Annual Report • Mar 26, 2010
Annual Report
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| MESSAGE FROM THE CEO 3 |
|---|
| MANAGEMENT REPORT 4 |
| Key strategic actions 5 |
| Key business indicators 7 |
| About Sonae 9 |
| Business overview19 |
| Sustainability 29 |
| Investor information 36 |
| Financial glossary40 |
| Acknowledgements 42 |
| CORPORATE GOVERNANCE REPORT 43 |
| Statement of compliance44 |
| Governance Model52 |
| Management 53 |
| Organisation of the Corporate Centre – Duties and Competencies 59 |
| Audit63 |
| Shareholders 65 |
| Remuneration68 |
| Risk control74 |
| Whistle blowing procedures 80 |
| Information81 |
| APPENDIX 103 |
| CONSOLIDATED FINANCIAL STATEMENTS 110 | |
|---|---|
| INDIVIDUAL FINANCIAL STATEMENTS 213 | |
| STATUTORY AUDITOR AND AUDITOR´S REPORT 248 | |
| REPORT AND OPINION OF THE STATUTORY AUDIT BOARD 251 |
Reviewing Sonae's performance in 2009 gives me great satisfaction since it was by no means obvious before the year began that it would be possible to keep our plan for international expansion on track and at the same time achieve our growth objectives during these times of financial and economic crisis. As it turned out, we successfully dealt with falling non food retail consumer demand and the need to reduce debt levels, to finish the year with a 6% increase in turnover, an 8% increase in EBITDA, and a decisive inroad into the Spanish market, while greatly improving our financial ratios and reducing net debt. In addition,, we kept to our publicly made commitment to create employment (1,935 jobs) and also increased the salaries of the lowest paid.
In both food and non-food retail, the key to maintaining growth and improving profitability in the Portuguese market were gains in market share. In those sectors for which independent and reliable information sources are available, the data shows that we increased market share in food retail and in consumer electronics. These gains were possible because of our continued investment in innovation and improvement in our core competences. The combined growth in turnover of SonaeMC and SonaeSR was 10%, and means that we remain in line with our long term growth objective, in spite of a background of sharp falls in sales of some non-food categories and very significant food price deflation. The international expansion of our core retail business has contributed some 30% of that growth and the results are becoming significant: 38 stores and 144 million euros of sales.
Our future growth potential however was not at all compromised by these financial achievements. The investment and startup costs (23 million euros EBITDA 09) required to enter the Spanish market were significant and in Portugal we continued to work on expanding our sales area and developing new formats.
It is important to point out that we achieved our goals despite the fact that Continente is the only one of the top five food retail chains in Portugal that is forced by law to close for business on Sunday afternoons. This law seriously distorts competition and cannot be justified since it clearly does not produce the results that it was designed to achieve. As a result of this, we were once again forced to eliminate 1,100 jobs at the end of the Christmas season.
The valuation of Sonae Sierras's properties and the pace of the company's development in Europe were hit by the financial crisis. Nonetheless, Sonae Sierra was able to maintain EBITDA and improve direct results by 13% while also achieving a relatively conservative LTV figure of around 50%. In the second half of the year, the impact of increases in yields was much lower and we saw improvements in the availability of equity and financing for prime shopping centres and quality developments. Brazil however suffered very little during this period allowing us to accelerate development.
Sonaecom has also posted improvements in its profitability and financial strength. Importantly, the mobile business performed impressively, increasing market share and achieving cost reductions, which led to an EBITDA margin of 27.5%. Asymmetric mobile termination rates came to an end during the year, making this regulatory initiative the smallest, latest and most short-lived policy in Europe. The only alternative to this much needed instrument for regulating the market is a very sharp fall in MTRs to values close to 0 cents.
2009 was a year of extremely hard work, in which we reorganized our corporate structure, implemented new and difficult corporate strategies and continued to deliver on our commitment to generate economic and social value in a sustainable manner. I am grateful to all of our workforce and our partners for their efforts and talent, but I would like to make a special mention of Nuno Jordão and Álvaro Portela for their wisdom and careful planning to prepare their succession. Our achievements give us increased confidence and a better base from which to make further progress in 2010.
At the beginning of 2009, Sonae announced its corporate strategic guidelines for future growth, the main goal of which is to transform the company into a major multinational retail corporation. On the one hand, Sonae began positioning itself as a retail company in the Shopping centre and telecommunication businesses. On the other, it made clear its belief that international expansion is its key strategic objective and also a requirement given the constraints to growth in Portugal. This expansion will be achieved by entering new markets with concepts that are considered to have a clear advantage over the competition.
During the year, a number of important corporate milestones, consistent with the strategic intent described above, were achieved.
During 2009, progress was made towards achieving the international expansion strategy: Sonae strengthened its presence in the Spanish market with the opening of 22 stores, totalling 22 thousand m 2 . As at the end of 2009, the company had three formats operating in Spain: Worten (consumer electronics) with 14 stores totalling 34 thousand m 2 ; SportZone (sports goods) with 14 stores totalling 17 thousand m 2 ; and Zippy (Kids clothing) with 10 stores totalling 4 thousand m 2 . Zippy made its first entrance into the Spanish market in the second half of 2009, while Worten and SportZone opened their first stores in 2008.
The consumer electronics chain, acquired in Spain and integrated in 1H08, was successfully converted to the Worten concept and branding, and consumers clearly welcomed the changes implemented. International expansion costs in the year included these conversion costs, in addition to those for expansion and the launch of Zippy, and are reflected in the negative EBITDA generated by the specialised retail operation in Spain in 2009.
Overall, Spanish operations performed according to plan, with encouraging growth on a like for like basis and accounted for approximately 13% of specialised retail sales in 2009 or a turnover of 144 million euros, compared to 30 million euros in 2008.
The election of two new non-executive (NED) members to Sonae's Board of Directors should be noted, with the goal of further increasing the Boards' expertise, particularly in the international expansion of retail operations.
A number of important organizational changes were implemented, designed to provide the necessary focus on the retail activity as well as to further develop Sonae's competences and management abilities:
The new structure takes into consideration various international expansion opportunities, which are significantly different for food and non-food businesses, and will be instrumental in the development of Senior Executives in each area. Additionally, the new Retail property business unit is expected to be an important source of capital to finance international growth and/or reduce debt.
In February 2010, in an action taken after the end of the year 2009, Sonae changed its corporate identity, launching a new brand reflecting its key attributes – creative, determined, dynamic, world class, enthusiastic and open. This event has not only changed Sonae's corporate image but has also involved attributing new brands and
images to the 3 new retail businesses mentioned above, namely: Sonae MC, the new corporate name for the food retail business, Sonae SR for the specialised retail business and Sonae RP for the retail property business.
Through this merger, Sonae believes that it will strengthen its focus on retail and retail related businesses and on those competencies and assets, which will provide significant opportunities for leveraging new retail business development. Also, it will allow the resources necessary for the new growth strategy to be released without increasing headcount.
A support unit within the newly merged corporate centre has been set up, which has M&A expertise and is focused on the retail sector. In the first phase, this unit will be responsible for Sonae's investments where M&A activity is as important as organic growth, in order to achieve value creation, namely: the insurance area (MDS, Cooper Gay and LazamMDS), travel agencies (the joint ventures with RAR group – Star and Geotur) and DIY (joint venture with CRH – Maxmat).
In 2009, Sonae's recently created investment management unit signed a strategic partnership agreement for its insurance brokerage area, which represents an important strategic move for the development of its business in the Latin American market. The agreement involved the acquisition of the Feffer family's 55% shareholding in Lazammds in exchange for 49.99% of the increased share capital of MDS, in addition to an up-front cash payment of 47 million euros to Sonae.
A capital gain of 29 million euros was recognized, which contributed significantly to the increase in EBITDA and direct profits of the period.
| Million euros | 2007 (R) | 2008 | 2009 |
|---|---|---|---|
| Direct income | |||
| Turnover | 4,417 | 5,353 | 5,665 |
| Recurrent EBITDA | 536 | 602 | 633 |
| as a % of turnover | 12.1% | 11.2% | 11.2% |
| EBITDA | 536 | 620 | 667 |
| as a % of turnover | 12.1% | 11.6% | 11.8% |
| EBIT | 298 | 332 | 349 |
| Financial results | -115 | -174 | -123 |
| Direct net income | 238 | 171 | 190 |
| Attributable to equity holders | 198 | 159 | 171 |
| Indirect income | |||
| Indirect net income | 117 | -132 | -116 |
| Attributable to equity holders | 7 6 |
-79 | -77 |
| Total net income | |||
| Total net income | 355 | 3 9 |
7 4 |
| Attributable to equity holders | 275 | 8 0 |
9 4 |
| CAPEX | 1,454 | 886 | 614 |
| Invested capital | 4,292 | 4,721 | 4,781 |
| Financial net debt | 2,526 | 3,139 | 3,028 |
| Total net debt | 2,621 | 3,159 | 3,080 |
| Return on Invested Capital (%) | 6.9% | 7.0% | 7.3% |
| Employees at 31 December | 34,896 | 37,437 | 39,372 |
| (R) Restated to exclude Sonae Capital contribution i n 2007, to consolidate the Portuguese shopping centres comprising the Sierra Portugal Fund under theequitymethod i n 2H0 8 and to includethe fair valueallocation of theCarrefour acquisition byend 2007. |
Sonae is one of the largest non-financial companies in Portugal, with a total of 39,372 employees and a consolidated Turnover of 5.7 billion euros in 2009. Sonae has achieved growth in turnover and profitability, despite recent adverse macroeconomic conditions. It has a clear and ambitious strategy, with high growth potential, coupled with a strong culture and values, and high quality management teams.
The Company began business in Portugal in 1959, in the wood products business, more specifically as a producer of high-pressure decorative laminates. The business grew steadily during the 80's, when it began a process of diversification through the acquisition of a supermarket chain followed by the opening of Portugal's first hypermarket.
Today, Sonae is primarily a retail company, with major partnerships in the shopping centre and telecommunications businesses. The business areas of the Company are run in an independent manner with fully dedicated management teams that develop and execute strategies based on their particular value drivers.
| Organizational structure | |||||
|---|---|---|---|---|---|
| Turnover 5.7 billion euros (2009) ; EBITDA 667 million euros (2009); Invested Capital 4.8billion euros (2009) | SONAE | ||||
| 100% | 100% | 100% | 50% | 53% | 100% |
| SONAEMC Food Retail Hipers and supers |
SONAES R Specialized Retail Non-Food Retail Formats: Sports, textiles |
SONAERP Retail Properties Retail real estate assets |
SONAESIERRA Shopping centres Shopping centre developer, owner and manager |
SONAECOM telco Integrated telecom provider |
Investment Manag. Businesses with M&A activity: Insurance, Travel |
| 55% Sales | and electronics 20% Sales |
2% Sales | 3% Sales | 17% Sales | and DIY 3% Sales |
| 30% EBITDA 10% Inv. Capital |
7% EBITDA 5% Inv. Capital |
17% E BITDA 32% Inv. Capital |
14% EBITDA 35% Inv. Capital |
26% EBITDA 16% Inv. Capital |
4% EBITDA 3% Inv. Capital |
| CORE BUSINESSES |
RELATED BUSINESS |
CORE PARTNERSHIPS |
ACTIVE INVESTMENT |
Sonae MC, the food retail business, is today a benchmark reference in the retail market, after initiating a real revolution in consumer habits and in the commercial landscape in Portugal with the opening of the first hypermarket in the country, and launching a number of innovative formats in the non-food area. This business is made up of a range of distinct formats:
The Continente brand was the first chain of hypermarkets in Portugal and is still a benchmark reference in food retail in the country. Its stores are located in big shopping centres in the main cities and have an average sales area of approximately 7,000 m 2 . The brand is positioned to offer highly competitive prices together with a wide choice of products and high standards of customer care.
The Modelo chain is made up of supermarkets located mainly in medium sized urban centres. With a strong focus on food and perishable products, the stores combine proximity with variety and competitive prices. The brand has a wide range of own brand products which are well received by its customers.
With an innovative concept, the Bom Bocado cafeteria chain combines the convenience of its offer with the quality of a personalised service, guaranteeing the freshness of its products and at the same time using a new approach to its shop layout.
The Área Saúde was the first para- -chemist/health stores in Portugal within a food based retail chain to sell medicines that do not need a doctor's prescription. Its stores have an average area of approximately 95 m 2 and are mainly located next to Continente and Modelo hypermarkets. The brand complements and extends its offer with a range of alternative beauty and health products.
Book.it entered the market as the first non-food retail brand in Portugal to combine three business concepts within one location: books, stationery and tobacco. It represents a cultural benchmark due to the variety of books and magazines on offer. The stores, with an average sales area of approximately 350 m 2 , are located in shopping centres and have an informal, youthful atmosphere, with a segmentation which is clear and easily assimilated by the customer.
Sonae SR, the non-food retail business, comprises 7 different brands that have benchmark positions in their respective non-food based market segments.
The offer is related with Sports, Fashion and Consumer Electronics, as follows:
Sport Zone is the biggest chain of sports stores in Portugal. The store portfolio consists of a network of stores with an average sales area of around 800 m 2 , which are located in the main shopping centres of the country. In 2008, the Sportzone brand entered the Spanish market and is present in Madrid, Barcelona, Galicia, Zaragoza, Murcia and Valencia. The brand offers a wide range of articles and equipment for different sporting activities with well known brands combined with various recognised brand options.
Loop is a specialised footwear chain with a range of brands for men, women and children. The chain offers the biggest selection in the market in the urban casual and sports casual segments, together with high quality and fast customer service. The brand is also noteworthy for its distinctive store atmosphere and strong personality.
Market leader in white goods and consumer and entertainment electronics in Portugal. With a wide range of products, entertainment and experimentation zones, this
Worten (132 stores) Vobis (17 stores) Worten mobile (48 stores) Specialist in retail computing in Portugal, the mission of the Vobis chain is to make new technologies accessible to all Portuguese people. With stores of approximately 500
Worten Mobile offers strong knowhow in mobile telecommunications. With the support of employees who are specialists in mobile telecommunications, Worten
brand offers a range of products that are technologically innovative, backed by qualified and knowledgeable customer service and by a variety of specialist services, combining super and megastores of around 500 and 1,500 m 2 , respectively. The Worten brand made its entry into the Spanish market in 2008.
m 2 integrated into shopping centres, customers find the best technology solutions at Vobis (computers, printers, multimedia and communications accessories, mobile phones, software and games) at competitive prices.
Mobile advises the customer on the most appropriate choice of equipment for his needs.
Modalfa (99 stores) Zippy (34 stores)
Launched in 1995, the chain has made its name in the Portuguese textile market, winning the preference of Portuguese families through attractive lines of clothing, shoes and accessories. Its business is based on a store network, each with an average sales area of 500 m 2 . In the first half 2008, a mega Modalfa concept was launch, a store with circa 1,000 m2 . The main feature of its value proposal is the design of collections adapted to the different lifestyles of its customers, following the latest fashion trends and ensuring an optimal price/quality ratio.
The first store opened in March 2004 in Gaiashopping (Portugal) as a store with a range of clothing and accessories for children from 0 to 14 years of age, with an average sales area of approximately 350 m 2 and a functional layout. Today, the stores have a more complete range, in which clothing products for children and mums-to-be are complemented by a wide range of child care products, furniture and toys. The Zippy brand made its entry into the Spanish market in 2009.
.
Sonae Sierra is an international shopping centre specialist, with an integrated approach to the business that includes development, ownership, and management activities – both asset and property management. This approach of being present across the value chain of the business, embedded in a long-term view of investment, ensures that shopping centres increase in value over time. Incorporated in Portugal in 1989, it is jointly owned by Sonae (50%) and Grosvenor (United Kingdom) (50%).
Sonae Sierra's strong partnership policy, both with international investors and local partners, allows the company to be financially strong and capable of both rapidly gaining an in-depth knowledge of a market and creating new business opportunities. At the end of 2009, Sonae Sierra was present in Portugal, Spain, Italy, Germany, Greece, Romania and Brazil, and owned 52 shopping centres, with a total GLA of more than 2,000 thousand m 2 ; and had more than 2,200 thousand m 2 of GLA under management with over 8,450 tenants.
Sonaecom comprises three key business areas - Telecommunications; Software and Information Systems; and Media -, identifying and exploring existing synergies while maximizing its businesses' growth potential. France Telecom is a strategic minority partner in the business with a 20% shareholding.
In the Telecommunication business, the Company with Optimus as the brand name offers a complete range of mobile, wireline communications and multimedia services targeting residential and business customers in Portugal. By the end of 2009, the mobile business attained a market share of circa 20% with approximately 3.4 million subscribers. In the SSI business, the Company is a worldwide leader in the Telecoms Revenue Assurance market with WeDo Technologies and in the Media business it is present in the daily press through owning a reference newspaper in Portugal, Público.
Sonae RP is a newly created business unit responsible for managing Sonae's freehold retail property. Its mandate is to manage Sonae's retail asset base more proactively and more efficiently; to partially release invested capital in such assets; and to develop retail real estate competencies and skills.
Sonae RP manages its business through two related teams; an Asset Management team responsible for managing the retail asset base, including asset development, new investments and asset monetization; and a Property Management team responsible for adding value to Sonae's small retail malls by proactively managing the tenant mix and by promoting commercial initiatives to attract consumers to the centres.
Currently, Sonae RP owns its assets through 29 real estate companies and 2 real estate funds. The portfolio includes 34 hypermarkets, 102 supermarkets, 2 large logistic centres, a number of office properties and a substantial "landbank" for future expansion. At the end of 2009, Sonae RP's invested capital amounted to 1.5 billion euros.
The Investment Management area creates value for Sonae by supporting the implementation of corporate and business strategy, maximizing shareholder's return on its portfolio, actively supporting core business M&A planning and execution, and reinforcing Sonae businesses' networking with Industry players, M&A advisors and investment banks. Currently, the Investment Management portfolio includes companies operating in DIY retail (Maxmat), travel agencies (GeoStar) and insurance brokerage (MDS), where M&A is considered to play a key role in value creation.
Sonae's corporate values and beliefs, shared by all of its management and employees, are considered a fundamental and structural cornerstone of its distinctive competencies. Given Sonae's size and organizational structure, with business areas operating in different countries and cultures, often with different market positioning and approaches, the corporate values and principles are viewed as the glue that keeps all the businesses together and guarantees their collective strength and common future.
These key features of Sonae's corporate culture are broken down into the following 7 major behavioural principles:
Sonae's fundamental commitment is to create economic value founded on principles of ethics and sustainable development, taking a long term view and based on relationships of confidence and trust with stakeholders.
Sonae's employees are a distinguishing factor in the markets in which we operate. The Company believes that developing the competencies and capabilities of each employee, encouraging an internal culture that promotes meritocracy, constant challenges and a readiness for change are the crucial factors to attract human resources of outstanding capability.
Sonae's ambition, which transformed a small laminate business into one of the finest Portuguese based companies, with a growing international footprint and a leading position in almost all sectors in which it is present, continues to be the guiding force of its success.
Sonae always aims to achieve leadership positions in its business areas. It continuously sets ambitious goals, above and beyond benchmarks and best practices, constantly stretching its competencies and demanding a bold and entrepreneurial attitude from its managers. The Company is highly persistent in pursuing its ambitious goals and implementing "best in class" risk management practices to balance its bold attitudes and guarantee that adverse situations are detected and managed swiftly.
Innovation is seen as one of the key pillars of Sonae's sustainability and long-term differentiation and, accordingly, Sonae relentlessly exploits innovative solutions and new business opportunities to find new ways of creating value, by continuously questioning both its business models, procedures, processes and industry orthodoxies. For Sonae, innovation is much more than simply creating new products and services. It entails screening the market and consumers, analyzing and anticipating their needs and, based on the results achieved, offer an attractive, unique and value enhancing proposition.
Sonae is fully committed to sustainable development and embodies, within its culture and values, the principle of social responsibility, since it recognizes its role as a driving force for a fairer and more balanced society. This includes a commitment to the environment and the community and respect for employees, clients, shareholders and suppliers.
Sonae eliminates superfluous expenditures and is cost conscious, always looking to improve its operational efficiency and organisational structure. Sonae looks to optimise the use of its resources, carefully choosing where and when to use them, and to maximise their return. The Company invests wisely in all areas and in initiatives that improve its ability to create value.
Sonae establishes long-term partnerships with third parties based on principles of honesty, integrity and transparency. Sonae is fully committed to the success of each established partnership adopting an active role by sharing objectives and risks, making valuable contributions, and committing the necessary resources.
Sonae looks to cooperate with central or local governments, whenever it is in a position to contribute with expertise, aiming to improve the regulatory, legislative and social framework. Nonetheless, Sonae's commitment and willingness to help society never leads to loss of independence or to any involvement with political parties.
Sonae's Board of Directors is composed of ten members and includes five Non-Executive Directors. Sonae complies with the Corporate Governance principles in relation to the separation of responsibilities, namely the separation of the roles of Chairman of the Board of Directors and the CEO, and of the power given to independent Non-Executive Directors to influence the decision making process and the development of the Company's strategy.
| EXECUTIVE | NON-EXECUTIVE | AUDIT AND FINANCE COMMITTEE |
NOMINATION AND REMUNERATION COMMITTEE |
||
|---|---|---|---|---|---|
| INDEPENDENT | NON-INDEPENDENT | ||||
| CHAIRMAN | |||||
| Belmiro Mendes | |||||
| Azevedo | |||||
| DIRECTORS | |||||
| Àlvaro Cuervo | |||||
| Bernd Bothe | |||||
| Christine Cross | |||||
| José Neves Adelino | |||||
| Michel Bon | |||||
| Paulo Azevedo | |||||
| (CEO) | |||||
| Álvaro Portela | |||||
| Ângelo Paupério | |||||
| Nuno Jordão |
The Board of Directors is responsible for ensuring the management of the Company's business, monitoring risks, managing conflicts of interests and developing the organization's goals and strategy. Sonae's Articles of Association permit the Board to delegate day to day company business, duties and responsibilities, as considered appropriate, to an Executive Committee. The Board of Directors also has 2 specialized working committees, namely the Board Audit and Finance Committee (BAFC) and the Board Nomination and Remuneration Committee (BNRC), with the former being responsible, among others, for monitoring and supervising the Company's financial reporting, accounting and audit and risk management activities, and the latter responsible, among others, for supervising Senior Management remuneration. It is worth noting that the BAFC is solely made up of Independent Non-Executive members whom, during 2009, have periodically met and exercised an important influence over decision-making processes and the development of strategy and policy, and did not encounter any restraints in the execution of their functions.
Sonae has defined a number of strategic objectives in which it strongly believes as a Company, that will guide the steps that it takes and allow it to craft individual strategic plans. They are neither considered business strategies, nor a detailed series of action plans, but rather key ideas that will guide Sonae through the necessary adaptations to continually changing circumstances. They clearly reflect how Sonae believes that it will develop in the future.
International expansion, focused on Sonae's core businesses but including related areas, will be the Company's key growth driver for many years to come. This is its top strategic priority and the Company will deploy its resources accordingly, as opportunities arise to broaden its international footprint and transform Sonae into a major multinational retail corporation.
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Sonae's strategy will target opportunities in 'growth geographies' and in mature markets. In 'growth geographies', it will look for economic growth, developing retail markets and good governance practices. In mature markets, where Sonae is already present, it will look for opportunities, where its distinctive concepts, competences and strategic assets can give a clear edge over existing competitors.
Sonae will leverage its resources and the effectiveness of its strategy implementation plans, by adopting the most appropriate investment style or mix of styles for each business, including wholly owned businesses and majority stakes, but also minority stakes with or without special rights.
Non-controlling stakes will be considered where Sonae does not have all the required resources or would benefit from the contribution of partners to achieve superior value creation. Sonae will, in these circumstances, facilitate consolidation and other industry restructuring movements, enter new geographical areas as technical partners and develop an appropriate high level business relationship.
Sonae will continue to explore new business opportunities in retail that leverage its exceptional asset base in Portugal, as a means of expanding its portfolio of future growth options. These new ventures should have the majority of the following features: (i) a clear path to international expansion; (ii) potentially attractive profitability levels; (iii) in line with global trends; (iv) the opportunity to strengthen Sonae's competitive position in retail, and; (v) the potential to become a large business in the medium term.
By maintaining a sharp focus on these objectives and overall strategy, Sonae will build its future, tackling day to day issues with an increased ambition to grow, promoting conditions for consolidating its international footprint, adopting a customer centred attitude and with an obsession for flawless execution and high quality.
The following table describes the milestones in Sonae's history over the last fifty years:
| 1959 | Foundation of Sonae. The Company introduces the production of a wood based product called "estratifite" in Portugal, using a waste-product-grape stems. |
|---|---|
| 1965 | Sonae hires Belmiro de Azevedo. The 26-year-old chemical engineer starts a major shakeup of production and the Company begins to recover financially, focusing on the production of laminates. |
| 1983 | Joint-venture between Sonae and the French company Promodés in the Retail business, with the main purpose of knowledge sharing. |
| Sonae enters the capital markets. | |
|---|---|
| 1984 | Set up of Modelo Continente Hypermarkets, with Promodés retaining a 20% shareholding. Set up of MDS, a company with the goal of managing the insurance and risk policies of Sonae companies. |
| 1985 | Opening of the first hypermarket in Portugal. |
| 1986 | Opening of the Porto Palácio Hotel, which soon became a highlight of the city. |
| 1987 | Acquisition of "Invictos" supermarkets and change of the brand name to Modelo. Set up of a national chain of competitive supermarkets, introducing new value offers such as the sale of non-food goods. |
| 1988 | Sonae Tecnologias de informação is founded, investing in the new technology and media sectors that had been recently deregulated. |
| 1989 | Start-up of Sonae Imobiliária. Opening of the first two shopping centres owned and managed by Sonae (Albufeira and Portimão). Acquisition of Star, a travel agency that provides tourism and business travel services. |
| 1990 | Launch of Público, an innovative newspaper project designed and conceived working with journalists, proud to be impartial and independent. |
| 1991 | Launch of the first batch of Continente own-brand products. Opening of the first modern shopping centre in Portugal, CascaisShopping. |
| 1992 | Acquisition of a stake in the share capital of the financial institution BPA, which was in the process of being privatised. |
| 1994 | Set up of Sonae Turismo. |
| 1995 | Launch of Visa Universo, the first co-branded credit card in Europe associated with a retail chain, offering discounts on purchases at Sonae's retail stores. Launch of Modalfa, a clothing chain for families. The first Solinca brand health club opens. Takeover bid by BCP for the entire share capital of BPA, with Sonae selling its stake in the bank. |
| 1996 | Launch of Worten, a format for home appliances and consumer electronics. |
| 1997 | Opening of the Colombo Shopping centre, the largest in the Iberian Peninsula. Launch of SportZone, Sonae's sports goods format, both in Portugal and Spain. Sonae acquires the Torralta brand, strengthening its presence in the tourism sector. |
| 1998 | Acquisition of the third mobile licence in Portugal. Launch of Optimus, the third mobile operator to enter the market in Portugal. Sonae Tecnologias de informação acquires, manages and sells TVI, a Portuguese television channel. |
| 1999 | Acquisition of a stake in Portucel, a manufacturer of pulp and paper. International expansion of Sonae Imobiliária to Spain, Greece and Brazil. Launch of Clix, which soon becomes the leader in internet access to the residential sector. Launch of Novis, a fixed telephony provider, after the deregulation of the fixed telecommunications market in Portugal. |
| 2000 | Sonaecom is listed on the Lisbon Stock Exchange. Optimus wins one of the four UMTS licenses (Universal Mobile Telecommunications System), investing in wireless data and voice transmission. Sonae Imobiliária enters Italy and Germany. |
| 2001 | Commercial launch of WeDo consulting, a provider of systems integration products, specializing in the telecom sector. |
| 2002 | Joint-Venture set up with the Suzano group to found Lazam-mds, which becomes one of the largest insurance brokers in Brazil. WeDo Consulting opens offices in Spain and Brazil. |
| 2003 | Setting up of the Sierra Fund, a pan-European real estate investment fund, with equity of €1.08 billion, and a scheduled 10 year life span. Creation of Mainroad, a leading player in international technology with competencies in areas such as IT outsourcing and management, help desk and business continuity. |
|---|---|
| 2004 | Sonae sales its stake in Portucel, thus leaving the pulp and paper sector, followed by the disposal of its shareholding in Gescartão. MDS leads the set up of Brokers Link, an international network of insurance brokers. Launch of Zippy, a chain of stores offering clothing for children from 0 to 14 years of age. |
| 2005 | Spin-off of Sonae Indústria, with Sonae disposing of its entire stake in the company. Sale of Sonae Distribuição Brazil to Walmart. Sonae imobiliária is rebranded as Sonae Sierra, with the goal of creating a brand of international standing in the shopping centre sector. |
| 2006 | Opening of the first Worten Mobile store, offering mobile telecommunication products and equipment. Launch of Area Saúde, selling health and beauty products. Launch of Clix Smart TV, the first IPTV offering in Portugal. MDS becomes market leader in Portugal. Launch of Sonaecom's takeover bid for Portugal Telecom and PT Multimédia. |
| 2007 | Paulo Azevedo succeeds Belmiro de Azevedo as CEO at Sonae. Sonae Distribuição acquires Carrefour hypermarket operations in Portugal, thus strengthening its leadership in the Portuguese retail market. Launch of Continente and Modelo Loyalty cards. The format "Book.it" is launched, offering books, stationery and tobacco. MDS acquires 14% of the reinsurance broker Cooper Gay in London. Spin-off of Sonae Capital, with Sonae disposing of its entire stake in the company. WeDo acquires Cape Technologies in Ireland, becoming the World Leader in Revenue Assurance. |
| 2008 | Launch of Loop, a casual footwear chain in specialised retail. International expansion of SportZone and Worten into the Spanish market. Listing of Sonae Capital on Euronext Lisbon. Merger of Sonae's Star and RAR's Geotur travel agencies, with the creation of a joint-venture between the companies. Launch of the coffee-shops Bom-Bocado. Setting-up of the Sierra Portugal Fund, a €300 million equity fund owning eight Sonae Sierra shopping centres operating in Portugal. |
| 2009 | Announcement of corporate strategic guidelines and business reorganization. Zippy expands into Spain. Strategic agreement signed between MDS and the Feffer family. |
| Turnover | ||||
|---|---|---|---|---|
| Million euros | ||||
| 2008 | 2009 | y.o.y | ||
| Sonae | 5,353 | 5,665 | 5.8% | |
| Sonae MC | 2,930 | 3,106 | 6.0% | |
| Sonae SR | 928 | 1,132 | 21.9% | |
| Sonae RP | 109 | 123 | 12.5% | |
| Sonae Sierra (1) | 158 | 156 | -1.3% | |
| Sonaecom | 976 | 949 | -2.7% | |
| Investment mngmt. | 221 | 192 | -13.1% | |
| Petrol stations | 151 | 133 | -12.0% | |
| Elimin.& adjust. | -121 | -127 | - | |
| (1) Shoppingcentres areproportionally consolidated (5 0%). |
Turnover breakdown
Sonae MC =Food based retail unit; Sonae SR = specialised retail unit; Sonae RP = retail property unit; Sonae Sierra = Shopping centres unit; Sonaecom = telecommunications unit
| Million euros | |||
|---|---|---|---|
| 2008 | 2009 | y.o.y | |
| Sonae | 602 | 633 | 5.3% |
| Sonae MC | 187 | 199 | 6.4% |
| Sonae SR | 5 2 |
4 8 |
-7.5% |
| Sonae RP | 101 | 111 | 9.7% |
| Sonae Sierra (2) | 9 0 |
9 0 |
0.2% |
| Sonaecom | 154 | 176 | 13.7% |
| Investment mngmt. | 7 | 1 | -79.7% |
| Elimin.& adjust. | 1 1 |
9 | - |
(1) EBITDA excluding extraordinary items; (2) Shopping centres are proportionally consolidated (5 0%).
| Recurrent EBITDA (1) as a % of turnover |
|||
|---|---|---|---|
| 2008 | 2009 | y.o.y | |
| Sonae | 11.2% | 11.2% | -0.1pp |
| Sonae MC | 6.4% | 6.4% | 0pp |
| Sonae SR | 5.6% | 4.2% | -1.4pp |
| Sonae Sierra (2) | 57.1% | 57.9% | 0.9pp |
| Sonaecom | 15.8% | 18.5% | 2.7pp |
| Investment mngmt. | 3.1% | 0.7% | -2.3pp |
(1) EBITDA excluding extraordinary items; (2) Shopping centres are proportionally consolidated (5 0%).
| Direct net income | |||
|---|---|---|---|
| Million euros | |||
| 2008 | 2009 | y.o.y | |
| Recurrent EBITDA | 602 | 633 | 5.3% |
| EBITDA | 620 | 667 | 7.6% |
| P&I losses (1) | -15 | -24 | 60.2% |
| D&A (2) | -274 | -294 | 7.4% |
| EBIT | 332 | 349 | 5.3% |
| Net financial results | -174 | -123 | -29.3% |
| Other income (3) | 1 5 |
2 | -86.6% |
| EBT | 173 | 228 | 32.2% |
| Taxes | -2 | -38 | - |
| Direct net income | 171 | 190 | 11.2% |
| Equity holders | 159 | 171 | 7.3% |
| Minority interests | 1 2 |
1 9 |
63.6% |
(1) Provisions and impairment losses including reversion of impairments and badwill; (2) Depreciation & Amortizations; (3) Share of results of associated undertakings + dividends.
| Shopping centres indirect net income (1) | |||||
|---|---|---|---|---|---|
| Million euros | |||||
| 2008 | 2009 | y.o.y | |||
| VCIDP (2) | -150 | -146 | 3.0% | ||
| Others | 6 | 1 | - | ||
| Taxes | 1 2 |
2 9 |
134.5% | ||
| Indirect net income | -132 | -116 | 11.7% | ||
| Equity holders | -79 | -77 | 2.6% | ||
| Minority interests | -53 | -40 | 25.2% |
(1) Management figures; (2) Value created on investment and development properties; development properties recognised since4Q0 8.
| CAPEX | |||
|---|---|---|---|
| Million euros | |||
| 2008 | 2009 | y.o.y | |
| Sonae | 886 | 614 | -30.7% |
| as a % of turnover | 16.6% | 10.8% | -5.7pp |
| Sonae MC | 133 | 137 | 3.3% |
| Sonae SR | 8 8 |
9 7 |
10.5% |
| Sonae RP | 131 | 9 0 |
-30.9% |
| Sonae Sierra (1) | 185 | 9 8 |
-47.0% |
| Sonaecom | 299 | 153 | -48.8% |
| Investment mngmt. | 1 1 |
3 4 |
- |
| Elimin.& adjust. | 3 9 |
4 | - |
| EBITDA minus CAPEX | -266 | 5 3 |
- |
| (1) Shoppingcentres areproportionally consolidated (5 0%). |
| Invested capital Million euros |
|||
|---|---|---|---|
| 2008 | 2009 | y.o.y | |
| Sonae | 4,721 | 4,781 | 1.3% |
| Investment properties(1) | 1,888 | 1,836 | -2.8% |
| Technical investment(2) | 2,958 | 3,221 | 8.9% |
| Financial investment | 110 | 5 3 |
-51.3% |
| Goodwill | 697 | 746 | 7.0% |
| Working capital | -932 | -1,075 | -15.4% |
| (1) Includes shopping centres accounted for as financial investments i n the |
balancesheet; (2) includes availablefor saleassets.
| Million euros | |||
|---|---|---|---|
| 2008 | 2009 | y.o.y | |
| Net debt inc. SH loans | 3,159 | 3,080 | -2.5% |
| Retail businesses | 1,186 | 1,188 | 0.2% |
| Sonae Sierra (1) | 889 | 927 | 4.2% |
| Sonaecom (2) | 400 | 376 | -5.9% |
| Investment mngmt. | 104 | 9 3 |
-9.7% |
| Holding (3) | 580 | 496 | -14.5% |
(1) Shopping centres are proportionally consolidated (50%); (2) excludes securitazationtransaction; (3) includesSonae's individual accounts.
| Retail and Telecom Net Debt/EBITDA (last 12 | |||
|---|---|---|---|
| months) |
Note: Leverage Ratios based on financial debt (excluding shareholder loans)
The activity of Sonae as a standalone holding company is focused on managing its shareholding positions in affiliated companies.
Total EBITDA amounted to negative 2.9 million euros in 2009, compared to negative 4.6 million euros in 2008. Net profit for the year 2009 amounted to 91.7 million euros, which was favourably impacted by dividends received from its retail businesses and Sonae Sierra.
Sonae's investment management unit signed a strategic partnership agreement for its insurance brokerage area, representing an important strategic move for the development of its business in the Latin American market. In this transaction, it was agreed that Sonae would acquire the Feffer family's 55% shareholding in Lazam-mds in exchange for 49.99% of the increased share capital of MDS plus an up-front cash payment of 47 million euros to Sonae. A capital gain amounting to approximately 27 million euros was recognized, reflecting an underlying Enterprise Value of Sonae's insurance brokerage area of 139 million euros.
A shareholders' extraordinary general meeting was convened and held on 9 November 2009, with the main purpose of:
The rationale for this election was to further increase the Boards' expertise particularly in international retail expansion.
Sonae purchased, on 23 April 2009, through the Euronext Lisbon Stock Exchange, 1,134,965 own shares, representing approximately 0.057% of its share capital, destined to the satisfaction of its Deferred Performance Plan. The abovementioned attribution was executed in moment immediately subsequent to the respective acquisition.
oSonae RP, the retail property unit expects to complete the sale & lease back of its logistics centre in Azambuja and of the portfolio of 20 Modelo stores, and to prepare the ground for additional asset monetization transactions in order to release invested capital to finance growth and/or reduce debt.
In relation to strategic actions involving core partnerships, the following should be highlighted: Sonae Sierra, the shopping centre business, will focus on remaining resilient to current market conditions and preparing to exploit all growth opportunities which will arise when the market recovers. It thus aims to: (i) focus on cost management; (ii) reduce capital employed through strengthening partnerships and accepting noncontrolling equity stakes; (iii) pursue opportunities to sell service activities to other shopping centre operators (development, asset management and property management); and (iv) adapt the pace of launch of new projects to the availability of financing, by carrying out new projects within committed financing levels, and achieving minimum required returns on equity rates; Sonaecom, the telecommunications business will focus on optimizing operational performance and managing free cash flow, while continuing to push for customer growth in its mobile business, based on its brand strength, making use of organisational and commercial initiatives, and improving customer service.
Sonae remains cautious about the overall economic situation and the uncertainty in the markets in which it operates, particularly in respect to the underlying economic indicators, such as unemployment and the rate of growth of private consumption. Despite this caution, the cash-flow generated by almost all of Sonae's businesses remained strong in 2009, thus giving confidence to the company's management in their ability to continue to successfully deliver profitable growth, while at the same time building a strong market position and earning the trust of shareholders.
Sustainability principles have been an integral part of Sonae since its creation. Over the years, Sonae has performed positively, not only in terms of profitability, but also in progress made socially through support to the community, environmentally and on the basis of a concern for proper governance by adopting a policy of transparency and internal rules designed to guarantee the ethical and responsible behaviour of the organization.
In view of the economic, social and environmental impacts of the Company, a sustainability policy has been progressively integrated into Sonae's management model and implemented by each of its business units. Economic growth has always been accompanied by active involvement in international discussion of issues relating to sustainable development, through membership of important international organizations and signing up to their principles.
The following is a summary of some of Sonae's major sustainability milestones:
| 1995 | Launch of Project Horizon aimed at strengthening environmental management as a factor of differentiation and competitive advantage; Membership of the World Business Council for Sustainable Development. |
|---|---|
| 1996 | Creation of the Environment Forum to discuss best practices, share experiences and exchange information on the environment. |
| 1999 | Launching of the Eco2 XXI programme to achieve effective implementation of actions aimed at increasing eco-efficiency. |
| 2000 | Board approval of Sonae's Environmental policy and Environmental Management System. |
| 2001 | Creation of the Business Council for Sustainable Development Portugal, with Sonae as a founding member; Publication of Sonae's first Environmental Report. |
| 2004 | Sonae signs up to the United Nations Global Compact. |
| 2005 | Signing up to the World Safety Declaration; Creation of the Sustainability Forum, which evolved out of the Environmental forum. |
| 2007 | Publication of Sonae's first Sustainability Report |
| 2008 | Signing up to the business HIV/AIDS Code of Practice; Signing up to the United Nations Declaration of Human Rights. |
| 2009 | Signing up of to the United Nations Declaration against corruption. |
This commitment to the principles of sustainability development is visible in the fact that Sonae, in 1995, was one of the first Portuguese companies to join the World Business Council for Sustainable Development and was also one of the founders of the Business Council for Sustainable Development – Portugal in 2001. In 2004, Sonae adhered to the ten principles of the United Nations Global Compact, which require the adoption of a set of values regarding Human rights, Labour standards, Environment and Anti-corruption. In 2008, Sonae signed up to the United Nations Declaration of Human Rights and in 2009 assumed a position against corruption.
The integration of Sonae's sustainability guidelines into each of its business units contributed towards the sustainable development of the Company in the economic, social and environmental areas, enabling it to mitigate negative impacts resulting from its corporate actions and to minimize related risks and identify new
opportunities. In addition, the challenge made to each business unit to strengthen their sustainability strategies led them to make commitments and implement changes to internal processes and procedures.
Sonae has therefore implemented a series of environmental processes and policies in such a way as to minimize its impact on the environment, as well as adopting several social initiatives aimed at minimizing the impact of social problems present in the countries in which it operates. To this end, the risk management of social and environmental issues is considered to be a cornerstone of Sonae's sustainability strategy, is applied to all management processes and considered as a responsibility of all employees. Through the risk management process, Sonae controls uncertainties and threats that can impact its businesses, with the aim of creating value. The methodology used in this process is based on international standards, namely the Enterprise Risk Management – Integrated Framework of the Committee of Sponsoring Organizations of the Treadway Commission.
In addition, Sonae reorganized its entire business structure, implemented a new and complex strategy and continued to honor its commitment to generate economic and social growth in a sustainable manner. This was only possible through the hard work and talent of its employees and partners, as well as the support of shareholders and the confidence of consumers in the value proposals presented by its businesses.
Sonae's concern about sharing its success also led to the sharing of value generated among its stakeholders with economic value distributed reaching a total of 5,678 million Euros in 2009:
Working at Sonae means contributing to the performance of a fast moving, innovative, proactive and exciting Company, where current and future employees may expect: (i) career development opportunities, where meritocracy is promoted and discrimination is not tolerated; (ii) lifelong training; and (iii) both a demanding and friendly work environment.
Sonae considers its employees as one of its most valuable assets: it is the talent, expertise, professionalism and dedication of each and every one of them that contribute to its continued success, distinctive business knowledge and competences.
At year end 2009, Sonae employed 39,372 people, 5% above the previous year, generating a total cost of 655 million euros, 7% above that in 2008, and equal to 12% of consolidated turnover.
Educational backgrounds vary widely across Sonae's businesses. 100% of employees in the Telecoms business have upper secondary-level education (beyond compulsory level). This figure is more than 93% in the Shopping centre business, but only 42% in the Retail business, due to the particular nature of its operations. In line with Sonae's general approach of continuously investing in employee career development through access to training and educational programmes, the Retail businesses are an active participant in the "new opportunities programme", a government initiative aimed at increasing the Portuguese population's educational qualifications by opening training centers providing teaching up to the compulsory level of education, and other professional and training courses.
Sonae needs the right mix of talented and experienced commercial and marketing managers, technology experts (R&D, Engineering, IT/IS), functional managers (Finance, HR, Legal) together with general managers who have acquired experience in different areas. In this respect, the Company believes that new challenges, learning opportunities, increasing job responsibilities, project work, network participation, and job rotation within one functional area or between businesses, are the best way of guaranteeing progress throughout a career.
Internal mobility within Sonae is nurtured and promoted based on the following principles: (i) talent has to be managed at the service of the entire Company, not to one specific unit or function; (ii) every individual has a responsibility to take his/her career development into his/her own hands; (iii) the Company offers guidance, opportunities and resources to maintain employability throughout a manager's career; and (iv) Sonae looks for a balance between developing competencies internally and attracting them from the outside.
For Sonae, although each of its businesses is independently managed with its own strengths and unique skills, they belong to one single organization, working together with a commonly shared culture and values. By encouraging the sharing of knowledge and experiences between its businesses, bringing different ideas together, sharing know-how and insights, and challenging people with a unique combination of talents and characteristics to work together, Sonae stimulates innovation, reduces the risk of mistakes, and promotes the adoption and sharing of best practices. To support this sharing of expertise, Sonae fosters the following forums:
(vi) FINOV, a forum dedicated to innovation, with the purpose of stimulating and supporting an innovation driven culture at Sonae, capable of sustaining high levels of value creation;
In addition to the above described forums, there are 2 internal commissions, created as platforms for sharing knowledge and experience, namely:
There are also 3 advisory groups which, in addition to the work of the forums described above, also continuously review and propose changes to Company policies in the following areas:
Each of these informal groups, commonly referred to as sharing and coordination entities, meet several times during the year and often organize specific seminars, workshops and internal training courses.
As a general principle, Sonae wants training and investment in competence building to be regarded as a key factor in understanding, anticipating and responding to today's market and competitive challenges, as well as meeting the strategic needs of the Company.
In this sense, Sonae employees are constantly challenged to learn and update skills and competences, with the following training plans being worthy of mention:
(i) The Sonae Learning Centre, set up in 2004 and mainly targeted at specific training for top managers and technical employees, organized conferences, training sessions, seminars, short and medium term courses and social events of various kinds.
As a result of these and the remaining learning and development initiatives, Sonae employees completed approximately 1,516 thousand training hours in 2009 (vs 1,656 in 2008)
To energize initiative and focus the commitment of its employees, Sonae offers an attractive and competitive remuneration, and a comprehensive and flexible benefits package. Above and beyond fixed remuneration, a performance bonus is paid, aimed at rewarding the achievement of previously defined annual objectives, linked to "key performance indicators of Sonae's businesses activities", "department key performance indicators" and "personal key performance indicators". Contributing to this performance assessment, Sonae's culture strongly encourages employees to take an active role in the planning of their own "key performance indicators" for the year, in accordance with the company's goals and strategy.
As in previous years, in 2009 Sonae carried out its annual performance appraisal process, through which each individual's performance and contribution to the organization's success was measured and assessed, and the variable remuneration to be awarded was calculated.
As an environmentally conscious Company, Sonae has implemented environmental policies and adapted its products, services, infrastructure and facilities in such a way as to minimize their impact on the environment, namely:
Of the environment related activities carried out during 2009, the following should be highlighted:
Sonae has carried out actions through its business chain, promoting not only the quality and safety of its products and services, but also improving its performance in the environmental and social areas. Sonae business chain embraces a range of stakeholders – suppliers, employees, visitors, store tenants, clients, business partners and society in general, which are crucial to the development of the business and, as such, are the target of specific actions aimed to promote regional and national socio-economic growth.
Among these actions should be highlighted the following:
Sonae has always been mindful of the local, regional and global context in which its business units operate. In order to be able to respond to the needs of communities and to help provide solutions to some social problems existing within them, Sonae has carried out actions that promote social harmony in the community, often setting up partnerships with other institutions and local organizations.
Among the different areas supported during 2009, the main ones are Culture, Education, Health, the Environment, Science and Social Solidarity, some highlights of which are:
For Sonae, transparency, ethical and responsible behaviour are fundamental principles guiding its business operations and contributing towards its performance.
Sonae promotes, through its Code of Conduct, the adoption of certain behavioural principles and rules ranging from integrity, transparency, respect, social responsibility, environmental commitment, health and safety, confidentiality and use of privileged information, to managing conflicts of interest and communicating irregularities.
Sonae's Directors, senior managers and employees, including external consultants, are required to comply with the Code of Conduct in the performance of their daily activities and in both internal and external relationships. The Sonae holding company also requires its consultants and suppliers to follow similar ethical standards.
In line with Sonae's culture of social corporate responsibility, Sonae has in place a policy for communicating internal irregularities, which sets out procedures to efficiently and fairly respond to the reporting of alleged irregularities. By successfully implementing these procedures and by making efforts to respond to them, Sonae aims to involve all employees in the creation of a healthy and balanced work environment.
Sonae has always given direct access to its Ombudsman, who reports directly to the Chairman of the Board of Directors, to employees and to the general public through its website (www.sonae.pt). This has proven to be an effective means of facilitating the report of complaints, to make sure that independence and freedom of opinion are guaranteed and that all issues are treated equally and fairly.
Further detailed information on Sonae's governance regulations can be found under section 8 of the Corporate Governance Report.
At 31 December 2009, Efanor Investimentos, a family holding company of which Belmiro de Azevedo is chairman, held a majority stake in Sonae, with approximately 53.0% of the shares and voting rights. The remaining 47.0% of free float capital was held by 40,246 shareholders, of whom 39,369 were individuals owning 23.1%, and 877 were institutional investors and companies owning 23.9%. A substantial 89.1% of free float capital was held by Portuguese investors, with most of the remaining stock being dispersed across several European countries.
As at 31 December 2009, no shares were directly owned by Sonae, since all of the 132.9 million Sonae treasury shares were sold in a market operation in November 2007. However, Sonae did not recognize the cost of the own shares sold in its balance sheet, since, simultaneously , it entered into a derivative financial instrument – Cash Settled Equity Swap –, hence maintaining full economic exposure to them
In accordance with article 16 of the Portuguese Securities Code, shareholdings, held directly or indirectly amounting to or exceeding the thresholds of 2%, 5%, 10%, 20%, 33.33%, 50%, 66.66% and 90% of the voting rights, must be reported to the Portuguese Securities Regulator and disclosed to the capital market. If at any time these shareholdings fall below the specified percentages, then these must also be reported.
As at the end of 2009, and based on notifications made, shares held by companies owning more than 2% of Sonae's share capital were as follows:
| SHAREHOLDER | # SHARES | % SHARE CAPITAL |
|---|---|---|
| Efanor Investimentos | 1,061,515 | 53.0% |
| Banco BPI | 178,040 | 8.9% |
| Fundação Berardo | 49,850 | 2.5% |
Sonae shares are quoted on the Portuguese stock exchange, Euronext Lisbon, and are listed on several indices, including the PSI 20, in which it has a weighting of 2.7% and the Euronext 150, with a weighting of 1.0%, as at the end of December 2009. The table below shows the key indicators of Sonae's share performance.
| 2007 | 2008 | 2009 | |
|---|---|---|---|
| ISIN CODE | PTSON0AM0001 | ||
| BLOOMERG CODE | SON PL | ||
| REUTERS CODE | SONP.IN | ||
| SHARE CAPITAL | 2,000,000,000 | 2,000,000,000 | 2,000,000,000 |
| CLOSING PRICE LAST | |||
| TRADING DAY (EUROS) | |||
| OF YEAR | 1.98 | 0.44 | 0.87 |
| YEAR HIGH | 2.17 | 1.75 | 0.98 |
| YEAR LOW | 1.5 | 0.39 | 0.43 |
| AVERAGE TRADING | |||
| VOLUME PER DAY (SHARES) | 15,004,151 | 12,971,220 | 7,861,992 |
| AVERAGE TRADING | |||
| VOLUME PER DAY (EUROS) | 28,666,669 | 10,965,297 | 5,644,343 |
| MARKET CAPITALIZATION | |||
| 31 DECEMBER (EUROS) | 3,960,000,000 | 880,000,000 | 1,740,000,000 |
Sonae shares ended the year quoted at 0.87 euros, reflecting a nominal gain of 98% during the year, which compares with a general stock market gain of 34%, as measured by the Portuguese Stock Market index PSI 20.
The following graph highlights the share price performance during 2009.
Following approval by shareholders at Annual General Meetings, the dividends distributed by Sonae for the past three financial years are as shown in the table below.
| (1) 2007 |
2008(1) | (1) 2009 |
|
|---|---|---|---|
| GROSS DIVIDEND PER | 0.0300 | 0.0300 | 0.0315 |
| SHARE (EUROS) | |||
| DIVIDEND DISTRIBUTED | 60,000 | 60,000 | 63,000 |
| (THOUSAND EUROS) | |||
| DIVIDEND YIELD (%)(2) | 1.5% | 6.9% | 3.6% |
| PAYOUT RATIO (%)(3) | 30.2% | 37.7% | 36.9% |
(1) Year when the dividend is distributed; (2) Dividend yield = Dividend distributed / closing price as at 31 December;
(3) Payout ratio = Dividend distributed / consolidated direct net profits attributable to the equity holders of Sonae.
In view of Sonae Holding net results for the financial year 2009 of 91,729,048.00 euros, the Board of Directors will propose to the Shareholders' Annual General Meeting that this profit should be appropriated as follows:
| Legal reserves | 4,586,452.40 euros |
|---|---|
| Dividend | 63,000,000.00 euros |
| Free reserves | 24,142,595.60 euros |
For 2009, a gross dividend of 0.0315 euros per share has been proposed by the Board of Directors, totalling 63,000,000 euros. This dividend is equal to a dividend yield of 3.6% on the closing price as at 31 December, and to a payout ratio of 37% of consolidated direct net profits (excluding value created on investment properties) attributable to equity holders of Sonae.
Sonae provides all the communication resources necessary to give its individual and institutional shareholders, as well as the financial community at large, regular, comprehensive and transparent information. Information is made publicly available on the company's own website (www.sonae.pt) while constant contact is made with investors and analysts through the company's Investor Relations Department. .
On a regular basis, Sonae engages in communications with investors via road shows, reverse road shows, one-onone meetings, group meetings, broker conferences and analysts days. The purpose of these meetings is to inform the market of the results, strategy and decisions made, as well as to receive feedback from shareholders. During these communications, Sonae is always represented by its Investor Relations department and, on many occasions, accompanied by senior managers.
The Company also engages in bilateral communications with investors. These communications either take place at the initiative of the company or at the initiative of individual investors. The subject matter of the bilateral communications ranges from individual queries to more elaborate discussions based on disclosures that the Company has made, such as its annual and quarterly reports.
The Company strictly complies with applicable rules and regulations on fair and non-selective disclosure and equal treatment of shareholders.
Further detailed information on Sonae Investor Relations activities can be found under section 9.13. of the Corporate Governance Report.
During 2009, a total of 10 financial institutions published regular analyses of Sonae – BPI, BCP, Santander, BANIF, UBS, JPMorgan, Goldman Sachs, Fidentiis, BES, Alpha Value –..
| INSTITUTION | ANALYST | CONTACT |
|---|---|---|
| UBS | Ignacio de Carvajal | [email protected] |
| GOLDMAN SACHS | Marcus Iwar | [email protected] |
| JPMORGAN | Jaime Vasquez | [email protected] |
| FIDENTIIS | Rui Cesário | [email protected] |
| BPI | João Safara Silva | [email protected] |
| BES | Filipe Rosa | [email protected] |
| BANIF | Julieta Vital/Teresa Martinho | [email protected] |
| SANTANDER | Luis Colaço | [email protected] |
| BCP | João Flores | [email protected] |
| ALPHA VALUE | Virginie Blue | [email protected] |
Any interested party may access the Investor Relations department through the following contacts:
Patrícia Mendes Pinheiro Investor Relations Manager Tel: (+351) 22 010 4794 Fax: (+351) 22 948 77 22 Email: [email protected]/ [email protected] Address: Lugar do Espido Via Norte 4471-909 Maia Portugal Site: www.sonae.pt
The consolidated financial information contained in this report (concerning the years ended 2008 and 2009) was audited and has been prepared in accordance with International Financial Reporting Standards ("IFRS"), as adopted by the European Union; the financial information regarding quarterly figures was not audited.
| CAPEX Investments in tangible and intangible assets, investment properties and acquisitions Direct income Direct income excludes contributions to indirect income Turnover + other revenues -impairment reversion - EBITDA badwill- operating costs (based on direct net income) + gain/losses from sales of companies; includes capital gains in the sale of shareholdings since 2008 Recurrent EBITDA EBITDA excluding non-recurrent items, namely gains in sales of investments and other movements that distorts comparability. EBITDA margin EBITDA / Turnover Eliminations & adjustments Intra-groups + consolidation adjustments Free Cash Flow EBITDA – operating capex-change in working capital financial investments-financial results-income taxes FMCG Fast Moving Consumer Goods Financial net debt Total net debt excluding shareholders loans Indirect Income includes Sierra's contributions net of Indirect income taxes to consolidated income statement, arising from: (i) investment property valuations; (ii) capital gains (losses) on the sale of financial investments, joint ventures or associates; (iii) impairment losses (including goodwill) and; (iv) provision for assets at Risk Investment properties Shopping centres in operation owned by Sonae Sierra Liquidity Cash & equivalents + current investments Sales made by stores that operated in both periods Like for Like sales under the same conditions. Excludes stores opened, closed or which suffered major upgrade works in one of the periods Holding Net debt/ Investment Portfolio Gross Asset Loan to value Holding Value; gross asset value based on Market multiples, real estate NAV and market capitalization for listed companies Loan to value shopping centres Net debt / (investment properties + properties under Development ) at book value Gross real estate assets + other tangible and intangible Net invested capital assets - amortizations and impairment losses + financial investments + working capital (including other assets & liabilities such as deferred taxes); all figures at acquisition cost with the exception of Sonae Sierra's building block Net asset value (NAV) Open market value attributable to Sonae Sierra - net debt - minorities + deferred tax liabilities |
ARPU | Average revenue per user |
|---|---|---|
| Net debt Bonds + bank loans + other loans + finance leases – cash, bank deposits and current investments Net income equity holders Net income attributable to Sonae shareholders Other income Share of results of associated undertakings + dividends Other loans Bonds, leasing and derivatives Fair value of properties in operation and under Open market value (OMV) development (100%), provided by an independent entity RoIC (Return on invested capital) EBIT(12 months) /Net invested capital Recurrent EBITDA EBITDA excluding extraordinary items Shopping Centre Services business Asset management services + property management services Technical investment Tangible assets + intangible assets + other fixed assets – depreciations and amortizations Increase (decrease) in the valuation of shopping centres Value created on investment and development in operation and under development; shopping centres properties (VCIDP) under development are only included if a high degree of certainty concerning their conclusion and opening |
|
|---|---|
| exists. |
The Board of Directors would like to thank the Statutory Audit Board and the Statutory External Auditor for the valuable advice and help given during 2009. The Board would also like to express its gratitude to suppliers, banks and other business associates of Sonae for their continuing involvement and the confidence that they have shown in the organization. Finally, the Board expresses its gratitude to the Non-Executive Directors for their work and valuable advice and to all employees for their effort and dedication throughout the year.
Maia, 16 March 2010
Belmiro de Azevedo, Chairman of the Board of Directors
Álvaro Cuervo Garcia, member of the Board of Directors
Bernd Bothe, member of the Board of Directors
Christine Cross, member of the Board of Directors
Michel Marie Bon, member of the Board of Directors
José Neves Adelino, member of the Board of Directors
Duarte Paulo Teixeira de Azevedo, CEO
Álvaro Carmona e Costa Portela, member of the Executive Committee
Ângelo Gabriel Ribeirinho dos Santos Paupério, member of the Executive Committee
Nuno Manuel Moniz Trigoso Jordão, member of the Executive Committee
The Corporate Governance Report provides a description of the Corporate Governance structure and practices followed by the Company under the terms of article 245-A of the Portuguese Securities Code, and was prepared to comply with the information disclosure requirements of the Portuguese Securities Market Commission (CMVM) Regulation no. 1/2007, of 21 November, as amended by CMVM Regulation no. 5/2008, of 15 October (Appendix II to this Report contains a table of references to the Appendix to CMVM Regulation no.1/2007, setting out the structure of the corporate governance report). The Report additionally contains the information required by CMVM Regulation no. 1/2010, of 1 February, considered to be complementary to CMVM Regulation no. 1/2007.
The information requirements of article 2 of Law no. 28/2009, of 18 June, articles 447 and 448 of the Portuguese Companies Act and CMVM Regulation no. 5/2008 have also been complied with.
The Company has adopted the CMVM Recommendations on Corporate Governance dated September 2007.
All of the rules and regulations mentioned above are publicly available at www.cmvm.pt.
This section should be read together with and as a complement to the Annual Management Report and Consolidated Accounts.
All references given relate to the Corporate Governance Report, unless stated otherwise.
I.1.1 The Chairman of the Board of the Shareholders' General Meeting shall be given adequate human and logistical resources, taking the financial position of the company into consideration.
The Chairman of the Board of the Shareholders' General Meeting is given the support of the Company's legal and administrative teams to prepare each General Meeting. Specific logistical support is also given to publicly give notice of the Shareholders' General Meeting, as well as to distribute all preparatory documents necessary for the shareholders to participate in the General Meeting. The Company uses its resources to facilitate contact between the Chairman and the shareholders and promote an increase in the overall attendance rate at the meeting.
I.1.2 The remuneration of the Chairman of the Board of the Shareholders' General Meeting shall be disclosed in the annual corporate governance report.
The Company discloses the remuneration of the Chairman of the Board of the Shareholders' General Meeting, as well of its Secretary, in section 6.5.
I.2.1 The requirement to deposit or block shares before the General Meeting, required by the Articles of Association, shall not exceed 5 working days.
The Articles of Association allow for the attendance at the Shareholders' General Meeting of shareholders who provide evidence of their shareholdings in Company's shares up to the third business day prior to each relevant session of the General Meeting. Proof is furnished by providing a certificate issued by a financial intermediary confirming the shareholder's ownership and the blocking of shares, by the fifth business day prior to that session.
I.2.2 Should the General Meeting be suspended, the Company shall not require share blocking during the full period until the meeting is resumed, but shall apply the same period as for the first session.
The Articles of Association require that shareholders have their shares registered in their name by the fifth business day prior to each session of the General Meeting.
I.3.1 Companies should not impose any statutory restriction on postal voting.
The Articles of Association, as amended by resolution taken at the Shareholders' Annual General Meeting held on 20 April 2009, allow shareholders to vote by post in relation to any item on the meeting's agenda.
I.3.2 The statutory advance deadline for receiving voting ballots by post should not exceed 3 working days.
A deadline of three calendar days is expressly stated in the Company's Articles of Association for receipt of postal votes.
I.3.3 The Company's Articles of Association shall respect the one share-one vote principle.
This principle is expressed in paragraph 1 of article 22 of the Company's Articles of Association.
I.4.1 Companies shall not set a constitutive or deliberative quorum that exceeds the minimum required by Portuguese law.
New wording in the CMVM Recommendations 2010 I.4.1 Companies shall not set a deliberative quorum that exceeds the minimum required by Portuguese law.
With the new wording introduced in the CMVM Recommendations, in force from 2010 onwards, the Company fully complies with this recommendation.
I.5.1 The minutes of the Shareholders' General Meetings shall be made available to shareholders on the Company's website within a 5 day period, irrespective of the fact that such information may not be legally classified as material information. The lists of attendees, agendas items and resolutions adopted shall be kept in a historic file on the Company's website, covering meetings held for at least the 3 previous years.
On the Company's website – www.sonae.pt (tab Investors, General Meetings section) - the list of attendees, agendas items and resolutions adopted over the last three years are publicly available. The minutes of the 2009 Shareholders' Annual and Extraordinary General Meetings were both made available on the Company's website within a five day period.
I.6.1 Measures aimed at preventing the success of takeover bids, shall respect the interests of both the Company and its shareholders.
The Company has not implemented any measures to prevent the success of takeover bids, nor is it aware of any such measure having been taken by shareholders.
I.6.2 In accordance with the principle established in the previous sub-paragraph, any Company that has Articles of Association with clauses that restrict or limit the number of votes that may be held or exercised by a single shareholder, either individually or acting in concert with other shareholders, shall also require that, at least once every five years, the continuation of such clauses must be ratified at a Shareholders' General Meeting, at which the quorum shall not exceed the legal minimum and all votes cast shall count, without applying any restriction.
The Company's Articles of Association do not contain any clauses that restrict or limit the number of votes which may be held or exercised by a single shareholder.
I.6.3 Defensive measures that automatically lead to serious erosion in the value of the Company's assets, when there has been a change in control or a change in the Company's management, should not be adopted, as this prevents the free transmission of shares and the ability of shareholders to evaluate those responsible for managing the Company.
RECOMMENDATION FULLY ADOPTED No such measures have been adopted or established.
II.1.1.1 The Board of Directors shall, in its corporate governance report, assess the model adopted by the Company, identifying any restrictions on its operation and proposing actions to be taken that are judged to be appropriate to resolve them.
The Board of Directors has assessed the impact of the corporate governance model adopted and has not encountered any restrictions susceptible of affecting the overall performance, as described in section 0.5.
II.1.1.2 Companies shall set up internal control systems in order to efficiently detect risks relating to the Company's activity, protect its assets and keep its corporate governance transparent.
The Company has established internal risk control systems as described below in section 0.
II.1.1.3 The management and audit boards shall establish internal regulations, which shall be disclosed on the Company's website.
The Board of Directors and the Statutory Audit Board have established their Terms of Reference, currently available at www.sonae.pt (tab Investors, Corporate Governance section).
II.1.2.1 The Board of Directors shall include a sufficient number of non-executive members to ensure that there is effective supervision, auditing and assessment of the activities of the members of the executive board.
The Board of Directors has a total number of ten members, six of which are non-executive members (please refer to section 2.1.2 of this Report for more detail on the composition of the Board).
II.1.2.2 Non-executive members shall include an adequate number of independent members, taking into account the size of the Company and its shareholder structure, but this shall never be less than one quarter of the total number of Board members.
The Board of Directors has five independent non-executive members.
II.1.3.1 Depending on the governance model adopted, the Chairman of the Statutory Audit Board, or of the Board Audit Committee or of the Financial Matters Committee shall be independent and possess the necessary skills to perform his/her duties.
The Chairman of the Statutory Audit Board, as well as the other members of this body, are independent under the terms of paragraph 5 of article 414 of the Portuguese Companies Act (please refer to section 4.1.2) and possess the necessary skills and experience to perform their duties (please refer to Appendix I for their curriculum vitae).
II.1.4.1 The Company shall adopt a policy on reporting irregularities that allegedly occurred, which includes the following information: i) the means through which such irregularities may be reported internally, including the persons who are entitled to receive the reports; ii) how the report is to be handled, including confidential treatment, should this be requested by the reporter.
Sonae has a long established policy for reporting irregularities according to rules and procedures specified in the Company's Code of Conduct, available at www.sonae.pt (tab Investors, Corporate Governance section). To that end, Sonae has assigned the role of receiving reports on irregularities concerning employees or services providers to the Sonae Ombudsman, and the role of receiving any such reports concerning members of the Company's statutory governing bodies to the Corporate Governance Officer.
II.1.4.2 General guidelines for this policy should be disclosed in the Corporate Governance Report.
A description of the Company's policy on reporting irregularities is included in section 8.
II.1.5.1 The remuneration of the members of the Board of Directors shall be structured to align their interests with those of the shareholders. For this purpose: i) the remuneration of Directors carrying out executive duties should include a variable component based on performance linked to a performance assessment that shall be carried out periodically by the governance body or committee appointed for this purpose; ii) the variable component shall be consistent with the maximization of the long term performance of the Company, and shall be dependent on the sustainability of the variables adopted to measure performance; iii) non-executive members of the Board of Directors shall only receive fixed remuneration, unless legal requirements dictate otherwise.
Specific details of the compensation policy of the members of the Board of Directors can be found in section 6. Executive members' remuneration includes short term and medium term variable remuneration, both of which are based on real performance, assessed by the Shareholders' Remuneration Committee, liaising with the Board Nomination and Remuneration Committee. Non-executive members of the Board have a fixed remuneration.
II.1.5.2 The Shareholders' Remuneration Committee and the Board of Directors shall present to the Shareholders' Annual General Meeting a statement of the remuneration policy which is applicable to management and audit boards, as well as to other persons discharging managerial responsibilities (―dirigentes‖) as defined in Article 248 B, paragraph 3 of the Portuguese Securities Code. The information to shareholders shall include the proposed criteria and main indicators to be used to assess their performance and to determine the variable component, independently of whether this in the form of bonuses paid in shares, share options, annual bonuses or other awards.
The remuneration policy of the statutory governing bodies and strategic decision makers ("dirigentes – as per the terms of article 248 B, paragraph 3 of the Portuguese Securities Code) was approved at the Shareholders' General Meeting, held on 3 May 2007, and confirmed at the Shareholders' General Meeting held on 21 April 2008. In both
cases, the policy was approved on the basis of a proposal made by the Shareholders' Remuneration Committee and is applicable to the current mandate starting in 2007 and ending in 2010. This policy describes the criteria and the indicators used to determine the variable component of the remuneration received by the executive members of the Board.
II.1.5.3 At least one representative of the Remuneration Committee must be present at the Shareholders' Annual General Meeting.
A member of the Shareholders' Remuneration Committee has always been present at the Shareholders' Annual General Meetings.
II.1.5.4 A proposal must be submitted to the Shareholders' General Meeting to approve plans to grant shares and/or share options or award compensation based on variations in share prices to members of the management and audit boards, as well as to other persons discharging managerial responsibilities (―dirigentes‖) as defined in Article 248 B, paragraph 3 of the Portuguese Securities Code. The proposal shall include all information necessary for a comprehensive assessment of the plan. The proposal shall be presented together with the regulation that governs the plan or if this has not yet been prepared, the general conditions that will be applied. In the same way, the main characteristics of any retirement benefit plan that benefits the management and audit boards, as well as other persons discharging managerial responsibilities (―dirigentes‖) as defined in Article 248 B, sub-paragraph 3 of the Portuguese Securities Code, shall also be approved at the Shareholders' General Meeting.
A proposal to approve a medium term variable remuneration plan, as well as to execute such a plan, was submitted and approved at the Shareholders' Annual General Meeting held on 21 April 2008 (please refer to proposals no. 8 and no. 9 available at www.sonae.pt (tab Investors, Shareholders' General Meetings section). The specific terms of this plan are described below in section 6.2.3. No retirement benefit plan has been adopted.
II.1.5.5 The remuneration of the members of the management and audit boards shall be individually disclosed on an annual basis. Fixed and variable components must be disclosed separately, when applicable, as well as any other remuneration received from other companies within the same Group or from companies controlled by shareholders with qualifying shareholdings.
This recommendation is considered to have been fully met. Please see section 6.2.4 of this report.
II.2.1 Within the limits established by the Portuguese Companies Act for each management and audit governance structure, and unless the Company is restricted by its size, the Board of Directors shall delegate the day-to-day running of the Company, and the powers and terms of the delegation should be set out in the Corporate Governance Report.
The day-to-day management of the Company is delegated by the Board of Directors to an Executive Committee (please refer to section 2.2).
II.2.2 The Board of Directors shall ensure that the Company acts in accordance with its objectives, and should not delegate its own responsibilities, including: i) definition of the Company's strategy and general policies; ii) definition of the corporate structure of the Group; iii) decisions that are considered to be strategic due to the amounts, risks and special circumstances involved.
A list of the non-delegated responsibilities is described in section 2.2.1.
II.2.3 Should the Chairman of the Board of Directors have an executive role, the Board of Directors shall set up efficient mechanisms to co-ordinate the work of non-executive members, to ensure that they take decisions in an independent and informed manner, and shall also explain these mechanisms to the shareholders in the Corporate Governance Report.
RECOMMENDATION NOT APPLICABLE
The Chairman of the Board of Directors does not have any executive role.
II.2.4 The Annual Management Report shall include a description of the activities carried out by non-executive Board members and shall, in particular, report any restrictions that they have encountered.
Such description is included in section 3.3 of the Annual Management Report.
II.2.5. The governing body responsible for management (Board of Directors) should promote the rotation of the Board member responsible for financial matters (CFO) at least at the end of every two mandates.
The Board of Directors has not appointed a CFO. The Chief Executive Officer (CEO) accumulates this role and currently covers the areas of financial responsibility. The CEO is serving his first Board mandate.
II.3.1 When Directors, who carry out executive duties are requested by other Board members to supply information, they shall provide answers in a timely manner with information that adequately responds to the request made.
Throughout the year, the Executive Committee discloses its decisions to the Board of Directors on a timely basis. The executive members provide additional information and clarification at their own initiative, as well as in response to the requests of non-executive members of the Board, so that the latter have the necessary support to fulfil their duties.
II.3.2 The Chairman of the Executive Committee shall send the notices convening meetings and minutes of the respective meetings to the Chairman of the Board of the Directors and, when applicable, to the Chairman of the Statutory Audit Board or the Audit Committee.
The CEO has made available all information regarding the meetings held to the Chairman of the Board of Directors and to the Chairman of the Statutory Audit Board.
II.3.3 The Chairman of the Executive Board of Directors shall send the notices convening meetings and minutes of the respective meetings to the Chairman of the General and Supervisory Board and to the Chairman of the Financial Matters Committee.
The Company has not adopted this governance model.
II.4.1 In addition to fulfilling its audit role, the General and Supervisory Board shall perform an advisory role, as well as monitor and continually assess the management of the Company by the Executive Board of Directors. Among the other matters on which the General and Supervisory Board should give their opinion, are the following: i) definition of the strategy and general policies of the Company; ii) the corporate structure of the Group; and iii) decisions that are considered to be strategic due to the amounts, risks and special circumstances involved.
The Company has not adopted this governance model.
II.4.2 The annual reports on the activity of the General and Supervisory Board, the Financial Matters Committee, the Audit Committee and the Statutory Audit Board shall be disclosed on the Company's website together with the financial statements.
The Statutory Audit Board annual reports are available at www.sonae.pt (tab Investors, Shareholders' General Meetings section), together with the respective financial statements.
II.4.3 The annual reports on the activity of the General and Supervisory Board, the Financial Matters Committee, the Audit Committee and the Statutory Audit Board shall include a description of the supervisory and verification work completed and shall, in particular, report any restrictions that they encountered.
Please refer to the Statutory Audit Board's annual report issued for the financial year 2009 available at www.sonae.pt (tab Investors, Shareholders' General Meetings section), together with the year's financial statements to be submitted for approval at the Shareholders' Annual General Meeting.
II.4.4 The Financial Matters Committee, the Audit Committee or the Statutory Audit Board (depending on the governance model adopted) shall represent the Company, for all purposes, in dealings with the external auditor. This shall include proposing who will provide this service, their respective remuneration, ensuring that the Company provides adequate conditions to allow them to provide their services, acting as the point of contact with the Company and being the first recipient of their reports.
The Statutory Audit Board is responsible for overseeing the work performed by the Statutory External Auditor and assessing its independence, as set out in its Terms of Reference available at www.sonae.pt (tab Investors, Corporate Governance section). The Statutory External Auditor was appointed at the Shareholders' Annual General Meeting held on 3 May 2007 as proposed by the Statutory Audit Board.
II.4.5 The Financial Matters Committee, the Audit Committee or the Statutory Audit Board (depending on the governance model adopted), shall assess the external auditor on an annual basis and propose to the Shareholders' General Meeting that the external auditor should be discharged, should justifiable grounds exist.
The Statutory Audit Board's annual report for 2009 includes an assessment of the work performed by the Statutory External Auditor.
II.5.1 Unless the Company is restricted by its size, the Board of Directors and the General and Supervisory Board, depending on the governance model adopted, shall set up the necessary Committees in order to: i) ensure that a robust and independent assessment of the performance of the Executive Directors is carried out, as well as of its own overall performance and including the performance of all existing Committees; ii) consider the governance system adopted and assess its efficiency and propose to the respective bodies, measures to be implemented to make improvements.
The Board of Directors has set up two specialized committees, made up of non-executive Board members, to ensure the effectiveness and the quality of the work performed. The committees currently in existence are the Board Audit and Finance Committee and the Board Nomination and Remuneration Committee. Their respective roles and functions are described in sections 2.3.1 and 2.3.2.
II.5.3 All Committees shall draw up minutes of the meetings held.
All committee meetings are minuted as set out in the Board of Directors' Terms of Reference (available at www.sonae.pt - tab Investors, Corporate Governance section).
III.1.2 Companies shall ensure that permanent contact is maintained with the market, upholding the principle of equal treatment for all shareholders and avoiding any asymmetry in the access to information by investors. To achieve this, the Company shall set up an Investor Relations Office.
The Company has an active Investor Relations Office that provides shareholders and the financial community at large, with regular and comprehensive information (please refer to section 9.13 for more detail).
b) Articles of Association;
RECOMMENDATION FULLY ADOPTED
All of the information indicated above is available in English at www.sonae.pt.
II.5.2 Members of the Shareholders' Remuneration Committee or alike, shall be independent from the members of the Board of Directors.
Belmiro Mendes de Azevedo, the Chairman and a non-executive member of the Company's Board of Directors, is a member of the Shareholders' Remuneration Committee. Nevertheless, he was elected to the Shareholders' Remuneration Committee by the Company's major shareholder, Efanor Investimentos, SGPS, S.A, and is thereby acting in the interests of this major shareholder and not as Chairman of the Board of Directors. Furthermore to ensure the independence of the two roles, he does not take part in any discussion or resolution where there is a conflict of interest, namely when discussing his own remuneration as a member of the Board of Directors.
The Board of Directors did not identify any fact or circumstance that would have caused any loss of independence by any of its independent non-executive members during the term to which this report refers. This conclusion was confirmed by written statements issued by each of this independent members at the request of the Board.
The Company's governance model and practices were not found to be subject to any constraints to the normal functioning of the Board of Directors or of its specialized committees, nor has the Board of Directors been aware of the existence of any such constraints on the functioning of any other governing bodies.
The Statutory Audit Board has exercised its supervisory powers, having received all the required support of the Board to that effect, through its Board and Audit Finance Committee, namely for the drawing up of its annual report on the supervision of the Company and issuance of a statement of opinion on the Company's annual report, accounts and proposals presented by the management.
The Statutory External Auditor has analysed the Company's activity and has conducted the exams and verifications deemed necessary to the proper audit and legal certification of the accounts, in interaction with the Statutory Audit Board, and with the full cooperation of the Board of Directors.
The Board of Directors, through its Board Audit and Finance Committee, has been carrying out its duties and cooperating with the Statutory Audit Board and the Statutory External Auditor in a transparent and rigorous manner and in compliance with its Terms of Reference and best corporate governance practices.
The Company's corporate governance structure is made up of the Board of Directors, the Statutory Audit Board and the Statutory External Auditor, all of them elected at the Shareholders' General Meeting.
The Board of Directors has delegated the day-to-day management of the Company to an Executive Committee.
The members of the Statutory Governing Bodies, of the Board of the Shareholders' General Meeting and of the Shareholders' Remuneration Committee are elected for a four-year mandate, subject to re-election.
The Shareholder's General Meeting approved the compensation policy of the statutory governing bodies and persons discharging managerial responsibilities ("dirigentes"), and delegated the determination of the specific values of remuneration to a Shareholders' Remuneration Committee. The Shareholders' General Meeting also approved the remuneration of the Shareholders' Remuneration Committee.
The Board of Directors is responsible for ensuring the management of the Company's business, exercising all management acts pertaining to its corporate purpose, setting strategic guidelines and appointing and generally supervising the activity of the Executive Committee and of the other specialized committees.
For the current mandate starting 2007 and ending 2010, the composition of the Board of Directors is as follows:
| Belmiro Mendes de Azevedo…………………………… | Chairman – Non-Executive |
|---|---|
| Álvaro Cuervo Garcia……………………… | Independent Non-Executive |
| Michel Marie Bon………………………………………… | Independent Non-Executive |
| José Neves Adelino……………………………………… | Independent Non-Executive |
| Bernd Hubert Joachim Bothe…………………………. | Independent Non-Executive |
| Christine Cross…………………………………………… | Independent Non-Executive |
| Duarte Paulo Teixeira de Azevedo…………………… | Executive – CEO |
| Álvaro Carmona e Costa Portela………………………. | Executive |
| Ângelo Gabriel Ribeirinho dos Santos Paupério…… | Executive |
| Nuno Manuel Moniz Trigoso Jordão…………… | Executive |
Note:
Bernd Hubert Joachim Bothe was co-opted to the Board of Directors on 17 March 2009. The Shareholders' General Meeting ratified the co- option on 20 April 2009. Christine Cross was elected, for the remainder of the current mandate, at the Shareholders' Extraordinary General Meeting held on 9 November 2009.
| Appointed for the first time | End of mandate | |
|---|---|---|
| Belmiro Mendes Azevedo | in 1989 |
2010 |
| José Neves Adelino | 2007 | 2010 |
| Álvaro Cuervo Garcia | 2004 | 2010 |
| Michel Marie Bon | 2004 | 2010 |
| Bernd Hubert Joachim Bothe | 2009 | 2010 |
| Christine Cross | 2009 | 2010 |
| Duarte Paulo Teixeira de Azevedo | 2000 | 2010 |
| Álvaro Carmona e Costa Portela | 1999 | 2010 |
| Ângelo Gabriel Ribeirinho dos Santos Paupério | 2000 | 2010 |
| Nuno Manuel Moniz Trigoso Jordão | 1999 | 2010 |
The members of the Board of Directors were appointed for the first time as follows:
The Board of Directors has a clear balance between the number of executive directors and the number of nonexecutive directors. Out of the six non-executive directors, five are considered to be independent, in accordance with the independence criteria set out in article 414, paragraph 5 of the Portuguese Companies Act. The five above mentioned independent non-executive directors also meet the requirements for assessing their compatibility under the terms of article 414-A, paragraph 1, of the Portuguese Companies Act, the only exception
being Michel Marie Bon, who exercises management and supervisory functions in more than five companies. Nevertheless, this situation does not affect his overall independence.
The qualifications, experience and responsibilities of the members of the Board of Directors are disclosed in Appendix I of this Report. The number of shares directly or indirectly held by them in companies controlled or in a group relationship with the Company is disclosed in the appendices to the Management Report, as required by article 447 of the Portuguese Companies Act and paragraph 6 of article 14 of CMVM Regulation no. 5/2008.
Under the terms of the Company's Articles of Association, the Board of Directors can be made up of an odd or even number of members, between three and eleven, elected based on proposals submitted by shareholders at the Shareholders' General Meeting.
The directors are elected to the Board of Directors, in accordance with the composition indicated in the winning proposal.
However, the Articles of Association allow for one director to be individually elected if there are proposals submitted by shareholders who, either by themselves or together with other shareholders, hold shares representing between ten and twenty percent of the share capital. The same shareholder cannot put forward more than one proposal. Each proposal should contain the identification of at least two eligible persons. If there are several proposals submitted by different shareholders or groups of shareholders, voting will be take place on all lists.
The Company's Articles of Association also establish that the Board of Directors may co-opt a substitute in case of death, resignation or temporary or permanent incapacity or unavailability of any member, subject to ratification by the shareholders at the next Shareholders' General Meeting. The Board Nomination and Remuneration Committee, exclusively made up of non-executive directors, is the specialized committee of the Board responsible for proposing to the latter potential candidates for executive and non-executive directors positions.
Additionally, if a director fails to attend any two meetings, whether consecutive or not, without providing a justification for such absence which is accepted by the Board of Directors, such director shall then be deemed to be permanently unavailable.
However, the definitive absence, by any motive whatsoever, of a replacement director individually elected according to the above mentioned rules must necessarily be elected to the Board of Directors by the Shareholders' General Meeting.
The Board of Directors is responsible for the election of its Chairman.
The Articles of Association provide that the Company's share capital can be increased, through new entries in cash, up to five thousand million Euro, in one or more stages, by resolution of the Boards of Directors, which will determine, in accordance with the law, the conditions of subscription and the categories of shares to be issued, based on those already existing at the time.
This power terminates five years after the respective shareholders resolution which was taken at the Shareholders' General Meeting held on 6 April 2006.
The Board of Directors meets at least four times a year, as required by the Company's Articles of Association and the respective Terms of Reference, and whenever the Chairman or two Board members call a meeting. The quorum for any Board meeting requires that the majority of Board Members are present or represented by proxy and decisions are taken by a majority of votes cast. If the Board of Directors is made up of an even number of members, the Chairman will have a casting vote.
The Board of Directors normally receives information about items on the agenda for the meeting at least 7 days beforehand, and receives supporting documents for meetings at least 2 working days in advance.
Minutes are recorded in the respective minute book.
During 2009, there were 5 Board meetings, and the overall attendance rate was 98%.
The Terms of Reference of the Board of Directors are available at www.sonae.pt (tab Investors, Corporate Governance section).
The Executive Committee has all day to day company management powers, as delegated by the Board of Directors.
The following matters were excluded from the terms of the delegation and considered to be of the exclusive competence of the Board:
Under the Terms of Reference of the Executive Committee as approved by the Board of Directors, the Executive Committee must present a summary in Portuguese and in English of the main resolutions taken, together with supporting documentation to be provided to the Board at each of its meetings.
These resolutions are also made available to the Chairman of the Board of Directors and the Chairman of the Statutory Audit Board.
The Executive Committee provides, on a timely basis, all information requested by other members of the Board of Directors.
The Executive Committee is made up of members appointed from and among the Board of Directors. In 2009 this Committee had the following members:
Executive Committee
Duarte Paulo Teixeira de Azevedo - CEO Álvaro Carmona e Costa Portela Ângelo Gabriel Ribeirinho dos Santos Paupério Nuno Manuel Moniz Trigoso Jordão
The Executive Committee meets at least once every month and additionally whenever the CEO or a majority of its members convenes a meeting. The quorum for any Executive Committee meeting requires that a majority of members are present or represented by proxy. Decisions are approved by simple majority, with the CEO having a casting vote whenever the Executive Committee is made up of an even number of members.
The Executive Committee normally receives information about items on the agenda for the meeting at least 7 days in advance, and receives supporting documents for meetings at least 2 working days in advance.
Minutes are recorded in the respective minute book.
During 2009, there were 12 meetings and the overall attendance rate at Executive Committee meetings was 100%.
Role
The BAFC operates under Terms of Reference approved by the Board of Directors and is responsible for monitoring and supervising the financial reporting processes, reviewing accounting policies and for monitoring audit and risk management activities on behalf of the Board, and additionally for overseeing corporate governance within the Company. The BAFC liaises with the Statutory Audit Board, the Statutory External Auditor and the Internal Audit and Risk Management Team in carrying out its duties. Duties of the BAFC:
The BAFC consists of five members who are appointed by and from among the members of the Board. All members are independent non-executive directors.
Board Audit and Finance Committee
| Michel Marie Bon ………………………………… | Chairman - Independent Non-Executive Director |
|---|---|
| Álvaro Cuervo Garcia …………………………… | Independent Non-Executive Director |
| José Manuel Neves Adelino…………………… | Independent Non-Executive Director |
| Bernd Hubert Joachim Bothe……………………… | Independent Non-Executive Director |
| Christine Cross……………………………………… | Independent Non-Executive Director |
Michel Marie Bon …………………………………... Chairman - Independent Non-Executive Director
Note:
Bernd Hubert Joachim Bothe and Christine Cross began exercising their role as members of this committee respectively as from 17 September and 12 November 2009.
The BAFC reports to the Board of Directors concerning the work accomplished, results obtained and concerns identified, and minutes of all BAFC meetings are written up and distributed to other Board Members, thus ensuring the effectiveness of the committee.
The BAFC meets at least five times a year and additionally whenever its Chairman, the Board of Directors or the Executive Committee deem necessary.
During 2009, the Committee met 5 times with an overall attendance rate of 94%.
Role
The BNRC operates under Terms of Reference approved by the Board of Directors, and is responsible for identifying candidates for the appointment to the Board of Directors when the Board decides to exercise its right to co-opt.
This Committee is also responsible for centralizing, in coordination with the Shareholders' Remuneration Committee, the information about the assessment of the performance of Board Directors.
It is also within the scope of the BNRC's competencies to propose candidates to senior management positions in Sonae and assess their respective performance.
The BNRC includes the Chairman of the Board of Directors, and one independent non-executive director, also appointed from among the Board of Directors, as follows:
Board Nomination and Remuneration Committee
Belmiro Mendes de Azevedo………….. Chairman - Non-Independent Non-Executive Michel Marie Bon ………………………. Independent Non-Executive
The BNRC submits to the Shareholders' Remuneration Committee proposals for the remuneration of the members of the Board of Directors. Its proposals take into consideration the Chairman of the Board of Directors' assessment of the performance of the non-executive directors and of the CEO's performance, and the joint assessment made by the Chairman and by the CEO of the performance of the remaining executive directors.
In carrying out its duties, the BNRC has at its disposal the possibility of assistance from specialist external entities.
The BNRC meets at least once a year and additionally whenever the Chairman or the Board of Directors deems necessary. Between formal meetings, BNRC members keep in touch by means of distance communication. There were two formal BNRC meetings during 2009 and the overall attendance record was 100%.
Main duties of BCGO:
The Board and Corporate Governance Officer is David Graham Shenton Bain.
BCGO reports to the Board of Directors as a whole, through the Chairman, and also, when appropriate, through the senior independent non-executive director.
The Company Secretary is responsible for:
The Secretary is Luzia Gomes Ferreira, who may be substituted in her absence by Anabela Nogueira de Matos.
During 2009, it was decided to merge the Corporate Centre of Sonae with that of the retail business to create a single corporate structure, which would create synergies and allow resources to be freed up for new challenges, without increasing the number of Sonae's employees. The objective of this change was to sharpen the focus on retail activities, on related business areas and on the competencies and assets which Sonae believes to have the greatest potential to sustain the development of new businesses and to create value for its shareholders.
The value proposal of the new corporate centre is based on the range of services that it provides, primarily for retail companies but also other Sonae's business units, enabling these functions to be centralised, efficiency to be increased and consequently advantage to be taken of synergies and the avoidance of redundant services in the various business units of Sonae.
Main responsibilities:
Main responsibilities:
(iv) Manage Sonae's legal procedural framework;
(v) Provide legal support to the corporate centre in relation to business transactions and other similar operations;
Main responsibilities:
Main responsibilities:
Main responsibilities:
Main responsibilities:
Main responsibilities:
Main responsibilities:
Main responsibilities:
(i) Manage the relationship between Sonae and the financial community through the continuous preparation and disclosure of relevant and up to date information about the company;
Main responsibilities:
Main responsibilities:
Sonae's Audit Committee was formed in 2000, to assist the Executive Committee in defining policies, reviewing and co-ordinating the activities of Risk Management, Internal Audit, and to establish internal control processes and systems. The Audit Committee, which meets quarterly, is chaired by Paulo Azevedo (CEO of Sonae), and includes Sonae's directors as well as its internal audit managers. This committee is supported by Sonae's Risk Management Consultation Group which provides guidance for the exercise of the risk management role and for risk management procedures implementation. This Group meets quarterly and is chaired by Ângelo Paupério (member of the Executive Committee), including the Board members and the Risk Managers responsible for this role in the Company and in its businesses.
Sonae's Finance Committee is chaired by Paulo Azevedo (CEO of Sonae), and includes the Chief Financial Officers (CFOs) and the directors responsible for corporate finance from each of Sonae's businesses as well as the managers of the Company's corporate centre, who are relevant to the subjects on each meeting's agenda. The Committee meets monthly to review and co-ordinate financial risk management policies, banking relationships and other matters related to corporate finance.
Besides the above mentioned Risk Management Consultation Group, there are also two other Sonae advisory groups which also continuously review and propose changes to Sonae's policies in the following areas:
Each of these informal bodies meets several times during the year and often organizes specific seminars, workshops and internal training courses.
The Statutory Audit Board is responsible for:
Under the Company's Articles of Association, the Statutory Audit Board may be made up of an odd or even number of members, with a minimum of three and a maximum of five members. The Statutory Audit Board additionally includes one substitute member, should the Board be composed of three members, or two substitute members, should the Board be composed of more than three members.
The Statutory Audit Board members were elected at the Company's Annual Shareholders' General Meeting held in 2007, for the current mandate, which covers the period 2007 to 2010.
| Statutory Audit Board | |
|---|---|
| Daniel Bessa Fernandes Coelho…….Chairman | |
| Arlindo Dias Duarte Silva | |
| Jorge Manuel Felizes Morgado | |
| Óscar José Alçada da Quinta…………Substitute |
All members are independent as required by article 414 paragraph 4 and are not in breach of any of the criteria for incompatibility as set out in article 414 A paragraph 1, both of the Portuguese Companies Act.
The members of the Statutory Audit Board are elected by the Shareholders' General Meeting.
If the Shareholders' General Meeting should fail to elect the members of the Statutory Audit Board, the management of the Company must do this and any shareholder may petition the courts for the appointment thereof.
If the Shareholders' General Meeting does not designate which of the members shall be the Chairman, the latter will be appointed by the members of the Statutory Audit Board.
If the Chairman leaves office prior to the end of the mandate for which he was elected, the other members must choose one among them to exercise these duties until the end of its mandate.
Members of the Statutory Audit Board who are temporarily unavailable or whose functions have ceased shall be replaced by the substitute.
Substitutes who replace members whose functions have ceased shall remain in office until the first annual general meeting at which the vacancies shall be filled.
In the event of it not being possible to fill a vacancy left by a member, due to a lack of elected substitutes, the vacant positions, both of members and of substitutes, shall be filled by means of a new election.
Decisions are taken by simple majority and the Chairman has a casting vote, if the Statutory Audit Board has an even number of members.
The Statutory Audit Board meets at least four times a year. During 2009, the Board met five times with an overall attendance rate of 93%.
The Terms of Reference of the Statutory Audit Board are available at www.sonae.pt (tab Investors, Corporate Governance section).
The Statutory External Auditor is responsible for:
The Statutory External Auditor is Deloitte & Associados, SROC, S. A., presently in its second four-year mandate, ending in 2010.
The Statutory External Auditor is elected by the shareholders at the Shareholders' General Meeting by proposal of the Statutory Audit Board. The renewal of the Statutory External Auditor's mandate is always subject to the Statutory Audit Board's advice.
Failure of the competent corporate body to appoint the Statutory External Auditor within the period fixed by law must be brought to the attention of the Portuguese Institute of Statutory Auditors within fifteen days, by any shareholder or member of the statutory governing bodies. Within fifteen days of the communication referred to above, the Institute of Statutory Auditors must officially appoint a statutory auditor to the Company, and the general meeting may confirm the appointment or elect another statutory auditor to complete the respective mandate.
Shareholders' General Meetings are conducted by its Chairman or, in his absence, by the Chairman of the Statutory Audit Board or, in his absence, by the shareholder present at the General Meeting representing the largest shareholding position. Shareholders' General Meetings are held in two possible circumstances: (i) in ordinary session, at a date set by law for the Shareholders' Annual General Meeting; (ii) in extraordinary session, whenever the Board of Directors or the Statutory Audit Board deem necessary or at the request of shareholders, representing the legally required minimum percentage of The Company's share capital (currently 5%). During 2009, two Shareholders' Meetings were held in ordinary session on 20 April and in extraordinary session on 9 November.
Under the terms of the Company's Articles of Association, the Shareholders' General Meeting may only adopt resolutions the first time it is convened if there are present or represented shareholders holding more than 50% of the Company's share capital.
If that quorum is not reached and the meeting is reconvened, resolutions may be adopted by the Shareholders' General Meeting regardless of the number of shareholders present or represented and of the percentage of share capital they hold.
The deliberative quorum for resolutions taken by the Shareholders' General Meeting complies with the Portuguese Companies Act.
At the Annual Shareholders' General Meeting held on 20 April 2009, 55.5% of the share capital held by 20 corporate or institutional shareholders was represented. On 9 November 2009, an Extraordinary Shareholders' General Meeting was held at which 16 corporate or institutional shareholders were present, representing 53.67% of the share capital.
The proposals for discussion and decision at Sonae's Shareholders' General Meetings, as well as other supporting information, are made available to shareholders at the Company's registered head office, and are posted on the Company's website - www.sonae.pt - at least 15 calendar days before the respective meeting. However, if the agenda items include amendments to the Company's articles of association, the respective proposals must be disclosed together with the notice of meeting.
The Shareholders' General Meetings are conducted by a Board elected for a four-year mandate. The present mandate began in 2007 and will end in 2010.
The Board of the Shareholders' General Meeting is made up as follows:
Board of the Shareholders' General Meeting
Manuel Cavaleiro Brandão …………...Chairman Maria da Conceição Cabaços ………...Secretary
The Shareholders' Remuneration Committee is the committee responsible for approving the remuneration of Board members and of other statutory governing bodies, on behalf of shareholders, under the terms specified in the compensation policy approved by shareholders at a Shareholders' General Meeting.
The remuneration committee is made up of three members, elected by the Shareholders' General Meeting for a mandate of four years from 2007 to 2010.
The members of the Remuneration Committee are:
| Shareholders' Remuneration Committee | |
|---|---|
| Belmiro Mendes de Azevedo | |
| Artur Eduardo Brochado dos Santos Silva | |
| Bruno Walter Lehmann |
The members of the Shareholders' Remuneration Committee have the necessary professional qualifications and experience to carry out their responsibilities effectively and rigorously, safeguarding the interest of the organization.
Belmiro de Azevedo abstains from discussing and deciding on his own remuneration in order to ensure adequate impartiality and the necessary transparency of the Committee's procedures, as further explained in section 0.3 in compliance with CMVM Recommendation II.5.2.
This member is related by bloodline to the Chairman of the Executive Committee, Paulo Azevedo.
The Shareholders' Remuneration Committee meets at least once every year. During 2009, there were three meetings, with an overall attendance rate of 100%.
Shareholders' General Meetings may only be attended by shareholders who have shares registered in their name and who respect the rules for providing proof of ownership.
The Company's Articles of Association allow the attendance at the Shareholders' General Meeting of shareholders holding shares who, up to the third business day prior to the General Meeting, by reference to any of its sessions, have provided confirmation of ownership to the Company. Proof of ownership is provided by a certificate issued by a financial institution where records of title are kept, certifying ownership and share blocking executed five business days prior to the General Meeting.
In case of suspension of the Shareholders' General Meeting, the Articles of Association do not enforce the blocking of the shares during the period until such meeting is resumed. In order for shareholders to attend the meeting, it is enough to block their shares on the fifth business day prior to the resuming date.
One share corresponds to one vote.
The right to vote by appointing a representative and the way in which this right is exercised are set out in the respective notices convening Shareholders' General Meetings, in accordance with the law and the Company's Articles of Association.
Shareholders who are private individuals can be represented at Shareholders' General Meetings by any representative, by sending a letter to the Chairman of the Board of the Shareholders' General Meeting, stating the name and address of the representative and the date of the meeting. Corporate entities may be represented by a person nominated by them in writing, whose authenticity will be verified by the Chairman of the Board of the Shareholders' General Meeting.
The Company provides appropriate information to enable shareholders, wishing to be represented, to give voting instructions by making available the proposals to be submitted to the General Meeting and a template of a representation letter at www.sonae.pt (tab Investors, Shareholders' General Meetings section), within the legally established time limits.
Shareholders, who can prove their ownership of shares, can vote by post in relation to all items on the agenda of the Shareholder's General Meeting. Postal votes will only be taken into account when received at the Company's head office by registered post, with acknowledgement of receipt addressed to the Chairman of the Board of the Shareholders' General Meeting or by electronic means, at least three business days prior to the General Meeting. The voting ballot, if sent by registered post, should be signed by the holder of the shares or by his legal representative. In the case of an individual, it should be accompanied by an authenticated copy of his/her identity card. In the case of a corporate entity, the signature should be authenticated by certifying that the signatory is duly authorized and mandated for that purpose. If the ballot is sent by electronic means it must respect the requirements and procedures established by the Chairman of the Board of the Shareholders' General Meeting as set out in the notice of the meeting, in order to ensure an equivalent level of security and authenticity.
It is the responsibility of the Chairman of the Board of the Shareholders' General Meeting, or the person replacing him, to verify compliance with postal voting requirements, and those postal votes which do not fulfil such requirements will not be accepted and will be treated as null and void.
The Company makes available at www.sonae.pt (tab Investors, Shareholders' General Meetings section) a template of the ballot for postal voting.
The right to vote electronically has been available since the Shareholders' Extraordinary General Meeting held on 9 November 2009. The manner by which this right can be exercised is set out in the notice of meeting for each meeting. A template to request the technical information necessary for exercising the shareholders' right to vote by electronic means is also available at www.sonae.pt (tab Investors, Shareholders' General Meetings section).
The remuneration policy adopted for Sonae's statutory governing bodies is approved in advance by the Shareholders' General Meeting.
The body responsible for approval of the remuneration of members of the Board of Directors and the other statutory governing bodies of the Company is the Shareholders' Remuneration Committee, in accordance with the remuneration policy approved by shareholders.
In the case of members of the Board of Directors, the Board Nomination and Remuneration Committee is involved in preparing proposals before final decisions are taken by the Shareholders' Remuneration Committee.
The compensation policy for the Board of Directors was approved at the Shareholders' General Meeting held on 3 May 2007 and confirmed at the Shareholders' General Meeting held on 21 April 2008. The policy's objective is to remunerate Directors in a fair, effective and competitive manner taking into consideration their individual responsibilities and performance.
The annual remuneration and other elements of the remuneration package are based on different criteria for executive and non-executive directors.
The remuneration of non-executive directors is paid on a fixed quarterly basis. The amount agreed is based on the market value paid in comparable companies.
There are no kinds of variable remuneration for non-executive directors.
The Chairman of the Board of Directors receives only a fixed remuneration, which is determined exclusively by the Remuneration Committee.
For each non-executive director, the fixed remuneration includes attendance fees during 2009, including presence at and preparation for at least five Board of Directors meetings each year (approximately 15% of remuneration is paid as attendance fees). Non-executive directors' attendance fees are paid as follows: Board of Directors' meetings €930; Audit and Finance Committee meetings €640; and Nomination and Remuneration Committee meetings €390. The Chairman of the Board of Directors only receives attendance fees for Board of Directors' meetings.
Fixed remuneration can increase by up to 6% for non-executive directors who chair a Board Committee. In addition, an annual responsibility allowance is paid which may vary between €1,900 and €3,000.
The remuneration policy for executive members of the Board of Directors aims at compensating fairly and appropriately the performance and contribution of each executive director to the success of the organisation, aligning the interests of executive Board members with those of shareholders and of the Company.
Proposals for the remuneration of executive directors are made, taking into account:
Overall market comparisons;
The remuneration is made up of a fixed and a variable component, as follows:
(i) Fixed remuneration, agreed on an annual basis with payment made in 14 monthly instalments;
Variable remuneration can be paid in cash, in shares or in combination cash and shares. Currently, no scheme involves the award of share purchase options.
Sonae has no complementary or early retirement pension scheme for directors and there are no other significant benefits in kind.
The remuneration and other elements of the remuneration package of executive directors are defined in accordance with the level of responsibility of the Board member and subject to review each year. Each director is classified into a "functional group" based on the Hay international model, which facilitates market comparisons.
Variable remuneration aims to guide and compensate board directors for achieving pre-defined objectives. It is divided into two equal parts, one short and the other medium term. Variable remuneration is of a discretionary nature and, in view of the fact that it is dependent on the achievement of objectives, payment is not guaranteed.
a) The goal of short term variable remuneration is to provide an incentive and to compensate directors for achieving annual objectives that are part of the Company's annual plan, and which are fixed in advance and linked to key performance indicators.
Short term variable remuneration is determined annually, defined as a percentage of fixed base remuneration, and varies between 33% and 75%.
Of this amount, around 70% is based on business KPIs: these are objective indicators, such as those of an economic and financial nature based on the annual budget for the performance of each business unit and for the consolidated performance of the Company. The amount awarded for remuneration associated with these KPIs can vary between 0% and 160 % of the pre-defined bonus objective.
The remaining 30% are determined based on the achievement of personal KPIs, which include both objective and subjective indicators. The evaluation of the remuneration associated with these KPIs can vary between 0% and 120 % of the pre-defined objective.
Combining both components, the value of the bonus has a minimum of 0% and a maximum of 148% of the pre-defined bonus objective.
The overall assessment of board directors is approved by the Shareholders' Remuneration Committee, in collaboration with the Board Nomination and Remuneration Committee as described in section 6.1.
b) The goal of medium term variable remuneration is to align directors' interests with the strategic objectives of the organisation, encourage their loyalty and strengthen the perception that their performance is important for the success of Sonae, measured by stock market capitalisation.
Board directors elected up to the 31st of December of the previous year are eligible for payment of medium term variable remuneration.
This component of variable remuneration is also awarded annually and relates to performance during the previous year. Payment is deferred for a period of three years, and is made in the month of March or April.
Amounts are calculated in accordance with the performance of the company, measured according to specific indicators and influenced by the price of shares, dividend distributions and changes to the company's share capital. The amount of medium term variable remuneration due is calculated by the quotient between the amount awarded, under the previous described criteria, and the average share price in the month prior to the award being made.
Payment of this component of variable remuneration is dependent on the director continuing to work with the company for a period of three years after its award. Thus, medium term variable remuneration ceases with the departure of the director from Sonae. However, the right to receive payment continues in case of death or permanent disability, with the amount due being paid to the director or to his/her heirs at the normal time for payment.
The following remuneration was awarded to members of the Board of Directors (including fixed remuneration, short and medium term variable remuneration) by the Company and Group companies:
| 2008 | 2009 | |||||||
|---|---|---|---|---|---|---|---|---|
| Short Term | Medium Term | Short Term | Medium Term | |||||
| Fixed | Variable | Variable | Fixed | Variable | Variable | |||
| Amounts in euros | Remuneration | Remuneration | Remuneration | Total | Remuneration | Remuneration | Remuneration | Total |
| Individual breakdown | ||||||||
| Executive Directors | ||||||||
| Duarte Paulo Teixeira Azevedo (CEO) |
476,020 | 297,100 | 288,100 | 1,061,220 | 479,320 | 328,700 | 313,200 | 1,121,220 |
| Nuno Manuel Moniz Trigoso Jordão |
414,560 | 273,900 | 333,000 | 1,021,460 | 411,560 | 270,800 | 290,200 | 972,560 |
| Ângelo Gabriel Ribeirinho dos Santos Paupério |
414,000 | 266,700 | 266,700 | 947,400 | 409,300 | 287,900 | 287,900 | 985,100 |
| Álvaro Carmona e Costa Portela |
406,780 | 173,800 | 93,100 | 673,680 | 406,780 | 231,900 | 175,200 | 813,880 |
| 1,711,360 | 1,011,500 | 980,900 | 3,703,760 | 1,706,960 | 1,119,300 | 1,066,500 | 3,892,760 | |
| Non-Executive Directors |
||||||||
| Belmiro Mendes de Azevedo (Chairman) |
435,900 | – | – | 435,900 | 435,900 | – | – | 435,900 |
| Michel Marie Bon | 39,170 | – | – | 39,170 | 39,560 | – | – | 39,560 |
| Jose Alvaro Cuervo Garcia |
37,150 | – | – | 37,150 | 37,150 | – | – | 37,150 |
| José Manuel Trindade Neves Adelino |
39,750 | – | – | 39,750 | 37,150 | – | – | 37,150 |
| Bernd Hubert Joachim Bothe (8 Months in 2009 only) |
– | – | – | – | 25,677 | – | – | 25,677 |
| Christine Cross (2 Months in 2009 only) |
– | – | – | – | 5,967 | – | – | 5,967 |
| 551,970 | 0 | 0 | 551,970 | 581,403 | 581,403 | |||
| Total | 2,263,330 | 1,011,500 | 980,900 | 4,255,730 | 2,288,363 | 1,119,300 | 1,066,500 | 4,474,163 |
Part of the remuneration detailed above is also disclosed in the Governance Reports of companies controlled by the Company, whenever the Company's Board members are also members of the Board Directors of these companies.
No sums were paid to former board directors relating to the termination of their duties.
Medium term variable remuneration plans awarded to executive directors and which have not yet vested are summarised in the following table:
| Executive Director | Plan (Performance Year) |
Award Date |
Vesting Date | Value Vested in 2009 |
Open Plans Value at Award Date |
Open Plans Value at 31 December 2009 |
|---|---|---|---|---|---|---|
| Duarte Paulo Teixeira Azevedo (Footnote 1) |
2007 | March 2008 |
March 2011 | 369,400 | 296,535 | |
| 2008 | March 2009 |
March 2012 | 288,100 | 496,125 | ||
| Total | 0 | 657,500 | 792,660 | |||
| Nuno Manuel Moniz Trigoso Jordão | 2005 | March 2006 |
March 2009 | 144,054 | ||
| 2006 | March 2007 |
March 2010 | 259,700 | 167,014 | ||
| 2007 | March 2008 |
March 2011 | 331,700 | 265,200 | ||
| 2008 | March 2009 |
March 2012 | 333,000 | 573,354 | ||
| Total | 144,054 | 924,400 | 1,005,568 | |||
| Ângelo Gabriel Ribeirinho dos Santos Paupério |
2007 | March 2008 |
March 2011 | 273,600 | 217,487 | |
| (Footnote 1) | 2008 | March 2009 |
March 2012 | 266,700 | 460,485 | |
| Total | 0 | 540,300 | 677,972 | |||
| Álvaro Carmona e Costa Portela | 2005 | March 2006 |
March 2009 | 236,695 | ||
| 2006 | March 2007 |
March 2010 | 318,202 | 264,650 | ||
| 2007 | March 2008 |
March 2011 | 330,500 | 224,354 | ||
| 2008 | March 2009 |
March 2012 | 93,100 | 127,495 | ||
| Total | 236,695 | 741,802 | 616,499 | |||
| TOTAL | 380,749 | 2,864,002 | 3,092,699 | |||
Footnote 1: The vesting dates of the 2005 and 2006 plans of these executive directors were anticipated and cash equivalents were paid on 31 December 2007, as result of their transfer to new roles within Sonae.
| Aggregated number of plans |
Euros | |
|---|---|---|
| Outstanding at 31.12.2008: | 8 | 1,325,244 |
| Movements in the year: Awarded Vested Adjustments (1) |
4 (2) |
980,900 (380,749) 405,806 |
| Outstanding at 31.12.2009: | 10 | 3.092.699 |
(1) Changes in the number of shares due to dividend payments and changes in the value due to shares price changes.
No agreements exist which specify any compensation payments for loss of office to member of the Board of Directors or other persons discharging managerial responsibilities ("dirigentes" - as set out in article 248 B, paragraph 3, of the Portuguese Securities Code) if their mandates or contracts are not renewed.
The short and medium term variable remuneration components also apply to Board directors of affiliate companies of the Company, as well as to managers of these companies whose responsibilities are considered by their respective Boards of Directors to have a relevant impact on the business risk profile and on its results.
The remuneration of the members of the Statutory Audit Board is made up of fixed annual fees, based on the company's situation and market practice.
The amount of fixed annual remuneration for members of this entity was as follows:
| Member of the Statutory Audit Board | 2008* | 2009* |
|---|---|---|
| Daniel Bessa Fernandes Coelho | 12,500 | 9,900 |
| Arlindo Dias Duarte Silva | 10,500 | 7,900 |
| Jorge Manuel Felizes Morgado | 10,500 | 7,900 |
| Total | 33,500 | 25,700 |
The Company's Statutory External Auditor and audit firm is Deloitte, currently in its second mandate. The amount of fees invoiced to Sonae (including affiliated companies) for 2008 and 2009 was as follows:
| 2008* | 2009* | |||
|---|---|---|---|---|
| Statutory Audit | 1,535,355 | 38% | 1,713,135 | 46% |
| Other Compliance and Assurance Services | 736,993 | 18% | 461,726 | 12% |
| Tax Consultancy Services | 339,507 | 8% | 359,555 | 10% |
| Other Services | 1,430,857 | 35% | 1,185,060 | 32% |
| Total | 4,042,712 | 100% | 3,719,475 | 100% |
* Amounts in Euros
Audit fees increased by 8.1% in 2009.
Fees for other services include:
"Tax Consultancy Services" and "Other Services" are provided by different teams from those who are involved in audit work, thereby reducing the risk to auditor independence.
Total annual fees paid in Portugal by Sonae to the Deloitte Group in 2009 represented approximately 2% of their total global fees in Portugal.
Deloitte's quality system controls and monitors potential conflicts of interest with Sonae as well as risks to auditor independence. In addition, an 'Independence Letter' was obtained from Deloitte covering 2009, confirming that they meet international guidelines on auditor independence, in accordance with the IFAC (International Federation of Accountants) rules.
The remuneration of the members of the Board of the Shareholders' General Meeting is made up of fixed annual fees, as follows:
| Board of the Shareholders' General Meeting | 2008* | 2009* |
|---|---|---|
| Chairman | 7,500 | 7,500 |
| Secretary | 2,500 | 2,500 |
| Total | 10,000 | 10,000 |
Risk Management is embedded in Sonae's culture and is one of its key Corporate Governance practices, part of all management processes and a responsibility of all employees of Sonae, at all levels of the organization.
The objective of risk management is to create value by managing and controlling uncertainties and threats that can affect the business objectives and the going concern of Sonae's businesses. Risk Management, together with Environmental Management and Social Responsibility, are pillars of sustainable development, in the sense that better understanding and more effective management of risks contribute to the sustainable development of businesses.
Risk management is integrated into Sonae's entire planning process, as a structured and disciplined approach that aligns strategy, processes, people, technologies and knowledge. Its goal is to identify, evaluate and manage the uncertainties and threats that Sonae's business units face in the pursuit of their business objectives and value creation.
Sonae's management and monitoring of its main risks are achieved through different approaches, including:
The risk management process is supported by a consistent and systematic methodology, based on the international standard1 that includes the following:
1 Enterprise Risk Management – Integrated Framework issued by COSO (Committee of Sponsoring Organizations of the Treadway Commission).
Risk Management is the responsibility of all managers and employees of Sonae's business units, at all levels of the organization, and is supported by the Internal Audit and Risk Management departments both in Sonae and business units, through especially dedicated teams, which report directly to their respective Boards of Directors.
The Internal Audit and Risk Management department's mission is to help companies reach their objectives via a systematic and structured approach to developing and evaluating the effectiveness of management and control of business processes and information systems risks, namely:
The Management Planning and Control department promotes and supports the integration of risk management into the management and planning control process of companies.
Financial and accounting information reliability and integrity risks are also evaluated and reported upon by the External Audit activity.
As at the end of December 2009, the Internal Audit and Risk Management functions had 40 full time employees, carrying out their work in all countries where Sonae operates.
The Board of Directors through its Board of Audit and Finance Committee monitors Audit and Risk Management activities.
As far as development of the Risk Management and Internal Audit function is concerned, in 2009, Sonae continued to support employee training for those who voluntarily put themselves forward for international certification programmes promoted by the IIA (The Institute of Internal Auditors) - Certified Internal Auditor (CIA) and Certification in Control Self Assessment (CCSA) – and other certifications, such as Certified Information System Auditor (CISA), Certified Information Security Manager (CISM); Certified Information System Security
Professional (CISSP), ISO/IEC 27001: 2005; Associated Business Continuity Professional (ABCP), Certified by Business Continuity Institute (CBCI); Certified Continuity Manager; BS 25999 Business Continuity Management and Project Management Professional (PMP).
There are 38 certifications in the Internal Audit and Risk Management teams of Sonae, thirteen CIA; seven CCSA; five CISA; three CISM; three ISO27001; one CISSP; one ABCP; one CBCI; two CCM; one BS25999 and one PMP. Sonae is one of the organizations with the most certified employees in internal audit and risk management in Portugal. In 2010, Sonae will continue to support this important training programme, and the international development and qualification of its internal audit and risk management staff, in line with international best practices.
In accordance with methodologies defined and implemented in previous years, risk management procedures were integrated into business management planning and control procedures from the strategic review phase right through to operational planning, so that risk management actions were included in functional and business unit plans and monitored throughout the year.
Sonae is obliged to comply with national and international laws and regulations for each market in which it operates that aim to ensure: consumer safety and protection, employees' rights, environmental protection and compliance with town and country planning regulations, and the maintenance of an open and competitive market. Due to this fact, Sonae is naturally exposed to the risk of changes in law and regulations that may impact business as usual and consequently affect or impede the achievement of its strategic objectives.
Sonae acts in constant collaboration with the authorities in order to comply with laws and regulations.
The main competition risks are the entrance of new competitors and the repositioning of current competitors or the actions they might take to reposition themselves to win new markets (price conditions, new businesses, innovation, etc..). The inability to be competitive in areas such as pricing, product range, quality and service can have a negative impact on the financial results of the company. In order to minimize this risk, Sonae constantly benchmarks competitor's actions and invests in new formats, businesses and products in order to always offer its customers innovative proposals.
One of the fundamental risk factors is the possibility of changes in consumer behaviour, especially as a consequence of economic and social factors. Customers frequently change their expectations and preferences, which imply a continuous adaptation and optimization of business concepts and offer.
In order to anticipate consumer needs and market trends, Sonae analyzes information about consumer behaviour on a regular basis with more than 100.000 customers interviewed per year. The introduction of new products and concepts is always tested using pilot schemes before being implemented globally. The Company also invests in the refurbishment of stores and shopping centres to ensure that they retain their attractiveness for customers.
Sonae owns several high value brands, and they are one of its main assets.
The risks associated with brands come from the negative impacts arising from extraordinary events affecting image reputation and awareness. The Company periodically monitors brand image value, their attributes and their awareness through customer opinion surveys, research by specialist entities and market studies. Sonae also performs continuous follow-up of brand reputation, namely through press analysis, opinion articles issued by the media and in blogs.
Preventive and safety audits were conducted in different locations of the business units. In the main business units, tests and simulations were made to emergency and preventive systems and plans, usually in the presence of civil protection services, security forces and fire brigades. The development and implementation of security standards, and related monitoring and self-assessment procedures (Control Risk Self Assessment) also continued. In relation to terrorism risks, preventive and emergency programs were launched and specialist training sessions were given to security managers and staff.
In relation to people safety risks (staff, subcontractors, customers and visitors), work continued on the implementation of the Safety Management System of Sonae Sierra, which began with the PERSONÆ Project, and on Health and Safety projects in other Sonae businesses, with the goal of developing integrated actions.
One of the main actions taken by Sonae Sierra in this area was the PERSONÆ Project, the main goal of which was to develop a culture of Safety and Health across the company and in its Shopping Centres, implementing measures consistent with the policies and objectives defined to minimize and control risks arising from its activities. .
The PERSONÆ Project was awarded the European Risk Management Award 2009 for best training programme, the DuPont Safety Award for Visible Management Commitment in 2007 and the Eco Prize 2006 from the Brazilian Chamber of Commerce. In total, it involved an investment of 5 million euros and involved Sonae Sierra shopping centres in Portugal, Spain, Italy, Germany, Greece, Romania and Brazil, and was carried out over four years in three separate phases (from 2004 to 2008). In these three phases, more than 70,000 people took part, among employees, suppliers and tenants of Sonae Sierra. .
The PERSONÆ Project was the basis for the current Health and Safety Management system installed in Sonae Sierra. The system was certified by TUV at the end of 2008, in accordance with the requirements of the OHSAS 18001 standard. Also in 2008, 3 Sonae Sierra centres won certification for their health and safety management systems (Colombo Centre in Portugal, the Parque Dom Pedro and the Shopping Penha in Brazil).
In 2009, another 5 centres in Portugal, 4 in Spain, 1 in Italy and 1 centre in Brazil also saw their health and safety systems certified according to the OHSAS 18001 standard.
More recently, Sonae Sierra became the first company in Europe to win Safety and Health Management certification for the construction of a shopping centre (Leiria Shopping).
Health and Safety management at Sonae Sierra aims to prevent and anticipate accidents, in order to protect its employees and all those who have contact with the company (service providers, tenants and visitors). "Zero accidents" is the goal to which Sonae Sierra aspires through a set of common values adopted across the organization.
The results and key indicators of health and safety have progressed very positively: the number of non conformance situations per observation hour fell by 33% between 2008 and 2009, and has fallen by more than 70% since 2005.
Employee absenteeism due to accidents at work fell by 26% in 2009 compared to 2008, and lost time accidents involving construction service providers fell more than 40% in the same period.
In the retail business unit, a project was carried out to define rules for customer physical safety, as a basis for action plans to prevent and mitigate customer safety risks.
Sonae signed the World Safety Declaration at the end of 2005, making a worldwide commitment by its businesses towards safety at work. Sonae was one of the founder members together with major worldwide corporations.
In relevant businesses, projects and programmes continued to be developed in order to guarantee the continuity of operations, through defining, revising and implementing procedures and processes to prepare for crisis and catastrophic scenarios, particularly through developing emergency, contingency and recovery plans.
The Telecommunications business continued the development of the business continuity plans, namely the evaluation of additional resilience strategies for the network platforms and development of plans for the evolution of the disaster recovery solution for information systems. Core functions were identified that might be single points of failure and resilience and contingency procedures were implemented in order to mitigate these risks. The development of sustainable maintenance for business continuity procedures was begun in the different business functions.
In 2008, in all Sonae companies and businesses, a project was begun with the objective of preparing and testing business continuity plans to deal with the pandemic flue threat.
In April 2009, as a consequence of an intense outbreak of the new virus H1N1 that reached the highest level on the WHO pandemic scale, the different businesses project teams were reactivated with a view to adapting existing business continuity plans to the new pandemic reality and to prepare the activation of response plans.
In each business, the response plans were adapted to the different phases of the pandemic, and actions were developed in 3 key areas:
Several protocols were established with local health authorities and other public entities to share information and experiences.
Examples of actions that were implemented by the different business units were the development of a remote access solution that allows key employees to work at their homes and the activation of Health and Safety measures, such as travel procedures, the strengthening of hygiene and cleanliness measures and the promotion of good personal preventive practices.
In the area of environmental risks, several environmental certifications have been obtained, audits continued and improvement actions were implemented as part of Sonae's Environmental Management Systems.
Sonae Sierra's Environmental Management System (EMS) covers these risks for all company activities, including procurement, construction and the operation of Shopping Centres.
In 2009, in addition to having had the corporate EMS re-certified in accordance with the ISO 14001 standard by Lloyds Register Quality Assurance, 39 shopping centres (out of a total of 51) have individually already won the same certification (4 of which in 2009). In the development phase, 17 construction projects won individual ISO 14001 certification. At Sonae Sierra, the Environmental Management System has enabled performance of Shopping Centres to be improved over the last few years.
Sonae Distribuição won certification for its corporate Environmental Management System in 2007 according to the ISO 14001 standard through Lloyds Register Quality Assurance. This program, among others factors, enables day to day environmental risks of the company's business to be managed.. In addition and during 2009, Sonae has continued its programme of environmental certification of its operational units, closing the year with 14 premises certified (3 Continente, 7 Modelo, 1 Worten and 3 Warehouses).
Risks associated with critical business processes and major change projects, especially new processes and information system changes, were analysed and monitored, both as part of Risk Management work as well as Internal Audit activity.
In relation to the transfer of insurable risks (technical and operational), the objective of rationalizing the financial transfer of these types of risk continued, either by searching to establish a sound insurance capital structure for the capital sums at risk, based on the constant changes in the businesses involved, or by reaching even greater critical mass for the kinds of risks involved. Insurance coverage and retention levels have also been optimized in accordance with the needs of each business, ensuring internally effective insurance management worldwide, using Sonae Re, Sonae's captive re-insurer, and Brokers Link, Sonae's insurance brokerage network, coordinated by MDS, Sonae´s insurance consultants.
In Retail, and as a result of the actions from the reorganization project begun in previous years, a programme of food safety audits was implemented and consolidated in stores, e-commerce, warehouses and production centres, the main result of which was to arrive at and report the main conclusions for the company and identify corrective actions. This audit programme has the goal of monitoring food safety risks in a systematic way, and also complying with legal regulations and the internal control system for food safety. Since the program was launched in 2003, the average number of findings per audit has decreased 45%, and, what is more important, the average number of critical findings has fallen by 60%.
Sonae's Information Systems are characterized as being broad ranging, distributed and heterogeneous. From the information security point of view, several risk reduction actions have been developed to ensure the availability and integrity of information, including: the development of Business Continuity Plans; carrying out back-ups offsite; implementing high availability systems and network infrastructure redundancy, verifying and controlling the quality of flows between applications; managing accesses and profiles, and implementing anti-virus software.
Sonae is exposed to a variety of financial risks related to its business activities, including interest rate risk, foreign currency risks, liquidity risk, and credit risks (described and analyzed in detail in the Appendix to Sonae's Annual Management Report and Consolidated Accounts). Due to the varied nature of the different Sonae businesses, exposure to these risks may vary from business to business, and thus there is no single risk management policy covering all activities of the company. Instead, when appropriate, individual risk policies are developed for each sub-holding. Sonae is also exposed to debt and equity markets fluctuations. During 2009, and in order to minimize potential adverse effects of the volatility of financial markets, in addition to individual policies to manage each identified financial risk and control mechanisms to identify and quantify such exposures, Sonae's
sub-holdings have also used derivative instruments to hedge certain exposures related to their operating business. Financial risk policies are approved by each Board at business level and exposures are identified and monitored by each sub-holding's Financial & Treasury Department. Exposures are also monitored by the Finance Committee, at which a consolidated exposure analysis is reviewed and reported on a monthly basis, and guidelines for risk management policies are defined and regularly reviewed.
The system implemented thus ensures that at any moment the appropriate policies for managing financial risk are adopted so that there is no adverse impact on Sonae's strategic objectives.
Sonae's position in relation to financial risks is conservative and cautious, and when derivative instruments are used to hedge certain exposures related to its operating business, Sonae follows a policy of not entering into derivatives or other financial instrument arrangements that are unrelated to its operating business and have speculative purposes.
Sonae and its subsidiaries have the support of legal and tax departments permanently dedicated to the respective businesses and under management's supervision, and exercising their competencies in interaction with other functions and departments, in order to pre-emptively ensure the protection of Sonae's interests in compliance with its legal obligations and best corporate governance practices.
The teams in these departments have specialized training and participate in in-house and external training courses to update their knowledge.
Legal and tax advice is also provided, nationally and internationally, by outsourced resources selected from firms with established reputations and which have the highest standards of competence, ethics and experience.
The Company's more relevant pending litigation is identified in the Appendix to Sonae's Annual Management Report and Consolidated Accounts.
All those involved in the financial analysis of the Company are part of the list of people with access to privileged information, and are particularly aware of their obligations, as well as of the penalties arising from the misuse of inside information.
The internal rules applicable to the disclosure of financial information aim to ensure its timely disclosure and prevent asymmetric access to information by the market.
Sonae's values and principles are widely spread and rooted in its culture, and form the basis of its actions founded upon principles of absolute respect and awareness for the rules of good conduct in the management of conflicts of interest and duties of diligence and confidentiality in dealings with third parties. The Company's values and principles can be consulted at - www.sonae.pt (tab Sonae, Values and Mission section).
The Board of Directors approved a Code of Conduct in 2009, which, in accordance with Sonae's principles and values, establishes rules of conduct to be complied with by its directors and employees in carrying out their duties.
The Code of Conduct is avialbale at www.sonae.pt (tab Investors, Corporate Governance section).
Internal regulations covering conflicts of interest, business gifts and related party transactions have also been approved.
The Company has a policy and process for communicating internal irregularities, which sets out procedures to efficiently and fairly respond to alleged irregularities reported, including:
All the irregularities reported directly to the Statutory Audit Board are immediately passed on to its Chairman.
The Company's whistle blowing policy is described in Sonae's Code of Conduct available at www.sonae.pt (tab Investors, Corporate Governance section).
The Company provides, through its website (www.sonae.pt – Contacts section), employees and the general public with direct access to its Ombudsman, who reports directly to the Chairman of the Board of Directors. This has proved to be an effective means of facilitating the report of complaints, to make sure that independence and freedom of opinion are guaranteed and that all issues are treated equally and fairly.
In 2009, the Ombudsman received 2,712 complaints, mainly from customers (97% of total complaints received), compared to 3.425 complaints in 2008. The average response time was 13 days, compared to 21 days in 2008.
The Company's share capital is of €2.000.000.000, fully subscribed and paid up, divided into 2.000.000.000 ordinary shares, each with a nominal value of one euro.
As at the end of 2009, and based on notifications received, shares held by companies owning more than 2% of Sonae's share capital were as follows:
| SHAREHOLDER | # SHARES | % SHARE CAPITAL |
|---|---|---|
| Efanor Investimentos | 1,061,515 | 53.0% |
| Banco BPI | 178,040 | 8.9% |
| Fundação Berardo | 49,850 | 2.5% |
| BestInver | 41,200 | 2.1% |
The Company does not have any shareholders holding any special rights.
The Company's shares do not have any restrictions on the transfer or ownership of shares.
The Board of Directors has no knowledge of any special rights or agreements involving the Company's shareholders.
There are no defensive measures in place.
No agreements made by the Company exist, which contain clauses with the purpose of setting up defensive measures against changes in shareholder control.
The majority of the share capital of the Company is owned by one shareholder.
The shareholders' agreement between Sonae and Grosvenor Group Limited (Grosvenor), in relation to Sonae Sierra, SGPS, SA, gives Grosvenor the power to terminate the agreement, in the case of a change of control of Sonae, but only in the particular and exclusive situation of the Company ceasing to be directly or indirectly owned by its present reference shareholder or any of his relatives.
This clause applies in the same way should a change of control occurs in Grosvenor.
The effects of terminating the agreement include the exercise of a call option, the sharing of assets or sale of the company Sonae Sierra, SGPS, SA.
Amendments to the Company's Articles of Association follow the terms set out in the Portuguese Companies Act, requiring a majority of two thirds of the votes cast for such a resolution to be approved at a Shareholders' General Meeting.
For a Shareholders' General Meeting to be held, the Company's Articles of Association require that a minimum of 50% of the issued share capital should be present or represented at the meeting.
Sonae does not have any control mechanism for employee ownership of Sonae shares.
Sonae shares are quoted on the Portuguese stock exchange, Euronext Lisbon, and are included in several indices, including the PSI 20, with a weighting of 2.7% and the Euronext 150, with a weighting of 1.0%, as at the end of December 2009. The table below shows the key indicators of Sonae's share performance.
| 2007 | 2008 | 2009 | |||
|---|---|---|---|---|---|
| ISIN CODE | PTSON0AM0001 | ||||
| BLOOMERG CODE | SON PL | ||||
| REUTERS CODE | SONP.IN | ||||
| SHARE CAPITAL | 2,000,000,000 | 2,000,000,000 | 2,000,000,000 | ||
| CLOSING PRICE LAST | |||||
| TRADING DAY (EUROS) | |||||
| OF YEAR | 1.98 | 0.44 | 0.87 | ||
| YEAR HIGH | 2.17 | 1.75 | 0.98 | ||
| YEAR LOW | 1.5 | 0.39 | 0.43 | ||
| AVERAGE TRADING | |||||
| VOLUME PER DAY (SHARES) | 15,004,151 | 12,971,220 | 7,861,992 | ||
| AVERAGE TRADING | |||||
| VOLUME PER DAY (EUROS) | 28,666,669 | 10,965,297 | 5,644,343 | ||
| MARKET CAPITALIZATION | |||||
| 31 DECEMBER (EUROS) | 3,960,000,000 | 880,000,000 | 1,740,000,000 |
Sonae shares ended the year quoted at 0.87 euros, reflecting a nominal gain of 98% during the year, which compares with a general stock market gain of 34%, as measured by the Portuguese Stock Market PSI 20 Index.
The following graph highlights the share price performance during 2009.
During the year, events with an impact on Sonae's share price were the following:
(ii) 18 March: Sonae announced full year 2008 results;
(iii) 15 May: Sonae shares started trading ex-dividend relating to the year ending 31 December 2008;
Following approval by shareholders at Shareholders' Annual General Meetings, the dividends distributed by Sonae over the past three financial years are as shown in the table below.
| (1) 2007 |
2008(1) | (1) 2009 |
|
|---|---|---|---|
| GROSS DIVIDEND PER | 0.0300 | 0.0300 | 0.0315 |
| SHARE (EUROS) | |||
| DIVIDEND DISTRIBUTED | 60,000 | 60,000 | 63,000 |
| (THOUSAND EUROS) | |||
| DIVIDEND YIELD (%)(2) | 1.5% | 6.9% | 3.6% |
| PAYOUT RATIO (%)(3) | 30.2% | 37.7% | 36.9% |
(1) Year when the dividend is distributed; (2) Dividend yield = Dividend distributed / closing price as at 31 December;
(3) Payout ratio = Dividend distributed / consolidated direct net profits attributable to the equity holders of Sonae.
In view of the net results for the financial year 2009, the Board of Directors will propose to the Shareholders' Annual General Meeting a gross dividend of 0.0315 euro per share. This dividend is equal to a dividend yield of 3.6% on the closing price as at 31 December, and to a payout ratio of 37% of consolidated direct net profits (excluding value created on investment properties) attributable to equity holders of Sonae.
Transactions with companies which are controlled, including wholly-owned, or with companies which control the Company, or with shareholders with qualified shareholdings, or with entities directly or indirectly controlled by the latter, or with the members of the Board of Directors, were made on an arms' length basis and are related to Sonae's normal business activity.
The Company did not have business dealings with any member of the Statutory Audit Board. The only transactions with the Statutory External Auditor were those related to their official duties as described in section 6.4.
The Investor Relations department is responsible for managing Sonae's relationship with the financial community – current and potential investors, analysts and market authorities – with the goal of enhancing their knowledge and understanding of Sonae by providing relevant, timely and reliable information.
In strict compliance with law and regulations, the Company informs expeditiously its shareholders and the market of all relevant facts about its activities, avoiding delays between their occurrence and disclosure. The Company has fulfilled this commitment to the market over the years.
The department regularly prepares presentations to the financial community and communications covering the quarterly, half year and annual results, as well as issues announcements to the market whenever necessary, to disclose or clarify any relevant event that could influence the share price. In addition, on request, it provides clarification about the Company's activities, by answering questions sent by email or by taking phone calls.
Information is made publicly available on the Internet at the Portuguese Securities Market Commission site (www.cmvm.pt) and on the Company's own website (www.sonae.pt – tab Investors, Announcements section). The site provides not only the required information, as stipulated in article 4 of the CMVM Regulation no. 1/2007 (article 5 under new CMVM Regulation no. 1/2010), but also general information about Sonae, in addition to other information considered relevant, including:
To further enhance effective communication with the capital market and guarantee the quality of information provided, the Investor Relations department organizes road shows covering the most important financial centres of Europe and United States, and participates in various conferences. Also, a wide variety of investors and analysts have the opportunity to talk to senior management in one-on-one meetings or conference calls.
Any interested party may contact the Investor Relations department:
Patrícia Mendes Pinheiro Investor Relations Manager Tel: (+351) 22 010 4794 Fax: (+351) 22 948 77 22 Email: [email protected]/ [email protected] Address: Lugar do Espido Via Norte 4471-909 Maia Portugal Site: www.sonae.pt
Luzia Leonor Borges e Gomes Ferreira Legal Representative for Relations with Capital Markets Tel: (+351) 22 010 4794 Fax: (+351) 22 948 77 22 Email: [email protected] Address: Lugar do Espido Via Norte 4471-909 Maia Portugal
The Company believes that the procedures described above ensure permanent contact with the market and respect the principles of equal treatment of all shareholders and equal access to information for investors.
1.1 Qualifications, experience and responsibilities
| Date of Birth | Belmiro Mendes de Azevedo |
|---|---|
| 17 February 1938 | |
| Education | |
| 1963 | Degree in in Chemical Engineering – Faculty of Engineering, University of Oporto |
| 1965-1968 | Teaching Assistant at the Oporto Faculty of Engineering in the following subjects: - ―Industries‖ (Industrial Project) - ―Industrial Organic Chemistry‖ |
| 1973 | PMD (Programme for Management Development) - Harvard Business School |
| 1985 | Financial Management Programme - Stanford University |
| 1987 | Strategic Management - Wharton University |
| 1995 | Global Strategy – University of California (Los Angeles) |
| Professional Experience | |
| 1963-1964 | Technician in the textile industry, Empresa Fabril do Norte (EFANOR) |
| 1965-1967 | Research and Development Manager of Sonae |
| 1967-1984 | General Manager and Chief Executive of Sonae |
| 1985-1988 | CEO of Sonae Indústria e Investimentos, SA |
| 1989 | Founding member of the Institute for Business Studies (ISEE) - currently EGP-UPBS (University of Oporto Business School) |
| 1989-1999 | Chairman of Sonae Distribuição, SGPS, SA (currently Sonae Investimentos SGPS, SA) |
| 1995 | Member of WBCSD – Order of Outstanding Contributors to Sustainable Development |
| 1997 | Member of the European Union Hong-Kong Business Cooperation Committee |
| 1998 | Member and current Chairman of INSEAD Portuguese Council |
| 1999-2007 | Chairman and CEO of Sonae SGPS, SA |
| Since 2000 | Member of the International Advisory Board of Allianz AG |
| 2001-2005 | Member of Regional Advisory Board of London Business School |
| Since 2002 | Member of the Management Board of Cotec Portugal |
| Since 2004 | Member of European Roundtable of Industrialists |
| Since 2005 | Member of European Advisory Board of Harvard Business School |
| Since 2005 | Founding Member and Chairman of the Board of the Founders Council of the Manufacture Portugal Forum |
| Since 2007 | Chairman of Sonae – SGPS, SA |
| Since 2008 | Chairman of the General Council of EGP – University of Oporto Business School |
| Date of Birth | ||
|---|---|---|
| 19 March 1954 | ||
| Education | ||
| 1976 | Degree in Finance, Technical University of Lisbon | |
| 1981 | DBA, Finance, Kent State University | |
| 1995 | Member of staffAggregation, Faculty of Economics, New University of Lisbon |
| 1978-1981 | Teaching Fellow, Kent State University |
|---|---|
| 1981-1986 | Member of the Directive Council, Faculty of Economics, New University of Lisbon |
| 1981-1995 | Professor, Faculty of Economics, New University of Lisbon |
| 1986-1989 | Visiting Professor, Portuguese Catholic University |
| 1987-1989 | Visiting Professor, Bentley College |
| 1988 | Visiting Professor, ISEE |
| 1990-1996 | Dean, MBA Program and Executive Program, Faculty of Economics, New University of Lisbon |
| 1992-1994 | Member of the Board of Directors, BPA |
| 1994-2002 | Member of the Management Board of the Deposit Guarantee Fund |
| 1999-2002 | Dean, Faculty of Economics, New University of Lisbon |
| 1999-2004 | Member of the Global Advisory Board of Sonae SGPS, SA |
| 2003-2006 | Member of the Board, Chairman of the Audit Committee of EDP |
| 2003-2006 | Strategy Advisory Board of PT |
| 2003-2007 | Chairman of the Board of Shareholders' Meeting of PT PRO |
| 2004-2007 | Member of the Investment Committee of PT Previsão |
| 2003-2007 | Member of the Remuneration Committee of Sonae SGPS, SA |
Date of Birth
| 30 May 1942 | |
|---|---|
| Education | |
| 1971 | PhD in Economics - Madrid University |
| 1973 | M.S. in Statistics - Madrid University |
| 1975 | M.S. in Industrial Psychology - Madrid University |
| Professional Experience | |
| 1975 | Professor of Business Economics at Madrid Complutense University |
| 1997-2006 | Member of the Academic Council of the Real Colegio Complutense of Harvard University |
| Since 1997 | Member of the Board of Directors of ACS, SA |
| Since 2004 | Member of the Board of Directors of Sonae Indústria, SGPS, SA |
| 2004 | Editor in Chief of Universia Business Review |
| 2006 | Member of the Board of Directors of Bolsas y Mercados Españoles |
| 2007 | Associate Editor of Globalization, Competitiveness and Governability Associate Editor Globalization, Competitiveness and Governability Member of the scientific and advisory committee of several newspapers Author of several books and numerous articles published in Spanish and foreign newspapers |
| Date of Birth | |
|---|---|
| 5 July 1943 | |
| Education | |
| 1966 | University Degree in Business Administration - ESSEC |
| 1971 | Graduation from the École Nationale d'Administration |
| 1986 | Stanford Executive Program – Stanford University |
| Professional Experience | |
| 1971-1975 | Tax Inspector at the French Ministry of Finance and Budget |
| 1975-1985 | Chief Credit Officer, and later Deputy CEO of Caisse Nationale de Crédit Agricole (Bank) |
|---|---|
| 1985-1992 | Deputy CEO, later CEO and Chairman of the Board of Directors of Carrefour (Retail) |
| 1993-1995 | Chairman of the Agence Nationale Pour l'Emploi (French State agency for employment) |
| 1995-2002 | Chairman and CEO of France Telecom |
| 1998-2002 | Co-chairman of the French American Business Council |
| 2003-2005 | Chairman of Institut Pasteur |
| Since 1984 | Director of Institut Pierre Mendès France |
| Since 1988 | Director of the French American Foundation |
| Since 1994 | Founder and Director of Transparency International (France) |
| Since 1998 | Chairman of the Supervisory Board of Les Editions du Cerf |
| Since 2006 | Chairman of the Supervisory Board of Devoteam |
| Since 2006 | Senior Advisor to Roland Berger |
| Since 2008 | Chairman of Fondation Nationale pour l'Enseignement de la Gestion des Entreprises (FNEGE) |
| Date of Birth | |
|---|---|
| 20 May 1944 | |
| Education | |
| 1966-1968 | Business Management – Trade and Industry Faculty, Cologne, Germany |
| 1968 | Diploma – Betriebswirt with distinction |
| Professional Experience | |
| 1963-1966 | Bank Für Gemeinwirtschaft Ag, Germany |
| 1963-1965 | Apprenticeship period, Cologne |
| 1965-1966 | Commercial Bank Clerk, Cologne |
| 1968-1970 | Pintsch Bamag Ag (Thyssen--Bornemisza-Group), GERMANY Deputy Manager Staff member Corporate Planning |
| 1970-1973 | MDS – Deutschland Gmbh, Germany (American multinational company in IT) |
| 1970 | Assistant Controller and Deputy Manager Finance, Accounting and Administration, Cologne |
| 1971-1973 | Controller and Treasurer, Cologne |
| 1973-1988 | Kienbaum Consulting Group, Germany |
| 1973-1974 | Controller and Senior Executive Manager |
| 1974-1975 | Deputy Member of the Management Board, Düsseldorf |
| 1975-1979 | Member of the Management Board – Head of the Personnel Department, Consulting, Düsseldorf |
| 1979-1980 | Member of the Management Board – Management Consulting Department, Düsseldorf |
| 1980-1983 | Deputy Chairman of the Management Board – Managing Partner |
| 1983-1988 | Chairman of the Management Board Deputy Chairman of the Management Board of the Central Management Board (Holding) |
| 1988-1992 | Kaufhof Holding Ag, Germany |
| 1988-1989 | Member of the Executive Board of Directors, Cologne |
| 1989-1992 | Deputy Member of the Executive Board of Directors, Cologne |
| 1992 | Member of the Executive Board of Directors, Cologne In charge of the Mail Order Division, responsible for IT, Logistics, HR |
| 1992-2002 | Metro Ag, Germany |
| 1992-1993 | Member of the Management Board, Metro International Management AG, Baar, SwitzerlandOperations Manager |
| 1993-1997 | President of the Management Board, Metro International Management AG, Baar, Switzerland |
|---|---|
| 1997-1998 | Chairman of the Executive Board of Directors, Metro International Management AG, Germany |
| 1998-2002 | Chairman of the Executive Board of Directors Chief Operating Officer for Central Europe Metro Cash & Carry GmbH In charge of the Cash &Carry Division, Marketing Corporate Planning, Merchandising, Operations, Public Relations, Construction & Fixtures/Fittings, Internal Audit |
| 2002-2007 | Member Supervisory Board Gardena, AG, Ulm |
| 2004-2007 | Member Supervisory Board Lekkerland-Tobacco Land GmbH & Co. KG, Frechen (A leading convenience store company) |
| 2002-2008 | Droege & Comp.Gmbh, Germany International Consultant Managing Director, Düsseldorf Head of Competence Center Consumer Goods & Retail Head of Competence Center Eastern Europe, Düsseldor |
| 2002-2009 | President Verwaltungsrat Charles Vögele Holding AG, Pfäffikon SZ, Switzerland (A fashion retailer) |
Date of Birth
| 13 June 1951 | |
|---|---|
| Education | |
| 1973 | B.Ed. (Distinction), Food Science and Nutrition, Newcastle University |
| 1983 | MSc in Food Science (Distinction), University of Reading |
| 1990 | Open University (OU) - Diploma in Management Studies |
| Professional Experience | |
| 1975-1978 | Edinburgh University - Lecturer in Food and Nutrition |
| 1979-1985 | Bath SPA University College – Senior Lecturer |
| 1985-1989 | Bath SPA University College – Principal Lecturer and Director of BSc (Hons) Programme |
| 1989-2003 | Tesco PLC |
| 1989-1990 | Head of Consumer Services |
| 1990-1994 | Divisional Director, Technical Services |
| 1994-1997 | Commercial Director |
| 1998-2002 | World Non Food Retail Procurement Director |
| 2002-2003 | Group Business Development Director |
| 1997-2003 | Visiting Professor, University of Ulster, Consumer Studies |
| 2002-2005 | Non Executive Director George Wimpey, plc |
| 2005-2006 | Non Executive Director Fairmont Hotels Inc |
| 2006-2007 | Retail Consultant PWC Transaction Services |
| Date of Birth | |
|---|---|
| 31 December 1965 | |
| Education | |
| 1986 | Degree in Chemical Engineering – Federal Polytechnic School of Lausanne |
| 1989 | Master in Business Administration – EGP-UPBS |
| Executive Education | |
| 1994 | Executive Retailing Program – Babson College |
| 1996 | Strategic Uses of Information Technology Program – Stanford Business School |
|---|---|
| 2002 | IMD – Breakthrough Program for Senior Executives - Lausanne |
| 2008 | Proteus Programme – London Business School |
| Professional Experience | |
| 1988-1990 | Analyst and Project manager of new investments at Sonae Tecnologias de Informação |
| 1990-1993 | Organizational Development project manager and New businesses Commercial Manager for Portugal at Sonae Indústria (Wood Based Panels) |
| 1993-1996 | Head of Strategic Planning and Control and Organizational Development of Sonae Distribuição, SGPS, SA (currently Sonae Investimentos SGPS, SA) |
| 1996-1998 | Executive Board Director of Merchandising, IT and Marketing of Modelo Continente Hipermercados (Retail) |
| 1998-2000 | CEO of Optimus (Mobile Operator) |
| 1998-2007 | Executive Director of Sonae – SGPS, SA |
| 2000-2007 | CEO of Sonaecom, SGPS, SA |
| 2001-2002 | Chairman of Apritel - Association of Electronic Telecommunication Companies |
| 2001-2008 | Member of the Supervisory Board of EGP - UPBS |
| 2002-2008 | Chairman of the Supervisory Board of Público Comunicação Social, SA |
| 2003 | Co-author of the book ―Reforming Portugal―(Reformar Portugal) |
| 2003-2007 | Chairman of the Supervisory Board of Glunz, AG |
| 2004-2007 | Chairman of the Board of Directors of Tafisa, SA |
| Date of Birth | |
|---|---|
| 14 September 1959 | |
| Education | |
| 1982 | Graduate in Civil Engineering - FEUP |
| 1988-1989 | Master in Business Administration-MBA(ISEE) |
| Professional Experience | |
| 1982-1984 | Structural Design Project Manager at Tecnopor (Civil Engineering) |
| 1984-1989 | Manager at EDP (Energy) |
| 1989-1991 | Leader of the Television Project Team at Sonae Tecnologias de Informação |
| 1991-1994 | Head of Planning and Control at Sonae Distribuição SGPS, SA (currently Sonae Investimentos SGPS, SA) |
| 1994-1996 | Director of several of Sonae Distribuição SGPS, SA (currently Sonae Investimentos SGPS, SA)'s affiliates (Retail) |
| 1996-2007 | CFO of Sonae Distribuição SGPS, SA (currently Sonae Investimentos SGPS, SA) and Director of Modelo Continente, SGPS, SA and several of its affiliates (Retail) |
| 1996-2007 | Executive Vice President and CFO of Sonae - SGPS, SA, Executive Director of Sonae Capital, SGPS, SA and Chairman of the Finance Committee of Sonae - SGPS, SA |
| 2004-2009 | Director and later Chairman of the Board of Directors of MDS – Corretor de Seguros, SA |
| 2009 | Chairman of the Board of Directors of MDS Consulting, SA |
| Offices held in other companies within Sonae: | ||
|---|---|---|
| None | ||
| Offices held in other companies outside Sonae: | ||
| Chairman of Sonae Indústria SGPS, SA | ||
| Chairman and CEO of Sonae Capital, SGPS, SA | ||
| Chairman of SC - SGPS, SA | ||
| Chairman of SPRED - SGPS, SA | ||
| Chairman and CEO of Efanor Investimentos, SGPS, SA | ||
| Sole Director of BA – Business Angels, SGPS, SA | ||
| Chairman of Casa Agrícola de Ambrães, SA | |
|---|---|
| Chairman of Praça Foz – Soc. Imobiliária, SA | |
| Chairman of Setimanale, SGPS, SA | |
| José Manuel Neves Adelino | |
| Offices held in other companies within Sonae: | |
| None | |
| Offices held in other companies outside Sonae: | |
| Full time Professor of Finance, Faculdade de Economia, Universidade Nova de Lisboa | |
| Visiting Professor, Bentley College | |
| Member of the Statutory Audit Board at Banco BPI | |
| Member of the Investment Committee of the Caravela Fund | |
| Member of Investment Committee of Portugal VC Initiative (EIF) | |
| Álvaro Cuervo Garcia Offices held in other companies within Sonae: |
|
| None | |
| Offices held in other companies outside Sonae: | |
| Editor in Chief of Universia Business Review | |
| Member of the Board of Directors of Sonae Indústria SGPS, SA | |
| Member of the Board of Directors of ACS, SA | |
| Member of the Board of Directors of Bolsas y Mercados Españoles | |
| Michel Marie Bon | |
| Offices held in other companies within Sonae: | |
| None | |
| Offices held in other companies outside Sonae: | |
| Member of the Board of Directors of Provimi | |
| Member of the Board of Directors of Compagnie Européenne de Téléphonie | |
| Member of the Board of Directors of Lafarge (Cements) | |
| Member of the Board of Directors of Sonepar (Electrical supply retail) | |
| Chairman of the Supervisory Board of Editions du Cerf (Book Publisher) | |
| Member of the Board of Directors of Myriad (High Technologies) | |
| Senior Advisor to Vermeer (Investment Fund) | |
| Senior Advisor to Roland Berger (Strategy Consulting) |
Bernd Hubert Joachim Bothe
Chairman of the Supervisory Board of Devoteam (Information Technologies)
International Management Consultants Head of Competence Center Consumer Good & Retail
Partner, Düsseldorf
Senior Advisory IK Investment Partners (former Industri Kapital) Stockolm Scheweden (A Swedish private equity company)
Member of the Supervisory Board Spar Österreichische Warenhandelsgesellschaft AG, Salzburg AU (A dominant supermarket chain in Austria, also owning shopping centers)
Vice Chairman of the Supervisory Board H & E Reinert Group, Versmold (A Germany food company)
Member of the Supervisory Board of Basler Fashion Holding GmbH, Goldbach D (A German based fashion and retail company)
Offices held in other companies within Sonae:
None
Non Executive Director (Nominations and Remunerations Committee Member) of Sobeys Inc, Canada
Advisor to the Board of DCS Europe
Non Executive Director (Audit, Nominations and Remunerations Committee member) Next plc
Retail Advisor Apax Private Equity
Retail Advisor Warburg Pincus Private Equity
Chief Retail Advisor, PWC
CHRISTINE CROSS LTD - Independent advisor in retail management
Chairman of Sonae Distribuição, SGPS, S.A. (presently Sonae Investimentos SGPS, SA)
Chairman of Sonaegest, Investment Funds Management Company, SA
Member of the Board of Directors of companies owned by Sonae Investimentos - SGPS, SA (these companies are listed in the Notes to the Consolidated Financial Statements)
Chairman of Sonaecom, SGPS, S.A.
Chairman of Sonae Sierra, SGPS, S.A.
Chairman of MDS, SGPS, SA
Offices held in other companies outside Sonae:
Chairman of Migracom, SGPS, S.A.
Executive Director of Efanor Investimentos, SGPS, S.A.
Executive Director of Imparfin, SGPS, S.A.
Non-Executive Director of Sonae Indústria, SGPS, SA
Member of APGEI (Portuguese Association of Industrial Engineering and Management)
Member of the Supervisory Board of AEP – Portuguese Entrepreneurship Association
Member of the Advisory Board ―Commitment Portugal‖ (Compromisso Portugal)
Member of the European Round Table of Industrialists (ERT)
CEO of Sonae Sierra, SGPS, SA
Non-Executive Director of Sonae Distribuição, SGPS, S.A. (presently Sonae Investimentos SGPS, SA)
Chairman of the Board of Directors or director of companies owned by Sonae Sierra, SGPS, SA (these companies are listed in the Notes to the Consolidated Financial Statements)
Fellow, Royal Institute of Chartered Surveyors
Non-Executive Director of CADE – Companhia Agrícola de Desenvolvimento, SA
Non-Executive Director of SOVICAR – Investimentos Agro-Turísticos, SA
Director of Portela & Portela, Lda
CEO of Sonaecom, SGPS, SA
Chairman of Sonaecom - Serviços de Comunicações, SA
Chairman of Sonaecom - Sistemas de Informação, SGPS, SA
Chairman of Sonae Telecom, SGPS, SA
Chairman of BE ARTIS – Concepção, Construção e Gestão de Redes de Comunicações, SA
Chairman of WeDo Consulting - Sistemas de Informação, SA
Chairman of Público - Comunicação Social, SA
Non-executive Director of Cooper Gay (Holdings) Limited
Director of Sonae Investments, BV
Director of Sontel BV
Director of MDS SGPS, SA
Non-executive Director of Sonae Distribuição SGPS, SA (presently Sonae Investimentos SGPS, SA)
Non-executive Director of Sonae Sierra, SGPS, SA
Board member of APGEI (Portuguese Association of Engineering and Management)
Executive Director of Lapidar, SGPS, SA
Executive Director of Love Letters – Galeria de Arte, SA
Sole Director of Enxomil, SGPS, SA
Sole Director of Enxomil, Sociedade Imobiliária, SA
Offices held in other companies within Sonae:
CEO of Sonae Distribuição, SGPS, SA (currently Sonae Investimentos – SGPS, SA)
Chairman or Member of the Board of Directors of most companies controlled by or majority owned by Sonae Investimentos - SGPS, SA (these companies are listed in the Notes to the Consolidated Financial Statements).
None
| Date of Birth | |
|---|---|
| 6 May 1948 | |
| Education | |
| 1970 | Degree in Economics – University of Oporto |
| 1986 | Phd in Economics – Lisbon Technical University |
| Profissional Experience | |
| Since 1970 | Teacher at the University of Oporto |
| 1970-1999 | Teacher at the University of Oporto |
| 1970-1999 | - Faculty of Economics |
| 1988-2000 | - ISEE (Institute for Entrepreneurship Studies) |
| 1989-2002 | - Faculty of Engineering |
| 2000-2008 | - EGP – Oporto Management School |
|---|---|
| 2008-2009 | - EGP – University of Oporto Business School |
| 2009 | - Faculty of Economics |
| 1978-1979 | Dean of the Faculty of Economics of the University of Oporto |
| 1989-1990 | Chairman of the Founding Committee of the Techonology and Management School of the Viana do Castelo Polytechnic Institute |
| 1990-1995 | Vice-Dean for the Financial Management Guidance of the University of Oporto |
| 1996-2000 | Executive Director at AURN – Northern Universities Association |
| 2000-2008 | Dean of EGP – Oporto Management School |
| 2008-2009 | Dean of EGP – University of Oporto Business School |
| 1992-1995 | Spokesman of the Socialist Party for economic and financial issues |
| 1995 | Elected Deputy for the National Assembly |
| 1995-1996 | Economics Minister of the Portuguese Government |
| 2003-2004 | Coordinator of the technical preparation of the Program of the Ministries of Economy, Social Welfare and Labour of the Portuguese Government for the Recovery of Underdeveloped Areas and Sectors |
| 2008-2009 | Dean of EGP – University of Oporto Business School |
| 1996-2006 | Non-Executive Director of CELBI – Celulose Beira Industrial |
| 1997-1999 | Non-Executive Director of INPARSA – Indústrias e Participações, SGPS, SA |
| 1997-2000 | Executive Director of Finibanco, SA |
| 1997-2007 | Chairman of the Statutory Audit Board of SPGM – Investment Company |
| 1999-2002 | Chairman of the Board of the Shareholder's General Meeting of APDL –Management of Douro and Leixões Ports |
| 2007-2010 | Member of the Board of Directors of the Agency for Investment and External Commerce of Portugal - AICEP, E.P.E. |
| 2000-2010 | Chairman of the Advisory Board of IGFCSS – Portuguese Institute for Welfare Funds Management |
| 2001-2003 | Advisory member of the Consulting council of Electric and Telephone Conducters Industries F. Cunha Barros, SA |
| 2003-2010 | Member of the Board of Directors of Bial Foundation |
| 2005-2010 | Chairman of the Studies Office of OTC – Association of Official Account Auditors (former CTOC – Chamber of Official Account Auditors) |
| 2009-2010 | General manager of COTEC Portugal – Portuguese Industry Association for Innovation |
| 1983-2010 | Freelance Economist |
| 1988-2010 | Author of ―Portugues Inflation Process 1945-1980‖ (Processo Inflacionário Português 1945-1980), and of numerous articles published in several magazines such as Análise Social, Cadernos de Ciências Sociais, Cadernos de Economia, Estudos de Economia, Indústria. Revista de Empresários e Negócios, Pensamiento Iberoamericano – Revista de Economia Política, Praxis e Revista Crítica de Ciências Sociais |
| Education | |
|---|---|
| 1963 | Graduate in Economics – University of Oporto |
| Professional Experience | |
| 1960-1963 | Teacher at the Commerce and Industry School |
| 1963-1968 | Career in banking |
| 1968-1971 | Mandatory Military Service including in Angola (interruption of banking career) |
| 1976-1979 | Restarted banking career – Assistant Manager of BPA Bank since 1976 |
| Since 1979 | External Auditor certified by the Portuguese Association of Auditors, carrying out this work both as a partner of the Statutory Auditors Company, or freelance |
| Since 1979 | Statutory External Auditor, member of the Audit Board and Sole Auditor in several companies such as Banco Universo, União Portuguesa de Bancos, Orbitur – Intercâmbio de Turismo, ATPS – SGPS, SA, MDS – Corretor de Seguros, SA, Imoareia – Sociedade Imobiliária, SA, and Contacto – SGPS, SA. |
|---|---|
| 1989-1992 | Member of the General Council of the Portuguese Association of Auditors |
| 1992-1995 | Member of the Managing Board of the Portuguese Association of Auditors |
| 1995-1997 | Vice-President of the Managing Board of the Portuguese Association of Auditors |
| Date of Birth | |
|---|---|
| 6 June 1955 | |
| Education | |
| Graduate in Management – ISEG – Universidade Técnica de Lisboa | |
| MBA in Finance – IEDE Madrid | |
| MBA in Management and Information Systems – Management and Economics Faculty – Universidade Católica |
|
| Certified External Auditor no. 775 | |
| Professional Experience | |
| 1980-1989 | Assistant and Audit Manager at Coopers & Lybrand |
| 1989-1991 | Responsible for the Internal Audit and Management Control at Coelima Group |
| 1991-2004 | Partner at Deloitte – member of the Statutory Audit Board and External Auditor of several companies; responsible for consultancy in the northern Portuguese region and for corporate finance in Portugal, since 2001 |
| Since 2004 | External Auditor of several national and international companies, and partner of Horwarth Parsus – Consultoria e Gestão, Lda |
| MBA Teacher at the European University | |
| Consultant to several companies such as Bolsa de Valores, Grupo Somelos, Hedva (Czech Republic), BAI (Angola), Vaz Pinheiro Group, Siemens, Corticeira Amorim |
Offices held in other companies within Sonae:
Executive Director of Finibanco Holding, SGPS, SA P
Non-Executive Director of Efacec Capital, SGPS, SA
Chairman of Statutory Audit Board at Galp Energia, SGPS, SA
Chairman of Statutory Audit Board at Bial – Portela e Companhia, SA
Member of the Statutory Audit Board at Sonaecom SGPS, SA
Member of the Statutory Audit Board at Sonae Investimentos SGPS SA (formerly known as Sonae Distribuição – SGPS, SA)
External auditor at DMJB – Consultoria de Gestão, SA
External auditor at Orbirio – Imobiliário e Empreendimentos Turísticos, SA
External auditor at Loisir – Equipamentos de Diversão e Ocupação de Tempos Livres, SA
| Member of the Statutory Audit Board at Rochinvest – Investimentos Imobiliários e Turísticos, SA |
|---|
| Member of the Statutory Audit Board at ALADI – Associação Lavrense de Apoio ao Diminuído Intelectual |
| Member of the Statutory Audit Board at Centro Social e Paroquial Padre Ângelo Ferreira Pinto |
| Member of the Statutory Audit Board at Associação de Apoio Social de Perafita |
| Member of the Statutory Audit Board at Associação Cultural do Senhor do Padrão |
| Member of the Statutory Audit Board at Liga dos Amigos do Hospital Pedro Hispano |
| Offices held in other companies within Sonae: |
|---|
| Member of the Statutory Audit Board at Sonae Sierra – SGPS, SA |
| Offices held in other companies outside Sonae: |
| Member of the Statutory Audit Board at Sonae Indústria, SGPS, SA |
| Member of the Statutory Audit Board at Sonae Capital, SGPS, SA |
| External Auditor at Vadeca Equipamentos, SA |
| External Auditor at GRIN – Gestão de Resíduos Urb. e Ind., SA |
| External Auditor at Vadeca Imobiliária, SA |
| External Auditor at Sucitesa Portugal, SA |
| External Auditor at Vadeca Org. e Gestão, SA |
| External Auditor at Vadeca Serviços – Limpeza Industrial, SA |
| External Auditor at Vadeca Jardins, SA |
| External Auditor at Vadeca Ambiente – Preservação e Controlo, SA |
| External Auditor at Vadeca Química – Higiene Profissional, SA |
| External Auditor at Vadeca Manutenção – Serviços Integrados, SA |
| External Auditor at E3C – Comunicação e Eventos, SA |
| External Auditor at Timeloft, SA |
| External Auditor at Valorinveste – Soc. Invest. Imob., SA |
| External Auditor at Jofabo – Construção e Imobiliária, SA |
| External Auditor at Polibrás – Polimentos e Abrasivos, SA |
| External Auditor at Know it – Soluções Formação Tecnologia, SA |
| External Auditor at J. Medeiros, SGPS, SA |
| External Auditor at Tratobem – Administ., CMP, VND, IMOV., SA |
| External Auditor at Hidroeléctrica S. Pedro, SA |
| External Auditor at Hidroeléctrica S. Nicolau, SA |
| External Auditor at JIZ – Arquitectura de Interiores e Pub., SA |
| External Auditor at Cortwoo - Marqueting, SA |
| External Auditor at Mindegames–Sociedade de Comunicação, Produções Audivisuais e Futebol, SA |
| External Auditor at FeedWater - Tubos, SA |
| External Auditor at SkyWorld, SA |
| External Auditor at Vincos Válvulas, SA |
| External Auditor at Blue Share, SA |
| External Auditor at VNG – Gestão, Consultoria e Gestão, SA |
| External Auditor at PM. IQS – Projecto, Gestão e Supervisão, SA |
| External Auditor at Imoguedes – Imobiliária e Engenharia, SA |
| External Auditor at Indivest – Investimentos, SGPS, SA |
| External Auditor at Construções Fernando Guedes II, SA |
| External Auditor at Silvil, SA |
| External Auditor at Sivil, SGPS, SA | ||||
|---|---|---|---|---|
| ------------------------------------- | -- | -- | -- | -- |
External Auditor at Praianorte – Hotelaria e Turismo, SA
External Auditor at Companhia das Pastas – Empreendimentos e Investimentos Hoteleiros, SA
External Auditor at PREC – Projectos de Engenharia e Construções, SA
External Auditor at PlanoPharma - Gestão de Farmacias, SA
| CMVM Regulation no. 1/2007 | Report Reference |
|---|---|
| Chapter 0 Compliance Statement | |
| 0.1.Location where the public may find the Corporate Governance Codes to which the issuer is subject or those which the issuer voluntarily abides by, if applicable. |
0.1 |
| 0.2. A detailed list of recommendations that have or have not been adopted, which are set out in the CMVM Corporate Governance Code. For these purposes, recommendations that are not comprehensively followed are deemed not to be adopted. |
0.2 and 0.3 |
| 0.3. When the corporate governance structure or practices differ from the CMVM's Recommendations or other Corporate Governance Codes to which the company is subject or has voluntarily acceded, the company shall explain which parts of each Code that have not been complied with. |
0.3 |
| 0.4. The statutory governing body of the relevant commission should assess the independence of each of its members and justify to the shareholders, through statement included in the company's corporate governance report, its assessment, either at the member's appointment or when a supervening circumstance determines the loss of independence. |
0.4 |
| Chapter I General Meeting | |
| I.1. Details of the members of the Presiding Board to the General Meeting. | 5.1.2 |
| I.2. Indication of the start and end dates of mandates. | 5.1.2 |
| I.3. Details of the remuneration of the Chairman of the Presiding Board to the General Meeting. | 6.5 |
| I.4 Indication of the prior notice required for the deposit or blocking of shares for participation in the General Meeting. |
5.2.2 |
| I.5 Indication of the rules for blocking shares in the event of the General Meeting being suspended. | 5.2.3 |
| I.6. Number of shares corresponding to one vote. | 5.2.4 |
| I.7. The existence of articles of association rules on the exercise of voting rights, including constitutive and decision-making quorums or systems for equity rights. |
5.1.1, 5.2.1 and 5.2.5 |
| I.8. The existence of articles of association rules on the exercise of voting rights via postal voting. | 5.2.6 |
| I.9. Providing a model for the right to vote via postal voting. | 5.2.7 |
| I.10. A deadline requirement for the receipt of the postal ballots and the date on which the General Meeting is held. |
5.2.6 |
| I.11. The exercise of voting rights by electronic means. | 5.2.8 |
| I.12. Information of the intervention by the General Meeting on matters concerning the company's remuneration policy and the assessment of the performance of members of the Board of Directors. |
6.1 |
| I.13. Indication of the defensive measures that have the effect of automatically causing a serious asset erosion of company assets in case of transfer of control or changes to the composition of the Board of Directors. |
9.6 |
| I.14 Important agreements to which the company is a party and that come into force, are changed or terminated in cases such as a change in company control, and also related outcome, unless the disclosure of same, due to its nature, is highly damaging to the company and except when the company is specifically obliged to disclose said information by virtue of other legal requirements. |
9.7 |
| I.15. Agreements between the company and the Board of Directors, within the meaning of Article 248-B/3 of the Securities Code, that provide for compensation in cases of dismissal, unfair dismissal or termination of employment following a change in company control. |
6.2.5 |
| Chapter II Management and Auditing Bodies | |
| II.1. Identification and composition of the statutory governing bodies. | 1.1, 2.1, 2.2, 4.1, and 4.2 |
| II.2. Identification and composition of other committees established with responsibilities for the management or the auditing of the company. |
1.2 and 2.3 |
| II.3. Organizational structure and functional chart relating to the division of powers among the various boards, committees and/or departments within the company, including information on the scope of the delegation of powers, or distribution of functions among the members of the management or of the auditing bodies, and a list of non-delegable matters. |
2.1,2.2,2.3 e 3 |
| II.4. Description of the company's internal control and risk management systems, in particular with regard to financial reporting. |
0 |
| II.5. Powers of the management bodies, particularly with regard to resolutions concerning capital increase. | 2.1.4 |
| II.6. Indication of the existence of regulations on the functioning of the corporate boards or other internally | 2.1.6 and 4.1.5 |
|---|---|
| defined rules on incompatibility and the maximum number of positions that a member is entitled to hold and the place where said rules may be consulted. |
|
| II.7. Rules applicable to the designation and substitution of members of the management and auditing bodies. | 2.1.3, 4.1.3 and 4.2.3 |
| II.8. Number of meetings held by the management and auditing bodies and by other committees with management and auditing functions for that financial year. |
2.1.5, 2.2.3, 2.3.2 and 4.1.4 |
| II.9. Identification of the members of the board of directors and of other board committees, distinguishing between executive and non-executive members and among these, differentiating those members that comply with the incompatibility criteria set forth in article 414-A/1 of the Portuguese Companies Act, except for item /b and the independency criteria provided for in article 414/5, both of the Portuguese Companies Act. |
0.4, 2.1.2, 2.2, 2.3, and 2.3.1 |
| II.10. The professional qualifications of the members of the board of directors, the professional activities carried out by same during the last five years at least, the number of company shares they hold, the date of the first appointment and the date of the end of mandate. |
Appendix I and 2.1.2 |
| II.11. Duties that the members of the board of directors carry out in other companies and a description of duties carried out in other companies of the same holding. |
Appendix I |
| Whenever applicable: | |
| II.12. Identification of the members of the statutory audit board, indicating if the same comply with the incompatibility rules provided for in article 414-A/1, and whether they comply with the independency criteria in article 414/5, both of the Portuguese Companies Act. |
4.1.2 |
| II 13. The professional qualifications of the members of the board of directors, the professional activities carried out by same during the last five years at least, the number of company shares they hold, the date of the first appointment and the date of the end of mandate. |
Appendix I and 4.1.2 |
| II.14. Duties that the members of the supervisory board carry out in other companies and describing those which are carried out in other companies of the same holding. |
Appendix I |
| Or, | |
| II.15 Identification of the members of the general and supervisory board and of its committees indicating if the same comply with the incompatibility rules provided for in article 414-A/1, and whether they comply with the independency criteria in article 414/5, both of the Portuguese Companies Act. |
N/A |
| II.16. The professional qualifications of the members of the general and supervisory board, the professional activities carried out by same during the last five years at least, the number of company shares they hold, the date of the first appointment and the date of the end of mandate. |
N/A |
| II.17. Duties that the members of the members of the general and supervisory board carry out in other companies and describing those which are carried out in other companies of the same holding. |
N/A |
| II.18. Description of the remuneration policy namely including the measures used o align the directors' interest with the interest of the company and the assessment of performance indicating that of the non executive directors, and a summary and examination of the company's policy as to the term of compensations negotiated by contract or by transaction in case of destitution, as well as other payments related with the anticipated termination of contracts |
6 |
| II.19. Composition of the remuneration committee or equivalent body, when existent, identifying its members who are also members of the management body, as well as its spouses, relatives by marriage or by bloodline up to, and including the third degree. |
5.1.3 |
| II.20. Indication of the individual and aggregate, as broadly perceived, in order to namely included, performance bonuses, received at the relevant financial year by the board of directors. This indication should include the following: a) Explicit indication of the amount referred to variable and fixed components of the directors' remuneration, as well as the indication of the eventual deferred payment of the variable component; b) Distinction between the amount due to executive directors and to non-executive directors; c) Sufficient information on the criteria upon which is based any right to shares, shares' options or variable components of the remuneration; d) Sufficient information on the connection between remuneration and performance; e) Identification of the principal parameters and grounds for any annual bonuses systems and any other non-monetary benefits; f) Shares attribution and/or rights to acquire shares and/or rights to acquire options over shares and/or any other shares' scheme incentive; g) Remuneration paid in the form of a share in the profits and/or the payment of bonuses and the rationale behind the act of awarding such bonuses and/or share in profits; h) Compensation paid or owed to former executive directors in relation to early contract termination; i) Amounts paid on any basis by other companies in a group relationship or exercising control over the company; |
6 |
| j) description of the main characteristics of the supplementary pensions or early retirement schemes set up for |
| executive directors and whether said schemes were subject or not to the approval of the general meeting; l) An estimate of the non-financial benefits considered as remuneration which do not fall under the categories listed above; |
|
|---|---|
| II.21. Indication of the amounts whose payment is foreseen, in individual terms, irrespective of its nature, in case of early termination of contract, when it twice exceeds the monthly fixed remuneration |
6.2.5 |
| II.22. Information on the whistle blowing procedures adopted by the Company. | 8 |
| Chapter III Information | |
| III.1 The equity structure including those shares that are not admitted to trading, the different category of shares, rights and duties of these shares and the equity percentage that each category represents. |
9.1 |
| III.2. Qualifying holdings in the issuer's equity calculated as per article 20 of the Securities Code. | 9.2 |
| III.3. Identification of the shareholders that hold special rights and a description of those rights. | 9.3 |
| III.4. Possible restrictions on share-transfer i.e. consent clauses for their disposal or restrictions on share ownership. |
9.4 |
| III.5. Shareholder agreements that the company may be aware of and that may restrict the transfer of securities or voting rights. |
9.5 |
| III.6. Rules applicable to the amendment of the articles of association. | 9.8 |
| III.7. Control mechanisms for a possible employee-shareholder system inasmuch as the voting rights are not directly exercised by them. |
9.9 |
| III.8 Description concerning the evolution of the issuer's share price and taking the following into account: a) The issuance of shares or other securities that entitle the subscription or acquisition of shares; b) The outcome announcement; c) The dividend payment for each share category including the net value per share. |
9.10 |
| III.9. Description of the dividend distribution policy adopted by the company, including the dividend value per share distributed during the last three periods. |
9.11 |
| III.10. A description of the main characteristics of the share and stock-option plans adopted or valid for the financial year in question, the reason for adopting said scheme and details of the category and number of persons included in the scheme, share-assignment conditions, non-transfer of share clauses, criteria on share pricing and the exercising option price, the period during which the options may be exercised, the characteristics of the shares to be allocated, the existence of incentives to purchase and/or exercise options, and the responsibilities of the Board of Directors for executing and/or changing the plan. Details shall also include the following: a) The number of shares required for the share allotment and the number of shares required for the exercise of the exercisable options at the start and end of the year in question; b) The number of allotted, exercisable and extinct shares during the year; c) The general meetings' appraisal of the plans adopted or in force during the period in question. |
6.2.2 and 6.2.3 |
| III.11. A description of the main data on business deals and transactions carried out between the company and between the members of the management and auditing bodies, qualified shareholders, or companies in a control or group relationship, provided the amount is economically significant for any of the parties involved, except for those business deals or transactions that are cumulatively considered within the bounds of normal market conditions for similar transactions and are part of the company's current business. |
9.12 |
| III.12 Reference to an Investor Relations or a similar service, describing: a) The role of said office; b) Type of information made available; c) Access means to said Office; d) The company's website; e) The market liaison officer's credentials. |
9.13 |
| III.13. Indication of the annual compensation paid to the auditor and to other individuals or groups that belong to the same network supported by the company and/or by any group that bears with it a control or group relationship and the percentage of the total amount paid for the following services: a) Statutory account review services; b) Other audit reliability services; c) Tax consulting services; d) Other non-statutory auditing services. A description of the auditor's independency safeguarding measures is required, should the auditor provide any of the services described in items c/ and d/. For the purposes of this text, the 'network' concept derives from the EC Recommendation No. C (2002) 1873 of 16 May. |
6.4 |
The signatories individually declare that, to their knowledge, the Management Report, the Consolidated and Individual Financial Statements and other accounting documents required by law or regulation were prepared meeting the standards of the applicable International Financial Reporting Standards, giving a truthful (fairly) and appropriate image, in all material respects, of the assets and liabilities, financial position and the consolidated and individual results of the issuer and that the Management Report faithfully describes the progress of the business and position of the issuer and of the companies included in the consolidation perimeter and contains a description of the major risks and uncertainties that they face.
Maia, 16 March 2010
Belmiro de Azevedo, Chairman of the Board of Directors
Álvaro Cuervo Garcia, member of the Board of Directors
Bernd Bothe, member of the Board of Directors
Christine Cross, member of the Board of Directors
Michel Marie Bon, member of the Board of Directors
José Neves Adelino, member of the Board of Directors
Duarte Paulo Teixeira de Azevedo, CEO
Álvaro Carmona e Costa Portela, member of the Executive Committee
Ângelo Gabriel Ribeirinho dos Santos Paupério, member of the Executive Committee
Nuno Manuel Moniz Trigoso Jordão, member of the Executive Committee
Disclosure of shares and other securities held by members of the Board of Directors and by those discharging managerial responsibilities, as well as by people closely connected with them (article 248 B of the Portuguese Securities Code), and disclosure of the respective transactions during the year involving such shares and other securities
| Date Quantity Aver. Price € Quantity Aver. Price € Quantity Belmiro Mendes de Azevedo ( ) ( ) Efanor Investimentos, SGPS, SA (1) 49,999,996 Sonaecom, SGPS, SA 75,537 Álvaro Carmona e Costa Portela ( ) Sonae, SGPS, SA 125,934 Sonaecom, SGPS, SA 5,000 Ângelo Gabriel Ribeirinho dos Santos Paupério ( ) Sonae, SGPS, SA 250,000 Sonaecom, SGPS, SA 225,000 Duarte Paulo Teixeira de Azevedo ( ) ( ) ( ) Efanor Investimentos, SGPS, SA (1) 1 Migracom, SGPS, SA (4) 1,969,996 Sonae, SGPS, SA Michel Marie Bon ( ) Sonae, SGPS, SA 131,363 Purchase 20.01.2009 12,000 0.497 Purchase 31.08.2009 19,000 0.852 Maria Margarida Carvalhais Teixeira de Azevedo ( ) ( ) Efanor Investimentos, SGPS, SA (1) 1 Sonae, SGPS, SA 14,901 Maria Cláudia Teixeira de Azevedo ( ) ( ) Efanor Investimentos, SGPS, SA (1) 1 Sonae, SGPS, SA 170 Linhacom, SGPS, SA (6) 99,996 Sonaecom, SGPS, SA 0 Shares attributed under a Share Based Compensation Plan 10.03.2009 1,861 Sale 31.03.2009 1,861 1.210 Nuno Teixeira de Azevedo ( ) ( ) Efanor Investimentos, SGPS, SA (1) 1 Sonae, SGPS, SA |
Additions Reductions |
Balance as of 31.12.2009 |
|||
|---|---|---|---|---|---|
| 3,293 (a) 10,500 (a) |
|||||
| Additions | Reductions | Balance as of 31.12.2009 |
||||
|---|---|---|---|---|---|---|
| Date | Quantity | Aver. Price € | Quantity | Aver. Price € | Quantity | |
| (1) Efanor Investimentos, SGPS, SA | ||||||
| Sonae, SGPS, SA | 659,650,000 | |||||
| Pareuro, BV (2) | 2,000,000 | |||||
| Sonaecom, SGPS, SA | 1,000 | |||||
| (2) Pareuro, BV | ||||||
| Sonae, SGPS, SA | 400,000,000 | |||||
| (3)Sonae, SGPS, SA | ||||||
| Sonae Investments, BV | 2,000,000 | |||||
| Sontel, BV | 4,286 | |||||
| Sonaecom, SGPS, SA | 838,649 | |||||
| (4) Migracom, SGPS, SA | ||||||
| Sonae, SGPS, SA | 1,485,000 | |||||
| Sonaecom, SGPS, SA | 387,342 | |||||
| Imparfin, SGPS, SA (5) | 150,000 | |||||
| (5) Imparfin, SGPS, SA | ||||||
| Sonae, SGPS, SA | 4,105,280 | |||||
| (6) Linhacom, SGPS, SA | ||||||
| Sonae, SGPS, SA | 351,296 | |||||
| Sonaecom, SGPS, SA Purchase |
17.03.2009 | 1,861 | 1.210 | 38,044 | ||
| Imparfin, SGPS, SA (5) | 150,000 | |||||
| (7) Sonae Investments BV | ||||||
| Sontel BV (8) | 5,714 | |||||
| Sonaecom, SGPS, SA (9) | 10,500,000 | |||||
| Purchase | 23.12.2009 | 1,750,000 | 1.822 | |||
| Purchase | 24.12.2009 | 8,750,000 | 1.822 | |||
| (8) Sontel BV | ||||||
| Sonaecom, SGPS, SA (9) | 183,374,470 | |||||
| Purchase | 12.01.2009 | 34,750 | 1.048 | |||
| Purchase | 13.01.2009 | 80,705 | 1.054 | |||
| Purchase | 19.01.2009 | 95,000 | 1.060 | |||
| Purchase | 20.01.2009 | 5,000 | 1.048 | |||
| Purchase | 22.01.2009 | 42,000 | 1.066 | |||
| Purchase | 23.01.2009 | 56,500 | 1.050 | |||
| Purchase | 26.01.2009 | 10,000 | 1.050 | |||
| Sale | 23.12.2009 | 1,750,000 | 1.822 | |||
| Sale | 24.12.2009 | 8,750,000 | 1.822 |
| Additions | Reductions | Balance as of 31.12.2009 |
||||
|---|---|---|---|---|---|---|
| Date | Quantity | Aver. Price € | Quantity | Aver. Price € | Quantity | |
| (9) Sonaecom SGPS, SA | ||||||
| Sonaecom, SGPS, SA (own shares) | 7,169,574 | |||||
| Shares attributed under a Share Based | ||||||
| Compensation Plan | 10.03.2009 | 786,243 | 0.000 | |||
| Purchase | 13.03.2009 | 150,000 | 1.191 | |||
| Purchase | 16.03.2009 | 163,500 | 1.216 | |||
| Purchase | 17.03.2009 | 55,000 | 1.207 | |||
| Purchase | 18.03.2009 | 180,000 | 1.247 | |||
| Purchase | 24.03.2009 | 82,500 | 1.429 | |||
| Purchase | 25.03.2009 | 117,500 | 1.467 | |||
| Purchase | 26.03.2009 | 100,000 | 1.486 | |||
| Purchase | 27.03.2009 | 20,000 | 1.487 | |||
| Purchase | 30.03.2009 | 44,350 | 1.471 | |||
| Purchase | 31.03.2009 | 53,704 | 1.494 | |||
| Purchase | 01.04.2009 | 27,658 | 1.499 | |||
| Purchase | 02.04.2009 | 85,590 | 1.507 | |||
| Purchase | 03.04.2009 | 160,000 | 1.533 | |||
| Purchase | 06.04.2009 | 121,500 | 1.606 | |||
| Purchase | 08.04.2009 | 58,500 | 1.582 | |||
| Shares attributed under a Share Based | ||||||
| Compensation Plan | 02.11.2009 | 8,628 | 0.000 | |||
| Purchase | 18.12.2009 | 50,000 | 1.799 | |||
| Purchase | 21.12.2009 | 110,000 | 1.813 | |||
| Purchase | 22.12.2009 | 90,000 | 1.821 | |||
| Purchase | 23.12.2009 | 34,000 | 1.823 | |||
| Purchase | 28.12.2009 | 52,000 | 1.879 | |||
| Purchase | 29.12.2009 | 58,000 | 1.894 | |||
| Purchase | 30.12.2009 | 145,000 | 1.918 | |||
| Purchase | 31.12.2009 | 75,000 | 1.932 |
(***) Person discharging managerial responsibilites at Efanor Investimentos SGPS, SA (directly and indirectly dominant company) (1)
(*****) M ember of the Board of Directors of Imparfin, SGPS, SA (5) (****) People closely connected with the President of the Board of Directors of Sonae Holding, Belmiro de Azevedo
(a) Shares held by underage descendents under his/her charge
(b) shares held by spouse
Note: The Independent Non-executive member of the Board of Directors, José M anuel Neves Adelino, is a member of the Statutory Audit Board of Banco BPI, SA, which holds 178,039,855 shares representing of 8.902 % of Company's share capital.
Number of shares held by shareholders owning more than 10%, 33% and 50% of the company's share capital.
Número de acções a 31.12.2009 Number of shares held as of 31.12.2009
Efanor Invetimentos, SGPS, SA Sonae, SGPS, SA 659,650,000 Pareuro, BV 2,000,000
Pareuro, BV Sonae, SGPS, SA 400,000,000
Shares held and voting rights of companies owning more than 2% of the share capital of the company, as required by article 8 nr.1 b) of Securities Market Regulation oard (CMVM) regulation 05/2008.
| Shareholder | Nr. of shares | % Share Capital |
% of Voting Rights |
|---|---|---|---|
| Efanor Investimentos, SGPS, SA | |||
| Directly | 659,650,000 | 32.983% | 32.983% |
| By Pareuro, BV (controlled by Efanor) | 400,000,000 | 20.000% | 20.000% |
| By Maria Margarida CarvalhaisTeixeira de Azevedo (Director of Efanor) | 14,901 | 0.001% | 0.001% |
| By Duarte Paulo Teixeira de Azevedo (Director of Efanor and held by descendent) | 3,293 | 0.000% | 0.000% |
| By Maria Cláudia Teixeira de Azevedo (Director of Efanor and held by spouse) | 170 | 0.000% | 0.000% |
| By Nuno Miguel Teixeira de Azevedo (Director of Efanor and held by descendent) | 10,500 | 0.001% | 0.001% |
| By Migracom, SGPS, SA (company controlled by Efanor's Director Duarte Paulo Teixeira de Azevedo) |
1,485,000 | 0.074% | 0.074% |
| By Linhacom, SGPS, SA (company controlled by Efanor's Director Maria Cláudia Teixeira de Azevedo) |
351,296 | 0.018% | 0.018% |
| Total attributable to Efanor Investimentos, SGPS, SA | 1,061,515,160 | 53.076% | 53.076% |
| Banco BPI, SA | 132,851,868 | 6.643% | 6.643% |
| Banco Português de Investimento, SA | 365,199 | 0.018% | 0.018% |
| Fundos de Pensões do Banco BPI | 40,071,372 | 2.004% | 2.004% |
| BPI Vida - Companhia de Seguros de Vida, SA | 4,751,416 | 0.238% | 0.238% |
| Total attributable to Banco BPI, SA | 178,039,855 | 8.902% | 8.902% |
| Fundação Berardo, Instituição Particular de Solidariedade Social | 49,849,514 | 2.492% | 2.492% |
| Total attributable to Fundação Berardo, Instituição Particular de Solidariedade Social | 49,849,514 | 2.492% | 2.492% |
CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEET FOR THE PERIODS ENDED 31 DECEMBER 2009 AND 2008
(Translation of consolidated financial statements originally issued in Portuguese. In case of discrepancy the Portuguese version prevails)
(Amounts expressed in euro)
| ASSETS | Notes | 31 December 2009 | 31 December 2008 |
|---|---|---|---|
| NON-CURRENT ASSETS: | |||
| Tangible assets | 10 | 2,781,177,575 | 2,507,943,036 |
| Intangible assets | 11 | 440,038,498 | 440,299,161 |
| Investment properties | 12 | 1,676,623,981 | 1,683,441,521 |
| Investment properties in progress | 12 | 119,846,837 | 158,561,052 |
| Goodwill | 13 | 746,340,691 | 697,267,362 |
| Associated investments | 6 | 74,649,393 | 142,663,495 |
| Other investments | 7, 9 and 14 | 18,127,492 | 12,978,175 |
| Deferred tax assets | 21 | 230,214,508 | 206,954,689 |
| Other non-current assets | 9 and 15 | 21,176,312 | 21,283,515 |
| Total Non-Current Assets | 6,108,195,287 | 5,871,392,006 | |
| CURRENT ASSETS: | |||
| Inventories | 16 | 603,003,189 | 560,433,179 |
| Trade account receivables | 9 and 17 | 208,066,473 | 215,062,609 |
| Other debtors | 9 and 18 | 163,392,565 | 145,992,505 |
| Taxes recoverable | 19 | 55,070,469 | 89,597,166 |
| Other current assets | 20 | 183,987,418 | 165,902,105 |
| Investments | 9 and 14 | 57,679,031 | 63,556,763 |
| Cash and cash equivalents | 9 and 22 | 172,229,871 | 184,360,904 |
| Total Current Assets | 1,443,429,016 | 1,424,905,231 | |
| Assets available for sale | - | 9,893,174 | |
| TOTAL ASSETS | 7,551,624,303 | 7,306,190,411 | |
| EQUITY AND LIABILITIES | |||
| EQUITY: Share capital |
23 | 2,000,000,000 | 2,000,000,000 |
| Own shares | 23 | (136,911,861) | (138,568,275) |
| Legal reserve | 163,229,581 | 161,705,974 | |
| Reserves and retained earnings | (896,913,017) | (952,178,592) | |
| Profit/(Loss) for the year attributable to the equity holders of Sonae | 93,760,817 | 80,035,669 | |
| Equity attributable to the equity holders of Sonae | 1,223,165,520 | 1,150,994,776 | |
| Equity attributable to minority interests | 24 | 477,968,755 | 411,549,101 |
| TOTAL EQUITY | 1,701,134,275 | 1,562,543,877 | |
| LIABILITIES: | |||
| NON-CURRENT LIABILITIES: | |||
| Loans | 9 and 25 | 1,208,324,810 | 1,281,262,524 |
| Bonds | 9 and 25 | 1,671,134,222 | 1,684,214,319 |
| Obligation under finance leases | 9, 25 and 26 | 29,357,393 | 28,701,579 |
| Other loans | 9 and 25 | 35,170,709 | 22,274,691 |
| Other non-current liabilities | 9 and 28 | 240,267,403 | 155,464,158 |
| Deferred tax liabilities | 21 | 326,420,118 | 330,908,680 |
| Provisions | 33 | 50,607,367 | 57,086,975 |
| Total Non-Current Liabilities | 3,561,282,022 | 3,559,912,926 | |
| CURRENT LIABILITIES: | |||
| Loans | 9 and 25 | 232,966,928 | 258,905,967 |
| Bonds | 9 and 25 | 64,848,660 | 99,930,567 |
| Obligation under finance leases | 9, 25 and 26 | 7,803,032 | 5,829,172 |
| Other loans | 9 and 25 | 7,935,788 | 5,405,466 |
| Trade creditors | 9 and 30 | 1,220,401,450 | 1,050,238,562 |
| Other creditors | 9 and 31 | 254,854,646 | 233,899,872 |
| Taxes and contributions payable | 19 | 86,627,709 | 71,507,795 |
| Other current liabilities | 32 | 411,152,042 | 455,647,053 |
| Provisions | 33 | 2,617,751 | 2,369,154 |
| Total Current Liabilities | 2,289,208,006 | 2,183,733,608 | |
| TOTAL LIABILITIES | 5,850,490,028 | 5,743,646,534 | |
| TOTAL EQUITY AND LIABILITIES | 7,551,624,303 | 7,306,190,411 |
The accompanying notes are part of these financial statements.
(Translation of consolidated financial statements originally issued in Portuguese. In case of discrepancy the Portuguese version
prevails)
| prevails) | |||||
|---|---|---|---|---|---|
| (Amounts expressed in euro) | |||||
| Notes | t h Quarter ended 4 31 December 2009 (Unaudited) |
t h Quarter ended 4 31 December 2008 (Unaudited) |
31 December 2009 | 31 December 2008 | |
| Sales | 36 | 1,317,452,411 | 1,224,164,092 | 4,549,719,919 | 4,168,562,332 |
| Services rendered | 36 | 281,583,829 | 295,520,414 | 1,115,457,155 | 1,184,541,613 |
| Value created on investment properties Investment income |
37 38 |
(29,855,184) 12,064,547 |
(72,717,918) 5,797,628 |
(142,684,216) 46,568,216 |
(115,805,475) 16,056,782 |
| Financial income | 39 | 3,641,933 | 13,024,900 | 16,691,189 | 43,101,223 |
| Other income | 40 | 116,873,399 | 135,102,425 | 414,502,429 | 455,789,170 |
| Cost of goods sold and materials consumed | 16 | (1,016,369,629) | (944,780,224) | (3,580,874,024) | (3,303,986,732) |
| External supplies and services | 41 | (290,488,507) | (302,990,345) | (1,112,751,419) | (1,177,241,538) |
| Staff costs | 42 | (171,724,405) | (168,231,021) | (654,698,188) | (612,404,391) |
| Depreciation and amortisation | 10 and 11 | (72,762,490) | (71,945,919) | (294,133,483) | (273,819,162) |
| Provisions and impairment losses | 33 | (7,890,492) | (19,140,909) | (28,207,470) | (35,512,894) |
| Financial expense | 39 | (28,254,988) | (67,122,503) | (139,477,904) | (216,811,915) |
| Other expenses | 43 | (33,398,980) | (50,543,285) | (99,289,713) | (114,990,028) |
| Share of results of associated undertakings | 6 | (1,509,333) | 8,776,695 | (5,365,399) | 8,952,847 |
| Profit/(Loss) before taxation | 79,362,111 | (15,085,970) | 85,457,092 | 26,431,832 | |
| Taxation Profit/(Loss) after taxation |
44 45 |
(14,022,051) 65,340,060 |
16,017,574 931,604 |
(11,836,862) 73,620,230 |
12,646,440 39,078,272 |
| Attributable to: | |||||
| Equity holders of Sonae | 61,931,270 | 26,936,411 | 93,760,817 | 80,035,669 | |
| Minority interests | 3,408,790 | (26,004,807) | (20,140,587) | (40,957,397) | |
| Profit/(Loss) per share Basic |
47 | 0.033148 | 0.014426 | 0.050192 | 0.042864 |
| Diluted | 47 | 0.033083 | 0.014426 | 0.050087 | 0.042864 |
| The Board of Directors | |||||
| 112 |
(Translation of consolidated financial statements originally issued in Portuguese. In case of discrepancy the Portuguese version prevails)
(Amounts expressed in euro)
| Notes | 31 December 2009 | 31 December 2008 | |
|---|---|---|---|
| Net Profit / (Loss) for the period | 45 | 73,620,230 | 39,078,272 |
| Exchange differences arising on translation of foreign operations | 29,981,805 | (24,389,309) | |
| Participation in other comprehensive income (net of tax) related to associated companies included in consolidation by the equity method |
3,897,962 | (7,417,795) | |
| Changes on fair value of available-for-sale financial assets | 6,474,000 | 7,304,000 | |
| Changes in hedge and fair value reserves | (13,322,929) | (30,435,394) | |
| Income tax relating to changes in hedge and fair value reserves | 2,481,121 | 7,088,257 | |
| Other comprehensive income for the period | 29,511,959 | (47,850,241) | |
| Total comprehensive income for the period | 103,132,189 | (8,771,969) | |
| Attributable to: | |||
| Equity holders of Sonae | 122,307,030 | 39,947,217 | |
| Minority interests | (19,174,841) | (48,719,186) |
The accompanying notes are part of these consolidated financial statements.
(Translation of consolidated financial statements originally issued in Portuguese. In case of discrepancy the Portuguese version prevails)
(Amounts expressed in euro)
| Attributable to Equity Holders of Sonae | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Notes | Share Capital |
Own Shares |
Legal Reserve |
Currency Translation Reserve |
Reserves and Retained Earnings Investments Fair Value Reserve |
Hedging Reserve |
Other Reserves and Retained Earnings |
Total | Net Profit/(Loss) |
Total | Minority Interests (Note 24) |
Total Equity |
|
| Balance as at 1 January 2008 | 2,000,000,000 | (138,568,275) | 160,880,817 | 25,481,974 | - | 4,449,821 | (1,166,627,627) | (975,815,015) | 284,044,038 | 1,169,660,748 | 448,365,507 | 1,618,026,255 | |
| Total comprehensive income for the period | - | - | - | (29,733,295) | 5,327,654 | (15,682,811) | - | (40,088,452) | 80,035,669 | 39,947,217 | (48,719,186) | (8,771,969) | |
| Appropriation of profit of 2007: | - | - | - | - | - | - | - | - | - | - | - | - | |
| Transfer to legal reserves and retained earnings | - | - | 825,157 | - | - | - | 283,218,881 | 284,044,038 | (284,044,038) | - | - | - | |
| Dividends distributed | - | - | - | - | - | - | (56,016,000) | (56,016,000) | - | (56,016,000) | (2,475,031) | (58,491,031) | |
| Aquisitions and sales of shares of affiliated undertakings | - | - | - | - | - | - | - | - | - | - | (20,508,575) | (20,508,575) | |
| Capital increases | - | - | - | - | - | - | - | - | - | - | 36,604,140 | 36,604,140 | |
| Other changes | - | - | - | - | - | - | (2,597,189) | (2,597,189) | - | (2,597,189) | (1,717,754) | (4,314,943) | |
| Balance as at 31 December 2008 | 2,000,000,000 | (138,568,275) | 161,705,974 | (4,251,321) | 5,327,654 | (11,232,990) | (942,021,935) | (790,472,618) | 80,035,669 | 1,150,994,776 | 411,549,101 | 1,562,543,877 | |
| Balance as at 1 January 2009 | 2,000,000,000 | (138,568,275) | 161,705,974 | (4,251,321) | 5,327,654 | (11,232,990) | (942,021,935) | (790,472,618) | 80,035,669 | 1,150,994,776 | 411,549,101 | 1,562,543,877 | |
| Total comprehensive income for the period | - | - | - | 31,921,890 | 6,474,000 | (9,849,677) | - | 28,546,213 | 93,760,817 | 122,307,030 | (19,174,841) | 103,132,189 | |
| Appropriation of profit of 2008: | - | - | - | - | - | - | - | - | - | - | - | - | |
| Transfer to legal reserves and retained earnings | - | - | 1,523,607 | - | - | - | 78,512,062 | 80,035,669 | (80,035,669) | - | - | - | |
| Dividends distributed | - | - | - | - | - | - | (56,050,049) | (56,050,049) | - | (56,050,049) | - | (56,050,049) | |
| Sales of own shares | - | 1,656,414 | - | - | - | - | - | - | - | 1,656,414 | - | 1,656,414 | |
| Share based payments | - | - | - | - | - | - | 3,869,586 | 3,869,586 | - | 3,869,586 | 346,915 | 4,216,501 | |
| Aquisition of subsidiaries | - | - | - | - | - | - | - | - | - | - | 54,233,850 | 54,233,850 | |
| Sales of shares of affiliated undertakings | - | - | - | - | - | - | - | - | - | - | 26,133,713 | 26,133,713 | |
| Other changes | - | - | - | - | - | - | 387,763 | 387,763 | - | 387,763 | 4,880,017 | 5,267,780 | |
| Balance as at 31 December 2009 | 2,000,000,000 | (136,911,861) | 163,229,581 | 27,670,569 | 11,801,654 | (21,082,667) | (915,302,573) | (733,683,436) | 93,760,817 | 1,223,165,520 | 477,968,755 | 1,701,134,275 | |
| The accompanying notes are part of these consolidated financial statements. | The Board of Directors | ||||||||||||
| 114 |
(Translation of consolidated financial statements originally issued in Portuguese. In case of discrepancy the Portuguese version
prevails)
(Amounts expressed in euro)
| 31 December 2009 | 31 December 2008 | ||
|---|---|---|---|
| OPERATING ACTIVITIES | Notes | ||
| Cash receipts from trade debtors | 5,666,094,946 | 5,303,693,940 | |
| Cash paid to trade creditors | (4,264,161,794) | (4,208,396,201) | |
| Cash paid to employees | (657,642,924) | (605,764,104) | |
| Cash flow generated by operations | 744,290,228 | 489,533,635 | |
| Income taxes (paid) / received | (14,620,799) | (16,616,170) | |
| Other cash receipts and (payments) relating to operating activities | 14,923,069 | (6,692,573) | |
| Net cash flow from operating activities (1) | 744,592,498 | 466,224,892 | |
| INVESTMENT ACTIVITIES | |||
| Cash receipts arising from: | |||
| Investments | 48 | 59,174,933 | 123,090,637 |
| Tangible assets and investment properties | 33,009,963 | 25,714,084 | |
| Intangible assets | 375,517 | 6,209,293 | |
| Interest and similar income | 16,608,941 | 27,913,003 | |
| Loans granted | 3,516,674 | 8,612,239 | |
| Dividends | 803,489 | 554,007 | |
| Others | 4,761,606 | - | |
| 118,251,123 | 192,093,263 | ||
| Cash payments arising from: Investments |
48 | (51,450,921) | (76,986,407) |
| Tangible assetsand investment properties | (539,590,330) | (592,118,629) | |
| Intangible assets | (40,344,537) | (51,595,045) | |
| Loans granted | (2,696,603) | (39,149,825) | |
| Others | (1,548,360) | (6,810,325) | |
| (635,630,751) | (766,660,231) | ||
| Net cash used in investment activities (2) | (517,379,628) | (574,566,968) | |
| FINANCING ACTIVITIES | |||
| Cash receipts arising from: | |||
| Loans obtained | 11,750,205,223 | 7,124,370,355 | |
| Capital increases, additional paid in capital and share premiums | - | 1,608,000 | |
| Others | 73,467,788 | - | |
| 11,823,673,011 | 7,125,978,355 | ||
| Cash payments arising from: | |||
| Loans obtained | (11,819,240,802) | (6,669,559,059) | |
| Interest and similar charges Reimbursement of capital and paid in capital |
(161,180,023) (1,046,014) |
(193,401,577) (632,564) |
|
| Dividends | (60,422,373) | (62,326,616) | |
| Others | (5,617,767) | (220,898,528) | |
| (12,047,506,979) | (7,146,818,344) | ||
| Net cash used in financing activities (3) | (223,833,968) | (20,839,989) | |
| Net increase in cash and cash equivalents (4) = (1) + (2) + (3) | 3,378,902 | (129,182,065) | |
| Effect of foreign exchange rate | (2,121,363) | 3,477,519 | |
| Cash and cash equivalents at the beginning of the period | 22 | 142,965,988 148,466,253 |
275,625,572 142,965,988 |
| Cash and cash equivalents at the end of the period | 22 |
The accompanying notes are part of these consolidated financial statements.
(Translation of consolidated financial statements originally issued in Portuguese. In case of discrepancy the Portuguese version prevails)
(Amounts expressed in euro)
SONAE, SGPS, SA ("Sonae Holding"), has its head-office at Lugar do Espido, Via Norte, Apartado 1011, 4470-909 Maia, Portugal, and is the parent company of a group of companies, as detailed in Notes 4 to 7 the Sonae Group ("Sonae"). Sonae's operations and operating segments are described in Note 50 and in the management report.
The principal accounting policies adopted in preparing the accompanying consolidated financial statements are as follows:
The accompanying consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union, issued by the International Accounting Standards Board ("IASB"), and interpretations issued by the International Financial Reporting Interpretations Committee ("IFRIC") or by the previous Standing Interpretations Committee ("SIC"), as adopted by the European Union as at the consolidated financial statements issuance date.
The accompanying consolidated financial statements have been prepared from the books and accounting records of the Company, subsidiaries and joint ventures, adjusted in the consolidation process, on a going concern basis and under the historical cost convention, except for financial instruments and investment properties which are stated at fair value.
New accounting standards and their impact on the consolidated financial statements:
Up to the financial statements approval date, the following Standards and Interpretations, some of which have became effective during the year 2009, have been endorsed by European Union:
Effective date (Financial years beginning or after)
With mandatory application in 2009 :
| IFRS 1/IAS 27 - Amendments (Cost of an Investment in a Subsidiary, Jointly Controlled | |
|---|---|
| Entity or Associate) | 01/01/2009 |
| IAS 39 – Amendments (Reclassification of financial assets) | 01/07/2008 |
| IFRS 2 – Amendments: Share/based Payment (Vesting conditions and cancellations) | 01/01/2009 |
| IAS 23 – Amendments: Borrowing Costs (Revised) | 01/01/2009 |
| IAS 32–IAS 1 – Amendments (Puttable Financial Instruments and Obligations Arising | |
| on Liquidation) | 01/01/2009 |
| IAS 1 – Amendments: Fist-time Adoption of International Financial Reporting | |
| standards (Revised) | 01/01/2009 |
| IFRIC 13 – Customer Loyalty Programmes | 01/07/2008 |
| IFRS 8 – Operating Segments | 01/01/2009 |
| IFRS 7 – Amendments (Improving disclosures about fair value measurements and | |
| liquidity risk) | 01/01/2009 |
| Annual improvements to International Financial Reporting | |
| standards (2007) | Several (on/after 01/01/2009) |
The adoption of the above mentioned standards has not led to material impacts to the enclosed consolidated financial statements of Sonae, with the exception of presentation and disclosure improvements as a result of the application of IAS 1 amendments and IFRS 8, as the accounting policies adopted by Sonae are already consistent with some of the new standards. Additionally, Sonae had already yearly adopted the amendments relating to IAS 40, integrated into the annual improvements to the international financial reporting standards (2007).
IAS 1 introduces changes in terminology as well as changes to the format and content of financial statements. IFRS 8 replaces the previous IAS 14 and led to a redefinition of the reportable segments of Sonae and information to report, requiring that these are reported in accordance with the reporting procedure assigned to management, and not necessarily based on geographical or business logic, as required by IAS 14.
With mandatory application after 2009:
| IFRS 3 – Business combinations and IAS 27, consolidated and separate financial statements (revised 2008) |
01/07/2009 |
|---|---|
| IFRS 1 (revised) – First-time adoption of International Financial Reporting standards | 01/01/2010 |
| IFRIC 12 – Service Concession Arrangements | 01/01/2010 |
| IFRIC 15 – Agreements for the Construction of Real Estate | 01/01/2010 |
| IFRIC 16 – Hedges of a Net Investment in a Foreign Operation | 01/07/2009 |
| IFRIC 9 and IAS 39 – Amendments (reassessment of embedded derivatives) | Financial periods beginning on/after 30/06/09 |
| IAS 39 – Amendments to (Qualifying hedging instruments) | 01/07/2009 |
| IFRIC 17 – Distributions of Non-cash Assets to Owners | 01/07/2009 |
| IFRIC 18 – Transfer of Assets from Customers | Transfers made on or after 01/07/2009 |
These standards, although approved ("endorsed") by the European Union, were not adopted by Sonae in 2009, because its application is not yet mandatory, and Sonae has decided not to adopt them in advance.
No significant impacts are expected to arise in the financial statements resulting from the adoption of these standards, with the exception of the amendments of IFRS 3, and consequent amendment to IAS 27.
Changes to IFRS 3 and IAS 27 bring some changes to business combinations, including: (a) calculating goodwill; (b) the measurement of non-contracting interests (formerly known as minority interests); (c) the recognition and subsequent measurement of contingent payments; (d) the treatment of direct costs related to the concentration; (e) the registration of purchase transactions of interests in already controlled entities and sales transactions of interests without such resulting in the loss of control; and (f) calculation of the result of the sale of participation with loss of control and need of remeasurement of the interests controlled kept in the alienated participation.
The main accounting policies adopted by Sonae are as follows:
Investments in companies in which Sonae owns, directly or indirectly, more than 50% of the voting rights at Shareholders' General Meetings or is able to establish financial and operational policies so as to benefit from its activities (definition of control normally used by Sonae), are included in the consolidated financial statements using the full consolidation method. Equity and net profit attributable to minority shareholders are shown separately, under the caption Minority interests, in the consolidated balance sheet and in the consolidated income statement, respectively. Companies included in the consolidated financial statements are listed in Note 4.
When losses attributable to minority interests exceed the minority interest in the equity of the Sonae the excess, and any further losses attributable to minority interests, are charged against the equity holders of Sonae except to the extent that minority shareholders have a binding obligation and are able to cover such losses. If the Group subsequently reports profits, such profits are allocated to the equity holders of Sonae until the minority's share of losses previously absorbed by the equity holders of Sonae has been recovered.
Assets and liabilities of each Sonae company are measured at their fair value at the date of acquisition being that measurement concluded in twelve months. Any excess of the cost of acquisition over the Sonae's interest in the fair value of the identifiable net assets acquired is recognised as goodwill (Note 2.2.d)). Any excess of the Sonae's share in the fair value of the identifiable net assets acquired over cost is recognised as income in profit or loss for the period of acquisition in the caption "Other income", after reassessment of the estimated fair value attributed to the net assets acquired. Minority interests include their proportion of the fair value of net identifiable assets and liabilities recognised on acquisition of Sonae companies.
The results of subsidiaries acquired or disposed of during the period are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate.
Adjustments to the financial statements of Sonae companies are performed, whenever necessary, in order to adapt accounting policies to those used by Sonae. All intra-group transactions, balances, income and expenses and distributed dividends are eliminated on consolidation.
Whenever Sonae has, in substance, control over other entities created for a specific purpose, even if no share capital interest is directly held in those entities, these are consolidated by the full consolidation method. Such entities, when applicable, are disclosed in Note 4.
Investments in jointly controlled companies are included in the accompanying consolidated financial statements in accordance with the proportionate consolidation method as from the date joint control is acquired. In accordance with this method, the Group includes in the accompanying consolidated financial statements its share of assets, liabilities, income and expenses of these companies, on a line-by-line basis.
Any excess of the cost of acquisition over the Group's interest in the fair value of identifiable net assets acquired is recognised as goodwill (Note 2.2.d)). Any excess of the Group's share in the fair value of net assets acquired over cost is recognised as income in profit or loss for the period of acquisition after reassessment of the estimated fair value of the net assets acquired in the caption "Other operational income".
Sonae's share of inter-company balances, transactions and dividends distributed are eliminated.
Investments in jointly controlled companies are classified as such based on shareholders' agreements that establish joint control.
Companies included in the accompanying consolidated financial statements in accordance with the proportionate method are listed in Note 5.
Investments in associated companies (companies where Sonae exercises significant influence but does not establish financial and operational policies – usually corresponding to holdings between 20% and 50% in a company's share capital) are accounted for in accordance with the equity method.
Under the equity method, investments are recorded at cost, adjusted by the amount corresponding to Sonae's share of changes in equity (including net profit) of associated companies and to dividends received.
Any excess of the cost of acquisition over Sonae's share in the fair value of the identifiable net assets acquired is recognised as goodwill (Note 2.2.d)), which is included in the caption Investment in associated companies. Any excess of Sonae's share in the fair value of the identifiable net assets acquired over cost is recognised as income in the profit or loss for the period of acquisition, after reassessment of the estimated fair value of the net assets acquired under the caption Share of profit of associates.
An assessment of investments in associated companies is performed when there is an indication that the asset might be impaired. Any impairment loss is recorded in the income statement. Impairment losses recorded in prior years that are no longer justifiable are reversed.
When Sonae's share of losses exceeds the carrying amount of the investment, the investment is reported at nil value and recognition of losses is discontinued, unless Sonae is committed beyond the value of its investment.
The Sonae's share in unrealized gains arising from transactions with associated companies is eliminated. Unrealized losses are eliminated, but only to the extent that there is no evidence of impairment of the asset transferred.
Investments in associated companies are disclosed in Note 6.
The excess of the cost of acquisition of investments in subsidiaries, jointly controlled and associated companies over Sonae's share in the fair value of the assets and liabilities of those companies at the date of acquisition is shown as Goodwill (Note 13) or as Investments in associated companies (Note 6). The excess of the cost of acquisition of investments in foreign companies over the fair value of their identifiable assets and liabilities at the date of acquisition is calculated using the functional currency of each of those companies. Translation to the Sonae's functional currency (Euro) is made using the closing exchange rate. Exchange rate differences arising from this translation are recorded and disclosed in "Other reserves and retained earnings".
Goodwill is not amortised, but it is subject to impairment tests on an annual basis. Net recoverable amount is determined based on business plans used by Sonae management or on valuation reports issued by independent entities. Impairment losses recognized in the period are recorded in the income statement under the caption "Provisions and impairment losses".
Impairment losses related with goodwill will not be reversed unless in the case of goodwill related with associated companies.
Any excess of Sonae's share in the fair value of identifiable assets and liabilities in group, jointly controlled and associated companies over cost, is recognised as income in the profit or loss for the period, at the date of acquisition, after reassessment of the fair value of the identifiable assets and liabilities acquired.
Assets and liabilities denominated in foreign currencies in the financial statements of foreign companies are translated to euro using exchange rates at the balance sheet date. Profit and loss and cash flows are converted to euro using the average exchange rate for the period. Exchange rate differences originated after 1 January 2004 are recorded as equity under Translation reserves in Reserves and retained earnings. Exchange rate differences that were originated prior to 1 January 2004 (date of transition to IFRS) were written-off through Retained earnings.
Goodwill and fair value adjustments arising from the acquisition of foreign companies are recorded as assets and liabilities of those companies and translated to euro using exchange rates at the balance sheet date.
Whenever a foreign company is sold (totally or partially), accumulated exchange rate differences are recorded in the income statement as a gain or loss on the disposal, in the caption Investment income.
Exchange rates used on translation of foreign group, jointly controlled and associated companies are listed below:
| 31 December 2009 | 31 December 2008 | ||||
|---|---|---|---|---|---|
| End of period | Average of period | End of period | Average of period | ||
| US Dollar | 0.69416 | 0.71896 | 0.71855 | 0.68350 | |
| Swiss Franc | 0.67404 | 0.66230 | 0.67340 | 0.63044 | |
| Pound Sterling | 1.12600 | 1.12324 | 1.04987 | 1.25890 | |
| Romanian New Leu | 0.23651 | 0.23606 | 0.24860 | 0.27178 | |
| Brazilian Real | 0.39820 | 0.36282 | 0.30830 | 0.37657 | |
| Polish Zloty | 0.24364 | 0.23153 | 0.24076 | 0.28570 |
Tangible assets acquired up to 1 January 2004 (transition date to IFRS) are recorded at acquisition or production cost, or revalued acquisition cost, in accordance with generally accepted accounting principles in Portugal until that date, net of depreciation and accumulated impairment losses.
Tangible assets acquired after that date is recorded at acquisition cost, net of depreciation and accumulated impairment losses.
Depreciation is calculated on a straight line basis, as from the date the asset is first used, over the expected useful life for each class of assets, and recorded against the income statement caption "Depreciation and amortisation".
Impairment losses detected on tangible assets are recorded in the year estimated against the income statement caption "Provisions and impairment losses".
The depreciation rates used correspond to the following estimated useful lives:
| Years | |
|---|---|
| Buildings | 10 to 50 |
| Plant and machinery | 10 to 20 |
| Vehicles | 4 to 5 |
| Tools | 4 to 8 |
| Fixture and fittings | 3 to 10 |
| Other tangible assets | 4 to 8 |
Maintenance and repair costs relating to tangible assets are recorded directly as expenses in the year they are incurred.
Tangible assets in progress represent fixed assets still under construction-development and are stated at acquisition cost net of impairment losses. These assets are depreciated from the date they are completed or become ready for use.
Gains or losses on sale or disposal of tangible assets are calculated as the difference between the selling price and the carrying amount of the asset at the date of its sale-disposal. These are recorded in the income statement under either "Other income" or "Other expenses".
Investment properties consist of shopping centre buildings and other constructions that are held to earn rental income or for capital appreciation or both, rather than for use in the production or supply of goods or services or for administrative purposes or for sale in the ordinary course of business.
The investment properties which do not fulfil the conditions to reliably measure their fair value are recorded at their historical or production cost, net from eventual impairment losses. Taking in concern that such investment properties are essentially fixed assets that are being qualified as investments properties in the future, they are separately classified in the caption Investments Properties in Progress on the Consolidated Balance Sheet.
The investment property in progress considered investment property, within the scope of IFRS, when they fulfil the conditions to reliably measure their fair value.
It is considered that an Investment property in progress fulfil the conditions for its fair value to be reliably measured, when a there is a high probability that the project will be concluded in a short period. This probability is high when the following events are simultaneously accomplished:
Investment properties are recorded at their fair value based on half-yearly valuations performed by an independent valuer. Changes in fair values of investment properties are accounted for in the period in which they occur, in the income statement under the caption Value created on Investment Properties.
The assets of Sonae which qualify as investment properties are recognized as such when they start being used or, in the case of the investment properties in progress, when their development is considered irreversible, as mentioned in the above conditions. Until the moment the asset is qualified as investment property, the same asset is booked at historical or production cost under the caption "Investment Property in progress" in the same way as a tangible asset (Note 2.3). Since that moment, the investment properties in progress are recorded at their fair value. The difference between cost (of acquisition or production) and the fair value at that date is accounted for in the consolidated income statement at the caption "Variation in fair value of investment properties".
Costs incurred with investment properties in use, such as maintenance, repairs, insurance and property taxes, are recognised in the income statement for the period to which they refer. Costs incurred with refurbishments-improvement which will generate estimated additional future economic benefits are capitalized under Investment Properties.
Intangible assets are stated at acquisition cost, net of depreciation and accumulated impairment losses. Intangible assets are only recognised if it is probable that future economic benefits will flow from them, if they are controlled by Sonae and if their cost can be reliably measured.
Expenditure on research associated with new technical know-how is recognised as an expense recorded in the income statement when it is incurred.
Expenditure on development is recognised as an intangible asset if Sonae demonstrates the technical feasibility and its intention to complete the asset, its ability to sell or use it and the probability that the asset will generate future economic benefits. Expenditure on development which does not fulfil these conditions is recorded as an expense in the period in which it is incurred.
Internal costs associated with maintenance and development of software is recorded as an expense in the period in which they are incurred. Only costs directly attributable to projects for which the generation of future economic benefits is probable are capitalised as intangible assets.
The expenses incurred with the acquisition of client portfolio's (attributed value relating to the allocation of the purchasing price in business activity concentration) are stated as intangible assets and amortized on a straight line bases, during the average estimated period of portfolio's client retention.
Amortisation is calculated on a straight line basis, as from the date the asset is first used, over the expected useful life which usually is between 3 and 6 years, except for property occupation rights and mobile and fixed operator licenses which are amortised over the duration of the contract which establishes these rights. It is recorded in the caption of "Amortizations and depreciations".
The property occupation rights, especially from Shopping centres segment, are being amortised on a straight line basis during the right´s estimated utilization time period (time periods vary between 10 and 15 years).
Brands and patents with defined useful lives are recorded at their historical cost and are amortised on straight line basis during the estimated useful life. Brands and patents with undefined useful lives are not amortised, but are subject to impairment tests on an annual basis or when there are impairment indicators.
Lease contracts are classified as (i) a finance lease if the risks and rewards incidental to ownership lie with the lessee and (ii) as an operating lease if the risks and rewards incidental to ownership do not lie with the lessee.
Whether a lease is classified as finance or an operating lease depends on the substance of the transaction rather than the form of the contract.
Assets acquired through finance lease contracts as well as the correspondent responsibilities, are posted by the financial method, posting in the balance sheet the acquired asset and the pending debts according to the contractual financial plan at fair value or, if less, at the present level of payments. Both the finance charge and the depreciation expense for depreciable assets are taken to the income statement in the period in which they are incurred.
Lease payments under operating lease contracts are recognised as an expense on a straight line basis over the lease term.
Most of the cases where the Group is the lessor arise from contracts with shopping centre tenants. These contracts are usually for a period of six years and establish the payment by the tenant of a monthly fixed rent - invoiced in advance –, a variable rent, invoiced if the monthly sales of the tenant are higher than the limit established in the contract and the payment of the tenant's share in the shopping centre operational expenses. The contract with the tenant may also establish the payment of an entrance fee in the shopping centre (key money income) and some discounts (usually in the first three years of the contract) to the fixed rent. These contracts can be renewed or cancelled by any of the parties involved (the company or the tenant). If the cancellation is made by the tenant it must pay a cancellation fee to the company established in the contract. In the case of being proposed a renovation by the lessor, Sonae should pay a compensation (indenisation) to the shopkeeper.
These contracts are classified as operating leases. Rents (fixed and variable) and common charges are recognised as income in the period to which they refer. Costs (namely rent discounts and compensations) as well as entrance fees (key money) and cancellation fees arising from operating leases are recorded as expenses or income in the period in which they are incurred or earned. This is consistent with the method adopted by independent valuers who determine the fair value of investment properties to which the leasing contracts refer.
The non-current assets (or disposal group) are recorded as held for sale if it is expected that the book value will be recovered through the sale and not through the use in the operations. This condition is achieved only if the sale is highly probable and the asset (or disposal group) is available for the immediate sale in the actual conditions. Additionally, there must be in progress actions that should allow concluding the sale within 12 months counting from the classification´s date in this caption. The noncurrent assets (or disposal group) recorded as held for sale are booked at the lower amount of the historical cost or the fair value deducted from costs, not being amortized after being classified as held for sale.
Government grants are recorded at fair value when there is reasonable assurance that they will be received and that Sonae will comply with the conditions attaching to them.
Grants received as compensation for expenses, namely grants for personnel training, are recognised as income in the same period as the relevant expense.
Grants related to depreciable assets are disclosed as Other non-current liabilities and are recognised as income on a straight line basis over the expected useful lives of those underlying assets.
Assets are assessed for impairment at each balance sheet date whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
Whenever the carrying amount of an asset exceeds its recoverable amount, an impairment loss is recognised in the income statement under Provisions and impairment losses.
The recoverable amount is the higher of an asset's fair value less costs to sell and its value in use. Fair value less costs to sell is the amount obtainable from the sale of an asset in an arm's length transaction less the costs of disposal. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life. Recoverable amounts are estimated for individual assets or, if this is not possible, for the cash-generating unit to which the asset belongs.
Reversal of impairment losses recognised in prior years is only recorded when it is concluded that the impairment losses recognised for the asset no longer exist or have decreased. This analysis is performed whenever there is an indication that the impairment loss previously recognised has been reversed. The reversal is recorded in the income statement as Operational income. However, the increased carrying amount of an asset due to a reversal of an impairment loss is recognised to the extent it does not exceed the carrying amount that would have been determined (net of depreciation) had no impairment loss been recognised for that asset in prior years.
Borrowing costs are usually recognised as an expense in the period in which they are incurred.
Borrowing costs directly attributable to the acquisition, construction or production of tangible and intangible assets, real estate projects classified as inventories or investment properties are capitalised as part of the cost of the qualifying asset. Borrowing costs are capitalised from the beginning of preparation of the activities to construct or develop the asset up to the time the production or construction is complete or when asset development is interrupted. Any income earned on funds temporarily invested pending their expenditure on the qualifying asset, is deducted from the borrowing costs that qualify for capitalisation.
Consumer goods and raw materials are stated at the lower of cost deducted from discounts obtained and net realisable value. Cost is determined on a weighted average basis.
Differences between cost and net realisable value, if negative, are shown as expenses under the caption "Cost of goods sold and materials consumed".
Provisions are recognised when, and only when, Sonae has an obligation (legal or constructive) resulting from a past event, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate can be made of that obligation. Provisions are reviewed and adjusted at the balance sheet date to reflect the best estimate as of that date.
Restructuring provisions are recorded by Sonae whenever a formal and detailed restructuring plan exists and that plan has been communicated to the parties involved.
Sonae classifies the financial instruments in the categories presented and conciliated with the Consolidated Balance Sheet disclosed in Note 9.
Investments are classified into the following categories:
Held to maturity investments are classified as non-current assets unless they mature within 12 months of the balance sheet date. Investments classified as held to maturity have defined maturities and Sonae has the intention and ability to hold them until the maturity date.
The investments measured at the fair value through profit or loss include the investments held for trading that Sonae acquires with the purpose of trading in the short term. They are classified in the consolidated balance sheet as current investments.
Sonae classifies as available-for-sale investments those that are neither included as investments measured at fair value through profit or loss neither as investments held to maturity. These assets are classified as non-current assets, except if the sale is expected to occur within 12 months from the date of classification.
All purchases and sales of investments are recognised on the trade date, independently of the settlement date.
Investments are initially measured at cost, which is the fair value of the consideration paid for them, including transaction costs apart from investment measured at fair value through results, in which the investments are initially recognised at fair value and transaction costs are recognised in the income statement.
Available-for-sale investments and investments measured at fair value through profit or loss are subsequently carried at fair value, without any deduction for transaction costs which may be incurred on sale, by reference to their quoted market price at the balance sheet date. Investments in equity instruments not listed and whose fair value cannot be reliably measured, are stated at cost less impairment losses.
Gains or losses arising from a change in fair value of available-for-sale investments are recognised directly in equity, under "Investments Fair value reserve", included in "Reserves and retained earnings" until the investment is sold or otherwise disposed of, or until it is determined to be impaired, at which time the cumulative gain or loss previously recognised in equity is transferred to net profit or loss for the period.
Changes in the fair value of investments measured at fair value through profit or loss are included in the consolidated income statement for the period under financial expenses or financial income.
Held to maturity investments are carried at amortised cost using the effective interest rate, net of capital reimbursements and interest income received.
Loans and non current accounts receivables are measured at amortised cost using the effective interest method, less any impairment losses.
Interest income is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial.
These financial investments arise when Sonae provides money, goods or services directly to a debtor with no intention of trading the receivable.
Loans and receivables are recorded as current assets, except when its maturity is greater than 12 months from the balance sheet date, when they are classified as non-current assets. Loans and receivables are included in the captions presented in Note 9.
Trade accounts receivables and other accounts receivable are recorded at their nominal value and presented in the consolidated balance sheet net of eventual impairment losses, recognised under the allowance account Impairment losses on accounts receivable , in order to reflect its net realisable value. These captions, when classified as current, do not include interests because the effect of discounting would be immaterial.
Impairment is recognised if there is objective and measurable evidence that, as a result of one or more events that occurred, the balance will not be fully received. Therefore, each Sonae company takes into consideration market information that indicates:
– significant financial difficulty of the issuer or counterparty;
– default or delinquency in interest or principal payments;
– it becoming probable that the borrower will enter bankruptcy or financial re-organisation.
When it's not feasible to assess the impairment for every single financial asset, the impairment is assessed on a collective basis, namely in the Telecommunications segment. Objective evidence of impairment of a portfolio of receivables could include Sonae's past experience of collecting payments, an increase in the number of delayed payments in the portfolio, as well as observable changes in national or local economic conditions that correlate with default on receivables.
For financial assets carried at amortised cost, the amount of the impairment is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the financial asset's original effective interest rate. If the receipt of the full amount is expected to be within one year the discount is considered null as it is immaterial.
Financial liabilities and equity instruments are classified and accounted for based on their contractual substance, independently from the legal form they assume.
Equity instruments are contracts that evidence a residual interest in the assets of Sonae after deducting all of its liabilities. Equity instruments issued by Sonae are recorded at the proceeds received, net of direct issue costs.
Loans are recorded as liabilities at their nominal value, net of up-front fees and commissions related to the issuance of those instruments. Financial expenses are calculated based on the effective interest rate and are recorded in the income statement on an accruals basis, in accordance with the accounting policy defined in Note 2.10. The portion of the effective interest charge relating to up-front fees and commissions, if not paid in the period, is added to the book value of the loan.
Accounts payable are stated at their nominal value, as they do not bear interests and the effect of discounting is considered immaterial.
Sonae uses derivatives in the management of its financial risks to hedge such risks and-or in order to optimise the funding costs.
Derivatives classified as cash flow hedging instruments are used by the Sonae mainly to hedge interest and exchange rate risks on loans obtained. Conditions established for these cash flow hedging instruments are identical to those of the corresponding loans in terms of base rates, calculation rules, rate setting dates and repayment schedules of the loans and for these reasons they qualify as perfect hedges. The inefficiencies, if any, are accounted under financial expenses or financial income in the consolidated income statement.
Sonae's criteria for classifying a derivative instrument as a cash flow hedge instrument include:
– the hedge transaction is expected to be highly effective in offsetting changes in cash flows attributable to the hedged risk;
– the effectiveness of the hedge can be reliably measured;
– there is adequate documentation of the hedging relationships at the inception of the hedge;
– the transaction being hedged is highly probable.
Cash flow hedge instruments used by the Sonae to hedge the exposure to changes in interest and exchange rates of its loans are initially accounted for at cost, if any, which corresponds to its fair value, and subsequently adjusted to their corresponding fair
value. Changes in fair value of these cash flow hedge instruments are recorded in equity under the caption Hedging reserves, and then recognised in the income statement over the same period in which the hedged instrument affects profit or loss.
The accounting of hedging derivative instruments is discontinued when the instrument matures or is sold. Whenever a derivative instrument can no longer be qualified as a hedging instrument, the fair value differences recorded in equity under the caption Hedging reserve are transferred to profit or loss of the period or to the carrying amount of the asset that resulted from the hedged forecast transaction. Subsequent changes in fair value are recorded in the income statement.
Sonae also uses financial instruments with the purpose of cash flow hedging that essentially respect the exchange rate hedging ("forwards") of loans and commercial operations that, however, do not configure perfect hedging relations, and so, do not receive hedge accounting treatment, but allow the reduction, in a very significant way, of the loan and receivable-payable balance exchange variability effect, nominated in foreign currency.
Sonae also uses financial instruments with the purpose of cash flow hedging that essentially respect the exchange rate hedging ("forwards") of loans and commercial operations that, however, do not configure perfect hedging relations, and so, do not receive hedge accounting treatment, but allow the reduction, in a very significant way, of the loan and receivable-payable balance exchange volatility, nominated in foreign currency.
Derivatives, despite being entered into with the above mentioned aims (mainly exchange forwards and derivatives in the form of or including interest rate options), do not qualify for hedge accounting, thus are initially recorded by their cost, which corresponds to its fair value, and are subsequently measured at fair value through profit and loss. The derivatives fair value is estimated internally by the use of specific software.
When embedded derivatives exist, they are accounted for as separate derivatives when the risks and the characteristics are not closely related to economic risks and characteristics of the host instruments, and this is not stated at fair value through profit or loss.
Sonae may agree to become part of a derivative transaction in order to fair value hedge some interest rate exposure. In these cases, derivatives are recorded at fair value through profit or loss and the effective portion of the hedging relationship is adjusted in the carrying amount of the hedged instrument, if not stated at fair value (namely loans recorded at amortised cost), through profit or loss.
Own shares are recorded at acquisition cost as a reduction to equity. Gains or losses arising from sales of own shares are recorded in Reserves and retained earnings.
Cash and cash equivalents include cash on hand, cash at banks, term deposits and other treasury applications which mature in less than three months and are subject to insignificant risk of change in value.
In the consolidated statement of cash flows, cash and cash equivalents also include bank overdrafts, which are included in the balance sheet caption Borrowings.
All the amounts included in this caption can be reimbursed at demand as there are no pledges or guarantees over these assets.
Share-based payments result from deferred performance bonus plans that are referenced to Sonae share price and/or that of its publicly listed affiliated companies (Sonae Sierra uses the "Net Asset Value" as a reference) and vest within a period of 3 years after being granted.
When the plans set out by Sonae are settled through the delivery of its own shares, the value of this responsibility is determined at the time of assignment based on the fair value of shares allotted and recognized during the period of deferment of each plan. The fair value of stock options is determined based on the model of "Black-Scholes". The responsibility is posted in equity, in the caption "Other revenues and retained earnings" against staff costs.
When the settlement is made in cash, the value of these responsibilities is determined at the time of assignment (usually in March of each year) and subsequently updated at the end of each reporting period depending on the number of shares or options on shares allotted and the fair value of the reporting date. The responsibility is registered on staff costs and other liabilities, linearly between the date of assignment and expiration date, in proportion to the time between those dates, in the case of shares or share options redeemable in cash.
Contingent liabilities are not recorded in the consolidated financial statements. Instead they are disclosed in the notes to the financial statements, unless the probability of a cash outflow is remote, in which case, no disclosure is made.
Contingent assets are not recorded in the consolidated financial statements but disclosed when future economic benefits are probable.
The tax charge for the year is determined based on the taxable income of companies included on consolidation and considers deferred taxation.
Current income tax is determined based on the taxable income of companies included on consolidation, in accordance with the tax rules in force in the respective country of incorporation.
Deferred taxes are calculated using the balance sheet liability method, reflecting the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred tax assets and liabilities are calculated and annually remeasured using the tax rates that have been enacted or substantively enacted and therefore are expected to apply in the periods when the temporary differences are expected to reverse.
Deferred tax assets are recognised only when it is probable that sufficient taxable profits will be available against which the deferred tax assets can be used, or when taxable temporary differences are recognised and expected to reverse in the same period. At each balance sheet date a review is made of the deferred tax assets recognised, which are reduced whenever their future use is no longer probable.
Deferred tax assets and liabilities are recorded in the income statement, except if they relate to items directly recorded in equity. In these cases the corresponding deferred tax is recorded in equity.
Revenue from the sale of goods is recognised in the income statement when the risks and benefits have been transferred to the buyer and the amount of the revenue can be measured reasonably. Sales are recognised net of sales taxes and discounts and other expenses arising from the sale, and are measured as the fair value of the amount received or receivable.
Revenue from services rendered is recognised in the income statement taking into consideration the stage of completion of the transaction at the balance sheet date and include fixed and variable rents billed to shopkeepers, recoverable common expenses from shopkeepers, exploration revenue from car parks and commissions arising from insurance mediation.
Revenue from admission rights and store transfer taxes are recognised in the consolidated income statement under "Other income" and under Services rendered, respectively, when billed to the tenant. Costs from discounts given over the rent and compensations are recognised in the consolidated income statement under Services Rendered and "Other expenses", respectively, when granted to the tenant.
With regards to services rendered by travel agencies, revenue is recognized with the issuance of invoice. At balance sheet date, adjustments are made under Other current assets and Other current liabilities in order to accrue for revenue of the services already rendered but whose billing had not occurred yet, as well as for the associated subcontract expenditures.
Revenue from Telecommunications services is recognised in the period in which it occurs. Such services are invoiced on a monthly basis. Revenues not yet invoiced, from the last invoicing cycle to the end of the month, are estimated and recorded based on actual traffic. Differences between the estimated and actual amounts, which are usually not material, are recorded in the following period.
The income related to prepaid cards is recognised whenever the minutes are used. At the end of each period the minutes still to be used are estimated and the amount of income associated with those minutes is deferred.
The income related to the commissions generated by the insurance mediation activity is recorded at the moment of the premium payment by the policyholder. No premium is accounted before it has been received. In that moment, Sonae posts a liability related with the obligation to transfer the insurance premium net of commissions, to the respective insurance company.
In cases where the premium is directly paid to the insurance company, Sonae records it's commission in the moment in which is informed of the premium payment by the policyholder to the insurance company.
The deferral of revenue related with the customer loyalty programmes by the attribution of points or discounts in future purchases, in the Retail and Telecommunications segments, are quantified having in account the probability of their exercise and are deducted to the revenue at the moment of his generation. The corresponding liability is presented in the caption "Other creditors".
The income arising from the services rendered are recognized in the income statement with reference to the stage of completion of the services rendered at the balance sheet date.
Dividends are recognised as income in the year they are attributed to the shareholders.
Income and expenses are recorded in the year to which they relate, independently of the date of the corresponding payment or receipt. Income and expenses for which their real amount is not known are estimated.
Other current assets and other current liabilities include income and expenses of the reporting year which will only be invoiced in the future. Those captions also include receipts and payments that have already occurred but will only correspond to income or expenses of future years, when they will be recognised in the income statement.
Transactions in currencies other than the euro, are translated to euro using the exchange rate as at the transaction date.
At each balance sheet date, all monetary assets and liabilities expressed in foreign currencies are translated to the functional currency of each foreign company at the exchange rates as at that date. All non-monetary assets and liabilities recorded at fair value and stated in foreign currencies are converted to the functional currency of each company, using the exchange rate at the date the fair value was determined.
Exchange gains and losses arising from differences between historical exchange rates and those prevailing at the date of collection, payment or the date of the balance sheet, are recorded as income or expenses of the period, except for those related to non-monetary assets or liabilities, for which adjustments to fair value are directly recorded under equity.
When Sonae wants to reduce currency exposure, it negotiates hedging currency derivatives (Note 2.13.g)).
Events after the balance sheet date that provide additional information about conditions that existed at the balance sheet date (adjusting events), are reflected in the consolidated financial statements. Events after the balance sheet date that are nonadjusting events are disclosed in the notes when material.
The most significant accounting estimates reflected in the consolidated income statements include:
Estimates used are based on the best information available during the preparation of consolidated financial statements and are based on best knowledge of past and present events. Although future events are neither controlled by the Sonae nor foreseeable, some could occur and have impact on the estimates. Changes to the estimates used by the management that occur after the date of these consolidated financial statements, will be recognised in net income, in accordance with IAS 8, using a prospective methodology.
The main estimates and assumptions in relation to future events included in the preparation of consolidated financial statements are disclosed in the correspondent notes.
In order to optimise insurance costs, Sonae, through a wholly owned subsidiary, enters into reinsurance operations over non-life insurance contracts entered into by subsidiaries and related of the Efanor Group.
The subsidiary of Sonae acts like an intermediate in the assurance operations as a way to optimise insurance coverage and retention levels in accordance with the needs of each business, ensuring effective insurance management worldwide. The retained risk is immaterial in the context of reinsurance carried out.
Premiums written on non-life insurance contracts and associated acquisition costs are recognised as income and cost on a prorata basis over the term of the related risk periods, through changes in the provision for unearned premiums.
The provision for unearned premiums (Note 33) reflects the portion of non-life insurance premiums written attributable to future years, namely the portion corresponding to the period between the balance sheet date and the end of the period to which the premium refers. It is calculated, for each contract in force.
The Provision for claims (Note 33) reflects the estimated amounts payable for claims, including claims that have been incurred but not reported and future administrative costs to be incurred on the settlement of claims under management. Provisions for claims recorded by Sonae are not discounted.
Reinsurer's share of technical provisions (Assets – Note 15) are determined by applying the above described criteria for direct insurance, taking into account the percentages ceded, in addition to other clauses existing in the treaties in force.
At each balance sheet date, Sonae assess the existence of evidence of impairment on assets originated by insurance or reinsurance contracts.
Information regarding operating segments identified is included in Note 50.
Legal reserves:
Portuguese commercial legislation requires that at least 5% of annual net profit must be appropriated to a legal reserve, until such reserve reaches at least 20% of the share capital. This reserve is not distributable, except in the case of liquidation of the Company, but it may be used to absorb losses, after all the other reserves are exhausted, or to increase the share capital.
Hedging reserve:
The Hedging reserve reflects the changes in fair value of "cash flow" hedging derivates that are considered as effective (Note 2.13.g)) and is not distributable or used to cover losses.
The currency translation reserve corresponds to exchange differences relating to the translation from the functional currencies of the Sonae's foreign subsidiaries and joint ventures into Euro, in accordance with the accounting policy described in Note 2.2.e)
Fair value reserve:
This reserve arises on the revaluation of available-for-sale financial assets as mentioned in Note 2.13.a).
The ultimate purpose of financial risk management is to support Sonae in the achievement of its strategy, reducing unwanted financial risk and volatility and mitigate any negative impacts in the income statement arising from such risks. Sonae's attitude towards financial risk management is conservative and cautious. Derivatives are used to hedge certain exposures related to its operating business and, as a rule, Sonae does not enter into derivatives or other financial instruments that are unrelated to its operating business or for speculative purposes.
Due to its diversified nature Sonae is exposed to a variety of financial risks, consequently each Sub-holding is responsible for, where applicable, for setting its own financial risk management policies, to monitor their own exposure and to implement their approved policies. Therefore for some risks there are not Sonae global risk management policies, but rather, where appropriate,
customised risk management policies at Sub-holding level, existing, however, common guiding principles. Financial risk management policies are approved by each Executive Committee and exposures are identified and monitored by each Subholding Finance Department. Exposures are also monitored by the Finance Committee as mentioned in the Corporate Governance Report.
The Finance Committee coordinates and reviews, amongst other responsibilities, global financial risk management policies. The Finance Department of Sonae Holding is responsible for consolidating and measuring the Company's financial risk exposure, being also responsible for assisting each Sub-holding in managing their own currency, interest rate, liquidity and refinancing risks trough the Corporate Dealing Desk. Exposures are recorded in a main system (Treasury Management System). Risk control and reporting is carried out both at Sub-holding level, on a daily basis and on a consolidated basis for the monthly Finance Committee meeting.
Credit risk is defined as the probability of a counterparty defaulting on its contractual obligations resulting in a financial loss. It is shown in two main ways:
The credit risk in what Financial Instruments is concerned arises mainly from holding cash and cash equivalents instruments, deposits with banks and financial institutions or resulting from derivative financial instruments entered into in the normal course of its hedging activities or from its lending activities to subsidiaries and associates in order to reduce the probability of counterpart default Sonae transactions (short term investments and derivatives) are only contracted in accordance with the following principles:
Only carry out transactions (short term investments and derivatives) with counterparties that have at least a credit rating of BBB from Moody's and/or Baa2 from Standard & Poor's or equivalent (this information is supplied trough independent market information systems);
Sonae only enters into eligible and approved financial instruments. The definition of the eligible instruments, for the investment of temporary excess of funds or derivatives, was made in a conservative approach (essentially consisting in short term monetary instruments, in what excess of funds is concerned and instruments that can be split into components and that can be properly fair valued, with a loss cap);
In relation to excess funds: i) those are preferentially used, whenever possible and when more efficient to repay debt, or invested preferably in instruments issued by existing relationships banks in order to reduce exposure on a net basis, and ii) may only be applied in pre approved instruments;
In some cases Sub-holdings can define more strict rules regarding counterparty exposure or more conservative policies;
Any departure from the above mentioned policies needs to be pre approved by the respective Executive Committee/Board of Directors of each Sub-holding.
Given the above mentioned policies and the minimum credit ratings Sonae does not expect any material failure in contractual obligation from its external counterparties nevertheless exposure to each counterparty resulting from financial instruments and the credit rating of potential counterparties is regularly monitored by the Sub-holding Finance Department and any departure is promptly reported to the respective Executive Committee/Board of Directors and to the Sonae Finance Committee.
In this case due to each business characteristics and consequently of different credit risk typology, each sub-holding determines the most appropriate policy, as described above. However the policies follow the same wide principles of: prudence, conservatism, and the implementation of control mechanisms.
The credit risk in the scope of its current operational activity is controlled through a system of gathering financial and qualitative information from independent entities that supply risk information, in order to allow the assessment of credit risk from debtors. Credit risk is mainly originated by sales to other retail operators and by advances made to or discounts billed to suppliers.
The credit risk results essentially of the risk of credit of the tenants of the commercial centres managed by Sub-holding and of the other debtors. Shopping Centre storekeepers credit risk monitoring is made by the adequate assessment of risk before the storekeepers are accepted and by the establishment of conservative credit limits for each storekeeper.
The Sub-holding exposure to credit risk is mainly associated with the accounts receivable related to current operational activities. The credit risk management purpose is to guarantee that the amounts owed by debtors are effectively collected within the periods negotiated without impacting the financial health of the Sub-holding. Sonaecom uses credit rating agencies and has specific departments responsible for risk control, collections and management of processes in litigation, which all contribute to the mitigation of credit risk.
The credit risk in the context of the current operating activity is controlled through a system of collecting qualitative and financial information provided by recognized entities that supply information of risks, which allow to evaluate the viability of the of customers in fulfilling their obligations, aimed at reducing the risk of concession credit, fundamentally originated by the rendering of travel agencies services.
Sonae Holding is a company without any relevant commercial or trade activity, other than the normal activities of a portfolio manager. As such, it is only exposed, on a regular basis, to credit risk resulting from its investing activities (holding cash and cash equivalents instruments, deposits with banks and financial institutions or resulting from derivative financial instruments entered into in the normal course of its hedging activities) in accordance with the principles mentioned in point 3.2.1.
Additionally Sonae Holding may also be exposed to credit risk as a result of it's portfolio manager activities (buying or selling investments), but in those exceptional situations risk reducing mechanisms and actions are implemented on a case by case basis under the supervision of the Executive Committee (requesting bank guarantee, escrow accounts, obtaining collaterals, amongst others).
The amount related to customers, other debtors and other assets presented in Financial Statements, which are net of impairment losses represent Sonae exposure to credit risk.
Sonae has the need, regularly, to raise external funds to finance its activities and investing plans. It holds a diversified loan portfolio, essentially made of long term bonds, long term project finance, mutual's, structured facilities, but which also includes a
variety of other short-term financing facilities in the form of commercial paper and credit lines. As at 31 December 2009 the total gross debt was 3.258 million euro (3.387 million euro as at 31 December 2008).
The purpose of liquidity risk management is to ensure, at all times, that Sonae has the financial capacity to fulfil its commitments as they become due and to carry on its business activities and strategy. Given the dynamic nature of its activities, Sonae needs a flexible financial structure and therefore uses a combination of:
Maintaining with its relationship banks, a combination of short and medium term committed credit facilities, commercial paper programme with sufficiently comfortable previous notice cancellation periods with a range that goes up to 360 days;
Maintenance of programs with different periods and terms, that allow, in some cases, to place the debt directly in institutional investors;
Detailed rolling annual financial planning, with monthly, weekly and daily cash adjustments in order to forecast cash requirements;
Diversification of financing sources and counterparties;
Ensuring an adequate debt average maturity, by issuing long term debt and avoiding excessive concentration of scheduled repayments. At the end of 2009, Sonae´s average debt maturity (considering 100% of Sonae Sierra´s debt) was approximately 5.1 years ( 5.7 years as at December 2008);
Negotiating contractual terms which reduce the possibility of the lenders being able to demand an early termination;
Where possible, by prefinancing forecasted liquidity needs;
Management procedures of short term applications, assuring that the maturity of the applications will match with foreseen liquidity needs, including a margin to hedge forecasting deviations. The margin of error needed in the treasury department prediction, will depend on the confidence degree and it will be determined by the business. The reliably of the treasury forecasts is an important variable to determinate the amounts and the periods of the market applications-borrowings.
The maturity table of each major class of financial liabilities is presented in Notes 25, 26, 28, 29, 30,31 and 32, based on the undiscounted cash flows of financial liabilities based on the earliest date on which Sonae can be required to pay ("worst case scenario").
A liquidity reserve in form of credit lines with its relationship banks is maintained by Sonae, to ensure the ability to meet its commitments without having to refinance itself in unfavourable terms. The value of loans maturing in 2010 is of 314 million euro (365 million euro maturing in 2009) and as at 31 December 2009 Sonae had undrawn committed credit facilities of 784 million euro (605 million euro in 2008) cancellable within a previous notice of less than one year and 339 million euro (259 million euro in 2008) cancellable with a previous notice of no less than 360 days.
Additionally, Sonae held, as at 31 December 2009, cash and cash equivalents and current investments amounting to 230 million euro (248 million euro as at 31 December 2008). Consequentially, Sonae expects to meet all its obligations by means of its operating cash flows and its financial assets as well as from drawing existing available credit lines, if needed.
As each Sub-holding operates in different markets and in different business environments, there is no single policy applicable to Sonae, but rather policies adjusted to each Sub-holding exposure which one described below. As previously mentioned, Sonae exposure is regularly monitored by the Finance Committee, at a group level, and at each Sub-holding level. Although there is no wide risk management interest rate policy in what concerns the derivatives negotiation, there are principles that have to be followed by all the companies and that are referred below:
Sonae hedging activities do not constitute a profit-making activity and derivatives are entered into without any speculation purpose;
For each derivative or financial instrument used to hedge a specific loan, the interest payment dates of the hedged loans should be consistent with the settlement dates of the hedging instruments to avoid any mismatch and hedging inefficiencies;
Perfect match between the base rates: the base rate used in the derivative or hedging instrument should be the same as that of the hedged facility / transaction;
Since the beginning of the transaction, the maximum cost of the hedging operation is known and limited, even in scenarios of extreme change in market interest rates, so that the resulting interest rates are within the cost of the funds considered in Sonae's business plans (or in extreme scenarios are not worse than the underlying cost of the floating rate underlying);
The counterparties of the derivative hedging instruments are limited to highly rated financial institutions, as described in 3.2. above / Credit Risk Management. It is Sonae policy that, when contracting such instruments, preference should be given to financial institutions that form part of Sonae's relationships, whilst at the same time obtaining quotes from a sufficient large sample of banks to ensure optimum conditions;
In determining the fair value of hedging operations Sonae uses certain methods, such as option valuation and discounted future cash flow models, using assumptions based on market interest rates, foreign exchange rates, volatility among others prevailing at the balance sheet date. Comparative financial institution quotes for specific or similar instruments are used as benchmark for the valuation;
All transactions have to be documented under ISDA's Agreements (International Swaps and Derivatives Association);
All transactions which do not follow the rules mentioned above have to be individually approved by the respective Executive Committee/ Board of Directors, and reported to Finance Committee, namely transactions entered into with the purpose of optimising the cost of debt when deemed appropriate according to prevailing financial market conditions.
Sub-holding exposure to interest rates arises mainly from long term loans which bear interests at Euribor plus spread.
Sonae Investimentos purpose is to limit cash-flows volatility and results, considering the profile of its operational activity, by using an appropriate mix of fixed and variable interest rate debt. Sonae Group policy allows the use of interest rate derivatives to decrease the exposure to Euribor fluctuations but does not allow for trading purposes.
Sonae Sierra's income and operating cash-flows are substantially independent of changes in market interests rates, as its cash and cash equivalents and its financing granted to other companies of the Group are dependent only of the evolution of the interest rates in Euro, which have had a minimum change.
In relation to long-term borrowings and in order to hedge the volatility of long term interest rates, Sonae Sierra uses, whenever appropriate, cash flow hedge instruments in the form of swaps or zero cost collars, which represent perfect hedges of those longterm borrowings. In certain long-term borrowings Sonae Sierra chose to have a fixed interest rate in the first years of the financing agreement and study afterwards the possibility to negotiate interest rate swaps or zero cost collars for the remaining period.
Sonaecom's total debt is indexed to variable rates, exposing the total cost of debt to a high risk of volatility. The impact of this volatility on the Group result or on its shareholders' equity is mitigated by the effect of the following factors (i) relatively low level of financial leverage; (ii) possibility of using interest rate hedging derivative instruments, as mentioned below; (iii) possible correlation between the market interest rates levels and economic growth, the latter having a positive effect on other lines of the Sub-holding consolidated results (namely operational), thus partially offsetting the increase of financial costs ("natural hedge"); and (iv) the availability of consolidated liquidity or cash, also bearing interests at variable rates.
Sonaecom only uses derivatives or similar transactions to hedge those interest rate risks considered significant. Sonaecom respects the same principles adopted by Sonae in determining and using instruments to hedge interest rate risks.
As all Sonaecom's borrowings (Note 50) bear interests at variable rates, interest rate swaps and other derivatives are used to hedge future changes in cash flow relating to interest payments. Interest rate swaps have the financial effect of converting the respective borrowings from floating rates to fixed rates. Under interest rate swaps, the Company agrees with third parties (banks) to exchange, in pre-determined periods, the difference between the amount of interest calculated at the fixed contract rate and the floating rate at the time of re-fixing, by reference to the respective agreed notional amounts.
Sonaecom's Board of Directors approves the terms and conditions of the funding with a significant impact on Sonaecom, based on an analysis of the debt structure, the inherent risks and the different options in the market, particularly as regards the type of interest rate (fixed / variable ). Under this policy, the Executive Committee is responsible for decisions regarding the contracting of occasional interest rate hedging derivative financial instruments, through monitoring the conditions and alternatives that exist in the market.
The operating segment exposure to interest rate arises essentially from short-term bank loans or loans payable to shareholders, which bears interests at Euribor market rates. The impact of this volatility on income or equity is mitigated by the following factors: (i) controlled financial leverage with conservative use of bank lending; (ii) possible correlation between the market interest rate levels and economic growth, the latter having a positive effect on other lines of the operating segment results (namely operational), thus partially offsetting the increased financial costs ("natural hedge").
Sonae Holding is exposed to cash flow interest rate risk in respect of items in the balance sheet (Loans and Short Term Investments) and to fair value interest rate risk as a result of interest rate derivatives (swaps, FRA's and options). All Sonae Holding debt bears variable interest rates, and interest rate derivatives may be entered into to convert part of the variable rate debt into fixed rate (usually through interest rate swaps or Forward Rate agreements), or to limit the maximum rate payable (usually through zero cost collars or purchased caps).
Sonae Holding mitigates interest rate risk by adjusting the proportion of its debt that bears fixed interest to that which bears floating interest although without a fixed goal or percentage to achieve, since hedging interest rate risk usually has an opportunity cost associated. Therefore a more flexible approach is considered preferable to a more strict traditional approach. Part of the risk is also mitigated by the fact that Sonae Holding grants loans to its subsidiaries as part of its normal activities and thus there may be some degree of natural hedging on a company basis, since if interest rates increase the additional interest paid would be partially offset by additional interest received.
Sonae Holding hedging activities do not constitute a profit-making activity and derivatives are deemed to be entered into without any speculation purpose. Strict rules are observed in relation to any derivative transaction entered into.
The interest rate sensitivity analysis is based on the following assumptions:
Changes in market interest rates affect the interest income or expense of variable interest financial instruments (the interest payments of which are not designated as hedged items of cash flow hedges against interest rate risks). As a consequence, these instruments are included in the calculation of income-related sensitivities;
Changes in market interest rates only affect interest income or expense in relation to financial instruments with fixed interest rates if these are recognised at their fair value. As such, all financial instruments with fixed interest rates that are carried at amortised cost are not subject to interest rate risk as defined in IFRS 7;
In the case of fair value hedges designed for hedging interest rate risks, when the changes in the fair values of the hedged item and the hedging instrument attributable to interest rate movements are offset almost completely in the income statement in the same period, these financial instruments are also not exposed to interest rate risk;
Changes in the market interest rate of financial instruments that were designated as hedging instruments in a cash flow hedge (to hedge payment fluctuations resulting from interest rate movements) affect the hedging reserve in equity and are therefore taken into consideration in the equity-related sensitivity;
Changes in the market interest rate of interest rate derivatives that are not part of a hedging relationship as set out in IAS 39 affect other financial income or expense and are therefore taken into consideration in the sensitivity calculations for changes in interest rate;
Changes in the fair values of derivative financial instruments and other financial assets and liabilities are estimated by discounting the future cash flows to net present values using appropriate market rates prevailing at the year end, and assuming a parallel shift in interest rate curves;
For the purposes of sensitivity analysis, such analysis is performed based on all financial instruments outstanding during the year.
Under these assumptions, if interest rates of euro denominated financial instruments had been 75 basis points higher, the consolidated net profit before tax of Sonae for the period ended as at 31 December 2009 would decrease by approximately 15 million euro, (10 million euro decrease as at 31 December 2008). The impact in equity (including minorities interests and excluding net income), as a consequence of interest rate change effect according to interest rate risk, would be an increase of, approximately, 16 million euro (increase by approximately 16 million euro in 2008).
Sonae operates at an international level, having subsidiaries that operate in different jurisdictions, and so it is exposed to foreign exchange rate risk. As each Sub-holding operates in different markets and in different business environments, there is no standard policy for Sonae, but rather individual policies for each Sub-holding which are stated below. Sonae's currency exposures are divided into two levels: transaction exposures (foreign exchange exposures relating to contracted cash flows and balance sheet items where changes in exchange rates will have an impact on earnings and cash flows) and translation exposure (equity in foreign subsidiaries). Although there is not global management exchange rate risk policy in what concerns hiring derivatives to managing exchange interest risk, it also applies to all group companies, with the necessary adaptations, the principles referred at 3.4.1).
The impact on the financial statements of changes in exchange rate is immaterial, as the most part of the transactions are denominated in euro. Sonae Investimentos is only exposed to foreign exchange risk due to inventories imports made and denominated in US Dollars.
The exchange risk management purpose is to provide a stable decision platform when deciding and negotiating the purchases of inventories establishing fixed exchange rates. The hedging accompanies all the purchase process, since procurement up to the formal agreement of purchase.
The exchange risk exposure is monitored through the purchase of forwards with the goal of minimising the negative impacts of volatility in exposure level as a consequence of changes of the amounts of imports denominated in other currencies rather than euro.
The main activity of each company is developed inside its country of origin and consequently the majority of the company transactions are maintained in its functional currency. The policy to hedge this specific risk is to avoid, if possible, the contracting of services in foreign currency.
The sub-holding operates internationally, having subsidiaries that operate in Brazil, United Kingdom, Poland, United States of America, Mexico, Australia, Egypt, Malaysia and Ireland and so it is exposed to foreign exchange rate risk.
Foreign exchange risk management seeks to minimise the volatility of investments and transactions made in foreign currency and contributes to reduce the sensitivity of Sonaecom results to changes in foreign exchange rates.
Whenever possible, the Sonaecom uses natural hedges to manage exposure, by offsetting credits granted and credits received expressed in the same currency. When such procedure is not possible, the Sonaecom adopt derivatives financial hedging instruments.
Sonaecom exposure to exchange rate risk results mainly from the fact that some of its subsidiaries report in currencies other than the Euro, the risk relating to the operations being insignificant.
The impact on the financial statements of changes in exchange rate is immaterial, as most part of the transactions are denominated in euro.
Insurance brokerage activity is developed in different countries. When transactions are made in a different currency than the one in the country where the entity operates, exposure to exchange rate risk is minimized by hiring hedging derivatives.
Due to the nature of holding company, Sonae Holding, has very limited transaction exposure to foreign exchange risk. Normally, when such exposures arise foreign exchange risk management seeks to minimize the volatility of such transactions made in foreign currency and to reduce the impact on the Profit and loss of exchange rate fluctuations. When significant material exposures occur with a high degree of certainty, Sonae Holding hedges such exposures mainly through forward exchange rate contracts. For uncertain exposures, options may be considered, subject to previous approval from the company's Executive Committee.
As at 31 December 2009 and 2008 the assets and liabilities denominated in a currency different from the subsidiary functional currency where the following (amounts in euro):
| Assets | Liabilities | |||||
|---|---|---|---|---|---|---|
| 31 December 2009 | 31 December 2008 31 December 2009 |
31 December 2008 | ||||
| Euro | - | - | 926,516 | 127,595 | ||
| Brazilian Real | 4,855,304 | 13,746,578 | 8,426,783 | 1,972,126 | ||
| British Pound | 693,369 | 592,721 | 3,812,122 | 3,549,021 | ||
| US Dollar | 2,183,739 | 6,499,470 | 7,266,004 | 7,556,866 | ||
| Other Currencies | 479,603 | 113,439 | 245,033 | 20,169 |
The amounts presented above, only include assets and liabilities expressed in different currency than the functional currency used by the affiliated or jointly controlled company. Therefore it does not represent any risk of financial statements translation. Considering the exposure above, which is considered immaterial, no sensitivity analysis is disclosed.
Sonae is exposed to equity price risk arising from equity investments, held for strategic rather than for trading purposes as the group does not actively trade these investments, which are disclosed in Note 7.
In 2007, Sonae entered into a Total Return Swap (TRS) with Sonae Holding shares as underlying. As explained in Note 23 the Total Return Swap precluded the derecognition of those own shares, and as such a change in the Sonae Holding, and Sonae Capital, SGPS, SA share price will have an impact on the cash flows by means of TRS cash settlements. If Sonae price had been 1% higher/lower, it would have 1.3 million euro additional receiving/payments (at 31 December 2008 the impact would be 0.7 million euro).
Group companies included in the consolidated financial statements, their head offices and percentage of share capital held by the Sonae as at 31 December 2009 and 2008 are as follows:
| Percentage of capital held | ||||||
|---|---|---|---|---|---|---|
| 31 December 2009 | 31 December 2008 | |||||
| COMPANY | Head Office | Direct | Total | Direct | Total | |
| Sonae, SGPS, S.A. | Maia | HOLDING | HOLDING | HOLDING | HOLDING | |
| Retail | ||||||
| Arat Inmuebles, SA | a) | Madrid (Spain) | 100.00% | 100.00% | 100.00% | 100.00% |
| Azulino Imobiliária, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% | |
|---|---|---|---|---|---|---|---|
| 1) | BB Food Service, SA | a) | Maia | 100.00% | 100.00% | - | - |
| Bertimóvel - Sociedade Imobiliária, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% | |
| Best Offer - Prestação de Informações por Internet, SA |
a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% | |
| Bikini, Portal de Mulheres, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% | |
| 1) | Bom Momento - Comércio Retalhista, SA | a) | Maia | 100.00% | 100.00% | - | - |
| Canasta - Empreendimentos Imobiliários, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% | |
| Carnes do Continente - Industria e Distribuição Carnes, SA |
a) | Santarém | 100.00% | 100.00% | 100.00% | 100.00% | |
| Chão Verde - Sociedade de Gestão Imobiliária, SA |
a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% | |
| Citorres - Sociedade Imobiliária, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% | |
| Contibomba - Comércio e Distribuição de Combustíveis, SA |
a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% | |
| Contimobe - Imobiliária de Castelo de Paiva, SA |
a) | Castelo de Paiva | 100.00% | 100.00% | 100.00% | 100.00% | |
| Continente Hipermercados, SA | a) | Lisbon | 100.00% | 100.00% | 100.00% | 100.00% | |
| Cumulativa - Sociedade Imobiliária, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% | |
| Difusão - Sociedade Imobiliária, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% | |
| Edições Book.it, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% | |
| Efanor - Design e Serviços, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% | |
| Estevão Neves - Hipermercados da Madeira, SA |
a) | Madeira | 100.00% | 100.00% | 100.00% | 100.00% | |
| Farmácia Selecção, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% | |
| Fozimo - Sociedade Imobiliária, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% | |
| Fozmassimo - Sociedade Imobiliária, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% | |
| 2) | Fundo de Investimento Imobiliário Fechado Imosede |
a) | Maia | 54.55% | 54.55% | 49.oo% | 49.00% |
| Fundo de Investimento Imobiliário Imosonae Dois |
a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% | |
| Global S - Hipermercado, Lda | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% |
| 1) | Good and Cheap - Comércio Retalhista, SA | a) | Matosinhos | 100.00% | 100.00% | - | - |
|---|---|---|---|---|---|---|---|
| 1) | Hipotética - Comércio Retalhista, SA | a) | Matosinhos | 100.00% | 100.00% | - | - |
| 3) | Sonaerp – Retail Properties, SA | a) | Porto | 100.00% | 100.00% | 100.00% | 100.00% |
| Igimo - Sociedade Imobiliária, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% | |
| Iginha - Sociedade Imobiliária, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% | |
| Imoconti - Sociedade Imobiliária, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% | |
| Imoestrutura - Sociedade Imobiliária, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% | |
| Imomuro - Sociedade Imobiliária, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% | |
| Imoresultado - Sociedade Imobiliária, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% | |
| Imosistema - Sociedade Imobiliária, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% | |
| Infofield - Informática, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% | |
| Inventory - Acessórios de Casa, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% | |
| 1) | Just Sport - Comércio de Artigos de Desporto, SA |
a) | Matosinhos | 100.00% | 100.00% | - | - |
| Marcas MC, zRT | a) | Budapest (Hungary) |
100.00% | 100.00% | 100.00% | 100.00% | |
| MJLF - Empreendimentos Imobiliários, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% | |
| 1) | MC - SGPS, SA | a) | Matosinhos | 100.00% | 100.00% | - | - |
| Modalfa - Comércio e Serviços, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% | |
| 1) | Modalloop – Vestuário e Calçado, SA | a) | Matosinhos | 100.00% | 100.00% | - | - |
| Modelo Continente Hipermercados,SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% | |
| Modelo Continente Seguros - Sociedade Mediação, SA |
a) | Porto | 100.00% | 87.50% | 100.00% | 100.00% | |
| Modelo Hiper Imobiliária, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% | |
| Modelo Hipermercados Trading, SA | a) | Madrid (Spain) | 100.00% | 100.00% | 100.00% | 100.00% | |
| Modelo.com - Vendas p/ Correspond., SA | a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% | |
| NA - Comércio de Artigos de Desporto, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% | |
| NA - Equipamentos para o Lar, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% | |
| Peixes do Continente - Indústria e Distribuição de Peixes, SA |
a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% |
| Pharmacontinente - Saúde e Higiene, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% | |
|---|---|---|---|---|---|---|---|
| 5) | Pharma Concept – Actividades em Saúde, SA | a) | Matosinhos | 100,00% | 100,00% | - | - |
| Predicomercial - Promoção Imobiliária, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% | |
| Selifa - Empreendimentos Imobiliários de Fafe, SA |
a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% | |
| Sempre à Mão - Sociedade Imobiliária, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% | |
| Sesagest - Proj.Gestão Imobiliária, SA | a) | Porto | 100.00% | 100.00% | 100.00% | 100.00% | |
| Socijofra - Sociedade Imobiliária, SA | a) | Gondomar | 100.00% | 100.00% | 100.00% | 100.00% | |
| Sociloures - Sociedade Imobiliária, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% | |
| Soflorin, BV | a) | Amsterdam (The Netherlands) |
100.00% | 100.00% | 100.00% | 100.00% | |
| Solaris Supermercados, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% | |
| Sonae Capital Brasil, Lda | a) | São Paulo (Brazil) | 100.00% | 100.00% | 100.00% | 100.00% | |
| 1) | Sonae Center Serviços II, SA | a) | Maia | 100,00% | 100,00% | - | - |
| 6) | Sonae Investimentos, SGPS, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% |
| SIAL Participações, Ltda | a) | São Paulo (Brazil) | 100.00% | 100.00% | 100.00% | 100.00% | |
| Sonae Retalho España - Servicios Generales, SA |
a) | Madrid (Spain) | 100.00% | 100.00% | 100.00% | 100.00% | |
| 4) | Sonae Specialized Retail, SGPS, SA | a) | Matosinhos | 100,00% | 100,00% | 100,00% | 100,00% |
| Sondis Imobiliária, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% | |
| Sontária - Empreendimentos Imobiliários, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% | |
| Sonvecap, BV | a) | Amsterdam (The Netherlands) |
100.00% | 100.00% | 100.00% | 100.00% | |
| Sport Zone - Comércio de Artigos de Desporto, SA |
a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% | |
| Sport Zone Espanã - Comércio de Articulos de Deporte, SA |
a) | Madrid (Spain) | 100.00% | 100.00% | 100.00% | 100.00% | |
| 5) | Têxtil do Marco, SA | a) | Marco de Canaveses |
80,37% | 80,37% | - | - |
| Tlantic Portugal - Sistemas de Informação, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% | |
| Tlantic Sistemas de Informação, Ltda | a) | Porto Alegre (Brazil) |
100.00% | 100.00% | 100.00% | 100.00% |
| Todos os Dias - Com. Ret. Expl. C. Comer., SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% | |
|---|---|---|---|---|---|---|---|
| Valor N, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% | |
| 1) | Well W - Electrodomésticos e Equipamentos, SA |
a) | Matosinhos | 100.00% | 100.00% | - | - |
| Worten - Equipamento para o Lar, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% | |
| Worten España Distribución, S.L. | a) | Madrid (Spain) | 100.00% | 100.00% | 100.00% | 100.00% | |
| 7) | Zippy – Comércio e Distribuição, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% |
| 8) | Zippy - Comércio Y Distribución, SA | a) | Madrid (Spain) | 100.00% | 100.00% | 100.00% | 100.00% |
| Telecommunications | |||||||
| Be Artis - Concepção, Construção e Gestão de Redes de Comunicações, SA |
a) | Maia | 100.00% | 54.23% | 100.00% | 53.95% | |
| Be Towering – Gestão de Torres de Telecomunicações, SA |
a) | Maia | 100.00% | 54.23% | 100.00% | 53.95% | |
| 9) | We Do Technologies Australia PTY Limited | a) | Australia | 100.00% | 54.23% | 100.00% | 53.95% |
| 10) | We Do Poland Sp.Z.o.o. | a) | Posnan (Poland) | 100.00% | 54.23% | 100.00% | 53.95% |
|---|---|---|---|---|---|---|---|
| 11) | Cape Tecnologies (U.K) Limited | a) | Cardiff (U.K.) | 100.00% | 54.23% | 100.00% | 53.95% |
| Cape Tecnologies Limited | a) | Dublin (Irland) | 100.00% | 54.23% | 100.00% | 53.95% | |
| Digitmarket - Sistemas de Informação, SA | a) | Maia | 75.10% | 40.72% | 75.10% | 40.52% | |
| Lugares Virtuais, SA | a) | Maia | 100.00% | 54.23% | 100.00% | 53.95% | |
| M3G - Edições Digitais, SA | a) | Maia | 100.00% | 54.23% | 100.00% | 53.95% | |
| Magma - Operação de Titularização de Créditos |
c) | Portugal | 100.00% | 54.23% | 100.00% | 53.95% | |
| Mainroad Serviços em Tecnologias de Informação, SA |
a) | Maia | 100.00% | 54.23% | 100.00% | 53.95% | |
| Miauger - Org. Gestão Leilões Electronicos, SA | a) | Maia | 100.00% | 54.23% | 100.00% | 53.95% | |
| Per-Mar - Sociedade de Construções, SA | a) | Maia | 100.00% | 54.23% | 100.00% | 53.95% | |
| Praesidium Services Limited | a) | Berkshire (U.K.) | 100.00% | 54.23% | 100.00% | 53.95% | |
| Praesidium Tecnologies Limited | a) | Berkshire (U.K.) | 100.00% | 54.23% | 100.00% | 53.95% | |
| Público - Comunicação Social, SA | a) | Porto | 100.00% | 54.23% | 100.00% | 53.95% |
| Saphety Level - Trusted Services, SA | a) | Maia | 86.99% | 47.17% | 86.99% | 46.93% | |
|---|---|---|---|---|---|---|---|
| Sonae Telecom, SGPS, SA | a) | Maia | 100.00% | 54.23% | 100.00% | 53.95% | |
| Sonaecom - Serviços de Comunicação, SA | a) | Maia | 100.00% | 54.23% | 100.00% | 53.95% | |
| Sonaecom - Sistemas de Informação, SGPS, SA |
a) | Maia | 100.00% | 54.23% | 100.00% | 53.95% | |
| Sonaecom BV | a) | Amsterdam (The Netherlands) |
100.00% | 54.23% | 100.00% | 53.95% | |
| Sonaecom, SGPS, SA | a) | Maia | 55.12% | 54.23% | 53.95% | 53.95% | |
| Sonaetelecom, BV | a) | Amsterdam (The Netherlands) |
100.00% | 54.23% | 100.00% | 53.95% | |
| Tecnológica Telecomunicações Ltda | a) | Rio de Janeiro (Brazil) |
99.99% | 54.17% | 99.99% | 53.89% | |
| 12) | Telemilénio - Telecomunicações Soc.Unipessoal, Lda |
a) | Lisbon | 100.00% | 54.23% | 100.00% | 53.95% |
| We Do Brasil - Soluções Informáticas, Ltda | a) | Rio de Janeiro (Brazil) |
99.91% | 54.28% | 99.91% | 53.90% | |
| 14) | We Do Cape Tecnologies Americas, Inc. | a) | Miami (USA) | 100.00% | 54.23% | 100.00% | 53.95% |
| We Do Consulting - Sistemas de Informação, SA |
a) | Maia | 100.00% | 54.23% | 100.00% | 53.95% | |
| We Do Technologies (UK) Limited | a) | Berkshire (U.K.) | 100.00% | 54.23% | 100.00% | 53.95% | |
| We Do Technologies BV | a) | Amsterdam (The Netherlands) |
100.00% | 54.23% | 100.00% | 53.95% | |
| We Do Technologies Egypt Limited Liability Company |
a) | Cairo (Egypt) | 100.00% | 54.23% | 100.00% | 53.95% | |
| We Do Technologies Mexico S. de RL | a) | Mexico City | 100.00% | 54.23% | 100.00% | 53.95% | |
| Investment Management | |||||||
| 13) | ADD Avaliações Engenharia de Avaliações e Perícias, Ltda |
a) | Brazil | 100.00% | 50.00% | - | - |
| 13) | ADDmakler Administração e Corretagem de Seguros, Ltda |
a) | Brazil | 99.98% | 50.00% | - | - |
| 13) | ADDmakler Administradora, Corretora de Seguros Partic. Ltda |
a) | Brazil | 100.00% | 50.00% | - | - |
| 13) | Fontana Corretora de Seguros Ltda | a) | Brazil | 99.99% | 50.01% | - | - |
|---|---|---|---|---|---|---|---|
| 13) | Herco Consultoria de Risco e Corretora de Seguros, Ltda |
a) | Brazil | 100.00% | 50.01% | - | - |
| 13) | Larim Corretora de Resseguros Ltda | a) | Brazil | 99.99% | 50.01% | - | - |
| 13) | Lazam-mds Correctora Ltda | a) | Brazil | 100.00% | 50.01% | 45.00% | 45.00% |
| MDS - Corretor de Seguros, SA | a) | Porto | 100.00% | 50.01% | 100.00% | 100.00% | |
| 15) | MDS, SGPS, SA | a) | Maia | 50.01% | 50.01% | 100.00% | 100.00% |
| 1) | MDS, Consultores, SA | a) | Maia | 100.00% | 50.01% | - | - |
| 13) | Miral Administração e Corretagem de Seguros, Ltda |
a) | Brazil | 100.00% | 50.01% | - | - |
| Modelo - Distribuição de Materiais de Construção, SA |
b) | Maia | 50.00% | 50.00% | 50.00% | 50.00% | |
| 13) | RSI Corretora de Seguros, Ltda | a) | Brazil | 100.00% | 50.01% | - | - |
| 13) | Terra Nossa Corretora de Seguros, Ltda | a) | Brazil | 100.00% | 50.01% | - | - |
| Libra Serviços, Lda | a) | Funchal | 100.00% | 100.00% | 100.00% | 100.00% |
|---|---|---|---|---|---|---|
| Sonae Investments, BV | a) | Amsterdam (The Netherlands) |
100.00% | 100.00% | 100.00% | 100.00% |
| Sonae RE, SA | a) | Luxembourg | 99.92% | 99.92% | 100.00% | 100.00% |
| Sonaecenter Serviços, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% |
| Sonaegest-Soc.Gest.Fundos Investimentos, SA |
a) | Maia | 80.00% | 70.00% | 80.00% | 70.00% |
| Sontel, BV | a) | Amsterdam (The Netherlands) |
100.00% | 100.00% | 100.00% | 100.00% |
4) Ex - Modelo Continente - Operações de Retalho SGPS, SA;
These group companies are consolidated using the full consolidation method as described in Note 2.2.a).
Jointly controlled companies included in the consolidated financial statements, their head offices and the percentage of share capital held by the Group as at 31 December 2009 and 2008 are as follows:
| Percentage of capital held | ||||||
|---|---|---|---|---|---|---|
| 31 December 2009 | 31 December 2008 | |||||
| COMPANY | Head Office | Direct | Total | Direct | Total | |
| Shopping Centres | ||||||
| 3DO Holding GmbH | Dusseldorf (Germany) |
100.00% | 50.00% | 100.00% | 50.00% | |
| 3DO Shopping Centre GmbH | Dusseldorf (Germany) |
100.00% | 50.00% | 100.00% | 50.00% |
| 3shoppings – Holding, SGPS, SA | Maia | 100.00% | 25.05% | 100.00% | 25.05% | |
|---|---|---|---|---|---|---|
| Aegean Park, SA | Athens (Greece) | 100.00% | 25.00% | 100.00% | 25.00% | |
| Airone - Shopping Centre, Srl | Milan (Italy) | 100.00% | 25.05% | 100.00% | 25.05% | |
| ALEXA Administration GmbH | Berlin (Germany) | 100.00% | 25.00% | 100.00% | 25.00% | |
| ALEXA Holding GmbH | Dusseldorf (Germany) |
50.00% | 25.00% | - | - | |
| 1) | ALEXA Asset GmbH & Co | Dusseldorf (Germany) |
50.00% | 25.00% | 50.00% | 25.00% |
| ALEXA Shopping Centre GmbH | Dusseldorf (Germany) |
100.00% | 25.00% | 100.00% | 25.00% | |
| Algarveshopping - Centro Comercial, SA | Maia | 100.00% | 25.05% | 100.00% | 25.05% | |
| Arrábidashopping - Centro Comercial, SA | Maia | 50.00% | 12.53% | 50.00% | 12.53% | |
| Avenida M-40, BV | Amsterdam (The Netherlands) |
100.00% | 25.05% | 100.00% | 25.05% | |
| 2) | Avenida M-40, SA | Madrid (Spain) | 100.00% | 25.05% | 100.00% | 25.05% |
| Cascaishopping - Centro Comercial, SA | Maia | 50.00% | 12.53% | 50.00% | 12.53% | |
| Cascaishopping Holding I, SGPS, SA | Maia | 100.00% | 25.05% | 100.00% | 25.05% | |
| Centro Colombo - Centro Comercial, SA | Maia | 100.00% | 12.53% | 100.00% | 12.53% | |
| Centro Vasco da Gama - Centro Comercial, SA | Maia | 50.00% | 12.53% | 50.00% | 12.53% | |
| Clérigoshopping - Gestão do Centro Comercial, SA |
Maia | 100.00% | 50.00% | 100.00% | 50.00% | |
| Coimbrashopping - Centro Comercial, SA | Maia | 100.00% | 25.05% | 100.00% | 25.05% | |
| Colombo Towers Holding, BV | The Hague (The Netherlands) |
50.00% | 25.00% | 50.00% | 25.00% | |
| Craiova Mall BV | Amsterdam (The Netherlands) |
100.00% | 50.00% | 100.00% | 50.00% | |
| Dortmund Tower GmbH | Dusseldorf (Germany) |
100.00% | 50.00% | 100.00% | 50.00% | |
| Dos Mares - Shopping Centre, BV | Amsterdam (The Netherlands) |
100.00% | 25.05% | 100.00% | 25.05% | |
| Dos Mares - Shopping Centre, SA | Madrid (Spain) | 100.00% | 25.05% | 100.00% | 25.05% | |
| El Rosal Shopping, SA | Madrid (Spain) | 70.00% | 35.00% | 70.00% | 35.00% |
| Estação Viana - Centro Comercial, SA | Viana do Castelo | 100.00% | 25.05% | 100.00% | 25.05% | |
|---|---|---|---|---|---|---|
| Freccia Rossa - Shopping Centre, Srl | Milan (Italy) | 50.00% | 25.00% | 50.00% | 25.00% | |
| 1) | Fundo I.I. Parque Dom Pedro Shopping Center, SA |
São Paulo (Brazil) | 50.00% | 3.99% | - | - |
| Fundo Investimento Imob. Shopping Parque D. Pedro Shopping, SA |
São Paulo (Brazil) | 100.00% | 21.25% | 100.00% | 24.36% | |
| Gaiashopping I - Centro Comercial, SA | Maia | 50.00% | 12.53% | 50.00% | 12.53% | |
| Gaiashopping II - Centro Comercial, SA | Maia | 100.00% | 12.53% | 100.00% | 12.53% | |
| 3) | Gli Orsi - Shopping Centre, Srl | Milan (Italy) | 100.00% | 50.00% | 100.00% | 50.00% |
| Gli Orsi 1 Shopping Centre, Srl | Milan (Italy) | 100.00% | 50.00% | 100.00% | 50.00% | |
| Guimarãeshopping - Centro Comercial, SA | Maia | 100.00% | 25.05% | 100.00% | 25.05% | |
| 4) | Harvey Dos Iberica, SL | Madrid (Spain) | 50.00% | 12.53% | - | - |
| 5) 4) |
Le Terrazze – Shopping Centre 1, Srl | Milan (Italy) | 50.00% | 25.00% | - | - |
| Le Terrazze - Shopping Centre, Srl | Milan (Italy) | 50.00% | 25.00% | 50.00% | 25.00% | |
| Iberian Assets, SA | Madrid (Spain) | 49.78% | 12.48% | 49.78% | 12.48% | |
| Inparsa - Gestão de Galeria Comerc, SA | Maia | 100.00% | 50.00% | 100.00% | 50.00% | |
| Ioannina Development of Shopping Centres, SA |
Athens (Greece) | 100.00% | 50.00% | 100.00% | 50.00% | |
| KLC Holdings XII, SA | Luxembourg | 100.00% | 50.00% | 100.00% | 50.00% | |
| La Farga - Shopping Centre, SL | Madrid (Spain) | 100.00% | 12.48% | 100.00% | 12.48% | |
| Larissa Development of Shopping Centres, SA | Athens (Greece) | 100.00% | 25.00% | 100.00% | 25.00% | |
| Lembo Services Ltd | Cyprus | 100.00% | 50.00% | 100.00% | 50.00% | |
| Loop 5 - Shopping Centre Gmbh | Dusseldorf (Germany) |
50.00% | 25.00% | 50.00% | 25.00% | |
| Luz del Tajo - Centro Comercial, SA | Madrid (Spain) | 100.00% | 25.05% | 100.00% | 25.05% | |
| Luz del Tajo, BV | Amsterdam (The Netherlands) |
100.00% | 25.05% | 100.00% | 25.05% | |
| Madeirashopping - Centro Comercial, SA | Funchal (Madeira) | 50.00% | 12.53% | 50.00% | 12.53% | |
| Maiashopping - Centro Comercial, SA | Maia | 100.00% | 25.05% | 100.00% | 25.05% | |
| MC Property Management, SA | Athens (Greece) | 75.00% | 18.75% | 75.00% | 18.75% |
| Münster Arkaden, BV | Amsterdam (The Netherlands) |
100.00% | 25.05% | 100.00% | 25.05% |
|---|---|---|---|---|---|
| Norte Shopping Retail and Leisure Centre, BV | Amsterdam (The Netherlands) |
50.00% | 12.53% | 50.00% | 12.53% |
| Norteshopping - Centro Comercial, SA | Maia | 100.00% | 12.53% | 100.00% | 12.53% |
| Pantheon Plaza BV | Amsterdam (The Netherlands) |
50.00% | 25.00% | 50.00% | 25.00% |
| Paracentro - Gestão de Galerias Comerciais, SA |
Maia | 100.00% | 50.00% | 100.00% | 50.00% |
| Park Avenue Developement of Shopping Centers, SA |
Athens (Greece) | 100.00% | 25.00% | 100.00% | 25.00% |
| Parque Atlântico Shopping - Centro Comercial SA |
Ponta Delgada (Azores) |
50.00% | 12.53% | 50.00% | 12.53% |
| Parque D. Pedro 1, BV Sarl | Luxembourg | 100.00% | 25.00% | 100.00% | 25.00% |
| Parque D. Pedro 2, BV Sarl | Luxembourg | 100.00% | 25.00% | 100.00% | 25.00% |
| Parque de Famalicão - Empreendimentos Imobiliários, SA |
Maia | 100.00% | 50.00% | 100.00% | 50.00% |
| Parque Principado, SL | Madrid (Spain) | 50.00% | 12.53% | 50.00% | 12.53% |
| Pátio Boavista Shopping, Ltda | São Paulo (Brazil) | 100.00% | 23.91% | 100.00% | 23.76% |
| Pátio Goiânia Shopping, Ltda | São Paulo (Brazil) | 100.00% | 23.91% | 100.00% | 23.76% |
| Pátio Londrina Empreendimentos e Participações, Ltda |
São Paulo (Brazil) | 100.00% | 23.91% | 100.00% | 23.76% |
| Pátio Penha Shopping, Ltda | São Paulo (Brazil) | 99.99% | 23.91% | 99.99% | 23.76% |
| Pátio São Bernardo Shopping Ltda | São Paulo (Brazil) | 100.00% | 23.91% | 100.00% | 23.76% |
| Pátio Sertório Shopping Ltda | São Paulo (Brazil) | 100.00% | 23.91% | 100.00% | 23.76% |
| Pátio Uberlândia Shopping Ltda | São Paulo (Brazil) | 100.00% | 23.91% | 100.00% | 23.76% |
| Plaza Eboli - Centro Comercial, SA | Madrid (Spain) | 100.00% | 50.00% | 100.00% | 50.00% |
| Plaza Eboli, BV | Amsterdam (The Netherlands) |
100.00% | 50.00% | 100.00% | 50.00% |
| Plaza Mayor Holding, SGPS, SA | Maia | 100.00% | 25.05% | 100.00% | 25.05% |
| Plaza Mayor Parque de Ócio, BV | Amsterdam (The Netherlands) |
100.00% | 25.05% | 100.00% | 25.05% |
| Plaza Mayor Parque de Ócio, SA | Madrid (Spain) | 100.00% | 25.05% | 100.00% | 25.05% |
| Plaza Mayor Shopping, BV | Amsterdam (The Netherlands) |
100.00% | 25.05% | 100.00% | 50.00% |
|---|---|---|---|---|---|
| Plaza Mayor Shopping, SA | Madrid (Spain) | 75.00% | 18.79% | 75.00% | 37.50% |
| Ploi Mall BV | Amsterdam (The Netherlands) |
100.00% | 50.00% | 100.00% | 50.00% |
| Pridelease Investments, Ltd | Cascais | 100.00% | 50.00% | 100.00% | 50.00% |
| Project 4, Srl | Milan (Italy) | 100.00% | 50.00% | 100.00% | 50.00% |
| Project SC 1, BV | Amsterdam (The Netherlands) |
50.00% | 25.00% | 50.00% | 25.00% |
| Project SC 2, BV | Amsterdam (The Netherlands) |
100.00% | 50.00% | 100.00% | 50.00% |
| Project Sierra 1 - Shopping Centre, GmbH | Vienna (Austria) | 100.00% | 50.00% | 100.00% | 50.00% |
| Project Sierra 2, BV | Amsterdam (The Netherlands) |
100.00% | 50.00% | 100.00% | 50.00% |
| Project Sierra 5, BV | Amsterdam (The Netherlands) |
100.00% | 50.00% | 100.00% | 50.00% |
| Project Sierra 6, BV | Amsterdam (The Netherlands) |
100.00% | 50.00% | 100.00% | 50.00% |
| Project Sierra 7 BV | Amsterdam (The Netherlands) |
100.00% | 50.00% | 100.00% | 50.00% |
| Project Sierra 8 BV | Amsterdam (The Netherlands) |
100.00% | 50.00% | 100.00% | 50.00% |
| Project Sierra 9 BV | Amsterdam (The Netherlands) |
100.00% | 50.00% | 100.00% | 50.00% |
| Project Sierra 10 BV | Amsterdam (The Netherlands) |
100.00% | 50.00% | 100.00% | 50.00% |
| Project Sierra Brazil 1, BV | Amsterdam (The Netherlands) |
100.00% | 50.00% | 100.00% | 50.00% |
| Project Sierra Four SA | Bucharest (Romania) |
100.00% | 50.00% | 100.00% | 50.00% |
| Project Sierra Germany 2 (two), Shopping Centre GmbH |
Dusseldorf (Germany) |
100.00% | 50.00% | 100.00% | 50.00% |
| Project Sierra Germany 3 (three), Shopping Centre. GmbH |
Dusseldorf (Germany) |
100.00% | 50.00% | 100.00% | 50.00% |
| Project Sierra Germany 4 (four), Shopping Centre. GmbH |
Dusseldorf (Germany) |
100.00% | 50.00% | 100.00% | 50.00% | |
|---|---|---|---|---|---|---|
| Project Sierra Germany Shopping Centre 1 BV | Amsterdam (The Netherlands) |
100.00% | 50.00% | 100.00% | 50.00% | |
| Project Sierra Germany Shopping Centre 2 BV | Amsterdam (The Netherlands) |
100.00% | 50.00% | 100.00% | 50.00% | |
| 6) | Project Sierra Holding Portugal V, SGPS, SA | Maia | 100.00% | 50.00% | 100.00% | 50.00% |
| Project Sierra Italy 1 - Shopping Centre, Srl | Milan (Italy) | 100.00% | 50.00% | 100.00% | 50.00% | |
| Project Sierra Italy 2 - Development of Shopping Centres, Srl |
Milan (Italy) | 100.00% | 50.00% | 100.00% | 50.00% | |
| Project Sierra Italy 3 - Shopping Centre, Srl | Milan (Italy) | 100.00% | 50.00% | 100.00% | 50.00% | |
| Project Sierra Italy 5 - Development of Shopping Centres Srl |
Milan (Italy) | 100.00% | 50.00% | 100.00% | 50.00% | |
| Project Sierra One Srl | Bucharest (Romania) |
100.00% | 50.00% | 100.00% | 50.00% | |
| Project Sierra Portugal I - C.Comercial, SA | Maia | 50.00% | 25.00% | 50.00% | 25.00% | |
| Project Sierra Portugal II - Centro Comercial, SA |
Maia | 100.00% | 50.00% | 100.00% | 50.00% | |
| Project Sierra Portugal IV - Centro Comercial, SA |
Maia | 100.00% | 50.00% | 100.00% | 50.00% | |
| 3) | Project Sierra Portugal V - Centro Comercial, SA |
Maia | 100.00% | 50.00% | 100.00% | 50.00% |
| Project Sierra Portugal VI - Centro Comercial, SA |
Maia | 100.00% | 50.00% | 100.00% | 50.00% | |
| Project Sierra Portugal VII - Centro Comercial, SA |
Maia | 100.00% | 50.00% | 100.00% | 50.00% | |
| Project Sierra Portugal VIII - Centro Comercial, SA |
Maia | 100.00% | 50.00% | 100.00% | 50.00% | |
| Project Sierra Spain 1, BV | Amsterdam (The Netherlands) |
100.00% | 50.00% | 100.00% | 50.00% | |
| Project Sierra Spain 2 - Centro Comercial, SA | Madrid (Spain) | 100.00% | 50.00% | 100.00% | 50.00% | |
| Project Sierra Spain 2, BV | Amsterdam (The Netherlands) |
100.00% | 50.00% | 100.00% | 50.00% | |
| Project Sierra Spain 3 - Centro Comercial, SA | Madrid (Spain) | 50.00% | 25.00% | 50.00% | 25.00% |
| Project Sierra Spain 3, BV | Amsterdam (The Netherlands) |
100.00% | 50.00% | 100.00% | 50.00% | |
|---|---|---|---|---|---|---|
| Project Sierra Spain 6 - Centro Comercial, SA | Madrid (Spain) | 100.00% | 50.00% | 100.00% | 50.00% | |
| Project Sierra Spain 6, BV | Amsterdam (The Netherlands) |
100.00% | 50.00% | 100.00% | 50.00% | |
| Project Sierra Spain 7 - Centro Comercial, SA | Madrid (Spain) | 100.00% | 50.00% | 100.00% | 50.00% | |
| Project Sierra Spain 7, BV | Amsterdam (The Netherlands) |
100.00% | 50.00% | 100.00% | 50.00% | |
| 3) | Project Sierra Srl | Bucharest (Romania) |
100.00% | 50.00% | 100.00% | 50.00% |
| Project Sierra Three Srl | Bucharest (Romania) |
100.00% | 50.00% | 100.00% | 50.00% | |
| Project Sierra Two Srl | Bucharest (Romania) |
100.00% | 50.00% | 100.00% | 50.00% | |
| River Plaza BV | Amsterdam (The Netherlands) |
100.00% | 50.00% | 100.00% | 50.00% | |
| River Plaza Mall, Srl | Bucharest (Romania) |
100.00% | 50.00% | 100.00% | 50.00% | |
| S.C. Microcom Doi Srl | Bucharest (Romania) |
100.00% | 50.00% | 100.00% | 50.00% | |
| SC Aegean, BV | Amsterdam (The Netherlands) |
50.00% | 25.00% | 50.00% | 25.00% | |
| SC Mediterranean Cosmos, BV | Amsterdam (The Netherlands) |
50.00% | 12.53% | 50.00% | 12.53% | |
| Shopping Centre Colombo Holding, BV | Amsterdam (The Netherlands) |
50.00% | 12.53% | 50.00% | 12.53% | |
| Shopping Centre Parque Principado, BV | Amsterdam (The Netherlands) |
100.00% | 25.05% | 100.00% | 25.05% | |
| Sierra Asset Management - Gestão de Activos, SA |
Maia | 100.00% | 50.00% | 100.00% | 50.00% | |
| Sierra Brazil 1, BV | Amsterdam (The Netherlands) |
100.00% | 25.00% | 100.00% | 25.00% | |
| Sierra Charagionis Development of Shopping Centers, SA |
Athens (Greece) | 50.00% | 25.00% | 50.00% | 25.00% | |
| Sierra Charagionis Property Management, SA | Athens (Greece) | 50.00% | 25.00% | 50.00% | 25.00% |
| Sierra Corporate Services - Apoio à Gestão, SA |
Lisbon | 100.00% | 50.00% | 100.00% | 50.00% |
|---|---|---|---|---|---|
| Sierra Corporate Services Holland, BV | Amsterdam (The Netherlands) |
100.00% | 50.00% | 100.00% | 50.00% |
| Sierra Development of Shopping Centres Greece, SA |
Athens (Greece) | 100.00% | 50.00% | 100.00% | 50.00% |
| Sierra Developments - Serviços de Promoção Imobiliária, SA |
Maia | 100.00% | 50.00% | 100.00% | 50.00% |
| Sierra Developments Germany GmbH | Dusseldorf (Germany) |
100.00% | 50.00% | 100.00% | 50.00% |
| Sierra Developments Germany Holding, BV | Amsterdam (The Netherlands) |
100.00% | 50.00% | 100.00% | 50.00% |
| Sierra Developments Holding, BV | Amsterdam (The Netherlands) |
100.00% | 50.00% | 100.00% | 50.00% |
| Sierra Developments Iberia 1. Promoção Imobiliária, SA |
Maia | 100.00% | 50.00% | 100.00% | 50.00% |
| Sierra Developments Italy, Srl | Milan (Italy) | 100.00% | 50.00% | 100.00% | 50.00% |
| Sierra Developments Romania SRL | Bucharest (Romania) |
100.00% | 50.00% | 100.00% | 50.00% |
| Sierra Developments Spain - Promociones de Centros Comerciales, SL |
Madrid (Spain) | 100.00% | 50.00% | 100.00% | 50.00% |
| Sierra Developments, SGPS, SA | Maia | 100.00% | 50.00% | 100.00% | 50.00% |
| Sierra Enplanta, Ltda | São Paulo (Brazil) | 100.00% | 23.91% | 100.00% | 23.76% |
| Sierra European Retail Real Estate Assets Holdings, BV |
Amsterdam (The Netherlands) |
50.10% | 25.05% | 50.10% | 25.05% |
| Sierra GP, Limited | Guernesey (U.K.) | 100.00% | 49.99% | 100.00% | 49.99% |
| Sierra Investimentos Brasil Ltda | São Paulo (Brazil) | 100.00% | 23.91% | 100.00% | 23.76% |
| Sierra Investments (Holland) 1, BV | Amsterdam (The Netherlands) |
100.00% | 50.00% | 100.00% | 50.00% |
| Sierra Investments (Holland) 2, BV | Amsterdam (The Netherlands) |
100.00% | 50.00% | 100.00% | 50.00% |
| Sierra Investments Holding, BV | Amsterdam (The Netherlands) |
100.00% | 50.00% | 100.00% | 50.00% |
| Sierra Investments SGPS, SA | Maia | 100.00% | 50.00% | 100.00% | 50.00% |
| Sierra Italy Holding, BV | Amsterdam (The Netherlands) |
100.00% | 50.00% | 100.00% | 50.00% | |
|---|---|---|---|---|---|---|
| Sierra Management Germany, GmbH | Dusseldorf (Germany) |
100.00% | 50.00% | 100.00% | 50.00% | |
| Sierra Management II - Gestão de Centros Comerciais, SA |
Lisbon | 100.00% | 50.00% | 100.00% | 50.00% | |
| Sierra Management Italy, Srl | Milan (Italy) | 100.00% | 50.00% | 100.00% | 50.00% | |
| Sierra Management New Tech.Bus. - Serv.Comu.CC, SA |
Lisbon | 100.00% | 50.00% | 100.00% | 50.00% | |
| Sierra Management Portugal - Gestão de Centros Comerciais, SA |
Lisbon | 100.00% | 50.00% | 100.00% | 50.00% | |
| Sierra Management Spain - Gestión de Centros Comerciales, SA |
Madrid (Spain) | 100.00% | 50.00% | 100.00% | 50.00% | |
| Sierra Management, SGPS, SA | Maia | 100.00% | 50.00% | 100.00% | 50.00% | |
| Sierra Property Management Greece, SA | Athens (Greece) | 100.00% | 50.00% | 100.00% | 50.00% | |
| Sierra Property Management, Srl | Bucharest (Romania) |
100.00% | 50.00% | 100.00% | 50.00% | |
| Sonae Sierra Brasil, Ltda. | São Paulo (Brazil) | 95.20% | 23.91% | 94.54% | 23.76% | |
| Sonae Sierra Brazil. BV Sarl | Luxembourg | 50.00% | 25.00% | 50.00% | 25.00% | |
| Sonae Sierra, SGPS, SA | Maia | 50.00% | 50.00% | 50.00% | 50.00% | |
| SPF - Sierra Portugal | Luxembourg | 100.00% | 50.00% | 100.00% | 50.00% | |
| SRP - Parque Comercial de Setúbal, SA | Maia | 50.00% | 25.00% | 50.00% | 25.00% | |
| Torre Ocidente – Imobiliária, SA | Maia | 50.00% | 12.50% | 50.00% | 12.50% | |
| 7) | Torre Oriente – Imobiliária, SA | Maia | 50.00% | 12.50% | 50.00% | 12.50% |
| Unishopping Administradora, Ltda | São Paulo (Brazil) | 100.00% | 23.91% | 100.00% | 23.76% | |
| Unishopping Consultoria Imobiliária, Ltda | São Paulo (Brazil) | 99.98% | 23.91% | 99.98% | 23.76% | |
| Valecenter, Srl | Milan (Italy) | 100.00% | 25.05% | 100.00% | 25.05% | |
| Via Catarina - Centro Comercial, SA | Maia | 50.00% | 12.53% | 50.00% | 12.53% | |
| 1) | Vuelta Omega, S.L. | Madrid (Spain) | 100.00% | 12.53% | - | - |
| Weiterstadt Shopping BV | Amsterdam (The Netherlands) |
100.00% | 50.00% | 100.00% | 50.00% | |
| Zubiarte Inversiones Inmobiliarias, SA | Madrid (Spain) | 49.83% | 12.48% | 49.83% | 12.48% |
| Unipress - Centro Gráfico, Lda | Vila Nova de Gaia | 50.00% | 27.11% | 50.00% | 26.97% | |
|---|---|---|---|---|---|---|
| Vipu ACE | Lisbon | 50.00% | 27.11% | 50.00% | 26.97% | |
| Investment Management | ||||||
| Equador & Mendes - Agência de Viagens e Turismo, Lda |
Lisbon | 50.00% | 37.50% | 50.00% | 37.50% | |
| 3) | Geotur - Viagens e Turismo, SA | Lisbon | 50.00% | 50.00% | 50.00% | 50.00% |
| Marcas do Mundo - Viagens e Turismo. Sociedade Unipessoal, Lda |
Lisbon | 50.00% | 50.00% | 50.00% | 50.00% | |
| Movimentos Viagens - Viagens e Turismo. Sociedade Unipessoal, Lda |
Lisbon | 50.00% | 50.00% | 50.00% | 50.00% | |
| Nova Equador Internacional.Agência de Viagens e Turismo, Lda |
Lisbon | 50.00% | 37.50% | 50.00% | 37.50% | |
| 4) | Puravida - Viagens e Turismo, Lda | Lisbon | 50.00% | 50.00% | - | - |
| Nova Equador P.C.O. e Eventos, Sociedade Unipessoal, Lda |
Lisbon | 50.00% | 37.50% | 50.00% | 37.50% | |
| Raso SGPS, SA | Lisbon | 50.00% | 50.00% | 50.00% | 50.00% | |
| 3) 8) |
Raso - Viagens e Turismo, SA | Lisbon | 50.00% | 50.00% | 50.00% | 50.00% |
| Viagens y Turismo de Geotur España, S.L. | Madrid (Spain) | 50.00% | 50.00% | 50.00% | 50.00% |
1) Companies created in the period;
2) Company for which it was requested to insolvency;
3) Companies merged in the period;
4) Company acquired in the period;
5) Ex - Helios Property, Srl.;
6) Company merged into River Plaza Mall, Srl with efects at April 1, 2009;
7) Company disposed in the period;
8) Company that created in the merger between a Geotur – Viagens e Turismo, SA and Star – Viagens e Turismo, SA.
These entities are consolidated using the proportionate consolidation method as referred to in Note 2.2.b).
Aggregate amounts excluding intra-group eliminations corresponding to the percentage of capital held in these jointly controlled companies included in the financial statements for the period using the proportional consolidation method can be summarised as follows:
| 31 December 2009 | 31 December 2008 | |
|---|---|---|
| Non-current assets | 4,508,730,523 | 4,540,862,267 |
| Current assets | 256,002,590 | 512,569,665 |
| Non-current liabilities | 1,652,852,079 | 1,749,706,883 |
| Current liabilities | 375,513,257 | 561,933,408 |
| 31 December 2009 | 31 December 2008 | |
| Income | 218,136,156 | 184,557,267 |
| Expenses | 304,508,331 | 296,759,268 |
Additionally the information related with Shopping Centres in Note 50 corresponds to the contribute to the consolidated financial statements of the companies referred above which are consolidated in accordance with proportionate method.
Associated companies, their head offices and the percentage of share capital held as at 31 December 2009 and 2008 are as follows:
| Percentage of capital held | |||||||
|---|---|---|---|---|---|---|---|
| 31 December 2009 | 31 December 2008 | Book value | |||||
| COMPANY | Head Office | Direct | Total | Direct | Total | 31 December 2009 | 31 December 2008 |
| Retail | |||||||
| 2) Fundo de Investimento Imobiliário Fechado Imosede |
Maia | 54.55% | 54.55% | 49.00% | 49.00% | - | 62,813,335 |
| Sempre a Postos - Produtos Alimentares e Utilidades, Lda |
Lisbon | 25.00% | 25.00% | 25.00% | 25.00% | 1,551,585 | 1,142,245 |
| Shopping Centres | |||||||
| 1) 8ª Avenida Centro Comercial, SA | Maia | 100.00% | 21.00% | 100.00% | 21.00% | - | - |
| 1) Arrábidashopping - Centro Comercial, SA |
Maia | 50.00% | 10.50% | 50.00% | 10.50% | - | - |
| Campo Limpo Lda | S. Paulo (Brazil) |
20.00% | 4.70% | 20.00% | 4.70% | 1,712,614 | 1,136,276 |
| 1) Gaiashopping I - Centro Comercial, SA |
Maia | 50.00% | 10.50% | 50.00% | 10.50% | - | - |
| 1) Gaiashopping II - Centro Comercial, SA |
Maia | 100.00% | 21.00% | 100.00% | 21.00% | - | - |
| 1) Loureshopping - Centro Comercial, SA |
Maia | 100.00% | 21.00% | 100.00% | 21.00% | - | - |
| Mediterranean Cosmos Shop. Centre Investments, SA | Athens (Greece) | 39.90% | 5.00% | 39.90% | 5.00% | 3,376,307 | 3,557,098 |
| 1) Oeste Retail Park - Gestão de G.Comer., SA |
Maia | 50.00% | 10.50% | 50.00% | 10.50% | - | - |
| 1) Rio Sul - Centro Comercial, SA | Lisbon | 50.00% | 10.50% | 50.00% | 10.50% | - | - |
| 1) Serra Shopping - Centro Comercial, SA |
Covilhã | 50.00% | 10.50% | 50.00% | 10.50% | - | - |
| 4) SIC Indoor - Gest. Suportes Publicitários, SA |
Lisbon | 35.00% | 17.50% | 35.00% | 17.50% | - | - |
| 1) Sol Retail Park - Gestão de G. Comerc., SA |
Maia | 50.00% | 10.50% | 50.00% | 10.50% | - | - |
| SPF - Sierra Portugal Real Estate, Sarl | Luxembourg | 42.00% | 21.00% | 42.00% | 21.00% | 32,013,766 | 38,597,922 |
| Telecommunications SIRS - Sociedade Independente de Radiodifusão Sonora, SA |
Porto | 45.00% | 24.40% | 45.00% | 24.37% | - | - |
| Investment Management | |||||||
| Cooper Gay (Holding) Limited | U.K. | 32.12% | 16.06% | 32.12% | 32.12% | 35,995,121 | 33,863,022 |
| 3) Lazam Corretora, Ltda | Brazil | 100.00% | 50.01% | 45.00% | 45.00% | - | 1,553,597 |
| Total | 74,649,393 | 142,663,495 |
1) Nil balances result from the application of the equity method over the consolidated financial statements of Sierra Portugal Real Estate, which holds these participations;
Associated companies are consolidated using the equity method as referred to in Note 2.2.c).
As at 31 December 2009 and 2008 aggregated values of main financial indicators of associated companies are as follows:
| 31 December 2009 | 31 December 2008 | |
|---|---|---|
| Total Assets | 1,189,131,004 | 1,144,530,713 |
| Total Liabilities | 945,768,301 | 758,543,421 |
| Income | 194,580,395 | 312,438,219 |
| Expenses | 206,996,722 | 287,264,367 |
During the periods ended as at 31 December 2009 and 2008 movements in Investments in associated companies are made up as follows:
| 31 December 2009 | 31 December 2008 | |||||
|---|---|---|---|---|---|---|
| Proportion on equity |
Goodwill | Total of investment |
Proportion on equity |
Goodwill | Total of investment |
|
| Investments in associated companies | ||||||
| Initial balance as at January,1 | 105,402,825 | 37,260,670 | 142,663,495 | 51,468,671 | 22,079,969 | 73,548,640 |
| Capital increase in associated companies | 6,955,606 | - | 6,955,606 | 33,095,032 | - | 33,095,032 |
| Disposals during the period | (1,718,550) | - | (1,718,550) | (2,567,481) | - | (2,567,481) |
| Capital reduction in associated companies | (733,808) | - | (733,808) | (4,167,889) | - | (4,167,889) |
| Change of consolidation method (Note 8) | (69,027,699) | (1,439,401) | (70,467,100) | 37,315,321 | 8,384,445 | 45,699,766 |
| Goodwill recognised during the period | - | - | - | (13,701,796) | 13,701,796 | - |
| Equity method | ||||||
| Effect in net income | (5,365,399) | - | (5,365,399) | 8,952,847 | - | 8,952,847 |
| Effect in equity capital and minority interests | (2,288,892) | 5,604,041 | 3,315,149 | (4,338,872) | (4,151,833) | (8,490,705) |
| Investments impairment in associated companies | - | - | - | (168,690) | (1,765,850) | (1,934,540) |
| Transfers | - | - | - | (484,318) | (987,857) | (1,472,175) |
| 33,224,083 | 41,425,310 | 74,649,393 | 105,402,825 | 37,260,670 | 142,663,495 |
The amount disclosed above related with consolidation method change corresponds in 2009 to: (i) the acquisition of Fundo de Investimento Fechado Imosede and (ii) subsidiaries acquisitions participation of insurance companies in Brazil (Lazam, according to note 8).In 2008 corresponds to the disposal of the companies constituting the Sierra Portugal Fund.
Group companies, jointly controlled companies and associated companies excluded from consolidation, their head offices, percentage of share capital held and book value as at 31 December 2009 and 2008 are as follows:
| Percentage of capital held | ||||||||
|---|---|---|---|---|---|---|---|---|
| 31 December 2009 | 31 December 2008 | Book value | ||||||
| COMPANY | Head Office | Direct | Total | Direct | Total | 31 December 2009 | 31 December 2008 | |
| Retail | ||||||||
| Dispar - Distrib. de Participações, SGPS, SA Lisbon | 7.14% | 7.14% | 7.14% | 7.14% | 4,988 | 4,988 | ||
| Insco - Insular de Hipermerc., SA | Ponta Delgada | 10.00% | 10.00% | 10.00% | 10.00% | 748,197 | 748,197 | |
| Shopping Centres | ||||||||
| Ercasa Cogeneracion SA | Grancasa (Spain) | 10.00% | 1,25% | 10.00% | 1,25% | 23,949 | 23,949 | |
| Telecommunications | ||||||||
| Altitude, SGPS, SA | Lisbon | 11.54% | 6.26% | 11.54% | 6.23% | 1,000,000 | 1,000,000 | |
| Lusa - Agên. de Notícias de Portugal, SA | Lisbon | 1.38% | 0.75% | 1.38% | 0.88% | 197,344 | 197,344 | |
| Investments Management | ||||||||
| 1) Puravida - Viagens e Turismo, Lda | Lisbon | 50.00% | 50.00% | 50.00% | 50.00% | - | 1,584,193 | |
| Other investments | 16,153,014 | 9,419,504 | ||||||
| Total (Note 14) | 18,127,492 | 12,978,175 |
1) Subsidiary included by the proportionate method in the period.
As at 31 December 2009, the caption "Other Investments" includes 13,778,000 euro (7,304,000 euro as at 31 December 2008) related to the fair value of Sonae Capital, SGPS, S.A. shares attributable to Sonae Holding and not derecognized as explained in Note 23.
Additionally, with the exception of investments mentioned above, all other are registered at acquisition cost less impairment losses, as they represent investments in unlisted companies.
| Percentage of capital held | |||||
|---|---|---|---|---|---|
| At acquisition date | |||||
| COMPANY | Head Office | Direct | Total | ||
| Retail | |||||
| Fundo de Investimentos Imobiliário Fechado Imosede | Maia | 54.55% | 54.55% | ||
| Pharma Concept - Actividades em Saúde, S A |
Matosinhos | 100.00% | 100.00% | ||
| Têxtil do Marco, S A |
Marco de Canaveses |
80.37% | 80.37% | ||
| Shopping Centres | |||||
| Harvey Dos Iberica, SL | Madrid (Spain) | 50.00% | 12.53% | ||
| Le Terrazze - Shopping Centre 1, Srl | Milan (Italy) | 50.00% | 25.00% | ||
| Investments Management | |||||
| a) | ADD Avaliações Engenharia de Avaliações e Perícias, Ltda |
Brazil | 100.00% | 50.00% | |
| a) | ADDmakler Administração e Corretagem de Seguros, Ltda |
Brazil | 99.98% | 50.00% | |
| a) | ADDmakler Administradora, Corretora de Seguros Partic. Ltda | Brazil | 100.00% | 50.00% | |
| a) | Fontana Corretora de Seguros Ltda | Brazil | 99.99% | 50.01% | |
| a) | Herco Consultoria de Risco e Corretora de Seguros, Ltda | Brazil | 100.00% | 50.01% | |
| a) | Larim Corretora de Resseguros Ltda | Brazil | 99.99% | 50.01% | |
| a) | Lazam/mds Correctora Ltda | Brazil | 100.00% | 50.01% | |
| a) | Miral Administração e Corretagem de Seguros, Ltda |
Brazil | 100.00% | 50.01% | |
| Puravida - Viagens e Turismo, SA | Lisbon | 50.00% | 50.00% | ||
| a) | RSI Corretora de Seguros, Ltda | Brazil | 100.00% | 50.01% | |
| a) | Terra Nossa Corretora de Seguros, Ltda | Brazil | 100.00% | 50.01% | |
a) The insurance area of Investment Management operating segment, whose main company is MDS, SGPS, SA, was extended during the current period through a concentration process which resulted from the roll-up of participation in Lazam/MDS – Corretora, Ltda., originating the control assumption over this company and it's subsidiaries, most of them acquired in the end of the first half of 2009, and a decrease on the shareholding over MDS, SGPS, SA.
Taking into account that the process of acquisition of Lazam was only concluded in the second half of 2009 and that it was necessary to re-express the financial statements of subsidiaries acquired to IFRS, the process of imputation of the fair value of the assets was not completed, liabilities and contingent liabilities acquired, including intangible assets acquired and unrecognized. This way, the goodwill established with this acquisition is expressed as provisional, based on the financial statements of subsidiaries acquired being expected the finalization of the calculation until the end of 2010.
Acquisitions mentioned above had the following impact on the consolidated financial statements for the period ended as at 31 December 2009:
| 31 December 2009 | |||||
|---|---|---|---|---|---|
| Retail | Management Investments |
Shopping Centres |
Total | Total | |
| Acquired net assets | |||||
| Tangible and intangible assets (Note 10 and 11) | 148,261,419 | 3,242,527 | - | 151,503,946 | 200,383,628 |
| Investment properties | - | - | 9,131,609 | 9,131,609 | 9,131,609 |
| Inventories | 759,076 | - | - | 759,076 | 759,076 |
| Deferred tax assets | 153,728 | - | - | 153,728 | 153,728 |
| Other assets | 11,667,237 | 2,442,239 | 8,500,391 | 22,609,867 | 12,644,686 |
| Cash and cash equivalents | 7,984,499 | 2,278,028 | 501,512 | 10,764,039 | 1,292,730 |
| Loans | - | (74,063) | - | (74,063) | (8,959,576) |
| Deferred tax liabilities | (3,119,234) | - | (1,083,090) | (4,202,324) | (4,061,142) |
| Other liabilities | (24,794,944) | (28,538,968) | (12,493,149) | (65,827,061) | (42,859,909) |
| 140,911,781 | (20,650,237) | 4,557,273 | 124,818,817 | 168,484,830 | |
| Goodwill (Note 13 and 40) | 145,131 | 53,095,700 | 1,204,488 | 54,445,319 | |
| Transfers from associated companies (Note 6) | (61,384,427) | (9,082,673) | - | (70,467,100) | |
| Shareholders loans | 1,977,451 | 84,193 | - | 2,061,644 | |
| Minority Interests | (63,575,392) | 7,919,350 | 1,422,192 | (54,233,850) | |
| Acquisition price | 18,074,544 | 31,366,333 | 7,183,953 | 56,624,830 | |
| Payments made | 17,402,534 | 29,782,140 | 7,183,953 | 54,368,627 | |
| Costs related to the acquisitions | 117,000 | - | - | 117,000 | |
| Advances | - | 1,584,193 | - | 1,584,193 | |
| Amounts not paid | 555,010 | - | - | 555,010 | |
| 18,074,544 | 31,366,333 | 7,183,953 | 56,624,830 | ||
| Net cash outflow arising on acquisition | |||||
| Payments made | 17,402,534 | 31,366,333 | 7,183,953 | 55,952,820 | |
| Cash and cash equivalents acquired | (7,984,499) | (2,278,028) | (501,512) | (10,764,039) | |
| 9,418,035 | 29,088,305 | 6,682,441 | 45,188,781 |
The Goodwill generated on the Investment Management operating segment is justified by the fact that the process of fair value allocation to assets and liabilities acquired was not completed, as well as by the fact that such investment represents the assumption of control of the operations of the group in Brazil, in locations where, previously, Lazam/MDS did not have operations, which promotes the creation of value through synergies and business growth, which cannot be separated from goodwill as they do not meet the criteria for intangible assets recognition.
The impacts of the above acquisitions on the income statement can be described as follows:
| 31 December 2009 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Retail | Investment Shopping Management Centres |
Total | ||||||
| Operational income | 6,061,153 | 9,897,677 | - | 15,958,830 | ||||
| Operational costs | (1,688,736) | (9,227,537) | (13,169) | (10,929,442) | ||||
| Financial net income | (51,909) | (17,383) | (185,635) | (254,927) | ||||
| Earnings before taxes | 4,320,508 | 652,756 | (198,804) | 4,774,460 | ||||
| Taxes | (1,295,301) | (398,196) | (124,479) | (1,817,976) | ||||
| Net income | 3,025,207 | 254,560 | (323,283) | 2,956,484 |
Had the above acquisitions been reported to 1 January 2009, operational income would have increased by approximately 28,500,000 euro.
At the end of 2009 and following the non-acceptance by the bank of the plans proposed by Avenida M40 to renegotiate it's debt, the Board of Directors of this subsidiary decided to request the insolvency of Avenida M40 to the court. In the sequence of this request, Sonae considered that the control over this subsidiary was lost and decided to derecognize it from the consolidated accounts with effect on 31 December 2009. The impact of this de-recognition may be analyzed as follows:
| Avenida M40 | |
|---|---|
| Acquired net assets | |
| Investment properties (Note 12) | 11,528,388 |
| Other assets | 853,697 |
| Cash and cash equivalents | 140,894 |
| Loans | (19,546,556) |
| Deferred tax liabilities | - |
| Other liabilities | (27,173,267) |
| (34,196,844) | |
| Impairment of assets | 26,263,623 |
| Gains / (losses) on de-recognition (Note 38) | 7,933,221 |
| Sale price | - |
| Net cash-flow | (140,894) |
| Percentage of capital held | |||||
|---|---|---|---|---|---|
| At alienation date | |||||
| COMPANY | Head Office | Direct | Total | ||
| Shopping Centres | |||||
| Torre Oriente - Imobiliária, SA | Maia | 50.00% | 12.50% | ||
| Disposals effects may be analyzed as follows: | |||||
| Shopping Centres | |||||
| Disposed net assets | |||||
| Investment properties (Note 12) | 8,887,000 | ||||
| Other assets | 448,778 | ||||
| Cash and cash equivalents | 40,663 | ||||
| Loans | - | ||||
| Deferred tax liabilities | (961,577) | ||||
| Other liabilities | (5,047,666) | ||||
| 3,367,198 | |||||
| Profit / (Loss) in the disposal | 706,755 | ||||
| Disposal price | 4,073,953 | ||||
| Net cash-flow arising from disposal | |||||
| Effective cash payment received | 4,073,953 | ||||
| Cash and cash equivalents disposed | (40,663) | ||||
| 4,033,290 |
The financial instruments classification according to policies disclosed in note 2.13. is as follows:
| Assets at fair value through profit or loss |
Loans and accounts |
Available for | Hedging derivatives |
Assets not within scope of |
||||
|---|---|---|---|---|---|---|---|---|
| Notes | (Note 27) | receivable | sale | (Note 27) | Sub-total | IFRS 7 | Total | |
| As at 31 December 2009 | ||||||||
| Non-current assets | ||||||||
| Other investments | 7 and 14 | - | - | 18,127,492 | - | 18,127,492 | - | 18,127,492 |
| Other non-current assets | 15 | - - |
15,088,439 15,088,439 |
- 18,127,492 |
12,991 12,991 |
15,101,430 33,228,922 |
6,074,882 6,074,882 |
21,176,312 39,303,804 |
| Current assets | ||||||||
| Trade receivables | 17 | - | 208,066,473 | - | - | 208,066,473 | - | 208,066,473 |
| Other debtors | 18 | - | 163,392,565 | - | - | 163,392,565 | - | 163,392,565 |
| Investments | 14 | 365,122 | 57,313,909 | - | - | 57,679,031 | - | 57,679,031 |
| Cash and cash equivalents | 22 | - | 172,229,871 | - | - | 172,229,871 | - | 172,229,871 |
| 365,122 | 601,002,819 | - | - | 601,367,941 | - | 601,367,941 | ||
| 365,122 | 616,091,258 | 18,127,492 | 12,991 | 634,596,863 | 6,074,882 | 640,671,745 | ||
| As at 31 December 2008 | ||||||||
| Non-current assets | ||||||||
| Other investments | 7 and 14 | - | - | 12,978,175 | - | 12,978,175 | - | 12,978,175 |
| Other non-current assets | 15 | - | 12,394,378 | - | 75,002 | 12,469,380 | 8,814,135 | 21,283,515 |
| - | 12,394,378 | 12,978,175 | 75,002 | 25,447,555 | 8,814,135 | 34,261,690 | ||
| Current assets | ||||||||
| Trade receivables | 17 | - | 215,062,609 | - | - | 215,062,609 | - | 215,062,609 |
| Other debtors | 18 | - | 145,992,505 | - | - | 145,992,505 | - | 145,992,505 |
| Investments | 14 | 72,483 | 60,956,604 | - | 2,527,676 | 63,556,763 | - | 63,556,763 |
| Cash and cash equivalents | 22 | - | 184,360,904 | - | - | 184,360,904 | - | 184,360,904 |
| 72,483 | 606,372,622 | - | 2,527,676 | 608,972,781 | - | 608,972,781 | ||
| 72,483 | 618,767,000 | 12,978,175 | 2,602,678 | 634,420,336 | 8,814,135 | 643,234,471 | ||
| Financial liabilities | ||||||||
| Liabilities at fair value through profit or loss |
Hedging derivatives |
Financial liabilities recorded at |
Liabilities not within scope of |
|||||
| Notes | (Note 27) | (Note 27) | amortised cost | Sub-total | IFRS 7 | Total | ||
| As at 31 December 2009 | ||||||||
| Non-current liabilities | ||||||||
| Bank loans | 25 | - | - | 1,208,324,810 | 1,208,324,810 | - | 1,208,324,810 | |
| Bonds | 25 | - | - | 1,671,134,222 | 1,671,134,222 | - | 1,671,134,222 | |
| Obligations under finance leases | 25 | - | - | 29,357,393 | 29,357,393 | - | 29,357,393 | |
| Other loans | 25 | - | 34,584,190 | 586,519 | 35,170,709 | - | 35,170,709 | |
| Other non-current liabilities | 28 | - | - | 206,187,331 | 206,187,331 | 34,080,072 | 240,267,403 | |
| - | 34,584,190 | 3,115,590,275 | 3,150,174,465 | 34,080,072 | 3,184,254,537 | |||
| Current liabilities | ||||||||
| Bank loans | 25 | - | - | 232,966,928 | 232,966,928 | - | 232,966,928 | |
| Bonds | 25 | - | - | 64,848,660 | 64,848,660 | - | 64,848,660 | |
| Obligations under finance leases | 25 | - | - | 7,803,032 | 7,803,032 | - | 7,803,032 | |
| Other loans | 25 | 79,039 | 7,823,283 | 33,466 | 7,935,788 | - | 7,935,788 | |
| Trade creditors | 30 | - | - | 1,220,401,450 | 1,220,401,450 | - | 1,220,401,450 | |
| Other creditors | 31 | - | - | 254,854,646 | 254,854,646 | - | 254,854,646 | |
| 79,039 | 7,823,283 | 1,780,908,182 | 1,788,810,504 | - | 1,788,810,504 | |||
| 79,039 | 42,407,473 | 4,896,498,457 | 4,938,984,969 | 34,080,072 | 4,973,065,041 |
| Notes | Liabilities at fair value through profit or loss (Note 27) |
Hedging derivatives (Note 27) |
Financial liabilities recorded at amortised cost |
Sub-total | Liabilities not within scope of IFRS 7 |
Total | |
|---|---|---|---|---|---|---|---|
| As at 31 December 2008 | |||||||
| Non-current liabilities | |||||||
| Bank loans | 25 | - | - | 1,281,262,524 | 1,281,262,524 | - | 1,281,262,524 |
| Bonds | 25 | - | - | 1,684,214,319 | 1,684,214,319 | - | 1,684,214,319 |
| Obligations under finance leases | 25 | - | - | 28,701,579 | 28,701,579 | - | 28,701,579 |
| Other loans | 25 | - | 21,646,496 | 628,195 | 22,274,691 | - | 22,274,691 |
| Other non-current liabilities | 28 | - | - | 96,875,210 | 96,875,210 | 58,588,948 | 155,464,158 |
| - | 21,646,496 | 3,091,681,827 | 3,113,328,323 | 58,588,948 | 3,171,917,271 | ||
| Current liabilities | |||||||
| Bank loans | 25 | - | - | 258,905,967 | 258,905,967 | - | 258,905,967 |
| Bonds | 25 | - | - | 99,930,567 | 99,930,567 | - | 99,930,567 |
| Obligations under finance leases | 25 | - | - | 5,829,172 | 5,829,172 | - | 5,829,172 |
| Other loans | 25 | 475,849 | 4,894,131 | 35,486 | 5,405,466 | - | 5,405,466 |
| Trade creditors | 30 | - | - | 1,050,238,562 | 1,050,238,562 | - | 1,050,238,562 |
| Other creditors | 31 | - | - | 233,899,872 | 233,899,872 | - | 233,899,872 |
| 475,849 | 4,894,131 | 1,648,839,626 | 1,654,209,606 | - | 1,654,209,606 | ||
| 475,849 | 26,540,627 | 4,740,521,453 | 4,767,537,929 | 58,588,948 | 4,826,126,877 |
As at 31 December 2009 and 2008 the financial instruments at fair value through profit/loss are the only derivatives that do not qualify as hedging derivatives (Note 27).
The table below details the financial instruments that are measured subsequent to initials recognition at fair value, grouped into 3 levels base on the degree to which the fair value is observable.
Level 1: fair value measurements are those derived from quoted prices;
Level 2: fair value measurements are determined from valuation techniques. The main inputs of the models are observable on the market;
Level 3: fair value measurements are those derived from valuation techniques, whose main inputs are not based on observable market data.
| 31 December 2009 | |||||
|---|---|---|---|---|---|
| Level 1 | Level 2 | Level 3 | |||
| Financial assets measured at fair value | |||||
| Investments | 13,778,000 | 365,122 | - | ||
| Derivates | - | 12,991 | - | ||
| 13,778,000 | 378,113 | - | |||
| Financial liabilities measured at fair value | |||||
| Derivates | - | 42,486,512 | - | ||
| - | 42,486,512 | - | |||
During the periods ended as at 31 December 2009 and 2008 movements in tangible assets as well as depreciation and accumulated impairment losses are made up as follows:
| Tangible | Total | ||||||
|---|---|---|---|---|---|---|---|
| Land and | Plant and | Fixtures and | assets | Tangible | |||
| Buildings | Machinery | Vehicles | Fittings | Others | in progress | Assets | |
| Gross costs: | |||||||
| Opening balance as at 1 January 2008 | 1,603,905,332 | 1,456,158,023 | 17,782,684 | 248,965,168 | 32,171,873 | 165,234,836 | 3,524,217,916 |
| Capital expenditure | 16,264,040 | 6,464,011 | 208,858 | 15,312,439 | 2,534,963 | 455,447,110 | 496,231,421 |
| Acquisitions of subsidiaries | 43,991,035 | 15,769,030 | 335,931 | 2,063,407 | 306,838 | 1,090,768 | 63,557,009 |
| Disposals | (19,832,796) | (61,558,448) | (796,515) | (15,556,162) | (1,418,448) | (2,362,161) | (101,524,530) |
| Disposals of subsidiaries | (348,113) | (825,536) | (620) | (1,086,418) | (131,074) | (144,083) | (2,535,844) |
| Exchange rate effect | (73,196) | (268,412) | (27,999) | (208,081) | (173) | - | (577,861) |
| Transfers | 98,584,185 | 198,540,292 | 2,221,279 | 14,213,870 | 4,401,250 | (335,318,433) | (17,357,557) |
| Opening balance as at 1 January 2009 | 1,742,490,487 | 1,614,278,960 | 19,723,618 | 263,704,223 | 37,865,229 | 283,948,037 | 3,962,010,554 |
| Capital expenditure | 13,949,905 | 10,872,945 | 802,676 | 17,961,269 | 226,473 | 370,033,084 | 413,846,352 |
| Acquisitions of subsidiaries | 94,389,008 | 1,326,170 | 258,281 | 1,225,668 | 54,726 | 52,149,670 | 149,403,523 |
| Disposals | (7,900,878) | (25,046,955) | (1,202,300) | (6,184,663) | (1,280,053) | (26,995,765) | (68,610,614) |
| Exchange rate effect | 85,614 | 384,504 | 114,067 | 465,875 | 528 | - | 1,050,588 |
| Transfers | 143,838,999 | 307,891,520 | 1,932,954 | 14,619,921 | 6,384,479 | (486,750,547) | (12,082,674) |
| Closing balance as at 31 December 2009 | 1,986,853,135 | 1,909,707,144 | 21,629,296 | 291,792,293 | 43,251,382 | 192,384,479 | 4,445,617,729 |
| Accumulated depreciation and impairment losses | |||||||
| Opening balance as at 1 January 2008 | 292,325,609 | 790,101,234 | 13,757,122 | 185,249,882 | 22,627,904 | - | 1,304,061,751 |
| Depreciation and impairment losses | 35,151,938 | 144,352,824 | 1,628,180 | 31,095,643 | 5,219,204 | - | 217,447,789 |
| Acquisitions of subsidiaries (Note 8) | 2,747,299 | 8,502,660 | 224,023 | 1,274,273 | 213,158 | - | 12,961,413 |
| Disposals | (6,376,485) | (54,062,247) | (680,753) | (14,758,363) | (1,313,171) | - | (77,191,019) |
| Disposals of subsidiaries | (177,254) | (228,724) | (620) | (704,909) | (62,731) | - | (1,174,238) |
| Exchange rate effect | (39,116) | (101,719) | (9,368) | (97,581) | (20) | - | (247,804) |
| Transfers | (3,097,892) | 1,374,419 | (4,050) | (45,360) | (17,491) | - | (1,790,374) |
| Opening balance as at 1 January 2009 | 320,534,099 | 889,938,447 | 14,914,534 | 202,013,585 | 26,666,853 | - | 1,454,067,518 |
| Depreciation and impairment losses | 36,556,747 | 160,521,582 | 2,044,367 | 33,416,170 | 5,901,520 | - | 238,440,386 |
| Acquisitions of subsidiaries (Note 8) | 18,325 | 1,035,558 | 169,007 | 764,447 | 50,899 | - | 2,038,236 |
| Disposals | (1,076,677) | (19,622,267) | (865,798) | (5,639,386) | (1,036,872) | - | (28,241,000) |
| Exchange rate effect | 47,514 | 161,201 | 60,277 | 201,567 | 528 | - | 471,087 |
| Transfers | (22,689) | (1,470,149) | (11,263) | (800,017) | (31,955) | - | (2,336,073) |
| Closing balance as at 31 December 2009 | 356,057,319 | 1,030,564,372 | 16,311,124 | 229,956,366 | 31,550,973 | - | 1,664,440,154 |
| Carrying amount | |||||||
| As at 31 December 2008 | 1,421,956,388 | 724,340,513 | 4,809,084 | 61,690,638 | 11,198,376 | 283,948,037 | 2,507,943,036 |
| As at 31 December 2009 | 1,630,795,816 | 879,142,772 | 5,318,172 | 61,835,927 | 11,700,409 | 192,384,479 | 2,781,177,575 |
Major amounts included in the caption tangible assets in progress refer to the following projects:
| 31 December 2009 31 December 2008 | ||
|---|---|---|
| Refurbishment and expansion of stores in the retail businesses located in Portugal |
42,956,387 | 146,344,713 |
| Refurbishment and expansion of stores in the retail businesses located in Spain |
4,787,987 | 5,575,577 |
| Projects of "Modelo" and "Continente" stores for which advance payments were made |
13,005,347 | 45,435,160 |
| Construction in Progress in Maia (Business Park) |
30,981,983 | - |
| Development of mobile network | 34,617,636 | 62,159,389 |
| Development of fixed network | 56,587,660 | 19,471,996 |
| Others | 9,447,479 | 4,961,145 |
| 192,384,479 | 283,948,037 |
The value of disposals in "Tangible assets in progress" includes 24,633,750 euro of advances from the operating segments of retail for acquisition of land made in previous years whose development projects have been stopped, having been received the amounts advanced.
During the 2009 period, the Board of Directors of the Telecommunications operating segment proceeded, with prospective effects, to the revision of estimated useful life of a set of assets related to telecommunication networks (fixed and mobile), which resulted in a decrease of depreciations of about 15 million euro, compared with what would result if it had used the previously estimated useful life.
As at 31 December 2009 and 2008, the telecommunications operating segment, presents a value of commitments assumed whith third parties relating to investments to be made, as follows:
| 31 December 2009 31 December 2008 | |
|---|---|
| 17,282,698 | 26,750,521 |
| 3,451,214 | 3,022,223 |
| 20,733,912 | 29,772,744 |
During the periods ended as at 31 December 2009 and 2008, movements in intangible assets as well as amortisation and accumulated impairment losses are made up as follows:
| Intangible | Total | ||||
|---|---|---|---|---|---|
| Patents and other | assets | Intangible | |||
| Gross assets: | similar rights | Software | Others | in progress | Assets |
| Opening balance as at 1 January 2008 | 274,917,793 | 321,099,387 | 19,434,580 | 20,054,687 | 635,506,447 |
| Capital expenditure | 99,281,740 | 2,813,484 | 168,961 | 42,743,396 | 145,007,581 |
| Acquisitions of subsidiaries | 922,565 | 998,542 | 5,456,647 | - | 7,377,754 |
| Disposals | (188,864) | (14,813,905) | (352,472) | (913,753) | (16,268,994) |
| Disposals of subsidiaries | (364,185) | (1,282,959) | (1,067,256) | (327,837) | (3,042,237) |
| Exchange rate effect | (425) | (579,689) | - | (4,828) | (584,942) |
| Transfers | 8,077,244 | 30,202,203 | (2,568) | (29,929,545) | 8,347,334 |
| Opening balance as at 1 January 2009 | 382,645,868 | 338,437,063 | 23,637,892 | 31,622,120 | 776,342,943 |
| Capital expenditure | 15,265,519 | 2,697,826 | 255,138 | 34,259,293 | 52,477,776 |
| Acquisitions of subsidiaries | 2,571,227 | 229,990 | 1,586,837 | 7,455 | 4,395,509 |
| Disposals | (143,707) | (3,761,520) | (1,049,897) | (343,398) | (5,298,522) |
| Exchange rate effect | 1,108 | 739,188 | 486,428 | 3,013 | 1,229,737 |
| Transfers | 4,067,691 | 29,139,757 | - | (34,269,322) | (1,061,874) |
| Closing balance as at 31 December 2009 | 404,407,706 | 367,482,304 | 24,916,398 | 31,279,161 | 828,085,569 |
| Accumulated depreciation and impairment losses | |||||
| Opening balance as at 1 January 2008 | 54,460,087 | 219,358,734 | 15,441,982 | - | 289,260,803 |
| Depreciation of the period | 23,054,285 | 32,606,424 | 710,664 | - | 56,371,373 |
| Acquisitions of subsidiaries | 697,432 | 881,559 | 5,404,247 | - | 6,983,238 |
| Disposals | (66,143) | (14,777,300) | (352,472) | - | (15,195,915) |
| Disposals of subsidiaries | (89,895) | (768,135) | (839,027) | - | (1,697,057) |
| Exchange rate effect | - | (181,275) | - | - | (181,275) |
| Transfers | 499,504 | 115 | 2,996 | - | 502,615 |
| Opening balance as at 1 January 2009 | 78,555,270 | 237,120,122 | 20,368,390 | - | 336,043,782 |
| Depreciation of the period | 20,695,818 | 34,371,166 | 626,113 | - | 55,693,097 |
| Acquisitions of subsidiaries | 32,804 | 100,342 | 123,704 | - | 256,850 |
| Disposals | (71,233) | (3,245,844) | (881,057) | - | (4,198,134) |
| Exchange rate effect | 6 | 304,779 | 37,144 | - | 341,929 |
| Transfers | (66,263) | (24,190) | - | - | (90,453) |
| Closing balance as at 31 December 2009 | 99,146,402 | 268,626,375 | 20,274,294 | - | 388,047,071 |
| Carrying amount | |||||
| As at 31 de December de 2008 | 304,090,598 | 101,316,941 | 3,269,502 | 31,622,120 | 440,299,161 |
| As at 31 de December de 2009 | 305,261,304 | 98,855,929 | 4,642,104 | 31,279,161 | 440,038,498 |
Intangible assets in progress as at 31 December 2009 were mainly composed of software projects and software development.
As at 31 December 2009 and 2008 Sonae kept recorded under the caption "Patents and other similar rights" the amounts of 202,090,404 euro and 197,381,992 euro, respectively which correspond to the investment net of depreciations made in the development of the UMTS network. This includes: (i) 63,006,050 euro (66,006,338 euro in 2008) related with the license; (ii) 21,052,631 euro (22,055,138 euro in 2008) related to the agreement signed in 2002 between Oni Way and the other three mobile telecommunication operators in Portugal with UMTS licenses; (iii) 6,465,899 euro (6,773,799 euro in 2008) related to a contribution to the "Fundação para as Comunicações Móveis" established in 2007, under an agreement entered with Ministry of Public Works, Transports and Communications ("Ministério das Obras Públicas Transportes e Comunicações") and the three mobile telecommunication operators in Portugal; and (iv) 106,182,551 euro (96,907,100 euro in 2008) related with the "Initiatives E" program, these last two commitments assumed by the Group in the scope of "Information Society" (Note 51).
Additionally this heading also includes the fair value attributed to a group of brands with indefinite useful lives among which the "Continente" brand amounts to 75,000,000 euro (the same amount as at December 2008).
The movement in Investment Properties during the periods ended as at 31 December 2009 and 2008 are as follows:
| Investment Properties | ||||
|---|---|---|---|---|
| In Operation | Fit Out | In progress | Total | |
| Opening balance as at 1 January 2008 | 1,864,634,551 | 4,021,510 | 193,472,865 | 2,062,128,926 |
| Increases | 21,738,803 | 275,000 | 105,772,145 | 127,785,948 |
| Write-offs | - | - | (26,518,956) | (26,518,956) |
| Reimbursements of Fit - Out | - | (398,689) | - | (398,689) |
| Transfers | 419,822 | 870,740 | (8,045,901) | (6,755,339) |
| Transfers from investment properties in progress: | ||||
| Construction and other costs | 149,979,571 | 700,000 | (151,855,403) | (1,175,832) |
| Adjustment to fair value (Note 37) | 18,716,720 | (64,750) | 7,579,782 | 26,231,752 |
| Change in fair value of investment properties | ||||
| between periods (Note 37): | ||||
| - Gains | 16,724,908 | 61,052 | - | 16,785,960 |
| - Losses | (158,127,074) | (696,113) | - | (158,823,187) |
| Business Combinations | - | - | 45,722,364 | 45,722,364 |
| Disposal of joint ventures | (211,934,750) | (1,003,250) | (23,916) | (212,961,916) |
| Other | - | - | - | - |
| Exchange rate effect | (22,476,530) | - | (7,541,928) | (30,018,458) |
| Opening balance as at 1 January 2009 | 1,679,676,021 | 3,765,500 | 158,561,052 | 1,842,002,573 |
| Increases | 13,062,049 | 49,333 | 67,945,991 | 81,057,373 |
| Write-offs | - | - | (3,239,766) | (3,239,766) |
| Reimbursements of Fit - Out | - | (527,756) | - | (527,756) |
| Transfers of assets available for sale | - | - | 5,782,500 | 5,782,500 |
| Disposals | - | - | (3,150,000) | (3,150,000) |
| Transfers | (419,826) | - | (6,929,908) | (7,349,734) |
| Transfers from investment properties in progress: | ||||
| Construction and other costs | 114,953,689 | (614,750) | (114,338,939) | - |
| Adjustment to fair value (Note 37) | 6,034,792 | - | 2,448,507 | 8,483,299 |
| Change in fair value of investment properties | ||||
| between periods (Note 37): | ||||
| - Gains | 20,356,854 | 150,110 | - | 20,506,964 |
| - Losses | (171,478,680) | (195,799) | - | (171,674,479) |
| Business Combinations | - | - | 9,131,609 | 9,131,609 |
| Subsidiary excluded from consolidation (Note 8) | (11,174,000) | (354,388) | - | (11,528,388) |
| Disposals of subsidiaries (Note 8) | (8,887,000) | - | - | (8,887,000) |
| Other | - | - | - | - |
| Exchange rate effect | 32,227,832 | - | 3,635,791 | 35,863,623 |
| Closing balance as at 31 December 2009 | 1,674,351,731 | 2,272,250 | 119,846,837 | 1,796,470,818 |
Fit out contracts correspond to agreements with tenants under which the Group pays part of the expenses incurred with the fit out of stores and the tenant assumes the responsibility to reimburse the amount invested to the Sonae over the period of the lease. The accounting treatment of fit outs is the same as the one used for investment properties.
As at 31 December 2009 and 2008 Investment properties in operation including fit-outs correspond to the fair value of the Group's share of shopping centres which can be detailed as follows:
| 31 December 2009 | ||||||
|---|---|---|---|---|---|---|
| 10 years "discount rate" |
Yields | Amount | 10 years "discount rate" |
Yields | Amount | |
| Portugal | 8,25% e 10,55% | 6,00% e 8,30% | 726,662,623 | 7,30% e 9,75% | 5,40% e 7,50% | 790,389,750 |
| Spain | 8,90% e 11,55% | 6,40% e 9,05% | 351,937,238 | 8,70% e 12,35% | 5,70% e 9,35% | 413,726,365 |
| Italy | 8,00% e 9,50% | 6,00% e 7,70% | 149,810,250 | 8,00% e 8,70% | 5,80% e 7,70% | 183,216,750 |
| Germany | 6,50% e 6,75% | 6,00% e 6,25% | 234,425,638 | 6.50% | 5,75% e 6,00% | 163,875,827 |
| Brazil | 12,75% e 14,00% | 8,25% e 9,50% | 180,277,982 | 13,45% e 14,95% | 8,25% e 9,75% | 91,665,330 |
| Greece | 10.75% | 7.00% | 18,529,750 | 10.75% | 7.00% | 21,796,500 |
| Romania | 10.75% | 9.00% | 14,980,500 | 9.75% | 8.00% | 18,770,999 |
| 1,676,623,981 | 1,683,441,521 |
The fair value of fit out contracts was determined by valuations as at 31 December 2009 and 2008 performed by an independent specialized entity. The methodology used to compute the fair value of the fit out contracts consisted in determining the discounted estimated cash flows of each one of the fit out contracts at closing date using a discounted market rate similar to the one used in determining the fair value of the investment properties to which each fit out contract relates.
The valuation of these investment properties was made in accordance with the Practice Statements of the RICS Appraisal and Valuation Manual published by The Royal Institution of Chartered Surveyors ("Red Book") located in the United Kingdom.
The methodology used to compute the market value of the investment properties consists in preparing 10 year projections of income and expenses of each shopping mall which are then discounted to the balance sheet date using a discount market rate. Projections are intended to reflect the actual best estimate of the valuators regarding future revenues and costs of each shopping mall. The residual amount at the end of year 10 is computed by applying a return rate ("Exit Yield" or "Cap Rate") on the projected net income of year 11. Both the return rate and discount rate are defined in accordance to the real estate local and institutional market conditions being the reasonability of the market value thus obtained tested in terms of initial gain.
In the valuation of investment properties some assumptions that in accordance with the Red Book are considered to be special, were additionally considered, namely in the case of recently inaugurated shopping malls, in which the possible costs still to be incurred were not considered, as the accompanying financial statements already include a provision for them.
The open market value of the investment properties under development as at the reporting date is calculated by subtracting from the open market value at opening calculated using the methodology described above the investment necessary to finish the project and weighted by a risk factor defined by the valuer.
According to the valuer whenever some uncertainty exists which may affect its opinion on the fair value of the property, the object and the degree of uncertainty associated should be properly disclosed.
Since September 2008 some events have been observed without precedence in the past, such as the bankruptcy of banks with a considerable dimension, nationalization of some banks and substantial reductions of interest rates. The global crisis in the financial markets and the consequent effect on the world economy has caused high levels of volatility in property markets, a greater lack of liquidity and a smaller volume of transactions.
Consequently, the evidence of market reduced significantly, by the degree of judgement used by the valuer has increased.
According to the valuer, despite the recent transactions may be considered to be "forced", it is inappropriate to conclude that all transactions occurring in the recent past have been forced. The lack between supply and demand (less buyers than sellers) is not always synonymous of forced transactions. A seller can be pressed to sell, but continues to have an active market, if there is more than a buyer and a temporal space to sell. Similarly, transactions initiated in insolvency procedures, should not be automatically assumed as forced.
According to the valuer, the valuers in common continue to have a range of values in which they base their evaluation. This range is usually higher in a non-liquid market, where inherent uncertainty and thus the degree of judgement would be greater. Therefore, assessments must be followed in the future, and must anticipate a temporal space higher than usual in the past, because there is the possibility of selling some property.
As at 31 December 2009 and 2008 Investment properties can be detailed as follows:
| 31 December 2009 | 31 December 2008 | |
|---|---|---|
| Investment Properties in progress at cost: | ||
| Portugal: | ||
| Alverca | 3,066,099 | 3,005,342 |
| GuimarãeShopping - expansion | - | 104,310 |
| Centro Bordalo | 1,685,228 | 1,430,192 |
| Cacém Shopping | - | 1,084,960 |
| Parque de Famalicão | 1,498,232 | 627,500 |
| Setubal Retail Park | - | 733,266 |
| Others | 519,902 | - |
| Germany: | ||
| Alexa (Torre) | 7,320,992 | - |
| Garbsen | 867,053 | 229,810 |
| Others | - | 120,648 |
| Brazil: | ||
| Goiânia Shopping | 3,770,303 | 2,332,966 |
| Uberlândia Shopping | 2,294,093 | 1,416,375 |
| Boulevard Londrina Shopping | 1,348,853 | 112,582 |
| Pátio Boavista | - | 646,176 |
| Others | 22,867 | - |
| Spain: | ||
| Alfaz del Pi | 9,575,000 | 9,724,204 |
| Pulianas Shopping | 103,105 | 6,393,375 |
| Los Barrios | - | 3,201,064 |
| Dos Mares - expansion | 1,404,902 | 1,404,902 |
| Others | 37,868 | - |
| Greece: | ||
| Ioannina | 13,531,277 | 12,425,240 |
| Galatsi Shopping | 5,771,370 | 4,077,148 |
| Aegean Park | 4,925,052 | 4,881,606 |
| Pantheon Plaza | 889,064 | 882,672 |
| Italy: | ||
| Le Terraze | 3,261,195 | 3,817,792 |
| Caldogno | 4,937,831 | 4,662,500 |
| Pavia | - | 3,755,236 |
| Others | 257,365 | 6,457 |
| Romania: | ||
| Craiova Shopping | 17,615,979 | 12,345,625 |
| Ploiesti Shopping | 7,415,770 | 6,726,158 |
| 92,119,400 | 86,148,106 | |
| Risk assets impairment | (6,537,230) | - |
| Investment Properties in progress at fair value: | ||
| Portugal: | ||
| Leiria Shopping | 24,597,667 | 5,705,415 |
| Torres Oriente and Ocidente | - | 3,310,285 |
| Brazil: | ||
| Manauara Shopping | - | 17,942,521 |
| Germany: | ||
| Loop 5 | - | 45,454,725 |
| Italy: | ||
| Le Terraze | 9,667,000 | - |
| 34,264,667 | 72,412,946 | |
| 119,846,837 | 158,561,052 | |
Investment properties in progress include borrowing expenses incurred during the construction period. As at 31 December 2009 and 2008 total borrowing expenses capitalised amounted to 2,223,179 euro and 8,543,570 euro respectively.
During the periods ended as at 31 December 2009 and 2008 the income (fixed rents - net of possible discounts- variable rents, common spaces rents, key income and transfer fees) and the corresponding direct operating expenses (property tax, insurance expense, maintenance expense, management fee and asset management fee and other direct operating expenses), relating the investment properties of the Group had the following detail:
| Rents | Operational direct expenses | |||
|---|---|---|---|---|
| 31 December 2009 | 31 December 2008 | 31 December 2009 31 December 2008 | ||
| Portugal | 52,466,368 | 59,498,236 | 3,415,593 | 3,048,116 |
| Spain | 27,413,536 | 28,001,533 | 865,982 | 2,073,938 |
| Brazil | 13,242,110 | 9,888,944 | 706,158 | 280,120 |
| Germany | 9,862,045 | 8,831,179 | 822,476 | 370,613 |
| Italy | 9,900,151 | 7,806,619 | 711,163 | 1,182,306 |
| Romania | 1,374,196 | 1,519,603 | 231,544 | 160,022 |
| Greece | 445,476 | 775,489 | 630,259 | 105,051 |
| 114,703,882 | 116,321,601 | 7,383,175 | 7,220,165 |
At 31 December 2009 the following investment properties had been given in guarantee of bank loans:
| Airone | Loop 5 |
|---|---|
| Alexa | Luz del Tajo |
| Algarveshopping | Madeirashopping |
| Alverca | Maiashopping |
| Arrabidashopping | Manauara Shopping |
| Cascaishopping | Max Center |
| Centro Colombo | Munster Arkaden |
| Centro Vasco da Gama | Norteshopping |
| Coimbrashopping | Parque Atlântico |
| Dos Mares | Parque Principado |
| El Rosal | Plaza Éboli |
| Estação Viana | Plaza Mayor |
| Freccia Rossa | Plaza Mayor Shopping |
| Gaiashopping | River Plaza Mall |
| Gli Orsi | Torre Ocidente |
| Grancasa | Valecenter |
| Guimarãeshopping | Valle Real | |
|---|---|---|
| La Farga | Viacatarina | |
| Leiria | Zubiarte |
At 31 December 2009 and 2008 there were no material contractual obligations to purchase construct or develop investment properties or for repairs or maintenance other than those referred to above.
Goodwill is allocated to each one of the operating segments and within to each one of the homogeneous groups of cash generating units as follows:
Retail - Goodwill is allocated to each one of the segment business concepts (Continente, Modelo , Worten, Sport Zone among others) explored by Food based Retail, being after allocated to each one business concept stores of the segment;
Shopping Centres - Goodwill was allocated to each of the own investment properties and to the management and development of investment properties business;
Telecommunications - Goodwill is allocated by each operating segment type (Telecommunications, Multimedia and Information Systems);
Investment Management - This segment's Goodwill is mainly related with the insurance business. Goodwill from:(i) this operating segment is related to the insurance clients portfolio, which was acquired previously to the adoption of IFRS, therefore explaining the non recognition as an Intangible asset; (ii) assets acquired in 2009, namely travel companies and Lazam/MDS;
At 31 December 2009 and 2008, the caption "Goodwill" was as follows:
| 31 December 2009 | 31 December 2008 | |
|---|---|---|
| Food based retail | 564,854,379 | 564,365,889 |
| Shopping centres | 58,040,038 | 58,703,923 |
| Telecommunications | 43,811,359 | 44,091,691 |
| Investment management | 79,634,915 | 30,105,858 |
| 746,340,691 | 697,267,362 |
During the years ended 31 December 2009 and 2008, movements in goodwill as well as in the corresponding impairment losses, are as follows:
| 31 December 2009 | 31 December 2008 | |
|---|---|---|
| Gross value: | ||
| Opening balance | 709,012,583 | 707,303,376 |
| New companies in the consolidation perimeter | 54,788,678 | 14,053,298 |
| Increases | 317,522 | 18,714,449 |
| Decreases | (4,332,109) | (16,363,744) |
| Transfers | - | (8,384,445) |
| Write-off | - | (6,310,351) |
| Closing balance | 759,786,674 | 709,012,583 |
| Accumulated impairment | ||
| losses: | ||
| Opening balance | 11,745,221 | 9,912,998 |
| Increases (Note 33) | 1,700,762 | 8,142,574 |
| Write-off | - | (6,310,351) |
| Closing balance | 13,445,983 | 11,745,221 |
| Carrying amount: | 746,340,691 | 697,267,362 |
The caption "Transfers" relates to the 42% goodwill of Sierra Portugal Fund (SPF) transferred to the caption "Investments in associated companies" measured in accordance with the equity method.
Sonae does annual impairment tests of Goodwill and whenever there are indications of goodwill impairment. During the reporting periods ended at 31 December 2009 and 2008, Sonae has tested the goodwill impairment, having as a result of that analysis, recognized impairment losses as follows:
| 31 December 2009 | 31 December 2008 | |
|---|---|---|
| Food based retail | - | 1,039,423 |
| Shopping centres | 1,700,762 | 6,375,724 |
| Investment management | - | 727,427 |
| 1,700,762 | 8,142,574 | |
The recoverable value of cash units generators is determined based on its value in use, which is calculated taking into consideration the last approved plans which are prepared using cash flow projections for periods of 5 years.
The main assumptions used in mentioned business plans are detailed as follows for each one of Sonae businesses.
For this purpose the segment uses the internal valuation results of its business concepts, using annual planning methologies, supported in business plans that consider cash flow projections for each unit which depend on detailed assumptions based properly supported. These plans take in consideration the impact of the main actions that will be carried out by each business concept as well as a study of the resources allocation of the company.
The case scenarios are elaborated with an average capital cost of 7 to 10% depending on the market and business concept. Perpetuity growth rate was considered to be between 0 and 1%.
The goodwill related with the Shopping Centre segment is allocated to each one of the companies that owns investment properties. The impairment tests of goodwill are based on the Net Asset value (NAV), at the balance sheet date, of the financial investments.
"Net Asset Value" is measured by the investment property valuation at market values (Open Market Value), not including the deferred taxes over the gains obtained. The assumptions related with investment properties valuation are detailed in Note 12.
For this purpose the segment uses the internal valuation results of its business areas, using annual planning methologies, supported in business plans that consider cash flow projections for each unit which depend on detailed assumptions based on historical performance of each business.
The discount rates used were based on the estimated weighted average cost of capital, which depends of the operating segment of each subsidiary, as indicated in the table below. In perpetuity, the Group considered a growth rate of circa 3%.
The discount rates used are:
| - Telecommunications | 9.00% |
|---|---|
| - Multimedia | 9.45% |
| - Information Systems | 11.22% |
Goodwill was exclusively allocated to business insurance clients portfolio, as consequence, the impairment analysis is made using the estimated profitability of the mentioned portfolio, being the main assumptions as follows:
| Insurance | Portugal | Brazil |
|---|---|---|
| Sales Increase rate during the projected period | 1% | 13.5% |
| Perpetuity growth rate | 1% | 3.7% |
| Discount rate used | 9% | 11.75% |
As at 31 December 2009 and 2008, this caption is made up as follows:
| 31 December 2009 | 31 December 2008 | |||
|---|---|---|---|---|
| Non current | Current | Non current | Current | |
| Investments in group companies, jointly controlled companies | ||||
| or associated companies excluded from consolidation | ||||
| Opening balance as at 1 January | 3,012,637 | - | 9,376,193 | - |
| Acquisitions in the period | 122,904 | - | 458,596 | - |
| Changes in consolidation perimeter | (1,584,193) | - | 1,598,800 | - |
| Disposals in the period | - | - | - | - |
| Transfers | (625,579) | - | (8,420,952) | - |
| Closing balance as at 31 December | 925,769 | - | 3,012,637 | - |
| Accumulated impairment losses | - | - | - | - |
| 925,769 | - | 3,012,637 | - | |
| Other investments: | ||||
| Fair value (net of impairment losses) as at 1 January | 9,965,538 | 60,956,604 | 2,678,964 | 56,093,108 |
| Acquisitions in the period | 22,873 | 7,243,466 | 19,750 | 6,029,043 |
| Disposals in the period | - | (10,902,651) | (25,000) | (1,165,547) |
| Increase/(Decrease) in fair value | 6,474,000 | - | 7,304,000 | - |
| Transfers | 739,312 | 16,490 | (12,176) | - |
| Fair value (net of impairment losses) as at 31 December | 17,201,723 | 57,313,909 | 9,965,538 | 60,956,604 |
| Other Investments (Note 7) | 18,127,492 | 57,313,909 | 12,978,175 | 60,956,604 |
| Derivative financial instruments (Note 27) | ||||
| Fair value as at 1 January | - | 2,600,159 | - | 3,976,816 |
| Acquisitions in the period | - | 365,121 | - | 72,494 |
| Disposals in the period | - | (72,494) | - | (296,968) |
| Increase/(Decrease) in fair value | - | (2,527,664) | - | (1,152,183) |
| Fair value as at 31 December | - | 365,122 | - | 2,600,159 |
| 18,127,492 | 57,679,031 | 12,978,175 | 63,556,763 |
The financial investments in group companies, jointly controlled companies or associated companies excluded from consolidation are recorded at the acquisition cost net of impairment losses. It is Sonae understanding that no reliable fair value estimate could be made as there is no market data available for these investments. The heading of Investments available for sale includes 3,423,724 euro (2,661,538 euro in 31 December 2008) of investments recorded at the cost net of impairment losses for the same reasons.
The investments available for sale are net impairment losses (Note 33) amounting 67,925 euro (13,157 euro in 31 December 2008).
Under the caption other financial investments is recorded an amount of 45,121,122 euro (56,042,299 euro as at 31 December 2008) related to deposited amounts on an Escrow Account which are invested in investment funds with superior rating and guarantee contractual liabilities assumed by Sonae which may arise from the sale of Sonae Distribuição Brasil, S.A. and for which provisions were recorded.
Although in accordance with the deadlines contractually established, the Escrow Account should have already been released by the buyer, that didn't happen as there are some points of disagreement on how to use the Escrow Account, namely as to whether or not, to return the Escrow Account for ongoing fiscal procedures have not yet decided (Note 34). It is the understanding of the Board of Directors, based in the legal opinions of Brazilian and Portuguese lawyers, that this amount shall be entirely received up to 31 December 2010, and that there are legal means that may be operated so as to compel the buyer to authorize the return of the Escrow account. If the negotiations currently under way between the two parties do not accomplish in results, it is the intention of the Board to make use of such legal means.
As at 31 December 2009 and 2008, Other non-current assets are detailed as follows:
| 31 December 2009 | 31 December 2008 | |||||
|---|---|---|---|---|---|---|
| Gross Value | Accumulated impairment losses (Note 33) |
Carrying Amount |
Gross Value | Accumulated impairment losses (Note 33) |
Carrying Amount |
|
| Loans granted to related parties | 1,312,071 | - | 1,312,071 | 294,089 | (160,125) | 133,964 |
| Trade accounts receivable and other debtors | ||||||
| Legal deposits | 819,480 | - | 819,480 | 634,470 | - | 634,470 |
| Cautions | 2,949,266 | - | 2,949,266 | 1,638,456 | - | 1,638,456 |
| Lisbon Town Council | 3,888,477 | - | 3,888,477 | 3,888,477 | - | 3,888,477 |
| Malaga Town Council | 824,948 | - | 824,948 | 512,108 | - | 512,108 |
| Rent deposits from tenants | 4,036,717 | - | 4,036,717 | 3,740,456 | - | 3,740,456 |
| Others | 1,399,468 | (141,988) | 1,257,480 | 1,977,893 | (131,446) | 1,846,447 |
| 13,918,356 | (141,988) | 13,776,368 | 12,391,860 | (131,446) | 12,260,414 | |
| Non-current derivatives | 12,991 | - | 12,991 | 75,002 | - | 75,002 |
| Total financial instruments (Note 9) | 15,243,418 | (141,988) | 15,101,430 | 12,760,951 | (291,571) | 12,469,380 |
| Reinsurer's' share of technical provisions | 5,396,067 | - | 5,396,067 | 8,763,158 | - | 8,763,158 |
| Other non-current assets | 678,815 | - | 678,815 | 50,977 | - | 50,977 |
| 21,318,300 | (141,988) | 21,176,312 | 21,575,086 | (291,571) | 21,283,515 |
Loans granted to related parties bear interests at usual market rates and do not have a defined maturity. The fair value of these loans is estimated to be similar to its carrying amount.
The amount of 3,888,477 Eero due by Lisbon Town Council, relates to works developed by a jointly controlled company of Shopping Centres segment developed on behalf of Lisbon Town Council ("CML") in accordance with protocols signed in the end of 2001. On the other hand, the caption "Other non-current liabilities", as at 31 December 2009 and 2008 includes the amount of 1,621,687 euro relating to works developed by CML on behalf of the joint controlled company and licenses. A legal action against CML was presented in 2001, claiming the totality of the improvements made by Colombo on account of CML and corresponding interests and other expenses incurred. Sonae believes that the legal action will be favourable to the Group and consequently did not record any impairment loss to face eventual losses on this account receivable.
The amount of 4,036,717 euro (3,740,456 euro as at December 2008) relates to the deposit in official entities of rents deposits received from tenants of shopping centres located in Spain. The rent deposits received from tenants are classified under "Other non-current liabilities" and "Other liabilities".
The Reinsurer's' share of technical provisions refer to non-life insurance ceded to reinsurance companies by a captive subsidiary. The provision can be detailed as follows: Provision for unearned premiums 3,582,953 euro (3,597,343 euro as at December 2008) and Provisions for outstanding claims 1,688,969 euro (5,156,815 euro as at December 2008) (Note 33).
As at 31 December 2009 and 2008, Inventories are as follows:
| 31 December 2009 | 31 December 2008 | |
|---|---|---|
| Raw materials and consumables | 1,109,140 | 1,659,166 |
| Goods for resale | 633,189,711 | 588,557,727 |
| Finished and intermediate goods | 202,575 | - |
| Work in progress | 146,535 | - |
| 634,647,961 | 590,216,893 | |
| Accumulated impairment losses on Inventories (Note 33) | (31,644,772) | (29,783,714) |
| 603,003,189 | 560,433,179 |
Cost of goods sold as at 31 December 2009 and 2008 amounted to 3,580,874,024 euro and 3,303,986,732 euro, respectively, and may be detailed as follows:
| 31 December 2009 | 31 December 2008 | ||
|---|---|---|---|
| Opening balance | 590,216,893 | 506,662,632 | |
| Changes in consolidation perimeter | 759,076 | 6,626,869 | |
| Purchases | 3,651,137,843 | 3,383,129,620 | |
| Adjustments | (29,518,161) | (6,415,488) | |
| Closing balance | 634,647,961 | 590,216,893 | |
| 3,577,947,690 | 3,299,786,740 | ||
| Impairment losses (Note 33) | 8,411,520 | 10,856,498 | |
| Reversal of impairment losses | (5,485,186) | (6,656,506) | |
| 3,580,874,024 | 3,303,986,732 |
a) The line adjustments includes 23 million euro (14 million euro at 31 December 2008) relating essentially to telecommunications terminal transfers from stocks Fixed Assets under contracts of lending agreements with customers of Telecommunications segment.
As at 31 December 2009 and 2008, trade accounts receivable are detailed as follows:
| 31 December 2009 | 31 December 2008 | |
|---|---|---|
| Trade accounts receivable | ||
| Retail | 33,530,469 | 32,407,651 |
| Shopping Centres | 28,908,566 | 24,227,509 |
| Telecommunications | 220,854,930 | 241,908,462 |
| Investments management | 10,555,411 | 12,408,563 |
| Sonae Holding | 982,280 | 796,899 |
| 294,831,656 | 311,749,084 | |
| Accumulated impairment losses on Trade Debtors (Note 33) |
(86,765,183) | (96,686,475) |
| 208,066,473 | 215,062,609 |
Sonae's exposition to credit risk is attributed to accounts receivable relating the operating activity of the Group. The amounts presented on the face of the balance sheet are net of impairment losses which were estimated based on Sonae's past experience
and on the assessment of present economic conditions. As a result, amounts disclosed in Trade Debtors are considered to reflect their fair value.
As at 31 December 2009 there is no indication that the debtors of trade accounts receivable not due will not fulfil their obligations on normal conditions, thus no impairment loss was recognised.
As at 31 of December of 2009 and 2008 pro-forma, the ageing of the trade receivables are as follows:
| Trade Receivables | ||||||
|---|---|---|---|---|---|---|
| 31 December 2009 | Retail | Shopping Centres | Telecommunications | Investments Management |
Others | Total |
| Not due | 12,137,691 | 6,525,055 | 54,453,780 | 5,956,405 | 675,928 | 79,748,859 |
| Due but not impaired | ||||||
| 0 - 30 days | 5,548,922 | 3,724,054 | 26,258,873 | 1,213,406 | 245,068 | 36,990,323 |
| 30 - 90 days | 7,838,363 | 3,642,067 | 9,859,150 | 1,118,968 | 48,286 | 22,506,834 |
| + 90 days | 977,475 | 4,797,664 | 43,235,363 | 761,826 | 12,998 | 49,785,326 |
| Total | 14,364,760 | 12,163,785 | 79,353,386 | 3,094,200 | 306,352 | 109,282,483 |
| Due and impaired | ||||||
| 0 - 90 days | 45,873 | 1,008,627 | 2,952,382 | 38,324 | - | 4,045,206 |
| 90 - 180 days | 46,342 | 858,683 | 3,589,051 | 4,500 | - | 4,498,576 |
| 180 - 360 days | 449,406 | 2,007,699 | 5,016,947 | 43,917 | - | 7,517,969 |
| + 360 days | 6,486,397 | 6,344,717 | 75,489,385 | 1,418,065 | - | 89,738,564 |
| Total | 7,028,018 | 10,219,726 | 87,047,764 | 1,504,806 | - | 105,800,314 |
| 33,530,469 | 28,908,566 | 220,854,931 | 10,555,411 | 982,280 | 294,831,656 |
| Trade Receivables | ||||||
|---|---|---|---|---|---|---|
| 31 December 2008 | Retail | Shopping Centres | Telecommunications | Investments Management |
Others | Total |
| Not due | 11,503,739 | 3,458,036 | 65,648,380 | 2,668,157 | 170,600 | 83,448,912 |
| Due but not impaired | ||||||
| 0 - 30 days | 1,542,815 | 4,754,801 | 18,043,737 | 2,564,490 | 262,509 | 27,168,352 |
| 30 - 90 days | 6,487,369 | 4,492,848 | 9,460,068 | 2,505,180 | 102,712 | 23,048,177 |
| + 90 days | 1,641,757 | 2,666,326 | 53,902,941 | 2,613,895 | 261,078 | 61,085,997 |
| Total | 9,671,941 | 11,913,975 | 81,406,746 | 7,683,565 | 626,299 | 111,302,526 |
| Due and impaired | ||||||
| 0 - 90 days | 127,988 | 603,977 | 5,444,803 | 79,543 | - | 6,256,311 |
| 90 - 180 days | 105,314 | 473,947 | 4,667,974 | 289,665 | - | 5,536,900 |
| 180 - 360 days | 318,903 | 3,082,340 | 4,371,783 | 291,101 | - | 8,064,127 |
| + 360 days | 10,679,766 | 4,695,234 | 80,368,775 | 1,396,533 | - | 97,140,308 |
| Total | 11,231,971 | 8,855,498 | 94,853,335 | 2,056,842 | - | 116,997,646 |
| 32,407,651 | 24,227,509 | 241,908,461 | 12,408,564 | 796,899 | 311,749,084 |
In determining the recoverability of a trade receivable, Sonae considers any change in the credit quality of the trade receivable from the date credit was initially granted up to the reporting date. The concentration of credit risk is limited due to the customer base being large. Accordingly, it is considered that the risk of not recovering the trade receivable is not higher than the allowance for doubtful debts.
Sonae considers that the maximum exposition to the credit risk is the amount presented in the consolidate balance sheet.
As at 31 December 2009 and 2008, Other debtors are as follows:
| 31 December 2009 | 31 December 2008 | |
|---|---|---|
| Granted loans to related companies | 8,339 | 4,269,936 |
| Other debtors | ||
| Trade creditors - debtor balances | 58,251,461 | 65,799,273 |
| Special regime for payment of tax and social security debts | 13,999,945 | 14,576,052 |
| VAT recoverable on real estate assets | 20,698,211 | 7,461,293 |
| Vouchers and gift cards | 1,308,743 | 2,347,902 |
| Accounts receivable from the disposal of fixed assets | 5,210,484 | 9,484,451 |
| Cash Settled Equity Swap | - | 3,452,800 |
| Advances for the acquisiton of a real estate project | 7,967,500 | 7,500,000 |
| Termination of the contract of acquisition of land in Pulianas | 5,382,500 | - |
| Revocation of contracts for acquisition of stores | 11,131,667 | 389,871 |
| Advances to suppliers | 15,905,764 | 12,458,873 |
| Advances to agents | 1,004,492 | 2,271,495 |
| Reinsurance operations | 3,351,186 | 4,051,296 |
| Other current assets | 36,395,501 | 24,825,971 |
| 180,607,454 | 154,619,277 | |
| Accumulated impairment losses in receivables accounts (Note 33) | (17,223,228) | (12,896,708) |
| Total of Financial Instruments (Note 9) | 163,392,565 | 145,992,505 |
Granted loans to related companies earn interests at market rates and do not have defined maturity but are deemed to be received within 12 months.
The amounts disclosed as 'Trade creditors - debtor balances' relates with commercial discounts billed to suppliers to be net settled with future purchases - mainly in the Retail segment.
The amount disclosed as 'Special regime for payment of tax and social security debts' corresponds to taxes which were disputed and subject to reimbursement claims. The Board of Directors is confident of the arguments presented by Sonae and expects court decisions to be in favour of Sonae.
In 2008, a company of Sonae Sierra made an advance to purchase land in Pulianas to build a shopping. The acquisition of that land was subject to fulfillment by selling a set of conditions acquisition made a bank guarantee for advance. As a result of noncompliance with the conditions agreed Sonae ran the bank guarantee which has not yet been met, as a result of a lawful action brought by the seller. According to the legal advice obtained, the Group believes that this amount is fully recoverable.
At as 31 December 2009 and 2008, the ageing of other debtors are as follows:
| Other Debtors | ||||
|---|---|---|---|---|
| 31 December 2009 | 31 December 2008 | |||
| Not due | 80,700,480 | 39,499,120 | ||
| Due but not impaired | - | - | ||
| 0 - 30 days | 28,915,142 | 43,946,973 | ||
| 30 - 90 days | 27,168,792 | 31,183,504 | ||
| + 90 days | 25,066,851 | 25,284,060 | ||
| Total | 81,150,785 | 100,414,537 | ||
| Due and impaired | ||||
| 0 - 90 days | 1,305,871 | 1,755,989 | ||
| 90 - 180 days | 136,019 | 360,306 | ||
| 180 - 360 days | 2,460,437 | 2,336,907 | ||
| + 360 days | 14,853,862 | 10,252,418 | ||
| Total | 18,756,189 | 14,705,620 | ||
| 180,607,454 | 154,619,277 |
As at 31 December 2009 there is no indication that the debtors not due will not fulfil their obligations on normal conditions, thus no impairment loss was recognized.
The carrying amount of other debtors is estimated to be approximately its fair value.
As at 31 December 2009 and 2008, Taxes recoverable and taxes and contributions payable are made up as follows:
| 31 December 2009 | 31 December 2008 | |
|---|---|---|
| Tax recoverable | ||
| Income taxation | 10,950,005 | 20,949,102 |
| VAT | 42,533,733 | 67,366,251 |
| Other taxes | 1,586,731 | 1,281,813 |
| 55,070,469 | 89,597,166 | |
| Taxes and contributions payable | ||
| Income taxation | 34,365,203 | 12,207,801 |
| VAT | 34,317,472 | 40,807,861 |
| Staff income taxes withheld | 3,252,893 | 3,383,806 |
| Social security contributions | 11,993,953 | 11,981,403 |
| Other taxes | 2,698,188 | 3,126,924 |
| 86,627,709 | 71,507,795 |
As at 31 December 2009 and 2008, Other current assets are made up as follows:
| 31 December 2009 | 31 December 2008 | |
|---|---|---|
| Invoices to be issued | 57,394,646 | 64,755,143 |
| "Initiatives E" program (Note 51) | 75,145,779 | 39,317,881 |
| Commercial Discounts | 14,211,921 | 19,482,183 |
| Commissions to be received | 1,368,173 | 1,269,874 |
| Prepayments - Rents | 4,204,847 | 4,206,320 |
| Prepayments of external supplies and services | 18,096,233 | 16,404,435 |
| Other current assets | 13,565,819 | 20,466,269 |
| 183,987,418 | 165,902,105 |
The caption invoices to be issued relates, basically with telecommunications operating segment and accounts for invoices to be issued to customers and other telecommunications operators.
Deferred tax assets and liabilities as at 31 December 2009 and 2008 are as follows, split between the different types of temporary differences:
| Deferred tax assets | Deferred tax liabilities | |||
|---|---|---|---|---|
| 31 December 2009 | 31 December 2008 | 31 December 2009 | 31 December 2008 | |
| Difference between fair value and acquisition cost | 3,700,884 | 4,565,926 | 258,974,803 | 273,169,996 |
| Harmonisation adjustments | 46,211 | 33,376 | 43,461,567 | 34,974,182 |
| Provisions and impairment losses not accepted for tax purposes | 15,627,931 | 15,593,155 | - | - |
| Write off of tangible and intangible assets | 58,633,429 | 64,320,965 | - | - |
| Write off of deferred costs | 36,005,911 | 43,052,099 | 1,362,430 | 1,500,154 |
| Valuation of hedging derivatives | 7,180,175 | 5,484,534 | 100,654 | 496,557 |
| Temporary differences arising from the securitization of receivable operation | 12,880,000 | 16,100,000 | - | - |
| Amortisation of Goodwill for tax purposes | - | - | 13,960,032 | 6,980,016 |
| Non taxed exchange differences | - | - | 928,553 | 5,326,355 |
| Revaluation of tangible assets | - | - | 2,131,967 | 2,281,496 |
| Tax losses carried forward | 94,364,809 | 54,525,172 | - | - |
| Reinvested capital gains/(losses) | - | - | 2,768,248 | 2,939,833 |
| Others | 1,775,158 | 3,279,462 | 2,731,864 | 3,240,091 |
| 230,214,508 | 206,954,689 | 326,420,118 | 330,908,680 |
During the periods ended 31 December 2009 and 2008, movements in Deferred tax assets and liabilities are as follows:
| Deferred tax assets | Deferred tax liabilities | |||
|---|---|---|---|---|
| 31 December 2009 | 31 December 2008 | 31 December 2009 | 31 December 2008 | |
| Opening balance | 206,954,690 | 149,323,388 | 330,908,680 | 348,408,863 |
| Effects in net income: | ||||
| Difference between fair value and acquisition cost | (870,449) | (5,044,606) | (23,252,384) | (14,246,452) |
| Amortisation and Depreciation harmonisation adjustments | 26,935 | (1,686,181) | 8,464,839 | 9,869,360 |
| Provisions and impairment losses not accepted for tax purposes | (399,556) | 3,169,630 | (26,495) | (70,763) |
| Write-off of tangible and intangible assets | (5,702,292) | 4,242,447 | (228) | 798,102 |
| Write-off of deferred costs | (7,092,466) | 2,027,199 | (49,998) | 192,768 |
| Revaluation of tangible assets | - | - | (149,436) | (236,149) |
| Tax losses carried forward | 38,081,299 | 16,718,637 | - | - |
| Temporary differences arising from the securitization of receivable operation |
(3,220,000) | 16,100,000 | - | - |
| Amortization of Goodwill for tax purposes | - | - | 6,980,016 | 6,980,016 |
| Non taxed exchange differences | - | - | (5,422,220) | 6,462,069 |
| Reinvested capital gains/(losses) | - | - | (155,523) | (136,246) |
| Changes in tax rates | - | - | (153,687) | 107 |
| Others | (87,939) | 2,688,741 | (418,850) | 130,616 |
| 20,735,532 | 38,215,867 | (14,183,966) | 9,743,428 | |
| Effects in equity: | ||||
| Valuation of hedging derivatives | 1,806,117 | 5,715,366 | (471,332) | (757,317) |
| Exchange rate effect | 1,045,771 | (1,110,020) | 6,592,197 | (5,786,745) |
| Change in tax rate | - | - | - | (181) |
| Others | (429,313) | (6,326) | 333,892 | 311,384 |
| 2,422,575 | 4,599,020 | 6,454,757 | (6,232,859) | |
| Changes in the percentages of jointly controlled companies | - | - | - | - |
| Acquisitions of subsidiaries (Note 8) | 153,728 | 26,105 | - | - |
| Disposals of subsidiaries (Note 8) | (52,017) | (1,868,508) | (961,577) | (30,792,483) |
| Allocation of fair value on companies acquisitions (Note 8) | - | 16,658,818 | 4,202,324 | 9,781,731 |
| Closing balance | 230,214,508 | 206,954,690 | 326,420,218 | 330,908,680 |
The recognition of deferred tax amounting to approximately 16.1 million euro in Telecommunications segment follows the securitization of future receivables completed in December 2008. As a result of this operation and in accordance with the provisions of 100 million euro from this operation was added for purposes of determining the taxable income for the year 2008, thereby generating a temporary difference between accounting and taxable amounts, having been registered deferred tax assets to the extent that its use was, with reasonable safety likely. Until the maturity of the operation, a gradual reversion of the corresponding deferred tax assets shall occur, by deduction, in the determination of the taxable income of each year, of the revenue associated to the securitized receivables. In 2009, It was reverted an amount of 3.2 million euro, corresponding to the reversal of the temporary difference in exercise.
During 2008, companies of specialized retail operating segment recognized deferred tax assets amounting 18,240,000 euro were recorded related to tax losses carried forward from the subsidiary Worten España, S.A. generated in the current and in past years (11,829,000 euro were previous to the acquisition. and therefore had impact in the calculated negative goodwill). In the year ending 31 December 2009, were accrued deferred tax assets related to the damage caused in the exercise of 9,144,723 euro in Worten Espanã, S.A. and 6,635,228 euro in Sport Zone Espanã, S.A..The deferred tax losses calculation is supported by the Company business plan that estimates its use in a period from 6 to 8 years (the last in a more conservative perspective). In Spain the deadline for reporting tax losses is 15 years.
As at 31 December 2009 and 2008, in Portuguese companies the tax rate used to calculate the deferred tax assets arising from tax losses carried forward was 25%. For the deferred tax assets arising from temporary differences, the considered rate was 26.5%. The companies located in other countries have used their tax.
As at 31 December 2009 and 2008, and in accordance with the tax statements presented by companies that recorded deferred tax assets arising from tax losses carried forward and using exchange rates effective at that time, tax losses carried forward can be summarised as follows:
| 31 December 2009 | 31 December 2008 | |||||
|---|---|---|---|---|---|---|
| Tax losses carried forward |
Deferred tax assets |
Time limit | Tax losses carried forward |
Deferred tax assets | Time limit | |
| With limited time use | ||||||
| Generated in 2003 | - | - | 2009 | 1,077,065 | 269,266 | 2009 |
| Generated in 2004 | 171,630 | 42,907 | 2010 | 2,658,095 | 664,524 | 2010 |
| Generated in 2005 | 1,454,441 | 363,610 | 2011 | 1,508,454 | 377,114 | 2011 |
| Generated in 2006 | 1,953,506 | 488,376 | 2012 | 1,138,251 | 284,562 | 2012 |
| Generated in 2007 | 15,775,143 | 3,943,786 | 2013 | 23,759,138 | 5,939,785 | 2013 |
| Generated in 2008 | 4,136,674 | 1,034,169 | 2014 | 4,651,622 | 1,162,908 | 2014 |
| Generated in 2009 | 50,067,344 | 12,516,838 | 2015 | - | - | |
| 73,558,738 | 18,389,686 | 34,792,625 | 8,698,159 | |||
| 18,581,710 | 5,096,472 | 10,346,392 | 3,126,514 | |||
| Without limited time use | ||||||
| 236,619,705 | 70,878,651 | 142,929,494 | 42,700,499 | |||
| With a time limit different from the | ||||||
| above mentioned | 255,201,415 | 75,975,123 | 153,275,886 | 45,827,013 | ||
| 328,760,153 | 94,364,809 | 188,068,511 | 54,525,172 |
As at 31 December 2009 and 2008, deferred tax assets resulting from tax losses carried forward were re-assessed against each company's business plans, which are regularly updated, and available tax planning opportunities. Deferred tax assets have only been recorded to the extent that future taxable profits will arise which may be offset against available tax losses or against deductible temporary differences.
As at 31 December 2009, there were tax losses carried forward, amounting to 639,018,631 euro (761,693,530 euro in 2008) for which no deferred tax assets were recognized due to uncertainties of their future use. These may be summarised as follows:
| 31 December 2009 | 31 December 2008 | |||||
|---|---|---|---|---|---|---|
| Tax losses carried | Deferred tax credit | Time limit | Tax losses carried | Deferred tax credit | Time limit | |
| With limited time use | forward | forward | ||||
| Generated in 2003 | - | - | 2009 | 7,840,316 | 1,960,080 | 2009 |
| Generated in 2004 | 7,026,627 | 1,756,656 | 2010 | 7,284,015 | 1,821,004 | 2010 |
| Generated in 2005 | 46,474,629 | 11,618,658 | 2011 | 31,838,954 | 7,959,738 | 2011 |
| Generated in 2006 | 60,520,774 | 15,130,192 | 2012 | 69,678,529 | 17,419,632 | 2012 |
| Generated in 2007 | 60,518,585 | 15,129,647 | 2013 | 79,771,355 | 19,942,840 | 2013 |
| Generated in 2008 | 13,091,128 | 3,272,783 | 2014 | 17,458,087 | 4,364,521 | 2014 |
| Generated in 2009 | 12,670,496 | 3,167,650 | 2015 | |||
| 200,302,239 | 50,075,586 | 213,871,256 | 53,467,815 | |||
| 38,617,859 | 10,737,954 | 31,496,303 | 8,383,429 | |||
| Without limited time use | ||||||
| 400,098,533 | 102,943,995 | 516,325,971 | 149,725,560 | |||
| With a time limit different from the | ||||||
| above mentioned | 639,018,631 | 163,757,535 | 761,693,530 | 211,576,804 |
As at 31 December 2009 and 2008, Cash and cash equivalents are as follows:
| 31 December 2009 | 31 December 2008 | |
|---|---|---|
| Cash at hand | 6,412,073 | 6,243,465 |
| Bank deposits | 140,227,780 | 140,335,695 |
| Treasury applications | 25,590,018 | 37,781,744 |
| Cash and cash equivalents on the balance sheet | 172,229,871 | 184,360,904 |
| Bank overdrafts (Note 25) | (23,763,618) | (41,394,916) |
| Cash and cash equivalents on the statement of cash flows | 148,466,253 | 142,965,988 |
Bank overdrafts are disclosed in the balance sheet under Current bank loans.
As at 31 December 2009, the share capital, which is fully subscribed and paid for, is made up of 2,000,000,000 ordinary shares, which do not have the right to a fixed dividend, with a nominal value of 1 euro each.
On 15 November 2007, Sonae Holding sold. 132,856,072 Sonae Holding shares directly owned by the Company. The shares were sold in a market operation at the unit price of 2.06 euro per share and resulted on a cash inflow (net of brokerage commissions) of 273,398,877 euro.
On the same date, Sonae Investments, BV wholly owned by Sonae Holding entered into a derivative financial instrument - Cash Settled Equity Swap - over a total of 132,800,000 Sonae Holding shares, representative of 6.64% of its capital.
This transaction has a maximum maturity of three years and a strictly financial liquidation, without any duty or right for the Company or any of its associated companies in the purchase of these shares. This transaction allows Sonae to totally maintain the economic exposure to the sold shares.
In this context, although legally all the rights and obligations inherent to these shares have been transferred to the buyer. Sonae Holding did not derecognize their own shares, recording a liability in the caption Other non-current liabilities (Note 28). According to the interpretation made by Sonae of the IAS 39, applied by analogy to own equity instruments, the derecognition of own shares is not allowed as the group maintains the risks and rewards arising on the instruments sold.
Consequently, Sonae maintains the deduction from Equity amounting to the acquisition cost of the 132,800,000 shares (138,568,275 euro), and has accounted for the consideration received for the above mentioned sale of own shares in the caption Other non-current liabilities (273,568,000 euro).
Due to the detach of Sonae Capital SGPS. SA demerger rights attributable to the 132,800,000 Sonae SGPS. SA shares subject to the above mentioned agreement, the Group recognized an asset measured at its' fair value. This asset as not been derecognized as the Group also entered into a Cash Settled Equity Swap over the Sonae Capital SGPS, SA shares, and therefore a liability was recognized. Consequently, and in relation with this operation the full liability amount can be detailed as follows: market value of Sonae SGPS. SA shares amounting to 112,905,322 euro, and market value of Sonae Capital SGPS, SA shares amounting to 13,778,000 euro, after demerged at 28 January 2008.
These liabilities are adjusted at the end of each month by the effect in Sonae Holding or Sonae Capital, SGPS, S.A. share price, as applicable, being recognized an asset/liability in order to present the right/obligation related to the cash settlement of the operation that resets monthly (Notes 18, 28 and 31).
Additionally, the costs related to the "floating amount" based on Euribor 1 month are recorded in the income statement.
During the year, the Sonae acquired 1,134,965 own shares at an average price of € 0.614/share, taking the Sonae proceeded to advance and partial cancellation of that derived to 1,134,965 shares at the same price. Such actions were delivered to employees of Sonae under deferred performance plan currently underway (Note 29).
The value to get established on the basis of dividends distributed by Sonae is credited in equity to offset the charge of the distribution.
The amount of dividends on Sonae SGPS, SA during the year ending 31 December 2009 amounted to 3,949,951 euro that were credited to equity.
The number of shares taken into consideration to calculate earnings per share includes the shares referred to above as a deduction to the shares issued by the Company (Note 47).
At 31 December 2009, the following entities held more than 20% of the subscribed share capital:
| Entity | % |
|---|---|
| Efanor Investimentos. SGPS. SA and subsidiaries | 52.98 |
The capital structure is analysed in the Management Report section titled "Business Performance".
Movements in minority interests during the periods ended as at 31 December 2009 and 2008 are as follows:
| 31 December 2009 | 31 December 2008 | |
|---|---|---|
| Opening balance as at 1 January | 411,549,101 | 448,365,507 |
| Dividends | (38,140) | (2,475,031) |
| Exchange rate effect | 2,515,177 | (890,857) |
| Acquisition of subsidiaries (Note 8) | 54,233,850 | - |
| Disposal of subsidiaries | - | (5,370,066) |
| Increase of capital and premium on subsidiaries | 4,912,947 | 36,604,140 |
| Increased shareholding by acquisitions | - | (11,887,804) |
| Decreased shareholding by disposals | 26,133,713 | (3,299,989) |
| Changes in hedge and fair value reserves | (1,549,431) | (7,761,789) |
| Others | 352,125 | (777,613) |
| Profit for the period attributable to minority interests | (20,140,587) | (40,957,397) |
| Closing balance as at 31 December | 477,968,755 | 411,549,101 |
As at 31 December 2009 and 2008, Borrowings are made up as follows:
| 31 December 2009 | 31 December 2008 | ||||||
|---|---|---|---|---|---|---|---|
| Outstanding amount | Outstanding amount | ||||||
| Amount limit | Current | Non Current | Amount limit | Current | Non Current | ||
| Bank loans | |||||||
| Sonae, SGPS, SA - commercial paper | 350,000,000 | 24,950,000 | - | 350,000,000 | 138,200,000 | - | |
| Sonae Investimentos, SGPS, S.A. - commercial paper | 692,500,000 | - | 271,000,000 | 563,000,000 | 20,000,000 | 230,000,000 | |
| a)b) Sonae Sierra affiliated companies |
470,086,920 | 16,621,638 | 385,383,442 | 471,190,318 | 26,844,447 | 382,135,505 | |
| a)b)c) Sonae Sierra affiliated companies | 442,830,796 | 61,288,733 | 377,516,488 | 430,867,643 | 7,153,557 | 415,653,220 | |
| a)b)d) Sonae Sierra affiliated companies | 11,179,526 | - | 11,179,526 | - | - | - | |
| a) Sonae Sierra affiliated companies |
12,185,116 | 8,179,211 | 3,435,116 | 41,097,065 | 13,670,597 | 22,516,460 | |
| a)b)d) Sonae Sierra SGPS, SA | 83,919,000 | 18,585,252 | - | - | - | - | |
| Sonaecom SGPS, SA commercial paper | 320,000,000 | 55,000,000 | 150,000,000 | 320,000,000 | - | 231,000,000 | |
| Sonaecom SGPS, SA | 26,500,000 | 3,500,000 | - | 15,000,000 | 4,873,000 | - | |
| Continente Hipermercados SA - commercial paper | 30,000,000 | - | - | 80,000,000 | - | - | |
| Others | 21,887,012 | 15,374,356 | 7,572,291 | 6,977,246 | |||
| 210,011,846 | 1,213,888,928 | 218,313,892 | 1,288,282,431 | ||||
| Bank overdrafts (Note 22) | 23,763,618 | - | 41,394,916 | - | |||
| Up-front fees beard with the issuance of borrowings | (808,536) | (5,564,118) | (802,841) | (7,019,907) | |||
| Bank loans | 232,966,928 | 1,208,324,810 | 258,905,967 | 1,281,262,524 | |||
| Bonds | |||||||
| Bonds Sonae / 05 | - | 100,000,000 | - | 100,000,000 | |||
| Bonds Sonae 2006/2011 | - | 250,000,000 | - | 250,000,000 | |||
| Bonds Sonae 2007/2014 | - | 150,000,000 | - | 150,000,000 | |||
| Bonds Modelo Continente / 2003 | - | 82,000,000 | - | 82,000,000 | |||
| Bonds Modelo Continente / 2004 | - | - | 100,000,000 | - | |||
| Bonds Modelo Continente / 2005 / 2010 | 64,925,000 | - | - | 64,925,000 | |||
| Bonds Modelo Continente / 2005 / 2012 | - | 150,000,000 | - | 150,000,000 | |||
| Bonds Modelo Continente / 2007 / 2012 | - | 200,000,000 | - | 200,000,000 | |||
| Bonds Sonae Distribuição / 2007 / 2015 | - | 200,000,000 | - | 200,000,000 | |||
| Bonds Sonae Distribuição / 2007 / 2015 | - | 310,000,000 | - | 310,000,000 | |||
| Bonds Sonae Distribuição / 2009 / 2014 | - | 50,000,000 | - | - | |||
| Bonds Sonaecom / 2005 | - | 150,000,000 | - | 150,000,000 | |||
| Bonds Sonae Sierra 2008/2013 | - | 37,500,000 | - | 37,500,000 | |||
| Up-front fees bearded with the issuance of borrowings | (76,340) | (8,365,778) | (69,433) | (10,210,681) | |||
| Bonds | 64,848,660 | 1,671,134,222 | 99,930,567 | 1,684,214,319 | |||
| Other loans | 33,466 | 586,519 | 35,485 | 628,196 | |||
| Derivative instruments (Note 27) | 7,902,322 | 34,584,190 | 5,369,980 | 21,646,496 | |||
| Other loans | 7,935,788 | 35,170,709 | 5,405,465 | 22,274,692 | |||
| Obligations under finance leases (Note 26) | 7,803,032 | 29,357,393 | 5,829,172 | 28,701,579 | |||
| 313,554,408 | 2,943,987,134 | 370,071,172 | 3,016,453,113 |
a) These amounts are proportionate considering the percentage held by Sonae;
b) These loans are guaranteed by mortgages of investment properties held by these affiliated companies;
c) These loans are guaranteed by a pledge of shares held in the those affiliated companies;
d) These loans are guaranteed by bank guarantees.
The interest rate at 31 December 2009 of bonds and loans were in average 1.72% (5.27% 31 December 2008).
Bank loans bear interests at market rates based on Euribor for each interest payment term therefore the fair value of bank loans is estimated to be similar to their market value.
The derivative instruments are recorded at fair value (Note 27).
The face value loans maturities and interests are as follows (including obligations under financial leases):
| 31 December 2009 | 31 December 2008 | ||||
|---|---|---|---|---|---|
| Capital | Interests | Capital | Interests | ||
| N+1 a) | 306,536,962 | 59,249,205 | 365,573,466 | 160,445,963 | |
| N+2 | 369,170,365 | 54,034,205 | 218,420,062 | 139,770,421 | |
| N+3 | 561,016,180 | 47,483,356 | 359,930,980 | 127,575,596 | |
| N+4 | 549,823,566 | 38,181,113 | 537,232,284 | 105,852,723 | |
| N+5 | 492,562,407 | 20,709,627 | 506,240,050 | 82,086,426 | |
| After N+5 | 950,760,322 | 39,538,308 | 1,390,213,829 | 154,813,311 | |
| 3,229,869,802 | 259,195,814 | 3,377,610,671 | 770,544,440 |
a) Includes amounts drawn under commercial paper programs.
The maturities above were estimated in accordance with the contractual terms of loans, and taking into account best expectation of Sonae regarding fulfilment ratios that some loans are issued.
All loans with "covenants" were analysed at the balance sheet date and in situations where they were breached the corresponding debt was reclassified for the current liabilities. Negotiations are in progress with banks for a renegotiation of debt.
As at 31 December 2009 and 2008, the available credit facilities are as follows:
| 31 December 2009 | 31 December 2008 | |||
|---|---|---|---|---|
| Commitments of less than one year |
Commitments of more than one year |
Commitments of less than one year |
Commitments of more than one year |
|
| Unused credit facilities amounts | ||||
| Retail | 348,517,927 | 204,000,000 | 330,372,762 | 170,000,000 |
| Shopping Centres | 42,718,579 | - | 53,781,154 | - |
| Telecommunications | 142,000,000 | - | 14,978,667 | 89,000,000 |
| Investment management | 10,948,727 | - | 11,311,787 | - |
| Sonae Holding | 324,907,000 | - | 194,783,894 | - |
| 869,092,233 | 204,000,000 | 605,228,264 | 259,000,000 | |
| Agreed credit facilities amounts | ||||
| Retail | 362,870,074 | 475,000,000 | 346,888,524 | 400,000,000 |
| Shopping Centres | 71,682,081 | - | 70,309,185 | - |
| Telecommunications | 200,500,000 | 150,000,000 | 19,851,688 | 320,000,000 |
| Investment management | 24,481,550 | - | 24,481,550 | - |
| Sonae Holding | 330,057,000 | - | 340,067,000 | - |
| 989,590,705 | 625,000,000 | 801,597,947 | 720,000,000 |
| Obligations under finance leases Minimum finance lease payments |
Present value of minimum finance lease payments |
|||
|---|---|---|---|---|
| Amounts under finance leases: | 31 December 2009 | 31 December 2008 | 31 December 2009 | 31 December 2008 |
| N+1 | 9,345,010 | 7,405,130 | 7,803,032 | 5,829,172 |
| N+2 | 4,783,299 | 6,425,872 | 3,725,414 | 5,145,609 |
| N+3 | 4,585,949 | 3,474,514 | 3,597,303 | 2,407,047 |
| N+4 | 3,748,523 | 3,046,952 | 2,886,380 | 2,094,646 |
| N+5 | 2,825,942 | 2,658,765 | 2,054,445 | 1,796,321 |
| After N+5 | 20,508,879 | 21,298,915 | 17,093,851 | 17,257,956 |
| 45,797,602 | 44,310,148 | 37,160,425 | 34,530,751 | |
| Interests | (8,637,177) | (9,779,397) | ||
| 37,160,425 | 34,530,751 | |||
| Current obligations under finance leases | 7,803,032 | 5,829,172 | ||
| Non-current obligations under finance leases | 29,357,393 | 28,701,579 |
Finance leases are contracted at market interest rates, have defined useful lives and include an option for the acquisition of the related assets at the end of the period of the contract (except for medium and long term agreements with suppliers of fibre optic network capacity).
The medium and long term agreements made with the suppliers of the fibre optic network capacity, under which Sonae has the right to use that network, which is considered as a specific asset, are recorded as finance leases in accordance with IAS 17 – "Leases" and IFRIC 4 – "Determining whether an arrangement contains a Lease". These contacts have a maturity between 15 and 20 years.
As at 31 December 2009 and 2008, the fair value of finance leases is close to its accounting value.
Obligations under finance leases are guaranteed by related assets.
As at 31 December 2009 and 2008, accounting net value of assets acquired under finance leases can be detailed as follows:
| 31 December 2009 | 31 December 2008 | |
|---|---|---|
| Assets acquired under finance leases | ||
| Lands and buildings | 30,956,605 | 31,389,745 |
| Plant and machinery | 21,161,109 | 18,583,456 |
| Vehicles | 87,424 | 89,349 |
| Fixture and Fittings | 5,447,197 | 4,974,377 |
| Total tangible assets | 57,652,335 | 55,036,927 |
| Investment properties | - | 2,261,077 |
| 57,652,335 | 57,298,004 | |
As at 31 December 2009, the acquisition cost of Tangible assets amounted to 80,001,497 euro (73,474,043 euro as at 31 December 2008).
Sonae uses exchange rate derivatives, essentially to hedge future cash flows.
Sonae contracted several exchange rate forwards and options in order to manage its exchange rate exposure.
As at 31 December 2009, the fair value of exchange rate derivatives witch haven't been considered hedging instruments, calculated based on present market value of equivalent financial instruments of exchange rate, is of 79,039 euro included in liabilities (475,848 euro as at 31 December 2008) and 365,121 euro included in assets (72,494 euro as at 31 December 2008).
The computation of the fair value of these financial instruments was made taking into consideration the present value at balance sheet date of the forward settlement amount in the due date of contract. The settlement amount considered in the valuation, is equal to the reference currency notional amount (foreign currency) multiplied by the difference between the contracted forward exchange rate and the forward exchange market rate to the settlement date as at the valuation date.
Losses in the period arising from changes in the fair value of instruments that do not qualify for hedging accounting treatment were recorded directly in the income statement in the captions "Financial income" or " Financial expenses"
As at 31 December 2009, derivatives used by Sonae refer essentially to swaps and interest rate options ("cash flow hedges"). These were negotiated to hedge the interest rate risk of loans amounting to 948,629,817 euro (1,510,850,147 euro as at 31 December 2008). The net fair value of these derivatives amounts to -42,394,481 euro (-19,091,434 euro as at 31 December 2008), and is disclosed as assets amounting to 12,992 euro (2,602,678 euro as at 31 December 2008) and as liabilities 42,407,473 euro (21,694,112 euro as at 31 December 2008).
The derivatives were valuated considering the estimated future cash-flows, assuming the exercise of the cancellation options by the counterparties when the forward interest rates are higher than the established fixed interest rate. Sonae intends to keep these derivatives until their expiration date, therefore, this valuation is considered to be the most appropriate to estimate the future cash flows off these instruments.
These interest rate derivatives are valued at fair value, at the balance sheet date, based on valuations performed by Sonae using specific software and on external valuations when this software does not deal with specific instruments. The fair value of swaps was calculated, as at the balance sheet date, based on the discounted cash flow of the difference between the fixed interest rate of the fixed leg and the indexed variable interest rate inherent to the variable leg. The calculation of the fair value of options was based on the "Black-Scholes" and similar models.
As at 31 December 2009 no contracts existed related to interest rate and exchange rate derivatives.
The fair value of derivatives is detailed as follows:
| Assets | Liabilities | |||
|---|---|---|---|---|
| 31 December 2009 | 31 December 2008 | 31 December 2009 | 31 December 2008 | |
| Derivatives not qualified as hedging | ||||
| Exchange rate | 365,121 | 72,494 | 79,039 | 475,849 |
| Interest rate | - | - | - | 4,846,515 |
| Hedging derivatives | ||||
| Exchange rate | - | - | - | - |
| Interest rate | 12,992 | 2,602,678 | 42,407,473 | 21,694,112 |
Interest and exchange rate - - - - Other derivatives - - - -
378,113 2,675,172 42,486,512 27,016,476
As at 31 December 2009 and 2008 Other non-current liabilities are made up as follows:
| 31 December 2009 | 31 December 2008 | |
|---|---|---|
| Shareholders loans | 47,276,787 | 17,409,765 |
| Fixed assets suppliers | 2,440,330 | 3,041,799 |
| Other non-current liabilities | 156,470,214 | 76,423,646 |
| Financial instruments (Note 9) | 206,187,331 | 96,875,210 |
| "E-Initiatives" Program (Note 51) | 32,923,892 | 56,772,000 |
| Accruals and deferrals | 1,156,180 | 1,816,948 |
| Other non-current liabilities | 240,267,403 | 155,464,158 |
The caption Shareholder loans relates to loans in affiliated undertakings in the Retail, Shopping Centres and Investment Management operating segments. These liabilities have a defined vesting date and bear interest at variable market rates.
The caption Other non-current liabilities includes the amount of 126,683,322 euro (65,453,108 euro as at 31 December 2008) related to the fair value of the derivative on Sonae Holding and Sonae Capital SGPS, SA, shares referred to in Note 23.
The Board of Directors believes that the fair value of Other non-current liabilities is similar to its carrying amount.
In 2009 and in previous years, Sonae granted deferred performance bonuses to its directors and eligible employees. These are either based on shares to be acquired at nil cost, three years after they were attributed to the employee, or based on share options with the exercise price equal to the share price at the grant date, to be exercised three years later. In both cases, the acquisition can be exercised during the period commencing on the third anniversary of the grant date and the end of that year.
In 2009 Sonae Holding change the way of payment of share options in the past they was usually paid in cash, now Sonae Holding paid in shares. The share options payment are accounted in the balance sheet under "other reserves" and in the Profit and Loss statement under caption "staff costs", having such a transfer is made with reference to 31 December 2009, the fair value of shares determined at 31 December 2009.
The plans that continue to be settled in cash, continue to be recorded in the balance sheet, in the figure other liabilities and in staff costs figure related to the income statement.
As at 31 December 2009 and 2008, the market value of total liabilities arising from share-based payments, which have not yet vested, may be summarised as follows:
| Grant | Vesting | Number of | Fair value | ||
|---|---|---|---|---|---|
| year | year | participants | 31 December 2009 | 31 December 2008 | |
| Shares | |||||
| 2006 | 2009 | 441 | - | 2,981,061 | |
| 2007 | 2010 | 464 | 4,554,430 | 3,102,734 | |
| 2008 | 2011 | 484 | 5,703,916 | 3,357,478 | |
| 2009 | 2012 | 461 | 7,568,676 | - | |
| Total | 17,827,022 | 9,441,273 |
As at 31 December 2009 and 2008 the financial statements include the following amounts corresponding to the period elapsed between the date of granting and those dates for each deferred bonus plan, which has not yet vested:
| 31 December 2009 | 31 December 2008 | |
|---|---|---|
| Staff costs | 7,588,472 | (1,112,886) |
| Recorded in previous years | 3,678,193 | 8,226,971 |
| 11,266,665 | 7,114,085 | |
| Recorded in other liabilities | 7,050,164 | 7,114,085 |
| Recorded value in Other reserves | 4,216,501 | - |
| 11,266,665 | 7,114,085 |
As at 31 December 2009 and 2008, Trade creditors are as follows:
| Payable to | |||
|---|---|---|---|
| 31 December 2009 | up to 90 days | more than 90 days | |
| Trade creditors - current account | |||
| Retail | 886,011,261 | 885,946,640 | 64,621 |
| Shopping Centres | 13,008,816 | 10,191,004 | 2,817,812 |
| Telecommunications | 144,238,227 | 144,238,227 | - |
| Investment Management | 19,249,964 | 19,057,972 | 191,992 |
| Sonae Holding | 660,114 | 474,209 | 185,905 |
| 1,063,168,382 | 1,059,908,052 | 3,260,330 | |
| Trade creditors - Invoice Accruals | 157,233,068 | 156,760,035 | 473,033 |
| 1,220,401,450 | 1,216,668,087 | 3,733,363 |
| Payable to | |||
|---|---|---|---|
| 31 December 2008 | up to 90 days | more than 90 days | |
| Trade creditors - current account | |||
| Retail | 655,153,542 | 653,826,037 | 1,327,505 |
| Shopping Centres | 13,678,175 | 11,995,539 | 1,682,636 |
| Telecommunications | 130,010,572 | 130,010,572 | - |
| Investment Management | 17,297,082 | 15,427,471 | 1,869,611 |
| Sonae Holding | 980,469 | 865,253 | 115,216 |
| 817,119,840 | 812,124,872 | 4,994,968 | |
| Trade creditors - Invoice Accruals | 233,118,722 | 230,822,879 | 2,295,843 |
| 1,050,238,562 | 1,042,947,751 | 7,290,811 |
As at 31 December 2009 and 2008 this account includes amounts payable to suppliers resulting from Sonae operating activity. The Board of Directors believes that the fair value of their balances doesn't differ significantly from the book value and the effect of updating their amount is not material.
The balances above include approximately 40 million euro for statements confirmed financial institutions by Sonae under contracts of "confirming" being that trade creditor can write off discount of payments in early date.
As at 31 December 2009 and 2008, Other creditors are as follows:
| Payable to | ||||
|---|---|---|---|---|
| 31 December 2009 | up to 90 days | 90 to 180 days | more than 180 days | |
| Fixed asset suppliers | 125,829,938 | 121,718,311 | 1,760,018 | 2,351,609 |
| Other debts | 123,496,868 | 104,312,000 | 5,245,653 | 13,939,215 |
| 249,326,806 | 226,030,311 | 7,005,671 | 16,290,824 | |
| Related undertakings | 5,527,840 | |||
| 254,854,646 | ||||
| Payable to | ||||
| 31 December 2008 | up to 90 days | 90 to 180 days | more than 180 days | |
| Fixed asset suppliers | 155,062,698 | 139,841,612 | 3,267,122 | 11,953,964 |
| Other debts | 71,581,443 | 41,733,907 | 10,124,094 | 19,723,441 |
| 226,644,141 | 181,575,519 | 13,391,216 | 31,677,405 | |
| Related undertakings | 7,255,731 | |||
| 233,899,872 |
The caption Other debts includes:
2,862,235 euro (as at 31 December 2008 the value was nil) relating to the amount payable to "Fundação para as Comunicações Móveis", under the programme "Initiatives E" (Note 51);
17,236,223 euro (11,135,042 euro as at 31 December 2008) of attributed discounts not yet used related to loyalty card "Cartão Cliente";
10,483,469 euro (8,235,402 euro as at 31 December 2008) related to means of payments owned by clients, as vouchers, gift cards and discount tickets;
5,973,902 euro (11,050,444 euro as at 31 December 2008) related to payable amounts to Sonae Distribuição Brasil. S.A. buyer as a result of responsibilities assumed with that entity. These amounts were fully provided for (Note 33);
As at 31 December 2009 and 2008, this caption includes payables amounts to other creditors and fixed assets suppliers that do not bear interest. The Board of Directors believes that the fair value of these payables is approximately its book value and the actualization is not material.
As at 31 December 2009 and 2008, Other current liabilities are made up as follows:
| 31 December 2009 | 31 December 2008 | |
|---|---|---|
| Property investments accruals | 11,315,293 | 17,195,145 |
| Fixed assets accrued costs | 14,472,472 | 52,666,464 |
| Holiday pay and bonuses | 124,087,431 | 116,989,003 |
| Interest payable | 14,528,300 | 39,631,328 |
| Invoices to be issued | 42,253,540 | 52,237,364 |
| Commissions | 6,049,967 | 7,352,747 |
| Marketing expenses | 22,938,341 | 14,265,989 |
| Information society (b) | 55,426,396 | 25,702,090 |
| Other external supplies and services | 49,901,884 | 49,814,557 |
| Accrued income - trade debtors (a) | 31,257,499 | 40,552,618 |
| Accrued income - rents | 4,929,704 | 4,931,720 |
| Others | 33,991,215 | 34,308,028 |
| 411,152,042 | 455,647,053 |
(b) Includes 21,946,029 euro related to amounts to be delivered to " Fundação para as Comunicações Móveis" and 33,480,367 euro related to the current portion of unpaid estimate associated with the commitments made by Sonaecom, under the program "Initiatives E".
Movements in Provisions and impairment losses over the period ended 31 December 2009 and 2008 are as follows:
| Caption | Balance as at 31 December 2008 |
Increase | Decrease | Changes in consolidation perimeter |
Balance as at 31 December 2009 |
|---|---|---|---|---|---|
| Accumulated impairment losses on investments (Note 14) | 13,157 | 50,871 | - | 3,897 | 67,925 |
| Accumulated impairment losses on other non current assets (Note 15) |
291,571 | 10,542 | (160,125) | - | 141,988 |
| Accumulated impairment losses on trade account receivables (Note 17) |
96,686,475 | 21,135,371 | (30,666,532) | (390,131) | 86,765,183 |
| Accumulated impairment losses on other debtors (Note 18) | 12,896,708 | 5,028,969 | (705,502) | 3,055 | 17,223,230 |
| Accumulated impairment losses on inventories (Note 16) | 29,783,714 | 8,914,226 | (7,185,776) | 132,608 | 31,644,772 |
| Non current provisions | 57,086,975 | 4,137,655 | (10,617,263) | - | 50,607,367 |
| Current provisions | 2,369,154 | 904,272 | (655,675) | - | 2,617,751 |
| 199,127,754 | 40,181,906 | (49,990,873) | (250,571) | 189,068,216 |
| Caption | Balance as at 31 December 2007 |
Increase | Decrease | Changes in consolidation perimeter |
Balance as at 31 December 2008 |
|---|---|---|---|---|---|
| Accumulated impairment losses on investments (Note 14) | 26,314 | - | - | (13,157) | 13,157 |
| Accumulated impairment losses on other non current assets (Note 15) |
301,571 | - | (10,000) | - | 291,571 |
| Accumulated impairment losses on trade account receivables (Note 17) |
85,985,340 | 23,115,177 | (12,226,277) | (187,765) | 96,686,475 |
| Accumulated impairment losses on other debtors (Note 18) | 9,250,508 | 3,884,296 | (866,539) | 628,443 | 12,896,708 |
| Accumulated impairment losses on inventories (Note 16) | 24,759,431 | 11,512,101 | (7,312,110) | 824,292 | 29,783,714 |
| Non current provisions | 109,305,995 | 5,344,758 | (60,739,295) | 3,175,517 | 57,086,975 |
| Current provisions | 2,551,957 | - | (113,252) | (69,551) | 2,369,154 |
| 232,181,116 | 43,856,332 | (81,267,473) | 4,357,779 | 199,127,754 |
Changes in consolidation perimeter, in provisions and impairment losses, during 2009 and 2008 are as follows:
| 31 December 2009 | 31 December 2008 |
|---|---|
| (449,355) | (1,047,849) |
| 198,784 | 5,405,628 |
| - | - |
| (250,571) | 4,357,779 |
As at 31 December 2009 and 2008 increases in Provisions and impairment losses are as follows:
| 31 December 2009 | 31 December 2008 | |
|---|---|---|
| Provisions and impairment losses | 28,207,470 | 35,512,894 |
| Impairment losses not included in this note | ||
| Goodwill (Note 13) | (1,700,762) | (8,142,574) |
| Investment Properties | 190,412 | (1,820,992) |
| Account receivables, Impairment Losses | - | 1,428,904 |
| Provisions for dismantling telecommunication sites (a) | 1,601,580 | 2,091,500 |
| Provision for inventories impairments | ||
| Recorded in cost of goods sold (Note 16) | 8,411,520 | 10,856,498 |
| Others | 3,471,686 | 3,930,102 |
| 40,181,906 | 43,856,332 |
As at 31 December 2009 and 2008, the provisions detail is as follows:
| 31 December 2009 | 31 December 2008 | |
|---|---|---|
| Technical provisions on reinsurance | 9,118,524 | 12,008,857 |
| Future liabilities relating to subsidiaries of retail in Brazil sold |
5,447,923 | 6,016,688 |
| Dismantling of telecommunication sites | 22,208,721 | 20,591,640 |
| Judicial claims | 9,133,101 | 17,942,992 |
| Others | 7,316,849 | 2,895,952 |
| 53,225,118 | 59,456,129 |
Amounts included in "Technical provisions on reinsurance" relate to a group captive company that operates in the non-life reinsurance industry. The provision amount can be detailed as follows: 4,318,576 euro (4,799,050 euro as at 31 December 2008) related to provisions for non-acquired insurance premiums and 4,799,948 euro (7,209,807 euro as at 31 December 2008) related to provisions for claims outstanding. The amount to be recovered from the reinsurance companies is recorded in the caption Reinsurer's share of technical provisions (Note 15) Other Debtors (Note 18).
Impairment losses are deducted from the book value of the corresponding asset.
As at 31 December 2009 and 2008, major Contingent liabilities were guarantees given are as follows:
| 31 December 2009 | 31 December 2008 | |
|---|---|---|
| Guarantees given: | ||
| on tax claims | 266,974,945 | 129,494,243 |
| on judicial claims | 659,048 | 2,021,086 |
| on municipal claims | 8,998,481 | 23,255,089 |
| others | 42,776,282 | 69,834,195 |
Others include the following guarantees:
9,250,883 euro (15,904,712 euro as at 31 December 2008) to guarantee part of the debt of Sonae Sierra affiliates related with the purchase sale and exchange of Land;
687,243 euro (10,576,961 euro as at 31 December 2008) related to VAT reimbursement requests.
In 2009, one of the retail subsidiaries Modelo Continente Hipermercados, SA, has granted a guarantee in favor of tax administration associated with a process for VAT amounting to 30,260,721.33 euro, which was presented their impugnation. Additionally, the shareholder of subsidiary referred to above, a guarantee amounting to 46,893,361.33 euro in order to ensure the payment of VAT, debt on who can become chargeable concerning additional tax settlement. Sonae will present the relevant appeal and believes, based on the opinion of their tax advisers, the sentence will be favorable to the company.
During the period ended 31 December 2009, a Retail segment company in Brazil granted a guarantee of approximately 28,971,147 euro (72,755,267 Brazilian real) on a tax claim, which is being judged by tax courts 70,892,539 brazilian real as at 31 December 2008.
As a consequence of the sale of a subsidiary company in Brazil, Sonae guaranteed the buyer all the losses incurred by that company arising on unfavourable decisions not open for appeal, concerning tax lawsuits on transactions that took place before the sale date (13 December 2005) and that exceed 40 million euro. As at 31 December 2009, the amount claimed by the Brazilian Tax Authorities concerning the tax lawsuits still in progress, which the company's lawyers assess as having a high probability of loss, amount to near 38 million euro, including processes paid under recovery program Brazilian State taxes ("REFIS") in the amount of 22 million euro (56 million brazilian real).
Furthermore, there are other tax lawsuits totalling 42 million euro for which the Board of Directors, based on the lawyers' assessment, understands will not imply future losses to the old subsidiary.
No provision has been registered to face risks arising from events related to guarantees given, as the Board of Directors considers that no liabilities will result for Sonae.
Minimum lease payments (fixed income) arising from operational leases, in which the Group acts as a lessor, recognised as income during the period ended 31 December 2009 and 2008 amounted to 107,125,140 euro and 105,702,189 euro, respectively.
Additionally, as at 31 December 2009 and 2008, Sonae had operational lease contracts, as a lessor, fundamentally in the Shopping Centres segment, whose minimum lease payments (fixed income) had the following payment schedule:
| 31 December 2009 | 31 December 2008 | |
|---|---|---|
| Due in: | ||
| N+1 automatically renewal | 2,554,818 | 982,169 |
| N+1 | 109,813,951 | 101,354,687 |
| N+2 | 101,000,486 | 90,091,077 |
| N+3 | 90,399,781 | 79,011,410 |
| N+4 | 77,955,113 | 68,789,212 |
| N+5 | 62,494,863 | 56,516,724 |
| After N+5 | 51,026,559 | 43,177,561 |
| 495,245,571 | 439,922,840 |
Rents arising from operational leases, in which the Sonae acts as a lessee, during the period ended 31 December 2009 amounted to 108,744,712 euro (104,297,554 euro as at 31 December 2008).
Additionally, as at 31 December 2009 and 2008, Sonae had operational lease contracts, as a lessee, whose minimum lease payments had the following payment schedule:
| 31 December 2009 | 31 December 2008 | |
|---|---|---|
| Due in: | ||
| N+1 automatically renewal | 19,658,295 | 19,266,686 |
| N+1 | 97,164,346 | 78,793,722 |
| N+2 | 88,561,911 | 74,801,157 |
| N+3 | 79,544,150 | 67,661,514 |
| N+4 | 70,396,851 | 61,321,705 |
| N+5 | 58,862,001 | 55,431,819 |
| After N+5 | 226,569,544 | 144,126,354 |
| 640,757,098 | 501,402,957 |
As at 31 December 2009 and 2008, Turnover is made up as follows:
| 31 December 2009 | 31 December 2008 | |
|---|---|---|
| Sale of goods | 4,532,588,111 | 4,149,749,990 |
| Sale of products | 17,131,808 | 18,812,342 |
| 4,549,719,919 | 4,168,562,332 | |
| Services rendered | 1,115,457,155 | 1,184,541,613 |
| Turnover | 5,665,177,074 | 5,353,103,945 |
As at 31 December 2009 and 2008, Value created on investment properties is made up as follows:
| 31 December 2009 | 31 December 2008 | |
|---|---|---|
| Properties previously under development and opened during the period (Note 12) |
6,034,792 | 18,716,720 |
| Changes in fair value of investment properties in operation (Note 12) |
2,448,507 | 7,579,782 |
| Variation in fair value on "fit-out" contracts (Note 12) | (45,689) | (699,811) |
| Variation in fair value in investment properties in operation (Note 12) |
||
| Gains | 20,356,854 | 18,024,012 |
| Losses | (171,478,680) | (159,426,178) |
| - | - | |
| (142,684,216) | (115,805,475) |
As at 31 December 2009 and 2008, Investment income is as follows:
| 31 December 2009 | 31 December 2008 | |
|---|---|---|
| Dividends | 378,624 | 375,121 |
| Sale of 49,9 % of insurance business | 29,580,737 | - |
| Partial sale or participating units on FII Shopping Parque D. Pedro and FII Parque D. Pedro Shopping Center |
3,628,091 | - |
| Exclusion by insolvency of the Avenue M40 | 7,933,221 | |
| Partial sale or participating units on Sierra PTF | - | 10,708,784 |
| Sale of 50 % of travel business | - | 4,674,685 |
| Sale of shares in Sonaecom | 1,045,260 | 651,721 |
| Others | 4,111,161 | 765,455 |
| Gains / (losses) on the sale of investments in subsidiaries |
46,298,470 | 16,800,645 |
| Gains / (losses) on the sale of investments on available for sale |
- | 810,746 |
| Others | (42,722) | - |
| Impairment losses on investments at subsidiaries | (66,156) | 4,809 |
| Impairment losses on investments at associated companies | - | (168,689) |
| Impairment losses on investments available for sale | - | (1,765,850) |
| Impairment reversal/(losses) on investments | (66,156) | (1,929,730) |
| 46,568,216 | 16,056,782 |
As at 31 December 2009 and 2008, Net financial expenses are as follows:
| 31 December 2009 | 31 December 2008 | |
|---|---|---|
| Expenses | ||
| Interest payable | ||
| related with bank loans and overdrafts | (41,118,822) | (75,234,793) |
| related with non convertible bonds | (53,964,652) | (97,512,565) |
| related with financial leases | (1,339,276) | (1,566,000) |
| related with hedge derivatives | (14,961,206) | (93,535) |
| others | (9,109,042) | (11,699,999) |
| (120,492,998) | (186,106,892) | |
| Exchange losses | (4,831,565) | (9,031,784) |
| Fair value adjustment of investments | - | (8,341,676) |
| registered at fair value on the income Losses on fair value of hedge derivatives |
- | (814,941) |
| Up front fees and commissions related to loans | (6,102,664) | (4,595,046) |
| Others | (8,050,677) | (7,921,576) |
| (139,477,904) | (216,811,915) | |
| Income | ||
| Interest receivable | ||
| related with bank deposits | 766,712 | 3,388,712 |
| others | 8,938,720 | 24,423,197 |
| 9,705,432 | 27,811,909 | |
| Exchange gains | 6,450,081 | 11,034,644 |
| Payments discounts received | 3,994 | 161,171 |
| Fair value adjustment of investments | - | 1,428,137 |
| registered at fair value on the income Hedge inefficiency |
- | 814,941 |
| Other financial income | 531,682 | 1,850,421 |
| 16,691,189 | 43,101,223 | |
| - | - | |
| Net financial expenses | (122,786,715) | (173,710,692) |
As at 31 December 2009 and 2008, Other income are as follows:
| 31 December 2009 | 31 December 2008 | |
|---|---|---|
| Supplementary income | 359,050,431 | 373,451,675 |
| Own work capitalised | 19,558,948 | 25,652,913 |
| Gains on sales of assets | 3,052,427 | 19,162,839 |
| Negative Goodwill (Note 8) | 343,359 | 9,864,000 |
| Impairment losses reversals | 1,971,057 | 3,605,668 |
| Key money | 2,281,478 | 2,498,222 |
| Subsidies | 799,536 | 398,525 |
| Taxes refunded | 2,843,707 | 123,500 |
| Others | 24,601,486 | 21,031,828 |
| 414,502,429 | 455,789,170 |
Supplementary income includes mainly income related with the share of suppliers in promotional campaigns in the retail business.
As at 31 December 2009 and 2008, External supplies and services are as follows:
| 31 December 2009 31 December 2008 |
||
|---|---|---|
| Subcontracts | 362,355,999 | 447,159,905 |
| Services | 114,139,805 | 119,553,347 |
| Publicity | 155,599,490 | 153,166,000 |
| Rents | 119,983,029 | 105,143,717 |
| Commissions | 51,398,768 | 45,847,951 |
| Transports | 51,671,907 | 46,097,161 |
| Electricity | 57,641,232 | 57,486,013 |
| Maintenance | 33,520,579 | 35,899,576 |
| Security | 27,661,211 | 27,373,830 |
| Cleaning up services | 26,228,269 | 24,698,728 |
| Insurances | 8,733,495 | 10,109,386 |
| Communications | 12,699,322 | 11,100,082 |
| Travel expenses | 11,637,617 | 8,978,656 |
| Others | 79,480,696 | 84,627,186 |
| 1,112,751,419 | 1,177,241,538 |
As at 31 December 2009 and 2008, Staff costs are as follows:
| 31 December 2009 31 December 2008 |
||
|---|---|---|
| Salaries | 521,453,218 | 486,458,558 |
| Social security contributions | 102,583,717 | 97,417,066 |
| Insurance | 10,346,021 | 10,173,927 |
| Welfare | 2,405,492 | 2,404,497 |
| Other staff costs | 17,909,740 | 15,950,343 |
| 654,698,188 | 612,404,391 |
As at 31 December 2009 and 2008, Other expenses are as follows:
| 31 December 2009 | 31 December 2008 | |
|---|---|---|
| ATM expenses | 26,143,352 | 23,842,612 |
| Other taxes | 18,577,015 | 19,501,934 |
| Write-off of investment properties | 3,430,178 | 26,518,956 |
| Exchange differences | 11,786,731 | 13,428,818 |
| Losses on the sale of assets | 6,556,875 | 6,375,143 |
| Municipal Property tax | 5,800,622 | 6,285,854 |
| Donations | 7,223,812 | 6,473,836 |
| Doubtful debts written-off | 1,439,490 | 1,587,256 |
| Others | 18,331,638 | 10,975,619 |
| 99,289,713 | 114,990,028 |
As at 31 December 2009 and 2008, Taxation is as follows:
| 31 December 2009 | 31 December 2008 | |
|---|---|---|
| Current tax | 46,756,360 | 24,656,511 |
| Deferred tax (Note 21) | (34,919,498) | (37,302,951) |
| 11,836,862 | (12,646,440) |
At December 2008 deferred taxation includes 8,830,512 euro, relating to a withholding tax credit on income received from participation units in the Real Estate Investment Trusts.
The reconciliation between the profit before taxation and the tax charge for the periods ended 31 December 2009 and 2008 is summarised as follows:
| 31 December 2009 | 31 December 2008 | |
|---|---|---|
| Profit before income tax | 85,457,092 | 26,431,832 |
| Difference between capital (losses)/gains for accounting and tax purposes |
(48,297,272) | (19,444,825) |
| Results of associated undertakings | 5,365,400 | (9,419,371) |
| Impairment of goodwill | 1,700,762 | 7,806,839 |
| Provisions and impairment losses not accepted for tax purposes | 9,148,321 | (2,084,940) |
| Permanent differences | 42,857,447 | (16,773,306) |
| Taxable Profit | 96,231,750 | (13,483,771) |
| Use of tax losses that have not originated deferred tax assets | (76,233,489) | (168,348,265) |
| Recognition of tax losses that have not originated deferred tax assets | 59,685,719 | 308,106,748 |
| 79,683,980 | 126,274,712 | |
| Income tax rate in Portugal | 25.00% | 25.00% |
| 19,920,995 | 31,568,678 | |
| Effect of different income tax rates in other countries |
(6,256,553) | (1,022,148) |
| Effect of change in tax income rate in the calculation of deferred taxes | 5,524,359 | (1,923,964) |
| Effect of increases or decreases in deferred taxes | (7,743,313) | (39,403,313) |
| Under/(over) taxation estimates | (2,967,003) | (3,306,940) |
| Autonomous taxes and tax benefits | 775,391 | (2,647,246) |
| Municipality surcharge | 2,582,986 | 4,088,493 |
| Income tax | 11,836,862 | (12,646,440) |
As at 31 December 2009 and 2008, the reconciliation of consolidated net profit is as follows:
| 31 December 2009 | 31 December 2008 | |
|---|---|---|
| Aggregate net profit | 37,309,705 | 326,656,822 |
| Use of the proportionate method | 14,460,158 | 3,781,170 |
| Harmonisation adjustments | (107,747,143) | 156,359,114 |
| Elimination of intragroup dividends | (201,784,010) | (478,520,374) |
| Elimination of intragroup capital gains and losses | (28,918,557) | (116,562,876) |
| Elimination of intragroup provisions | 292,051,001 | 120,638,760 |
| Equity method | (6,616,324) | 9,600,021 |
| Consolidation adjustments to gains/(losses) on sales of investments |
62,112,918 | 16,502,915 |
| Others | 12,752,482 | 622,720 |
| Consolidated net profit for the period | 73,620,230 | 39,078,272 |
Balances and transactions with related parties during the periods ended 31 December 2009 and 2008 are as follows:
| Sales and services rendered | Purchases and services obtained | ||||
|---|---|---|---|---|---|
| Transactions | 31 December 2009 | 31 December 2008 | 31 December 2009 | 31 December 2008 | |
| Parent Company | 140,796 | 101,014 | - | - | |
| Jointly controlled companies | 11,214,048 | 12,514,431 | 18,621,099 | 16,724,063 | |
| Associated companies | 34,392,308 | 19,975,645 | 2,172,809 | 12,746,169 | |
| Other partners in Group companies | 67,506,776 | 64,248,351 | 39,815,041 | 47,403,811 | |
| 113,253,928 | 96,839,441 | 60,608,949 | 76,874,043 | ||
| Interest income | Interest expenses | ||||
| Transactions | 31 December 2009 | 31 December 2008 | 31 December 2009 | 31 December 2008 | |
| Parent Company | - | - | - | - | |
| Jointly controlled companies | 137,303 | 268,731 | 9,127 | 3,215 | |
| Associated companies | - | - | - | 138,531 | |
| Other partners in Group companies | 77,771 | 78,816 | 1,296,894 | 1,794,312 | |
| 215,074 | 347,547 | 1,306,021 | 1,936,058 | ||
| Accounts receivable | Accounts payable | ||||
| Balances | 31 December 2009 | 31 December 2008 | 31 December 2009 | 31 December 2008 | |
| Parent Company | 42,212 | 97,899 | - | 85,057 | |
| Jointly controlled companies | 2,633,332 | 2,287,227 | 5,803,997 | 15,458,421 | |
| Associated companies | 2,044,450 | 7,105,542 | 1,655,097 | 2,459,698 | |
| Other partners in Group companies | 18,353,791 | 15,253,424 | 14,523,536 | 19,884,938 | |
| 23,073,785 | 24,744,092 | 21,982,630 | 37,888,114 | ||
| Loans | |||||
| Obtained | Granted | ||||
| Balances | 31 December 2009 | 31 December 2008 | 31 December 2009 | 31 December 2008 | |
| Parent Company | - | - | - | - | |
| Jointly controlled companies | - | 125,997 | 1,214,522 | 4,259,844 | |
| Associated companies | - | - | - | - | |
| Other partners in Group companies | 41,740,399 | 13,230,852 | - | - | |
| 41,740,399 | 13,356,849 | 1,214,522 | 4,259,844 |
The caption other partners in Group companies include Sonae Indústria, SGPS, SA and Sonae Capital, SGPS, SA affiliated, associated and jointly controlled companies, and also other shareholders of affiliated companies or jointly controlled companies of Sonae, as well as other affiliated companies of the parent company Efanor Investimentos, SGPS, SA.
In 2009 were disposed to administrators of Sonae or entities/persons related 51 Notes Magma N.º 1 Securitization Notes held by Sonae Holding by the value of 2,245,000 euro.
Members of the Board of Directors and strategic direction were attributed the following remuneration in 2009 and 2008:
| 31 December 2009 | 31 December 2008 | |||
|---|---|---|---|---|
| Board of Directors | Strategic direction (a) |
Board of Directors | Strategic direction (a) |
|
| Fixed remuneration | 2,288,363 | 5,759,789 | 2,272,750 | 5,463,640 |
| Variable remuneration Short Term | 1,119,300 | 2,560,400 | 1,011,500 | 2,502,329 |
| Variable remuneration Middel Term | 1,066,500 | 2,083,400 | 980,900 | 2,060,342 |
| 4,474,163 | 10,403,589 | 4,265,150 | 10,026,311 |
Earnings per share for the periods ended 31 December 2009 and 2008, were calculated taking into consideration the following amounts:
| 31 December 2009 | 31 December 2008 | |
|---|---|---|
| Net profit | ||
| Net profit taken into consideration t o calculate basic earnings per share (consolidated profit for the period) |
93,760,817 | 80,035,669 |
| Effect of dilutive potential shares | - | - |
| Interest related to convertible bonds (net of tax) | - | - |
| Net profit taken into consideration to calculate diluted earnings per share | 93,760,817 | 80,035,669 |
| Number of shares | ||
| Weighted average number of shares used t o calculated basic earnings per share |
1,868,037,206 | 1,867,200,000 |
| Effect of dilutive potential ordinary shares from convertible bonds | - | - |
| Outstanding shares related with share based payments | 9,166,614 | - |
| Shares related to performance bonus that can be bought at market price | (5,232,866) | - |
| Weighted average number of shares used t o calculated diluted earnings per share |
1,871,970,954 | 1,867,200,000 |
| Earnings per share | ||
| Basic | 0.050192 | 0.042864 |
| Diluted | 0.050087 | 0.042864 |
The calculation of 2009 average number of shares considered the effect of 131,962,794 Sonae Holding shares underlying the derivative in Note 23 as own shares.
As at 31 December 2009 and 2008, cash receipts and cash payments related to investments are as follows:
| 31 December 2009 | 31 December 2008 | |
|---|---|---|
| Receipts | ||
| Sale of 50 % of the Torre Oriente | 4,033,290 | - |
| Sale of 12 % of the fund D.Pedro I | 6,092,025 | - |
| Sale of 84 % of the fund D.Pedro II | 9,290,495 | - |
| Partial sale of MDS, SGPS | 26,510,469 | - |
| Sale of 58 % of Sierra Portugal Real Estate | - | 67,140,700 |
| Price adjustment of Continente Hipermercados | - | 30,113,103 |
| Sale of 50% of travel Business | - | 15,700,000 |
| Others | 13,248,654 | 10,136,834 |
| 59,174,933 | 123,090,637 | |
| 31 December 2009 | 31 December 2008 | |
| Payments | ||
| Lazam Capital Increase | 29,268,014 | - |
| Acquisition of Sonaecom Shares | 380,878 | 28,731,527 |
| Imosede Capital Increase | 15,000,063 | 14,878,381 |
| Acquisition of Geotur | - | 12,028,500 |
| Others | 6,801,966 | 21,347,999 |
| 51,450,921 | 76,986,407 |
In the Shareholders Annual General Meeting held on 20 April 2009, the payment of a gross dividend of 0.03 euro per share (0.03 euro per share in 2008) corresponding to a total of 60,000,000.00 euro (60,000,000.00 euro at 2008) was approved. On the 20 April 2009 the value of the dividends of the derivatives underlying shares mentioned in Note 23, amounted 3,949,951 euro (3,984,000 euro in 2008) and were credited in the caption equity.
For 2009, the Board of Directors will propose a gross dividend of 0.0315 euro per share corresponding to a total of 63,000,000 euro. This dividend is subject to approval by shareholders in the Shareholders Annual Meeting.
Sonae adopted this period for the first time IFRS 8 - Operating Segments, which requires segment information to be disclosed based on internally information used by all Sonae Group management.
As described with more detail in the Management Report the operating segments used by the Group management are as follows:
Food based retail
Specialised retail
Retail real estate Shopping Centres Telecommunications
Investment Management
The amounts reported below, are calculated, when applicable, excluding contributions to indirect income as explained in Note 53.
Sonae's reportable segment information regarding the income statement in accordance with IFRS 8 can be analysed as follows:
| 31 December 2009 | Inter-segment | 31 December 2008 | Inter-segment | |
|---|---|---|---|---|
| Turnover | income | income | ||
| Food based retail | 3,239,177,441 | (5,038,602) | 3,081,018,275 | (7,199,133) |
| Ex-Fuel | 3,106,023,672 | (5,038,602) | 2,929,735,617 | (7,199,133) |
| Fuel | 133,153,769 | - | 151,282,658 | - |
| Specialised retail | 1,132,040,059 | - | 928,294,963 | - |
| Retail real estate | 123,117,232 | (116,137,275) | 109,440,712 | (102,048,623) |
| Shopping centres | 155,595,000 | (13,066,383) | 157,580,005 | (13,554,252) |
| Telecommunications | 949,400,327 | (23,347,848) | 976,219,970 | (22,429,292) |
| Investment management | 192,362,423 | (339,393) | 221,272,968 | (297,006) |
| Eliminations and adjustments | (126,515,408) | (4,453,919) | (120,722,948) | (2,189,491) |
| Total direct consolidated | 5,665,177,074 | (162,383,420) | 5,353,103,945 | (147,717,797) |
| EBITDA | ||||
| Food based retail | 198,707,702 | 186,803,377 | ||
| Specialised retail | 48,104,311 | 52,015,207 | ||
| Retail real estate | 110,938,755 | 110,095,656 | ||
| Shopping centres | 90,127,000 | 89,930,602 | ||
| Telecommunications | 175,668,783 | 160,385,470 | ||
| Investment management | 30,250,744 | 6,757,748 | ||
| Eliminations and adjustments | 13,373,301 | 14,274,099 | ||
| Total direct consolidated | 667,170,596 | 620,262,159 | ||
| EBIT | ||||
| Food based retail | 124,026,421 | 123,512,742 | ||
| Specialised retail | 9,873,941 | 27,503,824 | ||
| Retail real estate | 83,071,313 | 87,654,242 | ||
| Shopping centres | 89,017,500 | 88,558,059 | ||
| Telecommunications | 23,894,513 | 2,809,803 | ||
| Investment management | 24,511,198 | 1,424,127 | ||
| Eliminations and adjustments | (5,111,939) | 155,459 | ||
| Total direct consolidated | 349,282,947 | 331,618,256 |
| 31 December 2009 | 31 December 2008 | |
|---|---|---|
| Investment (CAPEX) | ||
| Food based retail | 137,222,765 | 132,830,028 |
| Specialised retail | 97,443,316 | 88,200,326 |
| Retail real estate | 90,470,545 | 130,876,346 |
| Shopping centres | 97,993,884 | 184,789,552 |
| Telecommunications | 153,122,327 | 299,042,265 |
| Investment management | 33,848,094 | 11,106,496 |
| Eliminations and adjustments (1) | 4,342,523 | 39,323,808 |
| Total direct consolidated | 614,443,454 | 886,168,821 |
| 31 December 2009 | 31 December 2008 | |
| Invested capital | ||
| Food based retail | 483,969,819 | 546,161,687 |
| Specialised retail | 249,684,220 | 175,597,561 |
| Retail real estate | 1,523,249,390 | 1,411,291,922 |
| Shopping centres | 1,660,873,322 | 1,684,193,742 |
| Telecommunications | 751,867,339 | 746,745,744 |
| Investment management | 150,752,432 | 138,574,040 |
| Eliminations and adjustments (1) | (38,989,061) | 18,847,399 |
| Total direct consolidated | 4,781,407,461 | 4,721,412,093 |
| Total net debt (2) | ||
| Retail businesses | 1,188,231,638 | 1,186,354,238 |
| Shopping centres | 926,594,447 | 888,885,820 |
| Telecommunications | 375,961,568 | 399,731,657 |
| Investment management | 93,490,195 | 103,563,977 |
| Holding (1) | 495,839,008 | 580,332,523 |
| Total consolidated | 3,080,116,856 | 3,158,868,215 |
The caption "Eliminations and Adjustments" can be analysed as follows:
| Turnover | EBITDA | EBIT | |||||
|---|---|---|---|---|---|---|---|
| 31 December 2009 | 31 December 2008 | 31 December 2009 | 31 December 2008 | 31 December 2009 | 31 December 2008 | ||
| Inter-segment income | (162,383,420) | (147,717,797) | 5,875,726 | 2,678,944 | (862,529) | (3,562,627) | |
| Adjustment on telecommunications provisions (1) | - | - | 16,417,432 | 19,266,114 | - | - | |
| Entrance fees (key money) (2) | 679,718 | 1,950,497 | - | - | - | - | |
| Recovery of entrance fees | - | - | (1,317,802) | 940,658 | (1,317,802) | 940,658 | |
| Offset of the recovery of common expenses (2) | 43,580,189 | 37,417,230 | - | - | - | - | |
| Turnover of participated companies considered for management purposes by different consolidation |
(8,362,156) | (5,271,985) | (5,594,585) | (3,140,779) | (5,589,863) | (3,136,693) | |
| methods than from statutory purposes Tax related to interest and dividends |
- | - | (931,305) | (990,769) | (931,305) | (990,769) | |
| Others | (29,739) | (7,100,893) | (1,076,165) | (4,480,069) | 3,589,560 | 6,904,890 | |
| Eliminations and adjustments | (126,515,408) | (120,722,948) | 13,373,301 | 14,274,099 | (5,111,939) | 155,459 |
| Investment | Invested capital | |||
|---|---|---|---|---|
| 31 December 2009 | 31 December 2008 | 31 December 2009 | 31 December 2008 | |
| Inter-segment balances | 3,835,095 | 8,872,351 | 93,147,018 | 83,165,082 |
| Acquisition of Sonaecom shares | - | 28,770,251 | - | - |
| Cash settled equity swap (3) | - | - | (132,711,536) | (63,876,800) |
| Others | 507,428 | 1,681,206 | 575,457 | (440,883) |
Eliminations and adjustments 4,342,523 39,323,808 (38,989,061) 18,847,399
Glossary:
Invested capital = Gross real estate assets + other fixed assets (including Goodwill) - amortizations and impairment losses + financial investments + working capital (includes non-current assets and non-current liabilities excluding total net debt) ; all figures at book value with the exception of Shopping Centres building block;
Total Net debt = Bonds + bank loans + other loans + shareholders loans + finance leases - cash, bank deposits and current investments;
EBITDA = Turnover + other revenues -impairment reversion – badwill - operating costs + profit/losses on disposals of subsidiaries (excluding indirect income contributions);
Eliminations and adjustments = Includes the Holding company figures and consolidation adjustments;
CAPEX = Investments in tangible and intangible assets, investment properties and acquisitions of subsidiaries;
Direct income excludes contributions to indirect income;
Indirect Income includes the Shopping Centre segment contributions net of taxes to consolidated income statement, arising from: (i) investment property valuations; (ii) capital gains (losses) on the sale of financial investments, joint ventures or associates; (iii) impairment losses (including goodwill) and; provision for Development Funds at Risk.
Turnover and profit/(loss) before taxation by geographic segment are as follows:
| 31 December 2009 | 31 December 2008 | ||||
|---|---|---|---|---|---|
| Operational Turnover by profit/(loss) before destination market taxation |
Turnover by destination market |
Operational profit/(loss) before taxation |
|||
| Portugal | 5,321,723,218 | 186,052,031 | 5,136,445,409 | 172,663,122 | |
| Spain | 196,818,358 | (76,507,134) | 82,349,160 | (80,498,458) | |
| France | 13,403,031 | - | 14,827,603 | - | |
| United Kingdom | 12,260,683 | (1,635,266) | 13,729,924 | (3,867,699) | |
| Germany | 17,205,966 | (643,874) | 16,092,023 | (11,978,200) | |
| Brazil | 34,949,665 | 25,259,270 | 19,786,228 | 45,890,675 | |
| Italy | 16,561,445 | (34,379,889) | 12,105,508 | (5,465,135) | |
| Other European countries | 35,669,548 | (12,474,260) | 35,397,009 | (90,559,413) | |
| Rest of the world | 16,585,160 | (213,786) | 22,371,081 | 246,940 | |
| 5,665,177,074 | 85,457,092 | 5,353,103,945 | 26,431,832 |
| 31 December 2009 | 31 December 2008 | |
|---|---|---|
| Retail | 29,221 | 27,677 |
| Shopping Centres | 908 | 856 |
| Telecommunications | 2,081 | 1,983 |
| Investment management | 1,799 | 1,323 |
| Sonae Holding | 52 | 61 |
| 34,061 | 31,900 |
Under the agreed terms resulting from the grant of the UMTS License, Optimus (now Sonaecom – Serviços de Comunicações) assumed commitments in the area of promotion of the Information Society, totalling 274 million euro, to be complied with up to the end of the licence period (2015).
In accordance with the Agreement established on 5 June 2007 with the Ministry of Public Works, Transport and Communications ("MOPTC"), part of these commitments, up to 159 million euro will be realised through own projects which qualify as contributions to the Information Society and incurred under the normal activities of Sonaecom – Serviços de Comunicações, S.A. (investment in the network and technology not resulting from the need to comply with the obligations assumed when the UMTS Licence was granted, and activities relating to research, development and promotion of services, contents and applications) which must be recognised by the MOPTC and by entities created especially for that purpose. As at 31 December 2009 the total amount was already incurred and validated by the above referred entities, so at this date there are no additional responsibilities related to these commitments. These charges were recorded in the financial statements at the moment the projects were carried out and the estimated costs became known.
The remaining commitments, up to the amount of around 116 million euro, will be realised as agreed between Sonaecom-Serviços de Comunicações and MOPTC, through contributions to the "Initiatives E" project (offer of modems, discounts on tariffs, cash contributions, among others, relating to the widespread use of broadband internet by students and teachers), the contributions being made through an Open fund called Information Society Fund (Fundo para a Sociedade de Informação) now known as the "Fundação para as Comunicações Móveis" (Foundation for Mobile Communications), to be created by the three mobile operators operating in Portugal. The success of this project, initiated in the end of 2007, depended on the beneficiaries' participation to the various initiatives (e-opportunities, e-school and e-teacher) and could have been subject to revision during the a period of 12 months, i.e., until June 2008. Due to these facts, it was not possible, at 31 December 2007, to estimate in a reliable way the success of this project, and therefore, at that date it was not possible to produce a secure and reliable estimate of the responsibilities to be recognised.
Taking into consideration the success of the project during 2008, Sonaecom considered that conditions to produce a reliable estimate of the total responsibilities associated with "Initiatives E" project were in place. Therefore, such responsibilities were recorded, at 31 December 2009, as an added cost of the UMTS license, against an entry in the captions 'Other non-current liabilities' (Note 28) and 'Other current liabilities' (Note 32). At the end of 2009 this responsabilities were all recorded in the financial statements.
During the third quarter of 2008, taking into account important facts occurred in recent months, namely that: incumbent operators weren't allowed to take part in the 4th license tendering process; and current national and international practice of extension, without costs, of GSM licenses and the renewal of UMTS licenses; Sonae Board of Directors decided to revise the useful life of the UMTS license, extending the amortisation period of 2015 until 2030 of UMTS , given the high probability of its renewal and the high probability of such renewal being granted without significant costs. Therefore, in accordance with IAS 8, the impacts of the estimated useful life revision were recorded prospectively.
On 31 December 2009 net exposure of Sonae with the "Foundation for mobile communications" under the program "Initiatives E" corresponded to an amount receivable 20,337,515 euro (23,717,066 euro on 31 December 2008) which can be detailed as follows:
| 31.December.2009 | 31.December.2008 | |
|---|---|---|
| Other current assets (Note 20) | 75,145,779 | 39,317,818 |
| Other creditors (Note 31) | (32,862,235) | - |
| Other current liabilities (Note 32) | (21,946,029) | (15,600,815) |
| 20,337,515 | 23,717,003 |
Additionally, in 2010, and until the date of approval of the financial statements have been received from "Fundação para as Comunicações Móveis" (Foundation for Mobile Communications) the amount of approximately 13.3 million euro.
Following the sale of 49,9% of the share capital of Sierra Holdings BV to a group of Investors, Sonae Sierra has agreed to revise the sale price of such shares if certain of the shopping malls are sold by any of the participating companies of Sierra Holdings BV. The price revision can occur whether with a sale of the asset (investment property in the case) or with a sale of the shares of the company that is directly or indirectly the owner of such asset. The price revision shall occur if either the sale is made for a lower price than the Market Value or Net Asset Value of the shares of the company that owns the asset ("price difference").
In that case, the price revision will correspond to the maximum potential income tax on the profit that would arise if, instead of the contribution or sale of the shares of the company that owns the asset of Sierra Holdings BV, the contribution or sale of the asset had occurred.
The price revision shall be computed considering the Investors' ownership percentage of the asset and is limited to:
These guarantees are valid while the current agreements with the other shareholders of Sierra BV maintained.
Furthermore, Sonae Sierra has the right to make a proposal for the acquisition of the asset or the shares in stake before the same are offered for purchase to a third party.
Sonae believes that the direct sale of the asset is not an attractive solution for this kind of operations as it is subject to certain encumbrances which do not exist in the sale of the shares of the asset's owner.
In the Management Report, and for the purposes of calculating financial indicators as EBITDA, EBIT and as well for operating segments income presentation purposes, the income statement is divided between Direct Income and Indirect Income, according to common practice in the Shopping Centre operating segment.
The Indirect Income includes the contribution of the Shopping Centre operating segment to the consolidated income statement, net of taxes, that result from: (i) valuation of investment properties; (ii) gains (losses) with the sale of financial investments, joint ventures or associates; (iii) impairment losses (including goodwill) and provisions for "Development Funds at Risk".
The value of EBITDA and Recurrent EBITDA is only calculated in the direct income, excluding the indirect contributions.
The reconciliation between consolidated income and direct-indirect income for the periods ended 31 December 2009 and 2008 can be summarised as follows:
| 31 December 2009 | 31 December 2008 | |||||
|---|---|---|---|---|---|---|
| Consolidated | Indirect income | Direct income | Consolidated | Indirect income | Direct income | |
| Operational income | ||||||
| Sales | 4,549,719,919 | - | 4,549,719,919 | 4,168,562,332 | - | 4,168,562,332 |
| Services rendered | 1,115,457,155 | - | 1,115,457,155 | 1,184,541,613 | - | 1,184,541,613 |
| Value created on investment properties | (142,684,216) | (142,684,216) | - | (115,805,475) | (115,805,475) | - |
| Investment income | - | - | - | - | - | - |
| Dividends | 378,624 | - | 378,624 | 375,121 | - | 375,121 |
| Other (Note 38) | 46,189,592 | 12,493,557 | 33,696,035 | 15,681,661 | 12,180,521 | 3,501,140 |
| Other income | ||||||
| Badwill | 343,359 | - | 343,359 | 9,864,000 | - | 9,864,000 |
| Reversion of impairment losses | 2,599,594 | - | 2,599,594 | 3,605,668 | - | 3,605,668 |
| Other | 411,559,476 | - | 411,559,476 | 442,319,502 | - | 442,319,502 |
| Total income | 5,983,563,503 | (130,190,659) | 6,113,754,162 | 5,709,144,422 | (103,624,954) | 5,812,769,376 |
| Total cost (a) | 5,769,954,297 | 5,861,706 | 5,764,092,591 | 5,517,954,745 | 37,178,747 | 5,480,775,998 |
| Depreciation and amortisation | 294,133,483 | - | 294,133,483 | 273,819,162 | - | 273,819,162 |
| Provisions and impairment losses | 28,207,470 | 1,510,350 | 26,697,120 | 35,512,894 | 7,218,486 | 28,294,408 |
| Profit before financial results and share of results of associated |
213,609,206 | (136,052,365) | 349,661,571 | 191,189,677 | (140,803,701) | 331,993,378 |
| Financial profit/(loss) | (122,786,715) | - | (122,786,715) | (173,710,692) | - | (173,710,692) |
| Share of results of associated undertakings | (5,365,399) | (6,983,718) | 1,618,319 | 8,952,847 | (5,588,408) | 14,541,255 |
| Profit before income tax | 85,457,092 | (143,036,083) | 228,493,175 | 26,431,832 | (146,392,109) | 172,823,941 |
| Income tax | (11,836,862) | 26,539,044 | (38,375,906) | 12,646,440 | 14,530,359 | (1,883,919) |
| Net profit for the period | 73,620,230 | (116,497,038) | 190,117,269 | 39,078,272 | (131,861,750) | 170,940,022 |
| - attributable to equity holders of Sonae | 93,760,817 | (76,988,786) | 170,749,603 | 80,035,669 | (79,067,142) | 159,102,811 |
| - attributable to minority interests | (20,140,587) | (39,508,253) | 19,367,666 | (40,957,397) | (52,794,608) | 11,837,211 |
| EBITDA (b) | 667,170,596 | 620,262,159 |
On 16 February 2010 Union Investment concluded the agreement with Sonae Sierra and Foncière Euris-Rally to become the new majority holder of Alexa in Berlin city centre. Each investor had a 50% interest in property, and the property investment fund managing company located in Hamburg purchased 91% of the minority participation in Shopping Center Alexa. The price of the transaction has been fixed on the basis of asset valuation in 316 million euro approximately. The Sonae Sierra that will remain responsible for the management of the Shopping Center, intends to hold exclusively the remaining 9% ownership of Alexa in the future.
The Sonae Sierra Brasil SA, the jointly controlled entity by Sonae Sierra, presented on 2 of March of 2010, to the Brazilian Securities Commission (CVM), a preliminary prospectus for a public offer of shares, under conditions to be defined together with the banks coordinators – Credit Suisse and Itaú-BBA.
In February 2010 Sonaecom issued a new bond loan amounting to 30 million euro with a maturity of 3 years.
The accompanying consolidated financial statements were approved by the Board of Directors on 16 March 2010, nevertheless they are still subject to approval at the Shareholders Annual General Meeting.
The Board of Directors
Belmiro de Azevedo, Chairman of the Board of Directors
Álvaro Cuervo Garcia, member of the Board of Directors
Bernd Bothe, member of the Board of Directors
Christine Cross, member of the Board of Directors
Michel Marie Bon, member of the Board of Directors
José Neves Adelino, member of the Board of Directors
Duarte Paulo Teixeira de Azevedo, CEO
Álvaro Carmona e Costa Portela, member of the Executive Committee
Ângelo Gabriel Ribeirinho dos Santos Paupério, member of the Executive Committee
Nuno Manuel Moniz Trigoso Jordão, member of the Executive Committee
INDIVIDUAL BALANCE SHEETS AS AT 31 DECEMBER 2009 AND 2008
(Translation of individual financial statements originally issued in Portuguese. In case of discrepancy the Portuguese version prevails)
(Amounts expressed in euro)
| ASSETS | Notes | 31.December.2009 31.December.2008 | ||
|---|---|---|---|---|
| NON-CURRENT ASSETS: | ||||
| Tangible assets | 6 | 265.384 | 181.497 | |
| Intangible assets | 7 | 5.776 | 1.242 | |
| Investments in affiliated companies | 4, 8 | 2.991.917.733 | 3.070.652.704 | |
| Other investments | 4, 9 | 77.489.880 | 100.049.880 | |
| Other non-current assets | 4, 10 | 543.934.785 | 598.542.161 | |
| Total Non-Current Assets | 3.613.613.558 | 3.769.427.484 | ||
| CURRENT ASSETS: | ||||
| Trade account receivables | 4, 11 | 1.767.521 | 1.626.676 | |
| Other debtors | 4, 12 | 7.890.064 | 31.391.881 | |
| Taxes recoverable | 1 3 |
1.387.264 | 2.263.726 | |
| Other current assets | 4, 14 | 648.644 | 237.082 | |
| Investments held for trading | - | 576.934 | ||
| Cash and cash equivalents | 4, 15 | 2.769.998 | 418.450 | |
| Total Current Assets | 14.463.491 | 36.514.749 | ||
| TOTAL ASSETS | 3.628.077.049 | 3.805.942.233 | ||
| EQUITY AND LIABILITIES | ||||
| EQUITY: | ||||
| Share capital | 1 6 |
2.000.000.000 | 2.000.000.000 | |
| Legal reserves | 1 7 |
163.229.582 | 161.705.974 | |
| Hedge and fair value reserves | 1 8 |
832.780.717 | 962.614.622 | |
| Retained earnings | 322.737 | 322.737 | ||
| Profit for the period | ||||
| TOTAL EQUITY | 91.729.048 | 30.472.155 | ||
| 3.088.062.084 | 3.155.115.488 | |||
| LIABILITIES: NON-CURRENT LIABILITIES: |
||||
| Bonds | 4, 20 | 498.238.077 | 497.619.441 | |
| Other loans | 4, 20 | 12.218.451 | 4.846.515 | |
| Total Non-Current Liabilities | 510.456.528 | 502.465.956 | ||
| CURRENT LIABILITIES: | ||||
| Bank loans | 4, 20 | 24.950.000 | 138.209.277 | |
| Trade accounts payable | 4 | 985.568 | 1.116.009 | |
| Other creditors | 4 | 78.307 | 171.430 | |
| Taxes and contributions payable | 1 3 |
349.693 | 603.578 | |
| Other current liabilities | 4, 21 | 3.194.869 | 8.260.495 | |
| Total Current Liabilities | 29.558.437 | 148.360.789 | ||
| TOTAL EQUITY AND LIABILITIES | 3.628.077.049 | 3.805.942.233 |
The accompanying notes are part of these individual financial statements.
(Translation of individual financial statements originally issued in Portuguese. In case of discrepancy the Portuguese version prevails)
| Notes | th Quarter ended 4 31 December 2009 (Unaudited) |
th Quarter ended 4 31 December 2008 (Unaudited) |
31.December.2009 | 31.December.2008 | |
|---|---|---|---|---|---|
| Services rendered | 2 5 |
1.885.121 | 383.839 | 4.603.363 | 2.273.584 |
| Gains or losses on investments | 2 6 |
- | (87.275.000) | 94.981.321 | 7.691.335 |
| Financial income | 2 7 |
4.900.952 | 11.664.922 | 25.654.428 | 67.426.621 |
| Other income | 15.515 | (4.985) | 40.263 | 56.774 | |
| External supplies and services | 2 8 |
(1.426.252) | (1.182.690) | (3.730.551) | (3.692.492) |
| Staff costs | 2 9 |
(1.153.800) | (955.090) | (4.834.681) | (4.194.547) |
| Depreciation and amortisation | 6, 7 | (12.672) | (14.926) | (56.363) | (45.437) |
| Financial expense | 2 7 |
(4.608.783) | (15.590.947) | (24.557.052) | (38.334.504) |
| Other expenses | (173.176) | (94.508) | (353.584) | (263.330) | |
| Profit/(Loss) before taxation | (573.095) | (93.069.385) | 91.747.144 | 30.918.004 | |
| Taxation | 3 0 |
(26.744) | (445.849) | (18.096) | (445.849) |
| Profit/(Loss) after taxation | (599.839) | (93.515.234) | 91.729.048 | 30.472.155 | |
| Profit/(Loss) per share | |||||
| Basic | 3 1 |
(0,000300) | (0,046758) | 0,045865 | 0,015236 |
| Diluted | 3 1 |
(0,000300) | (0,046758) | 0,045858 | 0,015236 |
The accompanying notes are part of these individual financial statements.
INDIVIDUAL STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED AT 31 DECEMBER 2009 AND 2008
(Translation of individual financial statements originally issued in Portuguese. In case of discrepancy the Portuguese version prevails)
| Notes | 31.December.2009 | 31.December.2008 | |
|---|---|---|---|
| Net Profit / (Loss) for the period | 91.729.048 | 30.472.155 | |
| Changes on fair value of available-for-sale financial assets |
8 | (93.025.072) | (148.598.428) |
| Changes in hedging reserve | 1 8 |
(6.114.413) | 144.296 |
| Other compreensive income for the period | (99.139.485) | (148.454.132) | |
| Total compreensive income for the period | (7.410.437) | (117.981.977) |
The accompanying notes are part of these individual financial statements.
(Translation of individual financial statements originally issued in Portuguese. In case of discrepancy the Portuguese version prevails)
| Reserves and Retained Earnings | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Notes | Share Capital | Own Shares | Legal Reserve | Fair value Reserve |
Hedging Reserve | Share based payments Reserve |
Other Reserves | Retained Earnings |
Total Reserves and Retained Earnings |
Net Profit/(Loss) | Total | |
| Balance as at 1 January 2008 | 2.000.000.000 | - | 160.880.817 | 730.528.037 | 162.774 | - | 424.699.965 | 322.737 | 1.316.594.330 | 16.503.135 | 3.333.097.465 | |
| Total comprehensive income for the period | - | - | - | (148.598.428) | 144.296 | - | - | - | (148.454.132) | 30.472.155 | (117.981.977) | |
| Appropriation of profit of 2007: Transfer to legal reserves Dividends distributed |
17 | - - |
- - |
825.157 - |
- - |
- - |
- - |
- (44.322.022) |
- - |
825.157 (44.322.022) |
(825.157) (15.677.978) |
- (60.000.000) |
| Balance as at 31 December 2008 | 2.000.000.000 | - | 161.705.974 | 581.929.609 | 307.070 | - | 380.377.943 | 322.737 | 1.124.643.333 | 30.472.155 | 3.155.115.488 | |
| Balance as at 1 January 2009 | 2.000.000.000 | - | 161.705.974 | 581.929.609 | 307.070 | - | 380.377.943 | 322.737 | 1.124.643.333 | 30.472.155 | 3.155.115.488 | |
| Total comprehensive income for the period | - | - | - | (93.025.072) | (6.114.413) | - | - | - | (99.139.485) | 91.729.048 | (7.410.437) | |
| Appropriation of profit of 2008: Transfer to legal reserves |
17 | - | - | 1.523.608 | - | - | - | - | - | 1.523.608 | (1.523.608) | - |
| Dividends distributed | - | - | - | - | - | - | (31.051.453) | - | (31.051.453) | (28.948.547) | (60.000.000) | |
| Share based payments | 19 | - | - | - | - | - | 357.033 | - | - | 357.033 | - | 357.033 |
| Purchase of own shares | - | (696.429) | - | - | - | - | - | - | - | - | (696.429) | |
| Disposal / attribution to employees of own shares | - | 696.429 | - | - | - | - | - | - | - | - | 696.429 | |
| Balance as at 31 December 2009 | 2.000.000.000 | - | 163.229.582 | 488.904.537 | (5.807.343) | 357.033 | 349.326.490 | 322.737 | 996.333.036 | 91.729.048 | 3.088.062.084 |
The accompanying notes are part of these individual financial statements.
(Translation of individual financial statements originally issued in Portuguese. In case of discrepancy the Portuguese version prevails)
(Amounts expressed in euro)
| Notes | 31.December.2009 | 31.December.2008 | |
|---|---|---|---|
| OPERATING ACTIVITIES | |||
| Cash receipts from trade debtors | 4.447.853 | 2.039.760 | |
| Cash paid to trade creditors | (3.783.211) | (3.113.120) | |
| Cash paid to employees | (4.318.525) | (5.136.990) | |
| Cash flow generated by operations | (3.653.883) | (6.210.350) | |
| Income taxes (paid) / received | 322.953 | (343.865) | |
| Other cash receipts and (payments) relating to operating activities | 403.067 | (784.741) | |
| Net cash flow from operating activities (1) | (2.927.863) | (7.338.956) | |
| INVESTMENT ACTIVITIES | |||
| Cash receipts arising from: | |||
| Investments | 3 2 |
26.758.062 | 3.579.042 |
| Tangible and intangible assets | 6.679 | - | |
| Interest and similar income | 40.783.605 | 73.527.427 | |
| Dividends | 93.516.449 | 94.979.579 | |
| Loans granted | 838.603.328 | 1.314.820.280 | |
| 999.668.123 | 1.486.906.328 | ||
| Cash Payments arising from: | |||
| Investments | 3 2 |
(4.210.227) | (842.085.478) |
| Tangible assets | (276.434) | (585.135) | |
| Intangible assets | (4.523) | (399) | |
| Loans granted | (789.006.199) | (771.561.000) | |
| (793.497.383) | (1.614.232.012) | ||
| Net cash used in investment activities (2) | 206.170.740 | (127.325.684) | |
| FINANCING ACTIVITIES | |||
| Cash receipts arising from: | |||
| Loans obtained | 1.390.025.000 | 1.015.221.000 | |
| Sale of own shares | 637.113 | - | |
| 1.390.662.113 | 1.015.221.000 | ||
| Cash Payments arising from: | |||
| Loans obtained | (1.503.275.000) | (877.021.000) | |
| Interest and similar charges | (27.586.245) | (29.829.089) | |
| Dividends | (59.986.491) | (59.993.240) | |
| Purchase of own shares | (696.429) | - | |
| (1.591.544.165) | (966.843.329) | ||
| Net cash used in financing activities (3) | (200.882.052) | 48.377.671 | |
| Net increase in cash and cash equivalents (4) = (1) + (2) + (3) | 2.360.825 | (86.286.969) | |
| Cash and cash equivalents at the beginning of the period | 409.173 | 86.696.142 | |
| Cash and cash equivalents at the end of the period | 1 5 |
2.769.998 | 409.173 |
The accompanying notes are part of these individual financial statements.
O Conselho de Administração The Board of Directors
In case of discrepancy the Portuguese version prevails)
(Amounts expressed in euro)
SONAE, SGPS, SA ("the Company" or "Sonae"), has its head-office at Lugar do Espido, Via Norte, Apartado 1011, 4470- 909 Maia, Portugal.
The individual financial statements are presented as required by Commercial Companies Code. According to Decree-Law 35/2005 of 17 February, the company financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union.
The principal accounting policies adopted in preparing the accompanying individual financial statements are as follows:
The accompanying financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union effective as at 1 January 2009. This standards were issued by the International Accounting Standards Board ("IASB") and interpretations issued by International Financial Reporting Interpretations Committee ("IFRIC") or by the previous Standing Interpretations Committee ("SIC"), that have been adopted by the European Union.
Interim financial statements are presented quarterly, in accordance with IAS 34 – "Interim Financial Reporting".
The accompanying financial statements have been prepared from the books and accounting records on a going concern basis and under the historical cost convention, except for financial instruments and investment properties which are stated at fair value.
Up to the approval date of these financial statements, the European Union endorsed the following standards, interpretations, amendments and revisions, some of which have become effective during the year 2009:
| With mandatory application in 2009: | Effective Date (for financial years beginnig on/after) |
|---|---|
| IFRS 1 / IAS 27 – Amendments (Cost of an investment in a subsidiary, jointly controlled entity or associate) |
01-01-2009 |
| IAS 39 – Amendments (Reclassification of Financial Assets) | 01-07-2008 |
| IFRS 2 – Share-based Payments - Amendments (Vesting conditions and cancellations) |
01-01-2009 |
| IAS 23 – Borrowing costs (revised) | 01-01-2009 |
| IAS 32 / IAS 1 – Amendments (Puttable financial instruments and obligations arising on liquidation) |
01-01-2009 |
| IAS 1 – Presentation of financial statements (revised) | 01-01-2009 |
| IFRIC 13 –Customer loyalty programmes | 01-07-2008 |
| IFRS 8 – Operating segments | 01-01-2009 |
| IFRS 7 – Amendments (Improving disclosures about fair value measurements and liquidity risk) |
01-01-2009 |
| Improvements to the International Financial Reporting Standards (2007) | Several (on/after 01-01-2009) |
The adoption, during the 2009 of the above mentioned Standards did not produce material impacts on the Company financial statements , with the exception of presentation and disclosure improvements, as a result of the adoption of revised version of IAS 1.
The IAS 1 (Revised) changed the terminology, as well as the format and content of the financial statements.
| With mandatory application after 2009: | Effective Date (for financial years beginnig on/after) |
|---|---|
| IAS 32 – Amendments (Classification of right issues) | 01-02-2010 |
| IAS 39 – Amendments (Eligible hedged items) | 01-07-2009 |
| IFRS 3 – Business Combination e IAS 27 – Consolidated and Separate Financial Statements (revised 2008) |
01-07-2009 |
| IFRS 1 (Revised) – First-time adoption of International Reporting Standards | 01-01-2010 |
| IFRIC 12 – Service Concession Arrangements | 01-01-2010 |
| IFRIC 15 – Agreements for the Construction of Real Estate | 01-01-2010 |
| IFRIC 16 – Hedges of a Net Investment in a Foreign Operation | 01-07-2009 |
IFRIC 9 e IAS 39 – Amendments (Reassessment of Embedded Derivates) Financial years beginning
IFRIC 17 – Distributions of Non-cash as-sets to owners 01-07-2009
IFRIC 18 – Transfers of Assets from Customers Transfers made on/after 01-07-09
on/after30-06-09
The above mentioned endorsed standards were not adopted by Sonae in 2009, because its application is not mandatory for this financial year, and Sonae decided not to make an early adoption of the standards.
It is not expected that material impacts will arise on the adoption of the above mentioned standards.
Tangible assets acquired up to 1 January 2004 (transition date to IFRS) are recorded at acquisition cost, or revalued acquisition cost in accordance with generally accepted accounting principles in Portugal until that date, net of depreciation and accumulated impairment losses.
Depreciation charges for the year are calculated on a straight line basis over the useful life of each asset in the caption Depreciation and amortization.
The impairment losses in the realisable value of tangible assets are recorded in the year they arise in the caption of the Income Statement - "Impairment losses.
Intangible assets are stated at acquisition cost, net of amortisation and accumulated impairment losses. Intangible assets are only recognised if it is probable that future economic benefits will flow from them, if they are controlled by the Company and if their cost can be reliably measured.
Depreciation charges for the year are calculated on a straight line basis over the useful life of each asset in the caption Depreciation and amortization.
Borrowing costs are usually recognised as an expense in the period in which they are incurred on an accruals basis in accordance with effective interest rate method.
Non-current assets (or disposal groups) are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. For this to be the case the sale must be highly probable and the asset or disposal group is available for immediate sale in its present condition. In addition, the sale should be expected to occur within 12 months from the date of classification.
Non-current assets (or disposal groups) classified as held for sale are measured at the lower of their carrying amount and fair value less cost to sell. These assets are not depreciated.
The Company classifies the financial instruments in the categories presented and conciliated with the Balance Sheet disclosed in Note 4.
Investments are classified into the following categories:
Held to maturity
Investments measured at fair value through profit or loss
Available for sale
Held to maturity investments are classified as non-current assets unless they mature within 12 months of the balance sheet date. Investments classified as held to maturity have defined maturities and the Group has the intention and ability to hold them until the maturity date. Investments measured at fair value through profit or loss are classified as current assets. Available for sale investments are classified as non-current assets.
Equity Investments in subsidiaries and associates are classified as Available for sale.
The investments measured at fair value through profit or loss include the investments held for trading that the company acquires for sale in a short period of time, and are classified in the balance sheet as current assets.
The Company classifies as available for sale those investments that are neither included as investments measured at fair value through profit or loss nor as investments held to maturity. These assets are classified as non-current assets, except if the sale is expected to occur within 12 months from the date of classification.
All purchases and sales of investments are recognized on the trade date, independently of the settlement date.
Investments are initially measured at fair value, which is considered to be the fair value of the consideration paid for them, including transaction costs, in the case of available for sale investments.
Available for sale investments and investments measured at fair value through profit or loss are subsequently measured at fair value, without any deduction for transaction costs which may be incurred on sale, by reference to their quoted market price or independent valuation at the balance sheet date. Investments in equity instruments that do not have a quoted market price and whose fair value cannot be reliably measured are stated at cost, less impairment losses.
Gains or losses arising from a change in fair value of available for sale investments are recognised directly in equity, under Fair value reserve, until the investment is sold or otherwise disposed of, or until it is determined to be impaired, at which time the cumulative gain or loss previously recognised in equity is transferred to net profit or loss.
Gains or losses arising from a change in fair value of investments measured at fair value through profit or loss are recorded in the Income statement captions Financial expenses or Financial income.
Held to maturity investments are carried at amortised cost using the effective interest rate, net of capital reimbursements and interest income received.
Loans and accounts receivable are recorded at amortised cost using the effective rate method net of accumulated impairment losses, in order to reflect its realisable value.
Interest income is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial.
These financial investments arise when the Company provides money or services directly to a debtor with no intention of trading the receivable.
Loans and receivables are recorded as current assets, except when its maturity is greater than 12 months from the balance sheet date, situations when they are classified as non-current assets. Loans and receivables are included in the captions presented in Note 4.
Receivables are stated at net realisable value corresponding to their nominal value less impairment losses (recorded under the caption Impairment losses in accounts receivable).
Impairment is recognised if there is objective and measurable evidence that, as a result of one or more events that occurred, the balance will not be fully received.
For financial assets carried at amortised cost, the amount of the impairment is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the financial asset's original effective interest rate. If the receipt of the full amount is expected to be within one year the discount is considered null as it is immaterial.
Financial liabilities and equity instruments are classified and accounted for based on their contractual substance, independently from the legal form they assume.
Loans are recorded as liabilities at their nominal value, net of up-front fees and commissions related to the issuance of those instruments.
Financial expenses are calculated based on the effective interest rate and are recorded in the income statement on an accruals basis, in accordance with the accounting policy defined in Note 2.8. The portion of the effective interest charge relating to up-front fees and commissions, if not paid in the period, is added to the book value of the loan.
Trade accounts payable are stated at their nominal value.
The Company uses derivatives in the management of its financial risks to hedge such risks and/or in order to optimise funding costs, in accordance with Management interest rate risk policy described in point 3.4.1.
Derivatives classified as cash flow hedge instruments are used by the Company mainly to hedge interest rate risks on loans obtained. Conditions established for these cash flow hedge instruments are identical to those of the corresponding loans in terms of base rates, calculation rules, rate setting dates and repayment schedules of the loans and for these reasons they qualify as perfect hedges. The gain or loss relating to the ineffective portion of the hedge, if any, is recorded in the Income Statement under Financial Income or Expenses.
The Company's criteria for classifying a derivative instrument as a cash flow hedge instrument include:
Cash flow hedge instruments used by the Company to hedge the exposure to changes in interest of its loans are initially accounted for at cost, if any which corresponds to its fair value, and subsequently adjusted to their corresponding fair value. Changes in fair value of these cash flow hedge instruments are recorded in equity under the caption Hedging reserves, and then recognised in the income statement over the same period in which the hedged instrument affects profit or loss.
Hedge accounting of derivative instruments is discontinued when the instrument matures or is sold. Whenever a derivative instrument can no longer be qualified as a hedging instrument, the fair value differences recorded in equity under the caption Hedging reserve are transferred to profit or loss of the period or to the carrying amount of the asset that resulted from the hedged forecast transaction. Subsequent changes in fair value are recorded in the income statement.
Derivatives entered into in accordance with Interest rate risk management policy described in point 3.4.1 and not eligible for hedge accounting (mainly interest rate option), are initially recorded at cost, which corresponds to fair value at inception, and then, remeasured at fair value through profit and loss under financial income or expenses captions.
When embedded derivatives exist, they are accounted for as separate derivatives when the risks and the characteristics are not closely related to economic risks and characteristics of the host instruments, and this is not stated at fair value through profit or loss.
Own shares are recorded at acquisition cost as a reduction to equity. Gains or losses arising from sales of own shares are recorded in Other reserves.
Cash and cash equivalents include cash on hand, cash at bank, term deposits and other treasury applications which mature in less than three months and are subject to insignificant risk of change in value.
In the cash flow statement, cash and cash equivalents also include bank overdrafts, which are included in the balance sheet caption of current bank loans.
The effective interest rate method is a method of calculating the amortised cost of a financial asset or liability and of allocating interest income or expense over the relevant period.
Financial assets, other than Investments measured at fair value through profit or loss, are assessed for indicators of impairment at each balance sheet date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been impacted.
For non-quoted equity instruments determining whether the investment is impaired requires an estimation of the value in use of the investment. The value in use calculation requires the entity to estimate the future cash flows expected to arise for the entity and a suitable discount rate in order to calculate present value.
For financial assets carried at amortised cost, the amount of the impairment is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the financial asset's original effective interest rate.
For investments of non-quoted subsidiaries, which are measured at acquisition cost less impairment (equity investments and loans granted) the impairment analysis is based on the fair value estimate of its net assets, mainly equity investments in other Company's subsidiaries.
The above mentioned estimate is based on the fair value computation of the value in use of its holdings by means of discounted cash flow models.
It is the Board of Directors understanding that the use of the above mentioned methodology is adequate to conclude on the eventual existence of financial investments impairment as it incorporates the best available information as at the date of the financial statements.
With the exception of available for sale equity instruments, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.
In respect of equity available for sale securities, impairment losses previously recognised through profit or loss are not reversed. Any increase in fair value subsequent to an impairment loss is recognised directly in equity.
Contingent liabilities are not recorded in the financial statements. Instead they are disclosed in the notes to the financial statements, unless the probability of a cash outflow is remote, in which case, no disclosure is made.
Contingent assets are not recorded in the financial statements but disclosed when future economic benefits are probable.
Revenue from services rendered is recognised in the income statement in the period they are performed.
Dividends are recognised as income in the year they are attributed to the shareholders.
Income and expenses are recorded in the year to which they relate, independently of the date of the corresponding payment or receipt. Income and expenses for which their real amount is not known are estimated.
Other current assets and Other current liabilities include income and expenses of the reporting year which will only be invoiced in the future. Those captions also include receipts and payments that have already occurred but that correspond to income or expenses of future years, when they will be recognised in the income statement.
Events after the balance sheet date that provide additional information about conditions that existed at the balance sheet date (adjusting events), are reflected in the financial statements. Events after the balance sheet date that are nonadjusting events are disclosed in the notes when material.
The most significant accounting estimates reflected in the financial statements are as follows:
Estimates used are based on the best information available during the preparation of these financial statements and are based on the best knowledge of past and present events. Although future events, are not controlled by the Company are not foreseeable, some could occur and have impact on the estimates. Therefore and due to this uncertainty the outcome of the transactions being estimated may differ from the initial estimate. Changes to the estimates used by management that occur after the approval date of these consolidated financial statements, will be recognised in net income prospectively, in accordance with IAS 8.
The main estimates and assumptions in relation to future events included in the preparation of these financial statements are disclosed in the correspondent notes, if applicable.
Deferred Performance Bonus Plans are indexed to Sonae share price and are classified as share-based payments. These bonus plans vest within a period of 3 years after being granted.
Share-based payments are measured at fair value on the date they are granted (usually in March of each year).
When the plans are equity settled, by the delivery of Sonae shares, the value of the plan is determined as at the grant date based on fair value of shares granted and recognized rateably during the period of each plan. The fair value of the plan is recognized as staff costs against equity.
When settlement is made in cash the value of such liabilities shall be determined at the grant date and subsequently updated at the end of each reporting period based on the number of shares and the corresponding fair value at the closing date. These obligations are recognized as staff costs and other current liabilities, and are recorded on a straight-line basis, between the date the shares are granted and their vesting date, taking into consideration the time elapsed between these dates.
Current income tax is determined in accordance with tax rules in force in Portugal, considering the taxable profit for the period.
Deferred taxes are calculated using the balance sheet liability method. Deferred tax assets are recognised only when its use is probable.
The ultimate purpose of financial risk management is to support the Company in the achievement of its strategy by reducing unwanted financial risk and volatility and mitigate any negative impacts in the profit or loss statement arising from such risks.
The Group's attitude towards financial risk management is conservative and cautious. Derivatives are used to hedge certain exposures related to its operating business and, as a rule, Sonae does not enter into derivatives or other financial instruments that are unrelated to its operating business or for speculative purposes.
Financial risk management policies are approved by the Sonae Executive Committee. Exposures are identified and monitored by the Finance Department. Exposures are also monitored by the Finance Committee as noted in the Corporate Governance Report.
Credit risk is defined as the probability of a counterparty defaulting on its payment contractual obligations resulting in a financial loss. Sonae is a Holding company without any relevant commercial or trade activity, other than the normal activities of a portfolio manager. As such, it is only exposed, on a regular basis, to credit risk resulting from its investing activities (holding cash and cash equivalent instruments, deposits with banks and financial institutions or resulting from derivative financial instruments entered into in the normal course of its hedging activities) or from its lending activities to subsidiaries.
Additionally, Sonae may sometimes also be exposed to credit risk as a result of its portfolio management activities (buying or selling investments), but in those exceptional situations risk reducing mechanisms and actions are implemented on a case by case basis under the supervision of the Executive Committee. In order to reduce the probability of counterparties default Sonae transactions (short term investments and derivatives) are only concluded in accordance with the following principles:
Given the above mentioned policies and the minimum credit ratings management does not expect any material failure in contractual obligations from its external counterparties. Nevertheless, exposure to individual counterparties resulting from financial instruments and the credit rating of potential counterparties is regularly monitored by the Financial Department and any departure is promptly reported to the Executive Committee and Finance Committee.
Settlement risk is also a risk faced by Sonae, which is managed through the rigorous selection of its brokers which must be highly rated counterparties.
In relation to credit risk resulting from loans granted to subsidiaries, there is no specific risk management policy as the financing of its subsidiaries is part of the main operations of a holding company.
Sonae needs to raise external funds to finance its activities and investing plans. It holds a diversified loan portfolio, essentially made up of long term bond financing, but which also includes a variety of other short-term financing facilities in the form of commercial paper and credit lines. As at 31 December 2009 the total gross debt was 535 million euro (641 million euro as at 31 December 2008).
The purpose of liquidity risk management is to ensure, at all times, that Sonae has the financial capacity to fulfil its commitments as they become due and to carry on its business activities and strategy.
Given the dynamic nature of its activities, Sonae needs a flexible financial structure and therefore uses a combination of:
Diversification of financing sources and counterparties;
Ensuring an adequate debt average maturity, by issuing long term debt and avoiding excessive concentration of scheduled repayments. As at 31 December 2009 Sonae debt average life maturity was 2.5 years (3 years in 31 December 2008);
Sonae maintains a liquidity reserve in the form of credit lines with its relationship banks, to ensure the ability to meet its commitments without having to refinance itself on unfavourable terms. Sonae has a total of 266 million euro committed credit facilities, of which only 11.4% are cancellable with a notice period of 6 months and the remainder with no less than a 360 days notice period (261 million euro in 2008). Sonae expects to meet all its obligations by means of its operating cash flows and from its financial assets as well as from drawing existing available credit lines, if needed.
Sonae is exposed to cash flow interest rate risk in respect of items in the balance sheet (Loans and Short Term Investments) and to fair value interest rate risk as a result of interest rate derivatives (swaps, FRA's and options). All Sonae debt bears variable interest rates, and interest rate derivatives may be entered into to convert part of the variable rate debt into fixed rate (usually through interest rate swaps or Forward Rate agreements), or to limit the maximum rate payable (usually through zero cost collars or the purchased caps).
Sonae mitigates interest rate risk by adjusting the proportion of its debt that bears fixed interest to that which bears floating interest although without a fixed goal or percentage to achieve since hedging interest rate risk usually has an opportunity cost associated. Therefore a more flexible approach is considered preferable to a more strict traditional approach. Part of the risk is also mitigated by the fact that Sonae grants loans to its subsidiaries as part of its usual activities and thus there may be some degree of natural hedging on a company basis, since if interest rates increase the additional interest paid would be partially offset by additional interest received.
Sonae hedging activities do not constitute a profit-making activity and derivatives are deemed to be entered into without any speculation purpose. Strict rules are observed in relation to any derivative transaction entered into:
The counterparties of the derivative hedging instruments are limited to highly rated financial institutions, as described in 3.2. above - Credit Risk Management. It is Group policy that, when contracting such instruments, preference should be given to financial institutions that form part of Sonae's existing relationships, whilst at the same time obtaining quotes from a sufficient large sample of banks to ensure optimum conditions;
In determining the fair value of hedging operations Sonae uses certain methods, such as option valuation and discounted future cash flow models, using assumptions based on market interest rates, foreign exchange rates, volatility among others prevailing at the balance sheet date. Comparative financial institution quotes for the specific or similar instruments are used as a benchmark for the valuation;
The interest rate sensitivity analysis is based on the following assumptions:
Under the previously mentioned assumptions, if interest rates of euro denominated financial instruments had been 75 basis points higher, the company net profit before tax as at 31 December 2009 (individual statements) would increase by approximately 3 million euro (at 31 December 2008 would increase 10 million euro). Total equity, as at 31 December 2009, (not considering the impact over net profit) would increase by about 5 million euro as a result of the effect of changing interest rate up 75 basis points.
Due to its nature of Holding company, Sonae, has very limited transaction exposure to foreign exchange risk. Normally, when such exposures arise Foreign exchange risk management seeks to minimise the volatility of such transactions made in foreign currency and to reduce the impact on the income statement of exchange rate fluctuations. When significant material exposures occur with a high degree of certainty, Sonae hedges such exposures mainly through forward exchange
rate contracts. For uncertain exposures, options may be considered, subject to pre-approval from the company's Executive Committee.
Sonae does not have any material foreign exchange rate exposure at holding level, since almost all equity and loans to subsidiaries are denominated in Euros.
The Group is exposed to equity price risks arising from equity investments, maintained for strategic rather than for trading purposes as the group does not actively trade these investments. These investments are presented in Notes 8.
The accounting policies disclosed in note 2.6 have been applied to the line items below:
| Financial Assets | |||||||
|---|---|---|---|---|---|---|---|
| 31.December.2009 | |||||||
| Loans and | Derivatives used | Assets not | |||||
| Notes | accounts receivable |
Available for sale | for cash flow hedging |
Sub Total | w ithin scope of IFRS 7 |
Total | |
| Non-Current Assets | |||||||
| Investments in affiliated companies | 8 | - | 2.991.917.733 | - | 2.991.917.733 | - | 2.991.917.733 |
| Other investments | 9 | - | 77.489.880 | - | 77.489.880 | - | 77.489.880 |
| Other non-current assets | 10 | 543.934.785 | - | - | 543.934.785 | - | 543.934.785 |
| 543.934.785 | 3.069.407.613 | - | 3.613.342.398 | - | 3.613.342.398 | ||
| Current Assets | |||||||
| Trade Accounts Receivables | 11 | 1.767.521 | - | - | 1.767.521 | - | 1.767.521 |
| Other debtors | 12 | 7.890.064 | - | - | 7.890.064 | - | 7.890.064 |
| Other current assets | 14 | 501.873 | - | - | 501.873 | 146.771 | 648.644 |
| Cash and cash equivalents | 15 | 2.769.998 | - | - | 2.769.998 | - | 2.769.998 |
| 12.929.456 | - | - | 12.929.456 | 146.771 | 13.076.227 | ||
| 556.864.241 | 3.069.407.613 | - | 3.626.271.854 | 146.771 | 3.626.418.625 |
| 31.December.2008 | |||||||
|---|---|---|---|---|---|---|---|
| Notes | Loans and accounts receivable |
Available for sale | Derivatives used for cash flow hedging |
Sub Total | Assets not w ithin scope of IFRS 7 |
Total | |
| Non-Current Assets | |||||||
| Investments in affiliated companies | 8 | - | 3.070.652.704 | - | 3.070.652.704 | - | 3.070.652.704 |
| Other investments | 9 | - | 100.049.880 | - | 100.049.880 | - | 100.049.880 |
| Other non-current assets | 10 | 598.542.161 | - | - | 598.542.161 | - | 598.542.161 |
| 598.542.161 | 3.170.702.584 | - | 3.769.244.745 | - | 3.769.244.745 | ||
| Current Assets | |||||||
| Trade Accounts Receivables | 11 | 1.626.676 | - | - | 1.626.676 | - | 1.626.676 |
| Other debtors | 12 | 31.391.881 | - | - | 31.391.881 | - | 31.391.881 |
| Other current assets | 14 | 82.075 | - | - | 82.075 | 155.007 | 237.082 |
| Investments | - | - | 576.934 | 576.934 | - | 576.934 | |
| Cash and cash equivalents | 15 | 418.450 | - | - | 418.450 | - | 418.450 |
| 33.519.082 | - | 576.934 | 34.096.016 | 155.007 | 34.251.023 | ||
| 632.061.243 | 3.170.702.584 | 576.934 | 3.803.340.761 | 155.007 | 3.803.495.768 |
| Financial Liabilities | |||||||
|---|---|---|---|---|---|---|---|
| 31.December.2009 | |||||||
| Notes | Liabilities at fair value through profit or loss |
Derivatives used for cash flow hedging |
Other financial liabilities |
Sub Total | Liabilities not w ithin scope of IFRS 7 |
Total | |
| Non-Current Liabilities | |||||||
| Bonds | 20.1 | - | - | 498.238.077 | 498.238.077 | - | 498.238.077 |
| Other loans | 20.2 | - | 12.218.451 | - | 12.218.451 | - | 12.218.451 |
| - | 12.218.451 | 498.238.077 | 510.456.528 | - | 510.456.528 | ||
| Current Liability | |||||||
| Bank loans | 20.3 | - | - | 24.950.000 | 24.950.000 | - | 24.950.000 |
| Trade accounts payable | - | - | 985.568 | 985.568 | - | 985.568 | |
| Other payables accounts | - | - | 78.307 | 78.307 | - | 78.307 | |
| Other current liabilities | 21 | - | - | 1.673.465 | 1.673.465 | 1.521.404 | 3.194.869 |
| - | - | 27.687.340 | 27.687.340 | 1.521.404 | 29.208.744 | ||
| - | 12.218.451 | 525.925.417 | 538.143.868 | 1.521.404 | 539.665.272 |
| 31.December.2008 | |||||||
|---|---|---|---|---|---|---|---|
| Notes | Liabilities at fair value through profit or loss |
Derivatives used for cash flow hedging |
Other financial liabilities |
Sub Total | Liabilities not w ithin scope of IFRS 7 |
Total | |
| Non-Current Liabilities | |||||||
| Bonds | 20.1 | - | - | 497.619.441 | 497.619.441 | - | 497.619.441 |
| 20.2 | 4.846.515 | - | - | 4.846.515 | - | 4.846.515 | |
| 4.846.515 | - | 497.619.441 | 502.465.956 | - | 502.465.956 | ||
| Current Liability | - | - | - | - | - | - | |
| Bank loans | 20.3 | - | - | 138.209.277 | 138.209.277 | - | 138.209.277 |
| Trade Accounts payable | - | - | 1.116.009 | 1.116.009 | - | 1.116.009 | |
| Other payables accounts | - | - | 171.430 | 171.430 | - | 171.430 | |
| Other current liabilities | 21 | - | - | 6.884.750 | 6.884.750 | 1.375.745 | 8.260.495 |
| - | - | 146.381.466 | 146.381.466 | 1.375.745 | 147.757.211 | ||
| 4.846.515 | - | 644.000.907 | 648.847.422 | 1.375.745 | 650.223.167 |
The table below details the financial instruments that are measured at fair value after initial recognition, grouped into 3 levels according to the possibility of observing its fair value on the market:
Level 1: fair value is determined based on market prices for assets
Level 2: fair value is determined based on valuation techniques. The main inputs of the valuation models are observable in the market;
Level 3: fair value is determinated based on valuation models, whose main inputs are not observable in the market.
| 31.December.2009 | ||||
|---|---|---|---|---|
| Level 1 | Level 2 | Level 3 | ||
| Financial assets at fair values | ||||
| Investments in affiliated companies | 1.620.270 | 614.248.500 | - | |
| 1.620.270 | 614.248.500 | - | ||
| Financial liabilities at fair value | ||||
| Derivatives | - | 12.218.451 | - | |
| - | 12.218.451 | - | ||
During the year there were no material changes in accounting policies or prior period errors.
As at 31 December 2009 and 2008 tangible assets movements are as follows:
| Gross cost | Plant and machinery |
Vehicles | Fixtures and fittings |
Others | In progress | Total |
|---|---|---|---|---|---|---|
| Opening balance as at 1 January 2008 | 17.352 | 194.768 | 2.404.297 | 723 | - | 2.617.140 |
| Increase | - | - | - | - | 696.865 | 696.865 |
| Decrease | - | - | (5.046) | - | (563.757) | (568.803) |
| Transfers and w rite-offs |
- | - | 113.646 | - | (114.659) | (1.013) |
| Opening balance as at 1 January 2009 | 17.352 | 194.768 | 2.512.897 | 723 | 18.449 | 2.744.189 |
| Increase | - | - | - | - | 159.131 | 159.131 |
| Decrease | - | - | (336.222) | - | - | (336.222) |
| Transfers and w rite-offs |
4.696 | - | 55.580 | - | (63.158) | (2.882) |
| Closing balance as at 31 December 2009 | 22.048 | 194.768 | 2.232.255 | 723 | 114.422 | 2.564.216 |
| Accumulated depreciation | ||||||
| Opening balance as at 1 January 2008 | 17.352 | 194.768 | 2.309.839 | 608 | - | 2.522.567 |
| Increase | - | - | 45.241 | 28 | - | 45.269 |
| Decrease | - | - | (5.046) | - | - | (5.046) |
| Transfers and w rite-offs |
- | - | (98) | - | - | (98) |
| Opening balance as at 1 January 2009 | 17.352 | 194.768 | 2.349.936 | 636 | - | 2.562.692 |
| Increase | 587 | - | 53.077 | 28 | - | 53.692 |
| Decrease | - | - | (317.552) | - | - | (317.552) |
| Closing balance as at 31 December 2009 | 17.939 | 194.768 | 2.085.461 | 664 | - | 2.298.832 |
| Carrying amount | ||||||
| As at 31 December 2008 | - | - | 162.961 | 87 | 18.449 | 181.497 |
| As at 31 December 2009 | 4.109 | - | 146.794 | 59 | 114.422 | 265.384 |
As at 31 December 2009 and 2008 intangible assets movements are as follows:
| Softw are |
In progress | Total intangible assets |
|
|---|---|---|---|
| Gross cost | |||
| Opening balance as at 1 January 2008 | - | - | - |
| Increase | - | 399 | 399 |
| Transfers and w rite-offs |
1.410 | (399) | 1.011 |
| Opening balance as at 1 January 2009 | 1.410 | - | 1.410 |
| Transfers and w rite-offs |
7.205 | - | 7.205 |
| Closing balance as at 31 December 2009 | 8.615 | - | 8.615 |
| Accumulated depreciation | |||
| Opening balance as at 1 January 2008 | - | - | - |
| Increase | 168 | - | 168 |
| Opening balance as at 1 January 2009 | 168 | - | 168 |
| Increase | 2.671 | - | 2.671 |
| Closing balance as at 31 December 2009 | 2.839 | - | 2.839 |
| Carrying amount | |||
| As at 31 December 2008 | 1.242 | - | 1.242 |
| As at 31 December 2009 | 5.776 | - | 5.776 |
As at 31 December 2009 and 2008, the Company held investments in the following subsidiaries:
| 31.December.2009 | |||||||
|---|---|---|---|---|---|---|---|
| Companies | % Held | Opening balance | Increase | Decrease | Changes in fair value |
Closing balance | |
| Interlog, SGPS, SA | 1,02% | 106.686 | - | - | - | 106.686 | |
| MDS, SGPS, SA | 45,71% | 17.800.000 | 12.813.065 | 2.733.191 | - | 27.879.874 | |
| Sonae Investimentos, SGPS, SA (a)(b) | 82,48% | 1.690.800.661 | - | - | - | 1.690.800.661 | |
| Sonae Investments, BV | 100,00% | 550.000.000 | - | - | - | 550.000.000 | |
| Sonae RE, SA | 99,92% | 500 | 3.671.559 | - | - | 3.672.059 | |
| Sonae Sierra SGPS, SA (c) | 50,00% | 708.051.000 | - | - | (93.802.500) | 614.248.500 | |
| Sonaecom, SGPS, SA | 0,23% | 842.842 | - | - | 777.428 | 1.620.270 | |
| Sonaegest, SA | 20,00% | 159.615 | - | - | - | 159.615 | |
| Sonaecenter Serviços, SA | 100,00% | 50.000 | 538.668 | - | - | 588.668 | |
| Sontel, BV | 42,86% | 191.341.400 | - | - | - | 191.341.400 | |
| Total | 3.159.152.704 | 17.023.292 | 2.733.191 | (93.025.072) | 3.080.417.733 | ||
| Impairment | 88.500.000 | - | - | - | 88.500.000 | ||
| Total | 3.070.652.704 | 17.023.292 | 2.733.191 | (93.025.072) | 2.991.917.733 |
| 31.December.2008 | ||||||
|---|---|---|---|---|---|---|
| % Held | Opening balance | Increase | Decrease | Changes in fair value |
Closing balance | |
| Interlog, SGPS, SA | 1,02% | 106.686 | - | - | - | 106.686 |
| MDS, SGPS, SA | 89,00% | 20.000.000 | - | 2.200.000 | - | 17.800.000 |
| Sonae Investimentos, SGPS, SA (a)(b) | 82,48% | 1.690.800.661 | - | - | - | 1.690.800.661 |
| Sonae Investimentos America Latina | 0,00% | 25.684 | - | 25.684 | - | - |
| Sonae Investments, BV | 100,00% | 18.151 | 549.981.849 | - | - | 550.000.000 |
| Sonae RE, SA | 0,04% | 500 | - | - | - | 500 |
| Sonae Sierra SGPS, SA (c) | 50,00% | 856.602.000 | - | - | (148.551.000) | 708.051.000 |
| Sonaecom, SGPS, SA | 0,23% | 78.041 | 812.229 | - | (47.428) | 842.842 |
| Sonaegest, SA | 20,00% | 159.615 | - | - | - | 159.615 |
| Sonaecenter Serviços, SA | 100,00% | - | 50.000 | - | - | 50.000 |
| Sontel, BV | 42,86% | 100.000 | 191.241.400 | - | - | 191.341.400 |
| 2.567.891.338 | 742.085.478 | 2.225.684 | (148.598.428) | 3.159.152.704 | ||
| Impairment | - | 88.500.000 | - | - | 88.500.000 | |
| Total | 2.567.891.338 | 653.585.478 | 2.225.684 | (148.598.428) | 3.070.652.704 |
b) The value of this investment is the price paid in the public tender offer for de-listing occurred in 2006. Since that date no change in the value of the investment was recorded.
(c) Market value was determined based on an independent valuation as at 31 December 2008 of assets held by this affiliated company, after deduction of associated net debt and of the share attributable to minority interests. The major assumptions used for the purpose of estimating the fair value of the assets are disclosed on the consolidated financial statements.
In July 2009, Sonae signed an agreement for the roll-up of the Feffer family's shareholding in Lazam-MDS in exchange for shares owned by Sonae in MDS and for new shares in the enlarged share capital of MDS. Under this agreement, Sonae has
reduced its direct shareholding in MDS, SGPS to 45.71%. During the year there was also a capital increase of that subsidiary by conversion of shareholder loans into capital.
During the year the Company acquired 99.88% of the shares representing the share capital of Sonae, RE, SA.
During the year ended 31 December 2008, the Company recorded an impairment loss over the financial investment held in Sontel B.V. amounting to 88,500,000 euro (Note 26) as a result of applying the accounting policy mentioned in 2.6 k) and according to a valuation made by the use of discounted cash flow models, in order to estimate the value in use of those investments. As at 31 December 2009 the Company performed a similar exercise and determined that the amount of impairment is still adequate.
As at 31 December 2009 and 2008 other investments available for sale are as follows:
| 31.December.2009 | ||||||
|---|---|---|---|---|---|---|
| Companies | Opening balance | Increase | Decrease | Closing balance |
||
| Associação Escola Gestão Porto | 49.880 | - | - | 49.880 | ||
| Magma No. 1 Securitisation Notes | 100.000.000 | - | 22.560.000 | 77.440.000 | ||
| Total | 100.049.880 | - | 22.560.000 | 77.489.880 | ||
| 31.December.2008 | ||||||
| Companies | Opening balance | Increase | Decrease | Closing balance |
||
| Associação Escola Gestão Porto | 49.880 | - | - | 49.880 | ||
| Total | - | 100.000.000 | - | 100.000.000 | ||
| 49.880 | 100.000.000 | - | 100.049.880 |
In December 2008, the Company has completed the subscription of securitized assets, through a private offering, in the amount of approximately 100 million euro, issued by Tagus - Sociedade de Titularização de Créditos, SA named "MAGMA Nº 1 Securitisation Notes".
These bonds have a maturity of 5 years (2009/2013), and are amortized in equal quarterly instalments, having as underlying asset the future receivables to be generated under a portfolio of existing corporate customer contracts of Sonaecom - Serviços de Comunicações, SA, with a comfortable over colaterization, which strongly minimize this investment credit risk.
During 2009, the decrease amounting to 22,560,000 euro corresponds to reimbursements totaling 19,777,500 euro and to the sale of bonds with a carrying amount of 2,782,500 euro.
As at 31 December 2009 and 2008 other non-current assets are as follows:
| 31.December.2009 | 31.December.2008 | |
|---|---|---|
| Loans granted to group companies: | ||
| MDS, SGPS, SA | 30.119.075 | 69.410.000 |
| Sonae Investments, BV | 478.427.710 | 495.856.978 |
| Sontel, BV | 35.388.000 | 33.271.000 |
| 543.934.785 | 598.537.978 | |
| Guarantee deposits | - | 4.183 |
| 543.934.785 | 598.542.161 |
Loans granted to group companies earn interest at variable market rates indexed to Euribor and do not mature within one year.
There are no past due or impaired receivable balances as at 31 December 2009 and 2008. The eventual impairment of loans granted to group companies is assessed in accordance with note 2.6.k). The fair value of loans granted to group companies is considered to be similar to its carrying amount.
Trade accounts receivable amounted to 1,767,521 euro and 1,626,676 euro as at 31 December 2009 and 2008 respectively, and include balances arising solely from services rendered to group companies.
As at the balance sheet dates there is no accounts receivable past due, and no impairment loss was recorded, as there are no indications as of the reporting date that the debtors will not meet their payment obligations.
As at 31 December 2009 and 2008 other debtors are as follows:
| 31.December.2009 | 31.December.2008 | |
|---|---|---|
| Group companies - Short term loans: | ||
| MDS, SGPS, SA | - | 7.510.000 |
| Sonaecenter, Serviços, SA | 440.000 | 737.000 |
| 440.000 | 8.247.000 | |
| Group companies - Interest: | ||
| MDS, SGPS, SA | 556.946 | 1.660.159 |
| Sonae Investments, BV | 5.664.753 | 19.218.665 |
| Sontel, BV | 416.539 | 1.027.220 |
| 7.078.238 | 30.153.044 | |
| Other debtors | ||
| Others | 811.826 | 1.238.837 |
| 7.890.064 | 31.391.881 |
Loans granted to group companies return interest at variable market rates indexed to Euribor and have a maturity less than one year.
There were no assets impaired or past due. The fair value of loans granted is similar to its carrying amount.
As at 31 December 2009 and 2008 taxes balances are as follows:
Assets
| 31.December.2009 | 31.December.2008 | |
|---|---|---|
| Advance payments | 29.305 | 23.958 |
| Taxes w ithheld |
1.357.959 | 2.175.667 |
| Recoverable VAT | - | 64.101 |
| 1.387.264 | 2.263.726 |
| 31.December.2009 | 31.December.2008 | |
|---|---|---|
| Income tax charge for the year | 26.744 | 445.849 |
| Taxes w ithheld |
||
| Staff | 61.539 | 50.130 |
| Services | 149 | 197 |
| Capital | - | 52.192 |
| Other | 32 | - |
| Value added tax | 210.029 | 8.876 |
| Social security contributions | 49.693 | 46.279 |
| Stamp duty | 1.507 | 55 |
| 349.693 | 603.578 |
As at 31 December 2009 and 2008 other current assets are as follows:
| 31.December.2009 | 31.December.2008 | |
|---|---|---|
| Accrued income | 501.873 | 82.075 |
| Prepayments | 146.771 | 155.007 |
| 648.644 | 237.082 |
As at 31 December 2009 and 31 December 2008 cash and cash equivalents are as follows:
| 31.December.2009 | 31.December.2008 | |
|---|---|---|
| Cash in hand | 7.042 | 4.300 |
| Bank deposits | 2.762.956 | 414.150 |
| Cash and cash equivalents on the balance sheet | 2.769.998 | 418.450 |
| Bank overdrafts (Note 20.3) | - | 9.277 |
| Cash and cash equivalents on the cash flow statement |
2.769.998 | 409.173 |
As at 31 December 2009 bank deposits include short term deposits amounting to 2,705,000 euro (378,000 euro as at 31 December 2008) withdrawn at beginning of 2010 (2009).
As at 31 December 2009 and 2008 share capital consisted of 2,000,000,000 ordinary shares of 1 euro each.
As at 31 December 2009 and 2008 Efanor Investimentos, SGPS, SA and affiliated companies held 52.983% of Sonae's share capital.
The company has set up legal reserves in accordance with Commercial Companies Code. In 2009 and 2008, respectively, 1,523,608 euro and 825,157 euro was transferred from profit for the year to legal reserves.
As at 31 December 2009 and 2008 reserves are as follows:
| 31.December.2009 | 31.December.2008 | |
|---|---|---|
| Free reserves | 349.326.490 | 380.377.943 |
| Hedging reserve | (5.807.343) | 307.070 |
| Fair value reserve | 488.904.537 | 581.929.609 |
| Share-based payments reserve | 357.033 | - |
| 832.780.717 | 962.614.622 |
Movements occurred in 2009 and 2008 in these reserves are detailed in the Company Statement of changes in equity.
Hedging Reserves corresponds to the effective portion of changes in fair value of derivatives that qualify for cash flow hedge accounting.
Fair value reserves correspond to changes in the fair value of the financial instruments classified as available for sale.
The Share-based payments reserve relates to equity-share based payments under the deferred performance bonuses.
In 2009 and in previous years, Sonae granted deferred performance bonuses to its directors and eligible employees. These are based on shares to be acquired at nil cost, three years after they were attributed to the employee. These rights can only be exercised if the employee still works for the Sonae on the vesting date.
During the year ended 31 December 2009, Sonae changed the settlement method of the share based plans. Up to 2009, the plans were being settled in cash although the company had the choice to settle in cash or in shares. As at 31 December 2009, the plans are being accounted for as equity settled under the assumption that the plans will be settled in shares. This change resulted in an increase of Share-based payment plans in shares amounting to 357,033 euro.
As at 31 December 2009, the outstanding plans were as follows:
| Vesting period | ||||
|---|---|---|---|---|
| Year of grant | Vesting year | Number of participants |
Number of shares |
|
| Plan 2007 | 2008 | 2011 | 1 | 340.844 |
| Plan 2008 | 2009 | 2012 | 1 | 570.258 |
During the year the movements occurred can be detailed as follows:
| Number of shares |
|
|---|---|
| Balance as at 31.December.2008 | 340.844 |
| Changes during the year: | |
| Attributed | 570.258 |
| Vested | - |
| Balance as at 31.December.2009 | 911.102 |
As at 31 December 2009 and 2008 this caption included the following loans:
| 31.December.2009 | 31.December.2008 | |
|---|---|---|
| Bonds | 500.000.000 | 500.000.000 |
| Up-front fees not yet charged to income statement | (1.761.923) | (2.380.559) |
| 498.238.077 | 497.619.441 |
Bonds Sonae / 05 amounting to 100,000,000 euro, repayable after 8 years, in one installment, on 31 March 2013. Interest rate is variable, indexed to Euribor 6 months, with interest paid half-yearly.
Bonds Sonae 2006/2011 amounting to 250,000,000 euro, repayable after 5 years, in one installment, on 10 May 2011. Interest rate is variable, indexed to Euribor 6 months, with interest paid half-yearly. The company has the option to make whole or partial reimbursements, with no extra cost, on the date of the 6th and 8th coupons.
Bonds Sonae 2007/2014 amounting to 150,000,000 euro, repayable after 7 years, in one installment, on 11 April 2014. Interest rate is variable, indexed to Euribor 6 months, with interest paid half-yearly. The company has the option to make whole or partial reimbursements, with no extra cost, on the date of the 10th and 12th coupons.
The above mentioned loans are unsecured and its estimated fair value is considered to be near its carrying amount, as they bear interests at variable market rates.
The financial instruments considered to be hedging instruments are, mainly variable to fixed interest rates swaps entered into for the purposes of hedging interest rate risk of borrowings amounting to 250 million euro (same amount as at 31 December 2008) which fair value amounted to -12,218,451 euro (-4,846,515 euro as at 31 December 2008).
These interest rate derivatives are valued at fair value, at the balance sheet date, based on valuations performed by the Group using specific software. The fair value of swaps was calculated, as at the balance sheet date, based on the discounted cash flow of the difference between the fixed interest rate of the fixed leg and the indexed variable interest rate inherent to the variable leg of the derivative, estimated at interest rate setting dates based on yield curves from Bloomberg.
As at 31 December 2009 and 2008, derivatives have the following estimated cash flows:
| 31.December.2009 | 31.December.2008 | |
|---|---|---|
| N+1 | (6.209.007) | 221.084 |
| N+2 | (3.777.261) | (3.433.695) |
| N+3 | (1.753.523) | (1.020.834) |
| N+4 | (645.278) | (611.221) |
| N+5 | (95.829) | (289.458) |
| N+6 | - | (35.212) |
As at 31 December 2009 and 2008 this caption included the following loans:
| 31.December.2009 | 31.December.2008 | |
|---|---|---|
| Commercial paper (a) | 24.950.000 | 138.200.000 |
| Bank overdrafts (Note 15) | - | 9.277 |
| 24.950.000 | 138.209.277 |
(a) Short term commercial paper programme, privately placed, launched on 23 August 2004, valid for a ten year period, which may be extended at the option of the company, with a maximum limit of 350,000,000 euro.
The above mentioned loans are unsecured and its estimated fair value is considered to be near its carrying amount, as they bear interests at variable market rates.
As at 31 December 2009 and 2008 the analysis of the maturity of loans are as follows:
| 31.December.2009 | 31.December.2008 | |||
|---|---|---|---|---|
| Nominal value | Interests | Nominal value | Interests | |
| N+1 | 24.950.000 | 8.603.837 | 138.209.277 | 31.356.675 |
| N+2 | 250.000.000 | 6.447.146 | - | 28.885.188 |
| N+3 | - | 4.378.433 | 250.000.000 | 22.111.688 |
| N+4 | 100.000.000 | 3.409.425 | - | 15.456.700 |
| N+5 | 150.000.000 | 1.225.467 | 100.000.000 | 12.297.625 |
| after N+5 | - | - | 150.000.000 | 4.586.400 |
The interest amount was calculated considering the applicable interest rates for each loan at 31 December
Interest rate as at 31 December 2009 of the bonds and bank loan was, in average, 1.67% (5.54% as at 31 December 2008).
As at 31 December 2009 and 2008 other creditors are as follows:
| 31.December.2009 | 31.December.2008 | |
|---|---|---|
| Accruals: | ||
| Staff costs | 1.434.816 | 1.364.550 |
| Interest | 1.673.465 | 6.884.750 |
| Others | 86.588 | 11.195 |
| 3.194.869 | 8.260.495 |
As at 31 December 2009 and 2008, contingent liabilities were guarantees given are as follows
| 31.December.2009 | 31.December.2008 | |
|---|---|---|
| Guarantees given: | ||
| on tax claims | 216.835 | 1.776.135 |
| on judicial claims | 74.490 | 425.965 |
| Guarantee given in the name of a subsidiary | 256.137 | - |
As at 31 December 2009 and 2008, the company had operational lease contracts, as a lessee, whose minimum lease payments had the following schedule:
| 31.December.2009 | 31.December.2008 | |
|---|---|---|
| Due in | ||
| 2009 automatically renew able |
- | 261.978 |
| 2010 automatically renew able |
261.978 | - |
| 2009 | - | 155.174 |
| 2010 | 157.324 | 131.309 |
| 2011 | 73.709 | 41.995 |
| 2012 | 33.916 | 6.046 |
| 2013 | 1.331 | - |
| 528.258 | 596.502 |
During the year ended 31 December 2009 the Company recognized costs on operational leases 357,549 euro (438,882 euro during 2008).
As at 31 December 2009 and 2008 balances and transactions with related parties are as follows:
| 31.December.2009 | 31.December.2008 | |
|---|---|---|
| Transactions | ||
| Group companies | 3.794.149 | 1.922.557 |
| Jointly controlled companies | 709.215 | 338.460 |
| Other partners in group companies | 100.000 | 12.567 |
| Services rendered | 4.603.364 | 2.273.584 |
| Group companies | 710.725 | 852.481 |
| Jointly controlled companies | - | 375 |
| Other partners in group companies | 474.282 | 762.866 |
| Purchases and services obtained | 1.185.007 | 1.615.722 |
| Group companies | 19.588.244 | 64.527.232 |
| Interest income | 19.588.244 | 64.527.232 |
| Group companies | 16.853 | 665.365 |
| Interest expenses | 16.853 | 665.365 |
| Group companies | 93.516.449 | 94.979.579 |
| Dividend income (Note 26) | 93.516.449 | 94.979.579 |
| Group companies | - | 3.437.439 |
| Disposal of investments | - | 3.437.439 |
| Group companies | 4.210.227 | 700.000 |
| Acquisition of investments | 4.210.227 | 700.000 |
| Balance | ||
| Group companies | 8.927.985 | 24.041.601 |
| Jointly controlled companies | 483.632 | 101.195 |
| Other partners in group companies | 133.710 | 27.551 |
| Accounts receivable | 9.545.327 | 24.170.347 |
| Group companies | 547.244 | 403.809 |
| Jointly controlled companies | - | 3.636 |
| Other partners in group companies | 106.775 | 144.492 |
| Accounts payable | 654.019 | 551.937 |
| Group companies | 544.374.785 | 606.784.978 |
| Loans granted (Note 35) | 544.374.785 | 606.784.978 |
All Sonae, SGPS, S.A. subsidiaries, associates and joint ventures are considered related parties and are identified in Consolidated Financial Statements. All Efanor Investimentos, SGPS, SA, subsidiaries, including the ones of Sonae Indústria, SGPS, SA and of Sonae Capital, SGPS, SA are also considered related parties.
The remuneration of the Board of Directors for the years ended 31 December 2009 and 2008 is detailed as follows:
| 31.December.2009 | 31.December.2008 | |
|---|---|---|
| Fixed | 1.207.223 | 1.167.390 |
| Variable - short term | 328.700 | 297.100 |
| Variable - Medium term | 313.200 | 288.100 |
| 1.849.123 | 1.752.590 |
In 2009 and 2008 no loans were granted to the Company's Directors.
During 2009 51 Magma Nº1 Securitisation Notes (Note 9) were sold to Company's Directors or related entities / persons for the amount of 2.245.000 euro.
As at 31 December 2009 and 2008 no balances existed with the Company's Directors.
Services rendered amounted to 4,603,363 euro and 2,273,584 euro, in 31 December 2009 and 2008, respectively. Services rendered include management fees over subsidiaries in accordance with Holding companies law.
As at 31 December 2009 and 2008 investment income are as follows:
| 31.December.2009 | 31.December.2008 | |
|---|---|---|
| Dividends received (Note 24) | 93.516.449 | 94.979.579 |
| Gains/(Losses) on sale of investments (Note 8) | 1.464.872 | 1.211.756 |
| Impairment losses (Note 8) | - | (88.500.000) |
| 94.981.321 | 7.691.335 |
Dividends were received from Sonae Sierra, SGPS, SA (23,410,080 euro) and Sonae Distribuição, SGPS, SA (70,106,369 euro).
As at 31 December 2009 and 2008 net financial expenses are as follows:
| 31.December.2009 | ||
|---|---|---|
| Interest arising from: | ||
| Bank loans | (2.895.198) | (2.532.611) |
| Bonds | (16.211.768) | (27.929.993) |
| Other | (4.095.738) | (675.462) |
| Exchange losses | - | (107) |
| Changes in fair value | - | (6.192.312) |
| Up front fees on the issuance of debt | (729.655) | (618.636) |
| Other financial expenses | (624.693) | (385.383) |
| Interest payable and similar expenses | (24.557.052) | (38.334.504) |
| Interest income | 25.652.860 | 65.497.493 |
| Changes in fair value | - | 1.428.137 |
| Exchange gains | 1.568 | 991 |
| Others | - | 500.000 |
| Interest receivable and similar income | 25.654.428 | 67.426.621 |
| Net financial expenses | 1.097.376 | 29.092.117 |
As at 31 December 2009 and 2008 external supplies and services are as follows:
| 31.December.2009 | 31.December.2008 | |
|---|---|---|
| Subcontracts | 905.888 | 479.364 |
| Operational rents | 598.075 | 640.903 |
| Services obtained | 1.387.303 | 1.607.581 |
| Others | 839.285 | 964.644 |
| 3.730.551 | 3.692.492 |
As at 31 December 2009 and 2008 staff costs are as follows:
| 31.December.2009 | 31.December.2008 | ||
|---|---|---|---|
| Salaries | 4.201.903 | 3.457.447 | |
| Social costs | 470.085 | 431.134 | |
| Other staff costs | 162.693 | 305.966 | |
| 4.834.681 | 4.194.547 |
As at 31 December 2009 and 2009, the number of employees was 46 and 55, respectively.
Income tax charge for the year amounted to 18,096 euro and 445,849 euro, in 31 December 2009 and 2008, respectively.
The reconciliation between the profit before taxation and the tax charge for the years ended 31 December 2009 and 2008 are summarized as follows:
| 31.December.2009 | 31.December.2008 | |
|---|---|---|
| Profit before taxes | 91.747.144 | 30.918.004 |
| (Decrease) / Increase to net income for tax purposes | (94.817.645) | (2.797.671) |
| Taxable income | (3.070.501) | 28.120.333 |
| Use of carried forw ard tax losses |
- | (28.120.333) |
| Tax losses for w hich no deferred tax assets w ere recognized |
3.070.501 | - |
| Net taxable income | - | - |
| Tax charge @ 25% | - | - |
| Excesso of income tax estimate | (8.648) | - |
| Autonomous taxation | 26.744 | 24.044 |
| Municipal surcharge | - | 421.805 |
| Tax charge | 18.096 | 445.849 |
| Effective average tax rate | 0,020% | 1,442% |
During 2009, tax losses amounting to 3,070,501 were recognized which may be carried forward until 2015.
Earnings per share for the period were calculated taking into consideration the following amounts:
| 31.December.2009 | 31.December.2008 | |
|---|---|---|
| Net profit | ||
| Net profit taken into consideration to calculate basic earnings per share (Net profit for the period) |
91.729.048 | 30.472.155 |
| Effect of dilutive potential shares | ||
| Interest related to convertible bonds (net of tax) | - | - |
| Net profit taken into consideration to calculate diluted earnings per share Number of shares |
91.729.048 | 30.472.155 |
| Weighted average number of shares used to calculated basic earnings |
2.000.000.000 | 2.000.000.000 |
| Effect of dilutive potential ordinary shares from convertible bonds | - | - |
| Outstanting shares related w ith Deferred Performance Bonus |
911.102 | - |
| Number of shares that could be acquired at average market price | (606.519) | - |
| Weighted average number of shares used to calculated diluted earnings per share |
2.000.304.583 | 2.000.000.000 |
| Profit/(Loss) per share | ||
| Basic | 0,045865 | 0,015236 |
| Diluted | 0,045858 | 0,015236 |
During 2009 and 2008, the following receipts and payments occurred:
| 31.December.2009 | ||||
|---|---|---|---|---|
| Receipts | Payments | |||
| Companies | Total price | Amount received | Total price | Amount paid |
| Sonae RE, SA | - | - | 3.671.559 | 3.671.559 |
| Sonaecenter, Serviços, SA | - | - | 538.668 | 538.668 |
| Magma Nº 1 Securitisation Notes | 22.560.000 | 22.560.000 | - | - |
| MDS, SGPS, SA | 4.198.062 | 4.198.062 | - | - |
| 26.758.062 | 26.758.062 | 4.210.227 | 4.210.227 |
| Receipts | Payments | |||
|---|---|---|---|---|
| Companies | Total price | Amount received | Total price | Amount paid |
| Sonaecom, SGPS, SA | - | - | 812.229 | 812.229 |
| Sonae Investments, BV | - | - | 549.981.849 | 549.981.849 |
| Sontel, BV | - | - | 191.241.400 | 191.241.400 |
| Sonaecenter, Serviços, SA | - | - | 50.000 | 50.000 |
| Magma Nº 1 Securitisation Notes | - | - | 100.000.000 | 100.000.000 |
| MDS, SGPS, SA | 3.425.000 | 3.425.000 | - | - |
| Sonae Investimentos America Latina | 12.439 | 12.439 | - | - |
| 3.437.439 | 3.437.439 | 842.085.478 | 842.085.478 |
Amounts received on disposals of investments disclosed in the2008 cash flow statement include 141,603 euro relating to disposals in prior years.
In the Shareholders Annual Meeting held on 20 April 2009, payment of a gross dividend of 0.03 euro per share was approved. These dividends were paid on 20 May 2009, totalling 60,000,000 euro.
For 2009, the Board of Directors proposed a gross dividend of 0.0315 euro per share, totalling 63,000,000 euro. This dividend is subject to approval by shareholders in the Shareholders Annual Meeting.
The accompanying financial statements were approved by the Board of Directors on 16 March 2010. These financial statements will be presented to the Shareholders' General Meeting for final approval.
In the twelve months ended 31 December 2009 shareholders' loan contracts were entered into with the following companies:
MDS, SGPS, SA
Sontel, BV
Sonae Investments, BV
In 2009 short-term loan contracts were entered into with the following companies:
Edições Book It, SA
Farmácia Selecção, SA
Fozmassimo – Sociedade Imobiliária, SA
Modelo Continente Seguros, Lda
Modelo Hiper – Imobiliária, SA
Modelo.com – Vendas por Correspondência, SA
Sonaecenter, Serviços, SA
Sonae Investimentos, SGPS, SA
Sonae Specialized Retail, SGPS, SA
Sonaecom, SGPS, SA
Tlantic Portugal – Sistemas de Informação, SA
Valor N, SA
As at 31 December 2009 amounts owed by subsidiaries can be detailed as follows:
| Companies | Closing Balance |
|---|---|
| MDS, SGPS, SA | 30.119.075 |
| Sonae Investments, BV | 478.427.710 |
| Sonaecenter, Serviços, SA | 440.000 |
| Sontel, BV | 35.388.000 |
| 544.374.785 |
As at 31 December 2009 there was no amounts owed to affiliated undertakings.
The Board of Directors
Belmiro de Azevedo, Chairman of the Board of Directors
Álvaro Cuervo Garcia, member of the Board of Directors
Bernd Bothe, member of the Board of Directors
Christine Cross, member of the Board of Directors
Michel Marie Bon, member of the Board of Directors
José Neves Adelino, member of the Board of Directors
Duarte Paulo Teixeira de Azevedo, CEO
Álvaro Carmona e Costa Portela, member of the Executive Committee
Ângelo Gabriel Ribeirinho dos Santos Paupério, member of the Executive Committee
Nuno Manuel Moniz Trigoso Jordão, member of the Executive Committee
STATUTORY AUDITOR AND AUDITOR´S REPORT
(This is a translation of a report originally issued in Portuguese. In the event of discrepancies, the Portuguese language version prevails.)
Page 2 of 2
Porto, 16 March 2010
DELOITTE & ASSOCIADOS, SROC S.A. Represented by Luís Augusto Gonçalves Magalhães
(Translation of a Report and Opinion originally issued in Portuguese. In case of discrepancy the Portuguese version prevails)
To the Shareholders
In compliance with the applicable legislation and in accordance with the terms of our mandate, the Statutory Audit Board issues the present report over the supervision performed and its Opinion, which covers the Management Report and the individual and consolidated financial statements for the year ended 31 December 2009.
During the year under analysis, the Statutory Audit Board accompanied, within the scope of its competencies, the management of the Company and its subsidiaries. The Statutory Audit Board has also oversaw, with the scope considered adequate under the circumstances, the evolution of the operations, the adequacy of the accounting records, the appropriateness regarding the process of preparation and disclosure of financial information, corresponding accounting policies, valuation criteria used and the compliance with legal and regulatory requirements.
For that purpose, the Board met five times during the year, some of which with the presence of Directors, managers responsible for the departments of Planning and Control, Administrative and Accounting, Tax, Internal Audit and Risk Management and the Statutory Auditor and external auditor, Deloitte & Associados, SROC, S.A. Additionally, the Statutory Audit Board participated in the Board of Directors meeting where the Management Report and the financial statements of 2009 were approved.
The Statutory Audit Board oversaw the effectiveness of the risk management and internal control, having appreciated the planning and results of the internal and external auditors' activities.
The Statutory Audit Board was made aware of the communication of irregularities and has met with the Sonae's Ombudsman and has reviewed its reports.
The Statutory Audit Board examined, with special attention, the accounting treatment of transactions that had material economic or financial impacts in the development of operations, reflected in the financial statements under analysis, and, in accordance with its duties, verified the qualification and independence of the Statutory Auditor and External Auditor. In the fulfillment of its duties, the Statutory Audit Board reviewed the Management Report and the individual and consolidated financial statements, concluding that these information was prepared in accordance with the applicable legislation and accounting standards and give a true and fair view of the assets and liabilities, financial position and results of the Company and its affiliates included in the consolidation. Additionally, it has reviewed the Statutory Audit and Auditors' Report issued by the Statutory Auditor and agreed with their content.
Considering the above, in the opinion of the Statutory Audit Board, the Management Report, the consolidated and individual financial statements and the net result appropriation proposal, presented by the Board of Directors, are in accordance with the accounting, legal and statutory requirements and consequently recommends that those should be approved by the Shareholders' General Meeting.
In accordance with paragraph a), number 1 of article 8º of the Regulation of CMVM nr. 5/2008 and with the terms defined in paragraph c) nº 1 of the article 245º of the Portuguese Securities Market Code, the members of the Statutory Audit Board declare that, to their knowledge, the information contained in the Management Report and the remaining financial statements were prepared in accordance with applicable accounting standards, giving a true and fair view of the assets and liabilities, financial position and the results of the Sonae, S.G.P.S., S.A. and companies included in the consolidation. Also it is their understanding that the Management Report faithfully describes the business evolution, performance and financial position of Sonae, S.G.P.S., S.A. and of the companies included in the consolidation perimeter and contains a description of the major risks and uncertainties that they face.
Maia, 25 March 2010
The Statutory Audit Board
Daniel Bessa Fernandes Coelho
Arlindo Dias Duarte Silva
Jorge Manuel Felizes Morgado
This document may contain forward-looking information and statements, based on management's current expectations or beliefs. Forwardlooking statements are statements that are not historical facts.
These forward-looking statements are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements, including, but not limited to, changes in regulation, industry and economic conditions; and the effects of competition. Forward-looking statements may be identified by words such as "believes," "expects," "anticipates," "projects," "intends," "should," "seeks," "estimates," "future" or similar expressions.
Although these statements reflect our current expectations, which we believe are reasonable, investors and analysts are cautioned that forward-looking information and statements are subject to various risks and uncertainties, many of which are difficult to predict and generally beyond our control, that could cause actual results and developments to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements. You are cautioned not to put undue reliance on any forward-looking information or statements. We do not undertake any obligation to update any forward-looking information or statements.
Report available at Sonae's institutional website www.sonae.pt
Miguel Rangel Head of Institutional Relations and Communication [email protected] Tel: + 351 22 010 4705
Patrícia Mendes Pinheiro Head of Investor Relations [email protected] Tel.: + 351 22 010 4794
Sonae Lugar do Espido Via Norte 4471-909 Maia Portugal Tel.:+ 351 22 9487522 Fax: + 351 22 940 4634
Sonae is listed on the Euronext Stock Exchange. Information may be accessed on Reuters under the symbol SONP.IN and on Bloomberg under the symbol SONPL.
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