siditr1q18_6k.htm - Generated by SEC Publisher for SEC Filing
 
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 May, 2018
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, 19º e 20º andares
São Paulo, Estado de São Paulo
CEP 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, 2018 – 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

 

01/01/2018 to 03/31/2018

7

01/01/2017 to 03/31/2017

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

 

01/01/2018 to 03/31/2018

16

01/01/2017 to 03/31/2017

17

Statement of Value Added

18

Comments on the Company’s Consolidated Performance

19

Notes to the quarterly financial information

32

Comments on the Performance of Business Projections

82

Reports and Statements

 

Unqualified Independent Auditors’ Review Report

84

  Officers Statement on the Financial Statements

86 

  Officers Statement on Auditor's Report

87 


 
 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information - March 31, 2018 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

 

Company Information / Capital Breakdown

 

Number of Shares

(Units)

Current Quarter

03/31/2018

 

Paid-in Capital

 

 

Common

1,387,524,047

 

Preferred

0

 

Total

1,387,524,047

 

Treasury Shares

 

 

Common

30,391,000

 

Preferred

0

 

Total

30,391,000

 

 

 

                                                                                                                                                                                              Page 1

 


 
 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information - March 31, 2018 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

Parent Company Financial Statements / Balance Sheet - Assets

(R$ thousand)

Code

Description

Current Quarter

Previous Year

03/31/2018

12/31/2017

1

Total Assets

39,674,847

42,365,935

1.01

Current assets

7,701,212

7,642,103

1.01.01

Cash and cash equivalent

921,589

393,504

1.01.02

Financial investments

727,246

716,461

1.01.02.02

Financial investments at amortized cost

727,246

716,461

1.01.03

Trade receivables

2,221,671

2,966,706

1.01.04

Inventory

3,136,761

2,951,352

1.01.08

Other current assets

693,945

614,080

1.01.08.03

Others

693,945

614,080

1.02

Non-current assets

31,973,635

34,723,832

1.02.01

Long-term assets

2,349,103

2,267,226

1.02.01.09

Other non-current assets

2,349,103

2,267,226

1.02.02

Investments

20,124,494

22,894,885

1.02.03

Property, plant and equipment

9,443,432

9.502,411

1.02.04

Intangible assets

56,606

59,310

 

 

 

 

 

 

                                                                                                  Page 2

 


 
 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information - March 31, 2018 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

Parent Company Financial Statements / Balance Sheet – Liabilities

(R$ thousand)

Code

Description

Current Quarter

Previous Year

03/31/2018

12/31/2017

2

Total liabilities

 39,674,847

 42,365,935

2.01

Current liabilities

 9,641,838

 9,175,980

2.01.01

Payroll and related taxes

 121,866

 133,774

2.01.02

Trade payables

 2,266,775

 1,787,392

2.01.03

Tax payables

 111,427

 86,496

2.01.04

Borrowings and financing

 6,522,980

 6,578,171

2.01.05

Other payables

 567,211

 515,561

2.01.06

Provisions

 51,579

 74,586

2.01.06.01

Provision for tax, social security, labor and civil risks

 51,579

 74,586

2.02

Non-current liabilities

 23,065,239

 26,162,582

2.02.01

Long term Borrowings and financing

 18,730,178

 22,454,846

2.02.02

Other payables

 46,087

 57,599

2.02.03

Deferred Taxes

 1,030,209

 570,559

2.02.04

Provisions

 3,258,765

 3,079,578

2.02.04.01

Provision for tax, social security, labor and civil risks

 582,412

 555,459

2.02.04.02

Other provisions

 2,676,353

 2,524,119

2.02.04.02.03

Provision for environmental liabilities and decommissioning of assets

 242,529

 248,918

2.02.04.02.04

Pension and healthcare plan

 908,721

 908,721

2.02.04.02.05

Provision for losses on investments

 1,525,103

 1,366,480

2.03

Shareholders’ equity

 6,967,770

 7,027,373

2.03.01

Share Capital

 4,540,000

 4,540,000

2.03.02

Capital reserves

 30

 30

2.03.04.02

Earnings reserves

 238,976

 238,976

2.03.04.09

Treasury shares

(238,976)

(238,976)

2.03.05

Accumulated profit/(losses)

 180,174

(1,291,689)

2.03.08

Other comprehensive income

 2,247,566

 3,779,032

 

 

 

 

 

 

 

                                                                                                  Page 3

 


 
 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information - March 31, 2018 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

Parent Company Financial Statements / Statements of Income 

(R$ thousand)

 

 

 

 

 

Year to date

YTD previous year

Code

Description

01/01/2018 to 03/31/2018

01/01/2017 to 03/31/2017

3.01

Revenues from sale of goods and rendering of services

 3,028,977

2,486,216

3.02

Costs from sale of goods and rendering of services

(2,337,373)

(1,959,313)

3.03

Gross profit

 691,604

526,903

3.04

Operating expenses/income

 1,632,771

(152,046)

3.04.01

Selling expenses

(154,662)

(163,525)

3.04.02

General and administrative expenses

(73,543)

(60,579)

3.04.04

Other operating income

 1,938,914

3,582

3.04.05

Other operating expenses

(103,815)

(75,872)

3.04.06

Equity in results of affiliated companies

 25,877

144,348

3.05

Profit before financial income (expenses) and taxes

 2,324,375

374,857

3.06

Financial income (expenses)

(392,862)

(292,183)

3.06.01

Financial income

 30,326

81,728

3.06.02

Financial expenses

(423,188)

(373,911)

3.06.02.01

Net exchange differences over financial instruments

(1,996)

307,177

3.06.02.02

Financial expenses

(421,192)

(681,088)

3.07

Profit (loss) before taxes

 1,931,513

82,674

3.08

Income tax and social contribution

(459,650)

2,956

3.09

Profit (loss) from continued operations

 1,471,863

85,630

3.11

Profit (loss) for the year

 1,471,863

85,630

 

 

 

 

3.99.01.01

Common shares

1.08454

0.06310

3.99.02.01

Common shares

1.08454 

0.06310

 

                                                                                                                                                                                        Page 4

 


 
 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information - March 31, 2018 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

Parent Company Statements / Statement of Comprehensive Income (R$ thousand)

 

 

   

Year to date

YTD previous year

Code

Description

01/01/2018 to 03/31/2018

01/01/2017 to 03/31/2017

4.01

(Loss) profit for the year

 1,471,863

85,630

4.02

Other comprehensive income

(1,531,466)

167,792

4.02.01

Actuarial gains over pension plan of affiliates, net of taxes

 30

30

4.02.02

Cumulative translation adjustments for the year

 37,958

(39,643)

4.02.03

Fair value through other comprehensive income

(1,559,680)

53,299

4.02.5

(Loss) / gain on the percentage change in investments

 -  

2,814

4.02.8

Gain (loss) on cash flow hedge accounting

(18,646)

133,044

4.02.10

Realization of cash flow hedge accounting reclassified to income statement

 13,732

16,402

4.02.11

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

(4,860)

1,846

4.03

Comprehensive income for the year

(59,603)

253,422

 

 

                                                                                                                                                       Page 5

 


 
 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information - March 31, 2018 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

Parent Company Financial Statements / Statements of Cash Flows – Indirect Method (R$ thousand)

   

Year to date

YTD previous year

Code

Description

01/01/2018 to 03/31/2018

01/01/2017 to 03/31/2017

6.01

Net cash from operating activities

 4,361,055

(167.443)

6.01.01

Cash from operations

 519,750

427.478

6.01.01.01

Profit (loss) for the period

 1,471,863

85.630

6.01.01.02

Financial charges in borrowing and financing raised

 383,382

608,474

6.01.01.03

Financial charges in borrowing and financing granted

(9,680)

(13,720)

6.01.01.04

Depreciation, depletion and amortization

 142,547

170,254

6.01.01.05

Equity in results of affiliated companies

(25,877)

(144,348)

6.01.01.06

Deferred tax

 459,650

(2,956)

6.01.01.07

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

 3,946

15,714

6.01.01.08

Exchange differences, net

 30,811

(301,616)

6.01.01.09

Write-off and net reversal losses

 16

2,742

6.01.01.10

Provision for environmental liabilities and decommissioning of assets

(6,389)

868

6.01.01.11

Shares classified as fair value through profit or loss

(1,936,389)

0

6.01.01.13

Others

 5,870

6,436

6.01.02

Changes in assets and liabilities

 3,841,305

(594,921)

6.01.02.01

Trade receivables - third parties

 3,037

(150,012)

6.01.02.02

Trade receivables - related parties

(70,816)

(59,418)

6.01.02.03

Inventories

(185,409)

(266,794)

6.01.02.04

Receivables - related parties

 4,141,385

474,367

6.01.02.05

Tax assets

(53,572)

(44,811)

6.01.02.06

Judicial deposits

(12,502)

(10,466)

6.01.02.09

Trade payables

 479,383

184,644

6.01.02.10

Payroll and related taxes

(11,908)

(1,133)

6.01.02.11

Taxes in installments – REFIS

 24,933

(5,028)

6.01.02.13

Payables to related parties

(7,765)

(15,285)

6.01.02.15

Interest paid

(462,122)

(738,016)

6.01.02.16

Interest received - Related Parties

 1,522

187

6.01.02.19

Others

(4,861)

36,844

6.02

Net cash used in investing activities

(86,620)

(93,231)

6.02.01

Advance for future capital increase

(10,033)

(7,410)

6.02.02

Purchase of property, plant and equipment

(77,246)

(105,372)

6.02.04

Capital increase - subsidiary

 -  

0

6.02.05

Intercompany loans granted

(36,362)

(14,524)

6.02.06

Intercompany loans received 

 8,429

7,297

6.02.07

Exclusive funds

 -  

(95)

6.02.08

Financial Investments, net of redemption

(10,785)

26,873

6.02.09

Cash received from the sale of Usiminas shares

 39,377

0

6.03

Net cash used in financing activities

(3,746,350)

(244,599)

6.03.01

Borrowings and financing raised, net of transaction cost

 -  

0

6.03.02

Borrowings and financing, related parties

 -  

0

6.03.03

Transaction Costs

(24,025)

0

6.03.04

Amortization of borrowings and financing

(440,899)

(215,207)

6.03.05

Amortization of borrowings and financing - related parties

(3,281,426)

(29,392)

6.04

Exchange rate on translating cash and cash equivalents

 -  

(183)

6.05

Increase (decrease) in cash and cash equivalents

 528,085

(505,456)

6.05.01

Cash and equivalents at the beginning of the year

 393,504

1,466,746

6.05.02

Cash and equivalents at the end of the year

 921,589

961,290

Page 6

 


 
 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information - March 31, 2018 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

Parent Company Financial Statements / Statement of Changes in Equity - 01/01/2018 to 03/31/2018

(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

30

-

(1,291,689)

3,779,032

7,027,373

 

5.03

Adjusted opening balances

4,540,000

30

-

(1,291,689)

3,779,032

7,027,373

 

5.05

Total comprehensive income

-

-

-

1,471,863

(1,531,466)

(59,603)

 

5.05.01

Profit (loss) for the period

-

-

-

1,471,863

-

1,471,863

 

5.05.02

Other comprehensive income

-

-

-

-

(1,531,466)

(1,531,466)

 

5.05.02.04

Translation adjustments for the year

-

-

-

-

37,958

37,958

 

5.05.02.06

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

-

-

-

-

30

30

 

5.05.02.07

Available-for-sale assets, net of taxes

-

-

-

-

(1,559,680)

(1,559,680)

 

5.05.02.08

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

-

-

-

-

(4,914)

(4,914)

 

5.05.02.09

(Loss) / gain on foreign investments

-

-

-

-

(4,860)

(4,860)

 

5.07

Closing balance

4,540,000

30

-

180,174

2,247,566

6,967,770

 

 

 

 

 

                                                                                            Page 7

 


 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information - March 31, 2018 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

Parent Company Financial Statements / Statement of Changes in Equity - 01/01/2017 to 03/31/2017

(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

30

-

(1,301,961)

2,956,459

6,194,528

5.03

Adjusted opening balances

4,540,000

30

-

(1,301,961)

2,956,459

6,194,528

5.05

Total comprehensive income

-

-

-

85,630

167,792

253,422

5.05.01

Profit (loss) for the period

-

-

-

85,630

-

85,630

5.05.02

Other comprehensive income

-

-

-

-

167,792

167,792

5.05.02.04

Translation adjustments for the year

-

-

-

-

(39,643)

(39,643)

5.05.02.06

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

-

-

-

-

30

30

5.05.02.07

Available-for-sale assets, net of taxes

-

-

-

-

53,299

53,299

5.05.02.08

(Loss) / gain on the percentage change in investments

-

-

-

-

2,814

2,814

5.05.02.09

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

-

-

-

-

149,446

149,446

5.05.02.10

(Loss) / gain on foreign investments

-

-

-

-

1,846

1,846

5.07

Closing balance

4,540,000

30

-

(1,216,331)

3,124,251

6,447,950

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Page 8

                                                                                                                                                                                          


 
 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information - March 31, 2018 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

Parent Company Financial Statements / Statement of Value Added

(R$ thousand)

   

Year to date

Previous year

Code

Description

01/01/2018 to 03/31/2018

01/01/2017 to 03/31/2017

7.01

Revenues

 5,679,845

3,046,543

7.01.01

Sales of products and rendering of services

 3,750,436

3,038,748

7.01.02

Other revenues

 1,936,419

2,110

7.01.04

Allowance for (reversal of) doubtful accounts

(7,010)

5,685

7.02

Raw materials acquired from third parties

(2,716,816)

(2,235,392)

7.02.01

Cost of sales and services

(2,433,300)

(1,980,282)

7.02.02

Materials, electric power, outsourcing and other

(285,278)

(258,922)

7.02.03

Impairment/recovery of assets

 1,762

3,812

7.03

Gross value added

 2,963,029

811,151

7.04

Retentions

(142,547)

(170,254)

7.04.01

Depreciation, amortization and depletion

(142,547)

(170,254)

7.05

Wealth created

 2,820,482

640,897

7.06

Value added received

 84,720

208,755

7.06.01

Equity in income of affiliates

 25,877

144,348

7.06.02

Financial income

 30,326

81,728

7.06.03

Others

 28,517

(17,321)

7.06.03.01

Others and exchange gains

 28,517

(17,321)

7.07

Wealth for distribution

 2,905,202

849,652

7.08

Wealth distributed

 2,905,202

849,652

7.08.01

Personnel

 298,847

292,020

7.08.01.01

Salaries and wages

 220,044

221,052

7.08.01.02

Benefits

 62,275

56,293

7.08.01.03

Severance payment (FGTS)

 16,528

14,675

7.08.02

Taxes, fees and contributions

 680,901

117,347

7.08.02.01

Federal

 604,936

91,158

7.08.02.02

State

 75,962

26,191

7.08.02.03

Municipal

 3

(2)

7.08.03

Remuneration on third-party capital

 453,591

354,655

7.08.03.01

Interest

 421,192

681,020

7.08.03.02

Leases

 2,212

2,499

7.08.03.03

Others

 30,187

(328,864)

7.08.03.03.01

Others and exchange losses

 30,187

(328,864)

7.08.04

Remuneration on Shareholders' capital

 1,471,863

85,630

7.08.04.03

Retained earnings (accumulated losses)

 1,471,863

85,630

7.08.05

Others

 0  

0

7.08.05.01

Gain (loss) on discontinued operations

0

0

 

 

Page 9

                                                                                                                                                                                          


 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information - March 31, 2018 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

Consolidated Financial Statements / Balance Sheet - Assets

(R$ thousand)

       

Code

Description

Current Quarter

Previous Year

 

03/31/2018

12/31/2017

 

1

Total Assets

 44,841,710

 45,209,970

 

1.01

Current assets

 11,110,356

 11,881,496

 

1.01.01

Cash and cash equivalent

 2,234,154

 3,411,572

 

1.01.02

Financial investments

 729,027

 735,712

 

1.01.02.02

Financial investments measured at amortized cost

 729,027

 735,712

 

1.01.03

Trade receivables

 2,230,749

 2,276,215

 

1.01.04

Inventory

 4,902,125

 4,464,419

 

1.01.08

Other current assets

 1,014,301

 993,578

 

1.01.08.03

Others

 1,014,301

 993,578

 

1.02

Non-current assets

 33,731,354

 33,328,474

 

1.02.01

Long-term assets

 2,672,981

 2,591,594

 

1.02.01.06

Deferred tax assets

 79,513

 63,119

 

1.02.01.09

Other non-current assets

 2,593,468

 2,528,475

 

1.02.02

Investments

 5,865,593

 5,499,995

 

1.02.03

Property, plant and equipment

 17,923,452

 17,964,839

 

1.02.04

Intangible assets

 7,269,328

 7,272,046

 

             

 

 

Page 10

                                                                                                                                                                                          


 
 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information - March 31, 2018 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

Consolidated Financial Statements / Balance Sheet – Liabilities

(R$ thousand)

Code

Description

Current Quarter

Previous Year

03/31/2018

12/31/2017

2

Total liabilities

 44,841,710

 45,209,970

2.01

Current liabilities

 9,492,525

 10,670,050

2.01.01

Payroll and related taxes

 233,216

 252,418

2.01.02

Trade payables

 3,077,448

 2,460,774

2.01.03

Tax payables

 269,302

 264,097

2.01.04

Borrowings and financing

 5,178,612

 6,526,902

2.01.05

Other payables

 646,345

 1,059,901

2.01.06

Provisions

 87,602

 105,958

2.01.06.01

Provision for tax, social security, labor and civil risks

 87,602

 105,958

2.02

Non-current liabilities

 27,125,565

 26,251,691

2.02.01

Long term Borrowings and financing

 23,335,287

 22,983,942

2.02.02

Other payables

 133,817

 129,323

2.02.03

Deferred tax liabilities

 1,674,988

 1,173,559

2.02.04

Provisions

 1,981,473

 1,964,867

2.02.04.01

Provision for tax, social security, labor and civil risks

 739,009

 719,133

2.02.04.02

Other provisions

 1,242,464

 1,245,734

2.02.04.02.03

Provision for environmental liabilities and decommissioning of assets

 333,743

 337,013

2.02.04.02.04

Pension and healthcare plan

 908,721

 908,721

2.03

Consolidated Shareholders’ equity

 8,223,620

 8,288,229

2.03.01

Share Capital

 4,540,000

 4,540,000

2.03.02

Capital reserves

 30

 30

2.03.04.02

Earnings reserves

 238,976

 238,976

2.03.04.09

Treasury shares

(238,976)

(238,976)

2.03.05

Accumulated profit/(losses)

 180,174

(1,291,689)

2.03.08

Other comprehensive income

 2,247,566

 3,779,032

2.03.09

Profit attributable to the non-controlling interests

 1,255,850

 1,260,856

         

 

 

Page 11

                                                                                                                                                                                          


 
 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information - March 31, 2018 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

Consolidated Financial Statements / Statements of Income 

(R$ thousand)

   

Year to date

YTD previous year

Code

Description

01/01/2018 to 03/31/2018

01/01/2017 to 03/31/2017

3.01

Revenues from sale of goods and rendering of services

 5,065,950

4,411,596

3.02

Costs from sale of goods and rendering of services

(3,684,743)

(3,093,474)

3.03

Gross profit

 1,381,207

1,318,122

3.04

Operating expenses/income

 1,257,703

(566,335)

3.04.01

Selling expenses

(456,503)

(369,792)

3.04.02

General and administrative expenses

(107,573)

(118,459)

3.04.04

Other operating income

 1,945,587

6,499

3.04.05

Other operating expenses

(148,659)

(105,688)

3.04.06

Equity in results of affiliated companies

 24,851

21,105

3.05

Profit before financial income (expenses) and taxes

 2,638,910

751,787

3.06

Financial income (expenses)

(593,704)

(497,224)

3.06.01

Financial income

 42,896

116,519

3.06.02

Financial expenses

(636,600)

(613,743)

3.06.02.01

Net exchange differences over financial instruments

(113,344)

172,744

3.06.02.02

Financial expenses

(523,256)

(786,487)

3.07

Profit (loss) before taxes

 2,045,206

254,563

3.08

Income tax and social contribution

(558,711)

(136,948)

3.09

Profit (loss) from continued operations

 1,486,495

117,615

3.11

Consolidated Profit (loss) for the year

 1,486,495

117,615

3.11.01

Profit attributable to the controlling interests

 1,471,863

85,630

3.11.02

Profit attributable to the non-controlling interests

 14,632

31,985

3.99.01.01

Common shares

1.08454

0.06310

3.99.02.01

Common shares

1,08454

0.06310

 

Page 12

                                                                                                                                                                                          


 
 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information - March 31, 2018 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

Consolidated Financial Statements / Statement of Comprehensive Income

(R$ thousand)

   

Year to date

YTD previous year

Code

Description

01/01/2018 to 03/31/2018

01/01/2017 to 03/31/2017

4.01

Consolidated profit (loss) for the year

 1,486,495

117,615

4.02

Other comprehensive income

(1,531,466)

167,792

4.02.01

Actuarial gains over pension plan of affiliates, net of taxes

 30

30

4.02.04

Cumulative translation adjustments for the year

 37,958

(39,643)

4.02.05

Fair value through other comprehensive income

(1,559,680)

53,299

4.02.07

(Loss) / gain on the percentage change in investments

 -  

2,814

4.02.09

Gain (loss) on cash flow hedge accounting

(18,646)

133,044

4.02.11

Realization of cash flow hedge accounting reclassified to income statement

 13,732

16,402

4.02.12

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

(4,860)

1,846

4.03

Consolidated comprehensive income for the year

(44,971)

285,407

4.03.01

Attributed to controlling Shareholders

(59,603)

253,422

4.03.02

Attributed to non-controlling Shareholders

 14,632

31,985

 

 

 

 

Page 13

                                                                                                                                                                                          


 
 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information - March 31, 2018 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

 

Consolidated Financial Statements / Statements of Cash Flows – Indirect Method

(R$ thousand)

       
   

Year to date

YTD previous year

Code

Description

01/01/2018 to 03/31/2018

01/01/2017 to 03/31/2017

6.01

Net cash from operating activities

 459,217

(104,517)

6.01.01

Cash from operations

 822,335

 929,170

6.01.01.01

Profit (loss) attributable to the controlling interests

 1,471,863

 85,630

6.01.01.02

Profit (loss) attributable to the non-controlling interests

 14,632

 31,985

6.01.01.03

Financial charges in borrowing and financing raised

 462,685

 686,998

6.01.01.04

Financial charges in borrowing and financing granted

-11,175

(16,276)

6.01.01.05

Depreciation, depletion and amortization

 315,872

 401,276

6.01.01.06

Equity in in results of affiliated companies

-24,851

(21,105)

6.01.01.07

Deferred tax

 438,797

 22,793

6.01.01.08

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

 1,046

 17,478

6.01.01.09

Exchange differences, net

 51,488

(272,176)

6.01.01.10

Gain (loss) from derivative financial instruments

 -  

(13,224)

6.01.01.11

Shares classified as fair value through profit or loss

(1,936,389)

 -  

6.01.01.12

Write-off and net reversal losses

 1,780

 2,572

6.01.01.14

Provision for environmental liabilities and decommissioning of assets

(3,270)

 2,518

6.01.01.15

Others

 39,857

 701

6.01.02

Changes in assets and liabilities

(363,118)

(1,033,687)

6.01.02.01

Trade receivables - third parties

 112,946

 87,436

6.01.02.02

Trade receivables - related parties

(24,304)

(21,349)

6.01.02.03

Inventories

(420,862)

(312,169)

6.01.02.04

Receivables - related parties

(10,408)

 1,727

6.01.02.05

Tax assets

(1,156)

(2,852)

6.01.02.06

Judicial deposits

(12,443)

(15,347)

6.01.02.08

Trade payables

 606,335

 192,477

6.01.02.09

Payroll and related taxes

(19,827)

(1,670)

6.01.02.10

Taxes in installments – REFIS

 1,673

(56,195)

6.01.02.11

Payables to related parties

 4,605

(8,654)

6.01.02.13

Interest paid

(617,864)

(929,979)

6.01.02.14

Dividends received

 -  

 187

6.01.02.16

Others

 18,187

32,701

6.02

Net cash used in investing activities

(213,570)

(153,386)

6.02.02

Purchase of property, plant and equipment

(223,270)

(188,306)

6.02.04

Receivable/(payable) from derivative financial instruments

 -  

 15,200

6.02.06

Acquisition of intangible assets

 -  

(267)

6.02.07

Intercompany loans granted

(36,362)

(15,188)

6.02.08

Intercompany loans received 

 -  

 9,472

6.02.09

Financial Investments, net of redemption

 6,685

 25,703

6.02.10

Cash received from the sale of Usiminas shares

 39,377

 -  

6.03

Net cash used in financing activities

(1,423,065)

(306,516)

6.03.01

Borrowings and financing raised, net of transaction cost

 1,320,776

 -  

6.03.02

Transaction cost

(51,156)

 -  

6.03.03

Amortization of borrowings and financing

 (2,190,683)

(306,516)

6.03.04

Dividends paid

(502,002)

 -  

6.04

Exchange rate on translating cash and cash equivalents

-

9,053

6.05

Increase (decrease) in cash and cash equivalents

(1,177,418)

 555,366

6.05.01

Cash and equivalents at the beginning of the year

 3,411,572

 4,871,162

6.05.02

Cash and equivalents at the end of the year

 2,234,154

 4,315,796

             

Page 14

 


 
 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information - March 31, 2018 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

 

Consolidated Financial Statements / Statements of Changes in Equity - 01/01/2018 to 03/31/2018

(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

Consolidated shareholders' equity

5.01

Opening balances

 4,540,000

 30

 -  

(1,291,689)

 3,779,032

 7,027,373

 1,260,856

 8,288,229

5.03

Adjusted opening balances

 4,540,000

 30

 -  

(1,291,689)

 3,779,032

 7,027,373

 1,260,856

 8,288,229

5.05

Total comprehensive income

 -  

 -  

 -  

 1,471,863

(1,531,466)

(59,603)

 14,632

(44,971)

5.05.01

Profit (loss) for the year

 -  

 -  

 -  

 1,471,863

 -  

 1,471,863

 14,632

 1,486,495

5.05.02

Other comprehensive income

 -  

 -  

 -  

 -  

(1,531,466)

(1,531,466)

 -  

(1,531,466)

5.05.02.04

Translation adjustments for the year

 -  

 -  

 -  

 -  

 37,958

 37,958

 -  

 37,958

5.05.02.06

Actuarial gains on pension plan, net of taxes

 -  

 -  

 -  

 -  

 30

 30

 -  

 30

5.05.02.07

Available-for-sale assets, net of taxes

 -  

 -  

 -  

 -  

(1,559,680)

(1,559,680)

 -  

(1,559,680)

5.05.02.08

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

 -  

 -  

 -  

 -  

(4,914)

(4,914)

 -  

(4,914)

5.05.02.09

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

 -  

 -  

 -  

 -  

(4,860)

(4,860)

 -  

(4,860)

5.06

Internal changes in shareholders’ equity

 -  

 -  

 -  

 -  

 -  

 -  

(19,638)

(19,638)

5.06.04

Non-controlling interests in affiliates

 -  

 -  

 -  

 -  

 -  

 -  

(19,638)

(19,638)

5.07

Closing balance

 4,540,000

 30

 -  

 180,174

 2,247,566

 6,967,770

 1,255,850

 8,223,620

 

 

 

 

Page 16

                                                                                                                                                                                          


 
 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information - March 31, 2018 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

 

Consolidated Financial Statements / Statements of Changes in Equity - 01/01/2017 to 03/31/2017

(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

Consolidated shareholders' equity

5.01

Opening balances

4,540,000

30

-

(1,301,961)

2,956,459

6,194,528

1,189,993

7,384,521

5.03

Adjusted opening balances

4,540,000

30

-

(1,301,961)

2,956,459

6,194,528

1,189,993

7,384,521

5.05

Total comprehensive income

-

-

-

85,630

167,792

253,422

31,985

285,407

5.05.01

Profit (loss) for the year

-

-

-

85,630

0

85,630

31,985

117,615

5.05.02

Other comprehensive income

-

-

-

0

167,792

167,792

0

167,792

5.05.02.04

Translation adjustments for the year

-

-

-

0

(39,643)

(39,643)

0

(39,643)

5.05.02.06

Actuarial gains on pension plan, net of taxes

-

-

-

0

30

30

0

30

5.05.02.07

Available-for-sale assets, net of taxes

-

-

-

0

53,299

53,299

0

53,299

5.05.02.08

(Loss) / gain on the percentage change in investments

-

-

-

0

2,814

2,814

0

2,814

5.05.02.09

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

-

-

-

0

149,446

149,446

0

149,446

5.05.02.10

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

-

-

-

0

1,846

1,846

0

1,846

5.06

Internal changes in shareholders’ equity

-

-

-

0

0

0

9

9

5.06.04

Non-controlling interests in affiliates

-

-

-

0

0

0

9

9

5.07

Closing balance

4,540,000

30

-

(1,216,331)

3,124,251

6,447,950

1,221,987

7,669,937

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Page 17

 


 

CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information - March 31, 2018 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

 

Consolidated Financial Statements / Statements of Value Added

(R$ thousand)

   

Year to date

Previous year

Code

Description

01/01/2018 to 03/31/2018

01/01/2017 to

03/31/2017

7.01

Revenues

 7,781,869

5,052,156

7.01.01

Sales of products and rendering of services

 5,850,130

5,043,196

7.01.02

Other revenues

 1,940,033

3,013

7.01.04

Allowance for (reversal of) doubtful debts

(8,294)

5,947

7.02

Raw materials acquired from third parties

(3,950,032)

(3,149,745)

7.02.01

Cost of sales and services

(3,238,366)

(2,547,733)

7.02.02

Materials, electric power, outsourcing and other

(705,475)

(605,184)

7.02.03

Impairment/recovery of assets

(6,191)

3,172

7.03

Gross value added

 3,831,837

1,902,411

7.04

Retentions

(315,872)

(401,276)

7.04.01

Depreciation, amortization and depletion

(315,872)

(401,276)

7.05

Wealth created

 3,515,965

1,501,135

7.06

Value added received

 11,346

35,072

7.06.01

Equity in income of affiliates

 24,851

21,105

7.06.02

Financial income

 42,896

116,519

7.06.03

Others

(56,401)

(102,552)

7.06.03.01

Others and exchange gains

(56,401)

(102,552)

7.07

Wealth for distribution

 3,527,311

1,536,207

7.08

Wealth distributed

 3,527,311

1,536,207

7.08.01

Personnel

 557,720

529,763

7.08.01.01

Salaries and wages

 436,222

416,986

7.08.01.02

Benefits

 100,501

90,981

7.08.01.03

Severance payment (FGTS)

 20,997

21,796

7.08.02

Taxes, fees and contributions

 896,795

375,785

7.08.02.01

Federal

 796,634

302,090

7.08.02.02

State

 94,051

68,423

7.08.02.03

Municipal

 6,110

5,272

7.08.03

Remuneration on third-party capital

 586,301

513,044

7.08.03.01

Interest

 523,256

786,419

7.08.03.02

Leases

 6,425

6,542

7.08.03.03

Others

 56,620

(279,917)

7.08.03.03.01

Others and exchange losses

 56,620

(279,917)

7.08.04

Remuneration on Shareholders' capital

 1,486,495

117,615

7.08.04.03

Retained earnings (accumulated losses)

 1,471,863

85,630

7.08.04.04

Non-controlling interests in retained earnings

 14,632

31,985

 

Page 18

 


 
 


CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information – March 31, 2018 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

Comments on the Company’s Consolidated Performance

 

1Q18 Earnings Release

 

Companhia Siderúrgica Nacional (CSN) (BM&FBOVESPA: CSNA3) (NYSE: SID) announces today its results for the first quarter of 2018 (1Q18) in Brazilian reais, and its consolidated financial statements, which are presented in accordance with International Financial Reporting Standards (IFRS), issued by the International Accounting Standards Board (IASB) and with the accounting practices adopted in Brazil, 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 September 1, 2010. The comments presented herein refer to the Company's first quarter of 2018 (1Q18) and comparisons refer to the fourth quarter of 2017 (4Q17) and first quarter of 2017 (1Q17). The Brazilian real/US dollar exchange rate was R$3.3238 as at March 31, 2018 and R$3.3080 as at December 31, 2017.

 

1Q18 financial and operating highlights

 

·         Generation of adjusted EBITDA of R$1,242MM, an increase of 3% compared to the previous quarter, with EBITDA margin of 23%, due to better performance in the mining segment.

·         Steel sales volume in the domestic market in 1Q18 reached 782 thousand tons, an increase of 27% compared to the same period in 2017.

·         Increase in the production of flat rolled products from 12% to 2% compared to 1Q17 and 4Q17, respectively.

·         Mining adjusted EBITDA reached R$442MM, an increase of 26% compared to 4Q17, with highlight for the higher average price and adjusted EBITDA margin, an increase of 8.5 p.p. compared to the previous quarter.

·         Free cash flow, before the financing activities, significantly increased in 1Q18, totaling R$544MM, compared to R$73MM in 4Q17. 

·         Net profit of R$1.486MM in 1Q18, due to the gain accrued from the adjustment of the fair value of the Usiminas’ shares, which began to be recorded in profit or loss, under IFRS9.

 

Highlights

1Q17

4Q17

1Q18

 

Variation

 

1Q18

x

1Q17

1Q18

x

4Q17

Steel sales (thousand tons)

1,194

1,253

1,277

 

7%

2%

- Domestic market

617

770

782

 

27%

2%

- Subsidiaries abroad

485

401

436

 

(10%)

9%

- Export trade

92

82

60

 

(35%)

(27%)

                     

Iron ore sales (thousand tons)

7,244

9,561

7,474

 

3%

(22%)

- Domestic market

1,347

1,236

1,309

 

(3%)

6%

- Foreign market

5,897

8,325

6,165

 

5%

(26%)

                     

Consolidated profit or loss (R$ million)

                   

Net revenue

4,412

4,993

5,066

 

15%

1%

Gross profit

1,318

1,413

1,381

 

5%

(2%)

Adjusted EBITDA¹

1,333

1,203

1,242

 

(7%)

3%

                     

Adjusted net debt²

25,477

26,268

26,508

 

4%

1%

Adjusted cash/cash equivalents²

5,146

4,328

3,070

 

(40%)

(29%)

Adjusted net debt/adjusted EBITDA

5.45x

5.66x

5.82x

 

0.37 x

0.16 x

 

 

 

 

 

 

 

¹ Adjusted EBITDA is calculated based on net profit/loss, plus depreciation and amortization, income tax, net finance income (costs), share of profit (loss) of investees and other operating income (expenses), and includes the proportionate share of EBITDA of the jointly-owned subsidiaries MRS Logística and CBSI. Adjusted EBITDA includes 100% in Congonhas Minérios, 37.27% in MRS and 50% in CBSI beginning December/15.

² Adjusted net debt and adjusted cash account for, beginning December 15, 100% stake in Congonhas Minérios, 37.27% in MRS and 50% in CBSI.

 

 

Page 19

 


 
 


CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information – March 31, 2018 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

CSN´s Consolidated Result

 

· Net revenue in 1Q18 totaled R$5,066 million, 15% and 1% higher than those recorded in 1Q17 and 4Q17, respectively. The improvement in performance compared to 4Q17 was due to the increase in steel product prices, while in the mining segment net revenue remained stable.

 

· In 1Q18, cost of sales totaled R$3,685 million, an increase of 2.9% compared to 4Q17, due to coal HCC FOB Aus US$/ton (+17.0%) price increases and iron ore Platts Iron Ore Fines 62% CFR North China (+13.3%). 

 

· In the first quarter of 2018, gross profit totaled R$1,381 million, a decrease of 2% compared to 4Q17, and decrease in gross margin by 1.0 p.p. against the same comparison basis, reaching 27.3%, due to the increase in steel costs, partially compensated by the recovery of the mining margin.

 

· In 1Q18, general and administrative expenses totaled R$102 million, a decrease of 9% compared to the same period in 2017, from 2.5% (1Q17) to 2.0% (1Q18) of net revenue, reflecting the dilution of expenses against an increase in revenues. Selling expenses totaled R$455 million, or 9.0% of net revenue, a growth of 0.7 p.p. compared to 1Q17 (8.3% of net revenue) due to an increase in sales for the period.

 

· In 1Q18, other net income (costs), totaled R$1,797 million arising mainly from the gain on the appreciation of Usiminas’ shares, which were recognized at fair value through results, under IFRS9/CPC48, effective in January 2018.

 

· In 1Q18, net finance costs, totaled R$594 million. Finance costs (ex-variation) continue to decrease, by virtue of the decrease in Selic rate, generating a reduction of R$264MM compared to 1Q17. The losses on inflation adjustments and exchange rate changes, in the amount of R$138 million, were partially compensated by the hedge accounting positions.

 

Finance income (costs) (R$ million)

1Q17

4Q17

1Q18

Finance income (costs) - IFRS

(497)

(860)

(594)

Finance income

103

48

43

Finance costs

(601)

(908)

(637)

Finance costs (ex-variation)

(787)

(683)

(523)

Exchange rate changes

186

(225)

(113)

Inflation adjustments and exchange rate changes

308

(427)

(138)

Hedge accounting

(135)

202

24

Derivative gains

13

-

  1

The finance income (costs) includes 100% stake in CSN Mining, 37.27% in MRS and 50% in CBSI, beginning December/15.

 

 

 

 

 

· Share of profit of investees totaled R$25 million in 1Q18, compared to R$11 million in 4Q17, mainly due to the better results in MRS and Arverdi.

 

Share of profit of investees
(R$ million)

1Q17

4Q17

1Q18

Variation

1Q18

x

4Q17

1Q18

x

1Q17

MRS Logística

  39

  25

33

  32%

(15%)

CBSI

0

  0

1

 -

 -

TLSA

(4)

(2)

(3)

  50%

(25%)

Arvedi Metalfer BR

(1)

(5)

0

 -

 -

Eliminations

(13)

(8)

(6)

  (25%)

(54%)

Share of profit of investees

  21

  11

25

  127%

25%

 

Page 20

 


 
 


CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information – March 31, 2018 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

 

 

·          In 1Q18, the Company recorded net profit of R$1,486 million, compared to net profit of R$378 million in 4Q17, arising from the adjustment to fair value of Usiminas’ shares, which were recorded in results, under IFRS9.

 

 

 

Adjusted EBITDA (R$ million)

1Q17

4Q17

1Q18

Variation

1Q18

x

1Q17

1Q18

x

4Q17

Net profit (loss) for the period

118

378

1,486

1,159%

293%

(-) Depreciation

390

319

305

(22%)

(4%)

(+) Income tax and social contribution

137

(1)

559

308%

-

(+) Finance income (costs), net

497

860

594

20%

(31%)

EBITDA (ICVM 527)

1,142

1,556

2,944

158%

89%

(+) Other operating income (expenses)

99

(473)

(1,797)

-

280%

(+) Share of loss of investees

(21)

(11)

(25)

25%

127%

(-) Proportional EBITDA in jointly-owned subsidiaries

113

132

119

6%

(10%)

Adjusted EBITDA

1,333

1,204

1,242

(7%)

3%

¹The Company’s adjusted EBITDA excludes equity interest and other operating income (expenses) as these items should not be considered when calculating the cash flow generated from operating activities.

 

·         Adjusted EBITDA totaled R$1.242 million, compared to R$1.204 million in 4Q17, an increase of 3% due to the increase in the mining segment. Adjusted EBITDA margin reached 23.5%, an increase of 0.5 p.p. compared to the previous quarter.

   

 

Adjusted EBITDA margin is calculated based on Adjusted EBITDA divided by Adjusted net revenue, which includes 100% stake in CSN Mineração, 37.27% in MRS and 50% in CBSI, beginning December/15.

 

 

 

 

Debt

As of March 31, 2018, adjusted net debt totaled R$26,508 million, while net debt/EBITDA ratio, calculated based on the adjusted EBITDA for the last twelve months, reached 5.82x. The increase resulted from the exchange gains for the period that impacted the US dollar-denominated debt and dividends to minority shareholders for the 2015-2016 period of the former subsidiary Nacional Minérios S.A. (merged into CSN Mineração S.A.), paid in 1Q18.

 

 Debt (R$ million) and net debt/adjusted EBITDA(x)

 

 

 

 

 

Page 21

 


 
 


CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information – March 31, 2018 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

 

Foreign exchange exposure

 

The net foreign exchange exposure of the consolidated balance sheet was US$2,539 million as of March 31, 2018, as shown in the table below. It should be noted that within the net foreign exchange exposure, a liability of US$1.0 billion is included in line item “Borrowings and financing” related to the perpetual bond, which, due to its nature, will not require disbursement for settlement of the principal amount in the foreseeable future.

 

The hedge accounting adopted by CSN correlates the projected export inflow in US dollars with part of the scheduled debt payments in the same currency. As a result, the exchange rate changes in the US dollar-denominated debt is temporarily recorded in equity and subsequently recorded in profit or loss when revenues in US dollars from exports occur.

 

Foreign exchange exposure

12/31/2017

03/31/2018

(US$ thousand)

IFRS

Cash

777

244

Accounts receivable

311

322

Other

3

4

Total assets

1,091

571

Borrowings and financing

(4,333)

(4,236)

Trade payables

(98)

(175)

Other payables

(4)

(5)

Total liabilities

(4,434)

(4,417)

 

-

-

Natural foreign exchange exposure (assets - liabilities)

(3,343)

(3,846)

Derivatives, net

-

-

Cash flow hedge accounting

1,318

1,307

Foreign exchange exposure, net

(2,025)

(2,539)

Perpetual bond

1,000

1,000

Foreign exchange exposure, net (ex-bond)

(1,025)

(1,539)

 

Investments

 

Investments totaled R$223 million in 1Q18, a decrease of 35% compared to 4Q17, arising mainly due to the project seasonality. The increase in mining expenses refers to the waste filtering projects and production by magnetic concentrators.

 

Investments (R$ million)

1Q17

2Q17

3Q17

4Q17

2017

1Q18

Steel

92

102

119

168

481

65

Mining

60

106

115

97

378

116

Cement

24

20

34

40

118

23

Logistics

13

11

19

33

76

18

Other

0

0

6

6

12

2

Total investments - IFRS

           190

           239

           293

           344

        1,065

223

 

 

Page 22

 


 
 


CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information – March 31, 2018 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

Working capital

 

To calculate working capital, CSN adjusts its assets and liabilities as demonstrated below:

                                                                                                                                                                                               

·         Accounts receivable: excludes dividends receivable, advances to employees and other receivables;

·         Inventories: includes estimated losses and excludes the spare parts, which are not part of the cash conversion cycle, and will be subsequently recorded in property, plant and equipment when consumed;

·         Advanced taxes: solely composed of income tax and social contribution included in line item “Recoverable taxes”;

·         Taxes payable: composed of line item "Taxes payable”, in current liabilities, plus taxes in installments;

·         Advances from customers: recognized in line item “Other payables”, in current liabilities;

 

Accordingly, working capital invested in the Company’s business totaled R$2,383 million in 1Q18, reducing the financial cycle in 14 and 28 days, compared to 4Q17 and 1Q17, respectively, reflecting the effective working capital management, mainly in relation to the extension of maturity dates for payment of raw materials. 

 

Working capital (R$ million)

1Q17

4Q17

1Q18

 

Variation

 

1Q18

x

4Q17

1Q18

x

1Q17

Assets

5,526

5,986

6,252

 

                     266

                     726

Trade receivables

1,849

2,197

2,146

 

                      (51)

                     297

Inventories

3,562

3,783

4,064

 

                     281

                     502

Prepaid taxes

115

6

42

 

                       36

                      (72)

Liabilities

2,495

3,067

3,869

 

                     801

                  1,374

Trade payables

1,934

2,461

3,253

 

                     792

                  1,319

Payroll and related taxes

252

252

233

 

                      (19)

                      (18)

Taxes payable

190

286

288

 

                          2

                       98

Advances from customers

119

69

95

 

                       26

                      (24)

Working capital

3,031

2,919

2,383

 

                   (535)

                   (647)

 

 

 

 

 

 

 

 

 

 

 

Average term (days)

1Q17

4Q17

1Q18

 

Variation

 

1Q18

x

4Q17

1Q18

x

1Q17

Receipt

33

34

33

 

                        (1)

                           -

Payment

56

62

79

 

                       17

                       23

Inventories

104

95

99

 

                          4

                        (5)

Financial cycle

81

67

53

 

(14)

(28)

                                               

 

Business segment reporting

 

The Company maintains integrated operations in five business segments: steel, mining, logistics, cement and energy. The main assets and/or companies comprising each segment are presented below:

 

 

Page 23

 


 
 


CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information – March 31, 2018 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

Beginning 2013, the Company no longer proportionally consolidated its jointly-owned subsidiaries Namisa, MRS and CBSI. For purposes of preparation and presentation of the information by business segment, Management maintained the proportional consolidation of the jointly-owned subsidiaries, as historically presented. For purposes of reconciliation of the consolidated profit or loss, the amounts recorded by these companies are not included in “Corporate expenses/elimination”. After the closing of 2015, after the combination of the mining assets (Casa de Pedra, Namisa and Tecar), the consolidated profit or loss includes this new company´s information as a whole.

 

 

Net revenue by segment - 1Q18 (R$ million)

 
 

 

 

 

Adjusted EBITDA by segment - 1Q18 (R$ million)

 
 

 

Results - 1Q18

Steel

Mining

Logistics (Port)

Logistics (Railway)

Cement

Energy

Corporate expenses/
elimination

Consolidated

(R$ million)

               

Net revenue

 3,674

 1,152

 66

 331

 131

 91

 (378)

 5,066

Domestic market

 2,291

 219

 66

 331

 131

 91

 (612)

 2,515

Foreign market

 1,384

 933

 -  

 -  

 -  

 -  

 234

 2,551

CPV

 (2,900)

 (795)

 (46)

 (244)

 (125)

 (66)

 493

 (3,685)

Gross profit

 774

 356

 20

 87

 5

 24

 115

 1,381

SG&A

 (234)

 (21)

 (10)

 (23)

 (20)

 (7)

 (249)

 (564)

Depreciation

 150

 106

 4

 65

 27

 4

 (51)

 305

Proportional EBITDA - jointly-owned subsidiaries

 -  

 -  

 -  

 -  

 -  

 -  

 119

 119

Adjusted EBITDA

 690

 442

 14

 128

 12

 22

 (66)

 1,242

                 

Results - 4Q17

Steel

Mining

Logistics (Port)

Logistics (Railway)

Cement

Energy

Corporate expenses/
elimination

Consolidated

(R$ million)

               

Net revenue

3,435

1,175

71

365

106

104

(263)

4,993

Domestic market

2,147

175

71

365

106

104

(595)

2,372

Foreign market

1,287

1,001

-

-

-

-

333

2,621

CPV

(2,670)

(909)

(45)

(259)

(106)

(71)

480

(3,580)

Gross profit

765

266

26

106

(0)

33

217

1,413

SG&A

(204)

(37)

(8)

(27)

(22)

(7)

(356)

(660)

Depreciation

153

121

4

63

25

2

(49)

319

Proportional EBITDA - jointly-owned subsidiaries

-

-

-

-

-

-

132

132

Adjusted EBITDA

713

351

22

142

3

28

(56)

1,204

                 

Results - 1Q17

Steel

Mining

Logistics (Port)

Logistics (Railway)

Cement

Energy

Corporate expenses/
elimination

Consolidated

(R$ million)

               

Net revenue

3,071

1,174

55

323

126

90

(428)

4,412

Domestic market

1,789

190

55

323

126

90

(584)

1,990

Foreign market

1,283

984

-

-

-

-

156

2,422

CPV

(2,395)

(636)

(37)

(280)

(130)

(69)

454

(3,093)

Gross profit

677

538

18

43

(4)

21

25

1,318

SG&A

(235)

(40)

(7)

(24)

(19)

(7)

(156)

(488)

Depreciation

169

123

3

104

35

4

(48)

390

Proportional EBITDA - jointly-owned subsidiaries

-

-

-

-

-

-

113

113

Adjusted EBITDA

610

620

14

123

12

19

(65)

1,333

 

 

 

 

Page 24

 


 
 


CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information – March 31, 2018 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

 

CSN’s Steel Results

 

According to the World Steel Association (WSA), the global crude steel production totaled 426.6 million tons (Mton) in 1Q18, an increase of 4.1% compared to 1Q17. Asia produced 294.1 Mton in 1Q18, an increase of 4.6% compared to the same period in 2017, while the European Union and North America increased by 0.9% and 1.9%, respectively, on the same comparison basis.

 

· In 1Q18, CSN’s plate production totaled 1,050 thousand tons, an increase of 5% compared to 1Q17. In turn, the production of flat rolled products in 1Q18 increased by 2% and 12% compared to 4Q17 and 1Q17, respectively, totaling 1,023 thousand tons. According to the Brazilian Steel Institute (IABr), in the first quarter of 2018, the domestic sales totaled 4.4 million tons of steel, an increase of 11.4% compared to the first three months of prior year. The apparent consumption totaled 4.9 million tons, an increase of 8.3% compared to the same period of last year. Brazilian steel production totaled 8.6 million tons, an increase of 4.9%. The estimated domestic sales increased from 4.1% to 6.6% (18 million tons) in 2018.  

 

Steel production

1Q17

4Q17

1Q18

Variation

(thousand tons)

1Q18

x

4Q17

1Q18

x

1Q17

Total plates (UPV + third parties)

999

1,099

1,050

(5%)

  5%

Plate production

982

1,099

1,050

(4%)

  7%

Third-party plates

18

0

0

(100%)

  (100%)

Total flat rolled products

874

959

978

2%

  12%

Total long rolled products

53

45

40

(11%)

  (25%)

 

Page 25

 


 
 


CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information – March 31, 2018 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

 

·           CSN’s total sales reached 1,277 thousand tons of steel products in 1Q18, an increase of 2% compared to 4Q17.

 

 

 

·          In 1Q18 the steel volume sold by CSN in the domestic market totaled 782 thousand tons, an increase of 2% compared to 4Q17 and 27% compared to 1Q17. The expansion of the automotive and OEM market significantly increased the cold rolled flat steel products (+33% - 1Q18x1Q17) and galvanized items (+54%- 1Q18x1Q17). Out of this total, 737 thousand tons refers to flat steel products 45 thousand tons to long steel products.

 

·         In the foreign market, CSN’s sales in 1Q18 totaled 496 thousand tons, an increase of 2.5% compared to the immediately prior quarter. In this period, 60 thousand tons were directly exported and 436 thousand tons were sold by the foreign subsidiaries, out of which 118 thousand tons by LLC, 216 thousand tons by SWT and 102 thousand tons by Lusosider.

 

 

 

 

 

·         In 1Q18, CSN maintained its high share of coated products as a percentage of total sales volume, following the strategy of adding more value to its product mix. Sales of coated products such as galvanized items and metallic sheets accounted for 53% of flat steel sales, considering all markets in which the Company operates. In the foreign market, coated products accounted for 81% of flat steel sales in 1Q18.

 

 

    According to ANFAVEA (National Association of Automobile Manufacturers), in the first quarter of 2018, the production of vehicles, light commercial vehicles, trucks and buses totaled 669,657 thousand units, an increase of 14.6%, compared to the same period of prior year. The exports maintained good performance, totaling 180,200 thousand vehicles sold, an increase of 3.3% compared to the same period of prior year. Anfavea estimates an increase of 13.2% in vehicles produced in, for 3.05 million units.

 

Page 26

 


 
 


CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information – March 31, 2018 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

 

According to ABRAMAT(Brazilian Association of Building Material Industry), the accumulated building material salesdecreased by 6.3% through March 2018, compared to 1Q17; however, the association estimates an increase between 1% and 2% in the industry revenues.

 

According to IBGE (Brazilian Institute of Geography and Statistics), the home appliance productionincreased in the first six-month period of 2018, an increase of 4.3% and 28.3%, in white and brown lines, respectively.

 

According to INDA (National Institute of Steel Distributors) in 1Q18, distribution purchases increased by 4.4%,while flat steel sales increased by 13.8%compared to 1Q17. Accumulated imports through March 2018 increased by 2.9%compared to the same period in 2017, a total volume of 302.7 thousand tons.

 

 

·         Net revenue totaled R$3,674 million in 1Q18, an increase of 7% and 20% compared to 4Q17 and 1Q17, respectively, mainly due to an increase in sales in the domestic market and higher average steel prices, both in the domestic market (+6% compared to 4Q17) and foreign market (+5% compared to 4Q17).

 

·          Cost of salesin 1Q18increased by 8.6% compared to 4Q17, totaling R$2,900 million, mainly due to the increase in raw material prices (coal, iron ore, coke and pellets), non-scheduled maintenances and adverse climate condition.

 

 

 

·         Plate production cost in 1Q18 totaled R$1,474/t, an increase of 14% compared to 4Q17. The increase in the prices of the main raw materials, due to the abovementioned operational events, will be balanced in the next quarters.

 

·         Adjusted EBITDA totaled R$690 million in 1Q18, a decrease of 3.2% compared to R$713 million in 4Q17, due to CPV increase. The adjusted EBITDA margin in 1Q18 reached 18.8%, or a decrease of 2.0p.p. compared to the immediately prior quarter.

 

 

CSN’s Mining Results

 

In 1Q18, the expansion of the Chinese steel production aligned with the increase in the steel price in the foreign market positively impacted the iron ore prices. In this regard, iron ore price ratio in 1Q18 reached US$74.26/dmt (Platts, Fe62%, N. China), on average, a 13% increase compared to 4Q17; however, a decrease of 13% compared to 1Q17, with an average of US$85.64/dmt.

 

In relation to maritime freight, the BCI-C3 (Tubarão-Qingdao) route reached an average of US$15.60/wmt in 1Q18, a decrease of 16% compared to the prior quarter. In addition to the ore price, another positive factor in this quarter was the decrease in silica discounts, and the respective market discount has significantly decreased by 17% in 1Q18 compared to 4Q17.

 

 

 

 

Page 27

 


 
 


CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information – March 31, 2018 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

 

· In 1Q18, iron ore production totaled 6.2 million tons, a decrease of 4% compared to 4Q17, mainly due to the high rainfall index in the period and limitations on our tailing dam utilization. Iron ore purchases totaled 1,487 thousand tons in 1Q18, a decrease of 19% compared to 4Q17.

 

· Iron ore sales totaled 7.5 million tons in 1Q18, an increase of 3% compared to 1Q17, out of which 1.3 million tons were sold to Presidente Vargas Plant.

 

Mining production and sales volume

1Q17

4Q17

1Q18

Variation

(thousand tons)

1Q18

x

4Q17

 

1Q18

x

1Q17

Iron ore production

7,858

6,378

6,129

(4%)

 

(22%)

Ore purchased from third parties

137

1,828

1,487

(19%)

 

988%

Total production + purchases

7,995

8,206

7,616

(7%)

 

  (5%)

Sales to UPV

1,347

1,236

1,309

6%

 

  (3%)

Volume sold to third parties

5,897

8,325

6,165

(26%)

 

5%

Total sales

7,244

9,561

7,474

(22%)

 

3%

  The production and sales volumes considered a 100% stake in CSN Mineração.

 

· In 1Q18, mining net revenue totaled R$1.152 million, a decrease of 2% compared to the immediately prior quarter due to the decrease in sales volumes (-22%), compensated by the increase in the market prices, as well as the respective realization by the company. The CIF+FOB unit revenue in 1Q18 totaled US$55.9/wmt, an increase of 12% compared to the prior quarter.

 

Realized iron ore price by CSN Mineração

(CIF+FOB* - US$/wmt delivered in China)

 

*Beginning 4Q16, the company started to report the realized iron ore price considering the sum of the CIF and FOB values, as shown above.

 

· Mining sales cost totaled R$795 million in 1Q18, a decrease of 13% compared to 4Q17, due to the decrease in the sales volume in the period (-22%).

 

· Adjusted EBITDA totaled R$442 million in 1Q18, an increase of 26% compared to 4Q17. Adjusted EBITDA margin reached 38% in 1Q18, or an increase of 8,5p.p. compared to 4Q17, mainly due to the increase in realized prices, lower freight/ton ratio and decrease in the silica discounts in the period.

 

CSN’s Logistics Results

Railway logistics: In 1Q18, net revenue totaled R$331 million, generating adjusted EBITDA of R$128 million and adjusted EBITDA margin of 39%.

 

Port logistics: In 1Q18, Sepetiba Tecon shipped 219 thousand tons of steel products, in addition to 31 thousand tons of general cargo and approximately 65 thousand containers. In 1Q18, net revenue totaled R$66 million, generating adjusted EBITDA of R$14 million and adjusted EBITDA margin of 21%.

 

Sepetiba TECON highlights

1Q17

4Q17

1Q18

Variation

1Q18

x

4Q17

1Q18

x

1Q17

Container volume (thousand units)

30

69

65

(6%)

117%

Steel volume (thousand ton)

275

253

219

(13%)

(20%)

General cargo volume (thousand ton)

5

3

31

933%

520%

 

CSN’s Cement Results

 

Page 28

 


 
 


CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information – March 31, 2018 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

In the first quarter of 2018, cement sales in the domestic market totaled 12.6 million tons, according to the preliminary industry data, disclosed by the SNIC (National Cement Industry Union), a decrease of 3.0% compared to the first quarter of 2017.

 

According to the SNIC data, sales volume in the first quarter was slightly below the estimated volume, due to the strong rainfall index in February and March, which impacted the sales performance. For 2018, SNIC estimates an increase between 1% and 2% in cement sales compared to the sales in 2017.

 

In 1Q18, cement sales totaled 806 thousand tons, an increase of 22% compared to 4Q17, representing net revenue of R$131 million. Adjusted EBITDA reached R$12 million (+346%), with adjusted EBITDA margin of 9.3%, or an increase of 6.7p.p. compared to the prior quarter, due to the increased prices and volumes.

 

Cement highlights

1Q17

4Q17

1Q18

Variation

(thousand tons)

1Q18

x

4Q17

1Q18

x

1Q17

Total production

                   817

                   726

                   775

7%

(5%)

Total sales

                   821

                   661

                   806

22%

(2%)

 

CSN’s Energy Results

 

According to the EPE (Energy Research Company), domestic electric energy consumption increased by 0.4% in 1Q18 compared to the same period of prior year. The electric energy consumption in the industrial sector increased by 0.8% in March 2018 compared to the past year. The residential and commercial sectors reduced the electric energy consumption by -2.6% and -2.0%, respectively, compared to March 2017.

 

In 1Q18, net energy revenue totaled R$91 million, with adjusted EBITDA of R$22 million and adjusted EBITDA margin of 24%.

 

Capital market

 

In the first quarter of 2018, the CSN’s shares appreciated by 5.0%, while the Ibovespa index appreciated by 11.7%. The daily traded volume (CSNA3) on B3, in turn, totaled R$103.4 million. On the New York Stock Exchange (NYSE), the Company’s American Depositary Receipts (ADRs) appreciated by 4.4%, while Dow Jones decreased by 2.9%. The daily traded volume (SID) of the Company’s ADRs on NYSE totaled US$11.0 million.

 

1Q18

Number of shares (in thousands)

1,387,524

Market value

 

Closing price (R$/share)

                   8.80

Closing price (US$/ADR)

                     2.63

Market value (R$ million)

12,210

Market value (US$ million)

                   3,673

Total return including dividends and interest on capital

 

CSNA3

5.0%

SID

4.4%

Ibovespa

11.7%

Dow Jones

(2.9%)

Volume

 

Daily average (thousand shares)

10,466

Daily average (R$ thousand)

103,407

Daily average (thousand ADRs)

3,636

Daily average (US$ thousand)

11,031

Source: Bloomberg

 

 

Page 29

 


 
 


CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information – March 31, 2018 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

 

CONSOLIDATED SALES VOLUME (thousand tons)

 

 

                   

 

1Q17

4Q17

1Q18

 

Variation

 

 

1Q18

x

4Q17

 

1Q18

x

1Q17

 Flat steel

  566

  720

  737

 

17

 

171

Plate

  -

1

  -

 

  (1)

 

-

Hot rolled

  215

  275

  271

 

  (4)

 

56

Cold rolled

  118

  129

  157

 

28

 

39

Galvanized

  157

  236

  242

 

  6

 

85

Tin plates

  77

  78

  67

 

  (11)

 

  (10)

 UPV Long Steel

  51

  50

  45

 

  (5)

 

  (6)

 DOMESTIC MARKET

  617

  770

  782

 

12

 

165

 

                   

 

 

1Q17

4Q17

1Q18

 

1Q18

x

4Q17

 

1Q18

x

1Q17

 Flat steel

  349

  285

  280

 

  (5)

 

(69)

Hot rolled

  20

  24

  35

 

11

 

15

Cold rolled

  24

8

  17

 

  9

 

  (7)

Galvanized

  258

  202

  191

 

  (11)

 

  (67)

Tin Plates

  48

  52

  37

 

  (15)

 

  (11)

 Long Steel (profiles)

  228

  198

  216

 

18

 

  (12)

 FOREIGN MARKET

  577

  484

  496

 

12

 

  (81)

 

 

 

 

             

 

 

1Q17

4Q17

1Q18

 

1Q18

x

4Q17

 

1Q18

x

1Q17

 Flat steel

  915

1.005

1.017

 

12

 

102

Plate

  -

1

  -

 

  (1)

 

-

Hot rolled

  235

  298

  306

 

  8

 

71

Cold rolled

  141

  137

  174

 

37

 

33

Galvanized

  415

  438

  433

 

  (5)

 

18

Tin Plates

  124

  130

  104

 

  (26)

 

  (20)

 UPV Long Steel

  51

  50

  45

 

  (5)

 

  (6)

Long Steel (profiles)

  228

  198

  216

 

18

 

  (12)

 TOTAL MARKET

1,194

1,253

1,277

 

24

 

83

 

Page 30

 


 
 


CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information – March 31, 2018 – CIA SIDERURGICA NACIONAL

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).

 

 

Page 31

 


 
 


CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information – March 31, 2018 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

The Group's main operating activities are divided into five (5) 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 operations in the United States, 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 city of Congonhas, State of Minas Gerais.

 

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 the state of Rio de Janeiro. Imports of coal and coke are also carried out through this terminal by providing services to CSN’s steel segment.

 

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.

 

·       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.

 

In the fourth quarter of 2016, the Company started the operation of its second clinker production line 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”), which has the concession to operate the former Northeast Railway System of RFFSA, in the States of Maranhão, Piauí, Ceará, Rio Grande do Norte, Paraíba, Pernambuco and Alagoas, with TLSA being responsible for the rail links of Missão Velha-Salgueiro, Salgueiro-Trindade, Trindade-Eliseu Martins, Salgueiro-Porto de Suape and Missão Velha-Porto de Pecém (Railway System II), still under construction and FTL being responsible for the rail links of São Luiz-Mucuripe, Arrojado-Recife, Itabaiana-Cabedelo, Paula Cavalcante-Macau and Propriá-Jorge Lins (Railway System I).

 

Page 32

 


 
 


CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information – March 31, 2018 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

 

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.(“CSN Mineração”), TECAR, both at the Itaguaí Port. Locate in the Bay of Sepetiba, they have privileged highway, railroad and maritime access.

 

At TECON, shipment of CSN´s steel products, movement of containers, storage, consolidation and deconsolidation of cargo are carried out and, at TECAR, the shipment of iron ore to overseas market and the unloading of coal and other products, such as petroleum coke, sulfur and zinc concentrate for our own use and for several customers.

 

·       Energy:

 

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

 

Note 25 - “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.

 

Negotiations in progress for reprofiling part of the debts do not jeopardize the Company's operating continuity and Management does not have any other relevant operational restructuring plan that implies a change to the conclusion of the operational continuity. Further disclosures on the bases for evaluating the operational continuity were made in the disclosures of this subject included in the financial statements of December 31, 2017, approved by Management on March 26, 2018.

 

2.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

2.a) Basis of preparation

 

The Group’s parent company and consolidated 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), 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

 

The condensed 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 condensed interim financial information are consistent with the policies described in Note 02 to the Company’s financial statements for the year ended December 31, 2017, filed with CVM.

 

This condensed 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, 2017.

 

 

Page 33

 


 
 


CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information – March 31, 2018 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

Therefore, in this condensed 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 condensed interim financial information was approved by Management on May 14, 2018.

 

2.b) Basis of presentation

 

The consolidated condensed interim financial information is presented in thousands of 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, 2018, US$1 is equivalent to R$3.3238 (R$3.3080 as of December 31, 2017) and €1 is equivalent to R$4.0850 (R$3.9693 as of December 31, 2017), 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 interim financial statements for the period ended March 31, 2018 and year ended December 31, 2017 include the following direct and indirect subsidiaries and joint ventures, as well as the exclusive funds, as described below:

 

 

Page 34

 


 
 


CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information – March 31, 2018 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

·                      Companies

 
   

Equity interests (%)

 

Companies

 

03/31/2018

 

12/31/2017

 

Core business

             

Direct interest in subsidiaries: full consolidation

 

 

 

 

 

 

CSN Islands VII Corp.

 

        100,00

 

        100,00

 

Financial transactions

CSN Islands XI Corp.

 

        100,00

 

        100,00

 

Financial transactions

CSN Islands XII Corp.

 

        100,00

 

        100,00

 

Financial transactions

CSN Minerals S.L.U. (1)

 

 -

 

        100,00

 

Equity interests

CSN Export Europe, S.L.U. (1)

 

 -

 

        100,00

 

Financial transactions and Equity interests

CSN Metals S.L.U. (1)

 

 -

 

        100,00

 

Equity interests and Financial transactions

CSN Americas S.L.U. (1)

 

 -

 

        100,00

 

Equity interests and Financial transactions

CSN Steel S.L.U.

 

        100,00

 

        100,00

 

Equity interests and Financial transactions

TdBB S.A (*)

 

        100,00

 

        100,00

 

Equity interests

Sepetiba Tecon S.A.

 

          99,99

 

          99,99

 

Port services

Minérios Nacional  S.A.

 

          99,99

 

          99,99

 

Mining and Equity interests

Companhia Florestal do Brasil

 

          99,99

 

          99,99

 

Reforestation

Estanho de Rondônia S.A.

 

          99,99

 

          99,99

 

Tin Mining

Companhia Metalúrgica Prada

 

          99,99

 

          99,99

 

Manufacture of containers and distribution of steel products

CSN Gestão de Recursos Financeiros Ltda. (*)

 

          99,99

 

          99,99

 

Management of funds and securities portfolio

CSN Mineração S.A.

 

          87,52

 

          87,52

 

Mining and Equity interests

CSN Energia S.A.

 

          99,99

 

          99,99

 

Sale of electric power

FTL - Ferrovia Transnordestina Logística S.A.

 

          90,78

 

          90,78

 

Railroad logistics

Nordeste Logística S.A.

 

          99,99

 

          99,99

 

Port services

Aceros México CSN (2)

 

            1,00

 

                 -  

 

Commercial representation,sale of steel and related activity

             

Indirect interest in subsidiaries: full consolidation

           

Companhia Siderúrgica Nacional LLC

 

        100,00

 

        100,00

 

Steel

Lusosider Projectos Siderúrgicos S.A.

 

          99,94

 

          99,94

 

Equity interests and product sales

Lusosider Aços Planos, S. A.

 

          99,99

 

          99,99

 

Steel and Equity interests

CSN Resources S.A.

 

        100,00

 

        100,00

 

Financial transactions and Equity interests

Companhia Brasileira de Latas

 

          99,99

 

          99,99

 

Sale of cans and containers in general and Equity interests

Companhia de Embalagens Metálicas MMSA

 

          99,67

 

          99,67

 

Production and sale of cans and related activities

Companhia de Embalagens Metálicas - MTM

 

          99,67

 

          99,67

 

Production and sale of cans and related activities

CSN Steel Holdings 1, S.L.U.

 

        100,00

 

        100,00

 

Financial transactions, product sales and Equity interests

CSN Productos Siderúrgicos S.L.

 

        100,00

 

        100,00

 

Financial transactions, product sales and Equity interests

Stalhwerk Thüringen GmbH

 

        100,00

 

        100,00

 

Production and sale of long steel and related activities

CSN Steel Sections UK Limited (*)

 

        100,00

 

        100,00

 

Sale of long steel

CSN Steel Sections Polska Sp.Z.o.o

 

        100,00

 

        100,00

 

Financial transactions, product sales and Equity interests

CSN Asia Limited

 

        100,00

 

        100,00

 

Commercial representation

CSN Mining Holding, S.L 

 

          87,52

 

          87,52

 

Financial transactions, product sales and Equity interests

CSN Mining GmbH

 

          87,52

 

          87,52

 

Financial transactions, product sales and Equity interests

CSN Mining Asia Limited

 

          87,52

 

          87,52

 

Commercial representation

Aceros México CSN (2)

 

          99,00

 

        100,00

 

Commercial representation,sale of steel and related activity

Lusosider Ibérica S.A.

 

          99,94

 

          99,94

 

Steel, industrial and commercial activities and equity interests

CSN Mining Portugal, Unipessoal Lda.

 

          87,52

 

          87,52

 

Commercial representation

             

Direct interest in joint operations: proportionate consolidation

           

Itá Energética S.A.

 

          48,75

 

          48,75

 

Electric power generation

Consórcio da Usina Hidrelétrica de Igarapava

 

          17,92

 

          17,92

 

Electric power consortium

             

Direct interest in joint ventures: equity method

 

 

 

 

 

 

MRS Logística S.A.

 

          18,64

 

          18,64

 

Railroad transportation

Aceros Del Orinoco S.A.

 

          31,82

 

          31,82

 

Dormant company

CBSI - Companhia Brasileira de Serviços de Infraestrutura

 

          50,00

 

          50,00

 

Equity interests and product sales and iron ore

Transnordestina Logística S.A.

 

          46,30

 

          46,30

 

Railroad logistics

             

Indirect interest in joint ventures: equity method

           

MRS Logística S.A.

 

          16,30

 

          16,30

 

Railroad transportation

             

Direct interest in associates: equity method

           

Arvedi Metalfer do Brasil S.A.

 

          20,00

 

          20,00

 

Metallurgy and Equity interests

 

 (*) 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 is disclosed;

 

·                     Events in 2018

(1)     On February 6, 2018, the Spanish commercial registry recognized the merger by absorption of the companies by CSN Steel, S.L.U., date from which the companies were considered legally extinct, before third parties and for the purposes of commercial law, the merger is retroactive to the date of December 28, 2017.

(2)     Transfer of 1% stake in Aceros Mexico from CSN Steel to Companhia Siderúrgica Nacional on February 1, 2018.

 

Page 35

 


 
 


CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information – March 31, 2018 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

·                      Exclusive funds

 

 

   

Equity interests (%)

 

Exclusive funds

 

03/31/2018

 

12/31/2017

 

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

 

 

 

3. ADOPTION OF NEW ACCOUNTING PRACTICES

 

The Company applied as of January 1, 2018, the IFRS 09 Financial Instruments (corresponding to CPC 48) and IFRS 15 Revenues from Contracts with Customers (corresponding to CPC 47), both of which were approved by CVM in November 2016 as well as interpretation IFRIC 22, corresponding to ICPC 21, approved in July 2017. IFRS 09 and 15 replaced IAS 39 Financial Instruments: Recognition and Measurement and IAS 18 Revenue and related interpretations, respectively.

 

The Company decided to adopt the modified transition model for the implementation of the new standards, where any transitional adjustment is recognized in retained earnings on January 1, 2018, without comparative adjustment

 

• IFRS 9 / CPC 48 Financial instruments

 

The new pronouncement includes new rules on the classification and measurement of financial assets, as well as impairment and new practices for hedge accounting, which are simplified below:

 

Classification and measurement - IFRS 9 establishes that financial assets should be classified and measured in one of three categories: amortized cost, fair value through other comprehensive income (VJORA) and fair value through profit or loss (VJR). The categories of held-to-maturity loans and receivables available for sale that were part of the scope of IAS 39 were withdrawn

 

Impairment - the "incurred losses" model is replaced by an "estimated credit loss" model, where it is no longer necessary for a loss event to occur before recognition of the impairment loss. The model uses a two-pronged approach, in which the provision will be measured for expected credit losses for 12 months or for the entire life of the asset. These changes did not bring impacts to the Company.

 

Hedge Accounting - a new general hedge accounting model was included, which does not change, but fundamentally the types of hedge relationship or requirements for measurement and recognition of ineffectiveness. These changes did not bring impacts to the Company.

 

The main effect of the adoption of IFRS 09 is shown in note 13.II, referring to the classification and measurement of the investment in Usinas Siderúrgicas de Minas Gerais SA - Usiminas and Panatlântica SA at fair value through profit or loss (VJR) and obtained a gain of R $ 1.9 billion (gross) as of March 31, 2018 recorded in other operating income and expenses (Note 23).

 

• IFRS 15 / CPC 47 Revenue from contract with customer

 

Revenue from contracts with customers - IFRS 15 establishes a new concept for revenue recognition, replacing IAS 18 Revenue, IAS 11 - Construction Contracts and related interpretations. The Company adopted IFRS 15 using the modified retrospective method, which does not require the restatement of comparative information

 

Page 36

 


 
 


CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information – March 31, 2018 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

The new pronouncement establishes a five-step model for determining the recognition of revenue from customer contracts, as follows:

 

- Identification of the contract: identify when there is an agreement and the parties involved.

 

- Identify the performance obligations: from the defined contract, analyze the contractual promises, in order to identify which promised items can be considered as performance obligations.

 

- Determine the price of the obligation: The transaction price is the value of the consideration that the entity expects to receive by transferring the control of the promised goods and services, the value of the transaction can include fixed values, variable values ​​or both.

 

- Transaction Price Allocation: At the time of signing the contract, the transaction price must be allocated to each performance obligation.

 

- Recognize Revenue: Revenue recognition occurs at the time (or to the extent that) meets a performance obligation by transferring control of a good or service to a customer.

 

Analyzing the topic "identification of performance obligations", the Company identified in its operations the following performance obligations

 

- Sale of finished products: the transfer of risks and benefits coincides with the transfer of control of the products, thus, the moment of recognition of revenue from product sales was not impacted by the adoption of this new standard.

 

- Provision of service: in the main services provided by the company the revenue recognition coincides with the conclusion of the service, therefore without impacts by the adoption of this standard.

 

- Freight / insurance liability in CFR / CIF incoterms: the freight service in the CFR and CIF modalities will be considered a separate service and therefore a separate performance obligation, with allocation of part of the price of the transaction recognized in profit or loss, according to the effective provision of the service over time.

 

The effect of the difference in the recognition of the portion of revenue allocated to freight does not significantly affect the Company's income. Therefore, such revenue will not be presented separately in the Company's financial statements.

 

In the other topics of the new standard, the Company did not identify material measurement impacts in the application of this standard

 

 

 

• IFRIC 22 / ICPC 21 Foreign currency transaction and advance consideration

 

Required to apply in January 2018, IFRIC 22, which corresponds to ICPC 21, came to regulate the concepts established in CPC 02 - Effects of Changes in Foreign Exchange Rates and Conversion of Financial Statements, on how to determine the transaction date with the purpose of determining the exchange rate to be used in the initial recognition of an asset, expense or revenue (or part thereof) in the derecognition of non-monetary assets or non-monetary liabilities arising from the payment or early receipt in foreign currency.

 

Generally speaking, the interpretation deals with transactions in foreign currency in which the Company recognizes a non-monetary asset or non-monetary liability resulting from payment or early receipt, before the company recognizes the related asset, expense or revenue.

 

The consensus of this interpretation clarifies that the transaction date for determining the exchange rate to be used in the case of advances is defined as the date that the entity initially recognizes the non-monetary asset or non-monetary liability arising from the payment or early receipt. In the case of multiple payments or receipts in advance, the company shall determine the transaction date as each payment or anticipated receipt.

 

Page 37

 


 
 


CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information – March 31, 2018 – CIA SIDERURGICA NACIONAL

Version: 1

 

As the Company already adopts the practices established by CPC 02, establishing the historical rate at the time of recognition of non-monetary assets and liabilities related to the anticipation, there is no impact resulting from the application of this technical interpretation.

 

4.     CASH AND CASH EQUIVALENTS

 

 

 

 

Consolidated

 

 

 

Parent Company

 

03/31/2018

 

12/31/2017

 

03/31/2018

 

12/31/2017

Current

             

Cash and cash equivalents

             

Cash and banks

 399,750

 

 193,702

 

 51,867

 

 38,311

               

Short-term investments

             

In Brazil:

             

Government securities

 888

 

 12,100

 

 49

 

 150

Private securities

 1,057,091

 

 644,525

 

 555,864

 

 79,116

 

 1,057,979

 

 656,625

 

 555,913

 

 79,266

Abroad:

             

Time deposits

776,425

 

2,561,245

 

313,809

 

275,927

Total short-term investments

1,834,404

 

3,217,870

 

869,722

 

355,193

Cash and cash equivalents

2,234,154

 

3,411,572

 

921,589

 

393,504

 

 

The funds available established in Brazil, are basically invested in repurchase agreements and Bank Certificate of Deposit (“CDBs”) 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 funds are managed by BNY Mellon Serviços Financeiros DTVM S.A. and Caixa Econômica Federal (CEF). The Company invests part of the resources through the investments considered exclusive, 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 of the Company and its foreign subsidiaries is invested in time deposits in top rated banks abroad and the returns are based on fixed interest rates.

 

 

5.     SHORT-TERM INVESTMENTS

 

       

Consolidated

 

   

Parent Company

   

03/31/2018

 

12/31/2017

 

03/31/2018

 

12/31/2017

CDB - Bank certificate of deposit (1)

 

 727,141

 

 716,218

 

 727,141

 

 716,218

Government securities (2)

 

 1,886

 

 19,494

 

 105

 

 243

 

 

 729,027

 

 735,712

 

 727,246

 

 716,461

                 

1.    Financial investment 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.

 

 

Page 38

 


 
 


CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information – March 31, 2018 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

6.     TRADE RECEIVABLES

 

     

Consolidated

 

   

Parent Company

 

03/31/2018

 

12/31/2017

 

03/31/2018

 

12/31/2017

Trade receivables

 

 

 

 

 

 

 

Third parties

 

 

 

 

 

 

 

Domestic market

1,398,110

 

1,290,823

 

1,125,218

 

1,056,929

Foreign market

808,799

 

982,846

 

106,474

 

150,264

 

2,206,909

 

2,273,669

 

1,231,692

 

1,207,193

Allowance for doubtful debts

    (200,164)

 

    (191,979)

 

    (147,402)

 

    (140,392)

 

2,006,745

 

2,081,690

 

1,084,290

 

1,066,801

Related parties (Note 18 a)

139,692

 

115,388

 

902,809

 

831,993

 

2,146,437

 

2,197,078

 

1,987,099

 

1,898,794

               

Other receivables

             

Dividends receivable (Note 18 a) (*)

41,178

 

41,528

 

209,466

 

1,044,242

Advances to employees

35,163

 

33,942

 

24,562

 

22,123

Other receivables

          7,971

 

          3,667

 

             544

 

          1,547

 

        84,312

 

        79,137

 

      234,572

 

   1,067,912

 

   2,230,749

 

   2,276,215

 

   2,221,671

 

   2,966,706

 (*) In Parent Company, refers mainly to dividends receivable from CSN Mineração S.A.amounting to R$ 187,517. In 2018, was received the amount of  R$ 969,648.

 

In accordance with the internal 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 totals R$268,180 as of March 31, 2018 (R$181,972 as of December 31, 2017), less the trade receivables.

 

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

 

   

Consolidated

 

Parent Company

   

03/31/2018

 

12/31/2017

 

03/31/2018

 

12/31/2017

Current

 

   1,277,739

 

   1,391,839

 

      534,105

 

      530,774

Past-due up to 30 days

 

      133,221

 

      167,760

 

        23,863

 

        50,141

Past-due up to 180 days

 

        77,460

 

      142,346

 

        24,967

 

      114,230

Past-due over 180 days

 

      718,489

 

      571,724

 

      648,757

 

      512,048

 

 

   2,206,909

 

   2,273,669

 

   1,231,692

 

   1,207,193

 

 

 

 

 

 

 

 

 

 

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

 

       

Consolidated

 

   

Parent Company

   

03/31/2018

 

12/31/2017

 

03/31/2018

 

12/31/2017

Opening balance

 

    (191,979)

 

    (172,782)

 

    (140,392)

 

    (124,351)

Estimated losses

 

        (8,591)

 

      (36,697)

 

        (7,056)

 

      (29,270)

Recovery of receivables

 

             406

 

        17,500

 

               46

 

        13,229

Closing balance

 

    (200,164)

 

    (191,979)

 

    (147,402)

 

    (140,392)

                 

 

Page 39

 


 
 


CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information – March 31, 2018 – CIA SIDERURGICA NACIONAL

Version: 1

 

7.     INVENTORIES

                                                  

 

 

 

Consolidated

 

 

 

Parent Company

 

03/31/2018

 

12/31/2017

 

03/31/2018

 

12/31/2017

Finished goods

1,517,805

 

1,308,802

 

905,542

 

856,707

Work in progress

1,212,887

 

1,135,589

 

1,023,876

 

981,204

Raw materials

1,092,383

 

1,050,588

 

776,035

 

699,671

Spare parts

832,857

 

814,725

 

445,628

 

435,827

Iron ore

295,430

 

278,041

 

13,733

 

20,914

Advances to suppliers

91,360

 

12,514

 

20,412

 

8,997

(-) Provision for losses

        (140,597)

 

        (135,840)

 

          (48,465)

 

          (51,968)

 

       4,902,125

 

       4,464,419

 

       3,136,761

 

       2,951,352

               

 

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

 

       

Consolidated

 

   

Parent Company

   

03/31/2018

 

12/31/2017

 

03/31/2018

 

12/31/2017

Opening balance

 

    (135,840)

 

    (101,176)

 

      (51,968)

 

      (37,312)

Reversal / (losses)  for slow-moving and obsolescence

 

        (4,757)

 

      (34,664)

 

          3,503

 

      (14,656)

Closing balance

 

    (140,597)

 

    (135,840)

 

      (48,465)

 

      (51,968)

 

 

 

 

 

 

 

 

 

 

 

8.     OTHER CURRENT AND NONCURRENT ASSETS

 

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

 

 

 

 

 

 

   

Consolidated

 

   

 

 

   

Parent Company

 

Current

Non-current

Current

Non-current

 

03/31/2018

 

12/31/2017

 

03/31/2018

 

12/31/2017

 

03/31/2018

 

12/31/2017

 

03/31/2018

 

12/31/2017

Judicial deposits (note 16)

 

 

 

 

352.060

 

339.351

 

 

 

 

 

272.265

 

259.763

Credits with the PGFN (1)

     

 

46.774

 

46.774

 

     

 

46.774

 

46.774

Recoverable taxes (2)

869.273

 

866.986

 

399.940

 

401.071

 

578.873

 

530.748

 

240.305

 

234.858

Prepaid expenses

81.369

 

50.078

 

42.125

 

30.741

 

51.526

 

16.860

 

23.792

 

11.345

Actuarial asset - related party (note 18 a)

 

 

 

 

104.877

 

111.281

 

 

 

 

 

90.839

 

95.898

Derivative financial instruments (note 13 I)

734

           

 

             

Securities held for trading (note 13 I)

2.622

 

2.952

 

 

 

 

 

2.399

 

2.764

 

 

 

 

Iron ore inventory (3)

 

 

 

 

144.499

 

144.499

 

 

 

 

 

 

 

 

Northeast Investment Fund – FINOR

 

 

 

 

26.598

 

26.598

 

 

 

 

 

26.598

 

26.598

Other receivables (note 13 I)

 

 

 

 

16.025

 

20.024

 

 

 

 

 

1.365

 

5.364

Loans with related parties (nota 18 a e 13 I)

2.498

 

2.441

 

602.175

 

554.694

 

17.218

 

26.701

 

489.665

 

444.091

Other receivables from related parties (note 18 a)

3.577

 

3.577

 

30.145

 

30.770

 

43.929

 

37.007

 

329.785

 

320.377

Monetary adjustment related to the Eletrobrás's compulsory loan (4)

 

 

 

 

755.151

 

755.151

 

 

 

 

 

755.151

 

755.151

Others

54.228

 

67.544

 

73.099

 

67.521

 

 

 

 

 

72.564

 

67.007

 

1.014.301

 

993.578

 

2.593.468

 

2.528.475

 

693.945

 

614.080

 

2.349.103

 

2.267.226

 

Page 40

 


 
 


CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information – March 31, 2018 – CIA SIDERURGICA NACIONAL

Version: 1

 

1.    Refers to the excess of judicial deposit originated by the 2009 REFIS program (Tax Debt Refinancing Program). After the settlement of the program amount, the balance of one of the lawsuits was withdrawn by the Company with a court authorization.

 

2.    Refers mainly to taxes on revenue (PIS/COFINS) and state VAT (ICMS) recoverable and income tax and social contribution for offset. 

 

3.    Long-term iron ore inventories that will be used after the implementation of the processing plant, generating as final product the pellet feed, expected to start operating in the first half of 2020.

 

4.    This is a net amount, certain and due, arising from a favorable final decision to the Company, which is irreversible and irrevocable, in order to apply the STJ's consolidated position on the subject, which culminated in the conviction of the Eletrobrás to the payment of the correct interest and monetary correction of the Compulsory Loan. The said final decision, as well as the certainty about the amounts involved in the settlement of the judgment (judicial procedure to request the satisfaction of the right), allowed the conclusion that the entry of this value is certain.

 

 

9.     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, 2017 and, accordingly, the Company decided not to repeat it in the condensed interim financial information as of March 31, 2018.

 

 

Page 41

 


 
 


CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information – March 31, 2018 – CIA SIDERURGICA NACIONAL

Version: 1

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

03/31/2018

             

12/31/2017

 

03/31/2017

Companies

 

Number of shares held by CSN in units

 

% Direct equity interest

 

Participation in

 

% Direct equity interest

 

Participation in

 

 

     

Assets

 

Liabilities

 

Shareholders’ equity

 

Profit / (loss) for the period

   

Assets

 

Liabilities

 

Shareholders’ equity

 

Profit / (loss) for the period

                     
                     
 

Common

 

Preferred

                   

Investments under the equity method

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subsidiaries

                                               

CSN Islands VII Corp.

 

  20.001.000

 

 

 

100,00

 

  2.101.108

 

  2.385.608

 

(284.500)

 

(106.347)

 

100,00

 

5.242.890

 

5.421.043

 

  (178.153)

 

(66.443)

CSN Islands XI Corp.

 

50.000

 

 

 

100,00

 

2.497.289

 

  2.557.392

 

  (60.103)

 

(17.598)

 

100,00

 

  2.514.894

 

  2.557.398

 

(42.504)

 

(15.712)

CSN Islands XII Corp.

 

1.540

 

 

 

100,00

 

  2.147.826

 

  3.328.327

 

(1.180.501,0)

 

  (34.678)

 

100,00

 

  2.166.682

 

3.312.505

 

(1.145.823)

 

2.054

CSN Minerals S.L.U.

 (1)

-

 

 

 

  -

 

-

 

  -

 

-

 

  -

 

  -

 

-

 

  -

 

-

 

  (41.743)

CSN Export Europe, S.L.U.

 (1)

-

 

 

 

  -

 

-

 

  -

 

-

 

  -

 

  -

 

-

 

 -

 

-

 

  (14.924)

CSN Metals S.L.U.

 (1)

-

 

 

 

  -

 

-

 

  -

 

-

 

  -

 

  -

 

-

 

  -

 

-

 

  (14.399)

CSN Americas S.L.U.

 (1)

-

 

 

 

  -

 

-

 

  -

 

-

 

  -

 

  -

 

-

 

  -

 

-

 

20.795

CSN Steel S.L.U.

 

22.042.688

 

 

 

100,00

 

3.843.470

 

270.036

 

3.573.434

 

103.286

 

100,00

 

  6.905.164

 

322.963

 

  6.582.201

 

  49.190

Sepetiba Tecon S.A.

 

254.015.052

 

 

 

99,99

 

460.986

 

  156.460

 

304.526

 

  5.281

 

99,99

 

459.647

 

  160.402

 

 299.245

 

  6.100

Minérios Nacional  S.A.

 

66.393.587

 

 

 

99,99

 

114.203

 

74.001

 

40.202

 

(94)

 

99,99

 

  105.586

 

  65.290

 

40.296

 

(3.049)

Fair Value - Minérios Nacional

 

-

 

 

 

  -

 

-

 

  -

 

  2.123.507

 

  -

 

  -

 

-

 

  -

 

  2.123.507

 

-

Estanho de Rondônia S.A.

 

121.861.697

 

 

 

99,99

 

44.579

 

40.176

 

  4.403

 

  (570)

 

99,99

 

46.005

 

41.032

 

4.973

 

(2.829)

Companhia Metalúrgica Prada

 

  313.651.399

 

 

 

99,99

 

699.304

 

  546.091

 

153.213

 

(16.620)

 

99,99

 

655.748

 

  485.915

 

169.833

 

(1.140)

CSN Mineração S.A.

 

  158.419.480

 

 

 

87,52

 

  12.572.364

 

  3.951.216

 

8.621.148

 

105.765

 

87,52

 

  14.273.290

 

5.620.137

 

  8.653.153

 

261.932

CSN Energia S.A.

 

  43.149

 

 

 

99,99

 

  91.292

 

  29.775

 

61.517

 

9.054

 

99,99

 

146.130

 

  55.030

 

91.100

 

  8.621

FTL - Ferrovia Transnordestina Logística S.A.

 

395.302.149

 

 

 

90,78

 

409.242

 

  137.342

 

  271.900

 

(8.600)

 

90,78

 

  419.388

 

 138.888

 

  280.500

 

(49.394)

Companhia Florestal do Brasil

 

  41.673.302

 

 

 

99,99

 

  34.953,0

 

3.779,0

 

  31.174,0

 

(2)

 

99,99

 

  34.910

 

  3.734

 

31.176

 

(1.108)

Nordeste Logística

 

99.999

 

 

 

99,99

 

  80

 

  55

 

  25

 

  -

 

99,99

 

  80

 

  55

 

25

 

-

CGPAR - Construção Pesada S.A.

 (2)

-

 

 

 

 -

 

-

 

  -

 

-

 

  -

 

  -

 

-

 

 -

 

-

 

  165

Fair Value - CGPAR

 

-

 

 

 

  -

 

-

 

 

 

-

 

 

  -

 

-

 

  -

 

-

 

(3.940)

 

 

 

 

 

 

 

 

  25.016.696

 

13.480.258

 

13.659.945

 

38.877

 

 

 

  32.970.414

 

18.184.392

 

16.909.529

 

  134.176

 Joint-venture e Joint-operation

 

-

 

 

 

  -

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 Itá Energética S.A.

 

  253.606.846

 

 

 

48,75

 

  260.921

 

  14.591

 

246.330

 

2.734

 

48,75

 

265.476

 

 18.104

 

  247.372

 

2.283

MRS Logística S.A.

 

26.611.282

 

  2.673.312

 

  18,64

 

  1.448.893

 

  769.713

 

  679.180

 

  16.481

 

  18,64

 

  1.520.264

 

  857.581

 

  662.683

 

  19.278

CBSI - Companhia Brasileira de Serviços de Infraestrutura

 

1.876.146

 

 

 

50,00

 

  16.740

 

13.708

 

  3.032

 

  684

 

50,00

 

  16.005

 

13.654

 

  2.351

 

375

Transnordestina Logística S.A.

 

  24.168.304

 

 

 

46,30

 

  3.861.776

 

2.662.108

 

1.199.668

 

  (2.514)

 

46,28

 

3.806.380

 

2.604.198

 

1.202.182

 

(4.264)

Fair Value alocated to TLSA due to control loss

 

 

 

 

 

 

 

 

 

 

  271.116

 

 

 

 

 

 

 

271.116

 

               

5.588.330

 

3.460.120

 

  2.399.326

 

17.385

     

  5.608.125

 

  3.493.537

 

2.385.704

 

  17.672

Associates

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Arvedi Metalfer do Brasil

 

  46.994.971

 

 

 

20,00

 

  43.512

 

  23.792

 

  19.720

 

45

 

20,00

 

43.653

 

  23.978

 

  19.675

 

447

 

 

 

 

 

 

 

43.512

 

23.792

 

  19.720

 

  45

 

 

 

43.653

 

23.978

 

  19.675

 

  447

 Classified at fair value through profit or loss and other comprehensive income (note 13 I)

                                               

Usiminas

 

 

 

 

 

 

 

 

 

 

2.532.795

 

 

 

 

 

 

 

2.200.459

 

Panatlântica

         

 

 

 

 

 

26.968

 

 

 

 

 

 

 

  21.974

 

 

 

 

 

 

 

 

 

 

 

 

  2.559.763

 

 

 

 

 

 

 

2.222.433

 

Other investments

                                               

Profits on subsidiaries' inventories

 

 

 

 

 

 

 

 

 

 

  (102.900)

 

  (30.428)

 

 

 

 

 

 

(72.473)

 

(7.396)

Others

         

 

 

 

 

 

63.537

 

(2)

 

 

 

 

 

 

63.537

 

  (551)

 

 

 

 

 

 

 

 

 

 

 

 

  (39.363)

 

(30.430)

 

 

 

 

 

 

  (8.936)

 

(7.947)

Total investments

                     

  18.599.391

 

25.877

             

21.528.405

 

  144.348

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Classification of investments in the balance sheet

 

 

 

 

                                       

Investments in assets

 

 

 

 

 

 

 

 

 

 

 

  20.124.494

 

 

 

 

 

 

 

 

 

  22.894.885

 

 

Investments with equity deficit

                     

(1.525.103)

                 

  (1.366.480)

   

 

 

 

 

 

 

 

 

 

 

 

 

  18.599.391

 

 

 

 

 

 

 

 

 

21.528.405

 

 

(1) On February 6, 2018, the Spanish commercial registry recognized the merger by absorption of the companies by CSN Steel, S.L.U., date from which the companies were considered legally extinct, before third parties and for the purposes of commercial law, the merger is retroactive to the date of December 28, 2017.

(2) Company sold in July 2017, to the subsidiary CSN Mineração.

 

 

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.

 

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

 

 

Consolidated

 

Parent Company

 

03/31/2018

 

12/31/2017

 

03/31/2018

 

12/31/2017

               

Opening balance of investments

5,499,995

 

4,568,451

 

22,894,885

 

22,703,508

Opening balance of loss provisions

       

(1,366,480)

 

(1,019,299)

Capital increase

-

 

20,579

 

-

 

80,686

Dividends (1)

-

 

(79,189)

 

(3,325,351)

 

(2,059,972)

Comprehensive income (2)

(1,559,646)

 

850,640

 

(1,526,552)

 

1,021,099

Equity pickup  (3)

31,169

 

147,800

 

25,877

 

901,836

Receipt for the sale of Usiminas shares.

(39,377)

 

-

 

(39,377)

 

-

Updated of Panatlântica shares in the statement of income (note 13 II)

4,725

 

-

 

4,725

 

-

Updated of Usiminas shares in the statement of income (note 13 II)

1,931,664

 

-

 

1,931,664

 

-

Write-off of the investment due to sale of CGPAR

-

 

-

 

-

 

(14,055)

Asset valuation of CGPAR

-

   -  -

 

(50,009)

Capital transaction - CGPAR

-

 

-

 

-

 

(35,389)

Amortization of fair value – investment in MRS

(2,937)

 

(11,746)

 

-

 

-

Others

-

 

3,460

 

-

 

-

Closing balance of investments

5,865,593

 

5,499,995

 

20,124,494

 

22,894,885

Balance provision for investments with equity deficit

       

(1,525,103)

 

(1,366,480)

Total

5,865,593

 

5,499,995

 

18,599,391

 

21,528,405

 

1.    In 2018, refers to the allocation of dividends of subsidiaries CSN Energia, Itá Energética, CSN Mineração and CSN Steel.

2.    Refers to the mark-to-market of investments classified fair value through profit or loss and fair value through other comprehensive income, 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.

3.    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:

 

Page 42

 


 
 


CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information – March 31, 2018 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

     

Consolidated

 

03/31/2018

 

03/31/2017

       

Equity in results of affiliated companies

 

 

 

MRS Logística S.A.

                    32,954

 

                    38,547

CBSI - Companhia Brasileira de Serviços de Infraestrutura

                         684

 

                         375

Transnordestina

                    (2,514)

 

                    (4,264)

Arvedi Metalfer do Brasil

                           45

 

                         447

Others

                           -  

 

                       (551)

 

                    31,169

 

                    34,554

Eliminations

     

To cost of sales

                    (8,999)

 

                    (9,958)

To taxes

                      3,060

 

                      3,386

Others

                           -  

 

                           -  

Amortization of fair value – investment in MRS

                    (2,936)

 

                    (2,937)

Amortization of fair value – investment in CGPAR

                           -  

 

                    (3,940)

Others

                      2,557

 

                           -  

Equity in results

                    24,851

 

                    21,105

 

 

 

Page 43

 


 
 


CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information – March 31, 2018 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

9.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:

 

 

           

03/31/2018

                 

12/31/2017

   

Joint-Venture

 

Joint-Operation

   

Joint-Venture

 

Joint-Operation

Equity interest (%)

 

MRS Logística

 

CBSI

 

Transnordestina Logística

 

Itá Energética

 

 

 

MRS Logística

 

CBSI

 

Transnordestina Logística

 

Itá Energética

 

34.94%

 

50.00%

 

46.30%

 

48.75%

 

 

 

34.94%

 

50.00%

 

46.30%

 

48.75%

Balance sheet

                 

 

               

Current assets

                 

 

               

Cash and cash equivalents

 

        285,759

 

             28

 

                    9,244

 

                   14,986

 

 

 

       484,978

 

             101

 

                     5,763

 

                             16,231

Advance to suppliers

 

          12,199

 

             81

 

                          -  

 

                          33

 

 

 

         14,911

 

               37

 

                              

 

                                    22

Other current assets

 

        535,345

 

      29,932

 

                  54,402

 

                   16,020

 

 

 

       685,311

 

        28,475

 

                   49,494

 

                             16,447

Total current assets

 

        833,303

 

      30,041

 

                  63,646

 

                   31,039

 

 

 

    1,185,200

 

        28,613

 

                   55,257

 

                             32,700

Non-current assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other non-current assets

 

        668,755

 

        1,063

 

                236,100

 

                   26,983

 

 

 

       693,434

 

             974

 

                 238,004

 

                             27,459

Investments, PP&E and intangible assets

 

     6,271,224

 

        2,376

 

             8,041,041

 

                 477,200

 

 

 

    6,277,550

 

          2,423

 

              7,927,881

 

                           484,406

Total non-current assets

 

     6,939,979

 

        3,439

 

             8,277,141

 

                 504,183

 

 

 

    6,970,984

 

          3,397

 

              8,165,885

 

                           511,865

Total Assets

 

     7,773,282

 

      33,480

 

             8,340,787

 

                 535,222

 

 

 

    8,156,184

 

        32,010

 

              8,221,142

 

                           544,565

                   

 

               

Current liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Borrowings and financing

 

        627,389

 

  969

 

                  54,793

 

                              

 

 

 

       668,947

 

          1,411

 

                   52,691

 

                                        

Other current liabilities

 

        985,005

 

      26,448

 

                112,498

 

                   16,168

 

 

 

    1,272,365

 

        25,898

 

                 113,739

 

                             33,666

Total current liabilities

 

     1,612,394

 

      27,417

 

                167,291

 

                   16,168

 

 

 

    1,941,312

 

        27,309

 

                 166,430

 

                             33,666

Non-current liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Borrowings and financing

 

     1,950,224

 

                 

 

             5,582,415

 

                              

 

 

 

    2,084,422

 

                   

 

              5,457,768

 

                                        

Other non-current liabilities

 

        566,877

 

              -  

 

                          -  

 

                   13,761

 

 

 

       575,170

 

               -  

 

                        434

 

                               3,471

Total non-current liabilities

 

     2,517,101

 

              -  

 

             5,582,415

 

                   13,761

 

 

 

    2,659,592

 

               -  

 

              5,458,202

 

                               3,471

Shareholders’ equity

 

     3,643,787

 

        6,063

 

             2,591,081

 

                 505,293

 

 

 

    3,555,280

 

          4,701

 

              2,596,510

 

                           507,428

Total liabilities and shareholders’
equity

 

     7,773,282

 

      33,480

 

             8,340,787

 

                 535,222

 

 

 

    8,156,184

 

        32,010

 

              8,221,142

 

                           544,565

 

  

 

 

Page 44

 


 
 


CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information – March 31, 2018 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

       

01/01/2018 a 03/31/2018

         

01/01/2017 a 03/31/2017

 

 

Joint-Venture

 

Joint-Operation

 

 

Joint-Venture

Joint - Operation

Equity interest (%)

 

MRS Logística

 

CBSI

 

Transnordestina Logística

 

Itá Energética

   

 

MRS Logística

 

CBSI

 

Transnordestina Logística

 

Itá Energética

 

34.94%

 

50.00%

 

46.30%

 

48.75%

     

34.94%

 

50.00%

 

46.30%

 

48.75%

Statements of Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net revenue

 

        820,628

 

      34,919

 

                             

 

                   41,622

     

       798,330

 

        31,459

 

                              

 

                             40,877

Cost of sales and services

 

      (574,930)

 

     (30,653)

 

                             

 

                  (18,209)

     

     (560,503)

 

      (28,041)

 

                              

 

                           (19,467)

Gross profit

 

        245,698

 

        4,266

 

                          -  

 

                   23,413

     

       237,827

 

          3,418

 

                          -  

 

                             21,410

Operating income (expenses)

 

        (55,809)

 

       (2,442)

 

                      (923)

 

                  (14,893)

     

       (23,843)

 

        (1,975)

 

                   (7,028)

 

                           (14,309)

Financial income (expenses), net

 

        (54,468)

 

            (20)

 

                   (4,506)

 

                         (32)

     

       (54,701)

 

           (376)

 

                   (2,181)

 

                                  (16)

Income before income tax and social contribution

 

        135,421

 

        1,804

 

                   (5,429)

 

                     8,488

     

       159,283

 

          1,067

 

                   (9,209)

 

                               7,085

Current and deferred income tax
and social contribution

 

        (46,999)

 

          (436)

 

                             

 

                    (2,880)

     

       (55,855)

 

           (318)

 

                              

 

                             (2,403)

Profit / (loss) for the period

 

          88,422

 

        1,368

 

                   (5,429)

 

                     5,608

     

       103,428

 

             749

 

                   (9,209)

 

                               4,682

 

 

Page 45

 


 
 


CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information – March 31, 2018 – CIA SIDERURGICA NACIONAL

Version: 1


 

·         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 review and discussion with the responsible agencies; however, 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 2017 remain valid and there is no trigger to justify records of impairment in the first quarter.

 

 

Page 46

 


 
 


CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information – March 31, 2018 – CIA SIDERURGICA NACIONAL

Version: 1

 

10.   PROPERTY, PLANT AND EQUIPMENT

 

The information on property, plant and equipment has not changed significantly in relation to that disclosed in the Company's financial statements as of December 31, 2017.

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated

 

Land

 

Buildings and Infrastructure

 

Machinery, equipment and facilities

 

Furniture and fixtures

 

Construction
in progress

 

Other (*)

 

Total

Balance at December 31, 2017

  279,740

 

    2,796,947

 

     11,985,920

 

     33,103

 

   2,475,935

 

      393,194

 

   17,964,839

Cost

  279,740

 

    3,819,929

 

     21,674,362

 

   164,152

 

   2,475,935

 

      669,096

 

   29,083,214

Accumulated depreciation

               

 

   (1,022,982)

 

     (9,688,442)

 

 (131,049)

 

                   

 

    (275,902)

 

  (11,118,375)

Balance at December 31, 2017

  279,740

 

    2,796,947

 

     11,985,920

 

     33,103

 

   2,475,935

 

      393,194

 

   17,964,839

Effect of foreign exchange differences

      1,896

 

           3,418

 

            16,003

 

          129

 

          1,405

 

           (466)

 

              22,385

Acquisitions

               

 

                15

 

            28,316

 

          153

 

      193,750

 

          1,036

 

            223,270

Capitalized interest (notes 24 and 27)

               

 

                    

 

                       

 

                

 

        17,090

 

                   

 

              17,090

Write-off (note 23)

               

 

               (74)

 

            (1,703)

 

            (2)

 

                   

 

               (1)

 

               (1,780)

Depreciation (note 22)

               

 

        (39,096)

 

        (262,640)

 

     (1,335)

 

                   

 

          2,355

 

           (300,716)

Transfers to other asset categories

               

 

       302,911

 

            33,726

 

        (177)

 

       (50,153)

 

    (286,307)

 

                      -  

Others

               

 

                    

 

            (2,635)

 

          (10)

 

          2,213

 

        (1,204)

 

               (1,636)

Balance at March 31, 2018

  281,636

 

    3,064,121

 

     11,796,987

 

     31,861

 

   2,640,240

 

      108,607

 

   17,923,452

Cost

  281,636

 

    4,117,680

 

     21,757,805

 

   164,789

 

   2,640,240

 

      404,065

 

   29,366,215

Accumulated depreciation

               

 

   (1,053,559)

 

     (9,960,818)

 

 (132,928)

 

                   

 

    (295,458)

 

  (11,442,763)

Balance at March 31, 2018

  281,636

 

    3,064,121

 

     11,796,987

 

     31,861

 

   2,640,240

 

      108,607

 

   17,923,452

                               

 

Page 47

 


 
 


CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information – March 31, 2018 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Parent Company

 

 

Land

 

Buildings and Infrastructure

 

Machinery, equipment and facilities

 

Furniture and fixtures

 

Construction
in progress

 

Other (*)

 

Total

Balance at December 31, 2017

 

     94,485

 

    1,091,303

 

       7,375,505

 

     13,830

 

      906,851

 

     20,437

 

    9,502,411

Cost

 

     94,485

 

    1,334,093

 

     13,159,644

 

     96,609

 

      906,851

 

   118,888

 

      15,710,570

Accumulated depreciation

 

            -  

 

      (242,790)

 

     (5,784,139)

 

   (82,779)

 

               -  

 

   (98,451)

 

       (6,208,159)

Balance at December 31, 2017

 

     94,485

 

    1,091,303

 

       7,375,505

 

     13,830

 

      906,851

 

     20,437

 

    9,502,411

Acquisitions

 

                

 

                 -  

 

            11,744

 

            18

 

        65,048

 

          436

 

             77,246

Capitalized interest (notes 24 and 27)

 

            -  

 

                 -  

 

                   -  

 

            -  

 

          3,594

 

            -  

 

               3,594

Write-off (note 23)

 

            -  

 

                 -  

 

                 (14)

 

            -  

 

               -  

 

            (2)

 

                   (16)

Depreciation (note 22)

 

            -  

 

          (8,607)

 

        (129,211)

 

        (650)

 

               -  

 

     (1,375)

 

          (139,843)

Transfers to other asset categories

 

            -  

 

                 -  

 

            24,092

 

            -  

 

      (24,101)

 

              9

 

                        

Others

 

            -  

 

                 -  

 

                   -  

 

            -  

 

               40

 

            -  

 

                    40

Balance at March 31, 2018

 

     94,485

 

    1,082,696

 

       7,282,116

 

     13,198

 

      951,432

 

     19,505

 

    9,443,432

Cost

 

     94,485

 

    1,334,093

 

     13,195,461

 

     96,624

 

      951,432

 

   119,289

 

  15,791,384

Accumulated depreciation

 

            -  

 

      (251,397)

 

     (5,913,345)

 

   (83,426)

 

               -  

 

   (99,784)

 

   (6,347,952)

Balance at March 31, 2018

 

     94,485

 

    1,082,696

 

       7,282,116

 

     13,198

 

      951,432

 

     19,505

 

    9,443,432

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

 

The assumptions used for the impairment test in December 2017 are still effective and there is not factor that justifies the recognition of impairment in the quarter.

 

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

 

 

 

 

 

 

 

 

 

Consolidado

 

 

Project description

 

Start date

 

Completion Date

 

03/31/2018

 

12/31/2017

Logistics

 

 

 

 

 

 

 

 

 

 

   

  Current investments for maintenance of current operations.  

 

          

 

                 

   

123,996

 

106,956

 

 

 

 

          

 

                 

   

123,996

 

106,956

Mining 

           

   

     

 

 

  Expansion of Casa de Pedra Mine capacity production.  

 

2007

 

2020

(1)

760,564

 

750,999

   

  Expansion of TECAR export capacity.  

 

2009

 

2022

(2)

277,507

 

275,811

 

 

  Current investments for maintenance of current operations.  

 

          

 

                 

   

493,521

 

408,522

       

          

 

                 

   

1,531,592

 

1,435,332

Steel

 

 

 

 

 

 

   

     
   

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

 

2008

 

2019

   

100,576

 

99,483

 

 

  Current investments for maintenance of current operations.  

 

          

 

                 

(3)

260,316

 

228,029

 

 

 

 

          

 

a                 

   

360,892

 

327,512

Cement

 

 

 

 

 

 

   

     

 

 

  Construction of cement plants.  

 

2011

 

2020

(4)

563,749

 

554,865

 

 

  Current investments for maintenance of current operations.  

 

          

 

                 

   

60,011

 

51,270

 

 

 

 

          

 

                 

   

623,760

 

606,135

Construction in progress

 

 

 

 

 

   2,640,240

 

   2,475,935

                     

 

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

(2)   Estimated completion date of phase 60 Mtpa;

(3)   Refers substantially to renovation of coke ovens batteries and reuse of carbo-chemical cooling water;

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

Page 48

 


 
 


CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information – March 31, 2018 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

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

 

 

     

Consolidated

   

Parent Company

 

03/31/2018

 

12/31/2017

 

03/31/2018

 

12/31/2017

In Years

 

 

 

 

 

 

 

Buildings

38

 

39

 

41

 

41

Machinery, equipment and facilities

22

 

21

 

24

 

24

Furniture and fixtures

12

 

12

 

12

 

12

Others

15

 

17

 

12

 

12

 

 

11.   INTANGIBLE ASSETS

 

 

                         

Consolidated

     

Parent Company

 

Goodwill

 

Customer relationships

 

Software

 

Trademarks
and
patents

 

Rights and licenses (*)

 

Others

 

Total

 

Software

 

Total

Balance at December 31, 2017

  3,590,931

 

      300,875

 

    73,185

 

     134,137

 

  3,172,469

 

        449

 

 7,272,046

 

    59,310

 

    59,310

 Cost

      3,834,234

 

          513,068

 

      167,162

 

         134,137

 

      3,185,701

 

            449

 

     7,834,751

 

      126,279

 

      126,279

 Accumulated amortization

       (133,973)

 

        (212,193)

 

       (93,977)

 

                   -  

 

         (13,232)

 

               -  

 

       (453,375)

 

      (66,969)

 

      (66,969)

 Adjustment for accumulated recoverable value

       (109,330)

 

                    -  

 

                -  

 

                   -  

 

                   -  

 

               -  

 

       (109,330)

 

                -  

 

               -  

Balance at December 31, 2017

  3,590,931

 

      300,875

 

    73,185

 

     134,137

 

  3,172,469

 

        449

 

 7,272,046

 

    59,310

 

    59,310

Effect of foreign exchange differences

              -  

 

              8,486

 

           29

 

         3,910

 

               -  

 

          13

 

      12,438

 

            -  

 

               

Amortization (note 22)

              -  

 

      (10,697)

 

     (4,459)

 

               -  

 

               -  

 

              

 

     (15,156)

 

    (2,704)

 

    (2,704)

Balance at March 31, 2018

  3,590,931

 

      298,664

 

    68,755

 

     138,047

 

  3,172,469

 

        462

 

 7,269,328

 

    56,606

 

    56,606

 Cost

  3,834,234

 

      527,982

 

  163,402

 

     138,047

 

  3,185,701

 

        462

 

 7,849,828

 

  125,768

 

  125,768

 Accumulated amortization

   (133,973)

 

    (229,318)

 

   (94,647)

 

               -  

 

     (13,232)

 

           -  

 

   (471,170)

 

  (69,162)

 

  (69,162)

 Adjustment for accumulated recoverable value

   (109,330)

 

                -  

 

            -  

 

               -  

 

               -  

 

           -  

 

   (109,330)

 

            -  

 

               

Balance at March 31, 2018

  3,590,931

 

      298,664

 

    68,755

 

     138,047

 

  3,172,469

 

        462

 

 7,269,328

 

    56,606

 

    56,606

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

 

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

 

     

Consolidated

     

Parent Company

 

03/31/2018

 

12/31/2017

 

03/31/2018

 

12/31/2017

 

 

 

 

 

 

 

 

Software

8

 

8

 

9

 

9

Customer relationships

13

 

13

 

 

 

 

 

 

The assumptions used for the impairment test in December 2017 are still effective and there is not factor that justifies the recognition of impairment in the quarter.

 

 

Page 49

 


 
 


CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information – March 31, 2018 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

12.   BORROWINGS, FINANCING AND DEBENTURES

 

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

 

               

Consolidated

 

 

 

 

 

 

 

Parent Company

   

Rates p.a.  (%)

 

Current liabilities

Non-current liabilities

 

Current liabilities

Non-current liabilities

     

03/31/2018

 

12/31/2017

 

03/31/2018

 

12/31/2017

 

03/31/2018

 

12/31/2017

 

03/31/2018

 

12/31/2017

FOREIGN CURRENCY

 

 

 

                             

Prepayment

 

1% to 3,5%

 

2,481

 

2,174

 

491,922

 

489,584

 

2,481

 

2,174

 

491,922

 

489,584

Prepayment

 

3,51% to 8%

 

828,856

 

788,989

 

3,558,682

 

3,607,925

 

828,856

 

788,989

 

3,558,682

 

3,607,925

Prepayment Intercompany

 

3,51% to 8%

 

-

 

-

         

807,117

 

72,019

 

4,043,364

 

4,856,104

Perpetual bonds

 

7%

 

4,524

 

4,503

 

3,323,800

 

3,308,000

 

-

 

-

 

-

 

-

Bonds

 

4,14% to 10%

(1)

50,467

 

139,184

 

5,639,150

 

5,612,342

               

Bonds Intercompany

 

 

 

-

 

-

 

-

 

-

 

3,400

 

27,450

 

309,113

 

3,436,385

Intercompany

 

Libor 6M to 3%

 

-

 

-

 

-

 

-

 

1,125,516

 

1,113,411

 

1,526,269

 

1,620,921

ACC

 

3.14%

 

181,298

 

379,822

 

-

 

-

 

181,298

 

379,822

       

Others

 

1,2% to 8%

 

410,717

 

251,630

 

102,451

 

197,130

 

-

 

-

       

 

 

 

 

1,478,343

 

1,566,302

 

13,116,005

 

13,214,981

 

2,948,668

 

2,383,865

 

9,929,350

 

14,010,919

LOCAL CURRENCY

                                   

BNDES/FINAME

 

1,3% + TJLP and fixed 2,5% to 6% + 1,5%

 

69,951

 

71,121

 

946,957

 

960,872

 

43,832

 

43,235

 

910,203

 

918,466

Debentures

 

110,8% to 113,7% CDI

 

495,059

 

523,252

 

670,103

 

770,767

 

495,059

 

523,252

 

670,103

 

770,767

Prepayment

 

109,5% to 116,5% CD and fixed of 8%   (2)

574,579

 

1,789,737

 

3,981,273

 

3,378,333

 

467,388

 

1,048,204

 

2,576,073

 

2,093,333

CCB

 

112,5% and 113% CDI

 

2,590,969

 

2,601,352

 

4,693,000

 

4,693,000

 

2,590,969

 

2,601,352

 

4,693,000

 

4,693,000

 

 

 

 

3,730,558

 

4,985,462

 

10,291,333

 

9,802,972

 

3,597,248

 

4,216,043

 

8,849,379

 

8,475,566

Total Borrowings and Financing (note 13 I)

 

5,208,901

 

6,551,764

 

23,407,338

 

23,017,953

 

6,545,916

 

6,599,908

 

18,778,729

 

22,486,485

Transaction Costs and Issue Premiums

 

(30,289)

 

(24,862)

 

(72,051)

 

(34,011)

 

(22,936)

 

(21,737)

 

(48,551)

 

(31,639)

Total Borrowings and Financing + Transaction Costs

 

5,178,612

 

6,526,902

 

23,335,287

 

22,983,942

 

6,522,980

 

6,578,171

 

18,730,178

 

22,454,846

                                     
                                         

(1)     In February 2018, the Company issued debt securities in the foreign market ("Notes"), through its subsidiary CSN Resources SA, in the amount of US $ 350 million, with maturity in 2023 and interest of 7.625% per annum. In parallel, a tender offer ("Tender Offer") of the Notes issued by CSN Islands XI Corp. and CSN Resources S.A., subsidiaries of the Company, having repurchased US$ 350 million in bonds with maturity in 2019 and 2020. The Notes are unconditionally and irrevocably guaranteed by the Company.

 

(2)     In February 2018, the Company concluded the renegotiation of its debt of R$4.9 billion with Banco do Brasil SA ("BB"), related to its own issues of Export Credit Notes plus the issues made by its subsidiary CSN Mineração, moving the maturities from 2018 to 2022 to maturity until December 2024, with a guarantee of part of the preferred shares of Usiminas (USIM5), owned by the Company.

 

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

 

In the first quarter of 2018, the principal amount of long-term borrowings, financing and debentures by maturity year, adjusted for interest and inflation, is as follows:

 

 

Page 50

 


 
 


CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information – March 31, 2018 – CIA SIDERURGICA NACIONAL

Version: 1

 
                       

Consolidated

 

 

Prepayment

 

Bonds

 

Perpetual bonds

 

CCB

 

Others

 

Total

2019

 

1,747,223

 

1,574,305

 

-

 

1,507,000

 

459,157

 

5,287,685

 

23%

2020

 

1,700,068

 

2,901,515

 

-

 

1,508,000

 

282,488

 

6,392,071

 

27%

2021

 

1,333,401

 

-

 

-

 

774,000

 

176,454

 

2,283,855

 

10%

2022

 

1,405,973

 

-

 

-

 

784,000

 

95,256

 

2,285,229

 

10%

2023

 

1,216,856

 

1,163,330

 

-

 

120,000

 

56,719

 

2,556,905

 

11%

After 2023

 

628,356

 

-

 

-

 

-

 

649,437

 

1,277,793

 

5%

Perpetual bonds

 

-

 

-

 

3,323,800

 

-

 

-

 

3,323,800

 

14%

 

 

8,031,877

 

5,639,150

 

3,323,800

 

4,693,000

 

1,719,511

 

23,407,338

 

100%

                             

 

 

 

                   

Parent Company

 

 

Prepayment

 

Bonds

 

Intercompany

 

CCB

 

Others

 

Total

2019

 

2,138,463

 

-

 

1,526,269

 

1,507,000

 

441,983

 

5,613,715

 

30%

2020

 

2,545,597

 

-

 

-

 

1,508,000

 

171,623

 

4,225,220

 

23%

2021

 

1,802,210

 

-

 

-

 

774,000

 

170,960

 

2,747,170

 

15%

2022

 

1,613,930

 

-

 

-

 

784,000

 

91,623

 

2,489,553

 

13%

2023

 

822,436

 

-

 

-

 

120,000

 

54,956

 

997,392

 

5%

After 2023

 

1,747,405

 

309,113

 

-

 

-

 

649,161

 

2,705,679

 

14%

 

 

10,670,041

 

309,113

 

1,526,269

 

4,693,000

 

1,580,306

 

18,778,729

 

100%

                             

 

 

12.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

   

03/31/2018

 

12/31/2017

 

03/31/2018

 

12/31/2017

Opening balance

 

29,510,844

 

30,441,018

 

29,033,017

 

30,248,775

Raised

 

1,320,776

 

538,771

 

-  

 

371,000

Payment of principal

 

(2,190,683)

 

(1,528,023)

 

(3,722,325)

 

(1,652,283)

Payment of charges

 

(617,864)

 

(2,634,931)

 

(462,122)

 

(2,278,089)

Provision of charges

 

479,775

 

2,438,555

 

386,976

 

2,136,425

Others  (1)

 

11,051

 

255,454

 

17,612

 

207,189

Closing balance

 

28,513,899

 

29,510,844

 

25,253,158

 

29,033,017

 

1. Includes unrealized exchange and monetary variations.

 

In the first quarter of 2018, the Group raised and paid borrowings as shown below:

 

·       Raised

               

Consolidated

Transaction

 

Financial Institution

 

Date

 

Amount

 

Maturity

 Fixed Rate Notes

 

 BAYER LB

 

January/18 and March/18

 

               69,003

 

March/18 and March/19

 Bonds

 

 BONY

 

February/18

 

          1,148,735

 

February/23

 Fixed Rate Notes

 

 JP MORGAN

 

March/18

 

             103,038

 

February/19

 Total

 

 

 

 

 

          1,320,776

 

 

 

Page 51

 


 
 


CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information – March 31, 2018 – CIA SIDERURGICA NACIONAL

Version: 1

·       Paid

 

       

Consolidated

Transaction

 

Principal

 

Charges

 Bonds

 

1,132,785

 

238,845

 Fixed Rate Notes

 

109,661

 

6,748

 Debentures

 

116,666

 

34,499

 Bank Credit Bill

 

-

 

139,714

 Export Credit Note

 

550,000

 

156,821

 Pre - Export Payment

 

64,934

 

20,552

 BNDES/FINAME

 

16,638

 

18,005

 Advance contract exchange (ACC) 

 

199,999

 

2,680

 Total

 

2,190,683

 

617,864

         

 

 

·       Covenants

 

The Company’s borrowing agreements provide for the fulfillment of certain non-financial obligations, as well as the maintenance of certain parameters and performance indicators, such as the publication of its audited financial statements within the regulatory terms or payment of commission on assumption of risks in case the indicator of net debt to EBITDA reaches the levels set out in such agreements, under penalty of early maturity. Until now, the Company has complied with all financial and non-financial obligations (covenants) of its current contracts.

 

In the first quarter of 2018, the Company has provisioned R$36,049 in the Consolidated (R$30,843 as of December 31, 2017) and R$16,733 in the Parent Company (R$13,413 as of December 31, 2017) for commission on assumption of risks.

 

 

 

 

Page 52

 


 
 


CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information – March 31, 2018 – CIA SIDERURGICA NACIONAL

Version: 1

 

12.c) Guarantees

 

The Company is the guarantor or is liable for the guarantees given to its subsidiaries and joint ventures as follows:

 

 

Currency

 

Maturities

 

Borrowings

Tax foreclosure

Others

Total

         

03/31/2018

 

12/31/2017

 

03/31/2018

 

12/31/2017

 

03/31/2018

 

12/31/2017

 

03/31/2018

 

12/31/2017

Transnordestina Logísitca

R$

 

Up to 09/19/2056 and Indefinite

 

2,541,347

 

2,541,347

 

  22,214

 

  22,214

 

3,866

 

3,866

 

  2,567,427

 

  2,567,427

                                       

FTL - Ferrovia Transnordestina

R$

 

11/15/2020

 

  69,405

 

  69,405

 

  -

 

  -

 

 

-

 

69,405

 

69,405

                                       

Sepetiba Tecon

R$

 

Indefinite

 

  -

 

  -

 

 

 

  -

 

36,308

 

36,308

 

36,308

 

36,308

                                       

Cia Metalurgica Prada

R$

 

Indefinite

 

  -

 

  -

 

333

 

333

 

18,540

 

18,540

 

18,873

 

18,873

                                       

CSN Energia

R$

 

Indefinite

 

  -

 

  -

 

  2,829

 

  2,829

 

 

 

-

 

2,829

 

2,829

                                       

CSN Mineração

R$

 

12/22/2022

 

2,000,000

 

2,000,000

 

  -

 

  -

 

 

-

 

  2,000,000

 

  2,000,000

                                       
                                       

Estanho de Rondônia

R$

 

07/15/2022

 

  3,153

 

  3,153

 

  -

 

  -

 

 

-

 

3,153

 

3,153

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total in R$

       

4,613,905

 

4,613,905

 

  25,376

 

  25,376

 

58,714

 

58,714

 

  4,697,995

 

  4,697,995

                                       

CSN Islands XI

US$

 

09/21/2019

 

  750,000

 

  750,000

 

  -

 

  -

 

-

 

-

 

750,000

 

750,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CSN Islands XII

US$

 

Perpetual

 

1,000,000

 

1,000,000

 

  -

 

  -

 

-

 

-

 

  1,000,000

 

  1,000,000

                                       

CSN Resources

US$

 

07/21/2020

 

1,550,000

 

1,200,000

 

  -

 

  -

 

-

 

-

 

  1,550,000

 

  1,200,000

                                       

Total in US$

       

3,300,000

 

2,950,000

 

 

 

  -

 

 

 

-

 

  3,300,000

 

  2,950,000

                                       

CSN Steel S.L.

EUR

 

1/31/2020

 

  120,000

 

  120,000

 

  -

 

  -

 

-

 

-

 

120,000

 

120,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lusosider Aços Planos

EUR

 

Indefinite

 

  75,000

 

  25,000

 

 -

 

  -

 

-

 

-

 

75,000

 

25,000

                                       

Total in EUR

 

 

 

 

  195,000

 

  145,000

 

  -

 

  -

 

-

 

-

 

195,000

 

145,000

Total in R$

       

 11,765,115

 

 10,334,149

                 

  11,765,115

 

  10,397,535

 

 

 

 

 

 16,379,020

 

 14,948,054

 

  25,376

 

  25,376

 

58,714

 

58,714

 

  16,463,110

 

  15,095,530

 

13. FINANCIAL INSTRUMENTS

 

 

I - Identification and measurement of financial instruments

 

The Company enters into transactions involving 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 enters into derivative transactions, especially interest rate and foreign exchange rate swaps.

 

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 less than three months. Considering the term and the characteristics of these instruments, the book values approximate the fair values.

 

Page 53

 


 
 


CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information – March 31, 2018 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

· Classification of financial instruments

 

With the implementation of pronouncements CPC 48/ IFRS9, the classification of financial instruments: held to maturity, loans and receivables and available for sale were replaced by three categories of classification and measurement of financial instruments: amortized cost, fair value through other comprehensive income (VJORA) and fair value through profit or loss (VJR).

 

     

 Consolidated

 

 Parent Company

 

   

 Disclosed on 12/31/2017

 

 Applied on 01/01/2018

 

 Balance at 12/31/2017

 

 Disclosed on 12/31/2017

 

 Applied on 01/01/2018

 

 Balance at 12/31/2017

 Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 Current

                         

 Cash and cash equivalents

 

 

 Loans and receivables

 

 Amortized Cost

 

  3,411,572

 

 Loans and receivables

 

 Amortized Cost

 

393,504

 Short tem investment

 

 

 Loans and receivables

 

 Amortized Cost

 

735,712

 

 Loans and receivables

 

 Amortized Cost

 

716,461

 Accounts receivables, net

 

 

 Loans and receivables

 

 Amortized Cost

 

  2,197,078

 

 Loans and receivables

 

 Amortized Cost

 

  1,898,794

 Loans with related parties

 

 

 Loans and receivables

 

 Amortized Cost

 

2,441

 

 Loans and receivables

 

 Amortized Cost

 

26,701

 Derivative financial instruments

 

 

 VJR

 

 VJR

 

-

 

 VJR

 

 VJR

 

-

 Trading securities

 

 

 VJR

 

 VJR

 

2,952

 

 VJR

 

 VJR

 

2,764

 Dividends receivable

 

 

 Amortized Cost

 

 Amortized Cost

 

41,528

 

 Amortized Cost

 

 Amortized Cost

 

  1,044,242

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Non-current

 

 

 

 

 

 

 

 

 

 

 

 

 

 Loans with related parties

 

 

 Loans and receivables

 

 Amortized Cost

 

554,694

 

 Loans and receivables

 

 Amortized Cost

 

444,091

 Other trade receivables

 

 

 Loans and receivables

 

 Amortized Cost

 

20,024

 

 Loans and receivables

 

 Amortized Cost

 

5,364

 Investments

 

 

 Available for sale

 

 VJR

 

  2,222,479

 

 Available for sale

 

 VJR

 

  2,222,434

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 Current

 

 

 

 

 

 

 

 

 

 

 

 

 

 Borrowings and financing

 

 

 Amortized Cost

 

 Amortized Cost

 

  6,551,764

 

 Amortized Cost

 

 Amortized Cost

 

  6,599,908

 Derivative financial instruments

 

 

 VJR

 

 VJR

 

-

 

 VJR

 

 VJR

 

-

 Trade payables

 

 

 Amortized Cost

 

 Amortized Cost

 

  2,460,774

 

 Amortized Cost

 

 Amortized Cost

 

  1,787,392

 Dividends and interest on capital

 

 

 Amortized Cost

 

 Amortized Cost

 

510,692

 

 Amortized Cost

 

 Amortized Cost

 

2,345

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Non-current

 

 

 

 

 

 

 

 

 

 

 

 

 

 Borrowings and financing

 

 

 Amortized Cost

 

 Amortized Cost

 

  23,017,953

 

 Amortized Cost

 

 Amortized Cost

 

  22,486,485

 

 

 

Page 54

 


 
 


CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information – March 31, 2018 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

                       

Consolidated

Consolidated

 

 

 

 

 

03/31/2018

 

 

 

12/31/2017

 

Notes

 

Fair value through profit or loss

 

Measured at amortized cost method

 

Balances

 

Fair value through profit or loss

 

Measured at amortized cost method

 

Balances

             

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current

                           

Cash and cash equivalents

 

       4

 

               -  

 

      2,234,154

 

   2,234,154

 

               -  

 

      3,411,572

 

   3,411,572

Short-term investments

 

       5

 

               -  

 

         729,027

 

      729,027

 

               -  

 

         735,712

 

      735,712

Trade receivables

 

       6

 

               -  

 

      2,146,437

 

   2,146,437

 

               -  

 

      2,197,078

 

   2,197,078

Derivative financial instruments

 

       8

 

             734

 

                   -  

 

             734

 

               -  

 

                   -  

 

                -  

Trading securities

 

       8

 

          2,622

 

 

 

          2,622

 

          2,952

 

 

 

          2,952

Loans - related parties

 

       8

 

               -  

 

2,498

 

          2,498

 

               -  

 

2,441

 

          2,441

Dividends receivable

 

       6

 

               -  

 

           41,178

 

        41,178

 

               -  

 

           41,528

 

        41,528

Total

     

          3,356

 

      5,153,294

 

   5,156,650

 

          2,952

 

      6,388,331

 

   6,391,283

 

 

 

 

 

 

 

 

                   

 

 

 

 

 

                   

Non-current

             

                   

         

                   

Other trade receivables

 

       8

 

               -  

 

           16,025

 

        16,025

 

               -  

 

           20,024

 

        20,024

Investments

 

       9

 

   2,559,763

 

                   -  

 

   2,559,763

 

   2,222,433

 

                   -  

 

   2,222,433

Loans - related parties

 

       8

 

               -  

 

602,175

 

      602,175

 

               -  

 

         554,694

 

      554,694

Total

     

   2,559,763

 

         618,200

 

   3,177,963

 

   2,222,433

 

           20,024

 

   2,797,151

                             

Total Assets

 

 

 

   2,563,119

 

      5,771,494

 

   8,334,613

 

   2,225,385

 

      6,408,355

 

   9,188,434

                             

Liabilities

 

 

 

 

 

 

 

                   

 

 

 

 

 

                   

Current

             

                   

         

                   

Borrowings and financing

 

     12

 

               -  

 

      5,208,901

 

   5,208,901

 

               -  

 

      6,551,764

 

   6,551,764

Trade payables

 

      -  

 

               -  

 

      3,077,448

 

   3,077,448

 

               -  

 

      2,460,774

 

   2,460,774

Dividends and interest on capital

 

     14

 

               -  

 

           28,331

 

        28,331

 

               -  

 

         510,692

 

      510,692

Total

     

 

 

      8,314,680

 

   8,314,680

 

 

 

      9,523,230

 

   9,523,230

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-current

             

                   

         

                   

Borrowings and financing

 

     12

 

               -  

 

    23,407,338

 

 23,407,338

 

               -  

 

    23,017,953

 

 23,017,953

Total

     

 

 

    23,407,338

 

 23,407,338

 

 

 

    23,017,953

 

 23,017,953

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Liabilities

     

 

 

    31,722,018

 

 31,722,018

 

 

 

    32,541,183

 

 32,541,183

 

 

 

 

Page 55

 


 
 


CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information – March 31, 2018 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

   

Parent Company

Consolidated

 

 

 

 

 

03/31/2018

 

 

 

12/31/2017

 

Notes

 

Fair value through profit or loss

 

Measured at amortized cost method

 

Balances

 

Fair value through profit or loss

 

Measured at amortized cost method

 

Balances

             

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current

                           

Cash and cash equivalents

 

       4

 

               -  

 

         921,589

 

      921,589

 

               -  

 

         393,504

 

      393,504

Short-term investments

 

       5

 

               -  

 

         727,246

 

      727,246

 

               -  

 

         716,461

 

      716,461

Trade receivables

 

       6

 

               -  

 

      1,987,099

 

   1,987,099

 

               -  

 

      1,898,794

 

   1,898,794

Trading securities

 

       8

 

          2,399

 

                   -   

 

          2,399

 

          2,764

 

                   -  

 

          2,764

Loans - related parties

 

       8

 

               -  

 

17,218

 

        17,218

 

               -  

 

           26,701

 

        26,701

Dividends receivable

 

       6

 

               -  

 

         209,466

 

      209,466

 

               -  

 

      1,044,242

 

   1,044,242

Total

 

 

 

          2,399

 

      3,862,618

 

   3,865,017

 

          2,764

 

      4,079,702

 

   4,082,466

               

                   

         

                   

Non-current

 

 

 

 

 

 

 

                   

 

 

 

 

 

                   

Other trade receivables

 

       8

 

               -  

 

             1,365

 

          1,365

 

               -  

 

             5,364

 

          5,364

Investments

 

       9

 

   2,559,763

 

                   -  

 

   2,559,763

 

   2,222,433

 

                   -  

 

   2,222,433

Loans - related parties

 

       8

 

               -  

 

         489,665

 

      489,665

 

               -  

 

         444,091

 

      444,091

Total

 

 

 

   2,559,763

 

         491,030

 

   3,050,793

 

   2,222,433

 

         449,455

 

   2,671,888

                             

Total Assets

     

   2,562,162

 

      4,353,648

 

   6,915,810

 

   2,225,197

 

      4,529,157

 

   6,754,354

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

             

                   

         

                   

Current

 

 

 

 

 

 

 

                   

 

 

 

 

 

                   

Borrowings and financing

 

     12

 

               -  

 

      6,545,916

 

   6,545,916

 

               -  

 

      6,599,908

 

   6,599,908

Trade payables

 

      -  

 

               -  

 

      2,266,775

 

   2,266,775

 

               -  

 

      1,787,392

 

   1,787,392

Dividends and interest on capital

 

     14

 

               -  

 

             2,345

 

          2,345

 

               -  

 

             2,345

 

          2,345

Total

 

 

 

 

 

      8,815,036

 

   8,815,036

 

               -  

 

      8,389,645

 

   8,389,645

                             

Non-current

 

 

 

 

 

 

 

                   

 

 

 

 

 

                -  

Borrowings and financing

 

     12

 

               -  

 

    18,778,729

 

 18,778,729

 

               -  

 

    22,486,485

 

 22,486,485

Total

 

 

 

 

 

    18,778,729

 

 18,778,729

 

               -  

 

    22,486,485

 

 22,486,485

                             

Total Liabilities

 

 

 

 

 

    27,593,765

 

 27,593,765

 

               -  

 

    30,876,130

 

 30,876,130

 

 

· 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

 

   

03/31/2018

     

12/31/2017

 

Level 1

 

Level 2

 

Balances

 

Level 1

 

Level 2

 

Balances

Assets

 

                     

Current

                       

Financial assets at fair value through profit or loss 

 

                     

Derivative financial instruments

     

734

 

734

     

-

 

-

Trading securities

 

2,622

     

2,622

 

2,952

     

2,952

Non-current

                       

Available-for-sale financial assets

 

                     

Investments

 

2,559,763

     

2,559,763

 

2,222,433

     

2,222,433

Total Assets

 

2,562,385

 

734

 

2,563,119

 

2,225,385

 

-

 

2,225,385

                         

 

Level 1: quoted prices (unadjusted) 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.

 

Page 56

 


 
 


CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information – March 31, 2018 – CIA SIDERURGICA NACIONAL

Version: 1

 

There are no assets and liabilities classified as level 3.

 

 

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

 

During the application of IAS 39/CPC 38 until December 2017, the Company has investments in equity instruments, measured at fair value through other comprehensive income, because the nature of the investment is not included in any other categories of financial instruments (loans and receivables, held-to-maturity investments or financial assets at fair value through profit or loss).

 

Gains and losses arising from the variation of the share price, were recorded directly in shareholders' equity under the account "Other comprehensive income" and for each significant decrease in market value an impairment loss was recognized in income.

 

With the implementation of the pronouncements IFRS 9 / CPC 48 as from January 1, 2018, the equity instruments classified as held-to-maturity should be classified as fair value through profit or loss (VJR). In this way, the Company reclassified the investments in common (USIM3) and preferred (USIM5) shares of Usiminas ("Usiminas Shares"), from fair value through other comprehensive income (VJORA) to fair value through profit or loss. In relation to Panatlântica shares (PATI3), currently classified as (VJORA), the Company based on its current business model, whose objective is to maintain this financial asset to obtain contractual cash flows, but adopts the option to reclassify it to VJR, recognizing changes in fair value in profit or loss.

 

Accordingly, the credit balance accumulated in December 2017 in other comprehensive income of R$1,559,682 was reclassified to the statement of income from the effective date of the new standard. With the new classification, changes in fair value are recorded in the statement of income, totaling in the first quarter of 2018 an adjustment gain at fair value of R$ 376,707 and an adjustment gain at fair value accumulated of R$ 1,936,389. (See opening below and note 23).

 

Class of shares

 

03/31/2018

 

Sales of shares

 

12/31/2017

 

 

 

Quantity

 

Share price

 

Closing Balance

 

Quantity

 

Share price

 

Cash received

 

Quantity

 

Share price

 

Closing Balance

 

Fair value adjustment recognized in profit or loss

 

Amount reclassified from other comprehensive income to the income of the year.

USIM3

 

  107.156.651

 

               12,31

 

  1.319.098

 

 

 

 

 

 

 

  107.156.651

 

         10,83

 

  1.160.506

 

           158.592

 

                   694.685

USIM5

 

  111.144.456

 

               10,92

 

  1.213.697

 

        3.136.100

 

       12,56

 

               39.377

 

  114.280.556

 

           9,10

 

  1.039.953

 

           213.121

 

                   865.266

PATI3

 

      1.997.642

 

               13,50

 

       26.968

 

 

 

 

 

 

 

      1.997.642

 

         11,00

 

       21.974

 

               4.994

 

                         (269)

   

  220.298.749

     

  2.559.763

 

        3.136.100

     

               39.377

 

  223.434.849

     

  2.222.433

 

           376.707

 

                1.559.682

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

                1.936.389

 

As of March 31, 2018, the Company's interest in USIMINAS comprised 15.19% in common shares and 20.29% in preferred shares. As of December 31,2017, the Company's interest in USIMINAS comprised 15.19% in common shares and 20.86% in preferred shares.

 

In February 2018, 3,136,100 preferred shares (USIM5) were sold, totaling R $ 39,377 through the exclusive fund "VR1 - Multimarket Private Investment Fund".

 

• 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 and other comprehensive income that have their prices based on the market price on the stock exchange (B3).

 

 

 

Page 57

 


 
 


CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information – March 31, 2018 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

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.

 

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, 2018 is as follows.

 

       

03/31/2018

Foreign Exchange Exposure

 

(Amounts in US$’000)

 

(Amounts in €’000)

Cash and cash equivalents overseas

 

243,913

 

2,761

Trade receivables

 

322,481

 

4,387

 Other assets

 

4,480

 

4,210

Total Assets

 

570,874

 

11,358

Borrowings and financing

 

(4,236,471)

 

(48,305)

Trade payables

 

(175,441)

 

(5,502)

Other liabilities

 

(4,637)

 

(3,131)

Total Liabilities

 

(4,416,549)

 

(56,938)

Foreign exchange exposure

 

(3,845,675)

 

(45,580)

Cash flow hedge accounting

 

1,306,667

   

Net Investment hedge accounting

 

   

48,000

Net foreign exchange exposure

 

(2,539,008)

 

2,420

Perpetual bonds

 

1,000,000

   

Net foreign exchange exposure excluding perpetual bonds

 

(1,539,008)

 

2,420

         

 

CSN is currently in process of redefining its currency hedge strategy. The Company began to focus its hedging strategy to preserve its cash flow capturing the existing natural relationships and the use of 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 13b) we show the derivatives and hedging strategies to hedge foreign exchange and interest rate risks.

 

Page 58

 


 
 


CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information – March 31, 2018 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

13.b) Hedging instruments: Derivatives and hedge accounting:

 

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

 

 

·           Portfolio of derivative financial instruments

 

                       

 

 

Consolidated

               

 

 

 

 

 

 

03/31/2018

               

Appreciation (R$)

 

Fair value
(market)

 

Impact on financial income (cost) in 2018

Counterparties

 

Maturity

 

Functional Currency

 

Notional amount

 

Asset
position

 

Liability
position

 

Amounts receivable / (payable)

 

BNPP

 

06/22/2018 to 09/12/2018

 

Dollar

 

25,315

 

83,931

 

(83,197)

 

734

 

730

Total dollar-to-euro swap

     

25,315

 

83,931

 

(83,197)

 

734

 

730

                             

 

Swap cambial Dólar x Euro

 

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

 

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

 

 

 

 

 

 

 

03/31/2018

 

03/31/2017

Instruments

 

Assets

 

Net Finance Income (Note 23)

 

Current

 

Total

 

Dollar - to - euro swap

 

734

 

734

 

730

 

(229)

Future DI

 

       

-

 

13,224

   

734

 

734

 

730

 

12,995

                 

 

 

·       Cash flow hedge accounting

 

Beginning November 1, 2014, the Company formally designated cash flow hedging relationships to hedge highly probable future cash flows against US 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 impact on liabilities and on exports. The adoption of this hedge accounting does not entail entering into any financial instrument. As of March 31, 2018, US$1.3 billion in exports to be carried out between January 2018 until October 2022 are designated.

 

 

Page 59

 


 
 


CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information – March 31, 2018 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

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.

 

 

The table below shows a summary of the hedging relationships as of March 31, 2018:

 

Designation Date

 

Hedging Instrument

 

Hedged item

 

Type of hedged risk

 

Hedged period

 

Exchange rate on designation

 

Designated amounts (US$’000)

 

Amortizated part (USD'000)

 

Effect on Result
(*) (R$'000)

 

Impact on
Shareholders'
equity (R$'000)

11/03/2014

 

Export prepayments in US$ to third parties

 

Part of the highly probable future monthly iron ore exports

 

Foreign exchange - R$ vs. US$ spot rate

 

 October 2016 -
September 2019

 

2,4442

 

           500.000

 

         (133.334)

 

                        

 

              (322.519)

12/01/2014

 

Export prepayments in US$ to third parties

 

Part of the highly probable future monthly iron ore exports

 

Foreign exchange - R$ vs. US$ spot rate

 

October 2015 -
February 2019

 

2,5601

 

           175.000

 

         (134.999)

 

             13.732

 

                (30.554)

12/18/2014

 

Export prepayments in US$ to third parties

 

Part of the highly probable future monthly iron ore exports

 

Foreign exchange - R$ vs. US$ spot rate

 

 May 2020

 

2,6781

 

           100.000

 

                        

 

                        

 

                (64.570)

07/21/2015

 

Export prepayments in US$ to third parties

 

Part of the highly probable future monthly iron ore exports

 

Foreign exchange - R$ vs. US$ spot rate

 

 July 2019 - March
2021

 

3,1813

 

             60.000

 

                        

 

                        

 

                  (8.550)

07/23/2015

 

Export prepayments in US$ to third parties

 

Part of the highly probable future monthly iron ore exports

 

Foreign exchange - R$ vs. US$ spot rate

 

 July 2019 - March
2021

 

3,2850

 

           100.000

 

                        

 

                        

 

                  (3.880)

07/23/2015

 

Export prepayments in US$ to third parties

 

Part of the highly probable future monthly iron ore exports

 

Foreign exchange - R$ vs. US$ spot rate

 

 October 2018 -
October 2022

 

3,285

 

             30.000

 

                        

 

                        

 

                  (1.164)

07/24/2015

 

Export prepayments in US$ to third parties

 

Part of the highly probable future monthly iron ore exports

 

Foreign exchange - R$ vs. US$ spot rate

 

 October 2018 -
October 2022

 

3,3254

 

           100.000

 

                        

 

                        

 

                       160

07/27/2015

 

Export prepayments in US$ to third parties

 

Part of the highly probable future monthly iron ore exports

 

Foreign exchange - R$ vs. US$ spot rate

 

 October 2018 -
October 2022

 

3,3557

 

             25.000

 

                        

 

                        

 

                       798

07/27/2015

 

Export prepayments in US$ to third parties

 

Part of the highly probable future monthly iron ore exports

 

Foreign exchange - R$ vs. US$ spot rate

 

 October 2018 -
October 2022

 

3,3557

 

             70.000

 

                        

 

                        

 

                    2.233

07/27/2015

 

Export prepayments in US$ to third parties

 

Part of the highly probable future monthly iron ore exports

 

Foreign exchange - R$ vs. US$ spot rate

 

 October 2018 -
October 2022

 

3,3557

 

             30.000

 

                        

 

                        

 

                       957

07/28/2015

 

Export prepayments in US$ to third parties

 

Part of the highly probable future monthly iron ore exports

 

Foreign exchange - R$ vs. US$ spot rate

 

 October 2018 -
October 2022

 

3,3815

 

             30.000

 

                        

 

                        

 

                    1.731

08/03/2015

 

Export prepayments in US$ to third parties

 

Part of the highly probable future monthly iron ore exports

 

Foreign exchange - R$ vs. US$ spot rate

 

 Outubro de 2018 a Outubro de 2022

 

3,3940

 

           355.000

 

                        

 

                        

 

                  24.920

Total

 

 

 

 

 

 

 

 

 

 

 

        1.575.000

 

         (268.333)

 

             13.732

 

              (400.438)

 

 (*) The effect on profit or loss was recognized in other operating expenses.

 

 

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

 

The movement in hedge accounting amounts recognized in shareholders’ equity as of March 31, 2018 is as follows:

 

               
 

12/31/2017

 

Movement

 

Realization

 

03/31/2018

Cash flow hedge accounting

           395,524

 

             18,646

 

            (13,732)

 

           400,438

Fair value of cash flow hedge, net of taxes

           395,524

 

             18,646

 

            (13,732)

 

           400,438

               

 

 

Page 60

 


 
 


CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information – March 31, 2018 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

As of March 31, 2018, the hedging relationships established by the Company were effective, according to prospective tests conducted. Thus, no reversal for hedge accounting ineffectiveness was recognized.

 

 

·       Hedge of net investment in foreign operation

 

CSN has a natural currency exposure in Euros substantially arising from a borrowing taken by a foreign subsidiary with functional currency in Reais, for the acquisition of investments abroad where the functional currency is Euro. Such exposure arises from translating the balance sheets of these subsidiaries for consolidation into CSN, where the exchange difference on the borrowings affected the statement of income, in the financial income (expenses) line item, and the exchange difference on the net assets of the foreign operation directly affected the shareholders equity, in other comprehensive income.

 

As from September 1, 2015, CSN began to adopt the net investment hedge to eliminate such exposure and cover future fluctuations of the Euro on such borrowings. Non-derivative financial liabilities were designated, represented by borrowing agreements with financial institutions in the amount of € 120 million. The account balances as of March 31, 2018 are as follows:

                       

03/31/2018

 

Designation Date

 

Hedging Instrument

 

Hedged item

 

Type of hedged risk

 

Exchange rate on designation

 

Designated amounts (EUR'000)

 

Amortized part (USD’000)

Impact on shareholders' equity

09/01/2015

 

Non-derivative financial liabilities in EUR – Debt contract

 

Investments in subsidiaries which EUR is the functional currency

 

Foreign exchange - R$ vs. EUR spot rate

 

4.0825

 

120,000

 

(72,000)

(13,051)

Total

 

 

 

 

 

 

 

 

 

120,000

 

(72,000)

(13,051)

                         

 

The movement in the amounts related to net investment hedge recognized in shareholders’ equity as of March 31, 2018 is as follows:

             
 

12/31/2017

 

Movement

   

03/31/2018

Net Investment hedge accounting

(17,911)

 

4,860

   

(13,051)

Fair value of net investment hedge in foreign operations

(17,911)

 

4,860

   

(13,051)

 

As of March 31, 2018, the hedging relationships established by the Company were effective, according to prospective tests conducted. Therefore, no reversal for hedge ineffectiveness was recognized.

 

13.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, 2018.

 

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

 

Page 61

 


 
 


CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information – March 31, 2018 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

                 
   

 

 

 

 

 

 

03/31/2018

Currency

 

Exchange rate

 

Probable scenario

 

Scenario 1

 

Scenario 2

USD

 

                    3.3238

 

             3.3903

 

       4.1548

 

           4.9857

EUR

 

                    4.0850

 

             4.1772

 

       5.1063

 

           6.1275

USD x EUR

 

                    1.2321

 

             1.2304

 

       1.5401

 

           1.8482

                 
                 
                 
   

 

 

 

 

12/31/2017

   

Interest

 

Interest rate

 

Scenario 1

 

Scenario 2

   

CDI

 

6.39%

 

7.99%

 

9.59%

   

TJLP

 

6.75%

 

8.44%

 

10.13%

   

Libor

 

2.45%

 

3.06%

 

3.68%

   
                 

 

 

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

 

   

 

 

 

 

 

 

 

 

03/31/2018

Instruments

 

Notional

 

Risk

 

Probable scenario (*)

 

Scenario 1

 

Scenario 2

 

 

 

 

 

 

 

 

 

 

 

Hedge accounting of exports

 

1,306,667

 

Dollar

 

86,893

 

1,085,775

 

2,171,550

 

 

                 

Currency position

 

(3,845,675)

 

Dollar

 

(255,737)

 

(3,195,564)

 

(6,391,128)

(not including exchange derivatives above)

 

                 
                     

Consolidated exchange position

 

(2,539,008)

 

Dollar

 

(168,844)

 

(2,109,789)

 

(4,219,578)

(including exchange derivatives above)

                   

 

 

                 

Net Investment hedge accounting

 

48,000

 

Euro

 

4,426

 

49,020

 

98,040

 

 

                 

Currency position

 

(45,580)

 

Euro

 

(4,202)

 

(46,549)

 

(93,098)

 

 

                 

Consolidated exchange position

 

2,420

 

Euro

 

224

 

2,471

 

4,942

(including exchange derivatives above)

 

                 

 

 

 

 

 

 

 

 

 

 

 

Dollar-to-euro swap

 

25,315

 

Dollar

 

(850)

 

16,052

 

27,243

 

 (*) The probable scenarios were calculated considering the following variations for the risks: Real x Dollar – depreciation of Real by 2.00% / Real x Euro – depreciation of Real by 0.14%. Source: quotations from Central Bank of Brazil and European Central Bank on 04/09/2018.

 

 

·       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, 2018.

 

                   

Consolidated

                   

Impact on profit or loss

Changes in interest rates

 

% p.a

 

Assets

 

Liabilities

 

Probable scenario (*)

 

Scenario 1

 

Scenario 2

TJLP

 

  7.00

 

   

(1,003,712)

 

(3,202)

 

(17,565)

 

(35,130)

Libor

 

  1.84

     

(4,844,015)

 

(44,657)

 

(22,247)

 

(44,494)

CDI

 

  6.89

 

644,525

 

(13,550,383)

 

(206,061)

 

(222,303)

 

(444,606)

                         

(*) The sensitivity analysis is based on the assumption of maintaining as a probable scenario the market values as of March 31, 2017 recognized in the company's assets and liabilities.

 

Page 62

 


 
 


CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information – March 31, 2018 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

13.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 12.

 

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

 

 

 

 

 

 

 

 

 

Consolidated

At March 31, 2018

Less than one year

 

From one to two years

 

From two to five yyears

 

Over five years

 

Total

Borrowings, financing and debentures

5,208,901

 

11,679,756

 

7,125,989

 

4,601,593

 

28,616,239

Trade payables

3,077,448

 

-

 

-

 

-

 

3,077,448

Dividends and interest on capital

28,331

 

-

 

-

 

-

 

28,331

                   

 

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:

 

 

 

 

03/31/2018

 

 

 

12/31/2017

 

Closing Balance

 

Fair value

 

Closing Balance

 

Fair value

Perpetual bonds

            3,328,324

 

         2,576,589

 

            3,312,503

 

         2,602,090

Fixed Rate Notes

            5,689,617

 

         6,402,283

 

            5,751,526

 

         6,207,946

               

 (*) Source: Bloomberg

 

 

Page 63

 


 
 


CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information – March 31, 2018 – CIA SIDERURGICA NACIONAL

Version: 1

 

• 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

 

03/31/2018

 

03/31/2017

Shareholder's equity (equity)

 

       8,189,603

 

       8,288,229

Borrowings and Financing (Third-party capital)

 

     28,513,899

 

     29,510,844

Gross Debit/Shareholder's equity

 

                3.48

 

                3.56

 

 

14.   OTHER PAYABLES

 

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

 

 

 

 

 

 

 

 

Consolidated

 

 

 

 

 

 

 

Parent Company

 

Current

Non-current

Current

 

03/31/2018

 

12/31/2017

 

03/31/2018

 

12/31/2017

 

03/31/2018

 

12/31/2017

 

03/31/2018

 

12/31/2017

Payables to related parties (note 18 a)

61.613

 

57.008

 

 

 

 

 

298.838

 

295.094

 

37.745

 

49.254

Dividends and interest on capital payable (Note 13 I)

28.331

 

510.692

         

2.345

 

2.345

       

Advances from customers

94.732

 

68.521

 

 

 

 

 

70.917

 

50.391

 

 

 

 

Taxes in installments

20.746

 

21.551

 

77.230

 

79.242

 

9.425

 

9.420

 

1.388

 

1.421

Profit sharing - employees

97.247

 

42.699

 

 

 

 

 

60.927

 

26.759

 

 

 

 

Provision for freight

98.006

 

81.699

         

17.200

 

12.578

       

Provision industrial restructuring

3.330

 

1.350

 

 

 

 

 

 

 

 

 

 

 

 

Taxes payable

       

8.440

 

8.410

         

6.954

 

6.924

Other provisions

204.819

 

152.205

 

 

 

 

 

86.894

 

95.729

 

 

 

 

Third party materials in our possession

212

 

231

                       

Other payables

37.309

 

123.945

 

48.147

 

41.671

 

20.665

 

23.245

 

 

 

 

 

    646.345

 

 1.059.901

 

      133.817

 

       129.323

 

    567.211

 

    515.561

 

         46.087

 

         57.599

 

15.   INCOME TAX AND SOCIAL CONTRIBUTION

 

15.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

 

03/31/2018

 

03/31/2017

 

03/31/2018

 

03/31/2017

       

Income tax and social contribution income (expense)

             

Current

(119,914)

 

(114,155)

 

-

 

-

Deferred

(438,797)

 

(22,793)

 

(459,650)

 

2,956

 

(558,711)

 

(136,948)

 

(459,650)

 

2,956

 

 

Page 64

 


 
 


CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information – March 31, 2018 – 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

 

03/31/2018

 

03/31/2017

03/31/2018

03/31/2017

           

Profit before income tax and social contribution

2,045,206

 

254,563

1,931,513

82,674

Tax rate

34%

 

34%

34%

34%

Income tax and social contribution at combined statutory rate

(695,370)

 

(86,551)

(656,714)

(28,109)

Adjustment to reflect the effective rate:

         

Equity pickup

9,448

 

9,514

8,798

50,418

Profit with differentiated rates or untaxed

(42,380)

 

(20,840)

-

-

Transfer pricing adjustment

(9,546)

 

(653)

-

-

Tax loss carryforwards without recognizing deferred taxes

(465,400)

 

(137,880)

(455,949)

(116,051)

Indebtdness limit

(7,800)

 

(7,770)

(7,800)

(7,770)

Unrecorded deferred taxes on temporary differences

1,110,508

 

130,195

1,110,038

129,374

(Losses)/Reversal for deferred income and social contribution tax credits

(459,649)

 

(28,698)

(459,649)

(28,698)

Deferred taxes on foreign profit

(554)

 

-

-

-

Tax incentives

1,379

 

1,590

-

-

Other permanent deductions (add-backs)

653

 

4,145

1,626

3,792

Income tax and social contribution in profit for the period

(558,711)

 

(136,948)

(459,650)

2,956

Effective tax rate

27%

 

54%

24%

-4%

 

Currently, there are no sufficiently strong evidences to support the recognition of tax credits. For this reason, we maintained the recognition of tax credits arising from income tax and social contribution losses up to the limit of 30% of the deferred tax liabilities.

 

 

15.b) Deferred income tax and social contribution:

 

Deferred income tax and social contribution are calculated on income tax and social contribution losses and the corresponding temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements:                   

             

 

 

Consolidated

 

Opening balance

 

Movement

 

Closing balance

 

12/31/2017

 

Shareholders'
Equity

 

P&L

 

Others

 

03/31/2018

         

Deferred

 

 

 

 

 

 

 

 

 

Income tax losses

1,137,234

 

-

 

348,646

 

1

 

1,485,881

Social contribution tax losses

406,884

 

-

 

125,701

 

-

 

532,585

Temporary differences

(2,654,558)

 

(6,007)

 

(913,144)

 

(40,232)

 

(3,613,941)

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

269,899

 

-

 

(599)

 

360

 

269,660

- Provision for environmental liabilities

86,851

 

-

 

(1,781)

 

-

 

85,070

- Asset impairment losses

88,433

 

-

 

(1,832)

 

-

 

86,601

- Inventory impairment losses

45,814

 

-

 

(238)

 

-

 

45,576

- (Gains)/losses on financial instruments

(912)

 

-

 

(441)

 

-

 

(1,353)

- (Gains)/losses on available-for-sale financial assets

417,568

 

528,776

 

(656,766)

 

-

 

289,578

- Actuarial liability (pension and healthcare plan)

273,058

 

-

 

(104)

 

-

 

272,954

- Accrued supplies and services

67,716

 

-

 

18,744

 

-

 

86,460

- Allowance for doubtful debts

47,216

 

-

 

2,790

 

-

 

50,006

- Goodwill on merger

608

 

-

 

-

 

(608)

 

-

- Unrealized ex change differences (1)

1,511,152

 

-

 

(472,178)

 

-

 

1,038,974

- (Gain) on loss of control over Transnordestina

(92,180)

 

-

 

-

 

-

 

(92,180)

- Cash flow hedge accounting

134,479

 

(122,156)

 

-

 

-

 

12,323

- Aquisition Fair Value SWT/CBL

(193,311)

 

(4,396)

 

6,581

 

-

 

(191,126)

- Deferred taxes non computed

(212,236)

 

-

 

(8,981)

 

246

 

(220,971)

- (Losses) estimated/ reversals to deferred taxes credits

(4,130,837)

 

(406,620)

 

193,827

 

-

 

(4,343,630)

- Business Combination

(1,040,536)

 

-

 

2,557

 

-

 

(1,037,979)

- Other

72,660

 

(1,611)

 

5,277

 

(40,230)

 

36,096

Total

(1,110,440)

 

(6,007)

 

(438,797)

 

(40,231)

 

(1,595,475)

 

-

             

-

Total Deferred Assets

63,119

             

79,513

Total Deferred Liabilities

(1,173,559)

             

(1,674,988)

Total Deferred

(1,110,440)

             

(1,595,475)

                   

 

Page 65

 


 
 


CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information – March 31, 2018 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

             

Parent Company

 

Opening balance

 

Movement

Closing balance

 

12/31/2017

 

Shareholders'
Equity

 

P&L

 

03/31/2018

       

Deferred tax assets

 

 

 

 

 

 

 

Income tax losses

1,033,661

 

 

 

342,145

 

1,375,806

Social contribution tax losses

369,549

 

 

 

123,359

 

492,908

Temporary differences

(1,973,769)

 

 

 

(925,154)

 

(2,898,923)

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

215,128

 

 

 

(448)

 

214,680

- Provision for environmental liabilities

84,317

 

 

 

(2,177)

 

82,140

- Asset impairment losses

56,505

 

 

 

(1,517)

 

54,988

- Inventory impairment losses

17,669

 

 

 

(627)

 

17,042

(Gain)/loss in financial instruments

(912)

 

 

 

(441)

 

(1,353)

- (Gains)/losses on available-for-sale financial assets

417,568

 

528,776

 

(656,766)

 

289,578

- Actuarial liability (pension and healthcare plan)

276,792

 

 

     

276,792

- Accrued supplies and services

55,722

 

 

 

19,993

 

75,715

- Allowance for doubtful debts

33,168

 

 

 

2,383

 

35,551

- Unrealized ex change differences (1)

1,593,587

 

 

 

(481,695)

 

1,111,892

(Gain) in control loss on Transnorderstina

(92,180)

 

 

 

 

 

(92,180)

- Cash flow hedge accounting

134,479

 

(122,156)

 

 

 

12,323

- (Losses) estimated/ reversals to deferred taxes credits

(4,130,837)

 

(406,620)

 

193,827

 

(4,343,630)

- Business Combination

(699,383)

 

 

 

 

 

(699,383)

- Deferred IR and CS on Business Combination of CGPAR

(22,609)

   

 

 

 

(22,609)

- Other

87,217

 

 

 

2,314

 

89,531

Total

(570,559)

 

 

 

(459,650)

 

(1,030,209)

               

 

(570,559)

         

(1,030,209)

 

(570,559)

         

(1,030,209)

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

 

Page 66

 


 
 


CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information – March 31, 2018 – CIA SIDERURGICA NACIONAL

Version: 1

 

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 2013 to 2018, these foreign subsidiaries generated profits amounting to R$ 962,371. 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$ 314,793

 

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 the financial statements.

 

15.c) Income tax and social contribution recognized in shareholders' equity:

 

The income tax and social contribution recognized directly in shareholders' equity are as follows:

 

 

Consolidated

 

Parent Company

 

03/31/2018

 

12/31/2017

 

03/31/2018

 

12/31/2017

Income tax and social contribution

 

 

 

 

 

 

 

Actuarial gains on defined benefit pension plan

176,688

 

171,473

 

180,834

 

175,649

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

(180,834)

 

(175,649)

 

(180,834)

 

(175,649)

Change in the fair value of assets measured at fair value through other comprehensive income

(1,606)

 

(525,107)

 

(1,606)

 

(525,107)

Estimated losses for deferred income and social contribution tax assets - assets measured at fair value through other comprehensive income

1,606

 

525,107

 

1,606

 

525,107

Exchange differences on translating foreign operations

(369,017)

 

(369,017)

 

(369,017)

 

(369,017)

Cash flow hedge accounting

12,322

 

134,478

 

12,322

 

134,478

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

(12,322)

 

(134,478)

 

(12,322)

 

(134,478)

 

(373,163)

 

(373,193)

 

(369,017)

 

(369,017)

 

 

Page 67

 


 
 


CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information – March 31, 2018 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

16.   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

 

 

03/31/2018

 

12/31/2017

 

03/31/2018

 

12/31/2017

 

03/31/2018

 

12/31/2017

 

03/31/2018

 

12/31/2017

Tax

 

114,835

 

113,451

 

54,905

 

52,542

 

55,719

 

55,285

 

37,580

 

36,709

Social security

 

75,047

 

74,522

 

50,098

 

50,098

 

73,034

 

72,542

 

50,098

 

50,098

Labor

 

443,349

 

451,173

 

214,922

 

202,104

 

339,949

 

345,878

 

172,234

 

160,603

Civil

 

154,174

 

148,212

 

21,092

 

22,752

 

129,188

 

121,742

 

10,527

 

10,527

Environmental

 

39,206

 

37,733

 

1,826

 

1,826

 

36,101

 

34,598

 

1,826

 

1,826

Deposit of a guarantee

 

 

 

 

 

9,217

 

10,029

 

 

 

 

 

 

 

 

 

 

826,611

 

825,091

 

352,060

 

339,351

 

633,991

 

630,045

 

272,265

 

259,763

 

Classification

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current

 

87,602

 

105,958

 

 

 

 

 

51,579

 

74,586

 

 

 

 

Non-current

 

739,009

 

719,133

 

352,060

 

339,351

 

582,412

 

555,459

 

272,265

 

259,763

 

 

826,611

 

825,091

 

352,060

 

339,351

 

633,991

 

630,045

 

272,265

 

259,763

 

The movement in the provision for tax, social security, labor, civil and environmental risks in the period ended March 31, 2018 is as follows:

                   

Consolidated

 

 

 

 

 

 

 

 

 

 

Current + Non-current

Nature

 

12/31/2017

 

Additions

 

Net update on amount

 

Net utilization of reversal

 

03/31/2018

Tax

 

113,451

 

13,421

 

1,201

 

(13,238)

 

114,835

Social security

 

74,522

 

1,594

 

467

 

(1,536)

 

75,047

Labor

 

451,173

 

1,285

 

1,447

 

(10,556)

 

443,349

Civil

 

148,212

 

3,951

 

4,103

 

(2,092)

 

154,174

Environmental

 

37,733

 

8

 

1,548

 

(83)

 

39,206

   

825,091

 

20,259

 

8,766

 

(27,505)

 

826,611

 

 

 

 

 

 

 

 

 

 

 

Current + Non-current

Nature

 

12/31/2017

 

Additions

 

Net update on amount

 

Net utilization of reversal

 

03/31/2018

Tax

 

55,285

 

13,414

 

512

 

(13,492)

 

55,719

Social security

 

72,542

 

1,594

 

449

 

(1,551)

 

73,034

Labor

 

345,878

 

1,159

 

1,062

 

(8,150)

 

339,949

Civil

 

121,742

 

3,881

 

3,565

 

-

 

129,188

Environmental

 

34,598

 

8

 

1,501

 

(6)

 

36,101

   

630,045

 

20,056

 

7,089

 

(23,199)

 

633,991

 

Page 68

 


 
 


CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information – March 31, 2018 – CIA SIDERURGICA NACIONAL

Version: 1

 

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, this provision includes tax liabilities resulting from lawsuits filed by the Company, 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, 2018 and December 31, 2017.

 

 

 

03/31/2018

 

12/31/2017

Income tax / Social contribution - Assessment Notice and imposition of fine (AIIM) - Capital gain for an alleged sale of the shares of its subsidiary NAMISA.

 

  11.236.452

 

  11.073.961

         

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

 

    2.649.179

 

    2.623.179

         

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

 

    2.527.831

 

    2.500.606

         

Notices of violation and imposition of fine - Income taxes and social contribution due to profits from foreign subsidiaries (years 2008,2010 and 2011) (1)

 

    1.878.099

 

    1.858.640

         

Tax foreclosures - ICMS - Electricity credits

 

       933.220

 

       920.306

         

Installments MP 470 - alleged insufficiency of tax losses

 

       712.946

 

       704.739

         

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

 

    1.705.253

 

    1.685.648

         

Disallowance of the ICMS credits - Transfer of iron ore

 

       505.878

 

       499.006

         

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

 

       279.530

 

       275.233

         

Disallowance of the tax losses arising on adjustments to the SAPLI

 

       497.625

 

       491.862

         

Assessment Notice - ICMS - shipping and return merchandise for Industrialization

 

       826.689

 

       816.199

         

Assessment Notice- Income tax- Capital Gain of CFM vendors located outside

 

       206.006

 

       203.185

         

CFEM - Divergence on the understanding between CSN and DNPM on the calculation basis

 

       294.733

 

       290.249

         

Assessment Notice - ICMS - Question on sales to Incentivized Zone

 

       173.038

 

       170.330

         

Other tax (federal, state, and municipal) lawsuits

 

    3.094.095

 

    3.065.131

         

Social security lawsuits

 

       280.539

 

       278.600

         

Law suit applied by Brazilian antitrust authorities (CADE)

 

         98.848

 

         98.189

         

Other civil lawsuits

 

    1.152.490

 

    1.111.944

         

Labor and social security lawsuits

 

    1.569.560

 

    1.569.712

         

Environmental lawsuits - ACP TAC/PAC - Compliance with environmental obligations

 

       223.249

 

       216.878

         

Tax foreclosures - Fine of Volta Grande IV

 

         71.087

 

         67.620

         

Others Enviromental lawsuits

 

       120.129

 

       117.858

 

 

  31.036.476

 

  30.639.075

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.

 

Page 69

 


 
 


CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information – March 31, 2018 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

17.   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, 2017 and, accordingly, the Company decided not to repeat it in the condensed interim financial information as of March 31, 2018.

 

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

 

 

 

 

Consolidated

 

 

 

Parent Company

 

03/31/2018

 

12/31/2017

 

03/31/2018

 

12/31/2017

Environmental liabilities

250,313

 

255,517

 

241,904

 

248,306

Asset retirement obligations

83,430

 

81,496

 

625

 

612

 

333,743

 

337,013

 

242,529

 

248,918

 

 

18.   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, 2017.

 

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

 

·       By transaction

 

Consolidated

   

Current

Non-current

Total

   

03/31/2018

 

12/31/2017

 

03/31/2018

 

12/31/2017

 

03/31/2018

 

12/31/2017

                         

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Trade receivables(note 6)

 

139,692

 

115,388

         

139,692

 

115,388

Dividends receivable (note 6)

 

41,178

 

41,528

         

41,178

 

41,528

Actuarial asset (note 8)

         

104,877

 

111,281

 

104,877

 

111,281

Financial investments/ investments

 

78,088

 

53

         

78,088

 

53

Loans (note 8)

 

2,498

 

2,441

 

602,175

 

554,694

 

604,673

 

557,135

Other receivables (note 8)

 

3,577

 

3,577

 

30,145

 

30,770

 

33,722

 

34,347

Total Deferred   

265,033

 

162,987

 

737,197

 

696,745

 

1,002,230

 

859,732

Liabilities

 

                     

Other payables (Note 14)

                       

Accounts payable

 

61,613

 

57,008

         

61,613

 

57,008

Trade payables

 

97,452

 

81,063

         

97,452

 

81,063

Actuarial liabilities

 

       

41,937

 

41,937

 

41,937

 

41,937

Total Deferred Liabilities   

159,065

 

138,071

 

41,937

 

41,937

 

201,002

 

180,008

 

   

31/03/2018

 

31/03/2017

P&L

 

 

 

 

Revenues

       

Sales

 

293,123

 

250,657

Interest (note 24)

 

14,225

 

20,177

Expenses

 

     

Purchases

 

(295,724)

 

(258,307)

Foreing exchange and monetary variations, net

 

-

 

(4,381)

   

11,624

 

8,146

 

Page 70

 


 
 


CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information – March 31, 2018 – CIA SIDERURGICA NACIONAL

Version: 1

 

·       By company

 

   

Consolidated

   

Assets

 

Liabilities

 

P&L

 

Current

 

Non-current

 

Total

 

Current

 

Non-current

 

Total

 

Sales

 

Purchases

 

Financial income (costs), net

 

Exchange rate variations, net

Total

                   

Joint-venture and Joint-operation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Itá Energética S.A.

 

                -  

 

                  -  

 

                    

 

             2,741

 

               -  

 

           2,741

 

                 -  

 

        (7,962)

 

                   -  

   

               (7,962)

MRS Logística S.A.

 

        40,828

 

                  -  

 

         40,828

 

         110,781

 

 

 

       110,781

 

                 -  

 

    (229,994)

 

                   -  

 

 

           (229,994)

CBSI - Companhia Brasileira de Serviços e Infraestrutura

 

             360

 

                  -  

 

              360

 

           25,837

 

               -  

 

         25,837

 

                19

 

      (38,704)

 

                   -  

   

             (38,685)

Transnordestina Logística S.A (1)

 

             248

 

         602,175

 

       602,423

 

             7,382

 

               -  

 

           7,382

 

              184

 

        (1,613)

 

           11,118

 

 

                9,689

   

        41,436

 

         602,175

 

       643,611

 

         146,741

 

                  

 

       146,741

 

              203

 

    (278,273)

 

           11,118

 

                    

           (266,952)

Other related parties

 

 

 

 

 

                    

 

 

 

 

 

                    

 

 

 

 

 

 

 

 

 

CBS Previdência

 

                -  

 

         104,877

 

       104,877

 

                   -  

 

       41,937

 

         41,937

               

                         

Fundação CSN

 

          1,831

 

 

 

           1,831

 

                556

 

               -  

 

              556

 

                  6

 

           (492)

 

                   -  

 

 

                  (486)

Banco Fibra (2)

 

        78,088

 

                      

 

         78,088

 

                      

 

                  

 

                    

 

                    

 

                   

 

             3,050

   

                3,050

Usiminas

 

 

 

                  -  

 

                    

 

                  80

 

               -  

 

                80

 

                 -  

 

           (362)

 

 

 

 

                  (362)

Panatlântica (3)

 

      128,917

 

             1,125

 

       130,042

 

           11,688

     

         11,688

 

       265,020

 

      (15,745)

       

            249,275

Ibis Participações e Serviços

 

                -  

 

                  -  

 

                    

 

 

 

               -  

 

                    

 

                 -  

 

           (779)

 

 

 

 

                  (779)

Partifib Projetos Imobiliários

 

               94

 

                  -  

 

                94

 

                   -  

     

                    

 

              473

     

                   -  

   

                   473

Vicunha Imóveis Ltda.

 

                   

 

                      

 

                    

 

                      

 

                  

 

                    

 

                    

 

             (58)

 

                      

 

 

                    (58)

Vicunha Serviços Ltda.

 

                   

 

                      

 

                    

 

                      

 

                  

 

                    

 

                    

 

             (15)

 

                      

   

                    (15)

Vicunha Ind de Implementos

 

                   

 

                      

 

                    

 

                      

 

                  

 

                    

 

                24

 

                   

 

                      

 

 

                     24

   

      208,930

 

         106,002

 

       314,932

 

           12,324

 

       41,937

 

         54,261

 

       265,523

 

      (17,451)

 

             3,050

 

                    

            251,122

Associates

 

 

 

 

 

 

 

 

 

 

 

                    

 

 

 

 

 

 

 

 

 

Arvedi Metalfer do Brasil S.A.

 

        14,667

 

           29,020

 

         43,687

 

                   -  

 

               -  

 

                    

 

         27,397

 

               -  

 

                  57

   

              27,454

Total at 03/31/2018

 

      265,033

 

         737,197

 

    1,002,230

 

         159,065

 

       41,937

 

       201,002

 

       293,123

 

    (295,724)

 

           14,225

 

                    

              11,624

Total at 12/31/2017

 

      162,987

 

         696,745

 

       859,732

 

         138,071

 

       41,937

 

       180,008

 

                    

 

                   

 

                      

 

 

 

Total at 03/31/2017

 

                   

 

                      

 

                    

 

                      

 

                  

 

                    

 

       250,657

 

    (258,307)

 

           20,177

 

         (4,381)

                8,146

1.    Transnordestina Logística S.A: Assets: Refers mainly to loan agreements in R$: Interest from 102.0% to 115.0% of the CDI. As of March 31, 2018, the loans amounted to R$602,175 (R$507,009 as of December 31, 2017).

 

2.    Banco Fibra S.A: Assets: Refers mainly to Eurobond from Fibra Bank with maturity in February 2018.

 

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

 

 

 

Page 71

 


 
 


CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information – March 31, 2018 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

·       By transaction

 

 

   

 

 

 

 

 

 

 

 

 

 

Parent Company

 

 

Current

Non-current

Total

   

03/31/2018

 

12/31/2017

 

03/31/2018

 

12/31/2017

 

03/31/2018

 

12/31/2017

                         

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Trade receivables (1) (note 6)

 

902.809

 

831.993

         

902.809

 

831.993

Dividends receivable (note 6)

 

209.466

 

1.044.242

 

 

 

 

 

209.466

 

1.044.242

Actuarial asset (note 8)

         

90.839

 

95.898

 

90.839

 

95.898

Loans (note 8)

 

17.218

 

26.701

 

489.665

 

444.091

 

506.883

 

470.792

Short-term investments / Investments (2)

 

120.565

 

2.619

 

113.985

 

127.569

 

234.550

 

130.188

Other receivables (3) (note 8)

 

43.929

 

37.007

 

329.785

 

320.377

 

373.714

 

357.384

   

1.293.987

 

1.942.562

 

1.024.274

 

987.935

 

2.318.261

 

2.930.497

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Borrowings and financing

                       

Prepayment (note 12)

 

807.117

 

72.019

 

4.043.364

 

4.856.104

 

4.850.481

 

4.928.123

Intercompany Bonds (nota 12)

 

3.400

 

27.450

 

309.113

 

3.436.385

 

312.513

 

3.463.835

Intercompany Loans (note 13)

 

1.125.516

 

1.113.411

 

1.526.269

 

1.620.921

 

2.651.785

 

2.734.332

   

1.936.033

 

1.212.880

 

5.878.746

 

9.913.410

 

7.814.779

 

11.126.290

Other payables (Note 14)

 

 

 

 

 

 

 

 

 

 

 

 

Trade payables (4)

 

298.838

 

295.094

 

37.745

 

49.254

 

336.583

 

344.348

Trade payables

 

200.000

 

146.631

 

 

 

 

 

200.000

 

146.631

Actuarial liabilities

         

41.937

 

41.937

 

41.937

 

41.937

 

 

498.838

 

441.725

 

79.682

 

91.191

 

578.520

 

532.916

                         

 

 

03/31/2018

 

03/31/2017

               

P&L

 

 

                   

Revenues

 

 

 

 

               

Sales/Others

 

1.058.449

 

869.358

               

Interest (note 24)

 

14.744

 

16.913

               

Exclusive funds (note 24)

 

44

 

25.673

               

Expenses

 

 

 

 

               

Purchases

 

     (487.690)

 

     (467.131)

               

Interest (note 24)

 

     (100.913)

 

     (119.461)

               

Foreing exchange and monetary variations, net

 

         (5.561)

 

       283.731

               

 

 

479.073

 

609.083

               
 

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 and in the Fibra Bank. In noncurrent refers to investments in Usiminas shares classified as fair value through profit or loss.

 

Current: Refers mainly to pass through of administrative expenses amounting to R$ 36,481.

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

 

3.      Current: Refers mainly to commission and logistics expenses related to sales of steel for resale through its subsidiary CSN LLC.

 

Noncurrent: Refers mainly to assignment of credits from income tax and social contribution losses with Ferrovia Transnordestina Logistica)

 

 

 

Page 72

 


 
 


CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information – March 31, 2018 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

·       By company 

 

   

 

               

Parent Company

   

Assets

 

Liabilities

 

P&L

 

Current

 

Non-current

 

Total

 

Current

 

Non-current

 

Total

 

Sales/Others

 

Purchases

 

Financial income (costs), net

 

Exchange rate variations, net

 

Total

                     

Subsidiaries

 

 

 

 

 

                    

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Companhia Metalúrgica Prada (1)

 

      252,151

 

         121,336

 

       373,487

 

           10,540

 

             196

 

         10,736

 

          223,100

 

      (21,977)

 

                      

 

                   

 

      201,123

Estanho de Rondônia S.A.

 

        16,345

 

             1,766

 

         18,111

 

                      

 

                   

 

                    

 

                       

 

      (10,115)

 

                300

 

                   

 

        (9,815)

Sepetiba Tecon S.A.

 

        10,641

 

           96,747

 

       107,388

 

           29,427

 

                   

 

         29,427

 

                   73

 

      (21,235)

 

                109

 

                   

 

      (21,053)

Minérios Nacional S.A.

 

                 1

 

           45,195

 

         45,196

 

                      

 

                   

 

                    

 

                     1

 

                   

 

                      

 

                   

 

                 1

CSN Mineração S.A.  (2)

 

      277,449

 

                       

 

       277,449

 

           84,127

 

                   

 

         84,127

 

              5,000

 

    (251,701)

 

                      

 

                   

 

    (246,701)

CSN Energia S.A.

 

             116

 

                      

 

              116

 

           72,975

 

                   

 

         72,975

 

                       

 

      (57,602)

 

                      

 

                   

 

      (57,602)

Ferrovia Transnordestina Logística S.A.

 

                -  

 

           31,920

 

         31,920

 

                      

 

        37,551

 

         37,551

 

                       

 

                   

 

                      

 

            (677)

 

           (677)

Companhia Siderúrgica Nacional, LLC (3)

 

      400,916

 

                      

 

       400,916

 

         246,108

 

                   

 

       246,108

 

          272,191

 

                   

 

                      

 

          1,832

 

      274,023

CSN Resources S.A. (4)

 

 

 

                      

 

                    

 

      1,465,689

 

   3,953,621

 

    5,419,310

 

                       

 

                   

 

         (86,275)

 

          1,961

 

      (84,314)

Lusosider Aços Planos, S.A.

 

        60,334

 

                      

 

         60,334

 

                176

 

                   

 

              176

 

          177,984

 

                   

 

                      

 

          2,031

 

      180,015

CSN Islands XI Corp. (5)

 

                -  

 

                      

 

                    

 

                      

 

   1,001,107

 

    1,001,107

 

                       

 

                   

 

                      

 

         (4,383)

 

        (4,383)

CSN Islands XII Corp. (6)

 

                -  

 

                      

 

                    

 

         470,344

 

      924,016

 

    1,394,360

 

                       

 

                   

 

         (14,637)

 

         (6,325)

 

      (20,962)

Companhia Florestal do Brasil

 

          1,103

 

             2,676

 

           3,779

 

                      

 

                   

 

                    

 

                 145

 

                   

 

                      

 

                   

 

             145

Stahlwerk Thüringen GmbH

 

                -  

 

                      

 

                    

 

                  18

 

                   

 

                18

 

                       

 

                   

 

                      

 

                   

 

                   

   

   1,019,056

 

         299,640

 

    1,318,696

 

      2,379,404

 

   5,916,491

 

    8,295,895

 

          678,494

 

    (362,630)

 

       (100,503)

 

         (5,561)

 

      209,800

Joint-venture e Joint-operation

 

                -  

 

                      

 

                    

 

                      

 

                   

 

                    

 

                       

 

                   

 

                      

 

                   

 

                   

MRS Logística S.A.

 

        20,419

 

                      

 

         20,419

 

           25,673

 

                   

 

         25,673

 

                       

 

      (82,485)

 

                      

 

                   

 

      (82,485)

CBSI - Companhia Brasileira de Serviços e Infraestrutura

 

             360

 

                      

 

              360

 

           17,855

 

                   

 

         17,855

 

                   19

 

      (25,404)

 

                      

 

                   

 

      (25,385)

Transnordestina Logística S.A. (7)

 

             248

 

         489,665

 

       489,913

 

                      

 

                   

 

                    

 

                       

 

                   

 

             9,212

 

                   

 

          9,212

 

 

        21,027

 

         489,665

 

       510,692

 

           43,528

 

                   

 

         43,528

 

                   19

 

    (107,889)

 

             9,212

 

                   

 

      (98,658)

Other related parties

 

                -  

 

                       

 

                    

 

                      

 

                   

 

                    

 

                       

 

                   

 

                      

 

                   

 

                   

CBS Previdência

 

                -  

 

           90,839

 

         90,839

 

                      

 

        41,937

 

         41,937

 

                       

 

                   

 

                      

 

                   

 

                   

Fundação CSN

 

          1,831

 

                      

 

           1,831

 

                171

 

                   

 

              171

 

                     6

 

           (212)

 

                      

 

                   

 

           (206)

Banco Fibra

 

        78,235

 

                      

 

         78,235

 

                      

 

                   

 

                    

 

                       

 

                   

 

             5,065

 

                   

 

          5,065

Usiminas

 

                -  

 

                      

 

                    

 

                  80

 

                   

 

                80

 

                       

 

           (362)

 

                      

 

                   

 

           (362)

Panatlântica (8)

 

      128,917

 

             1,125

 

       130,042

 

           11,688

 

                   

 

         11,688

 

          265,020

 

      (15,745)

 

                      

 

                   

 

      249,275

Ibis Participações e Serviços

 

                -  

 

                      

 

                    

 

                      

 

                   

 

                    

 

                       

 

           (779)

 

                      

 

                   

 

           (779)

Partifib Projetos Imobiliários

 

               94

 

                      

 

                94

 

                      

 

                   

 

                    

 

                 473

 

                   

 

                      

 

                   

 

             473

Vicunha Imóveis Ltda.

 

                -  

 

                  -  

 

                -  

 

                   -  

 

                -  

 

                 -  

 

                   -  

 

             (58)

 

                   -  

 

                -  

 

             (58)

Vicunha Serviços Ltda.

 

                -  

 

                  -  

 

                -  

 

                   -  

 

                -  

 

                 -  

 

                   -  

 

             (15)

 

                   -  

 

                -  

 

             (15)

Vicunha Ind. de Implementos

 

                -  

 

                  -  

 

                -  

 

                   -  

 

                -  

 

                 -  

 

                   24

 

               -  

 

                   -  

 

                -  

 

               24

 

 

      209,077

 

           91,964

 

       301,041

 

           11,939

 

        41,937

 

         53,876

 

          265,523

 

      (17,171)

 

             5,065

 

                -  

 

      253,417

Associates

 

                -  

 

                      

 

                    

 

                      

 

                   

 

                    

 

                       

 

                   

 

                      

 

                   

 

                   

Arvedi Metalfer do Brasil S.A.

 

          2,497

 

           29,020

 

         31,517

 

                      

 

                   

 

                    

 

                   29

 

                   

 

                  57

 

                   

 

               86

   

                -  

 

                      

 

                    

 

                      

 

                   

 

                    

 

                       

 

                   

 

                      

 

                   

 

                   

Exclusive Funds

 

                -  

 

                      

 

                    

 

                      

 

                   

 

                    

 

                       

 

                   

 

                      

 

                   

 

                   

Diplic, Caixa Vertice, VR1, BB Steel (9)

 

        42,330

 

         113,985

 

       156,315

 

                      

 

                   

 

                    

 

          114,384

 

                   

 

                  44

 

                   

 

      114,428

 

 

                -  

 

                      

 

                    

 

                      

 

                   

 

                    

 

                       

 

                   

 

                      

 

                   

 

                   

Total at 03/31/2018

 

   1,293,987

 

      1,024,274

 

    2,318,261

 

      2,434,871

 

   5,958,428

 

    8,393,299

 

       1,058,449

 

    (487,690)

 

         (86,125)

 

         (5,561)

 

      479,073

Total at 12/31/2017

 

   1,942,562

 

         987,935

 

    2,930,497

 

      1,654,605

 

 10,004,601

 

  11,659,206

 

                       

 

                   

 

                      

 

                   

 

                   

Total at 03/31/2017

 

                   

 

                      

 

                    

 

                      

 

                   

 

                    

 

          869,358

 

    (467,131)

 

         (76,875)

 

      283,731

 

      609,083

1.      Companhia Metalúrgica Prada: Refers mainly to receivables in the amount of R$252,151 as of March 31, 2018 (197,654 as of December 31, 2017), and debentures from the indirect subsidiary CBL in the amount of R$121,336.

 

2.      CSN Mineração: Assets: Refers mainly to dividends in the amount of R$187,516, and pass through of administrative expenses in the amount of R$86,886.

Liabilities: Payables from purchases of iron ore and port services.

 

3.      Companhia Siderurgica Nacional, LLC: Receivables of R$400,916 as of December 31, 2018 (R$232,505 as of December 31, 2017), related to sale of steel for resale.

 

4.      CSN Resources SA: Prepayment and Fixed Rate Notes.  As of December 31, 2018, the loans amounted to R$5,419,310 (R$7,446,925 as of December 31, 2017).

 

5.      CSN Islands XI Corp.: Intercompany contracts in US dollars. As of December 31, 2018, loans total R$1,001,107 (R$1,058,560 as of December 31, 2017\).

 

6.    CSN Islands XII Corp.: Refers mainly to prepayment contracts and Intercompany contracts in dollar. As of December 31, 2018, loans total R$1,394,360 (R$1,417,099 as of December 31, 2017).

 

7.    Transnordestina Logística S.A. Noncurrent assets: refers to an intercompany contract in the amount of R$489,665 (R$ 444,091 as of December 31,2017).

 

8.    Panatlântica S.A: Current assets: refers to accounts receivable for the supply of flat steel in the amount of R$ 128,917 (R$ 109,565 as of December 31,2017).

 

 

Page 73

 


 
 


CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information – March 31, 2018 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

9.    Exclusive funds: Current assets: Refers mainly to investments in government securities and CDBs, in the amount of R$42,330 (R$ 2,567 as of December 31, 2017). Noncurrent assets: Refers to Usiminas S.A. shares in the amount of R$ 113,985 (R$ 127,569 as of December 31,2017). The funds VR1 and Diplic II are managed by Taquari Asset.

 

18.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, 2018.

 

 

         
   

03/31/2018

 

03/31/2017

   

Statement of Income

Short-term benefits for employees and officers

 

                  9,393

 

                  5,283

Post-employment benefits

 

                       26

 

                       53

 

 

                  9,419

 

                  5,336

 

 

19.   SHAREHOLDERS’ EQUITY

 

19.a) Paid-in capital

 

Fully subscribed and paid-in capital as of March 31, 2018 and December 31, 2017 is R$4,540,000 comprising 1,387,524,047 book-entry common shares without par value. Each common share entitles to one vote in resolutions of the General Meeting.

 

19.b) Authorized capital

 

The Company’s bylaws in effect as of March 31, 2018 determine that the capital can be raised to up to 2,400,000,000 shares by decision of the Board of Directors.

 

19.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 6,404/76, up to the ceiling of 20% of the share capital.  

 

19.d) Ownership structure

 

As of March 31, 2018, the Company’s ownership structure was as follows:

 

 

 

 

 

03/31/2018

 

 

 

 

 

12/31/2017

   

Number of common shares

 

% of total shares

 

% of voting capital

 

Number of common shares

 

% of total shares

 

% of voting capital

Vicunha Aços S.A. (*)

 

682,855,454

 

49.21%

 

50.32%

 

682,855,454

 

49.21%

 

50.32%

Rio Iaco Participações S.A. (*)

 

58,193,503

 

4.19%

 

4.29%

 

58,193,503

 

4.19%

 

4.29%

CFL Participações S.A. (*)   

 

3,977,536

 

0.29%

 

0.29%

 

3,977,536

 

0.29%

 

0.29%

Vicunha Textil S.A. (*)                      

 

4,927,000

 

0.36%

 

0.36%

 

4,927,000

 

0.36%

 

0.36%

Caixa Beneficente dos Empregados da CSN - CBS

 

20,143,031

 

1.45%

 

1.48%

 

20,143,031

 

1.45%

 

1.48%

BNDES Participações S.A. – BNDESPAR

 

8,794,890

 

0.63%

 

0.65%

 

8,794,890

 

0.63%

 

0.65%

NYSE (ADRs)

 

296,042,642

 

21.34%

 

21.81%

 

303,590,364

 

21.88%

 

22.37%

BM&FBovespa

 

282,198,991

 

20.34%

 

20.80%

 

274,651,269

 

19.79%

 

20.24%

 

 

 1,357,133,047

 

97.81%

 

100.00%

 

 1,357,133,047

 

97.81%

 

100.00%

Treasury shares

 

30,391,000

 

2.19%

 

 

 

30,391,000

 

2.19%

 

 

Total shares

 

 1,387,524,047

 

100.00%

 

 

 

 1,387,524,047

 

100.00%

 

 

 
(*) Controlling group companies.

 

Page 74

 


 
 


CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information – March 31, 2018 – CIA SIDERURGICA NACIONAL

Version: 1

 

19.e) Treasury shares

 

The Board of Directors authorized various share buyback programs in order to hold shares in treasury for subsequent disposal and/or cancelation with a view to maximizing the generation of value to the shareholder through an efficient capital structure management, as shown in the table below:

 

Program

 

Board’s Authorization

 

Authorized quantity

 

Program period

 

Average buyback price

 

Minimum and maximum buyback price

 

Number bought back

 

Share cancelation

 

Sales of shares

 

Balance in treasury

 

3/13/2014

 

   70.205.661

 

From 3/14/2014 to 4/14/2014

 

R$ 9,34

 

R$ 9,22 e R$ 9,45

 

      2.350.000

 

                      

 

 

 

    2.350.000

 

4/15/2014

 

   67.855.661

 

From 4/16/2014 to 5/23/2014

 

R$ 8,97

 

R$ 8,70 e R$ 9,48

 

      9.529.500

 

                      

     

  11.879.500

 

5/23/2014

 

   58.326.161

 

From 5/26/2014 to 6/25/2014

 

R$ 9,21

 

R$ 8,61 e R$ 9,72

 

    31.544.500

 

                      

 

 

 

  43.424.000

 

6/26/2014

 

   26.781.661

 

From 6/26/2014 to 7/17/2014

 

R$ 10,42

 

R$ 9,33 e R$ 11,54

 

    26.781.661

 

                      

     

  70.205.661

               

 

7/18/2014

 

                     

 

 

 

Not applicable

 

Not applicable

 

                      

 

    60.000.000

(1)

 

 

  10.205.661

 

7/18/2014

 

   64.205.661

 

From 7/18/2014 to 8/18/2014

 

R$ 11,40

 

R$ 11,40

 

         240.400

 

                      

     

  10.446.061

               

 

8/19/2014

 

                     

 

 

 

Not applicable

 

Not applicable

 

                      

 

    10.446.061

(1)

 

 

                    

 

8/19/2014

 

   63.161.055

 

From 8/19/2014 to 9/25/2014

 

R$ 9,82

 

R$ 9,47 e R$ 10,07

 

      6.791.300

 

                      

     

    6.791.300

 

9/29/2014

 

   56.369.755

 

From 9/29/2014 to 12/29/2014

R$ 7,49

 

R$ 4,48 e R$ 9,16

 

    21.758.600

 

                      

 

 

 

  28.549.900

 

12/30/2014

 

   34.611.155

 

From 12/31/2014 to 3/31/2015

R$ 5,10

 

R$ 4,90 e R$ 5,39

 

      1.841.100

 

                      

     

  30.391.000

9º (*)

 

03/31/2015

 

   32.770.055

 

From 4/01/2015 to 6/30/2015

 

                     

 

                            

 

                      

 

                      

 

 

 

  30.391.000

   

04/20/2018

 

   30.391.000

 

From 4/20/2018 to 4/30/2018

 

Não aplicável

 

Não aplicável

 

R$ 0,00

 

aR$ 0,00

 

       22.981.500

(2)

    7.409.500

 

 (*) There was no share buyback in this program.

 

 

1.      In 2014, the Board of Directors approved the cancellation of 70,446,061 shares held in treasury without changing the value of the Company's capital stock.

 

2.      In April 2018, the Board of Directors authorized the sale of up to 30,391,000 common shares held in treasury. Until the end of the program, 22,981,500 shares were sold for R$ 213,494 (see note 30)

 

 

As of March 31, 2018, the position of the treasury shares was as follows:

 

 

Page 75

 


 
 


CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information – March 31, 2018 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

Quantity purchased (Units)

 

Amount paid for the shares

 

Share price

 

Market price of the shares on 03/31/2018 (*)

     
   

Minimum

 

Maximum

 

Average

 

              30,391,000

 

R$ 238,976

 

 R$ 4.48

 

 R$ 10.07

 

 R$ 7.86

 

R$ 265,617

 

 (*) The last share average quotation on B3 – S.A. - Brasil, Bolsa, Balcão as of March 31, 2018 was used in the amount of R$ 8.74 per share.

 

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

 

At a meeting held on December 11, 2000, the Board of Directors decided to adopt a profit distribution policy which, in compliance with the provisions in Law 6,404/76, as amended by Law 9,457/97, will entail to the destination 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.

 

19.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 year, excluding the common shares purchased and held as treasury shares, as follows:

 

     

Parent Company

 

03/31/2018

 

03/31/2017

 

 

 

 

 

Common Shares

 

Profit for the year

1,471,863

 

85,630

Weighted average number of shares

1,357,133,047

 

1,357,133,047

Basic and diluted EPS

1.08454

 

0.06310

 

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

 

 

20.   PAYMENT TO SHAREHOLDERS

 

The Company's bylaws provide for the distribution of minimum dividends of 25% of adjusted net income under the law, to the holders of its shares. Dividends are calculated in accordance with the Company's Bylaws and in accordance with the Brazilian Corporate Law.

 

 

The following table shows the history of dividends approved and paid:

 

Approval Year

 

Dividends

 

Payment Year

 

Dividends

2014

 

        700,000

 

2014

 

       424,939

       

2015

 

       274,917

2015

 

        275,000

 

2015

 

       274,918

2016 (*)

 

                     

 

2016

 

                53

2017 (*)

 

                     

 

2017

 

 

Total approved

 

        975,000

 

Total paid

 

       974,827

(*) There was no resolution on the distribution of dividends during the years 2016 and 2017.

Page 76

 


 
 


CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information – March 31, 2018 – CIA SIDERURGICA NACIONAL

Version: 1

 

21.   NET SALES REVENUE

 

Net sales revenue is comprised as follows:

       

 Consolidated

   

 Parent Company

   

03/31/2018

 

03/31/2017

 

03/31/2018

 

03/31/2017

   

 

 

 

 

 

 

 

Gross revenue

 

 

 

 

 

 

 

 

Domestic market

 

             3,302,143

 

             2,623,699

 

             3,172,428

 

             2,406,405

Foreign market

 

             2,609,288

 

             2,463,249

 

                623,481

 

                672,987

 

 

             5,911,431

 

             5,086,948

 

             3,795,909

 

             3,079,392

Deductions

 

 

 

 

 

 

 

 

Sales returns and discounts

 

                (61,301)

 

                (43,752)

 

                (45,473)

 

                (40,644)

Taxes on sales

 

              (784,180)

 

              (631,600)

 

              (721,459)

 

              (552,532)

 

 

              (845,481)

 

              (675,352)

 

              (766,932)

 

              (593,176)

Net revenue

 

5,065,950

 

4,411,596

 

3,028,977

 

2,486,216

 

22.   EXPENSES BY NATURE

   

 

 

 Consolidated

 

 Parent Company

   

03/31/2018

 

03/31/2017

 

03/31/2018

 

03/31/2017

                 

Raw materials and inputs

 

(1,551,131)

 

(1,209,878)

 

(1,328,974)

 

(1,078,571)

Labor cost

 

(652,488)

 

(553,269)

 

(317,627)

 

(285,008)

Supplies

 

(405,762)

 

(328,309)

 

(289,716)

 

(238,154)

Maintenance cost (services and materials)

 

(290,572)

 

(255,091)

 

(159,510)

 

(149,334)

Outsourcing services

 

(887,224)

 

(738,760)

 

(322,033)

 

(254,617)

Depreciation, amortization and depletion

 

(305,175)

 

(389,884)

 

(142,547)

 

(170,254)

Others

 

(156,467)

 

(106,534)

 

(5,171)

 

(7,479)

   

(4,248,819)

 

(3,581,725)

 

(2,565,578)

 

(2,183,417)

                 

Classified as:

 

             

Cost of sales

 

(3,684,743)

 

(3,093,474)

 

(2,337,373)

 

(1,959,313)

Selling expenses

 

(456,503)

 

(369,792)

 

(154,662)

 

(163,525)

General and administrative expenses

 

(107,573)

 

(118,459)

 

(73,543)

 

(60,579)

 

 

(4,248,819)

 

(3,581,725)

 

(2,565,578)

 

(2,183,417)

                 

 

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

 

     

Consolidated

     

Parent Company

 

03/31/2018

 

03/31/2017

 

03/31/2018

 

03/31/2017

               

Production costs

298,344

 

381,606

 

137,761

 

163,982

Sales expenses

1,643

 

2,217

 

1,238

 

1,851

General and Administrative Expenses

5,188

 

6,061

 

3,548

 

4,421

 

305,175

 

389,884

 

142,547

 

170,254

Other operating expenses (*)

10,697

 

11,392

       
 

315,872

 

401,276

 

142,547

 

170,254

 (*) Refers to the amortization of intangible assets as descriabed ina note 23.

 

 

Page 77

 


 
 


CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information – March 31, 2018 – CIA SIDERURGICA NACIONAL

Version: 1

 

23.   OTHER OPERATING INCOME (EXPENSES)

 

   

Consolidated

 

 Parent Company

   

03/31/2018

 

03/31/2017

 

03/31/2018

 

03/31/2017

                 

Other operating income

 

 

 

 

 

 

 

 

Indemnities/gains on lawsuits

 

546

 

679

 

397

 

530

Rentals and leases

 

460

 

459

 

370

 

369

Contractual fines

 

1,780

 

348

 

960

 

152

Shares - VJR (Note 13)

 

1,936,389

     

1,936,389

   

Other revenues

 

6,412

 

5,013

 

798

 

2,531

 

 

1,945,587

 

6,499

 

1,938,914

 

3,582

   

 

 

 

 

 

 

 

Other operating expenses

 

 

 

 

 

 

 

 

Taxes and fees

 

(5,284)

 

(1,481)

 

(1,988)

 

(719)

Write-off/(Provision) of judicial deposits

 

(3,993)

 

3,276

 

(3,431)

 

3,042

Expenses with environmental liabilities, net

 

(3,790)

 

3,350

 

(1,473)

 

4,856

Expenses from tax, social security, labor, civil and environmental law suits

(24,393)

 

(38,353)

 

(22,490)

 

(30,021)

Depreciation of unused equipment and amortization of intangible assets (note 22)

(10,697)

 

(11,392)

 

-

 

-

 Write- off of PPE and intagible assests (notes 10 and 11)

 

(1,780)

 

(2,572)

 

(16)

 

(2,742)

 Inventory impairment losses/reversals

 

(6,191)

 

(4,091)

 

1,762

 

1,095

 Losses on spare parts

 

(295)

 

(1,250)

 

(295)

 

(1,250)

 Studies and project engineering expenses

 

(6,571)

 

(8,180)

 

(5,577)

 

(8,196)

 Research and development expenses

 

(958)

 

(676)

 

(958)

 

(676)

 Advisory expenses

 

(777)

 

(16)

 

(658)

 

(16)

 Healthcare plan expenses

 

(26,088)

 

(22,086)

 

(26,096)

 

(21,944)

Hedge cash flow realized (Note 13 b)

 

(13,732)

 

(16,402)

 

(13,732)

 

(16,402)

 Other expenses

 

(44,110)

 

(5,815)

 

(28,863)

 

(2,899)

 

 

(148,659)

 

(105,688)

 

(103,815)

 

(75,872)

 Other operating expenses, net

 

1,796,928

 

(99,189)

 

1,835,099

 

(72,290)

 

 

24.   FINANCIAL INCOME (EXPENSES)

 

   

03/31/2018

 

03/31/2017

03/31/2018

 

03/31/2017

               

Financial income

 

 

 

 

 

 

 

Related parties (note 18 a)

 

14,225

 

20,177

14,788

 

42,586

Income from short-term investments 

 

27,168

 

53,578

15,178

 

25,070

Gain from derivative

 

 

 

13,224

 

 

 

Gain on repurchase of debt securities

 

 

 

12,564

 

 

 

Outros rendimentos (1)

 

1,503

 

16,976

360

 

14,072

 

 

42,896

 

116,519

30,326

 

81,728

Financial costs

             

Borrowings and financing - foreign currency

 

(215,502)

 

(214,097)

(57,575)

 

(55,275)

Borrowings and financing - local currency

 

(264,273)

 

(511,998)

(228,488)

 

(440,272)

Related parties (note 18 a)

 

-

 

-

(100,913)

 

(119,461)

Capitalized interest (notes 10 and 27)

 

17,090

 

26,533

3,594

 

6,534

Interest, fines and late payment charges

 

(2,034)

 

(2,791)

(455)

 

(244)

Commission and bank fees

 

(41,875)

 

(38,875)

(37,928)

 

(34,496)

PIS/COFINS over financial income

 

(3,733)

 

(6,458)

(2,798)

 

(5,191)

Other financial costs (2)

 

(12,929)

 

(38,801)

3,371

 

(32,683)

 

 

(523,256)

 

(786,487)

(421,192)

 

(681,088)

Inflation adjustment and exchange differences, net

             

Inflation adjustments, net

 

1,570

 

1,364

11,179

 

(5,101)

Exchange rates, net

 

(115,644)

 

171,609

(13,175)

 

312,278

Exchange gain (losses) on derivatives

 

730

 

(229)

-

 

-

   

(113,344)

 

172,744

(1,996)

 

307,177

               

Financial income (costs), net

 

(593,704)

 

(497,224)

(392,862)

 

(292,183)

               

Statement of gains and (losses) on derivative transactions

 

           

Future Dollar BM&F

 

 

 

 

 

 

 

Dollar - to - euro swap

 

730

 

(229)

 

 

 

   

730

 

(229)

 

 

 

Future DI

 

     13,224      
   

 

 

13,224

 

 

 

 

 

730

 

13,224

     

(1)     Refers substantially an updating of tax credits

 

(2)     Refers substantially to IOF and provision of charges IRRF/CSLL.

 

Page 78

 


 
 


CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information – March 31, 2018 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

25.   SEGMENT INFORMATION

 

The segment information has not changed in relation to that disclosed in the Company's financial statements as of December 31, 2017. 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:

 

 

Page 79

 


 
 


CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information – March 31, 2018 – CIA SIDERURGICA NACIONAL

Version: 1

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

03/31/2018

P&L

 

Steel

 

Mining 

 

Logistics

 

 

 

Energy

 

Cement

 

Corporate expenses/elimination

 

Consolidated

     

Port

 

Railroads

       

Metric tons (thou.) (*)

 

            1.277.386

 

            7.474.162

 

                            

 

                            

 

                    

 

       805.599

 

  (1.308.943)

 

                      

Net revenues

 

                            

 

                            

 

                            

 

                            

 

                     

 

                    

 

                    

 

                      

Domestic market

 

            2.290.629

 

               218.650

 

                 65.643

 

               330.941

 

         90.619

 

       130.733

 

     (611.945)

 

      2.515.270

Foreign market

 

            1.383.668

 

               932.944

 

                            

 

                            

 

                     

 

                    

 

       234.068

 

      2.550.680

Total net revenue (note 21)

 

            3.674.297

 

            1.151.594

 

                 65.643

 

               330.941

 

         90.619

 

       130.733

 

     (377.877)

 

      5.065.950

Cost of sales and services

 

          (2.900.337)

 

             (795.292)

 

               (45.943)

 

             (244.173)

 

       (66.286)

 

     (125.282)

 

       492.570

 

    (3.684.743)

Gross profit

 

               773.960

 

               356.302

 

                 19.700

 

                 86.768

 

         24.333

 

           5.451

 

       114.693

 

      1.381.207

General and administrative expenses

 

             (234.058)

 

               (20.864)

 

                 (9.972)

 

               (23.307)

 

         (6.933)

 

       (19.974)

 

     (248.968)

 

       (564.076)

Depreciation (note 22)

 

               150.463

 

               106.487

 

                   4.035

 

                 64.621

 

           4.315

 

         26.682

 

       (51.428)

 

         305.175

Proportionate EBITDA of joint ventures

 

                            

 

                            

 

                             

 

                            

 

                    

 

                    

 

       119.284

 

         119.284

Adjusted EBITDA

 

               690.365

 

               441.925

 

                 13.763

 

               128.082

 

         21.715

 

         12.159

 

       (66.419)

 

      1.241.590

                                 

Sales by geographic area

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asia

 

                      157

 

               852.152

 

                            

 

                            

 

                    

 

                    

 

       234.068

 

      1.086.377

North America

 

               430.706

 

                            

 

                            

 

                            

 

                     

 

                    

 

                    

 

         430.706

Latin America

 

               105.557

 

                            

 

                            

 

                            

 

                    

 

                    

 

                    

 

         105.557

Europe

 

               829.013

 

                 80.792

 

                            

 

                             

 

                    

 

                    

 

                    

 

         909.805

Others

 

                 18.235

 

                            

 

                            

 

                            

 

                    

 

                    

 

                    

 

           18.235

Foreign market

 

            1.383.668

 

               932.944

 

                             

 

                            

 

                    

 

                    

 

       234.068

 

      2.550.680

Domestic market

 

            2.290.629

 

               218.650

 

                 65.643

 

               330.941

 

         90.619

 

       130.733

 

     (611.945)

 

      2.515.270

Total

 

            3.674.297

 

            1.151.594

 

                 65.643

 

               330.941

 

         90.619

 

       130.733

 

     (377.877)

 

      5.065.950

                                 
                                 
   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

03/31/2017

P&L

 

Steel

 

Mining 

 

Logistics

 

 

 

Energy

 

Cement

 

Corporate expenses/elimination

 

Consolidated

     

Port

 

Railroads

       

Metric tons (thou.) (*)

 

            1.194.246

 

            7.243.854

 

                            

 

                            

 

                    

 

       821.231

 

  (1.346.967)

 

                      

Net revenues

 

                            

 

                            

 

                            

 

                            

 

                    

 

                    

 

                    

 

                      

Domestic market

 

            1.788.518

 

               190.311

 

                 55.215

 

               323.390

 

         90.163

 

       125.651

 

     (583.696)

 

      1.989.552

Foreign market

 

            1.282.689

 

               983.794

 

                            

 

                            

 

                    

 

                    

 

       155.561

 

      2.422.044

Total net revenue (note 21)

 

            3.071.207

 

            1.174.105

 

                 55.215

 

               323.390

 

         90.163

 

       125.651

 

     (428.135)

 

      4.411.596

Cost of sales and services

 

          (2.394.558)

 

             (636.455)

 

               (37.194)

 

             (280.072)

 

       (69.139)

 

     (129.685)

 

       453.629

 

    (3.093.474)

Gross profit

 

               676.649

 

               537.650

 

                 18.021

 

                 43.318

 

         21.024

 

         (4.034)

 

         25.494

 

      1.318.122

General and administrative expenses

 

             (235.504)

 

               (40.384)

 

                 (7.093)

 

               (24.362)

 

         (6.643)

 

       (18.480)

 

     (155.785)

 

       (488.251)

Depreciation (note 22)

 

               169.042

 

               122.651

 

                   3.460

 

               103.625

 

           4.317

 

         34.650

 

       (47.861)

 

         389.884

Proportionate EBITDA of joint ventures

 

                            

 

                            

 

                             

 

                            

 

                    

 

                    

 

       112.792

 

         112.792

Adjusted EBITDA

 

               610.187

 

               619.917

 

                 14.388

 

               122.581

 

         18.698

 

         12.136

 

       (65.360)

 

      1.332.547

                                 

Sales by geographic area

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asia

 

                   4.055

 

               913.827

 

                            

 

                            

 

                    

 

                    

 

       155.561

 

      1.073.443

North America

 

               480.624

 

                            

 

                            

 

                            

 

                     

 

                    

 

                    

 

         480.624

Latin America

 

               150.614

 

                            

 

                            

 

                            

 

                    

 

                    

 

                    

 

         150.614

Europe

 

               633.917

 

                 69.967

 

                            

 

                             

 

                    

 

                    

 

                    

 

         703.884

Others

 

                 13.479

 

                            

 

                            

 

                            

 

                    

 

                    

 

                    

 

           13.479

Foreign market

 

            1.282.689

 

               983.794

 

                             

 

                            

 

                    

 

                    

 

       155.561

 

      2.422.044

Domestic market

 

            1.788.518

 

               190.311

 

                 55.215

 

               323.390

 

         90.163

 

       125.651

 

     (583.696)

 

      1.989.552

Total

 

            3.071.207

 

            1.174.105

 

                 55.215

 

               323.390

 

         90.163

 

       125.651

 

     (428.135)

 

      4.411.596

 

 (*) 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 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 financial 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.

 

 

Page 80

 


 
 


CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information – March 31, 2018 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

Even though it is an indicator used in segment measurement, EBITDA is not a measurement recognized by accounting practices adopted in Brazil or IFRS, it does not have a standard definition, and may not be comparable with measurements using similar names provided by other companies.

 

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:

 

       

Consolidated

   

03/31/2018

 

03/31/2017

         

Profit for the year

 

1,486,495

 

117,615

Depreciation/Amortization/Depletion (Note 22)

 

305,175

 

389,884

Income tax and social contribution (note 15)

 

558,711

 

136,948

Finance income (cost) (note 24)

 

593,704

 

497,224

EBITDA

 

2,944,085

 

1,141,671

Other operating income (expenses) (note 23)

 

(1,796,928)

 

99,189

Equity in results of affiliated companies

 

(24,851)

 

(21,105)

Proportionate EBITDA of joint ventures

 

119,284

 

112,792

Adjusted EBITDA (*)

 

1,241,590

 

1,332,547

 

 (*) 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.

 

 

26.   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 2017, after negotiation with insurers and reinsurers in Brazil and abroad, an insurance policy was issued for the contracting of a policy of Operational Risk of Property Damages and Loss of Profits, with effect from September 30, 2017 to March 31, 2019. Under the insurance policy, the LMI (Maximum Limit of Indemnity) is US$600 million and deductibles in the amount of R$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.

 

 

In view of their nature, the risk assumptions adopted are not part of the scope of an audit of the financial statements and, accordingly, were not audited by our independent auditors.

 

 

27.   ADDITIONAL INFORMATION TO CASH FLOWS

 

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

 

 

Consolidated

 

Parent Company

 

03/31/2018

 

03/31/2017

 

03/31/2018

 

03/31/2017

Income tax and social contribution paid

15,373

 

126,753

     

-

Addition to PP&E with interest capitalization (note 10 and 24)

17,090

 

26,533

 

3,594

 

6,534

Capitalization in subsidiaries without cash

   

509

     

10,353

 

32,463

 

153,795

 

3,594

 

16,887

               

 

 

Page 81

 


 
 


CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information – March 31, 2018 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

 

 

 

 

 

28.   STATEMENT OF COMPREHENSIVE INCOME

 

 

   

 

 

 Consolidated

 

 

 Parent Company

   

03/31/2018

 

03/31/2017

 

03/31/2018

03/31/2017

 (Loss)/  Profit for the period

 

           1.486.495

 

               117.615

 

           1.471.863

                 85.630

               

 Other comprehensive income

             
               

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

 

 

 

 

 

 

 

 Actuarial (loss) gain the defined benefit plan from investments in subsidiaries, net of taxes

 30

                       

30     30  

30

 

 

                       30

 

                        30

 

                       30

                        30

               

Items that could be subsequently reclassified to the statement of income

 

 

 

 

 

 

 

 Cumulative translation adjustments for the period

 

                37.958

 

               (39.643)

 

                37.958

               (39.643)

 Fair Value through other comprehensive income

 

         (1.559.680)

 

                 53.299

 

         (1.559.680)

                 53.299

(Loss) / gain on the percentage change in investments

     

                   2.814

   

                   2.814

 (Loss)/gain on cash flow hedge accounting

 

              (18.646)

 

               133.044

 

              (18.646)

               133.044

 Realization of cash flow hedge accounting reclassified to income statements

  13.732

               

16.402

 

13.732

16.402

(Loss)/gain on investments hedge of investments in subsidiaries

 

 

 

 (4.860)

1.846

(Loss)/gain on foreing investment hedge

 

 

 

 

 

 

 

(Loss)/gain on business combination

 

                (4.860)

 

                   1.846

 

 

 

   

         (1.531.496)

 

               167.762

 

         (1.531.496)

               167.762

               

 

 

         (1.531.466)

 

               167.792

 

         (1.531.466)

               167.792

               

 Total compreensive income for period 

 

              (44.971)

 

               285.407

 

              (59.603)

               253.422

 

 

 

 

 

 

 

 

 Attributable to:

             

 Participation of controlling interest

 

              (59.603)

 

               253.422

 

              (59.603)

               253.422

 Participation of non - controlling interest

 

                14.632

 

                 31.985

     

 

 

              (44.971)

 

               285.407

 

              (59.603)

               253.422

 

 

29.   INDEPENDENT INVESTIGATION – CONSTRUCTION OF THE LONG STEEL PLANT 

 

Considering the information from a Company’s officer published in the press in April 2017, based on testimonials made before the Court, the Audit Committee decided to hire a specialized forensic service to conduct an independent external investigation of the contractual relationship related to the construction of CSN’s Long Steel Plant (contract in which there would have been alleged undue payments, as bonus, as a form of reimbursement for payments made to political parties), and to analyze the extent of the business relationships between the contracting parties. The conclusion of the investigation is that nothing from the testimonials referred to above was confirmed, and there are no contingencies deriving from the matters investigated. Consequently, the Company understands that there is no basis to justify the setting up of a provision for losses or the disclosure of a contingency. In October 2017, complying with a determination of the Supreme Federal Court, the Federal Police started an investigation of the facts reported in those testimonials previously mentioned.  Subsequently, in February 2018, the Second Panel of the Federal Supreme Court determined that the examination of the facts should occur within the scope of the Electoral Justice rather than the Common Federal Justice. At the moment, compliance with the STF decision is awaited for referral of the case to the Electoral Court.

 

Page 82

 


 
 


CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE

 

Quarterly Financial Information – March 31, 2018 – CIA SIDERURGICA NACIONAL

Version: 1

 

 

30.   EVENTS AFTER THE REPORTING PERIOD

 

 

• Transactions between related parties (Banco Fibra)

 

As disclosed to the market on April 10, 2018 during the first quarter of 2018, the Company, within its regular management of cash and marketable securities, acquired USD 23 million in foreign debt securities issued by Banco Fibra SA (" Banco Fibra "), with a remuneration of 8,125% pa and maturing in February 2028.

 

• Disposal of treasury shares

 

The Company disclosed a material fact on April 20, 2018 informing that the Board of Directors authorized the sale by the Company of up to 30,391,000 common shares of its own issuance held in treasury in order to comply with the provisions of Art. 9th of CVM Instruction 567/2015. The sale operations were carried out between April 20 and 23, 2018, through stock exchange trading, at a market price totaling 22,981,500 shares in the total amount of R $ 213,494 million (average price R$ 9.29), recognizing a gain of R $ 32,690 million in shareholders' equity.

 

Sale of subsidiary LLC

 

The Board of Directors approved the sale, through its wholly-owned subsidiary CSN Steel SLU, of its entire ownership interest in Companhia Siderúrgica Nacional, LLC, a company located in the United States ("LLC"), with operations in stripping, cold rolling and galvanizing of flat steel. The transaction must be completed in up to 90 days and must be carried out in free cash and financial debt terms, as well as being subject to adjustments established in a purchase and sale agreement signed between the parties. The transaction is part of the Company's divestiture and deleverage plan.

 

 

 

 

 

 

Page 83

 

 

 

COMMENTS ON THE PERFORMANCE OF BUSINESS PROJECTIONS

1)     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

 

 

CSN estimates a Net Revenue of R$22.2 billion for 2018.

 

CSN estimates an adjusted annualized EBTIDA close to R$5.6 billion for 2018.

 

CSN estimates a leverage measured by the ratio of net debt to adjusted EBITDA close to 3.5 times over a 12 to 15 months.

 

b)        Period and validity term of the projection.

 

For the year 2018, is projected Net Revenue of R$22.2 billion, an adjusted EBITDA close to R$5.6 billion. In turn, the validity term of the presented projection ends with the results being disclosed for the fiscal year ended December 31, 2018, that will be available to the market within the period established by the local authority.

 

From 2018 to 2019, CSN estimates a leverage measured by the ratio of net debt to adjusted EBTIDA close to 3.5 times, that will be available to the market at the end of the first half of 2019.

 

 

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 these assumptions, the Company may revise its estimates mentioned below, modifying them in comparison with those originally presented.

 

Net Revenue

 

The assumptions used to project the estimated Net Revenue for 2018 is 20% above when compared to the previous year.

 

Adjusted EBITDA

 

The assumptions used to project the adjusted EBITDA  20% above in 2018, consider the best average prices for flat and long steel in the domestic and foreign markets, as well as the higher sales volume, highlighting the allocation of goods to the domestic market focusing on better operational margins. In relation to the mining, our estimate is that the price levels (Platts) of iron ore will remain the same in 2018 when compared to the previous year.

 


 
 

Leverage 15 months

The assumptions used for the leverage measured by the ratio of net debt to adjusted EBITDA close to 3.5 times over a 12 to 15 months, is based on an increase of the adjusted EBITDA in 2018 and 2019, resulting in a higher generation of free cash flow and lower net debt, leading to a substantial reduction of the indicator.

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

Net Revenue

Estimated

 

2016

n.a.

2017 E

18,000

2018 E

22,230

2019 E

n.a.

Reached

 

17,149

18,525

n.a.

n.a.

Variation %

 

-

3%

-

-

Adjusted EBITDA

 

2016

2017 E

2018 E

2019 E

Estimated

 

n.a.

5,000

5,574

n.a.

Reached

 

4,075

4,645

n.a.

n.a.

Variation %

 

-

-7%

-

-

Leverage

 

2016

2017 E

2018 E

2019 E

Estimated

 

n.a.

5.00x

n.a.

3.50x

Reached

 

6.32x

5.66x

n.a.

n.a.

Variation %

 

n.a.

13%

n.a.

n.a.

*E = estimated

 

 

 

 

 

**n.a = not evaluated or estimated

 

 

 

 

 

           

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

a)    In the form, inform which were being replaced by new projections and which were being repeated.

New estimates:

CSN estimates a Net Revenue of R$22.2 billion for 2018.

CSN estimates an adjusted annualized EBTIDA close to R$5.6 billion for 2018.  Estimates maintained:

CSN estimates a leverage measured by the ratio of net debt to adjusted EBITDA close to 3.5 times over a 12 to 15 months.

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.

In 2017, Net Revenue was 3% higher than the previous estimate, due to the better steel prices.

In 2017, the Adjusted EBITDA was 7% lower than the previous estimate, due to the fact that mining presented an adjusted EBITDA lower than expected in 4Q17.

In 2017, leverage was 13% higher than expected, due to the lower Adjusted EBITDA and exchange-rate appreciation that affected our dollar-debt position, resulting in an above average leverage ratio.

 

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.

 

Estimates in progress:

 

CSN estimates a leverage measured by the ratio of net debt to adjusted EBITDA close to 3.5 times over a 12 to 15 months.

 


 
 

 

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

 

 

Independent auditor’s report on review of the interim financial information

 

To the

Shareholders, Directors and Management of

Companhia Siderúrgica Nacional

São Paulo – SP

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, 2018, which comprises the balance sheet as at March 31, 2018 and the related income statement, statement of comprehensive income, statement of changes in equity and statement of cash flows for the three-month period then ended, 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 9.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 financial statements, 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 statements of value added

We have also reviewed the individual and consolidated statements of value added (DVA) for the three-month period ended March 31, 2018, prepared under the responsibility of the Company’s management, the presentation of which is required by the standards issued by the Brazilian Securities and Exchange Commission (CVM) applicable to the preparation of interim financial information and considered supplemental information by IFRS, which does not require the presentation of a DVA. This interim financial information was subject to the same review procedures described above and, based on our review, nothing has come to our attention that causes us to believe that it was not fairly presented, in all material respects, in relation to the individual and consolidated interim financial information taken as a whole.

São Paulo, May 14, 2018

 

Nelson Fernandes Barreto Filho

 

Grant Thornton Auditores Independentes

 

 


 
 

 

Opinions and Statements / Officers Statement on the Financial Statement

 

As Executive Officers of Companhia Siderurgica 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 31,2018.

 

São Paulo, May 14 th, 2018.

 

 

 

____________________________________________

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

 

 


 
 

 

Opinions and Statements / Officers Statement on Auditor’s Report

 

As Executive Officers of Companhia Siderurgica 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 31,2018.

 

São Paulo, May 14 th, 2018.

 

 

____________________________________________

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

 


 
 
 
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: May 30, 2018
 
COMPANHIA SIDERÚRGICA NACIONAL
By:
/S/ Benjamin Steinbruch

 
Benjamin Steinbruch
Chief Executive Officer

COMPANHIA SIDERÚRGICA NACIONAL
By:
/S/ Marcelo Cunha Ribeiro

 
Marcelo Cunha Ribeiro
IR Executive 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.