Form 6-K

 

 

UNITED STATES

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 September 2017

Commission File Number: 1-14862

 

 

BRASKEM S.A.

(Exact Name as Specified in its Charter)

N/A

(Translation of registrant’s name into English)

 

 

Rua Eteno, 1561, Polo Petroquímico de Camaçari

Camaçari, Bahia – CEP 42810-000 Brazil

(Address of principal executive offices)

 

 

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

Form 20-F:  ☒            Form 40-F:  ☐

(Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1)):

Yes:  ☐            No:  ☒

(Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7)):

Yes:  ☐            No:  ☒

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

Yes:  ☐            No:  ☒

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b):

 

 

 


Braskem S.A.

Condensed consolidated interim financial information (ITR) at

June 30, 2017

and Independent Auditors’ Report Review

 


Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of Braskem S.A.

We have reviewed the accompanying condensed consolidated balance sheet of Braskem S.A. and its subsidiaries (the “Company”) as of June 30, 2017, and the related condensed consolidated statements of operations and comprehensive income for the three-month and six-month periods ended June 30, 2017 and 2016 and the condensed consolidated statements of changes in shareholder’s equity and cash flows for the six-month periods ended June 30, 2017 and 2016. This condensed consolidated interim financial information is the responsibility of the Company’s management.

We conducted our review in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to the accompanying condensed consolidated interim financial information for it to be in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.

As discussed in Note 2.3 to the condensed consolidated interim financial information, the Company has restated its 2016 and 2015 financial statements to correct misstatements.

We previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet as of December 31, 2016, and the related consolidated statement of operations, comprehensive income, of statement of changes in equity and of cash flows for the year then ended (not presented herein), and in our report dated September 22, 2017, which included a paragraph regarding the correction of an error in the 2015 and 2014 financial statements, we expressed an unqualified opinion on those consolidated financial statements.

/s/ PricewaterhouseCoopers

Auditores Independentes

Salvador, Brazil, September 27, 2017


Braskem S.A.

Unaudited condensed consolidated balance sheet

at June 30, 2017

All amounts in thousands of reais

 

 

Assets   

Note

   Jun/2017      Dec/2016  

Current assets

        

Cash and cash equivalents

   4      5,711,450        6,701,864  

Financial investments

   5      2,677,819        1,190,483  

Trade accounts receivable

   6      2,460,514        1,634,137  

Inventories

   7      5,907,679        5,238,014  

Taxes recoverable

   9      1,184,187        826,015  

Dividends and interest on capital

   8      20,729        14,986  

Prepaid expenses

        204,444        101,747  

Derivatives operations

   15.2.1         8,387  

Other receivables

        311,058        180,915  
     

 

 

    

 

 

 
        18,477,880        15,896,548  
     

 

 

    

 

 

 

Non-current assets held for sale

   3         359,704  
        18,477,880        16,256,252  
     

 

 

    

 

 

 

Non-current assets

        

Trade accounts receivable

   6      62,697        70,236  

Advances to suppliers

   7      53,998        61,533  

Taxes recoverable

   9      1,148,419        1,088,353  

Deferred income tax and social contribution

   17(b.ii)      1,026,328        1,653,115  

Judicial deposits

        243,349        233,320  

Insurance claims

        39,650        50,653  

Derivatives operations

   15.2.1      14,820        29,308  

Other receivables

        174,117        140,971  

Investments

   10(b)      96,880        92,313  

Property, plant and equipment

   11      30,448,082        29,336,710  

Intangible assets

   12      2,785,911        2,809,087  
     

 

 

    

 

 

 
        36,094,251        35,565,599  
     

 

 

    

 

 

 

Total assets

        54,572,131        51,821,851  
     

 

 

    

 

 

 

The Management notes are an integral part of the financial statements.

 

1


Braskem S.A.   

Unaudited condensed consolidated balance sheet

at June 30, 2017

  
All amounts in thousands of reais    Continued

 

Liabilities and shareholders’ equity   

Note

   Jun/2017     Dec/2016  

Current liabilities

       

Trade payables

        5,257,693       6,545,136  

Borrowings

   13      4,216,322       2,594,463  

Braskem Idesa borrowings

   14      10,195,823       10,437,791  

Derivatives operations

   15.2.1      41,350       29,042  

Payroll and related charges

        476,967       562,455  

Taxes payable

   16      947,680       624,080  

Dividends

        2,560       3,083  

Advances from customers

        219,267       203,216  

Leniency agreement

   19.3      985,630       1,354,492  

Sundry provisions

   18      78,875       112,891  

Other payables

        212,317       476,262  
     

 

 

   

 

 

 
        22,634,484       22,942,911  
     

 

 

   

 

 

 

Non-current liabilities held for sale

   3        95,396  
        22,634,484       23,038,307  
     

 

 

   

 

 

 

Non-current liabilities

       

Trade payables

        272,911       201,686  

Borrowings

   13      19,385,947       20,736,604  

Derivatives operations

   15.2.1      840,485       861,302  

Taxes payable

   16      40,424       24,097  

Loan to non-controlling shareholders of Braskem Idesa

        1,679,492       1,620,519  

Deferred income tax and social contribution

   17(b.ii)      1,025,736       510,523  

Post-employment benefits

        171,318       162,136  

Advances from customers

        75,186       162,955  

Contingencies

   19      1,015,882       985,237  

Leniency agreement

   19.3      1,328,714       1,498,738  

Sundry provisions

   18      207,100       206,245  

Other payables

        154,437       92,792  
     

 

 

   

 

 

 
        26,197,632       27,062,834  
     

 

 

   

 

 

 

Shareholders’ equity

   20     

Capital

        8,043,222       8,043,222  

Capital reserve

        232,430       232,430  

Revenue reserves

        834,616       834,616  

Other comprehensive income

        (5,526,437     (6,321,859

Treasury shares

        (49,819     (49,819

Retained earnings

        2,911,851    
     

 

 

   

 

 

 

Total attributable to the Company’s shareholders

        6,445,863       2,738,590  
     

 

 

   

 

 

 

Non-controlling interest in Braskem Idesa

        (705,848     (1,017,880
     

 

 

   

 

 

 
        5,740,015       1,720,710  
     

 

 

   

 

 

 

Total liabilities and shareholders’ equity

        54,572,131       51,821,851  
     

 

 

   

 

 

 

The Management notes are an integral part of the financial statements.

 

2


Braskem S.A.

Unaudited condensed consolidated statements of operations and of comprehensive income

at June 30, 2017

All amounts in thousands of reais

 

 

Continued operations   

Note

   2Q2017     YTD2017     2Q2016     YTD2016  
                      Restated     Restated  

Net sales revenue

   22      11,870,430       24,470,158       11,721,937       23,636,532  

Cost of products sold

        (8,979,357     (17,890,990     (8,460,914     (17,074,199
     

 

 

   

 

 

   

 

 

   

 

 

 
        2,891,073       6,579,168       3,261,023       6,562,333  
     

 

 

   

 

 

   

 

 

   

 

 

 

Income (expenses)

           

Selling and distribution

        (358,284     (704,586     (341,888     (648,644

General and administrative

        (311,821     (622,384     (301,368     (586,624

Research and development

        (38,483     (72,145     (40,034     (82,628

Results from equity investments

   10(c)      10,642       22,851       11,690       13,377  

Other income (expenses), net

   23      118,316       16,807       (225,882     (363,505
     

 

 

   

 

 

   

 

 

   

 

 

 
        2,311,443       5,219,711       2,363,541       4,894,309  
     

 

 

   

 

 

   

 

 

   

 

 

 

Financial results

   24         

Financial expenses

        (820,578     (1,656,087     (901,777     (1,692,159

Financial income

        151,550       316,530       210,261       375,755  

Exchange rate variations, net

        (8,431     276,604       (1,202,296     (2,062,692
     

 

 

   

 

 

   

 

 

   

 

 

 
        (677,459     (1,062,953     (1,893,812     (3,379,096
     

 

 

   

 

 

   

 

 

   

 

 

 

Profit before income tax and social contribution

        1,633,984       4,156,758       469,729       1,515,213  
     

 

 

   

 

 

   

 

 

   

 

 

 

Current and deferred income tax and social contribution

   17(a)      (491,563     (1,108,963     (202,407     (463,225
     

 

 

   

 

 

   

 

 

   

 

 

 

Profit for the period of continued operations

        1,142,421       3,047,795       267,322       1,051,988  
     

 

 

   

 

 

   

 

 

   

 

 

 
     3                         

Discontinued operations results

           

Profit from discontinued operations

          13,499       10,897       27,200  

Current and deferred income tax and social contribution

          (4,623     (3,512     (8,927
     

 

 

   

 

 

   

 

 

   

 

 

 
          8,876       7,385       18,273  

Profit for the period

        1,142,421       3,056,671       274,707       1,070,261  
     

 

 

   

 

 

   

 

 

   

 

 

 

Attributable to:

           

Company’s shareholders

        1,089,848       2,897,400       406,980       1,230,371  

Non-controlling interest in Braskem Idesa

        52,573       159,271       (132,273     (160,110
     

 

 

   

 

 

   

 

 

   

 

 

 

Profit for the period

        1,142,421       3,056,671       274,707       1,070,261  
     

 

 

   

 

 

   

 

 

   

 

 

 

The Management notes are an integral part of the financial statements.

 

3


Braskem S.A.

Unaudited condensed consolidated statements of operations and of comprehensive income

at June 30, 2017

All amounts in thousands of reais, except earnings or loss per share    Continued

 

 

     Note     2Q2017     YTD2017     2Q2016     YTD2016  
                       Restated     Restated  

Profit for the period

       1,142,421       3,056,671       274,707       1,070,261  

Other comprehensive income or loss:

          

Items that will be reclassified subsequently to profit or loss

          

Fair value of cash flow hedge

       (36,411     51,167       151,913       179,831  

Income tax and social contribution

       12,821       (15,650     (54,348     (68,307

Fair value of cash flow hedge from jointly-controlled

       3,168       3,762       (2,761     (12,765
    

 

 

   

 

 

   

 

 

   

 

 

 
       (20,422     39,279       94,804       98,759  

Exchange variation of foreign sales hedge

     15.3 (a.i)      (711,317     (230,507     2,213,130       4,433,659  

Sales Hedge - transfer to profit or loss

     15.3 (a.i)      249,722       498,962       345,443       767,243  

Income tax and social contribution on exchange variation

       156,942       (91,275     (869,915     (1,768,307

Exchange variation of foreign sales hedge - Braskem Idesa

     15.3 (a.ii)      496,071       1,403,603       (914,249     (1,093,972

Sales Hedge - transfer to profit or loss - Braskem Idesa

     15.3 (a.ii)      42,992       73,910       14,297       14,297  

Income tax on exchange variation - Braskem Idesa

       (161,719     (443,254     274,275       328,192  
    

 

 

   

 

 

   

 

 

   

 

 

 
       72,691       1,211,439       1,062,981       2,681,112  

Foreign subsidiaries currency translation adjustment

       10,846       (288,565     40,643       (23,989
    

 

 

   

 

 

   

 

 

   

 

 

 

Total

       63,115       962,153       1,198,428       2,755,882  
    

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income for the period

       1,205,536       4,018,824       1,473,135       3,826,143  
    

 

 

   

 

 

   

 

 

   

 

 

 

Attributable to:

          

Company’s shareholders

       1,121,975       3,706,792       1,653,004       4,013,484  

Non-controlling interest in Braskem Idesa

       83,561       312,032       (179,869     (187,341
    

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income for the period

       1,205,536       4,018,824       1,473,135       3,826,143  
    

 

 

   

 

 

   

 

 

   

 

 

 
                       Basic and diluted  
                       YTD2017     YTD2016  
     Note                       Restated  

Profit per share attributable to the shareholders of the Company of continued operations at the end of the period (R$) (expressed in reais)

     21          

Earnings per share - common

           3.6309       1.5206  

Earnings per share - preferred shares class “A”

           3.6309       1.5206  

Earnings per share - preferred shares class “B”

           0.6069       0.6065  
        

 

 

   

 

 

 

Profit per share attributable to the shareholders of the Company of discontinued operations at the end of the period (R$)

          

Earnings per share - common

           0.0112       0.0258  

Earnings per share - preferred shares class “A”

           0.0112       0.0258  
        

 

 

   

 

 

 

Profit per share attributable to the shareholders of the Company at the end of the period (R$)

          

Earnings per share - common

           3.6421       1.5463  

Earnings per share - preferred shares class “A”

           3.6421       1.5463  

Earnings per share - preferred shares class “B”

           0.6069       0.6065  
        

 

 

   

 

 

 

The Management notes are an integral part of the financial statements.

 

4


Braskem S.A.

Unaudited condensed consolidated statements of changes in shareholder’s equity

All amounts in thousands of reais

 

 

          Attributed to shareholders’ interest                    
                      Revenue reserves                       Total              
                                  Additional     Other           Retained     Braskem     Non-controlling     Total  
                Capital     Legal     Retention     dividends     comprehensive     Treasury     earnings     shareholders’     interest in     shareholders’  
    Note     Capital     reserve     reserve     of profits     proposed     income     shares     (losses)     interest     Braskem Idesa     equity  

At December 31, 2015 - restated

    2.4       8,043,222       232,430       229,992       2,404,663       247,364       (9,060,710     (49,819     (416,768     1,630,374       (684,885     945,489  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income for the period:

                       

Profit for the period - restated

                    1,230,371       1,230,371       (160,110     1,070,261  

Exchange variation of foreign sales hedge, net of taxes

                2,868,983           2,868,983       (187,871     2,681,112  

Fair value of cash flow hedge, net of taxes

                130,105           130,105       (31,346     98,759  

Foreign subsidiaries currency translation adjustment

                (215,975         (215,975     191,986       (23,989
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
                2,783,113         1,230,371       4,013,484       (187,341     3,826,143  

Equity valuation adjustments:

                       

Realization of additional property, plant and equipment price-level restatement, net

                (13,619       13,619        

Realization of deemed cost of jointly-controlled investment, net of taxes

                (482       482        
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
                (14,101       14,101        

Contributions to shareholders:

                       

Additional dividends approved by the General Meeting

              (247,364           (247,364       (247,364
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
              (247,364           (247,364       (247,364
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

At June 30, 2016 - restated

    2.4       8,043,222       232,430       229,992       2,404,663         (6,291,698     (49,819     827,704       5,396,494       (872,226     4,524,268  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

At December 31, 2016

      8,043,222       232,430       229,992       604,624         (6,321,859     (49,819       2,738,590       (1,017,880     1,720,710  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income for the period:

                       

Profit for the period

                    2,897,400       2,897,400       159,271       3,056,671  

Exchange variation of foreign sales hedge, net of taxes

                952,874           952,874       258,565       1,211,439  

Fair value of cash flow hedge, net of taxes

                31,636           31,636       7,643       39,279  

Foreign currency translation adjustment

                (175,118         (175,118     (113,447     (288,565
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
                809,392         2,897,400       3,706,792       312,032       4,018,824  

Equity valuation adjustments:

                       

Realization of additional property, plant and equipment price-level restatement, net

                (13,488       13,488        

Realization of deemed cost of jointly-controlled investment, net of taxes

                (482       482        
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
                (13,970       13,970        

Contributions to shareholders:

                       

Lapsed dividends

                    481       481         481  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
                                                    481     481           481  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

At June 30, 2017

      8,043,222       232,430       229,992       604,624         (5,526,437     (49,819     2,911,851       6,445,863       (705,848     5,740,015  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

The Management notes are an integral part of the financial statements.

 

5


Braskem S.A.

Unaudited condensed consolidated statement of cash flows

at June 30, 2017

All amounts in thousands of reais

 

 

     Note     Jun/2017     Jun/2016  
     2.4           Restated  

Profit before income tax and social contribution and for the result with discontinued operations

       4,156,758       1,542,413  

Adjustments for reconciliation of profit

      

Depreciation, amortization and depletion

       1,424,202       1,243,975  

Results from equity investments

     10 (c)      (22,851     (13,377

Interest and monetary and exchange variations, net

       1,292,218       931,709  

Gain from divestment in subsidiary

     3       (276,816  

Provision for losses and write-offs of long-lived assets

       25,730       12,959  
    

 

 

   

 

 

 
       6,599,241       3,717,679  
    

 

 

   

 

 

 

Changes in operating working capital

      

Held-for-trading financial investments

       (1,430,383     (466,498

Trade accounts receivable

       (820,306     732,656  

Inventories

       (663,855     373,946  

Taxes recoverable

       184,040       686,777  

Prepaid expenses

       (102,697     7,922  

Other receivables

       (46,675     (25,407

Trade payables

       (1,346,034     (2,364,352

Taxes payable

       (177,213     (9,815

Advances from customers

       (71,718     (47,148

Leniency agreement

       (607,358  

Sundry provisions

       (2,516     5,043  

Other payables

       (227,315     (179,173
    

 

 

   

 

 

 

Cash from operations

       1,287,211       2,431,630  
    

 

 

   

 

 

 

Interest paid

       (1,024,942     (938,968

Income tax and social contribution paid

       (602,278     (668,126
    

 

 

   

 

 

 

Net cash (provided) generated by operating activities

       (340,009     824,536  
    

 

 

   

 

 

 

Proceeds from the sale of fixed assets

       1,468       114  

Funds received on the sale of investments

     3       450,000    

Acquisitions of property, plant and equipment and intangible assets

     (i     (755,063     (1,233,146

Premuim in the dollar put option

       (9,771  

Held-for-maturity financial investments

         38,353  
    

 

 

   

 

 

 

Net cash used in investing activities

       (313,366     (1,194,679
    

 

 

   

 

 

 

Short-term and Long-term debt

      

Obtained

       1,486,963       1,937,284  

Payments

       (1,513,356     (1,865,492

Braskem Idesa borrowings

      

Obtained funds

       187,959       153,126  

Payment of borrowings

       (448,525     (227,201

Dividends paid

       (41     (998,982
    

 

 

   

 

 

 

Net cash provided by financing activities

       (287,000     (1,001,265
    

 

 

   

 

 

 

Exchange variation on cash of foreign subsidiaries

       (50,039     568,780  
    

 

 

   

 

 

 

Decrease in cash and cash equivalents

       (990,414     (802,628
    

 

 

   

 

 

 

Represented by

      

Cash and cash equivalents at the beginning of the period

       6,701,864       7,043,262  

Cash and cash equivalents at the end of the period

       5,711,450       6,240,634  
    

 

 

   

 

 

 

Decrease in cash and cash equivalents

       (990,414     (802,628
    

 

 

   

 

 

 

 

(i) In the period ended June 30, 2016, the capitalized interest paid that was included in this item (R$252,722) was reclassified to “Interest paid” (Note 2.4(a)).

The Management notes are an integral part of the financial statements.

 

6


Braskem S.A.

Notes to the unaudited condensed consolidated interim financial information

at June 30, 2017

All amounts in thousands, unless otherwise stated

 

 

1. Operations

Braskem S.A. is a public corporation headquartered in Camaçari, Bahia (“BA”), which jointly with its subsidiaries (hereinafter “Braskem” or “Company”) is controlled by Odebrecht S.A. (“Odebrecht”), which directly and indirectly holds interests of 50.11% and 38.32% in its voting and total capital, respectively.

 

(a) Significant operating events impacting these financial statements

 

(i) In January 2017, Braskem’s new line to produce ultra-high molecular weight polyethylene (UHMWPE), known commercially as UTEC®, started operations. Located in La Porte, Texas, United States, the plant will complement the production capacity of the existing line in Brazil at the petrochemical complex in Camaçari.

 

(ii) On January 27, 2017, the Board of Directors of the Company authorized the execution of a purchase agreement with Odebrecht Utilities S.A., through which Braskem undertook to purchase all shares held by the seller in Cetrel S.A., which represent 63.7% of its voting capital, for the aggregate amount of R$610 million, to be paid upon the consummation of the transaction.

The consummation of the acquisition is subject to a vote by the Shareholders’ Meeting of Braskem, in accordance with Article 256 of Federal Law 6,404/76, and to the conditions precedent typical to transactions of this nature. The Shareholders’ Meeting has not yet to been called.

 

(iii) On June 21, 2017, the Board of Directors approved the construction of a new polypropylene production facility in the city of La Porte, Texas, in the United States. The approximate amount is up to US$675 million(*) to the production of 450 thousand tons per year(*). Completion of this project is planned for 2020.

(*) unaudited

 

(b) Net working capital

On June 30, 2017, in compliance with IAS 1—Presentation of Financial Statements, the subsidiary Braskem Idesa reclassified to current liabilities the finance obligations whose original maturities are long term, since certain contractual obligations (covenants) as of June 30, 2017 were in default (Notes 13(a) and 14). Consequently, the net working capital became negative R$4,156,604.

It should be noted that Braskem Idesa has been settling its debt service obligations in accordance with the original maturity schedule, none of the creditors has requested immediate repayment of such obligations and, without the above reclassification, consolidated net working capital is positive at R$5,030,520.

 

7


Braskem S.A.

Notes to the unaudited condensed consolidated interim financial information

at June 30, 2017

All amounts in thousands, unless otherwise stated

 

 

2. Summary of significant accounting policies

There were no changes in the accounting practices used in the preparation of the condensed interim financial information in relation to those presented in the December 31, 2016 financial statements, except for what is disclosed in the footnotes 2.4 Change in accounting policy.

 

2.1. Basis of preparation

This unaudited condensed interim financial information should be read together with the financial statements of Braskem as of December 31, 2016, which were prepared and presented in accordance with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB).

The preparation of the condensed interim financial information requires the use of certain critical accounting estimates. It also requires the Management of the Company to exercise its judgment in the process of applying its accounting policies.

There were no significant changes in the assumptions and judgments made by the Company’s management in the use of estimates for the preparation of the unaudited condensed interim financial information in relation to those used in the December 31, 2016 financial statements.

Issue of this unaudited condensed interim financial information was authorized by the Executive Board on September 27, 2017.

 

2.1.1 Unaudited consolidated condensed interim financial information

The unaudited condensed interim financial information was prepared and is being presented in accordance with the pronouncements IAS 34—Interim Financial Reporting, which establish the minimum content for interim financial statements.

All relevant information pertaining exclusively to these unaudited interim financial statements is presented herein and corresponds to the information used by the Management of the Company.

 

8


Braskem S.A.

Notes to the unaudited condensed consolidated interim financial information

at June 30, 2017

All amounts in thousands, unless otherwise stated

 

 

The condensed interim financial information includes the condensed interim financial information of Braskem S.A. and companies in which it, directly or indirectly, maintains a controlling equity interest or controls the activities, as presented below:

 

            Total and voting interest - %  
            Headquarters      Jun/2017      Dec/2016  

Direct and Indirect subsidiaries

           

Braskem America Finance Company (“Braskem America Finance”)

        EUA        100.00        100.00  

Braskem America, Inc. (“Braskem America”)

        EUA        100.00        100.00  

Braskem Argentina S.A. (“Braskem Argentina”)

        Argentina        100.00        100.00  

Braskem International GmbH (“Braskem Austria”)

     (i)        Austria        100.00        100.00  

Braskem Europe GmbH (“Braskem Alemanha”)

        Germany        100.00        100.00  

Braskem Finance Limited (“Braskem Finance”)

        Cayman Islands        100.00        100.00  

Braskem Idesa S.A.P.I. (“Braskem Idesa”)

        Mexico        75.00        75.00  

Braskem Idesa Servicios S.A. de CV (“Braskem Idesa Serviços”)

        Mexico        75.00        75.00  

Braskem Incorporated Limited (“Braskem Inc”)

        Cayman Islands        100.00        100.00  

Braskem Mexico Proyectos S.A. de C.V. SOFOM (“Braskem México Sofom”)

        Mexico        100.00        100.00  

Braskem Mexico, S. de RL de CV (“Braskem México”)

        Mexico        100.00        100.00  

Braskem Mexico Servicios S. RL de CV (“Braskem México Serviços”)

        Mexico        100.00        100.00  

Braskem Netherlands B.V. (“Braskem Holanda”)

        Netherlands        100.00        100.00  

Braskem Netherlands Finance B.V. (“Braskem Holanda Finance”)

        Netherlands        100.00        100.00  

Braskem Netherlands Inc. B.V. (“Braskem Holanda Inc”)

        Netherlands        100.00        100.00  

Braskem Petroquímica Chile Ltda. (“Braskem Chile”)

        Chile        100.00        100.00  

Braskem Petroquímica Ltda. (“Braskem Petroquímica”)

        Brazil        100.00        100.00  

Lantana Trading Co. Inc. (“Lantana”)

        Bahamas        100.00        100.00  

Specific Purpose Entity (“SPE”)

           

Fundo de Investimento Multimercado Crédito Privado Sol (“FIM Sol”)

        Brazil        100.00        100.00  

Fundo de Investimento Caixa Júpiter Multimercado

           

Crédito Privado Longo Prazo (“FIM Júpiter”)

        Brazil        100.00        100.00  

 

(i) In the process of dissolution.

 

9


Braskem S.A.

Notes to the unaudited condensed consolidated interim financial information

at June 30, 2017

All amounts in thousands, unless otherwise stated

 

 

2.2. Foreign and functional currency

The information on functional and foreign currency was presented in the 2016 annual financial statements of the Company, in Note 2.2.

Exchange variation effects

The main effects from exchange variation in this condensed interim financial information are shown below:

 

     Final rate     Average rate for period ended  
     Jun/2017      Dec/2016      Variation     Jun/2017      Jun/2017      Variation  

U.S. dollar - Brazilizan real

     3.3082        3.2591        1.51     3.1807        3.7017        -14.08

U.S. dollar - Mexican peso

     18.0820        20.6352        -12.37     19.4478        18.0712        7.62

U.S. dollar - Euro

     0.8763        0.9479        -7.54     0.9239        0.8957        3.14

 

2.3. Restatement

The statements of operations, of the starting balance of equity and of cash flows for the period ended June 30, 2016 and the starting balance of equity in December 2015 were restated due to the adjustment of taxes recognized from prior periods and other prior-year adjustments. The information related to this restatement was reported in the 2016 annual financial statements of the Company, in Note 2.4. The effect on the statement of income for the period ended June 30, 2016, corresponding to the update by the SELIC, recorded under “financial expenses”, was R$11,808.

Additionally, the statement of cash flows for the period ended June 30, 2016 was restated due to the reclassification of Brazilian government bonds from “cash and cash equivalents” to “financial investments” (negative variation of R$103,538 in the period ended June 30, 2016 as explained in Note 5.ii).

 

2.4. Change in accounting policy

 

(a) The Management of Braskem decided to change, in the statement of cash flows, the presentation of capitalized interest paid, which previously was presented under the group referred to as “cash used in investment activities.” These expenses are now recorded under the item “interest paid.” This change enables: (i) the direct identification of the total amount paid as interest; and (ii) greater accuracy in determining the net cash from operations. The amount reclassified in the period ended June 30, 2016 was R$252,722.

 

(b) In 2017, the Company changed the classification of provision for profit sharing to standardize such classification among all companies, whether or not productive, and because it deemed the current classification more appropriate, since this provision does not present recurring elements or, even when recurring, the amounts differ from year to year.

In the period ended June 30, 2016, the amounts related to this item were reclassified from “costs of products sold” (R$83,363), “selling and distribution expenses” (R$3,994) and “general and administrative expenses” (R$96,515) to the item “other income (expenses), net” (Note 23).

 

3. Available-for-sale assets and discontinued operations

On January 9, 2017, the Board of Directors approved the sale of the subsidiaries Quantiq Distribuidora Ltda and IQAG Armazens Gerais Ltda to the company GTM do Brasil Comércio de Produtos Químicos Ltda. The sale

 

10


Braskem S.A.

Notes to the unaudited condensed consolidated interim financial information

at June 30, 2017

All amounts in thousands, unless otherwise stated

 

 

agreement, in the amount of R$550 million, was signed on the following day, and in January the operation was approved by Brazil’s antitrust agency CADE (Conselho Administrativo de Defesa Econômica). The approval of the sale plan was made by Management during the second half of 2016. The transfer of control to the buyer company was concluded on April 3, 2017. On the same date, Braskem received R$450 million. The remaining R$100 million will be received within 12 months, subject to adjustments typical to operations of this nature. The capital gain from the operation was R$276,816 (Total income of R$550,000 (-) net assets of R$273,184) registered in the second quarter.

Assets and liabilities classified as held for sale and profit or loss from discontinued operations until the date of transfer of control are shown below:

 

     Mar/2017      Dec/2016  

Assets and liabilities classified as held for sale

     

Assets

     

Cash and cash equivalents

     40,216        76,146  

Trade accounts receivable

     119,076        65,626  

Inventories

     82,815        84,296  

Taxes recoverable

     46,858        45,859  

Property, plant and equipment

     61,591        61,037  

Intangible assets

     6,729        6,665  

Other assets

     17,932        20,075  
  

 

 

    

 

 

 

Total assets

     375,217        359,704  
  

 

 

    

 

 

 

Liabilities

     

Trade payables

     75,852        62,692  

Payroll and related charges

     7,099        11,170  

Dividends

     6,371        6,371  

Taxes payable

     9,668        7,064  

Other payables

     3,043        8,099  
  

 

 

    

 

 

 

Total liabilities

     102,033        95,396  
  

 

 

    

 

 

 

Net assets (Assets (-) Liabilities)

     273,184        264,308  
  

 

 

    

 

 

 

 

11


Braskem S.A.

Notes to the unaudited condensed consolidated interim financial information

at June 30, 2017

All amounts in thousands, unless otherwise stated

 

 

     Mar/2017      Dec/2016  

Result with discontinued operations

     

Net sales revenue

     212,238        211,915  

Cost of products sold and services provided

     (176,957      (169,739
  

 

 

    

 

 

 

Gross profit

     35,281        42,176  
  

 

 

    

 

 

 

Income (expenses)

     

Selling and distribution

     (10,164      (11,617

General and administrative

     (12,067      (20,021

Other income (expenses), net

     (1,298      1,691  
  

 

 

    

 

 

 

Operating profit

     11,752        12,229  
  

 

 

    

 

 

 

Financial results

     1,747        4,074  
  

 

 

    

 

 

 

Profit before income tax and social contribution

     13,499        16,303  
  

 

 

    

 

 

 

Current and deferred income tax and social contribution

     (4,623      (5,415
  

 

 

    

 

 

 

Result with discontinued operations

     8,876        10,888  
  

 

 

    

 

 

 

 

4. Cash and cash equivalents

The information on cash and cash equivalents were presented in the 2016 annual financial statements of the Company, in Note 6.

 

           Jun/2017      Dec/2016  

Cash and banks

     (i     2,567,561        2,178,611  

Cash equivalents:

       

Domestic market

       1,743,939        2,914,685  

Foreign market

     (i     1,399,950        1,608,568  
    

 

 

    

 

 

 

Total

       5,711,450        6,701,864  
    

 

 

    

 

 

 

 

(i) On June 30, 2017, it includes cash and banks of R$243,796 (R$172,390 on December 31, 2016) and cash equivalents of R$49,996 (R$29,169 on December 31, 2016) of the subsidiary Braskem Idesa, available for its exclusive use.

 

5. Financial investments

The information on financial investments was presented in the 2016 annual financial statements of the Company, in Note 7.

 

12


Braskem S.A.

Notes to the unaudited condensed consolidated interim financial information

at June 30, 2017

All amounts in thousands, unless otherwise stated

 

 

           Jun/2017      Dec/2016  

Loans and receivables

       

Time deposit investments

     (i     440,568        434,015  

Held-for-trading

       

LFT’s and LF’s

     (ii     2,236,755        755,712  

Other

       496        756  
    

 

 

    

 

 

 

Total

       2,677,819        1,190,483  
    

 

 

    

 

 

 

Current assets

       2,677,819        1,190,483  
    

 

 

    

 

 

 

Total

       2,677,819        1,190,483  
    

 

 

    

 

 

 

 

(i) This investment was given as guarantee to cover Braskem’s obligation related to the constitution of a reserve account for the Project finance of the subsidiary Braskem Idesa.
(ii) Government bonds held-for-trading refers to Brazilian floating-rate government bonds (“LFTs”) issued by the Brazilian federal government and Financial Bills (“LF’s”) are issued by financial institutions. These financial investments have maturity above three months, immediate liquidity and expected realization in the short term.

 

6. Trade accounts receivable

The information on trade accounts receivable was presented in the 2016 annual financial statements of the Company, in Note 8.

 

     Jun/2017      Dec/2016  

Customers

     

Domestic market

     1,029,501        869,306  

Foreign market

     1,871,579        1,215,626  

Allowance for doubtful accounts

     (377,869      (380,559
  

 

 

    

 

 

 

Total

     2,523,211        1,704,373  
  

 

 

    

 

 

 

Current assets

     2,460,514        1,634,137  

Non-current assets

     62,697        70,236  
  

 

 

    

 

 

 

Total

     2,523,211        1,704,373  
  

 

 

    

 

 

 

 

7. Inventories

The information on inventories was presented in the 2016 annual financial statements of the Company, in Note 9.

 

     Jun/2017      Dec/2016  

Finished goods

     3,789,850        3,444,898  

Raw materials, production inputs and packaging

     1,376,142        1,407,399  

Maintenance materials

     359,627        312,167  

Advances to suppliers

     409,468        103,267  

Imports in transit and other

     26,590        31,816  
  

 

 

    

 

 

 

Total

     5,961,677        5,299,547  
  

 

 

    

 

 

 

Current assets

     5,907,679        5,238,014  

Non-current assets

     53,998        61,533  
  

 

 

    

 

 

 

Total

     5,961,677        5,299,547  
  

 

 

    

 

 

 

 

13


Braskem S.A.

Notes to the unaudited condensed consolidated interim financial information

at June 30, 2017

All amounts in thousands, unless otherwise stated

 

 

8. Related parties

The information concerning related parties was presented in the 2016 annual financial statements of the Company, in Note 10.

 

    Balances at June 30, 2017     Balances at December 31, 2016  
    Associated companies, Jointly-controlled investment and Related  companies     Associated companies, Jointly-controlled investment and Related  companies  
    Odebrecht and
subsidiaries
    Petrobras and
subsidiaries
    Other     Total     Odebrecht and
subsidiaries
    Petrobras and
subsidiaries
    Other     Total  

Balance sheet

               

Assets

               

Current

               

Trade accounts receivable

    7,381       20,494       31,116       58,991       5,634       33,843       28,390       67,867  

Inventories

    155,507  8(a.iv)      37,625         193,132         5,434         5,434  

Dividends and interest on capital

        20,729       20,729           14,986       14,986  

Other

    42           42       50           50  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total assets

    162,930       58,119       51,845       272,894       5,684       39,277       43,376       88,337  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Liabilities

               

Current

               

Trade payables

    42,704       478,921       333       521,958       77,461       904,090       1,226       982,777  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities

    42,704       478,921       333       521,958       77,461       904,090       1,226       982,777  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
    Six-month period ended June 30, 2017     Six-month period ended June 30, 2016  
    Associated companies, Jointly-controlled investment and Related
companies
    Associated companies, Jointly-controlled investment and Related
companies
 
    Odebrecht
and subsidiaries
    Petrobras and
subsidiaries
    Other     Total     Odebrecht and
subsidiaries
    Petrobras and
subsidiaries
    Other     Total  

Transactions

               

Sales of products

    25,008       833,004       323,616       1,181,628       30,707       1,009,837       275,852       1,316,396  

Purchases of raw materials, finished goods services and utilities

    403,618  (i)      6,691,063       2,657       7,097,338       859,246  (i)      5,826,466       39,933       6,725,645  

Financial income (expenses)

    4,929       (36,110       (31,181     160       (104,399       (104,239

General and administrative expenses Post-employment benefits plan

               

Odebrecht Previdência Privada (“Odeprev”)

        11,026       11,026           10,054       10,054  

 

(i) Includes expenses with the Braskem Idesa project, of which R$62,584 related to the period ended June 30, 2017, and R$539,096 related to the period ended June 30, 2016.

 

14


Braskem S.A.

Notes to the unaudited condensed consolidated interim financial information

at June 30, 2017

All amounts in thousands, unless otherwise stated

 

 

(a) Agreements executed and/or renewed with related companies

In the period ended June 30, 2017, the following agreements were signed with related companies:

 

  (i) Sales of gasoil to Refinaria de Petróleo Riograndense (“RPR”) totaled R$26,077. The product is used as feedstock in the diesel production process.

 

  (ii) As from January 2017, Braskem will maintain monthly negotiations for the sale of gasoline to RPR. Sales in the period amounted to R$171,733.

 

  (iii) Since January 2017, Braskem has held agreements for the sale of gasoline to Petrobras Distribuidora S.A., which are renewed monthly. Sales in the period amounted to R$443,665.

 

  (iv) In March 2017, the Company entered into an agreement for supply of hydrous ethanol with Usina Conquista do Pontal S.A. and Agro Energia Santa Luzia S.A. Ethanol is the feedstock consumed by Braskem to produce green ethylene. The agreement is guaranteed by Odebrecht Agroindustrial Participações S.A. and Rio Claro Agroindustrial S.A.. The agreement also provides for a commercial discount and other flexibilities in the process of Braskem’s acquisition of the product. It also includes an advance of R$150,000, to be restated at market rates. The advance is guaranteed by a pledge of the sugarcane crop, its products and subproducts at net market value in an amount greater than the value of the advance, with the pledged asset insured through a policy contracted from a premium insurer and with a provision for subrogation. The agreement is valid through April 30, 2018.

 

(b) Key management personnel

 

Income statement transactions

   Jun/2017      Jun/2016  

Remuneration

     

Short-term benefits

     25,873        16,065  

Post-employment benefit

     219        174  
  

 

 

    

 

 

 

Total

     26,092        16,239  
  

 

 

    

 

 

 

 

15


Braskem S.A.

Notes to the unaudited condensed consolidated interim financial information

at June 30, 2017

All amounts in thousands, unless otherwise stated

 

 

9. Taxes recoverable

The information on taxes recoverable was presented in the 2016 annual financial statements of the Company, in Note 11.

 

     Jun/2017      Dec/2016  

Parent Company and subsidiaries in Brazil

     

IPI

     26,525        38,909  

Value-added tax on sales and services (ICMS) - normal operations

     523,473        495,339  

ICMS - credits from PP&E

     126,132        125,145  

Social integration program (PIS) and social contribution on revenue (COFINS) - normal operations

     26,740        32,823  

PIS and COFINS - credits from PP&E

     246,208        253,503  

Income tax and social contribution (IR and CSL)

     658,765        605,058  

REINTEGRA program

     66,618        53,129  

Federal supervenience

     161,494        155,533  

Other

     8,808        1,046  

Foreign subsidiaries

     

Value-added tax

     249,219        132,152  

Income tax (IR)

     233,125        19,103  

Other

     5,499        2,628  
  

 

 

    

 

 

 

Total

     2,332,606        1,914,368  
  

 

 

    

 

 

 

Current assets

     1,184,187        826,015  

Non-current assets

     1,148,419        1,088,353  
  

 

 

    

 

 

 

Total

     2,332,606        1,914,368  
  

 

 

    

 

 

 

 

16


Braskem S.A.

Notes to the unaudited condensed consolidated interim financial information

at June 30, 2017

All amounts in thousands, unless otherwise stated

 

 

10. Investments

The information related to investments was presented in the Company’s 2016 annual financial statements, in Note 12.

 

(a) Impacts on consolidation of Braskem Idesa

In compliance with IFRS 12, the Company is presenting the financial statements of the subsidiary in which it holds non-controlling interest and the effects on the Company’s consolidated statements.

Balance sheet

 

     Consolidated Braskem                                      
     Ex consolidated Braskem Idesa     Braskem Idesa consolidated (i)     Eliminations     Consolidated  
Assets    Jun/2017      Dec/2016     Jun/2017     Dec/2016     Jun/2017     Dec/2016     Jun/2017     Dec/2016  

Curent

                 

Cash and cash equivalents

     5,417,658        6,500,265       293,792       201,599           5,711,450       6,701,865  

Financial investments

     2,677,819        1,190,483               2,677,819       1,190,483  

Trade accounts receivable

     2,047,055        1,455,893       501,111       247,465       (87,652     (69,221     2,460,514       1,634,137  

Inventories

     5,520,262        4,862,571       387,417       375,443           5,907,679       5,238,014  

Taxes recoverable

     1,095,362        710,982       88,825       115,033           1,184,187       826,015  

Other receivables

     467,541        278,865       68,690       27,170           536,231       306,034  
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     17,225,697        14,999,059       1,339,835       966,710       (87,652 )       (69,221 )       18,477,880       15,896,548  
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-current assets held for sale

        359,704                 359,704  
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     17,225,697        15,358,763       1,339,835       966,710       (87,652 )       (69,221 )       18,477,880       16,256,252  
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-current

                 

Taxes recoverable

     1,148,362        1,088,304       57       49           1,148,419       1,088,353  

Deferred tax

     133,746        189,613       892,582       1,463,502           1,026,328       1,653,115  

Related parties

     4,917,597        4,690,672           (ii)      (4,917,597     (4,690,672    

Other receivables

     650,855        648,511       34,656       29,823           685,511       678,334  

Property, plant and equipment

     18,553,724        18,814,175       12,622,298       11,171,400  (iii)      (727,940     (648,865     30,448,082       29,336,710  

Intangible

     2,621,169        2,667,708       164,742       141,379           2,785,911       2,809,087  
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     28,025,453        28,098,983       13,714,335       12,806,153       (5,645,537 )      (5,339,537 )      36,094,251       35,565,599  
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total assets

     45,251,150        43,457,746       15,054,170       13,772,863       (5,733,189 )      (5,408,758 )      54,572,131       51,821,851  
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Liabilities and shareholders’ equity

                 

Current

                 

Trade payables

     5,100,510        6,335,452       244,835       278,905       (87,652     (69,221     5,257,693       6,545,136  

Borrowings

     4,216,322        2,594,463               4,216,322       2,594,463  

Braskem Idesa Borrowings

          10,195,823       10,437,791           10,195,823       10,437,791  

Payroll and related charges

     460,983        540,405       15,984       22,050           476,967       562,455  

Taxes payable

     935,411        611,231       12,269       12,849           947,680       624,080  

Other payables

     1,460,900        2,053,031       79,099       125,955           1,539,999       2,178,986  
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     12,174,126        12,134,582       10,548,010       10,877,550       (87,652 )       (69,221 )       22,634,484       22,942,911  
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-current liabilities held for sale

        95,396                 95,396  
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     12,174,126        12,229,978       10,548,010       10,877,550       (87,652 )       (69,221 )       22,634,484       23,038,307  
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-current

                 

Loan agreements

     19,385,947        20,736,604               19,385,947       20,736,604  

Accounts payable to related parties

          4,869,590       4,698,881  (ii)      (4,869,590     (4,698,881    

Loan agreement Etileno XXI project

          (v)      1,679,492       1,620,519           1,679,492       1,620,519  

Provision for losses on subsidiaries

     2,117,544        3,053,637           (iv)      (2,117,544     (3,053,637    

Other payables

     5,127,670        4,698,937       4,523       6,774           5,132,193       4,705,711  
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     26,631,161        28,489,178       6,553,605       6,326,174       (6,987,134 )      (7,752,518 )      26,197,632       27,062,834  
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Shareholders’ equity

                 

Attributable to the Company’s shareholders

     6,445,863        2,738,590       (2,047,445     (3,430,861     2,047,445       3,430,861       6,445,863       2,738,590  

Non-controlling interest in Braskem Idesa

              (705,848     (1,017,880     (705,848     (1,017,880
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     6,445,863        2,738,590       (2,047,445 )      (3,430,861     1,341,597       2,412,981       5,740,015       1,720,710  
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities and shareholders’ equity

     45,251,150        43,457,746       15,054,170       13,772,863       (5,733,189 )      (5,408,758 )      54,572,131       51,821,851  
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

17


Braskem S.A.

Notes to the unaudited condensed consolidated interim financial information

at June 30, 2017

All amounts in thousands, unless otherwise stated

 

 

(i) Consolidation of Braskem Idesa with its direct subsidiary Braskem Idesa Serviços.
(ii) Loan from Braskem Holanda as part of shareholders’ contribution to Braskem Idesa’s project.
(iii) Adjustment corresponding to the capitalization of a portion of financial charges of the loan mentioned above.
(iv) Provision recorded in the subsidiary Braskem Holanda for the negative shareholders’ equity of Braskem Idesa.
(v) Loan owed to the non-controlling shareholder as part of shareholders’ contribution to the project.

Statement of operations

 

    Consolidated Braskem                                      
    Ex consolidated Braskem Idesa     Braskem Idesa consolidated     Eliminations     Consolidated  
    Jun/2017     Jun/2016     Jun/2017     Jun/2016     Jun/2017     Jun/2016     Jun/2017     Jun/2016  
Continued operations                                             Restated  

Net sales revenue

    22,879,823       23,370,965       1,857,606       318,476       (267,271     (52,909     24,470,158       23,636,532  

Cost of products sold

    (17,126,516     (16,851,407     (1,038,061     (259,479     273,587       36,687       (17,890,990     (17,074,199
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
    5,753,307       6,519,558       819,545       58,997       6,316       (16,222     6,579,168       6,562,333  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (expenses)

               

Selling and distribution

    (619,997     (604,596     (84,589     (44,048         (704,586     (648,644

General and administrative

    (575,857     (521,977     (61,369     (88,759     14,842       24,112       (622,384     (586,624

Research and development

    (72,145     (82,628             (72,145     (82,628

Results from equity investments

    500,665       (466,953         (477,814     480,330       22,851       13,377  

Other income (expenses), net

    35,910       (349,243     (19,103     (14,262         16,807       (363,505
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
    5,021,883       4,494,161       654,484       (88,072     (456,656     488,220       5,219,711       4,894,309  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Financial results

               

Financial expenses

    (1,293,569     (1,519,787     (494,436     (200,265     131,918       27,893       (1,656,087     (1,692,159

Financial income

    445,771       497,102       2,677       1,876       (131,918     (123,223     316,530       375,755  

Exchange rate variations, net

    (446,018     (1,642,834     778,735       (510,952     (56,113     91,094       276,604       (2,062,692
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
    (1,293,816     (2,665,519     286,976       (709,341     (56,113     (4,236     (1,062,953     (3,379,096
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Profit before income tax and social contribution

    3,728,067       1,828,642       941,460       (797,413     (512,769     483,984       4,156,758       1,515,213  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

IR and CSL—current and deferred

    (839,543     (616,545     (269,420     153,320           (1,108,963     (463,225
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Profit for the period of continued operations

    2,888,524       1,212,097       672,040       (644,093     (512,769     483,984       3,047,795       1,051,988  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Discontinued operations results

               

Profit from discontinued operations

    13,499       27,200               13,499       27,200  

IR and CSL—current and deferred

    (4,623     (8,927             (4,623     (8,927
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
    8,876       18,273               8,876       18,273  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Profit for the period

    2,897,400       1,230,370       672,040       (644,093     (512,769     483,984       3,056,671       1,070,261  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

18


Braskem S.A.

Notes to the unaudited condensed consolidated interim financial information

at June 30, 2017

All amounts in thousands, unless otherwise stated

 

 

Statement of cash flows

 

    Consolidated Braskem                                      
    Ex consolidated Braskem Idesa     Braskem Idesa consolidated     Eliminations     Consolidated  
    Jun/2017     Jun/2016     Jun/2017     Jun/2016     Jun/2017     Jun/2016     Jun/2017     Jun/2016  
                                              Restated  

Profit before income tax and social contribution and for the result with discontinued operations

    3,728,067       1,855,842       941,460       (797,413     (512,769     483,984       4,156,758       1,542,413  

Adjustments for reconciliation of profit (loss)

               

Depreciation, amortization and depletion

    1,091,056       1,192,158       354,304       59,707       (21,158     (7,890     1,424,202       1,243,975  

Results from equity investments

    (500,665     466,953           477,814       (480,330     (22,851     (13,377

Interest and monetary and exchange variations, net

    1,360,610       721,003       (124,505     206,470       56,113       4,236       1,292,218       931,709  

Gain from divestment in subsidiary

    (276,816               (276,816  

Provision for losses and write-offs of long-lived assets

    25,402       12,936       328       23           25,730       12,959  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
    5,427,654       4,248,892       1,171,587       (531,213         6,599,241       3,717,679  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Changes in operating working capital

               

Held-for-trading financial investments

    (1,430,383     (466,498             (1,430,383     (466,498

Trade accounts receivable

    (585,091     741,723       (253,646     (27,197     18,431       18,130       (820,306     732,656  

Inventories

    (644,312     417,859       (19,543     (43,913         (663,855     373,946  

Taxes recoverable

    156,471       626,156       27,569       60,621           184,040       686,777  

Prepaid expenses

    (73,496     23,420       (29,201     (15,498         (102,697     7,922  

Other receivables

    (15,035     (17,521     (31,640     (7,886         (46,675     (25,407

Trade payables

    (1,293,533     (2,141,753     (34,070     (204,469     (18,431     (18,130     (1,346,034     (2,364,352

Taxes payable

    (21,779     (267,212     (155,434     257,397           (177,213     (9,815

Advances from customers

    (63,951     (47,760     (7,767     612           (71,718     (47,148

Leniency agreement

    (607,358               (607,358  

Other payables

    (280,448     (333,998     50,617       159,868           (229,831     (174,130
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cash from operations

    568,739       2,783,308       718,472       (351,678         1,287,211       2,431,630  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Interest paid

    (777,700     (663,335     (247,242     (275,633         (1,024,942     (938,968

Income tax and social contribution paid

    (600,908     (668,126     (1,370           (602,278     (668,126
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net cash generated by operating activities

    (809,869     1,451,847       469,860       (627,311         (340,009     824,536  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Proceeds from the sale of fixed assets

    450,000                 450,000    

Acquisitions to property, plant and equipment and intangible assets

    (701,863     (910,625     (62,971     (322,521         (764,834     (1,233,146

Other investiments

    1,468       38,467               1,468       38,467  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net cash used in investing activities

    (250,395     (872,158     (62,971     (322,521         (313,366     (1,194,679
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Short-term and long-term debt

               

Obtained

    1,486,963       1,937,284               1,486,963       1,937,284  

Payments

    (1,513,356     (1,865,492             (1,513,356     (1,865,492

Braskem Idesa borrowings

               

Obtained

        187,959       153,126           187,959       153,126  

Payments

        (448,525     (227,201         (448,525     (227,201

Related parties

               

Obtained loans (payment of loans )

    20,637       (925,183     (20,637     925,183          

Dividends paid

    (41     (998,982             (41     (998,982
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net provided (used) in financing activities

    (5,797     (1,852,373     (281,203     851,108           (287,000     (1,001,265
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Exchange variation on cash of foreign subsidiaries

    (16,546     539,202       (33,493     29,578           (50,039     568,780  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Increase (decrease) in cash and cash equivalents

    (1,082,607     (733,482     92,193       (69,146         (990,414     (802,628
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Represented by

               

Cash and cash equivalents at the beginning for the period

    6,500,265       6,908,623       201,599       134,639           6,701,864       7,043,262  

Cash and cash equivalents at the end for the period

    5,417,658       6,175,141       293,792       65,493           5,711,450       6,240,634  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Increase (decrease) in cash and cash equivalents

    (1,082,607     (733,482     92,193       (69,146         (990,414     (802,628
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

19


Braskem S.A.

Notes to the unaudited condensed consolidated interim financial information

at June 30, 2017

All amounts in thousands, unless otherwise stated

 

 

11. Property, plant and equipment

The information on property, plant and equipment was presented in the Company’s 2016 annual financial statements, in Note 13.

 

    Jun/2017     Dec/2016  
    Cost     Accumulated
depreciation/
depletion
    Net     Cost     Accumulated
depreciation/
depletion
    Net  

Land

    481,773         481,773       471,655         471,655  

Buildings and improvements

    6,109,166       (1,313,069     4,796,097       5,530,714       (1,111,642     4,419,072  

Machinery, equipment and installations

    38,728,299       (17,768,071     20,960,228       36,804,409       (16,595,497     20,208,912  

Projects and stoppage in progress

    3,490,516         3,490,516       3,495,965         3,495,965  

Other

    1,450,691       (731,223     719,468       1,404,759       (663,653     741,106  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

    50,260,445       (19,812,363     30,448,082       47,707,502       (18,370,792     29,336,710  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Capitalized charges in the six-month period ended June 30, 2017 were R$73,186 (R$298,804 on June 30, 2016).

There were no significant events or circumstances in this period that indicate the need for impairment testing on the property, plant and equipment.

 

12. Intangible assets

The information on intangible assets was presented in the 2016 annual financial statements of the Company, in Note 14.

 

    Jun/2017     Dec/2016  
    Cost     Accumulated
amortization
    Net     Cost     Accumulated
amortization
    Net  

Goodwill based on future profitability

    3,187,722       (1,128,848     2,058,874       3,187,722       (1,128,848     2,058,874  

Trademarks and patents

    361,059       (115,914     245,145       339,512       (110,880     228,632  

Software and use rights

    588,019       (384,481     203,538       566,673       (364,336     202,337  

Contracts with customers and suppliers

    780,645       (502,291     278,354       772,888       (453,644     319,244  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

    4,917,445       (2,131,534     2,785,911       4,866,795       (2,057,708     2,809,087  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

There were no significant events or circumstances in the period ended June 30, 2017 that indicated the need for updating the impairment testing of intangible assets with indefinite useful life made in the end of 2016, or that indicated the need to perform an impairment testing of intangible assets with definite useful life.

 

20


Braskem S.A.

Notes to the unaudited condensed consolidated interim financial information

at June 30, 2017

All amounts in thousands, unless otherwise stated

 

 

13. Borrowings

The information on borrowings was presented in the 2016 annual financial statements of the Company, in Note 15.

 

(a) The Company has borrowings contracted from financial institutions and the capital markets that include restrictive clauses (covenants) requiring the presentation of its audited financial statements within the legal deadline (or within 120 days from the end of the fiscal year).

On the base date for the condensed interim financial information of June 30, 2017, these clauses were not being complied with on the base date of these financial statements within de legal deadline for the following contracts. For this reason, the amounts indicated in the column “Reclassification to current liabilities” in the following table, have been reclassified to current liabilities, in compliance with accounting standard IAS 1 (Presentation of Financial Statements).

According to the standards mentioned above, such reclassification is required when a contractual breach entitles creditors to request the immediate repayment of the obligations in the short-term. In this context, note that none of the Company’s creditors requested such advance payment of the obligations and that Braskem has been settling these obligations in accordance with their original maturity schedule.

Additionally, said clauses will be automatically complied with once the audited financial statements are presented, as of when said creditors will no longer be entitled to request the immediate repayment of short-term obligations, with the amounts in the following table from current liabilities to non-current liabilities.

Original maturity – reclassified to current liabilities

 

Maturity

   Local currency
Government Agents
 

2018

  

2019

     2,793  

2020

     5,255  

2021

     5,255  

2022

     5,149  

2023

     4,896  

2024

     4,896  

2025

     4,896  

2026

     4,893  

2027 and thereafter

     2,448  
  

 

 

 

Total

     40,481  
  

 

 

 

 

21


Braskem S.A.

Notes to the unaudited condensed consolidated interim financial information

at June 30, 2017

All amounts in thousands, unless otherwise stated

 

 

(b) Borrowings position

 

    

Annual financial charges (% )

          Jun/2017      Dec/2016  

Foreign currency

           

Bonds

  

US dollar exchange variation + interest between 5.38 and 7.38

        14,239,556        14,216,539  

Advances on exchange contracts

  

US dollar exchange variation + 3.91%

        1,511,401        362,779  

Export prepayment

  

Note 13 (b)

        590,378        777,801  

BNDES

  

US dollar exchange variation + interest between 6.70 and 6.86

        150,781        201,147  

Export credit notes

  

US dollar exchange variation + interest between 7.30 and 8.10

        1,190,301        1,173,127  

Working capital

  

US dollar exchange variation + 1.77% above Libor

        1,464,528        1,644,487  

Transactions costs

           (185,344      (199,570
        

 

 

    

 

 

 
           18,961,601        18,176,310  
        

 

 

    

 

 

 

Current liabilities

           2,848,157        1,128,525  

Non-current liabilities

           16,113,444        17,047,785  
        

 

 

    

 

 

 

Total

           18,961,601        18,176,310  
        

 

 

    

 

 

 

Local currency

           

Export credit notes

  

8.00

        302,652        381,632  

Export credit notes

  

105.00 e 112.50 of CDI

     (i      1,707,898        1,717,262  

BNDES

  

TJLP + interest between 0.00 and 3.58

        1,242,629        1,527,765  

BNDES

  

SELIC + interest between 2.32 and 2.78

        560,651        602,648  

BNDES

  

Interest between 3.50 and 7.00

        241,481        288,486  

BNB/ FINEP/ FUNDES

  

6.21

        524,486        580,647  

FINAME

  

TJLP + 1.90

        1,680        1,850  

Fundo de Desenvolvimento do Nordeste (FDNE)

  

6.50

        44,510        46,991  

Other

  

CDI + 0.04

        24,400        19,321  

Transactions costs

           (9,719      (11,845
        

 

 

    

 

 

 
           4,640,668        5,154,757  
        

 

 

    

 

 

 

Current liabilities

           1,368,165        1,465,938  

Non-current liabilities

           3,272,503        3,688,819  
        

 

 

    

 

 

 

Total

           4,640,668        5,154,757  
        

 

 

    

 

 

 

Foreign currency and local currency

           

Current liabilities

           4,216,322        2,594,463  

Non-current liabilities

           19,385,947        20,736,604  
        

 

 

    

 

 

 

Total

           23,602,269        23,331,067  
        

 

 

    

 

 

 

 

(i) The Company enters into swap transactions to offset the variation in the Interbank Certificate of Deposit (CDI) rate (Note 15.2.1 (a.ii)).

 

(c) Export prepayments

 

Issue date

  

Initial amount
of the transaction
(US$)

  

Maturity

  

Charges (% per year)

   Jun/2017      Dec/2016  

Jan-2013

   200,000    Nov-2022   

US dollar exchange variation + semiannual Libor + 1.10

     364,691        391,923  

May-2016

   50,000    May-2017   

US dollar exchange variation + quarterly Libor + 3.25

        163,564  

Dec-2016

   68,000    Nov-2019   

US dollar exchange variation + quarterly Libor + 2.60

     225,687        222,314  
  

 

        

 

 

    

 

 

 

Total

   318,000            590,378        777,801  
  

 

        

 

 

    

 

 

 

 

(d) Payment schedule

The payment schedule below shows the original long-term maturities, not including the reclassification to current liabilities arising from the breach of contractual covenants related to the presentation of audited financial statements within the legal term (Note 13(a)).

 

22


Braskem S.A.

Notes to the unaudited condensed consolidated interim financial information

at June 30, 2017

All amounts in thousands, unless otherwise stated

 

 

     Jun/2017      Dec/2016  

2018

     1,015,015        2,379,757  

2019

     3,138,233        3,310,384  

2020

     2,479,107        2,442,493  

2021

     3,724,233        3,667,632  

2022

     1,771,643        1,745,936  

2023

     13,760        13,772  

2024

     2,497,899        2,461,086  

2025

     3,827        3,839  

2026

     1,379        1,391  

2027 and thereafter

     4,781,332        4,710,314  
  

 

 

    

 

 

 

Total

     19,426,428        20,736,604  
  

 

 

    

 

 

 

 

(e) Guarantees

Braskem gave collateral for part of its borrowings as follows:

 

Loans

  

Maturity

   Total debt
Jun/2017
     Total
guaranteed
    

Guarantees

BNB

   Dec-2022      122,222        122,222     

Mortgage of plants, pledge of machinery and equipment

BNB

   Aug-2024      202,649        202,649     

Bank surety

BNDES

   Jan-2022      2,195,542        2,195,542     

Mortgage of plants, land and property, pledge of machinery and equipment

FUNDES

   Jun-2020      95,843        95,843     

Mortgage of plants, land and property, pledge of machinery and equipment

FINEP

   Jul-2024      103,772        103,772     

Bank surety

FINAME

   Feb-2022      1,680        1,680     

Pledge of equipment

     

 

 

    

 

 

    

Total

        2,721,708        2,721,708     
     

 

 

    

 

 

    

 

23


Braskem S.A.

Notes to the unaudited condensed consolidated interim financial information

at June 30, 2017

All amounts in thousands, unless otherwise stated

 

 

14. Braskem Idesa borrowings

The information on Braskem Idesa borrowings was presented in the 2016 annual financial statements in Note 16.

 

Identification

  Initial value
of operation
US$
          Maturity     

Charges (% per year)

  Jun/2017     Dec/2016  

Project finance

      (i)           

Project finance I

    700,000         Feb-2027     

Us dollar exchange variation + quarterly Libor + 3.25

    2,242,709       2,274,754  

Project finance II

    189,996         Feb-2027     

Us dollar exchange variation + 6.17

    642,356       663,856  

Project finance III

    600,000         Feb-2029     

Us dollar exchange variation + 4.33

    1,866,837       1,911,857  

Project finance IV

    680,004         Feb-2029     

Us dollar exchange variation + quarterly Libor + 3.88

    2,067,783       2,111,234  

Project finance V

    400,000         Feb-2029     

Us dollar exchange variation + quarterly Libor + 4.65

    1,246,933       1,276,449  

Project finance VI

    89,994         Feb-2029     

Us dollar exchange variation + quarterly Libor + 2.73

    279,729       286,480  

Project finance VII

    533,095         Feb-2029     

Us dollar exchange variation + quarterly Libor + 4.64

    1,661,814       1,701,229  

Transactions costs

             (110,906     (104,157
 

 

 

          

 

 

   

 

 

 

Total

    3,193,089              9,897,255       10,121,702  
 

 

 

          

 

 

   

 

 

 

Other borrowings

            

VAT borrowings

      (ii)       Nov-2029      2.00% above TIIE (*)       13,500  

Borrowings for working capital

 

      Aug-2017      Usdollar exchange variation + quarterly Libor + 3.18     298,568       302,589  
          

 

 

   

 

 

 
             298,568       316,089  
          

 

 

   

 

 

 
             10,195,823       10,437,791  
          

 

 

   

 

 

 

Current liabilities

             10,195,823       10,437,791  
          

 

 

   

 

 

 

Total

             10,195,823       10,437,791  
          

 

 

   

 

 

 

 

(*) TIIE – “Tasa de Interés Interbancaria de Equilibrio” – basic interest rate in Mexico, similar to the CDI overnight rate in Brazil.
(i) Financing without resource or with resource limited to shareholders.
(ii) Financing obtained in Mexican peso and paid exclusively with IVA refund, settled in January 2017.

This kind of Project finance includes restrictive contractual clauses (covenants), among others, that require the presentation of the audited financial statements within the legal deadline (or within 120 days from the end of the fiscal year).

At the reporting date for the condensed interim financial information as of June 30, 2017, these clauses were not being complied with on the base date of these financial statements within the legal term, as well as other obligations customary in contracts of this nature. In this sense, the entire balance of non-current liabilities, in the amount of R$9,146,643, was reclassified to current liabilities, in accordance with accounting standard IAS 1 (Presentation of Financial Statements).

According to the standards mentioned above, such reclassification is required when a contractual breach entitles creditors to request the immediate repayment of the obligations in the short-term. In this context, note that none of the its creditors has requested said immediate repayment of obligations and Braskem Idesa has been settling this obligation in accordance with its original maturity schedule.

 

24


Braskem S.A.

Notes to the unaudited condensed consolidated interim financial information

at June 30, 2017

All amounts in thousands, unless otherwise stated

 

 

Additionally, Braskem Idesa has already entered into agreements with its creditors to obtain approvals for said contractual breach in order to return the entire amount reclassified from current liabilities to non-current liabilities.

The payment schedule below shows the original long-term maturities, excluding the reclassification to current liabilities arising from the breach of contractual covenants mentioned previously.

 

     Jun/2017      Dec/2016  

2018

     361,079        709,793  

2019

     736,980        736,885  

2020

     864,851        864,149  

2021

     988,253        986,914  

2022

     823,285        822,235  

2023

     1,090,310        1,088,155  

2024

     1,179,751        1,177,017  

2025

     1,179,390        1,176,346  

2026

     1,038,472        1,035,586  

2027 and thereafter

     884,272        894,606  
  

 

 

    

 

 

 

Total

     9,146,643        9,491,686  
  

 

 

    

 

 

 

 

25


Braskem S.A.

Notes to the unaudited condensed consolidated interim financial information

at June 30, 2017

All amounts in thousands, unless otherwise stated

 

 

15. Financial instruments

The information related to financial instruments was presented in the 2016 financial statements of the Company, in Note 17.

 

15.1. Non-derivative financial instruments and leniency agreement (Note 19.3)

 

              Fair value
hierarchy
    Book value     Fair value  
    Note    

Classification by category

    Jun/2017     Dec/2016     Jun/2017     Dec/2016  

Cash and cash equivalents

    4              

Cash and banks

          2,567,561       2,178,611       2,567,561       2,178,611  

Financial investments in Brazil

    Loans and receivables       1,743,939       2,914,685       1,743,939       2,914,685  

Financial investments abroad

    Held-for-trading     Level 2       1,399,950       1,608,568       1,399,950       1,608,568  
       

 

 

   

 

 

   

 

 

   

 

 

 
          5,711,450       6,701,864       5,711,450       6,701,864  

Financial investments

    5              

LFT’s and LF’s

    Held-for-trading     Level 2       2,236,755       755,712       2,236,755       755,712  

Time deposit investments

    Loans and receivables     Level 2       440,568       434,015       440,568       434,015  

Other

    Held-to-maturity     Level 2       496       756       496       756  
       

 

 

   

 

 

   

 

 

   

 

 

 
          2,677,819       1,190,483       2,677,819       1,190,483  

Trade accounts receivable

    6           2,523,211       1,704,373       2,523,211       1,704,373  

Trade payables

          5,530,604       6,746,822       5,530,604       6,746,822  

Borrowings

    13              

Foreign currency—Bond

        Level 1       14,239,556       14,216,539       15,039,361       12,509,981  

Foreign currency—other borrowings

          4,907,389       4,159,341       4,907,389       4,159,341  

Local currency

          4,650,387       5,166,602       4,650,387       5,166,602  
       

 

 

   

 

 

   

 

 

   

 

 

 
          23,797,332       23,542,482       24,597,137       21,835,924  

Braskem Idesa borrowings

    14           10,306,729       10,541,948       10,306,729       10,541,948  

Loan ton non-controlling shareholder of Braskem Idesa

          1,679,492       1,620,519       1,679,492       1,620,519  

Leniency agreement

    19.3           2,314,344       2,853,230       2,314,344       2,853,230  

Other payables (BNDESPAR)

            176,846         176,846  

 

26


Braskem S.A.

Notes to the unaudited condensed consolidated interim financial information

at June 30, 2017

All amounts in thousands, unless otherwise stated

 

 

15.2. Derivative financial instruments designated and not designated for hedge accounting

 

15.2.1 Changes

 

                  Operation characteristics            

Net

(Asset)/

    Change          

Net

(Asset)/

 

Identification

   Note     Fair value
hierarchy
     Principal
exposure
     Derivatives      Accumulated
OCI (equity)
     Liability
Dec/2016
    in fair
value
    Financial
settlement
    Liability
Jun/2017
 

Hedge accounting transactions

                      

Dollar put option

     15.2.1  (a.i)      Level 2        Real        Dollar           (4,184     5,139         955  

Exchange swap

     15.2.1  (a.ii)      Level 2        CDI        Dollar + Interests        533,134        857,099       14,484       (9,148     862,435  

Interest rate swaps

       Level 2        Libor        Fixed rates        302,399        (266     (1,316     5,207       3,625  
             

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 
                835,533        852,649       18,307       (3,941     867,015  
             

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Derivatives operations

                      

Current assets

                   (8,387      

Non-current assets

                   (29,308         (14,820

Current liabilities

                   29,042           41,350  

Non-current liabilities

                   861,302           840,485  
                

 

 

       

 

 

 
                   852,649           867,015  
                

 

 

       

 

 

 

 

(a) Operations designated for hedge accounting

 

(a.i) U.S. dollar Put Options

In September 2016, Braskem launched a recurring currency hedge program to mitigate the exposure of its cash flows to liabilities denominated in Brazilian real and not pegged to the U.S. dollar (such as electricity, payroll, etc.).

As of June 30, 2017, Braskem held a total notional value of put options of R$3,258, with a maximum term of 18 months and average strike price of 2.97 R$/US$. Braskem also held a total notional value of short positions in call option contracts in the amount of R$2,261. The average strike price of the short position in call options was R$4.28.

This type of strategy involving options, called Collar, offers protection in the event the Brazilian real appreciates while simultaneously enabling the capture of competitiveness gains in the event of currency depreciation, until limited to the strike price of the options.

Such operations were designed for the hedge accounting of cash flows as from January 1, 2017, and seek to hedge future dollar-denominated revenues with maturities in months coinciding with the maturity of the derivatives and that said it’s been accounted in compliance with Company’s cash flow hedge accounting policy.

The US Dollar put options were initially recognized at fair value and is being subsequently remeasured to its fair value at the end of each reporting period. The gain or loss relating to the effective portion of US Dollar options in-the-money (intrinsic value) is recognized in other comprehensive income in equity. The gain or loss relating to the ineffective portion and the extrinsic value of the option is recognized immediately in profit or loss within financial expenses or financial income.

 

27


Braskem S.A.

Notes to the unaudited condensed consolidated interim financial information

at June 30, 2017

All amounts in thousands, unless otherwise stated

 

 

(a.ii) Swaps related to export credit notes (NCE)

 

    Nominal value    

Hedge

Financial charges for year

  Maturity     Fair value  

Identification

        Jun/2017     Dec/2016  

Swap NCE I to III

    400,000     Exchange variation + 6.15%     Aug-2019       439,611       438,201  

Swap NCE IV to VII

    450,000     Exchange variation + 4.93% to 7.90%     Apr-2019       422,824       418,898  
 

 

 

       

 

 

   

 

 

 

Total

    850,000           862,435       857,099  
 

 

 

       

 

 

   

 

 

 

Derivatives operations

         

Current assets

            (4,203

Current liabilities

          21,950    

Non-Current liabilities

          840,485       861,302  
       

 

 

   

 

 

 

Total

          862,435       857,099  
       

 

 

   

 

 

 

 

15.3. Non-derivative liabilities designated for export hedge accounting

 

(a.i) Future exports in U.S. dollars

On June 30, 2017, exports that were designated and not yet realized are shown below:

 

     Total nominal value
US$
 

2017

     420,273  

2018

     787,894  

2019

     733,980  

2020

     724,000  

2021

     716,000  

2022

     719,000  

2023

     718,372  

2024

     688,854  
  

 

 

 
     5,508,373  
  

 

 

 

The following table shows the changes in financial instruments designated for this hedge in the period:

 

     US$  
     Dec/2016      Hedge
discontinued
     Jun/2017  

Designated balance

     5,301,099        (402,325      4,898,774  

 

28


Braskem S.A.

Notes to the unaudited condensed consolidated interim financial information

at June 30, 2017

All amounts in thousands, unless otherwise stated

 

 

On June 30, 2017, the maturities of financial liabilities designated are as follows:

 

     Total nominal value
US$
 

2017

     889,595  

2018

     772,104  

2019

     449,736  

2020

     570,782  

2021

     1,017,703  

2022

     510,000  

2024

     688,854  
  

 

 

 
     4,898,774  
  

 

 

 

Considering the strong cash generation in recent quarters, the Management of the Company believed it was appropriate to advance the payment of dollar-denominated obligations, including liabilities designated for this hedge. As a result of the decision, the amount of US$609,598 was discontinued prospectively (US$402,325 for the period ended June 30, 2017). Exchange variation on the discontinued amount, of R$771,222 (R$495,860 for the period ended June 30,2017), which is recorded under Shareholders’ Equity as “Other comprehensive income” (“OCI”) will be taken to net financial income (expenses) as of July 2017, as the hedged exports are realized.

 

     Total nominal
value US$
     Conversion rate
at Inception
R$/US$
     Closing rate
R$/US$
     Gross nominal
value
 

Hedge descontinued - Third quarter 2017

     207,273        2.0017        3.3302        275,362  

Hedge descontinued - Fourth quarter 2017

     213,000        2.0017        3.1684        248,507  

Hedge descontinued - First quarter 2018

     189,325        2.0017        3.3082        247,353  
  

 

 

          

 

 

 
     609,598              771,222  
  

 

 

          

 

 

 

The following table provides the balances of exchange variation recognized in the Company’s net financial income (expenses) due to the realization of exports designated for this hedge for the six-month period ended June 30, 2017:

 

     Total nominal
value US$
     Conversion rate
at Inception
MXN/US$
     Closing rate
MXN/US$
     Gross nominal
value
 

First quarter

     201,277        2.0017        3.2400        249,241  

Second quarter

     208,135        2.0017        3.2015        249,721  
  

 

 

          

 

 

 
     409,412              498,962  
  

 

 

          

 

 

 

 

29


Braskem S.A.

Notes to the unaudited condensed consolidated interim financial information

at June 30, 2017

All amounts in thousands, unless otherwise stated

 

 

The changes in foreign exchange variation and Income Tax and Social Contribution under “Other comprehensive income” of this hedge are as follows:

 

    Exchange
variation
    IR and CSL     Net
effect
 

At December 31, 2016

    (7,439,927     2,529,575       (4,910,352

Exchange variation recorded in the period on OCI / IR and CSL

    (230,507     78,372       (152,135

Exchange variation transferred to profit or loss / IR and CSL

    498,962       (169,647     329,315  
 

 

 

   

 

 

   

 

 

 

At June 30, 2017

    (7,171,472     2,438,300       (4,733,172
 

 

 

   

 

 

   

 

 

 

 

30


Braskem S.A.

Notes to the unaudited condensed consolidated interim financial information

at June 30, 2017

All amounts in thousands, unless otherwise stated

 

 

(a.ii) Liabilities related to the Project Finance of future sales in U.S. dollar

On June 30, 2017, sales designated and not yet realized are as follows:

 

     Nominal value
US$
 

2017

     106,182  

2018

     221,790  

2019

     229,270  

2020

     266,690  

2021

     303,392  

2022

     253,204  

2023

     333,093  

2024

     359,559  

2025

     357,903  

2026

     309,240  

2027

     152,103  

2028

     124,654  

2029

     31,164  
  

 

 

 
     3,048,244  
  

 

 

 

The following table shows the changes in financial instruments designated for these hedge operations in the period:

 

     US$  
     Dec/2016      Sales in
the year
     Hedge
discontinued
     Jun/2017  

Designated balance

     3,125,315        (77,070      (12,091      3,036,154  

On June 30, 2017, the maturities of financial liabilities designated were distributed as follows:

 

     Nominal value
US$
 

2017

     105,992  

2018

     221,390  

2019

     228,850  

2020

     266,187  

2021

     302,816  

2022

     252,723  

2023

     332,458  

2024

     358,788  

2025

     357,221  

2026

     308,650  

2027

     150,419  

2028

     124,348  

2029

     26,312  
  

 

 

 
     3,036,154  
  

 

 

 

 

31


Braskem S.A.

Notes to the unaudited condensed consolidated interim financial information

at June 30, 2017

All amounts in thousands, unless otherwise stated

 

 

The following table provides the balance of exchange variation of the discontinued amount, net of realization already occurred, on June 30, 2017, which is recorded in Braskem Idesa’s shareholders’ equity under “Other comprehensive income” and will be transferred to financial income (expenses) according to the schedule of future hedged sales:

 

     Total nominal
value US$
     Conversion rate
at Inception
MXN/US$
     Closing rate
MXN/US$
     Total nominal
value MXN
     Gross nominal
value
 

Hedge descontinued

     12,091        13.4541        17.9915        54,860        10,039  
           

 

 

    

 

 

 
              54,860        10,039  
           

 

 

    

 

 

 

The following table provides the balances of exchange variation recognized in Braskem Idesa’s financial income (expenses) due to the realization of sales designated for this hedge over the course of the six-month period ended June 30, 2017:

 

     Total nominal
value US$
     Conversion rate
at Inception
MXN/US$
     Closing rate
MXN/US$
     Total nominal
value MXN
     Gross nominal
value
 

First quarter

     29,174        13.6650        20.0871        187,361        30,918  

Second quarter

     47,896        13.6560        18.5659        235,167        42,992  
  

 

 

          

 

 

    

 

 

 
     77,070              422,528        73,910  
  

 

 

          

 

 

    

 

 

 

The changes in foreign exchange variation and Income Tax and Social Contribution under “Other comprehensive income” are as follows:

 

     Exchange
variation
    IR     Net effect  

At December 31, 2016

     (4,182,052     1,255,350       (2,926,702

Exchange variation recorded in the period on OCI / IR

     1,403,603       (421,081     982,522  

Exchange variation transferred to profit or loss / IR

     73,910       (22,173     51,737  
  

 

 

   

 

 

   

 

 

 

At June 30, 2017

     (2,704,539     812,096       (1,892,443
  

 

 

   

 

 

   

 

 

 

 

32


Braskem S.A.

Notes to the unaudited condensed consolidated interim financial information

at June 30, 2017

All amounts in thousands, unless otherwise stated

 

 

15.4. Credit quality of financial assets

 

(a) Trade accounts receivable

On June 30, 2017, the credit ratings for the domestic market were as follows:

 

                (%)  
                Jun/2017      Dec/2016  
1   

Minimum risk

       12.58        8.92  
2   

Low risk

       38.61        39.98  
3   

Moderate risk

       25.63        30.51  
4   

High risk

       18.60        16.48  
5   

Very high risk

     (i     4.58        4.11  

 

(i) Most clients in this group are inactive and the respective accounts are in the process of collection actions in the courts. Clients in this group that are still active buy from Braskem and pay in advance.

Default indicators

 

     Last 12 months  
     Domestic
Market
    Export
Market
 

June 30, 2017

     0.49     0.08

December 31, 2016

     0.18     0.04

June 30, 2016

     0.27     0.10

 

33


Braskem S.A.

Notes to the unaudited condensed consolidated interim financial information

at June 30, 2017

All amounts in thousands, unless otherwise stated

 

 

(b) Other financial assets

In order to determine the credit ratings of counterparties in financial assets classified as cash and cash equivalents, held-for-trading, held-to-maturity and loans and receivables, Braskem uses credit rating from the following agencies: Standard & Poor’s, Moody’s and Fitch Ratings within the limits established in its financial policy approved by the Board of Directors.

 

        Jun/2017      Dec/2016  

Financial assets with risk assessment

      

AAA

      4,288,374        3,871,105  

AA+

      3,362        241,359  

AA

      60,023        5,370  

AA-

      638,249        654,232  

A+

      1,601,138        2,426,078  

A

      1,521,426        364,198  

A-

      147,455        209,175  

BBB+

      3,060        116,987  

BBB

      122,538     
   

 

 

    

 

 

 
      8,385,625        7,888,504  

Financial assets without risk assessment

      

Other financial assets with no risk assessment

  (i)     3,644        3,843  
   

 

 

    

 

 

 
      3,644        3,843  
   

 

 

    

 

 

 

Total

      8,389,269        7,892,347  
   

 

 

    

 

 

 

 

(i) Investments approved by the Management of the Company, as permitted by the financial policy.

 

15.5. Sensitivity analysis

Financial instruments, including derivatives, may be subject to changes in their fair value as a result of the variation in commodity prices, foreign exchange rates, interest rates, shares and share indexes, price indexes and other variables. The sensitivity of the derivative and non-derivative financial instruments to these variables are presented below:

 

(a) Selection of risks

On June 30, 2017, the main risks that can affect the value of Braskem’s financial instruments are:

 

    Brazilian real/U.S. dollar exchange rate;

 

    Brazilian real/Mexican peso exchange rate;

 

    Libor floating interest rate;

 

    Selic interest rate;

 

    CDI interest rate; and

 

    TJLP interest rate.

For the purposes of the risk sensitivity analysis, Braskem presents the exposures to currencies as if they were independent, that is, not reflecting in the exposure to a foreign exchange rate the risks of the variation in other foreign exchange rates that could be directly influenced by it.

 

34


Braskem S.A.

Notes to the unaudited condensed consolidated interim financial information

at June 30, 2017

All amounts in thousands, unless otherwise stated

 

 

(b) Value at risk

The value at risk of the derivatives held by Braskem which is defined as the loss that could result in one month as from June 30, 2017, with a probability of 5%, and under normal market conditions, was estimated by the Company at US$28,144 for the NCE exchange rate swap (Note 15.2.1(a.ii)) and at US$2,489 for put and call options (Note 15.2.1(a.i)) and null for the swap of Libor related to Braskem Idesa’s project.

 

(c) Selection of scenarios

 

(c.1) Probable scenario

The Market Readout published by the Central Bank of Brazil was used to create the probable scenario for the U.S. dollar/Brazilian real exchange rate, Selic basic interest rate and the CDI interest rate, using the reference date of June 30, 2017. According to the Market Readout, at the end of 2017, the U.S. dollar will appreciate by 1.2% against the Brazilian real, compared to the closing PTAX rate at June 30, 2017, while the Selic rate will be 8.5% p.a. The Selic rate is used as a reference for analyses of sensitivity to the CDI.

The probable scenario for the TJLP is a decrease of 0.50% from the current rate of 7.0%, in line with the size of the government’s most recent decisions to increase or decrease the rate. The Market Readout does not publish forecasts for the Libor interest rate. Therefore, to determine the probable scenario, Braskem considered a 5% increase on current market levels.

 

35


Braskem S.A.

Notes to the unaudited condensed consolidated interim financial information

at June 30, 2017

All amounts in thousands, unless otherwise stated

 

 

(c.2) Possible and extreme adverse scenarios

The sensitivity values in the table below are the changes in the value of the financial instruments in each scenario:

 

     Gain (losses)  

Instrument / Sensitivity

   Probable      Possible adverse
(25%)
     Extreme adverse
(50%)
 

Brazilian real/U.S. dollar exchange rate

        

Bonds

     (177,707      (3,516,094      (7,032,189

BNDES

     (1,905      (37,695      (75,391

Working capital / structured operations

     (33,544      (663,707      (1,327,415

Export prepayments

     (7,331      (145,053      (290,107

Braskem Idesa borrowings

     (128,827      (2,548,956      (5,097,911

Financial investments abroad

     (19,097      (377,850      (755,700

Swaps

     (21,787      (431,094      (840,350

Dollar put option

     (1,852      (25,013      (77,752

Financial investments abroad

     36,103        714,331        1,428,662  

Selic interest rate

        

BNDES

     33,842        (52,500      (108,648

Libor floating interest rate

        

Working capital / structured operations

     (643      (3,217      (6,433

Export prepayments

     (2,251      (11,254      (22,508

Swaps

     2,060        10,233        20,300  

CDI interest rate

        

Swaps NCE

     32,076        (48,179      (97,805

Swaps NCA

     60,205        (94,454      (196,790

Financial investments in local currency

     (30,308      43,974        87,479  

Instrument / Sensitivity

   Probable
6.5%
     Possible adverse
7.5%
     Extreme adverse
8.0%
 

TJLP interest rate

        

BNDES

     26,540        (26,993      (54,443

Other government agents

     37        (37      (75

 

36


Braskem S.A.

Notes to the unaudited condensed consolidated interim financial information

at June 30, 2017

All amounts in thousands, unless otherwise stated

 

 

16. Taxes payable

The information related to taxes payable was presented in the Company’s 2016 annual financial statements, in Note 18.

 

     Jun/2017      Dec/2016  

Brazil

     

IPI

     65,110        59,323  

IR and CSL

     219,653        222,680  

ICMS

     211,500        182,034  

PIS and COFINS

     98,816        59,105  

Other

     50,103        62,743  

Other countries

     

IR

     214,252        46,670  

Value-added tax

     128,670        15,622  
  

 

 

    

 

 

 

Total

     988,104        648,177  
  

 

 

    

 

 

 

Current liabilities

     947,680        624,080  

Non-current liabilities

     40,424        24,097  
  

 

 

    

 

 

 

Total

     988,104        648,177  
  

 

 

    

 

 

 

 

17. Income tax (“IR”) and social contribution (“CSL”)

The information related to income tax and social contribution was presented in the Company’s 2016 annual financial statements, in Note 20.

 

(a) Reconciliation of the effects of income tax and social contribution on profit or loss

 

     Jun/2017      Jun/2016  
            Restated  

Income before IR and CSL

     4,156,758        1,515,213  

IR and CSL at the rate of 34%

     (1,413,298      (515,172

Permanent adjustments to the IR and CSL calculation basis

     

IR and CSL on equity in results of investees

     4,151        4,548  

Tax loss and negative basis - Installment Rectification

     38,403     

Tax benefits (Sudene and PAT)

     41,654     

Difference of rate applicable to each country

     166,406        (4,335

Other permanent adjustments

     53,721        51,734  
  

 

 

    

 

 

 

IR and CSL on results of operations

     (1,108,963      (463,225
  

 

 

    

 

 

 

Breakdown of IR and CSL:

     

Current IR and CSL

     (363,969      (551,597

Deferred IR and CSL

     (744,994      88,372  
  

 

 

    

 

 

 

Total

     (1,108,963      (463,225
  

 

 

    

 

 

 

 

37


Braskem S.A.

Notes to the unaudited condensed consolidated interim financial information

at June 30, 2017

All amounts in thousands, unless otherwise stated

 

 

(b) Breakdown of deferred income tax and social contribution

 

(b.i) According to tax collection records

 

     Jun/2017      Dec/2016  

Assets

     

Tax losses (IR) and negative base (CSL)

     1,864,478        2,420,376  

Goodwill amortized

     4,270        4,624  

Exchange variations

     255,357        464,947  

Temporary adjustments

     336,775        717,868  

Business combination

     192,101        191,250  
  

 

 

    

 

 

 
     2,652,981        3,799,065  
  

 

 

    

 

 

 

Liabilities

     

Amortization of goodwill based on future profitability

     783,659        767,277  

Tax depreciation

     919,228        867,922  

Temporary adjustments

     313,414        316,991  

Business combination

     179,353        198,381  

Additional indexation PP&E

     54,325        118,202  

Amortization of fair value adjustments on the assets from the acquisiton of Braskem Qpar

     398,904        263,808  

Other

     3,506        123,892  
  

 

 

    

 

 

 
     2,652,389        2,656,473  
  

 

 

    

 

 

 

 

(b.ii) Offset for the purpose of presentation in the balance sheet

 

     Jun/2017  
     Headquarters
(Country)
     IR and CSL      Balance  
        Tax calculation      Compensation     

Assets

           

Braskem S.A

     Brazil        1,523,548        (1,523,548   

Braskem Chile

     Chile        90           90  

Braskem Argentina

     Argentina        4,291           4,291  

Braskem Alemanha

     Germany        25,420           25,420  

Braskem Idesa

     Mexico        892,582           892,582  

Braskem México Serviços

     Mexico        1,613           1,613  

Braskem Petroquímica

     Brazil        103,105        (103,105   

Braskem Petroquímica—business combination effects

     Brazil        102,332           102,332  
     

 

 

    

 

 

    

 

 

 
        2,652,981        (1,626,653      1,026,328  
     

 

 

    

 

 

    

 

 

 

Liabilities

           

Braskem S.A

     Brazil        2,063,638        (1,523,548      540,090  

Braskem America

     USA        305,228           305,228  

Braskem Petroquímica

     Brazil        165,562        (103,105      62,457  

Braskem Petroquímica—business combination effects

     Brazil        117,961           117,961  
     

 

 

    

 

 

    

 

 

 
        2,652,389        (1,626,653      1,025,736  
     

 

 

    

 

 

    

 

 

 

 

38


Braskem S.A.

Notes to the unaudited condensed consolidated interim financial information

at June 30, 2017

All amounts in thousands, unless otherwise stated

 

 

     Dec/2016  
     Headquarters
(Country)
     IR and CSL      Balance  
        Tax calculation      Compensation     

Assets

           

Braskem S.A

     Brazil        2,106,303        (2,063,844      42,459  

Braskem Argentina

     Argentina        6,745           6,745  

Braskem Alemanha

     Germany        36,932           36,932  

Braskem Chile

     Chile        135        (135   

Braskem Idesa

     Mexico        1,463,502           1,463,502  

Braskem México Serviços

     Mexico        1,994           1,994  

Braskem Petroquímica

     Brazil        81,971        (81,971   

Braskem Petroquímica and Braskem Qpar—business combination effects

     Brazil        101,483           101,483  
     

 

 

    

 

 

    

 

 

 
        3,799,065        (2,145,950      1,653,115  
     

 

 

    

 

 

    

 

 

 

Liabilities

           

Braskem S.A

     Brazil        2,063,844        (2,063,844   

Braskem America

     USA        305,289           305,289  

Braskem Chile

     Chile        1,404        (135      1,269  

Braskem Petroquímica

     Brazil        162,241        (81,971      80,270  

Braskem Petroquímica and Braskem Qpar—business combination effects

     Brazil        123,695           123,695  
     

 

 

    

 

 

    

 

 

 
        2,656,473        (2,145,950      510,523  
     

 

 

    

 

 

    

 

 

 

 

(c) Realization of deferred income tax and social contribution

In the six-month period ended June 30, 2017, there were no material events or circumstances that indicate any compromise of the realization of these deferred taxes.

 

18. Sundry provisions

The information on sundry provisions was presented in the 2016 annual financial statements of the Company, in Note 22.

 

     Jun/2017      Dec/2016  

Provision for customers rebates

     32,123        41,475  

Provision for recovery of environmental damages

     229,397        254,040  

Other

     24,455        23,621  
  

 

 

    

 

 

 

Total

     285,975        319,136  
  

 

 

    

 

 

 

Current liabilities

     78,875        112,891  

Non-current liabilities

     207,100        206,245  
  

 

 

    

 

 

 

Total

     285,975        319,136  
  

 

 

    

 

 

 

 

39


Braskem S.A.

Notes to the unaudited condensed consolidated interim financial information

at June 30, 2017

All amounts in thousands, unless otherwise stated

 

 

19. Contingencies

 

19.1. Claims with probable loss and arising from business combinations

The description of the main contingent liabilities of the Company was presented in the 2016 annual financial statements, in Note 23.1.

 

     Jun/2017      Dec/2016  

Labor claims

     200,193        207,827  

Tax claims

     

Normal operations

     

IR and CSL

     14,044        11,462  

PIS and COFINS

     208,444        204,516  

ICMS

     44,067        39,604  

Other tax claims

     18,578        19,586  
  

 

 

    

 

 

 
     285,133        275,168  
  

 

 

    

 

 

 

Business Combination

     

IR and CSL

     48,158        45,656  

PIS and COFINS

     53,947        51,052  

ICMS—interstate purchases

     235,859        223,071  

ICMS—other

     17,308        16,379  
  

 

 

    

 

 

 
     355,272        336,158  
  

 

 

    

 

 

 

Corporate claims

     110,084        105,175  

Civil claims and other

     65,200        60,909  
  

 

 

    

 

 

 
     1,015,882        985,237  
  

 

 

    

 

 

 

 

19.2. Claims with possible losses

The amount of claims and a description of the main claims with possible losses are presented in the financial statements for fiscal year 2016, in Note 23.2.

 

(a) Civil claims

In January 2017, the Company became defendant in a civil lawsuit filed by former reseller of solvents, claiming alleged breach of a tacit distribution agreement. On June 30, 2017, the damages claimed in the lawsuit amounted to R$140 million.

Based on the opinion of external legal counsel accompanying the case, the Management believes that the lawsuit has a possible risk of loss within an eight-year period.

No judicial deposit or other form of security was made for these suits.

 

(b) Tax claims

In March 2017, the Company received a tax deficiency notice claiming that the methodology used to offset tax losses and tax loss carryforwards at Rio Polímeros failed to observe the limit of 30% of the Taxable Profit and Social Contribution calculation base when offsetting such liabilities with Income Tax and Social Contribution liabilities in its merger into Braskem Qpar S/A, in August 2013. On June 30, 2017, the restated value of the taxes recorded amounted to R$247 million.

 

40


Braskem S.A.

Notes to the unaudited condensed consolidated interim financial information

at June 30, 2017

All amounts in thousands, unless otherwise stated

 

 

The Company’s external legal advisors estimate that the administrative proceedings should be concluded by 2020.

Considering that the requirement to pay the tax liability has been suspended, currently no administrative, escrow or other type of guarantee deposit has been made for this proceeding.

 

19.3. Reports of irregularities and global settlement with authorities

Complete information on the reports of irregularities and on the global settlement with authorities was presented in Note 23.3 to the Company’s annual financial statements for 2016.

 

(a) Global Settlement with authorities

The Leniency Agreement (“Agreement”) with the Federal Prosecution Office (“MPF”) and with U.S. and Swiss authorities (“Global Settlement”), in the approximate amount of US$957 million (approximately R$3.1 billion), were definitively ratifying in the following manner:

 

  1. In Brazil, the Agreement was ratified by the 5th Coordination and Review Chamber of the MPF on December 15, 2016 and on June 6, 2017 by the Judge of the 13th Federal Court of Curitiba.

 

  2. The agreement with U.S. Department of Justice (“DoJ”) was confirmed by sentence by the American justice on January 26, 2017.

 

  3. The U.S. Securities and Exchange Commission (“SEC”) confirmed the agreement on February 28, 2017.

 

  4. The agreement with Swiss authorities did not require ratification to produce effect.

Of the total amount of the Global Agreement, the Company has already paid approximately R$1.3 billion in the following manner:

 

  1. US$94,894 (R$296,591) to DoJ on February 8, 2017;

 

  2. US$65,000 (R$206,460) to SEC on April 27, 2017;

 

  3. CHF30,240 (R$104,307) to the Office of the Attorney General of Switzerland on June 27, 2017;

 

  4. R$736,445 to MPF on July 6, 2017.

The outstanding amount of approximately R$1.7 billion will be paid in the following manner:

 

  1. CHF64,260 to the Office of the Attorney General of Switzerland in four equal annual and successive installments of CHF16,065 due on June 30 of each year as from 2018;

 

  2. R$1.5 billion to MPF in six annual installments adjusted for inflation by the variation in the IPCA inflation index due on January 30 of each year as from 2018. To guarantee payment of the installments coming due, Braskem offered fixed assets in an amount corresponding to one annual installment.

 

(b) Reimbursement for damages and other considerations

A significant portion of the total amount of R$$2.2 billion to be paid to MPF will be made available for use in reimbursing third parties for any damages caused by the wrongdoings.

Under the Agreement, the MPF undertook to coordinate actions with other authorities or government agencies with which Braskem comes to negotiate for entering into agreements involving the facts uncovered in connection with the Agreement, the public prosecution offices of states and cities in Brazil, state-owned companies and state-controlled companies for entering into similar agreements with such organizations, including for the purpose of preventing duplicate restitution with regard to the amount paid under the Agreement.

 

41


Braskem S.A.

Notes to the unaudited condensed consolidated interim financial information

at June 30, 2017

All amounts in thousands, unless otherwise stated

 

 

The Agreement does not prevent any third party from filing proceedings to seek reimbursement for any damages caused by Braskem, which could result in payments other than those provided for in the Agreement. Therefore, the Company cannot guarantee that the total amount available for reimbursement will be sufficient to fully reimburse any third parties affected by the wrongdoings, which means that the Company may be subject to the payment of damages or financial penalties other than those provided for in the Global Settlement.

With the exception of the amount mentioned above, as well as of the other non-monetary obligations imposed on the Company under the Global Settlement, it may have a material adverse effect on our business, reputation, financial condition, financial instruments and operational results, as well as on the liquidity and price of the securities of Braskem. Furthermore, the negative publicity resulting from the Global Settlement, could have a material adverse impact on our businesses, including reducing the demand for our products, our financial instruments and other effects that currently cannot be estimated or measured. In addition, other authorities with jurisdiction over our company may seek to impose additional monetary sanctions or fines or commence new investigations against us. Finally, as a result of the Global Settlement, the Company may be barred from entering into certain agreements with government authorities and may be subject to increased operating costs in connection with its obligations to improve its governance and anti-corruption practices, including the cost of the external monitorship.

It is not possible to predict the impacts on Braskem of others investigations or of any decision or action taken by authorities involving its largest shareholders, namely Odebrecht S.A. and Petróleo Brasileiro S.A. – Petrobras, or any of their subsidiaries.

 

(d) Class action

On July 1, 2015, a putative class action lawsuit was filed against the Company and its certain of its current and former officers in the United States District Court for the Southern District of New York. In the operative complaint, the Lead Plaintiff, Boilermaker-Blacksmith National Pension Trust, alleges that the Defendants made misrepresentations or omissions that inflated the price of the Company’s stock in violation of U.S. securities laws. The Company has engaged a U.S. law firm to represent it and filed motion to dismiss on July 6, 2016.

On March 31, 2017, the judge rendered a decision on the motion to dismiss granting it in part and denying it in part. With respect to the remaining claims, the class action is now in the discovery stage.

On August 29, 2017, the Lead Plaintiff, in agreement with the Company, has filed a letter requesting an amendment to the previously agreed schedule of the discovery, as the parties are currently engaged in settlement negotiations. Any definitive agreement that might be reached by the parties would be subject to a variety of conditions, including Court approval. The Company cannot foresee the outcome of this process, at this stage.

The Company may be named as a defendant in other legal actions. Furthermore, the Company may be required, in accordance with any applicable legal and regulatory limits, to indemnify directors, officers and employees that are defendants in the securities class action and any other related actions that may arise in the future. The litigation has required significant time and dedication of the Management of the Company and is expected to continue to require such time and attention in the future.

On September 14, 2017, the Company and the Lead Plaintiff in In re Braskem Securities Litigation (U.S. District Court for the Southern District of New York) have signed a proposed settlement agreement (“Proposed Settlement”) and submitted it to the mentioned Court for preliminary approval.

 

42


Braskem S.A.

Notes to the unaudited condensed consolidated interim financial information

at June 30, 2017

All amounts in thousands, unless otherwise stated

 

 

Under the terms of the Proposed Settlement, Braskem would pay US$10 million to resolve all claims of a settlement class consisting of purchasers of Braskem American Depositary Receipts (“ADRs”) traded on the New York Stock Exchange during the period of July 15, 2010 through March 11, 2015, that arise out of or relates to the subject matter of the Class Action, with the exception of any such claims belonging to purchasers who file valid and timely requests to opt out of the settlement class.

In accordance with IAS 37 (Provisions, Contingent Liabilities and Contingent Assets), the Company will record a provision in the amount of US$10 million, equivalent to approximately R$31 million, based on the fixed exchange rate of R$3.13 to US$1.00. The amount is deemed not material by management for the period ended June 30, 2017 and will be recognized in the statement of operations in the item “Other income (expenses), net” in the third quarter of 2017.

Braskem has made no admission of any wrongdoing or liability as part of the Proposed Settlement, and entered into the Proposed Settlement solely to avoid the risk, uncertainty, and expense of further litigation. The Proposed Settlement is subject to a number of conditions including Court approval.

 

20. Shareholders’ Equity

The information related to the Company’s shareholders’ equity was presented in its 2016 annual financial statements, in Note 26.

 

(a) Capital

 

           Amount of shares  
           Common
shares
     %     Preferred
shares
class A
     %      Preferred
shares
class B
     %      Total      %  

Odebrecht

       226,334,623        50.11       79,182,498        22.95              305,517,121        38.32  

Petrobras

       212,426,952        47.03       75,761,739        21.96              288,188,691        36.15  

ADR

     (i        0.00     54,996,724        15.94              54,996,724        6.90  

Other

       12,907,077        2.86       133,834,903        38.79        578,330        100.00        147,320,310        18.48  
    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

       451,668,652        100.00       343,775,864        99.64        578,330        100.00        796,022,846        99.85  
    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Treasury shares

     (ii          1,234,758        0.36              1,234,758        0.15  
    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

       451,668,652        100.00       345,010,622        100.00        578,330        100.00        797,257,604        100.00  
    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(i) American Depositary Receipts traded on the New York Stock Exchange (USA);
(ii) Includes 1,154,758 shares held by Braskem Petroquímica, considered “treasury shares” in the consolidated shareholders’ equity, amounting to R$48,892.

 

43


Braskem S.A.

Notes to the unaudited condensed consolidated interim financial information

at June 30, 2017

All amounts in thousands, unless otherwise stated

 

 

(b) Other comprehensive income—shareholders’ equity

 

    Attributed to shareholders’ interest              
                Defined                 Foreign                 Non-        
    Additional     Deemed     benefit     Foreign           currency     Gain (loss)     Total     controlling        
    indexation of     cost of     plans actuarial     sales     Fair value     translation     on interest     Braskem     interest in        
    PP&E     PP&E     Gain (loss)     hedge     of hedge     adjustment     in subsidiary     shareholders’     Braskem        
    (i)     (i)     (ii)     (iii)     (iii)     (iv)     (v)     interest     Idesa     Total  

On December 31, 2015

    217,595       17,309       (39,232     (9,666,973     (685,396     1,105,391       (9,404     (9,060,710     (476,708     (9,537,418
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Additional indexation

                   

Realization

    (20,635                 (20,635       (20,635

Income tax and social contribution

    7,016                   7,016         7,016  

Deemed cost of jointly-controlled investment

                   

Realization

      (730               (730       (730

Income tax and social contribution

      248                 248         248  

Foreign sales hedge

                   

Exchange rate

          3,613,180             3,613,180       (273,493     3,339,687  

Transfer to result

          777,966             777,966       3,574       781,540  

Income tax and social contribution

          (1,522,163           (1,522,163     82,048       (1,440,115

Fair value of Cash flow hedge

                   

Change in fair value

            239,487           239,487       (38,128     201,359  

Transfer to result

            (14,876         (14,876     (6,652     (21,528

Income tax and social contribution

            (81,741         (81,741     13,434       (68,307

Fair value of cash flow hedge from jointly-controlled

            (12,765         (12,765       (12,765

Foreign currency translation adjustment

              (215,975       (215,975     191,986       (23,989
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

On June 30, 2016

    203,976       16,827       (39,232     (6,797,990     (555,291     889,416       (9,404     (6,291,698     (503,939     (6,795,637
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

On December 31, 2016

    190,359       16,344       (43,351     (7,105,377     (539,518     1,169,088       (9,404     (6,321,859     (548,601     (6,870,460

Additional indexation

                   

Realization

    (20,437                 (20,437       (20,437

Income tax and social contribution

    6,949                   6,949         6,949  

Deemed cost of jointly-controlled investment

                   

Realization

      (730               (730       (730

Income tax and social contribution

      248                 248         248  

Foreign sales hedge

                   

Exchange rate

          822,195             822,195       350,901       1,173,096  

Transfer to result

          554,394             554,394       18,478       572,872  

Income tax and social contribution

          (423,715           (423,715     (110,814     (534,529

Fair value of Cash flow hedge

                   

Change in fair value

            (7,979         (7,979     (880     (8,859

Transfer to result

            48,227           48,227       11,799       60,026  

Income tax and social contribution

            (12,374         (12,374     (3,277     (15,651

Fair value of cash flow hedge from jointly-controlled

            3,762           3,762         3,762  

Foreign currency translation adjustment

              (175,118       (175,118     (113,447     (288,565
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

On June 30, 2017

    176,871       15,862       (43,351     (6,152,503     (507,882     993,970       (9,404     (5,526,437     (395,841     (5,922,278
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(i) Transfer to retained earnings as the asset is depreciated or written-off.
(ii) Transfer to retained earnings when the extinction of the plan.
(iii) Transfer to the income statement when maturity, prepayment or loss of efficacy for hedge accounting.
(iv) Transfer to the income statement when write-off of subsidiary abroad.
(v) Transfer to the income statement when divestment or transfer of control of subsidiary.

 

44


Braskem S.A.

Notes to the unaudited condensed consolidated interim financial information

at June 30, 2017

All amounts in thousands, unless otherwise stated

 

 

21. Earnings per share

The table below shows the reconciliation of profit or loss for the period adjusted for the amounts used to calculate basic and diluted earnings per share.

 

     Basic and diluted  
     Jun/2017      Jun/2016  
            Restated  

Profit for the period attributed to Company’s shareholders of continued operations

     2,888,524        1,209,880  

Distribution of dividends attributable to priority:

     

Preferred shares class “A”

     208,416        208,409  

Preferred shares class “B”

     351        360  
  

 

 

    

 

 

 
     208,767        208,769  
  

 

 

    

 

 

 

Distribution of 6% of unit value of common shares

     273,827        273,824  

Distribution of plus income, by class:

     

Common shares

     1,366,133        412,971  

Preferred shares class “A”

     1,039,797        314,316  
  

 

 

    

 

 

 
     2,405,930        727,287  
  

 

 

    

 

 

 

Reconciliation of income available for distribution, by class (numerator):

     

Common shares

     1,639,960        686,795  

Preferred shares class “A”

     1,248,213        522,725  

Preferred shares class “B”

     351        360  
  

 

 

    

 

 

 
     2,888,524        1,209,880  
  

 

 

    

 

 

 

Weighted average number of shares, by class (denominator):

     

Common shares

     451,668,652        451,668,652  

Preferred shares class “A”

     343,775,864        343,768,220  

Preferred shares class “B”

     578,330        593,618  
  

 

 

    

 

 

 
     796,022,846        796,030,490  
  

 

 

    

 

 

 

Profit per share (in R$)

     

Common shares

     3.6309        1.5206  

Preferred shares class “A”

     3.6309        1.5206  

Preferred shares class “B”

     0.6069        0.6065  

 

45


Braskem S.A.

Notes to the unaudited condensed consolidated interim financial information

at June 30, 2017

All amounts in thousands, unless otherwise stated

 

 

22. Net sales revenues

 

     Jun/2017      Jun/2016  
            Restated  

Sales revenue

     

Domestic market

     17,004,059        15,918,691  

Foreign market

     11,778,506        11,430,701  
  

 

 

    

 

 

 
     28,782,565        27,349,392  

Sales and services deductions

     

Taxes

     

Domestic market

     (4,158,457      (3,476,669

Foreign market

     (15,165      (13,456

Costumers rebates

     

Domestic market

     (3,415      (21,763

Foreign market

     (24,655      (26,699

Sales returns

     

Domestic market

     (61,683      (145,720

Foreign market

     (49,032      (28,553
  

 

 

    

 

 

 
     (4,312,407      (3,712,860
  

 

 

    

 

 

 

Net sales and services revenue

     24,470,158        23,636,532  
  

 

 

    

 

 

 

 

23. Other net income (expenses)

 

     Note      Jun/2017      Jun/2016  
                   Restated  

Participation of members in profits and results

     (i      (174,133      (183,872

Expense and depreciation with hibernate plants

        (97,724      (100,613

Expenses from fixed assets

        (30,911      (30,575

Capital gain—sale of Quantiq

     3        276,816     

Other

        42,759        (48,445
     

 

 

    

 

 

 
        16,807        (363,505
     

 

 

    

 

 

 

 

(i) In the period ended June 30, 2016, the amounts related to this item were reclassified from “costs of products sold” (R$83,363), “selling and distribution expenses” (R$3,994) and “general and administrative expenses” (R$96,515) (Note 2.5(b)).

 

46


Braskem S.A.

Notes to the unaudited condensed consolidated interim financial information

at June 30, 2017

All amounts in thousands, unless otherwise stated

 

 

24. Financial results

 

     Jun/2017      Jun/2016  
            Restated  

Financial income

     

Interest income

     286,111        352,879  

Other

     30,419        22,876  
  

 

 

    

 

 

 
     316,530        375,755  
  

 

 

    

 

 

 

Financial expenses

     

Interest expenses

     (1,147,962      (1,192,252

Monetary variations on fiscal debts

     (46,365      (45,433

Discounts granted

     (60,255      (54,182

Loans transaction costs—amortization

     (25,469      (29,392

Adjustment to present value—appropriation

     (174,589      (273,615

Other

     (201,447      (97,285
  

 

 

    

 

 

 
     (1,656,087      (1,692,159
  

 

 

    

 

 

 

Exchange rate variations, net

     

On financial assets

     209,373        (1,010,274

On financial liabilities

     67,231        (1,052,418
  

 

 

    

 

 

 
     276,604        (2,062,692
  

 

 

    

 

 

 

Total

     (1,062,953      (3,379,096
  

 

 

    

 

 

 

The financial effects of the Leniency Agreement in the period ended June 30, 2017 were: R$ 26,493 (inflation recorded under financial expenses “Other”), R$ 5,130 (“Exchange rate variations on financial liabilities”) and R$36,849 (“Adjustment to present value—appropriation”).

 

25. Expenses by nature and function

 

     Jun/2017      Jun/2016  
            Restated  

Classification by nature:

     

Raw materials other inputs

     (14,509,167      (13,773,204

Personnel expenses

     (1,074,155      (1,151,829

Outsourced services

     (986,094      (965,353

Depreciation, amortization and depletion

     (1,424,202      (1,241,299

Freights

     (1,011,658      (1,008,150

Other expenses, net

     (268,022      (615,765
  

 

 

    

 

 

 

Total

     (19,273,298      (18,755,600
  

 

 

    

 

 

 

Classification by function:

     

Cost of products sold

     (17,890,990      (17,074,199

Selling and distribution

     (704,586      (648,644

General and administrative

     (622,384      (586,624

Research and development

     (72,145      (82,628

Other income (expenses), net

     16,807        (363,505
  

 

 

    

 

 

 

Total

     (19,273,298      (18,755,600
  

 

 

    

 

 

 

 

47


Braskem S.A.

Notes to the unaudited condensed consolidated interim financial information

at June 30, 2017

All amounts in thousands, unless otherwise stated

 

 

26. Segment information

The information by segment was presented in the 2016 annual financial statements, in Note 33.

 

    Jun/2017  
                      Operating expenses        
    Net     Cost of           Selling, general     Results from              
    sales     products     Gross     and distribuition     equity     Other income     Consolidated  
    revenue     sold     profit     expenses     investments     (expenses), net     Braskem  

Reporting segments

             

Basic petrochemicals

    12,514,921       (10,166,902     2,348,019       (376,465       (79,907     1,891,647  

Polyolefins

    9,705,309       (7,603,727     2,101,582       (639,369       (62,170     1,400,043  

Vinyls

    1,457,179       (1,252,403     204,776       (76,209       (50,072     78,495  

USA and Europe

    4,734,490       (3,577,997     1,156,493       (296,192       (1,545     858,756  

Mexico

    1,821,095       (1,025,393     795,702       (134,618       (23,712     637,372  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

    30,232,994       (23,626,422     6,606,572       (1,522,853       (217,406     4,866,313  

Other segments

    7,220       (8,659     (1,439     (129       (1,639     (3,207

Corporate unit

          63,612       22,851       235,852  (i)      322,315  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Braskem consolidated before eliminations and reclassifications

    30,240,214       (23,635,081     6,605,133       (1,459,370     22,851       16,807       5,185,421  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Eliminations and reclassifications

    (5,770,056     5,744,091       (25,965     60,255           34,290  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

    24,470,158       (17,890,990     6,579,168       (1,399,115     22,851       16,807       5,219,711  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
    Jun/2016  
                      Operating expenses        
    Net     Cost of           Selling, general     Results from              
    sales     products     Gross     and distribuition     equity     Other income     Consolidated  
    revenue     sold     profit     expenses     investments     (expenses), net     Braskem  
                                        Restated  

Reporting segments

             

Basic petrochemicals

    12,105,795       (9,721,997     2,383,798       (306,891       (104,513     1,972,394  

Polyolefins

    10,407,556       (8,183,726     2,223,830       (619,844       (78,604     1,525,382  

Vinyls

    1,482,236       (1,393,112     89,124       (108,571       (15,362     (34,809

USA and Europe

    4,832,660       (3,077,924     1,754,736       (219,771       (29,865     1,505,100  

Mexico

    334,324       (263,580     70,744       (91,797       (58,781     (79,834
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

    29,162,571       (22,640,339     6,522,232       (1,346,874       (287,125     4,888,233  

Other segments

    6,012       (86,116     (80,104     (48,075       20,367       (107,812

Corporate unit

          (64,824     13,377       (11,279     (62,726
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Braskem consolidated before eliminations and reclassifications

    29,168,583       (22,726,455     6,442,128       (1,459,773     13,377       (278,037     4,717,695  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Eliminations and reclassifications

    (5,532,051     5,652,256       120,205       141,877         (85,468     176,614  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

    23,636,532       (17,074,199     6,562,333       (1,317,896     13,377       (363,505     4,894,309  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(i) Includes gain from sale of the former “chemical distribution” segment in the amount of R$276,816 (Note 3).

 

48


SIGNATURES

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: September 28, 2017

 

BRASKEM S.A.
By:  

/s/ Pedro van Langendonck Teixeira de Freitas

Name: Pedro van Langendonck Teixeira de Freitas
Title: Chief Financial 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.