85,136
Impairment losses 1,846,899 (9,107,213)
Closing balance 83,514,108 84,044,837
Change in production (Note 2.3) 1,612,980 (32,545,175)
Amounts in Euro
2021 2020
Opening balance (2,157,570) (11,121,848)
Increases (Note 2.3) (2,643,558) (933,009)
Reversals (Note 2.2) 866,224 9,900,226
Impact in profit or loss for the period (1,777,334) 8,967,217
Charge-off - (2,939)
Closing balance (3,934,904) (2,157,570)
2021 Consolidated Annual Report
13/04/2022 246
Accounting policies
Inventories are valued in accordance with the following criteria:
i. Goods and raw materials
Goods and raw, subsidiary and consumable materials are valued at the lower of their purchase cost
or their net realisable value. The purchase cost includes ancillary costs and it is determined using
the weighted average cost as the valuation method.
ii. Finished and intermediate products and work in progress
Finished and intermediate products and work in progress are valued at the lower of their production
cost (which includes incorporated raw materials, labour and general manufacturing costs, based on
a normal production capacity level) or their net realisable value.
The net realisable value corresponds to the estimated selling price, after deducting estimated
completion and selling costs. The difference between production cost and net realisable value, if
lower, are recorded as an operational cost.
4.2. RECEIVABLES
The amounts above are net of accumulated impairment losses. Analysis of impairment for
receivables is presented in Note 8.1.4 - Credit risk.
i) State is detailed as follows:
As at 31 December 2021, the amount of refund requests comprised the following, by month and by
company:
Up to the date of issuing this report, Euro 37,722,135 of the outstanding amounts as at 31 December
2021, had already been received.
Amounts in Euro Non-current Current Total Non-current Current Total
Trade receivables - 210,789,083 210,789,083 - 133,591,397 133,591,397
Other receivables - related companies (Note 11.3) - - - - 443,649 443,649
State i) - 44,603,384 44,603,384 - 45,933,424 45,933,424
Department of Commerce (EUA) ii) - 281,653 281,653 3,245,517 6,608,333 9,853,850
Enviva Pellets Greenwood, LLC (EUA) iii) 7,826,849 25,384,072 33,210,921 30,747,820 2,747,317 33,495,137
Accrued income iv) - 19,028,577 19,028,577 - 17,263,014 17,263,014
Deferred expenses v) - 8,463,089 8,463,089 - 7,148,871 7,148,871
Derivative financial instruments (Note 8.2) - 1,630,982 1,630,982 - 4,019,440 4,019,440
Other 777,698 7,701,920 8,479,619 702,768 14,016,837 14,719,604
8,604,547 317,882,760 326,487,308 34,696,105 231,772,282 266,468,387
31-12-2021
31-12-2020
Amounts in Euro
31-12-2021 31-12-2020
Value added tax - recoverable 6,848,780 16,980,665
Value added tax - refund requests 37,752,135 26,668,947
Amounts pending refund (tax proceedings decided in favour of the Group) 2,470 2,283,812
44,603,384 45,933,424
Amounts in Euro Nov-2021 Dec-2021 Total
The Navigator Company, S.A. 20,331,270 15,631,403 35,962,673
Sociedade de Vinhos da Herdade de Espirra, S.A. - 30,000 30,000
EucaliptusLand, S.A. 50,000 - 50,000
Bosques do Atlântico, S.L. - 1,709,462 1,709,462
20,381,270 17,370,865 37,752,135
2021 Consolidated Annual Report
13/04/2022 247
As at 31 December 2020, the amount of reimbursement requests comprised the following, by month
and by company:
All these amounts were received during the first half of 2021.
ii) As at 31 December 2021 and 2020, the balance corresponds to the amount receivable from the
Department of Commerce (DoC) following the investigation initiated in 2015 of alleged dumping
practices in exports of UWF paper to the United States by the subsidiary Navigator.
During the first quarter of 2021, Navigator received the missing amount related to the first review
period (POR 1), in the amount of Euro 6,608,333.
In January 2021, the Department of Commerce confirmed the final rate to be applied for the third
period of review from March 2018 to February 2019 at 6.75%. The final rate remained unchanged
from the preliminary rate at 6.75%, so that the Group will receive around Euro 4.4 million for the
difference between the deposits made and the final rate payable.
During 2021, the Department of Commerce confirmed the final rate to be applied for the fourth
period of review from March 2019 to February 2021 at 2.21%, therefore the Group will soon receive
approximately Euro 281,653 for the difference between the deposits made and the final rate payable.
For the subsequent review periods (5 and 6), Navigator is estimated to pay to the DoC approximately
Euro 8.5 million (Note 4.3).
iii) Reflects the present value of the amount still to be received from the sale of the pellet business.
The nominal receivable (in USD) shall bear interest at the rate of 2.5% (Note 5.11).
iv) Accrued income and deferred expenses are detailed as follows:
Amounts in Euro Nov-2020 Dec-2020 Total
The Navigator Company, S.A. 7,738,657 16,406,001 24,144,659
Eucaliptusland - 150,000 150,000
Bosques do Atlântico, S.L. - 2,374,288 2,374,288
7,738,657 18,930,290 26,668,947
Amounts in Euro
31-12-2021 31-12-2020
Accrued income
Interest receivable 718,888 1,729,911
Energy sales 17,470,569 12,314,111
Insurance compensation 272,689 2,950,000
Other 566,432 268,992
19,028,577 17,263,014
Deferred expenses
Insurance - 252
Rentals 8,312,244 7,082,041
Other 150,844 66,578
8,463,089 7,148,871
27,491,666 24,411,885
2021 Consolidated Annual Report
13/04/2022 248
Accounting policies
Trade receivables and other debtors
Classification
Trade receivables result from the Group's main activities and the business model followed is the
collection of contractual cash flows.
Balances from other debtors generally assume the business model of collecting contractual cash
flows.
Initial measurement
At fair value.
Subsequent measurement
At amortised cost, net of impairment losses.
Impairment from Trade receivables
Impairment losses are recorded based on the simplified model provided for in IFRS 9, recording
expected losses until maturity. The expected losses are determined on the basis of the experience
of historical actual losses over a statistically significant period and representative of the specific
characteristics of the underlying credit risk (Note 8.1.4).
Impairment from other debtors
Impairment losses are recorded on the basis of the general estimated credit loss model of IFRS 9.
2021 Consolidated Annual Report
13/04/2022 249
4.3. PAYABLES
State - details
As at 31 December 2021 and 2020, there were no overdue debts to the State.
Non-refundable grants - details
Accounting policies
Trade payables and other current liabilities are initially recorded at their fair value and subsequently
measured at amortised cost.
Amounts in Euro
31-12-2021 31-12-2020
Trade payables 253,983,711 165,865,189
Trade payables - current account 2,789,501 1,979,388
State 27,246,422 32,397,267
Related parties (Note 11.3) 1,264,454 1,264,454
Other creditors - CO
2
emission allowances 21,353,771 16,530,618
Tax consolidation (Semapa) (Note 10.4 and 11.3) 6,447,546 6,447,546
Other creditors (Note 5.4) 2,392,990 516,599
Derivative financial instruments (Note 8.2) 8,130,589 6,196,001
Payroll costs accruals 30,613,080 22,324,875
Accrued expenses - interest payable 6,711,797 5,167,352
Wood suppliers bonus 4,294,936 5,352,176
Water resource fee 1,096,148 1,104,037
Rent liabilities 15,634,141 13,683,172
Other accrued expenses 5,513,018 13,717,891
Non-refundable grants 5,689,791 11,103,125
Current payables 393,161,894 303,649,690
Non-refundable grants 28,460,138 30,234,237
Other payables 8,554,289 -
Non-current payables 37,014,427 30,234,237
430,176,319 333,883,925
Amounts in Euro
31-12-2021 31-12-2020
Personal income tax withhold (IRS) 3,298,154 2,765,825
Value added tax 20,793,757 26,852,922
Social Security contributions 2,202,736 2,202,862
Other 951,775 575,658
27,246,422 32,397,267
Amounts in Euro
31-12-2021 31-12-2020
Investment grants (Note 3.5) 3,234,584 4,997,433
Grants - CO
2
emission allowances (Note 3.2) - 1,425,646
Other grants 2,455,207 4,680,046
Non-refundable grants - current 5,689,791 11,103,125
Investment grants (Note 3.5) 28,460,138 30,234,237
Non-refundable grants - non-current 28,460,138 30,234,237
34,149,929 41,337,362
2021 Consolidated Annual Report
13/04/2022 250
5. CAPITAL STRUCTURE
5.1. CAPITAL MANAGEMENT
Capital management policy
For capital management purposes, the Group defines capital as including equity and net debt.
The Group's objectives in relation to capital management are:
i. To safeguard its ability to continue in business and thus provide returns for Shareholders and
benefits for its remaining Stakeholders;
ii. To keep a solid capital structure to support the growth of its business; and
iii. To maintain an optimal capital structure that enables it to reduce the cost of capital.
In order to maintain or adjust its capital structure, the Group can adjust the amount of dividends
payable to its Shareholders, return capital to its Shareholders, issue new shares or sell assets to
lower its borrowings.
In line with the sector, the Group monitors its capital based on the gearing ratio, defined as the
proportion between net debt and total capital.
Net interest-bearing debt is calculated by adding the total amount of loans (including the current
and non-current portions as disclosed in the statement of financial position) and deducting all cash
and cash equivalents. Total equity is calculated by adding Shareholders’ equity (as shown in the
statement of financial position), to interest-bearing net debt, and excluding treasury shares and
non-controlling interests.
The Group calculates the gearing ratio as follows:
5.2. SHARE CAPITAL AND THEASURY SHARES
Navigator's Shareholders
The Navigator Company is a public company with its shares quoted on the Euronext Lisbon.
As at 31 December 2021, The Navigator Company, S.A. share capital of Euro 500,000,000 was fully
subscribed and is represented by 711,183,069 shares without nominal value (31 de dezembro de
2020: 717,500,000 shares).
At the General Meeting held on 11 May 2021, a reduction of the Company's share capital from Euro
500,000,000 to Euro 495,597,957.49 was agreed, the amount of the reduction being Euro
4,402,042.51, for a special purpose, by cancellation of 6,316,931 treasury shares, without nominal
Amounts in Euro
31-12-2021 31-12-2020
Interest-bearing liabilities (Note 5.7) 833,944,049 982,410,783
Cash and cash equivalents (Note 5.9) (239,171,252) (302,399,831)
Net debt 594,772,797 680,010,952
Equity 1,045,114,080 1,026,201,689
Treasury shares (Note 5.2) - 20,189,264
Non-controlling interest (Note 5.6) (286,896) (275,182)
Equity, except for treasury shares and non-controlling interests 1,044,827,184 1,046,115,771
Total equity 1,639,599,981 1,726,126,723
Gearing 36.28% 39.40%
2021 Consolidated Annual Report
13/04/2022 251
value. The Company will now have 711,183,069 ordinary shares outstanding, followed by a share
capital increase from Euro 495,597,957.49 to Euro 500,000,000, the amount of the increase being
Euro 4,402,042.51, with no change in the number of shares, to be paid up by incorporation of free
reserves (surplus of legal reserve).
As at 31 December 2021 and 2020, the Shareholders with qualified shareholdings in the Company’s
capital were as follows:
Treasury shares - movements
These shares were mainly acquired during 2008 and 2012 as well as in 2018 and 2019, and the
changes in the period were as follows:
As at 31 December 2021, Navigator did not hold any own shares (31 December 2020: Euro
20,189,264), corresponding to a unit value of Euro 3.35 (31 December 2020: Euro 2,498) and the
market capitalisation of the Company at this date amounted to Euro 2,382,463,281 (31 December
2020: Euro 1,792,315,000) compared to an equity, net of non-controlling interests, of Euro
1,044,827,184 (31 December 2020: 1,025,926,506).
Accounting policies
Ordinary shares are classified in Shareholders’ equity.
Costs directly attributable to the issue of new shares or other equity instruments are reported as a
deduction, net of taxes, from the proceeds of the issue.
Designation No. of shares % No. of shares %
Semapa, SGPS, S.A. 497,617,299 69.97% 497,617,299 69.35%
Treasury shares - 0.00% 6,316,931 0.88%
Floating shares 213,565,770 30.03% 213,565,770 29.77%
711,183,069 100% 717,500,000 100%
31-12-2021
31-12-2020
No. of shares
Book value
(Euro)
No. of shares
Book value
(Euro)
Treasury shares held at the beginning of the period 6,316,931 20,189,264 6,316,931 20,189,264
Acquisition of treasury shares - - - -
Cancellation for the period (6,316,931) (20,189,264) - -
Treasury shares at the end of the period - - 6,316,931 20,189,264
31-12-2021
31-12-2020
Amounts in Euro
Quantity Amount Quantity Amount
Treasury shares held in January 6,316,931 20,189,264 6,316,931 20,189,264
Cancellation
January - - - -
February - - - -
March - - - -
April - - - -
May (6,316,931) (20,189,264) - -
June - - - -
July - - - -
August - - - -
September - - - -
October - - - -
November - - - -
December - - - -
(6,316,931) (20,189,264) - -
Treasury shares held in December - - 6,316,931 20,189,264
2021
2020
2021 Consolidated Annual Report
13/04/2022 252
Costs directly attributable to the issue of new shares or options for the acquisition of a new business
are deducted from the amount issued.
When any Group company acquires shares of the parent company (treasury shares), the payment,
which includes directly attributable incremental costs, is deducted from the Shareholders’ equity
attributable to the holders of the parent company’s capital until such time the shares are cancelled,
reissued or sold.
When such shares are subsequently disposed or reissued, any proceeds, net of the directly
attributable transaction costs and taxes, is directly reflected in the Shareholders’ equity and not in
profit or loss for the period.
5.3. EARNINGS PER SHARE
Accounting policies
Basic earnings per share are determined based on the division of profits or losses attributable to the
ordinary Shareholders of the Company by the weighted average number of common shares
outstanding during the period.
For the purpose of calculating diluted earnings per share, the Company adjusts the profits or losses
attributable to ordinary equity holders, as well as the weighted average number of outstanding
shares for the purposes of all potential dilutive common shares.
5.4. DIVIDENDS AND RESERVES DISTRIBUTED
Dividends and reserves distributed in the period
At the Annual General Meeting held on 13 May 2021, The Navigator Company, S.A. approved to
distribute dividends in the amount of Euro 99,565,630.
2021 2020
Profit attributable to Navigator's equity holders (Euro) 171,411,455 109,213,720
Total number of shares issued 711,183,069 717,500,000
Average treasury shares held for the period - (6,316,931)
Weighted average number of shares 711,183,069 711,183,069
Basic earnings per share (Euro) 0.241 0.154
Diluted earnings per share (Euro) 0.241 0.154
Amounts in Euro
Amount
approved
Dividends per
share (Euro)
Attributions in 2021
Distribution of retained earnings 99,565,630
0.140
Distribution of anticipated dividends 49,996,170
0.070
Attributions in 2020
Distribution of retained earnings 99,138,920 0.139
Distribution of 2019 free reserves (paid in January 2020) 99,138,920 0.139
2021 Consolidated Annual Report
13/04/2022 253
On 16 December 2021, the Board of Directors of The Navigator Company, S.A. decided to make an
advance on profits to Shareholders, in the amount of Euro 49,996,170, equivalent to the gross value
of Euro 0.0703 per share.
By resolution of the Extraordinary General Meeting held on 24 November 2020, The Navigator
Company, S.A. distributed retained earnings of Euro 99,138,920.
By resolution of the Extraordinary General Meeting held on 20 December 2019, The Navigator
Company, S.A. proceeded with the payment of free reserves, to be distributed to Shareholders from
9 January 2020, in the amount of Euro 99,138,919.82, equivalent to Euro 0.1394 per outstanding
share.
Accounting policies
The distribution of dividends to Shareholders is recognised as a liability in the Group’s financial
statements in the period in which the dividends are approved by the Shareholders at the General
Meeting and up until the time of their payment or, in the case of anticipated distributions, when
approved by the Board of Directors.
5.5. RESERVES AND RETAINED EARNINGS
Currency exchange reserve - details
Fair value reserves - details
The amount associated to the exchange rate hedge of the subsidiary Navigator North America (net
investment) will remain in reserves until the disposal or partial disposal of the net investment (at
Amounts in Euro
31-12-2021 31-12-2020
Currency translation reserve (24,346,001) (20,881,569)
Fair value reserve (5,604,076) (6,641,368)
Legal reserve 100,000,000 100,000,000
Other reserves 121,836,100 266,443,646
Retained earnings 231,525,876 97,981,342
Reserves and retained earnings 423,411,899 436,902,051
Amounts in Euro
31-12-2021 31-12-2020
Navigator North América (USD) (4,847,972) (5,134,850)
Navigator Paper Mexico (MXN) (69,753) (40,872)
Navigator Rus Company, LLC (RUB) - (19,775)
Navigator Middle East Trading DMCC (AED) (7,594) (17,312)
Navigator Egypt (EGP) (4,037) 284
Navigator Paper Company UK (GBP) (369,114) (457,725)
Navigator Eurasia (TYR) 799 799
Navigator Afrique du Nord (MAD) 395 395
Navigator Paper Poland (PLN) (2,897) (2,863)
Portucel Moçambique (MZM) (19,045,827) (15,209,650)
(24,346,001) (20,881,569)
Amounts in Euro
Gross amount Tax Net amout Gross amount Tax Net amout
Interest rate risk hedging (2,231,713) 613,722 (1,617,992) (6,610,686) 1,817,939 (4,792,748)
Foreign exchange hedging (2,586,225) 711,212 (1,875,013) 362,001 (99,550) 262,451
Foreign exchange hedging - Navigator North America (2,911,823) 800,751 (2,111,072) (2,911,823) 800,751 (2,111,072)
(7,729,761) 2,125,685 (5,604,076) (9,160,508) 2,519,140 (6,641,368)
31-12-2021
31-12-2020
2021 Consolidated Annual Report
13/04/2022 254
which time it will be reclassified to gains or losses). This occurs because the hedged item (the net
investment) does not affect the Group's earnings until its disposal.
Fair value reserves - movements
Other reserves – details
Accounting policies
Fair value reserves
It corresponds to the accumulated change in fair value of derivative financial instruments classified
as hedging instruments (Note 8.2), net of deferred taxes.
Changes related to derivatives are reclassified to profit or loss for the period (Note 5.11) as the
hedged instruments affect profit or loss for the period. The change in fair value of financial
investments recorded under this heading is not recycled to profit or loss.
Currency exchange reserve
The currency translation reserve corresponds to the accumulated amount related to the settlement
by the Group of the exchange rate differences resulting from the translation of the financial
statements of the subsidiaries operating outside the Euro zone.
Legal reserve
Commercial Company law prescribes that at least 5% of annual net profit must be transferred to the
legal reserve, until this is equal to at least 20% of the issued capital. This reserve cannot be
distributed unless the company is liquidated. It may, however, be drawn on to absorb losses, after
other reserves are exhausted, or incorporated in the share capital.
The legal reserve is constituted by its maximum amount in the periods presented.
Other reserves and retained earnings
This item corresponds to reserves available for distribution to Shareholders that were constituted
through the appropriation of prior period’s earnings, the reduction of share capital and other
movements. The portion of the balance corresponding to the acquisition value of treasury shares
held is not distributable (Note 5.2).
Amounts in Euro
31-12-2021 31-12-2020
Opening balance (6,641,368) (6,384,412)
Change in the fair value of derivative financial instruments (Note 8.2) 1,430,747 (354,422)
Deferred tax (393,455) 97,466
Closing balance (5,604,076) (6,641,368)
Amounts in Euro
31-12-2021 31-12-2020
Transfer of legal reserve surplus to free reserves 9,790,475 9,790,475
Free reserves arising from the share capital reduction not yet distributed 118,361,080 118,361,080
Adjustments to the application of 2014 profits (balance sheet bonus) 1,476 1,476
Net profit for 2019 - 138,290,615
Incorporation of capital reserves (6,316,931) -
121,836,100 266,443,646
2021 Consolidated Annual Report
13/04/2022 255
5.6. NON-CONTROLLING INTERESTS
Detail of non-controlling interests, by subsidiary
Non-controlling interests are related to RAÍZ – Instituto de Investigação da Florestal e Papel, where
the Group owns 97% of the share capital and voting rights. The remaining 3% are owned by external
associates.
In 2014, the Group signed agreements with IFC – Internacional Finance Corporation for the entry of
this institution into the share capital of the subsidiary Portucel Moçambique, S.A., thus ensuring the
construction phase of the Group's forestry project in Mozambique. In 2015, this Company performed
a capital increase from MZM 1,000 million to MZM 1,680,798 million subscribing MZM 332,798 million
corresponding to 19.98% of the capital at that date.
In February 2019, there was a reduction in the subscribed, underwritten and paid-up capital of the
shareholder The Navigator Company, S.A. to MZM 456,596,000, corresponding to 90.02% of the
Company’s share capital, and the IFC’s holding was revised to MZM 50,620,000, corresponding to
9.98% of the Portucel Moçambique’s share capital.
The surplus of the share capital reduction previously owned by The Navigator Company, S.A., of
MZM 891,404,000 was employed to offset negative retained earnings. The differential between the
MZM 332,798,000 previously subscribed by IFC and the MZM 50,620,000 which were paid in
February 2019 were included in the share capital of Portucel Moçambique, as share premium.
As at the reporting date, there are no rights of protection of non-controlling interests that
significantly restrict the entity's ability to access or use assets and settle liabilities of the Group.
Movements of non-controlling interests
5.7. INTEREST-BEARING LIABILITIES
In 2021, two short-term loans of Euro 40 and Euro 25 million, which had been taken in the context
of the onset of the pandemic, were repaid. Two bond loans of Euro 100 and Euro 45 million and a
Commercial Paper Programme of Euro 70 million were also repaid. On the other hand, two loans
%
Amounts in Euro held 31-12-2021 31-12-2020 2021 2020
Raiz - Instituto de Investigação da Floresta e Papel 3.00% 286,896 275,182 7,058 2,532
Portucel Moçambique i)
90.02% - - - -
286,896 275,182 7,058 2,532
Equity
Net profit
Amounts in Euro
2021 2020
Opening balance 275,182 273,817
Net profit for the period 7,058 2,532
Other comprehensive income 4,656 (1,167)
Closing balance 286,896 275,182
Amounts in Euro Non-current Current Total Non-current Current Total
Bond loans 442,500,000 2,500,000 445,000,000 340,000,000 145,000,000 485,000,000
Commercial paper 140,000,000 100,000,000 240,000,000 240,000,000 135,000,000 375,000,000
Bank loans 109,087,301 12,718,254 121,805,555 79,305,555 11,527,778 90,833,333
Charges with bond issuances (3,415,421) - (3,415,421) (3,449,340) - (3,449,340)
Refundable grants 34,509,610 4,099,903 38,609,513 37,955,008 4,578 37,959,586
Deferrals and adjustments (8,055,598) - (8,055,598) (2,932,796) - (2,932,796)
Debt securities and bank debt 714,625,892 119,318,157 833,944,049 690,878,427 291,532,356 982,410,783
Average interest rate, considering charges
for annual fees and hedging operations
1.5% 1.5%
31-12-2021
31-12-2020
2021 Consolidated Annual Report
13/04/2022 256
contracted in 2020 were disbursed, a 10-year EIB facility in the amount of Euro 27.5 million and a
5-year bond loan with Abanca in the amount of Euro 20 million. New long-term financing was also
contracted and issued with the Bank of China, in the amount of Euro 15 million.
On 5 August 2021, Navigator issued a bond loan – “sustainability linked bond” – associated with two
ESG performance indicators relevant to the pulp and paper industry, namely the reduction of CO
2
emissions and the increase in the % of certified wood purchased in the Portuguese market. This
issue, in the amount of Euro 100 million with a five-year maturity, was performed in exchange for
the early repayment of a financing in the same amount, which had its maturity in 2023. This
operation, to which a fixed rate swap was added, led to the extension of the average life of the
Group's debt, as well as to a reduction of the Company's financing cost, besides representing a
commitment to align with sustainability objectives.
The refundable grants include grants from AICEP - Agência para o Investimento e Comércio Externo
de Portugal, as part of a number of research and development projects, which includes the grant
under the investment agreement entered into with the Navigator Group subsidiary for the
construction of the new Tissue plant in Aveiro. This agreement comprises a financial incentive in the
form of a refundable grant, up to a maximum amount of Euro 42,166,636, without interest payment,
with a grace period of two years, with the last refund happening in 2027.
The maturity analysis of interest-bearing liabilities is presented in the Note 8.1.3 - Liquidity
risk.
Interest-bearing liabilities - details
31-12-2021
Amounts in Euro Amount
Outstanding
amount
Maturity Interest rate Current Non-current
Bond loans
Navigator 2015-2023 150,000,000 150,000,000 September 2023
Variable rate indexed to Euribor - 150,000,000
Navigator 2019-2026 50,000,000 50,000,000 January 2026
Fixed rate - 50,000,000
Navigator 2019-2025 50,000,000 50,000,000 March 2025
Variable rate indexed to Euribor - 50,000,000
Navigator 2021-2026 20,000,000 20,000,000 April 2026
Variable rate indexed to Euribor 2,500,000 17,500,000
Navigator 2020-2026 75,000,000 75,000,000 December 2026
Variable rate indexed to Euribor - 75,000,000
Navigator 2021-2026 100,000,000 100,000,000 August 2026
Fixed rate - 100,000,000
Fees - (3,415,421) - (3,415,421)
European Investment Bank (EIB)
EIB Loan - Energy 21,250,000 21,250,000 December 2024
Variable rate indexed to Euribor 7,083,333 14,166,667
EIB Loan - Cacia 18,055,555 18,055,555 May 2028
Fixed rate 2,777,778 15,277,777
EIB Loan - Figueira 40,000,000 40,000,000 February 2029
Fixed rate 2,857,143 37,142,857
EIB Loan - Biomass Boiler 27,500,000 27,500,000 March 2031
Fixed rate - 27,500,000
Commercial Paper Program
Commercial Paper Program 175M 175,000,000 175,000,000 February 2026
Fixed rate 35,000,000 140,000,000
Commercial Paper Program 65M 65,000,000 65,000,000 February 2026
Variable rate indexed to Euribor 65,000,000 -
Commercial Paper Program 75M 75,000,000 - February 2026
Variable rate indexed to Euribor - -
Commercial Paper Program 50M 50,000,000 - December 2025
Variable rate indexed to Euribor - -
Loans
Long-term investment 15,000,000 15,000,000 March 2026
Variable rate indexed to Euribor 15,000,000
Refundable grants
AICEP 38,609,513 38,609,513 November 2027
Fixed rate 4,099,903 34,509,610
Deferrals and adjustments - (8,055,598) - (8,055,598)
Bank credit facilities
Short-term facilities 20M 20,450,714 - - -
833,944,049 119,318,157 714,625,892
2021 Consolidated Annual Report
13/04/2022 257
As at 31 December 2021, the average cost of debt, considering the interest rate, annual fees and
hedging operations, was 1.5% (31 December 2020: 1.5%).
The refund terms for the interest-bearing liabilities recorded as non-current are detailed as follows:
As at 31 December 2021, the Group had contracted Commercial Paper Programs, contracted and
undisbursed long-term financing, as well as available but not used credit facilities of Euro
145,450,714 (31 December 2020: Euro 277,950,714).
31-12-2020
Amounts in Euro Amount
Outstanding
amount
Maturity Interest rate Current Non-current
Bond loans
Navigator 2015-2023 150,000,000 150,000,000 September 2023
Variable rate indexed to Euribor - 150,000,000
Navigator 2016-2021 100,000,000 100,000,000 April 2021
Fixed rate 100,000,000 -
Navigator 2016-2021 45,000,000 45,000,000 August 2021
Variable rate indexed to Euribor 45,000,000 -
Navigator 2019-2026 50,000,000 50,000,000 January 2026
Fixed rate - 50,000,000
Navigator 2019-2025 50,000,000 50,000,000 March 2025
Variable rate indexed to Euribor - 50,000,000
Navigator 2020-2023 100,000,000 15,000,000 agosto 2023
Variable rate indexed to Euribor 15,000,000
Navigator 2021-2026 20,000,000 - April 2026
Variable rate indexed to Euribor - -
Navigator 2020-2026 75,000,000 75,000,000 December 2026
Variable rate indexed to Euribor 75,000,000
Fees - (3,449,340) - (3,449,340)
European Investment Bank (EIB)
EIB Loan - Ambiente B 1,666,667 1,666,667 June 2021
Variable rate indexed to Euribor 1,666,667
EIB Loan - Energy 28,333,333 28,333,333 December 2024
Variable rate indexed to Euribor 7,083,333 21,250,000
EIB Loan - Cacia 20,833,333 20,833,333 May 2028
Fixed rate 2,777,778 18,055,555
EIB Loan - Figueira 40,000,000 40,000,000 February 2029
Fixed rate - 40,000,000
EIB Loan - Biomass Boiler 27,500,000 -
- - -
Commercial Paper Program
Commercial Paper Program 175M 175,000,000 175,000,000 February 2026
Fixed rate - 175,000,000
Commercial Paper Program 70M 70,000,000 70,000,000 April 2021
Fixed rate 70,000,000 -
Commercial Paper Program 65M 65,000,000 65,000,000 February 2026
Variable rate indexed to Euribor - 65,000,000
Commercial Paper Program 75M 75,000,000 - February 2026
Variable rate indexed to Euribor - -
Commercial Paper Program 50M 50,000,000 - December 2025
Variable rate indexed to Euribor - -
Commercial Paper Program 40M 40,000,000 40,000,000 March 2021
Variable rate indexed to Euribor 40,000,000
Commercial Paper Program 25M 25,000,000 25,000,000 April 2021
Variable rate indexed to Euribor 25,000,000
Refundable grants
AICEP 37,959,586 37,959,586 November 2027
Fixed rate 4,578 37,955,008
Deferrals - (2,932,796) - (2,932,796)
Bank credit facilities
Short-term facility 20M 20,450,714 - - -
982,410,783 291,532,356 690,878,427
Amounts in Euro 31-12-2021 31-12-2020
Non-current
1 to 2 years 234,259,122 54,536,485
2 to 3 years 86,223,407 263,441,716
3 to 4 years 106,640,074 100,544,797
4 to 5 years 261,140,074 114,461,463
More than 5 years 37,834,234 164,276,102
726,096,911 697,260,563
Fees (11,471,019) (6,382,136)
714,625,892 690,878,427
2021 Consolidated Annual Report
13/04/2022 258
As at 31 December 2021 and 2020, the Group’s interest-bearing net debt was as follows:
Financial Covenants in force
Based on the financial statements presented in this report, these ratios were as follows as at 31
December 2021 and 2020:
The amounts calculated in the table above exclude lease liabilities.
Considering the contracted limits, in 2021 and 2020, the Group is in compliance with the covenants
negotiated. As at 31 December 2021 and 2020, the Navigator Company presents a minimum safety
margin above 80% on the fulfilment of its covenants.
Accounting policies
Interest-bearing liabilities includes Bonds, Commercial Paper, bank loans and other financing.
Initial measurement
At fair value, net of transaction costs incurred.
Subsequent measurement
At amortised cost, using the effective interest rate method.
The difference between the refund amount and the initial measurement amount is recognised in the
income statement over the debt period under "Interest expenses on other loans" in Note 5.11 – Net
financial results.
Amounts in Euro
31-12-2021 31-12-2020
Interest-bearing liabilities (Note 5.7) 833,944,049 982,410,783
Cash and cash equivalents (Note 5.9) (239,171,252) (302,399,831)
Interest-bearing net debt 594,772,797 680,010,952
Lease liabilities 53,240,925 53,080,919
Interest-bearing net debt with lease liabilities 648,013,722 733,091,871
Ratio Definition Loans Limit
Interest coverage
EBITDA 12M / Annual net
interest
Bank
>= 4.5 - 5.5
Indebtedness
Interest-bearing debt /
EBITDA 12M
Bank
<= 4.5
Shareholder's equity ratio
Net Debt / EBITDA
(Interest-bearing debt -
Cash) / EBTDA 12M
Bank
Commercial
Paper
Bonds
<= 4.0
<= 4.0 - 5.0
<= 4.0
Ratio 31 December 2021 31 December 2020
Interest coverage 35.29 30.62
Indebtedness 2.35 3.44
Net Debt / EBITDA 1.68 2.38
2021 Consolidated Annual Report
13/04/2022 259
Fair value
The book value of short-term debt or loans contracted with variable interest rates approximates
their fair value.
The fair value of interest-bearing liabilities that are remunerated at a fixed rate is disclosed in Note
8.3 – Financial assets and liabilities.
Disclosure
As a current liability, except when the Group has an unconditional right to defer the settlement of
the liability for at least 12 months after the reporting date.
Estimates and judgements
Commercial paper
The Group has several commercial paper programs negotiated, of agreements with which it is
frequent to carry out emissions with contractual maturity of less than one year but with revolving
nature. Where the Group expects to roll over these loans, it presents them as non-current liabilities.
5.8. LEASE LIABILITIES
Lease liabilities - nature
Lease liabilities - future liabilities
In the periods ended 31 December 2021 and 2020, there were no changes in liability arising from
financing activities, including changes arising from cash flows and/or other changes in lease
liabilities.
The maturity analysis of lease liabilities is presented in the Note 8.1.3 - Liquidity risk.
Amounts in Euro Non-current Current Total Non-current Current Total
Forestry lands 40,983,597 2,281,533 43,265,130 40,096,070 2,236,735 42,332,805
Buildings 2,382,118 502,419 2,884,537 2,882,311 485,860 3,368,171
Vehicles 2,046,436 1,370,600 3,417,036 1,822,771 1,518,697 3,341,468
Software licenses 175,072 292,097 467,169 467,169 288,068 755,237
Other lease liabilities 1,829,870 1,377,184 3,207,054 2,204,781 1,078,457 3,283,238
47,417,092 5,823,833 53,240,925 47,473,102 5,607,817 53,080,919
31-12-2021
31-12-2020
Amounts in Euro
Maturing rents
Interest on
liabilities
Present value of
liabilities
Maturing rents
Interest on
liabilities
Present value of
liabilities
Less than 1 year 3,971,610 1,852,223 5,823,833 3,765,081 1,842,736 5,607,817
1 to 2 years 3,368,272 1,708,916 5,077,188 3,370,911 1,702,752 5,073,663
2 to 3 years 2,867,678 1,575,482 4,443,160 2,861,255 1,571,098 4,432,353
3 to 4 years 1,999,426 1,450,866 3,450,292 2,533,056 1,448,561 3,981,617
4 to 5 years 1,748,655 1,337,957 3,086,612 1,689,138 1,333,485 3,022,623
More than 5 years 22,150,369 9,209,471 31,359,840 21,467,905 9,494,941 30,962,846
Present value of liabilities 36,106,011 17,134,915 53,240,925 35,687,346 17,393,573 53,080,919
31-12-2021
31-12-2020
2021 Consolidated Annual Report
13/04/2022 260
Accounting policies
At the start date of the lease, the Group recognises lease liabilities measured at the present value
of future lease payments, which include fixed payments less lease incentives, variable lease
payments, and amounts expected to be paid as residual value. Lease payments also include the
exercise price of call or renewal options reasonably certain to be exercised by the Group or lease
termination penalty payments if the lease term reflects the Group's option to terminate the
agreement.
In calculating the present value of future lease payments, the Group uses an incremental financing
rate if the implied interest rate on the lease transaction is not easily determinable.
Subsequently, the value of the lease liabilities is increased by the interest amount (Note 5.11 - Net
financial results) and decreased by the lease payments (rents).
5.9. CASH AND CASH EQUIVALENTS
In 2020, the caption Other short-term investments includes Euro 18,550,446 (31 December 2020:
Euro 37,003,891) of amounts invested by Navigator in a portfolio of short-term, highly liquid
financial assets and issuers with adequate ratings.
As at 31 December 2021 and 2020, there are no significant balances of cash and cash equivalents
that are subject to restrictions on use by the Group.
Accounting policies
Cash and cash equivalents include cash, bank accounts and other short-term investments with an
initial maturity of up to 3 months, which can be mobilised immediately without any significant risk
in value fluctuations.
For cash flow statement purposes, this caption also includes bank overdrafts, which are presented
in the statement of financial position as a current liability, under the caption Loans granted (Note
5.7).
Amounts in Euro 31-12-2020 31-12-2020
Cash 35,334 37,778
Short-term bank deposits 220,585,472 265,358,163
Other short-term investments 18,550,446 37,003,891
239,171,252 302,399,831
2021 Consolidated Annual Report
13/04/2022 261
5.10. CASH FLOWS FROM FINANCING ACTIVITIES
Movements in liabilities of the Group's financing activities
5.11. NET FINANCIAL RESULTS
Financial results stood at negative Euro 17,777,209 (31 December 2020: Euro 14,685,632). This
worsening, in the amount of Euro 3,091,577, results essentially from losses in derivative
instruments. The costs of financing operations had a positive trend (Euro 1.1 million) due to the
decrease in the average debt compared to the same period of the previous year.
The reduction in Other financial income and gains is due to the fact that, in 2020, this item includes
the receipt of Euro 1,207,208 of interest associated with the amounts received in connection with
the anti-dumping proceedings in the USA.
Accounting policies
The Group classifies as "Financial income" the income and gains resulting from treasury management
activities such as: i) interest obtained from the application of cash surplus; and ii) changes in the
fair value in derivative financial instruments negotiated to hedge interest rate and exchange rate
risk on loans, regardless of the formal designation of hedge.
Amounts in Euro 31-12-2021 31-12-2020
Balance as at 1 January 982,410,783 877,131,386
Payment of interest-bearing liabilities (291,527,778) (133,194,444)
Receipts from interest-bearing liabilities 147,500,000 240,000,000
Refundable grants (4,472,875) (1,371,910)
Changes in borrowing costs 33,919 (154,248)
Changes in interest-bearing debt (148,466,734) 105,279,397
Gross interest-bearing debt 833,944,049 982,410,783
Amounts in Euro
2021 2020
Interest paid on debt securities and bank debt (10,777,640) (11,362,753)
Commissions on loans and expenses with the opening of credit facilities (3,241,922) (3,626,456)
Interest paid using the effective interest method (14,019,562) (14,989,209)
Interest paid on lease liabilities (2,042,333) (2,018,253)
Financial expenses related to the Group's capital structure (16,061,895) (17,007,463)
Favourable / (Unfavourable) exchange rate differences 2,702,247 (2,002,067)
Gains / (Losses) on financial instruments - interest-rate hedging (Note 8.2) (3,583,179) (2,207,774)
Gains / (Losses) on financial instruments - hedging (Note 8.2) (4,265,016) -
Accrual for option premiums - (1,440,140)
Financial expenses and losses (21,207,843) (22,657,443)
Interest earned on financial assets at amortised cost (Note 4.2) 726,713 830,846
Gains on financial instruments - hedging (Note 8.2) 391,539 -
Gains / (Losses) on financial instruments - hedging (Note 8.2) - 2,000,523
Gains on compensatory interest 2,274,881 2,818,589
Other income and financial gains 37,501 2,321,854
Financial income and gains 3,430,634 7,971,811
Net financial results (17,777,209) (14,685,632)
2021 Consolidated Annual Report
13/04/2022 262
6. INCOME TAX
6.1. INCOME TAX FOR THE PERIOD
6.1.1. Income tax recognised in the consolidated income statement
As at 31 December 2021, current tax includes Euro 36,488,394 (31 December 2020: Euro
22,748,901) regarding the liability created under the aggregated income tax regime of The Navigator
Company, S.A..
As at 31 December 2021 and 2020, the item “Variation of uncertain tax positions in the period”
reflects the excess / insufficiency of tax estimates, the favourable outcome of some cases related to
matters with high uncertainty, as well as requests for binding information, claims to the Tax
Administration and jurisprudence of the courts.
There have not been, nor are any expected changes arising from variations in the rate used to
determine the expected tax amount.
Nominal tax rate
In the periods presented, the Group considers a nominal tax rate in Portugal of 27.5%, resulting
from the tax legislation as follows:
Amounts in Euro 2021 2020
Current tax 37,586,136 25,415,652
Change in uncertain tax positions in the period (9,121,784) (15,628,264)
Deferred tax (Note 6.2) 11,913,967 6,735,366
40,378,319 16,522,754
2021 2020
Portugal
Nominal income tax rate 21.0% 21.0%
Municipal surcharge 1.5% 1.5%
22.5% 22.5%
State surcharge - on the share of taxable profits between Euro 1,500,000 and Euro 7,500,000 3.0% 3.0%
State surcharge - on the share of taxable profits between Euro 7,500,000 and Euro 35,000,000
5.0% 5.0%
State surcharge - on the share of taxable profits above Euro 35,000,000 9.0% 9.0%
2021 Consolidated Annual Report
13/04/2022 263
Reconciliation of the effective income tax rate for the period
6.1.2. Tax recognised in the consolidated statement of financial position
Detail of Corporate Income Tax - IRC (net)
The amounts of corporate income tax paid in the period are detailed as follows:
Amounts in Euro 2021 2020
Profit before income tax 211,796,832 125,739,005
Expected tax at nominal rate (21%) 44,477,335 26,405,191
Municipal surcharge (2021: 1.17% ; 2020: 1.56%) 2,480,719 1,961,120
State surcharge (2021: 3.04% ; 2020: 4.23%) 6,442,237 5,322,675
Income tax resulting from the applicable tax rate 53,400,290 33,688,986
Nominal tax rate for the period 25.21% 26.79%
Differences (a) (4,008,681) (4,445,705)
Excess of income tax estimate (4,684,477) (9,867,025)
Tax benefits (5,120,858) (3,036,164)
Autonomous tax 792,046 182,662
40,378,319 16,522,754
Effective tax rate 19.06% 13.14%
(a) This amount concerns mainly:
2021 2020
Capital gains/ (losses) for tax purposes 1,993,450 13,928,730
Capital gains/ (losses) for accounting purposes (2,039,580) (672,137)
Taxable provisions and impairment (7,167,993) (15,692,147)
Tax benefits (5,871,622) (6,038,487)
Post-employment benefits (5,118,074) (4,115,909)
Other 3,626,797 (3,576,249)
(14,577,023) (16,166,200)
Tax effect (27.5%) (4,008,681) (4,445,705)
Amounts in Euro 31-12-2021 31-12-2020
Assets
Amounts pending reimbursement (tax proceedings favourable to the Group) 1,118,815 3,482,762
1,118,815 3,482,762
Liabilities
Corporate Income Tax - IRC 19,913,222 13,012,879
Additional tax liabilities (IRC) 19,967,180 22,898,753
39,880,402 35,911,632
Amounts in Euro 31-12-2021 31-12-2020
Income tax for the period 37,586,136 25,415,652
Payments on account, Special and Additional payments on account (19,000,792) (11,094,358)
Withholding tax recoverable (22,809) (33,315)
Other payables / (receivables) 1,350,687 (1,275,100)
19,913,222 13,012,879
Amounts in Euro
31-12-2021 31-12-2020
Payment / (Refund) of corporate income tax for the previous period 2,748,971 (30,685,733)
Payments on account, Special and Additional payments on account 19,000,792 11,094,358
Withholding tax 22,809 33,315
Reimbursements of tax proceedings favourable to the Group (2,090,502) (6,303,952)
Payments of additional tax liabilities - 10,157,363
Other income tax payments / (refunds) 967,532 (3,717,791)
Income tax paid / (received) 20,649,602 (19,422,440)
2021 Consolidated Annual Report
13/04/2022 264
Amounts pending reimbursement
The movements in the period are detailed as follows:
Uncertain tax positions - liabilities
Taxes paid in litigation
As at 31 December 2021 and 2020, the additional tax assessments that are already paid and
contested, not recognised in assets, refer to the Navigator Group and are summarised as follows:
The variation referring to the aggregate corporate income tax for 2016 is justified by the fact that
the amount of the process has been revised in favour of the Company, reducing the disputed
corrections to only Euro 272,697, to which compensatory interest is still added. This amount is
recorded in "Foreign Double Tax Credit (CDTJI – 2016 and 2017 IRC”.
Accounting policies
Current income tax is calculated based on net profit, adjusted in conformity with tax legislation in
force at the statement of consolidated financial position date.
Amounts in Euro 2021 2020
2013 Corporate income tax (RETGS) - 86,215
2010 Corporate income tax (RETGS) - 2,341,168
RFAI 2010 to 2012 - compensatory interest 1,076,611 469,351
2017 Corporate income tax - Navigator Tissue Rodão - 347,336
Other 42,204 238,692
1,118,815 3,482,762
Amounts in Euro
31-12-2021 31-12-2020
Balance at the beginning of the period 3,482,762 7,198,086
Increases 97,239 6,416,018
Payments / (receipts) (2,027,635) (8,944,519)
Reversals (433,551) (1,186,823)
1,118,815 3,482,762
Amounts in Euro
31-12-2021 31-12-2020
Balance at the beginning of the period 22,898,753 36,228,728
Increases 8,094,261 6,051,524
Payments / (receipts) (62,867) (11,457,714)
Reversals (10,962,967) (7,923,785)
Changes in the period (2,931,573) (13,329,975)
19,967,180 22,898,753
Amounts in Euro
31-12-2021 31-12-2020
2005 Aggregated corporate income tax (Note 10.3) 10,394,386 10,394,386
2006 Aggregated corporate income tax (Note 10.3) 8,150,146 8,150,146
2015 Corporate income tax - Navigator Tissue Ródão, S.A. 7,586,361 7,586,361
2016 Aggregated corporate income tax - 2,697,180
2016 State surcharge 3,761,397 3,761,397
2017 State surcharge 8,462,724 8,462,724
2018 State surcharge 12,223,705 12,223,705
Foreign Double Tax Credit (CDTJI) - 2016 and 2017 IRC 1,522,660 -
52,101,379 53,275,899
2021 Consolidated Annual Report
13/04/2022 265
Taxation group
In Portugal, the Navigator Group is subject to the special tax regime for groups of companies
(RETGS), comprising companies in which the shareholding is equal to or more than 75% and which
meet the conditions laid down in articles 69, and following of the Corporate Income Tax Code (IRC
Code).
These companies included in the RETGS calculate income taxes as if they were taxed independently.
Liabilities are recognised as due to the dominant entity of the tax business Group, currently The
Navigator Company, S.A. which is responsible for the Group’s overall clearance and payment of the
corporate income tax. Where there are gains on the use of this regime, these are recorded as income
in the dominant entity financial statements.
In 2018, a tax group was also established in Spain, which includes the three subsidiaries of the
group based in that country, held by more than 90%, and owned by Bosques do Atlântico, S.L., the
parent-company in the tax group.
Estimates and judgements
The Group recognises liabilities for additional tax assessments that may result from reviews by the
tax authorities of the different countries where the Group operates. When the final result of these
situations is different from the amounts initially recorded, the differences will have an impact on
income tax in the period in which they occur.
In Portugal, annual income statements are subject to review and possible adjustment by the tax
authorities for a period of 4 years. However, if tax losses are presented, they may be subject to
review by the tax authorities for a period of 6 years. In other countries in which the Group operates,
these periods are different, usually higher.
The Board of Directors considers that any corrections to those statements as a result of
reviews/inspections by the tax authorities will not have a significant impact in the consolidated
financial statements as at 31 December 2020, although the periodsup to and including 2017 have
already been reviewed.
As at 31 December 2021, if the effective tax rate corresponded to the nominal rate of 27.5%, there
would be an increase in expenses with income taxes in the amount of Euro 17,865,809 (31 December
2020: Euro 18,055,472).
Uncertain tax positions
The amount of assets and liabilities recorded for tax proceedings arises from an assessment made
by the Group, as to the date of the consolidated statement of financial position, regarding potential
differences of understanding with the Tax Authorities, considering the developments in tax matters.
The Group, in relation to the measurement of uncertain tax positions, considers the provisions of
IFRIC 23 - "Uncertainty over Income Tax Treatments", namely the measurement of risks and
uncertainties in the definition of the best estimate of the expense required to settle the obligation,
by weighing all the possible results that are controlled by them and their associated probabilities.
2021 Consolidated Annual Report
13/04/2022 266
6.2. DEFERRED TAXES
Movements in deferred taxes
In the measurement of the deferred taxes as at 31 December 2021 and 2020, the rate of 27.50%
was used.
Accounting policies
Deferred tax is calculated based on the liability of the consolidated financial position on the
temporary differences between the book values of the assets and liabilities and their respective tax
base. To determine the deferred tax, the tax rate expected to be in force in the period in which the
temporary differences will be reversed is used.
Deferred tax assets are recognised whenever there is a reasonable likelihood that future taxable
profits will be generated against which they can be offset. Deferred tax assets are revised periodically
and decreased whenever it is likely they will not be used.
Deferred taxes are recorded as an income or expense for the period, except where they result from
amounts recorded directly under Shareholders’ equity, situation in which deferred tax is also
recorded under the same item. Tax benefits attributed to the Group regarding its investment projects
are recognised through the income statement as there is sufficient taxable income to allow its use.
Amounts in Euro
Increases Decreases
Temporary differences originating deferred tax assets
Taxed provisions 6,974,025 - (2,429,862) - 4,544,163
Adjustment of property, plant and equipment 71,179,011 - (8,708,614) - 62,470,397
Financial instruments 8,879,577 - - (1,430,747) 7,448,830
Deferred accounting gains on intra-group transactions 15,145,588 5,944,465 - - 21,090,054
Investment grants 203,588 - - - 203,588
Conventional capital remuneration 7,000,000 - (3,360,000) 560,000 4,200,000
109,381,789 5,944,465 (14,498,477) (870,747) 99,957,031
Temporary differences originating deferred tax liabilities
Pensions and other post-employment benefits (224,593) 649 357 - (813,523) (388,758)
Deferred accounting losses on intra-group transactions (9,929,599) - - 9,929,599 -
Valuation of biological assets (23,121,032) - (2,173,145) - (25,294,177)
Adjustment of property, plant and equipment (272,907,547) - (33,735,165) - (306,642,712)
Investment grants (6,406,374) 489,447 - 1,774,300 (4,142,627)
(312,589,145) 1,138,805 (35,908,310) 10,890,376 (336,468,275)
Deferred tax assets 30,079,993 1,634,728 (3,987,081) (239,456) 27,488,184
Government grants (Note 3.5) 549,224 - - - 549,224
Deferred tax assets 30,629,217 1,634,728 (3,987,081) (239,456) 28,037,408
Deferred tax liabilities (85,962,014) 313,171 (9,874,785) 2,994,853 (92,528,775)
As at 1 January
2021
Income Statement
Equity
As at 31 December
2021
Amounts in Euro
Increases Decreases
Temporary differences originating deferred tax assets
Taxed provisions 6,793,848 180,177 - - 6,974,025
Adjustment of property, plant and equipment 69,004,705 2,174,305 - - 71,179,011
Financial instruments 8,525,155 - - 354,422 8,879,577
Deferred accounting gains on intra-group transactions 18,864,851 - (3,719,263) - 15,145,588
Investment grants 203,588 - - - 203,588
Conventional capital remuneration 9,660,000 - (3,220,000) 560,000 7,000,000
113,052,148 2,354,482 (6,939,263) 914,422 109,381,789
Temporary differences originating deferred tax liabilities
Pensions and other post-employment benefits (510,040) - (638,963) 924,411 (224,593)
Deferred accounting losses on intra-group transactions (9,994,509) 64,910 - - (9,929,599)
Valuation of biological assets (25,999,474) - 2,878,442 - (23,121,032)
Adjustment of property, plant and equipment (249,833,138) - (23,074,409) - (272,907,547)
Investment grants (6,077,044) 862,557 - (1,191,888) (6,406,374)
(292,414,206) 927,467 (20,834,930) (267,477) (312,589,145)
Deferred tax assets 31,089,341 647,483 (1,908,297) 251,466 30,079,993
Government grants (Note 3.5) 549,224 - - - 549,224
Deferred tax assets 31,638,565 647,483 (1,908,297) 251,466 30,629,217
Deferred tax liabilities (80,413,906) 255,054 (5,729,606) (73,556) (85,962,014)
As at 1 January
2020
Income Statement
Equity
As at 31 December
2020
2021 Consolidated Annual Report
13/04/2022 267
7. PAYROLL
7.1. PAYROLL COSTS
The increase in payroll costs accompanied the good performance of Navigator in 2021, which allowed
the recognition of the increase in expenses for the payment of bonuses to employees in 2022, in
addition to the payment in 2021 of the second tranche of the extraordinary bonus awarded at the
end of 2020. The rejuvenation program that had been suspended in 2020 was also resumed.
The increase in charges for Social Security contributions results from the fact that these charges
were favourably impacted in 2020 by the exemption allowed by the Portuguese Government for
companies that joined the simplified lay-off regime.
Number of employees by segment at the end of the period
Other Payroll costs are detailed as follows during the periods ended 31 December 2021 and 2020:
The increase in social action expenses in 2021 is primarily due to expenses related to COVID-19
testing at the Group's units.
In 2020, due to the inability to terminate contracts as a result of joining the simplified lay-off scheme,
there was a reversal of the estimates recognised in previous years.
Amounts in Euro
2021 2020
Remuneration of Corporate Bodies - fixed (Note 7.3) 3,358,889 3,328,354
Remuneration of Corporate Bodies - variable 6,616,077 1,254,493
Other remunerations 105,452,229 100,923,626
Social Security contributions 22,186,532 19,456,050
Post-employment benefits (Note 7.2.4) 1,565,032 1,581,188
Other payroll costs 15,837,036 5,585,993
Payroll costs 155,015,795 132,129,704
31-12-2021 31-12-2020 Var. 21-20
Market pulp 254 258 (4)
UWF 1,778 1,831 (53)
Tissue 383 380 3
Other 735 763 (28)
3,150 3,232 (82)
Amounts in Euro
2021 2020
Training 848,438 776,426
Social action 2,519,264 894,224
Insurance 5,544,604 4,788,878
Compensations 6,464,506 (1,970,319)
Other 460,225 1,096,785
15,837,036 5,585,994
2021 Consolidated Annual Report
13/04/2022 268
Accounting policies
Short-term employee benefits
Acquired rights - holidays and holiday allowance
In accordance with the collective labour agreement applicable to The Navigator Company, S.A. as
well as under the agreement celebrated with the Labour Unions, the companies’ employees are
entitled to a 25 working days leave, as well as to a month’s holiday allowance.
Bonuses
According to the current Performance Management System (Sistema de Gestão de Desempenho),
Employees have the right to a bonus, based on annually defined objectives. The entitlement of this
bonus is usually acquired in the year preceding its payment.
These liabilities are recorded in the year in which the Employees acquire the respective right, against
the income statement and irrespective of the date of payment, whilst the balance payable at the
date of the consolidated statement of financial position is shown under the caption Payables and
other current liabilities.
Benefits arising from termination of employment
The benefits arising from termination of employment are recognised when the Group can no longer
withdraw the offer of such benefits or in which the Group recognises the cost of restructuring under
the provisions recording. Benefits due more than 12 months after the end of the reporting period
are discounted to their present value.
7.2. EMPLOYEE BENEFITS
7.2.1. Introduction
Some Group companies grant their Employees post-retirement benefits, either in the form of defined
benefit plans or in the form of defined contribution plans.
The plans are funded through a closed Pension Fund, managed by an external entity, which
subcontracts the management of its assets to external asset management entities.
A. Pension Plan – Defined benefit
The Group has responsibilities with post-employment benefit plans for a reduced group of Employees
who have chosen to maintain the defined benefit plan or who have chosen to maintain a safeguard
clause, the latter following the conversion of their plan into a Defined Contribution Plan. In effect,
the safeguard clause gives the Employee the option, at the time of retirement, to pay a pension in
accordance with the provisions laid down on the Defined Benefit Plan. For those who choose to
activate the Safeguard Clause, the accumulated balance in the Defined Contribution Plan (Conta 1)
will be used to finance the liability of the Defined Benefit Plan.For those who choose to activate the
Safeguard Clause, the accumulated balance in the Defined Contribution Plan (Conta 1) will be used
to finance the liability of the Defined Benefit Plan.
2021 Consolidated Annual Report
13/04/2022 269
B. Pension Plan – Defined contribution
As at 31 December 2021, three Defined Contribution plans were in force covering 2,936 Employees
(2020: 2,816 Employees) (Note 7.2.3).
7.2.2. Defined Benefit Plan
Policy for managing the risk associated with defined benefit plans
The Group's exposure to risk is limited to the number of existing beneficiaries and will tend to
decrease, since there are no defined benefit plans open to new employees in the Group.
The most significant risks to which the Group is exposed through defined benefit plans include:
i) Risk of change in longevity of participants
ii) Market rate variation risk – rate variation impacts the rate used to discount liabilities (technical
interest rate) which is based on yield curves of highly rated bonds with maturities similar to the
liabilities' expiry dates and the fixed rate of return of the assets. The Group uses yield curves in
order to monitor the evolution of rates and performs sensitivity analyses of interest rate variations
with the aim of foreseeing and preventing the consequent impact on the fund's funding level.
iii) Risk of change in the wage and pension growth rate
iv) Return on the fund's financial assets - the Group closely monitors the evolution of the fund's
assets, as well as the evolution of the main financial market indicators, revisiting the investment
policy approved for the management of the assets whenever justifiable, and at least every three
years. The investment policy is aligned with a conservative view of asset management and defined
on the basis of the responsibilities to be financed by the fund.
The Group's goal is to maintain a liability coverage level of 90%, thereby safeguarding against the
above risks.
Net liabilities
Net liabilities reflected in the consolidated statement of financial position and the number of
beneficiaries of the defined benefit plans in force in the Group are detailed as follows:
Historical information - last five years
No. of
Beneficiaries
Amount
No. of
Beneficiaries
Amount
Past service liabilities
Active employees, including individual accounts 408 71,291,405 458 77,829,641
Alumni 126 26,059,671 103 22,158,138
Retired employees 567 93,651,512 547 91,265,747
Market value of pension funds (185,327,671) (178,691,062)
Total net liabilities 1,101 5,674,918 1,108 12,562,465
31-12-2021
31-12-2020
Amounts in Euro
2017 2018 2019 2020 2021
Present value of liabilities 151,199,735 154,456,240 179,880,752 191,253,527 191,002,589
Fair value of assets and reserves 146,109,493 147,131,961 173,292,676 178,691,062 185,327,671
Surplus / (deficit) (5,090,242) (7,324,279) (6,588,076) (12,562,465) (5,674,918)
2021 Consolidated Annual Report
13/04/2022 270
Evolution of defined benefit plan liabilities
The average expected duration of defined benefit liabilities is 15 years (2020: 15 years).
Funds
Funds allocated to the defined benefit pension plans - evolution
During the periods of 2021 and 2020, the contributions to the defined benefit plans presented above
as allocations were made in full by the Group companies and no contributions were made by the
participants of these plans, although this option exists.
The assets of the pension fund related to the defined benefit plan are under the management of
AGEAS – Pensões, Schroders, BlackRock and Credit Suisse, as detailed below:
Funds allocated to defined benefit plans - composition of assets
The assets of the pension fund do not include any assets of the Group.
7.2.3. Defined Contribution Plan
As at 31 December 2021 and 2020, two defined contribution plans were in force for most of the
Employees.
2021
Amounts in Euro
Pensions with autonomous fund 191,253,527 44,883 2,353,176 3,350,242 (5,999,239) 191,002,589
191,253,527 44,883 2,353,176 3,350,242 (5,999,239) 191,002,589
2020
Amounts in Euro
Pensions with autonomous fund 179,880,752 67,304 3,098,478 13,875,538 (5,668,545) 191,253,527
179,880,752 67,304 3,098,478 13,875,538 (5,668,545) 191,253,527
Payments
performed
Closing balance
Opening balance
Current services
cost
Interest
expense
Actuarial
deviations
Closing balance
Opening balance
Current services
cost
Interest
expense
Actuarial
deviations
Payments
performed
Amounts in Euro
2021 2020
Opening balance 178,691,062 173,292,676
Charge for the period 5,318,407 4,300,000
Expected income for the period 2,195,584 2,983,348
Remeasurement 5,275,230 3,783,581
Pensions paid (5,999,229) (5,668,545)
Other (153,383) -
Closing balance 185,327,671 178,691,062
Amounts in Euro
2021 2020
Defined benefits and Conta 1:Defined benefits and Conta 1:
AGEAS - Pensões 3,938,660 4,358,496
Schroders 70,993,049 68,356,435
BlackRock 72,705,468 66,399,325
Conta 1 - Credit SuisseConta 1 - Credit Suisse 37,690,494 39,576,805
Total defined benefits and Conta 1 185,327,671 178,691,062
Amounts in Euro
31-12-2021 % 31-12-2020 %
Securities listed in the market
Bonds 112,303,157 60.6% 110,570,981 61.9%
Shares 50,274,545 27.1% 47,196,654 26.4%
Public debt 14,558,914 7.9% 12,142,648 6.8%
Liquidity 4,252,394 2.3% 4,480,780 2.5%
Real estate - 0.0% - 0.0%
Other short-term investments 3,938,660 2.1% 4,300,000 2.4%
185,327,671 100% 178,691,062 100%
2021 Consolidated Annual Report
13/04/2022 271
The assets of the pension fund that finance the defined contribution plans are under the management
of the BMO, as detailed below:
7.2.4. Expenses incurred with post-employment benefit plans
The effect in the income statement for the periods ended 31 December 2021 and 2020 was as
follows:
7.2.5. Remeasurement recognised directly in other comprehensive income
The re-measurements referred to above result from experience gains and losses, both in financial
and demographic terms.
Accounting policies
Post-employment benefits - defined benefit plan
Some of the Group subsidiaries have assumed the commitment to make payments to their
employees in the form of complementary retirement pensions, disability, early retirement and
survivors’ pensions, having constituted defined-benefit plans.
The Group set up autonomous pension funds as a means of funding most of the liabilities. Based on
the projected credit unit method, the Group recognises the costs with the attribution of these benefits
as the services are provided by the employees. The total liability is estimated separately for each
plan at least once every six months, on the date of closing of the interim and annual accounts, by a
specialised and independent entity.
The liability thus determined is presented in the consolidated statement of financial position, less
the fair value of the funds set up, under Pension liabilities.
Amounts in Euro
No. Of
Beneficiaries
Profitability
%
2021
No. Of
Beneficiaries
Profitability
% 2020
Defined contribution (BMO):
Defensive sub-fund 110 2.92% 7,995,969 128 3.52% 9,063,068
Conventional sub-fund 374 5.89% 19,301,087 391 4.05% 19,684,340
Dynamic sub-fund 696 10.46% 17,234,845 685 4.57% 15,440,179
Aggressive sub-fund 1,756 16.04% 6,462,291 1,612 4.34% 5,163,381
Total defined contribution 2,936 50,994,193 2,816 49,350,968
Amounts in Euro
Current services
cost
Net interest
Defined
contribution -
Contributions for
the period
Impact on net
result
(Note 7.1)
Current services
cost
Net interest
Defined
contribution -
Contributions for
the period
Impact on net
result
(Note 7.1)
Pensions with autonomous fund 44,883 157,592 - 202,474 67,304 115,130 - 182,433
Defined contributions plans - - 1,362,558 1,362,558 - - 1,398,754 1,398,754
44,883 157,592 1,362,558 1,565,032 67,304 115,130 1,398,754 1,581,188
2021
2020
2021
Amounts in Euro
Pensions with autonomous fund 1,924,988 (223,719) 1,701,269
1,924,988 (223,719) 1,701,269
2020
Amounts in Euro
Pensions with autonomous fund (10,245,329) 254,213 (9,991,116)
(10,245,329) 254,213 (9,991,116)
Gross amount
Deferred tax
Impact on
Equity
Impact on
Equity
Gross amount
Deferred tax
2021 Consolidated Annual Report
13/04/2022 272
Actuarial deviations resulting from changes in the value of estimated liabilities, as a consequence of
changes in the financial and demographic assumptions used and experience gains, added to the
differential between the actual return on fund assets and the estimated share of net interest, are
designated as re-measurements and recorded directly in the statement of comprehensive income,
under retained earnings.
Net interest corresponds to the application of the discount rate to the value of net liabilities (value
of liabilities less the fair value of fund assets) and is recognised in the income statement for the
period under Payroll costs.
The gains and losses generated by a curtailment or settlement of a defined-benefit plan are
recognised in the income statement for the period when the curtailment or settlement occurs. A
curtailment occurs when there is a material reduction in the number of employees.
Costs for past liabilities resulting from the implementation of a new plan or increases in benefits
attributed are recognised immediately in the income statement for the period.
Post-employment benefits - defined contribution plan
Most of the Group subsidiaries assumed commitments regarding payments to a defined contribution
plan in a percentage of the employees’ salary, in order to provide retirement, disability, early
retirement and survivors’ pensions.
To this end, Pension Funds have been set up to capitalise on those contributions, for which
employees may still make voluntary contributions, but for which the Group does not assume any
additional contribution responsibilities or a pre-fixed return. Thus, the contributions made are
recorded as expenses of the period in which they are recognised, regardless of the time of their
settlement.
Estimates and judgements
Actuarial assumptions
31-12-2021 31-12-2020
Social Security Benefits Formula
Disability table EKV 80 EKV 80
Mortality table TV 88-90 TV 88-90
Discount rate 1.25% 1.25%
Wage growth rate 1.00% 1.00%
Return rate on plan assets 1.25% 1.25%
Pensions growth rate 1.00% 1.00%
Decree Law no 187/2007 of 10 May
2021 Consolidated Annual Report
13/04/2022 273
Sensitivity analysis
7.3. REMUNERATION OF CORPORATE BODIES
Remuneration of the members of the board of directors
All the details of the remuneration policy for the members of Navigator's Board of Directors are
detailed in the company's Corporate Governance report.
Regarding post-employment benefits, as at 31 December 2021, the amount of liabilities related to
post employment benefit plans, in respect of one director of the Group, amounted to Euro 956,764
(31 December 2020: Euro 971,706). In addition, three of the current directors are members of
pension plans of Navigator Brands, S.A., a subsidiary of the Company, as Employees of that
company, before joining management positions.
As at 31 December 2021 and 2020, regarding the members of the Navigator's Board of Directors,
there were no: i) additional liabilities related to other long-term benefits, ii) termination benefits, iii)
share-based payments assigned; nor iv) outstanding balances.
Amounts in Euro
31-12-2021 31-12-2020
0.25% decrease in the discount rate
Increase in liabilities assumed 7,293,802 7,526,382
0.25% increase in the discount rate
Decrease in liabilities assumed (6,901,576) (7,112,509)
0.25% decrease in the wage growth rate
Decrease in liabilities assumed (1,643,123) (1,894,567)
0.25% increase in the wage growth rate
Increase in liabilities assumed 1,687,898 1,949,148
0.25% decrease in the pensions growth rate
Decrease in liabilities assumed (5,167,727) (5,174,516)
0.25% increase in the pensions growth rate
Increase in liabilities assumed 5,375,162 5,382,223
Amounts in Euro
2021 2020
Navigator Corporate Bodies
Board of Directors 2,978,880 2,979,882
Supervisory Board 53,998 53,998
Environmental Impact Council 33,500 29,000
General Meeting 4,000 16,000
3,070,378 3,078,880
Corporate Bodies of other Group companies 288,511 249,474
Total (Note 7.1) 3,358,889 3,328,354
2021 Consolidated Annual Report
13/04/2022 274
8. FINANCIAL INSTRUMENTS
8.1. FINANCIAL RISK MANAGEMENT
The Navigator Group has a risk-management program, which focuses its analysis on the financial
markets with a view to mitigate the potential adverse effects on its financial performance. Risk
management is undertaken by the Group's Financial Management in accordance with the policies
approved by the Board of Directors and monitored by the Risks and Control Commission.
The Group adopts a proactive approach to risk management, as a way to mitigate the potential
adverse effects associated with those risks, namely the foreign exchange rate risk and interest rate
risk.
8.1.1. Currency risk
Currency risk management policy
A significant part of the Navigator Group’s sales is priced in currencies other than the
Euro, therefore its evolution can have a significant impact on the cash flows obtained
from the Group's future sales, with the currency with the greatest impact being the
USD. Also, sales in GBP, PLN and CHF have some weight, having sales in other
currencies less expression.
Purchases of some raw materials are also made in USD, namely part of wood and long -
fibre pulp imports of wood and acquisitions of long-fibre pulp. Therefore, changes in
USD may have an impact on acquisition values.
In addition, once a sale or purchase is made in a currency other than the Euro, the Group becomes
exposed to exchange rate risk until the receipt or payment of such sale or purchase, if no hedging
instruments are in place. As a result, there is a significant number of receivables and debts payable,
the latter with lesser expression, exposed to exchange rate risk.
Use of derivative financial instruments
The Group manages foreign exchange risks by using derivative financial instruments, in accordance
with a policy that is subject to periodic review and whose purpose is to limit the exchange risk
associated with future sales and purchases and accounts receivable and payable, which are
denominated in currencies other than the Euro.
In the periods presented, the Group holds derivatives that are hedging the exchange rate risk of
future operations in currencies other than the presentation currency (see Note 8.2 - Derivative
financial instruments).
Exposure of financial assets and liabilities to exchange rate risk and sensitivity analysis
31 December 2021
US
dollar
Sterling
pound
Polish
zloti
Swedish
krona
Turkish
lira
Swiss
franc
Mozambican
metical
Moroccan
dirham
South
African
rand
Total ( Euro)
Amounts in foreign currency
Cash and cash equivalents 3,392,118 442,905 546,861 - 102,302 117,265 10,352,877 651,982 40,922 3,968,677
Receivables 63,112,114 7,550,211 6,306,245 - - 1,498,477 3,588,455 - - 67,580,500
Total financial assets 66,504,232 7,993,116 6,853,106 - 102,302 1,615,742 13,941,332 651,982 40,922 71,549,177
Loans
Payables (4,349,239) (24,525) (12,180) (62,730) (1,312) (4,062) (6,579,943) (71,000) - (3,979,758)
Total financial liabilities (4,349,239) (24,525) (12,180) (62,730) (1,312) (4,062) (6,579,943) (71,000) - (3,979,758)
Financial net position in foreign currency 62,154,993 7,968,590 6,840,927 (62,730) 100,990 1,611,680 7,361,389 580,982 40,922 67,569,419
Financial net position in Euro 54,878,150 9,483,256 1,488,161 (6,120) 6,629 1,560,043 101,789 55,245 2,266 67,569,419
Impact of + 10% change in all exchange rates on results for the period 8,223,512
Impact of - 10% change in all exchange rates on results for the period (10,199,055)
2021 Consolidated Annual Report
13/04/2022 275
In this Note, the Group discloses the exposure of financial assets and liabilities to foreign exchange
rate risk, as well as the respective sensitivity analysis. There are currencies in which the Group has
carried out transactions but in which, at the balance sheet date, it does not have relevant foreign
exchange exposures, which is why the exchange rates disclosed in note 1.6.4 are more numerous
than the currencies presented in this note.
8.1.2. Interest rate risk
Interest rate risk management policy
A significant share of the Group’s financial liabilities cost is indexed to short-term reference interest
rates, which are reviewed more than once a year (generally every six months for medium and long-
term debt). Hence, changes in interest rates can have an impact on the Group’s earnings.
The Group periodically reviews its interest rate risk management strategy. In view of the current
level of interest rates, we have favoured the contracting of fixed rate debt.
Use of derivative financial instruments
When deemed appropriate by the Board, the Group uses derivative financial instruments (Note 8.2),
namely swaps, with the purpose of fixing the interest rate on loans obtained, within certain
parameters, deemed appropriate by the Group's risk management policies.
Exposure to interest rate risk
As at 31 December 2021, approximately 5% (31 December 2020: 36%) of the Navigator Group’s
financial liabilities are indexed to short-term reference interest rates, revised in periods below one
year (usually 6-month rates for long-term debt), plus duly negotiated risk spreads. Hence, changes
in interest rates can impact the Group’s earnings.
The Group has favoured the contracting of fixed rate debt and has derivative financial instruments
to cover its interest rate risk, namely interest-rate swaps, with the purpose of fixing the interest rate
on the Navigator Group’s borrowings within certain limits.
31 December 2020
US
dollar
Sterling
pound
Polish
zloti
Swedish
krona
Turkish
lira
Swiss
franc
Mozambican
metical
Moroccan
dirham
South
African
rand
Total ( Euro)
Amounts in foreign currency
Cash and cash equivalents 2,034,916 380,848 75,379 - 13,525 5,427 12,706,712 718,347 40,922 2,309,685
Receivables 63,112,114 7,550,211 6,306,245 - - 1,498,477 3,588,455 - - 62,638,978
Total financial assets 65,147,029 7,931,059 6,381,624 - 13,525 1,503,904 16,295,167 718,347 40,922 64,948,663
Loans
Payables (4,349,239) (24,525) (12,180) (62,730) (1,312) (4,062) (6,579,943) (71,000) - (3,661,736)
Total financial liabilities (4,349,239) (24,525) (12,180) (62,730) (1,312) (4,062) (6,579,943) (71,000) - (3,661,736)
Financial net position in foreign currency 60,797,790 7,906,533 6,369,444 (62,730) 12,213 1,499,842 9,715,224 647,347 40,922 61,286,927
Financial net position in Euro 49,545,913 8,794,515 1,396,900 (6,252) 1,340 1,388,486 104,555 59,199 2,271 61,286,927
Impact of + 10% change in all exchange rates on results for the period 4,793,177
Impact of - 10% change in all exchange rates on results for the period (5,858,004)
2021 Consolidated Annual Report
13/04/2022 276
As at 31 December 2021 and 2020, the detail of the financial assets and liabilities with interest rate
exposure, considering the maturity or the next interest-fixing date is as follows:
Estimates and judgements
Sensitivity analysis
The Group uses the sensibility analysis technique to measure impacts on the income statement and
equity of increase or decrease on interest rates maintaining the other variables constant. This is an
illustrative analysis only since changes in market rates rarely occur separately.
The sensitivity analysis is based on the following assumptions:
i) Changes in market interest rates affect interest income and expenses arising from variable financial
instruments;
ii) Changes in market interest rates affect the fair value of derivative financial instruments as well
as other financial assets or liabilities;
iii) iii) Changes in fair value of derivative financial instruments and other financial assets and
liabilities are measured using the discounted cash flows method, with market interest rates at year
end.
Amounts in Euro Up to 1 month 1-3 months 3-12 months 1-5 years More than 5 years Total
31 December 2021
Assets
Current
Cash and cash equivalents 239,171,252 - - - - 239,171,252
Total financial assets 239,171,252 - - - - 239,171,252
Liabilities
Non-current
Interest-bearing liabilities - - - 647,913,901 32,202,381 680,116,282
Refundable grants - - - 28,877,757 5,631,853 34,509,610
Current -
Interest-bearing liabilities - 115,218,254 - - - 115,218,254
Refundable grants - - 4,099,903 - - 4,099,903
Total financial liabilities - 115,218,254 4,099,903 676,791,658 37,834,234 833,944,049
Cumulative differential 239,171,252 123,952,998 119,853,095 (556,938,563) (594,772,797)
Amounts in Euro Up to 1 month 1-3 months 3-12 months 1-5 years More than 5 years Total
31 December 2020
Assets
Current
Cash and cash equivalents 302,399,831 - - - - 302,399,831
Total financial assets 302,399,831 - - - - 302,399,831
Liabilities
Non-current
Interest-bearing liabilities - - - 503,086,118 149,837,301 652,923,419
Refundable grants - - - 23,516,208 14,438,800 37,955,008
Current -
Interest-bearing liabilities - 40,000,000 251,527,778 - - 291,527,778
Refundable grants - - 4,578 - - 4,578
Total financial liabilities - 40,000,000 251,532,356 526,602,326 164,276,101 982,410,783
Cumulative differential 302,399,831 262,399,831 10,867,475 (515,734,851) (680,010,952)
2021 Consolidated Annual Report
13/04/2022 277
A 0.50% increase in interest rates on which interest on loans are calculated would have an impact
on its earnings before taxes, for the period ended 31 December 2021 by approximately Euro 106,250
(31 December 2020: Euro 1,701,516).
8.1.3. Liquidity risk
Liquidity risk management policy
The Group manages the liquidity risk in two ways:
i) ensuring that its financial debt has a high medium- and long-term component with maturities
appropriate to the characteristics of the industries where it operates, and
ii) by contracting with financial institutions credit facilities available at all times for an amount
that guarantees adequate liquidity.
Available but not used credits
The Group's policy is to maintain credit facilities at adequate levels to, together with the amount of
Cash and Cash Equivalents in order to guarantee, with some comfort margin, the cash cycle expected
for the next 12 months.
Contractual maturity of financial liabilities (undiscounted flows, including interest)
The table takes into account the debt issued and the long-term debt contracted and not disbursed
that will refinance the debt maturing in 2022 (Available and unused credit facilities).
The contractual maturity of the interest-bearing liabilities presupposes the fulfilment of
financial covenants, as detailed in Note 5.7 - Interest-bearing liabilities.
Credit facilities available but not used
Amounts in Euro -1 month 1-3 months 3-12 months 1-5 years + 5 years Total
31 December 2021
Liabilities
Interest-bearing liabilities (Note 5.7)
Bond loans 420,000 2,197,750 6,495,875 457,660,500 - 466,774,125
Commercial paper 65,130,000 36,242,500 994,000 144,224,500 - 246,591,000
Bank loans - 552,000 13,495,740 80,570,487 33,462,507 128,080,736
Lease liabilities (Note 5.8) - - - - - -
Derivative financial instruments (Note 8.2) - 1,185,597 1,259,307 323,238 - 2,768,142
Other payables - - - - - -
Total liabilities 65,550,000 40,177,847 26,344,825 711,656,483 39,094,361 882,823,517
Of which interest (at the rates prevailing at that date) 37,408,448
Amounts in Euro -1 month 1-3 months 3-12 months 1-5 years + 5 years Total
31 December 2020
Liabilities
Interest-bearing liabilities (Note 5.7)
Bond loans - 351,070 36,732,406 358,440,835 98,316,486 493,840,798
Commercial paper 189,470 1,259,757 2,043,761 262,416,635 103,695,050 369,604,674
Bank loans - - 12,022,560 93,578,767 57,606,355 163,207,681
Lease liabilities (Note 5.8) - - - - - -
Derivative financial instruments (Note 8.2) - 941,492 987,948 4,115,276 - 6,044,716
Other payables - - - - - -
Total liabilities 189,470 2,552,319 51,786,674 718,551,513 259,617,891 1,032,697,868
Of which interest (at the rates prevailing at that date) 43,904,949
Amounts in Euro
31-12-2021 31-12-2020
Unused credit facilities
Commercial paper (with long term underwriting) 125,000,000 125,000,000
Long-term financing contracted and not disbursed - 132,500,000
Other credit facilities 20,450,714 20,450,714
145,450,714 277,950,714
Commercial paper used (Note 5.7) 240,000,000 375,000,000
Other credit facilities used 605,415,068 613,792,919
Contracted credit facilities (nominal value) 990,865,782 1,266,743,633
2021 Consolidated Annual Report
13/04/2022 278
8.1.4. Credit risk
Credit risk management policy
The Group is exposed to credit risk on balances receivable from Trade receivables and other debtors
and has adopted a policy of managing risk coverage within certain levels through credit insurance
with a specialised independent company.
The Group has adopted a policy of credit insurance for the majority of Trade receivables, with a 5%
deductible. As such, its exposure to credit risk is considered to have been mitigated up to acceptable
levels, when compared with its sales. Most sales that are not covered by credit insurance are covered
by bank guarantees, letters of credit, documentary credits or retention of title agreements, and any
unhedged exposure is within limits previously approved by the Executive Committee.
However, the worsening of global economic conditions or adversities affecting only economies on a
local scale may lead to deterioration in the ability of the Navigator Group’s Customers to meet their
obligations, leading entities providing credit insurance to significantly decrease the amount of credit
facilities that are available to those Customers. This scenario may result in limitations on the
amounts that can be sold to some Group Customers without directly incurring credit risk levels that
are not compatible with the risk policy in this area.
Cash equivalents
The Navigator Group adopts strict policies in approving its financial counterparties, limiting its
exposure in accordance with an individual risk analysis and within previously approved limits.
Maximum exposure to credit risk
The Group's maximum exposure to the credit risk of financial assets corresponds to their net amount,
as follows:
Amounts in Euro
31-12-2021 31-12-2020
Non-current
Receivables (Note 4.2) 8,604,547 34,696,105
Current
Receivables (Note 4.2) 317,882,760 231,772,282
Cash and cash equivalents (Note 5.9) 239,171,252 302,399,831
565,658,560 568,868,217
2021 Consolidated Annual Report
13/04/2022 279
Ageing structure of Trade receivables balances
As at 31 December 2021 and 2020, Trade receivables showed the following ageing structure,
considering the due dates for the balances outstanding before impairment:
The amounts shown above correspond to the amounts outstanding according to the contracted due
dates.
The amounts not covered relate to amounts previously approved by the Navigator Executive
Committee (Euro 5,065,895).
Despite some delays in the settlement of those amounts, that does not result, in accordance with
the available information, in the identification of impairment losses other than the ones considered
through the respective losses. These are calculated based on the information periodically collected
on the financial behaviour of the Group’s Customers, which allow, in conjunction with the experience
obtained in the client portfolio analysis and with the history of credit defaults, in the part not
attributable to the insurance company, to define the amount of losses to be recognised in the period.
The guarantees in place for a significant part of outstanding and long-term balances, justify the fact
that no impairment loss has been recorded for those balances. The rules defined by the credit risk
insurance policy applied by the Navigator Group, ensure a significant coverage of all outstanding
balances.
Amounts in Euro
31-12-2021 31-12-2020
Amounts not due 208,051,472 126,761,061
from 1 to 90 days 2,455,066 6,813,003
from 91 to 180 days 199,088 343,775
from 181 to 360 days 83,457 105,723
from 361 to 540 days - -
from 541 to 720 days - -
more than 721 days - 11,485
210,789,083 134,035,046
Balances considered impaired 2,173,128 1,984,970
Impairment (2,173,128) (1,984,970)
Net balance of trade receivables (Note 4.2) 210,789,083 134,035,046
Trade receivables covered by credit insurance 191,731,227 111,665,812
Trade receivables covered by bank guarantees 2,761,574 1,727,494
Trade receivables covered by title retention agreements 5,464,991 1,101,555
Trade receivables covered by letters of credit / documentary remittances 5,765,396 10,045,496
Covered receivables 205,723,188 124,540,357
Credit facilities available and unused 353,731,395 337,776,838
Credit hedging facilities contracted 559,454,583 462,317,195
2021 Consolidated Annual Report
13/04/2022 280
The analysis of the open balances, by business area, is as follows:
The table below represents the quality of the Navigator Group’s credit risk, as at 31 December 2021
and 2020, for financial assets (cash and cash equivalents), (Highest credit rating by one of the three
rating agencies, Standard & Poor’s, Fitch or Moody’s):
"Other" amounts include bank deposits with banks or entities with no rating, namely local banks in
Mozambique and other foreign branches.
The Navigator Group adopts strict policies in approving its financial counterparties, limiting its
exposure in accordance with an individual risk analysis and within previously approved limits.
31 December 2021
Amounts in Euro
MARKET
PULP UWF PAPER TISSUE PAPER ENERGY SUPPORT Total
Amounts not due 27,781,181 145,229,659 29,844,012 791,242 4,405,378 208,051,472
from 1 to 90 days - - 1,127,754 - 1,327,312 2,455,066
from 91 to 180 days - - 96,945 - 102,143 199,088
from 181 to 360 days - - 45,744 - 37,713 83,457
from 361 to 540 days - - - - - -
from 541 to 720 days - - - - - -
more than 721 days - - - - - -
27,781,181 145,229,659 31,114,455 791,242 5,872,546 210,789,083
31 December 2020
Amounts in Euro
MARKET
PULP UWF PAPER TISSUE PAPER ENERGY SUPPORT Total
Amounts not due 15,182,277 81,824,414 25,632,756 660,642 3,460,972 126,761,061
from 1 to 90 days 269,027 2,433,162 885,598 716,630 2,508,586 6,813,003
from 91 to 180 days - - 166,561 - 177,214 343,775
from 181 to 360 days - - - - 105,723 105,723
from 361 to 540 days - - - - - -
from 541 to 720 days - - - - - -
more than 721 days - - - - 11,485 11,485
15,451,304 84,257,576 26,684,915 1,377,272 6,263,980 134,035,046
Financial Institutions
Amounts in Euro 31-12-2021 31-12-2020
Rating
AA 9,801,253 -
AA- - 19,181,980
A+ 84,976,652 18,252,728
A 6,609,078 50,876,601
A- 61,586,886 40,589,336
BBB+ - 2,211,916
BBB 73,253,991 167,647,778
BBB- - -
BB+ 60,468 4,512
BB 108,006 1,695,165
BB- - -
B+ - -
B 179,662 -
B- - -
Other 2,595,255 1,939,816
239,171,252 302,399,831
2021 Consolidated Annual Report
13/04/2022 281
Impairment from Trade receivables and other debtors
Accounting policies
Impairment of debt instruments
The Group assesses, on a prospective basis, the expected credit losses associated with its financial
assets measured at amortised cost and at fair value through other comprehensive income, in
accordance with IFRS 9.
On this basis, the Group recognises expected credit losses throughout the lifetime of financial
instruments that have been subject to significant increases in credit risk since its initial recognition,
assessed either individually or collectively, considering all reasonable and sustainable information,
including available prospective information.
If, at the reporting date, the credit risk associated with a financial instrument has not increased
significantly since its initial recognition, the Group measures the impairment of that financial
instrument by an amount equivalent to the expected credit losses.
IFRS 9 provides that for the calculation of these impairments, one of two models is used: the 3-step
method or the use of a matrix, the distinguishing component being the existence or not of a
significant financing component. For Navigator's financial assets, since it is not a financial institution
and there are no assets that have a significant financing component, the use of a matrix was chosen.
The model adopted for the impairment assessment in accordance with IFRS 9 is as follows:
I. Calculate the total credit sales made by the Group over the last 12 months, as well as the
total amount of bad debts relating to them;
II. Determine the Customers’ payment profile, by setting buckets of receipt frequency;
III. Based on I. and II. above, estimate the probability of default (i.e., the amount of bad debts
calculated at I. compared to the balance of outstanding sales in each bucket calculated at
II.);
IV. Adjust the percentages of future projections obtained in III.;
V. Apply the default percentages as calculated in IV. to the balances of Customers still
outstanding at the reporting date.
Although IFRS 9 assumes 90 days as “default”, the Navigator Group considered a period of 180
days, since the experience of real losses before this period is low. This period is aligned with the
current risk management policies of the company, namely in what regards the credit insurance hired,
and to the fact that there is no sales with significant components of funding in light of IFRS 15.
Trade
receivables
Other debtors Total
Amounts in Euro
Balance as at 01 January 2020 (1,538,464) (31,262) (1,569,726)
Increase - IFRS 9 impact on results for the period (677,723) - (677,723)
Increase (Note 2.3) (106,018) (200,000) (306,018)
Reversals 47,052 - 47,052
Charge-off 290,183 - 290,183
Balance as at 31 December 2020 (1,984,970) (231,262) (2,216,232)
Increase - IFRS 9 impact on results for the period 123,146 - 123,146
Increase (Note 2.3) (404,476) (3,762) (408,238)
Reversals 77,603 - 77,603
Charge-off 15,568 15,568
Balance as at 31 December 2021 (2,173,128) (235,025) (2,408,153)
Impairment
2021 Consolidated Annual Report
13/04/2022 282
Additionally, the company evaluated the impact of considering 180 days of “default” instead of the
90 days and the Expected Credit Loss would not change significantly.
In addition to this period, in the event of an accident in the credit insurance company, the model
considers the limit of 5% paid by the Navigator Group (10% for national Customers).
Given the COVID-19 pandemic situation, the Group analysed the credit risk, considering the
expected economic and financial impacts arising from COVID-19 at the macroeconomic level.
In this regard, as at 31 December 2021, the recoverability risk value was decreased by Euro 123,146
(31 December 2020: increased in Euro 677,723).
In addition, the Group recognises impairment on a case-by-case basis, based on specific balances
and specific past events, considering the historical information of the counterparties, their risk profile
and other observable data in order to assess whether there are objective indicators of impairment
for these financial assets. The Group uses the write-off procedure only when the credit is considered
to be definitely uncollectible by a court decision.
8.2. DERIVATIVE FINANCIAL INSTRUMENTS
Movements in derivative financial instruments
8.2.1. Detail and maturity of derivative financial instruments by nature
Amounts in Euro
Trading
derivatives
Hedging
derivatives
Net total
Trading
derivatives
Hedging
derivatives
Net total
Balance at the beginning of the period 3,160,131 (5,336,693) (2,176,561) 536,035 (4,316,491) (3,780,456)
New contracts / settlements (623,573) 2,326,437 1,702,864 623,573 2,982,135 3,605,708
Change in fair value through profit or loss (Note 5.11) (4,265,016) (3,191,640) (7,456,656) 2,000,523 (3,647,914) (1,647,391)
Change in fair value through other comprehensive income (Note 5.5) - 1,430,747 1,430,747 - (354,422) (354,422)
Balance at the end of the period (1,728,458) (4,771,149) (6,499,607) 3,160,131 (5,336,693) (2,176,561)
2021
2020
31 December 2021
Amounts in Euro
Notional Currency Maturity
Positive
(Note 4.2)
Negative
(Note 4.3)
Net amount
Hedging
Hedging (future sales) 242,500,000 USD 2022 9,066 (1,426,675) (1,417,609)
Hedging (future sales) 83,000,000 GBP 2022 (483,940) (483,940)
Interest rate swaps - Bonds 375,000,000 EUR 2026 1,621,916 (2,804,403) (1,182,487)
BHKP pulp 27,120,000 USD 2022 - (1,687,112) (1,687,112)
1,630,982 (6,402,131) (4,771,149)
Trading
Foreign exchange forwards (future sales) 129,745,503 USD 2023 - (1,640,154) (1,640,154)
Foreign exchange forwards (future sales) 9,050,000 GBP 2021 - (86,856) (86,856)
Foreign exchange forwards (future sales) 300,000 CHF 2021 - (1,448) (1,448)
- (1,728,458) (1,728,458)
1,630,982 (8,130,589) (6,499,607)
31 December 2020
Amounts in Euro
Notional Currency Maturity
Positive
(Note 4.2)
Negative
(Note 4.3)
Net amount
Hedging
Hedging (future sales) 204,000,000 USD 2021 831,818 (668) 831,149
Hedging (future sales) 72,000,000 GBP 2021 (515,688) (515,688)
Interest rate swaps - Bonds 200,000,000 EUR 2025 - (5,501,229) (5,501,229)
BHKP pulp 9,120,000 USD 2021 - (150,926) (150,926)
831,818 (6,168,511) (5,336,693)
Trading
Foreign exchange forwards (future sales) 100,228,946 USD 2023 2,564,049 - 2,564,049
Foreign exchange forwards (future sales) 5,425,000 GBP 2021 - (27,345) (27,345)
Foreign exchange forwards (future sales) 225,000 CHF 2021 (146) (146)
Future purchase of CO
2
allowances (Note 3.2) 2,545,625 EUR 2021 623,573 - 623,573
3,187,622 (27,491) 3,160,131
4,019,440 (6,196,002) (2,176,562)
2021 Consolidated Annual Report
13/04/2022 283
Cash flow hedge | Exchange rate risk EUR/USD and EUR/GBP
During the last quarter of 2021, the Group concluded the contracting of derivative financial
instruments by acquiring USD 242,500,000 and GBP 83,000,000 in Zero Cost Collar, thus
guaranteeing total coverage of the estimated value of exposure for 2022.
Interest rate hedge
During the first quarter of 2021, the Group increased its interest rate hedges, by contracting a swap
in the amount of Euro 75,000,000 to set the interest rate associated with the Navigator 2020-2026
bond loan, of the same amount. At the end of the second quarter, the Group contracted a new
interest rate hedge, in the amount of Euro 100,000,000, to set the interest rate associated to the
Navigator 2021-2026 bond loan, starting in August 2021.
BHKP Pulp Hedge
As in the previous year, the Group periodically monitors its exposure to the price of BHKP pulp.
During the fourth quarter of 2021, the Group opted to acquire a financial instrument to hedge the
pulp price, by contracting a swap to set the price of 30,000 tons of pulp for the next 12 months,
ended 31 December 2022.
Accounting policies
The fair value of derivative financial instruments is included under Payables (Note 4.3), when
negative, and under Receivables (Note 4.2), when positive.
In accordance with IFRS 9 - Financial Instruments, the Group has opted to continue applying the
hedge accounting requirements of IAS 39 - Financial Instruments, until there is greater visibility on
the Dynamic Risk Management (macro hedging) project currently in progress.
Whenever expectations of changes in interest or exchange rates so justify, the Navigator Company
Group hedges these risks through derivative financial instruments, such as interest rate swaps (IRS),
interest rate and foreign exchange collars, forwards, etc.
Trading derivative financial instruments
Although the derivatives contracted by the Group represent effective economic hedges of risks, not
all of them qualify as hedging instruments in accounting terms to satisfy the applicable rules and
requirements. Instruments that do not qualify as hedging instruments are recorded in the
consolidated financial position at their fair value and changes in the same are recognised in Net
financial results (Note 5.11), when related to financing operations, or in External services and
supplies (Note 2.3) or Revenue (Note 2.1), when referring to hedging of sales receivable flows in a
currency other than the presentation currency.
Hedging derivative financial instruments
Derivative financial instruments used for hedging purposes may be recognised as hedging
instruments provided that they comply, cumulatively, with the conditions set out in IAS 39.
2021 Consolidated Annual Report
13/04/2022 284
Cash flow hedging (interest rate, exchange rate and commodity risk - BHKP)
In order to manage its exposure to interest rate risk and exchange rate risk, the Group enters into
cash flow hedges.
Those transactions are recorded in the interim consolidated statement of financial position at their
fair value, if considered effective hedges. Changes in the fair value are initially recognised in other
comprehensive income for the period. The gain or loss relating to the ineffective portion is recognised
immediately in the income statement.
Accumulated amounts in equity are reclassified to profit or loss in the periods when the hedged item
affects the income statement (for example, when the forecast sale that is hedged takes place). The
gain or loss relating to the effective portion of interest rate swaps hedging variable rate borrowings
is recognised in the income statement within "Net financial results" (Note 5.11). However, when the
forecast transaction that is hedged results in the recognition of a non-financial asset (for example,
inventory or property, plant and equipment), the gains and losses previously deferred in equity are
transferred from equity and included in the initial measurement of the cost of the asset.
When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for
hedge accounting, any cumulative gain or loss existing in equity is recycled to the income statement,
unless the hedged item is a forecast transaction, in which case any cumulative gain or loss existing
in equity at that time remains in equity and is recognised when the forecast transaction is ultimately
recognised in the Income statement.
Derivative financial instruments used by Navigator Group
Foreign exchange trading derivatives
The Navigator Group has a currency exposure on sales invoiced in foreign currencies, namely US
dollars (USD) and pounds sterling (GBP). As the Group’s financial statements are presented in Euro,
it is exposed to an economic risk on the conversion of these currency flows to the Euro. The Group
is also obliged, albeit to a lesser degree, to make certain payments in those same currencies which,
for currency exposure purposes, act as a natural hedge. Thus, the hedge is aimed at safeguarding
the net value of items in the statement of financial position denominated in a currency other than
the presentation currency against the respective currency fluctuations.
The hedging instruments used in this operation are foreign exchange forward contracts covering the
net exposure to currencies other than the presentation currency, for amounts and due dates close
to that exposure. The nature of the risk hedged is the change in the book value on sales and
purchases expressed in currencies other than the presentation currency. At the end of each month,
the balances of Trade receivables and Trade payables expressed in foreign currency are updated,
with the gain or loss offset against the fair value change of the forwards negotiated.
Cash flow hedge | Exchange rate risk EUR/USD and EUR/GBP
The Navigator Company Group makes use of derivative financial instruments in order to limit the
net exchange risk associated with sales and future purchases estimated at USD and GBP.
2021 Consolidated Annual Report
13/04/2022 285
Cash flow hedge | Interest rate
The Navigator Group hedges future interest payments associated with commercial paper issues by
hiring an interest rate swap, which pays a fixed rate and receives a floating rate. This instrument is
designated as hedges of cash flows from the commercial paper program and the bond loan.
Cash flow hedge | Commodities - BHKP
The Navigator Group uses derivative financial instruments in order to minimise the exposure risk
associated with the variation of the pulp price, indexed to PIX, in USD
Estimates and judgements
Fair value in derivative financial instruments
Whenever possible, the fair value of derivatives is estimated on the basis of quoted instruments. In
the absence of market prices, the fair value of derivatives is estimated through the discounted cash-
flow method and option valuation models, in accordance with prevailing market assumptions.
8.3. FINANCIAL ASSETS AND LIABILITIES
8.3.1. Categories of Group Financial Instruments
The financial instruments included in each item of the consolidated statement of financial position
are classified as follows:
Amounts in Euro
Note
Financial assets
at amortised
cost
Financial assets
at fair value
through profit or
loss (excluding
derivatives)
Financial assets
at fair value
through other
comprehensive
income
Hedging
derivative
financial
instruments
Trading
derivative
financial
instruments
Financial assets
outside the
scope of IFRS 9
Non-financial
assets
Total
31 December 2021
Non-current receivables 4.2 8,604,547 - - - - - - 8,604,547
Current receivables 4.2 236,454,808 - - 1,630,982 - - 79,796,970 317,882,760
Cash and cash equivalents 5.9 239,171,252 - - - - - - 239,171,252
Non-current assets held for sale 3.8 - - - - - - - -
Total assets 484,230,608 - - 1,630,982 - - 79,796,970 565,658,560
31 December 2020
Non-current receivables 8.3 34,696,105 - - - - - - 34,696,105
Current receivables 4.2 142,680,703 - - 3,187,622 831,818 - 85,072,139 231,772,282
Cash and cash equivalents 5.9 302,399,831 - - - - - - 302,399,831
Non-current assets held for sale 3.8 - - - - - - - -
Total assets 479,776,638 - - 3,187,622 831,818 - 85,072,139 568,868,217
Amounts in Euro
Note
Financial
liabilities at
amortised cost
Financial
liabilities at fair
value through
profit or loss
(excluding
derivatives)
Hedging
derivative
financial
instruments
Trading
derivative
financial
instruments
Financial
liabilities outside
the scope of
IFRS 9
Non-financial
liabilities
Total
31 December 2021
Interest-bearing liabilities 5.7 833,944,049 - - - - - 833,944,049
Lease liabilities 5.8 - - - - 53,240,925 - 53,240,925
Payables 4.3 422,045,733 - 6,402,131 1,728,458 - - 430,176,321
Total liabilities 1,255,989,782 - 6,402,131 1,728,458 53,240,925 - 1,317,361,295
31 December 2020
Interest-bearing liabilities 5.7 982,410,783 - - - - - 982,410,783
Lease liabilities 5.8 - - - - 53,080,919 - 53,080,919
Payables 4.3 327,687,925 - 6,168,511 27,491 - - 333,883,926
Total liabilities 1,310,098,708 - 6,168,511 27,491 53,080,919 - 1,369,375,629
2021 Consolidated Annual Report
13/04/2022 286
8.3.2. Fair value of financial assets and liabilities
Financial assets and liabilities measured at fair value
Accounting policies
The fair value of financial instruments is classified according to the fair value hierarchy of IFRS 13 -
Fair Value Measurement:
Level 1
Based on quotes from active net markets at reporting date
Level 2
Determined using evaluation models, the main inputs of which are observable in the market
Level 3
Determined using evaluation models, the main inputs of which are not observable in the market.
Estimates and judgements
Fair value of fixed-interest interest-bearing liabilities
The fair value of these liabilities is calculated using the discounted cash flow method at the reporting
date, using a discount rate in accordance with the characteristics of each financing, belonging to
level 2 of the fair value hierarchy of IFRS 13.
Amounts in Euro Level 1 Level 2 Level 3 Level 1 Level 2 Level 3
Financial assets at fair value through profit or loss
Trading derivatives - - - - 3,187,622 -
Hedging financial instruments - 1,630,982 - - 831,818 -
Assets measured at fair value
Biological assets - - 147,324,061 - - 148,584,452
Total assets - 1,630,982 147,324,061 - 4,019,440 148,584,452
Financial liabilities at fair value through profit or loss
Trading derivatives - (1,728,458) - - (27,491) -
Hedging financial instruments - (6,402,131) - - (6,168,511) -
Total liabilities - (8,130,590) - - (6,196,001) -
31-12-2020
31-12-2021
2021 Consolidated Annual Report
13/04/2022 287
9. OPERATIONAL RISK MANAGEMENT
The Group operates in the forestry sectors, in the production of eucalyptus for use in the production
of BEKP pulp, which is essentially incorporated in the production of UWF and Tissue paper but is also
sold in the market, and in energy production, essentially through the forest biomass that is
generated in the BEKP production process.
All the activities in which the Navigator Group is involved are subject to risks which could have a
significant impact on its operations, its operating results, the cash flow generated and in its financial
position.
The risk factors analysed in this chapter can be structured as follows:
i. Specific risks inherent to the sectors of activity in which the Navigator Group operates:
− Risks associated with the forestry sector
− Risks associated with the production and sale of BEKP pulp, UWF paper and tissue paper
− Risks associated with the production of energy
− Risks associated with climate change
− Human resources and talent management
− Information systems
− Context risks
ii. Navigator Group risks and the way it performs its activities.
The Group has a risk-management program in place which is focused on the analysis of the financial
markets in order to mitigate the potential adverse effects on its financial performance. Risk
management is conducted by the Finance Department in accordance with policies approved by the
Board of Directors. The Finance Department evaluates and undertakes the hedging of financial risks
in strict coordination with the Navigator Company Group’s operating units.
The Board of Directors provides the principles of risk management as a whole and policies covering
specific areas such as foreign exchange risk, interest rate risk, liquidity risk, credit risk, the use of
derivatives and other non-derivative financial instruments and the investment of liquidity surplus.
The Risk Management Department monitors the implementation of risk management policies defined
by the Board of Directors.
9.1. SPECIFIC RISKS INHERENT TO THE SECTORS OF ACTIVITY IN
WHICH THE GROUP OPERATES
9.1.1. Risks associated with the forestry sector
As at 31 December 2021, the Navigator Group managed around 105,5 thousand hectares (2020:
108 thousand hectares) distributed across mainland Portugal, the Azores and Galicia (Spain), in
around 1,283 Management Units in 170 municipalities in Portugal, and 32 Management Units
distributed across 2 municipalities in Galicia, Spain, in accordance with the principles expressed in
its Forestry Policy. Eucalyptus and areas under ongoing afforestation with this sort of species occupy
73% of this area, namely the Eucalyptus globulus species, deemed to have the perfect fibre for high-
quality papers. In the remaining area, in addition to conservation areas that account for about 11.8%
2021 Consolidated Annual Report
13/04/2022 288
of the total area under management, pine and cork oak forests are among the largest privately
owned national producers.
As a pioneer in Portugal in promoting certified forest management, most of its forestry assets located
in Portugal are certified by FSC® (Forest Stewardship Council®) (FSC®-C010852) and by PEFC
(Programme for the Endorsement of Forest Certification schemes) (PEFC/13-23-001), recognition
that management of these areas is carried out in an environmentally, economically and socially
responsible way, following a strict and internationally recognised criteria.
Navigator operates in sophisticated markets around the world where the demand for certified
products is an unavoidable reality. Since only a small part of the national forest is certified, in 2016,
the Company started a program to encourage producers to join sustainable forest management
models that, once certified, allow the continuous improvement of management practices, the
production valuation and the answer to the demand for certified products that is felt worldwide. This
effort has been increasing the area of certified forest in Portugal between 2016 and 2021 both via
FSC® (from 370,000 ha to 545,907 ha) and PEFC (from 260,000 ha to 306,956 ha).
Even so, it is clear that the effort should continue in the future, given the weight that still represents
the forest area not covered by any sustainable forest management system in Portugal. As an
example, at the end of 2021 the forestry area managed by the Navigator Group, although it
represented about 3% of Portugal’s total forested area, it represented, however, 34% of all certified
Portuguese forests according with PEFC standards and 19% of all certified Portuguese forests
according with FSC® standards.
We are, however, optimistic about the path taken, which demonstrates the adherence of Forestry
Production to sustainable forest management models. In 2021, 63% of wood from national sources,
excluding self-sufficiency, already came from properties that had their forest management certified
(2020: 61%). It should also be noted that, within this initiative, the Group has seen a significant
increase in the number of wood Supplier chain of custody / liability certification, representing a step
further on the development of a Supplier’s portfolio which will make it possible to ensure the
purposes defined in terms of wood from sources with certified forest management.
As a way of promoting the certification of forest management in the national eucalyptus forest, since
2007, the Group has continuously differentiated the value of the wood received at its factories,
positively discriminating in the price of wood from management units that have certified their
management. sustainable forestry. This support to the system was innovative worldwide and allowed
the stabilization of forest management certified as a practice recognized in the market and which,
being remunerated in the products it incorporates, must remunerate the respective production chain.
In addition, and as a way of demonstrating its commitment to sustainable forest management
processes, on 5 August 2021, the Group issued debt with an interest rate indexed to several
sustainability criteria, including the evolution of the weight of wood from units with their certified
forest management. This issue (the details of which are described in Note 5.7) places the Group in
a position of clear commitment to its practices, intending to involve its entire management structure
and its value chain around its strategic objectives.
The Group was awarded Land Use and Use Rights (DUAT) in Mozambique, located in the provinces
of Manica and Zambezia, comprising about 50 non-contiguous plots, and a planting permit for up to
246,000 hectares, made available under the Investment Agreement signed with the Mozambican
Government, of which around 13.6 thousand hectares have been planted. The project foresees the
installation of an industrial unit for the production of BEKP pulp and electric power in that country.
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In July 2018, the Mozambican Government and Portucel Moçambique signed a Memorandum of
Understanding (MoU) through which they agreed on a set of preceding conditions required to proceed
with the investment, namely and particularly of a logistical nature, which will be implemented in two
phases. In the first phase, the forest base will be increased to approximately 40,000 hectares, which
will guarantee the supply of a unit (to be built) for the production of eucalyptus wood chips for
export, of approximately 1 million tons per year, in an estimated additional investment of USD 140
million.
In a statement made to the market in mid-November, the concessionaire of the Macuze port and
the American fund, Ethos Asset Management Inc, informed that they had signed a long-term
financing agreement in the amount of USD 400 million, which will ensure the construction of the
first phase of the Macuse port and road accessibility, which involves the construction of terminals
for the operation of agricultural products, woodchips, fertilizers and fuel, with the capacity to operate
ships up to 65,000 DWT. The beginning of construction is scheduled for 2022 and the beginning of
operations for 2025.
Navigator and the Government of Mozambique have been working under the terms of the MoU
signed in 2018, namely on the theme of land and development, having advanced the first Forest
Development programme in Mozambique, a Government initiative with funding from the World Bank.
The goal is to promote small and medium-scale sustainable commercial forest plantations and the
restoration of degraded areas, with about 2,000 ha having been planted in the 2019-2020 and 2020-
2021 campaigns. Portucel Moçambique plays an active role in developing and implementing the
programme, providing a range of support, defining the forestry model, supplying cloned plants at
subsidised prices and access to raw materials and know-how. Later, at harvest time, Portucel
Moçambique will have an option to purchase the wood.
Work also started on harvesting timber from Portucel Moçambique's plantations in Manica, for export
from the Port of Beira, which will make it possible, amongst other goals, to put Mozambique on the
world map for this forest-based industry. During 2021, around 100,000 m
3
of wood were harvested,
and three vessels were shipped to Portugal, with around 90,000 m
3
.
In terms of forestry production, the main factor threatening the competitiveness of the eucalyptus
forestry sector lies in the low productivity of the Portuguese forest, which has a low intensity of
management, which contributes to decreasing profitability and increasing risks of forest fire and
plant health. The combination of all these factors, in recent years, without any strategic measures
of the State in the industry, has forced the import of raw material, a process conditioning the
profitability of the industry.
The Company considers the challenge of productivity and active forest management as a strategic
axis of development. As a company with responsibilities in the sector, Navigator has been promoting
several initiatives aimed at helping to reverse this trend. These initiatives cover several areas, from
the supply of improved plants from a genetic improvement program with decades of development,
technical support to forestry producers (with programs such as Premium, e-globulus and technical
support through dozens of actions of training that, complementing those organized with the
Suppliers we use, extend the transfer of knowledge to other companies in the sector).
In addition, through CELPA – Associação da Indústria Papeleira (representing the main industrial
groups in the sector), Navigator has also collaborated in the “Melhor Eucalipto” Program, in which
“Limpa & Aduba” is developed. Under this initiative, CELPA carries out at its own expense the
fertilisation of the plots of land owned by private individuals who apply to the programme, and who
clean up their eucalyptus forest properties. This measure, empowering productivity, also enables a
reduction in the risk of wildfire by reducing the fuel load on the plots, impacting on 12,000 ha during
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2020 and on more than 15,000 ha in 2021, accumulating more than 33,000 ha already intervened.
CELPA is also studying the implementation of an additional program - Replantar - which aims to
provide landowners with direct financial support for the replanting of their eucalyptus forest plots,
as well as an initiative of the same content aimed at the recovery of burned areas hit by fires from
2016 to 2018 seeking the rehabilitation of these areas for forest management.
In addition to the risks related to the impacts of rural fires and plant health, there is a regulatory
environment that strongly affects professional forestry activity, leading to a continued decrease in
the levels of forestry intervention at scale, whose leading indicator is the evolution (continuous
reduction) of forested or reforested areas in our country. The sustainability of an entire sector, based
on a large number of small suppliers of services and products, is dependent on the activity levels
(regardless of the species) that our country has not been able to ensure. This compromises the
sustainability of this business network, which is essential to ensure the interventions in rural areas
that reduce risk and promote productivity and income in regions of the country where the forest is
a significant component of the income of many families.
The Navigator Group’s activity is exposed to risks related to fires in rural areas, including:
I. Destruction of current and future wood inventory, belonging to the Navigator Group as well
as to third parties;
II. Increasing costs of forestry and subsequent land preparation for plantation.
In this respect, the manner in which the Navigator Group manages its woodlands is the front line
for mitigating this risk. In addition, the Innovation and Development effort is aimed at adapting
forestry techniques to the reality of the national forest, with a view to mitigating impacts, reducing
costs and improving management practices, by the Company and by market operators.
Among the different management measures undertaken by the Navigator Group, the strict
compliance with biodiversity rules, a proper planning of the forest facilities to be implemented and
the construction and maintenance of roads and access roads to each of the areas under development
are particularly relevant in mitigating the fire risk.
In addition, the Navigator Group has a share in the Afocelca grouping – an economic interest
grouping between the Navigator Group and the ALTRI Group, whose mission is to provide assistance
in the fight against forest fires at the grouped companies’ properties, in strict coordination and
collaboration with the National Civil Protection Authority (Autoridade Nacional de Protecção Civil –
ANEPC). This grouping manages an annual budget of about Euro 3 million, without public funds, and
has created an efficient and flexible structure which implements practices aimed at reducing
protection costs and minimising the damage caused by forest fires to the ACE companies, which own
and manage more than 190 thousand hectares of forests in Portugal.
The Navigator Group has also a research institute, RAIZ, whose activity is focused on 3 main areas:
Applied Research, Consulting and Training. In the forestry research area, RAIZ seeks:
i. To improve the productivity of eucalyptus forests;
ii. To enhance the quality of the fibre produced from that wood;
iii. To implement a sustained forestry management program from an economic, environmental
and social perspectives;
iv. To foster practices and processes aimed at reducing wood production costs.
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9.1.2. Risks associated with the production and sale of BEKP pulp, UWF paper
and Tissue paper
Supply of raw materials
Self-supply of wood for BEKP pulp production is only about 18% of the Group's needs. Therefore, is
a regular need for the Company to purchase wood in the domestic market (still insufficient), using
the Spanish market and the non-European (outside the Iberian Peninsula) markets, mainly Brazil,
Uruguay and Mozambique (mainly from NVG's local plantations) at an additional compared to the
national market due to transport.
The supply of wood from international markets, namely eucalyptus, is subject to price variations
mainly due to exchange rate effect, which has consequently implications in the production cost of
Navigator and BEKP pulp producing companies. In addition, the volatility of wood transportation
costs to the units also has impacts mainly due to the effect of fuel prices, oil prices, lower scarcity
of large ships without optimisation of returns and sea freight oscillation.
The realisation of new forest plantations is subject to the authorisation of the competent entities and
to a policy of area increase restrictions, which may limit the national production potential, although
there are many initiatives to help forest producers, among them the support in wood certification to
meet the commercial demand for certified products (paper and pulp), and to increase the
productivity of the existing areas, for a greater availability of raw material in the domestic market,
the use of imports will always be an unavoidable need in the short/medium/long term.
Due to the insufficient domestic production of wood in quantity, namely in terms of certified wood,
the Company has to increase the quantity of imported wood, either from Spain or from other more
distant markets, to ensure the supply to the mills, without restrictions, in the next decade(s).
It should be noted that, since wood is one of the main pulp production costs, any increase in the
cost of m3 of eucalyptus wood consumed in the pulp production BEKP always represents a negative
impact on the Company's operating profit.
On 31 December 2021, a 10% decrease in the cost per m3 of eucalyptus wood consumed in BEKP
pulp production would have had a negative impact in the Navigator Group’s operating results of
approximately Euro 31,400,000 (31 December 2020: Euro 28,100,000).
For other raw materials, including chemicals, the main risk identified is the scarcity of products under
the growing demand for these products in emerging markets, particularly in Asia and markets
supplying them, which can create occasional imbalances of supply and demand.
In this regard, the Navigator Group, together with the Altri Group, established in 2018 a
Complementary Grouping of Companies - Pulp Chem, ACE – intended for the joint acquisition of
chemical products, benefiting from economies of scale and thus mitigating this risk.
The Navigator Group seeks to mitigate these risks through proactive sourcing, by identifying sources
of supply geographically dispersed, whilst seeking to secure long-term supply contracts that ensure
volume, price and quality levels consistent with its requirements.
As at 31 December 2021, a 10% worsening in the price of chemical products would have represented
a negative impact on the Group's operating results of around Euro 11,300,000 (31 December 2020:
Euro 9,600,000).
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Finally, another resource required for the production process is water. Considering that water is a
finite resource and given its relevance to the pulp and paper production process, the Group has
taken on a special concern for its preservation, and over the last few years, investments have been
made to reduce the use of this important resource. Simultaneously, as a result of investments in the
implementation of BATs in the production processes and the improvement of the efficiency of its
effluent treatment plants (ETP), it was also possible to significantly improve the quality of the effluent
returned to the receiving environment. Between 2005 and 2018 there was a reduction of more than
25% in the specific use of water (cubic meters used for the production of one ton of product) and,
in the same period, there was a reduction of more than 20% in the load emitted for the vast majority
of the parameters monitored, which translates into the minimisation of the Group's environmental
impact.
Market Price for UWF paper, BEKP pulp and Tissue paper
The increase in competition, caused by an imbalance of supply and demand in the BEKP pulp, UWF
or Tissue paper markets may have a significant impact on prices and, as a consequence, in the
Navigator Group’s performance. The market prices of BEKP pulp, UWF and Tissue paper are defined
in the world global market in perfect competition and have a significant impact on the Navigator
Group’s revenues and on its profitability. Cyclical fluctuations in BEKP pulp, Tissue paper and UWF
Paper prices mainly arise from both changes in the world supply and demand and the financial
situation of each of the international market players (Producers, Traders, Distributors, Customers,
etc.), creating successive changes in equilibrium prices and raising the global market’s volatility.
The BEKP pulp and UWF paper markets are highly competitive. Significant variations in existing
production capacities could have a strong influence on world market prices. These factors have
encouraged the Navigator Group to follow a defined marketing and branding strategy and to invest
in relevant capital expenditure to improve productivity and generate high-quality and differentiated
products.
On 31 December 2021, a 10% drop in the price per ton of BEKP pulp and of 5% in the price per ton
of UWF paper and tissue paper sold by the Navigator Group in the period, would have represented
an impact on its operating results of approximately Euro 17,000,000 and Euro 65,400,000,
respectively (31 December 2020: Euro 15,600,000 and Euro 54,300,000, respectively).
Demand for the Navigator Group’s products
Notwithstanding the references below to the concentration of the portfolio of the Navigator Group’s
Customers, any decrease in demand for BEKP, UWF and tissue paper in the European and the United
States markets could have a significant impact on the Navigator Group’s turnover. The demand for
BEKP produced by the Group also depends on the evolution of the capacity for paper production in
the world, since various Navigator Group’s major Customers are themselves paper producers.
The demand for uncoated printing and writing paper has been historically related with
macroeconomic factors (e.g., GDP growth, employment, particularly in white collar jobs, confidence
indices), technological (e.g., penetration of information technology and hardware / software, and
demographic (e.g., population, average level of education, age structure of society). The evolution
of these factors drives the demand for paper positively or negatively, and in the recent past, the
trend of paper consumption is negative in the more developed countries and positive or stable in the
emerging / developing countries. Naturally, the performance of the Navigator Group also depends
on the evolution of demand in the various markets in which it operates.
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Uncertainty over the effects of the Pandemic COVID-19 waves on Western economies, as well as
changes in the pace of recovery of economic activity and the return to normality, may affect demand
for the Group's products, whether for BEKP, UWF and tissue.
Regarding the demand for eucalyptus market pulp, this is largely dependent on the production
progress in the non-integrated producers of printing and writing paper, tissue and speciality papers.
Chinese demand for this type of pulp represents more than 1/3 of the world's demand, making China
one of the most breakthrough drivers of demand.
Regarding Tissue segment, the key variables affecting the demand are:
− Expected future economic growth;
− Population growth and other social and demographic changes;
− Level of development of the service sector, namely tourism;
− Hygiene standards and product penetration levels;
− Developments in the quality of Tissue paper and product specifications; and
− Substitution effects.
Tissue paper consumption is not very sensitive to cyclical economical changes, although it tends to
grow faster with higher economic growth. On the other hand, an increase in production costs and,
consequently, sales prices can create a downgrading effect on consumption.
The importance of economic growth for the consumption of Tissue is more obvious in developing
countries. When the level of the income per capita is very low, the consumption of Tissue tends to
be low. There is a threshold after which consumption accelerates. Economic growth allows greater
penetration of the product, which is one of the main drivers of demand for such paper in the
population with lower incomes. In economies with strong dependence on tourism, a gradual recovery
in consumption by the professional sector is expected, as restrictions on mobility are lifted and
tourist flows are normalized. The Tissue paper is a product that does not face major threats of
substitution by other materials, and there are no expected changes at this level. In contrast, changes
in hygiene and cleaning standards that may be associated with the current health crisis will tend to
boost Tissue consumption.
Consumer preferences may have an impact on global paper demand or in certain particular types of
paper, such as the demand for recycled products or products with certified virgin fibre.
Regarding this matter, and in the particular case of UWF and Tissue paper, the Navigator Group
believes that the marketing strategy and branding that has been followed, combined with the
significant investments made to improve productivity and produce high quality products, allow it to
deliver its products in market segments that are less sensitive to variations in demand, resulting in
a lower exposure to this risk.
Energy
The pulp and paper production process are dependent on the constant supply of electric and steam
energy. The Group has several cogeneration units, which provide this supply, and redundancies have
been planned between the various units in order to mitigate the risk of any unplanned shutdowns.
Part of the electricity production is sold to the supplier of last resort at regulated tariffs, based on a
legal framework that lays down the special regime production from renewable resources and
cogeneration. The remuneration legal framework provides for a progressive tariff reduction over the
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applicable time period, implying that the central banks will tend to operate in a self-consumption
regime. This fact can be proven by both the reduction shown in revenues associated with the electric
power generation activity in recent years and by the reduction of electric energy and natural gas
consumption.
As of November 2021, given the volatility of electricity market prices, the Group started selling the
surplus production from the natural gas combined cycle plant in Setúbal at market prices to the
detriment of the regulated tariff. It is expected that, in 2022, the same will happen with the surplus
production of other plants of the Group.
As at 31 December 2021, a 10% worsening in the price of electricity, without compensation in the
contractual tariff, would have represented a negative impact on the Group's operating results of
around Euro 10,800,000 (31 December 2020: Euro 9,800,000).
Country risk - Portugal
The Navigator Group has a strong presence in Portugal. Its activity is based on assets mainly located
in Portugal. Similarly, about 20% of its raw material comes from Portuguese forests.
The Group is the third largest exporter in Portugal and the largest generator of National Added Value,
representing approximately 1% of the national GDP, about 3% of national exports of goods, close
to 6% of total containerised cargo exported by national ports.
Although open to the world, the strong dependence of its country of origin in terms of production
factors exposes the Group to Portugal's risk index.
Country risk - Mozambique
Due to the investment in the Mozambican project, the Navigator Group is exposed to the specific
risk in this country. However, consideration has been given to investments in terms of timing, choice
of suppliers/partners and geographical location, taking this risk into account, and the Group ensures
that these steps are taken with reasonable certainty that there will be no effects arising from the
risk.
At this moment, the Mozambique project is essentially a forestry project, with an option to develop
an industrial project. The planned investment will be implemented in two phases, the first being a
ship production (woodchip) project and a second phase the construction of a large-scale pulp mill.
The Group is, however, prepared to move forward with the forestry plan foreseen, once the
necessary conditions - most of which are under discussion with the Mozambican authorities - are
met.
Until 31 December 2021, the expenditure with this project amounted to Euro 124.9 million (31
December 2020: Euro 113.6 million), mainly related to plantation, land preparation and forest
maintenance, to land management, environmental and social licensing and the construction of what
is now one of Africa's largest forest nurseries.
Considering that Navigator is still working on the conditions precedent for Phase 1 of the MoU, as
previously mentioned, the estimated liabilities are duly provisioned.
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Country risk - USA
The US market has a significant weight in the total turnover of UWF paper, increasing the exposure
to the country’s specific risk.
This exposure requires a careful evaluation of the impacts resulting, for example, from changes in
regulations and taxes, or even from their application and interpretation by Governmental entities
and tax authorities.
Similarly to producers of other nationalities (Australians, Brazilians, Chinese and Indonesians), with
regard to UWF paper imports to the USA, the Group has, since 2015, been the target of anti-dumping
measures by the Department of Commerce of this country, and its products are subject to anti-
dumping duties defined by the United States Department of Commerce - see Note 4.2. Until 2021
these duties affected the Group's earnings by Euro 30,482,935 - review periods 1 to 6 (2020: Euro
19,702,424).
Competition
Increased competition in the paper and pulp markets may have a significant impact in price and
consequently, in the Navigator Group’s profitability.
The pulp and paper markets are highly competitive and thus the entry into the market of new
production units with increased available production capacity could have a relevant impact on prices
worldwide.
BEKP producers from the southern hemisphere (namely from Brazil, Chile, Uruguay and Indonesia),
with production costs still significantly lower than those in the northern hemisphere, have been
gaining weight in the market, undermining the competitive position of European pulp producers. In
the coming years capacity increases are planned in South America, strengthening the position of
these producers in the global market.
These factors have forced the Navigator Group to make significant investments in order to keep
production costs competitive and produce high-quality products as it is likely that this competitive
pressure will remain strong in the future.
There has been some disinvestment in the paper sector in the US, with closures/conversions of
installed capacity by some UWF producers, in a clear attempt to adjust supply according to the
negative evolution of demand. On the contrary, investments in new UWF capacity in China in the
short- and medium-term have occurred and are expected.
The Navigator Group has been adjusting its commercial strategy to the evolution of regional
consumption patterns. The Group has a significant presence in the US, accounting for about half of
European producer sales to this market. The turnover intended to the European markets represented
55% (2020: 59%), achieving particularly strong market shares in Western European countries and
relevant market shares in the other main European markets.
Concentration of Customers’ portfolio
As at 31 December 2021, the Navigator Group’s 10 main BEKP Customer groups accounted for 15%
of the period’s production of BEKP pulp (2020: 11%) and 71% of external sales of BEKP pulp (2020:
39%). This asymmetry is a result of the strategy pursued by the Navigator Group, consisting of a
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growing integration of the BEKP pulp produced into the UWF paper produced and sold. Nevertheless,
the Group believes there is little exposure to risks of Customer concentration in the marketing of
BEKP pulp.
In 2021, the Navigator Group’s 10 main Customer groups for UWF paper represented 37% of this
product’s sales during the period (2020: 40%). Regarding concentration, the group’s individual
Customers decreased 21% of the sales volume (2020: 22%). The Navigator Group recorded 154
new Customers with sales in 2021. Also, regarding UWF paper, the Group follows a risk mitigation
strategy for its Customer concentration. The Navigator Group sells UWF paper to more than 130
countries and to more than 1,000 individual Customers, thereby allowing a dispersion of the risk of
sales concentration in a reduced number of markets and/or Customers.
2021 was also marked by the launch of the latest omnichannel platform, NVG Hub, which aims to
improve the level of service, transparency and information we offer our Customers. The NVG Hub
allows all participating users to insert orders online, with automatic integration into the system, as
well as 24/7 access to a set of account information, including order tracking, current account status
and invoice consultation. The platform closed the year with presence in 9 markets, 110 on-board
Customers, a rate of use and submission of on-line orders of approximately 80% and positive
feedback from most users who describe it as intuitive, easy to navigate, useful and functional.
2021 was also marked by the official entry of the Navigator Group into the Packaging business, as
well as the launch of the gkraft brand, associated with the packaging market segments, covered by
the product ranges offered by the company and making use of the powerful concept “gkraft: From
fossil to Forest”.
It was marked by a very active attitude of market research, identifying all the crucial factors when
entering the business (competition, benchmarking, potential Customers, pricing policy, commercial
conditions, etc.), as well as a constant activity in the field of developing products, which materialized
during the year, through the production of a highly innovative unbleached pulp (HYKEP Pulp), the
basis of its new range of “brown” products, and an equally new range of products in “natural white”
(using less chemicals, without optical brighteners and dyes).
The products developed by the company for the packaging market serve the segments of flexible
packaging (gKraft FLEX), the sack industry (gKraft BAG), and corrugated cardboard (gKraft BOX).
In total, the Group exceeded 45 thousand tons of sales, exceeding the budget outlined for the year,
and for now concentrating its sales in the proximity markets, in southern Europe, and conquering
more than a hundred Customers.
In 2022, Navigator has the ambition to double its sales in packaging products, and, in line with the
growth plan in this business, the Group already has plans for geographic expansion, further north,
and even outside Europe, namely in North Africa and Turkey, where it has noticed interesting
business opportunities, and where it intends to expand its Customer base.
To this end, The Navigator Company is already committed to being present at three European Fairs
linked to the Packaging business, where it will seek to disclose and affirm the competitive advantages
offered by gKraft, and to position itself ever closer to its Customers and consumers.
Regarding the Tissue segment, tissue paper sales amounted to approximately Euro 145,8 million in
2021 (+3% compared to 2020). Commercial activity focuses essentially on sales of finished goods
in the Iberian Peninsula, which represent 63% of its sales.
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The Group continues with the goal of expanding its commercial activity in Tissue for the foreign
market, namely by increasing Navigator's presence in Spain, and by strengthening sales of finished
goods.
9.1.3. Risks associated with the production of energy
The production of electricity is an important activity for the Group, enabling the valuation of an
endogenous renewable resource, the biomass generated in the production of BEKP pulp. The energy
generation assets also allow the Group's wood suppliers to generate additional income from the sale
of residual forest biomass from their farms, and in this way contribute to reducing the risk of fire in
the country.
As a way of boosting the use of forest residual biomass made available by the forestry sector, two
biomass thermoelectric plants to produce renewable electric energy were built by the Group in 2009
and are fully operational.
The Group has played a pioneering role and has been developing a market for the sale of biomass
for supplying its renewable cogeneration power stations and biomass power plants. The fostering of
this market in a phase prior to the start-up of the new power-generating units has enabled it to
secure a sustained raw-material supply network.
The incentives in place in Portugal only consider the use of residual forest biomass, rather than the
use of wood to produce electrical power.
In terms of legal framework, we highlight the following diplomas:
i. Decree-Law No. 68-A/2015 of 30 April, which establishes provisions on energy efficiency
and cogeneration and amends Decree-Law No. 23/2010 and Order 140/2012, revised by
Order 325-A/2012, applicable to the regime of PRE- Special Regime Production in
cogeneration;
ii. For the Biomass Power Plants (CTB) in operation, dedicated to the production of electricity
the legal framework is supported by Decree-Law 33-A/2005 revised by Decree-Law
225/2007, which changes from 15 to 25 years the period of guaranteed remuneration in PRE
- Special Regime Generation. For these assets, the legal framework thus supports a tariff
framework that is expected to be stable over the coming years.
iii. More recently, the Decree-Law no. 120/2019 of 22 August created a special and
extraordinary regime for the installation and operation of new biomass recovery plants,
located near forest areas considered critical in terms of wildfire risk.
iv. Decree-Law no. 119-A/2021, of 22 December, which amends a set of measures within the
scope of the COVID-19 disease pandemic, namely within the scope of the legal and
remuneration regime applicable to electric and mechanical energy and useful heat produced
in cogeneration, approved by Decree-Law no. 23/2010, of 25 March, which revised the rules
of access and operation of the activity, with regard to admissible technologies and production
processes and the change between the different modalities of the remuneration system to
mitigate the rise in prices of fossil fuels, namely natural gas, in the post-pandemic recovery
period.
As a result of the measures taken under the Financial Adjustment Program to which Portugal was
subject, the entire remuneration system of the national electricity sector was revised, being the
major impact in the electricity produced from cogeneration, recognised as an energy efficiency
measure already which represents one of the most efficient forms of energy production.
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The Navigator Group represents a significant part of the energy produced in Portugal. The units
owned and operated by the Group under the Cogeneration regime, supported by a review of the
electric energy sales prices, over a period that began temporarily in 2012 and which will end
progressively between 2025-2030.
The progressive tariff reduction associated with the sale of electricity in special regime, affects the
economic sustainability of the sale to the electricity grid, so therefore after the applicable legal
periods, the cogenerations might operate on a self-consumption basis, i.e. directly supplying the
industrial units which has already occurred at the natural gas cogeneration plant at Figueira da Foz
since February 2016 and at the natural gas combined cycle plant at the industrial complex in Setúbal,
since the beginning of 2021.
The constant quest for optimisation of production costs and efficiency of generating units and the
analysis of new projects for the production of energy from renewable sources are the ways in which
the Group seeks to mitigate this risk. Accordingly, the Group will conclude the construction of a new
biomass boiler at the industrial site of Figueira da Foz in 2021 and is evaluating the development of
a new biomass recovery plant under Decree-Law no. 120/2019. It has also implemented several
projects for solar photovoltaic energy on a self-consumption basis.
9.1.4. Environmental risks
Regulatory environment
In recent years, environmental legislation in the EU has become increasingly restrictive regarding
the control of CO2 Emissions. The companies of the Navigator Group comply with the prevailing
legislation, in its various parameters (VLEs).
On September 2014, the Commission's implementing decision 2014/687 / EU approved the BREF
(Best Available Technologies Reference Documents) – Conclusions on Best Available Techniques of
the Reference Paper – for the paper and pulp sectors containing the new limits and requirements for
these sectors. The companies have four years to promote the required adjustments to its practices
and equipment. Furthermore, the technical discussion on the Large Combustion Facilities Reference
Document was finalised and published. This document has an impact on the Navigator Group’s
equipment, particularly in boilers and combustion facilities, which will be covered by the new
legislation, therefore requiring new investments, such as particle filters for biomass boilers.
In 2015, an environmental strategic plan was analysed and established, aiming to adapt Navigator
Group to a set of new and future requirements in the environmental area, namely to the reference
document for the sector (Conclusions on Best Available Techniques of the Reference Document for
the sector - BREF. Commission Decision 2014/687/EU) and for Large Combustion Facilities. The
reference documents correspond to the implementation of Directive 2010/75/EU on industrial
emissions. Projects are underway to implement the appropriate technological changes, as well as a
new version of the Environmental Master Plan, which incorporates new environmental challenges
that have arisen in the meantime.
The Environmental Strategic Plan aimed for areas other than the environmental covered by this
document. It was possible to confirm that Navigator Group is broadly in compliance with this future
referential and to identify some areas for improvement as well as technological solutions such as
atmosphere emissions from biomass boilers.
2021 Consolidated Annual Report
13/04/2022 299
On the other hand, under the terms set in Decree-Law 147/2008, dated 29 June that transposed
directive 2004/35/CE to the national law, the Navigator Group secured the environmental insurances
demanded by that law, thus guaranteeing compliance and reducing exposure to environmental risks.
Regarding the evolution of the EU Emissions Trading Scheme (EU ETS), the EU Directive 2018/410,
of 14 March, was approved, amending Directive 2003/87/EC to reinforce the cost-effectiveness of
emission reductions and investment in low carbon technologies. EU 2018/410 Directive sets out,
among other things, the new EU ETS period to be in force between 2021-2030, which will show a
reduction in the amount of CO
2
emission allowances allocated free of charge.
This development will bring increased costs for the transformation industry in general and in
particular for the paper and pulp industry, without any compensation for the CO
2
that, annually, is
absorbed by the forests of this industry.
In order to mitigate the impact of this change, the Group has long undertaken a series of investments
of an environmental nature that, among other advantages, have allowed the continued reduction of
CO
2
emissions.
In 2021, the Navigator Group's direct CO
2
emissions were reduced by 22% compared
to 2020. For this decrease, the start-up of the new biomass boiler at the Figueira da Foz industrial
complex was decisive.
In addition, the group has a Carbon Neutral Company Program that aims to implement, by 2035,
changes in its production processes in order to minimise the use of fossil fuels and consequently
reduce their CO
2
emissions.
It should be remembered that Navigator was the first Portuguese company, and one of the first in
the world, to anticipate by 15 years, to 2035, the commitment to have its industrial complexes
carbon neutral. To this end, the Company had already defined, in 2019, a Roadmap that includes
projects based on the use of renewable energy sources, namely biomass and solar, with the aim of
minimizing CO
2
emissions resulting from its activity and promoting the improvement of its energy
performance.
In 2021, Navigator joined the Science Based Targets initiative (SBTi), following the commitment
made in the 2030 Agenda. Contrary to what is usual and allowed for companies by the SBTi
methodology, Navigator has already submitted its greenhouse gas (GHG) emission reduction targets
for validation based on the most current climate science, waiving the period of two years that
companies have and typically use to do so, thus taking another important step in their positioning
in the fight against climate change.
The short-term, science-based targets submitted by Navigator are consistent with the ambition to
reduce GHG emissions to levels necessary to limit global warming to 1.5°C in the case of scopes 1
and 2, and well below of 2°C, in scope 3. It should be noted that by joining the SBTi, Navigator will
induce significant reductions in emissions from its Suppliers within scope 3.
Thus, Navigator reinforces its commitment and objectives for the next decade around one of the
relevant themes identified within the scope of its Agenda 2030 for responsible business management
– “Climate Change and CO
2
Fixation” –, pursuing the ambition to contribute for the Sustainable
Development Goal 13 (Climate Action) and make a positive impact on People and the Planet.
In 2021, the Company also saw its efforts to reduce environmental impact being recognized again,
registering an increase in the ESG Risk Rating 2021 of Sustainalytics, the entity that evaluates the
Company in the Environmental, Social and Corporate Governance aspects (environment, social and
2021 Consolidated Annual Report
13/04/2022 300
corporate governance) and annually assigns a rating of its performance (within the context of the
pulp and paper sector), placing it among the best companies in the world in sustainability with a
score of 14.3, having been classified again as a “Low ESG Risk Company ” for investors. In this
ranking, Navigator is in 3
rd
place, out of a total of 81 global companies that are part of the Paper &
Forestry industry cluster, and 3
rd
in the subset of 60 global companies that make up the Paper &
Pulp cluster.
The European Commission's policy initiatives will in future include policy and legislative
developments in areas such as the EU forestry and biodiversity strategies, the Renewable Energy
Directive, the EU Emissions Trading System (ETS) as well as the EU taxonomy.
The EU taxonomy regulation evolved during 2021, but uncertainty remains as to how much Navigator
Group economic activities will fall within the scope of the taxonomy, as the legislation evolves. Good
management of financial and sustainability risks and opportunities, as well as their disclosure, will
improve the likelihood of a favourable perception by the capital markets and, consequently, the cost
of capital.
For more detailed information on these and other initiatives within the scope of the Navigator Group's
roadmap for carbon neutrality, we advise you to consult our Sustainability Report.
Climate-related Financial Disclosures (TCFD)
In December 2015, the Financial Stability Board (FSB) created the Task Force on Climate-related
Financial Disclosures (TCFD) to develop a set of recommendations to clearly and consistently disclose
information that helps financial markets understand risks and impacts related to climate change.
The recommendations comprise 4 reporting dimensions:
• Governance: disclose the organization's governance of climate risks and opportunities;
• Strategy: disclose the actual and potential impacts of climate risks and opportunities on the
organization's business, strategy and financial planning;
• Risk Management: disclose how the organization identifies, assesses and manages climate
risks;
• Metrics and Goals: disclose the metrics and goals used to assess and manage climate risks
and opportunities.
During 2022, the Navigator Group intends to integrate the TCFD recommendations into corporate
risk management strategy and processes, taking the opportunity to assess potential financial and
strategic implications arising from climate change and develop appropriate responses.
Climate change risks
Navigator has been developing a set of strategies to measure and reduce its total GHG footprint, as
well as to promote mitigation and adaptation to the risks generated by climate change.
The Group monitors the potential impacts on its financial position, performance and cash flows
arising from climate change, namely impacts on relevant accounting estimates and judgements.
Long-term (25 to 30 years) changes in rainfall patterns, periods of drought, frequent extreme
weather events and higher average temperatures that increase the risk of forest fires and insect
outbreaks can cause damage to the Group's operations and forests, affecting the fair value of
2021 Consolidated Annual Report
13/04/2022 301
biological assets and wood prices. More frequent extreme weather events also increase the risk of
disruptions in production, logistics and the supply of raw materials and energy. Uncertainties
regarding climate change may also result in changes in the group's cash flow projections or in the
review of the useful lives of assets.
The Group has several mechanisms in place aimed at monitoring and mitigating these risks through
proactive management and early detection. The Group has incorporated climate change
considerations into its reforestation practices, such as establishing and maintaining paths and
firebreaks, conserving species biodiversity, and increasing monitoring during periods of fire danger.
In terms of property, plant and equipment, the Group periodically requests independent assessments
and reviews of the economic useful lives of its assets.
Physical risks arising from fires and droughts are largely covered by the Group's property and
operating loss insurance programs. However, if the frequency and severity of these events increase
as a result of climate change, the cost of such coverage could increase.
The Group believes that sustainable forest management, as well as the ability to react to events
such as forest fires and diseases, play an important role in mitigating the negative impacts of climate
change.
As widely disclosed, the Group's strategy is to provide sustainable and renewable alternatives to
fossil-based solutions, presenting attractive growth opportunities in the future. The Group's
innovation, the development of sustainable products and investments in energy efficiency will enable
Navigator to achieve its climate goals and an adequate response to climate challenges.
The Company continues to show a remarkable free cash-flow generation and a strengthened financial
position, and it is the Board of Directors’ belief that, given its financial and liquidity position, relevant
negative impacts arising from climate change are not expected to justify the recognition of additional
impairments or that jeopardize the going concern principle applied in the preparation of these
financial statements.
9.1.5. Human resources and talent management
In 2021, despite the pandemic context that brought added challenges, the strategy of standardizing
processes, policies and systems was maintained, with a view to making the People and Talent
Management processes more robust, as critical supports for the Organization and for Employee
development. It was also a year that required close work with the business in order to jointly
overcome some of the challenges that were posed.
During the year, extensive work was performed with the structures representing Workers within the
scope of labour negotiations in Navigator's different business areas, with emphasis on the new career
regulation for operational technicians, which allowed the career development of more than 1,235
Employees (70% of Employees in the business areas). For the first time, a collective bargaining
agreement was also signed for the Tissue segment, with conditions that reflect the current reality of
this business.
From the activities plan implemented in 2021, the following should be highlighted:
• Update and standardisation of the rules for attributing the additional supplement to the
sickness allowance;
2021 Consolidated Annual Report
13/04/2022 302
• Recruitment, training and professional internships for future operators, through partnerships
with the Instituto do Emprego e Formação Profissional (IEFP), which made it possible to
strengthen the theoretical and practical training of future operators, thus contributing to the
ongoing rejuvenation program;
• Implementation of the Employer Branding plan in a digital context, without the existence of
in-person events, but maintaining the presence of NVG in the different types of remote
academic events;
• Implementation of a uniform performance management model for all NVG Employees, with
very significant adherence rates and close to 99%;
• Design of new skills programs, in line with the new Career Plan, contributing significantly to
the expansion of the Learning Center specialized offer and to the development of Employees;
• Implementation of the Job Family, a new, more flexible career model with clearer
development criteria, working closely with the Board of Directors and first lines, for future
communication to the Organization;
• Development of plans customized to the different needs of the business, including topics
such as: Functions convergence plans; Upgrading of Supervisors, Young Executives Plan
(standard and faster), among others.
9.1.6. Information systems
The Group’s information systems, some of which rely on services rendered by third parties, play key
role in the operation of its business. Given the strong reliance placed on information technologies in
the several geographies and business areas in which the Group operates, it is important to highlight
the risk inherent to systems failures resulting from intentional actions such as computer attacks or
accidental actions.
Despite the procedures designed and implemented to mitigate the mentioned risks, the Navigator
Group is aware that, in the absence of inviolable information systems, it cannot be guaranteed that
these efforts will be sufficient to prevent such system failures, as well as the related repercussion
on reputation, litigation, inefficiencies or even in allocating operating margins.
The Group uses the support of service providers in the area of outsourcing information systems,
having renewed, during 2021, the outsourcing contracts for the management and operation of
infrastructures and for application management and maintenance until 31 December 2023 and 31
December 2024, respectively.
9.1.7. Other risks associated with the Group’s activity
The Navigator Company Group’s manufacturing facilities are subject to risks inherent to any
industrial activity, such as accidents, breakdowns or natural disasters that may cause losses in the
assets or temporary interruptions in the production process.
Likewise, these risks may also affect the Navigator Group’s main Customers and Suppliers, which
would have a significant impact on the levels of the profitability, should it not be possible to find new
Customers to ensure sales levels and new Suppliers that would enable the Group to maintain its
current cost structure.
The Navigator Group exports over 95% of its production of UWF paper and about 44% of its
production of Tissue paper. Consequently, transportation and logistics costs are materially relevant.
A continuous rise in transport costs may have a significant impact in its earnings.
2021 Consolidated Annual Report
13/04/2022 303
9.1.8. Context risks
The lack of efficiency in the Portuguese economy continues to be followed, adversely affecting the
Group's competitiveness, mainly in the following areas:
i. Ports and railroads;
ii. Roads, particularly those providing access to the Navigator Group’s producing units;
iii. Territorial planning and forest fires;
iv. Low productivity of the country’s forests;
v. The lack of certification of most of the Portuguese forest;
vi. Volatility of the tax policy and no reduction of the corporate income tax rate, as well as non-
elimination of the surcharges.
2021 Consolidated Annual Report
13/04/2022 304
10. PROVISIONS, COMMITMENTS AND CONTINGENCIES
10.1. PROVISIONS
Movements in provisions
No refunds of any nature are expected in respect of these provisions.
Legal proceedings
The outcome of provisions for legal proceedings depends on the labour or civil court decisions.
As at 31 December 2021, the balance is mainly composed of amounts referring to labour processes
(2021: Euro 6 million; 2020: Euro 2.8 million) and proceedings initiated by the IGAMAOT (Inspeção-
Geral da Agricultura, do Mar, do Ambiente e do Ordenamento do Território) (2021: Euro 617
thousand (2020: Euro 496 thousand).
Other provisions
The amount presented includes provisions to cover risks related to events of a different nature, the
resolution of which may result in outflows of cash, in particular organisational restructuring
processes, risks of contractual positions assumed in investments, among others.
In 2021, Other provisions include Euro 17,300,000 (2020: Euro 16,000,000) related to the
Mozambique project. Although the Memorandum of Understanding (MoU) signed with the
Mozambican Government provided for a "best effort" commitment to create the necessary conditions
to carry out the investment until last 31 December 2018, that was not possible until 31 December
2021, and both parties continued to work towards that goal. The reinforcement for the period in the
amount of Euro 1,300,000 results from the financial update of this responsibility.
Accounting policies
Provisions are recognised whenever the Group has a present legal or constructive obligation, as a
result of past events, in which it is probable that an outflow of resources will be required to settle
the obligation and the amount has been reliably estimated.
Amounts in Euro
Legal
proceedings
Other
Provisions
Total
1 January 2020 5,506,894 14,441,452 19,948,347
Increases 2,166,697 3,122,460 5,289,157
Reversals (2,978,869) - (2,978,869)
Impact in profit or loss for the period (812,172) 3,122,460 2,310,288
Exchange rate adjustment (26,617) - (26,617)
Other transfers and adjustments - 1,177,317 1,177,317
31 December 2020 4,668,105 18,741,229 23,409,335
Increases 3,815,210 1,300,000 5,115,210
Charge-off (16,250) - (16,250)
Reversals (1,443,952) (512,064) (1,956,016)
Impact in profit or loss for the period 2,355,008 787,936 3,142,944
Exchange rate adjustment (71,839) - (71,839)
Other transfers and adjustments - 271,641 271,641
31 December 2021 6,951,274 19,800,805 26,752,081
2021 Consolidated Annual Report
13/04/2022 305
Provisions for future operating losses are not recognised. Provisions are reviewed on the date of the
statement of financial position and are adjusted to reflect the best estimate at that date.
The Group incurs expenditure and assumes liabilities of an environmental nature. Accordingly,
expenditures on equipment and operating techniques that ensure compliance with applicable
legislation and regulations (as well as on the reduction of environmental impacts to levels that do
not exceed those representing a viable application of the best available technologies, on those
related to minimising energy consumption, atmospheric emissions, the production of residues and
noise), are capitalised when they are intended to serve the Group’s business in a durable way, as
well as those associated with future economic benefits and which serve to extend the useful lives,
increase capacity or improve the safety or efficiency of other assets owned by the Group.
The Group's uncertain income tax positions are disclosed in Note 6.1 - Income Tax.
Estimates and judgements
Legal and tax proceedings
These provisions were made in accordance with the risk assessments carried out internally by the
Group with the support of its legal advisers, based on the probability of the decision being favourable
or unfavourable to the Group.
10.2. COMMITMENTS
Guarantees provided to third parties
The guarantees provided to IAPMEI were carried out within the scope of the Investment contracts
signed between the Portuguese State and Navigator Pulp Aveiro, S.A. (Euro 833,097) and Navigator
Tissue Ródão, S.A. (Euro 447,604), in accordance with the terms and conditions defined in the
Payment Standard applicable to projects approved under QREN Incentive Systems.
The bank guarantees provided to the Tax Authority relate to the dispute of litigation processes,
related to the IRC for the 2015 tax period.
In the case of the Portuguese Environment Agency, bank guarantees were provided in the context
of proceedings in litigation associated with the water resources rate for the years 2017 to 2020.
Amounts in Euro
31-12-2021 31-12-2020
Guarantees provided
Navigator guarantees for EIB loans 42,916,667 56,666,667
Portuguese Tax Authorities 6,513,318 15,264,923
Customs clearance - USA - 5,671,909
IAPMEI 1,280,701 1,280,701
Customs clearance 1,250 1,250
Spanish Tax Administration State Agency 1,033,204 1,033,204
Portuguese Environment Agency 1,527,484 1,141,618
Simria 338,829 338,829
Other 1,987,855 700,971
55,599,308 82,100,072
2021 Consolidated Annual Report
13/04/2022 306
Purchase commitments
Other commitments
The Navigator Group has made a commitment to achieve carbon neutrality by 2035, with an
estimated global investment of Euro 154 million, of which Euro 55 million have already been invested
until 31 December 2021.
10.3. CONTINGENT ASSETS AND LIABILITIES
PUBLIC DEBT SETTLEMENT FUND
According to Decree-Law no. 36/93 of 13 February, the tax debts of privatised companies relating
to periods prior to the privatisation date (25 November 2006) are the responsibility of the Public
Debt Settlement Fund (FRDP). The Navigator Company submitted an application to the FRDP on 16
April 2008, requesting the payment of the tax debts until then settled by the Tax Authorities. On 13
December 2010, the company filed a new request for payment of debts assessed by the Tax
Administration for the periods of 2006 and 2003, which was supplemented, on 13 October 2011,
with the amounts already paid and undisputed relating to these same debts, as well as the expenses
directly related thereto, pursuant to the ruling dated 24 May 2011 (Case no. 0993A/02), which
confirmed the Company's position regarding the enforceability of such expenses.
On 13 December 2017, The Navigator Company, S.A. has made an extra-judicial agreement with
the Tax Authorities, in which it was acknowledged the FRDP responsibility for refunding the amount
of Euro 5,725,771 corresponding to the amount of Corporate Income Tax (IRC) unduly paid,
resulting from the alleged qualification/incorrect consideration, by the Tax Authorities, of the tax
loss calculated as a result of the operations performed by Soporcel, S.A. in 2003, as well as to
promote the reimbursement to Navigator of the mentioned amount.
In this context, FRDP is liable for Euro 22,140,855, detailed as follows:
Regarding the aggregate corporate income tax proceedings of 2005 and 2006, if Courts come to a
decision in favour of Navigator Group, the Group will withdraw the request made to FRDP.
Amounts in Euro
31-12-2021 31-12-2020
Purchase commitments
Property, plant and equipment - Industrial equipment
14,612,464
9,367,666
Wood
Commitments with acquisitions in the subsequent period 287,700,000 191,698,539
Commitments to long-term acquisitions 88,100,000 79,200,000
390,412,464 280,266,205
Amounts in Euro
Period
Amounts
requested
Decrease due to
RERD
Proceedings
decided
favourable to
the Group
Outstanding
amounts
Proceedings confirmed in court
Corporate income tax 2002 18,923 - - 18,923
Corporate income tax (withholding tax) 2004 3,324 - - 3,324
Corporate income tax 2004 766,395 - (139,023) 627,372
Expenses 314,957 - - 314,957
1,103,599 - (139,023) 964,576
Proceedings not confirmed in court
Corporate income tax 2005 11,754,680 (1,360,294) - 10,394,386
Corporate income tax 2006 11,890,071 (1,108,178) - 10,781,893
23,644,751 (2,468,472) - 21,176,279
24,748,350 (2,468,472) (139,023) 22,140,855
2021 Consolidated Annual Report
13/04/2022 307
Public Debt Settlement Fund - proceeding no. 774/11.3 BEALM
Additionally, a new petition was filed in the Administrative Court of Almada on 11 October 2011,
which called for the refund of various amounts, amounting to Euro 136,243,949. These amounts
regard adjustments in the financial statements of the Group after its privatisation that had not been
considered in formulating the price of its privatisation as they were not included in the documentation
made available for consultation by the bidders.
On 24 May 2014, the Court denied the Navigator Company Group’s proposal to present testimony
evidence, alternatively proposing written submissions. On 30 June 2014, the Group appealed against
this decision, but continuously presented written evidence. The Court subsequently confirmed the
Navigator Company Group’s views on this matter, both parts appointed experts and the partial
expert report was issued on July 2017, being required either by The Navigator Company, S.A. either
by the Ministério das Finanças, the attendance of both designated experts in court hearing, in order
to provide oral explanations on the expert report.
Following claims filed by Navigator on 11 September 2017 and 15 January 2019, the experts
submitted redrafted Expert Reports on 27 December 2018 and 19 March 2019, respectively.
The trial hearing sessions took place between May and June 2019, with the parties filing closing
arguments in September 2019 and now awaiting the Court's decision.
Infrastructure enhancement and maintenance fee
Under the licensing proceeding no. 408/04 related to the new Setúbal paper mill project, the City
Council issued a settlement note to Navigator regarding an infrastructure enhancement and
maintenance fee (“TMUE”) amounting to Euro 1,199,560, with which the Company disagrees.
This situation regards the amount collected under this levy in the licensing process mentioned above,
for the construction of a new paper mill in the industrial site of Mitrena, Setúbal. The Navigator
disagrees with the amount charged and filed an administrative claim against it on 25 February 2008
(request no. 2485/08), followed by an appeal to Court against the rejection of the claim on 28
October 2008. On 3 October 2012, this claim had an adverse decision, and in 13 November 2012,
Navigator appealed to the Supreme Administrative Court (STA - Supremo Tribunal Administrativo),
which referred the case to the Administrative Central Court (TCA - Tribunal Central Administrativo)
on 4 July 2013.
On 19 November 2020 the South Administrative Central Court (TCA Sul- Tribunal Central
Administrativo) issued a decision which determined that the case should be sent back to the court
of first instance to expand on the contested facts. An exceptional appeal was filed with the STA
against this decision, and on 24 March 2021 the STA decided not to allow the appeal. Having the
case returned to the first instance, the Administrative and Fiscal Court (TAF - Tribunal Administrativo
e Fiscal) of Almada issued a new unfavourable sentence on 4 November 2021. Navigator presented
an appeal to TCA Sul on 13 December 2021, which was allowed and is now awaiting a decision.
2021 Consolidated Annual Report
13/04/2022 308
11. GROUP STRUCTURE
11.1. COMPANIES INCLUDED IN THE CONSOLIDATION PERIMETER
11.1.1. Navigator Group subsidiaries
31-12-2020
Company
Head Office
Direct
Indirect
Total Total Main activity
Parent company:
The Navigator Company, S.A. Portugal - - - - Sale of paper and pulp
Subsidiaries:
Navigator Brands , S.A. Portugal 100.00 - 100.00 100.00
Acquisition, operation, lease or concession of the use
and disposal of trademarks, patents and other
industrial or intellectual property
Navigator Parques Industriais, S.A. Portugal 100.00 - 100.00 100.00 Management of industrial real estate
Navigator Pulp Figueira, S.A Portugal 100.00 - 100.00 100.00 Paper production
Empremédia - Corretores de Seguros, S.A. Portugal 100.00 - 100.00 100.00 Insurance mediation and advisory services
Empremedia, DAC Ireland 100.00 - 100.00 100.00 Management of shareholdings
Empremedia RE , DAC Ireland - 100.00 100.00 - Insurance mediation and advisory services
Raiz - Instituto de Investigação da Floresta e Papel Portugal 97.00 - 97.00 97.00
Applied research in the field of pulp and paper
industry and forestry activity
Raiz Ventures , SA Portugal - 97.00 97.00 97.00
Promotion of business units directly or indirectly
related to research, development and innovation
activities in the field of forest-based bioeconomy
About the Future - Essential Oils, SA ** Portugal - 97.00 97.00 97.00
Production, rectification and wholesale of essential
oils
Enerpulp – Cogeração Energética de Pasta, S.A. Portugal 100.00 - 100.00 100.00 Energy production
Navigator Pulp Figueira, S.A. Portugal 100.00 - 100.00 100.00
Production of cellulose pulp and provision of
administration, management and internal advisory
services
Ema Cacia - Engenharia e Manutenção Industrial,
ACE
Portugal - 74.20 74.20 74.20
Ema Setúbal - Engenharia e Manutenção Industrial,
ACE
Portugal - 80.20 80.20 80.20
Ema Figueira da Foz- Engenharia e Manutenção
Industrial, ACE
Portugal - 79.80 79.80 79.80
Navigator Pulp Setúbal, S.A. Portugal 100.00 - 100.00 100.00 Cellulose pulp production
Navigator Pulp Aveiro, S.A. Portugal 100.00 - 100.00 100.00 Cellulose pulp production
Navigator Tissue Aveiro, S.A. Portugal 100.00 - 100.00 100.00
Navigator Tissue Ródão , S.A. Portugal - 100.00 100.00 100.00
Navigator Tissue Iberica , S.A. Spain - 100.00 100.00 100.00 Sale of tissue paper
Portucel Moçambique - Sociedade de
Desenvolvimento Florestal e Industrial, Lda
Mozambique 90.02 - 90.02 90.02 Forestry production
Navigator Internacional Holding SGPS, S.A. Portugal 100.00 - 100.00 100.00 Management of shareholdings
Navigator Financial Services sp . Zoo ** Poland - - - 100.00 Financial services
Navigator Forest Portugal, S.A. Portugal 100.00 - 100.00 100.00 Forestry production
EucaliptusLand, S.A. Portugal - 100.00 100.00 100.00 Forestry production
Sociedade de Vinhos da Herdade de Espirra -
Produção e Comercialização de Vinhos, S.A.
Portugal - 100.00 100.00 100.00 Wine production
Gavião - Sociedade de Caça e Turismo, S.A. Portugal - 100.00 100.00 100.00 Management of hunting resources
Afocelca - Agrupamento complementar de
empresas para protecção contra incêndios, ACE
Portugal - 64.80 64.80 64.80
Provision of forest fire prevention and fighting
services
Viveiros Aliança - Empresa Produtora de Plantas,
S.A.
Portugal - 100.00 100.00 100.00 Plant production in nurseries
Atlantic Forests, S.A. Portugal - 100.00 100.00 100.00
Provision of services within the scope of forestry
activities and trade in timber
Bosques do Atlantico, SL Spain - 100.00 100.00 100.00 Trade in wood and biomass and logging
Navigator Africa, SRL Italy - 100.00 100.00 100.00 Trade in wood and biomass and logging
Navigator Paper Setúbal , S.A. Portugal 100.00 - 100.00 100.00 Paper and energy production
Navigator North America Inc. USA - 100.00 100.00 100.00 Sale of paper
Navigator Afrique du Nord Morocco - 100.00 100.00 100.00
Navigator España, S.A. Spain - 100.00 100.00 100.00
Navigator Netherlands, BV
The
Netherlands
- 100.00 100.00 100.00
Navigator France, EURL France - 100.00 100.00 100.00
Navigator Paper Company UK, Ltd
United
Kingdom
- 100.00 100.00 100.00
Navigator Italia, SRL Italy - 100.00 100.00 100.00
Navigator Deutschland, GmbH Germany - 100.00 100.00 100.00
Navigator Paper Austria, GmbH Austria - 100.00 100.00 100.00
Navigator Paper Poland SP Z o o Poland - 100.00 100.00 100.00
Navigator Eurasia Turkey - 100.00 100.00 100.00
Navigator Rus Company, LLC Russia - - - 100.00
Navigator Paper Mexico Mexico 25.00 75.00 100.00 100.00
Navigator Middle East Trading DMCC Dubai - 100.00 100.00 100.00
Navigator Egypt, ELLC Egypt 1.00 99.00 100.00 100.00
Navigator Abastecimento de Madeira, ACE Portugal 97.00 3.00 100.00 100.00 Sale of timber
* Companies merged and liquidated in 2021 (Note 11.2)
31-12-2021
Share equity owned
Provision of industrial maintenance services
Tissue paper production
Provision of sales intermediation services
2021 Consolidated Annual Report
13/04/2022 309
11.1.2. Incorporated joint operations
11.2. CHANGES IN THE CONSOLIDATION PERIMETER
During the period ended 31 December 2021, the consolidation perimeter was changed from the
previous period by the following corporate reorganisation operations:
− Merger by incorporation of About The Future – Essencial Oils, S.A. in Raiz Ventures, S.A.
− Liquidation of Navigator Financial Services Sp. Z.o.o. and Navigator Rus Company, LLC.
− Incorporation of Empremedia RE, DAC, in Ireland.
11.3. TRANSACTIONS WITH RELATED PARTIES
Balances with related parties
Transactions with related parties
On 1 February 2013, a contract to render administrative and management services was signed
between Semapa - Sociedade de Investimentos e Gestão, SGPS, S.A. (currently owner of 69.97%
of the Group´s share capital) and Navigator Group, establishing a remuneration system based in
equal criteria for both parties in the continuous cooperation and assistance relationships, that meets
the rules applicable to commercial relationships between Group companies.
31-12-2020
Company Head Office Direct
Indirect
Total Total Main activity
Pulpchem Logistics, A.C.E. Portugal 50.00 - 50.00 50.00
Purchases of materials, subsidiary materials and
services used in the pulp and paper production
processes
Share equity owned
31-12-2021
Amounts in Euro
Receivables
(Note 4.2)
Payables
(Note 4.3)
Lease
liabilities
(Note 5.8)
Receivables
(Note 4.2)
Payables
(Note 4.3)
Lease
liabilities
(Note 5.8)
Shareholders (Note 5.2)
Semapa - Soc. de Investimento e Gestão, SGPS, S.A. - 7,470,630 - - 7,001,046 -
Other subsidiaries of Semapa Group
Secil - Companhia Geral Cal e Cimento, S.A. - 40,831 - 443,649 35,503 -
Secil Britas, S.A. - 138,666 - - 86,954 -
Secil Prebetão, S.A. - 41,858 - - - -
CMP ‐ Cimentos Maceira e Pataias, S.A. - 24 - - 23,682 -
Unibetão, S.A. - 16,527 - - 66,595 -
Other related parties
Sonagi Imobiliária, S.A. - - - - - 188,841
Hotel Ritz, S.A. - 3,464 - - 3,654 -
- 7,712,000 - 443,649 7,217,433 188,841
31-12-2021
31-12-2020
Amounts in Euro
Purchase of
goods and
services
Sales and
services
rendered
Financial
(expenses) /
income
Purchase of
goods and
services
Sales and
services
rendered
Other
operating
income
Financial
(expenses) /
income
Shareholders (Note 5.2)
Semapa - Soc. de Investimento e Gestão, SGPS, S.A. 10,043,173 34 - 8,743,735 - - 9,217
10,043,173 34 - 8,743,735 - - 9,217
Other subsidiaries of Semapa Group
Secil - Companhia Geral Cal e Cimento, S.A. 165,466 15,750 606 58,549 12,000 233,356 -
Secil Britas, S.A. 310,125 - - 45,188 - - -
Secil Prebetão, S.A. 5,475 - - - - - -
CMP ‐ Cimentos Maceira e Pataias, S.A. 8,846 - 450 45,582 - - -
Unibetão, S.A. 5,756 - - 78,684 - - -
495,668 15,750 1,056 228,003 12,000 233,356 -
Other related parties
Seinpar Investments BV - - - - - 1,735 -
Hotel Ritz, S.A. 21,656 - - 7,878 - - -
21,656 - - 7,878 - 1,735 -
10,560,497 15,784 1,056 8,979,616 12,000 235,091 9,217
31-12-2021
31-12-2020
2021 Consolidated Annual Report
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A lease agreement was also entered into between Navigator Brands, S.A. (formerly called Navigator
Paper Figueira, S.A.) and Cimilonga – Imobiliária, S.A. under which an office was leased in Semapa
SGPS, SA headquarters’ building, in Lisbon, which was terminated in 2020.
The Navigator Company, S.A. and Refundos - Sociedade Gestora de Investimentos Imobiliário, S.A.,
also entered into a lease agreement beginning on 1 June 2017 and ending on 31 May 2027,
automatically renewable for a 5-year period, regarding the lease of an office building located in
Lisbon, Avenida Fontes Pereira de Melo. Since the Company was sold to a third party, it is no longer
considered a related party in 2020.
The operations performed with the Secil Group arise from normal market operations.
In the identification of related parties for the purpose of financial reporting, the members of the
Board of Directors and other corporate bodies were considered as related parties.
The remuneration of the Group's key corporate bodies is detailed in Note 7.3 - Remuneration
of corporate bodies.
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12. Explanation added for translation
These financial statements are a translation of the financial statements originally issued in
Portuguese. In the event of discrepancies, the Portuguese language version shall prevail.
BOARD OF DIRECTORS
Ricardo Miguel dos Santos Pacheco Pires
Chairman of the Board of Directors
António José Pereira Redondo
Chairman of the Executive Board
Adriano Augusto da Silva Silveira
Executive Board Member
José Fernando Morais Carreira de Araújo
Executive Board Member
Nuno Miguel Moreira de Araújo Santos
Executive Board Member
João Paulo Araújo Oliveira
Executive Board Member
João Paulo Cabete Gonçalves Lé
Executive Board Member
Manuel Soares Ferreira Regalado
Member
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Maria Teresa Aliu Presas
Member
Mariana Rita Antunes Marques dos Santos
Member
Sandra Maria Soares Santos
Member
Vítor Manuel Rocha Novais Gonçalves
Member
Vítor Paulo Paranhos Ferreira
Member
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9. STATUTORY AUDITOR’S REPORT AND AUDIT REPORT
CONSOLIDATED FINANCIAL STATEMENTS
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10. REPORT AND OPINION OF THE SUPERVISORY BOARD
FISCAL CONSOLIDATED FINANCIAL STATEMENTS
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The Navigator Company, S.A.
Report and Opinion of the Audit Board
Consolidated Financial Accounts
2021 Financial Year
Shareholders,
1. In accordance with the law, the articles of association of the Company and
the terms of our mandate, we hereby submit the report on our supervisory
activities in 2021 and issue our opinion on The Consolidated Management
Report and Consolidated Financial Statements presented by the Board of
Directors of the Navigator Company, SA, for the financial year ended 31
December 2021.
2. Over the course of the year we regularly monitored the affairs of the
Company and its most significant affiliates and associates, with the frequency
and to the extent we deemed appropriate, through periodic meetings with
the Company’s directors and senior management. We monitored the
verification of the accounting records and respective supporting
documentation, as well as the effectiveness of the risk management, internal
control and internal audit systems. We monitored compliance with the law
and the articles of association. In the course of our work we encountered no
constraints whatsoever.
3. We met several times with the Statutory Auditor and External Auditor, KPMG
& Associados, SROC, Lda, monitoring its auditing activities and checking its
independence. We assessed the Legal Accounts Certificate and the Audit
Report and are in agreement with the Legal Accounts Certificate presented.
4. The Audit Board analyzed the proposals submitted to it for the provision of
non-audit services by the external auditor, and approved those that
concerned permitted services, did not affect the independence of the external
auditor and complied with additional legal requirements.
5. In the course of our work we found that:
a) The Consolidated Income Statement, the Consolidated Statement of
Financial Position, the Consolidated Statement of Comprehensive
Income, the Consolidated Statement of Changes in Equity, the
Consolidated Statement of Cash Flows and the related Notes to the
Consolidated Financial Statements, provide an adequate understanding
2021 Consolidated Annual Report
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of the Company's financial position and results, comprehensive income,
changes in equity, and cash flows;
b) The accounting policies and valuation criteria adopted comply with the
International Financial Reporting Standards (IFRS) as adopted in the
European Union and suitably assure that such criteria lead to a correct
valuation of the Company’s assets and profits, taking due account of the
analyses and recommendations of the external auditor;
c) The Management Report provides a sufficient description of the business
affairs of the Company and its affiliates included in the consolidated
accounts, offering a clear account of the most significant developments;
d) The Corporate Governance Report includes the information required by
Article 245-A of the Securities Code and takes into account the
recommendations of the Code of the Portuguese Institute for Corporate
Governance (IPCG).
6. Accordingly, taking into consideration the information received from the
Board of Directors and the Company departments, and also the conclusions
of the Legal Accounts Certificate and the Audit Report, we recommend that:
a) The Management Report be approved;
b) The Consolidated Financial Statements be approved.
7.
Finally, the members of the Audit Board wish to acknowledge and express
their appreciation for the assistance received from the Board of Directors,
the senior managers of the Company and other staff, as well as the external
auditor, KPMG & Associados, SROC, Lda.
Lisbon, March 28, 2022
The Chairman of the Audit Board
José Manuel Oliveira Vitorino
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Member
Gonçalo Nuno Palha Gaio Picão Caldeira
Member
Maria da Graça Torres Ferreira da Cunha Gonçalves
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11. SEPARATE FINANCIAL STATEMENTS
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SEPARATE INCOME STATEMENT
FOR THE PERIODS ENDED 31 DECEMBER 2021
The accompanying notes form an integral part of these separate financial statements.
Amounts in Euro Note 2021 2020
Revenue 2.1 2,366,947,621 1,886,063,068
Other operating income 2.2 2,090,803 3,659,206
Costs of goods sold and materials consumed 4.1 (2,103,980,956) (1,684,534,452)
External services and supplies 2.3 (221,150,420) (173,228,279)
Payroll costs 7.1 (11,092,252) (7,364,418)
Other operating expenses 2.3 (5,729,376) (1,373,943)
Net provisions 9.1 (1,138,500) (2,013,378)
Gains/(losses) of subsidiaries 10.1 160,083,746 81,797,972
Depreciation, amortisation and impairment losses in non-financial assets
3.4 (611,085) (661,271)
Operating income
185,419,582 102,344,504
Financial income and gains 5.10 25,605,954 40,671,883
Financial expenses and losses 5.10 (36,184,414) (47,017,278)
Profit before income tax
174,841,122 95,999,108
Income tax 6.1 (3,429,667) 13,214,611
Net profit for the period
171,411,455 109,213,720
Earnings per share
Basic earnings per share, Eur 5.3 0.241 0.154
Diluted earnings per share, Eur 5.3 0.241 0.154
Weighted Average Shares 711,183,069 711,183,069
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SEPARATE STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIODS ENDED 31 DECEMBER 2021
The accompanying notes form an integral part of these separate financial statements.
Amounts in Euro
Note 2021 2020
Net profit for the period 171,411,455 109,213,720
Items that may be reclassified to profit or loss
Hedging derivative financial instruments
Changes in fair value 8.2 1,430,747 (354,422)
Tax effect 6.2 (393,455) 97,466
Other changes in equity of subsidiaries 10.1 (4,354,319) (11,058,931)
- -
Items that cannot be reclassified to profit or loss
Remeasurement of post-employment benefits 7.2.2 277,718 (148,138)
Other comprehensive income 90,332 170,453
Total other comprehensive income net of taxes
(2,948,977) (11,293,572)
Total comprehensive income
168,462,478 97,920,148
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SEPARATE STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2021 AND 2020
The accompanying notes form an integral part of these separate financial statements.
Amounts in Euro
Note 31-12-2021 31-12-2020
ASSETS
Non-current assets
Intangible assets 3.1 - 6,636,500
Property, plant and equipment 3.2 908,505 1,665,219
Right-of-use assets 3.3 2,768,659 3,286,815
Investments in subsidiaries 10.1 1,919,170,450 1,858,530,371
Investments in associates 45,824 67,041
Non-current receivables 4.2 6,684 6,684
Deferred tax assets 6.2 7,243,947 5,978,436
1,930,144,069 1,876,171,066
Current assets
Inventories 4.1 18,548,495 22,585,686
Current receivables 4.2 866,987,969 750,265,643
Income tax 6.1 1,118,815 3,482,762
Cash and cash equivalents 5.8 354,336,647 296,941,052
1,240,991,926 1,073,275,143
Total Assets
3,171,135,995 2,949,446,208
EQUITY AND LIABILITIES
Equity
Share capital 5.2 500,000,000 500,000,000
Treasury shares 5.2 - (20,189,264)
Reserves by applying the equity method 5.5 (437,672,593) (433,318,274)
Fair value reserve 5.5 (5,604,076) (6,641,368)
Legal reserve 5.5 100,000,000 100,000,000
Other reserves 5.5 119,458,835 264,066,381
Retained earnings 5.5 647,229,733 512,795,312
Net profit for the period 171,411,455 109,213,720
Prepaid dividends (49,996,170) -
Total Equity
1,044,827,184 1,025,926,506
Non-current liabilities
Interest-bearing liabilities 5.6 688,171,881 655,856,215
Lease liabilities 5.7 2,460,807 2,974,645
Pensions and other post-employment benefits 7.2 - 1,163,105
Deferred tax liabilities 6.2 197,458 197,458
Provisions 9.1 18,989,832 36,144,390
709,819,978 696,335,813
Current liabilities
Interest-bearing liabilities 5.6 244,993,753 291,527,778
Lease liabilities 5.7 423,170 400,890
Current payables 4.3 1,139,129,433 913,579,785
Income tax 6.1 31,942,477 21,675,436
1,416,488,833 1,227,183,889
Total Liabilities
2,126,308,811 1,923,519,702
Total Equity and Liabilities
3,171,135,995 2,949,446,208
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SEPARATE STATEMENT OF CHANGES IN EQUITY
FOR THE PERIODS ENDED 31 DECEMBER 2021
The accompanying notes form an integral part of these separate financial statements.
Amounts in Euro Note Share capital Treasury shares
Reserves by
applying the
equity method
Fair value
reserve
Legal reserve Other reserves
Retained
earnings
Net profit for the
period
Prepaid
dividends
Total
Equity as at 31 December 2020
500,000,000 (20,189,264) (433,318,274) (6,641,368) 100,000,000 264,066,381 512,795,312 109,213,720 - 1,025,926,506
Net profit for the period - - - - - - - 171,411,455 - 171,411,455
Other comprehensive income (net of taxes) - - (4,354,319) 1,037,292 - - 368,050 - - (2,948,977)
Total comprehensive income for the period
- - (4,354,319) 1,037,292 - - 368,050 171,411,455 - 168,462,478
Application of 2020 net profit for the period: -
- Application of prior period's net profit 5.4 - - - - - - 116,213,720 (109,213,720) - 7,000,000
- Dividends paid - - - - - - (99,565,630) - - (99,565,630)
- Bonus to employees - - - - - - (7,000,000) - - (7,000,000)
Transfer from free reserves to retained earnings - - - - (138,290,615) 138,290,615 - - -
Incorporation of reserves 6,316,931 - - - - (6,316,931) - - - -
Cancellation of treasury shares 5.2 (6,316,931) 20,189,264 - - - - (13,872,333) - - -
Prepaid dividends - - - - - - - - (49,996,170) (49,996,170)
Total transactions with shareholders
- 20,189,264 - - - (144,607,546) 134,066,371 (109,213,720) (49,996,170) (149,561,800)
Equity as at 31 December 2021
500,000,000 - (437,672,593) (5,604,076) 100,000,000 119,458,835 647,229,733 171,411,455 (49,996,170) 1,044,827,184
Amounts in Euro Note Share capital Treasury shares
Reserves by
applying the
equity method
Fair value
reserve
Legal reserve Other reserves
Retained
earnings
Net profit for the
period
Prepaid
dividends
Total
Equity as at 1 January 2020
500,000,000 (20,189,264) (422,259,343) (6,384,412) 100,000,000 95,776,066 611,911,916 168,290,315 - 1,027,145,277
Net profit for the period - - - - - - - 109,213,720 - 109,213,720
Other comprehensive income (net of taxes) - - (11,058,931) (256,956) - - 22,315 - - (11,293,572)
Total comprehensive income for the period
- - (11,058,931) (256,956) - - 22,315 109,213,720 - 97,920,148
Application of 2019 net profit for the period: -
- Application of prior period's net profit 5.4 - - - - - 168,290,315 - (168,290,315) - -
- Dividends paid 5.4 - - - - - - - - - -
- Bonus to employees - - - - - - - - - -
Distribution of retained earnings - - - - - - (99,138,919) - - (99,138,919)
Acquisition of treasury shares 5.2 - - - - - - - - - -
Total transactions with shareholders
- - - - - 168,290,315 (99,138,919) (168,290,315) - (99,138,919)
Equity as at 31 December 2020
500,000,000 (20,189,264) (433,318,274) (6,641,368) 100,000,000 264,066,381 512,795,312 109,213,720 - 1,025,926,506
2021 Consolidated Annual Report
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SEPARATE STATEMENT OF CASH FLOWS
FOR THE PERIODS ENDED 31 DECEMBER 2021
The accompanying notes form an integral part of these separate financial statements.
Amounts in Euro
Notes 2021 2020
OPERATING ACTIVITIES
Cash receipts from customers 2,455,874,053 2,063,154,363
Payments to suppliers (2,575,275,826) (2,245,990,597)
Payments to employees (7,108,255) (6,701,173)
Cash flow from operations
(126,510,028) (189,537,408)
Income tax received/ (paid) (19,461,688) 37,627,142
Other (payments)/ receipts relating to operating activities 244,558,651 255,572,020
Cash flows from operating activities (1)
98,586,935 103,661,754
INVESTING ACTIVITIES
Inflows:
Intangible assets 3.1 6,636,500 550,000
Interest and similar income 13,026,983 17,600,135
Dividends from subsidiaries 10.1 85,802,502 95,272,652
105,465,985 113,422,788
Outflows:
Investments in subsidiaries 10.1 (5,750,000) -
Property, plant and equipment - (15,028)
(5,750,000) (15,028)
Cash flows from investing activities (2)
99,715,985 113,407,760
FINANCING ACTIVITIES
Inflows:
Interest-bearing liabilities 5.6 147,500,000 240,000,000
Loans to subsidiaries 10.2 666,496,513 270,265,699
813,996,513 510,265,699
Outflows:
Interest-bearing liabilities 5.6 (291,527,778) (133,194,444)
Amortisation of lease agreements 5.7 (589,656) (606,420)
Interest and similar expense 5.1 (9,756,483) (27,288,413)
Loans to subsidiaries 10.2 (633,141,611) (225,441,868)
Distribution of dividends 5.4 (149,561,800) (99,138,919)
Distribution of reserves - (99,138,920)
(1,084,577,328) (584,808,985)
Cash flows from financing activities (3)
(270,580,815) (74,543,286)
CHANGES IN CASH AND CASH EQUIVALENTS (1)+(2)+(3)
(72,277,895) 142,526,229
Effect of exchange rate differences (102,010) (192,628)
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE
PERIOD
5.8
296,941,052 154,607,452
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD 5.8
224,561,148 296,941,052
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NOTES TO THE SEPARATE FINANCIAL STATEMENTS
1. INTRODUCTION 334
1.1. PRESENTATION .............................................................................................334
1.2. NAVIGATOR STRATEGY UPDATE ......................................................................336
1.3. IMPACTS OF THE COVID-19 PANDEMIC ............................................................337
1.4. SUBSEQUENT EVENTS ....................................................................................338
1.5. BASIS FOR PREPARATION ...............................................................................339
1.6. NEW IFRS ADOPTED AND TO BE ADOPTED .......................................................342
1.7. SIGNIFICANT ESTIMATES AND JUDGEMENTS ....................................................345
2. OPERATIONAL PERFORMANCE 346
2.1. REVENUE AND SEGMENT REPORTING...............................................................346
2.2. OTHER OPERATING INCOME ...........................................................................348
2.3. OTHER OPERATING EXPENSES ........................................................................349
3. INVESTMENTS 351
3.1. INTANGIBLE ASSETS ......................................................................................351
3.2. PROPERTY, PLANT AND EQUIPMENT .................................................................352
3.3. RIGHT-OF-USE ASSETS ..................................................................................353
3.4. DEPRECIATION, AMORTISATION AND IMPAIRMENT LOSSES ...............................354
4. WORKING CAPITAL 355
4.1. INVENTORIES ...............................................................................................355
4.2. RECEIVABLES ................................................................................................356
4.3. PAYABLES .....................................................................................................358
5. CAPITAL STRUCTURE 359
5.1. CAPITAL MANAGEMENT ..................................................................................359
5.2. SHARE CAPITAL AND THEASURY SHARES .........................................................359
5.3. EARNINGS PER SHARE ...................................................................................361
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5.4. DIVIDENDS ...................................................................................................361
5.5. RESERVES AND RETAINED EARNINGS ..............................................................362
5.6. INTEREST-BEARING LIABILITIES .....................................................................364
5.7. LEASE LIABILITIES ........................................................................................367
5.8. CASH AND CASH EQUIVALENTS ......................................................................367
5.9. CASH FLOWS FROM FINANCING ACTIVITIES .....................................................368
5.10. NET FINANCIAL RESULTS ..............................................................................368
6. INCOME TAX 370
6.1. INCOME TAX FOR THE PERIOD ........................................................................370
6.2. DEFERRED TAXES ..........................................................................................373
7. PAYROLL 375
7.1. PAYROLL COSTS ............................................................................................375
7.2. EMPLOYEE BENEFITS .....................................................................................376
7.3. REMUNERATION OF CORPORATE BODIES .........................................................379
8. FINANCIAL INSTRUMENTS 381
8.1. FINANCIAL RISK MANAGEMENT .......................................................................381
8.2. DERIVATIVE FINANCIAL INSTRUMENTS ............................................................388
8.3. FINANCIAL ASSETS AND LIABILITIES ...............................................................391
9. PROVISIONS, COMMITMENTS AND CONTINGENCIES 393
9.1. PROVISIONS .................................................................................................393
9.2. COMMITMENTS ..............................................................................................394
9.3. CONTINGENT ASSETS AND LIABILITIES ...........................................................394
10. GROUP STRUCTURE 397
10.1. INVESTMENTS IN SUBSIDIARIES ...................................................................397
10.2. TRANSACTIONS WITH RELATED PARTIES .......................................................400
11. Explanation added for translation 401
2021 Consolidated Annual Report
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1. INTRODUCTION
The following symbols are used in the presentation of the Notes to the financial statements:
Accounting
policies
This symbol indicates the
disclosure of accounting policies
specifically applicable to the items
in the respective Note (shaded
area).
Significant
estimates and
judgements
This symbol indicates the disclosure
of the estimates and/or judgements
made regarding the items in the
respective Note (shaded area).
Significant estimates and
judgements are indicated in Note
1.7.
Reference
This symbol indicates a reference to
another Note or another section of
the Financial Statements were more
information about the items
disclosed is presented.
1.1. PRESENTATION
The Navigator Company, S.A. (Navigator or the Company) is a publicly traded company with its head
office in Mitrena, 2901-861 Setúbal, and it is listed on NYSE Euronext Lisbon under the ISIN
PTPTI0AM0006.
Company: The Navigator Company, S.A.
Head Office: Mitrena, 2901-861 Setúbal | Portugal
Legal Form: Public Limited Company
Share Capital: Euro 500,000,000
Registration no.: 503 025 798
Navigator is the parent company of the Navigator Group (Group), comprising Navigator and
Subsidiaries, as presented in the consolidated financial statements.
The Navigator Company, S.A. (formerly known as: Portucel, S.A.), hereinafter referred to as
Company or Navigator, is a publicly traded company with its share capital represented by nominal
shares and was incorporated on 31 May 1993, under Decree-Law no. 39/93 of 13 February, as a
result of the restructuring process of Portucel - Empresa de Celulose e Papel de Portugal, E.P.
The genesis of the Group it currently heads was created in the mid 1950’s, when a group of
technicians from “Companhia Portuguesa de Celulose de Cacia” made this company the first in the
world to produce bleached eucalyptus sulphate pulp.
In 1976, Portucel EP was created as a result of the nationalisation of all of Portugal’s cellulose
industry. As such, Portucel – Empresa de Celulose e Papel de Portugal, E.P. resulted from the merger
with CPC – Companhia de Celulose, S.A.R.L. (Cacia), Socel – Sociedade Industrial de Celulose,
S.A.R.L. (Setúbal), Celtejo – Celulose do Tejo, S.A.R.L. (Vila Velha de Ródão), Celnorte – Celulose
do Norte, S.A.R.L. (Viana do Castelo) and Celuloses do Guadiana, S.A.R.L. (Mourão), being
converted into a Public Limited Company with a majority public shareholding by Decree-Law no.
405/90, of 21 December.
2021 Consolidated Annual Report
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Years after, as a result of the restructuring of Portucel – Empresa de Celulose e Papel de Portugal,
S.A., which was redenominated to Portucel, S.G.P.S., S.A., towards to its privatisation, Portucel S.A.
was created, on 31 May 1993, through Decree-law no. 39/93, of 13 February, with the former assets
of the two main companies, based in Cacia and Setúbal.
In 1995, the company was again privatised, and became a publicly traded company.
Aiming to restructure the paper industry in Portugal, Portucel, S.A. acquired Papéis Inapa, S.A.
(Setúbal), in 2000, and Soporcel – Sociedade Portuguesa de Papel, S.A. (Figueira da Foz), in 2001.
These strategic moves were decisive and gave rise to the Portucel Soporcel group (now The
Navigator Company Group), which is currently the largest European producer of bleached eucalyptus
pulp and one of the largest European producers of uncoated wood-free paper (UWF).
In June 2004, the Portuguese State sold a 30% stake of Portucel’s equity, which was acquired by
Semapa Group. In September 2004, Semapa launched a public acquisition offer tending to assure
the Group’s control, which was accomplished by guaranteeing a 67.1% stake of Portucel’s equity.
In November 2006, the Portuguese State concluded the third and final stage of the sale of Portucel,
S.A., and Párpublica, SGPS, S.A. sold the remaining 25.72% it still held.
In 2007 the Group invested in a new paper machine located at the Setúbal industrial site which
started operating on a regular basis in October 2009.
From 2009 to July 2015, more than 75% of the Company’s share capital was held directly and
indirectly by Semapa – Sociedade de Investimento e Gestão SGPS, S.A.. (excluding treasury shares)
having the percentage of voting rights been reduced to less than 70% following the conclusion of
the offer for the acquisition, in the form of an exchange offer, of the ordinary shares of Semapa, in
July 2015.
In February 2015, the Group started its activity in the Tissue segment with the acquisition of AMS-
BR Star Paper, S.A. (currently denominated Navigator Tissue Ródão, S.A.), a Company that holds
and explores a tissue paper mill, located in Vila Velha de Ródão. A new industrial facility was built in
Aveiro, in August 2018, being operated by Navigator Tissue Aveiro, S.A., which is currently the
largest Portuguese producer and the third in the Iberian Peninsula, with a production and
transformation capacity of 130 thousand tons and 120 thousand tons.
Also, in 2015, the Company sold to its indirect subsidiary Navigator Pulp Setúbal, S.A. the industrial
assets used in the production of BEKP at the Setúbal industrial complex.
On 6 February 2016, the PortucelSoporcel Group changed its corporate brand to The Navigator
Company. This new corporate identity represents the union of companies with a history of more
than 60 years, aiming to give the Group a more appealing and modern image.
Following this event, and after approval in the General Shareholder’s Meeting, held on 19 April 2016,
Portucel S.A. changed its designation to The Navigator Company, S.A.
Also, in 2016, the Company carried out a capital increase in kind in Enerpulp - Cogeração Energética
da Pasta, S.A., through the delivery of the two biomass power generation plants located at the
Setúbal and Aveiro industrial sites, and also carried out a capital increase in kind in Navigator
Parques Industriais, S.A. through the incorporation of the industrial land and buildings located in
Aveiro and Setúbal.
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On 1 January 2017, the Company started to concentrate its sales of paper, cellulose pulp and Tissue
products, becoming the Group's product distributor. As a result, it quickly became one of the main
national exporters, and certainly the one with the highest added value for the national economy.
In October 2017, it started to centralise supplies to the Group, with the Group's pulp producers
starting to sell pulp exclusively to Navigator, which supplies the Group's paper producers, in addition
to the sales to the market it had already been developing. As from January 2018, it strengthened
this new activity, centralising its foreign purchases and the supply of most of the raw materials used
in the production process.
Also, in 2017, Navigator started to prepare its separate financial statements in accordance with IFRS
- International Financial Reporting Standards.
Thus, from 2017 onwards, and with reinforcement in 2018, the Company focused its activities on
selling paper and related products, supplying industrial products, as well as providing administration
and management services to its direct and indirect subsidiaries, and on managing its shareholdings.
In addition, the Company manages the brands of the former Papéis Inapa, S.A., rents equipment
and transfers personnel within the group.
The Navigator Company group’s main business is the production and sale of writing and printing
uncoated woodfree paper (UWF) and domestic consumption paper (Tissue), as well as pulp, and it
is present in the whole value-added chain, from research and development of forestry and
agricultural production, to the purchase of wood and the production and sale of bleached eucalyptus
kraft pulp – BEKP and electric and thermal energy, as well as its commercialisation.
A more detailed description of the activity in each business line of Navigator is disclosed in
Note 2.1 - Revenue and segment reporting.
Navigator is included in the consolidation perimeter of Semapa – Sociedade de Investimento e
Gestão, SGPS, S.A., the Parent Company, and Sodim - SGPS, S.A., the final controlling entity.
1.2. NAVIGATOR STRATEGY UPDATE
The Navigator Company Group's strategic thinking has led it to move decisively into the production
of new packaging products, developing a new business area in a fast-growing segment and
responding to the need felt worldwide to reduce consumption of plastics, namely single-use plastics,
confirming its role in replacing plastics with sustainable materials.
From Fossil to Forest - a strategy aligned with the purpose of creating sustainable value, for its
Shareholders, and for society as a whole, leaving future generations a better planet. Through
natural, recyclable and biodegradable sustainable products and solutions which contribute upstream
to carbon fixing, oxygen production, biodiversity protection, soil formation and the fight against
climate change, Navigator has decided to invest in making safer and more hygienic packaging paper
available to the food industry without the risks of contamination by bacteria, microorganisms and
even dangerous substances that recycled fibre typically contains. With a unique texture and unique
printing performance, these products are resistant and fully in line with the concept of sustainable
shelf ready packaging.
This new development strategy foresees a gradual growth and will allow to take advantage, in this
first phase, of Setúbal's PM1 and PM3 paper machines, which are smaller but with a great production
2021 Consolidated Annual Report
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flexibility, creating the opportunity for future conversions or a greenfield investment in new
machines.
In 2021 sales of over Euro 40 million were achieved for the packaging sector, serving the bag,
flexible packaging and corrugated cardboard manufacturing industries. The Company's aim is to
gradually increase production until it reaches around 200,000 tonnes in 2025/2026. The Capex
forecasted in this first phase for the production of these products is approximately Euro 10-12
million, per year, in the coming years.
1.3. IMPACTS OF THE COVID-19 PANDEMIC
Navigator has continued to monitor the evolution of this public health emergency on an ongoing
basis, with constant updates of its contingency plan in line with guidance from the Portuguese
Directorate-General of Health and the Portuguese Government.
In a highly adverse environment, marked by the pandemics strong impact on demand for its
products, Navigator demonstrated great flexibility and resilience in its business model, adjusting
swiftly to changes in the market and making significant adjustments to its entire fixed and variable
cost base.
Navigator continues to evaluate the potential impacts on its financial position, performance and cash
flows of the Group arising from the decline in economic activity as a result of the COVID-19
pandemic, namely the impacts on significant accounting estimates and judgements. No evidence of
impairment resulted from this analysis.
Actuarial assumptions
The Company assessed the discount rate applicable to the defined benefit plan for employees and
other post-employment benefits. The definition of the rate used to discount the liabilities (technical
interest rate) is based on yield curves of highly rated bonds with a maturity consistent with the
duration of the plan's liabilities. As a result of this assessment and based on the actuarial study as
at 31 December 2021, Navigator kept the discount rate at 1.25%, in order to reflect the decrease
in reference interest rates. The Company presents in Note 7.2 a sensitivity analysis that allows
assessing the impact of a possible change in the discount rate.
Inventories
In view of the impacts on demand, namely at the UWF level, the Company considers that given the
mark-ups charged during the pandemic, the net realisable value of its inventories is higher than the
book value and concluded that no adjustments to the book value are necessary.
Recoverability of Trade and other receivables
Impairment losses are recorded based on the simplified model provided for in IFRS 9, recording
expected losses until maturity. In Navigator, the impacts of IFRS 9 on the consolidated statement
of financial position are low considering that a significant part of its sales are either insured or
adequately covered by collaterals.
Nevertheless, the Company periodically assesses the expected credit losses and the impacts on all
financial assets measured at amortised cost. In this regard, the Company assessed the current
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exposure to credit risk and the potential impact of future economic forecasts and concluded that the
impact of this component is small.
Liquidity
The Company currently has a comfortable liquidity position as a result of a significant increase in its
short-term assets and careful management of working capital.
It is important to highlight the following measures, mainly in 2020:
• In order to strengthen the financial and liquidity position, several short-term funding operations were
carried out via commercial paper, which resulted in the creation of a liquidity safety net, appropriate
to the COVID-19 context (Note 5.7);
• Containment of the rate of implementation of the investment plan;
• Implementation of a confirming programme to extend payment deadlines without, however, impacting
Suppliers.
Navigator has been working and will continue to work thoroughly within its reach, namely in its
operational and commercial planning, cost efficiency, cash flow allocation and effective liquidity
management to ensure it remains a going concern and the health of its Employees.
1.4. SUBSEQUENT EVENTS
1.4.1. U.S. Antidumping Proceeding: sunset review
After a period of five years since the beginning of the anti-dumping proceeding, Navigator requested
in 2021 a so-called "sunset review" procedure to reassess whether the proceeding should be
maintained or discontinued. The US authorities conducted a full review of the anti-dumping
proceeding on UWF paper imports to the United States that were the subject of the original order,
including imports from Portugal, with Navigator actively participating in the proceeding.
In January 2022, the North American authorities determined the continuation of the anti-dumping
proceeding for another 5 years, despite the continued increase in Navigator's prices in the North
American market and the reduced supply in this market by local producers.
1.4.2. Sustainalytics ESG Risk Rating 2021
The annual ESG (Environmental, Social and Governance) performance rating was published in
January 2022, and Navigator obtained a score of 14.3, placing it in 3rd place out of a total of 81
global companies belonging to the Paper & Forestry cluster of industries, and in 3rd place in the
subset of 60 global companies belonging to the Paper & Pulp cluster. The assessment and good
positioning in this ranking reflect the continuous work carried out by the Company to integrate
sustainability as a priority in its business model, demonstrating its ability to anticipate and manage
ESG risks in the course of its operations.
1.4.3. Military conflict in Ukraine and economic sanctions imposed on the Russian
Federation
On 21 February 2022, the Russian Federation officially recognised two breakaway republics in
eastern Ukraine and authorised the use of military forces in that territory. On 24 February, Russian
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troops invaded Ukraine and a widespread military conflict began in this country entailing high
material and human losses, leading to massive population displacements.
In response, multiple jurisdictions, including the European Union, United Kingdom, Switzerland,
United States of America, Canada, Japan and Australia, condemned this conflict and initiated the
application of several economic sanctions against Russia, several of its economic agents and, in
some cases, Belarus.
Further sanctions may be implemented in the short term and could cover more individuals, entities
and a wider range of goods and services. Moreover, Russia has also begun to retaliate with economic
measures and, at the international level, a growing number of companies have announced voluntary
measures to limit their business with Russia.
Navigator has thus decided to halt the sale of its products in the markets of Russia and Belarus and
is following and continuously monitoring the situation in the markets where it operates
geographically and throughout the supply chain - from the supply of wood, energy, raw and
subsidiary materials (including logistical issues), in technical and support services provided by
foreign companies and outsourcing service providers, amongst others. The Company is convinced
that in view of the weight of the markets of Russia and Ukraine in the Company's sales, which
represent less than 1% as at the period ended 31 December 2021, and the fact that these markets
do not directly affect the supply chain, the Company's direct exposure to the markets of Ukraine and
Russia is not significant.
With regard to the international economic context, a deterioration of the current economic
environment is expected, which is forecasted to be one of high uncertainty and rapid evolution, so
it is not possible to estimate with reasonable confidence the possible impacts, if any, on the
Company's activity. According to the accounting standards, these events, which occurred after the
balance sheet date, were considered as non-adjustable subsequent events, and therefore the
assumptions made by the Board of Directors for the purpose of assessing the impairment and
recoverability of the Company's assets as at 31 December 2021 do not take into account the
potential effect of these events.
1.5. BASIS FOR PREPARATION
1.5.1. Authorisation to issue financial statements
These financial statements were approved by the Board of Directors on 9 March 2022. However,
they are still subject to approval by the General Shareholders’ Meeting, in accordance with the
Portuguese commercial legislation.
The Company’s senior management, which are the members of the Board of Directors who sign this
report, declare that, to the best of their knowledge, the information contained herein was prepared
in compliance with the applicable accounting standards, providing a true and fair view of the assets
and liabilities, the financial position and results of the Company.
1.5.2. Accounting Standards
The separate financial statements for the period ended 31 December 2021 were prepared in
accordance with the International Financial Reporting Standards (IFRS), effective 1 January 2021
and as adopted by the European Union.
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1.5.3. Presentation currency and transactions in a currency other than the
presentation currency
The items included in the Separate Financial Statements are measured using the currency of the
economic environment in which the entity operates (functional currency).
These financial statements are presented in Euro, which is the Group’s functional and reporting
currency.
Transactions in currencies other than Euro are translated into the functional currency using the
exchange rates at the date of the transactions (Note 8.1.1).
The currency differences arising from differences between the exchange rates ruling at the
transaction date and those ruling on collection, payment or at the separate statement of financial
position date, are recorded as income and expenses in the period (Note 5.10).
The amounts recorded in profit or loss of subsidiaries were translated using the exchange rates
prevailing at the dates of the transactions. Where this is not possible, or where the cost of such a
procedure exceeds the benefits to be derived therefrom, they have been translated at the average
exchange rate for the period. The differences resulting from the application of these rates compared
with the previous values were reflected as a separate component of Equity, under Other reserves
(Note 5.5).
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Exchange rates used
1.5.4. Basis for measurement
The notes to the separate financial statements have been prepared on a going concern basis from
Navigator's books and accounting records and based on historical cost, except for financial
instruments measured at fair value through profit or loss or at fair value through other
comprehensive income (Note 8.3), in which derivative financial instruments are included (Note 8.2).
31-12-2021 31-12-2020
Valuation /
(Devaluation)
GBP (Sertling pound)
Average exchange rate for the period 0.86 0.89 3.38%
Closing exchange rate for the period 0.84 0.90 6.53%
USD (American dollar)
Average exchange rate for the period 1.18 1.14 (3.55%)
Closing exchange rate for the period 1.13 1.23 7.70%
PLN (Polish zloti)
Average exchange rate for the period 4.57 4.44 (2.75%)
Closing exchange rate for the period 4.60 4.56 (0.82%)
SEK (Swedish krona)
Average exchange rate for the period 10.15 10.48 3.23%
Closing exchange rate for the period 10.25 10.03 (2.15%)
CZK (Czech koruna)
Average exchange rate for the period 25.64 26.46 3.08%
Closing exchange rate for the period 24.86 26.24 5.27%
CHF (Swiss franc)
Average exchange rate for the period 1.08 1.07 (0.99%)
Closing exchange rate for the period 1.03 1.08 4.36%
AUD (Australian dollar)
Average exchange rate for the period 1.57 1.65 4.83%
Closing exchange rate for the period 1.56 1.59 1.77%
MZM (Mozambican metical)
Average exchange rate for the period 77.75 80.23 3.10%
Closing exchange rate for the period 78.09 92.92 15.96%
MAD (Moroccan dirham)
Average exchange rate for the period 10.67 10.82 1.33%
Closing exchange rate for the period 10.52 10.94 3.83%
NOK (Norway kroner)
Average exchange rate for the period 10.16 10.72 5.22%
Closing exchange rate for the period 9.99 10.47 4.60%
MXN (Mexican peso)
Average exchange rate for the period 23.99 24.52 2.18%
Closing exchange rate for the period 23.14 24.42 5.21%
AED (Dirham)
Average exchange rate for the period 4.34 4.19 (3.54%)
Closing exchange rate for the period 4.16 4.51 7.70%
ZAR (South African rand)
Average exchange rate for the period 17.48 18.77 6.87%
Closing exchange rate for the period 18.06 18.02 (0.23%)
RUB (Russian roubles)
Average exchange rate for the period 87.15 82.72 (5.35%)
Closing exchange rate for the period 85.30 91.47 6.74%
BRL (Brazilian real)
Average exchange rate for the period 6.38 5.89 (8.21%)
Closing exchange rate for the period 6.31 6.37 0.99%
EGP (Egyptian pound)
Average exchange rate for the period 18.55 18.62 0.40%
Closing exchange rate for the period 17.82 18.63 4.34%
TRY (Turkish lira)
Average exchange rate for the period 10.51 8.05 (30.51%)
Closing exchange rate for the period 15.23 9.11 (67.16%)
2021 Consolidated Annual Report
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1.5.5. Comparability
These financial statements are comparable in all material respects with those of the previous year.
1.6. NEW IFRS ADOPTED AND TO BE ADOPTED
1.6.1. Other standards, amendments and interpretations adopted or to be
adopted
Standards, amendments and interpretations adopted in 2021
No impacts on the financial statements
Amendment
Date of
application
Standards and amendments endorsed by the European Union
COVID-19-Related
Rent Concessions
(Amendment to IFRS
16)
In May 2020, the International Accounting Standards Board issued
COVID-19-Related Rent Concessions, which amended IFRS 16
Leases.
If certain conditions are met, the Amendment would permit lessees,
as a practical expedient, not to assess whether particular COVID-19-
related rent concessions are lease modifications. Instead, lessees
that apply the practical expedient would account for those rent
concessions as if they were not lease modifications, so that, for
example, the amount of rent forgiven on or before 30 June 2021 is
taken to income the same year that the concession is granted,
instead of being allocated over the duration of the contract as would
be the case were the practical expedient not allowed.
The Amendment shall be applied for annual reporting periods
beginning on or after 1 June 2020.
1 June 2020
Interest rate
benchmark reform -
Phase 2 (amendments
to IFRS 9, IAS 39,
IFRS 7, IFRS 4 and
IFRS 16)
In August 2020, the IASB issued the interest rate benchmark reform
- Phase 2, which amends IFRS 9 Financial Instruments, IAS 39
Financial Instruments: Recognition and Measurement, IFRS 7
Financial Instruments: Disclosures, IFRS 4 Insurance Contracts and
IFRS 16 Leases.
The objective of the Amendments is to assist entities with providing
useful information to users of financial statements and to support
preparers in applying IFRS Standards when changes are made to
contractual cash flows or hedging relationships, as a result of the
transition from an IBOR benchmark rate to alternative benchmark
rates, in the context of the ongoing risk-free rate reform (IBOR
reform). The amendments are the result of the second phase of the
IASB project addressing the accounting impacts of the IBOR reform,
which gave rise to the Interest Rate Benchmark Reform
(Amendments to IFRS 9, IAS 39 and IFRS 7) issued by the IASB on
26 September 2019. They complement the first phase of the project
that addressed the pre-replacement accounting impacts of the IBOR
reform and were issued by the IASB in 2019.
The amendments shall be applied retrospectively for annual periods
beginning on or after 1 January 2021.
1 January
2021
Extension of the
Temporary Exemption
from Applying IFRS 9
(Amendments to IFRS
4)
IASB has issued the Extension of the Temporary Exemption from
Applying IFRS 9 (Amendments to IFRS 4) on 25 June 2020.
The objective of the Amendments is to extend the expiry date of the
temporary exemption from applying IFRS 9 by two years (i.e. from
2021 to 2023) in order to align the effective dates of IFRS 9 Financial
Instruments with IFRS 17 Insurance Contracts.
1 January
2021
2021 Consolidated Annual Report
13/04/2022 343
Standards, amendments and interpretations to be adopted in subsequent periods
No impacts on the financial statements
Amendment
Date of
application
Standards and amendments endorsed by the European Union which the Company has
opted not to apply early
Reference to the
Conceptual Framework
(Amendments to IFRS
3)
In May 2020 the IASB issued Reference to the Conceptual Framework,
which made amendments to IFRS 3 Business Combinations.
The amendments updated IFRS 3 by replacing a reference to an old
version of the Board’s Conceptual Framework for Financial Reporting
with a reference to the latest version, which was issued in March
2018.
The Amendments shall be applied to business combinations for which
the acquisition date is on or after the beginning of the first annual
reporting period beginning on or after 1 January 2022. Earlier
application is permitted if at the same time or earlier an entity also
applies all the amendments made by Amendments to References to
the Conceptual Framework in IFRS Standards, issued in March 2018.
1 January
2022
Property, Plant and
Equipment — Proceeds
before Intended Use
(Amendments to IAS
16 Property, Plant and
Equipment)
In May 2020, the IASB issued Property, Plant and Equipment—
Proceeds before Intended Use, which made amendments to IAS 16
Property, Plant and Equipment.
The Amendments would prohibit deducting from the cost of an item
of property, plant and equipment any proceeds from selling items
produced while bringing that asset to the location and condition
necessary for it to be capable of operating in a manner intended by
the Board of Directors. Instead, an entity would recognise those sales
proceeds in profit or loss.
The amendments shall be applied retrospectively for annual periods
beginning on or after 1 January 2022, with earlier application
permitted.
1 January
2022
Onerous Contracts —
Cost of Fulfilling a
Contract
In May 2020, the IASB issued Onerous Contracts — Cost of Fulfilling
a Contract, which made amendments to IAS 37 Provisions,
Contingent Liabilities and Contingent Assets.
The objective of the Amendments is to clarify the requirements of IAS
37 on onerous contracts regarding the assessment of whether, in a
contract, the unavoidable costs of meeting the obligations under the
contract exceed the economic benefits expected to be received under
it.
The Amendments shall be applied for annual periods beginning on or
after 1 January 2022, with earlier application permitted.
1 January
2022
Annual Improvements
to IFRS Standards
2018-2020
On 14 May 2020, the IASB issued Annual Improvements to IFRS
Standards 2018–2020 containing the following amendments to
IFRSs:
(a) permit an entity that is a subsidiary, associate or joint venture,
who becomes a first-time adopter later than its parent and elects to
apply paragraph D16(a) of IFRS 1 First-time Adoption of International
Financial Reporting Standards, to measure the cumulative translation
differences using the amounts reported by the parent, based on the
parent’s date of transition to IFRS;
(b) clarify that the reference to fees in the 10 per cent test includes
only fees paid or received between the borrower and the lender,
including fees paid or received by either the borrower or lender on
the other’s behalf (IFRS 9);
(c) remove the potential confusion regarding the treatment of lease
incentives applying IFRS 16 Leases as was illustrated in Illustrative
Example 13 accompanying IFRS 16; and
(d) remove the requirement in paragraph 22 of IAS 41 Agriculture for
entities to exclude cash flows for taxation when measuring fair value
applying IAS 41.
The Amendments shall be applied for annual periods beginning on or
after 1 January 2022, with earlier application permitted.
1 January
2022
2021 Consolidated Annual Report
13/04/2022 344
Amendment
Date of
application
Clarification
requirements for
classifying liabilities
as current or non-
current (amendments
to IAS 1 –
Presentation of
Financial Statements)
The IASB issued on 23 January 2020 an amendment to IAS 1
Presentation of Financial Statements to clarify how to classify debt
and other liabilities as current and non-current.
The amendments clarify an IAS 1 criteria for classifying a liability as
non-current: the requirement for an entity to have the right to defer
the liability’s settlement at least 12 months after the reporting period.
The amendments aim to:
a. specify that an entity's right to defer settlement must exist
at the end of the reporting period;
b. clarify that the classification is not affected by the Board's
intentions or expectations as to whether the entity will
exercise its right to postpone settlement;
c. clarify how loan conditions affect classification; and
d. clarify the requirements to classify the liabilities that an
entity will settle, or may settle, by issuing its own equity
instruments.
This amendment is effective for periods starting on 1 January 2023.
1 January
2023
Amendments to IAS 1
Presentation of
Financial Statements
and IFRS Practice
Statement 2:
Disclosure of
Accounting policies
Following feedback that more guidance was needed to help companies
decide what accounting policy information should be disclosed, the
IASB issued on 12 February 2021 amendments to IAS 1 Presentation
of Financial Statements and IFRS Practice Statement 2 Making
Materiality Judgements.
The key amendments to IAS 1 include: i) requiring companies to
disclose their material accounting policies rather than their significant
accounting policies; ii) clarifying that accounting policies related to
immaterial transactions, other events or conditions are themselves
immaterial and as such need not be disclosed; and iii) clarifying that
not all accounting policies that relate to material transactions, other
events or conditions are themselves material to a company’s financial
statements.
The IASB also amended IFRS Practice Statement 2 to include
guidance and two additional examples on the application of
materiality to accounting policy disclosures. The amendments are
consistent with the refined definition of material:
“Accounting policy information is material if, when considered
together with other information included in an entity’s financial
statements, it can reasonably be expected to influence decisions that
the primary users of general-purpose financial statements make on
the basis of those financial statements”.
The amendments are effective from 1 January 2023 but may be
applied earlier.
1 January
2023
Standards and amendments not yet endorsed by the European Union
Amendments to IAS 8
Accounting policies,
Changes in Accounting
Estimates and Errors:
Definition of
Accounting Estimates
The IASB has issued amendments to IAS 8 Accounting Policies,
Changes in Accounting Estimates and Errors to clarify how companies
should distinguish changes in accounting policies from changes in
accounting estimates, with a primary focus on the definition of and
clarifications on accounting estimates.
The amendments introduce a new definition for accounting estimates:
clarifying that they are monetary amounts in the financial statements
that are subject to measurement uncertainty.
The amendments also clarify the relationship between accounting
policies and accounting estimates by specifying that a company
develops an accounting estimate to achieve the objective set out by
an accounting policy. The effects of changes in such inputs or
measurement techniques are changes in accounting estimates.
The amendments are effective for periods beginning on or after 1
January 2023, with earlier application permitted, and will apply
prospectively to changes in accounting estimates and changes in
accounting policies occurring on or after the beginning of the first
annual reporting period in which the company applies the
amendments.
1 January
2023
2021 Consolidated Annual Report
13/04/2022 345
Amendment
Date of
application
Amendments to IAS
12: deferred tax
related to assets and
liabilities arising from
a single transaction
The IASB issued amendments to IAS 12 Income Taxes on 7 May 2021..
The amendments require companies to recognise deferred tax on
transactions that, on initial recognition, give rise to equal amounts of
taxable and deductible temporary differences.
In specified circumstances, companies are exempt from recognising
deferred tax when they recognise assets or liabilities for the first time.
Previously, there had been some uncertainty about whether the
exemption applied to transactions such as leases and
decommissioning obligations—transactions for which companies
recognise both an asset and a liability. The amendments clarify that
the exemption does not apply and that companies are required to
recognise deferred tax on such transactions. The aim of the
amendments is to reduce diversity in the reporting of deferred tax on
leases and decommissioning obligations.
The amendments are effective for annual reporting periods beginning
on or after 1 January 2023. Earlier application is permitted.
1 January
2023
IFRS 17 — Insurance
Contracts
The IASB issued on 18 May 2017 a standard that superseded IFRS 4
and completely reformed the treatment of insurance contracts. The
standard introduces significant changes to the way in which the
performance of insurance contracts is measured and presented with
various impacts also at the level of the financial position. The standard
expected to be effective for annual periods beginning on or after 1
January 2023.
1 January
2023
1.7. SIGNIFICANT ESTIMATES AND JUDGEMENTS
The preparation of separate financial statements requires the Board of Directors to make judgements
and estimates that affect the amount of revenue, costs, assets, liabilities and disclosures at the date
of the statement of financial position. To that effect, the Board of Directors' estimates and
judgements are based on:
(i) the best information and knowledge of current events and in certain cases on the reports of
independent experts; and
(ii) the actions that the Company considers it may have to take in the future.
On the date on which the operations take place, the outcome could differ from those estimates.
Significant estimates and judgements
The estimates and assumptions which present a significant risk of generating a material adjustment
to the book value of assets and liabilities in the following financial period are presented below:
Estimates and judgements
Notes
Uncertainty over Income Tax Treatments
6.1 - Income tax for the period
6.2 - Deferred taxes
Recognition of provisions
9.1 - Provisions
Valuation of financial investments
10.1 – Investments in subsidiaries
2021 Consolidated Annual Report
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2. OPERATIONAL PERFORMANCE
2.1. REVENUE AND SEGMENT REPORTING
Accounting policies
Within the Navigator Group, the Company operates as a trader of the Group's products and supplier
of most of the Group's raw materials.
In preparing the separate financial statements, the accounting policies used by the Company in the
areas of revenue and segment reporting are consistent with the policies applied in the consolidated
financial statements, as described below.
Navigator Group business areas
The Navigator Group’s main business is the production and sale of writing and printing uncoated
woodfree paper (UWF) and domestic consumption paper (tissue) as well as pulp, and it is present in
the whole value-added chain, from research and development of forestry and agricultural production,
to the purchase and sale of wood and the production and sale of bleached eucalyptus kraft pulp –
BEKP – and electric and thermal energy, as well as its commercialisation.
The Navigator Group has four industrial plants. BEKP, energy and UWF paper are produced in two
plants located in Figueira da Foz and Setúbal. BEKP energy and tissue paper are also produced in a
plant located in Aveiro and the fourth plant, located in Vila Velha de Ródão, where tissue paper is
produced.
Wood and cork are produced from woodlands from subsidiaries or leased in Portugal and Spain, and
also form granted lands in Mozambique. The production of cork and pine wood are sold to third
parties while the eucalyptus wood is mainly consumed in the production of BEKP.
A significant portion of the Group’s own BEKP production is consumed in the production of UWF and
tissue paper. Sales of BEKP, UWF and tissue paper are made to more than 130 countries around the
world.
Energy, heat and electricity are mainly produced from biofuels in 3 cogeneration units, integrated in
the production of pulp. Heat production is used for internal consumption while electricity is sold to
the national energy grid. The Navigator Group also owns another two cogeneration units using
natural gas, integrated in the production of paper in Figueira da Foz and in Setúbal, and two separate
units using biofuel, with the output of the latter two sold to the national energy grid. It also has
three photovoltaic plants for self-consumption.
Segment reporting
The Company classifies an operating segment under IFRS 8 as a component of the Company that
engages in business activities, from which it may obtain income and incur expenses, and whose
operating profit or loss is regularly reviewed by the Executive Committee, which is the chief operating
decision maker for the purposes of making decisions about resources to be allocated to the segment
and assessing its performance, and for which separate financial information is available.
2021 Consolidated Annual Report
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The information used in segment reporting corresponds to the financial information prepared by the
Company.
Although the Group has defined a series of segments, Navigator is only responsible for the marketing
of the products produced by its subsidiaries and for the management of those subsidiaries.
Therefore, it is considered that all the Company's activities fall into one single segment and so no
further breakdown is required.
Revenue
Revenue is presented by goods and services sold and by geographical area, based on the country of
destination of the goods and services sold by the Company.
Commercial contracts with Customers refer essentially to the sale of goods such as tissue paper and
pulp, and to an extent, to the transportation inherent to those goods, when applicable.
Revenue recognition in each operating segment is described as follows:
BEKP Pulp
Pulp revenue results from sales made to the Company's subsidiaries and international
producers of paper and decoration. Revenue is recognised at a specific time, by the amount
of the performance obligation satisfied, the price of the transaction corresponding to a fixed
amount invoiced on the basis of quantities sold, less cash discounts and quantity discounts,
which are reliably determinable. On the export side, the transfer of control of the products
generally occurs when the products are transferred to the control of the customer, in
accordance with the negotiated Incoterms.
The Company is solely responsible for selling BEKP pulp produced by Navigator Group
companies, intended for sale to the market and to the Group's UWF paper and tissue
producers.
UWF
Paper revenue refers to sales made to retail Customers (B2C) or Commercial Distributors
(B2B) which include large distributors, wholesalers or commercial operators, as well as
producers and processors of paper products. Revenue is recognised at a specific time, on the
date of delivery of the product to the customer when the transfer of control occurs, by the
amount of the performance obligation satisfied, and the price of the transaction corresponds
to a fixed amount invoiced according to the quantities sold, less cash discounts and quantity
discounts, which are reliably determinable.
Tissue
Tissue revenue results from sales of tissue paper produced for the private label of national
and international retail chains. Revenue is recognised at a specific time, by the amount of
the performance obligation satisfied, the price of the transaction corresponding to a fixed
amount invoiced on the basis of quantities sold, less cash discounts and quantity discounts,
which are reliably determined. Revenue is recognised against the delivery of the product, at
which time the transfer of control over the product is deemed to take place.
Central
purchasing
operations
The revenue from goods purchased from producers and distributors to supply the Group's
plants that use them as raw materials for processing is recognised on the date of delivery of
the product to the customer, for the amount of the performance obligation satisfied, where
the transaction price corresponds to a fixed amount invoiced based on the quantities sold
that can be reliably determined.
2021 Consolidated Annual Report
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Detail of revenue by materials/services groups and geographical areas
During the periods ended 31 December 2021 and 2020, the revenue from sales of goods and
rendering of services is detailed as follows:
In 2021, the Company recorded a positive evolution in turnover, and the year was marked by an
increase in demand for UWF, particularly in Europe, after a year of significant decline in global paper
consumption as a result of the COVID-19 pandemic.
Throughout 2021, in addition to growth in paper sales volumes, successive price increases were
achieved for UWF, pulp and tissue, along with significant optimisation of the sales mix.
2.2. OTHER OPERATING INCOME
For the periods ended 31 December 2021 and 2020, Other operating income is detailed as follows:
2021 2020
Sales
UWF Paper
Portugal 61,336,753 55,989,503
Rest of Europe 663,878,514 593,330,391
America 104,965,167 105,164,626
Rest of the world 292,813,637 205,807,035
1,122,994,072 960,291,555
Tissue Paper
Portugal 62,471,134 59,340,330
Rest of Europe 84,523,982 80,583,066
Rest of the world 5,960,980 8,065,349
152,956,096 147,988,744
BEKP pulp market
Portugal 2,857,768 4,058,511
Rest of Europe 134,392,260 92,978,608
Rest of the world 32,545,863 61,302,006
169,795,892 158,339,125
BEKP pulp for supplying subsidiaries
Portugal 568,118,228 341,144,548
568,118,228 341,144,548
Sales of goods - subsidiaries 276,315,409 240,731,971
Total sales 2,290,179,696 1,848,495,943
Services rendered
Management and administration services of subsidiaries 76,767,926 37,567,125
Total services rendered 76,767,926 37,567,125
Total revenue 2,366,947,621 1,886,063,068
Amounts in Euro
2021 2020
Gains on the disposal of intangible assets - CO
2
emission allowances - Related parties - 980,000
Gains on inventories 491,339 497,791
Compensation for claims 272,689 475,800
Discounts received on purchases 475,599 323,360
Operating grants 48,866 47,956
Sale of miscellaneous materials and services rendered - 33,520
Impairment reversal on receivables 44,011 27,950
Other operating income 758,299 1,272,828
2,090,803 3,659,206
Amounts in Euro
2021 Consolidated Annual Report
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Accounting policies
Operating grants
Government grants are recognised at their fair value and only when there is a reasonable assurance
that the grant will be received, and the Company will comply with all required conditions. Operating
grants, received with the purpose of compensating the Company for costs incurred, are
systematically recorded in the income statement during the periods in which the costs that those
grants are intended to compensate are recorded.
Grants – CO
2
Emission allowances
Grants related to CO
2
emission allowances are recognised as deferred income (Note 4.3.) and are recorded systematically in the
income statement during the periods in which the costs they are intended to offset are recognised.
2.3. OTHER OPERATING EXPENSES
2021 2020
Cost of goods sold and materials consumed (Note 4.1.2) 2,103,980,956 1,684,534,452
External services and supplies
Transportation of goods 137,488,303 99,732,257
Specialised work 65,028,640 56,980,835
Royalties 9,064,427 8,651,406
Fees 4,664,334 2,394,061
Insurance 1,246,160 1,780,739
Rentals 1,099,970 725,491
Fees 592,277 820,504
Advertising and marketing 730,259 651,847
Travel and accommodation 662,619 550,668
Communications 254,003 309,302
Materials 74,122 164,537
Energy and fluids 91,927 108,957
Subcontracts 30,453 91,915
Maintenance and repair 40,024 26,356
Other 82,900 239,405
221,150,420 173,228,279
Payroll costs (Note 7.1) 11,092,252 7,364,418
Other operating expenses
Donations 252,905 397,220
Membership fees 272,893 311,478
Indirect taxes 133,681 211,956
Other inventory losses (Note 4.1) 792,470 -
Impairment on inventories (Note 4.1.3) 1,988,828 -
Cash discounts granted 240,275 163,658
Losses on disposal of non-current assets 654,801 5,068
Impairment on receivables (Note 4.1.3) 127,605 249,846
Other operating expenses 1,265,918 34,718
5,729,375 1,373,943
Net provisions (Note 9.1) 1,138,500 2,013,378
Total operating expenses 2,341,953,003 1,866,501,093
Amounts in Euro
2021 Consolidated Annual Report
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The overall increase in costs borne by the Company is largely explained by the increase in sales in
2021, after a year in 2020 marked by the strong impact of the pandemic on demand, which led
Navigator to implement various cost-cutting measures.
The economic upturn, which has led to a recovery in paper consumption, with a positive impact on
the quantities sold by the Company, explains the increase in the cost of goods sold, as well as in the
caption Transportation of Goods, Royalties and Fees.
The increase in logistics costs also stems from the current logistical constraints ( scarcity of transport
and significant rise in freight costs) which are affecting the entire economy. Notwithstanding,
Navigator was able to operate at 100% without any disruption in supplies.
Audit fees
The services indicated as "Other assurance services" relate to the reporting of financial information,
verification services of the Sustainability Information and limited review of the interim balance sheet
for the purpose of early distribution of dividends. Other services relate to financial statements due
diligence.
The Board of Directors believes there are sufficient procedures to safeguard the independence of
auditors through the analysis carried out by the Supervisory Board of the work proposed and their
careful definition when they are contracted.
Expenses in the
period
Fees
invoiced
Expenses in the
period
Fees
invoiced
KPMG (SROC) and other entities belonging to the same network
Audit fees 104,746 128,838 125,140 81,183
Other reliability assurance services 87,875 108,086 - -
Other services 72,250 88,868 - -
264,871 325,791 125,140 81,183
Amounts in Euro
2021
2020
2021 Consolidated Annual Report
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3. INVESTMENTS
3.1. INTANGIBLE ASSETS
Movements in intangible assets
CO
2
allowances
The balance on 31 December 2020 corresponds to 263,750 CO
2
emission allowances acquired
through forward contracting in 2020, to which were added 31,250 allowances acquired directly in
the spot market.
CO
2
Allowances – movements of the period
Accounting policies
Intangible assets are stated at acquisition cost net of amortisation and impairment losses.
Amounts in Euro
CO
2
emission
allowances
Total
Gross amount
Balance as at 1 January 2020 550,000 550,000
Acquisitions 6,636,500 6,636,500
Disposals (550,000) (550,000)
Balance as at 31 December 2020 6,636,500 6,636,500
Acquisitions - -
Disposals (6,636,500) (6,636,500)
Balance as at 31 December 2021 - -
Accumulated amortisation and impairment losses
Balance as at 1 January 2020 - -
Balance as at 31 December 2020 - -
Balance as at 31 December 2021 - -
Balance as at 1 January 2020 550,000 550,000
Balance as at 31 December 2020 6,636,500 6,636,500
Balance as at 31 December 2021 - -
31-12-2021 31-12-2020
CO
2
allowances (units) - 295,000
Average unit value - 5.50
Market quotation n.a. 32.72
Amounts in Euro Tons Amount Tons Amount
Opening balance 295,000
6,636,500
100,000
550,000
CO
2
allowances acquired - - 295,000 6,636,500
CO
2
allowances sold (Note 2.2) (295,000) (6,636,500) (100,000) (550,000)
Closing balance - - 295,000
6,636,500
2021
2020
2021 Consolidated Annual Report
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The Group carries out impairment tests whenever events or circumstances may indicate that the
book value of an asset exceeds its recoverable amount, being any impairment recognised in the
income statement.
CO
2
Emission Rights
CO
2
emission Allowances attributed to the Group within the European Union Emissions Trading
Scheme (EU ETS) for the assignment of CO
2
emission allowances at no cost, gives rise to an
intangible asset for the allowances, a Government grant and a liability for the obligation to deliver
allowances equal to the emissions that have been made during the compliance period.
Emission allowances are only recorded as intangible assets when the Group is able to exercise
control. In such circumstances these are initially measured at fair value (Level 1). When the market
value of the emission allowances falls significantly below its book value and such decrease is
considered permanent, an impairment charge is booked for allowances which the group will not use
internally.
3.2. PROPERTY, PLANT AND EQUIPMENT
Movements in property, plant and equipment
Accounting policies
Recognition and initial measurement
Property, plant and equipment acquired up to 1 January 2004 (transition date to IFRS) are recorded
at acquisition cost, or revalued acquisition cost in accordance with generally accepted accounting
principles in Portugal until that date, net of amortisation and accumulated impairment losses.
Property, plant and equipment acquired after the transition date are shown at cost, less accumulated
depreciation and impairment losses.
Depreciation and impairment
We use the straight-line method from the moment the asset is available for use and using the rates
that best reflect their estimated useful life.
Basic Transportation Administrative
Amounts in Euro
equipment equipment equipment
Gross amount
Balance as at 1 January 2020
12,872 693,726 1,394,763 4,386,921 11,799,251 14,988,161 - 33,275,695
Acquisitions - - - - - - 15,028 15,028
Disposals - - - (30,050) - - - (30,050)
Balance as at 31 December 2020
12,872 693,726 1,394,763 4,356,871 11,799,251 14,988,161 15,028 33,260,672
Acquisitions - - - - - - - -
Disposals - - (2,085) (300,102) (3,680,850) (4,456,558) - (8,439,596)
Balance as at 31 December 2021
12,872 693,726 1,392,678 4,056,768 8,118,401 10,531,603 15,028 24,821,076
Accumulated depreciation and impairment losses
Balance as at 1 January 2020
- (33,190) (1,339,204) (4,200,225) (11,398,866) (14,508,535) - (31,480,020)
Depreciation and amortisation for the period (Note 3.4)
- (14,791) (14,932) (15,667) (46,236) (48,790) - (140,415)
Disposals - - - 24,982 - - - 24,982
Balance as at 31 December 2020
- (47,981) (1,354,136) (4,190,910) (11,445,102) (14,557,325) - (31,595,453)
Depreciation and amortisation for the period (Note 3.4)
- (14,791) (14,808) (13,987) (24,247) (21,490) - (89,322)
Disposals - - 844 275,728 3,425,939 4,069,693 - 7,772,204
Balance as at 31 December 2021
- (62,772) (1,368,100) (3,929,168) (8,043,410) (10,509,121) - (23,912,572)
Balance as at 1 January 2020
12,872 660,536 55,558 186,697 400,384 479,626 - 1,795,674
Balance as at 31 December 2020
12,872 645,745 40,627 165,961 354,149 430,837 15,028 1,665,219
Balance as at 31 December 2021
12,872 630,954 24,578 127,600 74,991 22,482 15,028 908,505
Land
Buildings and
other
constructions
Other property,
plant and
equipment
Assets under
construction
Total
2021 Consolidated Annual Report
13/04/2022 353
The residual values of the assets and respective useful lives are reviewed and adjusted when
necessary at the Statement of financial position date. When the carrying amount of the asset exceeds
its realisable value, the asset is written down to the estimated recoverable amount, and an
impairment charge is booked.
Subsequent costs
Scheduled maintenance expenses are considered a component of the acquisition cost of property,
plant and equipment and are fully depreciated by the next forecasted maintenance date.
All other repairs and maintenance costs are charged to the income statement in the financial period
in which they are incurred.
Write-offs and disposals
Gains or losses arising from write-offs or disposals are determined by the difference between the
proceeds from the disposals when applicable less transaction costs and the carrying amount of the
asset, and are recognised in the income statement as Other operating income (Note 2.2) or Other
operating expenses (Note 2.3).
3.3. RIGHT-OF-USE ASSETS
Movements in right-of-use assets
The item Buildings refers to the lease agreement entered into between The Navigator Company,
S.A. and Refundos - Sociedade Gestora de Fundos de Investimento Imobiliário, S.A. for the building
located at Avenida Fontes Pereira de Melo, in Lisbon, for use as an office.
Average useful life
Buildings and other constructions 12 – 30
Basic equipment 6 – 25
Transportation equipment 4 – 9
Administrative equipment 4 – 8
Other property, plant and equipment 4 – 10
Amounts in Euro
Buildings Vehicles Total
Gross amount
Balance as at 1 January 2020
4,173,841 26,983 4,200,825
Acquisitions 103,667 - 103,667
Adjustments, transfers and write-offs - 12,685 12,685
Balance as at 31 December 2020
4,277,508 39,668 4,317,176
Acquisitions - - -
Adjustments, transfers and write-offs - 4,645 4,645
Balance as at 31 December 2021
4,277,508 44,313 4,321,821
Accumulated depreciation and impairment losses -
Balance as at 1 January 2020
(495,902) (12,530) (508,432)
Depreciation and amortisation for the period (Note 3.4) (508,928) (13,002) (521,929)
Balance as at 31 December 2020
(1,004,830) (25,531) (1,030,361)
Depreciation and amortisation for the period (Note 3.4) (510,028) (12,773) (522,801)
Balance as at 31 December 2021
(1,514,857) (38,305) (1,553,162)
Balance as at 1 January 2020
3,677,939 14,454 3,692,393
Balance as at 31 December 2020
3,272,678 14,137 3,286,815
Balance as at 31 December 2021
2,762,651 6,008 2,768,659
2021 Consolidated Annual Report
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Accounting policies
At the date the lease enters into force, the Company recognises right-of-use assets at its cost, which
corresponds to the initial amount of the lease liability adjusted for: i) any prepayments; ii) lease
incentives received; and iii) initial direct costs incurred.
To the right-of-use asset, the estimate of removing and/or restoring the underlying asset and/or its
location may be added, when required by the lease agreement.
The right-of-use asset is subsequently depreciated using the straight-line method, from the start
date until the lower between the end of the asset's useful life and the lease term. Additionally, the
right-of-use asset reduced of impairment losses, if any, and adjusted for any remeasurement of the
lease liability. The useful life considered for each class of right-of-use assets is equal to the useful
life of Property, plant and equipment (Note 3.2) in the same class when there is a call option, and
the Company expects to exercise it.
Short-term leases and low-value asset leases
The Company recognises payments for leases of 12 months or less and for leases of assets whose
individual acquisition value is less than USD 5,000 directly as operating expenses of the period (Note
2.3), on a straight-line basis.
3.4. DEPRECIATION, AMORTISATION AND IMPAIRMENT LOSSES
Amounts in Euro
2021 2020
Depreciation of property, plant and equipment for the period (Note 3.2) 89,322 140,415
Government grants charged-off (1,038) (1,074)
Depreciation of property, plant and equipment, net of grants charged-off
88,284 139,342
Depreciation of right-of-use assets for the period (Note 3.3)
522,801 521,929
611,085 661,271
2021 Consolidated Annual Report
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4. WORKING CAPITAL
4.1. INVENTORIES
4.1.1. Inventories - detail by nature
Amounts net of accumulated impairment losses
Inventories – distribution by geographical area
The Company's inventories include Euro 10,352,819 (2020: Euro 8,612,930) relating to UWF paper
and tissue paper for which invoices have already been issued but whose control has not been
transferred to Trade receivables.
As at 31 December 2021 and 2020, there are no inventories in which ownership is restricted and/or
pledged as collateral for liabilities.
4.1.2. Cost of goods sold and materials consumed in the period
Costs of goods and materials consumed by type
Amounts in Euro
Gross amount Impairment Net amount Gross amount Impairment Net amount
BEKP Pulp 4,005,792 - 4,005,792 1,561,643 - 1,561,643
UWF Paper 12,514,531 (1,615,825) 10,898,706 17,201,363 - 17,201,363
Tissue Paper 1,266,139 (372,860) 893,279 1,801,587 - 1,801,587
Goods to supply the Group's factories 2,750,862 (144) 2,750,718 2,021,093 - 2,021,093
Total
20,537,324 (1,988,828) 18,548,495 22,585,686 - 22,585,686
31-12-2021
31-12-2020
Amounts in Euro
31-12-2021
%
31-12-2020
%
Portugal 14,363,932 69.9% 11,294,786 50.0%
Rest of Europe 6,173,392 30.1% 11,290,900 50.0%
20,537,324 100.0% 22,585,686 100.0%
Amounts in Euro
2021 2020
Opening balance 22,585,686 24,821,721
Purchases 2,102,233,726 1,681,807,078
Gains /(losses) on inventories (Notes 2.2 and 2.3) (301,132) 491,339
Impairment gains/(losses) (Note 2.3) (1,988,828) -
Closing balance (18,548,495) (22,585,686)
Cost of goods sold and materials consumed (Note 2.3)
2,103,980,956 1,684,534,452
Amounts in Euro
2021 2020
BEKP Pulp - Sale to the market 162,302,396 141,432,541
BEKP Pulp - Incorporation into the Group 567,185,028 354,807,792
UWF Paper 1,036,754,808 880,295,455
Tissue Paper 147,476,502 149,330,893
Goods to supply the Group's factories 190,262,222 158,667,771
2,103,980,956 1,684,534,452
2021 Consolidated Annual Report
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4.1.3. Movements in impairment losses in inventories
The impairment losses in inventories recorded in 2021 are related to adjustments in the stock of
UWF and Tissue paper.
Accounting policies
Goods
The goods held by Navigator correspond essentially to eucalyptus pulp, UWF paper and tissue paper
acquired from its subsidiaries, for sale to the market. It also includes materials acquired from third
parties to supply subsidiaries as part of the Navigator Group's central purchasing functions.
The Company acts as the Navigator Group's central purchasing body, and most of the Group's
purchases of raw materials are made centrally by the Company, which then supplies the
manufacturing companies, except for wood supply.
Goods and raw materials are valued at the lower of their purchase cost or their net realisable value.
The purchase cost includes ancillary costs and it is determined using the weighted average cost as
the valuation method.
4.2. RECEIVABLES
The amounts above are net of accumulated impairment losses. Analysis of impairment for
receivables is presented in Note 8.1.4 - Credit risk.
i) State is detailed as follows:
As at the date of issuing this report, the full amount of VAT refunds requested has been received.
Amounts in Euro
2021 2020
Opening balance
(10,256) (10,256)
Increases (1,988,828) -
Reversals - -
Impact in profir or loss for the period (Note 2.3)
(1,988,828) -
Charge-off 10,256 -
Closing balance
(1,988,828) (10,256)
Amounts in Euro Non-current Current Total Non-current Current Total
Trade receivables - 178,899,757 178,899,757 - 115,144,261 115,144,261
Receivables - related companies (Note 10.2) - 612,402,309 612,402,309 - 556,892,987 556,892,987
State i) - 35,962,673 35,962,673 - 24,146,616 24,146,616
Tax consolidation - related parties (Note 10.2) - 35,390,055 35,390,055 - 28,542,277 28,542,277
Accrued income ii) - 1,291,884 1,291,884 - 21,476,730 21,476,730
Deferred expenses ii) - 107,002 107,002 - 43,333 43,333
Derivative financial instruments (Note 8.2) - 1,630,982 1,630,982 - 4,019,440 4,019,440
Post-employment plan (Note 7.2) - 444,631 444,631 - - -
Other iii) 6,684 858,676 865,361 6,684 - 6,684
6,684 866,987,969 866,994,654 6,684 750,265,643 750,272,328
31-12-2021
31-12-2020
Amounts in Euro
31-12-2021 31-12-2020
Value added tax - reimbursement requests 35,962,673 24,144,659
Value added tax - recoverable - 1,958
35,962,673 24,146,616
2021 Consolidated Annual Report
13/04/2022 357
ii) Accrued income and deferred expenses are detailed as follows:
iii) The amount recorded as non-current in 2021 and 2020 is related to a VAT guarantee in
connection with the Company's VAT registration in Switzerland.
Accounting policies
Trade and other receivables
Classification
Trade receivables balances result from the Company's main activities and the business model
followed is the collection of contractual cash flows.
Balances from other debtors generally assume the business model of collecting contractual cash
flows.
Initial measurement
At fair value.
Subsequent measurement
At amortised cost, net of impairment losses.
Impairment from Trade receivables
Impairment losses are recorded based on the simplified model provided for in IFRS 9, recording
expected losses until maturity. The expected losses are determined on the basis of the experience
of historical actual losses over a statistically significant period and representative of the specific
characteristics of the underlying credit risk (Note 8.1.4).
Impairment from other debtors
Impairment losses are recorded on the basis of the general estimated credit loss model of IFRS 9.
Amounts in Euro
31-12-2021 31-12-2020
Accrued income
Related parties (Note 10.2) 1,019,195 19,746,819
Interest receivable - 1,729,911
Other 272,689 -
1,291,884 21,476,730
Deferred expenses
Other 107,002 43,333
107,002 43,333
1,398,886 21,520,062
2021 Consolidated Annual Report
13/04/2022 358
4.3. PAYABLES
i) State is detailed as follows:
As at 31 December 2021 and 2020, there were no overdue debts to the State.
Accounting policies
Trade payables and other current liabilities are initially recorded at their fair value and subsequently
at amortised cost.
Amounts in Euro
31-12-2021 31-12-2020
Trade payables 66,873,047 103,435,376
Payables - related companies (Note 10.2) 1,021,874,914 774,329,862
Trade payables - current account 7,270 7,270
State i) 5,388,180 3,169,242
Tax consolidation (Semapa) 6,447,546 6,447,546
Other creditors 211,344 909,632
Derivative financial instruments (Note 8.2) 8,130,589 6,196,001
Accrued expenses - payroll 9,274,445 6,320,359
Accrued expenses - interest payable 6,711,797 5,167,352
Accrued expenses - logistics and sales commissions 12,473,917 6,313,130
Accrued expenses - related companies (Note 10.2) 1,482,570 -
Other accrued expenses 220,101 1,212,295
Deferred income - Operating grants (Note 2.2) 33,714 71,719
1,139,129,433 913,579,785
Amounts in Euro
31-12-2021 31-12-2020
Personal income tax withhold (IRS) 845,665 610,130
Contributions to the Work Compensation Fund (FCT) and to the Guarantee
Fund for Work (FGCT)
110 24,658
Value added tax 4,117,647 2,077,427
Social Security contributions 424,757 457,027
5,388,180 3,169,242
2021 Consolidated Annual Report
13/04/2022 359
5. CAPITAL STRUCTURE
5.1. CAPITAL MANAGEMENT
Capital management policy
For capital management purposes, the Company defines capital as including equity and net debt.
The Company's objectives regarding capital management are:
i. To safeguard its ability to continue in business and thus provide returns for Shareholders and
benefits for its remaining Stakeholders;
ii. To keep a solid capital structure to support the growth of its business; and
iii. To maintain an optimal capital structure that enables it to reduce the cost of capital.
In order to maintain or adjust its capital structure, the Company can adjust the amount of dividends
payable to its Shareholders, return capital to its Shareholders, issue new shares or sell assets to
lower its borrowings.
In line with the sector, the Company monitors its capital based on the gearing ratio, defined as the
proportion between net debt and total capital.
Net interest-bearing debt is calculated by adding the total amount of loans (including the current
and non-current portions as disclosed in the balance sheet) and deducting all cash and cash
equivalents. Total equity is calculated by adding shareholders’ equity (as shown in the Statement of
financial position), to interest-bearing net debt, and excluding treasury shares and non-controlling
interests.
The Company calculates the gearing ratio as follows:
5.2. SHARE CAPITAL AND THEASURY SHARES
The Navigator Company is a public company with its shares quoted on the Euronext Lisbon.
As at 31 December 2021, The Navigator Company, S.A.’s share capital of Euro 500,000,000 was
fully subscribed and is represented by 711,183,069 shares without nominal value (31 December
2020: 717,500,000 shares).
At the General Meeting held on 11 May 2021, a reduction of the Company's share capital from Euro
500,000,000 to Euro 495,597,957.49, the amount of the reduction being Euro 4,402,042.51, for a
Amounts in Euro
31-12-2021 31-12-2020
Interest-bearing liabilities (Note 5.6) 933,165,634 947,383,993
Cash and cash equivalents (Note 5.8) (354,336,647) (296,941,052)
Net debt
578,828,987 650,442,941
Equity 1,044,827,184 1,025,926,506
Treasury shares (Note 5.2) - 20,189,264
Equity excluding treasury shares 1,044,827,184 1,046,115,770
Total equity
1,623,656,171 1,696,558,711
Gearing
35.65% 38.34%
2021 Consolidated Annual Report
13/04/2022 360
special purpose, by cancellation of 6,316,931 treasury shares, without par value. The Company will
now have 711,183,069 ordinary shares outstanding, followed by a share capital increase from Euro
495,597,957.49 to Euro 500,000,000, the amount of the increase being Euro 4,402,042.51, with no
change in the number of shares, to be paid up by incorporation of free reserves (surplus of legal
reserve).
As at 31 December 2021 and 2020, the shareholders with qualified shareholdings in the Company’s
capital were as follows:
Navigator's shareholders
Treasury shares - movements
These shares were mainly acquired during 2008 and 2012 as well as in 2018 and 2019, and the
changes in the period were as follows:
As at 31 December 2021, Navigator did not hold any treasury shares (31 December 2020: Euro
20,189,264), the unit value of the share at that date being Euro 3.35 (31 December 2020: Euro
2.498) and the market capitalisation of the Company at this date amounted to Euro 2,382,463,281
(31 December 2020: Euro 1,792,315,000) compared to an equity, net of non-controlling interests,
of Euro 1,044,827,184 (31 December 2020: 1,025,926,506).
Designation No. of shares % No. of shares %
Shares without nominal value
Semapa, SGPS, S.A. 497,617,299 69.97% 497,617,299 69.35%
Treasury shares - 0.00% 6,316,931 0.88%
Floating shares 213,565,770 30.03% 213,565,770 29.77%
711,183,069 100% 717,500,000 100%
31-12-2021
31-12-2020
No. of shares
Book value
(Euro)
No. of shares
Book value
(Euro)
Treasury shares held at the beginning of the
period
6,316,931 20,189,264 6,316,931 20,189,264
Acquisition of treasury shares - - - -
Cancellation for the period (6,316,931) (20,189,264) - -
Treasury shares at the end of the period
- - 6,316,931 20,189,264
31-12-2021
31-12-2020
Amounts in Euro
Quantity Amount Quantity Amount
Treasury shares held in January 6,316,931 20,189,264 6,316,931 20,189,264
Cancellations
January - - - -
February - - - -
March - - - -
April - - - -
May (6,316,931) (20,189,264) - -
June - - - -
July - - - -
August - - - -
September - - - -
October - - - -
November - - - -
December - - - -
(6,316,931) (20,189,264) - -
Treasury shares held in December - - 6,316,931 20,189,264
2021
2020
2021 Consolidated Annual Report
13/04/2022 361
Accounting policies
Ordinary shares are classified in shareholders’ equity.
Costs directly attributable to the issue of new shares or other equity instruments are reported as a
deduction, net of taxes, from the proceeds of the issue.
Costs directly attributable to the issue of new shares or options for the acquisition of a new business
are deducted from the amount issued.
When such shares are subsequently disposed or reissued, any proceeds, net of the directly
attributable transaction costs and taxes, is directly reflected in the shareholders’ equity and not in
profit or loss for the period.
5.3. EARNINGS PER SHARE
Accounting policies
The basic earnings per share are determined based on the division of profits or losses attributable
to the ordinary shareholders of the Company/Group by the weighted average number of common
shares outstanding during the period.
For the purpose of calculating diluted earnings per share, the Company/Group adjusts the profits or
losses attributable to ordinary shareholders, as well as the weighted average number of outstanding
shares for the purposes of all potential dilutive common shares.
5.4. DIVIDENDS
Dividends and reserves distributed in the period
2021 2020
Profit attributable to Navigator's equity holders (Euro)
171,411,455 109,213,720
Total number of shares issued 711,183,069 717,500,000
Average treasury shares held for the period - (6,316,931)
Weighted average number of shares
711,183,069 711,183,069
Basic earnings per share (Euro)
0.241 0.154
Diluted earnings per share (Euro)
0.241 0.154
Amounts in Euro
Amount
approved
Dividends per
share (Euro)
Attributions in 2021
Distribution of retained earnings 99,565,630 0.140
Distribution of prepaid dividends 49,996,170 0.070
149,561,800
Attributions in 2020
Distribution of retained earnings 99,138,920 0.139
99,138,920
2021 Consolidated Annual Report
13/04/2022 362
At the Annual General Meeting held on 13 May 2021, The Navigator Company, S.A. approved to
distribute dividends in the amount of Euro 99,565,630.
On 16 December 2021 the Board of Directors of The Navigator Company, S.A. resolved to make an
advance on profits to Shareholders in the amount of Euro 49,996,170, equivalent to a gross amount
of Euro 0.0703 per share.
By resolution of the Extraordinary General Meeting held on 24 November 2020, The Navigator
Company, S.A. distributed retained earnings of Euro 99,138,920.
By resolution of the Extraordinary General Meeting held on 20 December 2019, The Navigator
Company, S.A. proceeded to the payment of free reserves, to be distributed to shareholders as from
9 January 2020, in the amount of Euro 99,138,919.82, equivalent to Euro 0.1394 per outstanding
share.
Accounting policies
The distribution of dividends to shareholders is recognised as a liability in the Group’s Financial
Statements in the period in which the dividends are approved by the Shareholders at the General
Meeting and up until the time of their payment or, in the case of anticipated distributions, when
approved by the Board of Directors.
5.5. RESERVES AND RETAINED EARNINGS
Amounts in Euro
31-12-2021 31-12-2020
Reserves by applying the equity method (437,672,593) (433,318,274)
Fair value reserve (5,604,076) (6,641,368)
Legal reserve 100,000,000 100,000,000
Reservas livres 121,836,100 266,443,646
Other reserves (2,377,265) (2,377,265)
Retained earnings 647,229,733 512,795,312
Reserves and retained earnings
423,411,899 436,902,051
2021 Consolidated Annual Report
13/04/2022 363
Reserves by applying the equity method – details
Fair value reserves - details
The amount associated to foreign exchange hedging of the subsidiary Navigator North America (net
investment) will remain in reserves until the net investment is sold or partially sold (at which time
it will be reclassified to profit or loss). This occurs because the hedged item (the net investment)
does not affect the Company's results until it is sold.
Fair value reserves - movements
Accounting policies
Reserves by applying the equity method
Corresponds to the accumulated change in changes in equity in the Company's subsidiaries whose
investment is measured by the equity method (Note 10.1). In accordance with the Portuguese
commercial legislation, these reserves are not distributable.
Company
31-12-2021 31-12-2020
Subsidiaries
Navigator Internacional Holding SGPS, S.A. (4,027,714) (3,998,782)
Navigator Brands, S.A. (496,755,521) (498,130,498)
Navigator Pulp Figueira, S.A. (7,936,300) (7,936,300)
Enerpulp, S.A. 154,000 153,999
Navigator Parques Industriais, S.A. (1,499,368) (1,499,368)
Portucel Moçambique, S.A. (139,396) 7,881,976
Portucel Finance sp. Z o.o. - 99,840
Navigator Pulp Figueira, S.A. 154,000 154,000
Navigator Pulp Figueira, S.A. 615,945 615,954
Navigator Forest Portugal, S.A. (572,996) (510,623)
Navigator Paper Setúbal , S.A. (9,956,752) (12,467,337)
Navigator Tissue Aveiro, S.A. 2,117,121 2,040,121
Navigator Pulp Figueira, S.A. 79,783,696 79,783,696
Raíz - Inst.Investigação Floresta e Papel 398,250 247,708
Empremédia 249,752 249,238
Empremedia DAC (246,192) -
Navigator Paper Mexico (11,080) (1,902)
Navigator Egypt (40) 3
Subsidiaries
(437,672,593) (433,318,274)
Amounts in Euro
Gross amount Tax Net amount Gross amount Tax Net amount
Interest rate risk hedging (2,231,713) 613,722 (1,617,992) (6,610,686) 1,817,939 (4,792,748)
Foreign exchange hedging (2,586,225) 711,212 (1,875,013) 362,001 (99,550) 262,452
Foreign exchange hedging - Navigator North America (2,911,823) 800,751 (2,111,072) (2,911,823) 800,751 (2,111,072)
(7,729,761) 2,125,685 (5,604,076) (9,160,508) 2,519,140 (6,641,368)
31-12-2021
31-12-2020
Amounts in Euro
31-12-2021 31-12-2020
Opening balance
(6,641,368) (6,384,412)
Change in fair value of derivative financial instruments (Note 8.2) 1,430,747 (354,422)
Reclassification of derivative financial instruments to profit or loss by
maturity (Note 5.10)
(393,455) 97,466
Closing balance
(5,604,076) (6,641,368)
2021 Consolidated Annual Report
13/04/2022 364
Fair value reserve
It corresponds to the accumulated change in fair value of derivative financial instruments classified
as hedging instruments (Note 8.2), net of deferred taxes.
Changes relating to derivatives are reclassified to profit or loss for the period (Note 5.10) as the
hedged instruments affect profit or loss for the period. The change in fair value of financial
investments recorded under this item is not recycled to profit or loss.
Legal reserve
The Portuguese commercial legislation prescribes that at least 5% of annual net profit must be
transferred to the legal reserve, until this is equal to at least 20% of the share capital. This reserve
cannot be distributed unless the company is liquidated. It may, however, be drawn on to absorb
losses, after other reserves are exhausted, or incorporated in the share capital.
The legal reserve is constituted by its maximum amount in the periods presented.
Other reserves
This heading corresponds to reserves available for distribution to shareholders that were constituted
through the application of prior period’s profit and other movements. The portion of the balance
corresponding to the acquisition value of treasury shares held is not distributable (Note 5.2).
5.6. INTEREST-BEARING LIABILITIES
In 2021, two short-term loans of Euro 40 and Euro 25 million, which had been taken in the context
of the onset of the pandemic, were repaid. Two bond loans of Euro 100 and Euro 45 million and a
Commercial Paper Programme of Euro 70 million were also repaid. On the other hand, two loans
contracted in 2020 were disbursed, a 10-year EIB facility in the amounts of Euro 27.5 million and a
5-year bond loan of Euro 20 million. A new long-term financing with Bank of China of Euro 15 million
was also contracted and issued.
On 5 August 2021, Navigator issued a bond loan in the amount of Euro 100 million with a five-year
maturity, in exchange for the early repayment of a financing in the same amount, which had its
maturity in 2023. This operation, to which a fixed rate swap was added, led to the extension of the
average life of the Group's debt, as well as to a reduction of the Company's financing cost, besides
representing a commitment to align with sustainability objectives. The operation is indexed to two
ESG indicators already present in the Company's Sustainability Agenda.
During 2021, the Company and the majority of its subsidiaries have adopted the Cash Pooling
system, being its responsibility towards the other Group entities detailed in Note 10.2.
Amounts in Euro Non-current Current Total Non-current Current Total
Bond loans 442,500,000 2,500,000 445,000,000 340,000,000 145,000,000 485,000,000
Commercial paper 140,000,000 100,000,000 240,000,000 240,000,000 135,000,000 375,000,000
Bank loans 109,087,301 12,718,254 121,805,555 79,305,555 11,527,778 90,833,333
Navigator Group Cash pooling - 129,775,499 129,775,499 - - -
Charges with bond issuances (3,415,421) - (3,415,421) (3,449,340) - (3,449,340)
Debt securities and bank debt
688,171,881 244,993,753 933,165,634 655,856,215 291,527,778 947,383,993
Average interest rate (Note 5.10),
considering charges for annual fees and
hedging operations
1.5% 1.7%
31-12-2021
31-12-2020
2021 Consolidated Annual Report
13/04/2022 365
The maturity analysis of interest-bearing liabilities is presented in the Note 8.1.3 - Liquidity
risk.
Interest-bearing liabilities - Details
As at 31 December 2021, the average cost of debt, considering interest rate, the annual fees and
hedging operations, was 1.5% (31 December 2020: 1.5%).
As at 31 December 2021, the Company had contracted Commercial Paper Programs, contracted and
undisbursed long-term financing, as well as available but not used credit facilities of Euro
145,450,714 (31 December 2020: Euro 277,950,714).
Financial Covenants in force
31-12-2021
Amounts in Euro Amount
Outstanding
amount
Maturity Interest rate Current Non-current
Bond loans
Navigator 2015-2023 150,000,000 150,000,000 September 2023
Variable rate indexed to Euribor - 150,000,000
Navigator 2019-2026 50,000,000 50,000,000 January 2026
Fixed rate - 50,000,000
Navigator 2019-2025 50,000,000 50,000,000 March 2025
Variable rate indexed to Euribor - 50,000,000
Navigator 2021-2026 20,000,000 20,000,000 April 2026
Variable rate indexed to Euribor 2,500,000 17,500,000
Navigator 2020-2026 75,000,000 75,000,000 December 2026
Variable rate indexed to Euribor - 75,000,000
Navigator 2021-2026 100,000,000 100,000,000 August 2026
Fixed rate - 100,000,000
Fees - (3,415,421) - (3,415,421)
European Investment Bank (EIB)
EIB Loan - Energy 21,250,000 21,250,000 December 2024
Variable rate indexed to Euribor 7,083,333 14,166,667
EIB Loan - Cacia 18,055,555 18,055,555 May 2028
Fixed rate 2,777,778 15,277,777
EIB Loan - Figueira 40,000,000 40,000,000 February 2029
Fixed rate 2,857,143 37,142,857
EIB Loan - Biomass Boiler 27,500,000 27,500,000 March 2031
Fixed rate - 27,500,000
Commercial Paper Program
Commercial Paper Program 175M 175,000,000 175,000,000 February 2026
Fixed rate 35,000,000 140,000,000
Commercial Paper Program 65M 65,000,000 65,000,000 January 2022
Variable rate indexed to Euribor
65,000,000
-
Commercial Paper Program 75M 75,000,000 - February 2026
Variable rate indexed to Euribor - -
Commercial Paper Program 50M 50,000,000 - December 2025
Variable rate indexed to Euribor - -
Loans
Long-term loan 15,000,000 15,000,000 March 2026
Variable rate indexed to Euribor - 15 000 000
Bank credit facilities
Short-term facilities 20M
20,450,714
- -
-
CashPooling
Navigator Group cashpooling facility 129,775,499 129,775,499
Variable rate indexed to Euribor
129 775 499 -
933,165,634 244,993,753 688,171,881
31-12-2020
Amounts in Euro Amount
Outstanding
amount
Maturity Interest rate Current Non-current
Bond loans
Navigator 2015-2023 150,000,000 150,000,000 September 2023
Variable rate indexed to Euribor - 150,000,000
Navigator 2016-2021 100,000,000 100,000,000 April 2021
Fixed rate 100,000,000 -
Navigator 2016-2021 45,000,000 45,000,000 August 2021
Variable rate indexed to Euribor 45,000,000 -
Navigator 2019-2026 50,000,000 50,000,000 January 2026
Fixed rate - 50,000,000
Navigator 2019-2025 50,000,000 50,000,000 March 2025
Variable rate indexed to Euribor - 50,000,000
Navigator 2020-2023 100,000,000 15,000,000 August 2023
Variable rate indexed to Euribor 15,000,000
Navigator 2021-2026 20,000,000 - April 2026
Variable rate indexed to Euribor - -
Navigator 2020-2026 75,000,000 75,000,000 December 2026
Variable rate indexed to Euribor 75,000,000
Fees - (3,449,340) - (3,449,340)
European Investment Bank (EIB)
EIB Loan - Ambiente B 1,666,667 1,666,667 June 2021
Variable rate indexed to Euribor 1,666,667
EIB Loan - Energy 28,333,333 28,333,333 December 2024
Variable rate indexed to Euribor 7,083,333 21,250,000
EIB Loan - Cacia 20,833,333 20,833,333 May 2028
Fixed rate 2,777,778 18,055,555
EIB Loan - Figueira 40,000,000 40,000,000 February 2029
Fixed rate - 40,000,000
EIB Loan - Biomass Boiler 27,500,000 -
- - -
Commercial Paper Program
Commercial Paper Program 175M 175,000,000 175,000,000 February 2026
Fixed rate - 175,000,000
Commercial Paper Program 70M 70,000,000 70,000,000 April 2021
Fixed rate 70,000,000
-
Commercial Paper Program 65M 65,000,000 65,000,000 February 2026
Variable rate indexed to Euribor - 65,000,000
Commercial Paper Program 75M 75,000,000 - February 2026
Variable rate indexed to Euribor - -
Commercial Paper Program 50M 50,000,000 - December 2025
Variable rate indexed to Euribor - -
Commercial Paper Program 40M 40,000,000 40,000,000 March 2021
Variable rate indexed to Euribor 40,000,000
Commercial Paper Program 25M 25,000,000 25,000,000 April 2021
Variable rate indexed to Euribor 25,000,000
Bank credit facilities
Short-term facilities 20M 20,450,714 - - -
947,383,993 291,527,778 655,856,215
Ratio Definition Loans Limit
Interest coverage EBITDA 12M / Annual net interest
Bank >= 4.5 - 5.5
Indebtedness Interest-bearing debt / EBTDA 12M
Bank <= 4.5
Net Debt / EBITDA (Interest-bearing debt - Cash) / EBTDA 12M
Bank
Commercial
Paper
Bonds
<= 4.0
<= 4.0 - 5.0
<= 4.0
2021 Consolidated Annual Report
13/04/2022 366
Given the contractual limits, in 2021 and 2020 the Company is in compliance with the covenants
negotiated. As at 31 December 2021 and 2020, the company presents a minimum safety margin
above 80% on the fulfilment of its covenants.
Accounting policies
Interest-bearing liabilities includes Bonds, Commercial Paper, bank loans and other financing.
Initial measurement
At fair value, net of transaction costs incurred.
Subsequent measurement
At amortised cost, using the effective interest rate method.
The difference between the repayment amount and the initial measurement amount is recognised
in the income statement over the debt period under "Interest expenses on other loans" in Note 5.10
– Net financial results.
Fair value
The book value of short-term interest-bearing liabilities or loans contracted at variable interest rates
are close to their fair value.
The fair value of interest-bearing liabilities that are remunerated at a fixed rate is disclosed in Note
8.3 – Financial assets and liabilities.
Introduction
In current liabilities unless the Company has an unconditional right to defer the settlement of the
liability for at least 12 months after the reporting date.
Estimates and judgements
Commercial paper
The Company has several commercial paper programmes negotiated; agreements with which issues
with contractual maturity below one year and with a revolving nature are often made. Where the
Company expects to extend these loans (roll over), it classifies them as non-current liabilities.
2021 Consolidated Annual Report
13/04/2022 367
5.7. LEASE LIABILITIES
Lease liabilities – nature
Lease liabilities – future liabilities
The maturity analysis of lease liabilities is presented in the Note 8.1.3 - Liquidity risk.
Accounting policies
At the start date of the lease, the Company recognises lease liabilities measured at the present value
of future lease payments, which include fixed payments less any lease incentives, variable lease
payments, and amounts expected to be paid as residual value. Lease payments also include the
exercise price of call or renewal options reasonably certain to be exercised by the Company or lease
termination penalty payments if the lease term reflects the Company's option to terminate the
agreement.
In calculating the present value of future lease payments, the Company uses an incremental
financing rate if the implied interest rate on the lease transaction is not easily determinable.
Subsequently, the value of the lease liabilities is increased by the interest amount (Note 5.10 Net
Financial Results) and decreased by the lease payments.
5.8. CASH AND CASH EQUIVALENTS
Amounts in Euro Non-current Current Total Non-current Current Total
Buildings 2,459,148 417,970
2,877,118
2,971,186 389,746
3,360,932
Vehicles 1,659 5,200
6,860
3,460 11,144
14,604
2,460,807 423,170 2,883,977 2,974,645 400,890 3,375,536
31-12-2021
31-12-2020
Amounts in Euro 2021 2020
Less than 1 year
423,170 400,890
1 to 2 years
449,916 420,924
2 to 3 years
479,584 451,201
3 to 4years
511,808 480,906
4 to 5 years
545,016 513,171
More than 5 years
237,129 777,710
2,646,622 3,044,802
Interest on liabilities
237,355 330,733
Present value of liabilities
2,883,977 3,375,536
Amounts in Euro 31-12-2021 31-12-2020
Cash 5,540 5,740
Short-term bank deposits 285,780,660 209,931,421
Other short-term investments 68,550,446 87,003,891
Cash and cash equivalents in the statement of financial position
354,336,647 296,941,052
Bank overdrafts - Cash pooling (Note 5.6) (129,775,499) -
Cash and cash equivalents in the statement of cash flows
224,561,148 296,941,052
2021 Consolidated Annual Report
13/04/2022 368
In 2021 and 2020, the amount presented under Other short-terms investments corresponds to
amounts invested by Navigator in a portfolio of short-term, highly liquid financial assets and issuers
with adequate ratings.
As at 31 December 2021 and 2020, there are no significant balances of cash and cash equivalents
that are subject to restrictions on use by the Company.
Accounting policies
Cash and cash equivalents includes cash, bank accounts and other short-term investments with an
initial maturity of up to 3 months, which can be mobilised immediately without any significant risk
in value fluctuations.
For cash flow statement purposes, this caption will also include, when applicable, bank overdrafts,
which are presented in the Statement of financial position as a current liability, under the caption
Interest-bearing liabilities (Note 5.6).
5.9. CASH FLOWS FROM FINANCING ACTIVITIES
Movements in liabilities for financing activities
5.10. NET FINANCIAL RESULTS
Amounts in Euro 31-12-2021 31-12-2020
Balance as at 1 January 947,383,993 840,975,392
Payment of interest-bearing liabilities (291,527,778) (133,194,444)
Receipts from interest-bearing liabilities 147,500,000 240,000,000
Cash Pooling 129,775,499 -
Changes in borrowing costs 33,919 (396,954)
Changes in interest-bearing debt (14,218,360) 106,408,602
Gross interest-bearing debt 933,165,633 947,383,993
Amounts in Euro
2021 2020
Interest paid on debt securities and bank debt (Note 5.6) (10,385,295) (11,095,664)
Interest paid on other interest-bearing liabilities (Note 5.6) (4,409,101) (5,263,650)
Commissions on loans and expenses with the opening of credit facilities (3,349,422) (3,521,320)
Interest paid using the effective interest method (18,143,818) (19,880,634)
Interest paid on lease liabilities (Note 5.7) (93,453) (107,721)
Financial expenses related to the Group's capital structure (18,237,271) (19,988,355)
Unfavourable exchange rate differences (10,379,571) (23,087,537)
Losses on financial instruments - foreign exchange hedging (Note 8.2) (3,191,640) (3,647,914)
Gains on financial instruments - hedging (Note 8.2) (4,265,016) -
Losses on compensatory interest - (290,461)
Other expenses and financial losses (110,915) (3,011)
Financial expenses and losses (36,184,414) (47,017,278)
Interest received from loans granted - 4,026,167
Unfavourable exchange rate differences 12,539,990 21,731,525
Other income and financial gains 9,031,354 10,523,653
Gains on financial instruments - hedging (Note 8.2) - 2,000,523
Gains on compensatory interest 767,705 2,390,014
Financial income and gains 25,605,954 40,671,883
Financial results (10,578,460) (6,345,395)
2021 Consolidated Annual Report
13/04/2022 369
This worsening results essentially from losses in derivative instruments. The costs of financing
operations had a positive trend due to the decrease in the average debt compared to the same
period of the previous year.
Accounting policies
The Company classifies as "Financial income" the income and gains resulting from treasury
management activities such as: i) interest obtained from the application of cash surplus; and ii)
changes in the fair value in derivative financial instruments negotiated to hedge interest rate and
exchange rate risk on loans, regardless of the formal designation of hedge.
2021 Consolidated Annual Report
13/04/2022 370
6. INCOME TAX
6.1. INCOME TAX FOR THE PERIOD
6.1.1. Tax amount recognised in the income statement
Nominal tax rate
In the periods presented, the Company considers a nominal tax rate in Portugal of 27.5%, resulting
from the tax legislation as follows:
Reconciliation of the effective income tax rate for the period
Amounts in Euro 2021 2020
Current tax (1,260,778) 5,801,316
Change in uncertain tax positions in the period (3,827,856) 8,577,775
Deferred tax (Note 6.2) 1,658,967 (1,164,479)
(3,429,667) 13,214,611
2021 2020
Portugal
Nominal income tax rate 21.0% 21.0%
Municipal surcharge 1.5% 1.5%
22.5% 22.5%
State surcharge - on the share of taxable profits between Euro 1,500,000 and Euro 7,500,000 3.0% 3.0%
State surcharge - on the share of taxable profits between Euro 7,500,000 and Euro 35,000,000 5.0% 5.0%
State surcharge - on the share of taxable profits above Euro 35,000,000 9.0% 9.0%
Amounts in Euro 2021 2020
Profit before income tax 174,841,122 95,999,108
Expected tax at nominal rate (21%) 36,716,636 20,159,813
Municipal surcharge (2021: 0.15% ; 2020: 0.27%) 258,781 256,307
State surcharge (2021: 0.38% ; 2020: 0.69%) 667,605 659,357
Income tax resulting from the applicable tax rate 37,643,022 21,075,477
Nominal tax rate for the period 21.53% 21.95%
Differences (a) 2,679,217 246,280
Effect of applying the equity method (40,821,355) (20,858,483)
Uncertain tax positions - liabilities - (4,262,470)
Tax losses - (10,326,983)
Autonomous tax 475,660 -
Excess of income tax estimate 3,453,123 911,568
3,429,667 (13,214,611)
Effective tax rate 1.96% (14%)
(a) This amount concerns mainly: 2021 2020
Capital gains/ (losses) for tax purposes (654,801) -
Capital gains/ (losses) for accounting purposes 655,648 -
Taxable provisions and impairment 6,987,197 2,783,619
Employee benefits (1,390,000) 84,760
Tax benefits (326,801) (375,183)
Appropriate result of Complementary Group of Companies (ACE) - 2,526
Other 5,235,491 (1,529,919)
10,506,734 965,804
Tax effect (25.5%) 2,679,217 246,280
2021 Consolidated Annual Report
13/04/2022 371
6.1.2. Tax recognised in the statement of financial position
Detail of Corporate Income Tax - IRC (net)
Amounts pending refund
The movements in the period are detailed as follows:
Uncertain tax positions - liabilities
Amounts in Euro
31-12-2021 31-12-2020
Assets
Corporate Income Tax (IRC) - -
Amounts pending reimbursement (tax proceedings favourable to the Group) 1,118,815 3,482,762
1,118,815 3,482,762
Liabilities
Corporate Income Tax (IRC) 20,200,713 12,660,736
Additional settlements - 2013 IRC - -
Additional tax liabilities (IRC) 11,741,764 9,014,699
31,942,477 21,675,436
Amounts in Euro
31-12-2021 31-12-2020
Income tax for the period (1,260,778) 5,801,316
Payments on account, Special and Additional payments on account 18,765,072 9,608,232
Withholding tax recoverable 7,865 18,324
IRC for companies included in the RETGS (34,106,939) (28,089,643)
Other payables / (receivables) (3,605,933) 1,035
(20,200,713) (12,660,736)
Amounts in Euro 2021 2020
2013 Corporate income tax (RETGS) - 86,215
2010 Corporate income tax (RETGS) - 2,341,168
RFAI 2010 to 2012 - compensatory interest 1,076,611 469,351
Other 42,204 586,028
1,118,815 3,482,762
Amounts in Euro 2021
2020
Balance as at the beginning of the period 3,482,762 7,198,086
Increases 189,876 7,639,701
Charge-off (2,120,272) (10,168,202)
Reversals (433,551) (1,186,823)
Changes in the period (2,363,947) (3,715,324)
1,118,815 3,482,762
Amounts in Euro 2021
2020
Balance as at the beginning of the period 9,014,699 13,277,169
Increases 10,756,268 5,126,254
Charge-off (975,264) (2,697,180)
Reversals (7,053,939) (6,691,544)
Changes in the period 2,727,065 (4,262,470)
11,741,764 9,014,699
2021 Consolidated Annual Report
13/04/2022 372
Taxes paid in litigation
As at 31 December 2021 and 2020, the additional tax assessments that are already paid and
contested, not recognised in assets, refer to the Navigator Group and are summarised as follows:
Accounting policies
Current income tax is calculated based on net profit, adjusted in compliance with tax legislation in
force at the Statement of financial position date.
Tax business group
In Portugal, the Navigator Group is subject to the Special Tax Regime for Groups of Companies
(REGTS - Regime Especial de Tributação de Grupos de Sociedades), comprising companies in which
the shareholding is equal to or more than 75% and which meet the conditions laid down in articles
69, and following of the Portuguese Corporate Income Tax Code (IRC).
These companies included in the RETGS calculate income taxes as if they were taxed independently.
Liabilities are recognised as due to the dominant entity of the tax business Group, currently The
Navigator Company, S.A. which is responsible for the Group’s overall clearance and payment of the
corporate income tax. Where there are gains on the use of this regime, these are recorded as income
in the dominant entity financial statements.
The amounts the Company has receivable from or payable to other companies in the tax business
group in respect of their liabilities are presented under Receivables and Payables.
Estimates and judgements
The Company recognises liabilities for additional tax assessments that may result from reviews by
the tax authorities. When the final result of these situations is different from the amounts initially
recorded, the differences will have an impact on income tax in the period in which they are
calculated.
In Portugal, annual income statements are subject to review and possible adjustment by the tax
authorities for a period of 4 years. However, if tax losses are presented, they may be subject to
review by the tax authorities for a period of 6 years.
The Board of Directors considers that any corrections to those declarations as a result of
reviews/inspections by the Portuguese Tax Authorities will not have a significant impact in the
financial statements as at 31 December 2021, although the periods up to and including 2018 have
already been reviewed.
Amounts in Euro
31-12-2021 31-12-2020
2005 Aggregated corporate income tax (Note 9.3) 10,394,386 10,394,386
2006 Aggregated corporate income tax (Note 9.3) 8,150,146 8,150,146
2016 Aggregated corporate income tax - 2,697,180
2016 State surcharge 3,761,397 3,761,397
2017 State surcharge 8,462,724 8,462,724
2018 State surcharge 12,223,705 12,223,705
Foreign Double Tax Credit (CDTJI) - 2016 and 2017 IRC 1,522,660 -
44,515,018 45,689,538
2021 Consolidated Annual Report
13/04/2022 373
Uncertain tax positions
The amount of assets and liabilities recorded for tax proceedings arises from an assessment made
by the Group, as at the date of the Statement of Financial Position, regarding potential differences
of understanding with the Portuguese Tax Authorities, considering the developments in tax matters.
With respect to the measurement of uncertain tax positions, the Company takes into consideration
the provisions of IFRIC 23 – “Uncertainty over income tax treatments”, namely the measurement of
risks and uncertainties in defining the best estimate of expenditure required to settle the obligation,
by weighting all possible results controlled by the Company and their related probabilities.
6.2. DEFERRED TAXES
Movements in deferred taxes
In the measurement of the deferred taxes as at 31 December 2021 and 2020, the corporate income
tax rate used was 27.50%.
Accounting policies
Deferred tax is calculated on the basis of the Statement of financial position, on temporary
differences between the book values of assets and liabilities and their respective tax base. The
income tax rate expected to be in force in the period in which the temporary differences will reverse
is used in calculating deferred tax.
Deferred tax assets are recognised whenever there is a reasonable likelihood that future taxable
profits will be generated against which they can be offset. Deferred tax assets are revised periodically
and decreased, whenever it is likely that tax losses will not be used.
Deferred taxes are recorded as an income or expense for the period, except where they result from
amounts recorded directly under shareholders’ equity, situation in which deferred tax is also
recorded under the same caption. Tax benefits attributed to the Company regarding its investment
Amounts in Euro
Increases Decreases
Temporary differences originating deferred tax assets
Adjustments in investments in subsidiaries 12,580,190 8,425,255 (2,252,649) - - 18,752,796
Financial instruments 8,879,577 - - (1,430,747) - 7,448,830
Conventional capital remuneration 280,000 - (140,000) - - 140,000
21,739,768 8,425,255 (2,392,649) (1,430,747) - 26,341,626
Temporary differences originating deferred tax liabilities
Adjustments in investments in subsidiaries (718,030) - - - - (718,030)
(718,030) - - - - (718,030)
Deferred tax assets 5,978,436 2,316,945 (657,978) (393,455) - 7,243,947
Deferred tax liabilities (197,458) - - - - (197,458)
Amounts in Euro
Increases Decreases
Temporary differences originating deferred tax assets
Adjustments in investments in subsidiaries 16,674,660 - (4,094,470) - - 12,580,190
Financial instruments 8,525,155 - - 354,423 - 8,879,577
Conventional capital remuneration - - (140,000) - 420,000 280,000
25,199,815 - (4,234,470) 354,423 420,000 21,739,768
Temporary differences originating deferred tax liabilities
Adjustments in investments in subsidiaries (718,030) - - - - (718,030)
(781,735) - 63,705 - - (718,030)
Deferred tax assets 6,929,949 - (1,164,479) 97,466 115,500 5,978,436
Deferred tax liabilities (197,458) - - - - (197,458)
Mergers
Equity
Mergers
As at 31
December
2021
As at 31
December
2020
As at 31
December
2020
Income Statement
As at 1
January 2020
Income Statement
Equity
2021 Consolidated Annual Report
13/04/2022 374
projects are recognised through the income statement as there is sufficient taxable income to allow
its use.
2021 Consolidated Annual Report
13/04/2022 375
7. PAYROLL
7.1. PAYROLL COSTS
The increase in payroll costs accompanied Navigator's good performance in 2021, which allowed for
the recognition of accrued expenses for bonus payments in 2022. The rejuvenation programme that
had been suspended in 2020 was also resumed.
Other payroll costs - details
In 2020, due to the inability to terminate contracts as a result of joining the simplified lay-off scheme,
there was a reversal of the estimates recognised in previous years.
Number of employees at the end of the period
As at 31 December 2021 and 2020, the number of Employees under contractual employment with
the Company was 426 and 515, respectively, of which 410 were employed by other Group companies
(2020: 492).
Accounting policies
Short-term employee benefits
Acquired rights - holidays and holiday allowance
In accordance with the collective agreement applicable to The Navigator Company, S.A., Workers
are entitled to 25 working days leave, as well as one month's holiday allowance, acquired in the year
preceding that of the payment.
Amounts in Euro
2021 2020
Remuneration of Corporate Bodies - fixed (Note 7.3) 1,328,245 1,315,984
Remuneration of Corporate Bodies - variable (Note 7.3) 1,180,000 192,543
Other remunerations 3,746,324 4,058,390
Social Security contributions 973,317 817,405
Post-employment benefits (Note 7.2.2) 143,080 178,493
Other payroll costs 3,721,285 801,602
Payroll costs 11,092,252 7,364,418
Amounts in Euro
2021 2020
Training 865,755 458,475
Recruitment costs 81,125 117,214
Insurance 587 589 187,134
Compensations 1 149 505 (646,261)
Food allowance 124 142 119,154
Other 913,170 565,886
3,721,285 801,602
2021 Consolidated Annual Report
13/04/2022 376
Bonuses
According to the current Performance Management System (Sistema de Gestão de Desempenho),
Employees have the right to a bonus, based on annually defined objectives. The entitlement of this
bonus is usually acquired in the year preceding its payment.
These liabilities are recorded in the period in which the Employees acquire the respective right,
irrespective of the date of payment, whilst the balance payable at the date of the Statement of
financial position is shown under the caption Payables (Note 4.3).
Benefits arising from termination of employment
The benefits arising from termination of employment are recognised when the Company can no
longer withdraw the offer of such benefits or in which the Company recognises the cost of
restructuring under the provisions recording. Benefits due over 12 months after the end of the
reporting period are discounted to their present value.
7.2. EMPLOYEE BENEFITS
7.2.1. Defined Benefit Plan
Policy for managing the risk associated with defined benefit plans
The Company's exposure to risk is limited to the number of existing beneficiaries and will tend to
decrease, since there are no defined benefit plans open to new employees in the Company.
The most significant risks to which the Company is exposed through defined benefit plans include:
i) Risk of change in longevity of participants
ii) Market rate variation risk – rate variation impacts the rate used to discount liabilities (technical
interest rate) which is based on yield curves of highly rated bonds with maturities similar to the
liabilities' expiry dates and the fixed rate of return of the assets. The Company uses yield curves in
order to monitor the evolution of rates and performs sensitivity analyses of interest rate variations
with the aim of foreseeing and preventing the consequent impact on the fund's funding level.
iii) Risk of change in the wage and pension growth rate
iv) Return on the fund's financial assets - the Company closely monitors the evolution of the fund's
assets, as well as the evolution of the main financial market indicators, revisiting the investment
policy approved for the management of the assets whenever justifiable, and at least every three
years. The investment policy is aligned with a conservative view of asset management and defined
on the basis of the responsibilities to be financed by the fund.
2021 Consolidated Annual Report
13/04/2022 377
Net liabilities
Net liabilities reflected in the Statement of financial position and note 4.2 - Receivables and the
number of beneficiaries of the defined benefit plans in force in the Company are detailed as follows:
Historical information - last five years
Evolution of defined benefit plan liabilities
The average expected duration of the defined benefit liabilities is 10 years (2020: 10 years).
Funds
Funds allocated to the defined benefit pension plans - evolution
During the period of 2021, the contributions to the defined benefit plan presented above as Allocation
was made in full by Company and no contributions were made by the participants of these plans.
Funds allocated to defined benefit plan - estimated contributions in the following period
The contributions planned for the next annual reporting period are, among other factors, dependent
on the profitability of the funds' assets.
No. of Beneficiaries Amount
No. of
Beneficiaries
Amount
Past service liabilities
Active employees, including individual accounts 13 900,211 16 2,077,755
Former employees 1 457,502 1 461,311
Retired employees 143 14,996,483 142 14,548,795
Market value of pension funds - (16,798,826) - (15,924,756)
Total net liabilities 157 (444,631) 159 1,163,105
31-12-2021
31-12-2020
Amounts in Euro
2017 2018 2019 2020 2021
Present value of liabilities 17,102,056 16,609,101 17,339,850 17,087,861 16,354,196
Fair value of assets and Reserve account 17,495,274 15,544,240 16,409,644 15,924,756 16,798,826
Surplus / (deficit) 393,218 (1,064,860) (930,206) (1,163,105) 444,631
2021
Amounts in Euro
Pensions with autonomous fund 17,087,861 44,883 206,569 238,451 (1,223,568) 16,354,196
17,087,861 44,883 206,569 238,451 (1,223,568) 16,354,196
2020
Amounts in Euro
Pensions with autonomous fund 17,339,850 67,304 293,996 566,370 (1,179,659) 17,087,861
17,339,850 67,304 293,996 566,370 (1,179,659) 17,087,861
Current services
cost
Net interest
Desvios
atuariais
Payments
performed
Closing
balance
Opening balance
Current services
cost
Net interest
Desvios
atuariais
Payments
performed
Closing
balance
Opening balance
Amounts in Euro
2021 2020
Opening balance 15,924,756 16,409,644
Charge for the period 1,390,000 -
Return on plan assets 191,470 276,540
Pensions paid (1,223,568) (1,179,659)
Remeasurement 516,168 418,233
Closing balance 16,798,826 15,924,756
2021 Consolidated Annual Report
13/04/2022 378
Funds allocated to defined benefit plans - composition of assets
7.2.2. Expenses incurred with post-employment benefit plans
Accounting policies
Post-employment benefits - defined benefit plan
The Company has assumed the commitment to make payments to their employees in the form of
complementary retirement pensions, disability, early retirement and survivors’ pensions, having
constituted defined-benefit plans.
The Company set up autonomous pension funds as a means of funding most of the liabilities. Based
on the projected credit unit method, the Company recognises the costs with the attribution of these
benefits as the services are provided by the employees. The total liability is estimated separately for
each plan at least once every six months, on the date of closing of the interim and annual accounts,
by a specialised and independent entity.
The liability thus determined is presented in the Statement of financial position, less the fair value
of the funds set up, under Pensions and other post-employment benefits.
Actuarial deviations resulting from changes in the value of estimated liabilities, as a consequence of
changes in the financial and demographic assumptions used and experience gains, added to the
differential between the actual return on fund assets and the estimated share of net interest, are
designated as remeasurements and recorded directly in the Statement of comprehensive income,
under retained earnings.
The net interest corresponds to the application of the discount rate to the value of net liabilities
(value of the liabilities deducted of fund asset’s fair value) and is recognised under the caption Payroll
costs (Note 7.1).
The gains and losses generated by a curtailment or settlement of a defined-benefit plan are
recognised in the income statement for the period when the curtailment or settlement occurs. A
curtailment occurs when there is a material reduction in the number of employees.
Costs for past liabilities resulting from the implementation of a new plan or increases in benefits
attributed are recognised immediately in profit or loss for the period.
Amounts in Euro
31-12-2021 % 31-12-2020 %
Securities listed in the market
Bonds 11,134,262 66.3% 6,721,836 42.2%
Shares 4,806,144 28.6% 2,885,564 18.1%
Public debt - 0.0% 684,764 4.3%
Liquidity 858,420 5.1% 5,632,592 35.4%
16,798,826 100% 15,924,756 100.0%
Amounts in Euro
Current
services cost
Net interest
Defined
contribution -
Contributions
for the period
Impact on net
result
(Note 7.1)
Current
services cost
Net interest
Defined
contribution -
Contributions
for the period
Impact on net
result
(Note 7.1)
Pensions with autonomous fund 44,883 15,100 - 59,982 67,304 17,457 - 84,760
Defined contributions plans - - 83,098 83,098 - - 93,733 93,733
44,883 15,100 83,098 143,080 67,304 17,457 93,733 178,493
2020
2021
2021 Consolidated Annual Report
13/04/2022 379
Post-employment benefits - defined contribution plan
The Company assumed commitments regarding payments to a defined contribution plan in a
percentage of the employees’ salary, in order to provide retirement, disability, early retirement and
survivors’ pensions.
To this end, Pension Funds have been set up to capitalise on those contributions, for which
employees may still make voluntary contributions, but for which the Company does not assume any
additional contribution responsibilities or a pre-fixed return. Thus, the contributions made are
recorded as expenses of the period in which they are recognised, regardless of the time of their
settlement.
Estimates and judgements
Actuarial assumptions
Sensitivity analysis
The Company considers the technical interest rate and the expected wage growth rate as the most
significant variables in the calculation of liabilities for defined benefit plans.
As at 31 December 2021, a downward change of 0.25 percentage points in the discount rate used
(1.25%) in the calculation of pension liabilities would result in an increase in liabilities of
approximately Euro 399,516 (31 December 2020: an increase in liabilities of approximately Euro
429,095).
As at 31 December 2021, an upward change of 0.25 percentage points in the discount rate used
(1.25%) in the calculation of pension liabilities would result in a decrease in liabilities of
approximately Euro 382,788 (31 December 2020: Euro 410,889).
7.3. REMUNERATION OF CORPORATE BODIES
31-12-2021 31-12-2020
Social Security Benefits Formula
Disability table
EKV 80 EKV 80
Mortality table
88–90 88–90
Wage growth rate
1.00% 1.00%
Technical interest rate
1.25% 1.25%
Return rate on plan assets
1.25% 1.25%
Pensions growth rate
1.00% 1.00%
Decree Law no. 187/2007 of 10 May
Amounts in Euro
2021 2020
Navigator Corporate Bodies
Board of Directors 1,244,461 1,224,700
Supervisory Board 46,284 46,284
General Meeting 4,000 16,000
Environmental Impact Council 33,500 29,000
Total (Note 7.1) 1,328,245 1,315,984
2021 Consolidated Annual Report
13/04/2022 380
Remuneration of Board of Directors
All the details of the remuneration policy for members of Navigator's Board of Directors are detailed
in the Company's Corporate Governance Report.
Regarding post-employment benefits, as at 31 December 2021, the amount of liabilities related to
post-employment benefit plans, in respect of one director of the Company, amounted to Euro
956,764 (31 December 2020: Euro 991,706). In addition, three of the current Directors are
members of pension plans of Navigator Brands, S.A., a subsidiary of the Company, as Employees of
that company, before joining management positions.
As at 31 December 2021 and 2020, regarding the members of the Board of Directors of Navigator,
there were no: i) any additional liabilities allocated to other long-term benefits, ii) employment
termination benefits, iii) share-based payments and iv) any outstanding balances.
2021 Consolidated Annual Report
13/04/2022 381
8. FINANCIAL INSTRUMENTS
8.1. FINANCIAL RISK MANAGEMENT
The Company, at the Navigator Group level, has a risk-management program, which focuses its
analysis on the financial markets with a view to mitigate the potential adverse effects on its financial
performance. Risk management is undertaken by the Group's Financial Management in accordance
with the policies approved by the Board of Directors and monitored by the Risks and Control
Commission.
The Company adopts a proactive approach to risk management, as a way to mitigate the potential
adverse effects associated with those risks, namely the exchange rate risk and interest rate risk.
8.1.1. Exchange rate risk
Exchange rate risk management policy
A significant part of the Company’s sales is priced in currencies other than the Euro, therefore its
evolution can have a significant impact on the cash flows obtained from the Company's future sales,
with the currency with the greatest impact being the USD. Also, sales in Sterling Pound (GBP), Polish
Zloty (PLN) and Swiss Franc (CHF) have some expression, as sales in other currencies are less
significant.
Purchases of some raw materials are also made in USD, namely part of wood and long-fibre pulp
imports of wood and acquisitions of long-fibre pulp. Therefore, changes in EUR against USD may
have an impact on acquisition values.
In addition, once a sale or purchase is made in a currency other than the Euro, the Company
becomes exposed to exchange rate risk until the receipt or payment of such sale or purchase, if no
hedging instruments are in place. As a result, there is a significant number of receivables and
payables, the latter with lesser expression, exposed to exchange rate risk.
The Company has foreign subsidiaries that expose it to foreign exchange rate risk, namely Navigator
North America in the United States and Portucel Moçambique. Besides those operations, the
Company does not hold materially relevant investments in foreign operations, the net assets of
which are exposed to foreign exchange risk.
Use of derivative financial instruments
The Company manages foreign exchange risks by using derivative financial instruments, in
accordance with a policy that is subject to periodic review and whose purpose is to limit the exchange
risk associated with future sales and purchases, receivables and payables, as well as other assets
expressed in currencies other than the Euro.
In the periods presented, the Company holds derivatives that are hedging the exchange rate risk of
future operations in currencies other than the presentation currency.
2021 Consolidated Annual Report
13/04/2022 382
Exposure of financial assets and liabilities to exchange rate risk and sensitivity
analysis
In this Note, the Company discloses the exposure of financial assets and liabilities to foreign
exchange rate risk, as well as the respective sensitivity analysis. There are currencies in which the
Company has carried out transactions but in which, at the balance sheet date, it does not have
relevant foreign exchange exposures, which is why the exchange rates disclosed in Note 1.4.4 are
more numerous than the currencies presented in this note.
8.1.2. Interest rate risk
Interest rate risk management policy
A significant share of the Company’s financial liabilities cost are indexed to short-term reference
interest rates, which are reviewed more than once a year (generally every six months for medium
and long-term debt). Hence, changes in interest rates can have an impact on the Company’s income
statement.
The strategy for interest rate risk management is reviewed annually by the Company, and currently
the Company maintains the majority of its debt traded at fixed rate.
Use of derivative financial instruments
When deemed appropriate by the Board of Directors, the Company uses derivative financial
instruments (Note 8.2), namely swaps, with the purpose of fixing the interest rate on loans obtained,
within certain parameters, deemed appropriate by the Company's risk management policies.
Exposure to interest rate risk
As at 31 December 2021, approximately 5% (31 December 2020: 36%) of the Company’s financial
liabilities are indexed to short-term reference interest rates, revised in periods below one year
(usually 6-month rates for long-term debt), plus duly negotiated risk spreads. Hence, changes in
interest rates can impact the Company’s earnings.
31 December 2021
US
dollar
Sterling
pound
Polish
zloti
Swiss
franc Total ( Euro)
Amounts in foreign currency
Cash and cash equivalents 2,180,829 263,672 288,237 117,265 2,415,508
Receivables 111,969,488 16,861,333 10,996,016 1,397,421 122,671,601
Total financial assets 114,150,317 17,125,005 11,284,253 1,514,686 125,087,108
Loans
Payables (5,701,640) (58,920) - (36,545) (5,139,610)
Total financial liabilities (5,701,640) (58,920) - (36,545) (5,139,610)
Financial net position in foreign currency 108,448,677 17,066,085 11,284,253 1,478,141
Financial net position in Euro 95,751,966 20,309,997 2,454,753 1,430,782 119,947,498
Impact of + 10% change in all exchange rates on results for the period 8,223,512
Impact of - 10% change in all exchange rates on results for the period (10,199,055)
31 December 2020
US
dollar
Sterling
pound
Polish
zloti
Swiss
franc
Australian
Dollar
Total ( Euro)
Amounts in foreign currency
Cash and cash equivalents 1,745,012 235,187 1,175 5,427 - 1,688,945
Receivables 46,002,864 4,727,535 3,295,918 148,770 140,476 43,696,508
Total financial assets 47,747,876 4,962,722 3,297,092 154,197 140,476 45,385,452
Payables (40,393,128) (7,484,115) - (41,426) - (41,280,558)
Total financial liabilities (40,393,128) (7,484,115) - (41,426) - (41,280,558)
Financial net position in foreign currency 7,354,748 (2,521,394) 3,297,092 112,771 140,476
Financial net position in Euro 5,993,601 (2,804,571) 723,094 104,398 88,372 4,104,895
Impact of + 10% change in all exchange rates on results for the period 241,594
Impact of - 10% change in all exchange rates on results for the period (219,632)
2021 Consolidated Annual Report
13/04/2022 383
Navigator has favoured the contracting of fixed rate debt and has derivative financial instruments to
cover its interest rate risk, namely interest-rate swaps, with the purpose of fixing the interest rate
on borrowings within certain limits.
As at 31 December 2021 and 31 December 2020, the detail of the financial assets and liabilities with
interest rate exposure, considering the maturity or the next interest-fixing date is as follows:
Estimates and judgements
Sensitivity analysis
Navigator carries out sensitivity analysis in order to assess the impact on the income statement and
equity caused by an increase or decrease in market interest rates, considering all other factors
unchanged. This is a mere illustrative analysis since changes in market rates rarely occur separately.
The sensitivity analysis is based on the following assumptions:
i) Changes in market interest rates affect interest income and expenses arising from variable
financial instruments;
ii) Changes in market interest rates affect the fair value of derivative financial instruments as
well as other financial assets or liabilities;
Amounts in Euro Up to 1 month 1-3 months 3-12 months 1-5 years
More than 5 years
Total
As at 31 December 2021
Assets
Current
Cash and cash equivalents 354,336,647 - - - - 354,336,647
Total financial assets 354,336,647 - - - - 354,336,647
Liabilities
Non-current
Interest-bearing liabilities - - - 647,913,901 32,202,381 680,116,282
Current
Interest-bearing liabilities - 115,218,254 - - - 115,218,254
Total financial liabilities - 115,218,254 - 647,913,901 32,202,381 795,334,536
Cumulative differential 354,336,647 239,118,393 239,118,393 (408,795,508) (440,997,889)
Amounts in Euro Up to 1 month 1-3 months 3-12 months 1-5 years
More than 5 years
Total
As at 31 December 2020
Assets
Current
Cash and cash equivalents 296,941,052 - - - - 296,941,052
Total financial assets 296,941,052 - - - - 296,941,052
Liabilities
Non-current
Interest-bearing liabilities - - - 503,086,118 149,837,301 652,923,419
Current
Interest-bearing liabilities - 40,000,000 251,527,778 - - 291,527,778
Total financial liabilities - 40,000,000 251,527,778 503,086,118 149,837,301 944,451,197
Cumulative differential 296,941,052 256,941,052 5,413,274 (497,672,844) (647,510,145)
2021 Consolidated Annual Report
13/04/2022 384
iii) Changes in fair value of derivative financial instruments and other financial assets and
liabilities are measured using the discounted cash flows method, with market interest rates
at year end.
A 0.50% increase in interest rates on which interest on loans are calculated would have an impact
on profit before taxes, for the period ended 31 December 2021 by approximately Euro 106,250
million (31 December 2020: Euro 1,701,516).
8.1.3. Liquidity risk
Liquidity risk management policy
The Company manages liquidity risk in two ways:
i) by ensuring that its financial debt has a high medium- and long-term component with
maturities appropriate to the characteristics of the industries where it operates, and
ii) by contracting with financial institutions credit facilities available at all times for an amount
that guarantees adequate liquidity.
Available but not used credits
The Group's policy is to maintain credit facilities at appropriate levels to, together with the amount
of Cash and Equivalents, meet the Group's cash budget over the next 12 months.
Contractual maturity of financial liabilities (undiscounted flows, including
interest)
The table considers the debt issued and the long-term debt contracted and not disbursed that will
refinance the debt maturing in 2022 (Available and unused credit facilities).
The contractual maturity of the interest-bearing liabilities presupposes the fulfilment of
financial covenants, as detailed in Note 5.6 - Interest-bearing liabilities.
Amounts in Euro Up to 1 month 1-3 months 3-12 months 1-5 years + 5 years Total
As at 31 December 2021
Liabilities
Interest-bearing liabilities (Note 5.7)
Bond loans 420,000 2,197,750 6,495,875 457,660,500 - 466,774,124
Commercial paper 65,130,000 36,242,500 994,000 144,224,500 - 246,590,999
Bank loans - 552,000 13,495,740 80,570,487 33,462,507 128,080,736
Lease liabilities (Note 5.8) - - - - -
Derivative financial instruments (Note 8.2) - 1,185,597 1,259,307 323,238 - 2,768,142
Other payables - - - - - -
Total liabilities
65,550,000 40,177,847 22,244,922 682,778,726 33,462,507 844,214,001
Of which interest (at the rates prevailing at that date)
37,408,448
As at 31 December 2020
Liabilities
Interest-bearing liabilities (Note 5.7)
Bond loans - 351,070 36,732,406 358,440,835 98,316,486 493,840,798
Commercial paper 189,470 1,259,757 2,043,761 262,416,635 103,695,050 369,604,674
Bank loans - - 12,022,560 93,578,767 57,606,355 163,207,681
Lease liabilities (Note 5.7)
Payables (Note 4.3)
Derivative financial instruments (Note 8.2) - 941,492 987,948 4,115,276 - 6,044,716
Other payables
Total liabilities
189,470 2,552,319 51,786,674 718,551,513 259,617,891 1,032,697,868
Of which interest (at the rates prevailing at that date)
43,904,949
2021 Consolidated Annual Report
13/04/2022 385
Credit facilities available but not used
As at 31 December 2021 Navigator's current liabilities are higher than its current assets. However,
this fact is strongly influenced by balances payable to subsidiaries, whose management is common
and the ability to determine the enforceability of balances rests with the same Board of Directors. It
should also be noted that the Company's liquidity indicators and debt covenants demonstrate
significant comfort.
8.1.4. Credit risk
Credit risk management policy
The Company is exposed to credit risk on balances receivable from Trade and other receivables and
has adopted a policy of managing risk coverage within certain levels through credit insurance with
a specialised independent company.
Most sales that are not covered by credit insurance are covered by bank guarantees and
documentary credits, and any exposure that is not covered remains within the limits previously
approved by the Executive Committee.
However, the worsening of global economic conditions or adversities affecting only economies on a
local scale may lead to deterioration in the ability of the Company’s Customers to settle their
liabilities, leading entities providing credit insurance to significantly decrease the amount of credit
facilities that are available to those Customers. This scenario may result in limitations on the
amounts that can be sold to some customers without directly incurring credit risk levels that are not
compatible with the risk policy in this area.
Cash equivalents
The Company adopts strict policies in approving its financial counterparties, limiting its exposure in
accordance with an individual risk analysis and within previously approved limits.
Maximum exposure to credit risk
The Company's maximum exposure to the credit risk of financial assets corresponds to their net
amount, as follows:
Amounts in Euro
31-12-2021 31-12-2020
Unused credit facilities
Commercial paper (with long term underwriting) 125,000,000 125,000,000
Long-term financing contracted and not disbursed - 132,500,000
Other credit facilities 20,450,714 20,450,714
145,450,714 277,950,714
Commercial paper used (Note 5.6) 240,000,000 375,000,000
Other credit facilities used 593,805,254 613,792,919
Contracted credit facilities (nominal value)
979,255,968 1,266,743,633
Amounts in Euro 31-12-2021 31-12-2020
Non-current
Receivables (Note 4.2) 6,684 6,684
Current
Receivables (Note 4.2) 866,987,969 750,265,643
Cash and cash equivalents (Note 5.8) 354,336,647 296,941,052
1,221,331,300 1,047,213,380
2021 Consolidated Annual Report
13/04/2022 386
Ageing structure of Trade receivables balances
As at 31 December 2021 and 2020, Trade receivables balances presented the following ageing
structure, considering as reference the maturity date of the outstanding amounts before
impairments:
The amounts shown above correspond to the amounts outstanding according to the contracted due dates.
Despite some delays in the settlement of those amounts, that does not result, in accordance with
the available information, in the identification of impairment losses other than the ones considered
through the respective losses. These are calculated based on the information periodically collected
on the financial behaviour of the Company’s Customers, which allow, in conjunction with the
experience obtained in the client portfolio analysis and with the history of credit defaults, in the part
not attributable to the insurance company, to define the amount of losses to be recognised in the
period. The guarantees in place for a significant part of outstanding and long-term balances, justify
the fact that no impairment loss has been recorded for those balances. The rules defined by the
credit risk insurance policy applied by the Group, ensure a significant hedge of all outstanding
balances.
Movements in accumulated impairment losses in Trade receivables
Amounts in Euro 31-12-2021 31-12-2020
Amounts not due 177,898,470 114,903,558
from 1 to 90 days 904,687 240,704
from 91 to 180 days 68,708 -
from 181 to 360 days 27,892 -
from 361 to 540 days - -
from 541 to 720 days - -
more than 721 days - -
178,899,757 115,144,261
Balances considered impaired 1,452,954 1,249,988
Impairment (1,452,954) (1,249,988)
Net balance of trade receivables (Note 4.2) 178,899,757 115,144,261
Trade receivables covered by credit insurance 165,019,240
99,185,012
Trade receivables covered by bank guarantees 2,650,130
1,727,494
Trade receivables covered by title retention agreements 5,464,991
1,101,555
Trade receivables covered by letters of credit / documentary collections 5,765,396
10,045,496
Covered receivables 178,899,757 112,059,557
Credit facilities available and unused 264,747,564 350,257,638
Credit hedging facilities contracted 443,647,321 462,317,195
Amounts in Euro
2021 2020
Accumulated impairments at the beginning of the period (1,249,988) (550,370)
Changes due to:
Increases recognised in profit or loss for the period (127,605) ( 249 846)
Reversal of unused amounts 44,011 27,950
Changes recognised in profit or loss for the period (Note 2.3) (83,594) (221,895)
Derecognition of assets due to uncollectibility (119,371) (477,723)
Treasury shares at the end of the period (1,452,954) (1,249,988)
2021 Consolidated Annual Report
13/04/2022 387
Accounting policies
Impairment of debt instruments
The Company assesses, on a prospective basis, the expected credit losses associated with its
financial assets measured at amortised cost and at fair value through other comprehensive income,
in accordance with IFRS 9.
On this basis, Navigator recognises expected credit losses throughout the lifetime of financial
instruments that have been subject to significant increases in credit risk since its initial recognition,
assessed either individually or collectively, considering all reasonable and sustainable information,
including available prospective information.
If, at the reporting date, the credit risk associated with a financial instrument has not increased
significantly since initial recognition, the Company measures impairment in respect of that financial
instrument at an amount equal to expected credit losses.
IFRS 9 establishes that for the calculation of these impairments one of two models can be used: the
3-stage method or the use of a matrix, being the distinctive component the existence or not of a
significant financing component. For Navigator's financial assets, since it is not a financial institution
and there are no assets that have a significant financing component, the use of a matrix was chosen.
The model adopted for the impairment assessment in accordance with IFRS 9 is as follows:
I. Calculate the total credit sales made over the last 12 months, as well as the total amount of
bad debts relating to them;
II. Determine the Customers’ payment profile, by setting buckets of receipt frequency;
III. Based on I. and II. above, estimate the probability of default (i.e., the amount of bad debts
calculated at I. compared to the balance of outstanding sales in each bucket calculated at
II.);
IV. Adjust the percentages of future projections obtained in III.;
V. Apply the default percentages as calculated in IV. to the balances of Trade receivables still
outstanding at the reporting date.
Although IFRS 9 assumes 90 days as “default”, Navigator considered a period of 180 days, since the
experience of real losses before this period is low. This period is aligned with the current risk
management policies of the company, namely in what regards the credit insurance hired, and to the
fact that there is no sales with significant components of funding in light of IFRS 15. Additionally,
the company evaluated the impact of considering 180 days of “default” instead of the 90 days and
the Expected Credit Loss would not change significantly.
In the event of an accident in the credit insurance company, the model considers the limit paid, by
Navigator, of 10% for national Customers and 5% for international Customers.
Given the COVID-19 pandemic situation, the Company analysed the credit risk, considering the
expected economic and financial impacts arising from COVID-19 at a macroeconomic level.
Accordingly, and as at 31 December 2021, the amount of the recoverability risk was reduced by
Euro 123,146 (31 December 2020: increased by Euro 677,723).
2021 Consolidated Annual Report
13/04/2022 388
Moreover, the Company recognises impairment on a case-by-case basis, based on specific balances
and specific past events, considering the historical information of the counterparties, their risk profile
and other observable data in order to assess whether there are objective indicators of impairment
for these financial assets. The Company uses the write-off procedure only when the credit is
considered to be definitively uncollectible by a court decision.
8.2. DERIVATIVE FINANCIAL INSTRUMENTS
Movements in derivative financial instruments
Detail and maturity of derivative financial instruments by nature
Cash flow hedge | Exchange rate risk EUR/USD and EUR/GBP
During the last quarter of 2021, the Company concluded the contracting of derivative financial
instruments by acquiring USD 242,500,000 and GBP 83,000,000 in Zero Cost Collar, thus
guaranteeing total coverage of the estimated value of exposure for 2022.
Interest rate hedge
During the first quarter of 2021, the Company increased its interest rate hedges, by contracting a
swap in the amount of Euro 75,000,000 to set the interest rate associated with the Navigator 2020-
2026 bond loan, of the same amount. At the end of the second quarter, the Company contracted a
new interest rate hedge, in the amount of Euro 100,000,000, to set the interest rate associated to
the Navigator 2021-2026 bond loan, starting in August 2021.
Amounts in Euro
Trading
derivatives
Hedging
derivatives
Net total
Trading
derivatives
Hedging
derivatives
Net total
Balance as at the beginning of the period
3,160,131 (5,336,693) (2,176,562) 536,035 (4,316,492) (3,780,457)
New contracts / settlements (623,573) 2,326,438 1,702,865 623,573 2,982,135 3,605,708
Change in fair value through profit or loss (Note 5.10) (4,265,016) (3,191,640) (7,456,656) 2,000,523 (3,647,914) (1,647,391)
Change in fair value through other comprehensive income (Note 5.5) - 1,430,747 1,430,747 - (354,422) (354,422)
Balance as at the end of the period
(1,728,458) (4,771,149) (6,499,607) 3,160,131 (5,336,693) (2,176,562)
2021
2020
31 December 2021
Amounts in Euro
Notional Currency Maturity
Positive
(Note 4.2)
Negative
(Note 4.3)
Net
Hedging
Hedging (future sales) 242,500,000 USD 2022 9,066 (1,426,675) (1,417,609)
Hedging (future sales) 83,000,000 GBP 2022 (483,940) (483,940)
Interest rate swaps - Bonds 375,000,000 EUR 2026 1,621,916 (2,804,403) (1,182,487)
BHKP Pulp 27,120,000 USD 2022 - (1,687,112) (1,687,112)
1,630,982 (6,402,131) (4,771,149)
Trading
Foreign exchange forwards (future sales) 129,745,503 USD 2023 - (1,640,154) (1,640,154)
Foreign exchange forwards (future sales) 9,050,000 GBP 2021 - (86,856) (86,856)
Foreign exchange forwards (future sales) 300,000 CHF 2021 - (1,448) (1,448)
Future purchase of CO
2
allowances (Note 3.2) - EUR 2021 - - -
- (1,728,458) (1,728,458)
1,630,982 (8,130,589) (6,499,607)
31 December 2020
Amounts in Euro
Notional Currency Maturity
Positive
(Note 4.2)
Negative
(Note 4.3)
Net
Hedging
Hedging (future sales) 204,000,000 USD 2021 831,818 (668) 831,149
Hedging (future sales) 72,000,000 GBP 2021 (515,688) (515,688)
Interest rate swaps - Bonds 200,000,000 EUR 2025 - (5,501,229) (5,501,229)
BHKP Pulp 9,120,000 USD 2021 - (150,926) (150,926)
831,818 (6,168,511) (5,336,693)
Trading
Foreign exchange forwards (future sales) 100,228,946 USD 2023 2,564,049 - 2,564,049
Foreign exchange forwards (future sales) 5,425,000 GBP 2021 - (27,345) (27,345)
Foreign exchange forwards (future sales) 225,000 CHF 2021 (146) (146)
Future purchase of CO
2
allowances (Note 3.2) 2,545,625 EUR 2021 623,573 - 623,573
3,187,622 (27,491) 3,160,131
4,019,440 (6,196,001) (2,176,561)
2021 Consolidated Annual Report
13/04/2022 389
BHKP Pulp Hedge
As in the previous year, the Group periodically monitors its exposure to the price of BHKP pulp.
During the fourth quarter of 2021, the Company opted to acquire financial instruments to hedge the
pulp price, by contracting swaps to set the price of 30,000 tons of pulp for the next 12 months,
ended 31 December 2022.
Accounting policies
The fair value of derivative financial instruments is included under Payables (Note 4.3), when
negative, and under Receivables (Note 4.2), when positive.
In accordance with IFRS 9 - Financial Instruments, the Company has opted to continue applying the
hedge accounting requirements of IAS 39 - Financial Instruments, until there is greater visibility on
the Dynamic Risk Management (macro hedging) project currently in progress.
Whenever expectations of changes in interest or exchange rates so justify, the Company hedges
these risks through derivative financial instruments, such as interest rate swaps (IRS), interest rate
and foreign exchange collars, forwards, etc.
Trading derivative financial instruments
Although the derivatives contracted by the Company represent effective economic hedges of risks,
not all of them qualify as hedging instruments in accounting terms to satisfy the applicable rules and
requirements. Instruments that do not qualify as hedging instruments are recorded in the
Consolidated statement of financial position at their fair value and changes are recognised in Net
financial results (Note 5.10), when related to financing operations, or in External services and
supplies (Note 2.3) or Revenue (Note 2.1), when referring to hedging of sales receivable flows in a
currency other than the presentation currency.
Hedging derivative financial instruments
Derivative financial instruments used for hedging purposes may be recognised as hedging
instruments provided that they comply, cumulatively, with the conditions set out in IAS 39.
Cash flow hedging (interest rate, exchange rate and commodity risk - BHKP)
In order to manage its exposure to interest rate risk and exchange rate risk, the Group enters into
cash flow hedges.
Those transactions are recorded in the interim consolidated statement of financial position at their
fair value, if considered effective hedges. The effective portion of changes in the fair value of
derivatives that are designated and qualify as cash flow hedges is recognised in other comprehensive
income. The gain or loss relating to the ineffective portion is recognised immediately in the income
statement.
Accumulated amounts in equity are reclassified to profit or loss in the periods when the hedged item
affects the Income statement (for example, when the forecast sale that is hedged takes place). The
gain or loss relating to the effective portion of interest rate swaps hedging variable rate borrowings
2021 Consolidated Annual Report
13/04/2022 390
is recognised in the income statement within "Net financial results" (Note 5.10). However, when the
forecast transaction that is hedged results in the recognition of a non-financial asset (for example,
inventory or property, plant and equipment), the gains and losses previously deferred in equity are
transferred from equity and included in the initial measurement of the cost of the asset.
When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for
hedge accounting, any cumulative gain or loss existing in equity is recycled to the income statement,
unless the hedged item is a forecast transaction, in which case any cumulative gain or loss existing
in equity at that time remains in equity and is recognised when the forecast transaction is ultimately
recognised in the Income statement
Derivative financial instruments used by Navigator
Foreign exchange trading derivatives
Navigator has a currency exposure on sales invoiced in foreign currencies, namely US dollars (USD)
and pounds sterling (GBP). As the Company’s financial statements are presented in Euro, it is
exposed to an economic risk on the conversion of these currency flows to the Euro. The Company is
also obliged, albeit to a lesser degree, to make certain payments in those same currencies which,
for currency exposure purposes, act as a natural hedge. Thus, the hedge is aimed at safeguarding
the net value of items in the statement of financial position denominated in a currency other than
the presentation currency against the respective currency fluctuations.
The hedging instruments used in this operation are foreign exchange forward contracts covering the
net exposure to currencies other than the presentation currency, for amounts and due dates close
to that exposure. The nature of the risk hedged is the change in the book value on sales and
purchases expressed in currencies other than the presentation currency. At the end of each month,
the balances of Trade receivables and Trade payables expressed in foreign currency are updated,
with the gain or loss offset against the fair value change of the forwards negotiated.
Cash flow hedge | Exchange rate risk EUR/USD and EUR/GBP
The Company makes use of derivative financial instruments in order to limit the net exchange risk
associated with sales and future purchases estimated at USD and GBP.
Cash flow hedge | Interest rate
Navigator hedges future interest payments associated with commercial paper issues by hiring an
interest rate swap, which pays a fixed rate and receives a floating rate. This instrument is designated
as hedge of cash flows from the commercial paper program and the bond loan.
Cash flow hedge | Commodities - BHKP
Navigator uses derivative financial instruments in order to minimize the exposure risk associated
with the variation of the pulp price, indexed to PIX, in USD
2021 Consolidated Annual Report
13/04/2022 391
Estimates and judgements
Fair value of derivative financial instruments
Whenever possible, the fair value of derivatives is estimated on the basis of quoted instruments. In
the absence of market prices, the fair value of derivatives is estimated through the discounted cash-
flow method and option valuation models, in accordance with prevailing market assumptions.
8.3. FINANCIAL ASSETS AND LIABILITIES
8.3.1. Categories of financial instruments of the Company
The financial instruments included in each caption of the statement of financial position are classified
as follows:
8.3.2. Fair Value of Financial Assets and Liabilities
Financial assets and liabilities measured at fair value
Amounts in Euro Note
Financial assets
at amortised
cost
Hedging
derivative
financial
instruments
Trading
derivative
financial
instruments
Non-financial
assets
Total
31 December 2021
Non-current receivables 4.2 6,684 - - - 6,684
Current receivables 4.2 827,995,428 1,630,982 - 37,361,559 866,987,969
Cash and cash equivalents 5.8 354,336,647 - - - 354,336,647
Total assets 1,182,338,759 1,630,982 - 37,361,559 1,221,331,300
31 December 2020
Non-current receivables 4.2 6,684 - - - 6,684
Current receivables 4.2 700,579,525 831,818 3,187,622 45,666,678 750,265,643
Cash and cash equivalents 5.8 296,941,052 - - - 296,941,052
Total assets 997,527,262 3,187,622 831,818 45,666,678 1,047,213,380
Amounts in Euro Note
Financial
liabilities at
amortised cost
Hedging
derivative
financial
instruments
Trading
derivative
financial
instruments
Financial
liabilities
outside the
scope of IFRS 9
Total
31 December 2021
Interest-bearing liabilities 5.6 933,165,634 - - - 933,165,634
Lease liabilities 5.7 - - - 2,883,977 2,883,977
Payables 4.3 1,145,268,183 6,402,131 1,728,458 - 1,153,398,771
Total liabilities 2,078,433,816 6,402,131 1,728,458 2,883,977 2,089,448,382
31 December 2020
Interest-bearing liabilities 5.6 947,383,993 - - - 947,383,993
Lease liabilities 5.7 - - - 3,375,536 3,375,536
Payables 4.3 907,383,784 6,168,511 27,491 - 913,579,785
Total liabilities 1,854,767,777 6,168,511 27,491 3,375,536 1,864,339,314
Amounts in Euro Level 1 Level 2 Level 3 Level 1 Level 2 Level 3
Financial assets at fair value through profit or loss
Trading derivatives - - - - 3,187,622 -
Hedging financial instruments - 1,630,982 - - 831,818 -
Total assets - 1,630,982 - - 4,019,440 -
Financial liabilities at fair value through profit or loss
Trading derivatives - (1,728,458) - - (27,491) -
Hedging financial instruments - (6,402,131) - - (6,168,511) -
Total liabilities - (8,130,589) - - (6,196,001) -
31-12-2020
31-12-2021
2021 Consolidated Annual Report
13/04/2022 392
Accounting policies
The fair value of financial instruments is classified according to the fair value hierarchy of IFRS 13 -
Fair Value Measurement:
Level 1
Based on quotes from active net markets at reporting date
Level 2
Fair value is determined using valuation models, whose main inputs of the models used are
observable in the market
Level 3
Determined using evaluation models, the main inputs of which are not observable in the market.
Estimates and judgements
Fair value of derivative financial instruments
Whenever possible, the fair value of derivatives is estimated on the basis of quoted instruments. In
the absence of market prices, the fair value of derivatives is estimated through the discounted cash-
flow method and option valuation models, in accordance with prevailing market assumptions.
2021 Consolidated Annual Report
13/04/2022 393
9. PROVISIONS, COMMITMENTS AND CONTINGENCIES
9.1. PROVISIONS
Movements in provisions
No refunds of any nature are expected in respect of these provisions.
Investments in Subsidiaries
In 2021 and 2020, the amount recognised as provisions for investments in subsidiaries corresponds
only to the shareholding in the subsidiary Portucel Moçambique. The detail of the final positions and
movements are detailed in Note 10.
Other provisions
The amount presented includes provisions to cover risks related to events of a different nature, the
resolution of which may result in outflows of cash, in particular organisational restructuring
processes, risks of contractual positions assumed in investments, among others.
In 2021, Other provisions include Euro 17,300,000 (2020: Euro 16,000,000) related to the
Mozambique project. Although the Memorandum of Understanding (MoU) signed with the
Mozambican Government provided for a "best effort" commitment to create the necessary conditions
to carry out the investment until last 31 December 2018, that was not possible, up to date, and both
parties continued to work towards that goal.
Accounting policies
Provisions are recognised whenever the Company has a present legal or constructive obligation, as
a result of past events, in which it is probable that an outflow of resources will be required to settle
the obligation and the amount has been reliably estimated.
Provisions for future operating losses are not recognised. Provisions are reviewed on the date of the
statement of financial position and are adjusted to reflect the best estimate at that date.
Amounts in Euro
Legal
proceedings
Investments in
subsidiaries
Other Total
1 January 2020
49,880 31,648,272 15,788,074 47,486,226
Increases 237,540 - 3,122,460 3,360,000
Reversals - - (1,346,622) (1,346,622)
Impact in profit or loss for the period
237,540 - 1,775,838 2,013,378
Transfers and adjustments - (13,355,215) (13,355,215)
31 December 2020
287,420 18,293,058 17,563,912 36,144,390
Increases 350,564 - 895,773 1,246,337
Reversals - - (107,837) (107,837)
Impact in profit or loss for the period
350,564 - 787,936 1,138,500
Transfers and adjustments - (18,293,058) (18,293,058)
31 December 2021
637,984 - 18,351,848 18,989,832
2021 Consolidated Annual Report
13/04/2022 394
Investments in Subsidiaries
Provisions are recognised for the Company's liabilities for losses on investments in subsidiaries (Note
10), after the related book value has been reduced to zero, to the extent that the Company may
have incurred legal or constructive obligations or made payments on behalf of such subsidiaries.
Tax proceedings
The Company's uncertain income tax positions are disclosed in Note 6.1 - Income Tax.
Estimates and judgements
Legal and tax proceedings
These provisions were made in accordance with the risk assessments carried out internally by the
Company with the support of its legal advisors, based on the likelihood of the decision being
favourable or unfavourable to the Company.
9.2. COMMITMENTS
Guarantees provided to third parties
The bank guarantees provided to the Tax Authority relate to the challenging of proceedings in
litigation, relating to corporate income tax for the tax period 2015.
9.3. CONTINGENT ASSETS AND LIABILITIES
PUBLIC DEBT SETTLEMENT FUND
According to Decree-Law no. 36/93 of 13 February, the tax debts of privatised companies relating
to periods prior to the privatisation date (in the case of The Navigator Company, 25 November 2006)
are the responsibility of the Public Debt Settlement Fund (FRDP). The Navigator Company submitted
an application to the FRDP on 16 April 2008, requesting the payment of the tax debts until then
settled by the Tax Authorities. On 13 December 2010, the company filed a new request for payment
of debts assessed by the Tax Administration for the periods of 2006 and 2003, which was
supplemented, on 13 October 2011, with the amounts already paid and uncontested relating to
these same debts, as well as the expenses directly related thereto, pursuant to the ruling dated 24
Amounts in Euro
31-12-2021 31-12-2020
Navigator guarantees for EIB loans 42,916,667 56,666,667
Portuguese tax authorities (AT) ii)
6,513,318 5,813,179
Customs clearance - USA - 5,671,909
Simria 338,829 338,829
Infrastructures of Portugal 22,320 6,480
Administration Fédérale des Contributions 79,373 76,585
Other 49,364 70,048
49,919,872 68,643,698
2021 Consolidated Annual Report
13/04/2022 395
May 2011 (Case No. 0993A/02), which confirmed the company's position regarding the enforceability
of such expenses.
On 13 December 2017, The Navigator Company, S.A. has made an extra-judicial agreement with
the Tax Authorities, in which it was acknowledged the FRDP´s responsibility for refunding the amount
of Euro 5,725,771 corresponding to the amount of Corporate Income Tax (IRC) unduly paid,
resulting from the alleged qualification/incorrect consideration, by the Tax Authorities, of the tax
loss calculated as a result of the operations performed by Soporcel, S.A. in 2003, as well as to
promote the reimbursement to Navigator of the mentioned amount.
In this context, FRDP is liable for Euro 22,140,855, detailed as follows:
Regarding the aggregate corporate income tax proceedings of 2005 and 2006, if Courts come to a
decision in favour of Navigator Group, the Group will withdraw the request made to FRDP.
Public Debt Settlement Fund - proceeding no. 774/11.3 BEALM
Additionally, a new petition was filed in the Administrative Court of Almada on 11 October 2011,
which called for the refund of various amounts, amounting to Euro 136,243,949. These amounts
regard adjustments in the financial statements of the Group after its privatisation that had not been
considered in formulating the price of its privatisation as they were not included in the documentation
made available for consultation by the bidders.
On 24 May 2014 the Court denied the Group’s proposal to present testimony evidence, alternatively
proposing written submissions. On 30 June 2014, the Group appealed against this decision, but
continuously presented written evidence. The Court subsequently confirmed the Group’s views on
this matter, both parts appointed experts and the partial expert report was issued in July 2017,
being required either by The Navigator Company, S.A. either by the Portuguese Ministry of Finance
(Ministério das Finanças), the attendance of both designated experts in court hearing, in order to
provide oral explanations on the expert report.
Following claims filed by Navigator on 11 September 2017 and 15 January 2019, the experts
submitted redrafted Expert Reports on 27 December 2018 and 19 March 2019, respectively.
The trial hearing sessions took place between May and June 2019, with the parties filing closing
arguments in September 2019 and now awaiting the Court's decision.
Amounts in Euro
Period
Amounts
requested
Decrease due
to RERD
Tax proceedings
favourable to the
Group
Outstanding
amounts
Proceedings confirmed in court
Corporate income tax 2002 18,923 - - 18,923
Corporate income tax (withhold) 2004 3,324 - - 3,324
Corporate income tax 2004 766,395 - (139,023) 627,372
Expenses 314,957 - - 314,957
1,103,599 - (139,023) 964,576
Proceedings not confirmed in court
Corporate income tax 2005 11,754,680 (1,360,294) - 10,394,386
Corporate income tax 2006 11,890,071 (1,108,178) - 10,781,893
23,644,751 (2,468,472) - 21,176,279
24,748,350 (2,468,472) (139,023) 22,140,855
2021 Consolidated Annual Report
13/04/2022 396
Infrastructure enhancement and maintenance fee
Under the licensing process No. 408/04 related to the new Setubal´s paper mill project, the Setubal
City Council issued a settlement note to Navigator regarding an infrastructure enhancement and
maintenance fee (“TMUE ") amounting to Euro 1,199,560, with which the Company disagrees.
This situation regards the amount collected under this levy in the licensing process mentioned above,
for the construction of a new paper mill in the industrial site of Mitrena, Setúbal. Navigator disagrees
with the amount charged and filed an administrative claim against it on 25 February 2008 (request
no. 2485/08), followed by an appeal to Court against the rejection of the claim on 28 October 2008.
On 3 October 2012, this claim had an adverse decision, and on 13 November 2012, Navigator
appealed to the Supreme Administrative Court (STA - Supremo Tribunal Administrativo), which
referred the case to the Administrative Central Court (TCA - Tribunal Central Administrativo) on 4
July 2013.
On 19 November 2020 the South Administrative Central Court (TCA Sul- Tribunal Central
Administrativo Sul) issued a decision which determined that the case should be sent back to the
court of first instance to expand on the contested facts. An exceptional appeal was filed with the STA
against this decision, and on 24 March 2021 the STA decided not to allow the appeal. Having the
case returned to the first instance, the Administrative and Fiscal Court (TAF - Tribunal Administrativo
e Fiscal) of Almada issued a new unfavourable sentence on 4 November 2021. Navigator presented
an appeal to TCA Sul on 13 December 2021, which was allowed and is now awaiting a decision.
2021 Consolidated Annual Report
13/04/2022 397
10. GROUP STRUCTURE
10.1. INVESTMENTS IN SUBSIDIARIES
(A) Includes Goodwill generated on the acquisition of the Figueira da Foz integrated pulp and paper business
(B) Balance sheet value reflects elimination of unrealised internal margins
(C) Company renamed in 2021 from Empremedia RE to Empremedia DAC
Goodwill associated with the integrated pulp and paper production activity of Figueira da Foz,
amounting to Euro 376,756,383, is disclosed in the table above as integrating the value of the
financial investment by applying the equity method, in accordance with the requirements of IAS 27
and IAS 28.
Changes in the period
Changes in investments in subsidiaries - summary
Company Head Office Equity % held Balance Equity % held Balance
Navigator Internacional Holding SGPS, S.A. Setúbal
120,226,861 100 120,226,861 115,736,283 100 115,736,283
Navigator Brands, S.A. (A) Figueira da Foz
10,054,563 100 386,810,950 14,154 100 376,770,540
Navigator Pulp Figueira, S.A. Aveiro
105,544,053 100 105,544,053 83,846,538 100 83,846,538
Enerpulp, S.A. Setúbal
49,504,315 100 49,504,315 58,957,847 100 58,957,846
Navigator Parques Industriais, S.A. Setúbal
129,751,094 100 129,751,094 132,438,397 100 132,438,397
Portucel Moçambique, S.A. Mozambique
4,466,703 90 9,306,240 (17,862,828) 90 (18,293,058)
Portucel Finance sp. Z o.o. Poland
- 25 n.a. 94,055,435 25 28,783,626
Navigator Pulp Figueira, S.A. Setúbal
199,116,255 100 199,116,253 162,554,922 100 162,554,921
Navigator Pulp Figueira, S.A. Figueira da Foz
151,392,875 100 151,392,866 107,721,947 100 107,721,947
Navigator Forest Portugal, S.A. Setúbal
26,088,918 100 26,088,918 27,953,642 100 27,953,642
Navigator Paper Setúbal , S.A. (B) Setúbal
547,465,274 100 536,556,882 534,917,366 100 525,841,166
Navigator Tissue Aveiro, S.A. (B) Aveiro
100,861,464 100 100,945,534 114,130,158 100 113,832,148
Raíz - Inst.Investigação Floresta e Papel Aveiro
9,563,212 97 9,276,315 9,172,733 97 8,897,551
Navigator Pulp Figueira, S.A. (B) Figueira da Foz
96,742,435 100 88,335,334 115,181,026 100 109,013,352
Pulpchem Logistics, A.C.E. Figueira da Foz
- 50 - - 50 -
Empremédia - Corretores de Seguros, S.A. Lisbon
4,819,316 100 4,819,316 4,599,588 100 4,599,588
Empremedia DAC (C) Ireland
1,494,226 100 1,494,226 1,580,173 100 1,580,173
Navigator Paper Mexico Mexico
4,519 25 1,130 10,183 25 2,546
Navigator Egypt Egypt
16,152 1 162 10,607 1 106
1,919,170,450 1,840,237,313
Provisions for affiliates with negative net position - 18,293,058
Investments in subsidiaries 1,919,170,450 1,858,530,371
31-12-2021
31-12-2020
Amounts in Euro
2021 2020
Opening balance 1,858,530,371 1,907,383,990
Acquisition and disposal of shareholdings - -
Mergers, Spin-offs and Liquidations (28,622,021) (15,312,237)
Additional capital contributions 32,273,764 -
Appropriate result by applying the equity method 160,083,746 81,797,972
Other comprehensive income (4,354,319) (11,058,931)
Dividends (85,802,502) (95,272,652)
Capital increases and reductions - 4,950,000
Transfer to provisions (Note 9.1) (18,293,058) (13,355,215)
Other movements 5,354,469 (602,556)
Closing balance 1,919,170,450 1,858,530,371
2021 Consolidated Annual Report
13/04/2022 398
Changes in investments in subsidiaries - details
Amounts in Euro
2021 2020
Opening balance 1,858,530,371 1,907,383,990
Mergers, spin-offs and liquidations
Navigator Internacional Holding SGPS, S.A. - (77,849,071)
Navigator Products & Tecnology, S.A. - (2,726,239)
Empremédia - Corretores de Seguros, S.A. - 3,363,260
RAIZ - 1,970,268
Navigator Pulp Figueira, S.A. - 60,674,420
Navigator International Trading Gmbh (DE) - (744,875)
Portucel Finance sp. Z o.o. (28,622,021) -
Mergers, spin-offs and liquidations (28,622,021) (15,312,237)
Additional capital contributions
Portucel Moçambique, Lda. 32,273,764 -
Additional capital contributions 32,273,764 -
Appropriate result by applying the equity method
Navigator Internacional Holding SGPS, S.A. 4,519,509 (4,879,895)
Navigator Brands, S.A. 8,665,432 6,452,682
Navigator Pulp Figueira, S.A. 21,697,515 (36,628,271)
Enerpulp, S.A. (2,025,042) 45,865,198
Navigator Parques Industriais, S.A. 4,226,240 1,572,934
Portucel Moçambique, Lda. (1,922,861) 16,587,267
Portucel Finance sp. Z o.o. (146,467) (1,486,443)
Navigator Pulp Figueira, S.A. 36,561,332 (2,324,042)
Navigator Pulp Figueira, S.A. 47,769,394 (31,906,474)
Navigator International Trading Gmbh (DE) 572,047
Navigator Forest Portugal, S.A. (1,011,885) 549,436
Navigator Tissue Aveiro, S.A. 8,807,387 17,290,599
Navigator Paper Setúbal , S.A. 22,327,297 44,420,153
RAIZ 228,222 81,855
Navigator Pulp Figueira, S.A. 9,071,443 23,059,226
Empremédia - Corretores de Seguros, S.A. 1,148,123 987,090
Empremedia DAC 160,245 1,580,073
Navigator Paper Mexico 7,763 4,494
Navigator Egypt 99 45
Appropriate result by applying the equity method 160,083,746 81,797,972
Changes in investee's equity not recognised in profit or loss
Navigator Internacional Holding SGPS, S.A. (28,932) 163,025
Navigator Products & Tecnology, S.A. - (154,000)
Enerpulp, S.A. 1 -
Navigator Brands, S.A. 1,374,977 (9,593,668)
Navigator Forest Portugal, S.A. (62,373) (1,372,638)
Navigator Tissue Aveiro, S.A. 77,000 -
Navigator Paper Setúbal , S.A. 2,510,585 (3,071,398)
Navigator Pulp Figueira, S.A. (9) 307,998
Raíz - Inst.Investigação Floresta e Papel 150,542 (21,454)
Portucel Moçambique, S.A. (8,021,372) 2,037,714
Navigator Internacional Holding SGPS, S.A. - 298,613
Portucel Finance sp. Z o.o. (99,840) 99,538
Empremédia - Corretores de Seguros, S.A. 515 249,238
Empremedia DAC (246,192) -
Navigator Paper Mexico (9,179) (1,902)
Navigator Egypt (43) 3
Changes in investee's equity not recognised in profit or loss (4,354,319) (11,058,931)
Distribution of dividends / reserves
Navigator Pulp Figueira, S.A. - (6,554,804)
Navigator Parques Industriais, S.A. (6,913,543) -
Navigator Forest Portugal, S.A. (790,466) (18,796,298)
Navigator Pulp Figueira, S.A. - (2,077,540)
Navigator Pulp Figueira, S.A. (4,098,466) -
Navigator Paper Setúbal , S.A. (14,122,166) (47,973,531)
Navigator Tissue Aveiro, S.A. (21,771,001) (1,762,791)
Navigator Pulp Figueira, S.A. (29,749,461) (15,004,235)
Empremédia - Corretores de Seguros, S.A. (928,910) -
Enerpulp, S.A. (7,428,489) -
Portucel Finance sp. Z o.o. - (3,103,452)
Distribution of dividends / reserves (85,802,502) (95,272,652)
Share capital increases/(reductions)
Navigator Brands, S.A. - 4,950,000
Share capital increases/(reductions) - 4,950,000
Other movements and reclassifications 5,354,469 (602,556)
Closing balance 1,937,463,508 1,871,885,585
Provisions for subsidiaries (Note 9.1) (18,293,058) (13,355,215)
Closing balance considering Provisions 1,919,170,450 1,858,530,371
2021 Consolidated Annual Report
13/04/2022 399
Accounting policies
Subsidiaries are all entities over which the Company has control, which occurs when the Company
is exposed or entitled to the variable returns resulting from its involvement with the entities and has
the capacity to affect that return through the exercise of power over the entities, regardless of the
percentage they hold over equity.
The existence and the effect of potential voting rights which are currently exercisable, or convertible
are considered when the Company assesses whether it has control over another entity.
Measurement
Investments in subsidiaries are accounted under the equity method.
In accordance with the equity method, financial investments are recorded at their acquisition cost,
subsequently adjusted by the amount corresponding to the Company's share of changes in
shareholders' equity (including net profit) of the subsidiaries, against results for the period or against
shareholders' equity, as applicable, and by dividends received.
The accounting policies of joint ventures are amended, when necessary, to ensure that they are
applied consistently with those of Navigator.
When the Company’s share in the subsidiary’s losses is equal to or exceeds its investment in the
subsidiary, the Company ceases to recognise additional losses, except where it has assumed liability
or made payments in the subsidiary’s name, as detailed in Note 9.1 - Provisions. If they subsequently
report profits, the Company resumes recognising its share of those profits only after its share of the
profits equals the share of unrecognised losses.
Estimates and judgements
As at 31 December 2021 the amount of equity interests recognised in the separate financial
statements of The Navigator Company, S.A., by applying the equity method amounts to Euro 1,943
million (2020: Euro 1,872 million), which includes Goodwill essentially allocated to the integrated
Paper cash generating unit in Figueira da Foz. Goodwill is not amortised and is subject to impairment
tests, at least annually, and whenever there are changes in the assumptions underlying the test
performed at the date of the statement of financial position which result in a possible loss of value.
The recoverable amounts of cash-generating units have been determined based on value-in-use
calculations. These calculations require the use of estimates.
As at 31 December 2021, a possible increase of 0.5% in the discount rate used in the impairment
test of Goodwill allocated to the cash-generating unit in Figueira da Foz integrated Paper, would
imply a decrease in the assessment in the amount of Euro 138,398,565 (31 December 2020: Euro
152,647,490), which is still around 2.5 times higher than the book value of this cash-generating
unit.
2021 Consolidated Annual Report
13/04/2022 400
10.2. TRANSACTIONS WITH RELATED PARTIES
Balances with related parties
Transactions of the period with related parties
The remuneration of the Company's key management personnel is detailed in Note 7.3 -
Remuneration of corporate bodies.
Amounts in Euro
Cash - Cash
Pooling
(Note 5.8)
Receivables
(Note 4.2)
Payables
(Note 4.3)
Interest-bearing
liabilities - Cash Pooling
(Note 5.6)
Receivables
(Note 4.2)
Payables
(Note 4.3)
Shareholders
Semapa - Soc. de Investimento e Gestão, SGPS, S.A. - - 1,023,084 - - -
Subsidiaries
Portucel Moçambique, Lda. - 14,865,030 174,985 - 35,482,476 -
Portucel Finance sp. Z o.o. - - - - - 99,244,899
Soc. Vinhos Herdade Espirra, S.A. - 137,824 1,251,899 43,771 137,783 1,348,260
EucaliptusLand, S.A. 843,296 890,762 19,476,136 - 695,352 14,764,045
Enerpulp, S.A. 1,733,135 25,681,527 8,800 - 16,008,808 -
Navigator Forest Portugal, S.A. 4,017,761 216,076,667 - 13,502,206 216,768,495 -
Empremédia, S.A. - 180,051 2,500,000 - 273,670 2,500,000
Navigator Tissue Aveiro, S.A. 11,593,771 110,641,569 6,702,391 - 111,632,284 -
Viveiros Aliança, S.A. 309,067 404,346 19,430 457,048 17,653 95,769
Navigator Paper Setúbal , S.A. 5,547,220 49,304,601 258,426,311 17,277,315 15,185,595 228,629,911
Navigator Pulp Figueira, S.A. 37,415,900 41,014,027 103,659,149 - 9,757,036 65,246,005
Atlantic Forests, S.A. 189,422 55,164 4,105,354 - (191) 4,072,444
Navigator Pulp Figueira, S.A. 443,913 24,130,709 159,527,631 5,392,673 3,192,915 76,363,590
Navigator Tissue Ródão , S.A. 6,498,824 3,864,894 113,273,287 - 3,446,970 113,136,728
Navigator Pulp Figueira, S.A. 4,629,832 39,953,737 54,839,067 28,853,098 29,032,070 (11,831)
Raiz - - 4,583,372 225,161 (215,327) 5,410,824
Navigator Internacional Holding SGPS, S.A. 137,171 - 120,430,883 - 2,046,157 51,770,089
Navigator Brands, S.A. 2,053,234 900,750 31,105,863 - 170,201 528,717
Navigator Pulp Figueira, S.A. 2,008,215 62,674,140 27,490,406 10,638,537 61,937,305 420,764
Navigator Parques Industriais, S.A. - 2,406,276 40,756,247 907,939 722,281 39,467,412
Navigator Abastecimento de Madeira, ACE 47,503,683 2,374,016 - 49,425,162 - 16,723,457
Bosques do Atlantico, SL - - 28,848,149 2,150,313 - 28,932,243
PulpChem Logístics, ACE - - 2,181,040 - 48,570 631,899
Navigator North America Inc. - - 16,825,852 - 2,431,314 1,607,993
Navigator Eurasia - 7,917 - - 3,631 (539)
Navigator Afrique du Nord - 1,329 - - 1,136 -
Navigator United Kingdom, Ltd - 7,508,562 20,803,913 - 6,286,221 18,013,702
Gavião - Sociedade de Caça e Turismo, S.A. 117,454 - 1,379,264 - 2,107 1,600,706
Navigator Tissue Ibérica - 10,556,982 3,803,135 - 9,932,676 3,936,105
Navigator Netherlands, BV - - - - - 4,551
Navigator France, EURL - - - - - 396
Navigator Italia, SRL - - 1,765 - - 1,360
Navigator Deutschland, GmbH - - 159,886 - - (86,347)
Navigator Austria - - - - - 2,480
Navigator Paper Poland (SP) - 10,941 13 - 4,801 -
Empremedia RE - 35,169,737 - - 31,891,000 (25,770)
Ema Cacia - Engenharia e Manutenção Industrial, ACE - - - 221,084 - -
Ema Setúbal - Engenharia e Manutenção Industrial, Portugal ACE
- - - 291,169 - -
Ema Figueira da Foz- Engenharia e Manutenção Industrial, ACE
- - - 293,422 - -
Raiz - Ventures - - 169 96,601 - -
125,041,900 648,811,560 1,023,357,484 129,775,499 556,892,987 774,329,862
31-12-2020
31-12-2021
Amounts in Euro
Purchase of
goods and
services
Sales and
services
rendered
Payroll costs
Other operating
income
Other operating
expenses
Financial
(expenses)/ income
Purchase of
goods and
services
Sales and
services
rendered
Payroll costs
Other
operating
income
Other
operating
expenses
Financial
(expenses)/
income
Shareholders
Semapa - Soc. de Investimento e Gestão, SGPS, S.A. 10,043,173 - - - - - 8,718,731 - - - - -
10,043,173 - - - - 8,718,731 - - - -
Subsidiaries - -
Portucel Finance sp. Z o.o. - - - - - (71,004) - - - - - (440,188)
Soc. Vinhos Herdade Espirra, S.A. 1,241 - 331 - - (9,200) (10,174) - - (130) - (13,643)
EucaliptusLand, S.A. - 602,844 - - (464) (113,561) - 1,036,959 - - - (138,816)
Afocelca, ACE - - - - - - (244) - - - - -
Enerpulp, S.A. (162,428) 312,575 (213,222) - - 333,207 (171,300) 825,558 (188,761) 588,815 - 586,419
Navigator Brands, S.A. 9,088,196 1,565,009 3,173,946 - (98,978) (35,969) 7,184,110 1,802,712 2,787,482 - (48,408) -
Navigator Forest Portugal, S.A. (2,988) 916,759 (458,756) - (513) 1,623,599 (2,730,305) (5,187) (196,253) 1,029 - 1,922,749
Empremédia, S.A. 42,440 - (46,111) - (12,071) 53,033 - - - 459 - -
Navigator Tissue Aveiro, S.A. 67,662,434 44,015,950 - 255,135 - 809,857 69,558,642 35,229,027 - - (88,310) 1,243,895
Viveiros Aliança, S.A. 207,752 - - 5,767 - 324 260,956 70,066 - 352 - 1,790
Navigator Paper Setúbal , S.A. 478,994,732 356,319,540 (8,380,950) 6,599,529 - 1,378,460 442,050,109 208,661,945 (7,885,557) 4,173,681 - 1,815,566
Atlantic Forests, S.A. 146,430 - - 15,093 - (28,009) 400,299 - - - - (39,084)
PulpChem Logístics, ACE 16,424,171 - - - - - 12,160,636 - - - - -
Navigator Pulp Figueira, S.A. 252,161,826 40,006,811 (5,517,212) - (66,395) 266,355 142,757,714 898,804 (6,049,905) 4,038,521 - 324,720
Navigator Tissue Ródão , S.A. 79,893,369 46,533,576 853,980 - (752,956) 75,480,995 33,462,956 1,572 - - 1,776,173
Navigator Pulp Figueira, S.A. 317,052,366 42,120,929 (8,262,168) - (90,523) 1,948,524 221,215,371 22,073,627 (7,345,625) 2,940,527 - -
Raiz (1,434) 321,023 (98,635) - (39,001) (22,300) (6,946) 335,991 (83,932) 6,612 - (36,194)
Navigator Internacional Holding SGPS, S.A. - - - - - 141,575 - - - - - 409,479
Navigator United Kingdom, Ltd 18,786,761 - - - - - 18,744,549 - - - - -
Navigator Tissue Ibérica 817,914 29,658,532 - - - - 623,659 27,171,960 - - - -
Navigator Pulp Figueira, S.A. 482,457,760 370,091,446 99,152 - 1,082,456 413,234,947 276,063,878 (136) - 3,374,718 1,259,532
Navigator Pulp Figueira, S.A. 167,517,664 26,700,416 (3,803,912) - (37,794) 198,366 106,565,226 52,687 (4,419,060) 2,265,381 - 766,063
Navigator Parques Industriais, S.A. - 2,021,312 - - - 463,705 - 2,935,094 - - - 443,839
Navigator North America Inc. 3,650,314 107,226,620 - - - 119,673 (2,576,408) 106,306,138 - - (4,292,209) 774,027
Portucel Moçambique, Lda. - - - - - - 30,181 - - - - -
Bosques do Atlantico, SL (1,293) - - - - - 1,017 - - - - -
Empremedia RE - - - - - 607,899 - - (98,769) - - 280,542
Gavião - Sociedade de Caça e Turismo, S.A. - - - 69,482 - (11,198) - - - - - 20,240
Navigator Italia, SRL 355 - - - - - 1,248 - - - - -
Navigator Netherlands, BV 1,281 - - - - - 4,551 - - - - -
Navigator Deutschland, GmbH 92 - - - - - - - - - - -
Navigator Abastecimento de Madeira, ACE (24,410) (2,699,553) (391,622) - - (37,385) (21,953) 7,463,411 (338,353) - - (407,040)
1,894,714,546 1,065,713,789 (23,998,309) 7,898,138 (345,739) 7,945,452 1,504,756,881 724,385,626 (23,817,297) 14,015,245 (1,054,208) 10,550,069
2021
2020
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11. Explanation added for translation
These financial statements are a translation of the financial statements originally issued in
Portuguese. In the event of discrepancies, the Portuguese language version shall prevail.
BOARD OF DIRECTORS
Ricardo Miguel dos Santos Pacheco Pires
Board of Directors Chairman
António José Pereira Redondo
Chairman of the Executive Board
Adriano Augusto da Silva Silveira
Executive Board Member
José Fernando Morais Carreira de Araújo
Executive Board Member
Nuno Miguel Moreira de Araújo Santos
Executive Board Member
João Paulo Araújo Oliveira
Executive Board Member
João Paulo Cabete Gonçalves Lé
Executive Board Member
Manuel Soares Ferreira Regalado
Member
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Maria Teresa Aliu Presas
Member
Mariana Rita Antunes Marques dos Santos
Member
Sandra Maria Soares Santos
Member
Vítor Manuel Rocha Novais Gonçalves
Member
Vítor Paulo Paranhos Ferreira
Member
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12. STATUTORY AUDITOR’S REPORT AND AUDIT REPORT
SEPARATE FINANCIAL STATEMENTS
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13. REPORT AND OPINION OF THE SUPERVISORY BOARD
SEPARATE FINANCIAL STATEMENTS
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The Navigator Company, S.A.
Report and Opinion of the Audit Board
Separate Financial Accounts
2021 Financial Year
Shareholders,
1. In accordance with the law, the articles of association and the terms of our
mandate, we hereby submit the report on our supervisory activities in 2021
and issue our opinion on The Individual Management Report and Separate
Financial Statements presented by the Board of Directors of the Navigator
Company, SA, for the financial year ended 31 December 2021.
2. Over the course of the year we regularly monitored the affairs of the
Company and its most significant affiliates and associates, with the frequency
and to the extent we deemed appropriate, through periodic meetings with
the Company’s directors and senior management. We monitored the
verification of the accounting records and respective supporting
documentation, as well as the effectiveness of the risk management, internal
control and internal audit systems. We monitored compliance with the law
and the articles of association. In the course of our work we encountered no
constraints whatsoever.
3. We met several times with the statutory auditor and external auditor, KPMG
& Associados, SROC, Lda, monitoring its auditing activities and checking its
independence. We assessed the Legal Accounts Certificate and the Audit
Report and are in agreement with the Legal Accounts Certificate presented.
4. The Audit Board analyzed the proposals submitted to it for the provision of
non-audit services by the external auditor, and approved those that
concerned permitted services, did not affect the independence of the external
auditor and complied with additional legal requirements.
5. In the course of our work we found that:
a) The Separate Statement of Income by Nature, the Separate Statement
of Financial Position, the Separate Statement of Comprehensive Income,
the Separate Statement of Changes in Equity, the Separate Statement of
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Cash Flows and the related Notes to the Separate Financial Statements,
provide an adequate understanding of the Company's financial position
and results, comprehensive income, changes in equity, and cash flows;
b) The accounting policies and valuation criteria adopted comply with the
International Financial Reporting Standards (IFRS) as adopted in the
European Union and suitably assure that such criteria lead to a correct
valuation of the Company’s assets and profits, taking due account of the
analyses and recommendations of the external auditor;
c) The Management Report provides a sufficient description of the business
affairs of the Company and its affiliates included in the consolidated
accounts, offering a clear account of the most significant developments;
d) The Corporate Governance Report includes the information required by
Article 245-A of the Securities Code and takes into account the
recommendations of the Code of the Portuguese Institute for Corporate
Governance (IPCG).
6. We are of the opinion that the proposal for application of results presented
by the Board of Directors is not contrary to the applicable legal and statutory
provisions.
7. Accordingly, taking into consideration the information received from the
Board of Directors and the Company departments, and also the conclusions
of the Legal Accounts Certificate and the Audit Report, we recommend that:
a) The Management Report be approved;
b) The Separate Financial Statements be approved;
c) The proposal for the application of results presented by the Board of
Directors be approved.
8.
Finally, the members of the Audit Board wish to acknowledge and express
their appreciation for the assistance received from the Board of Directors,
the senior managers of the Company and other staff, as well as the external
auditor, KPMG & Associados, SROC, Lda.
Lisbon, March 28, 2022
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The Chairman of the Audit Board
José Manuel Oliveira Vitorino
Member
Gonçalo Nuno Palha Gaio Picão Caldeira
Member
Maria da Graça Torres Ferreira da Cunha Gonçalves
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