Management Report 2020
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Management Report 2020
Notes to the financial statements
1. Operations
SLC Agrícola S.A., founded in 1977, hereinafter referred to as "Parent Com-
pany", "SLC" or "Company", and its subsidiaries (jointly referred to as "the
Group" or "Consolidated"), has its headquarters located in the city of Porto
Alegre, RS, Brazil and has as its corporate purpose the activities of agriculture
and cattle raising; production and marketing of seeds and seedlings; pro-
cessing and marketing of its products, being able to export and import goods
for its own use and consumption; supply of primary agricultural goods and
products and goods in general; reception, cleaning, drying and storage ser-
vices of cereals for third parties; provision of services with agricultural ma-
chinery and implements for third parties; trade, import and export of agricul-
tural products; agro-industrial activity of industrialization of sugar cane, alco-
hol and its derivatives; and participation in other companies; lease of own
property.
On September 1, 2020, the Company and subsidiaries began its cultivation of
the 2020/2021 crop with operations at sixteen production units and a total
planted area of 468.2 thousand hectares, including company-owned areas and
areas leased from third parties and realted parties, which are located in six
Brazilian states: Mato Grosso, Mato Grosso do Sul, Goiás, Bahia, Piauí and Ma-
ranhão.
Effects of COVID-19 on the Financial Statements
In compliance with Circular Letter SNC / SEP 02/2020, which deals with guid-
ance on the disclosure of the potential impacts of COVID-19 on the financial
statements of publicly-held companies, carefully considering the main risks
and uncertainties arising from this analysis and observing the accounting
standards, Company worked, especially in the analysis of the following possible
impacts:
SLC
Agrícola
a) Actions taken by the Company as a result of COVID-19 and possible
impacts on its internal controls;
b) b) Increased risk of losses on financial assets (CPC 48 - Financial In-
struments);
c)
c) Realizable value of inventories (CPC 16 - Inventories);
d)
d) Impairment of fixed and intangible assets (CPC 01 - Impairment of
Assets);
e) e) Measurement of the fair value of Biological assets and investment
properties;
f)
f) Impacts on revenue for the period and margins;
g)
g) Analysis of the Company's operational continuity;
h)
h) Cash flow, impacts on access to credit for loans and financing and
covenants.
The Company carried out a study of the items listed above and did not identify
any relevant impacts on its individual and consolidated interim financial state-
ments. In this sense, it is important to comment that the operations of the
Company and its subsidiaries are being accompanied by a crisis management
model and strategies are being set up so that the Company can cross this
period with the least possible negative impact. The Company acted quickly and
assertively in the creation of a Committee, which was responsible for the prep-
aration and continuous monitoring of the COVID-19 Contingency Plan and the
COVID-19 Coping Guide, two instruments that aim at the identification of risks
and vulnerabilities, in addition to establishing protection, control and contain-
ment measures against eventual proliferation of COVID-19 within the scope of
the Company and its subsidiaries.
In relation to its business, it is worth mentioning that the Company is part of
a sector considered essential, in relation to the maintenance of its productive
activity, since, among its three main products, two are used by the food and
beverage industry as material -cousin. Another factor that deserves mention
and that directly involves the Company is the strong demand for exports,
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