SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 

 
FORM 6-K
 
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of the
Securities Exchange Act of 1934
 
For the month of June, 2020
Commission File Number 1-14732
 

 
COMPANHIA SIDERÚRGICA NACIONAL
(Exact name of registrant as specified in its charter)
 
National Steel Company
(Translation of Registrant's name into English)
 
Av. Brigadeiro Faria Lima 3400, 20º andar
São Paulo, SP, Brazil
04538-132
(Address of principal executive office)
 

Indicate by check mark whether the registrant files or will file annual reports
under cover Form 20-F or Form 40-F. 
Form 20-F ___X___ Form 40-F _______

 Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.  

Yes _______ No ___X____


 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information - March 31, 2020 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

Table of Contents

 

Company Information

 

Capital Breakdown

1

Parent Company Financial Statements

 

Balance Sheet – Assets

2

Balance Sheet – Liabilities

3

Statement of Income

4

Statement of Comprehensive Income

5

Statement of Cash Flows

6

Statement of Changes in Shareholders’ Equity

 

01/01/2020 to 03/31/2020

7

01/01/2019 to 03/31/2019

8

Statement of Value Added

9

Consolidated Financial Statements

 

Balance Sheet - Assets

10

Balance Sheet - Liabilities

11

Statement of Income

12

Statement of Comprehensive Income

13

Statement of Cash Flows

14

Statement of Changes in Shareholders’ Equity

 

01/01/2020 to 03/31/2020

15

01/01/2019 to 03/31/2019

16

Statement of Value Added

17

Comments on the Company’s Consolidated Performance

18

Notes to the quarterly financial information

34

Comments on the Performance of Business Projections

82

Reports and Statements

 

Unqualified Independent Auditors’ Review Report

85

Officers Statement on the Financial Statements

87

Officers Statement on Auditor’s Report

88


 
 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information - March 31, 2020 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

 

Company Information / Capital Breakdown

 

Number of Shares

(Units)

Current Quarter

03/31/2020

 

Paid-in Capital

 

 

Common

1,387,524,047

 

Preferred

0

 

Total

1,387,524,047

 

Treasury Shares

 

 

Common

7,409,500

 

Preferred

0

 

Total

7,409,500

 

 

Page 1


 
 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information - March 31, 2020 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

Parent Company Financial Statements / Balance Sheet - Assets

   

(R$ thousand)

     
       

Code

Description

 Current Quarter 03/31/2020

 Previous Year 12/31/2019

1

Total Assets

            46,214,834

            44,814,611

1.01

Current assets

              9,986,891

              9,719,866

1.01.01

Cash and cash equivalents

              1,425,986

                  392,107

1.01.02

Financial investments

              1,639,699

              2,596,424

1.01.02.01

Financial investments measured a fair value through profit or loss

              1,152,266

              2,114,620

1.01.02.01.03

Financial investments measured a fair value through profit or loss – Usiminas’ shares

              1,152,266

              2,114,620

1.01.02.03

Financial investments at amortized cost

                  487,433

                  481,804

1.01.03

Trade receivables

              2,053,614

              1,691,643

1.01.04

Inventory

              3,470,304

              3,736,716

1.01.08

Other current assets

              1,397,288

              1,302,976

1.01.08.03

Others

              1,397,288

              1,302,976

1.01.08.03.01

Recoverable taxes

              1,208,099

              1,129,584

1.01.08.03.02

Prepaid expenses

                  103,720

                    82,664

1.01.08.03.03

Dividends receivable

                    33,351

                    33,447

1.01.08.03.04

Others

                    52,118

                    57,281

1.02

Non-current assets

            36,227,943

            35,094,745

1.02.01

Long-term assets

              7,299,609

              7,374,332

1.02.01.03

Financial investments at amortized cost

                  121,027

                    95,719

1.02.01.07

Deferred taxes assets

              2,435,855

              2,435,551

1.02.01.10

Other non-current assets

              4,742,727

              4,843,062

1.02.01.10.03

Recoverable taxes

              1,746,032

              1,907,420

1.02.01.10.04

Judicial deposits

                  223,398

                  224,300

1.02.01.10.05

Prepaid expenses

                    98,731

                  110,099

1.02.01.10.06

Receivable from related parties

              1,648,448

              1,558,194

1.02.01.10.07

Others

              1,026,118

              1,043,049

1.02.02

Investments

            18,614,972

            17,402,191

1.02.02.01

Equity interest

            18,468,033

            17,316,463

1.02.02.02

Investment Property

                  146,939

                    85,728

1.02.03

Property, plant and equipment

            10,263,175

            10,266,084

1.02.03.01

Property, plant and equipment in operation

            10,224,167

            10,221,911

1.02.03.02

Right of use in leases

                    39,008

                    44,173

1.02.04

Intangible assets

                    50,187

                    52,138

 

 

 

Page 2


 
 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information - March 31, 2020 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

 

Parent Company Financial Statements / Balance Sheet – Liabilities

   

(R$ thousand)

     
       

Code

Description

 Current Quarter 03/31/2020

 Previous Year 12/31/2019

2

Total Liabilities

                    46,214,834

                    44,814,611

2.01

Current liabilities

                       9,293,987

                       9,224,591

2.01.01

Payroll and related taxes

                          156,175

                          170,792

2.01.02

Trade payables

                       2,833,119

                       2,506,244

2.01.03

Tax payables

                            84,615

                            78,911

2.01.04

Borrowings and financing

                       4,299,929

                       4,396,840

2.01.05

Other payables

                       1,882,455

                       2,019,788

2.01.05.02

Others

                       1,882,455

                       2,019,788

2.01.05.02.04

Dividends and interests on shareholder´s equity

                            13,116

                            13,252

2.01.05.02.05

Advances from clients

                            64,046

                            72,404

2.01.05.02.06

Trade payables – Drawee risk

                          937,576

                       1,121,312

2.01.05.02.07

Lease liabilities

                            14,897

                            17,269

2.01.05.02.08

Other payables

                          852,820

                          795,551

2.01.06

Provisions

                            37,694

                            52,016

2.01.06.01

Provision for tax, social security, labor and civil risks

                            37,694

                            52,016

2.02

Non-current liabilities

                    32,750,837

                    25,415,476

2.02.01

Borrowings and financing

                    25,608,213

                    19,702,620

2.02.02

Other payables

                          428,804

                          356,942

2.02.02.02

Others

                          428,804

                          356,942

2.02.02.02.03

Lease liabilities

                            26,078

                            28,671

2.02.02.02.04

Derivative financial instruments

                            94,909

                                      -  

2.02.02.02.05

Other payables

                          307,817

                          328,271

2.02.04

Provisions

                       6,713,820

                       5,355,914

2.02.04.01

Provision for tax, social security, labor and civil risks

                          374,935

                          370,703

2.02.04.02

Other provisions

                       6,338,885

                       4,985,211

2.02.04.02.03

Provision for environmental liabilities and decommissioning of assets

                          175,875

                          164,464

2.02.04.02.04

Pension and healthcare plan

                          912,184

                          912,184

2.02.04.02.05

Provision for losses on investments

                       5,250,826

                       3,908,563

2.03

Shareholders’ equity

                       4,170,010

                    10,174,544

2.03.01

Share Capital

                       4,540,000

                       4,540,000

2.03.02

Capital reserves

                            32,720

                            32,720

2.03.04

Profit reserves

                       4,431,200

                       4,431,200

2.03.04.01

Legal reserve

                          278,576

                          278,576

2.03.04.02

Earnings reserves

                       4,210,888

                       4,210,888

2.03.04.09

Treasury shares

                           (58,264)

                           (58,264)

2.03.05

Accumulated profit/(losses)

                     (1,360,851)

                                      -  

2.03.08

Other comprehensive income

                     (3,473,059)

                       1,170,624

        

Page 3


 
 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information - March 31, 2020 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

Parent Company Financial Statements / Statement of Income   

(R$ thousand)

 
 

Code

Description

Year to date 01/01/2020 to 31/03/2020

YTD previous year 01/01/2019 to 31/03/2019

3.01

Revenues from sale of goods and rendering of services

                    3,031,309

                    3,021,217

3.02

Costs from sale of goods and rendering of services

                  (2,778,380)

                  (2,833,088)

3.03

Gross profit

                       252,929

                       188,129

3.04

Operating (expenses)/income

                  (1,262,912)

                       308,308

3.04.01

Selling expenses

                     (162,239)

                     (120,144)

3.04.02

General and administrative expenses

                        (50,192)

                        (56,117)

3.04.04

Other operating income

                         74,847

                       219,694

3.04.05

Other operating expenses

                     (534,638)

                     (284,595)

3.04.06

Equity in results of affiliated companies

                     (590,690)

                       549,470

3.05

Profit before financial income (expenses) and taxes

                  (1,009,983)

                       496,437

3.06

Financial income (expenses)

                     (351,172)

                     (458,764)

3.06.01

Financial income

                         53,376

                       101,370

3.06.02

Financial expenses

                     (404,548)

                     (560,134)

3.06.02.01

Net exchange differences over financial instruments

                       931,016

                        (72,099)

3.06.02.02

Financial expenses

                  (1,335,564)

                     (488,035)

3.07

Profit (loss) before taxes

                  (1,361,155)

                         37,673

3.08

Income tax and social contribution

                               304

                        (45,245)

3.09

Profit (loss) from continued operations

                  (1,360,851)

                          (7,572)

3.11

Profit (loss) for the year

                  (1,360,851)

                          (7,572)

3.99

Earnings per share – (Reais / Share)

                                   -  

                                   -  

3.99.01

Basic earnings per share

                                   -  

                                   -  

3.99.01.01

Common shares

                     (0.98604)

                     (0.00551)

3.99.02

Diluted earnings per share

                                   -  

                                   -  

3.99.02.01

Common shares

                     (0.98604)

                     (0.00551)

 

Page 4


 
 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information - March 31, 2020 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

Parent Company Financial Statements / Statement of Comprehensive Income

 

(R$ thousand)

   
       

Code

Description

Year to date 01/01/2020 to 31/03/2020

YTD previous year 01/01/2019 to 31/03/2019

4.01

(Loss) profit for the year

              (1,360,851)

                      (7,572)

4.02

Other comprehensive income

              (4,643,683)

                   150,183

4.02.01

Actuarial gains over pension plan of subsidiaries, net of taxes

                             31

                             30

4.02.02

Cumulative translation adjustments for the year

                   380,042

                   (21,804)

4.02.04

Losses in cash flow hedge

              (5,390,043)

                   (18,440)

4.02.05

Cash flow hedge reclassified to income upon realization

                   364,818

                   184,217

4.02.06

Gain (Loss) on net investment hedge from investments in subsidiaries

                       1,469

                       6,180

4.03

Comprehensive income for the year

              (6,004,534)

                   142,611

 

 

 

 

 

 

 

 

 

 

 

 

 

Page 5


 
 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information - March 31, 2020 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

Parent Company Financial Statements / Statements of Cash Flows – Indirect Method

(R$ thousand)

   
   
       

Code

Description

Year to date 01/01/2020 to 31/03/2020

YTD previous year 01/01/2019 to 31/03/2019

6.01

Net cash from operating activities

                  (43,913)

                     (948,165)

6.01.01

Cash from operations

                 145,068

                         82,028

6.01.01.01

Profit (loss) for the period

             (1,360,851)

                         (7,572)

6.01.01.02

Financial charges in borrowing and financing raised

                 276,982

                       349,039

6.01.01.03

Financial charges in borrowing and financing granted

                  (16,540)

                       (12,414)

6.01.01.04

Charges on lease liabilities

                        956

                              965

6.01.01.05

Equity in results of affiliated companies

                 590,690

                     (549,470)

6.01.01.06

Deferred tax

                       (304)

                         45,256

6.01.01.07

Provision for tax, social security, labor, civil and environmental risks

                  (10,090)

                       (69,429)

6.01.01.08

Monetary and exchange variations, net

                (547,893)

                       259,413

6.01.01.09

Write-off of property, plant and equipment and Intangible assets

                           -  

                         13,542

6.01.01.10

Provision for environmental liabilities and decommissioning of assets

                   11,411

                         (5,158)

6.01.01.11

Updated shares – Fair value through profit or loss

                 962,561

                     (127,653)

6.01.01.12

Depreciation, amortization and depletion

                 209,495

                       158,007

6.01.01.13

Accrued/(reversal) for consumption and services

                   21,527

                         19,504

6.01.01.16

Others provisions

                     7,124

                           7,998

6.01.02

Changes in assets and liabilities

                (188,981)

                  (1,030,193)

6.01.02.01

Trade receivables - third parties

                  (19,768)

                         16,862

6.01.02.02

Trade receivables - related parties

                (394,990)

                     (275,407)

6.01.02.03

Inventories

                 266,412

                     (371,991)

6.01.02.04

Receivables - related parties/dividends

                        814

                            (635)

6.01.02.05

Tax assets

                   82,873

                       (54,342)

6.01.02.06

Judicial deposits

                        902

                       (11,405)

6.01.02.09

Trade payables

                 326,875

                     (118,919)

6.01.02.10

Trade payables – Drawee Risk

                (183,736)

                       235,181

6.01.02.11

Payroll and related taxes

                  (14,616)

                           4,512

6.01.02.12

Taxes in installments – REFIS

                     5,679

                       (65,858)

6.01.02.13

Payables to related parties

                 113,756

                         (6,136)

6.01.02.14

Advance with related parties

                  (20,289)

                                 -  

6.01.02.15

Interest paid

                (268,170)

                     (368,593)

6.01.02.16

Interest received

                        198

                                 -  

6.01.02.19

Others

                  (84,921)

                       (13,462)

6.02

Net cash investment activities

                (297,419)

                     (104,805)

6.02.01

Investments / AFAC / Acquisitions of Shares

                    (2,180)

                         (4,847)

6.02.02

Purchase of property, plant and equipment and intangible assets

                (196,628)

                     (158,189)

6.02.05

Intercompany loans granted

                  (98,614)

                       (49,698)

6.02.06

Intercompany loans received

                     4,076

                                 -  

6.02.08

Financial Investments, net of redemption

                    (4,073)

                       107,929

6.03

Net cash used in financing activities

              1,375,211

                       807,103

6.03.01

Borrowings and financing raised

                   80,744

                    2,246,890

6.03.02

Transactions cost - Borrowings and financing

                    (1,980)

                       (28,810)

6.03.03

Borrowings and financing – related parties

              2,205,145

                    1,581,639

6.03.04

Amortization of borrowings and financing

                (889,247)

                  (2,763,750)

6.03.05

Amortization of borrowings and financing - related parties

                  (13,053)

                     (222,553)

6.03.06

Amortization of leases

                    (6,262)

                         (6,313)

6.03.07

Dividends and interest on shareholder’s equity

                       (136)

                                 -  

6.05

Increase (decrease) in cash and cash equivalents

              1,033,879

                     (245,867)

6.05.01

Cash and equivalents at the beginning of the year

                 392,107

                       539,853

6.05.02

Cash and equivalents at the end of the year

              1,425,986

                       293,986

 

Page 6


 
 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information - March 31, 2020 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

Parent Company Financial Statements / Statement of Changes in Equity - 01/01/2020 to 03/31/2020

(R$ thousand)

       
       
               

Code

Description

Paid-in capital

Capital reserve, granted options and treasury shares

Earnings reserve

Retained earnings (accumulated losses)

Other comprehensive income

Shareholders’ equity

5.01

Opening balances

           4,540,000

                                      32,720

            4,431,200

                                  -  

                 1,170,624

         10,174,544

5.03

Adjusted opening balances

           4,540,000

                                      32,720

            4,431,200

                                  -  

                 1,170,624

         10,174,544

5.05

Total comprehensive income

                          -  

                                               -  

                           -  

                 (1,360,851)

               (4,643,683)

          (6,004,534)

5.05.01

Profit (loss) for the period

                          -  

                                               -  

                           -  

                 (1,360,851)

                                -  

          (1,360,851)

5.05.02

Other comprehensive income

                          -  

                                               -  

                           -  

                                  -  

               (4,643,683)

          (4,643,683)

5.05.02.04

Translation adjustments for the year

                          -  

                                               -  

                           -  

                                  -  

                    380,042

               380,042

5.05.02.06

Actuarial gains/(losses) on pension plan, net of taxes

                          -  

                                               -  

                           -  

                                  -  

                              31

                         31

5.05.02.07

(Loss) / gain on the percentage change in investments

                          -  

                                               -  

                           -  

                                  -  

               (5,025,225)

          (5,025,225)

5.05.02.08

(Loss) / gain on cash flow hedge accounting, net of taxes

                          -  

                                               -  

                           -  

                                  -  

                         1,469

                   1,469

5.07

Closing balance

           4,540,000

                                      32,720

            4,431,200

                 (1,360,851)

               (3,473,059)

           4,170,010

 

 

 

 

Page 7


 
 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information - March 31, 2020 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

Parent Company Financial Statements / Statement of Changes in Equity - 01/01/2019 to 03/31/2019

       

(R$ thousand)

           
               

Code

Description

Paid-in capital

Capital reserve, granted options and treasury shares

Earnings reserve

Retained earnings (accumulated losses)

Other comprehensive income

Shareholders’ equity

5.01

Opening balances

                       4,540,000

                             32,720

                       3,064,827

                                      -  

                       1,065,188

                       8,702,735

5.03

Adjusted opening balances

                       4,540,000

                             32,720

                       3,064,827

                                      -  

                       1,065,188

                       8,702,735

5.05

Total comprehensive income

                                      -  

                                      -  

                                      -  

                             (7,572)

                          150,183

                          142,611

5.05.01

Profit (loss) for the period

                                      -  

                                      -  

                                      -  

                             (7,572)

                                      -  

                             (7,572)

5.05.02

Other comprehensive income

                                      -  

                                      -  

                                      -  

                                      -  

                          150,183

                          150,183

5.05.02.04

Translation adjustments for the year

                                      -  

                                      -  

                                      -  

                                      -  

                           (21,804)

                           (21,804)

5.05.02.06

Actuarial gains/(losses) on pension plan, net of taxes

                                      -  

                                      -  

                                      -  

                                      -  

                                     30

                                     30

5.05.02.07

(Loss) / gain on the percentage change in investments

                                      -  

                                      -  

                                      -  

                                      -  

                          165,777

                          165,777

5.05.02.08

(Loss) / gain on cash flow hedge accounting, net of taxes

                                      -  

                                      -  

                                      -  

                                      -  

                               6,180

                               6,180

5.07

Closing balance

                       4,540,000

                             32,720

                       3,064,827

                             (7,572)

                       1,215,371

                       8,845,346

                       

 

 

 

 

Page 8


 
 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information - March 31, 2020 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

Parent Company Financial Statements / Statement of Value Added

 

(R$ thousand)

   
       

Code

Description

Year to date 01/01/2020 to 31/03/2020

YTD previous year  01/01/2019 to 31/03/2019

7.01

Revenues

                   3,772,385

                   3,901,138

7.01.01

Sales of products and rendering of services

                   3,769,699

                   3,751,792

7.01.02

Other revenues

                         4,729

                      127,754

7.01.04

Allowance for (reversal of) doubtful debts

                        (2,043)

                        21,592

7.02

Raw materials acquired from third parties

                  (3,469,351)

                  (3,373,861)

7.02.01

Cost of sales and services

                  (2,878,256)

                  (3,060,346)

7.02.02

Materials, electric power, outsourcing and other

                     (585,281)

                     (304,580)

7.02.03

Impairment/recovery of assets

                        (5,814)

                        (8,935)

7.03

Gross value added

                      303,034

                      527,277

7.04

Retentions

                     (209,001)

                     (158,007)

7.04.01

Depreciation, amortization and depletion

                     (209,001)

                     (158,007)

7.05

Wealth created

                        94,033

                      369,270

7.06

Value added received

                     (392,985)

                      657,660

7.06.01

Equity in results of affiliates companies

                     (590,690)

                      549,470

7.06.02

Financial income

                        53,376

                      101,370

7.06.03

Others

                      144,329

                         6,820

7.06.03.01

Others and exchange gains

                      144,329

                         6,820

7.07

Wealth for distribution

                     (298,952)

                   1,026,930

7.08

Wealth distributed

                     (298,952)

                   1,026,930

7.08.01

Personnel

                      355,029

                      347,839

7.08.01.01

Salaries and wages

                      249,708

                      241,697

7.08.01.02

Benefits

                        69,873

                        70,631

7.08.01.03

Severance payment (FGTS)

                        35,448

                        35,511

7.08.02

Taxes, fees and contributions

                      156,377

                      119,424

7.08.02.01

Federal

                      113,851

                        60,064

7.08.02.02

State

                        42,526

                        59,360

7.08.03

Remuneration on third-party capital

                      550,493

                      567,239

7.08.03.01

Interest

                   1,335,564

                      488,035

7.08.03.02

Rental

                         1,618

                         1,030

7.08.03.03

Others

                     (786,689)

                        78,174

7.08.03.03.01

Others and exchange losses

                     (786,689)

                        78,174

7.08.04

Remuneration on Shareholders' capital

                  (1,360,851)

                        (7,572)

7.08.04.03

Retained earnings (accumulated losses)

                  (1,360,851)

                        (7,572)

             

Page 9


 
 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information - March 31, 2020 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

 

Consolidated Financial Statements / Balance Sheet - Assets

   

(R$ thousand)

     
       

Code

Description

Current Quarter 03/31/2020

Previous Year 12/31/2019

1

Total assets

            52,723,083

            50,869,276

1.01

Current assets

            14,385,591

            12,725,805

1.01.01

Cash and cash equivalents

              3,281,138

              1,088,955

1.01.02

Financial investments

              1,644,460

              2,633,173

1.01.02.01

Financial investments measured a fair value through profit or loss

              1,152,266

              2,114,620

1.01.02.01.03

Financial investments measured a fair value through profit or loss – Usiminas’ shares

              1,152,266

              2,114,620

1.01.02.03

Financial investments at amortized cost

                 492,194

                 518,553

1.01.03

Trade receivables

              2,205,944

              2,047,931

1.01.04

Inventory

              5,465,046

              5,282,750

1.01.08

Other current assets

              1,789,003

              1,672,996

1.01.08.03

Others

              1,789,003

              1,672,996

1.01.08.03.01

Recoverable taxes

              1,388,468

              1,282,415

1.01.08.03.02

Prepaid expenses

                 208,868

                 107,428

1.01.08.03.03

Dividends receivable

                    44,554

                    44,554

1.01.08.03.04

Derivative financial instruments

                      4,579

                      1,364

1.01.08.03.05

Others

                 142,534

                 237,235

1.02

Non-current assets

            38,337,492

            38,143,471

1.02.01

Long-term assets

              7,558,528

              7,626,577

1.02.01.03

Financial investments at amortized cost

                 121,027

                    95,719

1.02.01.07

Deferred taxes assets

              2,475,496

              2,473,304

1.02.01.10

Other non-current assets

              4,962,005

              5,057,554

1.02.01.10.03

Recoverable taxes

              1,956,660

              2,119,940

1.02.01.10.04

Judicial deposits

                 333,120

                 328,371

1.02.01.10.05

Prepaid expenses

                 129,562

                 126,213

1.02.01.10.06

Receivable from related parties

              1,365,520

              1,274,972

1.02.01.10.07

Others

              1,177,143

              1,208,058

1.02.02

Investments

              3,600,997

              3,584,169

1.02.02.01

Equity interest

              3,438,752

              3,482,974

1.02.02.02

Investment Property

                 162,245

                 101,195

1.02.03

Property, plant and equipment

            19,857,633

            19,700,944

1.02.03.01

Property, plant and equipment in operation

            19,392,387

            19,228,599

1.02.03.02

Right of use in leases

                 465,246

                 472,345

1.02.04

Intangible assets

              7,320,334

              7,231,781

 

Page 10


 
 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information - March 31, 2020 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

Consolidated Financial Statements / Balance Sheet – Liabilities

   

(R$ thousand)

     
       

Code

Description

Current Quarter 03/31/2020

Previous Year 12/31/2019

2

Total Liabilities

             52,723,083

             50,869,276

2.01

Current liabilities

             11,970,831

             11,619,957

2.01.01

Payroll and related taxes

                  308,501

                  317,510

2.01.02

Trade payables

               3,451,945

               3,012,654

2.01.03

Tax payables

                  486,766

                  541,027

2.01.04

Borrowings and financing

               5,314,667

               5,125,843

2.01.05

Other payables

               2,325,921

               2,526,444

2.01.05.02

Others

               2,325,921

               2,526,444

2.01.05.02.04

Dividends and interests on shareholder´s equity

                     13,116

                     13,252

2.01.05.02.05

Advances from clients

                  809,173

                  787,604

2.01.05.02.06

Trade payables – Drawee risk

                  937,576

               1,121,312

2.01.05.02.07

Lease liabilities

                     31,807

                     35,040

2.01.05.02.09

Other payables

                  534,249

                  569,236

2.01.06

Provisions

                     83,031

                     96,479

2.01.06.01

Provision for tax, social security, labor and civil risks

                     83,031

                     96,479

2.02

Non-current liabilities

             35,345,710

             27,887,387

2.02.01

Borrowings and financing

             30,305,393

             22,841,193

2.02.02

Other payables

               2,426,514

               2,493,702

2.02.02.02

Others

               2,426,514

               2,493,702

2.02.02.02.03

Advances from clients

               1,699,617

               1,845,248

2.02.02.02.04

Lease liabilities

                  434,640

                  439,350

2.02.02.02.05

Derivative financial instruments

                     94,909

                              -  

2.02.02.02.06

Other payables

                  197,348

                  209,104

2.02.03

Deferred taxes assets

                  620,227

                  589,539

2.02.04

Provisions

               1,993,576

               1,962,953

2.02.04.01

Provision for tax, social security, labor and civil risks

                  536,751

                  526,768

2.02.04.02

Other provisions

               1,456,825

               1,436,185

2.02.04.02.03

Provision for environmental liabilities and decommissioning of assets

                  544,641

                  524,001

2.02.04.02.04

Pension and healthcare plan

                  912,184

                  912,184

2.03

Shareholders’ equity

               5,406,542

             11,361,932

2.03.01

Share Capital

               4,540,000

               4,540,000

2.03.02

Capital reserves

                     32,720

                     32,720

2.03.04

Profit reserves

               4,431,200

               4,431,200

2.03.04.01

Legal reserve

                  278,576

                  278,576

2.03.04.02

Earnings reserves

               4,210,888

               4,210,888

2.03.04.09

Treasury shares

                   (58,264)

                   (58,264)

2.03.05

Accumulated profit/(losses)

             (1,360,851)

                              -  

2.03.08

Other comprehensive income

             (3,473,059)

               1,170,624

2.03.09

Profit attributable to the non-controlling interests

               1,236,532

               1,187,388

         

 

 

Page 11


 
 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information - March 31, 2020 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

 

Consolidated Financial Statements / Statements of Income

   

(R$ thousand)

   
       

Code

Description

Year to date 01/01/2020 to 31/03/2020

YTD previous year 01/01/2019 to 31/03/2019

3.01

Revenues from sale of goods and rendering of services

                     5,334,653

                     6,005,466

3.02

Costs from sale of goods and rendering of services

                    (4,017,707)

                    (4,021,495)

3.03

Gross profit

                     1,316,946

                     1,983,971

3.04

Operating (expenses)/income

                    (1,221,313)

                       (803,252)

3.04.01

Selling expenses

                       (390,915)

                       (573,484)

3.04.02

General and administrative expenses

                       (119,055)

                       (120,181)

3.04.04

Other operating income

                         102,689

                         228,952

3.04.05

Other operating expenses

                       (768,924)

                       (364,372)

3.04.06

Equity in results of affiliated companies

                         (45,108)

                           25,833

3.05

Profit before financial income (expenses) and taxes

                           95,633

                     1,180,719

3.06

Financial income (expenses)

                    (1,201,138)

                       (635,099)

3.06.01

Financial income

                           65,131

                         111,314

3.06.02

Financial expenses

                    (1,266,269)

                       (746,413)

3.06.02.01

Net exchange differences over financial instruments

                         364,882

                       (113,564)

3.06.02.02

Financial expenses

                    (1,631,151)

                       (632,849)

3.07

Profit (loss) before taxes

                    (1,105,505)

                         545,620

3.08

Income tax and social contribution

                       (206,204)

                       (458,857)

3.09

Profit (loss) from continued operations

                    (1,311,709)

                           86,763

3.11

Consolidated Profit (loss) for the year

                    (1,311,709)

                           86,763

3.11.01

Profit attributable to the controlling interests

                    (1,360,851)

                            (7,572)

3.11.02

Profit attributable to the non-controlling interests

                           49,142

                           94,335

3.99

Earnings per share – (Reais / Share)

                                    -  

                                    -  

3.99.01

Basic earnings per share

                                    -  

                                    -  

3.99.01.01

Common shares

                            (0.98604)

                            (0.00551)

3.99.02

Diluted earnings per share

                                    -  

                                    -  

3.99.02.01

Common shares

                            (0.98604)

                            (0.00551)

 

 

 

 

Page 12


 
 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information - March 31, 2020 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

Consolidated Financial Statements / Statement of Comprehensive Income

   

(R$ thousand)

     
       

Code

Description

Year to date 01/01/2020 to 31/03/2020

YTD previous year 01/01/2019 to 31/03/2019

4.01

Consolidated profit (loss) for the year

                         (1,311,709)

                                 86,763

4.02

Other comprehensive income

                         (4,643,681)

                              150,183

4.02.01

Actuarial gains over pension plan of subsidiaries, net of taxes

                                         33

                                         30

4.02.02

Cumulative translation adjustments for the year

                              380,042

                               (21,804)

4.02.04

Losses in cash flow hedge

                         (5,390,043)

                               (18,440)

4.02.05

Cash flow hedge reclassified to income upon realization

                              364,818

                              184,217

4.02.06

(Loss)/gain on hedge of net investment in foreign operations.

                                   1,469

                                   6,180

4.03

Consolidated comprehensive income for the year

                         (5,955,390)

                              236,946

4.03.01

Profit attributable to the controlling interests

                         (6,004,534)

                              142,611

4.03.02

Profit attributable to the non-controlling interests

                                 49,144

                                 94,335

 

 

 

 

Page 13


 
 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information - March 31, 2020 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

 

Consolidated Financial Statements / Statements of Cash Flows – Indirect Method

   

(R$ thousand)

     
       

Code

Description

Year to date 01/01/2020 to 31/03/2020

YTD previous year 01/01/2019 to 31/03/2019

6.01

Net cash from operating activities

                                466,933

                            1,185,970

6.01.01

Cash from operations

                            1,166,186

                            1,018,203

6.01.01.01

Profit attributable to the controlling interests

                           (1,360,851)

                                   (7,572)

6.01.01.02

Results of non-controlling shareholders

                                  49,142

                                  94,335

6.01.01.03

Financial charges in borrowing and financing raised

                                470,990

                                465,928

6.01.01.04

Financial charges in borrowing and financing granted

                                (11,481)

                                (13,946)

6.01.01.05

Charges on lease liabilities

                                  13,056

                                    4,957

6.01.01.06

Equity in results of affiliated companies

                                  45,108

                                (25,833)

6.01.01.07

Deferred taxes assets

                                (11,351)

                                  89,039

6.01.01.08

Provision for tax, social security, labor, civil and environmental risks

                                   (8,685)

                                (69,853)

6.01.01.09

Monetary and exchange variations, net

                                522,571

                                239,582

6.01.01.10

Write-off of property, plant and equipment and Intangible assets

                                    1,400

                                  13,712

6.01.01.11

Provision for environmental liabilities and decommissioning of assets

                                  20,640

                                    7,592

6.01.01.12

Updated shares – Fair value through profit or loss

                                962,561

                              (127,653)

6.01.01.13

Depreciation, amortization and depletion

                                437,507

                                328,070

6.01.01.14

Accrued/(reversal) for consumption and services

                                  37,158

                                    8,853

6.01.01.17

Other provisions

                                   (1,579)

                                  10,992

6.01.02

Changes in assets and liabilities

                              (699,253)

                                167,767

6.01.02.01

Trade receivables - third parties

                                (89,849)

                              (713,057)

6.01.02.02

Trade receivables - related party

                                (31,572)

                                (92,283)

6.01.02.03

Inventory

                                (13,512)

                              (653,465)

6.01.02.04

Receivables - related parties/dividends

                                           -  

                                        447

6.01.02.05

Tax assets

                                  57,227

                                (41,211)

6.01.02.06

Judicial deposits

                                   (4,749)

                                (11,569)

6.01.02.08

Trade payables

                                341,567

                              (170,461)

6.01.02.09

Trade payables – Drawee risk

                              (183,736)

                                235,181

6.01.02.10

Payroll and related taxes

                                (14,420)

                                  14,014

6.01.02.11

Taxes in installments – REFIS

                                (61,612)

                                282,973

6.01.02.12

Payables to related parties

                                (20,572)

                                (30,173)

6.01.02.13

Advances from clients

                              (130,568)

                            1,935,831

6.01.02.14

Interest paid

                              (511,242)

                              (590,621)

6.01.02.16

Others

                                (36,215)

                                    2,161

6.02

Net cash investment activities

                              (404,851)

                              (220,750)

6.02.02

Purchase of property, plant and equipment and intangible assets

                              (353,698)

                              (313,579)

6.02.04

Receipt/(payment) in derivative transactions

                                           -  

                                      (372)

6.02.07

Intercompany loans granted

                                (82,089)

                                (40,643)

6.02.08

Intercompany loans received

                                    3,022

                                  16,796

6.02.09

Financial Investments, net of redemption

                                  27,914

                                117,048

6.03

Net cash used in financing activities

                            2,157,127

                              (514,817)

6.03.01

Borrowings and financing raised

                            4,553,970

                            2,465,845

6.03.02

Transactions cost - Borrowings and financing

                                   (9,131)

                                (28,810)

6.03.03

Amortization of borrowings and financing

                           (2,363,666)

                           (2,939,145)

6.03.04

Dividends and interest on shareholder’s equity

                                      (136)

                                           -  

6.03.05

Amortization of leases

                                (23,910)

                                (12,707)

6.04

Exchange rate on translating cash and cash equivalents

                                (27,026)

                                    3,670

6.05

Increase (decrease) in cash and cash equivalents

                            2,192,183

                                454,073

6.05.01

Cash and equivalents at the beginning of the year

                            1,088,955

                            2,248,004

6.05.02

Cash and equivalents at the end of the year

                            3,281,138

                            2,702,077

Page 14


 
 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information - March 31, 2020 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

Consolidated Financial Statements / Statements of Changes in Equity - 01/01/2020 to 03/31/2020

(R$ thousand)

               
                   

Code

Description

Paid-in capital

Capital reserve, granted options and treasury shares

Earnings reserve

Retained earnings (accumulated losses)

Other comprehensive income

Shareholders’ equity

Non-controlling interests

Shareholders’ equity

5.01

Opening balances

                 4,540,000

                           32,720

          4,431,200

                          -  

          1,170,624

        10,174,544

          1,187,388

        11,361,932

5.03

Adjusted opening balances

                 4,540,000

                           32,720

          4,431,200

                          -  

          1,170,624

        10,174,544

          1,187,388

        11,361,932

5.05

Total comprehensive income

                            -  

                                  -  

                     -  

             (1,360,851)

         (4,643,683)

         (6,004,534)

              49,144

         (5,955,390)

5.05.01

(Loss) profit for the year

                            -  

                                  -  

                     -  

             (1,360,851)

                     -  

         (1,360,851)

              49,142

         (1,311,709)

5.05.02

Other comprehensive income

                            -  

                                  -  

                     -  

                          -  

         (4,643,683)

         (4,643,683)

                      2

         (4,643,681)

5.05.02.04

Translation adjustments for the year

                            -  

                                  -  

                     -  

                          -  

            380,042

            380,042

                     -  

            380,042

5.05.02.06

Actuarial (loss)/gain on pension plan, net of taxes

                            -  

                                  -  

                     -  

                          -  

                    31

                    31

                      2

                    33

5.05.02.07

(Loss) / gain on cash flow hedge accounting, net of taxes

                            -  

                                  -  

                     -  

                          -  

         (5,025,225)

         (5,025,225)

                     -  

         (5,025,225)

5.05.02.08

(Loss) / gain on hedge of net investment in foreign operations

                            -  

                                  -  

                     -  

                          -  

                1,469

                1,469

                     -  

                1,469

5.07

Closing balance

                 4,540,000

                           32,720

          4,431,200

             (1,360,851)

         (3,473,059)

          4,170,010

          1,236,532

          5,406,542

 

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CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information - March 31, 2020 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

 

 

Consolidated Financial Statements / Statements of Changes in Equity - 01/01/2019 to 03/31/2019

           

(R$ thousand)

               
                   

Code

Description

Paid-in capital

Capital reserve, granted options and treasury shares

Earnings reserve

Retained earnings (accumulated losses)

Other comprehensive income

Shareholders’ equity

Non-controlling interests

Shareholders’ equity

5.01

Opening balances

               4,540,000

                    32,720

               3,064,827

                        -  

               1,065,188

               8,702,735

               1,310,705

             10,013,440

5.03

Adjusted opening balances

               4,540,000

                    32,720

               3,064,827

                        -  

               1,065,188

               8,702,735

               1,310,705

             10,013,440

5.05

Total comprehensive income

                          -  

                          -  

                          -  

                  (7,572)

                  150,183

                  142,611

                    94,335

                  236,946

5.05.01

(Loss) profit for the year

                          -  

                          -  

                          -  

                  (7,572)

                          -  

                    (7,572)

                    94,335

                    86,763

5.05.02

Other comprehensive income

                          -  

                          -  

                          -  

                        -  

                  150,183

                  150,183

                          -  

                  150,183

5.05.02.04

Translation adjustments for the year

                          -  

                          -  

                          -  

                        -  

                   (21,804)

                   (21,804)

                          -  

                   (21,804)

5.05.02.06

Actuarial (loss)/gain on pension plan, net of taxes

                          -  

                          -  

                          -  

                        -  

                          30

                          30

                          -  

                          30

5.05.02.07

(Loss) / gain on cash flow hedge accounting, net of taxes

                          -  

                          -  

                          -  

                        -  

                  165,777

                  165,777

                          -  

                  165,777

5.05.02.08

(Loss) / gain on hedge of net investment in foreign operations

                          -  

                          -  

                          -  

                        -  

                     6,180

                     6,180

                          -  

                     6,180

5.06

Internal changes in shareholders’ equity

                          -  

                          -  

                          -  

                        -  

                          -  

                          -  

                            2

                            2

5.06.04

Non-controlling interests in subsidiaries

                          -  

                          -  

                          -  

                        -  

                          -  

                          -  

                            2

                            2

5.07

Closing balance

               4,540,000

                    32,720

               3,064,827

                  (7,572)

               1,215,371

               8,845,346

               1,405,042

             10,250,388

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Quarterly Financial Information - March 31, 2020 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

Consolidated Financial Statements / Statements of Value Added

 

(R$ thousand)

   
       

Code

Description

Year to date 01/01/2020 to 31/03/2020

YTD previous year  01/01/2019 to 31/03/2019

7.01

Revenues

                    6,143,475

                    6,948,101

7.01.01

Sales of products and rendering of services

                    6,137,834

                    6,795,881

7.01.02

Other revenues

                           6,962

                       131,521

7.01.04

Allowance for (reversal of) doubtful debts

                          (1,321)

                         20,699

7.02

Raw materials acquired from third parties

                   (4,758,610)

                   (4,677,204)

7.02.01

Cost of sales and services

                   (3,776,787)

                   (3,742,381)

7.02.02

Materials, electric power, outsourcing and other

                      (961,472)

                      (893,674)

7.02.03

Impairment/recovery of assets

                        (20,351)

                        (41,149)

7.03

Gross value added

                    1,384,865

                    2,270,897

7.04

Retentions

                      (436,293)

                      (328,070)

7.04.01

Depreciation, amortization and depletion

                      (436,293)

                      (328,070)

7.05

Wealth created

                       948,572

                    1,942,827

7.06

Value added received

                       698,088

                         95,823

7.06.01

Equity in results of affiliated companies

                        (45,108)

                         25,833

7.06.02

Financial income

                         65,131

                       111,314

7.06.03

Others

                       678,065

                        (41,324)

7.06.03.01

Others and exchange gains

                       678,065

                        (41,324)

7.07

Wealth for distribution

                    1,646,660

                    2,038,650

7.08

Wealth distributed

                    1,646,660

                    2,038,650

7.08.01

Personnel

                       584,191

                       610,988

7.08.01.01

Salaries and wages

                       432,137

                       457,968

7.08.01.02

Benefits

                       108,569

                       108,793

7.08.01.03

Severance payment (FGTS)

                         43,485

                         44,227

7.08.02

Taxes, fees and contributions

                       424,401

                       631,219

7.08.02.01

Federal

                       352,361

                       551,594

7.08.02.02

State

                         63,146

                         74,681

7.08.02.03

Municipal

                           8,894

                           4,944

7.08.03

Remuneration on third-party capital

                    1,949,777

                       709,680

7.08.03.01

Interest

                    1,631,151

                       632,849

7.08.03.02

Rental

                           5,441

                           5,342

7.08.03.03

Others

                       313,185

                         71,489

7.08.03.03.01

Others and exchange losses

                       313,185

                         71,489

7.08.04

Remuneration on Shareholders' capital

                   (1,311,709)

                         86,763

7.08.04.03

Retained earnings (accumulated losses)

                   (1,360,851)

                          (7,572)

7.08.04.04

Non-controlling interests in retained earnings

                         49,142

                         94,335

             

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Quarterly Financial Information – June 30, 2019 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

Comments on the Company’s Consolidated Performance

São Paulo, May 23, 2020

 

Results for the First Quarter of 2020

 

Companhia Siderúrgica Nacional (“CSN”) (B3 S.A. – Brasil, Bolsa e Balcão: CSNA3) (NYSE: SID) announces its results for the first quarter of 2020 (1Q20) in Brazilian Reais,  in accordance with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB), and with Brazilian accounting practices, which are fully convergent with international accounting standards, issued by the Accounting Pronouncements Committee (CPC) and approved by the Brazilian Securities and Exchange Commission (CVM), pursuant to CVM Instruction 485 of 09/01/10.

All comments presented herein refer to the Company’s consolidated results for the first quarter of 2020 (1Q20) and comparisons refer to the fourth quarter of 2019 (4Q19) and the first quarter of 2019 (1Q19). The Real/U.S. dollar exchange rate was R$5.1987 on 03/31/2020, R$4.0307 on 12/31/2019 and R$3.8967 on 03/31/2019.

 

Operating and Financial Highlights in 1Q20

 

·        Adjusted EBITDA reached R$1,331 million in 1Q20, even with a lower iron ore production.

·        Adjusted Free Cash Flow reached R$506MM, reflecting actions for liquidity protection.

·        Iron ore production totaled 5.9 million tons in the 1Q20, 39% lower YoY, due to heavy rains in the region and delay in new mining fronts.

·        Steel Sales Volume reached 1,140 thousand tons, 2% higher than in 4Q19. Steel EBITDA showed sequential growth of 68%, totalling R$298MM.

·        Net debt/EBITDA reached 4.78x, or 1.01x higher than 4Q19, due to strong exchange rate variation.

·        New Bonds issued due 2028 in the amount of US$1.0 billion, providing significant increase in debt’s maturities.

 

Highlights

1Q19

4Q19

1Q20

 

 

Variation

1Q20

x

1Q19

1Q20

x

4Q19

 

 

 

Steel Sales (thousand tons)

1,175

1,117

1,140

 

 

(3%)

2%

 

- Domestic Market

811

819

775

 

 

(4%)

(5%)

 

- Subsidiaries Abroad

340

283

356

 

 

5%

26%

 

- Exports

24

14

8

 

 

(64%)

(41%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Iron Ore Sales (thousand tons)

8,859

10,334

5,609

 

 

(37%)

(46%)

 

-  Domestic Market

1,169

953

1,806

 

 

(7%)

14%

 

-  Exports

7,690

9,382

4,524

 

 

(41%)

(52%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Results (R$ millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Revenue

6,005

6,524

5,335

 

 

(11%)

(18%)

 

Gross Profit

1,948

2,108

1,317

 

 

(32%)

(38%)

 

Adjusted EBITDA¹

1,724

1,580

1,331

 

 

(23%)

(16%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Net Debt²

25,772

27,360

32,804

 

 

27%

20%

 

Adjusted Cash and Cash Equivalents²

3,601

1,857

4,129

 

 

15%

122%

 

Net Debt / Adjusted EBITDA

4.07x

3.77x

4.78x

 

 

0.71x

1.01x

 

 

¹ Adjusted EBITDA is calculated based on net profit/loss, plus depreciation and amortization, income tax, net financial result, share of profit (loss) of investees and other operating income (expenses), and includes the proportionate share of EBITDA of jointly owned subsidiaries MRS Logística and CBSI. Adjusted EBITDA includes stakes of 100% in CSN Mineração, 37.27% in MRS and 50% in CBSI (until November/2019).

² Adjusted net debt and adjusted cash and cash equivalents includes the stakes of 100% in CSN Mineração, 37.27% in MRS and 50% in CBSI (until November/2019), excluding forfaiting and drawee risk operations.

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Version: 1

 

CSN’s Consolidated Result

 

·        Net revenue in 1Q20 totaled R$5,335 million, 11% and 8% less than 1Q19 and 4Q19, respectively. The decrease in iron ore sales volume was due to the heavy rainfall and delay in new mining fronts.

 

·         In 1Q20, cost of goods sold totaled R$4,018 million, 9.3% lower than the previous quarter.

 

·        In 1Q20, gross profit reached R$1,317 million, a 34% contraction compared to 1Q19. Gross margin decreased 8.3 p.p. versus 1Q19, to 24.7% in 1Q20, due to a punctual drop in iron ore volumes.

 

·        In 1Q20, selling, general and administrative expenses totaled R$510 million, 26.5% lower YoY, while net revenue, in the same comparison basis, reached 11%. Selling expenses strongly decreased by 32% in 1Q20, while general and administrative expenses dropped 2.8% in the same period, corresponding 2.1% of net revenue, stable when compared to 1Q19.

 

·        Other operating income and expenses was negative by R$666MM, mainly due to cash flow hedging and to idle capacity in mining equipment.

 

·        Financial result was negative by R$1,201MM, impacted by the exchange rate variation and Usiminas’ shares drop providing negative results without cash impact in the amount of R$962MM.

 

 

Financial Result (R$ million)

1Q19

4Q19

1Q20

Financial Result - IFRS

         (635)

           (298)

        (1,201)

Financial Revenue

           111

               68

           65

Financial Expenses

         (746)

           (366)

        (1,266)

Financial Expenses (ex-exchange rate variation)

         (633)

           (624)

           (1,631)

Result with Exchange Rate Variation

         (113)

             258

           365

Monetary and Exchange Rate Variation

         (125)

             605

        (4,928)

Hedge Accounting

             12

           (355)

          5,389

Derivative Result

               0

                  8

              (96)

 

 

·        Equity result of affiliated companies was negative by R$45 million in 1Q20 versus a positive amount of R$7 million in 4Q19, mainly due to the negative result from MRS caused by a strong reduction of cargoes with heavy rains above historical average.

 

 

Equity Results of Affiliated Companies
(R$ million)

1Q19

4Q19

1Q20

MRS Logística

          43

          16

  (34)

CBSI

             1

            2

     -  

TLSA

           (6)

           (2)

    (6)

Arvedi Metalfer BR

            -  

           (1)

    (1)

Eliminações

         (12)

           (8)

    (4)

Equity in Results of Affiliated companies

          26

            7

  (45)

 

 

 

 

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Quarterly Financial Information – June 30, 2019 – CIA SIDERURGICA NACIONAL

Version: 1

 

·        In 1Q20, the Company registered a net loss of R$1,312 million, versus a net gain of R$87 million in 1Q19, mainly due to non-operational issues and non-cash such as hedge accounting and market value loss in Usiminas shares.

 

Adjusted EBITDA (R$ million)

1Q19

4Q19

1Q20

Variation

1Q20

x

1Q19

1Q20

X

4Q19

Net Profit /(Loss) for the period

87

1,134

(1,312)

(1,608%)

(216%)

(-) Depreciation

306

432

415

36%

(4%)

(+) Income tax and social contribution

459

(474)

206

(55%)

(143%)

(+) Net financial result

635

298

1,201

89%

303%

EBITDA (ICVM 527)

1,487

1,390

511

(66%)

(63%)

(+) Other Operating Income/Expenses

135

103

666

393%

547%

(+) Equity in Results of Affiliated Companies

(26)

(7)

45

(273%)

(743%)

(-) Proportional EBITDA of Jointly Owned Subsidiaries

127

94

109

(14%)

16%

Adjusted EBITDA

1,724

1,580

1,331

(23%)

(16%)

*The Company discloses adjusted EBITDA excluding interests in investments and other operating income (expenses) with the understanding that these items should not be considered when calculating recurring operating cash flow.

 

·  Adjusted EBITDA reached R$1,331 million in 1Q20, versus R$1,580 million in 4Q19, due to low iron ore production as a result of severe rain, although partially compensated by the gradual evolution of steel’s result. Adjusted EBITDA margin reached 24.1%, or 0.6 p.p. higher in the same comparison basis.

 

 

¹ Adjusted EBITDA margin is calculated as the ratio between adjusted EBITDA and adjusted net revenue, which considers stakes of 100% in CSN Mineração and 37.27% in MRS and 50% in CBSI (until November/19).

 

Adjusted Free Cash Flow¹

 

Adjusted Free Cash Flow in 1Q20 reached R$506MM, negatively influenced by lower cash generation measured by EBITDA in mining segment, due to severe rain in the period.

 

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Quarterly Financial Information – June 30, 2019 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

 

¹ Adjusted free cash flow is calculated from adjusted EBITDA less EBITDA of joint ventures, Capex, Income tax, financial result and variation of working capital ¹, excluding the impact of Glencore’s prepay.

²Adjusted Working Capital comprises the variation in NWC (-R$ 187 million), plus variation in long-term asset and liability accounts (+ R$ 192 million, mainly reclassification of PIS / COFINS credits), and adjusted by following non-cash launches in the period: (i) Receipt of Property in Payment (-R$ 61 million), and (ii) Recognition of Tax Credits (+ R$ 104 million).

 

Debt

 

On 03/31/2020, consolidated net debt was R$32,804 million, while net debt/EBITDA, reached 4.78x, or 1.01x higher than in 4Q19. Debt evolution in the quarter was impacted by the exchange rate variation, with no cash impact, considering a longer duration of debt in dollars.

 

 


In 1Q20, the Company issued new Bonds due in 2028 in the amount of US$1.0 billion, obtaining an increase in its debt duration. Additionally, the liquidity support obtained solves the Company’s short-term financial obligations.

 

 

 

 

 

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Quarterly Financial Information – June 30, 2019 – CIA SIDERURGICA NACIONAL

Version: 1

Foreign Exchange Exposure

Net FX exposure on the consolidated balance sheet on 03/31/2020 was US$374 million, as shown in the table below.

 

Foreign Exchange Exposure

03/31/2019

12/31/2019

03/31/2020

(in US$ ‘000)

IFRS

IFRS

IFRS

Cash

                                      99

105

293

Accounts Receivable

                                   486

346

323

Other

                                         7

4

3

Total Assets

                                   593

455

619

Loans and Financing

                    (4,053)

(4,097)

(4,730)

Trade Payables

                        (125)

(69)

(87)

Other Payables

                              (3)

(3)

(3)

Total Liabilities

                    (3,181)

(4,169)

(4,819)

 

 

 

 

Natural Foreign Exchange Exposure (Assets - Liabilities)

                    (2,589)

(3,714)

(4,200)

Cash Flow Hedge Accounting

1,862 

2,531

4,641

Swap CDI x Dollar

-                     

(67)

(67)

Net Foreign Exchange Exposure

                    (1,726)

(1,250)

374

 

Hedge Accounting adopted by CSN correlates projected export in dollars with scheduled debt payments in the same currency. Therefore, the exchange rate variation of the dollar-denominated debt is temporarily accounted for under shareholders’ equity, being recorded in the income statement when dollar revenues from exports are received.

 

Investments

 

A total of R$354 million were invested in 1Q20, due to the slowdown in expenses in several sustaining projects in the steel segment, within the context of the stoppage of blast furnace #3 which occurred during 2Q19. In mining, investments were related mostly with operational continuity.

 

Investments (R$ million)

2018

1Q19

2Q19

3Q19

4Q19

2019

1Q20

 

 

 

Steel

637

160

212

405

576

1,353

170

 

 

 

Mining

505

118

190

165

174

647

132

 

 

 

Other

175

35

44

40

96

215

51

 

 

 

Total Investments - IFRS

1,318

314

446

610

846

2,216

354

 

 

 

 

Net Working Capital

 

Net Working Capital invested in the business totaled R$3,826 million in 1Q20, raising the financial cycle in 8 days when compared to 4Q19, due to higher accounts receivable and inventory balance, but partially offset by trade payables.

 

Net Working Capital analysis applied to the business disregard Glencore’s advance, as shown in the table below:

 

Net Working Capital (R$ million)

1Q19

4Q19

1Q20

 

Variation

 

1Q20

x

1Q19

1Q20

X

4Q19

Assets

10,293

8,997

9,451

 

(842)

454

Accounts Receivable

2,838

2,048

2,206

 

(632)

158

Inventories

5,663

5,283

5,465

 

(198)

182

Prepaid Taxes

764

828

889

 

125

61

Credit from PIS/COFINS

658

455

500

 

(158)

45

Anticipated Expenses

194

204

209

 

15

5

Dividends Receivable

45

44

44

 

(2)

-

Other Assets NWC¹

131

137

139

 

9

3

Liabilities

5,696

5,359

5,625

 

(71)

267

Trade Payables

3,528

4,134

4,390

 

862

255

Payroll and Related Taxes

415

429

461

 

46

(18)

Taxes Payable

181

222

271

 

89

49

Advances from Customers

106

104

110

 

4

77

Provision for Consumption

298

162

186

 

(112)

24

Other Liabilities NWC²

1,168

258

208

 

(960)

(50)

Net Working Capital

4,596

3,639

3,826

 

(771)

187

                     

Average Term (days)

1Q19

4Q19

1Q20

 

Variation

 

1Q20

x

1Q19

1Q20

X

4Q19

Receivables

37

25

32

 

(5)

7

Payables

76

84

95

 

19

11

Inventories³

109

92

104

 

(5)

12

Financial Cycle

70

33

41

 

(29)

8

¹Other Assets NWC: Consider: Advances and other Accounts Receivable

²Other Liabilities NWC: Consider Other payable accounts, payable dividends, installment taxes and other provisions.

³ Invetories term average term doesn’t consider Warehouse.

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Version: 1

 

 

Results by Business Segment

 

The Company maintains integrated operations in five business segments: Steel, Mining, Logistics, Energy and Cement. The main assets and/or companies comprising each segment are presented below:

 

 

 

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Quarterly Financial Information – June 30, 2019 – CIA SIDERURGICA NACIONAL

Version: 1

 

1Q20 Results

Steel

Mining

Port Logistics

Railway Logistics

Energy

Cement

Corporate Expenses/ Eliminations

Consolidated

(R$ million)

               

Net Revenue

3,542

1,646

75

282

42

146

(398)

5,335

Domestic Market

2,511

263

75

282

42

146

(581)

2,738

Foreign Market

1,031

1,382

-

-

-

-

184

2,597

COGS

(3,237)

(823)

(49)

(270)

(29)

(145)

537

(4,018)

Gross Profit

305

823

25

12

13

1

139

1,317

SG&A

(214)

(46)

(10)

(26)

(8)

(23)

(183)

(510)

Depreciation

207

145

8

124

4

36

(110)

415

Proportional EBITDA of jointly owned subsidiaries

-

 

-

-

-

-

109

109

Adjusted EBITDA

298

921

23

111

9

14

(45)

1,331

4Q19 Results

Steel

Mining

Port Logistics

Railway Logistics

Energy

Cement

Corporate Expenses/ Eliminations

Consolidated

(R$ million)

               

Net Revenue

3,349

2,522

55

292

103

144

57

6,524

Domestic Market

2,529

242

55

292

103

144

(606)

2,761

Foreign Market

820

2,280

-

-

-

-

663

3,763

COGS

(3,171)

(1,323)

(39)

(260)

(84)

(141)

590

(4,429)

Gross Profit

178

1,199

16

32

20

3

646

2,095

SG&A

(230)

(43)

(9)

(32)

(7)

(24)

(696)

(1,041)

Depreciation

228

134

7

100

4

43

(85)

432

Proportional EBITDA of jointly owned subsidiaries

-

-

-

-

-

-

94

94

Adjusted EBITDA

177

1,290

15

100

17

22

(41)

1,580

1Q19 Results

Steel

Mining

Port Logistics

Railway Logistics

Energy

Cement

Corporate Expenses/ Eliminations

Consolidated

(R$ million)

               

Net Revenue

3,605

2,079

52

335

70

120

(255)

6,005

Domestic Market

2,567

245

52

335

70

120

(629)

2,760

Foreign Market

1,038

1,834

-

-

-

-

374

3,245

COGS

(3,222)

(870)

(47)

(261)

(61)

(138)

577

(4,021)

Gross Profit

383

1,209

5

74

9

(18)

322

1,984

SG&A

(197)

(42)

(9)

(27)

(7)

(21)

(390)

(694)

Depreciation

157

92

7

92

4

32

(79)

306

Proportional EBITDA of jointly owned subsidiaries

-

-

-

-

-

-

127

127

Adjusted EBITDA

344

1,259

3

138

6

(7)

(19)

1,724

 

Steel Results

According to the World Steel Association (WSA), global crude steel production totaled 443.0 million tons (Mton) in 1Q20, 1.4% lower YoY. Asia produced 315.2 Mton, drop of 0.3%, while the European Union and North America reduced by 10% and 4.0%, respectively YoY.

·      In 1Q20, CSN’s slab production totaled 884 thousand tons, 14% higher than in 4Q19, normalizing production after the revamp of blast furnace #3 in 2H19. 

 

Steel Production

1Q19

4Q19

1Q20

Variation

(thousand tons)

1Q20

x

1Q19

1Q20

x

4Q19

Total Slabs (UPV + Third parties)

1,040

934

943

                 (9%)

                   1%

Slab Production

830

775

884

                   7%

                14%

Third-party Slabs

210

160

58

               (72%)

               (64%)

Total Flat Rolled Products

927

845

928

                   -

                10%

Total Long Rolled Products

51

61

51

                     -  

               (17%)

 

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Version: 1

 

In 1Q20, total sales reached 1,140 thousand tons, 2% higher compared to 4Q19, mainly due to higher sales in the foreign market. Domestic sales started to slowdown in the third week of March, due to the COVID-19 pandemic effects in some important segments.

 

 

·   

In 1Q20, volume of steel sold in the domestic markettotaled 775 thousand tons, 5% less than 4Q19. Of this total, 720 thousand tons are flat steel and 55 thousand tons were long steel. According to the Brazilian Steel Institute (IABr), apparent consumption reached 5.1 million tons, decreasing 0.6% versus 1Q19. Brazilian crude steel production reached 8 million tons, decreasing 7% YoY.

 
     
·   

In foreign markets,sales in 1Q20 totaled 365 thousand tons, 22% higher QoQ, due to seasonality at SWT/Lusosider/LLC. In this period, 8 thousand tons were exported directly, and 356 thousand tons were sold through subsidiaries overseas, with 45 thousand tons by LLC, 221 thousand tons by SWT, and 90 thousand tons by Lusosider.

 

 

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·        In 1Q20, CSN maintained a high share of coated products of its total sales volume, following the strategy of adding more value to its product mix. Sales of coated products such as galvanized and tin plates accounted for 49% of flat steel sales, considering all the markets in which the Company operates. In the domestic market, coated products maintained 43% of flat steel sales in 1Q20.

According to ANFAVEA (National Association of Automobile Manufacturers), in 1Q20, the production of automobiles, light commercial vehicles, trucks and buses reached 585,889 thousand units, decreasing 16% YoY. Exports recorded a lower performance, totaling sales of 88,998 thousand vehicles, a 14.9% reduction in volume YoY.

 

According to ABRAMAT (Construction Material Manufacturers’ Association), sales of construction materials increased 2.4% in 1Q20 on a YoY basis.

 

According to IBGE (Brazilian Institute of Geography and Statistics), production of home appliances increased by 11.8% in the last twelve months until March 2020, versus the same period in 2019.

 

·   

Net revenue from Steel operations reached R$3,542 million in 1Q20, 6% higher than in 4Q19. This was due to higher sales volume in the foreign market and higher prices in both, domestic and foreign markets. The average price in domestic market was 4% highercompared to the previous quarter, due to an increasing in steel prices. In the foreign market, the average price was 3% higher in the same comparison basis.

·   

Cost of goods sold increased by 2% in 1Q20 over 4Q19, totaling R$3,237 million.

·   

Slab production cost in 1Q20 reached R$2,036/t,   impacted by (1) power outage by utility company due to technical malfunction at a substation in January; (2) high humidity of raw materials impacted performance of the blast furnace in February.

·   

Since January, with production volumes stabilizing, slab cost has been positively evolving in a consistent way.

·   

Adjusted EBITDA reached R$298 million in 1Q20, 68% higher than in 4Q19, with EBITDA margin at 8.4% in 1Q20.

 

 

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Earnning Results

 

In 1Q20, resilient steel demand in China (+1.4% YoY of gross steel production) and the prospect of an iron ore balance deficit, due to the heavy rainfall in Minas Gerais, had a lightly positive effect on prices. Within this context, iron ore reached an average price of US$89.00/dmt (Platts, Fe62%, N. China), stable when compared with the 4Q19 (US$88.61/dmt).

 

As for maritime freight, the BCI-C3 (Tubarão-Qingdao) route reached an average of US$13.79/wmt in 1Q20, 33% lower than the previous quarter, influenced by balanced supply and demand of vessels, as well as, oil prices at lower levels.

 

·        In 1Q20, iron ore production totaled 5.9 million tons, 39% lower YoY due to heavy rainfall in the region and delay in new mining fronts.

 

·        In 1Q20, sales volume reached 5.6 million tons, 37% lower YoY due to production restrictions, even with good availability of iron ore from third parties.

 

 

Mining Production Volume and Sales

1Q19

4Q19

1Q20

Variation

(thousand tons)

1Q20

x

1Q19

 

1Q20

x

4Q19

Total Production

9,719

8,859

5,942

               (39%)

 

               (33%)

Sales to UPV

1,169

953

1,086

                 (7%)

 

                14%

Volume Sold to Third Parties

7,690

9,382

4,524

               (41%)

 

               (52%)

Total Sales

8,859

10,334

5,609

               (37%)

 

               (46%)

Production volumes includes third party iron ore purchases. 

Production and sales volumes includes CSN’s 100% stake in CSN Mineração.

 

·        In 1Q20, net revenue from mining operations totaled R$1,646 million, 35% lower than the previous quarter, due to lower sales volume (-37%).

 

·        The Platts 62 index reached US$89.0/dmt stable when compared to the previous quarter. CIF+FOB prices reached US$73.3/wmt, 2% higher than the previous quarter. The positive variation in 1Q20 is explained by the pricing basket of the quotational period and for a lower reduction on FOB freights.

 

 

 

 

 

·        Cost of goods sold in the mining segment totaled R$823 million in 1Q20, decreasing 5.4% on a YoY comparison. The FOB Cash Cost was USD21.3/t in 1Q20, or 11% higher YoY due to lower production volumes and a lower operational fixed dilution, that must return to normalized levels in the upcoming quarters.

 

 

·        EBITDA reached R$921 million in 1Q20, with an EBITDA margin of 56%, providing a good quarter result even with a lower sales volume.

 

 

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Version: 1

 

CSN’s Logistics Results

 

Railway Logistics: In 1Q20,net revenuereached R$282 million, with EBITDA of R$111 million and EBITDA margin of 39.2%. 

 

Port Logistics: In 1Q20, Sepetiba Tecon shipped 112 thousand tons of steel products, in addition to 2 thousand tons of general cargo, approximately 37 thousand containers and 488 thousand tons of bulk cargo. Net revenue reached R$75 million, with an EBITDAof R$23 million, and EBITDA marginof 31.1%.

 

Sepetiba TECON Highlights

1Q19

4Q19

1Q20

   

Variation

1Q20

x

1Q19

1Q20

x

4Q19

     

Container Volume (thousand units)

43

39

37

 

 

(14%)

(4%)

 

Steel Volume (thousand tons)

162

137

112

 

 

(31%)

(18%)

 

General Cargo Volume (thousand tons)

1

3

2

 

 

229%

(31%)

 

Bulk Volume (thousand tons)

56

16

488

 

 

772%

3003%

 

Vehicles Volume (thousand units)

-

2

-

 

 

-

-

 

 

 

CSN’s Energy Results

 

According to EPE (Energy Research Company), electricity consumption in Brazil decreased by 0.9% in 1Q20, versus the same period in 2019. The industrial segment reduced by 0.4% in the quarter, while residential and commercial segments decreased by 0.3% and 2.2%, respectively in the same comparison basis.

 

In 1Q20, the volume of energy traded decreased, totaling a net revenue of R$42 million, with EBTIDA of R$9 million and EBITDA margin of 22.3%.

 

 

CSN’s Cement Results

 

In 1Q20, domestic cement sales totaled 12.6 million tons, according to preliminary data from SNIC (National Cement Industry Association). This amount represents a decrease of 0.3% over the same period in 2019.

 

In 1Q20, net revenue reached R$146 million, 1.4% more than the previous quarter and 20.2% higher than in the same period in 2019, due to higher sales volume (+19%) compared to 1Q19, in addition to higher prices, generating an EBITDA of R$14 million and EBITDA margin of 9.7%%.

 

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Version: 1

 

Capital Markets

 

In 1Q20, CSN’s share depreciated 52.48%, while the Ibovespa decreased 15.49%. Daily traded volume (CSNA3) on B3 was R$159 million. On the New York Stock Exchange (NYSE), CSN’s American Depositary Receipts (ADR’s) depreciated 63.81% while the Dow Jones moved down 24.08%. On the NYSE, the average daily traded value of CSN’s ADR (SID) was US$12 million.

 

4Q19

1Q20

Number of shares (in thousands)

1,387,524

1,387,524

Market Cap

 

 

Closing price (R$/share)

14.11

6.98

Closing price (US$/ADR)

3.45

1.31

Market cap (R$ million)

20,805

9,685

Market cap (US$ million)

5,230

1,818

Total return including Dividends and Interest on Equity

 

 

CSNA3

6.73%

(52.48%)

SID

8.83%

(63.81%)

Ibovespa

11.14%

(15.49%)

Dow Jones

7.40%

(24.08%)

Volume

 

 

Daily average (thousand shares)

10,651

14,491

Daily average (R$ thousand)

137,760

158,635

Daily average (thousand ADRs)

3,505

4,447

Daily average (US$ thousand)

10,901

12,056

Source: Bloomberg

   

Webcast - 1Q20 Earnings Presentation                                                        Investor Relations Team

Conference Call in Portuguese with Simultaneous Translation into English

 CFO and IRO Marcelo Cunha Ribeiro

 Leo Shinohara (leonardo.shinohara@csn.com.br)

 José Henrique Triques (jose.triques@csn.com.br)

 Sandra Saad (sandra.saad@csn.com.br)

 Guilherme Vinco (guilherme.vinco@csn.com.br)

 

 

May 15, 2020

03:00 p.m. (US EDT)

04:00 p.m. (Brasilia Time)

Phone.: +1 929 378-3440 / +1 516 300-1066

Code: CSN

Replay Phone: +55 11 3127-4999

Replay Code: 11977050 

Webcast: click here

 

 

 

Some of the statements contained herein are forward-looking statements that express or imply expected results, performance or events. These include future results that may be implied by historical results and the statements under ‘Outlook’. Actual results, performance or events may differ materially from those expressed or implied by the forward-looking statements as a result of several factors, such as the general and economic conditions in Brazil and other countries, interest rate and exchange rate levels, protectionist measures in the USA, Brazil and other countries, changes in laws and regulations and general competitive factors (on a global, regional or national basis).

 

 

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CONSOLIDATED SALES VOLUME (in thousands of tons)

 

                     

 

1Q19

4Q19

1Q20

Variation

 

1Q20

x

1Q19

 

1Q20

x

4Q19

 Flat Steel

     760

     748

     720

                  (40)

 

                  (28)

Slab

        -  

        -  

        -  

                     -  

 

                     -  

Hot Rolled

     293

     298

     262

                  (31)

 

                  (36)

Cold Rolled

     155

     126

     146

                    (9)

 

                   20

Galvanized

     244

     244

     239

                    (5)

 

                    (5)

Tin Plates

       68

       81

       73

                      5

 

                    (8)

 UPV Long Steel

       51

       71

       55

                      4

 

                  (16)

DOMESTIC MARKET

     811

     819

     775

                  (36)

 

                  (44)

 

                   

 

1Q19

4Q19

1Q20

1Q20

x

1Q19

 

1Q20

x

4Q19

 Flat Steel

     137

     119

     144

                      7

 

                   25

Slab

        -  

        -  

         8

                      8

 

                      8

Hot Rolled

       10

       10

       13

                      3

 

                      3

Cold Rolled

         6

         7

         7

                      1

 

                     -  

Galvanized

       96

       90

     106

                   10

 

                   16

Tin Plates

       26

       13

         9

                  (17)

 

                    (4)

 Long Steel Profiles

     226

     178

     221

                    (5)

 

                   43

 FOREIGN MARKET

     364

     298

     365

                      1

 

                   67

 

 

 

 

             

 

1Q19

4Q19

1Q20

1Q20

x

1Q19

 

1Q20

x

4Q19

 Flat Steel

     897

     867

     864

                  (33)

 

                    (3)

Slab

        -  

        -  

         8

                      8

 

                      8

Hot Rolled

     303

     307

     276

                  (27)

 

                  (31)

Cold Rolled

     161

     133

     153

                    (8)

 

                   20

Galvanized

     340

     334

     345

                      5

 

                   11

Tin Plates

       94

       94

       82

                  (12)

 

                  (12)

 UPV Long Steel

       51

       71

       55

                      4

 

                  (16)

 Long Steel Profiles

     226

     178

     221

                    (5)

 

                   43

 TOTAL MARKET

 1,175

 1,117

 1,140

                  (35)

 

                   23

 

 

 

 

 

 

 

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Version: 1

 

INCOME STATEMENT

CONSOLIDATED – Brazilian Corporate Law (in thousands of reais)

       
       

 

1Q19

4Q19

1Q20

 Net Sales Revenue

                    6,005,466

                   6,523,816

                    5,334,653

 Domestic Market

                    2,760,089

                   2,760,705

                    2,737,944

 Foreign Market

                    3,245,377

                   3,763,111

                    2,596,709

 Costs of Goods Sold (COGS)

                  (4,021,495)

                  (4,429,143)

                  (4,017,707)

 COGS, excluding Depreciation and Depletion

                  (3,722,830)

                  (4,009,168)

                  (3,614,107)

 Depreciation/Depletion allocated to COGS

                     (298,665)

                     (419,975)

                     (403,600)

 Gross Profit

                    1,983,971

                   2,094,673

                    1,316,946

 Gross Margin (%)

33%

32%

25%

 Selling Expenses

                     (572,205)

                     (907,221)

                     (387,639)

 General and Administrative Expenses

                     (113,959)

                     (121,879)

                     (110,750)

 Depreciation and Amortization Expenses

                         (7,501)

                       (11,798)

                       (11,581)

 Other Income (Expenses), net

                     (135,420)

                     (102,574)

                     (666,235)

 Equity in Results of Affiliated Companies

                         25,833

                          6,747

                       (45,108)

 Operating Income Before the Financial Result

                    1,180,719

                      957,948

                         95,633

 Net Financial Result

                     (635,099)

                     (298,335)

                  (1,201,138)

 Income before Income Tax and Social Contribution

                       545,620

                      659,613

                  (1,105,505)

 Income Tax and Social Contribution

                     (458,857)

                      474,329

                     (206,204)

 Profit for the Period

                         86,763

                   1,133,942

                  (1,311,709)

 

 

 

 

 

 
 

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BALANCE SHEET

CONSOLIDATED – Brazilian Corporate Law (in thousands of reais)

 

12/31/2019

03/31/2020

Current assets

12,725,805

14,385,591

Cash and cash equivalents

1,088,955

3,281,138

Financial Investments

2,633,173

1,644,460

   Accounts Receivable

2,047,931

2,205,944

   Inventory

5,282,750

5,465,046

  Other Current Assets

1,672,996

1,789,003

Taxes to recover

1,282,415

1,388,468

Prepaid expenses

203,733

208,868

Dividends receivable

44,554

44,554

Derivative financial instruments

1,364

4,579

Others

140,930

142,534

 Non-current Assets

38,143,471

38,337,492

  Long-term Assets

7,626,577

7,558,528

Financial Investments valued at amortized cost

95,719

121,027

Deferred Taxex

2,473,304

2,475,496

Other non-current assets

5,057,554

4,962,005

Tax to recover

2,119,940

1,956,660

Judicial deposits

328,371

333,120

Prepaid expenses

139,927

129,562

Credts Related Parties

1,274,972

1,365,520

Others

1,194,344

1,177,143

Investments

3,584,169

3,600,997

Shareholdings

3,482,974

3,438,752

Investment Properties

101,195

162,245

Property, plant and equipmet

19,700,944

19,857,633

Fixed Assets in Operation

19,228,599

19,392,387

Lease

472,345

465,246

Intangible Assets

7,231,781

7,320,334

TOTAL ASSETS

50,869,276

52,723,083

 Current Liabilities

11,619,957

11,970,831

   Payroll and Related Taxes

317,510

308,501

    Trade Payables

3,012,654

3,451,945

    Taxes Payable

541,027

486,766

    Loans and Financing

5,125,843

5,314,667

    Other Payables

2,526,444

2,325,921

Dividends and JCP Payable

13,252

13,116

Customer Advances

787,604

809,173

Payables – Drawee Risk

1,121,312

937,576

Lease Liabilities

35,040

31,807

Other Payables

569,236

534,249

Provisions for Tax, Social Security, Labor and Civil Risks

96,479

83,031

Non-current Liabilities

27,887,387

35,345,710

    Loans, Financing and Debentures

22,841,193

30,305,393

Other Payables

2,493,702

2,426,514

Customer Advances

1,845,248

1,699,617

Lease Liabilities

439,350

434,640

Derivative financial instruments

 

94,909

Other Payables

209,104

197,348

    Deferred Taxes

589,539

620,227

    Provisions for Tax, Social Security, Labor and Civil Risks

526,768

536,51

    Other Provisions

1,436,185

1,456,825

Provisions for Environmental Liabilities and Deactivation

524,001

544,641

Pension and Health Plan

912,184

912,184

 Equity

11,361,932

5,406,542

   Paid-up Capital

4,540,000

4,540,000

   Capital Reserve

32,720

32,720

   Profit Reserve

4,431,200

4,431,200

   Accumulated Earnings

 

                  (1,360,851)

   Other Comprehensive Income

1,170,624

                  (3,473,059)

   Non-controlling Interest

1,187,388

1,236,532

 TOTAL LIABILITIES AND EQUITY

50,869,276

52,723,083

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CASH FLOW

CONSOLIDATED – Brazilian Corporate Law (in thousands of reais)

 

 
 

1Q19

4Q19

1Q20

 Net Cash generated by Operating Activities

1,185,970

1,111,510

466,933

 Net income (loss) for the period attributable to controlling shareholders

(7,572)

1,044,514

             (1,360,851)

 Net income attributable to non-controlling shareholders

94,335

89,428

49,142

 Charges on loans and financing raised

465,928

410,529

470,990

 Charges on loans and financing granted

(13,946)

(13,509)

(11,481)

 Charges on lease liabilities

4,957

16,177

13,056

 Depreciation, depletion and amortization

328,070

454,075

437,507

 Equity in results of affiliated companies

(25,833)

(6,747)

45,108

 Deferred taxes

89,039

(777,754)

(11,351)

 Provisions for tax, social security, labor, civil and environmental risk

(69,853)

(31,638)

(8,685)

 Monetary and exchange rate variation, net

239,582

(65,389)

522,571

Write-off of fixed and intangible assets

13,712

74,797

1,400

Actuarial liability provision

-

(20,194)

-

 Adjusted shares – VJR

(127,653)

(246,525)

962,561

 Provisions for decommissioning and environmental liabilities

7,592

9,233

20,640

 Monetary correction of compulsory loan to Eletrobrás

(1,715)

-

-

Provisions (reversal) for consumption and services

8,853

(181,587)

37,158

Credit from Pis and Cofins

-

(160,609)

-

Contractual agreements

-

(131,817)

-

 Other provisions

10,992

12,029

(1,579)

 Working Capital Variation

758,388

1,056,057

(188,011)

 Accounts receivable – third parties

(713,057)

211,970

(89,849)

 Accounts receivable – related parties

(92,283)

13,551

(31,572)

 Inventories

(653,465)

648,224

(13,512)

 Borrowings – related parties

447

93,956

-

 Taxes to offset

(41,211)

210,739

57,227

 Judicial deposits

(11,569)

22,746

(4,749)

 Trade payables

(170,461)

(202,903)

341,567

 Trade payables – Drawee Risk

235,181

193,134

(183,736)

 Payroll and related taxes

14,014

(65,056)

(14,420)

 Taxes/Refis

282,973

51,037

(61,612)

 Accounts payable – related parties

(30,173)

25,494

(20,572)

Customer advances

1,935,831

(121,136)

(130,568)

 Other 

2,161

(25,699)

(36,215)

 Other Payments and Receipts

(590,621)

(419,560)

(511,242)

 Interest paid

(590,621)

(419,560)

(511,242)

 Cash Flow from Investing Activities

(220,750)

(919,840)

(404,851)

Investments/Future Advance for capital increase

-

(153,606)

-

 Acquisition of intangible assets

(313,579)

(838,544)

(353,698)

Receipt / (payment) in derivative transactions

(372)

142

-

 Loans granted - related parties

(40,643)

-

(82,089)

 Loans received - related parties

16,796

3,237

3,022

 Financial application, net of redemption

117,048

90,276

27,914

Cash used to acquire a stake in CBSI

 

(21,345)

 

 Cash Flow from Financing Activities

(514,817)

(999,075)

2,157,127

 Loans and financing raised

2,465,845

492,789

4,553,970

 Loan amortizations – principal

(2,939,145)

(1,340,202)

(2,363,666)

 Borrowing costs

(28,810)

(15,289)

(9,131)

 Lease amortizations

(12,707)

(37,258)

(23,910)

 Dividends paid

-

(99,115)

(136)

 Exchange Rate Variation on Cash and Cash Equivalents

3,670

497

(27,026)

 Cash Flow

454,073

(806,908)

2,192,183

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Version: 1

 

 

(Expressed in thousands of reais – R$, unless otherwise stated)

 

1.      DESCRIPTION OF BUSINESS

 

Companhia Siderúrgica Nacional “CSN”, also referred to as “the Company” or “Parent Company”, is a publicly-held company incorporated on April 9, 1941, under the laws of the Federative Republic of Brazil (Companhia Siderúrgica Nacional, its subsidiaries, associates and joint ventures are collectively referred to herein as the "Group”). The Company’s registered office is located in São Paulo, SP, Brazil.

 

CSN is listed on the São Paulo Stock Exchange (B3 S.A.- Brasil, Bolsa, Balcão) and on the New York Stock Exchange (NYSE). Accordingly, the Company reports its information to the Brazilian Securities and Exchange Commission (CVM) and the U.S. Securities and Exchange Commission (SEC).

 

The Group's main operating activities are divided into five segments as follows:

 

·      Steel:

 

The Company’s main industrial facility is the Presidente Vargas steelworks (“UPV”), located in the city of Volta Redonda, state of Rio de Janeiro. This segment consolidates all operations related to the production, distribution and sale of flat steel, long steel, metallic containers and galvanized steel. In addition to the facilities in Brazil, CSN has commercial operations in the United States and operations in Portugal and Germany aimed at gaining markets and providing excellent services to end consumers. Its steel is used in home appliances, civil construction and automobile industries.

 

·      Mining:

 

The production of iron ore is developed in the cities of Congonhas, Ouro Preto and Belo Vale, in the state of Minas Gerais, by the subsidiary CSN Mineração.

 

Iron ore is sold basically in the international market, especially in Europe and Asia. The prices charged in these markets are historically cyclical and subject to significant fluctuations over short periods of time, driven by several factors related to global demand, strategies adopted by the major steel producers, and the foreign exchange rate. All these factors are beyond the Company’s control. The ore transportation is carried out through Terminal de Carvão e Minérios do Porto de Itaguaí – (“TECAR”), a solid bulk terminal, one of the four terminals that comprise the Itaguaí Port, in State of Rio de Janeiro. Imports of coal and coke are also carried out through this terminal by providing services by CSN Mineração to CSN. The Company´s mining activities also comprise exploitation of tin in the State of Rondônia, to supply the needs of the UPV. The surplus of these raw materials is sold to subsidiaries and third parties.

 

The Company's mining activities utilize tailings filtering and dams are maintained for contingent situations (power supply shortfalls, sudden interruptions in the beneficiation plant, etc.) for tailing discharges. The Company has invested around R$250 million in two filtering plants. The filtered tailings are placed in piles geotechnically controlled which represents a new trend in iron ore mining without the use of tailing dams. As a result of those measures, decommissioning of dams is the natural path of processing dry tailings.

 

All of our dams, both mining and hydroelectric dams, are positively certified and comply with the environmental legislation in force.

 

·      Cement:

 

CSN entered the cement market boosted by the synergy between this activity and its existing businesses. Next to the Presidente Vargas Steelworks (UPV) in Volta Redonda (RJ), the Company installed a new business unit that produces CP-III type cement using slag produced by the UPV’s blast furnaces. It also exploits limestone and dolomite at the Arcos unit in the State of Minas Gerais, to meet the needs of the UPV and of the cement plant. Additionally, the operation clinker production line is located in Arcos/MG. As a result, the Company is self-sufficient in the production of cement, with an installed capacity of 4.7 million tons per year.

 

·      Logistics

 

Railroads:

 

CSN has interests in three railroad companies: MRS Logística S.A., which manages the Southeast Railway System of the former Rede Ferroviária Federal S.A. (“RFFSA”), Transnordestina Logística S.A. (“TLSA”) and FTL - Ferrovia Transnordestina Logística S.A. (“FTL”), the last two having the concession to operate the former Northeast Railway System of RFFSA, in the States of Maranhão, Piauí, Ceará, Rio Grande do Norte, Paraíba, Pernambuco, Alagoas and Sergipe, with TLSA being responsible for the rail links of Eliseu Martins-Trindade, Trindade-Salgueiro, Salgueiro-Porto Suape, Salgueiro - Missão Velha and Missão Velha – Pecém (Railway System II),and construction phase, and FTL responsible for the rail links of São Luís - Altos, Altos - Fortaleza, Fortaleza - Sousa, Sousa - Recife/Jorge Lins, Recife/Jorge Lins - Salgueiro, Jorge Lins - Propriá, Paula Cavalcante - Cabedelo, Itabaiana - Macau (Railway System I).

                                                           

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Ports:

 

The Company operates in the State of Rio de Janeiro, through its subsidiary Sepetiba Tecon S.A., the Container Terminal ("TECON”) and through its subsidiary CSN Mineração S.A., TECAR, both at the Itaguaí Port. Locate in the Bay of Sepetiba, they have privileged highway, railroad and maritime access.

 

TECON handles and stores containers, vehicles, steel products, general cargo, among other products, and TECAR performs the operational activities of loading and unloading of solid bulk ships, storage and distribution (road and rail) of coal, coke, petroleum coke, clinker, zinc concentrate, sulfur, iron ore and other bulk intended for the seaborne market, for own consumption or for different customers.

 

·      Energy:

 

As energy is fundamental to its production process, the Company has electric energy generation assets to guarantee its self-sufficiency.

 

Note 23 - “Segment Information” details the financial information per CSN´s business segment.

 

·      Going Concern

 

The interim financial information was prepared based on the normal continuity of its business.

 

The negotiations for reprofiling part of the debts remain in constant progress and do not jeopardize the Company's operating continuity. The management does not have any other relevant operational restructuring plan that implies a change to the conclusion of the operational continuity. Except for the statement in the next paragraph, the assumptions adopted on the disclosures on the bases for evaluating the operational continuity included in the financial statements of December 31, 2019 remain unchanged in their majority, being those financial statements approved by Management on March 4, 2020.

 

The COVID-19 pandemic was a new and important factor that emerged globally, reaching great relevance at the end of the first quarter 2020 causing impacts to the global economy. Our operations had not experienced significant impacts until March 31, 2020, but we expect some adverse effects during the second quarter. However, it is not possible to predict how long the pandemic will continue active and what its effects will be in the global economy as well as in our activities. We haven’t identified any evidences of continuity risks and substantially maintained our primary operating assumptions unchanged, except for the assessment of turning off the blast furnace No.2 anytime during the second half of May 2020 consequently reducing steel production volumes in the Presidente Vargas steelworks. We continue closely monitoring the pandemic unfoldings and, in the case the global business and economic environments further deteriorate significantly, our projections may be revised to face the incoming challenges. Our other operating projections in mining, cement and logistics continue with no significant impacts.

 

2.      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

2.a) Basis of preparation and declaration of conformity

 

The consolidated and parent company condensed interim financial information (“condensed quarterly information”) have been prepared and are being presented in accordance with accounting practices adopted in Brazil based on the provisions of the Brazilian Corporate Law, pronouncements, guidelines and interpretations issued (CPC), approved by CVM, besides the own standards issued by the Brazilian Securities and Exchange Commission (“CVM”) and International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standard Board (IASB) and highlight all the relevant information of the interim financial statements, and only this information, is being disclosed and corresponds to the information used by the Company's management in its activities

 

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The interim financial information has been prepared and is being presented in accordance with CPC 21 (R1) - “Interim Financial Reporting” and IAS 34 - “Interim Financial Reporting”, consistently with the standards issued by the CVM.

 

The significant accounting policies applied in this interim financial information are consistent with the policies described in Note 02 to the Company’s financial statements for the year ended December 31, 2019, filed with CVM.

 

This interim financial information does not include all requirements of annual or full financial statements and, accordingly, should be read in conjunction with the Company’s financial statements for the year ended December 31, 2019.

 

Therefore, in this interim financial information the following notes are not repeated, either due to redundancy or to the materiality in relation to those already presented in the annual financial statements:

 

Note 02 – Summary of significant accounting policies

Note 08 - Investments

Note 15 - Taxes in installments

Note 16 - Provision for tax, social security, labor, civil and environmental risks and judicial deposits

Note 26 – Employee benefits

Note 27 – Commitments

 

The parent company and consolidated interim financial information was approved by Management on May 14, 2020.

 

2.b) Basis of presentation

 

The interim financial information is presented in Brazilian reais (R$), which is the Company’s principal functional currency and the Group’s presentation currency.

 

Transactions in foreign currencies are translated into the functional currency using the exchange rates in effect at the dates of the transactions or valuations when items are remeasured. The asset and liability balances are translated at the exchange rates prevailing at the end of the reporting period. As of March 31, 2020, US$1 is equivalent to R$5.1987 (R$4.0307 as of December 31, 2019) and €1 is equivalent to R$5.7264 (R$4.5305 as of December 31, 2019), according to the rates obtained from the Central Bank of Brazil website.

 

2.c) Basis of consolidation

 

The accounting policies have been consistently applied to all consolidated companies. The consolidated financial statements for the period ended March 31, 2020 and year ended December 31, 2019 include the following direct and indirect subsidiaries and joint ventures, as well as the exclusive funds, as described below:

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·                  Companies

 

 (*) Dormant companies, therefore, they are presented in note 9.a., where information on companies accounted for under the equity method and fair value through profit or loss and comprehensive income are disclosed;

 

1.       The company was liquidated on March 11, 2020;

 

2.       As of March 31, 2020 and December 31, 2019, the Company directly owned 63,377,198 common shares, 26.611,282 preferred shares class A and 36,765,916 preferred shares class B and indirectly owned 63,388,872 common shares, 25.802,872 preferred shares class A and 37,563,000 preferred shares class B of MRS Logistica S.A..

 

3.       As of March 31, 2020, the Company held 24,168,304 common shares and 501,789 preferred shares Class B.

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·                  Exclusive funds

   

Equity interests (%)

 

Exclusive funds

 

03/31/2020

 

12/31/2019

 

Core business

Direct interest: full consolidation

 

 

 

 

 

 

Diplic II  - Private credit balanced mutual fund

 

       100.00

 

       100.00

 

Investment fund

Caixa Vértice - Private credit balanced mutual fund

 

       100.00

 

       100.00

 

Investment fund

VR1 - Private credit balanced mutual fund

 

       100.00

 

       100.00

 

Investment fund

 

2.d) COVID-19 effects

 

As of December 31, 2019, the first cases of Covid-19 arose in many countries and in March 2020 the WHO (World Health Organization) declared the pandemic of the virus. Brazil is one of the countries with community transmission and, accordingly, the Company has adopted several precautionary measures to reduce exposure of its employees and assure the continuity of its businesses.

 

All employees in conditions of vulnerability (group of risk) have been identified and set on vacations together with many others with the purpose of reducing around 50% of the corporate staff in the Company’s premises. Additionally, we provided masks to our employees, placed hand sanitizers in all of our premises and, also, circulate internal communications with preventive measures with the purpose of reinforcing the hygiene protocols recommended by the authorities.

 

Also, the Company has permanently assessed in details the effects caused by the Covid-19 pandemic in its businesses due to the sharp decrease in the economic activities in Brazil since the end of March 2020, which imposed restrictions and measures of social distancing with the purpose of reducing the virus circulation. The Company expects some impacts in its businesses, but they may not be measured reliably due to all uncertain in which the Company is inserted.

 

The Company’s economic activity is directly linked to the steel products demand in the automotive, domestic and civil construction segments, as well as in the iron ore’s in the domestic and international markets. Any reduction in the activities of those segments may affect the demand and the prices of our products and bring relevant impacts in our financial position and results.

 

The potential economic effects of Covid-19 in the Company are presented below:

 

a) Operating effects

 

The 2020 budget of investments has been revised considering the adverse effects of a global economic deacceleratiwe on and, consequently, the amount of investments has been reduced since priority is given to primary sustaining investments to maintain our current conditions in the operating capacity, environmental and security.

 

The Company considers to turn off the blast furnace No.2 in the Presidente Vargas steelplant (UPV), in the city of Volta Redonda – RJ, due to the weak global economic scenario and CSN is a major supplier of raw material to the automotive, appliances and civil construction industries.However, blast furnace No.3 has been recently refurbished and has the productive capacity to supply the current demand and the growing demand that will arise as the pandemic begins to decline and the global economy starts to recover.

 

As of March 31, 2020, the pandemic effects had not caused relevant impacts in our steel, mining, cement and others revenues. However, the Company expects to experience an important decrease in the domestic steel demand in the second quarter. Those impacts will be partially offset by shifting its products to the international market with an additional benefit of the strong appreciation of the exchange rates against the Brazilian Real.

 

The Company’s rail and seaborne logistics are not experiencing any impacts as well as the Company’s supply chain that could cause interruptions in its operating activities.

 

b) Assets recovery and financial and non-financial liabilities

 

The pandemic has not caused any significant impacts in the fair value of our assets and liabilities, except for the market value of our Usiminas’ shares that, as of March 31, 2020, had accumulated losses of R$962 million in the quarter. It is not possible to predict the actual impact of the pandemic in the Company’s businesses. In limit situations, certain covenants or special obligations applicable to our debt instruments may be achieved. The Company closely monitors the indicators to avoid the risks to its financial position.

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There are no relevant impacts in the Company’s financial assets. A portion of the receivables has been postponed but it is expected to be fully received until the end of the second quarter of 2020. The default rate of the Company’s receivables has not changed significantly and is not expected to change in the future.

 

Our portfolio of investments and the nature of our industrial plants have long-term characteristics. The long-term operating and economic context in which the Company is inserted gives us more flexibility in the strategies and plans to mitigate the risks and effects of the pandemic and, accordingly, ensure the maintenance of recoverability expected from our non-financial assets, such as equity instruments, property, plant and equipment and tax credits. We realized stressing tests playing with many assumptions of our business projections, especially for the years 2020 and 2021, and did not identify any impairment losses that should be recognized in our financial information as of March 31, 2020. 

 

According to orientations given by the Brazilian Securities and Exchange Commission (CVM), the Company assessed effects that eventually could have a relationship with its business continuity and accounting estimates. Despite we have perceived some adverse effects, we consider risks of continuity do not exist and changes to our accounting estimates are not necessary that could produce significant effects in the Company’s businesses and, consequently, in the financial position. But, due to the scenario uncertain and for being impossible to predict how long the current situation will last, it is not possible to measure reliably future eventual impacts of the pandemic in our businesses, financial position and results. Despite a few effects perceived in the short-term, the Company maintains in its entirety the production and sales projections for the medium and long terms.

 

 

3.      CASH AND CASH EQUIVALENTS

 

 

 

 

Consolidated

 

 

 

Parent Company

 

03/31/2020

 

12/31/2019

 

03/31/2020

 

12/31/2019

Current

 

 

 

 

 

 

 

Cash and cash equivalents

             

Cash and banks

       1,710,799

 

          496,769

 

          278,413

 

            99,835

               

Short-term investments

 

 

 

 

 

 

 

In Brazil:

             

Government securities

                 439

 

            69,093

 

                   77

 

                 735

Private securities

       1,517,759

 

          462,831

 

       1,147,496

 

          291,537

 

       1,518,198

 

          531,924

 

       1,147,573

 

          292,272

Abroad:

             

Private securities

52,141

 

60,262

 

 

 

 

Total short-term investments

1,570,339

 

592,186

 

1,147,573

 

292,272

Cash and cash equivalents

3,281,138

 

1,088,955

 

1,425,986

 

392,107

 

 

The funds available established in Brazil, are basically invested in private securities and yield interest based on the floating of Certificates of Interbank Deposits (“CDI”) and government securities are basically repurchase agreements backed by National Treasury Notes. The Company invests part of the funds through exclusive fund investments, and their financial statements were consolidated into the Company’s statements. The funds are managed by BNY Mellon Serviços Financeiros DTVM S.A. and Caixa Econômica Federal (CEF).

 

A significant part of the funds is invested abroad in Time Deposits in banks considered by management as top rated banks and the returns are based on fixed interest rates.

 

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4.      FINANCIAL INVESTMENTS

 

 

 

1.     Restricted financial investments linked to Bank Certificate of Deposit to secure a letter of guarantee of certain loans.

 

2.     Investments in National Treasury Bills (LFT) managed by its exclusive funds.

 

3.     A portion of the shares is given as guarantee to a portion of the Company’s debt.

 

4.     Bonds issued by Fibra with maturity in February 2028.

 

 

5.      TRADE RECEIVABLES

 

     

Consolidated

 

   

Parent Company

 

03/31/2020

 

12/31/2019

 

03/31/2020

 

12/31/2019

Trade receivables

 

 

 

 

 

 

 

Third parties

 

 

 

 

 

 

 

Domestic market

1,106,924

 

1,118,632

 

822,577

 

852,434

Foreign market

1,151,052

 

1,003,905

 

61,714

 

62,833

 

2,257,976

 

2,122,537

 

884,291

 

915,267

Allowance for doubtful debts

    (254,192)

 

    (245,194)

 

    (169,290)

 

    (167,247)

 

2,003,784

 

1,877,343

 

715,001

 

748,020

Related parties (Note 17 a)

202,160

 

170,588

 

1,338,613

 

943,623

 

2,205,944

 

2,047,931

 

2,053,614

 

1,691,643

 

 

In accordance with the sales policy the Group carries out transactions of assignment of receivables without co-obligation in which, after assigning the customer’s trade notes/bills and receiving the amounts from each transaction closed, CSN settles the receivables and becomes entirely free from the credit risk of the transaction. This transaction in the consolidated totals R$20,531 as of March 31, 2020 (R$51,161 as of December 31, 2019) and in the Parent Company R$ 16,242 (R$47,994 as of December 31,2019).

 

The gross balance of receivables from third parties is comprised as follows:

 

       

Consolidated

 

   

Parent Company

   

03/31/2020

 

12/31/2019

 

03/31/2020

 

12/31/2019

Current

 

   1,773,461

 

   1,739,746

 

      707,345

 

      731,377

Past-due up to 30 days

 

      244,860

 

      132,845

 

        36,219

 

          9,089

Past-due up to 180 days

 

        47,649

 

        23,877

 

          2,528

 

          6,684

Past-due over 180 days

 

      192,006

 

      226,069

 

      138,199

 

      168,117

 

 

   2,257,976

 

   2,122,537

 

      884,291

 

      915,267

 

The movements in the Company’s allowance for doubtful debts are as follows:

 

       

Consolidated

 

   

Parent Company

   

03/31/2020

 

12/31/2019

 

03/31/2020

 

12/31/2019

Opening balance

 

    (245,194)

 

    (237,352)

 

    (167,247)

 

    (176,855)

Estimated losses

 

      (11,180)

 

      (43,313)

 

        (3,734)

 

      (18,540)

Recovery of receivables

 

          2,182

 

        35,471

 

          1,691

 

        28,148

Closing balance

 

    (254,192)

 

    (245,194)

 

    (169,290)

 

    (167,247)

 

 

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6.      INVENTORIES

 

 

 

 

Consolidated

 

 

 

Parent Company

 

03/31/2020

 

12/31/2019

 

03/31/2020

 

12/31/2019

Finished goods

1,941,688

 

1,691,842

 

1,209,187

 

1,141,385

Work in progress

1,294,420

 

1,294,369

 

1,051,143

 

1,081,050

Raw materials

1,368,692

 

1,493,129

 

691,314

 

1,021,350

Storeroom supplies

936,795

 

902,135

 

524,208

 

502,591

Advances to suppliers

38,826

 

35,828

 

33,017

 

31,541

Provision for losses

        (115,375)

 

        (134,553)

 

          (38,565)

 

          (41,201)

 

       5,465,046

 

       5,282,750

 

       3,470,304

 

       3,736,716

The movements in the provision for inventory losses are as follows:

   

Consolidated

 

Parent Company

   

03/31/2020

 

12/31/2019

 

03/31/2020

 

12/31/2019

Opening balance

 

(134,553)

 

(157,754)

 

(41,201)

 

(45,076)

Reversal / (losses) for slow-moving and obsolescence

 

19,178

 

23,201

 

2,636

 

3,875

Closing balance

 

(115,375)

 

(134,553)

 

(38,565)

 

(41,201)

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7.      OTHER CURRENT AND NONCURRENT ASSETS

 

The group of other current and noncurrent assets is comprised as follows:

 

 

 

1.       Refers to the excess of judicial deposit originated by the 2009 REFIS (Tax Debt Refinancing Program).

 

2.       Refers mainly to PIS / COFINS, ICMS recoverable and income and social contribution taxes to be offset. On September 20, 2018, the writ of mandamus and special appeal filed in 2006, in which CSN and Federal Union were parties, related to the discussion about the non-inclusion of ICMS in the calculation base of PIS and COFINS, confirmed the CSN's right to offset the amounts unduly paid under these taxes from 2001 to 2014.

 

3.       Refers a payment of freight expenses and maritime insurance over revenues didn’t recognized.

 

4.       Long-term iron ore inventories that will be used after the construction of the processing plant, which will produce pellet feed, expected to start operating from the second half of 2021.

 

5.       Refers to a virtually certain receivable, arising from the res judicata favorable decision to the Company, which is irreversible and irrevocable, to apply the STJ's consolidated position on the subject, which culminated in the conviction of Eletrobrás to the payment of the correct interest and monetary adjustment of the Compulsory Loan. The res judicata decision, as well as the certainty about the amounts involved in the liquidation of the sentence (judicial procedure to request the satisfaction of the right), allowed the conclusion that the entry of this value is certain. In addition to this amount recognized, the Company continues seeking alternatives to recover additional unrecognized credits over R$350 million at the Company’s best estimates.

 

 

8.      INVESTMENTS

 

The information on the activities of subsidiaries, joint ventures, joint operations, associates and other investments did not have any changes in relation to that disclosed in the Company's financial statements as of December 31, 2019 and, accordingly, the Company decided not to repeat it in the condensed interim financial information as of March 31, 2020.

 

 

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Version: 1

 

8.a) Direct interests in subsidiaries, joint ventures, joint operations, associates and other investments

 

 

(*)  As of March 31, 2020 and December 31, 2019, the net balance of R$271,116 refers to fair value allocation in the loss of control in Transnordestina Logística S.A. in the amount of  R$659,105, further impaired in R$387,989 before taxes.

 

The number of shares, the balances of assets, liabilities and shareholders’ equity, and the amounts of profit/(loss) for the period refer to the interests held by CSN in those companies.

 

 

8.b) Movement in investments in subsidiaries, joint ventures, joint operations, associates and other investments

     

 Consolidated

     

 Parent Company

 

 03/31/2020

 

 12/31/2019

 

 03/31/2020

 

 12/31/2019

               

 Opening balance of investments

3,482,974

 

5,630,613

 

17,316,463

 

20,232,005

 Opening balance of loss provisions

       

(3,908,563)

 

(3,258,138)

 Capital increase/acquisition of shares 

   

27,909

 

18,566

 

66,621

 Dividends

   

(94,603)

 

96

 

(4,166,291)

 Comprehensive income (1)

31

 

(2,592)

 

381,542

 

31,441

 Equity pickup  (2)

(41,159)

 

175,524

 

(590,690)

 

2,720,437

 Update of shares measured at fair value through profit or loss (Note 12 II)

(207)

 

(118,780)

 

(207)

 

(118,780)

 Reclassification of Usiminas’ shares

   

(2,114,620)

     

(2,114,620)

 Goodwill from acquisition of 50% interest of CBSI (note 8d)

           

15,225

 Consolidation of CBSI (Note 8d)

   

(8,775)

       

 Amortization of fair value - investment MRS

(2,937)

 

(11,747)

       

 Others

50

 

45

       

 Closing balance of investments

3,438,752

 

3,482,974

 

18,468,033

 

17,316,463

 Balance of provision for investments with negative equity

       

(5,250,826)

 

(3,908,563)

 Total

3,438,752

 

3,482,974

 

13,217,207

 

13,407,900

 

1.     Refers to a translation to reporting currency of the foreign investment whose functional currency is not the Real, actuarial gain/loss and gain/loss on investment hedge from investments accounted for under the equity method.

2.     The reconciliation of the equity in results of joint ventures and associates and the amount recorded in the statement of income are presented below and derive from the elimination of results of CSN's transactions with these companies:

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Version: 1

 

 

     

Consolidated

 

03/31/2020

 

03/31/2019

       

Equity in results of affiliated companies

 

 

 

MRS Logística S.A.

(34,113)

 

42,922

CBSI - Companhia Brasileira de Serviços de Infraestrutura

-

 

784

Transnordestina Logística S.A.

(6,334)

 

(6,056)

Arvedi Metalfer do Brasil S.A.

(712)

 

-

Others

-

 

12

 

(41,159)

 

37,662

Eliminations

     

To cost of sales

(1,243)

 

(13,711)

To taxes

423

 

4,662

Others

-

 

-

Amortizated at fair value - Investment in MRS

(2,937)

 

(2,937)

Others

(192)

 

157

Equity in results

(45,108)

 

25,833

 

8.c) Investments in joint ventures and joint operations

 

The balances of the balance sheet and statement of income of joint ventures are presented below and refer to 100% of the companies’ results:

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·        TRANSNORDESTINA LOGÍSTICA S.A. (“TLSA”)

 

It is in pre-operational phase and will continue as such until the completion of Railway System II. The approved schedule, which estimated the completion of the work by January 2017, is currently under discussion with the responsible agencies; however, TLSA management believes that new deadlines for project completion will not have material adverse effects on the expected return on the investment. After analyzing this matter, management considered as appropriate the use of the accounting basis of operational continuity (going concern) of the project in the preparation of its financial statements.

 

The assumptions used to evaluate the impairment test in December 2019 remain valid and there is no event to justify records of impairment in the first quarter.

 

   

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Version: 1

8.d) Investment properties:

 

As of March 31, 2020, the balance of investment properties can be shown as follows:

 

 

 

 

 

 

Consolidated

 

 

 

 

 

Parent Company

 

 

Land

 

Buildings

 

Total

 

Land

 

Buildings

 

Total

Balance at December 31, 2019

 

68,877

 

32,318

 

101,195

 

65,698

 

20,030

 

85,728

Cost

 

68,877

 

53,816

 

122,693

 

65,698

 

41,528

 

107,226

Accumulated depreciation

 

-

 

(21,498)

 

(21,498)

 

-

 

(21,498)

 

(21,498)

Balance at December 31, 2019

 

68,877

 

32,318

 

101,195

 

65,698

 

20,030

 

85,728

Acquisitions

 

28,733

 

32,864

 

61,597

 

28,733

 

32,864

 

61,597

Depreciation

     

(547)

 

(547)

     

(386)

 

(386)

Balance at March 31, 2020

 

97,610

 

64,635

 

162,245

 

94,431

 

52,508

 

146,939

Cost

 

97,610

 

86,681

 

184,291

 

94,431

 

74,392

 

168,823

Accumulated depreciation

 

   

(22,046)

 

(22,046)

     

(21,884)

 

(21,884)

Balance at March 31, 2020

 

97,610

 

64,635

 

162,245

 

94,431

 

52,508

 

146,939

 

As of March 31, 2020, the Company’s management estimated the market value of the investment properties would be around R$1,843 million in the consolidated (R$1,781million as of December 31, 2019) and R$1,775 million in the Parent Company (R$1,714 million as of December 31, 2019).

 

The average useful lives are estimated as follows (in years):

 

     

Consolidated

     

Parent Company

 

03/31/2020

 

12/31/2019

 

03/31/2020

 

12/31/2019

Buildings

21

 

21

 

21

 

21

 

9.      PROPERTY, PLANT AND EQUIPMENT

 

 

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Version: 1

 

 

(*) Refer basically to railway assets such as courtyards, tracks and leasehold improvements, vehicles, hardware, mines, ore deposits, and spare part inventories.

 

 

(i)      Rights of Use

 

The movement of the rights of use as of March 31, 2020 is as follows:

 

 

 

 

 

 

 

 

 

 

Consolidated

 

Land

 

Buildings and Infrastructure

 

Machinery, equipment and facilities

 

Others

 

Total

Balance at December 31, 2019

380,566

 

64,154

 

24,144

 

3,481

 

472,345

Cost

401,746

 

73,344

 

39,455

 

16,499

 

531,044

Accumulated depreciation

(21,180)

 

(9,190)

 

(15,311)

 

(13,018)

 

(58,699)

Balance at December 31, 2019

380,566

 

64,154

 

24,144

 

3,481

 

472,345

Effect of foreign exchange differences

   

600

 

2,045

 

211

 

2,856

Addition

   

4,378

     

132

 

4,510

Remesurement

           

555

 

555

Depreciation

(5,984)

 

(2,154)

 

(4,298)

 

(1,981)

 

(14,417)

Write-offs

(285)

 

(318)

         

(603)

Transfers to other asset categories

   

(4,707)

 

3,878

 

829

   

Balance at March 31, 2020

374,297

 

61,953

 

25,769

 

3,227

 

465,246

Cost

401,176

 

71,485

 

47,311

 

18,729

 

538,701

Accumulated depreciation

(26,879)

 

(9,532)

 

(21,542)

 

(15,502)

 

(73,455)

Balance at March 31, 2020

374,297

 

61,953

 

25,769

 

3,227

 

465,246

 

 

 

 

 

 

 

 

 

Parent Company

 

 

Land

 

Machinery, equipment and facilities

 

Others

 

Total

Balance at December 31, 2019

 

        30,145

 

               13,580

 

                448

 

            44,173

Cost

 

        37,719

 

               25,719

 

             2,997

 

            66,435

Accumulated depreciation

 

        (7,574)

 

              (12,139)

 

            (2,549)

 

           (22,262)

Balance at December 31, 2019

 

        30,145

 

               13,580

 

                448

 

            44,173

Remesurement

 

 

 

 

 

                341

 

                 341

Depreciation

 

        (2,417)

 

                (3,088)

     

             (5,505)

Balance at March 31, 2020

 

        27,728

 

               10,492

 

                789

 

            39,009

Cost

 

        37,719

 

               25,719

 

             3,338

 

            66,776

Accumulated depreciation

 

        (9,991)

 

              (15,227)

 

            (2,549)

 

           (27,767)

Balance at March 31, 2020

 

        27,728

 

               10,492

 

                789

 

            39,009

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(ii)    Construction in Progress

 

The breakdown of the projects comprising construction in progress is as follows:

 

 

 

 

 

 

 

 

 

 

 

Consolidated

 

 

Project description

 

Start date

 

Completion date

 

03/31/2020

 

12/31/2019

Logistics

 

 

 

 

 

 

 

 

 

 

   

Current investments for maintenance of current operations.  

 

          

 

                 

       

77,990

 

81,944

 

 

 

 

          

 

                 

       

77,990

 

81,944

Mining 

           

       

     

 

 

 Expansion of Casa de Pedra Mine capacity production.  

 

2007

 

2024

(1)

893,317

 

883,742

   

  Expansion of TECAR export capacity.  

 

2009

 

2022

(2)

308,125

 

303,965

 

 

  Current investments for maintenance of current operations.  

 

          

 

                 

       

463,998

 

389,510

       

          

 

                 

       

1,665,440

 

1,577,217

Steel

 

 

 

 

 

 

       

     
   

Supply of 16 torpedo’s cars for operation in the steel industry

 

2008

 

2020

 

76,269

 

75,582

 

 

  Current investments for maintenance of current operations.  

 

          

 

                 

(3)

844,586

 

811,049

             

       

920,855

 

886,631

Cement

 

 

 

 

 

 

       

     
   

Construction of cement plants.  

 

2011

 

2023

(4)

578,500

 

577,712

 

 

Current investments for maintenance of current operations.  

 

          

 

                 

       

114,538

 

93,548

       

          

 

                 

       

693,038

 

671,260

Construction in progress

 

 

 

 

 

3,357,323

 

3,217,052

 

 

(1)   Estimated completion date of the Central Plant Step 1;

(2)   Estimated completion date of phase 60 Mtpa;

(3)   Refers substantially to the technological upgrade of the continuous running machines, productivity increase of the galvanized lines and new equipment;

(4)   Refers substantially to the acquisition of new Integrated Cement Plants.

 

The average estimated useful lives are as follows (in years):

 

     

Consolidated

     

Parent Company

 

03/31/2020

 

12/31/2019

 

03/31/2020

 

12/31/2019

Buildings

38

 

38

 

41

 

41

Machinery, equipment and facilities

20

 

21

 

22

 

22

Furniture and fixtures

12

 

12

 

12

 

12

Others

13

 

14

 

13

 

14

 

9.a) Capitalized Interest

 

A part of the debt costs were capitalized in the amount of R$23,390 in the consolidated and R$7,280 in the Parent Company as of March 31, 2020 (as of March 31, 2019 R$21,111 in the consolidated and R$5,419 in the Parent Company). Those costs capitalized, basically, in the mining projects such as: (i) expansion of Casa de Pedra (MG) and TECAR (RJ), see Notes 22 and 25. The average interest rates of the unespecified projects in the period ended March 31, 2020 is 1.48% (1.65% as of March 31, 2019).

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10.    INTANGIBLE ASSETS

 

 

 (*) Composed mainly by mineral rights with potential of 1,101 million tons (Not audited or reviewed by independent auditors). Amortization is based on production volume.

 

The average useful lives by nature are as follows (in years):

 

     

Consolidated

     

Parent Company

 

03/31/2020

 

12/31/2019

 

03/31/2020

 

12/31/2018

Software

9

 

9

 

8

 

9

Customer relationships

13

 

13

       

 

 

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11.    BORROWINGS, FINANCING AND DEBENTURES

 

The balances of borrowings, financing and debentures, which are carried at amortized cost, are as follows:

 

 

(1)   In January 2020, the Company issued debt securities in the foreign market (“Notes”), through its subsidiary CSN IslandsXI Corp, in the amount of US$1 billion, with maturity for 2028 and interest rate of 6.75% per year. A portion of the funds, in the amount of US$263 million, was used to repurchase (“Tender Offer”) the Notes issued by CSN Resources S.A. with maturity for 2020. The Notes are unconditionally and irrevocably guaranteed by the Company.  

 

The following table shows the average interest rate:

 

 

 

 

 

Consolidated

 

 

 

Parent Company

 

 

 

 

03/31/2020

 

 

 

03/31/2020

 

 

Average interest rate (i)

 

Total debt

 

Average interest rate (i)

 

Total debt

US$

 

6.60%

 

       24,708,252

 

3.84%

 

           19,102,857

EUR

 

1.50%

 

            314,755

 

3.88%

 

             1,455,059

R$

 

4.83%

 

       10,722,635

 

5.67%

 

             9,443,842

 

 

 

 

       35,745,642

 

 

 

           30,001,758

 

(i) In order to determine the average interest rates for debt contracts with floating rate, the Company used the rates applied as of March 31, 2020. In the parent company was considered the interest rates of intercompany contracts.

 

11.a) Maturities of borrowings, financing and debentures presented in noncurrent liabilities

 

As of September 30, 2019, the inflation-adjusted principal of long-term borrowings, financing and debentures by maturity year is as follows:

 

           

Consolidated

         

Parent Company

 

 

 

 

 

 

03/31/2020

 

 

 

 

 

03/31/2020

 

 

 

 

 

 

Principal

 

 

 

 

 

Principal

 

 

Borrowings and financing in foreign currency

 

Borrowings and financing in nacional currency

 

Total

 

Borrowings and financing in foreign currency

 

Borrowings and financing in nacional currency

 

Total

2021

 

752,831

 

1,837,248

 

2,590,079

 

709,882

 

1,474,601

 

2,184,483

2022

 

758,576

 

2,782,243

 

3,540,819

 

5,235,486

 

2,454,584

 

7,690,070

2023

 

5,428,053

 

2,989,612

 

8,417,665

 

1,901,021

 

2,639,255

 

4,540,276

2024

 

519,870

 

1,237,113

 

1,756,983

 

4,881,951

 

1,056,101

 

5,938,052

2025

 

   

68,595

 

68,595

 

929,819

 

68,587

 

998,406

After 2025

 

8,317,920

 

514,124

 

8,832,044

 

3,811,259

 

514,124

 

4,325,383

Perpetual bonds

 

5,198,700

     

5,198,700

           

 

 

20,975,950

 

9,428,935

 

30,404,885

 

17,469,418

 

8,207,252

 

25,676,670

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11.b) Borrowings, financing and debentures raised and paid

 

The table below shows the borrowings, financing and debentures raised and paid during the period:

 

       

Consolidated

     

Parent Company

 

 

03/31/2020

 

12/31/2019

 

03/31/2020

 

12/31/2019

Opening balance

 

27,967,036

 

28,827,074

 

24,099,460

 

24,161,596

New debts

 

4,553,970

 

10,149,381

 

2,285,889

 

6,798,683

Repayment

 

(2,350,669)

 

(11,775,093)

 

(902,300)

 

(7,431,176)

Repurchase of debt securities

 

(12,997)

 

 

 

 

 

 

Payments of charges

 

(511,078)

 

(2,039,112)

 

(268,170)

 

(1,400,496)

Charges of repurchase of debt securities

 

(164)

 

 

 

 

 

 

Accrued charges (Note 22)

 

494,380

 

1,996,305

 

284,262

 

1,376,862

Consolidation of CBSI

     

19,722

 

 

 

 

Others  (1)

 

5,479,582

 

788,759

 

4,409,001

 

593,991

Closing balance

 

35,620,060

 

27,967,036

 

29,908,142

 

24,099,460

1.Includes unrealized exchange and monetary variations and cost of transactions.

 

As of March 31,2020, the Group raised and paid borrowings as shown below:

 

·      Funding raised and amortizations:

 

           

Consolidated

 

 

 

 

 

 

03/31/2020

Nature

 

New debts

 

Repayment

 

Interest payment

 Prepayment

 

   

(473,633)

 

(67,993)

 Bonds, Perpetual bonds, ACC and Facility

 

4,553,970

 

(1,646,848)

 

(343,277)

 BNDES/FINAME, Debentures, NCE and CCB

 

   

(230,188)

 

(99,808)

 

 

4,553,970

 

(2,350,669)

 

(511,078)

·      Covenants

 

The Company’s borrowing agreements provide for the fulfillment of certain non-financial obligations, as well as the maintenance of certain parameters and financial indicators, besides the publication of its audited financial statements within the regulatory terms or payment of commission on assumption of risks in case certain financial indicators reach the levels set out in such agreements. As of March 31, 2020, the Company had recognized in the consolidated and in the parente company R$10,531 (R$10.531 as of December 31, 2019) as commission on assumption of risks, which was settled on April 24, 2020.

 

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12.    FINANCIAL INSTRUMENTS

 

I - Identification and measurement of financial instruments

 

The Company can operate with various financial instruments, mainly cash and cash equivalents, including short-term investments, marketable securities, trade receivables, trade payables, and borrowings and financing. The Company also can operate into derivative transactions, currency swap, interest rate swap and commodity swap operations.

 

Considering the nature of the instruments, the fair value is basically determined by the use of quotations in the open capital market of Brazil and the Commodities and Futures Exchange. The amounts recorded in current assets and liabilities have immediate liquidity or maturity, mostly in terms of short time. Considering the term and the characteristics of these instruments, the book values approximate the fair values.

 

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·          Classification of financial instruments

 

 

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·          Fair value measurement

 

The following table shows the financial instruments recognized at fair value through profit or loss classifying them according to the fair value hierarchy:

 

Consolidated

 

       

03/31/2020

         

12/31/2019

 

Level 1

 

Level 2

 

Balances

 

Level 1

 

Level 2

 

Balances

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Current

                       

Financial assets at fair value through profit or loss     

 

 

 

 

 

 

 

 

 

 

 

 

Derivative financial instruments

     

         4,579

 

        4,579

     

         1,364

 

        1,364

Trading securities

 

         3,297

 

 

 

        3,297

 

         4,034

 

 

 

        4,034

Non-current

                       

Financial assets at fair value through profit or loss     

 

 

 

 

 

 

 

 

 

 

 

 

Investments

 

       47,093

     

      47,093

 

       47,300

     

      47,300

Derivative financial instruments

 

 

 

 

 

 

 

 

 

         4,203

 

        4,203

Total Assets

 

       50,390

 

         4,579

 

      54,969

 

       51,334

 

         5,567

 

      56,901

                         

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Non-current

                       

Financial liabilities at fair value through profit or loss

 

 

 

 

 

 

 

 

 

 

 

 

Derivative financial instruments

     

       94,909

 

      94,909

           

Total Liabilities

 

 

 

       94,909

 

      94,909

 

 

 

 

 

 

                         

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Level 1: quoted prices in active markets for identical assets or liabilities.

 

Level 2: Includes observable inputs in market such as interest rates, exchange etc., but not prices traded in active markets.

 

There are no assets and liabilities classified as level 3.

 

II – Investments in securities measured at fair value through profit or loss

 

The Company has investments in common shares (USIM3), preferred shares (USIM5) of Usiminas (“Ações Usiminas”) and shares of Panatlântica S.A (PATI 3), which are designated as fair value through profit or loss.

 

Usiminas’ shares are classified as a financial investment in the current asset and Panatlântica’s is recognized as non-current investment and are all recorded at fair value based on the market price quotation on the stock exchange (B3 S.A.).

 

In accordance with the Company's policy, gains and losses arising from changes in the share prices are recorded directly in the statement of income under financial results (Usiminas’ shares) and Other Operating Income and Expenses (Panatlântica shares).

 

 

 

• Share market price risks

 

The Company is exposed to the risk of changes in the price of the shares due to the investments, valued at fair value through profit or loss that have their prices based on the market price.

 

III -          Financial risk management:

 

The Company follows risk management strategies, with guidelines in relation to the risks incurred by the company. The nature and general position of financial risks is regularly monitored and managed to assess the results and the financial impact on cash flow. The credit limits and hedge quality of the counterparties are also periodically reviewed.

 

Market risks are protected when it is considered necessary to support the corporate strategy or when it is necessary to maintain the level of financial flexibility.

 

The Company may manage some of the risks through the use of derivative instruments, not associated with any speculative trading or short selling.

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13.a) Foreign exchange rate and interest rate risks:

 

·          Foreign exchange rate risk:

 

The exposure arises from the existence of assets and liabilities denominated in Dollar or Euro, since the Company's functional currency is substantially the Real and is denominated natural currency hedge. The net exposure is the result of offsetting the natural currency exposure by hedging instruments adopted by CSN.

 

 

The consolidated net exposure as of March 31, 2020 is as follows:

 

       

03/31/2020

Foreign Exchange Exposure

 

(Amounts in US$’000)

 

(Amounts in €’000)

Cash and cash equivalents overseas

 

292,988

 

3,399

Trade receivables

 

323,287

 

1,279

 Other assets

 

2,978

 

5,268

Total Assets

 

619,253

 

9,946

 Borrowings

 

(4,729,641)

 

-

Trade payables

 

(87,256)

 

(10,666)

Other liabilities

 

(2,552)

 

(904)

Total Liabilities

 

(4,819,449)

 

(11,570)

Foreign exchange exposure

 

(4,200,196)

 

(1,624)

Cash flow hedge accounting

 

4,640,920

   

Swap CDI x Dollar

 

(67,000)

   

Net foreign exchange exposure

 

               373,724

 

               (1,624)

 

 

CSN uses as strategy hedge accounting, as well as derivative instruments to hedge CSN’s future cash flows.

 

·          Interest rate risk:

 

The risk arises from short and long-term liabilities with fixed or floating interest rates and inflation indices.

 

In item 12b) we show the derivatives and hedging strategies to hedge foreign exchange and interest rate risks.

 

12.b) Hedging instruments: Derivatives and cash flows hedge accounting and net investment hedge in foreign operations:

 

CSN uses various instruments to hedge foreign exchange and interest rate risks, as shown in the following topics:

 

·          Portfolio of derivative financial instruments

 

Exchange rate swap Dollar x Euro

 

The subsidiary Lusosider has derivative operations to hedge its exposure of the dollar against the euro.

 

Exchange rate swap GBP (Sterling Pound) x Euro

 

The subsidiary Lusosider has derivative operations to hedge its exposure of the GBP against the euro.

 

 

 

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Exchange rate swap CDI x Dollar

 

The company has derivative operations with Bradesco Bank to hedge its NCE debt raised in September 2019 with maturity in October 2023 in the amount of US$67million (equivalent to R$267milhões), at a cost consistent with that usually praticed by the Company.

 

                       

 

 

Consolidated

               

 

 

 

 

 

 

03/31/2020

               

Appreciation (R$)

 

Fair value (market)

 

Impact on financial income (expenses) in 2020

Counterparties

 

Maturity

 

Functional Currency

 

Notional amount

 

Asset position

 

Liability position

 

Amounts receivable / (payable)

 

BCP

 

09/22/2020

 

Dollar

 

         22,881

 

     119,591

 

     (115,180)

 

         4,411

 

             2,757

Total dollar-to-euro swap

         

         22,881

 

     119,591

 

     (115,180)

 

         4,411

 

             2,757

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BCP

 

 08/03/2020

 

GBP

 

           3,956

 

       25,555

 

       (25,387)

 

            168

 

                168

Total Swap GBP x Euro

 

 

 

           3,956

 

       25,555

 

       (25,387)

 

            168

 

                168

                             

Bradesco

 

 09/22/2020

 

Dollar

 

       (67,000)

 

     292,635

 

     (387,544)

 

      (94,909)

 

          (99,113)

Total Swap CDI x dollar

         

       (67,000)

 

     292,635

 

     (387,544)

 

      (94,909)

 

          (99,113)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

       

     437,781

 

     (528,111)

 

      (90,330)

 

          (96,188)

 

·      Classification of the derivatives in the balance sheet and statement of income

 

 

 

 

 

 

 

 

 

 

03/31/2020

 

03/31/2019

Instruments

 

Assets

 

Liabilities

 

Financial income (expenses), net (note 22)

 

Current

 

Total

 

Current

 

Total

   

Dollar - to - euro swap

 

4,411

 

4,411

         

2,757

 

(354)

Great Britain pound-to-euro swap

 

168

 

168

         

168

   

Swap CDI x Dollar

 

       

(94,909)

 

(94,909)

 

(99,113)

   
   

4,579

 

4,579

 

(94,909)

 

(94,909)

 

(96,188)

 

(354)

                         

 

·      Cash flow hedge accounting

 

The Company designates cash flow hedging relationships to hedge highly probable future cash flows against U.S. dollar fluctuations.

 

In order to better reflect the accounting impacts of this foreign exchange hedging strategy on the Company’s results, CSN designated part of its US dollar-denominated liabilities as a hedging instrument of its future exports. As a result, foreign exchange differences arising from designated liabilities will be temporarily recognized in shareholders’ equity and recognized in profit or loss when such exports are carried out, allowing the concurrent recognition of the dollar fluctuations on liabilities and on exports. The adoption of this hedge accounting does not entail entering into any financial instrument.

 

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In order to support the aforementioned designations, the Company prepared formal documentation indicating how the hedge designation is aligned with CSN's objective and risk management strategy, identifying the hedging instruments used, the hedge object, the nature of the risk to be hedged and demonstrating the expectation of high effectiveness of the designated relations. Debt instruments have been designated in amounts equivalent to the portion of future exports. Therefore, the exchange variation of the instrument and the object are similar. According to the Company's accounting policy, continuous evaluations of prospective and retrospective effectiveness should be carried out, comparing the amounts designated with the amounts expected and approved in the Management's budgets, as well as the amounts actually exported.

 

Through hedge accounting, the exchange gains and losses on debt instruments will not immediately affect the Company’s profit or loss except to the extent that exports are carried out.

 

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The table below shows a summary of the hedging relationships as of March 31, 2020:

 

   

 

 (*) For the three-month period ended March 31, 2020 we recognized R$364,818 in Other Operating Expenses (R$184,217 for the same period of 2019).

 

In the hedging relationships described above, the amounts of the debt instruments were fully designated for equivalent iron ore export portions.

 

The movement in the cash flow hedge recognized in shareholders’ equity as of March 31, 2020 is as follows:

               
 

12/31/2019

 

Movement

 

Realization

 

03/31/2020

Cash flow hedge accounting

        1,255,770

 

        5,390,043

 

          (364,818)

 

        6,280,995

Fair value of cash flow hedge, net of taxes

        1,255,770

 

        5,390,043

 

          (364,818)

 

        6,280,995

 

As of March 31, 2020, the hedging relationships established by the Company were effective, according to prospective tests performed. Thus, no reversal for hedge accounting ineffectiveness in the cash flow hedge was recognized.

 

·      Hedge of net investment in foreign operation

 

On January 31, 2020, the Company repaid the Euro-denominated non-derivative financial liability designated as hedged item. The variations of the hedge recognized in the shareholders’ equity as of March 31, 2020 were R$1,469.

 

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12.c) Sensitivity analysis

 

We present below the sensitivity analysis of foreign exchange rate and interest rate risks.

 

·      Sensitivity analysis of derivative financial instruments and consolidated foreign exchange exposure

 

The Company considered scenarios 1 and 2 as 25% and 50% deterioration for currency volatility using as reference the closing exchange rate as of March 31, 2020.

 

The currencies used in the sensitivity analysis and their scenarios are shown below:

 

   

 

 

 

 

 

 

03/31/2020

Currency

 

Exchange rate

 

Probable scenario

 

Scenario 1

 

Scenario 2

USD

 

                    5.1987

 

                    5.4291

 

       6.4984

 

           7.7981

EUR

 

                    5.7264

 

             5.8922

 

       7.1580

 

           8.5896

USD x EUR

 

                    1.0956

 

             1.0842

 

       1.3695

 

           1.6434

GBP x EUR

 

                    0.8864

 

             0.8738

 

       1.1080

 

           1.3296

                 
                 
   

 

 

 

 

03/31/2020

   

Interest

 

Interest rate

 

Scenario 1

 

Scenario 2

   

CDI

 

3.65%

 

4.56%

 

5.48%

   

TJLP

 

5.09%

 

6.36%

 

7.64%

   

LIBOR

 

1.18%

 

1.47%

 

1.76%

   

 

The effects on profit or loss, considering scenarios 1 and 2, are shown below:

 

   

 

 

 

 

 

 

 

 

03/31/2020

Instruments

 

Notional

 

Risk

 

Probable scenario (*) R$

 

Scenario 1 R$

 

Scenario 2 R$

 

 

 

 

 

 

 

 

 

 

 

Currency position

 

   (4,200,196)

 

Dollar

 

(967,725)

 

(5,458,890)

 

(10,917,780)

(not including exchange derivatives below)

 

 

 

 

 

         
                     

Cash flow hedge accounting of exports

 

    4,640,920

 

Dollar

 

1,069,268

 

6,031,688

 

12,063,376

                     

Swap CDI x Dollar

 

        (67,000)

 

Dollar

 

(15,437)

 

(87,078)

 

(174,156)

                     

Consolidated exchange position in U$

 

       373,724

 

Dollar

 

86,106

 

485,720

 

971,440

(including exchange derivatives above)

                   

 

 

 

 

 

 

         

Currency position

 

          (1,624)

 

Euro

 

(269)

 

(2,325)

 

(4,650)

 

 

 

 

 

 

         

Consolidated exchange position in €$

 

          (1,624)

 

Euro

 

(269)

 

(2,325)

 

(4,650)

(including exchange derivatives above)

 

 

 

 

 

         
               

 

 

   

Dollar-to-euro swap

 

         22,881

 

Dollar

 

(5,669)

 

19,507

 

35,452

                     

Great Britain pound-to-euro swap

 

           3,956

 

GBP

 

(538)

 

4,943

 

8,350

 (*) The probable scenarios were calculated considering the following variations for the risks: Real x Dollar – depreciation of Real by 4.43% / Real x Euro – depreciation of Real by 2.90%. Euro x Dollar – appreciation of Euro by 1.04%. Source: quotations from Central Bank of Brazil and Central Bank of Europe on 04/29/2020.

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·      Sensitivity analysis of changes in interest rates

 

The Company considered scenarios 1 and 2 as 25% and 50% of changes in interest volatility as of March 31, 2020.

                   

 

 

Consolidated

                   

Impact on profit or loss

Changes in interest rates

 

% p.a

 

Assets

 

Liabilities

 

Probable scenario (*)

 

Scenario 1

 

Scenario 2

TJLP

 

  5.09

 

   

(865,977)

 

(2,292)

 

(11,020)

 

(22,040)

Libor

 

  1.18

     

(4,931,747)

 

(56,436)

 

(14,490)

 

(28,980)

CDI

 

  3.65

 

1,517,760

 

(9,741,264)

 

(19,829)

 

(75,039)

 

(150,078)

 (*) The sensitivity analysis is based on the assumption of maintaining, as a probable scenario, the market values as of March 31, 2020 recognized in the company's assets and liabilities.

 

12.d) Liquidity risk

 

It is the risk that the Company does not have sufficient liquid resources to honor its financial commitments, as a result of mismatching of term or volume between expected receipts and payments.

 

In order to manage the liquidity of the cash in local and foreign currency, premises of disbursements and future receipts are established, being monitored daily by the Treasury area. The payment schedules for the long-term portions of the loans and financing and debentures are presented in Note 11.

 

The following table shows the contractual maturities of financial liabilities and lease liabilities, including accrued interest.

 

 

 

 

 

 

 

 

 

 

Consolidated

At March 31, 2020

Less than one year

 

From one to two years

 

From two to five yyears

 

Over five years

 

Total

Borrowings, financing and debentures (note 11)

        5,340,757

 

        6,130,898

 

      10,243,243

 

      14,030,744

 

      35,745,642

Trade payables (note 12I)

        3,451,945

 

                        

 

                        

 

                        

 

        3,451,945

Trade payables – Drawee risk (note 12I)

           937,576

 

                        

 

                        

 

                        

 

           937,576

Dividends and interest on equity (note 13)

             13,116

 

                        

 

                        

 

                        

 

             13,116

 

IV - Fair values of assets and liabilities as compared to their carrying amounts

 

Financial assets and liabilities measured at fair value through profit or loss are recorded in current and noncurrent assets and liabilities and gains and losses are recorded as financial income and expenses, respectively.

 

The amounts are recorded in the financial statements at their carrying amount, which are substantially similar to those that would be obtained if they were traded in the market. The fair values of other long-term assets and liabilities do not differ significantly from their carrying amounts, except for the amounts below.

 

The estimated fair values for certain consolidated long-term borrowings and financing were calculated at prevailing market rates, taking into consideration the nature, terms and risks similar to those of the recorded contracts, according below:

 

 

 

 

03/31/2020

 

 

 

12/31/2019

 

Closing Balance

 

Fair value

 

Closing Balance

 

Fair value

Perpetual bonds

            5,205,776

 

         3,110,070

 

            4,036,186

 

         3,706,553

Fixed Rate Notes

          14,227,272

 

         9,617,195

 

            8,090,297

 

         8,345,471

 

 (*) Source: Bloomberg

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• Credit Risks

 

The exposure to credit risks of financial institutions complies with the parameters established in the financial policy. The Company has as practice the detailed analysis of the patrimonial and financial situation of its clients and suppliers, the establishment of a credit limit and the permanent monitoring of its outstanding balance.

 

With respect to financial investments, the Company only makes investments in institutions with low credit risk rated by rating agencies. Since part of the funds is invested in repo operations that are backed by Brazilian government bonds, there is also exposure to the credit risk of the Brazilian State.

 

Regarding the exposure to credit risk in accounts receivable and other receivables, the company has a credit risk committee, in which each new customer is analyzed individually regarding their financial condition, before granting the credit limit and payment terms and periodically revised, according to the periodicity procedures of each business area.

 

• Capital Management

 

The Company seeks to optimize its capital structure in order to reduce its financial costs and maximize the return to its shareholders. The table below shows the evolution of the Company's capital structure, with financing by equity and third-party capital:

 

 

Thousands of reais

 

03/31/2020

 

03/31/2020

Shareholder's equity (equity)

 

       5,406,542

 

     11,361,932

Borrowings and Financing (Third-party capital)

 

     35,620,060

 

     27,967,036

Gross Debit/Shareholder's equity

 

                6.59

 

                2.46

 

13.    OTHER PAYABLES

 

The group of other payables classified in current and noncurrent liabilities is comprised as follows:

 

(1) Advances from customers: On March 29, 2019, the Company received in advance through its subsidiary CSN Mineração the amount of US$496 million (R$ 1,951 million) related to a supply contract of approximately 22 million tons of ore to a major international trading, to be executed within 5 years. On July 11, 2019, CSN Mineração entered into an amendment to this contract and received in advance, on August 5, 2019,  US$250million (R$956 million) for the additional supply of approximately 11 million tons of iron ore. On September 16, 2019 the contract was amended to reflect some changes in the terms of iron ore delivery.

 

(2) Trade Payables – Drawee risk: The Company negotiated with financial institutions to anticipate payments from its suppliers, with the objective of lengthening the deadlines. This financial modality is an option of suppliers, and does not require mandatory participation, nor is the Company not reimbursed and / or benefited by the financial institution of discounts for payment executed before the due date agreed with the supplier, there is no change in the degree of subordination of the security in case of judicial execution and no changes in the commercial conditions existing between the Company and its suppliers.

 

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13.a.) LEASE LIABILITIES

 

In the quarter, the lease liabilities are presented as follows:

 

     

Consolidated

     

Parent Company

 

03/31/2020

 

12/31/2019

 

03/31/2020

 

12/31/2019

Leases

             1,481,248

 

             1,501,960

 

                  47,417

 

                  53,279

Present value adjustment - Leases

           (1,014,801)

 

           (1,027,570)

 

                  (6,442)

 

                  (7,339)

 

                466,447

 

                474,390

 

                  40,975

 

                  45,940

Classified:

             

Current

                  31,807

 

                  35,040

 

                  14,897

 

                  17,269

Non-current

                434,640

 

                439,350

 

                  26,078

 

                  28,671

 

                466,447

 

                474,390

 

                  40,975

 

                  45,940

 

The Company has lease agreements for port operations in Itaguaí, the solid bulk terminal – TECAR, used for charges and discharges of coal and iron ore, and the containers terminal – TECON, with remaining terms of 27 and 31 years, respectively. Also, we have lease agreements for railway operations using the Northeast Railway System with a remaining term of 7 years.

 

Additionally, the Company has real estate lease agreements used for operating premises and sales and administrative offices in several localities where the Company holds operations, with remaining terms of 2, 5 and 16 years.

 

CSN also has lease agreements for operating equipment used in the mining and steel operations, with remaining terms from 2 to 5 years.

The present value of the future obligations was measured using the implicit rate observed in the contracts and, for the contracts with no explicit rates, the Company applied the Incremental Borrowing Rate – IBR, both in nominal terms.

 

The incremental borrowing rate was determined by consultations with the banks the Company maintains relationship and and by calculating the average life of its contracts in accordance with orientations given by CVM in the Oficio-Circular/CVM/SNC/SEP nº 02/2019.

 

The changes in lease liabilities for the three-month period ended March 31, 2020 are shown in the table below:

 

     

03/31/2020

 

Consolidated

 

Parent Company

Opening balance

           474,390

 

                   45,940

New leases

               1,223

 

                              

Present Value Adjustments - New leases

                (322)

 

                              

Contract review

                  555

 

                        341

Write off

                (610)

 

                              

Payments

           (23,910)

 

                   (6,262)

Interest appropriated

             13,056

 

                        956

Exchange variation

               2,065

 

                              

Net balance

           466,447

 

                   40,975

 

 

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The minimum future payments estimated to leasing agreements include variable payments, essentially fixed when based on minimum performance and contractually fixed rates and as of March 31, 2020 are as follows:

 

 

 

 

 

 

 

 

Consolidated

 

 Less than one year

 

 Between one and five years

 

 Over five years

 

 Total

 Leases

                 82,288

 

               315,624

 

            1,083,336

 

            1,481,248

 Present value adjustment - Leases

                (50,481)

 

              (227,874)

 

              (736,446)

 

           (1,014,801)

 

                 31,807

 

                 87,750

 

               346,890

 

               466,447

 

·           Recoverable PIS and COFINS

 

The lease liabilities were remeasured by the payable amounts to the lessors, and did not include the tax credits arisen from such payments. The tax credits embedded in the lease liabilities are shown below:

 

     

3/31/2020

 

Consolidated

 

Parent Company

Leases

        1,481,248

 

                   47,417

Present value adjustment - Leases

      (1,014,801)

 

                   (6,442)

Potencial PIS and COFINS credit

           137,015

 

                     4,386

Present value adjustment – Potential PIS and COFINS credit

           (93,869)

 

                      (596)

 

·           Payments of leases not recognized as liabilities:

 

The Company chose not to recognize lease liabilities in contracts with a maturity of less than twelve months and for assets with low value. The realized payments to these contracts are recognized as expenses, when incurred.

 

The Company has lease agreements for the use of ports (TECAR) and railways (FTL) which, even if they establish minimum performance, cannot determine their cash flow since these payments are fully variable and will only be known when they occur. In such cases, payments will be recognized as expenses when incurred

The expenses related to payments not included in the measurement of a lease liability in the three-month period ended March 31, 2020 are:

 

 

 

 

Consolidated

 

 

 

Parent Company

 

03/31/2020

 

03/31/2019

 

03/31/2020

 

03/31/2019

 Contract less than 12 months

                        159

 

                          

 

                     3,244

 

  

 Lower Assets value

                     1,934

 

                        760

 

                     2,019

 

                     1,593

 Variable lease payments

                   45,900

 

                     5,126

 

                   39,675

 

  

 

                   47,993

 

                     5,886

 

                   44,938

 

                     1,593

 

14.    INCOME TAX AND SOCIAL CONTRIBUTION

 

14.a) Income tax and social contribution recognized in profit or loss:

 

The income tax and social contribution recognized in profit or loss for the year are as follows:

 

     

Consolidated

     

Parent Company

 

03/31/2020

 

03/31/2019

 

03/31/2020

 

03/31/2019

Income tax and social contribution income (expense)

             

Current

(217,555)

 

(369,818)

     

11

Deferred

11,351

 

(89,039)

 

304

 

(45,256)

 

(206,204)

 

(458,857)

 

304

 

(45,245)

 

 

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Quarterly Financial Information – June 30, 2019 – CIA SIDERURGICA NACIONAL

Version: 1

 

The reconciliation of consolidated and parent company income tax and social contribution expenses and the result from applying the tax rate to profit before income tax and social contribution are as follows:

 

     

Consolidated

     

Parent Company

 

03/31/2020

 

03/31/2019

 

03/31/2020

 

03/31/2019

(Loss)/Profit before income tax and social contribution

(1,105,505)

 

545,620

 

(1,361,155)

 

37,673

Tax rate

34%

 

34%

 

34%

 

34%

Income tax and social contribution at combined statutory rate

375,872

 

(185,511)

 

462,793

 

(12,809)

Adjustment to reflect the effective rate:

             

Equity in results of affiliated companies

(14,338)

 

9,782

 

(200,835)

 

186,820

Profit with differentiated rates or untaxed

(291,828)

 

(47,576)

       

Transfer price adjustment

   

(8,574)

       

Tax loss carryforwards without recognizing deferred taxes

(11,199)

 

(8,866)

       

Indebtdness limit

(5,730)

 

(6,715)

 

(5,730)

 

(6,715)

Unrecorded deferred taxes on temporary differences

(451)

 

(2,735)

       

(Loss)/Reversal for deferred income and social contribution tax credit

(253,261)

 

(211,848)

 

(253,261)

 

(211,848)

Deferred taxes on foreign profit

   

(14)

       

Tax incentives

1,625

 

7,462

       

Other permanent deductions (additions)

(6,894)

 

(4,262)

 

(2,663)

 

(693)

Income tax and social contribution in profit for the period

(206,204)

 

(458,857)

 

304

 

(45,245)

Effective tax rate

-19%

 

84%

 

0%

 

120%

 

14.b) Deferred income tax and social contribution:

 

The balances of deferred income tax and social contribution can be shown as follows:

 

         

Consolidated

 

Opening balance

 

Movement

 

Closing balance

 

12/31/2019

 

Shareholders'
Equity

 

P&L

 

03/31/2020

       

Deferred

 

 

 

 

 

 

 

Income tax losses

1,610,801

     

160,566

 

1,771,367

Social contribution tax losses

610,046

     

57,809

 

667,855

Temporary differences

(337,082)

 

(39,847)

 

(207,024)

 

(583,953)

- Provision for tax. social security, labor, civil and environmental risks

264,013

     

3,006

 

267,019

- Asset impairment losses

182,431

     

(1,710)

 

180,721

- (Gains)/losses on financial instruments

414,495

     

327,436

 

741,931

- Actuarial liability (pension and healthcare plan)

314,601

         

314,601

- Accrued supplies and services

132,411

     

10,432

 

142,843

- Unrealized exchange variation (1)

1,181,501

     

(269,677)

 

911,824

- Gain upon loss of control in Transnordestina

(92,180)

         

(92,180)

- Cash flow hedge accounting

426,961

 

1,708,578

     

2,135,539

- Acquisition at fair value of SWT and CBL

(184,513)

 

(37,889)

 

6,283

 

(216,119)

- Deferred taxes not computed

(300,819)

     

(16,563)

 

(317,382)

- Estimated (losses)/reversals for deferred income tax and social contribution credits

(1,625,998)

 

(1,708,578)

 

(253,261)

 

(3,587,837)

- Business Combination

(1,023,341)

     

1,804

 

(1,021,537)

- Consolidation of CBSI

50

     

(34)

 

16

- Others

(35,552)

 

(1,958)

 

(14,740)

 

(52,250)

Total

1,883,765

 

(39,847)

 

11,351

 

1,855,269

               

Total Deferred Assets

2,473,304

         

2,475,496

Total Deferred Liabilities

(589,539)

         

(620,227)

Total Deferred

1,883,765

         

1,855,269

               

 

 

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Quarterly Financial Information – June 30, 2019 – CIA SIDERURGICA NACIONAL

Version: 1

 

             

Parent Company

 

Opening balance

 

Movement

Closing balance

 

12/31/2019

 

Shareholders'
Equity

 

P&L

 

03/31/2020

       

Deferred tax assets

 

 

 

 

 

 

 

Income tax losses

              1,463,981

 

                          -  

 

       149,461

 

              1,613,442

Social contribution tax losses

                 549,026

 

                          -  

 

         53,805

 

                 602,831

Temporary differences

                 422,544

     

     (202,962)

 

                 219,582

- Provision for tax. social security, labor, civil and environmental risks

                 193,245

 

                          -  

 

              405

 

                 193,650

- Asset impairment losses

                 119,645

 

                          -  

 

           1,666

 

                 121,311

- (Gains)/losses on financial instruments

                 414,495

 

                          -  

 

       327,435

 

                 741,930

- Actuarial liability (pension and healthcare plan)

                 317,053

 

                          -  

 

                -  

 

                 317,053

- Accrued supplies and services

                 121,680

 

                          -  

 

           9,640

 

                 131,320

- Unrealized exchange variation (1)

              1,183,053

 

                          -  

 

     (280,984)

 

                 902,069

- Gain) in control loss on Transnorderstina

                 (92,180)

 

                          -  

 

                -  

 

                 (92,180)

- Cash flow hedge accounting

                 426,961

 

             1,708,578

 

                -  

 

              2,135,539

- Estimated (losses)/reversals for deferred income tax and social contribution credits

            (1,625,998)

 

            (1,708,578)

 

     (253,261)

 

            (3,587,837)

- Business Combination

               (721,992)

 

                          -  

 

                -  

 

               (721,992)

- Outras

                   86,582

 

                          -  

 

         (7,863)

 

                   78,719

Total

              2,435,551

 

                             

 

              304

 

              2,435,855

 

                           -  

 

                          -  

 

                -  

 

                           -  

 

              3,258,542

         

              3,258,542

 

               (822,991)

 

 

 

 

 

               (822,687)

 

              2,435,551

         

              2,435,855

 

 (1) The Company taxes exchange differences on a cash basis to calculate income tax and social contribution on net income.

 

In its corporate structure the Company has foreign subsidiaries whose profits are subject to income tax in the countries where they were established at rates lower than those prevailing in Brazil. In the period from 2015 and 2020, these foreign subsidiaries generated profits amounting to R$1,128,996. If the tax authorities understand that these profits are subject to additional taxation in Brazil in respect of income tax and social contribution, these, if due, would total approximately R$359,555. The Company, based on its legal counsel’s opinion, assessed as possible the likelihood of loss in the event of challenge by the tax authorities and, therefore, no provision was recognized in this interim financial information.

 

In addition, the management assessed IFRIC 23 – “Uncertainties Over Income Tax Treatments” and considered the tax authorities have no reasons to diverge from the Company’s current tax positions. Accordingly, we did not recognize any additional provisions for income tax and social contribution arisen from the assessment of IFRIC 23 in the interim financial information as of March 31, 2020.

 

 

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Version: 1

 

A sensitivity analysis of tax credit was performed considering a variation of macroeconomics assumptions, operating performance and liquidity events. In this way, considering the results of studies performed, which indicates that it is probable that there will be generated taxable income to use the deferred income and social contribution taxes.

 

The estimated recovery of deferred tax assets of IRPJ and CSLL is presented by its net amount when they refer to a same tax jurisdiction, as shown below:

 

In millions of reais

Consolidated

 

Parent Company

2020

                        230

 

                        230

2021

                        713

 

                        713

2022

                        938

 

                        938

2023

                        985

 

                        985

2024

                        432

 

                        393

Deferred asset

                     3,298

 

                     3,259

Deferred liabilities - Parent Company

                      (823)

 

                      (823)

Net deferred asset

                     2,475

 

                     2,436

Deferred liabilities - subsidiaries

                      (620)

 

 

Deferred liabilities - Parent Company

                     1,855

 

                     2,436

 

14.c) Income statement and social contribution recognized in the shareholders’ equity

 

The income statement and social contribution recognized directly in the shareholder’s equity are demonstrated below:

     

Consolidated

 

Parent Company

 

03/31/2020

 

12/31/2019

 

03/31/2020

 

12/31/2019

Income tax and social contribution

 

 

 

 

 

 

 

Actuarial gains on defined benefit pension plan

215,336

 

215,306

 

217,969

 

217,969

Estimated losses for deferred income and social contribution tax credits - actuarial gains

(217,969)

 

(217,969)

 

(217,969)

 

(217,969)

Exchange differences on translating foreign operations

(325,350)

 

(325,350)

 

(325,350)

 

(325,350)

Cash flow hedge accounting

2,135,539

 

426,961

 

2,135,539

 

426,961

Estimated losses for deferred income and social contribution tax credits - cash flow hedge

(2,135,539)

 

(426,961)

 

(2,135,539)

 

(426,961)

 

(327,983)

 

(328,013)

 

(325,350)

 

(325,350)

 

15.    PROVISION FOR TAX, SOCIAL SECURITY, LABOR, CIVIL AND ENVIRONMENTAL RISKS AND JUDICIAL DEPOSITS

 

Are being discussed in the competent spheres, actions and complaints of various natures. The details of the provisioned amounts and the related judicial deposits are presented below:

 

 

 

 

 

 

 

 

Consolidated

 

 

 

 

 

 

 

Parent Company

 

 

Accrued liabilities

 

Judicial deposits

 

Accrued liabilities

 

Judicial deposits

 

 

03/31/2020

 

12/31/2019

 

03/31/2020

 

12/31/2019

 

03/31/2020

 

12/31/2019

 

03/31/2020

 

12/31/2019

Tax

 

125,615

 

128,411

 

19,271

 

31,060

 

52,278

 

56,343

 

3,043

 

15,227

Social security

 

5,306

 

7,039

       

 

5,102

 

6,447

       

Labor

 

312,828

 

305,309

 

238,818

 

227,213

 

221,575

 

217,907

 

174,181

 

164,580

Civil

 

158,010

 

138,990

 

55,628

 

53,771

 

122,302

 

105,464

 

43,933

 

42,252

Environmental

 

18,023

 

43,498

 

3,731

 

3,731

 

11,372

 

36,558

 

2,241

 

2,241

Deposit of a guarantee

 

 

 

 

 

15,672

 

12,596

 

 

 

 

 

 

 

 

 

 

619,782

 

623,247

 

333,120

 

328,371

 

412,629

 

422,719

 

223,398

 

224,300

                                 

Classified:

                               

Current

 

83,031

 

96,479

 

 

 

 

 

37,694

 

52,016

 

 

 

 

Non-current

 

536,751

 

526,768

 

333,120

 

328,371

 

374,935

 

370,703

 

223,398

 

       224,300

 

 

619,782

 

623,247

 

333,120

 

328,371

 

412,629

 

422,719

 

223,398

 

224,300

 

 

 

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Quarterly Financial Information – June 30, 2019 – CIA SIDERURGICA NACIONAL

Version: 1

 

The changes in the provisions for tax, social security, labor, civil and environmental risks for the three-month period ended March 31, 2020 were as follows:

 

                   

Consolidated

 

 

 

 

 

 

 

 

 

 

Current + Non-current

Nature

 

12/31/2019

 

Additions

 

Accrued charges

 

Net utilization of reversal

 

03/31/2020

Tax

 

128,411

 

19,558

 

316

 

(22,670)

 

125,615

Social security

 

7,039

 

1,782

 

169

 

(3,684)

 

5,306

Labor

 

305,309

 

11,923

 

16,588

 

(20,992)

 

312,828

Civil

 

138,990

 

21,217

 

4,265

 

(6,462)

 

158,010

Environmental

 

43,498

 

4,948

 

123

 

(30,546)

 

18,023

   

623,247

 

59,428

 

21,461

 

(84,354)

 

619,782

 

 

 

 

 

 

 

 

 

 

 

Parent Company

 

 

 

 

 

 

 

 

 

 

Current + Non-current

Nature

 

12/31/2019

 

Additions

 

Accrued charges

 

Net utilization of reversal

 

03/31/2020

Tax

 

56,343

 

16,721

 

121

 

(20,907)

 

52,278

Social security

 

6,447

 

1,578

 

169

 

(3,092)

 

5,102

Labor

 

217,907

 

6,702

 

9,565

 

(12,599)

 

221,575

Civil

 

105,464

 

18,005

 

3,548

 

(4,715)

 

122,302

Environmental

 

36,558

 

4,935

 

25

 

(30,146)

 

11,372

   

422,719

 

47,941

 

13,428

 

(71,459)

 

412,629

 

The provision for tax, social security, labor, civil and environmental risks was estimated by Management and is mainly based on the legal counsel’s assessment. Only lawsuits for which the risk is classified as probable loss are provisioned. Additionally, tax liability from actions initiated by the Company is included in this provision and is subject to SELIC (Central Bank’s policy rate).

 

§   Possible administrative and judicial proceedings

 

The table below shows a summary of the main matters classified as possible risk compared with the balances as of March 31, 2020 and December 31, 2019.

 

 

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Version: 1

 

 

 

03/31/2020

 

12/31/2019

Assessment Notice and imposition of fine (AIIM) - Income tax and social contribution - Capital gain on sale of NAMISA's shares.

 

  12,472,256

 

  12,412,964

         

Assessment Notice and Imposition of fine (AIIM) - Income tax and Social contribution - Disallowance of deductions of goodwill generated in the reverse incorporation of Big Jump by NAMISA.

 

    3,877,991

 

    3,867,663

         

Assessment Notice and Imposition of fine (AIIM) - Income tax and Social contribution - Disallowance of interest on prepayment arising from supply contracts of iron ore and port services.

 

    2,409,997

 

    2,249,708

         

Assessment Notice and imposition of fine (AIIM) - Income tax and social contribution due to profits from foreign subsidiaries for years 2008, 2010, 2011, 2014.

 

    2,968,671

 

    2,946,288

         

Tax foreclosures - ICMS - Electricity credits

 

    1,026,947

 

    1,022,371

         

Offset of taxes that were not approved by the Federal Revenue Service - IRPJ/CSLL, PIS/COFINS and IPI

 

    1,116,289

 

    1,100,564

         

Disallowance of the ICMS credits - Transfer of iron ore

 

       570,156

 

       567,534

         

ICMS - Refers to the transfer of imported raw material at an amount lower than the price disclosed in the import documentation

 

       311,984

 

       310,349

         

Disallowance of the tax loss and negative basis of social contribution arising from the adjustments in the SAPLI

 

       540,000

 

       538,268

         

Assessment Notice- IRRF- Capital Gain of CFM vendors located abroad

 

       255,972

 

       254,850

         

CFEM – difference of understanding between CSN and DNPM on the calculation basis

 

    1,034,890

 

    1,020,266

         

Assessment Notice- ICMS- questions about sales for incentive area

 

    1,018,596

 

    1,015,812

         

Other tax lawsuits (federal, state, and municipal)

 

    4,556,997

 

    4,478,014

         

Social security lawsuits

 

       277,915

 

       325,492

         

Action to discuss the balance of the construction contract – Tebas

 

       487,124

 

       468,776

         

Action related to power supply payment’s charge - Light

 

       259,558

 

       253,569

         

Indemnity action due to the supply contract termination - Indumill

 

       221,427

 

       215,281

         

Enforcement action applied by Brazilian antitrust authorities (CADE)

 

         93,830

 

         93,212

         

$0.00

 

         20,000

 

         20,000

         

Other civil lawsuits

 

       778,440

 

       764,127

         

Labor and social security lawsuits

 

    1,575,714

 

    1,565,237

         

Tax foreclosures – Fine – Volta Redonda IV (2)

 

         86,138

 

         84,599

         

Other environmental lawsuits

 

       241,737

 

       215,691

   

  36,202,629

 

  35,790,635

 

(1)      In May 2019, the Public Ministry of the state of Minas Gerais judged an ACP to oblige CSN Mineração to adopt measures to mitigate the risks and psichological damages theoretically caused by the dam of Casa de Pedra, relocating families who prefer to move, and assuming rental expenses and social assistance, as well as relocating the kids and children to nursery and school rebuilt in safer locations. By an injunction, the First Instance Magistrate  determined the block of R$3 million to rebuild the nursery and school, a decision canceled by the Court of second instance, which determined the Magistrate to reassess all injunctions. The Public Ministry of the state of Minas Gerais also determined the payment of collective moral damages, as well as definitive relocation of the families at the cost of CSN Mineração. The action is in initial stage and no judicial sentence has been given yet.

 

(2)      On April 8, 2013, INEA applied to CSN a fine in the amount of R$35 million related to the aspects of the condominium Volta Grande IV, determining the execution of the actions already weigthed and discussed in the public civil action filed in July 2012. In relation to that fine, an anullment action was filed, distributed to the 10th Civil Court of Rio de Janeiro County in January 2014, with the purpose of cancelling the fine and its effects. Also, INEA filed a tax enforcement action to execute the imposed fine. The tax enforcement action was distributed in May 2014 to the 4th Registry of Active Debt of Volta Redonda, in the state of Rio de Janeiro. Currently, the tax enforcement action is suspended until the judgement of the anullment action in order to avoid conflicting decisions.

 

The assessments made by the legal counsel define these administrative and judicial proceedings as entailing risk of possible loss and, therefore, no provision was recognized in conformity with Management’s judgment and accounting practices adopted in Brazil.

 

 

 

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Version: 1

 

16.    PROVISION FOR ENVIRONMENTAL LIABILITIES AND ASSET RETIREMENT OBLIGATIONS

 

The information on provision for environmental liabilities and asset retirement obligations has not changed in relation to that disclosed in the Company's financial statements as of December 31, 2019 and, accordingly, the Company decided not to repeat it in the condensed interim financial information as of March 31, 2020.

 

The balance of the provision for environmental liabilities and asset retirement obligation (ARO) is as follows:

 

 

 

Consolidated

 

 

 

Parent Company

 

03/31/2020

 

12/31/2019

 

03/31/2020

 

12/31/2019

Environmental liabilities

205,271

 

192,270

 

175,048

 

163,659

Asset retirement obligations

339,370

 

331,731

 

827

 

805

 

544,641

 

524,001

 

175,875

 

164,464

 

17.    RELATED-PARTY BALANCES AND TRANSACTIONS

 

The information on related-party transactions has not changed significantly in relation to that disclosed in the Company's financial statements as of December 31, 2019.

 

17.a) Transactions with subsidiaries, joint ventures, associates, exclusive funds and other related parties

 

·      By transaction

 

                         
       

Consolidated

   

Current

Non-current

Total

   

03/31/2020

 

12/31/2019

 

03/31/2020

 

12/31/2019

 

03/31/2020

 

12/31/2019

Assets

 

                     

Trade receivables(note 5)

 

202,160

 

170,588

         

202,160

 

170,588

Dividends receivable (note 7)

 

44,554

 

44,554

         

44,554

 

44,554

Actuarial asset (note 7)

         

12,453

 

13,714

 

12,453

 

13,714

Short-term investments

 

1,298,370

 

2,116,560

 

121,027

 

95,719

 

1,419,397

 

2,212,279

Loans (note 7)

         

936,848

 

846,300

 

936,848

 

846,300

Other receivables (note 7)

 

1,829

 

1,830

 

428,672

 

428,672

 

430,501

 

430,502

   

1,546,913

 

2,333,532

 

1,499,000

 

1,384,405

 

3,045,913

 

3,717,937

Liabilities

 

                     

Empréstimos e financiamentos

                       

Empréstimos Intercompany (nota 11)

 

   

25,038

             

25,038

Other payables (note 13)

                       

Accounts payable

 

21,193

 

23,566

 

70,241

 

88,021

 

91,434

 

111,587

Provision for consumption and services

 

22,081

 

22,497

         

22,081

 

22,497

Trade payables

 

202,900

 

240,984

 

-

     

202,900

 

240,984

Actuarial liabilities

         

19,788

 

19,788

 

19,788

 

19,788

 

 

246,174

 

312,085

 

90,029

 

107,809

 

336,203

 

419,894

                         

 

 

 

03/31/2020

 

03/31/2019

P&L

       

Revenues

 

 

 

 

Sales

 

      331,989

 

       264,366

Interest (note 22)

 

        17,819

 

         20,161

Foreing exchange and monetary variations, net

 

        26,864

 

              504

Expenses

 

 

 

 

Purchases

 

     (172,240)

 

     (345,387)

Interest (note 22)

 

         (3,402)

 

         (3,735)

Financial investments (nota 22)

 

     (962,354)

 

                -  

 

 

     (761,324)

 

       (64,091)

 

 

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Quarterly Financial Information – June 30, 2019 – CIA SIDERURGICA NACIONAL

Version: 1

 

·      By company

                   

1.     Transnordestina Logística S.A: Assets: Refers mainly to loan agreements with interest rate ranging from 125% to 130% of the CDI. As of March 31, 2020, the loans amounted to R$934,908 (R$844,426 as of December 31, 2019) and advances for future capital increase of R$ 428,672 (R$ 428,672 as of December 31, 2019).

2.     Banco Fibra S.A: Assets: Refers mainly to Eurobond from Fibra Bank with maturity in February 2028.

3.     Panatlântica: Receivables from the sale of steel products.

 

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Version: 1

 

·      By transaction

 

 

                         
   

 

 

 

 

 

 

 

 

 

 

Parent Company

 

 

Current

Non-current

Total

   

03/31/2020

 

12/31/2019

 

03/31/2020

 

12/31/2019

 

03/31/2020

 

12/31/2019

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Trade receivables (1) (note 5)

 

1,338,613

 

943,623

         

1,338,613

 

943,623

Dividends receivable (note 7)

 

33,351

 

33,447

 

 

 

 

 

33,351

 

33,447

Loans (note 7)

         

990,034

 

883,394

 

990,034

 

883,394

Financial investments (2)

 

1,306,049

 

2,124,626

 

121,027

 

95,719

 

1,427,076

 

2,220,345

Other receivables (3) (note 7)

 

13,957

 

14,770

 

658,414

 

674,800

 

672,371

 

689,570

 

 

2,691,970

 

3,116,466

 

1,769,475

 

1,653,913

 

4,461,445

 

4,770,379

Liabilities

                       

 Borrowings

 

 

 

 

 

 

 

 

 

 

 

 

Prepayment (note11)

 

113,260

 

73,334

 

7,915,437

 

6,162,673

 

8,028,697

 

6,236,007

Intercompany Bonds (note 11)

 

13,185

 

2,491

 

483,479

 

374,855

 

496,664

 

377,346

Intercompany Loans (note11)

 

289,634

 

1,499,197

 

6,869,338

 

2,075,353

 

7,158,972

 

3,574,550

 

 

416,079

 

1,575,022

 

15,268,254

 

8,612,881

 

15,684,333

 

10,187,903

Other payables (note 13)

                       

Accounts payable

 

93,531

 

92,352

 

298,566

 

318,967

 

392,097

 

411,319

Provision for consumption and services

 

477,916

 

365,225

         

477,916

 

365,225

Trade payables

 

941,252

 

910,929

 

 

 

 

 

941,252

 

910,929

Actuarial liabilities

         

19,788

 

19,788

 

19,788

 

19,788

 

 

1,512,699

 

1,368,506

 

318,354

 

338,755

 

1,831,053

 

1,707,261

   

1,928,778

 

2,943,528

 

15,586,608

 

8,951,636

 

17,515,386

 

11,895,164

                         

 

 

03/31/2020

 

03/31/2019

               

P&L

 

 

                   

Revenues

 

 

 

 

               

Sales/Others

 

875,927

 

764,532

               

Interest (note 22)

 

18,284

 

18,344

               

Exclusive funds (note 22)

 

              (30)

 

683

               

Expenses

 

 

 

 

               

Purchases

 

     (443,603)

 

     (643,306)

               

Interest (note 22)

 

       (97,782)

 

       (71,100)

               

Foreing exchange and monetary variations, net

 

  (3,099,824)

 

       (66,033)

               

Financial investments (nota 22)

 

     (962,354)

 

                -  

               
   

  (3,709,382)

 

           3,120

               
                         

 

 

1.     Receivables from sales of goods and services between the parent company, subsidiaries and joint ventures.

 

2.     Assets: Financial investments classified in current total are investments in exclusive funds, in the Fibra Bank and in Usiminas’ shares, the last classified as fair value through profit or loss.

 

3.     Noncurrent: Refers mainly to advance for future capital increase, dividends receivable and receivables from acquisition of debentures.

 

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Quarterly Financial Information – June 30, 2019 – CIA SIDERURGICA NACIONAL

Version: 1

·      By company

 

 

 

1.       Companhia Metalúrgica Prada: Refers mainly to receivables in the amount of R$296,986 (R$278,739 as of December 31,2019), and debentures from the indirect subsidiary CBL in the amount of R$121,336 (R$121,336 as of December 31,2019).

 

2.       CSN Mineração: Liabilities: Payables from purchases of iron ore and port services in the amount of R$727,650 (R$992,267 as of December 31,2019).

 

3.       Companhia Siderurgica Nacional, LLC: Receivables of R$634,236 (R$345,470 as of December 31, 2019), related to sale of steel for resale. Current liabilities refer mainly to commission expenses and logistics in the operations of steel resales in the amount of R$ R$463,126 (R$348,060 as of December 31,2019).

 

4.       CSN Resources SA: Prepayment contracts in dollar and Fixed Rate Notes. As of March 31, 2020, the loans amounted to R$7,217,341 (R$5,485,880 as of December 31, 2019).

 

5.       CSN Islands XI Corp.: Intercompany contracts in US dollars. As of March 31, 2020, the loans amounted to R$4,904,910 (R$1,787,566 as of December 31, 2019).

 

6.     CSN Islands XII Corp.: Refers mainly to Intercompany contracts in dollar. As of March 31, 2020, the loans amounted to R$2,089,303 (R$1,619,896 as of December 31, 2019).

 

7.     Transnordestina Logística S.A: noncurrent assets: refers to loan agreements in the amount of R$835,250 (R$742,875 as of December 31,2019) and advance for future capital increase in the amount of R$428,672 (R$428,672 as of December 31,2019).

 

8.       Panatlântica: current assets: refers to accounts receivable for the supply of flat steel in the amount of R$156,268 (R$128,573 on December 31, 2019).

 

9.     Exclusive funds: Current assets: Refers to investments in Government securities and CDBs, in the amount of R$8,272 (R$8,301 as of December 31,2019).  Noncurrent assets: Refers to Usiminas’ shares in the amount of R$46,890 (R$84,171 as of December 31,2019). The funds VR1 and Diplic II are managed by Taquari Asset.

 

 

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Version: 1

 

17.b) Key management personnel

 

The key management personnel with authority and responsibility for planning, directing and controlling the Company’s activities, include the members of the Board of Directors and statutory directors. The following is information on the compensation of such personnel and the related balances as of March 31, 2020.

 

   

03/31/2020

 

03/31/2019

   

P&L

Short-term benefits for employees and officers

 

                  6,581

 

                  3,818

Post-employment benefits

 

                         9

 

                       26

 

 

                  6,590

 

                  3,844

 

 

 17.c) Guarantees

 

The Company is responsible for fiduciary guarantees of its subsidiaries, joint-ventures and joint-operations as shown below:

 

 

 

 

18.    SHAREHOLDERS’ EQUITY

 

18.a) Paid-in capital

 

Fully subscribed and paid-in capital as of March 31, 2020 and December 31, 2019 is R$4,540,000 represented by 1,387,524,047 book-entry common shares without par value. Each common share entitles to one vote in resolutions of the General Meeting.

 

18.b) Authorized capital

 

The Company’s bylaws in effect as of March 31, 2020 determine that the capital can be raised to up to 2,400,000,000 shares by decision of the Board of Directors.

 

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Version: 1

 

 

18.c) Legal reserve

 

This reserve is recognized at the rate of 5% of the profit for each period, as provided for by Article 193 of Law 6404/76, up to the ceiling of 20% of the share capital.  

 

18.d) shareholder structure

 

As of March 31, 2020, the Company’s shareholder structure was as follows:

 

 

   

 

 

 

 

03/31/2020

 

 

 

 

 

12/31/2019

   

Number of common shares

 

% of total shares

 

% of voting capital

 

Number of common shares

 

% of total shares

 

% of voting capital

Vicunha Aços S.A. (*)

 

679,522,254

 

48.97%

 

49.24%

 

679,522,254

 

48.97%

 

49.24%

Rio Iaco Participações S.A. (*)

 

58,193,503

 

4.19%

 

4.22%

 

58,193,503

 

4.19%

 

4.22%

NYSE (ADRs)

 

249,270,033

 

17.97%

 

18.06%

 

262,206,103

 

18.90%

 

19.00%

Other shareholders

 

393,128,757

 

28.33%

 

28.49%

 

380,192,687

 

27.40%

 

27.55%

 

 

 1,380,114,547

 

99.47%

 

100.00%

 

 1,380,114,547

 

99.47%

 

100.00%

Treasury shares

 

7,409,500

 

0.53%

 

 

 

7,409,500

 

0.53%

 

 

Total shares

 

 1,387,524,047

 

100.00%

 

 

 

 1,387,524,047

 

100.00%

 

 

 

 (*) Controlling group companies.

 

 

18.e) Treasury shares

 

As of March 31, 2020, the treasury shares were as follows:

 

Quantity purchased (in units)

 

Amount paid for the shares

 

Share price

 

Share market price as of 03/31/2020 (*)

     
   

Minimum

 

Maximum

 

Average

   

                7,409,500

 

R$ 58,264

 

 R$       4.48

 

 R$ 10.07

 

 R$           7.86

 

R$ 51,644

 

 (*) By using the average price of the shares as of March 31, 2020 of R$6.97 per share.

 

 

18.f) Policy on investments and payment of interest on capital and dividends

 

The Company adopts a profit distribution policy which, in compliance with the provisions in Law 6,404/76, as amended by Law 9,457/97, will entail the allocation of all the profit to the Company’s shareholders, provided that the following priorities are observed, irrespective of their order: (i) carrying out the business strategy; (ii) fulfilling its obligations; (iii) making the required investments; and (iv) maintaining a healthy financial situation of the Company.

 

18.g) Earnings/(loss) per share:

 

Basic earnings/(loss) per share were calculated based on the profit/loss attributable to the owners of CSN divided by the weighted average number of common shares outstanding during the period, excluding the common shares purchased and held as treasury shares, as follows:

 

     

Parent Company

 

03/31/2020

 

03/31/2019

 

Common Shares

 

 

Loss for the period

           (1,360,851)

 

                  (7,572)

Weighted average number of shares

      1,380,114,547

 

      1,373,250,595

Basic and diluted EPS

              (0.98604)

 

              (0.00551)

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Version: 1

 

The Company does not hold potential dilutable ordinary shares outstanding that could result in dilution of earnings per share

 

19.    NET SALES REVENUE

 

Net sales revenue is comprised as follows:

       

 Consolidated

     

 Parent Company

   

03/31/2020

 

03/31/2019

 

03/31/2020

 

03/31/2019

Gross revenue

 

 

 

 

 

 

 

 

Domestic market

 

3,570,496

 

3,563,173

 

3,430,097

 

3,418,248

Foreign market

 

2,645,352

 

3,293,102

 

414,945

 

390,842

 

 

6,215,848

 

6,856,275

 

3,845,042

 

3,809,090

Deductions

 

             

Sales returns, discounts and rebates

 

(78,014)

 

(60,394)

 

(75,343)

 

(57,298)

Taxes on sales

 

(803,181)

 

(790,415)

 

(738,390)

 

(730,575)

   

(881,195)

 

(850,809)

 

(813,733)

 

(787,873)

Net revenue

 

5,334,653

 

6,005,466

 

3,031,309

 

3,021,217

 

20.    EXPENSES BY NATURE

   

 

 

 

 

 

 

 Parent Company

   

03/31/2020

 

03/31/2019

 

03/31/2020

 

03/31/2019

Raw materials and inputs

 

(1,622,429)

 

(1,797,797)

 

(1,598,255)

 

(1,762,660)

Labor cost

 

(689,990)

 

(630,183)

 

(326,852)

 

(293,695)

Supplies

 

(496,110)

 

(472,504)

 

(390,627)

 

(349,240)

Maintenance cost (services and materials)

 

(251,076)

 

(322,986)

 

(135,578)

 

(167,491)

Outsourcing services

 

(603,247)

 

(540,677)

 

(231,771)

 

(204,884)

Freight

 

(52,970)

 

(20,553)

 

(12,601)

 

(11,186)

Distribution freight

 

(278,725)

 

(448,201)

 

(88,424)

 

(59,584)

Depreciation, amortization and depletion

 

(415,181)

 

(306,166)

 

(206,703)

 

(157,112)

Others

 

(117,949)

 

(176,093)

     

(3,497)

   

(4,527,677)

 

(4,715,160)

 

(2,990,811)

 

(3,009,349)

Classified as:

 

             

Cost of sales

 

(4,017,707)

 

(4,021,495)

 

(2,778,380)

 

(2,833,088)

Selling expenses

 

(390,915)

 

(573,484)

 

(162,239)

 

(120,144)

General and administrative expenses

 

(119,055)

 

(120,181)

 

(50,192)

 

(56,117)

 

 

(4,527,677)

 

(4,715,160)

 

(2,990,811)

 

(3,009,349)

 

Additions to depreciation, amortization and depletion for the period were distributed as follows:

 

 

     

Consolidated

     

Parent Company

 

03/31/2020

 

03/31/2019

 

03/31/2020

 

03/31/2019

Production costs (1)

403,600

 

298,665

 

200,458

 

152,637

Selling expenses

3,276

 

1,279

 

2,729

 

978

General and administrative expenses

8,305

 

6,222

 

3,516

 

3,497

 

415,181

 

306,166

 

206,703

 

157,112

Other operational (2)

21,112

 

21,904

 

2,298

 

895

 

436,293

 

328,070

 

209,001

 

158,007

 

1.     The production cost line includes PIS and COFINS credits on the lease agréments in the amount of R$1,214 in the consolidated and R$494 in the parent company as of March 31, 2020 in accordance with the orientations of CVM in its Ofício-Circular CVM/SNC/SEP 02/2019.

2.     Refer substantially to the depreciation of the investment properties, out-of-work equipment and amortization of SWT’s customers relationship, see Note 21.

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Version: 1

 

21.    OTHER OPERATING INCOME (EXPENSES)

 

   

 Consolidated

 

 Parent Company

   

03/31/2020

 

03/31/2019

 

03/31/2020

 

03/31/2019

Other operating income

 

             

Indemnities

 

1,156

 

1,287

 

983

 

1,255

Rentals and leases

 

2,462

 

2,162

 

2,393

 

2,072

Dividends received

     

380

     

380

PIS, COFINS and INSS to compensate (1)

 

88,390

 

87,394

 

65,092

 

87,394

Contractual fines

 

2,016

 

864

 

1,410

 

686

Updated shares – Fair value through profit or loss (Note 12II)

 

(207)

 

127,653

 

(207)

 

127,653

Other revenues

 

8,872

 

9,212

 

5,176

 

254

 

 

102,689

 

228,952

 

74,847

 

219,694

   

 

 

 

 

 

 

 

Other operating expenses

               

Taxes and fees

 

(5,304)

 

(5,134)

 

(2,393)

 

(1,024)

Expenses with environmental liabilities, net

 

(15,922)

 

(8,607)

 

(2,209)

 

(3,313)

Write-off/(Provision) of judicial lawsuits

 

(7,157)

 

42,427

 

3,454

 

44,453

Depreciation of investment property, equipment paralyzed and amortization of intangible assets (note 20)

(21,112)

 

(21,904)

 

(2,298)

 

(895)

Write- off of PPE and intagible assests (note 9)

 

(1,400)

 

(13,712)

     

(13,542)

Estimated (Loss)/reversal in inventories

 

(20,351)

 

(41,149)

 

(5,814)

 

(8,935)

Idleness in stocks and paralyzed equipment (2)

 

(202,240)

 

(67,261)

 

(37,043)

 

(67,261)

Studies and project engineering expenses

 

(5,075)

 

(4,919)

 

(3,840)

 

(7,108)

Research and development expenses

 

(197)

 

(349)

 

(197)

 

(349)

Healthcare plan expenses

 

(28,829)

 

(29,086)

 

(28,693)

 

(28,976)

Cash flow hedge accounting realized (note 12 b)

 

(364,818)

 

(184,217)

 

(364,818)

 

(184,217)

Other expenses

 

(96,519)

 

(30,461)

 

(90,787)

 

(13,428)

 

 

(768,924)

 

(364,372)

 

(534,638)

 

(284,595)

 Other operating income (expenses), net

 

(666,235)

 

(135,420)

 

(459,791)

 

(64,901)

                 

(1)     In 2020, refers to social security credit recoverable due to benefits granted to employees that should not be included in the basis of calculation of the contribution to the Social Security. In 2019, refers to the exclusion of ICMS in the basis of calculation of PIS and COFINS.

 

(2)     Refers to the idle capacity arisen from production volumes lower than normal. In the parent company was generated from the refurbishment of the blast furnace No.3 and in the consolidated was generated in the iron ore mining operation due to delays in the release of environmental licenses, which postponed the start of new ore mining fronts, as well as new dry tailing processes still in ramp-up stage.

 

 

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22.    FINANCIAL INCOME (EXPENSES)

   

 

 

Consolidated

 

 

 

Parent Company

   

03/31/2020

 

03/31/2019

 

03/31/2020

 

03/31/2019

Finance income

 

 

 

 

 

 

 

 

Related parties (note 17 a)

 

17,819

 

20,161

 

18,254

 

19,027

Income from financial investments

 

15,788

 

20,110

 

8,533

 

13,406

Other income (1)

 

31,524

 

71,043

 

26,589

 

68,937

 

 

65,131

 

111,314

 

53,376

 

101,370

Financial expenses

               

Borrowings and financing - foreign currency

 

(348,111)

 

(252,348)

 

(57,428)

 

(77,132)

Borrowings and financing - local currency

 

(146,269)

 

(234,691)

 

(129,052)

 

(206,226)

Related parties

 

       

(97,782)

 

(71,100)

Lease liabilities

 

(12,100)

     

(891)

   

Capitalised interest (notes 9 and 25)

 

23,390

 

21,111

 

7,280

 

5,419

Interest, fines e late payment charges

 

(23,720)

 

(58,234)

 

(19,473)

 

(56,966)

Commission and bank fees

 

(30,298)

 

(44,183)

 

(27,332)

 

(42,034)

PIS/COFINS over financial income

 

(6,233)

 

(5,366)

 

(3,431)

 

(5,342)

Updated shares – Fair value through profit or loss (Note 12II)

 

(962,354)

     

(962,354)

   

Other financial expenses

 

(125,456)

 

(59,138)

 

(45,101)

 

(34,654)

 

 

(1,631,151)

 

(632,849)

 

(1,335,564)

 

(488,035)

Foreign exchange and monetary variation, net

               

Monetary variation, net

 

(9,338)

 

(11,711)

 

(4,861)

 

(961)

Exchange variation, net

 

470,408

 

(101,499)

 

1,034,990

 

(71,138)

Exchange variation on derivatives

 

(96,188)

 

(354)

 

(99,113)

   
   

364,882

 

(113,564)

 

931,016

 

(72,099)

                 

Finance income (costs), net

 

(1,201,138)

 

(635,099)

 

(351,172)

 

(458,764)

                 

(*) Statement of gains and (losses) on derivative transactions (note 12)

 

             

Dollar - to - euro swap

 

2,757

 

(354)

       

Great Britain pound-to-euro swap

 

168

           

Swap CDI x Dollar

 

(99,113)

     

(99,113)

   

 

 

(96,188)

 

(354)

 

(99,113)

   
                 
                 

(1)     Refers mainly to the monetary adjustment of the Social Security – INSS credit in the amount of R$16,321 and to the recognition of the exclusion of ICMS in the PIS and COFINS basis of calculation in the amount of R$9,866 as of March 31, 2020 (R$61,877 as of March 31, 2019).

(2)     As of December 31, 2019, Usiminas’ shares were reclassified to financial investments in the current asset and their price changes are recognized as financial result.

 

23.    SEGMENT INFORMATION

 

The segment information has not changed in relation to that disclosed in the Company's financial statements as of December 31, 2019. Therefore, management decided not to repeat it in this condensed interim financial information.

 

According to the Group´s structure, the businesses are distributed and managed in five operating segments as follows:

 

 

 

 

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 (*) The ore sales volumes presented in this note take into consideration Company sales and the interest in its subsidiaries and joint ventures.

 

·      Adjusted EBITDA

 

Adjusted EBITDA is the principal measurement through which the chief operating decision maker assesses the segment performance and the capacity to generate recurring operating cash, consisting of profit for the year less net finance income (expenses), income tax and social contribution, depreciation and amortization, equity in results, results of discontinued operations and other operating income (expenses), plus the proportionate EBITDA of joint ventures.

 

As required by IFRS 8, the table below shows the reconciliation of the measurement used by the chief operating decision maker with the results determined using the accounting practices:

 

   

 03/31/2020

 

 03/31/2019

(Loss)/profit for the period

 

          (1,311,709)

 

                 86,763

Depreciation/Amortization/Depletion (note 20)

 

               415,181

 

               306,166

Income tax and social contribution (note 14)

 

               206,204

 

               458,857

Financial income (expenses) (note 22)

 

            1,201,138

 

               635,099

EBITDA

 

               510,814

 

            1,486,885

Other operating (income) expenses (note 21)

 

               666,235

 

               135,420

Equity in results of affiliated companies (note 8)

 

                 45,108

 

               (25,833)

Proportionate EBITDA of joint ventures

 

               108,953

 

               127,338

Adjusted EBITDA (*)

 

            1,331,110

 

            1,723,810

 

 

 (*) The Company discloses its adjusted EBITDA net of its share of investments and other operating income (expenses) because it understands that these should not be considered in the calculation of recurring operating cash generation.

 

 

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24.    INSURANCE

 

Aiming to properly mitigate risk and in view of the nature of its operations, the Company and its subsidiaries have taken out several different types of insurance policies. Such policies are contracted in line with the Risk Management policy and are similar to the insurance taken out by other companies operating in the same lines of business as CSN and its subsidiaries. The risks covered under such policies include the following: Domestic Transportation, International Transportation, Life and Casualty, Health, Vehicles Fleet, D&O (Civil Liability Insurance for Directors and Officers), General Civil Liability, Engineering Risks, Named Peril, Export Credit, Surety Bond and Port Operator’s Civil Liability.

 

In 2019, after negotiation with insurers and reinsurers in Brazil and abroad, an insurance policy was issued of Operational Risk of Property Damages and Loss of Profits, with effect from March 31, 2019 to June 30, 2020. Under the insurance policy, the LMI (Maximum Limit of Indemnity) is US$600 million and deductibles in the amount of US$385 million for material damages and 45 days for loss of profits and covers the following Company’s units and subsidiaries: Presidente Vargas Steelworks, CSN Mineração and Sepetiba Tecon.

 

The risk assumptions adopted, given their nature, are not within the scope of a review of interim financial information and, consequently, were not reviewed by our independent auditors.

 

 

25.    ADDITIONAL INFORMATION TO CASH FLOWS

 

The following table provides additional information on transactions related to the statement of cash flows:

 

     

Consolidated

     

Parent Company

 

03/31/2020

 

03/31/2019

 

03/31/2020

 

03/31/2019

Income tax and social contribution paid

231,350

 

8,030

       

Addition to PP&E with interest capitalization (notes 9 and 22)

23,390

 

21,111

 

7,280

 

5,419

Initial adoption CPC 06 – Right of use

   

640,989

     

61,072

Remeasurement – Right of use (note 9.a)

555

     

341

   

Capitalization in subsidiaries without cash

       

18,566

   

Addition to investment property without cash effect

61,597

     

61,597

   

 

316,892

 

670,130

 

87,784

 

66,491

 

 

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26.    STATEMENT OF COMPREHENSIVE INCOME

   

 

 

 Consolidated

 

 

 

 Parent Company

   

03/31/2020

 

03/31/2019

 

03/31/2020

 

03/31/2019

 (Loss) profit for the year

 

         (1,311,709)

 

                 86,763

 

         (1,360,851)

 

                 (7,572)

                 

 Other comprehensive income

               
                 

Items that will not be subsequently reclassified to the statement of income

 

 

 

 

 

 

 

 

 Actuarial of the defined benefit plan from investments in subsidiaries, net of taxes

                       33

 

                        30

 

                       31

 

                        30

 

 

                       33

 

                        30

 

                       31

 

                        30

                 

Items that could be subsequently reclassified to the statement of income

 

 

 

 

 

 

 

 

 Cumulative translation adjustments for the period

 

              380,042

 

               (21,804)

 

              380,042

 

               (21,804)

 (Loss)/gain on cash flow hedge accounting

 

         (5,390,043)

 

               (18,440)

 

         (5,390,043)

 

               (18,440)

 Realization on cash flow hedge accounting reclassified to income statements

              364,818

 

               184,217

 

              364,818

 

               184,217

(Loss)/gain on investments hedge in subsidiaries

 

                           

 

                            

 

                  1,469

 

                   6,180

(Loss)/gain on net investment hedge in foreign subsidiaries

 

                  1,469

 

                   6,180

 

                           

 

                            

 

 

         (4,643,714)

 

               150,153

 

         (4,643,714)

 

               150,153

                 

 

 

         (4,643,681)

 

               150,183

 

         (4,643,683)

 

               150,183

                 

 Total comprehensive income for the period

 

         (5,955,390)

 

               236,946

 

         (6,004,534)

 

               142,611

 

 

 

 

 

 

 

 

 

 Attributable to:

               

 Owners of the Company

 

         (6,004,534)

 

               142,611

 

         (6,004,534)

 

               142,611

 Non-controlling interests

 

                49,144

 

                 94,335

 

                           

 

                            

 

 

         (5,955,390)

 

               236,946

 

         (6,004,534)

 

               142,611

 

27.    SUBSEQUENT EVENTS

 

·        Our Usiminas’ shares classified as financial investment in the current asset (see Note 4) are exposed to price volatility since they are recognized at the fair value through profit and loss and are quoted in the Brazilian Stock Exchange. On May 14, 2020, the common and preferred shares had price decreases in the amount of R$100,060 since the balance sheet date.

 

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COMMENTS ON THE PERFORMANCE OF BUSINESS PROJECTIONS

Projections

 

The Company clarifies that the information disclosed in this item represents a mere estimate, hypothetical data and cannot be interpreted as a promise of performance by the Company and/or its Management. The projections listed below include market variables that are not under the Company’s control and, therefore, may change.

 

 

a)    Purpose of Projection

 

Update projections of iron ore production for 2020. The Company changed the method of presentation of iron ore production and, accordingly, as from the first quarter of 2020 adds iron ore purchased from third parties to its own production and expects to achieve around 33 to 36 million tons of iron ore produced in the period.

 

CSN estimates investments in the amount of R$1.1 billion.

 

b)    Period and validity term of the projection.

 

CSN estimates annual volume of iron ore production from 2020 to 2023 and the annual volumes will be available to the market in the financial statements to be published in each of those years.

 

 

c)    Assumptions of the projection, indicating which can be influenced by the issuer’s management and which are beyond its control.

 

All assumptions mentioned below are subject to the influence of external variables, which are beyond the control of the Company’s management. Therefore, in case of relevant changes in those assumptions, the Company may revise its estimates mentioned below, modifying them in comparison with those originally presented.

 

 

Volume of Iron Ore Production

 

The volume of ore production considers our mining plan between 2020 and 2023, with an increase in pellet feed production, in line with the investment projects announced through Material Fact and Corporate Presentation with the market.

 

d) Values of the indicators that are subject of the forecast.

 

 

Net Revenue

2016

2017

2018

1S19

2019

2020 E

2021 E

2022 E

2023 E

Estimate

n.a.

18,000

22,230

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

Actual

17,149

18,525

22,969

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

Variation %

-

3%

3%

-

-

-

-

-

-

Adjusted EBITDA

2016

2017

2018

1S19

2019

2020 E

2021 E

2022 E

2023 E

Estimate

n.a.

5,000

5,574

n.a.

7,500

n.a.

n.a.

n.a.

n.a.

Actual

4,075

4,645

5,849

n.a.

               7,251

n.a.

n.a.

n.a.

n.a.

Variation %

-

-7%

5%

n.a.

-3%

n.a.

n.a.

n.a.

n.a.

Leverage

2016

2017

2018

1S19

2019

2020 E

2021 E

2022 E

2023 E

Estimate

n.a.

5.00x

n.a.

3.50x

3.00x

n.a.

n.a.

n.a.

n.a.

Actual

6.32x

5.66x

4.55x

3.65x

3.74x

n.a.

n.a.

n.a.

n.a.

Variation

n.a.

0.66x

n.a.

0.15x

0.74x

n.a.

n.a.

n.a.

n.a.

Iron ore production volume

2016

2017

2018

1S19

2019

2020 E

2021 E

2022 E

2023 E

Estimate

n.a.

n.a.

28,500

n.a.

33,000

25,000-28,000

31,200

36,600

38,000

Actual

32,174

29,921

27,875

n.a.

32,090

n.a.

n.a.

n.a.

n.a.

Variation %

n.a.

n.a.

-2%

n.a.

-3%

n.a.

n.a.

n.a.

n.a.

CAPEX

2016

2017

2018

1S19

2019

2020 E

2021 E

2022 E

2023 E

Estimate

n.a.

n.a.

n.a.

n.a.

n.a.

1.100

n.a.

n.a.

n.a.

Iron ore sales volume

2016

2017

2018

1S19

2019

2020 E

2021 E

2022 E

2023 E

Estimate

n.a.

n.a.

n.a.

n.a.

40,000

n.a.

n.a.

n.a.

n.a.

Actual

n.a.

n.a.

n.a.

n.a.

            38,545

n.a.

n.a.

n.a.

n.a.

Variation %

n.a.

n.a.

n.a.

n.a.

-4%

n.a.

n.a.

n.a.

n.a.

Iron ore production volume

New Method (Purchases+Production)

2016

2017

2018

1S19

2019

2020 E

2021 E

2022 E

2023 E

Estimate

n.a.

n.a.

n.a.

n.a.

n.a.

33,000-36,000

n.a.

n.a.

n.a.

Actual

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

Variation %

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

*E = estimate

 

 

 

 

 

 

 

 

 

**n.a. = not measured

 

 

 

 

 

 

 

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If the issuer has disclosed, in the last 3 fiscal years, projections over the progress of its indicators:

 

a)      Inform which were being replaced by new projections and which were being repeated.

 

New estimates:

We estimate our capital expenditures in R$1.1 billion.

 

Estimates changed:

We adjusted the estimated iron ore production volume in 2020 to 33-36Mton (new method).

 

Estimates maintained:

CSN estimates iron ore production volume at 31.2Mton in 2021, 36.6Mton in 2022 and 38Mton in 2023.

 

b)  In relation to the projections for periods that have already occured, compare the projection data with the performance indicators, clearly indicating the reasons that led to deviations in the projections.

 

The adjusted EBITDA in 2019 was 3% lower than the projected R$7.5 billion, impacted by the lower results of the mining segment as a result of lower Platts than budgeted and, also, freight costs higher than projected.

 

CSN estimated leverage as measured by net debt to adjusted EBITDA close to 3.5x at the end of the year 2019, when we reached 3.74x, materially worse than our initial estimates mainly due to foreign exchange effects that negatively influenced our U.S. dollar denominated debt, Capex above expectations and worse mining results due to higher freight costs and lower Platts as from the third quarter.

 

The iron ore production was 3% under the projection of 33Mton due to heavy rains on the Southeast in November and December 2019.

 

 

The iron ore sales were 4% lower than projected 40Mton due to lower ore production in the fourth quarter of 2019.

 

 

Net Revenue

2016

2017

2018

1S2019

2019

Estimate

n.a.

18,000

22,230

n.a.

n.a.

Actual

17,149

18,525

22,969

n.a.

n.a.

Variation %

n.a.

3%

3%

n.a.

-

Adjusted EBITDA

2016

2017

2018

1S2019

2019

Estimate

n.a.

5,000

5,574

n.a.

7,500

Actual

4,075

4,645

5,849

n.a.

               7,251

Variation %

n.a.

-7%

5%

n.a.

-3%

Leverage

2016

2017

2018

1S2019

2019

Estimate

n.a.

5.00x

n.a.

3.50x

3.00x

Actual

6.32x

5.66x

4.55x

3.65x

3.74x

Variation %

n.a.

13%

n.a.

0.15x

0.74x

Iron Ore Production Volume

2016

2017

2018

1S2019

2019

Estimate

n.a.

n.a.

28,500

n.a.

33,000

Actual

32,174

29,921

27,875

n.a.

32,090

Variation %

n.a.

n.a.

-2%

n.a.

-3%

Iron Ore Sales Volume

2016

2017

2018

1S19

2019

Estimate

n.a.

n.a.

n.a.

n.a.

40,000

Actual

n.a.

n.a.

n.a.

n.a.

            38,545

Variation %

n.a.

n.a.

n.a.

n.a.

-4%

*E = estimate

 

 

 

 

 

**n.a. = not measured

 

 

 

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c)  In relation to the projections for periods still in progress, inform if the projections remain valid on the date of delivery the form and, when applicable, explain why they were abandoned or replaced.

 

Ongoing and valid estimates:

 

CSN estimates iron ore production volume at 33-36 million tons (Mton) in 2020.

 

CSN estimates iron ore production volume at 31.2million tons (Mton) in 2021, 36.6 Mton in 2022 and 38.0 Mton in 2023. The expected decrease in production volume in 2020 is due to high rainfall in Q1-2020 and delays to start new mining fronts.

 

 

Follow-up and changes to projections disclosed

 

The result of the first quarter of 2020 does not bring any material variation to the projections of results previously presented, which can therefore be maintained.

 

 

 

 

 

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 (Free translation from the original issued in Portuguese. In the event of any discrepancies, the Portuguese language version shall prevail.)

 

 

Independent Limited Review Auditor’s Report on Review of the Interim Financial Information

 

To the

Shareholders, Directors and Management of

Companhia Siderúrgica Nacional

São Paulo – SP

Introduction

We have reviewed the accompanying individual and consolidated interim financial information of Companhia Siderúrgica Nacional (“Company”), identified as Parent and Consolidated, respectively, included in the Interim Financial Information Form (ITR) for the quarter ended March 31, 2020, which comprises the balance sheet as of March 31, 2020 and the related statement of profit and loss and statement of comprehensive income (loss) and the statement of changes in equity and statement of cash flows for the three-month period then ended, including a summary of significant accounting policies and other explanatory notes.

Management is responsible for the preparation of the individual and consolidated interim financial information in accordance with Technical Pronouncement CPC 21 (R1) - Interim Financial Reporting and IAS 34 - Interim Financial Reporting, issued by the International Accounting Standards Board (IASB), as well as for the presentation of such information in accordance with the standards issued by the Brazilian Securities and Exchange Commission (CVM) applicable to the preparation of Interim Financial Information (ITR). Our responsibility is to express a conclusion on this interim financial information based on our review.

Scope of review

We conducted our review in accordance with Brazilian and international standards on review of interim financial information (NBC TR 2410 - Review of Interim Financial Information Performed by the Independent Auditor of the Entity and ISRE 2410 - Review of Interim Financial Information Performed by the Independent Auditor of the Entity, respectively). A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with the standards on auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion on the individual and consolidated interim financial information

Based on our review, nothing has come to our attention that causes us to believe that the accompanying individual and consolidated interim financial information included in the Interim Financial Information Form (ITR) referred to above is not prepared, in all material respects, in accordance with CPC 21 (R1) and IAS 34 applicable to the preparation of interim financial information and presented in accordance with the standards issued by the Brazilian Securities and Exchange Commission (CVM).

Emphasis of matter

Ability of the jointly-controlled subsidiary Transnordestina Logística S.A. to continue as a going concern

We draw attention to note 8.c) to the interim financial information, which describes the percentage of completion of the new railway network by the jointly-controlled subsidiary Transnordestina Logística S.A. (TLSA), currently under construction and originally scheduled to be completed by January 2017, is currently being revised and discussed by the relevant regulatory bodies. The completion of the work under the project (and consequent start of operations) is contingent upon receiving ongoing financial contribution from TLSA´s shareholders and third parties. These events and conditions, together with other issues described in note 8.c) to the interim financial information, indicate the existence of significant uncertainty that may raise significant doubt as to TLSA´s ability to continue as a going concern. Our conclusion is not qualified regarding this matter.

Other matters

Interim statement of value added

The quarterly information referred to above includes the individual and consolidated statements of value added for the period of three months ended March 31, 2020, prepared under the responsibility of the Company's management and presented as supplementary information for the purposes of IAS 34.


These statements were submitted to the same review procedures in conjunction with the review of the Company's interim financial information in the order to conclude they are reconciliated to the interim financial information and to the accounting records, as applicable, and whether the structure and content are in accordance with the criteria established in the CPC 09 - Statement of Value Added. Based on our review, nothing has come to our attention that causes us to believe that the accompanying statements of value added were not prepared, in all material respects, in accordance with the individual and consolidated interim financial information taken as a whole.

 

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São Paulo, May 14, 2020

 

Nelson Fernandes Barreto Filho

CT CRC 1SP-151.079/O-0

Grant Thornton Auditores Independentes

CRC 2SP-025.583/O-1

 

 

 

 

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Opinions and Statements / Officers Statement on the Financial Statement

 

As Executive Officers of Companhia Siderúrgica Nacional, we declare pursuant to Article 25, paragraph 1º, item VI of CVM Instruction 480, of December 7, 2009, as amended, that we reviewed, discussed and agreed with the Company’s Financial Statements for the quarter ended March 31, 2020.

 

São Paulo, May 14th, 2020.

 

 

 

____________________________________________

Benjamin Steinbruch

CEO

 

 

____________________________________________

Luis Fernando Barbosa Martinez

Executive Officer

 

 

 

____________________________________________

David Moise Salama

Executive Officer

 

 

 

____________________________________________

Pedro Gutemberg Quariguasi Netto

Executive Officer

 

 

____________________________________________

Marcelo Cunha Ribeiro

Executive Officer – CFO and Investors Relations

 

 

 

 

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Opinions and Statements / Officers Statement on Auditor’s Report

 

As Executive Officers of Companhia Siderúrgica Nacional, we declare pursuant to Article 25, paragraph 1º, item V of CVM Instruction 480, of December 7, 2009, as amended, that we reviewed, discussed and agreed with the opinion expressed on the Independent Auditors’ Report related to the Company’s Financial Statements for the quarter ended March 31, 2020.

 

São Paulo, May 14th, 2020.

 

 

____________________________________________

Benjamin Steinbruch

CEO

 

____________________________________________

Luis Fernando Barbosa Martinez

Executive Officer

 

 

____________________________________________

David Moise Salama

Executive Officer

 

 

____________________________________________

Pedro Gutemberg Quariguasi Netto

Executive Officer

 

 

____________________________________________

Marcelo Cunha Ribeiro

Executive Officer – CFO and Investors Relations

 

 

 

 

 

 

Page 88

 

SIGNATURE
 
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: June 12, 2020
 
COMPANHIA SIDERÚRGICA NACIONAL
By:
/S/ Benjamin Steinbruch

 
Benjamin Steinbruch
Chief Executive Officer

 

 
By:
/S/ Marcelo Cunha Ribeiro

 
Marcelo Cunha Ribeiro
Chief Financial and Investor Relations Officer

 
 

 

 
FORWARD-LOOKING STATEMENTS

This press release may contain forward-looking statements. These statements are statements that are not historical facts, and are based on management's current view and estimates of future economic circumstances, industry conditions, company performance and financial results. The words "anticipates", "believes", "estimates", "expects", "plans" and similar expressions, as they relate to the company, are intended to identify forward-looking statements. Statements regarding the declaration or payment of dividends, the implementation of principal operating and financing strategies and capital expenditure plans, the direction of future operations and the factors or trends affecting financial condition, liquidity or results of operations are examples of forward-looking statements. Such statements reflect the current views of management and are subject to a number of risks and uncertainties. There is no guarantee that the expected events, trends or results will actually occur. The statements are based on many assumptions and factors, including general economic and market conditions, industry conditions, and operating factors. Any changes in such assumptions or factors could cause actual results to differ materially from current expectations.